1999 Long-Term Management Incentive Plan - Blockbuster Inc.

                                BLOCKBUSTER INC.

                    1999 LONG-TERM MANAGEMENT INCENTIVE PLAN

                                    ARTICLE I

                                     GENERAL


SECTION 1.1   PURPOSE.

         The purpose of the Blockbuster Inc. 1999 Long-Term Management Incentive
Plan (the 'Plan') is to benefit and advance the interests of Blockbuster Inc., a
Delaware corporation (the 'Company'), and its subsidiaries by attracting and
retaining employees, Non-Employee Directors and Advisors (as defined below) of
the Company and its subsidiaries, rewarding them for their contributions to the
financial success of the Company and thereby motivating them to continue to make
such contributions in the future.

SECTION 1.2   DEFINITIONS.

         As used in the Plan, the following terms shall have the following
meanings:

         (a)  'Advisor' shall mean any person performing advisory or consulting
services for the Company or any subsidiary, with or without compensation, to
whom the Company chooses to make a Grant in accordance with the Plan; PROVIDED
that (i) BONA FIDE services must be rendered by such person; and (ii) such
services shall not be rendered in connection with the offer or sale of
securities in a capital-raising transaction and do not directly or indirectly
promote or maintain a market for the Company's securities.

         (b)  'Agreement' shall mean the written agreement governing a Grant
under the Plan, in a form approved by the Committee, which shall contain terms
and conditions not inconsistent with the Plan and which shall incorporate the
Plan by reference.

         (c)  'Appreciation Value' shall mean the excess, if any, of the Value
of a Phantom Share on the applicable Valuation Date or date of termination of
service or of the Participant's death or Permanent Disability (as described in
Section 5.5(a) hereof), as the case may be, over the Initial Value of such
Phantom Share.

         (d)  'Board' shall mean the Board of Directors of the Company.

         (e)  'Code' shall mean the Internal Revenue Code of 1986, as amended,
including any successor law thereto.


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         (f)  'Committee' shall mean the committee(s) appointed or designated by
the Board to administer the Plan in accordance with Section 1.3 of the Plan.

         (g)  'Common Stock' shall mean shares of Class A Common Stock, par 
value $0.01 per share, of the Company.

         (h)  'Date of Grant' shall mean the effective date of the Grant of the
Stock Options, Stock Appreciation Rights, Restricted Shares, Restricted Share
Units and/or Phantom Shares as set forth in the applicable Agreement.

         (i)  'Effective Date' shall have the meaning set forth in Article X.

         (j)  'Exchange Act' shall mean the Securities Exchange Act of 1934, as
amended, including any successor law thereto.

         (k)  'Fair Market Value' of a share of Common Stock on a given date
shall be the closing price of a share of Common Stock on the New York Stock
Exchange or such other national securities exchange as may be designated by the
Committee, or, in the event that the Common Stock is not listed for trading on a
national securities exchange but is quoted on an automated quotation system, the
average closing bid per share of the Common Stock on such automated quotation
system or, in the event that the Common Stock is not quoted on any such system,
the average of the closing bid prices per share of the Common Stock as furnished
by a professional marketmaker making a market in the Common Stock designated by
the Committee. Notwithstanding the foregoing, with respect to any option granted
in connection with the Company's initial public offering, the Fair Market Value
of a share of Class A Common Stock shall mean the initial public offering price.

         (l)  'Grant' shall mean a grant under the Plan which may consist of a
grant of Stock Options, Stock Appreciation Rights, Restricted Shares, Restricted
Share Units or Phantom Shares or a combination of any of the above.

         (m)  'Initial Value' shall mean the value of a Phantom Share as
specified by the Committee as of the Date of Grant or the Value of a Phantom
Share calculated as of the Date of Grant or such earlier date as the Committee
may determine.

         (n)  'Non-Employee Director' shall mean a member of the Board of
Directors of the Company or any subsidiary who is not an employee of the
Company, the parent thereof or any subsidiary.

         (o)  'Outstanding Phantom Share' shall mean a Phantom Share granted to 
a Participant for which the Valuation Date has not yet occurred.


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         (p)  'Outstanding Stock Option' shall mean a Stock Option granted to a
Participant which has not yet been exercised and which has not yet expired or
been terminated in accordance with its terms.

         (q)  'Participant' shall mean any employee, Non-Employee Director or
Advisor who has met the eligibility requirements set forth in Section 1.4 hereof
and to whom an outstanding Grant has been made under the Plan.

         (r)  'Permanent Disability' shall have the same meaning as such term or
a similar term has in the long-term disability policy maintained by the Company,
the parent thereof or a subsidiary thereof for the Participant and that is in
effect on the date of the onset of the Participant's Permanent Disability,
unless the Committee determines otherwise, in its discretion, and sets forth an
alternative definition in the applicable Agreement; PROVIDED, HOWEVER, with
respect to grants of Incentive Stock Options, permanent disability shall have
the meaning given it under the rules governing Incentive Stock Options under the
Code. With respect to any Grant other than an Incentive Stock Option, to the
extent that a Participant's employment agreement differs from the Plan with
respect to the meaning of disability, if such employment agreement has been
approved by the Committee which granted the Stock Options, the definition
included in such employment agreement shall govern. Anything in the Plan to the
contrary notwithstanding, 'Permanent Disability' is a term that shall apply only
to Participants who are employees of the Company.

