
<PAGE>












                        ALLEGIANCE CHANGE IN CONTROL PLAN





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                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----


SECTION 1                                                                      1
     Introduction                                                              1
          Purpose                                                              1
          Effective Date, Plan Year                                            1
          Employers                                                            1
          Administration                                                       1

SECTION 2                                                                      2
     Participation                                                             2

SECTION 3                                                                      2
     Plan Benefits                                                             2
          Benefits Following a Change in Control                               2
          Non-Solicitation and Non-Competition                                 2
          Change in Control                                                    3
          Terminations for Cause and Good Reason                               4

SECTION 4                                                                      5
     Payment of Benefits                                                       5
          Agreement Governs                                                    5
          Form of Payment                                                      5
          Designation of Beneficiary                                           6

SECTION 5                                                                      6
     Financing Plan Benefits                                                   6

SECTION 6                                                                      6
     Other Employment                                                          6

SECTION 7                                                                      7
     Miscellaneous                                                             7
          Information to be Furnished by Participants                          7
          Claims Review                                                        7
          Evidence                                                             8
          Fees and Expenses                                                    8
          Action by Employer                                                   8
          Controlling Laws                                                     8
          Interests Not Transferable                                           8


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                                                                            PAGE
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          Mistake of Fact                                                      8
          Severability                                                         8
          Withholding                                                          9
          Effect on Other Plans or Agreements                                  9

SECTION 8                                                                      9
     Amendment and Termination                                                 9
          Amendment and Termination                                            9


                                      -ii-
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                        ALLEGIANCE CHANGE IN CONTROL PLAN



                                    SECTION 1

                                  INTRODUCTION


          1.1.  PURPOSE.  Allegiance Corporation ("Allegiance") has established
the Allegiance Change In Control Plan (the "Plan") to enable Allegiance and its
Subsidiaries and Affiliates (collectively, the "Company") to provide severance
benefits to eligible executive or management employees whose employment is
terminated following a Change in Control of the Company.  It is the intent of
the Company that the Plan, as set forth herein, constitute an "employee welfare
benefit plan" within the meaning of Section 3(1) of the Employee Retirement
Income Act of 1974 ("ERISA") and comply with the applicable requirements of
ERISA.


          1.2.  EFFECTIVE DATE, PLAN YEAR. The "Effective Date" of the Plan is
October 1, 1996.  A "Plan Year" is the 12-month period beginning on October 1
and ending on the following September 30.


          1.3.  EMPLOYERS.  Any Subsidiary or Affiliate of Allegiance employing
an employee who has been designated as a Participant by the Committee shall be
deemed to have adopted the Plan.  A "Subsidiary" of Allegiance is any
corporation more than 50 percent of the voting stock of which is owned, directly
or indirectly, by Allegiance.  An "Affiliate" of Allegiance is any corporation
more than 50 percent of the voting stock of which is owned, directly or
indirectly, by the owner or owners of more than 50 percent of the voting stock
of Allegiance.


          1.4.  ADMINISTRATION.  The Plan is administered by the Compensation
Committee of the Board of Directors of Allegiance (the "Committee").  The
Committee, from time to time, may adopt such rules and regulations as may be
necessary or desirable for the proper and efficient administration of the Plan
and as are consistent with the terms of the Plan.  The Committee, from time to
time, may also appoint such individuals to act as its representatives as the
Committee considers necessary or desirable for the effective administration of
the Plan.  Any notice or document required to be given or filed with the
committee will be properly given or filed if delivered or mailed, by registered
mail, postage prepaid, to the Committee at 1430 Waukegan Road, McGaw Park,
Illinois 60085.


                                       -1-
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                                    SECTION 2

                                  PARTICIPATION


          The Committee shall designate from time to time those employees of the
Company employed in an executive or management position who shall participate in
the plan (a "Participant").  An employee who has been so designated shall
participate by signing an agreement with the Company ("Agreement") which shall
specify the benefits the Participant is entitled to receive should the
Participant's employment terminate following a Change in Control of the Company
and the terms and conditions under which those benefits will be provided.  A
Participant's Agreement implements and forms a part of the Plan as respects the
Participant's participation in the Plan.  To the extent there are any
inconsistencies between the Plan document and a Participant's Agreement, the
terms of the Participant's Agreement shall be controlling.  No employee other
than those designated by the Committee shall be eligible to participate in the
Plan.



                                    SECTION 3

                                  PLAN BENEFITS


          3.1.  BENEFITS FOLLOWING A CHANGE IN CONTROL.  If a Participant's
employment with the Company terminates within twenty-four (24) months following
a Change in Control, the Participant shall be entitled to the benefits specified
in the Participant's Agreement and such benefits shall be paid at such time, in
such manner and subject to such conditions as are specified in the Agreement.  A
Participant's entitlement to benefits as specified in the Participant's
Agreement shall depend upon whether the Participant's termination is voluntary
or involuntary and whether for Cause (as defined below), if involuntary, or for
Good Reason (as defined below), if voluntary.


          3.2.  NON-SOLICITATION AND NON-COMPETITION.  In consideration for the
benefits provided for under a Participant's Agreement, the Participant shall
agree that during the 24-month period following the Participant's date of
termination (the "Separation Period"), the Participant:

          (a)  will not, without the prior written consent of the Company,
               alone or in association with others, solicit on behalf of
               the Participant, or any other person, firm, corporation or
               entity, any employee of the Company, or any of its operating
               divisions, Subsidiaries or


                                       -2-
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               Affiliates, for employment with a person, firm, corporation or
               entity which competes with the Company, or any of its divisions,
               Subsidiaries or Affiliates.

          (b)  will not, without the prior written consent of the Company,
               directly or indirectly, engage or invest in, counsel or
               advise or be employed by any other person, firm, corporation
               or entity engaged in or conducting business which is the
               same as, or competing with, the business being conducted by
               the Company, or any of its operating divisions, Subsidiaries
               or Affiliates, in any area or territory in which the
               Company, or such operating divisions, Subsidiaries or
               Affiliates, shall be conducting business during the
               Separation Period.  Notwithstanding the foregoing, the
               Participant shall be entitled to passively own not more than
               four and nine-tenths percent (4.9%) of any publicly held
               entity engaged in any business in which the Company, or any
               of its operating divisions, Subsidiaries or Affiliates,
               shall be engaged during said period.

If a Participant fails to comply with the non-solicitation and/or non-
competition restrictions of this subsection 3.2 and the Participant's Agreement,
participation in the Plan shall immediately terminate and the Participant shall
forfeit any remaining unpaid benefits.


          3.3.  CHANGE IN CONTROL.  For purposes of the Plan a "Change in
Control" shall have occurred if:

          (a)  any "Person", as such term is used in Sections 13(d) and
               14(d) of the Securities Exchange Act of 1934, as amended
               ("Exchange Act") other than Allegiance, any corporation
               owned, directly or indirectly, by the stockholders of
               Allegiance in substantially the same proportions as their
               ownership of stock of Allegiance, and any trustee or other
               fiduciary holding securities under a Company employee
               benefit plan or such proportionately owned corporation,
               becomes the "beneficial owner" (as defined in rule 13d-3
               under the Exchange Act), directly or indirectly, of
               securities of Allegiance representing 20% or more of the
               combined voting power of Allegiance's then outstanding
               securities;

          (b)  during any period of not more than twenty-four (24) months,
               individuals who at the beginning of such period constitute
               the Board of Directors of Allegiance, and any new director
               (other than a director designated by a Person who has
               entered into an agreement with Allegiance to effect a
               transaction described in subparagraph (a), (c), or (d) of
               this subsection



                                       -3-
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               3.3) whose election by the board or nomination for election by
               Allegiance's stockholders was approved by a vote of at least two-
               thirds of the directors then still in office who either were
               directors at the beginning of the period or whose election or
               nomination for election was previously so approved, cease for any
               reason to constitute at least a majority thereof;

          (c)  the stockholders of Allegiance approve a merger or
               consolidation of Allegiance with any other corporation,
               other than (i) a merger or consolidation which would result
               in the voting securities of Allegiance outstanding
               immediately prior thereto continuing to represent (either by
               remaining outstanding or by being converted into voting
               securities of the surviving entity) more than 60% of the
               combined voting power of the voting securities of Allegiance
               or such surviving entity outstanding immediately after such
               merger or consolidation, or (ii) a merger or consolidation
               effected to implement a recapitalization of Allegiance (or
               similar transaction) in which no Person acquires more than
               20% of the combined voting power of Allegiance's then
               outstanding securities; or

          (d)  the stockholders of Allegiance approve a plan of complete
               liquidation of Allegiance or an agreement for the sale or
               disposition by Allegiance of all or substantially all of its
               assets (or any transaction having a similar effect).

