The Mediacom Communications Corporation
 
 
                               2003 Incentive Plan
                     (formerly the "1999 Stock Option Plan")
 
 
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                                TABLE OF CONTENTS
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ARTICLE 1 - Effective Date, Objectives and Duration............................1
   1.1      Effective Date of the Plan.........................................1
   1.2      Objectives of the Plan.............................................1
   1.3      Duration of the Plan...............................................1
 
ARTICLE 2 - Definitions........................................................1
   2.1      Affiliate..........................................................1
   2.2      Annual Incentive Award.............................................1
   2.3      Award..............................................................1
   2.4      Award Agreement....................................................2
   2.5      Board..............................................................2
   2.6      Code...............................................................2
   2.7      Committee..........................................................2
   2.8      Common Stock.......................................................2
   2.9      Covered Employee...................................................2
   2.10     Deferred Stock.....................................................2
   2.11     Disability.........................................................2
   2.12     Dividend Equivalent................................................2
   2.13     Eligible Person....................................................2
   2.14     Exchange Act.......................................................2
   2.15     Fair Market Value..................................................3
   2.16     Grant Date.........................................................3
   2.17     Grantee............................................................3
   2.18     Incentive Stock Option.............................................3
   2.19     including or includes..............................................3
   2.20     Mature Shares......................................................3
   2.21     Other Stock-Based Award............................................3
   2.22     Option.............................................................3
   2.23     Option Price.......................................................3
   2.24     Option Term........................................................3
   2.25     Performance-Based Exception........................................3
   2.26     Performance Measures...............................................3
   2.27     Performance Period.................................................4
   2.28     Performance Share and Performance Unit.............................4
   2.29     Period of Restriction..............................................4
   2.30     Person.............................................................4
   2.31     Restricted Shares..................................................4
   2.32     Rule 16b-3.........................................................4
   2.33     SEC................................................................4
   2.34     Section 16 Non-Employee Director...................................4
   2.35     Section 16 Person..................................................4
   2.36     Share..............................................................4
   2.37     Termination of Affiliation.........................................4
 
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   2.38     Wrongful Activities................................................4
 
ARTICLE 3 - Administration.....................................................5
   3.1      Committee..........................................................5
   3.2      Powers of Committee................................................5
 
ARTICLE 4 - Shares Subject to the Plan, Maximum Awards, and 162(m) Compliance..7
   4.1      Number of Shares Available for Grants..............................7
   4.2      Adjustments in Authorized Shares and Awards........................8
   4.3      Compliance with Section 162(m) of the Code.........................8
   4.4      Performance-Based Exception Under Section 162......................9
 
ARTICLE 5 - Eligibility and General Conditions of Awards......................11
   5.1      Eligibility.......................................................11
   5.2      Award Agreement...................................................11
   5.3      General Terms and Termination of Affiliation......................11
   5.4      Nontransferability of Awards......................................11
   5.5      Cancellation and Rescission of Awards.............................12
   5.6      Stand-Alone, Tandem and Substitute Awards.........................13
   5.7      Compliance with Rule 16b-3........................................13
   5.8      Deferral of Award Payouts.........................................14
 
ARTICLE 6 - Stock Options.....................................................14
   6.1      Grant of Options..................................................14
   6.2      Award Agreement...................................................15
   6.3      Option Price......................................................15
   6.4      Grant of Incentive Stock Options..................................15
   6.5      Payment...........................................................16
 
ARTICLE 7 - Restricted Shares.................................................17
   7.1      Grant of Restricted Shares........................................17
   7.2      Award Agreement...................................................17
   7.3      Consideration for Restricted Shares...............................17
   7.4      Effect of Forfeiture..............................................17
   7.5      Escrow; Legends...................................................17
 
ARTICLE 8 - Performance Units and Performance Shares..........................18
   8.1      Grant of Performance Units and Performance Shares.................18
   8.2      Value/Performance Goals...........................................18
   8.3      Earning of Performance Units and Performance Shares...............18
 
ARTICLE 9 - Deferred Stock....................................................19
   9.1      Grant of Deferred Stock...........................................19
   9.2      Delivery and Limitations..........................................19
   9.3      Forfeiture........................................................19
 
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ARTICLE 10 - Dividend Equivalents.............................................19
 
ARTICLE 11 - Other Stock-Based Awards.........................................20
 
ARTICLE 12 - Annual Incentive Awards..........................................20
   12.1      Annual Incentive Awards..........................................20
   12.2      Definitions......................................................20
   12.3      Determination of Amount of Annual Incentive Awards...............21
   12.4      Time of Payment of Amount Incentive Awards.......................22
 
ARTICLE 13 - Amendment, Modification, and Termination.........................22
   13.1      Amendment, Modification, and Termination.........................22
   13.2      Awards Previously Granted........................................22
 
ARTICLE 14 - Withholding......................................................22
   14.1      Required Withholding.............................................22
   14.2      Notification under Code Section 83(b)............................23
 
ARTICLE 15 - Additional Provisions............................................23
   15.1      Successors.......................................................24
   15.2      Gender and Number................................................24
   15.3      Severability.....................................................24
   15.4      Requirements of Law..............................................24
   15.5      Securities Law Compliance........................................24
   15.6      No Rights as a Stockholder.......................................24
   15.7      Nature of Payments...............................................25
   15.8      Non-Exclusivity of Plan..........................................25
   15.9      Governing Law....................................................25
   15.10     Share Certificates...............................................25
   15.11     Unfunded Status of Awards; Creation of Trusts....................25
   15.12     Affiliation......................................................25
   15.13     Participation....................................................26
   15.14     Military Service.................................................26
   15.15     Construction.....................................................26
   15.16     Headings.........................................................26
   15.17     Obligations......................................................26
   15.18     Stockholder Approval.............................................26
 
 
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                       MEDIACOM COMMUNICATIONS CORPORATION
                               2003 INCENTIVE PLAN
 
 
                                   ARTICLE 1.
                     EFFECTIVE DATE, OBJECTIVES AND DURATION
 
1.1 EFFECTIVE DATE OF THE PLAN. Mediacom Communications Corporation, a Delaware
corporation (the "Company"), established a stock option plan known as the
Mediacom Communications Corporation 1999 Stock Option Plan. The Company hereby
amends, restates and renames such plan (as so amended, the "Plan") as set forth
herein effective April 24, 2003 ("Effective Date"), subject to approval by the
Company's stockholders.
 
1.2 OBJECTIVES OF THE PLAN. The Plan is intended (a) to allow selected current
and employees and officers of and consultants to the Company and its Affiliates
to acquire or increase equity ownership in the Company, thereby strengthening
their commitment to the success of the Company and stimulating their efforts on
behalf of the Company, and to assist the Company and its Affiliates in
attracting new employees, officers and consultants and retaining existing
employees, officers and consultants, (b) to optimize the profitability and
growth of the Company and its Affiliates through incentives which are consistent
with the Company's goals, (c) to provide Grantees with an incentive for
excellence in individual performance, and (d) to promote teamwork among
employees, officers and consultants.
 
1.3 DURATION OF THE PLAN. The Plan shall commence on the Effective Date and
shall remain in effect, subject to the right of the Board of Directors of the
Company ("Board") to amend or terminate the Plan at any time pursuant to Article
13 hereof, until the earlier of April 23, 2013, or the date all Shares subject
to the Plan shall have been purchased or acquired and the restrictions on all
Restricted Stock granted under the Plan shall have lapsed, according to the
Plan's provisions.
 
                                   ARTICLE 2.
                                   DEFINITIONS
 
         Whenever used in the Plan, the following terms shall have the meanings
set forth below:
 
2.1 "AFFILIATE" means any Person that directly or indirectly, through one or
more intermediaries, controls, or is controlled by or is under common control
with the Company.
 
2.2 "ANNUAL INCENTIVE AWARD" means an annual cash bonus payable to a Grantee
under Article 12.
 
2.3 "AWARD" means Annual Incentive Awards, Options (including non-qualified
options and Incentive Stock Options), Restricted Shares, Performance Units
(which may be paid
 
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in cash or Shares), Performance Shares, Deferred Stock, Dividend Equivalents, or
Other Stock-Based Awards granted under the Plan.
 
2.4 "AWARD AGREEMENT" means the written agreement by which an Award shall be
evidenced.
 
2.5 "BOARD" means the Board of Directors of the Company.
 
2.6 "CODE" means the Internal Revenue Code of 1986, as amended from time to
time. References to a particular section of the Code include references to
regulations and rulings thereunder and to successor provisions.
 
2.7 "COMMITTEE" has the meaning set forth in Section 3.1(a).
 
2.8 "COMMON STOCK" means the Class A and/or Class B common stock, $0.01 par
value, of the Company.
 
2.9 "COVERED EMPLOYEE" means a Grantee who, as of the last day of the fiscal
year in which the value of an Award is recognizable as income for federal income
tax purposes, is one of the group of "covered employees," within the meaning of
Code Section 162(m), with respect to the Company.
 
2.10 "DEFERRED STOCK" means a right granted under Section 9.1 to receive Shares
at the end of a specified deferral period.
 
2.11 "DISABILITY" means, unless otherwise defined in an Award Agreement, or as
otherwise determined under procedures established by the Committee for purposes
of the Plan, a disability within the meaning of Section 22(e)(3) of the Code.
 