         (s)  'Phantom Share' shall mean a contractual right granted to a
Participant pursuant to Article V to receive an amount equal to the Appreciation
Value at such time, and subject to such terms and conditions, as are set forth
in the Plan and the applicable Agreement.

         (t)  'Restricted Share' shall mean a share of Common Stock granted to a
Participant pursuant to Article III, which is subject to the restrictions set
forth in Section 3.3 hereof and to such other terms, conditions and restrictions
as are set forth in the Plan and the applicable Agreement.

         (u)  'Restricted Share Unit' shall mean a contractual right granted to 
a Participant pursuant to Article IV to receive either Common Stock, a cash
payment equal to the Fair Market Value of such Common Stock or a combination of
Common Stock and cash, subject to the terms and conditions as are set forth in
the Plan and in the applicable Agreement.

         (v)  'Rule 16b-3' shall mean Rule 16b-3 promulgated under the Exchange
Act, as amended from time to time, or any successor provision.

         (w)  'Section 162(m)' shall mean Section 162(m) of the Code and the
regulations promulgated thereunder from time to time.

         (x)  'Section 162(m) Exception' shall mean the exception under Section
162(m) for 'qualified performance-based compensation.'


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         (y)  'Stock Appreciation Right' shall mean a contractual right granted
to a Participant pursuant to Article II to receive an amount determined in
accordance with Section 2.5 of the Plan.

         (z)  'Stock Option' shall mean a contractual right granted to a
Participant pursuant to Article II to purchase shares of Common Stock at such
time and price, and subject to such other terms and conditions, as are set forth
in the Plan and the applicable Agreement. Stock Options may be 'Incentive Stock
Options' within the meaning of Section 422 of the Code or 'Non-Qualified Stock
Options' which do not meet the requirements of such Code section.

         (aa) 'Termination for Cause' for Participants who are employees of the
Company and for Advisors, shall mean a termination of service with the Company
or any of its subsidiaries which, as determined by the Committee, is by reason
of (i) 'cause' as such term or a similar term is defined in any employment or
consulting agreement applicable to the Participant, or (ii) if there is no such
employment or consulting agreement or if such employment or consulting agreement
contains no such term, (x) dishonesty, conviction of a felony, or willful
unauthorized disclosure of confidential information, (y) failure, neglect of or
refusal by a Participant to substantially perform the duties of such
Participant's service, or (z) any other act or omission which is materially
injurious to the financial condition or business reputation of the Company or
any subsidiary thereof.

              'Termination for Cause' for Participants who are Non-Employee
Directors shall mean removal from the Board for 'cause' in accordance with the
certificate of incorporation or by-laws of the Company, as amended from time to
time.

         (bb) 'Valuation Date' shall mean the date on which the Appreciation
Value of a Phantom Share shall be measured and fixed in accordance with Section
5.2(a) hereof.

         (cc) The 'Value' of a Phantom Share shall be determined by reference to
the 'average Fair Market Value' of a share of Common Stock. The 'average Fair
Market Value' on a given date of a share of Common Stock shall be determined
over the 30-day period ending on such date or such other period as the Committee
may decide shall be applicable to a Grant of Phantom Shares, determined by
dividing (i) by (ii), where (i) shall equal the sum of the Fair Market Values on
each day that the Common Stock was traded and a closing price was reported on
such national securities exchange or on such automated quotation system or by
such marketmaker, as the case may be, during such period, and (ii) shall equal
the number of days, as determined by the Committee for the purposes of
determining the average Fair Market Value for such Phantom Shares, on which the
Common Stock was traded and a closing price was reported on such national
securities exchange or on such automated quotation system or by such
marketmaker, as the case may be, during such period.

         (dd) To 'vest' a Stock Option, Stock Appreciation Right, Restricted
Share, Restricted Share Unit or Phantom Share held by a Participant shall mean,
with respect to a Stock Option or Stock Appreciation Right, to render such Stock
Option or Stock Appreciation Right exercisable, subject to the terms of the Plan
or the Agreement, and, in the case of a Restricted Share, Restricted


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Share Unit or Phantom Share, to render such Restricted Share, Restricted Share
Unit or Phantom Share nonforfeitable.

SECTION 1.3   ADMINISTRATION OF THE PLAN.