Allegiance may also determine, in its discretion, that a sale of a substantial
portion of its assets or one of its businesses constitutes a "Change of Control"
with respect to any Participant if the Participant is employed in the affected
operation.


          3.4.  TERMINATIONS FOR CAUSE AND GOOD REASON.  A Participant will be
considered to have been terminated for "Cause" if the  termination is by reason
of the Participant willfully engaging in conduct demonstrably and materially
injurious to the Company, the Participant being convicted of or confessing to a
crime involving dishonesty or moral turpitude or the Participant's willful and
continued failure for a significant period of time to perform the Participant's
duties after a demand for substantial performance has been delivered to the
Participant by the Board of Directors of Allegiance which demand specifically
identifies the manner in which the Board believes that the Participant has not
substantially performed his duties.  A Participant's termination shall be
considered to have been for "Good Reason" if the Participant's termination is by
reason of the occurrence of any of the following events within twenty-four (24)
months following a Change in Control without the Participant's express written
consent:


                                       -4-
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          (a)  any significant change in the Participant's title,
               authorities, responsibilities (including reporting
               responsibilities) which, in the Participant's reasonable
               judgment, represents an adverse change; the assignment to
               the Participant of any significant duties or work
               responsibilities which, in his reasonable judgment, are
               inconsistent with such title, authorities or
               responsibilities; or any removal of the Participant from, or
               failure to reappoint or reelect him to any of such
               positions, except if any such changes are because of
               disability, retirement or Cause;

          (b)  a reduction in or failure to pay any portion of the
               Participant's annual base salary as in effect on the date of
               the Change in Control or as the same may be increased from
               time to time thereafter;

          (c)  the failure by the Company to provide the Participant with
               compensation and benefits (including, without limitation,
               incentive, bonus and other compensation plans and any
               vacation, medical, hospitalization, life insurance, dental
               or disability benefit plan), or cash compensation in lieu
               thereof, which are, in the aggregate, no less favorable than
               those provided by the Company to the Participant immediately
               prior to the occurrence of the Change in Control;

          (d)  any breach by the Company of any provision of a
               Participant's Agreement; and

          (e)  the failure of the Company to obtain a satisfactory
               agreement from any successor or assign of the Company to
               assume and agree to perform the Participant's Agreement.



                                    SECTION 4

                               PAYMENT OF BENEFITS


          4.1.  AGREEMENT GOVERNS.  Any benefits under the Plan shall be payable
at such time, and pursuant to the terms and conditions of each Participant's
Agreement.


          4.2.  FORM OF PAYMENT.  Subject to the terms of a Participant's
Agreement, benefits shall be paid in equal installments according to the
Company's normal payroll schedule.  In the event of a Participant's death before
the Participant receives all benefits


                                       -5-
<PAGE>

to which he otherwise would be entitled under the Plan, payment shall be made to
the Participant's beneficiary in installments or a lump sum, as determined by
the Committee.


          4.3.  DESIGNATION OF BENEFICIARY.  By signing a form furnished by the
Committee, each Participant may designate any person or persons to whom his
benefits are to be paid if he dies before he receives all of his benefits.  A
beneficiary designation form will be effective only when the form is filed with
the Committee while the Participant is still alive and will cancel all
beneficiary designation forms previously filed by the Participant with respect
to this Plan.  If a deceased Participant has failed to designate a beneficiary
as provided above, or if the designated beneficiary predeceases the participant,
payment of the Participant's benefits shall be made to the Participant's estate.
If a designated beneficiary dies before complete payment of any benefits
attributable to a Participant, remaining benefits shall be paid to the
beneficiary's estate.



                                    SECTION 5

                             FINANCING PLAN BENEFITS


          All benefits payable under the Plan shall be paid directly by the
Company out of general assets.  The Company shall not be required to segregate
on its books or otherwise any amount to be used for the payment of benefits
under the Plan.



                                    SECTION 6

                                OTHER EMPLOYMENT


          A Participant shall not be required to mitigate the amount of any
payment or benefit provided for under the Plan by seeking other employment or
otherwise nor shall the amount of any payment or benefit provided for under the
Plan be reduced by any compensation earned by the Participant as a result of
other employment.


                                       -6-
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                                    SECTION 7

                                  MISCELLANEOUS


          7.1.  INFORMATION TO BE FURNISHED BY PARTICIPANTS.  Each Participant
must furnish to the Committee such documents, evidence, data or other
information as the Committee consider necessary or desirable for the purpose of
administering the Plan.  Benefits under the Plan for each Participant are
provided on the condition that he/she furnish full, true and complete data,
evidence or other information, and that he/she will promptly sign any document
related to the Plan, requested by the Committee.

          7.2.  CLAIMS REVIEW.  Any claim for benefits under the Plan or a
Participant's Agreement by a Participant shall be made in writing and delivered
to the Committee.  If a Participant, or any beneficiary following the
Participant's death (collectively, the "Claimant"), believes he has been denied
any benefits or payments under the Plan or Agreement, either in total or in an
amount less than the full benefit or payment to which the Claimant would
normally be entitled, the Committee shall advise the Claimant in writing of the
amount of the benefit, or payment, if any, and the specific reasons for the
denial.  The Committee shall also furnish the Claimant at that time with a
written notice containing:

          (a)  A specific reference to pertinent provisions of the Plan or
               the Participant's Agreement;

          (b)  A description of any additional material or information
               necessary for the Claimant to perfect the claim if possible,
               and an explanation of why such material or information is
               needed; and

          (c)  An explanation of the claim review procedure set forth
               below.

Within 60 days of receipt of the information described above, a Claimant shall,
if further review is desired, file a written request for reconsideration with
the Committee.  So long as the Claimant's request for review is pending
(including such 60-day period), Claimant or his duly authorized representative
may review pertinent documents and may submit issues and comments in writing to
the Committee.  A final and binding decision shall be made by the Committee
within 60 days of the filing by the Claimant of the request for reconsideration;
provided, however, that if the Committee, in its discretion, feels that a
hearing with the Claimant or his representative present is necessary or
desirable, this period shall be extended an additional 60 days.  The decision by
the Committee shall be conveyed to the Claimant in writing and shall include
specific reasons for the decision, written in a manner calculated to be
understood by the Claimant, which specifically references to the pertinent
provisions of the Plan or the Participant's Agreement on which the decision is


                                       -7-
<PAGE>

based.  The Committee shall use ordinary care and diligence in the performance
of its duties.


          7.3.  EVIDENCE.  Evidence required of anyone under the Plan may be by
certificate, affidavit, document or other information which the person relying
thereon considers pertinent and reliable, and signed, made or presented by the
proper party or parties.


