


                                                                EXHIBIT 10.16









                            THE ALLSTATE CORPORATION





                              EQUITY INCENTIVE PLAN


                  AS AMENDED AND RESTATED ON NOVEMBER 12, 1996



























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                                TABLE OF CONTENTS
                                -----------------

                                                                           PAGE

1.      Purpose.............................................................1

2.      Definitions.........................................................1

3.      Scope of the Plan...................................................3
        (a)      Number of Shares Available For Delivery Under the Plan.....3
        (b)      Effect of Expiration or Termination........................3
        (c)      Treasury Stock.............................................3
        (d)      Committee Discretion to Cancel Options.....................3

4.      Administration......................................................4
        (a)      Committee Administration...................................4
        (b)      Board Reservation and Delegation...........................4
        (c)      Committee Authority........................................4
        (d)      Committee Determinations Final.............................5

5.      Eligibility.........................................................5

6.      Conditions to Grants................................................6
        (a)      General Conditions.........................................6
        (b)      Grant of Options and Option Price..........................6
        (c)      Grant of Incentive Stock Options...........................6
        (d)      Grant of Reload Options....................................7
        (e)      Grant of Shares of Restricted Stock........................8
        (f)      Grant of Unrestricted Stock................................10

7.      Non-transferability.................................................10

8.      Exercise ...........................................................11
        (a)      Exercise of Options........................................11
        (b)      Special Rules for Section 16 Grantees......................12
        (c)      Permissible Shares Issued..................................12

9.      Loans and Guarantees................................................13

10.     Notification under Section 83(b)....................................13

11.     Mandatory Withholding Taxes.........................................13


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                                TABLE OF CONTENTS
                                   (CONTINUED)
                                                                           PAGE

12.     Elective Share Withholding..........................................14
13.     Termination of Employment...........................................14
        (a)      Restricted Stock...........................................14
        (b)      Other Awards...............................................14
        (c)      Maximum Extension..........................................15

14.     Equity Incentive Plans of Foreign Subsidiaries......................15

15.     Substituted Awards..................................................15

16.     Securities Law Matters..............................................16

17.     No Funding Required.................................................16

18.     No Employment Rights................................................16

19.     Rights as a Stockholder.............................................16

20.     Nature of Payments..................................................17

21.     Non-Uniform Determinations..........................................17

22.     Adjustments.........................................................17

23.     Amendment of the Plan...............................................17

24.     Termination of the Plan.............................................17

25.     No Illegal Transactions.............................................18

26.     Controlling Law.....................................................18

27.     Severability........................................................18


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                The Plan.  The  Company  established  The  Allstate  Corporation
                --------
Equity  Incentive  Plan (as set forth herein and from time to time amended,  the
"Plan"),  effective  June 2, 1993.  Amendments  to the Plan were approved by the
Company's stockholders on May 19, 1994. On March 9, 1995, the Board of Directors
approved  amendments  to the Plan,  subject  to the  approval  of the  Company's
stockholders  of such  amendments  and of an amendment to increase the Company's
authorized Common Stock to 1,000,000,000  shares,  and subject to the occurrence
of the proposed Distribution described in the Proxy Statement dated February 21,
1995 of Sears, Roebuck and Co. On May 21, 1996, and subsequently on November 12,
1996 the Plan was further amended and restated.


     1. Purpose.  The primary purpose of the Plan is to provide a means by which
        -------
key employees of the Company and its Subsidiaries can acquire and maintain stock
ownership,  thereby strengthening their commitment to the success of the Company
and its  Subsidiaries and their desire to remain employed by the Company and its
Subsidiaries.  The Plan also is intended to attract and retain key employees and
to provide such employees  with  additional  incentive and reward  opportunities
designed to encourage them to enhance the  profitable  growth of the Company and
its Subsidiaries.


        2.  Definitions.  As used in the  Plan,  terms  defined  parenthetically
            -----------
immediately after their use shall have the respective  meanings provided by such
definitions  and the terms set forth  below  shall have the  following  meanings
(such meanings to be equally applicable to both the singular and plural forms of
the terms defined):

        (a)  "Award" means options, shares of restricted Stock, or shares of
unrestricted Stock granted under the Plan.

        (b)  "Award Agreement" means the written agreement by which an Award is
evidenced.

        (c)  "Board" means the board of directors of the Company.

        (d)  "Committee" means the committee of the Board appointed pursuant to
Article 4.

        (e)  "Company" means The Allstate Corporation, a Delaware corporation.

        (f) "Disability" means, as relates to the exercise of an incentive stock
option after Termination of Employment,  a permanent and total disability within
the meaning of Section  22(e)(3) of the Internal Revenue Code, and for all other
purposes, a mental or physical condition which, in the opinion of the Committee,
renders a Grantee unable or  incompetent  to carry out the job  responsibilities
which such  Grantee held or the duties to which such Grantee was assigned at the
time the disability  was incurred,  and which is expected to be permanent or for
an indefinite duration.

