Document:

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                                                                  EXHIBIT 10.2

                              ALLIANCE IMAGING INC.

                             1997 STOCK OPTION PLAN

1.  PURPOSE OF THE PLAN.

          The purpose of the ALLIANCE IMAGING INC. 1997 STOCK OPTION PLAN (the
"PLAN") is (i) to further the growth and success of Alliance Imaging, Inc., a
Delaware corporation (the "COMPANY"), by permitting employees of the Company to
acquire shares (the "SHARES") of Common Stock, $.01 par value (the "COMMON
STOCK"), of the Company, thereby increasing such employees' personal interest in
such growth and success and (ii) to provide a means of rewarding outstanding
contribution by such persons to the Company. Options granted under this Plan
(the "OPTIONS") may be either "incentive stock options" under the provisions of
Section 422 of the Internal Revenue Code of 1986, as amended (the "CODE"), or
non-qualified stock options.

2.  DEFINITIONS.

           As used in this Plan, the following capitalized terms shall have the
meanings set forth below:

          "AFFILIATE" means, with respect to any Person, any other Person that
is controlled by, controlling or under common control with, such Person.
Notwithstanding anything to the contrary contained herein, with respect to the
Company, the term "Affiliate" shall include Newport Investment LLC and each of
its members and each Person in which Newport Investment LLC or such members hold
or have the right to acquire, collectively, more than 25% of the voting Equity
Interest.

          "BOARD" has the meaning set forth in Section 3(a).

          "CAPITAL STOCK" means any and all shares, interests, participation or
other equivalents (however designated) of corporate stock, including all common
stock and preferred stock.

          "CAUSE" shall have the meaning defined in an employment or similar
agreement between the Company and the Optionee, or, if there is no employment or
similar agreement between the Company and the Optionee that defines what
constitutes a termination for cause for purposes of such agreement, what
constitutes "cause" shall be determined by the Committee in good faith.

          "CHANGE-IN-CONTROL" means the occurrence of one or more of the
following:

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            (a) a sale to any Person other than an Affiliate of the Company of
 all or substantially all of the assets of the Company;

            (b) a sale by the Company of shares (whether by merger or
otherwise), if any such sale is made to a Person other than any of its
Affiliates, which Person, after giving effect to such sale, will own more than
50% of the outstanding Capital Stock of the Company;

            (c) a sale by the stockholders of the Company of Shares, if any such
sale is made to a Person other than an Affiliate of the Company, which Person,
after giving effect to such sale, will own more than 50% of the outstanding
Shares;

          "CODE" has the meaning set forth in Section 1.

          "COMMITTEE" has the meaning set forth in Section 3(a).

          "COMMON STOCK" has the meaning set forth in Section 1.

          "COMPANY" has the meaning set forth in Section 1.

          "DRAG-ALONG NOTICE" has the meaning set forth in Section 12(a).

          "DRAG-ALONG GRANTEES" has the meaning set forth in Section 12(a).

          "EBITDA" means, for any period of determination thereof, Net Income of
the Company and its subsidiaries plus, without duplication, (a) Interest
Expense, (b) income tax expense, refunds or credits for such periods, and (c)
depreciation and amortization expense of the Company and its subsidiaries, all
determined in accordance with GAAP.

          "EFFECTIVE DATE" means December 18, 1997.

          "EQUITY INTEREST" means (a) with respect to a corporation, any and all
Capital Stock or warrants, options or other rights to acquire Capital Stock (but
excluding any debt security which is convertible into, or exchangeable for,
Capital Stock) and (b) with respect to a partnership, limited liability company
or similar Person, any and all units, interests, rights to purchase, warrants,
options or other equivalents of, or other ownership interests in, any such
Person.

                                     -2-
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          "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

          "EXPIRATION DATE" has the meaning set forth in Section 9.

          "FAIR MARKET VALUE" means:

          (a) if the Shares are publicly traded and reported on a closing price
basis, the closing price on the principal national securities exchange, market
or system on which the Shares are traded on the trading day immediately
preceding the date of determination or, if no trades were made on such day, on
the next preceding day on which trades were made, otherwise, the average of the
bid and asked prices for the Shares on the trading day immediately preceding the
date of determination in the over-the-counter market as reported by Nasdaq or,
if not reported by Nasdaq, by an established quotation service for
over-the-counter securities;

          (b) or if there is no public trading market for the Shares, the fair
value of such Shares on the date of any determination as reasonably determined
in good faith by the Committee after taking into consideration all factors which
it deems appropriate, including, without limitation, recent sale and offer
prices of Shares in private transactions negotiated at arms' length.

          Notwithstanding anything contained in this Plan to the contrary, all
determinations pursuant to this Section shall be made without regard to any
restriction other than a restriction which, by its terms, will never lapse.

          "GAAP" means generally accepted accounting principles in the United
States, consistently applied, and statements and interpretations (if applicable)
issued by the Financial Accounting Standards Board, or any successor body, as in
effect from time to time, unless otherwise stated.

          "GOOD REASON" shall have the meaning defined in an employment or
similar agreement between the Company and the Optionee, or, if there is no
employment or similar agreement between the Company and the Optionee that
defines what constitutes a termination for good reason for purposes of such
agreement, what constitutes "good reason" shall be determined by the Committee
in good faith.

          "INDEBTEDNESS" means indebtedness for borrowed money, reimbursement
obligations with respect to letters of credit and similar instruments,
obligations incurred, issued or assumed as the deferred purchase price of
property or services (other than accounts payable incurred in the ordinary
course of business consistent with past practice), obligations of

                                     -3-
<PAGE>

others secured by (or, for which the holder of such indebtedness has an
existing right, contingent or otherwise, to be secured) any lien on property
or assets of the Company or any subsidiary, capital lease obligations, and
obligations in respect of guarantees of any of the foregoing or any "keep
well" or other agreement to maintain any financial statement condition of
another person, in each case, whether or not matured, liquidated, fixed,
contingent, or disputed.

          "INTEREST EXPENSE" means, for any period, all interest (including
capitalized interest) and all amortization of debt discount and expense on any
particular Indebtedness (including, without limitation payment-in-kind, zero
coupon and other like securities and the interest component of capital lease
obligations applicable to such period) of the Company and its subsidiaries
determined on a consolidated basis in accordance with GAAP.

          "INVESTMENT" in any Person, means any loan or advance to such Person,
any purchase or other acquisition of any Equity Interest or other ownership or
profit interest, warrants, rights, options, obligations or other securities of
such Person, any capital contribution to such Person or any other investment in
such Person, including any arrangement pursuant to which an investing Person
incurs Indebtedness of the types referred to in the definition of "Indebtedness"
in respect of such Person.

          "NET DEBT" means (a) all amounts owing by the Company in respect of
outstanding Indebtedness (including principal, interest, fees, expenses and
prepayment penalties), less (b) cash of the Company, all determined on a
consolidated basis in accordance with GAAP.

          "NET INCOME" means, for any period, the gross revenues of the Company
and its consolidated subsidiaries for such period less all expenses and other
proper charges, in each case determined in accordance with GAAP, but (a)
excluding in any event any gains or losses on the sale or other disposition of
Investments or fixed or capital assets or from any transaction classified as
extraordinary under GAAP, any taxes on such excluded gains and any tax
deductions or credits on account of any such excluded losses and (b) in the sole
discretion of the Board or the Committee, adjusted for non-recurring or
non-operating gains or losses and other non-recurring or non-operating gains or
losses which affect Net Income;

                                     -4-
<PAGE>

          "NOTICE" has the meaning set forth in Section 14(b).

          "OPTION" has the meaning set forth in Section 1.

          "OPTION AGREEMENT" has the meaning set forth in Section 4(c).

          "OPTION PRICE" has the meaning set forth in Section 5(a).

          "OPTIONED SHARES" has the meaning set forth in Section 14(b).

          "OPTIONEES" has the meaning set forth in Section 4(a).

          "PER SHARE EQUITY VALUE" means, in respect of any Tranche B or Tranche
C Performance Measurement Date, (a) (i) the product of (x) EBITDA for the
calendar year ending on such Performance Measurement Date, multiplied by (y)
six, plus (ii) the aggregate Option Price of Vested Options, plus (iii) the
aggregate Option Price for all Tranche B Options and Tranche C Options which
will become vested as of the next succeeding Performance Measurement Date if the
applicable Per Share Equity Values are achieved, less (iv) the aggregate
principal amount of the outstanding consolidated Indebtedness (which shall
include, without limitation, if the Per Share Equity Value is being determined
following or in connection with a Change-in-Control, all prepayment penalties
which may be payable by the Company upon the repayment of its Indebtedness),
less (v) the aggregate face value (or, if the Per Share Equity Value is being
determined following or in connection with a Change-in-Control, the aggregate
redemption price) of all of the Company's outstanding shares of redeemable
Capital Stock, plus (vi) the aggregate amount of the consolidated cash on hand
of the Company and its Subsidiaries, divided by (b) the sum of (x) the number of
Shares outstanding as of the end of such calendar year and (y) the number of
Shares issuable upon the conversion of securities convertible into Shares or
upon the exercise of options or warrants exercisable for Shares, in each case in
this clause (b), which are both vested (or, in the case of Tranche B Options and
Tranche C Options, will become vested on or before the next succeeding
Performance Measurement Date if the applicable Per Share Equity Values are
achieved) and "in the money" (I.E., the exercise price or conversion price is
less than the Per Share Equity Value calculated without giving effect to such
convertible securities or options or warrants); PROVIDED, HOWEVER, that if a
Qualified Public Offering shall have been consummated prior to any such
calculation,

          "PER SHARE EQUITY VALUE" shall mean the average closing stock price
for the thirty trading days immediately preceding the date of any such
determination (with the five highest and five lowest closing stock prices
disregarded), as reported by the National Association of Securities Dealers
Automated Quotations System ("NASDAQ"), or, if the Shares are then traded on
a national securities exchange, on the principal national securities exchange
on which it is so traded; PROVIDED, FURTHER, HOWEVER, that all outstanding
"in the money" options shall be deemed to be vested solely for purposes of
the definition of

          "PER SHARE EQUITY VALUE" if Per Share Equity Value is being
determined following or in connection with a Change-in-Control or a Qualified
Public Offering.

          "PERSON" is to be construed in the broadest sense and means and
includes any natural person, company, limited

                                     -5-
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liability company, partnership, joint venture, corporation, business trust,
or unincorporated organization or any national, federal, state, municipal,
local, territorial, foreign or other government or any department,
commission, board, bureau, agency, regulatory authority or instrumentality
thereof, or any court, judicial, administrative or arbitral body or public or
private tribunal.

          "PRO RATA PORTION" has the meaning set forth in Section 13(a).

          "QUALIFIED PUBLIC OFFERING" means a public offering of Common Stock of
the Company in which the proceeds to the Company, net of all fees, commissions,
discounts and expenses, equals or exceeds $35 million.

          "RECAPITALIZATION" has the meaning set forth in Section 15(a).

          "RULE 16b-3" has the meaning set forth in Section 3(a).

          "SEC" means the Securities and Exchange Commission.

          "SHARES" has the meaning set forth in Section 1.

          "SECURITIES ACT" has the meaning set forth in Section 16(b).

          "TAG-ALONG GRANTORS" has the meaning set forth in Section 13(a).

          "TRANCHE A OPTIONS" has the meaning set forth in Section 4(d).

          "TRANCHE B MISSED PERFORMANCE MEASUREMENT DATE" has the meaning set
forth in Section 7(b).

          "TRANCHE B OPTIONS" has the meaning set forth in Section 4(d).

          "TRANCHE B PERFORMANCE MEASUREMENT DATE" has the meaning set forth in
Section 7(a).

          "TRANCHE B PER SHARE TARGET VALUE" has the meaning set forth in
Section 7(a).

          "TRANCHE B VESTING DATE" has the meaning set forth in Section 7(a).

          "TRANCHE C MISSED PERFORMANCE MEASUREMENT DATE" has the meaning set
forth in Section 8(b).

          "TRANCHE C OPTIONS" has the meaning set forth in Section 4(d).

          "TRANCHE C PERFORMANCE MEASUREMENT DATE" has the meaning set forth in
Section 8(a).

          "TRANCHE C PER SHARE TARGET VALUE" has the meaning set forth in
Section 8(a).

           "TRANCHE C VESTING DATE" has the meaning set forth in 8 (a).

          "TRANSFER" means, with respect to any security (including any Option),
a sale, transfer, assignment, encumbrance, pledge or other disposition of such
security either voluntarily or involuntarily and with or without consideration
(including, without limitation, by way of foreclosure or other acquisition by
any lender with respect to any shares pledged to such lender by an Optionee).