          7.4.  FEES AND EXPENSES.  The Company shall pay all reasonable legal
fees and related expenses (including the reasonable costs of experts, evidence
and counsel), when and as incurred by a Participant, as a result of contesting
or disputing any termination of employment of the Participant following a Change
in Control whether or not such contest or dispute is resolved in the
Participant's favor but only if the Participant was seeking in good faith to
obtain or enforce any right or benefit provided by the Plan or the Participant's
Agreement or by any other plan or arrangement maintained by the Employers under
which the Participant is or may be entitled to receive benefits.


          7.5.  ACTION BY EMPLOYER.  Any action required of or permitted by
Allegiance under the Plan shall be by resolution of its Board of Directors, by
resolution of a duly authorized committee of its Board of Directors, or by a
person or persons authorized by resolutions of its Board of Directors or such
committee.


          7.6.  CONTROLLING LAWS.  Except to the extent superseded by laws of
the United States, the laws of Illinois shall be controlling in all matters
relating to the Plan.


          7.7.  INTERESTS NOT TRANSFERABLE.  The interests of persons entitled
to benefits under the Plan are not subject to their debts or other obligations
and, except as may be required by the tax withholding provisions of the Internal
Revenue Code or any state's income tax act, or pursuant to an agreement between
a Participant and the Employers, may not be voluntarily sold, transferred,
alienated, assigned or encumbered.


          7.8.  MISTAKE OF FACT.  Any mistake of fact or misstatement of fact
shall be corrected when it becomes known and proper adjustment made by reason
thereof.


          7.9.  SEVERABILITY.  In the event any provision of the Plan or an
Agreement shall be held to be illegal or invalid for any reason, such illegality
or invalidity shall not affect


                                       -8-
<PAGE>

the remaining parts of the Plan or Agreement, and the Plan or Agreement shall be
construed and enforced as if such illegal or invalid provisions had never been
contained in the Plan or Agreement.


          7.10.  WITHHOLDING.  The Company will withhold from any amounts
payable under the Plan all federal, state, city and local taxes as shall be
legally required and any applicable insurance premiums, as well as any other
amounts authorized or required by Company policy including, but not limited to,
withholding for garnishments and judgments or other court orders.


          7.11.  EFFECT ON OTHER PLANS OR AGREEMENTS.  Payments or benefits
provided to a Participant under any Company stock, deferred compensation,
savings, retirement or other employee benefit plan are governed solely by the
terms of such plan.  Any obligations or duties of a Participant pursuant to any
non-competition or other agreement with the Company shall not be affected by the
receipt of benefits under this Plan.



                                    SECTION 8

                            AMENDMENT AND TERMINATION


          8.1. AMENDMENT AND TERMINATION.  Allegiance reserves the right to
amend the Plan at any time or to terminate the Plan at any time provided that no
such amendment or termination of the Plan shall affect the provisions of any
Participant's Agreement then in force under the Plan.


                                       -9-
<PAGE>

                                    AGREEMENT
                                      UNDER
                        ALLEGIANCE CHANGE IN CONTROL PLAN
                               (3X BASE, GROSS-UP)


          THIS AGREEMENT is made as of October 1, 1996 by and between Allegiance
Corporation, a Delaware corporation (the "Company") and _______________ (the
"Employee") under the Allegiance Change in Control Plan (the "Plan").

          WHEREAS, Company considers the maintenance of a vital management group
to be essential to protecting and enhancing the best interests of Company and
its stockholders and to that end Company has established the Plan to provide
benefits to certain management employees in the event their employment is
terminated following a Change in Control of Company, participation in which Plan
is evidenced by an individual agreement between Company and each participating
employee; and

          WHEREAS, Employee is a member of Company's management group and
Company has determined that to reinforce and encourage the continued attention
and dedication of Employee to his duties free from distractions which could
arise in anticipation of or subsequent to a Change in Control of Company, it
should extend participation in the Plan to Employee;

          NOW, THEREFORE, in consideration of the mutual covenants contained
herein, Company and Employee agree that Employee shall become a Participant in
the Plan subject to the following terms which form a part of the Plan with
respect to Employee's participation therein.

     1.   TERM AND NATURE OF AGREEMENT.  This Agreement and Employee's
participation in the Plan shall commence as of the date hereof and shall
continue in effect until October 1, 1999.  As of October 1, 1999 and each third
October 1 occurring thereafter, this Agreement shall be automatically renewed
for a term of three (3) years unless Company gives written notice to Employee at
least 90 days prior to the renewal date that this Agreement will not be
extended.  Notwithstanding the foregoing, if a Change in Control (as hereinafter
defined) occurs during the last two (2) years of any term of this Agreement, the
term of this Agreement and Employee's Plan participation shall automatically be
extended for a period of twenty-four (24) months after the end of the month in
which the Change in Control occurs.  If Employee's employment with Company
terminates prior to a Change in Control, this Agreement and Employee's
participation in the Plan shall automatically expire.  Furthermore, Employee may
terminate this Agreement and his participation in the Plan at any time by giving
Company 30 days' advance written notice.  This Agreement which evidences
Employee's participation in the Plan shall be construed and enforced under the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") as an
unfunded welfare



<PAGE>

benefit plan.  The Plan and the Agreement shall be administered by the
Compensation Committee of the Board of Directors of the Company (the
"Committee").

     2.   SEVERANCE BENEFITS FOLLOWING A CHANGE IN CONTROL.  If Employee's
employment with Company is terminated within twenty-four (24) months following a
Change in Control, Employee shall be entitled to the following severance
benefits (in addition to any non-severance compensation and benefits provided
for under any of Company's employee benefit plans, policies and practices or
under the terms of any other contracts, but in lieu of any severance pay under
any Company employee benefit plan, policy and practice or under the terms of any
other contract including any employment contract):

          (a)  If Employee's employment is terminated by reason of Employee's
     disability, retirement or death or by Employee other than for Good Reason,
     the Company shall pay Employee his full base salary through the Date of
     Termination at the rate in effect at the time of termination (or the date
     of death in the case of Employee's death), plus any bonus or incentive
     compensation award which, pursuant to the terms of any compensation or
     incentive plan, Employee is entitled to receive but which has not yet been
     paid.

          (b)  If Employee's employment is terminated for Cause, Company shall
     pay Employee his full base salary through the Date of Termination at the
     rate in effect at the time Notice of Termination is given plus any bonus or
     incentive compensation award which, pursuant to the terms of any
     compensation or incentive plan, Employee is entitled to receive but which
     has not yet been paid.

          (c)  If Employee's employment is terminated by Company other than for
     Cause or by Employee for Good Reason, then:

               (i)  Within five (5) days after the Date of Termination, Company
          shall pay Employee his full base salary through the Date of
          Termination at the greater of the rate in effect at the time the
          Change in Control occurred or the rate in effect when the Notice of
          Termination was given plus an amount equal to 100% of Employee's
          Target Annual Bonus (as defined below).

               (ii)  Company shall pay Employee a gross severance benefit equal
          to the product of three (3) times the sum of (A) Employee's Annual
          Base Salary at the greater of the rate in effect at the time the
          Change in Control occurred or the rate in effect when Notice of
          Termination was given and (B) Employee's Target Annual Bonus.  The
          severance benefit shall be paid during the ensuing 36-month period in
          equal installments according to Company's normal payroll schedule
          beginning with the first payroll period in which Employee's Date of
          Termination occurs.  Employee's "Annual Base Salary" shall mean the
          yearly salary rate established from time to time by Company as
          Employee's regular


                                       -2-
<PAGE>

          salary for the next succeeding twelve (12) month period, payable
          pursuant to the Company's payroll on a periodic basis and Employee's
          "Target Annual Bonus" shall mean the maximum bonus Employee could earn
          under Company's Short Term Incentive Plan for the year in which his
          Date of Termination occurs.

               (iii) Any outstanding options to purchase stock of Company held
          by Employee shall immediately vest and become exercisable in full in
          accordance with their terms and the provisions of Company's omnibus
          incentive plan.