         The Plan shall be administered by the Board or by a Committee appointed
by the Board, consisting of at least two members of the Board; PROVIDED that (i)
with respect to any Grant that is intended to satisfy the requirements of Rule
16b-3, such Committee shall consist of at least such number of directors as is
required from time to time by Rule 16b-3, and each such Committee member shall
satisfy the qualification requirements of such rule; and (ii) with respect to
any Grant that is also intended to satisfy the requirements of the Section
162(m) Exception, such Committee shall consist of at least such number of
directors as is required from time to time to satisfy the Section 162(m)
Exception, and each such Committee member shall satisfy the qualification
requirements of such exception. The Committee shall adopt such rules as it may
deem appropriate in order to carry out the purpose of the Plan. All questions of
interpretation, administration and application of the Plan shall be determined
by a majority of the members of the Committee then in office, except that the
Committee may authorize any one or more of its members, or any officer of the
Company, to execute and deliver documents on behalf of the Committee. The
determination of such majority shall be final and binding as to all matters
relating to the Plan. The Committee shall have authority to select Participants
from among the class of eligible persons specified in Section 1.4 below and to
determine the number of Stock Options, Stock Appreciation Rights, Restricted
Shares, Restricted Share Units or Phantom Shares (or combination thereof) to be
granted to each Participant; PROVIDED, HOWEVER, no member of the Committee shall
participate in such decisions contemplated by this Section 1.3 if it relates to
a Grant made on his or her behalf. The Committee shall also have the authority
to amend the terms of any outstanding Grant or waive any conditions or
restrictions applicable to any Grant; PROVIDED, HOWEVER, that no amendment shall
impair the rights of the holder thereof. With respect to any restrictions in the
Plan or in any Agreement that are based on the requirements of Rule 16b-3,
Section 422 of the Code, the Section 162(m) Exception, the rules of any exchange
upon which the Company's securities are listed, or any other applicable law,
rule or restriction to the extent that any such restrictions are no longer
required, the Committee shall have the sole discretion and authority to make
Grants that are not subject to such restrictions and/or to waive any such
restrictions with respect to outstanding Grants.

SECTION 1.4   ELIGIBLE PERSONS.

         Grants may be awarded to any employee, Non-Employee Director or Advisor
of the Company or any of its subsidiaries selected by the Committee, PROVIDED
that only employees shall be eligible to receive Incentive Stock Options.


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SECTION 1.5   COMMON STOCK SUBJECT TO THE PLAN.

         The total aggregate number of shares of Common Stock that may be
distributed under the Plan (whether reserved for issuance upon grant of Stock
Options or Stock Appreciation Rights or granted as Restricted Shares or
Restricted Share Units) shall be 25,000,000, subject to adjustment pursuant to
Article VI hereof. The shares of Common Stock shall be made available from
authorized but unissued Common Stock or from Common Stock issued and held in the
treasury of the Company. The delivery of shares of Common Stock upon exercise of
a Stock Option or Stock Appreciation Right in any manner and the vesting of
Restricted Shares or Restricted Share Units shall result in a decrease in the
number of shares which thereafter may be issued for purposes of this Section
1.5, by the number of shares as to which the Stock Option or Stock Appreciation
Right is exercised or by the number of Restricted Shares or Restricted Share
Units which vest. To the extent permitted by law or the rules and regulations of
any stock exchange on which the Common Stock is listed, shares of Common Stock
with respect to which Stock Options and Stock Appreciation Rights expire, are
canceled without being exercised or are otherwise terminated or, in the case of
Stock Appreciation Rights or Restricted Share Units, are exercised for cash, may
be regranted under the Plan. Restricted Shares or Restricted Share Units that
are forfeited for any reason shall not be deemed granted for purposes of this
Section 1.5 and may thereafter be regranted under the Plan.

SECTION 1.6   LIMIT ON GRANTS TO PARTICIPANTS.

         The maximum aggregate number of (i) shares of Common Stock that may be
granted under the Plan (whether reserved for issuance upon grant of Stock
Options or Stock Appreciation Rights or granted as Restricted Shares or
Restricted Share Units) and (ii) Phantom Shares or Restricted Share Units that
may be granted under the Plan to any Participant during the five-year period
starting on the Effective Date of the Plan is 5,000,000.

SECTION 1.7   AGREEMENTS.

   
         Each Agreement (i) shall state the Date of Grant and the name of 
the Participant, (ii) shall specify the terms of the Grant, (iii) shall be 
signed by the Participant and a person designated by the Committee, (iv) 
shall incorporate the Plan by reference and (v) shall be delivered to the 
Participant. The Agreement shall contain such other terms and conditions as 
are required by the Plan and, in addition, such other terms not inconsistent 
with the Plan as the Committee may deem advisable. The Committee shall have 
the authority to require that any Agreement relating to a Grant in a 
jurisdiction outside of the United States contain such terms as are required 
by local law in order to constitute a valid grant under the laws of such 
jurisdiction. Such authority shall be notwithstanding the fact that the 
requirements of the local jurisdiction may be more restrictive than the terms 
set forth in the plan. 
    


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                                   ARTICLE II

                     PROVISIONS APPLICABLE TO STOCK OPTIONS


SECTION 2.1   GRANTS OF STOCK OPTIONS.

         The Committee may from time to time grant Stock Options on the terms
and conditions set forth in the Plan and on such other terms and conditions as
are not inconsistent with the purposes and provisions of the Plan, as the
Committee, in its discretion, may from time to time determine, and subject to
satisfaction of any performance goal requirements established by the Committee.
Each Agreement covering a Grant of Stock Options shall specify the number of
Stock Options granted, the Date of Grant, the exercise price of such Stock
Options, whether such Stock Options are Incentive Stock Options or Non-Qualified
Stock Options, the period during which such Stock Options may be exercised and
any vesting schedule, including any applicable performance goal requirements.
Any Stock Option intended to qualify as an Incentive Stock Option that fails to
so qualify will be deemed a Non-Qualified Stock Option.

