LONG TERM PERFORMANCE-BASED INCENTIVE PLAN
 
 
                          DELPHI FINANCIAL GROUP, INC.
 
                              AMENDED AND RESTATED
 
                   LONG-TERM PERFORMANCE-BASED INCENTIVE PLAN
 
1.       PURPOSE
 
The purpose of this Amended and Restated Long-Term Performance-Based Incentive
Plan (the "Plan") is to advance the interests of Delphi Financial Group, Inc.
(the "Company") by providing Mr. Robert Rosenkranz, Chairman, President and
Chief Executive Officer of the Company, with a compensation arrangement that may
be utilized to reward him for his contributions to the performance of the
Company and enhancement of the interests of the Company's stockholders, subject
to the terms of the Plan. Subject to stockholder approval as set forth in
Section 3 hereof, the Plan will replace and supersede the Long-Term
Performance-Based Incentive Plan previously adopted by the Company and approved
by the stockholders of the Company on May 13, 1997 (the "Predecessor Plan").
 
The Plan is intended to accomplish these goals by enabling the Company to grant
Awards in the form of Restricted Stock, Deferred Shares, or Options, or a
combination of each type of Award, all as more fully described below.
 
2.       ADMINISTRATION
 
Unless otherwise determined by the Board of Directors of the Company (the
"Board"), the Plan will be administered by a Committee of the Board designated
for such purpose (the "Committee"). The Committee shall consist of at least two
directors. A majority of the members of the Committee shall constitute a quorum,
and all determinations of the Committee shall be made by a majority of its
members. Any determination of the Committee under the Plan may be made without
notice or meeting of the Committee by a writing signed by a majority of the
Committee members. So long as the Company's Class A common stock (the "Stock")
is registered under the Securities Exchange Act of 1934, as amended (the "1934
Act"), all members of the Committee shall be Non-Employee Directors within the
meaning of Rule 16b-3 under the 1934 Act, outside directors within the meaning
of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"),
and shall satisfy any applicable requirements of any exchange or system on which
the Stock is listed or traded. The Committee will have authority, not
inconsistent with the express provisions of the Plan and in addition to other
authority granted under the Plan, to (a) determine the number of shares subject
to any Award and grant Awards at such time or times as it determines in
accordance with the Plan; (b) prescribe the form or forms of instruments that
are required or deemed appropriate under the Plan, including any required
written notices and elections, and change such forms from time to time; (c)
adopt, amend and rescind rules and regulations for the administration of the
Plan; and (d) interpret the Plan and decide any questions and settle all
controversies and disputes that may arise in connection with the Plan. Such
determinations and actions of the Committee, and all other determinations and
actions of the Committee made or taken under authority granted by any provision
of the Plan, will be final and conclusive and will bind all parties. The
Committee shall certify the achievement of any performance goals established
pursuant to the Plan. Nothing in this Section 2 shall be construed as limiting
the power of the Committee to make adjustments under Section 8.6 hereof.
 
The Committee may designate employees of the Company and professional advisors
to assist the Committee in the administration of this Plan and may grant
authority to officers to execute agreements or other documents on behalf of the
Committee.
 
The Committee may employee such legal counsel, consultants and agents as it may
deem desirable for the administration of this Plan and may rely upon any opinion
received from any such counsel or consultant and any computation received from
any such consultant or agent. Expenses incurred by the Committee or the Board in
the engagement of any such counsel, consultant or agent shall be paid by the
Company. The Committee, its members and any person designated pursuant to the
preceding paragraph shall not be liable for any action or determination made in
good faith with respect to this Plan. To the maximum extent permitted by
applicable law, no officer of the Company or member or former member of the
Committee or of the Board shall be liable for any action or determination made
in good faith with respect to this Plan or any Award granted hereunder.
 
