<PAGE>   1
                                                                    Exhibit 10.1


                             ALLEGRO NEW MEDIA, INC.

                          1994 LONG-TERM INCENTIVE PLAN


         1. PURPOSE. The purpose of the 1994 Long-Term Incentive Plan (the
"Plan") is to advance the interests of Allegro New Media, Inc., a Delaware
corporation (the "Company"), and its stockholders by providing incentives to
certain key employees of the Company and its affiliates and to certain other key
individuals who perform services for these entities, including those who
contribute significantly to the strategic and long-term performance objectives
and growth of the Company and its affiliates.

         2. ADMINISTRATION.

         (a) The Plan shall be determined solely by the Long-Term Incentive Plan
Administrative Committee (the "Committee") of the Board of Directors (the
"Board") of the Company, as such Committee is from time to time constituted, or
any successor committee the Board may designate to administer the Plan; provided
that if at any time Rule 16b-3 or any successor rule ("Rule 16b-3") under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), so permits
without adversely affecting the ability of the Plan to comply with the
conditions for exemption from Section 16 of the Exchange Act (or any successor
provision) provided by Rule 16b-3, the Committee may delegate the administration
of the Plan in whole or in part, on such terms and conditions, and to such
person or persons as it may determine in its discretion, as it relates to
persons not subject to Section 16 of the Exchange Act (or any successor
provision). The membership of the Committee or such successor committee shall be
constituted so as to comply at all times with the applicable requirements of
Rule 16b-3. No member of the Committee shall be eligible or have been eligible
within one year prior to his appointment to receive awards under the Plan
("Awards") or to receive awards under any other plan, program or arrangement of
the Company or any of its affiliates if such eligibility would cause such member
to cease to qualify as a "Non-Employee Director" or any successor standard under
Rule 16b-3 as then in effect; provided that if at any time Rule 16b-3 so permits
without adversely affecting the ability of the Plan to comply with the
conditions for exemption from Section 16 of the Exchange Act (or any successor
provision) provided by Rule 16b-3, one or more members of the Committee may
cease to qualify as a "Non-Employee Director" or any successor standard.

         (b) The Committee has all the powers vested in it by the terms of the
Plan set forth herein, such powers to include exclusive authority (except as may
be delegated as permitted herein) to select the key employees and other key
individuals to be granted Awards under the Plan, to determine the type, size and
terms of the Award to be made to each individual selected, to modify the terms
of any Award that has been granted, to determine the time when awards will be
granted, to establish performance objectives, to make any adjustments necessary
or desirable as a result of

                                      - 1 -
<PAGE>   2
the granting of Awards to eligible individuals located outside the United States
and to prescribe the form of the instruments embodying Awards made under the
Plan. The Committee is authorized to interpret the Plan and the Awards granted
under the Plan, to establish, amend and rescind any rules and regulations
relating to the Plan, and to make any other determination, which it deems
necessary or desirable for the administration of the Plan. The Committee (or its
delegate as permitted herein) may correct any defect or supply any omission or
reconcile any inconsistency in the Plan or in any Award in the manner and to the
extent the Committee deems necessary or desirable to carry it into effect. any
decision of the Committee (or its delegate as permitted herein) in the
interpretation and administration of the Plan, as described herein, shall lie
within its sole and absolute discretion and shall be final, conclusive and
binding on all parties concerned. The Committee may act only by a majority of
its members in office, except that the members thereof may authorize any one or
more of their members or any officer of the Company to execute and deliver
documents or to take any other ministerial action on behalf of the Committee
with respect to Awards made or to be made to Plan participants. No member of the
Committee and no officer of the Company shall be liable for anything done or
omitted to be done by him, by any other member of the Committee or by any
officer of the Company in connection with the performance of duties under the
Plan, except for his own willful misconduct or as expressly provided by statute.
Determinations to be made by the Committee under the Plan may be made by its
delegates.

         3. PARTICIPATION.

         (a) Affiliates. If an Affiliate (as hereinafter defined) of the Company
wishes to participate in the Plan and its participation shall have been approved
by the Board upon the recommendation of the Committee, the board of directors or
other governing body of the Affiliate shall adopt a resolution in form and
substance satisfactory to the Committee authorizing participation by the
Affiliate in the Plan with respect to its key employees or other key individuals
performing services for it. As used herein, the term "Affiliate" means any
entity in which the Company has a substantial direct or indirect equity interest
or which has a substantial direct or indirect equity interest in the Company, as
determined by the Committee in its discretion.

         An Affiliate participating in the Plan may cease to be a participating
company at any time by action of the Board or by action of the board of
directors or other governing body of such Affiliate, which latter action shall
be effective not earlier than the date of delivery to the Secretary of the
Company of a certified copy of a resolution of the Affiliate's board of
directors or other governing body taking such action. If the participation in
the Plan of an Affiliate shall terminate, such termination shall not relieve it
of any obligations theretofore incurred by it, except as may be approved by the
Committee in its discretion.

         (b) Participants. Consistent with the purposes of the Plan, the
Committee shall have exclusive power (except as may be delegated as permitted
herein) to select the key employees and other key individuals performing
services for the Company, including consultants or independent contractors and
others who perform services for the Company and its Affiliates who may
participate

                                      - 2 -
<PAGE>   3
in the Plan and be granted Awards under the Plan. Eligible individuals may be
selected individually or by groups or categories, as determined by the Committee
in its discretion. No director of the Company, unless he is an employee of the
Company or is an officer or director of an Affiliate, shall be eligible to
receive an Award under the Plan. In no event may a corporation be eligible to
receive an Award under the Plan.