               (iv) Company shall ensure that Employee is paid in cash within 30
          days after the Date of Termination Employee's benefit under the
          Allegiance Excess Benefit Plan or any successor thereto.

               (v)  Company shall pay the costs of a reasonable outplacement
          service until Employee is employed on a full time basis.

     3.   EXCISE TAX 280G GROSS UP.  In the event that any payment or benefit
received or to be received by Employee in connection with a Change in Control or
the termination of Employee's employment (whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with Company, with any
person whose actions result in a Change in Control of Company or with any person
affiliated with Company or such person) (all such payments and benefits,
including the payments and benefits provided herein, being hereinafter called
"Total Payments") would be subject to the excise tax imposed by Section 4999 of
the Internal Revenue Code of 1986 ("Code"), or any interest or penalties are
incurred by Employee with respect to such excise tax (such excise tax, together
with any such interest and penalties, hereinafter collectively referred to as
the "Excise Tax"), Employee shall be entitled to receive an additional payment
(a "Gross-Up Payment") in an amount such that after payment by Employee of all
taxes (including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and penalties
imposed with respect thereto) and the Excise Tax imposed upon the Gross-Up
Payment, Employee retains an amount of the Gross-Up Payment equal to the Excise
Tax imposed upon the Total Payments.  Payment of the Gross-Up Payment shall be
subject to the following:

          (a)  Subject to paragraph 3(b) below, the determination of whether and
     when a Gross-Up Payment is required and the amount of such Gross-Up Payment
     shall be made by a nationally recognized certified public accounting firm
     designated by Employee (the "Accounting Firm").  The Accounting Firm shall
     provide detailed supporting calculations to Company and Employee within
     fifteen (15) business days of being requested by Employee to make a Gross-
     Up Payment determination.  If the Accounting Firm determines that a Gross-
     Up Payment is required, the Gross-Up Payment so determined shall be paid
     within five (5) days after the receipt of the Accounting Firm's
     determination.  If the Accounting Firm determines that no Excise


                                       -3-
<PAGE>

     Tax is payable by Employee, it shall so advise Employee in writing.  The
     Accounting Firm's determinations shall be binding upon Company and
     Employee.  If, following the exhaustion of Company's remedies under
     paragraphs (b) and (c) below,  Employee is required to pay an Excise Tax,
     the Accounting Firm shall make a determination of the amount of any
     underpayment in any previous Gross-Up Payment and any underpayment shall be
     paid promptly by Company to Employee.

          (b)  Employee shall notify Company in writing of any claim by the
     Internal Revenue Service that, if successful, would require Company to make
     a Gross-Up Payment.  Such notification shall be given as soon as
     practicable but no later than ten (10) business days after Employee is
     informed in writing of such claim and shall apprise Company of the nature
     of such claim and the date on which such claim is requested to be paid.
     Employee shall not pay such claim prior to the expiration of the thirty
     (30) day period following the date on which it gives such notice to Company
     (or such shorter period ending on the date that any payment of taxes with
     respect to such claim is due).  If Company notifies Employee in writing
     prior to the expiration of such period that it desires to contest such
     claim,  Employee shall (i) give Company any information reasonably
     requested by Company relating to such claim, (ii) take such action in
     connection with contesting such claim as Company shall reasonably request
     in writing, including, without limitation, accepting legal representation
     with respect to such claim by an attorney reasonably selected by Company,
     (iii) cooperate with Company in good faith in order to effectively contest
     such claim and (iv) permit Company to participate in any proceedings
     relating to such claim; provided, however, that Company shall bear and pay
     directly all costs and expenses (including additional interest and
     penalties) incurred in connection with such contest and shall indemnify and
     hold Employee harmless, on an after-tax basis, for any Excise Tax or income
     tax (including interest and penalties with respect thereto) imposed as a
     result of such representation and payment of costs and expenses.


          (c)  Without limitation on the foregoing provisions of this Section 3,
     Company shall control all proceedings taken in connection with contesting a
     claim by the Internal Revenue Service and, at its sole option, may pursue
     or forego any and all administrative appeals, proceedings, hearings and
     conferences with the taxing authority in respect of such claim and may, at
     its sole option either direct Employee to pay the tax claimed and sue for a
     refund or contest the claim in any permissible manner, and Employee agrees
     to prosecute such contest to a determination before any administrative
     tribunal, in a court of initial jurisdiction and in one or more appellate
     courts, as Company shall determine; provided, however, that if Company
     directs Employee to pay such claim and sue for a refund, Company shall
     advance the amount of such payment to Employee on an interest-free basis,
     and shall indemnify and hold Employee harmless, on an after-tax basis, from
     any Excise Tax or income tax (including interest or penalties with respect
     thereto) imposed with respect to such advance or with respect to any
     imputed income with respect to such advance; and


                                       -4-
<PAGE>

     provided, further that if Employee is required to extend the statute of
     limitations to enable Company to contest such claim, Employee may limit
     this extension solely to such contested amount.  Company's control of the
     contest shall be limited to issues with respect to which a Gross-Up Payment
     would be payable hereunder and Employee shall be entitled to settle or
     contest, as the case may be, any other issue raised by the Internal Revenue
     Service or any other taxing authority.

          (d)  If, after the receipt by Employee of an amount advanced by
     Company pursuant to paragraph 3(c) above, Employee becomes entitled to
     receive any refund with respect to such claim, Employee shall (subject to
     Company's complying with the requirements of paragraphs 3(b) and (c))
     promptly pay to Company the amount of such refund (together with any
     interest paid or credited thereon after taxes applicable thereto).

          (e)  If, after the receipt by Employee of an amount advanced by
     Company under this paragraph 3(c), a determination is made that Employee
     shall not be entitled to any refund with respect to such claim and Company
     does not notify Employee in writing of its intent to contest such denial of
     refund prior to the expiration of thirty (30) days after such
     determination, then such advance shall be forgiven and shall not be
     required to be repaid and the amount of such advance shall offset, to the
     extent thereof, the amount of Gross-Up Payment required to be paid.

          (f) No Gross-Up Payment shall be required under this Section 3 if the
     Total Payments are reduced pursuant to Section 4 below.

     4.   SECTION 280G LIMITATIONS.  In the event that the Total Payments would
not be deductible (in whole or in part) as a result of Section 280G of the Code
then the payments and benefits required under this Agreement shall be reduced to
the extent necessary to eliminate the disallowance of the deduction under Code
Section 280G (after taking into account any reduction in the Total Payments
required by such other plans, arrangements or agreements because of Code Section
280G) unless such reduction would result in Employee receiving less than ninety-
five percent (95%) of the Total Payments that would have been paid had such
Total Payments not been reduced.  If the reduction provided for herein would
result in Employee receiving less than ninety-five percent (95%) of the Total
Payments before taking into account such reduction, then no reduction under this
Section 4 shall be made and Employee shall be entitled to full amount of
payments and benefits otherwise provided in this Agreement.  For purposes of
this limitation there shall not be taken into account any payment or benefit
which in the opinion of tax counsel selected by Company does not constitute a
"parachute payment" within the meaning of Code Section 280G(b)(2).  The value of
any non-cash benefit or any deferred payment or benefit included in the Total
Payments shall be determined by Company's independent auditors in accordance
with the principles of Sections 280G(d)(3) and (4) of the Code.  If the Total
Payments are reduced as provided in this Section 4 and it is established
pursuant to a final determination of a court or an Internal


                                       -5-
<PAGE>

Revenue Service proceeding that, notwithstanding the good faith of Employee and
Company in applying the terms of this Section 4, any portion of the Total
Payments are not deductible by reason of Code Section 280G, Employee shall have
an obligation to pay Company upon demand an amount equal to the excess of the
Total Payments provided to Employee over the payments and benefits that can
provide to Employee on a fully deductible basis.