To the maximum extent permitted by applicable law and the certificate of
incorporation and by-laws of the Company and to the extent not covered by
insurance directly insuring such person, each officer and member or former
member of the Committee or the Board shall be indemnified and held harmless by
the Company against any cost or expense (including
 
                                      -1-
 
<PAGE>
 
reasonable fees of counsel reasonably acceptable to the Committee) or liability
(including any sum paid in settlement of a claim with the approval of the
Committee), and, to the extent permitted by applicable law, advance amounts
necessary to pay the foregoing at the earliest time and to the fullest extent
permitted, arising out of any act or omission to act in connection with the
administration of this Plan, except to the extent arising out of such officer's,
member's or former member's own fraud or bad faith. Such indemnification shall
be in addition to any rights of indemnification the employees, officers,
directors or members or former officers, directors or members may have under
applicable law or under the certificate of incorporation or by-laws of the
Company or any affiliate thereof. Notwithstanding anything else herein, this
indemnification will not apply to the actions or determinations made by an
individual with regard to Awards granted to him or her under this Plan.
 
3.       EFFECTIVE DATE AND TERM OF PLAN
 
The Plan shall be subject to approval by the stockholders of the Company, and
Awards granted hereunder prior to such approval shall also be subject to such
approval. The Plan will terminate on December 31, 2013.
 
4.       SHARES SUBJECT TO THE PLAN
 
Subject to adjustment as provided in Section 8.6 hereof, the aggregate number of
shares, measured by reference to Stock Units, subject to Award during any
calendar year of the Plan (the "Award Amount") shall equal a maximum of 158,988,
plus the Carryover Award Amount, as then in effect. For purposes hereof, "Stock
Units" shall consist of restricted or deferred shares of Company common stock,
each of which individual shares shall represent one Stock Unit, and options to
purchase shares of Company common stock, each of which individual options shall
represent one-third of one Stock Unit. The "Carryover Award Amount" consists of
317,796 restricted or deferred shares and options to purchase 953,924 shares of
Company common stock, representing the number of such shares as to which Awards
were available but not granted under the Predecessor Plan for the Performance
Period (as defined in such plan) consisting of the 1999 through 2002 calendar
years, and all or a portion of such Carryover Award Amount may be applied to
increase the Award Amount for any calendar year of the Plan, with the Carryover
Award Amount to be decreased by any portions thereof so applied for purposes of
future calendar years of this Plan.
 
No fractional shares of Company common stock will be delivered under the Plan.
 
5.       PARTICIPATION AND AWARDS
 
         5.1      PARTICIPATION
 
                  Mr. Robert Rosenkranz, Chairman, President and Chief Executive
Officer of the Company, is the sole participant in the Plan. Mr. Rosenkranz will
be eligible to receive an Award under the Plan following the end of each fiscal
year of the Company (each, a "Fiscal Year"), beginning with the Fiscal Year
ending December 31, 2003, to the extent determined by the Committee, as set
forth in Section 5.2 hereof.
 
         5.2      DETERMINATION OF AWARDS
 
                  (a) Within the ninety (90) day period following the end of
each Fiscal Year for which the Plan is in effect, the Committee shall determine
whether and to what extent to grant an Award for such year (including the number
of shares subject to any Award it determines to grant), and the composition of
such Award as between Restricted Stock, Deferred Shares and Options, each as
hereinafter defined (subject to the provisions of Section 4 hereof), based on
such criteria relating to Mr. Rosenkranz's performance, the Company's
performance, the Company's stock performance and such other factors for or
relating to such year as it, in its sole discretion, deems relevant or, if
applicable, the extent to which Mr. Rosenkranz is entitled to an Award for such
Fiscal Year based on the satisfaction of the performance criteria previously
established by the Committee in its sole discretion for such year in accordance
with Section 5.2(b) hereof. Any Award shall be granted on the date on which the
Committee makes its determination to grant such Award, or, in the event that an
Award is granted pursuant to performance criteria established in advance by the
Committee for a Fiscal Year pursuant to Section 5.2(b) hereof, on the last
business day of such year, provided that Mr. Rosenkranz continues to be employed
on
 
                                      -2-
 
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such date, it being understood that Section 5.5 hereof shall apply with respect
to any Fiscal Year during which such employment terminates.
 
                  (b) The Committee may, in its sole discretion, establish in
advance with respect to any Fiscal Year objective performance criteria which it
selects in its sole discretion and which, if satisfied (as determined by the
Committee in its sole discretion), will give rise to a target, minimum and/or
maximum potential Award hereunder (as to the number of shares subject to the
Award) for such year or a specified portion thereof, as well as the composition
of the Award or portion thereof to be earned if such criteria are satisfied. Any
such criteria and potential Award composition shall be established by the
Committee within ninety (90) days of the beginning of the Fiscal Year as to
which they shall apply. The Committee may, on or before the date of grant
thereof and in its sole discretion, reduce any Award earned upon satisfaction of
such performance criteria.
 