SECTION 2.2   EXERCISE PRICE.

         The Committee shall establish the per share exercise price at the time
any Stock Option is granted at such amount as the Committee shall determine;
PROVIDED that, with respect to any Incentive Stock Option or any Stock Option
intended to qualify for the Section 162(m) Exception, such exercise price shall
not be less than 100% of the Fair Market Value of a share of Common Stock on the
Date of Grant; and PROVIDED FURTHER that, with respect to any Incentive Stock
Option that is granted to a person holding more than 10% of the combined voting
power of all the classes of common stock of the Company (or its parent or any
subsidiaries within the meaning of the Code), such exercise price shall not be
less than 110% of the Fair Market Value of a share of Common Stock on the Date
of Grant. The exercise price will be subject to adjustment in accordance with
the provisions of Article VI of the Plan.

SECTION 2.3   EXERCISE OF STOCK OPTIONS.

         (a)  EXERCISABILITY. Stock Options shall be exercisable only to the
extent the Participant is vested therein, subject to any restrictions that the
Committee shall determine and specify in the applicable Agreement (or any
employment or consulting agreement applicable to the Participant). A Participant
shall vest in Stock Options over such time and in such increments as the
Committee shall determine and specify in a vesting schedule set forth in the
applicable Agreement (or any employment or consulting agreement applicable to
the Participant). The Committee may, however, in its sole discretion, accelerate
the time at which a Participant vests in his Stock Options.


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         (b)  OPTION PERIOD. For each Stock Option granted, the Committee shall
specify the period during which the Stock Option may be exercised; PROVIDED,
HOWEVER, that anything in the Plan or in the applicable Agreement to the
contrary notwithstanding:

              (i)       LATEST EXERCISE DATE. No Stock Option granted under the 
         Plan shall be exercisable after the tenth anniversary of the Date of
         Grant thereof.

              (ii)      REGISTRATION RESTRICTIONS. A Stock Option shall not be
         exercisable, no transfer of shares of Common Stock shall be made to any
         Participant, and any attempt to exercise a Stock Option or to transfer
         any such shares shall be void and of no effect, unless and until (A) a
         registration statement under the Securities Act of 1933, as amended,
         has been duly filed and declared effective pertaining to the shares of
         Common Stock subject to such Stock Option, and the shares of Common
         Stock subject to such Stock Option have been duly qualified under
         applicable Federal or state securities or blue sky laws or (B) the
         Committee, in its sole discretion, determines, or the Participant, upon
         the request of the Committee, provides an opinion of counsel
         satisfactory to the Committee, that such registration or qualification
         is not required as a result of the availability of an exemption from
         registration or qualification under such laws. Without limiting the
         foregoing, if at any time the Committee shall determine, in its sole
         discretion, that the listing, registration or qualification of the
         shares of Common Stock subject to such Stock Option is required under
         any federal or state law or on any securities exchange or the consent
         or approval of any governmental regulatory body is necessary or
         desirable as a condition of, or in connection with, delivery or
         purchase of such shares pursuant to the exercise of a Stock Option,
         such Stock Option shall not be exercised in whole or in part unless and
         until such listing, registration, qualification, consent or approval
         shall have been effected or obtained free of any conditions not
         acceptable to the Committee.

         (c)  EXERCISE IN THE EVENT OF TERMINATION OF SERVICE FOR PARTICIPANTS
OTHER THAN NON-EMPLOYEE DIRECTORS.

              (i)       TERMINATION OF SERVICE OTHER THAN A TERMINATION FOR 
         CAUSE OR DUE TO DEATH OR PERMANENT DISABILITY. In the event that (A)
         such Participant's service with the Company or any of its subsidiaries
         ends by reason of a voluntary termination by the Participant or due to
         termination by the Company or any of its subsidiaries other than due to
         a Termination for Cause, the Participant's Outstanding Stock Options
         may be exercised, to the extent then exercisable, for a period of six
         months after the date of termination or such longer period, not in
         excess of twelve months following the date of termination, as
         determined by the Committee, (B) such Participant dies during a period
         during which his Stock Options could have been exercised by him, his
         Outstanding Stock Options may be exercised, to the extent exercisable,
         at the date of death by the person who acquired the right to exercise
         such Stock Options by will or the laws of descent and distribution or
         permitted transfer for a period of twelve months following the date of
         death or such longer period as may be determined by the Committee, in
         its discretion, prior to the expiration of such twelve-month period),
         or (C)


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         the Permanent Disability of such Participant occurs, his Outstanding
         Stock Options may be exercised, to the extent exercisable, upon the
         date of the onset of such Permanent Disability for a period of twelve
         months following such date or such longer period, not in excess of
         twenty-four months following the date of the Permanent Disability, as
         may be determined by the Committee, in its discretion. Upon the
         occurrence of an event described in clause (A), (B) or (C) of this
         Section 2.3(c)(i), all rights with respect to Stock Options that are
         not vested as of such event will be relinquished.

              (ii)      TERMINATION FOR CAUSE. If such Participant's service 
         with the Company or any of its subsidiaries ends due to a Termination
         for Cause then, unless the Committee in its discretion determines
         otherwise, all Outstanding Stock Options, whether or not then vested,
         shall terminate effective as of the date of such termination.