                                     -6-
<PAGE>

          "VESTED OPTION" means an option which has vested in accordance with
this Agreement, or pursuant to an Option Agreement, as the case may be.

3.  ADMINISTRATION OF THE PLAN

            (a) STOCK OPTION COMMITTEE. This Plan shall be administered by a
three- person committee (the "COMMITTEE") comprised of three members of the
Board of Directors of the Company (the "BOARD"), appointed from time to time by
the Board. The Committee shall have the power and authority to grant Options
under this Plan; PROVIDED, HOWEVER, that, so long as the Company shall be
required to comply with Rule 16b-3 promulgated by the SEC under the Exchange Act
("RULE 16b-3") in order to permit officers and directors of the Company to be
exempt from the provisions of Section 16(b) of the Exchange Act with respect to
transactions effected pursuant to this Plan, each member of the Committee, at
the effective date of his or her appointment to the Committee and at all times
thereafter while serving on the Committee, shall be a "DISINTERESTED PERSON"
within the meaning of Rule 16b-3.

            (b) PROCEDURES. The members of the Committee shall from time to time
select a Chairman from among the members of the Committee. The Committee shall
adopt such rules and regulations as it shall deem appropriate concerning the
holding of meetings and the administration of this Plan. A majority of the
entire Committee shall constitute a quorum and the actions of a majority of the
members of the Committee present at a meeting at which a quorum is present, or
actions approved in writing by all of the members of the Committee, shall be the
actions of the Committee.

            (c) ADMINISTRATION. Except as may otherwise be expressly reserved to
the Board as provided herein, and, with respect to any Option, except as may
otherwise be provided in the Option Agreement evidencing such Option, the
Committee shall have all powers with respect to the administration of this Plan,
including the interpretation of the provisions of this Plan and any Option
Agreement, and all decisions of the Board or the Committee, as the case may be,
shall be conclusive and binding on all participants in this Plan.

4.  GRANT OF OPTIONS; SHARES SUBJECT TO THIS PLAN.

            (a) POWER TO GRANT OPTIONS. Subject to the provisions of this Plan,
the Committee shall have the power and authority, in its sole discretion, to
determine:

                                     -7-
<PAGE>

                  (i) the persons (from among the class of persons eligible to
      receive Options under this Plan) to whom Options shall be granted (the
      "OPTIONEES");

                  (ii) the time or times at which Options shall be granted; and

                  (iii) the number of Shares subject to such Option.

Notwithstanding anything to the contrary contained herein, as of the Effective
Date, each Person listed in EXHIBIT A shall be granted Options which shall
represent the right to acquire, subject to Section 6, that number of Shares set
forth opposite such Person's name on EXHIBIT A.

            (b) ELIGIBILITY. Options may be granted under this Plan at any time
and from time to time on or prior to the tenth anniversary of the Effective Date
to any person who is an employee of the Company or any of its Subsidiaries at
the time of grant. Notwithstanding anything contained in Section 4(a) to the
contrary, Options may not be granted to any Person in any one taxable year of
the Company in excess of 25% of the Options issued or issuable under this Plan.
Notwithstanding any other provision of this Plan to the contrary, the Committee
may, in its discretion, provide that, with respect to any Option, the terms of
the Option Agreement evidencing such Option shall control any conflicts between
provisions of this Plan and provisions of such Option Agreement.

            (c) OPTION AGREEMENTS. Each Option shall be evidenced by a written
agreement (an "OPTION AGREEMENT"), in substantially the form of EXHIBIT B, with
such changes thereto as are consistent with this Plan as the Committee shall
deem appropriate. Each Option Agreement shall be executed by the Company and the
Optionee.

            (d) TRANCHE A OPTIONS, TRANCHE B OPTIONS, AND TRANCHE C OPTIONS. One
half of the Options granted on the Effective Date to each Optionee shall vest in
accordance with Section 6(b) ("TRANCHE A OPTIONS"), one-quarter of the options
granted to each Optionee on the Effective Date shall vest in accordance with
Section 7 ("TRANCHE B OPTIONS"), and one-quarter of the options granted to each
Optionee on the Effective Date shall vest in accordance with Section 8 ("TRANCHE
C OPTIONS"). Options granted after the Effective Date shall vest as determined
by the Committee, in its sole and absolute discretion, and as set forth in the
applicable Option Agreement.

            (e) DATE OF GRANT. Other than Options granted as of the Effective
Date, the date of grant of an Option under this Plan shall be the date as of
which the Committee approves the grant.

                                     -8-
<PAGE>

            (f) NUMBER OF SHARES. Subject to any equitable adjustments for
Recapitalizations pursuant to Section 15 and subject to the vesting
provisions set forth herein, each Option shall be exercisable for one Share.
Subject to any equitable adjustments for Recapitalization pursuant to Section
15, the number of Shares subject at any one time to Options granted under
this Plan, and the number of Shares theretofore issued and delivered pursuant
to the exercise of Options granted under this Plan, shall be 454,545 Shares.
If and to the extent that Options granted under this Plan terminate, expire
or are canceled without having been fully exercised, new Options may be
granted under this Plan with respect to the Shares covered by the unexercised
portion of such terminated, expired or canceled Options.

            (g) CHARACTER OF SHARES. The Shares issuable upon exercise of
Options granted under this Plan shall be (i) authorized but unissued Shares,
(ii) Shares held in the Company's treasury or (iii) a combination of the
foregoing.

            (h) RESERVATION OF SHARES. The Company shall use commercially
reasonable efforts to ensure that the number of Shares reserved for issuance
under this Plan shall at all times be equal to the maximum number of shares
which may be purchased at such time pursuant to outstanding Options.

5.  OPTION PRICE

            (a) GENERAL. The exercise price (the "OPTION PRICE") for each Share
subject to an Option shall be determined by the Committee and set forth in the
Option Agreement, except that (i) the exercise price for Options granted on the
Effective Date shall be $11.00 per share (subject to equitable adjustment for
Recapitalizations affecting the Common Stock) and (ii) no incentive stock option
may be granted under the plan to an employee who owns, directly or indirectly
(within the meaning of Sections 422(b)(6) and 424(d) of the Code), stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or any of its subsidiaries, unless (A) the Option Price of
the Shares of Common Stock subject to such incentive stock option is fixed at
not less than 110% of the Fair Market Value on the date of grant of such shares
and (B) such incentive stock option by its terms is not exercisable after the
expiration of five years from the date it is granted.

            (b) REPRICING OF OPTIONS. Subsequent to the date of grant of any
Option, the Committee may (i) in its sole discretion, establish a new Option
Price for such Option so as to decrease the Option Price of such Option or (ii)
with the consent of the Optionee, establish a new Option Price for such Option
so as to increase the Option Price of such Option.

6.  EXERCISABILITY AND VESTING OF TRANCHE A OPTIONS

            (a) All Tranche A Options granted on the Effective Date shall be
subject to vesting as set forth in this Section 6, and all Options granted after
the Effective Date shall be subject to vesting as determined by the Committee
and set forth in the applicable Option Agreement.

                                     -9-
<PAGE>

            (b) 25% of the Tranche A Options shall become Vested Options on each
of the first four anniversaries of December 31, 1997 if the Optionee is employed
by the Company on such anniversary date. If a Change-in-Control shall occur,
then all of the Time Vesting Options held by such Optionee shall become
Vested Options immediately prior to such Change-in-Control.

            (c) Notwithstanding anything to the contrary contained in this Plan,
each Tranche A Option shall cease vesting as of the time that an Optionee's
employment with the Company is terminated for any reason and no Tranche A Option
which is not a Vested Option as of such time shall become a Vested Option
thereafter. All decisions by the Committee with respect to any calculations
pursuant to this Section (absent manifest error) shall be final and binding on
all Optionees.

7.  EXERCISABILITY AND VESTING OF TRANCHE B OPTIONS

            (a) All of the Tranche B Options shall become Vested Options on the
date that is seven years and six months immediately following the date of grant
("TRANCHE B VESTING DATE") if the Optionee is employed by the Company on the
Tranche B Vesting Date. However, if the Per Share Equity Value as of a Tranche B
Performance Measurement Date indicated below (each a "TRANCHE B PERFORMANCE
MEASUREMENT DATE") equals or exceeds the corresponding Tranche B Per Share
Target Value indicated below (the "TRANCHE B PER SHARE TARGET VALUE") and the
Optionee is employed by the Company on such Tranche B Performance Measurement
Date, then 25% of the Tranche B Options shall vest on such Tranche B Performance
Measurement Date.

<TABLE>
<CAPTION>

          TRANCHE B
         PERFORMANCE          TRANCHE B PER SHARE
       MEASUREMENT DATE          TARGET VALUE
      ------------------      -------------------
<S>                           <C>
      December 31, 1998             $14.85

      December 31, 1999             $20.05

      December 31, 2000             $27.06

      December 31, 2001             $36.54
</TABLE>

            (b) If the Tranche B Per Share Target Value is not achieved for any
year, the Committee, upon consultation with management, will have the discretion
to cause all or part of the applicable Tranche B Options to become Vested
Options.

            (c) If both (i) the Per Share Equity Value as of any Tranche B
Performance Measurement Date equals at least 80% of the Tranche B Per Share
Target Value established for such Tranche B Performance Measurement Date (the
"TRANCHE B MISSED PERFORMANCE MEASUREMENT DATE"), but is less than 100% of
the Tranche B Per Share Target Value established for such Tranche B
Performance Measurement Date and (ii) either (A) the Per Share Equity Value
as of the immediately subsequent Tranche B Performance Measurement als or
exceeds the Tranche B Per Share Target Value as of such subsequent Tranche B
Performance Measurement Date pursuant to Section 7(a) or (B) both (x) the Per
Share Equity Value as of the immediately subsequent Tranche B Performance
Measurement Date equals at least 80% of the Tranche B Per Share Target Value
established for such Tranche B Performance Measurement Date, but is less than
100% of the Tranche B Per Share Target Value established for such subsequent
Tranche B Performance Measurement Date and (y) the Per Share Equity Value as
of the second subsequent Tranche B Performance Measurement Date equals or
exceeds the Tranche B Per Share Target Value established for such second
subsequent Tranche B Performance Measurement Date pursuant to Section 7(a),
then the Tranche B Options which did not become Vested Options as of the
Tranche B Missed Performance Measurement Date shall become Vested Options as
of the first anniversary of the Tranche B Missed Performance Measurement Date
if the Optionee holding the applicable Tranche B Option is employed by the
Company as of the first anniversary of the Tranche B Missed Performance
Measurement Date.

            (d) If a Change-in-Control shall occur prior to December 31, 2001,
all of the Tranche B Options will become Vested Options if the Fair Market Value
of the per share consideration received by the holders of Shares (after giving
effect to the vesting described herein) equals or exceeds (i) the Tranche B Per
Share Target Value for the Tranche B Performance Measurement Date immediately
preceding such Change-in-Control plus (ii) the product of (x) (A) the Tranche B
Per Share Target Value for the Tranche B Performance Measurement Date
immediately following such Change-in-Control less (B) the Tranche B Per Share
Target Value for the Tranche B Performance Measurement Date immediately
preceding such Change-in-Control, multiplied by (y) a fraction, the numerator of
which is the number of days elapsed as of the consummation of such Change-in-
Control since the immediately preceding Tranche B Performance Measurement Date
and the denominator of which is 365.

            (e) Notwithstanding anything to the contrary contained in this Plan,
25% of the Tranche B Options shall become Vested Options on each of the first
four anniversaries of the last day of the month in which the Effective Date
occurs to the extent that any such anniversary occurs after a Qualified Public
Offering if after such Qualified Public Offering, Newport Investment LLC shall
sell more than 50% of the Shares held by it as of the Effective Date at an
average price exceeding (i) the Tranche B Per Share Target Value for the Tranche
B Performance Measurement Date immediately preceding such Qualified Public
Offering plus (ii) the product of (x) (A) the Tranche B Per Share Target Value
for the Tranche B Performance Measurement Date immediately following such
Qualified Public Offering less (B) the Tranche B Per Share Target Value for the
Tranche B Performance Measurement Date immediately preceding such Qualified
Public Offering, multiplied by (y) a fraction, the numerator of which is the
number of days elapsed as of the consummation of such Qualified Public Offering
since the immediately preceding Tranche B Performance Measurement Date and the
denominator of which is 365.