     5.   NON-SOLICITATION AND NON-COMPETITION.  In consideration for the
severance benefits called for under paragraph 2(c) and Section 3 above, Employee
agrees that during the 24-month period following his Date of Termination (the
"Severance Period"), Employee:

          (a)  will not, without the prior written consent of Company, alone or
     in association with others, solicit on behalf of Employee, or any other
     person, firm, corporation or entity, any employee of Company, or any of its
     operating divisions, subsidiaries or affiliates, for employment with a
     person, firm, corporation or entity which competes with Company, or any of
     its divisions, subsidiaries or affiliates.

          (b)  will not, without the prior written consent of Company, directly
     or indirectly, engage or invest in, counsel or advise or be employed by any
     other person, firm, corporation or entity engaged in or conducting business
     which is the same as, or competing with, the business being conducted by
     Company, or any of its operating divisions, subsidiaries or affiliates, in
     any area or territory in which Company, or such operating divisions,
     subsidiaries or affiliates, shall be conducting business during the
     Severance Period.  Notwithstanding the foregoing, Employee shall be
     entitled to passively own not more than four and nine-tenths percent (4.9%)
     of any publicly held entity engaged in any business in which Company, or
     any of its operating divisions, subsidiaries or affiliates, shall be
     engaged during said period.

Should Employee fail to comply with the non-solicitation and/or non-competition
restrictions contained in this Section 5, this Agreement shall immediately
terminate and Employee shall forfeit any remaining unpaid benefits under this
Agreement.

     6.   OTHER EMPLOYMENT.  Employee shall not be required to mitigate the
amount of any payment or benefit provided for under this Agreement by seeking
other employment or otherwise nor shall the amount of any payment or benefit
provided for in this Agreement be reduced by any compensation earned by Employee
as a result of other employment.  Payment to Employee pursuant to this Agreement
shall constitute the entire obligation of Company for severance pay and full
settlement of any claim for severance pay under law or in equity that Employee
might otherwise assert against Company or any of its employees, officers or
directors on account of Employee's termination.

     7.   CHANGE IN CONTROL.  For purposes of this Agreement a "Change in
Control" shall have occurred if:


                                       -6-
<PAGE>

          (a)  any "Person" (as such term is used in Sections 13(d) and
               14(d) of the Securities Exchange Act of 1934, as amended
               ("Exchange Act") other than Company, any corporation owned,
               directly or indirectly, by the stockholders of Company in
               substantially the same proportions as their ownership of
               stock of Company, and any trustee or other fiduciary holding
               securities under a Company employee benefit plan or such
               proportionately owned corporation, becomes the "beneficial
               owner" (as defined in rule 13d-3 under the Exchange Act),
               directly or indirectly, of securities of Company
               representing 20% or more of the combined voting power of
               Company's then outstanding securities;

          (b)  during any period of not more than 24 months, individuals
               who at the beginning of such period constitute the Board of
               Directors of Company, and any new director (other than a
               director designated by a Person who has entered into an
               agreement with Company to effect a transaction described in
               paragraph (a), (c), or (d) of this Section 7) whose election
               by the board or nomination for election by the Company's
               stockholders was approved by a vote of at least two-thirds
               of the directors then still in office who either were
               directors at the beginning of the period or whose election
               or nomination for election was previously so approved, cease
               for any reason to constitute at least a majority thereof;

          (c)  the stockholders of Company approve a merger or
               consolidation of Company with any other corporation, other
               than (i) a merger or consolidation which would result in the
               voting securities of Company outstanding immediately prior
               thereto continuing to represent (either by remaining
               outstanding or by being converted into voting securities of
               the surviving entity) more than 60% of the combined voting
               power of the voting securities of Company or such surviving
               entity outstanding immediately after such merger or
               consolidation, or (ii) a merger or consolidation effected to
               implement a recapitalization of Company (or similar
               transaction) in which no Person acquires more than 20% of
               the combined voting power of Company's then outstanding
               securities; or

          (d)  the stockholders of Company approve a plan of complete
               liquidation of Company or an agreement for the sale or
               disposition by Company of all or substantially all of its
               assets (or any transaction having a similar effect).


                                       -7-
<PAGE>

Company may also determine, in its discretion, that a sale of a substantial
portion of its assets or one of its businesses constitutes a "Change of Control"
with respect to Employee if Employee is employed in the affected operation.

     8.   TERMINATIONS FOR CAUSE AND GOOD REASON.  Employee will be considered
to have been terminated for "Cause" if the  termination is by reason of Employee
willfully engaging in conduct demonstrably and materially injurious to the
Company, Employee being convicted of or confessing to a crime involving
dishonesty or moral turpitude or Employee's willful and continued failure for a
significant period of time to perform Employee's duties after a demand for
substantial performance has been delivered to Employee by the Board of Directors
of Company which demand specifically identifies the manner in which the Board
believes that Employee has not substantially performed his duties.  Employee's
termination shall be considered to have been for "Good Reason" if Employee's
termination is by reason of the occurrence of any of the following events within
24 months following a Change in Control without Employee's express written
consent:

          (a)  any significant change in Employee's title, authorities,
     responsibilities (including reporting responsibilities) which, in
     Employee's reasonable judgment, represents an adverse change; the
     assignment to Employee of any significant duties or work responsibilities
     which, in his reasonable judgment, are inconsistent with such title,
     authorities or responsibilities; or any removal of Employee from, or
     failure to reappoint or reelect him to any of such positions, except if any
     such changes are because of disability, retirement or Cause;

          (b)  a reduction in or failure to pay any portion of Employee's Annual
     Base Salary as in effect on the date of the Change in Control or as the
     same may be increased from time to time thereafter;

          (c)  the failure by Company to provide Employee with compensation and
     benefits (including, without limitation, incentive, bonus and other
     compensation plans and any vacation, medical, hospitalization, life
     insurance, dental or disability benefit plan), or cash compensation in lieu
     thereof, which are, in the aggregate, no less favorable than those provided
     by Company to Employee immediately prior to the occurrence of the Change in
     Control;

          (d)  any breach by Company of any provision of this Agreement; and

          (e)  the failure of Company to obtain a satisfactory agreement from
     any successor or assign of Company to assume and agree to perform this
     Agreement, as required in Section 10 of this Agreement.

Employee's continued employment after the expiration of 60 days from any action
which would constitute Good Reason under paragraph 8(a) above shall constitute a
waiver of rights


                                       -8-
<PAGE>

with respect to such action constituting Good Reason under this Agreement.

     9.   NOTICE OF TERMINATION.  Any purported termination of employment by
Company or by Employee shall be communicated by a written Notice of Termination
to the other party which notice is given in accordance with Section 12 of this
Agreement.  No purported termination shall be effective without such a Notice of
Termination.  The Notice of Termination shall set forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of Employee's
employment and shall specify the Date of Termination.  The "Date of Termination"
shall mean the date specified in the Notice of Termination provided that in no
case shall the date be less than thirty (30) days or more than sixty (60) days
after the date the Notice of Termination is given.  If within thirty (30) days
after any Notice of Termination is given the party receiving such Notice of
Termination notifies the other party that a dispute exists concerning the
termination, the Date of Termination shall be the date on which the dispute is
finally determined either by mutual written agreement of the parties, or by the
final judgment, order or decree of a court of competent jurisdiction (the time
for appeal therefrom having expired and no appeal having been taken).