              (iii)     MAXIMUM EXERCISE PERIOD. Anything in this Section 2.3(c)
         to the contrary notwithstanding, no Stock Option shall be exercisable
         after the earlier to occur of (A) the expiration of the option period
         set forth in the applicable Agreement or (B) the tenth anniversary of
         the Date of Grant thereof.

              (iv)      MINIMUM EXERCISE PERIOD. With respect to a termination
         described in Section 2.3(c)(i)(A) only, the Committee may establish a
         shorter exercise period for Incentive Stock Options of not less than
         three months following the date of termination.

         (d)  EXERCISE IN THE EVENT OF TERMINATION OF SERVICE FOR NON-EMPLOYEE
DIRECTORS.

              (i)       TERMINATION OF SERVICE FOR ANY REASON OTHER THAN A 
         TERMINATION FOR CAUSE. In the event that a Non-Employee Director ceases
         to be a member of the Board for any reason other than due to a
         Termination for Cause, the Non-Employee Director may exercise any
         Outstanding Stock Options for a period of twelve months following the
         date of such termination, but only to the extent such Outstanding
         Options were vested on the date of such termination. The Non-Employee
         Director shall relinquish all rights with respect to Stock Options that
         are not vested as of the date of such termination of service.

              (ii)      TERMINATION FOR CAUSE. In the event that a Non-Employee
         Director ceases to be a member of the Board due to a Termination for
         Cause then, unless the Committee, in its discretion, determines
         otherwise, all Outstanding Stock Options, whether or not then vested,
         shall terminate effective as of the date of such termination.

              (iii)     MAXIMUM EXERCISE PERIOD. Anything in this Section 2.3(d)
         to the contrary notwithstanding, no Stock Option shall be exercisable
         after the earlier to occur of (A) the expiration of the option period
         set forth in the applicable Agreement or (B) the tenth anniversary of
         the Date of Grant thereof.


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SECTION 2.4   PAYMENT OF PURCHASE PRICE UPON EXERCISE.

         Every share purchased through the exercise of a Stock Option shall be
paid for in full at the time of exercise in cash or, in the discretion of the
Committee, in shares of Common Stock (PROVIDED that such shares of Common Stock
have been held for at least six months by the Participant) or other securities
of the Company designated by the Committee, in a combination of cash, shares or
such other securities or in any other form of valid consideration that is
acceptable to the Committee in its sole discretion.

SECTION 2.5   STOCK APPRECIATION RIGHTS.

         The Committee may grant Stock Appreciation Rights only in tandem with a
Stock Option, either at the time of Grant or by amendment at any time prior to
the exercise, expiration or termination of such Stock Option. Each Stock
Appreciation Right shall be subject to the same terms and conditions as the
related Stock Option and shall be exercisable only at such times and to such
extent as the related Stock Option is exercisable. A Stock Appreciation Right
shall entitle the holder to surrender to the Company the related Stock Option
unexercised and receive from the Company in exchange therefor an amount equal to
the excess of the Fair Market Value of the shares of Common Stock subject to
such Stock Option, determined as of the day preceding the surrender of such
Stock Option, over the Stock Option aggregate exercise price. Such amount shall
be paid in cash or, in the discretion of the Committee, in shares of Common
Stock or other securities of the Company designated by the Committee or in a
combination of cash, shares or such other securities.


                                   ARTICLE III

                   PROVISIONS APPLICABLE TO RESTRICTED SHARES


SECTION 3.1   GRANTS OF RESTRICTED SHARES.

         The Committee may from time to time grant Restricted Shares on the
terms and conditions set forth in the Plan and on such other terms and
conditions as are not inconsistent with the purposes and provisions of the Plan,
as the Committee, in its discretion, may from time to time determine. Each
Agreement covering a Grant of Restricted Shares shall specify the number of
Restricted Shares granted, the Date of Grant, the price, if any, to be paid by
the Participant for such Restricted Shares and the vesting schedule (as provided
for in Section 3.2 hereof) for such Restricted Shares, including any applicable
performance goal requirements.

SECTION 3.2   VESTING.

         The Committee shall establish the vesting schedule applicable to
Restricted Shares granted hereunder, which vesting schedule shall specify the
period of time, the increments in which a


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Participant shall vest in the Grant of Restricted Shares and any applicable
performance goal requirements, subject to any restrictions that the Committee
shall determine and specify in the applicable Agreement.

SECTION 3.3   RIGHTS AND RESTRICTIONS GOVERNING RESTRICTED SHARES.

         As of the Date of Grant of Restricted Shares, one or more certificates
representing the appropriate number of shares of Common Stock granted to a
Participant shall be registered in his name but shall be held by the Company for
the account of the Participant. The Participant shall have all rights of a
holder as to such shares of Common Stock (including, to the extent applicable,
the right to receive dividends and to vote), subject to the following
restrictions: (a) the Participant shall not be entitled to delivery of
certificates representing such shares of Common Stock until such shares have
vested; (b) none of the Restricted Shares may be sold, transferred, assigned,
pledged or otherwise encumbered or disposed of until such shares have vested;
and (c) except as otherwise provided in Section 3.6 below, all unvested
Restricted Shares shall be immediately forfeited upon a Participant's
termination of service with the Company or any subsidiary for any reason.