2.12 "DIVIDEND EQUIVALENT" means a right to receive payments equal to dividends
or property, if and when paid or distributed, on a specified number of Shares.
 
2.13 "ELIGIBLE PERSON" means any employee (including any officer) of, or
non-employee consultant to, the Company or any Affiliate, or potential employee
(including a potential officer) of, or non-employee consultant to, the Company
or an Affiliate. A former employee (or former officer) of the Company or any
Affiliate shall also be treated as an Eligible Person if and to the extent such
former employee (or former officer) is entitled to be granted any Award (or
Awards) under the Plan pursuant to the terms of an employment agreement or
similar contract between the former employee (or former officer) and the Company
or an Affiliate that was entered into prior to such former employee's (or former
officer's) Termination of Affiliation. Solely for purposes of Section 5.6(b),
the term Eligible Employee includes any current or former employee or
non-employee director of, or consultant to, an Acquired Entity (as defined in
Section 5.6(b)) who holds Acquired Entity Awards (as defined in Section 5.6(b))
immediately prior to the Acquisition Date (as defined in Section 5.6(b)) .
 
2.14 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from
time to time. References to a particular section of the Exchange Act include
references to successor provisions.
 
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2.15 "FAIR MARKET VALUE" means (a) with respect to any property other than
Shares, the fair market value of such property determined by such methods or
procedures as shall be established from time to time by the Committee, and (b)
with respect to Shares, unless otherwise determined in the good faith discretion
of the Committee, as of any date, (i) the closing price on the date of
determination reported in the table entitled "New York Stock Exchange Composite
Transactions" contained in The Wall Street Journal (or an equivalent successor
table) (or, if no sale of Shares was reported for such date, on the most recent
trading day prior to such date on which a sale of Shares was reported); (ii) if
the Shares are not listed on the New York Stock Exchange, the closing sales
price of the Shares on such other national exchange on which the Shares are
principally traded, or as reported by the National Market System, or similar
organization, as reported in the appropriate table or listing contained in The
Wall Street Journal, or if no such quotations are available, the average of the
high bid and low asked quotations in the over-the-counter market as reported by
the National Quotation Bureau Incorporated or similar organizations; or (iii) in
the event that there shall be no public market for the Shares, the fair market
value of the Shares as determined (which determination shall be conclusive) in
good faith by the Committee.
 
2.16 "GRANT DATE" means the date on which an Award is granted or, in the case of
a grant to an Eligible Person, such later date as specified in advance by the
Committee.
 
2.17 "GRANTEE" means a person who has been granted an Award.
 
2.18 "INCENTIVE STOCK OPTION" means an Option that is intended to meet the
requirements of Section 422 of the Code.
 
2.19 "INCLUDING" or "INCLUDES" means "including, without limitation," or
"includes, without limitation," respectively.
 
2.20 "MATURE SHARES" means Shares for which the holder thereof has good title,
free and clear of all liens and encumbrances, and which such holder either (i)
has held for at least six months or (ii) has purchased on the open market.
 
2.21 "OTHER STOCK-BASED AWARD" means a right, granted under Article 11 hereof,
that relates to or is valued by reference to Shares or other Awards relating to
Shares.
 
2.22 "OPTION" means an option granted under Article 6 of the Plan.
 
2.23 "OPTION PRICE" means the price at which a Share may be purchased by a
Grantee pursuant to an Option.
 
2.24 "OPTION TERM" means the period beginning on the Grant Date of an Option and
ending on the date such Option expires, terminates or is cancelled.
 
2.25 "PERFORMANCE-BASED EXCEPTION" means the performance-based exception from
the tax deductibility limitations of Code Section 162(m) contained in Code
Section 162(m)(4)(C) (including the special provisions for options thereunder).
 
2.26 "PERFORMANCE MEASURES" has the meaning set forth in Section 4.4.
 
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2.27 "PERFORMANCE PERIOD" means the time period during which performance goals
must be met.
 
2.28 "PERFORMANCE SHARE" and "PERFORMANCE UNIT" have the respective meanings set
forth in Article 8.
 
2.29 "PERIOD OF RESTRICTION" means the period during which Restricted Shares are
subject to forfeiture if the conditions specified in the Award Agreement are not
satisfied.
 
2.30 "PERSON" means any individual, sole proprietorship, partnership, joint
venture, limited liability company, trust, unincorporated organization,
association, corporation, institution, public benefit corporation, entity or
government instrumentality, division, agency, body or department.
 
2.31 "RESTRICTED SHARES" means Shares that are both subject to forfeiture and
are nontransferable if the Grantee does not satisfy the conditions specified in
the Award Agreement applicable to such Shares.
 
2.32 "RULE 16B-3" means Rule 16b-3 promulgated by the SEC under the Exchange
Act, as amended from time to time, together with any successor rule.
 
2.33 "SEC" means the United States Securities and Exchange Commission, or any
successor thereto.
 
2.34 "SECTION 16 NON-EMPLOYEE DIRECTOR" means a member of the Board who
satisfies the requirements to qualify as a "non-employee director" under Rule
16b-3.
 
2.35 "SECTION 16 PERSON" means a person who is subject to potential liability
under Section 16(b) of the Exchange Act with respect to transactions involving
equity securities of the Company.
 
2.36 "SHARE" means a share of Common Stock, and such other securities of the
Company as may be substituted or resubstituted for Shares pursuant to Section
4.2 hereof.
 
2.37 "TERMINATION OF AFFILIATION" occurs on the first day on which an individual
is for any reason no longer providing services to the Company or an Affiliate in
the capacity of an employee, officer or consultant or with respect to an
individual who is an employee or officer of or a consultant to an Affiliate, the
first day on which such entity ceases to be an Affiliate of the Company.
 
2.38 "WRONGFUL ACTIVITIES" mean
 
(a) the commission by the Grantee of a criminal act punishable as a felony with
respect to his employment with, or performance of services to, the Company or
any Affiliate; or
 
(b) the unlawful taking or use by the Grantee of any asset or property of the
Company or of any Affiliate; or
 
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(c) the breach by the Grantee of the terms of an Award Agreement or of any other
written agreement between the Grantee and the Company or a Affiliate (including
any predecessor entity or equity owner of such entity) insofar as such terms
prohibit or otherwise restrict the Grantee from (i) using or disclosing any
confidential information of the Company or any Affiliate, (ii) competing with,
or rendering services to any competitor of, the Company or any Affiliate or
(iii) making or publishing any statement (oral or written) that is negative or
derogatory in any way to the Company, any Affiliate or any of their respective
executive officers.
 
                                   ARTICLE 3.
                                 ADMINISTRATION
 
3.1 COMMITTEE.
 
(a) Subject to Section 3.2, the Plan shall be administered by a committee
("Committee"), the members of which shall be appointed by the Board from time to
time and may be removed by the Board from time to time. To the extent the Board
considers it desirable to comply with Rule 16b-3 or meet the Performance-Based
Exception, the Committee shall consist of two or more directors of the Company,
all of whom qualify as "outside directors" within the meaning of Code Section
162(m) and Section 16 Non-Employee Directors. The number of members of the
Committee shall from time to time be increased or decreased, and shall be
subject to such conditions, in each case if and to the extent the Board deems it
appropriate to permit transactions in Shares pursuant to the Plan to satisfy
such conditions of Rule 16b-3 and the Performance-Based Exception as then in
effect.
 
(b) The Committee may delegate to the chief executive officer of the Company any
or all of the authority of the Committee with respect to Awards to Grantees,
other than Grantees who are executive officers, or are (or are expected to be)
Covered Employees and/or are Section 16 Persons at the time any such delegated
authority is exercised.
 
3.2 POWERS OF COMMITTEE. Subject to and consistent with the provisions of the
Plan, the Committee has full and final authority and sole discretion as follows:
 
(a) to determine when, to whom and in what types and amounts Awards should be
granted;
 
(b) to grant Awards to Eligible Persons in any number, and to determine the
terms and conditions applicable to each Award (including the number of Shares or
the amount of cash or other property to which an Award will relate, any exercise
price, grant price or purchase price, any limitation or restriction, any
schedule for or performance conditions relating to the earning of the Award or
the lapse of limitations, forfeiture restrictions, restrictions on
exercisability or transferability, any performance goals including those
relating to the Company and/or an Affiliate and/or any division thereof and/or
an individual, and/or vesting based on the passage of time, based in each case
on such considerations as the Committee shall determine);
 
(c) to determine the benefit payable under any Performance Unit, Performance
Share, Dividend Equivalent, or Other Stock-Based Award and to determine whether
any performance or vesting conditions have been satisfied;
 
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(d) to determine whether or not specific Awards shall be granted in connection
with other specific Awards, and if so, whether they shall be exercisable
cumulatively with, or alternatively to, such other specific Awards and all other
matters to be determined in connection with an Award;
 
(e) to determine the Option Term;
 
(f) to determine the amount, if any, that a Grantee shall pay for Restricted
Shares, whether to permit or require the payment of cash dividends thereon to be
deferred and the terms related thereto, when Restricted Shares (including
Restricted Shares acquired upon the exercise of an Option) shall be forfeited
and whether such shares shall be held in escrow;
 
(g) to determine whether, to what extent and under what circumstances an Award
may be settled in, or the exercise price of an Award may be paid in, cash,
Shares, other Awards or other property, or an Award may be accelerated, vested,
canceled, forfeited or surrendered or any terms of the Award may be waived, and
to accelerate the exercisability of, and to accelerate or waive any or all of
the terms and conditions applicable to, any Award or any group of Awards for any
reason and at any time;
 