        (g)  "Effective Date" means the date described in the first paragraph of
the Plan.

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        (h) "Fair Market Value" of the Stock means,  as of any  applicable  date
(other than on the  Effective  Date) the mean between the high and low prices of
the Stock as reported on the New York Stock  Exchange  Composite  Tape, or if no
such  reported  sale of the Stock shall have  occurred on such date, on the next
preceding date on which there was such a reported sale, provided,  however, that
                                                        --------   -------
if the  Stock  is  acquired  and sold in a  simultaneous  sale  pursuant  to the
provisions of Article 8(a)(iv),  Fair Market Value means the price received upon
such sale.  Solely as of the effective date of the IPO, Fair Market Value of the
Stock  means the price to the public  pursuant  to the form of final  prospectus
used in  connection  with  the  IPO,  as  indicated  on the  cover  page of such
prospectus or otherwise.

        (i) "Grant Date"  means  the  date  of  grant of an  Award determined in
accordance with Article 6.

        (j) "Grantee" means an individual who has been granted an Award.

        (k) "Internal  Revenue Code" means the Internal Revenue Code of 1986, as
amended,  and  regulations  and rulings  thereunder.  References to a particular
section of the  Internal  Revenue  Code shall  include  references  to successor
provisions.

        (l) "IPO" means such term as defined in the first paragraph of the Plan.

        (m) "Minimum  Consideration"  means the $.01 par value per share or such
larger  amount  determined  pursuant  to  resolution  of the Board to be capital
within the meaning of Section 154 of the Delaware General Corporation Law.

        (n) "1934 Act" means the Securities Exchange Act of 1934, as amended.

        (o) "Option  Price"  means  the per share  purchase  price of (i) Stock
subject to an option or (ii) restricted Stock subject to an option.

        (p)  [deleted]

        (q)  "Plan" has the meaning set forth in the introductory paragraph.

        (r)  "Reload Option" has the meaning specified in Article 6(d).

        (s)  "Retirement" means a Termination of Employment occurring on or 
after an individual attains age 65, or a Termination of Employment approved by 
the Company  as an  early  retirement;  provided  that in the case of a Section
16 Grantee, such early retirement must be approved by the Committee.

        (t)  "SEC" means the Securities and Exchange Commission.


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        (u) "Section 16 Grantee" means a person  subject to potential  liability
with respect to equity securities of the Company under Section 16(b) of the 1934
Act.

        (v) "Stock" means common stock of the Company, par value $.01 per share.

        (x) "Subsidiary" means a corporation as defined in Section 424(f) of the
Internal   Revenue  Code,  with  the  Company  being  treated  as  the  employer
corporation for purposes of this definition.

        (y)  "10% Owner" means a person who owns stock (including  stock treated
as owned under Section 424(d) of the Internal Revenue Code) possessing more than
10% of the Voting Power of the Company.

        (z)  "Termination  of  Employment"  occurs  the  first  day on  which an
individual  is for any reason no longer  employed  by the  Company or any of its
Subsidiaries,  or  with  respect  to  an  individual  who  is an  employee  of a
Subsidiary,  the first day on which the Company no longer owns voting securities
possessing at least 50% of the Voting Power of such Subsidiary.

        (aa) "Voting   Power"   means  the   combined   voting  power  of  the
then-outstanding voting securities entitled to vote generally in the election of
directors.

3.       Scope of the Plan.
         -----------------

        (a) Number of Shares Available For Delivery Under the Plan. A maximum of
            ------------------------------------------------------
20,000,000  shares of Stock may be  awarded  under the Plan.  Awards may be made
from  authorized but unissued  shares of Stock or from Treasury  Stock.  No more
than an aggregate  of 1,800,000  shares of the  aforesaid  20,000,000  shares of
Stock may be granted under Article 6(e) and (f). No more than 900,000  shares of
Stock may be granted as stock options to any employee during the duration of the
Plan.

        (b) Effect of Expiration or Termination. If and to the extent an Award ,
            -----------------------------------
other than an Award granted under Article 6(e) or (f),shall  expire or terminate
for any  reason  without  having  been  exercised  in full  (including,  without
limitation,  a  cancellation  and  regrant  of an  option  pursuant  to  Article
4(c)(vii)),  or shall be forfeited,  without, in either case, the Grantee having
enjoyed any of the benefits of stock  ownership,  the shares of Stock associated
with such Award shall become available for other Awards. Except in the case of a
Reload  Option  granted to a Section 16  Grantee,  the grant of a Reload  Option
shall not reduce the number of shares of Stock available for other Awards.