         4. AWARDS UNDER THE PLAN.

         (a) Types of Awards. Awards under the Plan may include, but need not be
limited to, one or more of the following types, either alone or in any
combination thereof: (i) "Stock Options," (ii) "Stock Appreciation Rights,"
(iii) "Restricted Stock," (iv) "Performance Grants" and (v) any other type of
Award deemed by the Committee in its discretion to be consistent with the
purposes of the Plan (including but not limited to, Awards of or options or
similar rights granted with respect to unbundled stock units or components
thereof, and Awards to be made to participants who are foreign nationals or are
employed or performing services outside the United States). Stock Options, which
include "Non-Qualified Stock Options" and "Incentive Stock Options" or
combinations thereof, are rights to purchase common shares of the Company and
stock of any other class into which such shares may thereafter be changed (the
"Common Shares"). Non-Qualified Stock Options and Incentive Stock Options are
subject to the terms, conditions and restrictions specified in Paragraph 5.
Stock Appreciation Rights are rights to receive (without payment to the Company)
cash, Common Shares, other Company securities (which may include, but need not
be limited to, unbundled stock units or components thereof, debentures,
preferred stock, warrants, securities convertible into Common Shares or other
property, and other types of securities including, but not limited to, those of
the Company or an Affiliate, or any combination thereof ("Other Company
Securities") or property, or other forms of payment, or any combination thereof,
as determined by the Committee, based on the increase in the value of the number
of Common Shares specified in the Stock Appreciation Right. Stock Appreciation
Rights are subject to the terms, conditions and restrictions specified in
Paragraph 6. Shares of Restricted Stock are Common Shares which are issued
subject to certain restrictions pursuant to Paragraph 7. Performance Grants are
contingent awards subject to the terms, conditions and restrictions described in
Paragraph 8, pursuant to which the participant may become entitled to receive
cash, Common Shares, Other Company Securities or property, or other forms of
payment, or any combination thereof, as determined by the Committee.

         (b) Maximum Number of Shares that May Be Issued. There may be issued
under the Plan (as Restricted Stock, in payment of Performance Grants, pursuant
to the exercise of Stock Options or Stock Appreciation Rights, or in payment of
or pursuant to the exercise of such other Awards as the Committee, in its
discretion, may determine) an aggregate of not more than 3,000,000 Common
Shares, subject to adjustment as provided in Paragraph 15. Common Shares issued
pursuant to the Plan may be either authorized but unissued shares, treasury
shares, reacquired shares, or any combination thereof. If any Common Shares
issued as Restricted Stock or otherwise subject to repurchase or forfeiture
rights are reacquired by the Company pursuant to such rights, or if any

                                      - 3 -
<PAGE>   4
Award is cancelled, terminates or expires unexercised, any Common Shares that
would otherwise have been issuable pursuant thereto will be available for
issuance under new Awards.

         (c) Rights with Respect to Common Shares and Other Securities.

                  (i) Unless otherwise determined by the Committee in its
         discretion, a participant to whom an Award of Restricted Stock has been
         made (and any person succeeding to such a participant's rights pursuant
         to the Plan) shall have, after issuance of a certificate or copy
         thereof for the number of Common Shares awarded and prior to the
         expiration of the Restricted Period or the earlier repurchase of such
         Common Shares as herein provided, ownership of such Common Shares,
         including the right to vote the same and to receive dividends or other
         distributions made or paid with respect to such Common Shares (provided
         that such Common Shares, and any new, additional or different shares,
         or Other Company Securities or property, or other forms of
         consideration which the participant may be entitled to receive with
         respect to such Common Shares as a result of a stock split, stock
         dividend or any other change in the corporate or capital structure of
         the Company, shall be subject to the restrictions hereinafter described
         as determined by the Committee in its discretion), subject, however, to
         the options, restrictions and limitations imposed thereon pursuant to
         the Plan. Notwithstanding the foregoing, unless otherwise determined by
         the Committee in its discretion, a participant with whom an Award
         agreement is made to issue Common Shares in the future shall have no
         rights as a shareholder with respect to Common Shares related to such
         agreement until issuance of a certificate to him.

                  (ii) Unless otherwise determined by the Committee in its
         discretion, a participant to whom a grant of Stock Options, Stock
         Appreciation Rights, Performance Grants or any other Award is made (and
         any person succeeding to such a participant's rights pursuant to the
         Plan) shall have no rights as a stockholder with respect to any Common
         Shares or as a holder with respect to other securities, if any,
         issuable pursuant to any such Award until the date of the issuance of a
         stock certificate to him for such Common Shares or other instrument of
         ownership, if any. Except as provided in Paragraph 15, no adjustment
         shall be made for dividends, distributions or other rights (whether
         ordinary or extraordinary, and whether in cash, securities, other
         property or other forms of consideration, or any combination thereof)
         for which the record date is prior to the date such stock certificate
         or other instrument of ownership, if any, is issued.


         5. STOCK OPTIONS. The Committee may grant Stock Options either alone,
or in conjunction with Stock Appreciation Rights, Performance Grants or other
Awards, either at the time of grant or by amendment thereafter, provided that an
Incentive Stock Option may be granted only to an eligible employee of the
Company or its parent or subsidiary corporation. Each Stock Option (referred to
herein as an "Option") granted under the Plan shall be evidenced by an
instrument in such form as the Committee shall prescribe from time to time in
accordance with the Plan and shall comply with the following terms and
conditions, and with such other terms and conditions,

                                      - 4 -
<PAGE>   5
including, but not limited to, restrictions upon the Option or the Common Shares
issuable upon exercise thereof, as the Committee, in its discretion, shall
establish:

         (a) The option price may be less than, equal to, or greater than, the
fair market value of the Common Shares subject to such Option at the time the
Option is granted, as determined by the Committee, but in no event will such
option price be less than 85% of the fair market value of the underlying Common
Shares at the time the Option is granted; provided, however, that in the case of
an Incentive Stock Option granted to such an employee, the option price shall
not be less than the fair market value of the Common Shares subject to such
Option at the time the Option is granted, or if granted to such an employee who
owns stock representing more than ten percent of the voting power of all classes
of stock of the Company or of its parent or subsidiary (a "Ten Percent
Employee"), such option price shall be not less than 110% of such fair market
value at the time the Option is granted; provided, further that in no event will
such option price be less than the par value of such Common Shares.

         (b) The Committee shall determine the number of Common Shares to be
subject to each option. The number of Common Shares subject to an outstanding
Option may be reduced on a share-for-share or other appropriate basis, as
determined by the Committee, to the extent that Common Shares under such Option
are used to calculate the cash, Common Shares, Other Company Securities or
property, or other forms of payment, or any combination thereof, received
pursuant to exercise of a Stock Appreciation Right attached to such Option, or
to the extent that any other Award granted in conjunction with such Option is
paid.