(h) to determine with respect to Awards granted to Eligible Persons whether, to
what extent and under what circumstances cash, Shares, other Awards, other
property and other amounts payable with respect to an Award will be deferred,
either at the election of the Grantee or if and to the extent specified in the
Award Agreement automatically or at the election of the Committee (whether to
limit loss of deductions pursuant to Code Section 162(m) or otherwise);
 
(i) to offer to exchange or buy out any previously granted Award for a payment
in cash, Shares or other Award;
 
(j) to construe and interpret the Plan and to make all determinations, including
factual determinations, necessary or advisable for the administration of the
Plan;
 
(k) to make, amend, suspend, waive and rescind rules and regulations relating to
the Plan;
 
(l) to appoint such agents as the Committee may deem necessary or advisable to
administer the Plan;
 
(m) to determine the terms and conditions of all Award Agreements applicable to
Eligible Persons (which need not be identical) and, with the consent of the
Grantee, to amend any such Award Agreement at any time, among other things, to
permit transfers of such Awards to the extent permitted by the Plan; provided
that the consent of the Grantee shall not be required for any amendment (i)
which does not adversely affect the rights of the Grantee, or (ii) which is
necessary or advisable (as determined by the Committee) to carry out the purpose
of the Award as a result of any new applicable law or change in an existing
applicable law, or (iii) to the extent the Award Agreement specifically permits
amendment without consent;
 
(n) to cancel, with the consent of the Grantee, outstanding Awards and to grant
new Awards in substitution therefor;
 
                                       A-6
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(o) to impose such additional terms and conditions upon the grant, exercise or
retention of Awards as the Committee may, before or concurrently with the grant
thereof, deem appropriate, including limiting the percentage of Awards which may
from time to time be exercised by a Grantee;
 
(p) to make adjustments in the terms and conditions of, and the criteria in,
Awards in recognition of unusual or nonrecurring events (including events
described in Section 4.2) affecting the Company or an Affiliate or the financial
statements of the Company or an Affiliate, or in response to changes in
applicable laws, regulations or accounting principles; provided, however, that
in no event shall such adjustment increase the value of an Award for a person
expected to be a Covered Employee for whom the Committee desires to have the
Performance-Based Exception apply;
 
(q) to correct any defect or supply any omission or reconcile any inconsistency,
and to construe and interpret the Plan, the rules and regulations, and Award
Agreement or any other instrument entered into or relating to an Award under the
Plan; and
 
(r) to take any other action with respect to any matters relating to the Plan
for which it is responsible and to make all other decisions and determinations
as may be required under the terms of the Plan or as the Committee may deem
necessary or advisable for the administration of the Plan.
 
         Any action of the Committee with respect to the Plan shall be final,
conclusive and binding on all persons, including the Company, its Affiliates,
any Grantee, any person claiming any rights under the Plan from or through any
Grantee, and stockholders, except to the extent the Committee may subsequently
modify, or take further action not consistent with, its prior action. If not
specified in the Plan, the time at which the Committee must or may make any
determination shall be determined by the Committee, and any such determination
may thereafter be modified by the Committee. The express grant of any specific
power to the Committee, and the taking of any action by the Committee, shall not
be construed as limiting any power or authority of the Committee. The Committee
may delegate to officers or managers of the Company or any Affiliate the
authority, subject to such terms as the Committee shall determine, to perform
specified functions under the Plan (subject to Sections 4.3 and 5.7(c)).
 
                                   ARTICLE 4.
        SHARES SUBJECT TO THE PLAN, MAXIMUM AWARDS, AND 162(M) COMPLIANCE
 
4.1 NUMBER OF SHARES AVAILABLE FOR GRANTS. Prior to the Effective Date (i) 9
million Shares were authorized for issuance under the terms of the 1999 Stock
Option Plan (the "Prior Plan") and (ii) the Company had awarded other stock
options, which were not granted under the Prior Plan ("Non-Plan Options"), for
an additional 7.2 million Shares. Subject to adjustment as provided in Section
4.2, and except as provided in Section 5.6(b) the number of Shares hereby
reserved for delivery under the Plan shall be 21 million (which represents the
sum of the 9 million Shares available under the Prior Plan plus the 7.2 million
Shares subject to Non-Plan Options plus an additional 4.8 million Shares
available for issuance under the Plan). Except as provided in the following
paragraph, any Shares that have been or will be issued pursuant to awards
 
                                       A-7
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granted under the Prior Plan or pursuant to the Non-Plan Options will be charged
against the Shares available for issuance under this Plan (including Shares
issued prior to the Effective Date).
 
         If any Shares subject to an Award granted hereunder (or under the Prior
Plan) or subject to a Non-Plan Option are forfeited or such Award or Non-Plan
Option otherwise terminates without the delivery of such Shares, the Shares
subject to such Award or Non-Plan Option, to the extent of any such forfeiture
or termination, shall again be available for grant under the Plan. If any Shares
subject to an Award granted hereunder (or under the Prior Plan) or subject to a
Non-Plan Option are withheld, applied as payment, or sold and the proceeds
thereof applied as payment in connection with the exercise of an Award or
Non-Plan Option or the withholding or payment of taxes related thereto
("Returned Shares"), such Returned Shares, shall again be available for grant
under the Plan.
 
         The Committee shall from time to time determine the appropriate
methodology for calculating the number of Shares to which an Award relates
pursuant to the Plan.
 
         Shares delivered pursuant to the Plan may be, in whole or in part,
authorized and unissued Shares, or treasury Shares, including Shares repurchased
by the Company for purposes of the Plan.
 
4.2 ADJUSTMENTS IN AUTHORIZED SHARES AND AWARDS. In the event that the Committee
determines that any dividend or other distribution (whether in the form of cash,
Shares, or other property), recapitalization, forward or reverse stock split,
subdivision, consolidation or reduction of capital, reorganization, merger,
consolidation, scheme of arrangement, split-up, spin-off or combination
involving the Company or repurchase or exchange of Shares or other securities of
the Company or other rights to purchase Shares or other securities of the
Company, or other similar corporate transaction or event affects the Shares such
that any adjustment is determined by the Committee to be appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan, then the Committee shall, in such manner as
it may deem equitable, adjust any or all of (a) the number and type of Shares
(or other securities or property) with respect to which Awards may be granted,
(b) the number and type of Shares (or other securities or property) subject to
outstanding Awards, (c) the grant or exercise price with respect to any Award
or, if deemed appropriate, make provision for a cash payment to the holder of an
outstanding Award, (d) the number and kind of Shares of outstanding Restricted
Shares or relating to any other outstanding Award in connection with which
Shares are subject, and (e) the number of Shares with respect to which Awards
may be granted to a Grantee, as set forth in Section 4.3; provided, in each
case, that with respect to Awards of Incentive Stock Options intended to
continue to qualify as Incentive Stock Options after such adjustment, no such
adjustment shall be authorized to the extent that such adjustment would cause
the Incentive Stock Option to violate Section 424(a) of the Code; and provided
further that the number of Shares subject to any Award denominated in Shares
shall always be a whole number.
 
4.3 COMPLIANCE WITH SECTION 162(M) OF THE CODE. To the extent the Committee
determines that compliance with the Performance-Based Exception is desirable
with respect to an Award (including Annual Incentive Awards under Article 12),
the following shall apply:
 
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(a) SECTION 162(M) COMPLIANCE. Each Award that is intended to meet the
Performance-Based Exception and is granted to a person the Committee believes
likely to be a Covered Employee shall comply with the requirements of the
Performance-Based Exception; provided, however, that to the extent Code Section
162(m) requires periodic shareholder approval of performance measures, such
approval shall not be required for the continuation of the Plan or as a
condition to grant any Award hereunder after such approval is required. In
addition, in the event that changes are made to Code Section 162(m) to permit
flexibility with respect to the Award or Awards available under the Plan, the
Committee may, subject to this Section 4.3, make any adjustments to such Awards
as it deems appropriate.
 
(b) ANNUAL INDIVIDUAL LIMITATIONS. No Grantee may be granted Awards (other than
Awards that cannot be satisfied in Shares) in any calendar year with respect to
more than 4,000,000 Shares, subject to adjustment as provided in Section 4.2 and
except as otherwise provided in Section 5.6(b). The maximum value of Awards to
be settled in cash or property (other than Shares) that may be granted in any
calendar year to any Grantee who is expected to be a Covered Employee
(regardless of when such Award is settled) shall not exceed $5,000,000. (Thus,
Awards that accrue over more than one calendar year (or fiscal year) may exceed
the one-year grant limit in the prior sentence at the time of payment or
settlement.)
 