            (f) Notwithstanding anything to the contrary contained in this Plan,
the determination as to whether the Per Share Equity Value equals or exceeds the
Tranche B Per Share Target Value shall be made after the Company's audited
financials for the applicable fiscal year become available.

            (g) Notwithstanding anything to the contrary contained in this
Plan, each Tranche B Option shall cease vesting as of the time that an
Optionee's employment with the Company is terminated for any reason and no
Tranche B Option which is not a Vested Option as of such time shall become a
Vested Option thereafter. All decisions by the Committee with respect to any
calculations pursuant to this Section (absent manifest error) shall be final
and binding on all Optionees.

8.  EXERCISABILITY AND VESTING OF TRANCHE C OPTIONS

            (a) All of the Tranche C Options shall become Vested Options on the
date that is seven years and six months immediately following the date of the
grant ("TRANCHE C VESTING DATE") if the Optionee is employed by the Company on
the Tranche C Vesting Date. However, if the Per Share Equity Value as of the
Tranche C Performance Measurement Date indicated below (each a "TRANCHE C
PERFORMANCE MEASUREMENT DATE") equals or exceeds the corresponding Tranche C Per
Share Target Value indicated below (the "TRANCHE C PER SHARE TARGET VALUE") and
the Optionee is employed by the Company on such Tranche C Performance
Measurement Date indicated below, then 25% of the Tranche C Options shall vest
on such Tranche C Performance Measurement Date.

<TABLE>
<CAPTION>

          TRANCHE C           TRANCHE C PER
         PERFORMANCE          SHARE TARGET
       MEASUREMENT DATE           VALUE
      ------------------      -------------
<S>                           <C>
      December 31, 1998         $15.40

      December 31, 1999         $21.56

      December 31, 2000         $30.18

      December 31, 2001         $42.26
</TABLE>

            (b) If the Tranche C Per Share Target Value is not achieved for any
year, the Committee, upon consultation with management, will have the discretion
to cause all or part of the applicable Tranche C Options to become Vested
Options.

                                     -10-
<PAGE>

            (c) If both (i) the Per Share Equity Value as of any Tranche C
Performance Measurement Date equals at least 80% of the Tranche C Per Share
Target Value established for such Tranche C Performance Measurement Date (the
"TRANCHE C MISSED PERFORMANCE MEASUREMENT"), but is less than 100% of the
Tranche C Per Share Target Value established for such Tranche C Performance
Measurement Date and (ii) either (A) the Per Share Equity Value as of the
immediately subsequent Tranche C Performance Measurement Date equals or
exceeds the Tranche C Per Share Target Value as of such subsequent Tranche C
Performance Measurement Date pursuant to Section 8(a) or (B) both (x) the Per
Share Equity Value as of the subsequent Tranche C Performance Measurement
Date equals at least 80% of the Tranche C Per Share Target Value established
for such Tranche C Performance Measurement Date, but is less than 100% of the
Tranche C Per Share Target Value established for such subsequent Tranche C
Performance Measurement Date and (y) the Per Share Equity Value as of the
second subsequent Tranche C Performance Measurement Date equals or exceeds
the Tranche C Per Share Target Value established for such second subsequent
Tranche C Performance Measurement Date pursuant to Section 8(a), then the
Tranche C Options which did not become Vested Options as of the Tranche C
Missed Performance Measurement Date shall become Vested Options as of the
first anniversary of the Tranche C Missed Performance Measurement Date if the
Optionee holding the applicable Tranche C Option is employed by the Company
as of the first anniversary of the Tranche C Missed Performance Measurement
Date.

            (d) If a Change-in-Control shall occur prior to December 31, 2001,
all of the Tranche C Options will become Vested Options if the Fair Market Value
of the per share consideration received by the holders of Shares (after giving
effect to the vesting described herein) equals or exceeds (i) the Tranche C Per
Share Target Value for the Tranche C Performance Measurement Date immediately
preceding such Change-in-Control plus (ii) the product of (x) (A) the Tranche C
Per Share Target Value for the Tranche C Performance Measurement Date
immediately following such Change-in-Control less (B) the Tranche C Per Share
Target Value for the Tranche C Performance Measurement Date immediately
preceding such Change-in-Control, multiplied by (y) a fraction, the numerator of
which is the number of days elapsed as of the consummation of such
Change-in-Control since the immediately preceding Tranche C Performance
Measurement Date and the denominator of which is 365.

            (e) Notwithstanding anything to the contrary contained in this Plan,
25% of the Tranche C Options shall become Vested Options on each of the first
four anniversaries of the last day of the month in which the Effective Date
occurs to the extent that any such anniversary occurs after a Qualified Public
Offering if after such Qualified Public Offering, Newport Investment LLC shall
sell more than 50% of the Shares held by it as of the Effective Date at an
average price exceeding (i) the Tranche C Per Share Target Value for the Tranche
C Performance Measurement Date immediately preceding such Qualified Public
Offering plus (ii) the product of (x) (A) the Tranche C Per Share Target Value
for the Tranche C Performance Measurement Date immediately following such
Qualified Public Offering less (B) the Tranche C Per Share Target Value for the
Tranche C Performance Measurement Date immediately preceding such Qualified
Public Offering, multiplied by (y) a fraction, the numerator of which is the
number of days elapsed as of the consummation of such Qualified Public Offering
since the immediately preceding Tranche C Performance Measurement Date and the
denominator of which is 365.

            (f) Notwithstanding anything to the contrary contained in this Plan,
the determination as to whether the Per Share Equity Value equals or exceeds the
Tranche C Per Share Target Value shall be made after the Company's audited
financials for the applicable fiscal year become available.

            (g) Notwithstanding anything to the contrary contained in this Plan,
each Tranche C Option shall cease vesting as of the time that an

                                     -11-
<PAGE>

Optionee's employment with the Company is terminated for any reason and no
Tranche C Option which is not a Vested Option as of such time shall become a
Vested Option thereafter. All decisions by the Committee with respect to any
calculations pursuant to this Section (absent manifest error) shall be final
and binding on all Optionees.

9.     AUTOMATIC TERMINATION OF OPTION

          Each Option granted under this Plan shall automatically terminate and
shall become null and void and be of no further force or effect upon the first
of the following to occur (the "EXPIRATION DATE"):

            (a) the tenth anniversary on which such Option is granted;

            (b) subject to Section 9(e), if an Optionee terminates his
employment with the Company without Good Reason, or the Company terminates the
Optionee's employment for Cause, the thirtieth day following the date of such
termination;

            (c) subject to Section 9(e), if an Optionee's employment with the
Company is terminated by the Optionee or the Company for any reason other than
for Cause or without Good Reason, the sixtieth day following the date of such
termination;

            (d) subject to Section 9(e), if an Optionee's employment with the
Company is terminated due to the death or disability of the Optionee, six months
after the date of such death or disability; or

            (e) with respect to Options granted after the Effective Date, the
expiration of such other period of time or the occurrence of such other event as
the Committee, in its discretion, may provide in the Option Agreement governing
such Option.

10.    REGISTRATION ON FORM S-8.

          On or prior to the first anniversary of a public offering by the
Company of Capital Stock, the Company will file or cause to be filed, and will
use commercially reasonable efforts to cause to be effective, a registration
statement on Form S-8 with respect to the sale of Shares purchased upon the
exercise of Options; PROVIDED that the Company may delay such filing on one or
more occasions for up to 180 days if the Company determines that the filing of a
Form S-8 would require disclosure that the Company deems advisable to defer.

                                     -12-
<PAGE>

11.    REPURCHASE OF SHARES

            (a) If an Optionee ceases to be employed by the Company, the Company
shall have the right to purchase each Vested Option (or portion thereof) and
each Share held by such Optionee or holder of Shares, purchased upon the
exercise of an Option, beginning sixty days after termination.

            (b) The repurchase right referred to in this Section may be
exercised by delivery of a notice of exercise to such effect to the Optionee at
the address of such Optionee set forth in the Company's records.

            (c) The purchase price for Shares purchased pursuant to Section
11(a) shall be (i) the Fair Market Value of each Share subject to Vested
Options, less the exercise price thereof plus (ii) the Fair Market Value of each
Share.

            (d) Promptly, but not later than five business days after receipt of
the notice of exercise referred to in this Section, the Optionee shall deliver
to the Company all certificates representing Shares or Options held by such
Optionee, duly endorsed for transfer to the purchaser thereof, against delivery
of the purchase price therefor. Such Shares and Options shall be delivered free
and clear of all liens, charges, encumbrances, pledges, hypothecations and other
security interests.

            (e)   The Company shall have the right to assign its rights pursuant
to this Section to the Company or to any Affiliate of the Company.

12.    DRAG-ALONG RIGHT

            (a) If, prior to the consummation of a Qualified Public Offering,
(i) stockholders of the Company holding more than 50% of the outstanding Shares
(assuming all Options are exercised) (the "DRAG-ALONG GRANTEES") enter into an
agreement with any Person or Persons, to Transfer (pursuant to a merger or
otherwise) all Shares then held by the Drag-Along Grantees, the Drag-Along
Grantees shall be entitled, at their option, to require each Optionee to sell
all Shares held by such Optionee (together with all Options then outstanding and
held by such Optionee), by providing such holders with notice at least fifteen
days prior to consummation of the proposed transaction, setting forth in
reasonable detail the material terms and conditions of the proposed transaction
or offering,

                                     -13-
<PAGE>

and the price per share at which such holder shall be required to
sell all of his or her Shares (which price per share shall be equal to the same
price per share that the Drag-Along Grantees shall receive pursuant to the
proposed transaction).

            (b) Immediately prior to the closing of the proposed transaction
(notice of the date, place and time of which shall be designated by the Company
and provided to such holder in writing at least five business days prior
thereto), such holder shall exercise all Vested Options. At such closing, the
Optionee shall deliver certificates evidencing all Shares then held by such
Optionee, duly endorsed for transfer to the proposed transferee, against the
purchase price therefor. Such Shares shall be delivered free and clear of all
liens, charges, encumbrances and other security interests. None of the
Drag-Along Grantees nor the Company shall have any liability or obligation to
deliver the purchase price payable pursuant to this Section, except to the
extent that any such Drag-Along Grantees or the Company receive the
consideration thereof from the proposed purchaser. All consideration payable
pursuant to this Section shall be payable in the same form as the consideration
received by the Drag- Along Grantees.

            (c) The Company shall have the right to assign its rights pursuant
to this Section to the Company or to any Affiliate of the Company.

            (d) The rights granted pursuant to this Section shall terminate upon
consummation of a Qualified Public Offering.

13.    TAG-ALONG RIGHT

            (a) If stockholders of the Company holding more than 50% of the
outstanding Shares (assuming all Options are exercised) (the "TAG-ALONG
GRANTORS") enter into an agreement with any Person or Persons to Transfer Shares
(pursuant to a merger or otherwise), then each Optionee shall have the right to
include a Pro Rata Portion of Shares owned by such Optionee in the proposed
transaction by providing a notice of exercise to the Company at any time on or
before five business days following the last day that a Drag-Along Notice may be
given. The term "PRO RATA PORTION" means the total number of Shares held by such
Optionee multiplied by a fraction, the numerator of which is the total number of
Shares proposed to be disposed of by the Tag-Along Grantors in the proposed
transaction and the denominator of which is the total number of Shares
outstanding.

            (b) At the closing of the proposed transaction (notice of the date,
place and time of which shall be

                                     -14-
<PAGE>

designated by the Company and provided to each such holder in writing at
least five business days prior thereto), such Optionee shall deliver
certificates evidencing a Pro Rata Portion of the Shares owned by such
Optionee, duly endorsed for transfer to the proposed purchaser, against
delivery of the purchase price therefor. Such Shares shall be delivered free
and clear of all liens, charges, encumbrances and other security interests.
None of the Tag-Along Grantors or the Company shall have any liability or
obligation to deliver the purchase price payable pursuant to this Section,
except to the extent that any such Tag-Along Grantors or the Company receive
the consideration thereof from the proposed purchaser. All consideration
payable pursuant to this Section shall be payable in the same form as the
consideration received by the Drag-Along Grantees.

            (c) The rights granted pursuant to this Section shall terminate upon
consummation of a Qualified Public Offering.