SECTION 3.4   ADJUSTMENT WITH RESPECT TO RESTRICTED SHARES.

         Any other provision of the Plan to the contrary notwithstanding, the
Committee may, in its discretion, at any time accelerate the date or dates on
which Restricted Shares vest. The Committee may, in its sole discretion, remove
any and all restrictions on such Restricted Shares whenever it may determine
that, by reason of changes in applicable law, the rules of any stock exchange on
which the Common Stock is listed or other changes in circumstances arising after
the Date of Grant, such action is appropriate.

SECTION 3.5   DELIVERY OF RESTRICTED SHARES.

         On the date on which Restricted Shares vest, all restrictions contained
in the Agreement covering such Restricted Shares and in the Plan shall lapse as
to such Restricted Shares. One or more stock certificates for the appropriate
number of shares of Common Stock, free of the restrictions set forth in the Plan
and applicable Agreement, shall be delivered to the Participant or such shares
shall be credited to a brokerage account if the Participant so directs;
PROVIDED, HOWEVER, that such certificates shall bear such legends as the
Committee, in its sole discretion, may determine to be necessary or advisable in
order to comply with applicable federal or state securities laws.

SECTION 3.6   TERMINATION OF SERVICE.

         In the event that the Participant's service with the Company or any of
its subsidiaries ends for any reason prior to the date or dates on which
Restricted Shares vest, the Participant shall forfeit all unvested Restricted
Shares as of the date of such event, unless, other than due to a Termination for
Cause, the Committee determines that the circumstances in the particular case so
warrant and provides that some or all of such Participant's unvested Restricted
Shares shall vest as of the date of


                                      -11-




such event, in which case certificates representing such shares shall be
delivered, in accordance with Section 3.5 above, to the Participant or in the
case of the Participant's death, to the person or persons who acquired the right
to receive such certificates by will or the laws of descent and distribution.


                                   ARTICLE IV

                 PROVISIONS APPLICABLE TO RESTRICTED SHARE UNITS


SECTION 4.1   GRANTS OF RESTRICTED SHARE UNITS.

         The Committee may from time to time grant Restricted Share Units on the
terms and conditions set forth in the Plan and on such other terms and
conditions as are not inconsistent with the purposes and provisions of the Plan
as the Committee, in its discretion, may from time to time determine. Each
Restricted Share Unit awarded to a Participant shall correspond to one share of
Common Stock. Each Agreement covering a Grant of Restricted Share Units shall
specify the number of Restricted Share Units granted and the vesting schedule
(as provided for in Section 4.2 hereof) for such Restricted Share Units,
including any applicable performance goal requirements.

SECTION 4.2   VESTING.

         The Committee shall establish the vesting schedule applicable to
Restricted Share Units granted hereunder, which vesting schedule shall specify
the period of time, the increments in which a Participant shall vest in the
Grant of Restricted Share Units and any applicable performance goal
requirements, subject to any restrictions that the Committee shall determine and
specify in the applicable Agreement.

SECTION 4.3   ADJUSTMENT WITH RESPECT TO RESTRICTED SHARE UNITS.

         Any other provision of the Plan to the contrary notwithstanding, the
Committee may, in its discretion, at any time accelerate the date or dates on
which Restricted Share Units vest.

SECTION 4.4   SETTLEMENT OF RESTRICTED SHARE UNITS.

         On the date on which Restricted Share Units vest, all restrictions
contained in the Agreement covering such Restricted Share Units and in the Plan
shall lapse as to such Restricted Share Units and the Restricted Stock Units
will be payable, at the discretion of the Committee, in Common Stock, in cash
equal to the Fair Market Value of the shares subject to such Restricted Share
Units or in a combination of Common Stock and cash. In the event the Restricted
Share Units are paid in Common Stock, one or more stock certificates for the
appropriate number of shares of Common Stock, free of the restrictions set forth
in the Plan and applicable Agreement, shall be delivered to the Participant or
such shares shall be credited to a brokerage account if the Participant so
directs;


                                      -12-




PROVIDED, HOWEVER, that such certificates shall bear such legends as the
Committee, in its sole discretion, may determine to be necessary or advisable in
order to comply with applicable federal or state securities laws.

SECTION 4.5   TERMINATION OF SERVICE.

         In the event that the Participant's service with the Company or any of
its subsidiaries ends for any reason prior to the date or dates on which
Restricted Share Units vest, the Participant shall forfeit all unvested
Restricted Share Units as of the date of such event, unless, other than due to a
Termination for Cause, the Committee determines that the circumstances in the
particular case so warrant and provides that some or all of such Participant's
unvested Restricted Share Units shall vest as of the date of such event, in
which case, in the discretion of the Committee, either certificates representing
shares of Common Stock or a cash payment equal to the Fair Market Value of the
shares of Common Stock, shall be delivered in accordance with Section 4.4 above,
to the Participant or in the case of the Participant's death, to the person or
persons who acquired the right to receive such certificates by will or the laws
of descent and distribution.