4.4 PERFORMANCE-BASED EXCEPTION UNDER SECTION 162(M). Unless and until the
Committee proposes for stockholder vote and stockholders approve a change in the
general performance measures set forth in this Section 4.4, for Awards (other
than Options) designed to qualify for the Performance-Based Exception, the
objective Performance Measure(s) shall be chosen from among the following:
 
(a) Earnings (either in the aggregate or on a per-share basis);
 
(b) Net income or loss (either in the aggregate or on a per-share basis);
 
(c) Operating income or loss;
 
(d) Operating profit;
 
(e) Annual cash flow provided by operations (including Operating Cash Flow as
defined in Section 12.2(d));
 
(f) Free cash flow (defined as Operating Cash Flow less interest expense and
capital spending), either in the aggregate on a per-share basis;
 
(g) Costs;
 
(h) Gross revenues;
 
(i) Reductions in expense levels in each case, where applicable, determined
either on a Company-wide basis or in respect of any one or more business units;
 
(j) Operating and maintenance cost management and employee productivity;
 
                                       A-9
<PAGE>
 
(k) Stockholder returns (including return on assets, investments, equity, or
gross sales);
 
(l) Return measures (including return on assets, equity, or sales);
 
(m) Share price (including growth measures and total stockholder return or
attainment by the Shares of a specified value for a specified period of time);
 
(n) Net economic value;
 
(o) Economic value added;
 
(p) Aggregate product unit and pricing targets;
 
(q) Strategic business criteria, consisting of one or more objectives based on
meeting specified revenue, market share, market penetration, geographic business
expansion goals, objectively identified project milestones, production volume
levels, cost targets, and goals relating to acquisitions or divestitures;
 
(r) Achievement of business or operational goals such as market share and/or
business development;
 
(s) Results of customer satisfaction surveys;
 
(t) Safety record;
 
(u) Network and service reliability; and/or
 
(v) Debt ratings, debt leverage and debt service;
 
provided that applicable performance measures may be applied on a pre- or
post-tax basis; and provided further that the Committee may, on the Grant Date
of an Award intended to comply with the Performance-Based Exception, and in the
case of other grants, at any time, provide that the formula for such Award may
include or exclude items to measure specific objectives, such as losses from
discontinued operations, extraordinary gains or losses, the cumulative effect of
accounting changes, acquisitions or divestitures, foreign exchange impacts and
any unusual, nonrecurring gain or loss. For Awards intended to comply with the
Performance-Based Exception, the Committee shall set the Performance Measures
within the time period prescribed by Section 162(m) of the Code. The levels of
performance required with respect to Performance Measures may be expressed in
absolute or relative levels and may be based upon a set increase, set positive
result, maintenance of the status quo, set decrease or set negative result.
Performance Measures may differ for Awards to different Grantees. The Committee
shall specify the weighting (which may be the same or different for multiple
objectives) to be given to each performance objective for purposes of
determining the final amount payable with respect to any such Award. Any one or
more of the Performance Measures may apply to the Grantee, a department, unit,
division or function within the Company or any one or more Affiliates; and may
apply either alone or relative to the performance of other businesses or
individuals (including industry or general market indices).
 
                                      A-10
<PAGE>
 
         The Committee shall have the discretion to adjust the determinations of
the degree of attainment of the pre-established performance goals; provided,
however, that Awards which are designed to qualify for the Performance-Based
Exception may not (unless the Committee determines to amend the Award so that it
no longer qualified for the Performance-Based Exception) be adjusted upward (the
Committee shall retain the discretion to adjust such Awards downward). The
Committee may not, unless the Committee determines to amend the Award so that it
no longer qualifies for the Performance-Based Exception, delegate any
responsibility with respect to Awards intended to qualify for the
Performance-Based Exception. All determinations by the Committee as to the
achievement of the Performance Measure(s) shall be in writing prior to payment
of the Award.
 
         In the event that applicable laws change to permit Committee discretion
to alter the governing performance measures without obtaining stockholder
approval of such changes, and still qualify for the Performance-Based Exception,
the Committee shall have sole discretion to make such changes without obtaining
stockholder approval.
 
                                   ARTICLE 5.
                  ELIGIBILITY AND GENERAL CONDITIONS OF AWARDS
 
5.1 ELIGIBILITY. The Committee may in its discretion grant Awards to any
Eligible Person, whether or not he or she has previously received an Award.
 
5.2 AWARD AGREEMENT. To the extent not set forth in the Plan, the terms and
conditions of each Award shall be set forth in an Award Agreement.
 
5.3 GENERAL TERMS AND TERMINATION OF AFFILIATION. The Committee may impose on
any Award or the exercise or settlement thereof, at the date of grant or,
subject to the provisions of Section 13.2, thereafter, such additional terms and
conditions not inconsistent with the provisions of the Plan as the Committee
shall determine, including terms requiring forfeiture, acceleration or pro-rata
acceleration of Awards in the event of a Termination of Affiliation by the
Grantee. Except as may be required under the Delaware General Corporation Law,
Awards may be granted for no consideration other than prior and future services.
Except as provided in an Award Agreement or as otherwise determined by the
Committee pursuant to this Section 5.3, all Options that have not been
exercised, or any other Awards that remain subject to a risk of forfeiture or
which are not otherwise vested, or which have outstanding Performance Periods,
at the time of a Termination of Affiliation shall be forfeited to the Company.
 
5.4 NONTRANSFERABILITY OF AWARDS.
 
(a) Each Award and each right under any Award shall be exercisable only by the
Grantee during the Grantee's lifetime, or, if permissible under applicable law,
by the Grantee's guardian or legal representative or by a transferee receiving
such Award pursuant to a qualified domestic relations order (a "QDRO") as
defined in the Code or Title I of the Employee Retirement Income Security Act of
1974 as amended, or the rules thereunder.
 
(b) No Award (prior to the time, if applicable, Shares are delivered in respect
of such Award), and no right under any Award, may be assigned, alienated,
pledged, attached, sold or otherwise transferred or encumbered by a Grantee
 
                                      A-11
<PAGE>
 
otherwise than by will or by the laws of descent and distribution (or in the
case of Restricted Shares, to the Company) or pursuant to a QDRO, and any such
purported assignment, alienation, pledge, attachment, sale, transfer or
encumbrance shall be void and unenforceable against the Company or any
Affiliate; provided that the designation of a beneficiary to receive benefits in
the event of the Grantee's death shall not constitute an assignment, alienation,
pledge, attachment, sale, transfer or encumbrance.
 
(c) Notwithstanding subsections (a) and (b) above, to the extent provided in the
Award Agreement, Deferred Stock and Awards other than Incentive Stock Options,
may be transferred, without consideration, to a Permitted Transferee. For this
purpose, a "Permitted Transferee" in respect of any Grantee means any member of
the Immediate Family of such Grantee, any trust of which all of the primary
beneficiaries are such Grantee or members of his or her Immediate Family, or any
partnership (including limited liability companies and similar entities) of
which all of the partners or members are such Grantee or members of his or her
Immediate Family; and the "Immediate Family" of a Grantee means the Grantee's
spouse, children, stepchildren, grandchildren, parents, stepparents, siblings,
grandparents, nieces and nephews or the spouse of any of the foregoing
individudals. Such Award may be exercised by such transferee in accordance with
the terms of such Award. If so determined by the Committee, a Grantee may, in
the manner established by the Committee, designate a beneficiary or
beneficiaries to exercise the rights of the Grantee, and to receive any
distribution with respect to any Award upon the death of the Grantee. A
transferee, beneficiary, guardian, legal representative or other person claiming
any rights under the Plan from or through any Grantee shall be subject to and
consistent with the provisions of the Plan and any applicable Award Agreement,
except to the extent the Plan and Award Agreement otherwise provide with respect
to such persons, and to any additional restrictions or limitations deemed
necessary or appropriate by the Committee.
 
(d) Nothing herein shall be construed as requiring the Committee to honor a QDRO
except to the extent required under applicable law.
 
5.5 CANCELLATION AND RESCISSION OF AWARDS. Unless the Award Agreement specifies
otherwise, the Committee may cancel, rescind, suspend, withhold, or otherwise
limit or restrict any unexercised Award at any time if the Grantee is not in
compliance with all applicable provisions of the Award Agreement and the Plan or
if the Grantee has a Termination of Affiliation.
 
(a) If and to the extent provided in the Award Agreement, in the event that a
Grantee has a Termination of Affiliation that is initiated by the Company or an
Affiliate because the Grantee has engaged in any Wrongful Activities or if at
any time the Committee determines that the Grantee has engaged in any Wrongful
Activity whether before or after his Termination of Affiliation, then, in either
of such events, any and all outstanding Awards to such Grantee hereunder shall
automatically terminate and be cancelled upon such Termination of Affiliation or
determination by the Committee, as the case may be, regardless of the extent to
which such Awards are or were otherwise vested, accrued or exercisable.
 
(b) If and to the extent provided in an Award Agreement, upon the exercise or
settlement an Award at any time whether before or after the Grantee's
 
                                      A-12
<PAGE>
 
Termination of Affiliation, the Grantee shall certify on a form acceptable to
the Committee that the Grantee has not engaged in any Wrongful Activities. In
addition, to the extent provided in the Award Agreement, the exercise or
settlement of any Award shall be cancelled and rescinded if the Committee
determines that the Grantee has engaged in any Wrongful Activities at any time
prior to the exercise or settlement of such Award or at any time during the
period, not to exceed one-year, following the exercise or settlement of such
Award. In the event the exercise or settlement of an Award is cancelled or
rescinded pursuant to this subsection (b), the Grantee shall be required to
return to the Company any cash, Shares or other property he received upon
exercise or settlement of such Award (or, if the Grantee has sold such Shares or
other property, any gain he realized upon the sale of such Shares or other
property) and upon return of any such Shares or other property to the Company,
the Company shall return to the Grantee the lesser of (i) the amount that the
Grantee had paid to the Company for such Shares or other property or (ii) the
Fair Market Value of such Shares or other property determined as of the date
such Shares or property are returned to the Company.
 