     10.   SUCCESSORS.  Company will require any successor or assign
(whether direct or indirect, by purchase, merger, consolidation or otherwise) to
all or substantially all of the business and/or assets of Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent Company would be required to perform if no such succession or assignment
had taken place.  As used in this Agreement, "Company" shall include any
successor or assign to its business and/or assets which assumes and agrees to
perform this Agreement by operation of law, or otherwise.  This Agreement shall
inure to the benefit of and be enforceable by Employee's personal and legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.  If Employee should die while any amounts would still be
payable to him hereunder if he had continued to live, all such amounts, unless
otherwise provided herein, shall be paid in accordance with the terms of this
Agreement to Employee's named beneficiary and if there is no such named
beneficiary, to Employee's estate in a lump sum.

      11. FEES AND EXPENSES.  Company shall pay all reasonable legal fees and
related expenses (including the reasonable costs of experts, evidence and
counsel), when and as incurred by Employee, as a result of contesting or
disputing any termination of employment of Employee following a Change in
Control whether or not such contest or dispute is resolved in Employee's favor
but only if Employee was seeking in good faith to obtain or enforce any right or
benefit provided by this Agreement or by any other plan or arrangement
maintained by the Company under which Employee is or may be entitled to receive
benefits.

      12. NOTICE.  Any notice or other communication provided for or required by
this Agreement shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by certified mail, return receipt requested,
postage prepaid, addressed to the respective addresses last given by each party
to the other or to such other address as either


                                       -9-
<PAGE>

party may have furnished to the other in writing.

     13.  MODIFICATIONS, WAIVERS AND SURVIVAL OF OBLIGATIONS.  No provision of
this Agreement may be modified, waived or discharged unless such modification,
waiver or discharge is agreed to in writing and signed by Employee and Company.
A waiver of any condition or provision of this Agreement shall be limited to the
terms and conditions of such waiver and shall be not be construed as a waiver of
any similar or dissimilar provisions or condition at any time.  The obligations
of Company under Sections 2 and 3 shall survive the expiration of the term of
this Agreement.

     14.  CLAIMS PROCEDURE.  Any claim for benefits under this Agreement by
Employee shall be made in writing pursuant to the claim procedures stated in the
Plan.

     15.  GOVERNING LAW.  The laws of Illinois shall be controlling in all
matters relating to this Agreement and the Plan to the extent not preempted by
ERISA.

     16.  SEVERABILITY.  The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof.

     17.  ENTIRE AGREEMENT.  This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements, understandings
and arrangements, oral or written, between the parties hereto with respect to
the subject matter hereof.

     18.  ACTION BY COMPANY.  Any action required of or permitted by Company
under this Agreement shall be by resolution of its Board of Directors, by
resolution of a duly authorized committee of its Board of Directors, or by a
person or persons authorized by resolutions of its Board of Directors or such
committee.

      19. COUNTERPARTS.  This Agreement may be executed in several counterparts,
each of which shall be deemed to be an original but all of which together will
constitute one and the same instrument.

      20. NON-EXCLUSIVELY OF RIGHTS.  Nothing in this Agreement shall prevent or
limit Employee's continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by Company and for which Employee
may qualify, nor shall anything herein limit or reduce such rights as Employee
may have under any other agreements with Company.  Amounts which are vested
benefits or which Employee is otherwise entitled to


                                      -10-
<PAGE>

receive under any plan or program of Company shall be payable in accordance with
such plan or program, except as explicitly modified by this Agreement.

                              ALLEGIANCE CORPORATION


                              By:
                                   --------------------------------------------
                                  Its:
                                       ----------------------------------------


                              ------------------------------------------------
                                            Employee


                              SSN:
                                   --------------------------------------------


                                      -11-




<PAGE>

                                    AGREEMENT
                                      UNDER
                        ALLEGIANCE CHANGE IN CONTROL PLAN
                                    (1X BASE)


          THIS AGREEMENT is made as of October 1, 1996 by and between 
Allegiance Corporation, a Delaware corporation (the "Company") and ____________
(the "Employee") under the Allegiance Change in Control Plan (the "Plan").

          WHEREAS, Company considers the maintenance of a vital management 
group to be essential to protecting and enhancing the best interests of 
Company and its stockholders and to that end Company has established the Plan 
to provide benefits to certain management employees in the event their 
employment is terminated following a Change in Control of Company, 
participation in which Plan is evidenced by an individual agreement between 
Company and each participating employee; and

          WHEREAS, Employee is a member of Company's management group and 
Company has determined that to reinforce and encourage the continued 
attention and dedication of Employee to his duties free from distractions 
which could arise in anticipation of or subsequent to a Change in Control of 
Company, it should extend participation in the Plan to Employee;

          NOW, THEREFORE, in consideration of the mutual covenants contained 
herein, Company and Employee agree that Employee shall become a Participant 
in the Plan subject to the following terms which form a part of the Plan with 
respect to Employee's participation therein.

     1.   TERM AND NATURE OF AGREEMENT.  This Agreement and Employee's 
participation in the Plan shall commence as of the date hereof and shall 
continue in effect until October 1, 1999.  As of October 1, 1999 and each 
third October 1 occurring thereafter, this Agreement shall be automatically 
renewed for a term of three (3) years unless Company gives written notice to 
Employee at least 90 days prior to the renewal date that this Agreement will 
not be extended.  Notwithstanding the foregoing, if a Change in Control (as 
hereinafter defined) occurs during the last two (2) years of any term of this 
Agreement, the term of this Agreement and Employee's Plan participation shall 
automatically be extended for a period of twenty-four (24) months after the 
end of the month in which the Change in Control occurs.  If Employee's 
employment with Company terminates prior to a Change in Control, this 
Agreement and Employee's participation in the Plan shall automatically 
expire.  Furthermore, Employee may terminate this Agreement and his 
participation in the Plan at any time by giving Company 30 days' advance 
written notice.  This Agreement which evidences Employee's participation in 
the Plan shall be construed and enforced under the Employee Retirement Income 
Security Act of 1974, as amended ("ERISA") as an unfunded welfare

<PAGE>

benefit plan.  The Plan and the Agreement shall be administered by the 
Compensation Committee of the Board of Directors of the Company (the 
"Committee").

     2.   SEVERANCE BENEFITS FOLLOWING A CHANGE IN CONTROL.  If Employee's 
employment with Company is terminated within twenty-four (24) months 
following a Change in Control, Employee shall be entitled to the following 
severance benefits (in addition to any non-severance compensation and 
benefits provided for under any of Company's employee benefit plans, policies 
and practices or under the terms of any other contracts, but in lieu of any 
severance pay under any Company employee benefit plan, policy and practice or 
under the terms of any other contract including any employment contract):

          (a)  If Employee's employment is terminated by reason of Employee's
     disability, retirement or death or by Employee other than for Good Reason,
     the Company shall pay Employee his full base salary through the Date of
     Termination at the rate in effect at the time of termination (or the date
     of death in the case of Employee's death), plus any bonus or incentive
     compensation award which, pursuant to the terms of any compensation or
     incentive plan, Employee is entitled to receive but which has not yet been
     paid.

          (b)  If Employee's employment is terminated for Cause, Company shall
     pay Employee his full base salary through the Date of Termination at the
     rate in effect at the time Notice of Termination is given plus any bonus
     or incentive compensation award which, pursuant to the terms of any
     compensation or incentive plan, Employee is entitled to receive but which
     has not yet been paid.

          (c)  If Employee's employment is terminated by Company other than for
     Cause or by Employee for Good Reason, then:

               (i)  Within five (5) days after the Date of Termination,
          Company shall pay Employee his full base salary through the Date of
          Termination at the greater of the rate in effect at the time the
          Change in Control occurred or the rate in effect when the Notice of
          Termination was given plus an amount equal to 100% of Employee's
          Target Annual Bonus (as defined below).