         (c) The Option may not be sold, assigned, transferred, pledged,
hypothecated or otherwise disposed of, except by will or the laws of descent and
distribution, and shall be exercisable during the grantee's lifetime only by
him. Unless the Committee determines otherwise, the Option shall not be
exercisable for at least six months after the date of grant, unless the grantee
ceases employment or performance of services before the expiration of such
six-month period by reason of his disability as defined in Paragraph 12 or his
death.

         (d) The Option shall not be exercisable:

                  (i) in the case of any Incentive Stock Option granted to a Ten
         Percent Employee, after the expiration of five years from the date it
         is granted, and, in the case of any other Option, until after the
         expiration of ten years from the date it is granted; provided that an
         Option may be exercised during such period only at such time or times
         and in such installments as the Committee may establish;

                  (ii) unless payment in full is made for the shares being
         acquired thereunder at the time of exercise, such payment shall be made
         in such form (including, but not limited to, cash, Common Shares, or
         the surrender of another outstanding Award under the Plan, or any
         combination thereof) as the Committee may determine in its discretion;
         and


                                      - 5 -
<PAGE>   6
                  (iii) unless the person exercising the Option has been, at all
         times during the period beginning with the date of the grant of the
         Option and ending on the date of such exercise, employed by or
         otherwise performing services for the Company or an Affiliate, or a
         corporation, or a parent or subsidiary of a corporation, substituting
         or assuming the Option in a transaction to which Section 425(a) of the
         Internal Revenue Code of 1986, as amended, or any successor statutory
         provisions thereto (the "Code"), is applicable, except that:

                           (A) in the case of any Non-Qualified Stock Option, if
                  such person shall cease to be employed by or otherwise
                  performing services for the Company or an Affiliate solely by
                  reason of a period of related Employment as defined in
                  Paragraph 14, he may, during such period of Related
                  Employment, exercise the Non-Qualified Stock Option as if he
                  continued such employment or performance of service; or

                           (B) if such person shall cease such employment or
                  performance of services by reason of his disability as defined
                  in Paragraph 12 or early, normal or deferred retirement under
                  an approved retirement program of the Company or an Affiliate
                  (or such other plan or arrangement as may be approved by the
                  Committee, in its discretion, for this purpose) while holding
                  an option which has not expired and has not been fully
                  exercised, such person, at any time within three years (or
                  such other period determined by the Committee) after the date
                  he ceased such employment or performance of services (but in
                  no event after the Option has expired), may exercise the
                  Option with respect to any shares as to which he could have
                  exercised the Option on the date he ceased such employment or
                  performance of services, or with respect to such greater
                  number of shares as determined by the Committee; or

                           (C) if such person shall cease such employment or
                  performance of services for reasons other than Related
                  Employment, disability, early, normal or deferred retirement
                  or death (as provided elsewhere) while holding an Option which
                  has not expired and has not been fully exercised, such person
                  may exercise the Option at any time during the period, if any,
                  which the Committee approves (but not beyond the expiration of
                  the Option) following the date he ceased such employment or
                  performance of services with respect to any shares as to which
                  he could have exercised the Option on the date he ceased such
                  employment or performance of services or, in the Committee's
                  discretion, any or all shares under the Option whether or not
                  he could have exercised the Option on the date he ceased such
                  employment or performance of services; or

                           (D) if any person to whom an Option has been granted
                  shall die holding an Option which has not expired and has not
                  been fully exercised, his executors, administrators, heirs or
                  distributees, as the case may be, may, at any time within one
                  year (or such other period determined by the Committee) after
                  the date of death (but in no event after the Option has
                  expired), exercise the Option with respect to any shares as to
                  which the decedent could have exercised the Option at the time
                  of his

                                      - 6 -
<PAGE>   7
                  death, or with respect to such greater number of shares as
                  determined by the Committee.

         (e) In the case of an Incentive Stock Option, the amount of aggregate
fair market value of Common Shares (determined at the time of grant of the
Option pursuant to subparagraph 5(a) of the Plan) with respect to which
incentive stock options are exercisable for the first time by an employee during
any calendar year (under all such plans of his employer corporation and its
parent and its parent and subsidiary corporations) shall not exceed $100,000.

         (f) It is the intent of the Company that Non-Qualified Stock Options
granted under the Plan not be classified as Incentive Stock Options, that the
Incentive Stock Options granted under the Plan be consistent with and contain or
be deemed to contain all provisions required under Section 422A and other
appropriate provisions of the Code and any implementing regulations (and any
successor provisions thereof), and that any ambiguities in construction shall be
interpreted in order to effectuate such intent. The Agreements providing
Non-Qualified Stock Options shall provide that such Options are not "incentive
stock options" for the purposes of Section 422A of the Code.


         6. STOCK APPRECIATION RIGHTS. The Committee may grant Stock
Appreciation Rights either alone, or in conjunction with Stock Options,
Performance Grants or other Awards, either at the time of grant or by amendment
thereafter. Each Award of Stock Appreciation Rights granted under the Plan shall
be evidenced by an instrument in such form as the Committee shall prescribe from
time to time in accordance with the Plan and shall comply with the following
terms and conditions, and with such other terms and conditions, including, but
not limited to, restrictions upon the Award of Stock Appreciation Rights or the
Common Shares issuable upon exercise thereof, as the Committee in its discretion
shall establish:

         (a) The Committee shall determine the number of Common Shares to be
subject to each Award of Stock Appreciation Rights. The number of Common Shares
subject to an outstanding Award of Stock Appreciation Rights may be reduced on a
share-for-share or other appropriate basis, as determined by the Committee, to
the extent that Common Shares under such Award of Stock Appreciation Rights are
used to calculate the cash, Common Shares, Other Company Securities or property,
or other forms of payment, or any combination thereof, received pursuant to
exercise of an Option attached to such Award of Stock Appreciation Rights, or to
the extent that any other Award granted in conjunction with such Award of Stock
Appreciation Rights is paid.

         (b) The Award of Stock Appreciation Rights may not be sold, assigned,
transferred, pledged, hypothecated or otherwise disposed of, except by will or
the laws of the descent and distribution, and shall be exercisable during the
grantee's lifetime only by him. Unless the Committee determines otherwise, the
Award of Stock Appreciation Rights shall not be exercisable for at least six
months after the date of grant, unless the grantee ceases employment or
performance of services before the expiration of such six-month period by reason
of his disability as defined in Paragraph 12 or his death.