5.6 STAND-ALONE, TANDEM AND SUBSTITUTE AWARDS.
 
(a) Awards granted under the Plan may, in the discretion of the Committee, be
granted either alone or in addition to, in tandem with, or in substitution for,
any other Award granted under the Plan or any award or benefit granted by the
Company or any Affiliate under any other plan, program, arrangement, contract or
agreement (a "Non-Plan Award"); provided that if the stand-alone, tandem or
substitute Award is intended to qualify for the Performance-Based Exception, it
must separately satisfy the requirements of the Performance-Based Exception. If
an Award is granted in substitution for another Award or any Non-Plan Award, the
Committee shall require the surrender of such other Award or Non-Plan Award in
consideration for the grant of the new Award. Awards granted in addition to or
in tandem with other Awards or Non-Plan Awards may be granted either at the same
time as or at a different time from the grant of such other Awards or Non-Plan
Awards.
 
(b) The Committee may, in its discretion and on such terms and conditions as the
Committee considers appropriate in the circumstances, grant Awards under the
Plan ("Substitute Awards") in substitution for stock and stock-based awards
("Acquired Entity Awards") held by current and former employees or non-employee
directors of, or consultants to, another corporation or entity who become
Eligible Persons as the result of a merger or consolidation of the employing
corporation or other entity (the "Acquired Entity") with the Company or an
Affiliate or the acquisition by the Company or an Affiliate of property or stock
of the Acquired Entity immediately prior to such merger, consolidation or
acquisition ("Acquisition Date") in order to preserve for the Grantee the
economic value of all or a portion of such Acquired Entity Award at such price
as the Committee determines necessary to achieve preservation of economic value.
The limitations of Sections 4.1 and 4.3 on the number of Shares reserved or
available for grants shall not apply to Substitute Awards granted under this
subsection (b).
 
5.7 COMPLIANCE WITH RULE 16B-3.
 
(a) SIX-MONTH HOLDING PERIOD ADVICE. Unless a Grantee could otherwise dispose of
or exercise a derivative security or dispose of Shares delivered under the Plan
without incurring liability under Section 16(b) of the Exchange Act, the
Committee may advise or require a Grantee to comply with the following in order
 
                                      A-13
<PAGE>
 
to avoid incurring liability under Section 16(b): (i) at least six months must
elapse from the date of acquisition of a derivative security under the Plan to
the date of disposition of the derivative security (other than upon exercise or
conversion) or its underlying equity security, and (ii) Shares granted or
awarded under the Plan other than upon exercise or conversion of a derivative
security must be held for at least six months from the date of grant of an
Award.
 
(b) REFORMATION TO COMPLY WITH EXCHANGE ACT RULES. To the extent the Committee
determines that a grant or other transaction by a Section 16 Person should
comply with applicable provisions of Rule 16b-3 (except for transactions
exempted under alternative Exchange Act rules), the Committee shall take such
actions as necessary to make such grant or other transaction so comply, and if
any provision of this Plan or any Award Agreement relating to a given Award does
not comply with the requirements of Rule 16b-3 as then applicable to any such
grant or transaction, such provision will be construed or deemed amended, if the
Committee so determines, to the extent necessary to conform to the then
applicable requirements of Rule 16b-3.
 
(c) RULE 16B-3 ADMINISTRATION. Any function relating to a Section 16 Person
shall be performed solely by the Committee if necessary to ensure compliance
with applicable requirements of Rule 16b-3, to the extent the Committee
determines that such compliance is desired. Each member of the Committee or
person acting on behalf of the Committee shall be entitled to, in good faith,
rely or act upon any report or other information furnished to him by any
officer, manager or other employee of the Company or any Affiliate, the
Company's independent certified public accountants or any executive compensation
consultant or attorney or other professional retained by the Company to assist
in the administration of the Plan.
 
5.8 DEFERRAL OF AWARD PAYOUTS. The Committee may permit a Grantee to defer, or
if and to the extent specified in an Award Agreement require the Grantee to
defer, receipt of the payment of cash or the delivery of Shares that would
otherwise be due by virtue of the exercise of an Option, the lapse or waiver of
restrictions with respect to Restricted Shares, the satisfaction of any
requirements or goals with respect to Performance Units or Performance Shares,
the lapse or waiver of the deferral period for Deferred Stock, or the lapse or
waiver of restrictions with respect to Other Stock-Based Awards. If any such
deferral is required or permitted, the Committee shall, in its sole discretion,
establish rules and procedures for such payment deferrals. Except as otherwise
provided in an Award Agreement, any payment or any Shares that are subject to
such deferral shall be made or delivered to the Grantee as specified in the
Award Agreement or pursuant to the Grantee's deferral election.
 
                                   ARTICLE 6.
                                  STOCK OPTIONS
 
6.1 GRANT OF OPTIONS. Subject to and consistent with the provisions of the Plan,
Options may be granted to any Eligible Person in such number, and upon such
terms, and at any time and from time to time as shall be determined by the
Committee.
 
         In addition, if and the extent permitted by the Committee, an Eligible
Person may elect (an "Option Election") at such times and in accordance with
 
                                      A-14
<PAGE>
 
such rules and procedures adopted by the Committee, to receive all or any
portion of his salary and/or bonus (including any cash Award payable under this
Plan) in the form of an Award of Options having a fair market value (as
determined by the Committee using a Black-Scholes option pricing model or
similar option pricing model, applied on the basis of such risk-free interest
rate, expected option life, volatility, average stock price, and other
applicable parameters, or formula therefor, as the Committee in its sole
discretion deems appropriate) equal to the amount of salary and/or bonus subject
to such Option Election.
 
6.2 AWARD AGREEMENT. Each Option grant shall be evidenced by an Award Agreement
that shall specify the Option Price, the Option Term, the number of Shares to
which the Option pertains, the time or times at which such Option shall be
exercisable and such other provisions as the Committee shall determine.
 
6.3 OPTION PRICE. The Option Price of an Option under this Plan shall be
determined in the sole discretion of the Committee. Subject to the adjustment
allowed under Section 4.2, neither the Committee nor the Board shall have the
authority or discretion to change the Option Price of any outstanding Option.
 
6.4 GRANT OF INCENTIVE STOCK OPTIONS. At the time of the grant of any Option,
the Committee may in its discretion designate that such Option shall be made
subject to additional restrictions to permit it to qualify as an Incentive Stock
Option. Any Option designated as an Incentive Stock Option:
 
(a) shall be granted only to an employee of the Company or a Subsidiary
Corporation (as defined below);
 
(b) shall have an Option Price of not less than 100% of the Fair Market Value of
a Share on the Grant Date, and, if granted to a person who owns capital stock
(including stock treated as owned under Section 424(d) of the Code) possessing
more than 10% of the total combined voting power of all classes of capital stock
of the Company or any Subsidiary Corporation (a "10% Owner"), have an Option
Price not less than 110% of the Fair Market Value of a Share on its Grant Date;
 
(c) shall be for a period of not more than 10 years (five years if the Grantee
is a 10% Owner) from its Grant Date, and shall be subject to earlier termination
as provided herein or in the applicable Award Agreement;
 
(d) shall not have an aggregate Fair Market Value (as of the Grant Date) of the
Shares with respect to which Incentive Stock Options (whether granted under the
Plan or any other stock option plan of the Grantee's employer or any parent or
Subsidiary Corporation ("Other Plans")) are exercisable for the first time by
such Grantee during any calendar year ("Current Grant"), determined in
accordance with the provisions of Section 422 of the Code, which exceeds
$100,000 (the "$100,000 Limit");
 
(e) shall, if the aggregate Fair Market Value of the Shares (determined on the
Grant Date) with respect to the Current Grant and all Incentive Stock Options
previously granted under the Plan and any Other Plans which are exercisable for
the first time during a calendar year ("Prior Grants") would exceed the $100,000
 
                                      A-15
<PAGE>
 
Limit, be, as to the portion in excess of the $100,000 Limit, exercisable as a
separate option that is not an Incentive Stock Option at such date or dates as
are provided in the Current Grant;
 
(f) shall require the Grantee to notify the Committee of any disposition of any
Shares delivered pursuant to the exercise of the Incentive Stock Option under
the circumstances described in Section 421(b) of the Code (relating to holding
periods and certain disqualifying dispositions) ("Disqualifying Disposition"),
within 10 days of such a Disqualifying Disposition;
 
(g) shall by its terms not be assignable or transferable other than by will or
the laws of descent and distribution and may be exercised, during the Grantee's
lifetime, only by the Grantee; provided, however, that the Grantee may, to the
extent provided in the Plan in any manner specified by the Committee, designate
in writing a beneficiary to exercise his or her Incentive Stock Option after the
Grantee's death; and
 
(h) shall, if such Option nevertheless fails to meet the foregoing requirements,
or otherwise fails to meet the requirements of Section 422 of the Code for an
Incentive Stock Option, be treated for all purposes of this Plan, except as
otherwise provided in subsections (d) and (e) above, as an Option that is not an
Incentive Stock Option.
 