14.    PROCEDURE FOR EXERCISE

            (a) PAYMENT. At the time an Option is granted under this Plan, the
Committee shall, in its discretion, specify one or more of the following forms
of payment which may be used by an Optionee upon exercise of his Option:

                  (i) cash or personal or certified check payable to the Company
      in an amount equal to the aggregate Option Price of the Shares with
      respect to which the Option is being exercised and the aforementioned form
      of payment shall be the only form available on or after a Qualified Public
      Offering;

                  (ii) stock certificates (in negotiable form) representing
      Shares having a Fair Market Value on the date of exercise equal to the
      aggregate Option Price of the Shares with respect to which the Option is
      being exercised;

                  (iii) Vested Options, valued for such purposes at the Fair
      Market Value per share of Common Stock on the date of exercise, net of the
      Option Price for each such Share; or

                  (iv) a combination of the methods set forth in clauses (i),
      (ii) and (iii) above.

            (b) NOTICE. An Optionee (or other person, as provided in Section
16(c)) may exercise a Vested Option granted under this Plan in whole or in part
(but for the purchase of whole Shares only), as provided in the Option Agreement
evidencing his Option, by delivering a written

                                     -15-
<PAGE>

notice (the "NOTICE") to the Secretary of the Company. The Notice shall
state:

                  (i) that the Optionee elects to exercise the Vested Option;

                  (ii)  the number of Shares with respect to which the Vested
      Option is being exercised (the "OPTIONED SHARES");

                  (iii) the method of payment for the Optioned Shares (which
      method must be available to the Optionee under the terms of his or her
      Option Agreement);

                  (iv) the date upon which the Optionee desires to consummate
      the purchase (which date must be prior to the termination of such Option);

                  (v) a copy of any election filed by the Optionee pursuant to
      Section 83(b) of the Code; and

                  (vi) such further provisions consistent with this Plan as the
      Committee may from time to time require. The exercise date of a Vested
      Option shall be the date on which the Company receives the Notice from the
      Optionee.

            (c) ISSUANCE OF CERTIFICATES. The Company shall issue a stock
certificate in the name of the Optionee (or such other person exercising the
Option in accordance with the provisions of Section 14(c)) for the Shares
purchased upon exercise of an Option as soon as practicable after receipt of the
Notice and payment of the aggregate Option Price for such shares. Neither the
Optionee nor any person exercising a Vested Option in accordance with the
provisions of Section 14(c) shall have any privileges as a stockholder of the
Company with respect to any shares of stock subject to an Option granted under
this Plan until the date of issuance of a stock certificate pursuant to this
Section 12(c).

15.    ADJUSTMENTS

            (a) CHANGES IN CAPITAL STRUCTURE. If the Common Stock is changed by
reason of a stock split, reverse stock split or stock combination, stock
dividend or distribution, or recapitalization, or converted into or exchanged
for other securities as a result of a merger, consolidation or reorganization
(each such event being a "RECAPITALIZATION"), the Committee shall make such
adjustments in the number and class of shares of stock available under this Plan
as shall be necessary to preserve to an Optionee rights substantially
proportionate to his rights existing immediately prior to such transaction or
event (but subject to the limitations and

                                     -16-
<PAGE>

restrictions on such rights), including, without limitation, a corresponding
adjustment changing the number and 16

class of shares allocated to, and the Option Price of, each Option or portion
thereof outstanding at the time of such change and the number of shares that
vest pursuant to this Plan.

            (b) SPECIAL RULES. The following rules shall apply in connection
with Section 15(a) above:

                  (i) no adjustment shall be made for cash dividends or the
      issuance to stockholders of rights to subscribe for additional Shares; and

                  (ii) any adjustments referred to in Section 15(a) shall be
      made by the Committee in its sole and absolute discretion, and shall be
      conclusive and binding on all persons holding any Options granted under
      this Plan.

16.    RESTRICTIONS ON OPTIONS AND OPTIONED SHARES.

            (a) No Options shall be granted under this Plan, and no Shares shall
be issued and delivered upon the exercise of Options granted under this Plan,
unless and until the Company and/or the Optionee shall have complied with all
applicable Federal or state registration, listing and/or qualification
requirements and all other requirements of law or of any regulatory agencies
having jurisdiction.

            (b) The Committee in its sole and absolute discretion may, as a
condition to the exercise of any Vested Option granted under this Plan, require
an Optionee (i) to represent in writing that the Shares received upon exercise
of a Vested Option are being acquired for investment and not with a view to
distribution and (ii) to make such other representations and warranties as are
reasonably deemed appropriate by the Company to satisfy the requirements of
applicable law, including, without limitation, an applicable private placement
exemption of the Securities Act as determined by the Committee. Stock
certificates representing Shares acquired upon the exercise of Vested Options
that have not been registered under the Securities Act shall, if required by the
Committee, bear the following legend and such additional legends as may be
required by the Option Agreement evidencing a particular Option:

"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE SHARES HAVE BEEN
ACQUIRED FOR INVESTMENT AND MAY NOT BE PLEDGED, HYPOTHECATED, SOLD OR

                                     -17-
<PAGE>

TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES
UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL TO THE ISSUER HEREOF THAT
REGISTRATION IS NOT REQUIRED UNDER SAID ACT."

            (c) No Option granted under this Plan may be Transferred by the
Optionee, except by will or by the laws of descent and distribution. A Vested
Option may be exercised during the lifetime of the Optionee only by the
Optionee. If an Optionee dies, his or her Vested Options shall thereafter be
exercisable, during the period specified in Section 9(d) or the applicable
Option Agreement (as the case may be), by his or her executors or
administrators to the full extent (but only to such extent) to which such
Options were exercisable by the Optionee at the time of his or her death.

            (d) No Share issued upon exercise of an Option may be Transferred,
except otherwise provided in this Plan, by will, by the laws of descent and
distribution or to the Company or any of the Company's affiliates.

17.    EFFECTIVE DATE AND TERMINATION OF THE PLAN.

            (a) This Plan shall become effective on the Effective Date.

            (b) No Options may be granted after the tenth anniversary of the
Effective Date.

            (c) Any Option outstanding as of the tenth anniversary of the
Effective Date shall remain in effect until the earlier of the exercise thereof
and the Expiration Date with respect to such Option.

18.    WITHHOLDING TAXES.

          Whenever under this Plan, Shares are to be delivered to an Optionee,
the Company shall be entitled to require as a condition of delivery that the
Optionee remit or, in appropriate cases, agree to remit when due, an amount
sufficient to satisfy all current or estimated future Federal, state and local
withholding tax and employment tax requirements relating thereto.

19.    MISCELLANEOUS

          Each Option granted under this Plan may contain such other terms and
conditions not inconsistent with this Plan as may be determined by the
Committee, in its sole and absolute discretion.

            (a) NUMBER AND GENDER. With respect to words used in this Plan, the
singular form shall include the plural

                                     -18-
<PAGE>

form, the masculine gender shall include the feminine gender, and vice-versa,
as the context requires.

            (b) CAPTIONS. The use of captions in this Plan is for convenience.
The captions are not intended to provide substantive rights.

            (c) AMENDMENT OF PLAN. Subject to any provision in any Option
Agreement, this Plan may be modified, supplemented or amended in any respect
by the Board or the Committee.

            (d) GOVERNING LAW. All questions concerning the construction,
interpretation and validity of this Plan and the instruments evidencing the
Options granted hereunder shall be governed by and construed and enforced in
accordance with the domestic laws of the State of New York, without giving
effect to any choice or conflict of law provision or rule (whether in
the State of New York or any other jurisdiction) that would cause the
application of the laws of any jurisdiction other than the State of New York. In
furtherance of the foregoing, the internal law of the State of New York will
control the interpretation and construction of this Plan, even if under such
jurisdiction's choice of law or conflict of law analysis, the substantive law of
some other jurisdiction would ordinarily apply.

            (e) SECURITIES EXCHANGE ACT COMPLIANCE. The Corporation will use its
commercially reasonable efforts to cause the exemption from Section 16 of the
1934 Act afforded by such Rule 16b-3 to be available at the time the Company has
a class of equity securities registered under Section 12 of the 1934 Act.

            (f) NO EVIDENCE OF EMPLOYMENT OR SERVICE Nothing contained in this
Plan or in any Option Agreement shall confer upon any Optionee any right with
respect to the continuation of his or her employment by or service with the
Company or any of its Subsidiaries or interfere in any way with the right of the
Company or any such Subsidiary (subject to the terms of any separate agreement
to the contrary) at any time to terminate such employment or service or to
increase or decrease the compensation of the Optionee from the rate in existence
at the time of the grant of an Option.

                                     -19-
<PAGE>

          STOCK OPTION AGREEMENT dated as of the date set forth on the
signature page hereto, between ALLIANCE IMAGING, INC., a Delaware corporation
(the "COMPANY"), and the optionee set forth on the signature page hereto (the
"OPTIONEE").

          The Company, whether acting through its Board of Directors (the
"BOARD") or a committee thereof (the "COMMITTEE") has granted to the Optionee,
effective as of the date of this Agreement, an option under the Company's 1997
Stock Option Plan (the "PLAN") to purchase up to the number of shares of the
Common Stock, $.01 par value, of the Company (the "COMMON STOCK") set forth on
the signature page hereto, on the terms and subject to the conditions set forth
in this Agreement and the Plan.

          NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained in this Agreement, the parties hereto agree as follows:

1.   THE PLAN.

          The terms and provisions of the Plan are hereby incorporated into this
Agreement as if set forth herein in their entirety. In the event of a conflict
between any provision of this Agreement and the Plan, the provisions of this
Agreement shall control. A copy of the Plan may be obtained from the Company by
the Optionee upon request. Capitalized terms used herein and not otherwise
defined shall have the meanings ascribed thereto in the Plan.

2.   OPTION; OPTION PRICE.

          On the terms and subject to the conditions of this Agreement, the
Optionee is hereby granted the option (the "OPTION") to purchase Shares at the
Option Price set forth on the signature page hereto. The Option is not intended
to qualify for federal income tax purposes as an "incentive stock option" within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the
"CODE").

3.   TERM.

          The term of the Option (the "OPTION TERM") shall commence on the date
hereof and expire on the tenth anniversary of the date hereof, unless the Option
shall have sooner been

<PAGE>

terminated in accordance with the terms of the Plan or this Agreement.

4.   RESTRICTION ON TRANSFER.

          The Option may not be transferred, pledged, assigned, hypothecated or
otherwise disposed of in any way by the Optionee and may be exercised during the
lifetime of the Optionee only by the Optionee. The Option shall not be subject
to execution, attachment or similar process. Any attempted assignment, transfer,
pledge, hypothecation or other disposition of the Option contrary to the
provisions hereof, and the levy of any execution, attachment or similar process
upon the Option, shall be null and void and without effect.

5.   OPTIONEE'S EMPLOYMENT.

          Nothing in the Option shall confer upon the Optionee any right to
continue to be employed by the Company or any of its Affiliates or interfere in
any way with the right of the Company or its Affiliates or stockholders, as the
case may be, to terminate the Optionee's employment or retention by the Company
or any of its Affiliates or to increase or decrease the Optionee's compensation
at any time.

6.   NOTICES.

          All notices, claims, certificates, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given and delivered if personally delivered or if sent by nationally-
recognized overnight courier guaranteeing next day delivery, by telecopy, or by
registered or certified mail, return receipt requested and postage prepaid,
addressed as follows:

     (a)  if to the Company, to it at:

          Alliance Imaging, Inc.
          1065 North PacifiCenter Drive, Suite 200
          Anaheim, California  92806
          Attention:  President
          Telecopier:  (714) 688-3388
          Telephone:  (714) 688-7100; and

                                     2
<PAGE>

     (b)  if to the Optionee, to him at his address set forth in the Company's
records.

or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. Any such notice
or communication shall be deemed to have been received (i) in the case of
personal delivery, on the date of such delivery (or if such date is not a
business day, on the next business after the date sent), (ii) in the case of
nationally-recognized overnight courier, on the next business day after the date
sent, (iii) in the case of telecopy transmission, when received (or if not sent
on a business day, on the next business day after the date sent), and (iv) in
the case of mailing, on the third business day following that on which the piece
of mail containing such communication is posted.

7.   WAIVER OF BREACH.

          The waiver by either party of a breach of any provision of this
Agreement must be in writing and shall not operate or be construed as a waiver
of any other or subsequent breach.

8.   OPTIONEE'S UNDERTAKING.

          The Optionee hereby agrees to take whatever additional actions and
execute whatever additional documents the Company may in its reasonable judgment
deem necessary or advisable in order to carry out or effect one or more of the
obligations or restrictions imposed on the Optionee pursuant to the express
provisions of this Agreement and the Plan.