                                      - 7 -
<PAGE>   8
         (c) The Award of Stock Appreciation Rights shall not be exercisable:

                  (i) in the case of any Award of Stock Appreciation Rights that
         are attached to an Incentive Stock Option granted to a Ten Percent
         Employee, after the expiration of five years from the date it is
         granted, and, in the case of any other award of Stock Appreciation
         Rights, after the expiration of ten years from the date it is granted.
         Any Award of Stock Appreciation Rights may be exercised during such
         period only at such time or times and in such installments as the
         Committee may establish;

                  (ii) unless the Option or other Award to which the Award of
         Stock Appreciation Rights is attached is at the time exercisable; and

                  (iii) unless the person exercising the Award of Stock
         Appreciation Rights has been, at all times during the period beginning
         with the date of the grant thereof and ending on the date of such
         exercise, employed by or otherwise performing services for the Company
         or an Affiliate, except that

                           (A) in the case of any Award of Stock Appreciation
                  Rights (other than those attached to an Incentive Stock
                  Option), if such person shall cease to be employed by or
                  otherwise performing services for the Company or an Affiliate
                  solely by reason of a period of Related Employment as defined
                  in Paragraph 14, he may, during such period of Related
                  Employment, exercise the Award of Stock Appreciation Rights as
                  if he continued such employment or performance of services; or

                           (B) if such person shall cease such employment or
                  performance of services by reason of his disability as defined
                  in Paragraph 12 or early, normal or deferred retirement under
                  an approved retirement program of the Company or an Affiliate
                  (or such other plan or arrangement as may be approved by the
                  Committee, in its discretion, for this purpose) while holding
                  an Award of Stock Appreciation Rights which has not expired
                  and has not been fully exercised, such person may, at any time
                  within three years (or such other period determined by the
                  Committee) after the date he ceased such employment or
                  performance of services (but in no event after the Award of
                  Stock Appreciation Rights has expired), exercise the Award of
                  Stock Appreciation Rights with respect to any shares as to
                  which he could have exercised the Award of Stock Appreciation
                  Rights on the date he ceased such employment or performance of
                  services, or with respect to such greater number of shares as
                  determined by the Committee; or

                           (C) if such person shall cease such employment or
                  performance of services for reasons other than Related
                  Employment, disability, early, normal or deferred retirement
                  or death (as provided elsewhere) while holding an Award of
                  Stock Appreciation Rights which has not expired and has not
                  been fully exercised,

                                      - 8 -
<PAGE>   9
                  such person may exercise the Award of Stock Appreciation
                  Rights at any time during the period, if any, which the
                  Committee approves (but in no event after the Award of Stock
                  Appreciation Rights expires) following the date he ceased such
                  employment or performance of services with respect to any
                  shares as to which he could have exercised the Award of Stock
                  Appreciation Rights on the date he ceased such employment or
                  performance of services or as otherwise permitted in the
                  Committee's discretion; or

                  (D) if any person to whom an Award of Stock Appreciation
         Rights has been granted shall die holding an Award of Stock
         Appreciation Rights which has not expired and has not been fully
         exercised, his executors, administrators, heirs or distributees, as the
         case may be, may, at any time within one year (or such other period
         determined by the Committee) after the date of death (but in no event
         after the Award of Stock Appreciation Rights has expired), exercise the
         Award of Stock Appreciation Rights with respect to any shares as to
         which the decedent could have exercised the Award of Stock Appreciation
         Rights at the time of his death, or with respect to such greater number
         of shares as determined by the Committee.

         (d) An Award of Stock Appreciation Rights shall entitle the holder (or
any person entitled to act under the provisions of subparagraph 6(c)(iii)(D)
hereof) to exercise such Award or to surrender unexercised the option (or other
Award) to which the Stock Appreciation Rights is attached (or any portion of
such Option or other Award) to the Company and to receive from the Company in
exchange therefor, without payment to the Company, that number of Common Shares
having an aggregate value equal to the excess of the fair market value of one
share, at the time of such exercise, over the exercise price (or Option Price,
as the case may be) per share, times the number of shares subject to the Award
or the Option (or other Award), or portion thereof, which is so exercised or
surrendered, as the case may be. The Committee shall be entitled in its
discretion to elect to settle the obligation arising out of the exercise of a
Stock Appreciation Right by the payment of cash or Other Company Securities or
property, or other forms of payment, or any combination thereof, as determined
by the Committee, equal to the aggregate value of the Common Shares it would
otherwise be obligated to deliver. Any such election by the Committee shall be
made as soon as practicable after the receipt by the Committee of written notice
of the exercise of the Stock Appreciation Right. The value of a Common Share,
Other Company Securities or property, or other forms of payment determined by
the Committee for this purpose shall be the fair market value thereof on the
last business day next preceding the date of the election to exercise the Stock
Appreciation Right, unless the Committee, in its discretion, determines
otherwise.

         (e) A Stock Appreciation Right may provide that it shall be deemed to
have been exercised at the close of business on the business day preceding the
expiration date of the Stock Appreciation Right or of the related Option (or
other Award), or such other date as specified by the Committee, if at such time
such Stock Appreciation Right has a positive value. Such deemed exercise shall
be settled or paid in the same manner as a regular exercise thereof as provided
in subparagraph 6(d) hereof.

                                      - 9 -
<PAGE>   10
         (f) No fractional shares may be delivered under this Paragraph 6, but
in lieu thereof a cash or other adjustment shall be made as determined by the
Committee in its discretion.

         7. RESTRICTED STOCK. Each Award of Restricted Stock under the Plan
shall be evidenced by an instrument in such form as the Committee shall
prescribe from time to time in accordance with the Plan and shall comply with
the following terms and conditions, and with such other terms and conditions as
the Committee, in its discretion, shall establish:

         (a) The Committee shall determine the number of Common Shares to be
issued to a participant pursuant to the Award, and the extent, if any, to which
they shall be issued in exchange for cash, other consideration, or both.