         For purposes of this Section 6.4, "Subsidiary Corporation" means a
corporation other than the Company in an unbroken chain of corporations
beginning with the Company if, at the time of granting the Option, each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain. Notwithstanding the
foregoing and Section 3.2, the Committee may, without the consent of the
Grantee, at any time before the exercise of an Option (whether or not an
Incentive Stock Option), take any action necessary to prevent such Option from
being treated as an Incentive Stock Option.
 
6.5 PAYMENT. Except as otherwise provided by the Committee in an Award
Agreement, Options shall be exercised by the delivery of a written notice of
exercise to the Company, setting forth the number of Shares with respect to
which the Option is to be exercised, accompanied by full payment for the Shares
made by any one or more of the following means:
 
(a) cash, personal check or wire transfer;
 
(b) Mature Shares, valued at their Fair Market Value on the date of exercise;
 
(c) with the approval of the Committee, Restricted Shares held by the Grantee
for at least six months prior to the exercise of the Option, each such share
valued at the Fair Market Value of a Share on the date of exercise; or
 
(d) subject to applicable law (including the prohibited loan provisions of
Section 402 of the Sarbanes-Oxley Act of 2002), through the sale of the Shares
acquired on exercise of the Option through a broker-dealer to whom the Grantee
has submitted an irrevocable notice of exercise and irrevocable instructions to
deliver promptly to the Company the amount of sale or loan proceeds sufficient
to pay for such Shares, together with, if requested by the Company, the amount
of federal, state, local or foreign withholding taxes payable by Grantee by
reason of such exercise.
 
                                      A-16
<PAGE>
 
         The Committee may in its discretion specify that, if any Restricted
Shares ("Tendered Restricted Shares") are used to pay the Option Price, (x) all
the Shares acquired on exercise of the Option shall be subject to the same
restrictions as the Tendered Restricted Shares, determined as of the date of
exercise of the Option, or (y) a number of Shares acquired on exercise of the
Option equal to the number of Tendered Restricted Shares shall be subject to the
same restrictions as the Tendered Restricted Shares, determined as of the date
of exercise of the Option.
 
         At the discretion of the Committee and subject to applicable law
(including the prohibited loan provisions of Section 402 of the Sarbanes-Oxley
Act of 2002), the Company may loan a Grantee all or any portion of the amount
payable by the Grantee to the Company upon exercise of the Option.
 
                                   ARTICLE 7.
                                RESTRICTED SHARES
 
7.1 GRANT OF RESTRICTED SHARES. Subject to and consistent with the provisions of
the Plan, the Committee, at any time and from time to time, may grant Restricted
Shares to any Eligible Person in such amounts as the Committee shall determine.
 
7.2 AWARD AGREEMENT. Each grant of Restricted Shares shall be evidenced by an
Award Agreement that shall specify the Period(s) of Restriction, the number of
Restricted Shares granted, and such other provisions as the Committee shall
determine. The Committee may impose such conditions and/or restrictions on any
Restricted Shares granted pursuant to the Plan as it may deem advisable,
including restrictions based upon the achievement of specific performance goals,
time-based restrictions on vesting following the attainment of the performance
goals, and/or restrictions under applicable securities laws; provided that such
conditions and/or restrictions may lapse, if so determined by the Committee, in
the event of the Grantee's Termination of Affiliation due to death, disability,
normal or approved early retirement, or involuntary termination by the Company
or an Affiliate without "cause".
 
7.3 CONSIDERATION FOR RESTRICTED SHARES. The Committee shall determine the
amount, if any, that a Grantee shall pay for Restricted Shares.
 
7.4 EFFECT OF FORFEITURE. If Restricted Shares are forfeited, and if the Grantee
was required to pay for such shares or acquired such Restricted Shares upon the
exercise of an Option, the Grantee shall be deemed to have resold such
Restricted Shares to the Company at a price equal to the lesser of (x) the
amount paid by the Grantee for such Restricted Shares, or (y) the Fair Market
Value of a Share on the date of such forfeiture. The Company shall pay to the
Grantee the deemed sale price as soon as is administratively practical. Such
Restricted Shares shall cease to be outstanding, and shall no longer confer on
the Grantee thereof any rights as a stockholder of the Company, from and after
the date of the event causing the forfeiture, whether or not the Grantee accepts
the Company's tender of payment for such Restricted Shares.
 
7.5 ESCROW; LEGENDS. The Committee may provide that the certificates for any
Restricted Shares (x) shall be held (together with a stock power executed in
blank by the Grantee) in escrow by the Secretary of the Company until such
Restricted Shares become nonforfeitable or are forfeited and/or (y) shall bear
an appropriate legend restricting the transfer of such Restricted Shares under
 
                                      A-17
<PAGE>
 
the Plan. If any Restricted Shares become nonforfeitable, the Company shall
cause certificates for such shares to be delivered without such legend.
 
                                   ARTICLE 8.
                    PERFORMANCE UNITS AND PERFORMANCE SHARES
 
8.1 GRANT OF PERFORMANCE UNITS AND PERFORMANCE SHARES. Subject to and consistent
with the provisions of the Plan, Performance Units or Performance Shares may be
granted to any Eligible Person in such amounts and upon such terms, and at any
time and from time to time, as shall be determined by the Committee.
 
8.2 VALUE/PERFORMANCE GOALS. The Committee shall set performance goals in its
discretion which, depending on the extent to which they are met, will determine
the number or value of Performance Units or Performance Shares that will be paid
to the Grantee. With respect to Covered Employees and to the extent the
Committee deems it appropriate to comply with Section 162(m) of the Code, all
performance goals shall be objective Performance Measures satisfying the
requirements for the Performance-Based Exception, and shall be set by the
Committee within the time period prescribed by Section 162(m) of the Code and
related regulations.
 
(a) PERFORMANCE UNIT. Each Performance Unit shall have an initial value that is
established by the Committee at the time of grant.
 
(b) PERFORMANCE SHARE. Each Performance Share shall have an initial value equal
to the Fair Market Value of a Share on the date of grant.
 
8.3 EARNING OF PERFORMANCE UNITS AND PERFORMANCE SHARES. After the applicable
Performance Period has ended, the holder of Performance Units or Performance
Shares shall be entitled to payment based on the level of achievement of
performance goals set by the Committee. If a Performance Unit or Performance
Share Award is intended to comply with the Performance-Based Exception, the
Committee shall certify the level of achievement of the performance goals in
writing before the Award is settled.
 
         At the discretion of the Committee, the settlement of Performance Units
or Performance Shares may be in cash, Shares of equivalent value, or in some
combination thereof, as set forth in the Award Agreement.
 
         If a Grantee is promoted, demoted or transferred to a different
business unit of the Company during a Performance Period, then, to the extent
the Committee determines that the Award, the performance goals, or the
Performance Period are no longer appropriate, the Committee may adjust, change,
eliminate or cancel the Award, the performance goals, or the applicable
Performance Period, as it deems appropriate in order to make them appropriate
and comparable to the initial Award, the performance goals, or the Performance
Period.
 
         At the discretion of the Committee, a Grantee may be entitled to
receive any dividends or Dividend Equivalents declared with respect to Shares
 
                                      A-18
<PAGE>
 
deliverable in connection with grants of Performance Units or Performance Shares
which have been earned, but not yet delivered to the Grantee.
 
                                   ARTICLE 9.
                                 DEFERRED STOCK
 
9.1 GRANT OF DEFERRED STOCK. Subject to and consistent with the provisions of
the Plan, the Committee, at any time and from time to time, may grant Deferred
Stock to any Eligible Person, in such amount and upon such terms as the
Committee shall determine, including grants at the election of a Grantee to
convert Shares to be acquired upon Option exercise, upon lapse of restrictions
on Restricted Shares, or vesting of Performance Shares, into such Deferred
Stock.
 
         In addition, if and the extent permitted by the Committee, an Eligible
Person may elect (a "Deferral Election") at such times and in accordance with
such rules and procedures adopted by the Committee, to receive all or any
portion of his salary and/or bonus (including any cash Award payable under this
Plan) in the form of a number of shares of Deferred Stock equal to the quotient
of the amount of salary and/or cash bonus to be paid in the form of Deferred
Stock divided by the Fair Market Value of a Share on the date such salary or
bonus would otherwise be paid in cash.
 
9.2 DELIVERY AND LIMITATIONS. Delivery of Shares will occur upon expiration of
the deferral period specified for the Award of Deferred Stock by the Committee.
In addition, an Award of Deferred Stock shall be subject to such limitations as
the Committee may impose, which limitations may lapse at the expiration of the
deferral period or at other specified times, separately or in combination, in
installments or otherwise, as the Committee shall determine at the time of grant
or thereafter. Unless and only to the extent that the Committee shall provide
otherwise in the Award Agreement, a Grantee awarded Deferred Stock will have no
voting rights but will have the rights to receive Dividend Equivalents in
respect of Deferred Stock, which Dividend Equivalents shall be deemed reinvested
in additional Shares of Deferred Stock.
 
9.3 FORFEITURE. Upon Termination of Affiliation during the applicable deferral
period, Deferred Stock that is at that time subject to deferral shall be
forfeited to the extent provided in the Award Agreement.
 
                                  ARTICLE 10.
                              DIVIDEND EQUIVALENTS
 
         The Committee is authorized to grant Awards of Dividend Equivalents
alone or in conjunction with other Awards. The Committee may provide that
Dividend Equivalents shall be paid or distributed when accrued or shall be
deemed to have been reinvested in additional Shares or additional Awards or
otherwise reinvested.
 