         5.3      PAYMENT OF AWARDS
 
                  The Award to be granted with respect to a Fiscal Year shall,
subject to Section 5.4(a), consist, as applicable, of a number of shares of
restricted Company Class B Common Stock ("Restricted Stock") and/or options
covering a number of shares of Company Class B Common Stock ("Options")
determined in accordance with Section 5.2 hereof.
 
                  The Restricted Stock and Options shall be granted upon the
terms and conditions set forth below.
 
         5.4      DEFERRED SHARES
 
                  (a) AWARDS IN LIEU OF RESTRICTED STOCK. If the Committee
determines that the payment of an Award, in whole or in part, in shares of
Restricted Stock may result in the Company not being able to take a tax
deduction under Section 162(m) of the Code upon the vesting of such Restricted
Stock or otherwise would not be in the best interests of the Company, or if the
Committee determines that the Plan objective of deferral of taxation may not be
met by issuance of Restricted Stock, it may elect instead to pay the Restricted
Stock portion of the Award in an equivalent number of Deferred Shares. Deferred
Shares represent the right to receive the stated number of shares of Company
Class B Common Stock upon the same events described in Section 6.2(c) hereof for
the vesting of Restricted Stock. In the event that any Deferred Shares are
awarded pursuant to this Section 5.4(a), all references to Restricted Stock in
this Plan (including but not limited to the provisions of Section 6.2(c)) shall
be deemed to apply, insofar as they are applicable, to the Deferred Shares.
 
                  (b) DIVIDEND EQUIVALENTS. In the event that a dividend is paid
or property is distributed (including, without limitation, shares of Company
stock) with respect to a share of Company Class B Common Stock while a Deferred
Share is outstanding, Mr. Rosenkranz shall receive with respect to each Deferred
Share then outstanding:
 
                           (i)      in the case of a cash dividend, or a
distribution of property other than stock, dividend equivalents in cash or such
property which shall be paid concurrently with the payment of the dividend on
the stock; and
 
                           (ii)     in the case of stock dividends, a number of
additional Deferred Shares equal to the number of whole shares of stock that
would have been paid if the Deferred Shares had been stock outstanding on the
date of distribution.
 
                           Any additional Deferred Shares issued under this
Section 5.4(b) shall be subject to the same terms and conditions, including with
respect to vesting, forfeiture and distribution, as apply to the Deferred Shares
in respect of which they are issued.
 
         5.5      AWARDS FOR PARTIAL YEARS
 
                  If Mr. Rosenkranz's employment terminates during any Fiscal
Year for which the Plan is in effect other than by the Company for Cause or by
Mr. Rosenkranz without Good Reason, Mr. Rosenkranz will be eligible to receive
an Award to the extent provided in Section 5.2 hereof. Unless otherwise provided
by the Committee in connection therewith, if the Committee has established
objective performance criteria and the potential Award composition for such
Fiscal Year pursuant to Section 5.2(b) hereof, Mr. Rosenkranz shall, to the
extent that such criteria have been satisfied (on a pro-rated basis for such
partial year, where applicable) and subject to the last sentence of Section
5.2(b) hereof, be entitled to receive a portion of such Award to be pro-rated to
reflect the portion of the Fiscal Year elapsed. Within the ninety (90) day
period following Mr. Rosenkranz's termination of employment, the Committee shall
make its determination as to whether and to
 
                                      -3-
 
<PAGE>
 
what extent to grant an Award for such partial year. The provisions of Section
5.2(a) hereof shall apply with respect to such determination as if it were being
made with respect to a completed Fiscal Year, except that any Award shall be
granted on the date on which the Committee makes its determination to grant such
Award, including but not limited to any determination as to the satisfaction of
performance criteria on a pro-rated basis. The portion of any Award pursuant to
this Section 5.5 that would have been paid in Restricted Stock will be satisfied
by an equivalent number of shares of Company Class B Common Stock free of any
restrictions.
 