9.   MODIFICATION OF RIGHTS.

          Anything contained in this Agreement or the Plan to the contrary
notwithstanding, no provision of this Agreement may be modified or amended
without the prior written consent of the Corporation and the Optionee, and no
interpretation, modification, amendment or termination of any provision of the
Plan that would adversely affect the rights of the Optionee under or with
respect to the Plan or this Agreement shall be effective as to the Optionee
without the Optionee's prior written consent.

                                      3
<PAGE>

10.  GOVERNING LAW.

          All questions concerning the construction, interpretation and validity
of this Agreement shall be governed by and construed and enforced in accordance
with the domestic laws of the State of Delaware, without giving effect to any
choice or conflict of law provision or rule (whether in the State of Delaware or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware. In furtherance of the foregoing,
the internal law of the State of Delaware will control the interpretation and
construction of this Agreement, even if under such jurisdiction's choice of law
or conflict of law analysis, the substantive law of some other jurisdiction
would ordinarily apply.

11.  COUNTERPARTS.

          This Agreement may be executed in one or more counterparts, and each
such counterpart shall be deemed to be an original, but all such counterparts
together shall constitute but one agreement.

12.  ENTIRE AGREEMENT.

          This Agreement and the Plan (and the other writings referred to
herein) constitute the entire agreement between the parties with respect to the
subject matter hereof and thereof and supersede all prior written or oral
negotiations, commitments, representations and agreements with respect thereto.

13.  SEVERABILITY.

          It is the desire and intent of the parties hereto that the provisions
of this Agreement be enforced to the fullest extent permissible under the laws
and public policies applied in each jurisdiction in which enforcement is sought.
Accordingly, if any particular provision of this Agreement shall be adjudicated
by a court of competent jurisdiction to be invalid, prohibited or unenforceable
for any reason, such provision, as to such jurisdiction, shall be ineffective,
without invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.

                               *    *    *    *

                                       4
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first written above.

                                ALLIANCE IMAGING, INC.

                                By:
                                   ________________________________
                                      Name:
                                      Title:

                                ___________________________________
                                OPTIONEE:

                                NUMBER OF SHARES
                                OF COMMON STOCK:

                                OPTION PRICE:  $ __________________

                                DATED: DECEMBER 18, 1997

                                       5
<PAGE>

                           ALLIANCE IMAGING, INC.

        AMENDMENT TO THE 1997 ALLIANCE IMAGING, INC. STOCK OPTION PLAN

        This Amendment to the 1997 Alliance Imaging, Inc. Stock Option Plan
(the "Amendment") is dated as of August 5, 1999. Except as modified hereby,
the Stock Option Plan remains in full force and effect.

        The 1997 Alliance Imaging, Inc. Stock Option Plan is amended as follows:

1.  Section 6(b) is hereby amended by deleting, in its entirety, the second
    sentence thereof, and substituting, in lieu thereof, the following second
    sentence:

        "IF A CHANGE-IN-CONTROL SHALL OCCUR, THEN ALL OF THE TRANCHE A OPTIONS
        HELD BY SUCH OPTIONEE SHALL BECOME VESTED OPTIONS IMMEDIATELY PRIOR TO
        SUCH CHANGE-IN-CONTROL."

2.  Section 19(c) is hereby amended by deleting, in its entirety, the
    existing language thereof, and replacing it with the following:

        "(c) AMENDMENT OF PLAN. SUBJECT TO ANY PROVISION IN ANY OPTION
        AGREEMENT, THIS PLAN MAY BE MODIFIED, SUPPLEMENTED OR AMENDED
        IN ANY RESPECT BY THE BOARD OR THE COMMITTEE."
<PAGE>

                             ALLIANCE IMAGING, INC.

         AMENDMENT TO THE ALLIANCE IMAGING, INC. 1997 STOCK OPTION PLAN

         WHEREAS, Alliance Imaging, Inc. (the "Company") maintains the Alliance
Imaging, Inc. 1997 Stock Option Plan (the "1997 Plan"); and

         WHEREAS, both the Company and the committee appointed under the 1997
Plan (the "Committee") have the power to amend the 1997 Plan under Section 19(c)
of the 1997 Plan;

         WHEREAS, amendment of the 1997 Plan is desirable.

         NOW, THEREFORE, BE IT RESOLVED, that the 1997 Plan is hereby amended,
effective as of November 2, 1999, as follows:

         1.       By adding the following to the definition of "Indebtedness" in
                  Article 2 of the 1997 Plan:

                  "other than the incremental amount of indebtedness incurred by
         the Company in connection with the consummation of the transactions
         contemplated by the Agreement and Plan of Merger between Viewer
         Acquisition Corporation and Alliance Imaging, Inc., dated as of
         September 13, 1999, as amended (the "Merger")."

         2.       By adding the following to the definition of "Net Income" in
                  Article 2 of the 1997 Plan:

                  "and (c) excluding all costs associated with the Merger."

         3.       By substituting for the definition of "Per Share Equity Value"
                  in Article 2 of the 1997 Plan the following:

                  " "PER SHARE EQUITY VALUE" means, in respect of any Tranche B
         or Tranche C Performance Measurement Date, (a) (i) the product of (x)
         EBITDA for the calendar year ending on such Performance Measurement
         Date (excluding any legal, accounting or other direct expenses related
         to the Merger) multiplied by (y) six, plus (ii) the aggregate Option
         Price of Vested Options, plus (iii) the aggregate Option Price for all
         Tranche B Options and Tranche C Options which will become vested as of
         the next succeeding Performance Measurement Date if the applicable Per
         Share Equity Values are achieved, less (iv) the aggregate principal
         amount of the outstanding consolidated Indebtedness (which shall not
         include, if the Per Share Equity Value is being determined following or
         in connection with the Merger, any Indebtedness incurred by the Company
         to pay pre-payment penalties which are directly triggered upon the
         closing of the Merger and any Indebtedness incurred at the closing of
         the Merger) less (v) the aggregate face value (or, if the Per Share
         Equity Value is being determined following or in connection with a
         Change-in-Control, the aggregate redemption price) of all of the
         Company's outstanding shares of redeemable Capital Stock, plus (vi) the
         aggregate amount of the consolidated cash on hand of the Company and
         its Subsidiaries, divided by (b) the sum of (x) the

<PAGE>

         number of Shares outstanding as of the end of such calendar year
         (which shall be calculated as if the Shares cancelled in connection
         with the Merger had continued to remain outstanding) and (y) the
         number of Shares issuable upon the conversion of securities
         convertible into Shares or upon the exercise of options or warrants
         exercisable for Shares, in each case in this clause (b), which are
         both vested (or, in the case of Tranche B Options and Tranche C
         Options, will become vested on or before the next succeeding
         Performance Measurement Date if the applicable Per Share Equity Values
         are achieved) and "in the money" (I.E., the exercise price or
         conversion price is less than the Per Share Equity Value calculated
         without giving effect to such convertible securities or options or
         warrants); PROVIDED, HOWEVER, that if a Qualified Public Offering
         shall have been consummated prior to any such calculation,"PER SHARE
         EQUITY VALUE" shall mean the average closing stock price for the
         thirty trading days immediately preceding the date of any such
         determination (with the five highest and five lowest closing stock
         prices disregarded), as reported by the National Association of
         Securities Dealers Automated Quotations System ("NASDAQ"), or, if the
         shares are then traded on a national securities exchange, on the
         principal national securities exchange on which it is so traded;
         PROVIDED, FURTHER, HOWEVER, that all outstanding "in the money" options
         shall be deemed to be vested solely for purposes of the definition of
         "PER SHARE EQUITY VALUE" if Per Share Equity Value is being determined
         following or in connection with a Change-in-Control or a Qualified
         Public Offering."

         4.       By deleting Sections 12 and 13 of the 1997 Plan and
                  substituting the following therefore:

                  "12:  [RESERVED]

                   13:  STOCKHOLDER'S AGREEMENT. All Optionees shall be
                  required to execute and be bound by the terms of the
                  Stockholder's Agreement in substantially the form attached
                  hereto as Exhibit A."

         5.       Effective November 2, 1999 no further options shall be granted
                  under the Plan.

                                       2

<PAGE>

         THIS AMENDMENT is hereby executed this 2nd day of November, 1999.

                                        ALLIANCE IMAGING, INC.

                                        By:___________________________________
                                        Name:
                                        Title:<PAGE>

                           THREE RIVERS HOLDING CORP.
                            1997 STOCK OPTION PLAN
             (As adopted by the Board of Directors of the Company
                            as of October 14, 1997)

  1. PURPOSE OF THE PLAN.

     The purpose of the THREE RIVERS HOLDING CORP. 1997 STOCK OPTION PLAN
(the "PLAN") is (i) to further the growth and success of Three Rivers Holding
Corp., a Delaware corporation ("PARENT") and its wholly owned subsidiary, SMT
Health Services Inc., a Delaware corporation (the "COMPANY") by permitting
employees of the Company to acquire shares ("SHARES") of Common Stock, $.01
par value (the "COMMON STOCK"), of Parent, thereby increasing such employees'
personal interest in such growth and success and (ii) to provide a means of
rewarding outstanding contribution by such persons to the Company. Options
granted under this Plan ("OPTIONS") are not intended to qualify as "incentive
stock options" under the provisions of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code").

  2. DEFINITIONS.

     As used in this Plan, the following capitalized terms shall have the
  meanings set forth below:

     "ACQUISITION SUB" means Three Rivers Acquisition Corp., a Delaware
  corporation.

     "AFFILIATE" means, with respect to any Person, any other Person that is
  controlled by, controlling or under common control with, such Person.

     "BOARD" has the meaning set forth in Section 3(a).

     "CAPITAL STOCK" means any and all shares, interests, participation or
  other equivalents (however designated) of corporate stock, including all
  common stock and preferred stock.

     "CAUSE" shall have the meaning defined in an employment or similar
  agreement between the Company and the Optionee, or, if there is no
  employment or similar agreement between the Company and the Optionee that
  defines what constitutes a termination for cause for purposes of such
  agreement, what constitutes "cause" shall be as reasonably determined by
  the Board of Directors in good faith.

     "CHANGE-IN-CONTROL" means the occurrence of one or more of the following:

<PAGE>

          (a) a sale to any Person other than an Affiliate of Parent of all
  or substantially all of the assets of either the Company or Parent;

          (b) a sale by Parent of the Capital Stock of the Company, if any
  such sale is made to a Person other than Parent or any of its Affiliates,
  which Person, after giving effect to such sale, will own (i) more than 25%
  of the outstanding Capital Stock of the Company and (ii) more of the
  Capital Stock of the Company than is owned by Parent and its Affiliates; or

          (c) a sale by the stockholders of Parent of Shares, if any such
  sale is made to a Person other than an Affiliate of Parent, which Person,
  after giving effect to such sale, will own (i) more than 25% of the
  outstanding Shares and (ii) more of the Capital Stock of Parent than is
  owned by Affiliates of Parent.

     "CODE" has the meaning set forth in Section 1.

     "COMMITTEE" has the meaning set forth in Section 3(a).

     "COMMON STOCK" has the meaning set forth in Section 1.

     "COMPANY" has the meaning set forth in Section 1.

     "DRAG-ALONG GRANTEES" has the meaning set forth in Section 10(a).

     "DRAG-ALONG NOTICE" has the meaning set forth in Section 10.

     "EBITDA" means, for any period of determination thereof, Net Income of
  the Company and its subsidiaries plus, without duplication, (a) Interest
  Expense, (b) income tax expense, refunds or credits for such periods, and
  (c) depreciation and amortization expense of the Company and its
  subsidiaries, all determined in accordance with GAAP.

     "EFFECTIVE DATE" means October 14, 1997.

     "EQUITY INTEREST" means (a) with respect to a corporation, any and all
  Capital Stock or warrants, options or other rights to acquire Capital Stock
  (but excluding any debt security which is convertible into, or exchangeable
  for, Capital Stock) and (b) with respect to a partnership, limited
  liability company or similar Person, any and all units, interests, rights to
  purchase, warrants, options or other equivalents of, or other ownership
  interests in, any such Person.

                                     -2-

<PAGE>

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

     "EXPIRATION DATE" has the meaning set forth in Section 7.

     "FAIR MARKET VALUE" means:

        (a)  if the Shares are publicly traded and reported on a closing
price basis, the closing price on the principal national securities exchange,
market or system on which the Shares are traded on the trading day
immediately preceding the date of determination or, if no trades were made
on such day, on the next preceding day on which trades were made, otherwise,
the average of the bid and asked prices for the Shares on the trading day
immediately preceding the date of determination in the over-the-counter
market as reported by Nasdaq or, if not reported by Nasdaq, by an established
quotation service for over-the-counter securities; or

        (b)  if there is no public trading market for the Shares, the fair
value of such Shares on the date of any determination as reasonably
determined in good faith by the Committee after taking into consideration all
factors which it deems appropriate, including, without limitation, recent
sale and offer prices of Shares in private transactions negotiated at arms'
length.