                                      A-19
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                                  ARTICLE 11.
                            OTHER STOCK-BASED AWARDS
 
         The Committee is authorized, subject to limitations under applicable
law, to grant such other Awards that are denominated or payable in, valued in
whole or in part by reference to, or otherwise based on, or related to, Shares,
as deemed by the Committee to be consistent with the purposes of the Plan
including Shares awarded which are not subject to any restrictions or
conditions, convertible or exchangeable debt securities or other rights
convertible or exchangeable into Shares, and Awards valued by reference to the
value of securities of or the performance of specified Affiliates. Subject to
and consistent with the provisions of the Plan, the Committee shall determine
the terms and conditions of such Awards. Except as provided by the Committee,
Shares delivered pursuant to a purchase right granted under this Article 11
shall be purchased for such consideration, paid for by such methods and in such
forms, including cash, Shares, outstanding Awards or other property, as the
Committee shall determine.
 
                                  ARTICLE 12.
                             ANNUAL INCENTIVE AWARDS
 
12.1 ANNUAL INCENTIVE AWARDS. Subject to and consistent with the provisions of
the Plan, Annual Incentive Awards may be granted to any Eligible Person in
accordance with the provisions of this Article 12.
 
12.2 DEFINITIONS. For purposes of this Section 12, the following terms have the
meaning set forth below:
 
(a) "ANNUAL INCENTIVE AWARDS" means the amount payable to a Participant pursuant
to Section 12. 3 for any Year. In addition, the Committee is authorized to pay
an Annual Incentive Awards to a Participant for a period of less than a full
Year; provided, however, that any Annual Incentive Award paid for a partial Year
shall be deducted from the Bonus Pool for the Year to which such Annual
Incentive Award relates.
 
(b) "BONUS POOL" means for any Year, an amount not to exceed 5% of the Operating
Cash Flow for such Year. The Bonus Pool will be reduced by any Annual Incentive
Award payable to a Participant with respect to a period of less than a full
Year.
 
(c) "MAXIMUM POTENTIAL ANNUAL INCENTIVE AWARD" with respect to a Participant for
a Year shall equal the Bonus Pool for such Year multiplied by a fraction the
numerator of which is the Participant's Target Bonus Opportunity for such Year
and the denominator of which is the sum of the Target Bonus Opportunity of all
Participants for such Year. Notwithstanding the foregoing, if the fraction
determined in the preceding sentence for any Participant exceeds 25%, the
Participant's Target Bonus Opportunity for such Year shall be reduced until the
fraction does not exceed 25%.
 
(d) "OPERATING CASH FLOW" means, for any Year, with respect to the Company and
its subsidiaries (determined on a consolidated basis without duplication in
accordance with generally accepted accounting principles), (i) gross operating
revenues (not including extraordinary items) for such Year, MINUS (ii) all
 
                                      A-20
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operating expenses (not including extraordinary items) for such Year, including
without limitation, technical programming and selling, general and
administrative expenses, but excluding (to the extent included in operating
expenses) income taxes, depreciation, amortization and interest expense;
provided that gross operating revenues and operating expenses for any Year shall
exclude all extraordinary and unusual items and all non-cash items. For purposes
of determining Operating Cash Flow, gross operating revenues will include
revenues received in cash in respect of investments, so long as such investments
are recurring (i.e., reasonably expected to continue for four or more fiscal
quarters) and do not for any Year exceed 20% of gross operating revenues for
such period (not including extraordinary items and such investment revenues).
 
(e) "PARTICIPANT" means an Eligible Person who is selected by the Committee to
be eligible to receive an Annual Incentive Award for the Year. The Committee
shall designate the Participants for a Year within the first ninety (90) days of
such Year or, in the case of a Person who is hired or promoted to a position
which warrants the Person becoming a Participant after the first day of the
Year, within ninety (90) days of such hiring or promotion but not later than the
elapse of 25% of the remainder of such Year after such hiring or promotion. The
Committee may designate an Eligible Person as a Participant for a full Year or
for a period of less than a full Year; provided, however, that any Annual
Incentive Award payable to any Participant with respect to a partial Year, shall
be charged against the Participant's share of the Bonus Pool for the Year.
 
(f) "TARGET BONUS OPPORTUNITY" means for any Participant for a Year (i) the
target bonus specified in the Participant's employment agreement with the
Company for such Year based on the Participant's base salary in effect on the
first day of such Year, or (ii) if the Participant does not have an employment
agreement as of the first day of such Year, the percentage of such Participant's
base salary in effect on the first day of such Year (or such later date as such
person is designated as a Participant) as determined by the Committee in its
sole discretion within the first ninety (90) days of such Year (or before such
later date as such person is designated as a Participant).
 
(g) "YEAR" means the fiscal year of the Company.
 
12.3 DETERMINATION OF AMOUNT OF ANNUAL INCENTIVE AWARDS.
 
(a) As soon as feasible after the close of each Year, the independent certified
public accountants of the Company shall determine and report the Operating Cash
Flow for such Year and the Committee shall certify the amount of the Maximum
Potential Annual Incentive Award for each Participant for such Year.
 
(b) The amount of the Annual Incentive Award payable to any Participant for a
Year shall be the Participant's Maximum Potential Annual Incentive Award for
such Year reduced by such amount as the Committee may in its absolute discretion
determine based on such criteria, factors and measures (which may but need not
be the Performance Measures set forth in Section 4.4) as the Committee deems
appropriate, or the Committee may decide not to pay any Annual Incentive Award
to the Participant for the Year. In no event shall a Participant's Annual
Incentive Award for a Year exceed the Participant's Maximum Potential Annual
Incentive Award determined and certified by the Committee in subsection (a). The
 
                                      A-21
<PAGE>
 
determination of the Committee to reduce the amount of the Annual Incentive
Award payable to one or more Participants for a Year (or the decision of the
Committee not to pay any Annual Incentive Award to one or more Participants for
a Year) shall not affect the Maximum Potential Annual Incentive Award of any
other Participant for such Year.
 
(c) If a Participant has a Termination of Affiliation during the Year, the
Committee may, in its absolute discretion and under such rules as the Committee
may from time to time prescribe, authorize the payment of an Annual Incentive
Award to such Participant in accordance with the foregoing provisions of this
Section 12.3 and in the absence of such determination by the Committee the
Participant shall receive no Annual Incentive Award for such Year.
 
(d) The Committee shall determine the amount of the Annual Incentive Award
payable to each Participant as soon as administratively practicable after the
end of each Year but not later than 90 days after the end of such Year.
 
12.4 TIME OF PAYMENT OF ANNUAL INCENTIVE AWARDS. Annual Incentive Awards shall
be paid in cash as soon as administratively practicable after the Committee
determines the amount of the Award payable under Section 12.3(b) but not later
than 90 days after the end of such Year.
 
                                   ARTICLE 13.
                    AMENDMENT, MODIFICATION, AND TERMINATION
 
13.1 AMENDMENT, MODIFICATION, AND TERMINATION. Subject to Section 13.2, the
Board may, at any time and from time to time, alter, amend, suspend, discontinue
or terminate the Plan in whole or in part without the approval of the Company's
stockholders, except that (a) any amendment or alteration shall be subject to
the approval of the Company's stockholders if such stockholder approval is
required by any federal or state law or regulation or the rules of any stock
exchange or automated quotation system on which the Shares may then be listed or
quoted, and (b) the Board may otherwise, in its discretion, determine to submit
other such amendments or alterations to stockholders for approval.
 
13.2 AWARDS PREVIOUSLY GRANTED. Except as otherwise specifically permitted in
the Plan or an Award Agreement, no termination, amendment, or modification of
the Plan shall adversely affect in any material way any Award previously granted
under the Plan, without the written consent of the Grantee of such Award.
 
                                   ARTICLE 14.
                                   WITHHOLDING
 
14.1     REQUIRED WITHHOLDING
 
(a) The Committee in its sole discretion may provide that when taxes are to be
withheld in connection with the exercise of an Option, or upon the lapse of
restrictions on Restricted Shares, or upon the transfer of Deferred Stock, or
upon payment of any other benefit or right under this Plan (the date on which
such exercise occurs or such restrictions lapse or such payment of any other
benefit or right occurs hereinafter
 
                                      A-22
<PAGE>
 
referred to as the "Tax Date"), the Grantee may elect to make payment for the
withholding of federal, state and local taxes, including Social Security and
Medicare ("FICA") taxes by one or a combination of the following methods:
 
         (i) payment of an amount in cash equal to the amount to be withheld;
 
         (ii) delivering part or all of the amount to be withheld in the form of
Mature Shares valued at their Fair Market Value on the Tax Date;
 
         (iii) requesting the Company to withhold from those Shares that would
otherwise be received upon exercise of the Option, upon the lapse of
restrictions on Restricted Stock, or upon the transfer of Deferred Stock, a
number of Shares having a Fair Market Value on the Tax Date equal to the amount
to be withheld; or
 
         (iv) withholding from any compensation otherwise due to the Grantee.
 