6.       TYPES OF AWARDS
 
         6.1      OPTIONS
 
                  (a) NATURE OF OPTIONS; GRANT DATE. An Option will entitle Mr.
Rosenkranz to purchase Company Class B Common Stock at a specified exercise
price. The grant date for each Option shall be as set forth in Section 5.2(a)
hereof.
 
                  (b) EXERCISE PRICE. The exercise price of an Option will be
the Fair Market Value per share of the stock subject to the Option, determined
as of the grant date. In no case may the exercise price paid for stock which is
part of an original issue of authorized stock be less than the par value per
share of the stock. For purposes hereof, "Fair Market Value" shall be the
closing price per share of Stock, as reported on the New York Stock Exchange
("NYSE") on the grant date, or if the Stock is not listed for trading on the
NYSE, the closing price of Stock as reported on another recognized securities
exchange or on the NASDAQ National Market System if the Stock shall then be
listed on such exchange or system. If the Stock did not trade on the grant date
on the NYSE or such other applicable exchange or system, the Fair Market Value
for purposes hereof shall be the reported closing price on the last business day
on which the Stock was traded preceding the grant date.
 
                  (c) DURATION OF OPTIONS. The latest date on which an Option
may be exercised will be the tenth anniversary of the day immediately preceding
the date the Option was granted.
 
                  (d) EXERCISE OF OPTIONS. An Option will be exercisable 30 days
following the grant thereof, subject to approval of the Plan by shareholders of
the Company and, in the case of an Option granted pursuant to the satisfaction
of performance criteria established in advance by the Committee, certification
by the Committee that such criteria have been satisfied. Any exercise of an
Option must be in writing, delivered or mailed to the Company, accompanied by
(1) any documents required by the Committee and (2) payment in full in
accordance with paragraph (e) below for the number of shares for which the
Option is exercised.
 
                  (e) PAYMENT FOR STOCK. Stock purchased on exercise of an
Option must be paid for as follows: (1) in cash or by check (acceptable to the
Company in accordance with guidelines established for this purpose), bank draft
or money order payable to the order of the Company or (2) (i) through the
delivery of shares of Company common stock which have been outstanding for at
least six months and which have a fair market value on the last business day
preceding the date of exercise equal to the exercise price, or (ii) to the
extent permitted by applicable law, by delivery of an unconditional and
irrevocable undertaking by a broker selected by Mr. Rosenkranz to deliver
promptly to the Company sufficient funds to pay the exercise price, or (iii) by
any combination of the permissible forms of payment.
 
         6.2      RESTRICTED STOCK
 
                  (a) NATURE OF RESTRICTED STOCK AWARD. The portion of any Award
paid in Restricted Stock entitles Mr. Rosenkranz to receive shares of Company
Class B Common Stock subject to the restrictions described in paragraph (c)
below.
 
                  (b) RIGHTS AS A STOCKHOLDER. Mr. Rosenkranz will have all the
rights of a stockholder with respect to the Company Class B Common Stock granted
in connection with an Award, including voting and dividend rights, subject to
the restrictions described in paragraph (c) below, and subject to approval of
the Plan by shareholders of the Company. Certificates evidencing shares of
Restricted Stock will remain in the possession of the Company until such shares
are free of such restrictions, at which time such certificates will be delivered
to Mr. Rosenkranz.
 
                                      -4-
 
<PAGE>
 
                  (c) RESTRICTIONS. Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of until the earliest
of (i) Mr. Rosenkranz's termination of employment (A) by reason of death,
Disability or normal retirement in accordance with the policies set by the Board
of Directors, (B) by the Company other than for Cause or (C) by Mr. Rosenkranz
for Good Reason (each a "Qualifying Termination") and (ii) a Change of Ownership
of the Company. If the Company terminates Mr. Rosenkranz's employment for Cause
or if Mr. Rosenkranz terminates his employment other than for Good Reason or in
connection with an event described in clause (A) above, any shares of Restricted
Stock that he then holds subject to restrictions will be forfeited to the
Company.
 