Notwithstanding anything contained in this Plan to the contrary, all
determinations pursuant to this Section shall be made without regard to any
restriction other than a restriction which, by its terms, will never lapse.

     "GAAP" means generally accepted accounting principles in the United
States, consistently applied, and statements and interpretations (if
applicable) issued by the Financial Accounting Standards Board, or any
successor body, as in effect from time to time, unless otherwise stated.

     "GOOD REASON" shall have the meaning defined in an employment or
similar agreement between the Company and the Optionee, or, if there is no
employment or similar agreement between the Company and the Optionee that
defines what constitutes a termination for good reason for purposes of such
agreement, what constitutes "good reason" shall be as reasonably determined
by the Board of Directors in good faith.

     "INDEBTEDNESS" means indebtedness for borrowed money, reimbursement
obligations with respect to letters of credit and similar instruments,
obligations incurred, issued or assumed as the deferred purchase price of
property or services (other than accounts payable incurred in the ordinary
course of business consistent with past practice), obligations of

                                 -3-

<PAGE>

others secured by (or, for which the holder of such indebtedness has an
existing right, contingent or otherwise, to be secured) any lien on property
or assets of the Company or any subsidiary, capital lease obligations, and
obligations in respect of guarantees of any of the foregoing or any "keep
well" or other agreement to maintain any financial statement condition of
another person, in each case, whether or not matured, liquidated, fixed,
contingent, or disputed.

     "INTEREST EXPENSE" means, for any period, all interest (including
capitalized interest) and all amortization of debt discount and expense on
any particular Indebtedness (including, without limitation payment-in-kind,
zero coupon and other like securities and the interest component of capital
lease obligations applicable to such period) of the Company and its
subsidiaries determined on a consolidated basis in accordance with GAAP.

     "INVESTMENT" in any Person, means any loan or advance to such Person,
any purchase or other acquisition of any Equity Interest or other ownership
or profit interest, warrants, rights, options, obligations or other
securities of such Person, any capital contribution to such Person or any
other investment in such Person, including any arrangement pursuant to which
an investing Person incurs Indebtedness of the types referred to in the
definition of "Indebtedness" in respect of such Person.

     "MISSED PERFORMANCE MEASUREMENT DATE" has the meaning set forth in
Section 6(d).

     "MISSED VESTING DATE" has the meaning set forth in Section 6(d).

     "NET DEBT" means (a) all amounts owing by the Company in respect of
outstanding Indebtedness (including principal, interest, fees, expenses and
prepayment penalties), less (b) cash of the Company, all determined on a
consolidated basis in accordance with GAAP.

     "NET INCOME" means, for any period, the gross revenues of the Company
and its consolidated subsidiaries for such period less all expenses and other
proper charges, in each case determined in accordance with GAAP, but (a)
excluding in any event any gains or losses on the sale or other disposition of
Investments or fixed or capital assets or from any transaction classified as
extraordinary under GAAP, any taxes on such excluded gains and any tax
deductions or credits on account of any such excluded losses and (b) in the
good faith sole discretion of the Board or the Committee, adjusted for
non-recurring or non-operating gains or losses and other non-recurring or
non-operating gains or losses which affect Net Income;

                                 -4-

<PAGE>

            "NOTICE" has the meaning set forth in Section 12(b).

            "OPTION" has the meaning set forth in Section 1.

            "OPTION AGREEMENT" has the meaning set forth in Section 4(c).

            "OPTION PRICE" has the meaning set forth in Section 5(a).

            "OPTIONED SHARES" has the meaning set forth in Section 12(b).

            "OPTIONEES" has the meaning set forth in Section 4(a).

            "PARENT" has the meaning set forth in Section 1.

            "PERFORMANCE MEASUREMENT DATE" has the meaning set forth in
Section 6(c).

            "PER SHARE EQUITY VALUE" means, in respect of any Performance
Measurement Date, (a)(i) the product of (x) EBITDA for the calendar year
ending on such Performance Measurement Date, multiplied by (y) six, minus
(ii) Net Debt as of the end of such calendar year, divided by (b) the sum of
(x) the number of Shares outstanding as of the end of such calendar year and
(y) the number of Shares issuable upon the conversion of securities
convertible into Shares or upon the exercise of options or warrants
exercisable for Shares, in each case in this clause (b), which are both
vested (or, in the case of Options, will become vested on or before the April
1 next succeeding such Performance Measurement Date) and "in the money"
(I.E., the exercise price or conversion price is less than the Per Share
Equity Value calculated without giving effect to such convertible securites
or options or warrants); PROVIDED, HOWEVER, that if a Qualified Public
Offering shall have been consummated prior to any such calculation, "PER
SHARE EQUITY VALUE" shall mean the average closing stock price of a Share or
a share of common stock of the Company for the thirty trading days
immediately preceding the date of any such determination (with the five
highest and five lowest closing stock prices disregarded), as reported by the
National Association of Securities Dealers Automated Quotations System
("NASDAQ"), or, if the Shares or shares of common stock of the Company are
then traded on a national securities exchange, on the principal national
securities exchange on which it is so traded.

             "PER SHARE TARGET VALUE" has the meaning set forth in Section
6(c).

             "PERSON" is to be construed in the broadest sense and means and
includes any natural person, company, limited

                                      -5-
<PAGE>

liability company, partnership, joint venture, corporation, business trust,
or unincorporated organization or any national, federal, state, municipal,
local, territorial, foreign or other government or any department,
commission, board, bureau, agency, regulatory authority or instrumentality
thereof, or any court, judicial, administrative or arbitral body or public or
private tribunal.

             "PRO RATA PORTION" has the meaning set forth in Section 11(a).

             "PRO RATA TARGET" has the meaning set forth in Section 6(f).

             "QUALIFIED PUBLIC OFFERING" means a public offering of Common
Stock of Parent in which the proceeds to Parent, net of all fees,
commissions, discounts and expenses, equals or exceeds $20 million.

             "RECAPITALIZATION" has the meaning set forth in Section 13(a).

             "RULE 16b-3" has the meaning set forth in Section 3(a).

             "SEC" means the Securities and Exchange Commission.

             "SECURITIES ACT" has the meaning set forth in Section 14(b).

             "SHARES" has the meaning set forth in Section 1.

             "TAG-ALONG GRANTORS" has the meaning set forth in Section 11(a).

             "TIME/ACCELERATION TIME VESTING DATE" has the meaning set forth
in Section 6(c).

            "TIME/ACCELERATION VESTING DATE" has the meaning set forth in
Section 6(c).

            "TIME/ACCELERATION VESTING OPTIONS" has the meaning set forth in
Section 4(d).

            "TIME VESTING OPTIONS" has the meaning set forth in Section 4(d).

            "TRANSFER" means, with respect to any security (including any
Option), a sale, transfer, assignment, encumbrance, pledge or other
disposition of such security either voluntarily or involuntarily and with or
without consideration (including, without limitation, by way of foreclosure
or other acquisition by any lender with respect to any shares pledged to such
lender by an Optionee).

                                      -6-
<PAGE>

             "VESTED OPTION" has the meaning set forth in Section 6.

    3. ADMINISTRATION OF THE PLAN.

              (a) STOCK OPTION COMMITTEE.  This Plan shall be administered by a
three-person committee (the "COMMITTEE") comprised of three members of the
Board of Directors of Parent (the "BOARD"), appointed from time to time by
the Board. The Committee shall have the power and authority to grant Options
under this Plan; PROVIDED, HOWEVER, that, so long as the Company shall be
required to comply with Rule 16b-3 promulgated by the SEC under the Exchange
Act ("RULE 16b-3") in order to permit officers and directors of Parent to be
exempt from the provisions of Section 16(b) of the Exchange Act with respect
to transactions effected pursuant to this Plan, each member of the Committee,
at the effective date of his or her appointment to the Committee and at all
times thereafter while serving on the Committee, shall be a "DISINTERESTED
PERSON" within the meaning of Rule 16b-3.

              (b) PROCEDURES.  The members of the Committee shall from time
to time select a Chairman from among the members of the Committee. The
Committee shall adopt such rules and regulations as it shall deem appropriate
concerning the holding of meetings and the administration of this Plan. A
majority of the entire Committee shall constitute a quorum and the actions of
a majority of the members of the Committee present at a meeting at which a
quorum is present, or actions approved in writing by all of the members of
the Committee, shall be the actions of the Committee.

              (c) ADMINISTRATION.  Except as may otherwise be expressly
reserved to the Board as provided herein, and, with respect to any Option,
except as may otherwise be provided in the Option Agreement evidencing such
Option, the Committee shall have all powers with respect to the
administration of this Plan, including the interpretation of the provisions
of this Plan and any Option Agreement, and all decisions of the Board or the
Committee, as the case may be, shall be conclusive and binding on all
participants in this Plan.

    4. GRANT OF OPTIONS; SHARES SUBJECT TO THIS PLAN.

              (a) POWER TO GRANT OPTIONS.  Subject to the provisions of this
Plan, the Committee shall have the power and authority, in its sole
discretion, after consultation with Jeff D. Bergman (so long as Mr. Bergman
is the Chief Executive Officer or a Director of the Company at the applicable
time) and with Daniel Dickman (so long as Mr. Dickman is the Chief Operating
Officer or a Director of the Company at the applicable time), to determine:

                                      -7-
<PAGE>

                (i)   the persons (from among the class of persons eligible to
receive Options under this Plan) to whom Options shall be granted (the
"OPTIONEES");

                (ii)  the time or times at which Options shall be granted; and

                (iii) the number of Shares subject to such Option.

Notwithstanding anything to the contrary contained herein, as of the
Effective Date, each Person listed in EXHIBIT A shall be granted Options
which shall represent the right to acquire, subject to Section 6, that number
of Shares set forth opposite such Person's name on EXHIBIT A.

              (b) ELIGIBILITY.  Options may be granted under this Plan at any
time and from time to time on or prior to the tenth anniversary of the
Effective Date to any person who is an employee of Parent or any of its
Subsidiaries at the time of grant. Notwithstanding anything contained in
Section 4(a) to the contrary, Options may not be granted to any Person in any
one taxable year of Parent in excess of 25% of the Options issued or
issuable under this Plan. Notwithstanding any other provision of this Plan to
the contrary, the Committee may, in its discretion, provide that, with
respect to any Option, the terms of the Option Agreement evidencing such
Option shall control any conflicts between provisions of this Plan and
provisions of such Option Agreement.

              (c) OPTION AGREEMENTS.  Each Option shall be evidenced by a
written agreement (an "OPTION AGREEMENT"), in substantially the form of
EXHIBIT B, with such changes thereto as are consistent with this Plan as the
Committee shall deem appropriate. Each Option Agreement shall be executed by
Parent and the Optionee.

              (d) TIME VESTING OPTIONS AND TIME/ACCELERATION VESTING OPTIONS.
One half of the Options granted on the Effective Date to each Optionee shall
Vest in accordance with Section 6(b) ("TIME VESTING OPTIONS") and one half of
the Options granted to each Optionee on the Effective Date shall Vest in
accordance with Section 6 (other than Section 6 (b)) ("TIME/ACCELERATION
VESTING OPTIONS"). Options granted after the Effective Date shall vest as
determined by the Committee, in its sole and absolute discretion, and set
forth in the applicable Option Agreement.

              (e) DATE OF GRANT.  Other than the Options granted as of the
Effective Date, the date of grant of an Option under this Plan shall be the
date as of which the Committee approves the grant.

                                      -8-

<PAGE>

          (f) NUMBER OF SHARES.  Subject to any equitable adjustments for
Recapitalizations pursuant to Section 13 and subject to the vesting
provisions set forth in Section 6, each Option shall be exercisable for one
Share. Subject to any equitable adjustments for Recapitalization pursuant to
Section 13, the number of Shares subject at any one time to Options granted
under this Plan, and the number of Shares theretofore issued and delivered
pursuant to the exercise of Options granted under this Plan, shall be 35,000
Shares. If and to the extent that Options granted under this Plan terminate,
expire or are canceled without having been fully exercised, new Options may
be granted under this Plan with respect to the Shares covered by the
unexercised portion of such terminated, expired or canceled Options.