         (b) Common Shares issued to a participant in accordance with the Award
may not be sold, assigned, transferred, pledged, hypothecated or otherwise
disposed of, except by will or the laws of descent and distribution, or as
otherwise determined by the Committee, for such period as the Committee shall
determine, from the date on which the Award is granted (the "Restricted
Period"). The Company will have the option, at the Committee's discretion, to
repurchase the shares subject to the Award at such price as the Committee shall
have fixed or to provide for forfeiture to the Company of the shares subject to
the Award, which option or forfeiture may be exercisable (i) if the
participant's continuous employment or performance of services for the Company
and its Affiliates shall terminate for any reason, except solely by reason of a
period of Related Employment as defined in Paragraph 14, or except as otherwise
provided in subparagraph 7(c), prior to the expiration of the Restricted Period,
(ii) if, on or prior to the expiration of the Restricted Period or the earlier
lapse of such forfeiture option, the participant has not paid to the Company an
amount equal to any federal, state, local or foreign income or other taxes which
the Company determines is required to be withheld in respect of such shares, or
(iii) under such other circumstances as determined by the Committee in its
discretion. Such repurchase option or forfeiture shall be exercisable on such
terms, in such manner and during such period as shall be determined by the
Committee when the Award is made or as amended thereafter, except as otherwise
determined in the Committee's discretion. Each certificate for Common Shares
issued pursuant to a Restricted Stock Award shall bear an appropriate legend
referring to the foregoing repurchase option or forfeiture and other
restrictions and to the fact that the shares are partly paid, shall be deposited
by the award holder with the Company, together with a stock power endorsed in
blank, or shall be evidenced in such other manner permitted by applicable law as
determined by the Committee in its discretion. Any attempt to dispose of any
such Common Shares in contravention of the foregoing repurchase and forfeiture
options and other restrictions shall be null and void and without effect. If
Common Shares issued pursuant to a Restricted Stock Award shall be repurchased
or forfeited pursuant to the repurchase option described above, the participant,
or in the event of his death, his personal representative, shall forthwith
deliver to the Secretary of the Company the certificates for the Common Shares
awarded to the participant, accompanied by such instrument of transfer, if any,
as may reasonably be required by the Secretary of the Company.


                                     - 10 -
<PAGE>   11
         (c) If a participant who has been in continuous employment or
performance of services for the Company or an Affiliate since the date on which
a Restricted Stock Award was granted to him shall, while in such employment or
performance of services, die, or terminate such employment or performance of
services by reason of disability as defined in Paragraph 12 or by reason of
early normal or deferred retirement under an approved retirement program of the
Company or an Affiliate (or such other plan or arrangement as may be approved by
the Committee in its discretion, for this purpose) and any of such events shall
occur after the date on which the Award was granted to him and prior to the end
of the Restricted Period of such Award, the Committee may determine to cancel
the repurchase option or forfeiture (and any and all other restrictions) on any
or all of the Common Shares subject to such Award; and the repurchase option or
forfeiture shall become exercisable at such time as to the remaining shares, if
any.

         8. PERFORMANCE GRANTS. The Award of a Performance Grant ("Performance
Grant") to a participant will entitle him to receive a specified amount
determined by the Committee (the "Actual Value"), if the terms and conditions
specified herein and in the Award are satisfied. Each Award of a Performance
Grant shall be subject to the following terms and conditions, and to such other
terms and conditions, including but not limited to, restrictions upon any cash,
Common Shares, Other Company Securities or property, or other forms of payment,
or any combination thereof, issued in respect of the Performance Grant, as the
Committee, in its discretion, shall establish, and shall be embodied in an
instrument in such form and substance as is determined by the Committee.

         (a) The Committee shall determine the value or range of values of a
Performance Grant to be awarded to each participant selected for an award and
whether or not such a Performance Grant is granted in conjunction with an Award
of Options, Stock Appreciation Rights, Restricted Stock or other Award, or any
combination thereof, under the Plan (which may include, but need not be limited
to, deferred Awards) concurrently or subsequently granted to the participant
(the "Associated Award"). As determined by the Committee, the maximum value of
each Performance Grant (the "Maximum Value") shall be: (i) an amount fixed by
the Committee at the time the award is made or amended thereafter, (ii) an
amount which varies from time to time based in whole or in part on the then
current value of a Common Share, Other Company Securities or property, or other
securities or property, or any combination thereof, or (iii) an amount that is
determinable from criteria specified by the Committee. Performance Grants may be
issued in different classes or series having different names, terms and
conditions. In the case of a Performance Grant awarded in conjunction with an
Associated Award, the Performance Grant may be reduced on an appropriate basis
to the extent that the Associated Award has been exercised, paid to or otherwise
received by the participant, as determined by the Committee.

         (b) The award period ("Award Period") in respect of any Performance
Grant shall be a period determined by the Committee. At the time each Award is
made, the Committee shall establish performance objectives to be attained within
the Award Period as the means of determining the Actual Value of such a
Performance Grant. The performance objectives shall be based on such

                                     - 11 -
<PAGE>   12
measure or measures of performance, which may include, but need not be limited
to, the performance of the participant, the Company, one or more of its
subsidiaries or one or more of their divisions or units, or any combination of
the foregoing, as the Committee shall determine, and may be applied on an
absolute basis or be relative to industry or other indices, or any combination
thereof. The Actual Value of a Performance Grant shall be equal to its Maximum
Value only if the performance objectives are attained in full, but the Committee
shall specify the manner in which the Actual Value of Performance Grants shall
be determined if the performance objectives are met in part. Such performance
measures, the Actual Value or the Maximum Value, or any combination thereof, may
be adjusted in any manner by the Committee in its discretion at any time and
from time to time during or as soon as practicable after the Award Period, if it
determines that such performance measures, the Actual Value or the Maximum
Value, or any combination thereof, are not appropriate under the circumstances.

         (c) The rights of a participant in Performance Grants awarded to him
shall be provisional and may be cancelled or paid in whole or in part, all as
determined by the Committee, if the participant's continuous employment or
performance of services for the Company and its Affiliates shall terminate for
any reason prior to the end of the Award Period, except solely by reason of a
period of Related Employment as defined in Paragraph 14.