                                    ARTICLE V

                     PROVISIONS APPLICABLE TO PHANTOM SHARES


SECTION 5.1   GRANTS OF PHANTOM SHARES.

         The Committee may from time to time grant Phantom Shares, the value of
which is determined by reference to a share of Common Stock, on the terms and
conditions set forth in the Plan and on such other terms and conditions as are
not inconsistent with the purposes and provisions of the Plan as the Committee,
in its discretion, may from time to time determine. Each Agreement covering a
Grant of Phantom Shares shall specify the number of Phantom Shares granted, the
Initial Value of such Phantom Shares, the Valuation Dates, the number of Phantom
Shares whose Appreciation Value shall be determined on each such Valuation Date,
any applicable vesting schedule (as provided for in Section 5.3 hereof) for such
Phantom Shares, and any applicable limitation on payment (as provided for in
Section 5.4 hereof) for such Phantom Shares.

SECTION 5.2   APPRECIATION VALUE.

         (a)  VALUATION DATES; MEASUREMENT OF APPRECIATION VALUE. The Committee
shall provide in the Agreement for one or more Valuation Dates on which the
Appreciation Value of the Phantom Shares granted pursuant to the Agreement shall
be measured and fixed, and shall designate in the Agreement the number of such
Phantom Shares whose Appreciation Value is to be calculated on each such
Valuation Date.


                                      -13-




         (b)  PAYMENT OF APPRECIATION VALUE. Except as otherwise provided in
Section 5.5 hereof, and subject to the limitation contained in Section 5.4
hereof, the Appreciation Value of a Phantom Share shall be paid to a Participant
in cash in a lump sum as soon as practicable following the Valuation Date
applicable to such Phantom Share.

SECTION 5.3   VESTING.

         The Committee may, in its discretion, provide in the Agreement that
Phantom Shares granted thereunder shall vest (subject to such terms and
conditions as the Committee may provide in the Agreement) over such period of
time, from the Date of Grant, as may be specified in a vesting schedule
contained therein.

SECTION 5.4   LIMITATION ON PAYMENT.

         The Committee may, in its discretion, establish and set forth in the
Agreement a maximum dollar amount payable under the Plan for each Phantom Share
granted pursuant to such Agreement.

SECTION 5.5   TERMINATION OF SERVICE, DEATH OR PERMANENT DISABILITY.

         (a)  TERMINATION OF SERVICE OTHER THAN A TERMINATION FOR CAUSE, OR DUE
TO DEATH OR PERMANENT DISABILITY. If, before the occurrence of one or more
Valuation Dates applicable to the Participant's Outstanding Phantom Shares, the
Participant's service with the Company or any of its subsidiaries ends by reason
of (i) a voluntary termination by the Participant or a termination by the
Company or any of its subsidiaries other than due to a Termination for Cause or
(ii) the Participant's death or, in the case of a Participant who is an
employee, Permanent Disability, then, unless the Committee, in its discretion,
determines otherwise, the Appreciation Value of each Outstanding Phantom Share
as to which the Participant's rights are vested as of the date of such event
shall be the lesser of (x) the Appreciation Value of such Phantom Share
calculated as of the date of such event or (y) the Appreciation Value of such
Phantom Share calculated as of the originally scheduled Valuation Date
applicable thereto. Unless the Committee, in its discretion determines
otherwise, the Appreciation Value so determined for each such vested Outstanding
Phantom Share shall then be payable to the Participant or the Participant's
estate following the originally scheduled Valuation Date applicable thereto in
accordance with Section 5.2(b) hereof. Upon the occurrence of an event described
in this Section 5.5(a), all rights with respect to Phantom Shares that are not
vested as of such date will be relinquished.

         (b)  TERMINATION FOR CAUSE. If a Participant's service with the Company
or any of its subsidiaries ends due to a Termination for Cause, then, unless the
Committee, in its discretion, determines otherwise, all Outstanding Phantom
Shares, whether or not vested, and any and all rights to the payment of
Appreciation Value with respect to such Outstanding Phantom Shares shall be
forfeited effective as of the date of such termination.


                                      -14-




                                   ARTICLE VI

                       EFFECT OF CERTAIN CORPORATE CHANGES


         In the event of a merger, consolidation, stock-split, dividend,
distribution, combination, reclassification or recapitalization that changes the
character or amount of the Common Stock, the Committee shall make such
adjustments to (i) the number and kind of shares of Common Stock subject to any
Stock Options or Stock Appreciation Rights or the number and kind of Restricted
Shares, Restricted Share Units or Phantom Shares granted to each Participant,
(ii) the exercise price of any Outstanding Stock Options or Stock Appreciation
Rights or the Initial Value of any Outstanding Phantom Shares, and (iii) the
maximum number of shares of Common Stock referred to in Section 1.5 and Section
1.6 of the Plan, in each case, as it deems appropriate. Such determinations
shall be conclusive and binding for all purposes.



                                   ARTICLE VII

                                  MISCELLANEOUS


SECTION 7.1   NO RIGHTS TO GRANTS OR CONTINUED SERVICE.