               (ii)  Company shall pay Employee a gross severance benefit equal
          to the product of one (1) times the sum of (A) Employee's Annual Base
          Salary at the greater of the rate in effect at the time the Change in
          Control occurred or the rate in effect when Notice of Termination was
          given and (B) Employee's Target Annual Bonus.  The severance benefit
          shall be paid during the ensuing 12-month period in equal installments
          according to Company's normal payroll schedule beginning with the
          first payroll period in which Employee's Date of Termination occurs. 
          Employee's "Annual Base Salary" shall mean the yearly salary rate
          established from time to time by Company as Employee's regular

                                      -2-

<PAGE>

          salary for the next succeeding twelve (12) month period, payable
          pursuant to Company's payroll on a periodic basis and Employee's
          "Target Annual Bonus" shall mean the maximum bonus Employee could
          earn under Company's Short Term Incentive Plan for the year in which
          his Date of Termination occurs.

               (iii) Any outstanding options to purchase stock of Company held
          by Employee shall immediately vest and become exercisable in full in
          accordance with their terms and the provisions of Company's omnibus
          incentive plan.

               (iv) Company shall ensure that Employee is paid in cash within
          30 days after the Date of Termination Employee's benefit under the
          Allegiance Excess Benefit Plan or any successor thereto.

               (v)  Company shall pay the costs of a reasonable outplacement
          service until Employee is employed on a full time basis.

     3.   SECTION 280G LIMITATIONS.  Notwithstanding any other provisions of 
this Agreement, in the event that any payment or benefit received or to be 
received by Employee in connection with a Change in Control or the 
termination of Employee's employment (whether pursuant to the terms of this 
Agreement or any other plan, arrangement or agreement with Company, with any 
person whose actions result in a Change in Control of Company or with any 
person affiliated with Company or such person) (all such payments and 
benefits, including the severnace payments and benefits provided herein, 
being hereinafter called "Total Payments") would not be deductible (in whole 
or in part) as a result of Section 280G of the Internal Revenue Code of 1986, 
as amended (the "Code"), then the payments and benefits required under this 
Agreement shall be reduced to the extent necessary to eliminate the 
disallowance of the deduction under Code Section 280G after taking into 
account any reduction in the Total Payments required by such other plans, 
arrangements or agreements because of Code Section 280G if the Net After-Tax 
Amount of the Total Payments after taking into account the reduction 
described herein would be greater than the Net After-Tax Amount of the Total 
Payments before any such reduction.  The Net After-Tax Amount of the Total 
Payments shall mean the gross amount of the Total Payments reduced by any 
federal, state and local income tax, medicare payroll tax and excise tax 
under Section 4999 of the Code assuming for this purpose tax at the highest 
marginal applicable rates and net of the maximum reduction in federal income 
taxes which could be obtained from the deduction of any state and local 
taxes.  If the Net After-Tax Amount of the Total Payments after taking into 
account the reduction would not be greater than the Net After-Tax Amount of 
the Total Payments before taking into account any reduction, then no 
reduction under this Section 3 shall be made and Employee shall be entitled 
to the full amount of payments and benefits otherwise provided for in this 
Agreement.  For purposes of this limitation there shall not be taken into 
account any payment or benefit which in the opinion of tax counsel selected 
by Company does not constitute a "parachute payment" within the meaning of 
Code Section 280G(b)(2).  The value of any non-cash benefit or any deferred 
payment or benefit included

                                   -3-

<PAGE>

in the Total Payments shall be determined by Company's independent auditors 
in accordance with the principles of Sections 280G(d)(3) and (4) of the Code. 
If the Total Payments are reduced as provided herein and it is established 
pursuant to a final determination of a court or an Internal Revenue Service 
proceeding that, notwithstanding the good faith of Employee and Company in 
applying the terms of this Section 3, any portion of the Total Payments are 
not deductible by reason of Code Section 280G, Employee shall have an 
obligation to pay Company upon demand an amount equal to the excess of the 
Total Payments provided to Employee over the payments and benefits that can 
provide to Employee on a fully deductible basis.

     4.   NON-SOLICITATION AND NON-COMPETITION.  In consideration for the 
severance benefits called for under paragraph 2(c) above, Employee agrees 
that during the 24-month period following his Date of Termination (the 
"Severance Period"), Employee:

          (a)  will not, without the prior written consent of Company, alone or
     in association with others, solicit on behalf of Employee, or any other
     person, firm, corporation or entity, any employee of Company, or any of
     its operating divisions, subsidiaries or affiliates, for employment with a
     person, firm, corporation or entity which competes with Company, or any of
     its divisions, subsidiaries or affiliates.

          (b)  will not, without the prior written consent of Company, directly
     or indirectly, engage or invest in, counsel or advise or be employed by
     any other person, firm, corporation or entity engaged in or conducting
     business which is the same as, or competing with, the business being
     conducted by Company, or any of its operating divisions, subsidiaries or
     affiliates, in any area or territory in which Company, or such operating
     divisions, subsidiaries or affiliates, shall be conducting business during
     the Severance Period.  Notwithstanding the foregoing, Employee shall be
     entitled to passively own not more than four and nine-tenths percent
     (4.9%)of any publicly held entity engaged in any business in which
     Company, or any of its operating divisions, subsidiaries or affiliates,
     shall be engaged during said period.

Should Employee fail to comply with the non-solicitation and/or 
non-competition restrictions contained in this Section 4, this Agreement 
shall immediately terminate and Employee shall forfeit any remaining unpaid 
benefits under this Agreement.

     5.   OTHER EMPLOYMENT.  Employee shall not be required to mitigate the 
amount of any payment or benefit provided for under this Agreement by seeking 
other employment or otherwise nor shall the amount of any payment or benefit 
provided for in this Agreement be reduced by any compensation earned by 
Employee as a result of other employment.  Payment to Employee pursuant to 
this Agreement shall constitute the entire obligation of Company for 
severance pay and full settlement of any claim for severance pay under law or 
in equity that Employee might otherwise assert against Company or any of its 
employees, officers or directors on account of Employee's termination.

                                  -4-
<PAGE>

     6.   CHANGE IN CONTROL.  For purposes of this Agreement a "Change in 
Control" shall have occurred if:

          (a)  any "Person" (as such term is used in Sections 13(d) and
               14(d) of the Securities Exchange Act of 1934, as amended
               ("Exchange Act") other than Company, any corporation owned,
               directly or indirectly, by the stockholders of Company in
               substantially the same proportions as their ownership of
               stock of Company, and any trustee or other fiduciary holding
               securities under a Company employee benefit plan or such
               proportionately owned corporation, becomes the "beneficial
               owner" (as defined in rule 13d-3 under the Exchange Act),
               directly or indirectly, of securities of Company
               representing 20% or more of the combined voting power of
               Company's then outstanding securities;

          (b)  during any period of not more than 24 months, individuals
               who at the beginning of such period constitute the Board of
               Directors of Company, and any new director (other than a
               director designated by a Person who has entered into an
               agreement with Company to effect a transaction described in
               paragraph (a), (c), or (d) of this Section 6) whose election
               by the board or nomination for election by the Company's
               stockholders was approved by a vote of at least two-thirds
               of the directors then still in office who either were
               directors at the beginning of the period or whose election
               or nomination for election was previously so approved, cease
               for any reason to constitute at least a majority thereof;

          (c)  the stockholders of Company approve a merger or
               consolidation of Company with any other corporation, other
               than (i) a merger or consolidation which would result in the
               voting securities of Company outstanding immediately prior
               thereto continuing to represent (either by remaining
               outstanding or by being converted into voting securities of
               the surviving entity) more than 60% of the combined voting
               power of the voting securities of Company or such surviving
               entity outstanding immediately after such merger or
               consolidation, or (ii) a merger or consolidation effected to
               implement a recapitalization of Company (or similar
               transaction) in which no Person acquires more than 20% of
               the combined voting power of Company's then outstanding
               securities; or

                                  -5-
<PAGE>

          (d)  the stockholders of Company approve a plan of complete
               liquidation of Company or an agreement for the sale or
               disposition by Company of all or substantially all of its
               assets (or any transaction having a similar effect).