         (d) The Committee shall determine whether the conditions of
subparagraph 8(b) or 8(c) hereof have been met and, if so, shall ascertain the
Actual Value of the Performance Grants. If the Performance Grants have no Actual
Value, the Award and such Performance Grants shall be deemed to have been
cancelled and the Associated Award, if any, may be cancelled or permitted to
continue in effect in accordance with its terms. If the Performance Grants have
any Actual Value and:

                  (i) were not awarded in conjunction with an Associated Award,
         the Committee shall cause an amount equal to the actual Value of the
         Performance Grants earned by the participant to be paid to him or his
         beneficiary as provided below; or

                  (ii) were awarded in conjunction with an Associated Award, the
         Committee shall determine, in accordance with criteria specified by the
         Committee (A) to cancel the Performance Grants, in which event no
         amount in respect thereof shall be paid to the participant or his
         beneficiary, and the Associated Award may be permitted to continue in
         effect in accordance with its terms, (B) to pay the Actual Value of the
         Performance Grants to the participant or his beneficiary as provided
         below, in which event the Associated Award may be cancelled or (C) to
         pay to the participant or his beneficiary as provided below, the Actual
         Value of only a portion of the Performance Grants, in which a
         complimentary portion of the Associated Award may be permitted to
         continue in effect in accordance with its terms or be cancelled, as
         determined by the Committee.

         Such determination by the Committee shall be made as promptly as
practicable following the end of the Award Period or upon the earlier
termination of employment or performance of

                                     - 12 -
<PAGE>   13
services, or at such other time or times as the Committee shall determine, and
shall be made pursuant to criteria specified by the Committee.

         Payment of any amount in respect of the Performance Grants which the
Committee determines to pay as provided above shall be made by the Company as
promptly as practicable after the end of the Award Period or at such other time
or times as the Committee shall determine, and may be made in cash, Common
Shares, Other Company Securities or property, or other forms of payment, or any
combination thereof or in such other manner, as determined by the Committee in
its discretion. Notwithstanding anything in this Paragraph 8 to the contrary,
the Committee may, in its discretion, determine and pay out the Actual Value of
the Performance Grants at any time during the Award Period.


         9. DEFERRAL OF COMPENSATION. The Committee shall determine whether or
not an Award shall be made in conjunction with deferral of the participant's
salary, bonus or other compensation, or any combination thereof, and whether or
not such deferred amounts may be

         (i) forfeited to the Company or to other participants, or any
         combination thereof, under certain circumstances (which may include,
         but need not be limited to, certain types of termination of employment
         or performance of services for the Company and its Affiliates),

         (ii) subject to increase or decrease in value based upon the attainment
         of or failure to attain, respectively, certain performance measures
         and/or

         (iii) credited with income equivalents (which may include, but need not
         be limited to, interest, dividends or other rates of return) until the
         date or dates of payment of the Award, if any.

         10. DEFERRED PAYMENT OF AWARDS. The Committee may specify that the
payment of all or any portion of cash, Common Shares, Other Company Securities
or property, or any other form of payment, or any combination thereof, under an
Award shall be deferred until a later date. Deferrals shall be for such periods
or until the occurrence of such events, and upon such terms, as the Committee
shall determine in its discretion. Deferred payments of Awards may be made by
undertaking to make payment in the future based upon the performance of certain
investment equivalents (which may include, but need not be limited to,
government securities, Common Shares, other securities, property or
consideration, or any combination thereof), together with such additional
amounts of income equivalents (which may be compounded and may include, but need
not be limited to, interest, dividends or other rates of return, or any
combination thereof) as may accrue thereon until the date or dates of payment,
such investment equivalents and such additional amounts of income equivalents to
be determined by the Committee in its discretion.

                                     - 13 -
<PAGE>   14
         11. AMENDMENT OR SUBSTITUTION OF AWARDS UNDER THE PLAN. The terms of
any outstanding Award under the Plan may be amended from time to time by the
Committee in its discretion in any manner that it deems appropriate (including,
but not limited to, acceleration of the date of exercise of any Award and/or
payments thereunder, or reduction of the Option Price of an Option or exercise
price of an Award of Stock Appreciation Rights); provided, that no such
amendment shall adversely affect in a material manner any right of a participant
under the Award without his written consent, unless the Committee determines in
its discretion that there have occurred or are about to occur significant
changes in the participant's position, duties or responsibilities, or
significant changes in economic, legislative, regulatory, tax, accounting or
cost/benefit conditions which are determined by the Committee in its discretion
to have or to be expected to have a substantial effect on the performance of the
Company, or any subsidiary, affiliate, division or department thereof, on the
Plan or an any Award under the Plan. The Committee may, in its discretion,
permit holders of Awards to surrender outstanding Awards as a condition
precedent to the grant of new Awards under the Plan.

         12. DISABILITY. For the purposes of this Plan, a participant shall be
deemed to have terminated his employment or performance of services for the
Company and its Affiliates by reason of disability if the Committee shall
determine that the physical or mental condition of the participant by reason of
which such employment or performance of services terminated was such at that
time as would entitle him to payment of monthly disability benefits under any
disability plan of the Company or an Affiliate in which he is a participant. If
the participant is not eligible for benefits under any disability plan of the
Company or an Affiliate, he shall be deemed to have terminated such employment
or performance of services by reason of disability if the Committee shall
determine that he is permanently and totally disabled within the meaning of
Section 22(e)(3) of the Code.

         13. TERMINATION OF A PARTICIPANT. For all purposes under the Plan, the
Committee shall determine whether a participant has terminated employment by or
the performance of services for the Company or an Affiliate, provided that
transfers between the Company and an Affiliate or between Affiliates, and
approved leaves of absence shall not be deemed such a termination.

         14. RELATED EMPLOYMENT. For the purposes of this Plan, Related
Employment shall mean the employment or performance of services by an individual
for an employer that is neither the Company nor an Affiliate, provided that (i)
such employment or performance of services is undertaken by the individual at
the request of the Company or an Affiliate, (ii) immediately prior to
undertaking such employment or performance of services, the individual was
employed by or performing services for the Company or an Affiliate or was
engaged in Related Employment as herein defined, and (iii) such employment or
performance of services is in the best interests of the Company and is
recognized by the Committee, in its discretion, as Related Employment for
purposes of this Paragraph 14. The death or disability of an individual during a
period of Related

                                     - 14 -
<PAGE>   15
Employment as herein defined shall be treated, for purposes of this Plan, as if
the death or onset of disability had occurred while the individual was employed
by or performing services for the Company or an Affiliate.