                  (d) CAUSE. For purposes of this Plan, "Cause" means (i)
conviction of a felony or other crime involving fraud, dishonesty or moral
turpitude, (ii) fraud with respect to the business of the Company, or (iii)
gross neglect of duties of the office specified in writing by the Board. For
purposes of this Plan, Mr. Rosenkranz shall not be deemed to have been
terminated for Cause until the later to occur of (i) the 30th day after notice
of termination is given and (ii) the delivery to him of a copy of a resolution
duly adopted by the affirmative vote of not less than a majority of the
Company's directors at a meeting called and held for that purpose, and at which
Mr. Rosenkranz together with his counsel was given an opportunity to be heard,
finding that Mr. Rosenkranz was guilty of conduct described in the definition of
"Cause" above, and specifying the particulars thereof in detail.
 
                  (e) GOOD REASON. For purposes of this Plan, "Good Reason"
means the voluntary termination by Mr. Rosenkranz of his employment (1) to enter
public service or (2) within 120 days after the occurrence without his express
written consent of any of the following events, provided that Mr. Rosenkranz
gives notice to the Company at least 30 days in advance requesting that the
situation be remedied, and the situation remains unremedied upon expiration of
such 30-day period:
 
                           (i)      Mr. Rosenkranz's removal from, or any
failure to reelect him to, the positions of Chairman of the Board, President or
Chief Executive Officer, except in connection with his termination for Cause or
Disability or termination by him other than for Good Reason; or
 
                           (ii)     reduction in Mr. Rosenkranz's rate of Base
Salary for any fiscal year to less than 100 percent of the rate of Base Salary
paid to him in Fiscal Year 2001; or
 
                           (iii)    failure of the Company to continue in effect
any retirement, life insurance, medical insurance or disability plan in which
Mr. Rosenkranz was participating on the date of Board adoption of this Plan
unless the Company provides Mr. Rosenkranz with a plan or plans that provide
substantially comparable benefits; or
 
                           (iv)     a Change of Ownership; or
 
                           (v)      any purported termination by the Company of
Mr. Rosenkranz's employment for Cause that is not effected in compliance with
paragraph (d) of this Section 6.2.
 
                  (f) CHANGE OF OWNERSHIP. For purposes of this Plan, a "Change
of Ownership" shall be deemed to have occurred (1) if individuals who, as of the
effective date of this Plan, constitute the Board of Directors of the Company
(the "Board of Directors" generally and as of the date hereof the "Incumbent
Board") cease for any reason to constitute at least a majority of the directors
constituting the Board of Directors, provided that any person becoming a
director subsequent to the effective date of this Plan whose election, or
nomination for election by the Company's shareholders, was approved by a vote of
at least three-quarters (3/4) of the then directors who are members of the
Incumbent Board (other than an election or nomination of an individual whose
initial assumption of office is (A) in connection with the acquisition by a
third person, including a "group" as such term is used in Section 13(d)(3) of
the 1934 Act, of beneficial ownership, directly or indirectly, of 20% or more of
the combined voting securities ordinarily having the right to vote for the
election of directors of the Company (unless such acquisition of beneficial
ownership was approved by a majority of the Board of Directors who are members
of the Incumbent Board), or (B) in connection with an actual or threatened
election contest relating to the election of the directors of the Company, as
such terms are used in Rule 14a-11 of Regulation 14A promulgated under the 1934
Act) shall be, for purposes of this Plan, considered as though such person were
a member of the Incumbent Board; or (2) if the stockholders of the Company
approve a merger, consolidation, recapitalization or reorganization of the
Company, reverse split of any class of voting securities of the Company, or an
acquisition of securities or assets by the Company, or the sale or disposition
by the Company of all or substantially all of the Company's assets, or if any
such transaction is consummated without stockholder approval, other than any
such transaction in which the holders of outstanding Company voting securities
immediately prior to the transaction receive, with respect to such Company
voting securities, voting securities of the surviving or transferee entity
representing more than 60 percent of the total voting power outstanding
 
                                      -5-
 
<PAGE>
 
immediately after such transaction, with the voting power of each such
continuing holder relative to other such continuing holders not substantially
altered in the transaction; or (3) if the stockholders of the Company approve a
plan of complete liquidation of the Company.
 