         (g) CHARACTER OF SHARES The Shares issuable upon exercise of Options
granted under this Plan shall be (i) authorized but unissued Shares,
(ii) Shares held in Parent's treasury or (iii) a combination of the foregoing.

         (h) RESERVATION OF SHARES Parent shall use commercially reasonable
efforts to ensure that the number of Shares reserved for issuance under this
Plan shall at all times be equal to the maximum number of shares which may be
purchased at such time pursuant to outstanding Options.

5.  OPTION PRICE.

         (a) GENERAL The exercise price (the "OPTION PRICE") at which each
Share subject to an Option may be purchased shall be $100.00 (subject to
equitable adjustment for Recapitalization affecting the Common Stock).

         (b) REPRICING OF OPTIONS Subsequent to the date of grant of any
Option, the Committee may (i) in its sole discretion, establish a new Option
Price for such Option so as to decrease the Option Price of such Option or
(ii) with the consent of the Optionee, establish a new Option Price for such
Option so as to increase the Option Price of such Option.

6.  EXERCISABILITY AND VESTING OF OPTIONS.

         (a) All Options granted on the Effective Date shall be subject to
vesting as set forth in this Section 6, and all Options granted after the
Effective Date shall be subject to vesting as determined by the Committee and
set forth in the applicable Option Agreement.  Each Option which has vested
in accordance with this Section 6, or pursuant to an Option Agreement, as the
case may be, is herein referred to as a "VESTED OPTION."

                                      -9-

<PAGE>

         (b) 25% of the Time Vesting Options shall become Vested Options on
each of the first four anniversaries of the date of grant of such Option if
the Optionee is employed by the Company on such anniversary date. If a
Change-in-Control shall occur, then all of the Time Vesting Options held by
such Optionee shall become Vested Options immediately prior to such
Change-in-Control.

         (c) The Time/Acceleration Vesting Options shall become Vested
Options on the date that is seven years and six months (the
"TIME/ACCELERATION TIME VESTING DATE") immediately following the date of
grant if the Optionee is employed by the Company on the Time Acceleration
Vesting Date; PROVIDED, HOWEVER, that if the Per Share Equity Value as of the
Performance Measurement Date indicated below (each, a "PERFORMANCE
MEASUREMENT DATE") equals or exceeds the Per Share Target Value indicated
below (the "PER SHARE TARGET VALUE") and the Optionee is employed by the
Company on the Time/Acceleration Vesting Date indicated below (collectively
with the Time/Acceleration Time Vesting Date, the "TIME/ACCELERATION
VESTING DATE"), then 25% of the Time/Acceleration Vesting Options shall vest
on such Time/Acceleration Vesting Date.

<TABLE>
<CAPTION>
             PERFORMANCE            TIME/ACCELERATION              PER SHARE
          MEASUREMENT DATE            VESTING DATE                TARGET VALUE
          -----------------         -----------------             -------------
          <S>                       <C>                           <C>
          December 31, 1998         April 1, 1999                   $164.00

          December 31, 1999         April 1, 2000                   $229.60

          December 31, 2000         April 1, 2001                   $321.44

          December 31, 2001         April 1, 2002                   $450.02

          December 31, 2002         April 1, 2003                   $630.02
</TABLE>

         (d) If both (i) the Per Share Equity Value as of any Performance
Measurement Date (the "MISSED PERFORMANCE MEASUREMENT DATE") equals at least
80% of the Per Share Target Value established for such Performance
Measurement Date, but is less than 100% of the Per Share Target Value
established for such Performance Measurement Date and (ii) the Per Share
Equity Value as of the immediately subsequent Performance Measurement Date
equals or exceeds the Per Share Target Value established for such subsequent
Performance Measurement Date pursuant to to Section 6(c), then

                                     -10-
<PAGE>

the Time/Acceleration Vesting Options which did not become Vested Options as
of the Time/Acceleration Vesting Date immediately succeeding the Missed
Performance Measurement Date (the "MISSED VESTING DATE") shall become Vested
Options as of the first anniversary of the Missed Vesting Date if the
Optionee holding the applicable Time/Acceleration Vesting Options is employed
by the Company as of the first anniversary of the Missed Vesting Date.

     (e)  Notwithstanding anything to the contrary contained herein, if the
Per Share Equity Value as of any Performance Measurement Date is less than
the Per Share Equity Target established for such Performance Measurement
Date, the Committee may, in its sole and absolute discretion, cause all or
any part of the Time/Acceleration Vesting Options which did not become Vested
Options to become Vested Options as of the applicable Time/Acceleration
Vesting Date.

     (f)  If a Change-in-Control shall occur prior to December 31, 2002, all
of the Time/Acceleration Vesting Options automatically shall become Vested
Options if the Fair Market Value of the per share consideration received by
the holders of Shares equals or exceeds the sum of (i) the Per Share Target
Value (which shall be adjusted in connection with any Recapitalization) as of
the Performance Measurement Date immediately preceding the date of such
Change-in-Control, plus (ii) the Pro Rata Target as of the date of
consummation of such Change-in-Control. The "PRO RATA TARGET" means, as of
any date, (i) (x) the Per Share Target Value (which shall be adjusted in
connection with any Recapitalization) as of the Performance Measurement Date
immediately succeeding the date of such Change-in-Control, less (y) the Per
Share Target Value (which shall be adjusted in connection with any
Recapitalization) as of the Performance Measurement Date immediately
preceding the date of such Change-in-Control, multiplied by (ii) a fraction,
the numerator of which is the number of days elapsed since the immediately
preceding Performance Measurement Date and the denominator of which is 365.

     (g)  If Parent consummates a Qualified Public Offering before January 1,
2003, all Time/Acceleration Vesting Options shall become Vested Options if
the per share proceeds to Parent, net of all fees, commissions, discounts and
expenses, equal or exceed the sum of (i) Per Share Target Value (which shall
be adjusted in connection with any Recapitalization) as of the Performance
Measurement Date immediately preceding the consummation of the Qualified
Public Offering, plus (ii) the Pro Rata Target as of the date of consummation
of such Qualified Public Offering.

Notwithstanding anything to the contrary contained in this Plan, each Option
shall cease vesting as of the time that an

                                      -11-

<PAGE>

Optionee's employment with the Company is terminated for any reason and no
Option which is not a Vested Option as of such time shall become a Vested
Option thereafter. All decisions by the Committee with respect to any
calculations pursuant to this Section (absent manifest error) shall be final
and binding on all Optionees.

7.  AUTOMATIC TERMINATION OF OPTION.

     Each Option granted under this Plan shall automatically terminate and
shall become null and void and be of no further force or effect upon the
first to occur of the following (the "EXPIRATION DATE"):

        (a)  the tenth anniversary on which such Option is granted;

        (b)  subject to Section 7(d), if an Optionee terminates his
employment with the Company without Good Reason, on the thirtieth day
following the date of such termination;

        (c)  subject to Section 7(d), if an Optionee's employment with the
Company is terminated by the Optionee or the Company for any reason other
than a termination by the Optionee for Good Reason, on the expiration of
twelve months following such termination;

        (d)  if an Optionee enters into a consulting or other material
business relationship with the Company, the earlier of (i) the second
anniversary of the date of termination of employment for any reason and (ii)
the termination of any such consulting or other relationship; or

        (e)  with respect to Options granted after the Effective Date, the
expiration of such other period of time or the occurence of such other event
as the Committee, in its discretion, may provide in the Option Agreement
governing such Option.

8.  REGISTRATION ON FORM S-8.

     On or prior to the first anniversary of a Qualified Public Offering,
Parent will file or cause to be filed, and will use commercially reasonable
efforts to cause to be effective, a registration statement on Form S-8 with
respect to the sale of Shares purchased upon the exercise of Options;
PROVIDED that Parent may delay such filing on one or more occasions for up
to 180 days if Parent determines in good faith that in order to file a Form
S-8 disclosure that would be materially adverse to Parent or the Company
would be required.

                                      -12-

<PAGE>

9.     REPURCHASE OF SHARES.

                                   [RESERVED]

10.  DRAG-ALONG RIGHT.

                                   [RESERVED]

                                     -13-

<PAGE>

11.  STOCKHOLDER'S AGREEMENT. All Optionees shall be required to execute and
be bound by the terms of the Stockholder's Agreement in substantially the
form attached hereto as Exhibit A.

                                     -14-

<PAGE>

12. PROCEDURE FOR EXERCISE.

         (a) PAYMENT At the time an Option is granted under this Plan, the
Optionee shall, in its discretion, specify one or more of the following forms
of payment which may be used by an Optionee upon exercise of his Option:

              (i)   cash or personal or certified check payable to the Company
    in an amount equal to the aggregate Option Price of the Shares with
    respect to which the Option is being exercised and the aforementioned
    form of payment shall be the only form available on or after a Qualified
    Public Offering;

              (ii)  stock certificates (in negotiable form) representing
    Shares having a Fair Market Value on the date of exercise equal to the
    aggregate Option Price of the Shares with respect to which the Option is
    being exercised;

              (iii) Vested Options, valued for such purposes at the Fair
    Market Value per share of Common Stock on the date of exercise, net of the
    Option Price for each such Share; or

              (iv)  a combination of the methods set forth in clauses (i),
    (ii) and (iii).

         (b) NOTICE  An Optionee (or other person, as provided in Section
14(c)) may exercise a Vested Option granted under this Plan in whole or in
part (but for the purchase of Whole Shares only), as provided in the Option
Agreement evidencing his Option, by delivering a written

                                      -15-

<PAGE>

notice (the "NOTICE") to the Secretary of the Company. The Notice shall state:

              (i)   that the Optionee elects to exercise the Vested Option;

              (ii)  the number of Shares with respect to which the Vested
    Option is being exercised (the "OPTIONED SHARES");

              (iii) the method of payment for the Optioned Shares (which
    method must be available to the Optionee under the terms of his or her
    Option Agreement);

              (iv)  the date upon which the Optionee desires to consummate
    the purchase (which date must be prior to the termination of such Option);

              (v)   a copy of any election filed by the Optionee pursuant to
    Section 83(b) of the Code; and

              (vi)  such further provisions consistent with this Plan as the
    Committee may from time to time require.

The exercise date of a Vested Option shall be the date on which the Company
receives the Notice from the Optionee.

         (c) ISSUANCE OF CERTIFICATES  The Company shall issue a stock
certificate in the name of the Optionee (or such other person exercising the
Option in accordance with the provisions of Section 14(c)) for the Shares
purchased upon exercise of an Option as soon as practicable after receipt of
the Notice and payment of the aggregate Option Price for such shares. Neither
the Optionee nor any person exercising a Vested Option in accordance with the
provisions of Section 14(c) shall have any privileges as a stockholder of the
Company with respect to any shares of stock subject to an Option granted under
this Plan until the date of issuance of a stock certificate pursuant to this
Section 12(c).

13.  ADJUSTMENTS.

         (a) CHANGES IN CAPITAL STRUCTURE. If the Common Stock is changed by
reason of a stock split, reverse stock split or stock combination, stock
dividend or distribution, or recapitalization, or converted into or exchanged
for other securities as a result of a merger, consolidation or reorganization
(each such event being a "RECAPITALIZATION"), the Committee shall make such
adjustments in the number and class of shares of stock available under this
Plan as shall be necessary to preserve to an Optionee rights substantially
proportionate to his rights existing immediately prior to such transaction or
event (but subject to the limitations and

                                      -16-
<PAGE>

  restrictions on such rights), including, without limitation, a
  corresponding adjustment changing the number and class of shares allocated
  to, and the Option Price of, each Option or portion thereof outstanding at
  the time of such change and the number of shares that vest pursuant to this
  Plan.

          (b) SPECIAL RULES.  The following rules shall apply in connection
  with Section 13(a) above:

                (i)  no adjustment shall be made for cash dividends or the
      issuance to stockholders of rights to subscribe for additional Shares; and

               (ii)  any adjustments referred to in Section 13(a) shall be
      made by the Committee in its sole and absolute discretion (absent manifest
      error) and shall be conclusive and binding on all persons holding any
      Options granted under this Plan.

14. RESTRICTIONS ON OPTIONS AND OPTIONED SHARES.

          (a) No Options shall be granted under this Plan (other than Options
  granted on the Effective Date), and no Shares shall be issued and delivered
  upon the exercise of Options granted under this Plan, unless and until the
  Company and/or the Optionee shall have complied with all applicable Federal
  or state registration, listing and/or qualification requirements and all
  other requirements of law or of any regulatory agencies having
  jurisdiction. Subject to Section 8, Parent shall use commercially
  reasonable efforts to be in compliance with such laws and requirements.