         15. DILUTION AND OTHER ADJUSTMENTS. In the event of any change in the
outstanding Common Shares of the Company by reason of any stock split, stock
dividend, split-up, split-off, spin-off, recapitalization, merger,
consolidation, rights offering, share offering, reorganization, combination or
exchange of shares, a sale by the Company of all or part of its assets, any
distribution to stockholders other than a normal cash dividend, or other
extraordinary or unusual event, if the Committee shall determine, in its
discretion, that such change equitably requires an adjustment in the terms of
any Award or the number of Common Shares available for Awards, such adjustment
may be made by the Committee and shall be final, conclusive and binding for all
purposes of the Plan.

         16. DESIGNATION OF BENEFICIARY BY PARTICIPANT. A participant may name a
beneficiary to receive any payment to which he may be entitled in respect of any
Award under the Plan in the event of his death, on a written form to be provided
by and filed with the Committee, and in a manner determined by the Committee in
its discretion. The Committee reserves the right to review and approve
beneficiary designations. A participant may change his beneficiary from time to
time in the same manner, unless such participant has made an irrevocable
designation. Any designation of beneficiary under the Plan (to the extent it is
valid and enforceable under applicable law) shall be controlling over any other
disposition, testamentary or otherwise, as determined by the Committee in its
discretion. If no designated beneficiary survives the participant and is living
on the date on which any amount becomes payable to such participant's
beneficiary, such payment will be made to the legal representatives of the
participant's estate, and the term "beneficiary" as used in the Plan shall be
deemed to include such person or persons. If there is any question as to the
legal right of any beneficiary to receive a distribution under the Plan, the
Committee in its discretion may determine that the amount in question be paid to
the legal representatives of the estate of the participant, in which event the
Company, the Board and the Committee and the members thereof will have no
further liability to anyone with respect to such amount.

         17. CHANGE IN CONTROL.

         (a) Upon any Change in Control:

                  (i) each Stock Option and Stock Appreciation Right that is
         outstanding on the date of such Change in Control shall be exercisable
         in full immediately;

                  (ii) all restrictions with respect to Restricted Stock shall
         lapse immediately, and the Company's right to repurchase or forfeit any
         Restricted Stock outstanding on the date of

                                     - 15 -
<PAGE>   16
         such Change in Control shall thereupon terminate and the certificates
         representing such Restricted Stock and the related stock powers shall
         be promptly delivered to the participants entitled thereto; and

                  (iii) All Award Periods for the purposes of determining the
         amounts of Awards of Performance Grants shall end as of the end of the
         calendar quarter immediately preceding the date of such Change in
         Control, and the amount of the Award payable shall be the portion of
         the maximum possible Award allocable to the portion of the Award Period
         that had elapsed and the results achieved during such portion of the
         Award Period.

         (b) For this purpose, a Change in Control shall be deemed to occur when
and only when any of the following events first occurs:

                  (i) any person who is not currently such becomes the
         beneficial owner, directly or indirectly, of securities of the Company
         representing 25% or more of the combined voting power of the Company's
         then outstanding voting securities; or

                  (ii) three or more directors, whose election or nomination for
         election is not approved by a majority of the Incumbent Board (as
         hereinafter defined), are elected within any single 24-month period to
         serve on the Board of Directors; or

                  (iii) members of the Incumbent Board cease to constitute a
         majority of the Board of Directors without the approval of the
         remaining members of the Incumbent Board; or

                  (iv) any merger (other than a merger where the Company is the
         survivor and there is no accompanying Change in Control under
         subparagraphs (i), (ii) or (iii) of this paragraph (b)), consolidation,
         liquidation or dissolution of the Company, or the sale of all or
         substantially all of the assets of the Company.

         Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur pursuant to subparagraph (i) of this paragraph (b) solely because 25%
or more of the combined voting power of the Company's outstanding securities is
acquired by one or more employee benefit plans maintained by the Company or by
any other employer, the majority interest in which is held, directly or
indirectly, by the Company. For purposes of this Section 17, the terms "person"
and "beneficial owner" shall have the meaning set forth in Sections 3(a) and
13(d) of the Exchange Act, and in the regulations promulgated thereunder, as in
effect on December 15, 1993; and the term "Incumbent Board" shall mean (A) the
members of the Board of Directors of the Company on December 31, 1993, to the
extent that they continue to serve as members of the Board of Directors, and (B)
any individual who becomes a member of the Board of Directors after December 31,
1993, if his election or nomination for election as a director was approved by a
vote of at least three-quarters of the then Incumbent Board.


                                     - 16 -
<PAGE>   17
         18. MISCELLANEOUS PROVISIONS.

         (a) No employee or other person shall have any claim or right to be
granted an Award under the Plan. Determinations made by the Committee under the
Plan need not be uniform and may be made selectively among eligible individuals
under the Plan, whether or not such eligible individuals are similarly situated.
Neither the Plan nor any action taken hereunder shall be construed as giving any
employee or other person any right to continue to be employed by or perform
services for the Company or any Affiliate, and the right to terminate the
employment of or performance of services by any participant at any time and for
any reason is specifically reserved.

         (b) No participant or other person shall have any right with respect to
the Plan, the Common Shares reserved for issuance under the Plan or in any
Award, contingent or otherwise, until written evidence of the Award shall have
been delivered to the recipient and all the terms, conditions and provisions of
the Plan and the Award applicable to such recipient (and each person claiming
under or through him) have been met.

         (c) Except as may be approved by the Committee where such approval
shall not adversely affect compliance of the Plan with Rule 16b-3 under the
Exchange Act, a participant's rights and interest under the Plan may not be
assigned or transferred, hypothecated or encumbered in whole or in part either
directly or by operation of law or otherwise (except in the event of a
participant's death) including, but not by way of limitation, execution, levy,
garnishment, attachment, pledge, bankruptcy or in any other manner; provided,
however, that any Option or similar right (including, but not limited to, a
Stock Appreciation Right) offered pursuant to the Plan shall not be transferable
other than by will or the laws of descent and distribution and shall be
exercisable during the participant's lifetime only by him.

         (d) No Common Shares, Other Company Securities or property, other
securities or property, or other forms of payment shall be issued hereunder with
respect to any Award unless counsel for the Company shall be satisfied that such
issuance will be in compliance with applicable federal, state, local and foreign
legal, securities exchange and other applicable requirements.

         (e) It is the intent of the Company that the Plan comply in all
respects with Rule 16b-3 under the Exchange Act, that any ambiguities or
inconsistencies in construction of the Plan be interpreted to give effect to
such intention and that if any provision of the Plan is found not to be in
compliance with Rule 16b-3, such provision shall be deemed null and void to the
extent required to permit the Plan to comply with Rule 16b-3.