                  (g) DISABILITY. For purposes of this Plan, "Disability" means
an illness, injury, accident or condition of either a physical or psychological
nature as a result of which Mr. Rosenkranz is unable to perform substantially
the duties and responsibilities of his position for 180 days during a period of
365 consecutive calendar days.
 
                  (h) NOTICE OF ELECTION. If Mr. Rosenkranz makes an election
under Section 83(b) of the Code with respect to Restricted Stock, he must
provide a copy thereof to the Company within 10 days of the filing of such
election with the Internal Revenue Service.
 
7.       EVENTS AFFECTING OUTSTANDING OPTIONS
 
         7.1      QUALIFYING TERMINATION
 
                  If Mr. Rosenkranz's employment with the Company terminates in
connection with a Qualifying Termination, he (or his executor or administrator
or the person or persons to whom the Option is transferred by will or the
applicable laws of descent and distribution) may exercise all or any Options he
then holds or is granted subsequent to a Qualifying Termination at any time
prior to the expiration of their respective terms.
 
         7.2      TERMINATION OF EMPLOYMENT (OTHER THAN A QUALIFYING
TERMINATION)
 
                  If Mr. Rosenkranz's employment with the Company terminates
other than in connection with a Qualifying Termination, all Options will
continue to be exercisable for a period of ninety days following the termination
and shall thereupon terminate, unless the termination was by the Company for
Cause, in which case all such Options shall immediately terminate. In no event,
however, shall an Option remain exercisable beyond the latest date on which it
could have been exercised without regard to this Section 7.
 
8.       GENERAL PROVISIONS
 
         8.1      DOCUMENTATION OF AWARDS
 
                  Awards will be evidenced by such written instruments, if any,
as may be prescribed by the Committee from time to time.
 
         8.2      RIGHTS AS A STOCKHOLDER
 
                  Except as specifically provided by the Plan, the receipt of an
Award will not give Mr. Rosenkranz rights as a stockholder. He will obtain such
rights, subject to any limitations imposed by the Plan or the instrument
evidencing the Award, upon actual receipt of Company common stock.
 
         8.3      CONDITIONS ON DELIVERY OF STOCK
 
                  The Company will not be obligated to deliver any shares of
Company common stock pursuant to the Plan or to remove restrictions from shares
previously delivered under the Plan (a) until all conditions of the Award have
been satisfied or removed, (b) until, in the opinion of the Company's counsel,
all applicable federal and state laws and regulations have been complied with,
(c) if the outstanding Company common stock is at the time listed on any stock
exchange, until the shares to be delivered have been listed or authorized to be
listed on such exchange upon official notice of issuance, and (d) until all
other legal matters in connection with the issuance and delivery of such shares
have been approved by the
 
                                      -6-
 
<PAGE>
 
Company's counsel. If the sale of Company common stock has not been registered
under the Securities Act of 1933, as amended, the Company may require, as a
condition to exercise of the Award, such representations or agreements as
counsel for the Company may consider appropriate to avoid violation of such Act
and may require that the certificates evidencing such stock bear an appropriate
legend restricting transfer.
 
         8.4      TAX WITHHOLDING
 
                  Upon the lapse of restrictions on the Restricted Stock, the
delivery of any Deferred Shares and the exercise of any Options, the Committee
will have the right to require that Mr. Rosenkranz or his representative remit
to the Company an amount sufficient to satisfy the withholding requirements, or
make other arrangements satisfactory to the Committee with regard to such
requirements, prior to the delivery of any Company common stock. If and to the
extent that such withholding is required, the Committee may permit Mr.
Rosenkranz or such other person to elect at such time and in such manner as the
Committee provides to have the Company hold back from the shares to be
delivered, or to deliver to the Company, Company common stock having a value
calculated to satisfy the withholding requirement.
 