         Neither the adoption of this Plan nor any action of the Board or the
Committee shall be deemed to give any person any right to a Grant or any other
rights except as may be evidenced by an Agreement, or any amendment thereto,
duly authorized by the Committee and executed on behalf of the Company, and then
only to the extent and upon the terms and conditions expressly set forth
therein. Neither the Plan nor any action taken hereunder shall be construed as
giving any employee, Non-Employee Director or Advisor, any right to be retained
by the Company or any of its subsidiaries nor the right to be nominated,
reelected or retained as a member of the Board for any period of time or at any
particular rate of compensation.

SECTION 7.2   RESTRICTION ON TRANSFER.

         The rights of a Participant with respect to Stock Options, Stock
Appreciation Rights, Restricted Shares, Restricted Share Units or Phantom Shares
shall not be transferable by the Participant to whom such Stock Options, Stock
Appreciation Rights, Restricted Shares, Restricted Share Units or Phantom Shares
are granted, except by will or the laws of descent and distribution.


                                      -15-




SECTION 7.3   TAXES.

         The Company or a subsidiary thereof, as appropriate, shall have the
right to deduct from all payments made under the Plan to a Participant or to a
Participant's estate any federal, state, local or other taxes required by law to
be withheld with respect to such payments. The Committee, in its discretion, may
require, as a condition to the exercise of any Stock Option or Stock
Appreciation Right or delivery of any certificate(s) for shares of Common Stock,
that an additional amount be paid in cash equal to the amount of any federal,
state, local or other taxes owed as a result of such exercise. Any Participant
who makes an election under Section 83(b) of the Code to have his or her receipt
of shares of Restricted Stock taxed in accordance with such election must give
notice to the Company of such election immediately upon making a valid election
in accordance with the rules and regulations of the Code. Any such election must
be made in accordance with the rules and regulations of the Code.

SECTION 7.4   STOCKHOLDER RIGHTS.

         No Grant under the Plan shall entitle a Participant or a Participant's
estate or permitted transferee to any rights of a holder of shares of common
stock of the Company, except as provided in Article III with respect to
Restricted Shares or when and until share certificates are delivered upon
exercise of a Stock Option or when and until share certificates are delivered in
settlement of a Stock Appreciation Right or a Restricted Share Unit.

SECTION 7.5   NO RESTRICTION ON RIGHT OF COMPANY TO EFFECT CORPORATE CHANGES.

         The Plan shall not affect in any way the right or power of the Company
or its stockholders to make or authorize any or all adjustments,
recapitalization, reorganization or other changes in the Company's capital
structure or its business, or any merger or consolidation of the Company, or any
issue of stock or of options, warrants or rights to purchase stock or of bonds,
debentures, preferred or prior preference stock whose rights are superior to or
affect the Common Stock or the rights thereof or which are convertible into or
exchangeable for Common Stock, or the dissolution or liquidation of the Company,
or any sale or transfer of all or any part of its assets or business, or any
other corporate act or proceeding, whether of a similar character or otherwise.

SECTION 7.6   SOURCE OF PAYMENTS.

         The general funds of the Company shall be the sole source of cash
settlements of Stock Appreciation Rights or Restricted Share Units under the
Plan and payments of Appreciation Value and the Company shall not have any
obligation to establish any separate fund or trust or other segregation of
assets to provide for payments under the Plan. Nothing contained in this Plan,
and no action taken pursuant to its provisions, shall create or be construed to
create a trust of any kind, or a fiduciary relationship, between the Company and
a Participant or any other person. To the extent a person acquires any rights to
receive payments hereunder from the Company, such rights shall be no greater
than those of an unsecured creditor.


                                      -16-




                                  ARTICLE VIII

                            AMENDMENT AND TERMINATION


         The Plan may be terminated and may be altered, amended, suspended or
terminated at any time, in whole or in part, by the Board; PROVIDED, HOWEVER,
that no alteration or amendment will be effective without stockholder approval
if such approval is required by law or under the rules of the New York Stock
Exchange, the NASDAQ Stock Market or any stock exchange on which the Common
Stock is listed. No termination or amendment of the Plan may, without the
consent of the Participant to whom a grant has been made, adversely affect the
rights of such Participant in the Stock Options, Stock Appreciation Rights,
Restricted Shares, Restricted Share Units or Phantom Shares covered by such
Grant. Unless previously terminated pursuant to this Article VIII, the Plan
shall terminate on the fifth anniversary of the Effective Date (as defined
below), and no further Grants may be awarded hereunder after such date.


                                   ARTICLE IX

                                 INTERPRETATION


SECTION 9.1   GOVERNMENTAL REGULATIONS.

         The Plan, and all Grants hereunder, shall be subject to all applicable
rules and regulations of governmental or other authorities.

SECTION 9.2   HEADINGS.

         The headings of articles and sections herein are included solely for
convenience of reference and shall not affect the meaning of any of the
provisions of the Plan.

SECTION 9.3   GOVERNING LAW.

         The Plan and all rights hereunder shall be construed in accordance with
and governed by the laws of the State of Delaware.


                                      -17-




                                    ARTICLE X

                     EFFECTIVE DATE AND STOCKHOLDER APPROVAL


         The Plan became effective upon its adoption by the Board and its
approval by the stockholder of the Company on July 15, 1999.


                                      -18-