         (f) The Company and its Affiliates shall have the right to deduct from
any payment made under the Plan, any federal, state, local or foreign income or
other taxes required by law to be withheld with respect to such payment. It
shall be a condition to the obligation of the Company to issue Common Shares,
Other Company Securities or property, other securities or property, or other
forms of payment, or any combination thereof, upon exercise, settlement or
payment of any Award under the Plan, that the participant (or any beneficiary or
person entitled to act) pay to the Company,

                                     - 17 -
<PAGE>   18
upon its demand, such amount as may be requested by the Company for the purpose
of satisfying any liability to withhold federal, state, local or foreign income
or other taxes. If the amount requested is not paid, the Company may refuse to
issue Common Shares, Other Company Securities or property, other securities or
property, or other forms of payment, or any combination thereof. Notwithstanding
anything in the Plan to the contrary, the Committee may, in its discretion,
permit an eligible participant (or any beneficiary or person entitled to act) to
elect to pay a portion or all of the amount requested by the Company for such
taxes with respect to such Award, at such time and in such manner as the
Committee shall deem to be appropriate including, but not limited to, by
authorizing the Company to withhold, or agreeing to surrender to the Company on
or about the date such tax liability is determinable, Common Shares, Other
Company Securities or property, other securities or property, or other forms of
payment, or any combination thereof, owned by such person or a portion of such
forms of payment that would otherwise be distributed, or have been distributed,
as the case may be, pursuant to such Award to such person, having a fair market
value equal to the amount of such taxes.

         (g) The expenses of the Plan shall be borne by the Company. However, if
an Award is made to an individual employed by or performing services for an
Affiliate:

                  (i) if such Award results in payment of cash to the
         participant, such Affiliate shall pay to the Company an amount equal to
         such cash payment unless the Committee shall otherwise determine in its
         discretion;

                  (ii) if the Award results in the issuance by the Company to
         the participant of Common Shares, Other Company Securities or property,
         other securities or property, or other forms of payment, or any
         combination thereof, such Affiliate shall, unless the Committee shall
         otherwise determine in its discretion, pay to the Company an amount
         equal to the fair market value thereof, as determined by the Committee,
         on the date such Common Shares, other Company Securities or property,
         other securities or property, or other forms of payment, or any
         combination thereof, are issued (or in the case of the issuance of
         Restricted Stock or of Common Shares, Other Company Securities or
         property, or other securities or property, or other forms of payment
         subject to transfer and forfeiture conditions, equal to the fair market
         value thereof on the date on which they are no longer subject to
         applicable restrictions), minus the amount, if any, received by the
         Company in respect of the purchase of such Common Shares, Other Company
         Securities or property, other securities or property or other forms of
         payment, or any combination thereof, all as the Committee shall
         determine in its discretion; and

                  (iii) the foregoing obligations of any such Affiliate entity
         shall survive and remain in effect and binding on such entity even if
         its status as an Affiliate of the Company should subsequently cease,
         except as otherwise agreed by the Company and the entity.

         (h) The Plan shall be unfunded. The Company shall not be required to
establish any special or separate fund or to make any other segregation of
assets to assure the payment of any

                                     - 18 -
<PAGE>   19
Award under the Plan, and rights to the payment of Awards shall be no greater
than the rights of the Company's general creditors.

         (i) By accepting any Award or other benefit under the Plan, each
participant and each person claiming under or through him shall be conclusively
deemed to have indicated his acceptance and ratification of, and consent to, any
action taken by the Company, the Board or the Committee or its delegates.

         (j) Fair market value in relation to Common Shares, Other Company
Securities or property, other securities or property or other forms of payment
of Awards under the Plan or any combination thereof, as of any specific time
shall mean such value as determined by the Committee in accordance with
applicable law.

         (k) The masculine pronoun includes the feminine and the singular
includes the plural wherever appropriate.

         (l) The appropriate officers of the Company shall cause to be filed any
reports, returns or other information regarding Awards hereunder or any Common
Shares issued pursuant hereto as may be required by Section 13 or 15(d) of the
Exchange Act (or any successor provision) or any other applicable statute, rule
or regulation.

         (m) The validity, construction, interpretation, administration and
effect of the Plan, and of its rules and regulations, and rights relating to the
Plan and to Awards granted under the Plan, shall be governed by the substantive
laws, but not the choice of law rules, of the State of Delaware.

         19. PLAN AMENDMENT OR SUSPENSION. The Plan may be amended or suspended
in whole or in part at any time and from time to time by the Board, but no
amendment shall be effective unless and until the same is approved by
stockholders of the Company where the failure to obtain such approval would
adversely affect the compliance of the Plan with Rule 16b-3 under the Exchange
Act and with other applicable law. No amendment of the Plan shall adversely
affect in a material manner any right of any participant with respect to any
Award theretofore granted without such participant's written consent, except as
permitted under Paragraph 11.

         20. PLAN TERMINATION. This Plan shall terminate upon the earlier of the
following dates or events to occur:

         (a) upon the adoption of a resolution of the Board terminating the
Plan; or

         (b) ten years from the date the Plan is initially approved and adopted
by the stockholders of the Company in accordance with Paragraph 21 hereof;
provided, however, that the Board may, prior to the expiration of such ten-year
period, extend the term of the Plan for an additional period

                                     - 19 -
<PAGE>   20
of up to five years for the grant of Awards other than Incentive Stock Options.
No termination of the Plan shall materially alter or impair any of the rights or
obligations of any person, without his consent, under any Award theretofore
granted under the Plan except that subsequent to termination of the Plan, the
Committee may make amendments permitted under Paragraph 11.

         21. SHAREHOLDER ADOPTION. The Plan shall be submitted to the
stockholders of the Company for their approval and adoption at a meeting to be
held on or before December 31, 1993, or at any adjournment thereof. The Plan
shall not be effective and no Award shall be made hereunder unless and until the
Plan has been so approved and adopted. The stockholders shall be deemed to have
approved and adopted the Plan only if it is approved and adopted at a meeting of
the stockholders duly held by vote taken in the manner required by the laws of
the State of Delaware and the applicable Federal securities laws.


                                     - 20 -