         8.5      NONTRANSFERABILITY OF AWARDS
 
                  Except as set forth below and in Section 6.2(c), Awards
granted hereunder may not be sold, assigned, transferred, pledged or otherwise
encumbered or disposed of other than by will or the laws of descent and
distribution. Notwithstanding the foregoing, if the Committee expressly so
provides in the applicable Award agreement (at the time of grant or at any time
thereafter), an Option granted hereunder may be transferred, for or without
consideration, by Mr. Rosenkranz to members of his "immediate family", to an
organization exempt from taxation under Section 501(c)(3) of the Code (a
"tax-exempt organization"), to a trust or trusts (each, a "family trust")
established for the exclusive benefit of one or more of the following: Mr.
Rosenkranz, a "controlled entity", one or more members of his "immediate family"
and/or any tax-exempt organizations, or to a partnership or limited liability
company in which one or more "immediate family" members, "controlled entities"
and/or any tax-exempt organizations are the only partners or members, as the
case may be. Any Option held by the transferee will continue to be subject to
the same terms and conditions that were applicable to the Option immediately
prior to the transfer, except that the Option will be transferable by the
transferee only by will or the laws of descent and distribution. For purposes
hereof, "immediate family" means Mr. Rosenkranz's children, stepchildren,
grandchildren, parents, stepparents, grandparents, spouse, siblings (including
half brothers and sisters), in-laws, and relationships arising because of legal
adoption.
 
         8.6      ADJUSTMENTS
 
                  (a) In the event of a stock dividend, stock split or
combination of shares, recapitalization or other change in the Company's
capitalization, or other distribution to common stockholders other than normal
cash dividends, after the effective date of the Plan, the Committee will make
any appropriate adjustments to the maximum number of shares that may be
delivered under the Plan under Section 4 hereof.
 
                  (b) In any event referred to in paragraph (a), the Committee
will also make any appropriate adjustments to the number and kind of shares of
stock or securities subject to Awards then outstanding or subsequently granted,
any exercise prices relating to Options and any other provision included in or
relating to the calculation of Awards affected by such change. The Committee may
also make appropriate adjustments to take into account, mergers, consolidations,
acquisitions, dispositions or similar corporate transactions if it is determined
by the Committee that adjustments are appropriate to avoid distortion in the
operation of the Plan and to preserve (but not enhance) the benefits under the
Plan.
 
         8.7      EMPLOYMENT RIGHTS, ETC.
 
                  Neither the adoption of the Plan nor the grant of Awards will
confer upon Mr. Rosenkranz any right to continued retention by the Company as an
employee or otherwise, or affect in any way the right of the Company to
terminate the employment relationship at any time.
 
         8.8      DEFERRAL OF PAYMENTS
 
                  The Committee may agree at any time, upon Mr. Rosenkranz's
request but subject to its discretion, to defer the date on which any payment
under an Award will be made.
 
                                      -7-
 
<PAGE>
 
         8.9      EXCISE TAX GROSS-UP
 
                  In the event it shall be determined by the Company's
independent auditors that any payment or distribution made, or benefit provided
(including, without limitation, the acceleration of any payment, distribution or
benefit and the acceleration of vesting of any restricted stock or deferred
shares), by the Company to or for the benefit of Mr. Rosenkranz (whether paid or
payable or distributed or distributable pursuant to the terms of this Plan or
otherwise, but determined without regard to any additional payments required
under this Section 8.9) (a "Payment") would be subject to the excise tax imposed
by Section 4999 of the Code (or any similar excise tax) or any interest or
penalties are incurred by Mr. Rosenkranz with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then Mr. Rosenkranz shall be
entitled to receive an additional payment (a "Gross-Up Payment") in an amount
such that after payment by Mr. Rosenkranz of all taxes (including any Excise
Tax, income tax or payroll tax) imposed upon the Gross-Up Payment and any
interest or penalties imposed with respect to such taxes, Mr. Rosenkranz retains
from the Gross-Up Payment an amount equal to the Excise Tax imposed upon the
Payments.
 
9.       EFFECT, DISCONTINUANCE, CANCELLATION, AMENDMENT AND TERMINATION
 
The Committee may, in accordance with applicable law and the rules of any
exchange or system on which the Company's securities are listed or traded, at
any time or times amend the Plan or any outstanding Award for any purpose which
may at the time be permitted by law, provided that (except to the extent
expressly required or permitted by the Plan) no such amendment will without Mr.
Rosenkranz's consent, amend the Plan or any outstanding Award so as to adversely
affect his rights under the Plan or any outstanding Award. Nothing in this Plan
shall modify or in any way affect any of the Awards previously received by Mr.
Rosenkranz under the Predecessor Plan.
 
                                      -8-