Company may also determine, in its discretion, that a sale of a substantial 
portion of its assets or one of its businesses constitutes a "Change of 
Control" with respect to Employee if Employee is employed in the affected 
operation.

     7.   TERMINATIONS FOR CAUSE AND GOOD REASON.  Employee will be 
considered to have been terminated for "Cause" if the  termination is by 
reason of Employee willfully engaging in conduct demonstrably and materially 
injurious to the Company, Employee being convicted of or confessing to a 
crime involving dishonesty or moral turpitude or Employee's willful and 
continued failure for a significant period of time to perform Employee's 
duties after a demand for substantial performance has been delivered to 
Employee by the Board of Directors of Company which demand specifically 
identifies the manner in which the Board believes that Employee has not 
substantially performed his duties.  Employee's termination shall be 
considered to have been for "Good Reason" if Employee's termination is by 
reason of the occurrence of any of the following events within 24 months 
following a Change in Control without Employee's express written consent:

          (a)  any significant change in Employee's title, authorities,
     responsibilities (including reporting responsibilities) which, in
     Employee's reasonable judgment, represents an adverse change; the
     assignment to Employee of any significant duties or work responsibilities
     which, in his reasonable judgment, are inconsistent with such title,
     authorities or responsibilities; or any removal of Employee from, or
     failure to reappoint or reelect him to any of such positions, except if
     any such changes are because of disability, retirement or Cause;

          (b)  a reduction in or failure to pay any portion of Employee's
     Annual Base Salary as in effect on the date of the Change in Control or as
     the same may be increased from time to time thereafter;

          (c)  the failure by Company to provide Employee with compensation and
     benefits (including, without limitation, incentive, bonus and other
     compensation plans and any vacation, medical, hospitalization, life
     insurance, dental or disability benefit plan), or cash compensation in
     lieu thereof, which are, in the aggregate, no less favorable than those 
     provided by Company to Employee immediately prior to the occurrence of the
     Change in Control;

          (d)  any breach by Company of any provision of this Agreement; and

                                  -6-
<PAGE>

          (e)  the failure of Company to obtain a satisfactory agreement from
     any successor or assign of Company to assume and agree to perform this
     Agreement, as required in Section 9 of this Agreement.

Employee's continued employment after the expiration of 60 days from any 
action which would constitute Good Reason under paragraph 7(a) above shall 
constitute a waiver of rights with respect to such action constituting Good 
Reason under this Agreement.

     8.   NOTICE OF TERMINATION.  Any purported termination of employment by 
Company or by Employee shall be communicated by a written Notice of 
Termination to the other party which notice is given in accordance with 
Section 11 of this Agreement.  No purported termination shall be effective 
without such a Notice of Termination.  The Notice of Termination shall set 
forth in reasonable detail the facts and circumstances claimed to provide a 
basis for termination of Employee's employment and shall specify the Date of 
Termination.  The "Date of Termination" shall mean the date specified in the 
Notice of Termination provided that in no case shall the date be less than 
thirty (30) days or more than sixty (60) days after the date the Notice of 
Termination is given.  If within thirty (30) days after any Notice of 
Termination is given the party receiving such Notice of Termination notifies 
the other party that a dispute exists concerning the termination, the Date of 
Termination shall be the date on which the dispute is finally determined 
either by mutual written agreement of the parties, or by the final judgment, 
order or decree of a court of competent jurisdiction (the time for appeal 
therefrom having expired and no appeal having been taken).

      9.  SUCCESSORS.  Company will require any successor or assign (whether 
direct or indirect, by purchase, merger, consolidation or otherwise) to all 
or substantially all of the business and/or assets of Company to expressly 
assume and agree to perform this Agreement in the same manner and to the same 
extent Company would be required to perform if no such succession or 
assignment had taken place.  As used in this Agreement, "Company" shall 
include any successor or assign to its business and/or assets which assumes 
and agrees to perform this Agreement by operation of law, or otherwise.  This 
Agreement shall inure to the benefit of and be enforceable by Employee's 
personal and legal representatives, executors, administrators, successors, 
heirs, distributees, devisees and legatees.  If Employee should die while any 
amounts would still be payable to him hereunder if he had continued to live, 
all such amounts, unless otherwise provided herein, shall be paid in 
accordance with the terms of this Agreement to Employee's named beneficiary 
and if there is no such named beneficiary, to Employee's estate in a lump sum.

      10. FEES AND EXPENSES.  Company shall pay all reasonable legal fees and 
related expenses (including the reasonable costs of experts, evidence and 
counsel), when and as incurred by Employee, as a result of contesting or 
disputing any termination of employment of Employee following a Change in 
Control whether or not such contest or dispute is resolved in Employee's 
favor but only if Employee was seeking in good faith to obtain or enforce any 

                                  -7-

<PAGE>

right or benefit provided by this Agreement or by any other plan or 
arrangement maintained by the Company under which Employee is or may be 
entitled to receive benefits.

      11. NOTICE.  Any notice or other communication provided for or required 
by this Agreement shall be in writing and shall be deemed to have been duly 
given when personally delivered or sent by certified mail, return receipt 
requested, postage prepaid, addressed to the respective addresses last given 
by each party to the other or to such other address as either party may have 
furnished to the other in writing.

     12.  MODIFICATIONS, WAIVERS AND SURVIVAL OF OBLIGATIONS.  No provision 
of this Agreement may be modified, waived or discharged unless such 
modification, waiver or discharge is agreed to in writing and signed by 
Employee and Company. A waiver of any condition or provision of this 
Agreement shall be limited to the terms and conditions of such waiver and 
shall be not be construed as a waiver of any similar or dissimilar provisions 
or condition at any time.  The obligations of Company under Sections 2 and 3 
shall survive the expiration of the term of this Agreement.

     13.  CLAIMS PROCEDURE.  Any claim for benefits under this Agreement by 
Employee shall be made in writing pursuant to the claim procedures stated in 
the Plan.

     14.  GOVERNING LAW.   The laws of Illinois shall be controlling in all 
matters relating to this Agreement and the Plan to the extent not preempted 
by ERISA.

     15.  SEVERABILITY.  The provisions of this Agreement shall be deemed 
severable and the invalidity or unenforceability of any provision shall not 
affect the validity or enforceability of the other provisions hereof.

     16.  ENTIRE AGREEMENT.  This Agreement constitutes the entire agreement 
between the parties hereto and supersedes all prior agreements, 
understandings and arrangements, oral or written, between the parties hereto 
with respect to the subject matter hereof.

     17.  ACTION BY COMPANY.  Any action required of or permitted by Company 
under this Agreement shall be by resolution of its Board of Directors, by 
resolution of a duly authorized committee of its Board of Directors, or by a 
person or persons authorized by resolutions of its Board of Directors or such 
committee.

      18. COUNTERPARTS.  This Agreement may be executed in several 
counterparts, each of which shall be deemed to be an original but all of 
which together will constitute one and the same instrument.

      19. NON-EXCLUSIVELY OF RIGHTS.  Nothing in this Agreement shall prevent 
or limit Employee's continuing or future participation in any benefit, bonus, 
incentive or other plan or program provided by Company and for which Employee 
may qualify, nor shall anything

                                  -8-

<PAGE>

herein limit or reduce such rights as Employee may have under any other 
agreements with Company.  Amounts which are vested benefits or which Employee 
is otherwise entitled to receive under any plan or program of Company shall 
be payable in accordance with such plan or program, except as explicitly 
modified by this Agreement.

                              ALLEGIANCE CORPORATION


                              By:____________________________________
                                 Its:________________________________
               
                              _______________________________________
                                            Employee


                              SSN:___________________________________

                                  -9-