The Committee in its sole discretion may provide that the maximum amount of tax
withholding upon exercise of an Option to be satisfied by withholding Shares
upon exercise of such Option pursuant to clause (iii) above shall not exceed the
minimum amount of taxes, including FICA taxes, required to be withheld under
federal, state and local law. An election by Grantee under this subsection is
irrevocable. Any fractional share amount and any additional withholding not paid
by the withholding or surrender of Shares or delivery of Mature Shares must be
paid in cash. If no timely election is made, the Grantee must deliver cash to
satisfy all tax withholding requirements.
 
(b) Any Grantee who makes a Disqualifying Disposition (as defined in Section
6.4(f)) or an election under Section 83(b) of the Code shall remit to the
Company an amount sufficient to satisfy all resulting tax withholding
requirements in the same manner as set forth in subsection (a).
 
14.2 NOTIFICATION UNDER CODE SECTION 83(B). If the Grantee, in connection with
the exercise of any Option, or the grant of Restricted Shares, makes the
election permitted under Section 83(b) of the Code to include in such Grantee's
gross income in the year of transfer the amounts specified in Section 83(b) of
the Code, then such Grantee shall notify the Company of such election within 10
days of filing the notice of the election with the Internal Revenue Service, in
addition to any filing and notification required pursuant to regulations issued
under Section 83(b) of the Code. The Committee may, in connection with the grant
of an Award or at any time thereafter, prohibit a Grantee from making the
election described above.
 
                                   ARTICLE 15.
                              ADDITIONAL PROVISIONS
 
15.1 SUCCESSORS. All obligations of the Company under the Plan with respect to
Awards granted hereunder shall be binding on any successor to the Company,
whether the existence of such successor is the result of a direct or indirect
purchase, merger, consolidation, or otherwise of all or substantially all of the
business and/or assets of the Company.
 
                                      A-23
<PAGE>
 
15.2 GENDER AND NUMBER. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine, the plural shall
include the singular and the singular shall include the plural.
 
15.3 SEVERABILITY. If any part of the Plan is declared by any court or
governmental authority to be unlawful or invalid, such unlawfulness or
invalidity shall not invalidate any other part of the Plan. Any Section or part
of a Section so declared to be unlawful or invalid shall, if possible, be
construed in a manner which will give effect to the terms of such Section or
part of a Section to the fullest extent possible while remaining lawful and
valid.
 
15.4 REQUIREMENTS OF LAW. The granting of Awards and the delivery of Shares
under the Plan shall be subject to all applicable laws, rules, and regulations,
and to such approvals by any governmental agencies or national securities
exchanges as may be required. Notwithstanding any provision of the Plan or any
Award, Grantees shall not be entitled to exercise, or receive benefits under,
any Award, and the Company (and any Affiliate) shall not be obligated to deliver
any Shares or deliver benefits to a Grantee, if such exercise or delivery would
constitute a violation by the Grantee or the Company of any applicable law or
regulation.
 
15.5 SECURITIES LAW COMPLIANCE.
 
(a) If the Committee deems it necessary to comply with any applicable securities
law, or the requirements of any stock exchange upon which Shares may be listed,
the Committee may impose any restriction on Awards or Shares acquired pursuant
to Awards under the Plan as it may deem advisable. All certificates for Shares
delivered under the Plan pursuant to any Award or the exercise thereof shall be
subject to such stop transfer orders and other restrictions as the Committee may
deem advisable under the rules, regulations and other requirements of the SEC,
any stock exchange upon which Shares are then listed, any applicable securities
law, and the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such restrictions. If so requested
by the Company, the Grantee shall make a written representation to the Company
that he or she will not sell or offer to sell any Shares unless a registration
statement shall be in effect with respect to such Shares under the Securities
Act of 1993, as amended, and any applicable state securities law or unless he or
she shall have furnished to the Company, in form and substance satisfactory to
the Company, that such registration is not required.
 
(b) If the Committee determines that the exercise or nonforfeitability of, or
delivery of benefits pursuant to, any Award would violate any applicable
provision of securities laws or the listing requirements of any national
securities exchange or national market system on which are listed any of the
Company's equity securities, then the Committee may postpone any such exercise,
nonforfeitability or delivery, as applicable, but the Company shall use all
reasonable efforts to cause such exercise, nonforfeitability or delivery to
comply with all such provisions at the earliest practicable date.
 
15.6 NO RIGHTS AS A STOCKHOLDER. No Grantee shall have any rights as a
stockholder of the Company with respect to the Shares (other than Restricted
Shares) which may be deliverable upon exercise or payment of such Award until
such Shares have been delivered to him or her. Restricted Shares, whether held
 
                                      A-24
<PAGE>
 
by a Grantee or in escrow by the Secretary of the Company, shall confer on the
Grantee all rights of a stockholder of the Company, except as otherwise provided
in the Plan or Award Agreement. At the time of a grant of Restricted Shares, the
Committee may require the payment of cash dividends thereon to be deferred and,
if the Committee so determines, reinvested in additional Restricted Shares.
Stock dividends and deferred cash dividends issued with respect to Restricted
Shares shall be subject to the same restrictions and other terms as apply to the
Restricted Shares with respect to which such dividends are issued. The Committee
may in its discretion provide for payment of interest on deferred cash
dividends.
 
15.7 NATURE OF PAYMENTS. Unless otherwise specified in the Award Agreement,
Awards shall be special incentive payments to the Grantee and shall not be taken
into account in computing the amount of salary or compensation of the Grantee
for purposes of determining any pension, retirement, death or other benefit
under (a) any pension, retirement, profit-sharing, bonus, insurance or other
employee benefit plan of the Company or any Affiliate, except as such plan shall
otherwise expressly provide, or (b) any agreement between (i) the Company or any
Affiliate and (ii) the Grantee, except as such agreement shall otherwise
expressly provide.
 
15.8 NON-EXCLUSIVITY OF PLAN. Neither the adoption of the Plan by the Board nor
its submission to the stockholders of the Company for approval shall be
construed as creating any limitations on the power of the Board to adopt such
other compensatory arrangements for employees as it may deem desirable.
 
15.9 GOVERNING LAW. The Plan, and all agreements hereunder, shall be construed
in accordance with and governed by the laws of the State of Delaware, other than
its laws respecting choice of law.
 
15.10 SHARE CERTIFICATES. All certificates for Shares delivered under the terms
of the Plan shall be subject to such stop-transfer orders and other restrictions
as the Committee may deem advisable under federal or state securities laws,
rules and regulations thereunder, and the rules of any national securities laws,
rules and regulations thereunder, and the rules of any national securities
exchange or automated quotation system on which Shares are listed or quoted. The
Committee may cause a legend or legends to be placed on any such certificates to
make appropriate reference to such restrictions or any other restrictions or
limitations that may be applicable to Shares. In addition, during any period in
which Awards or Shares are subject to restrictions or limitations under the
terms of the Plan or any Award Agreement, or during any period during which
delivery or receipt of an Award or Shares has been deferred by the Committee or
a Grantee, the Committee may require any Grantee to enter into an agreement
providing that certificates representing Shares deliverable or delivered
pursuant to an Award shall remain in the physical custody of the Company or such
other person as the Committee may designate.
 
15.11 UNFUNDED STATUS OF AWARDS; CREATION OF TRUSTS. The Plan is intended to
constitute an "unfunded" plan for incentive and deferred compensation. With
respect to any payments not yet made to a Grantee pursuant to an Award, nothing
contained in the Plan or any Award Agreement shall give any such Grantee any
rights that are greater than those of a general creditor of the Company;
provided, however, that the Committee may authorize the creation of trusts or
make other arrangements to meet the Company's obligations under the Plan to
 
                                      A-25
<PAGE>
 
deliver cash, Shares or other property pursuant to any Award which trusts or
other arrangements shall be consistent with the "unfunded" status of the Plan
unless the Committee otherwise determines.
 
15.12 AFFILIATION. Nothing in the Plan or an Award Agreement shall interfere
with or limit in any way the right of the Company or any Affiliate to terminate
any Grantee's employment or consulting contract at any time, nor confer upon any
Grantee the right to continue in the employ of or as an officer of or as a
consultant to the Company or any Affiliate.
 
15.13 PARTICIPATION. No employee or officer shall have the right to be selected
to receive an Award under this Plan or, having been so selected, to be selected
to receive a future Award.
 
15.14 MILITARY SERVICE. Awards shall be administered in accordance with Section
414(u) of the Code and the Uniformed Services Employment and Reemployment Rights
Act of 1994.
 
15.15 CONSTRUCTION. The following rules of construction will apply to the Plan:
(a) the word "or" is disjunctive but not necessarily exclusive, and (b) words in
the singular include the plural, words in the plural include the singular, and
words in the neuter gender include the masculine and feminine genders and words
in the masculine or feminine gender include the other neuter genders.
 
15.16 HEADINGS. The headings of articles and sections are included solely for
convenience of reference, and if there is any conflict between such headings and
the text of this Plan, the text shall control.
 
15.17 OBLIGATIONS. Unless otherwise specified in the Award Agreement, the
obligation to deliver, pay or transfer any amount of money or other property
pursuant to Awards under this Plan shall be the sole obligation of a Grantee's
employer; provided that the obligation to deliver or transfer any Shares
pursuant to Awards under this Plan shall be the sole obligation of the Company.
 
15.18 STOCKHOLDER APPROVAL. All Awards granted on or after the Effective Date
and prior to the date the Company's stockholders approve the amended and
restated Plan are expressly conditioned upon and subject to approval of the
amended and restated Plan by the Company's stockholders.
 
                                      A-26