          (b) The Committee in its sole and absolute discretion may, as a
  condition to the exercise of any Vested Option granted under this Plan,
  require an Optionee (i) to represent in writing that the Shares received
  upon exercise of a Vested Option are being acquired for investment and not
  with a view to distribution and (ii) to make such other representations and
  warranties as are reasonably deemed appropriate by the Company to satisfy
  the requirements of applicable law, including, without limitation, an
  applicable private placement exemption of the Securities Act as determined
  by the Committee. Stock certificates representing Shares acquired upon the
  exercise of Vested Options that have not been registered under the
  Securities Act shall, if required by the Committee, bear the following
  legend and such additional legends as may be required by the Option
  Agreement evidencing a particular Option:

  "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
  THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE SHARES
  HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE PLEDGED, HYPOTHECATED,
  SOLD OR

                                     -17-

<PAGE>

  TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE
  SHARES UNDER THE SECURITIES ACT OR AN OPINION OF COUNSEL TO THE ISSUER
  HEREOF THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT."

          (c) No Option granted under this Plan may be Transferred by the
  Optionee, except by will or by the laws of descent and distribution. A
  Vested Option may be exercised during the lifetime of the Optionee only by
  the Optionee. If an Optionee dies, his or her Vested Options shall
  thereafter be exercisable, during the period specified in Section 7(b) or
  the applicable Option Agreement (as the case may be), by his or her
  executors or administrators to the full extent (but only to such extent) to
  which such Options were exercisable by the Optionee at the time of his or
  her death.

          (d) No Share issued upon exercise of an Option may be Transferred,
  except as otherwise provided in this Plan (including any Transfer permitted
  by law from and after effectiveness of a Form S-8 covering Shares issued
  upon exercise of Options), by will, by the laws of descent and
  distribution or to Parent or any of Parent's affiliates.

15. EFFECTIVE DATE AND TERMINATION OF THE PLAN.

          (a) This Plan shall become effective on the Effective Date.

          (b) No Options may be granted after the tenth anniversary of the
  Effective Date.

          (c) Any Option outstanding as of the tenth anniversary of the
  Effective Date shall remain in effect until the earlier of the exercise
  thereof and the Expiration Date with respect to such Option.

16. WITHHOLDING TAXES.

     Whenever under this Plan, Shares are to be delivered to an Optionee, the
Company shall be entitled to require as a condition of delivery that the
Optionee remit or, in appropriate cases, agree to remit when due, an amount
sufficient to satisfy all current or estimated future Federal, state and
local withholding tax and employment tax requirements relating thereto.

17. MISCELLANEOUS.

     Each Option granted under this Plan may contain such other terms and
  conditions not inconsistent with this Plan as may be determined by the
  Committee, in its sole and absolute.

          (a) NUMBER AND GENDER. With respect to words used in this Plan, the
  singular form shall include the plural

                                     -18-

<PAGE>

  form, the masculine gender shall include the feminine gender, and
  vice-versa, as the context requires.

          (b) CAPTIONS. The use of captions in this Plan is for convenience.
  The captions are not intended to provide substantive rights.

          (c) AMENDMENT OF PLAN. The Board of Directors or the Committee may
  at any time amend or revise the terms of the Plan, provided that no such
  amendment or revision shall, unless appropriate shareholder approval of
  such amendment or revision is obtained, increase the maximum number of
  shares in the aggregate which may be sold pursuant to options granted under
  the Plan, or otherwise materially increase the benefits accruing to
  participants under the Plan.

          (d) GOVERNING LAW. All questions concerning the construction,
  interpretation and validity of this Plan and the instruments evidencing the
  Options granted hereunder shall be governed by and construed and enforced
  in accordance with the domestic laws of the State of New York, without
  giving effect to any choice or conflict of law provision or rule (whether
  in the State of New York or any other jurisdiction) that would cause the
  application of the laws of any jurisdiction other than the State of New
  York. In furtherance of the foregoing, the internal law of the State of
  New York will control the interpretation and construction of this Plan,
  even if under such jurisdiction's choice of law or conflict of law
  analysis, the substantive law of some other jurisdiction would ordinarily
  apply.

          (e) SECURITIES EXCHANGE ACT COMPLIANCE. The Corporation will use
  its commercially reasonable efforts to cause the exemption from Section 16
  of the 1934 Act afforded by such Rule 16b-3 to be available at the time the
  Company has a class of equity securities registered under Section 12 of the
  1934 Act.

          (f) NO EVIDENCE OF EMPLOYMENT OR SERVICE. Nothing contained in this
  Plan or in any Option Agreement shall confer upon any Optionee any right
  with respect to the continuation of his or her employment by or service
  with Parent or any of its Subsidiaries or interfere in any way with the
  right of Parent or any such Subsidiary (subject to the terms of any
  separate agreement to the contrary) at any time to terminate such
  employment or service or to increase or decrease the compensation of the
  Optionee from the rate in existence at the time of the grant of an Option.

                                     -19-

<PAGE>

                                                      NONQUALIFIED STOCK
                                             OPTION AGREEMENT dated as of the
                                             date set forth on the signature
                                             page hereto between THREE RIVERS
                                             HOLDING CORP., a Delaware
                                             corporation ("PARENT"), and the
                                             person set forth on the
                                             signature page hereto (the
                                             "OPTIONEE").

     Parent, acting through a committee (the "COMMITTEE") of its Board of
Directors (the "BOARD") has granted to the Optionee, effective as of the date
of this Agreement, an option under Parent's 1997 Stock Option Plan (the
"PLAN") to purchase up to the number of shares of the Common Stock, $.01 par
value, of Parent (the "COMMON STOCK") set forth on the signature page hereto,
on the terms and subject to the conditions set forth in this Agreement and the
Plan.

     NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained in this Agreement, the parties hereto agree as follows:

     SECTION 1.  THE PLAN.

     The terms and provisions of the Plan are hereby incorporated into this
Agreement as if set forth herein in their entirety. In the event of a conflict
between any provision of this Agreement and the Plan, the provisions of this
Agreement shall control. A copy of the Plan may be obtained from Parent by
the Optionee upon request. Capitalized terms used herein and not otherwise
defined shall have the meanings ascribed thereto in the Plan.

     SECTION 2.  OPTION; OPTION PRICE.

     On the terms and subject to the conditions of this Agreement, the
Optionee is hereby granted the option (the "OPTION") to purchase Shares at
the Option Price set forth on the signature page hereto. The Option is not
intended to qualify for federal income tax purposes as an "incentive stock
option" within the meaning of Section 422 of the Internal Revenue Code of
1986, as amended (the "CODE").

     SECTION 3.  TERM.

     The term of the Option (the "OPTION TERM") shall commence on the date
hereof and expire on the tenth anniversary of the date hereof, unless the
Option shall have sooner been

<PAGE>

terminated in accordance with the terms of the Plan or this Agreement.

     SECTION 4.  RESTRICTION ON TRANSFER.

     The Option  may not be transferred, pledged, assigned, hypothecated or
otherwise disposed of in any way by the Optionee and may be exercised during
the lifetime of the Optionee only by the Optionee. The Option shall not be
subject to execution, attachment or similar process. Any attempted assignment,
transfer, pledge, hypothecation or other disposition of the Option contrary to
the provisions hereof, and the levy of any execution, attachment or similar
process upon the Option, shall be null and void and without effect.

     SECTION 5.  OPTIONEE'S EMPLOYMENT.

     Nothing in the Option shall confer upon the Optionee any right to
continue to be employed by Parent or any of its Affiliates or interfere in
any way with the right of Parent or its Affiliates or stockholders, as the
case may be, to terminate the Optionee's employment or retention by Parent
or any of its Affiliates or to increase or decrease the Optionee's
compensation at any time.

     SECTION 6.  NOTICES.

     All notices, claims, certificates, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given and delivered if personally delivered or if sent by
nationally-recognized overnight courier guaranteeing next day delivery, by
telecopy, or by registered or certified mail, return receipt requested and
postage prepaid, addressed as follows:

               (a) if to Parent, to it at:

                   Three Rivers Holding Corp.
                   c/o SMT Health Services Inc.
                   10521 Perry Highway
                   Wexford, PA 15090
                   Attention: President
                   Telecopier: (412) 933-3300
                   Telephone:  (412) 933-3311;

                                       2

<PAGE>

                   with a copy to:

                   O'Sullivan Graev & Karabell, LLP
                   30 Rockefeller Plaza
                   41st Floor
                   New York, NY 10112
                   Attention: John J. Suydam
                   Telecopier:  (212) 408-2420
                   Telephone:   (212) 408-2400; and

if to the Optionee, to him at the address and telecopier number set forth in
the Parent's records, or to such other address as the party to whom notice is
to be given may have furnished to the other party in writing in accordance
herewith. Any such notice or communication shall be deemed to have been
received (i) in the case of personal delivery, on the date of such delivery
(or if such date is not a business day, on the next business after the date
sent), (ii) in the case of nationally-recognized overnight courier, on the
next business day after the date sent, (iii) in the case of telecopy
transmission, when received (or if not sent on a business day, on the next
business day after the date sent), and (iv) in the case of mailing, on the
third business day following that on which the piece of mail containing such
communication is posted.

     SECTION 7.  WAIVER OF BREACH.

     The waiver by either party of a breach of any provision of this
Agreement must be in writing and shall not operate or be construed as a
waiver of any other or subsequent breach.

     SECTION 8.  OPTIONEE'S UNDERTAKING.

     The Optionee hereby agrees to take whatever additional actions and
execute whatever additional documents Parent may in its reasonable judgment
deem necessary or advisable in order to carry out or effect one or more of
the obligations or restrictions imposed on the Optionee pursuant to the
express provisions of this Agreement and the Plan.

     SECTION 9.  MODIFICATION OF RIGHTS.

     Anything contained in this Agreement or the Plan (including, without
limitation, Section 3(c) of the Plan) to the contrary notwithstanding, no
provision of this Agreement may be modified or amended without the prior
written consent of the Corporation and the Optionee, and no interpretation,
modification, amendment or termination of any provision of the Plan that would
adversely affect the rights of the Optionee under or with respect to the
Plan or this Agreement shall be effective as to the Optionee without the
Optionee's prior written consent.

                                       3
<PAGE>

         SECTION 10. GOVERNING LAW.

          All questions concerning the construction, interpretation and
validity of this Agreement shall be governed by and construed and enforced
in accordance with the domestic laws of the State of Delaware, without giving
effect to any choice or conflict of law provision or rule (whether in the
State of Delaware or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of Delaware. In
furtherance of the foregoing, the internal law of the State of Delaware will
control the interpretation and construction of this Agreement, even if under
such jurisdiction's choice of law or conflict of law analysis, the
substantive law of some other jurisdiction would ordinarily apply.

         SECTION 11. COUNTERPARTS.

          This Agreement may be executed in one or more counterparts, and
each such counterpart shall be deemed to be an original, but all such
counterparts together shall constitute but one agreement.

         SECTION 12. ENTIRE AGREEMENT.

          This Agreement and the Plan (and the other writings referred to
herein) constitute the entire agreement between the parties with respect to
the subject matter hereof and thereof and supersede all prior written or oral
negotiations, commitments, representations and agreements with respect
thereto.

         SECTION 13. SEVERABILITY.

          It is the desire and intent of the parties hereto that the
provisions of this Agreement be enforced to the fullest extent permissible
under the laws and public policies applied in each jurisdiction in which
enforcement is sought. Accordingly, if any particular provision of this
Agreement shall be adjudicated by a court of competent jurisdiction to be
invalid, prohibited or unenforceable for any reason, such provision, as to
such jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of
this Agreement or affecting the validity or enforceability of such provision
in any other jurisdiction. Notwithstanding the foregoing, if such provision
could be more narrowly drawn so as not to be invalid, prohibited or
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
narrowly drawn, without invalidating the remaining provisions of this
Agreement or affecting the validity or enforceability of such provision in
any other jurisdiction.

                         *        *        *        *

                                      -4-
<PAGE>

          IN WITNESS WHEREOF, the parties hereto have executed this
Nonqualified Incentive Stock Option Agreement as of the date first written
above.

Dated as of: _____________, 199_

                                  THREE RIVERS HOLDING CORP.

                                  By:________________________________
                                     Name:
                                     Title:

                                  ___________________________________
                                  Signature of Optionee

                                  ___________________________________
                                  Name of Optionee

                                  ______________________
                                  Number of shares
                                  of Common Stock

                                  $______________________
                                  Option Price
                                  per share

                                      -5-

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