        (c) Treasury Stock.  The Committee shall have the authority to cause the
            --------------
Company to purchase from  time to  time  shares of  Stock to be held as treasury
shares and used for or in connection with Awards.

        (d)  Committee Discretion to Cancel Options.  The Committee  may, in its
             --------------------------------------
discretion, elect at any time, should it determine it is in the best interest of
the Company's stockholders to cancel any

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options granted hereunder, to cancel all or any of the options granted hereunder
and pay the holders of any such options an amount (payable in such proportion as
the Committee may determine in cash or in Stock (valued at the Fair Market Value
of a share of Stock on the date of  cancellation  of such option))  equal to the
number of shares of Stock subject to such  cancelled  option,  multiplied by the
amount  (if  any) by  which  the  Fair  Market  Value  of  Stock  on the date of
cancellation  of the option  exceeds  the  Option  Price;  provided  that if the
Committee should determine that not making payment of such amount to the holders
of  such  option  upon  the  cancellation  would  be in the  best  interests  of
stockholders  of the Company  (ignoring in such  determination  the cost of such
payment and  considering  only other  matters),  the  Committee may void options
granted  hereunder  and declare that no payment  shall be made to the holders of
such options.

4.       Administration.
         --------------

        (a) Committee Administration. Subject to Article 4(b), the Plan shall be
            ------------------------
administered by the Committee,  which shall consist of not less than two persons
appointed by the Board,  who are  directors of the Company and not  employees of
the Company or any of its  Subsidiaries.  Membership on the  Committee  shall be
subject to such limitations (including, if appropriate,  a change in the minimum
number of members of the  Committee)  as the Board deems  appropriate  to permit
transactions  pursuant to the Plan to be exempt from potential  liability  under
Section 16(b) of the 1934 Act and to comply with Section 162 (m) of the Internal
Revenue Code.

        (b) Board Reservation and Delegation.  The Board may, in its discretion,
            --------------------------------
reserve to itself or  delegate to another  committee  of the Board any or all of
the authority  and  responsibility  of the  Committee  with respect to Awards to
Grantees  who are not  Section  16  Grantees  at the  time  any  such  delegated
authority or  responsibility  is exercised.  Such other committee may consist of
one or more  directors  who may,  but need not be,  officers or employees of the
Company or of any of its Subsidiaries. To the extent that the Board has reserved
to itself or delegated the authority and responsibility of the Committee to such
other  committee,  all  references to the Committee in the Plan shall be to such
other committee.

        (c)  Committee Authority.  The Committee shall have full and final
             -------------------
authority, in its sole and absolute discretion, but subject to the express 
provisions of the Plan, as follows: 

                (i)  to grant Awards,

                (ii) to  determine  (A)  when  Awards  may be  granted,  and (B)
        whether or not specific  Awards shall be identified  with other specific
        Awards, and if so, whether they shall be exercisable  cumulatively with,
        or alternatively to, such other specific Awards,

                (iii) to interpret the Plan and to make all determinations 
        necessary or advisable for the administration of the Plan,

                (iv)  to prescribe, amend, and rescind rules and regulations 
        relating to the Plan,

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        including, without limitation, rules with respect to the exercisability
        and nonforfeitability of Awards upon the Termination of Employment of a
        Grantee,

                (v)  to  determine  the  terms  and   provisions  of  the  Award
        Agreements,  which need not be  identical  and,  with the consent of the
        Grantee, to modify any such Award Agreement at any time,

                (vi)  to cancel options in accordance with the provision of 
       Section 3(d),

                (vii) except as provided in Section 4(c)(vi) hereof,  to cancel,
        with the consent of the Grantee,  outstanding  Awards,  and to grant new
        Awards in substitution thereof,

                (viii) to accelerate the exercisability of, and to accelerate or
        waive any or all of the restrictions and  conditions applicable to, any
        Award,

                (ix)   to authorize foreign Subsidiaries to adopt plans as
        provided in Article 14,

                (x)    to make  such  adjustments  or  modifications  to  Awards
        to Grantees working outside the  United  States  as  are  necessary  and
        advisable to fulfill the purposes of the Plan,

                (xi) to authorize any action of or make any determination by the
        Company as the Committee  shall deem necessary or advisable for carrying
        out the purposes of the Plan,

                (xii)  to make appropriate adjustments to, cancel or continue 
        Awards in accordance with Article 22, and

                (xiii) to impose such additional conditions,  restrictions,  and
        limitations  upon the  grant,  exercise  or  retention  of Awards as the
        Committee  may,  before or  concurrently  with the grant  thereof,  deem
        appropriate,   including,  without  limitation,  requiring  simultaneous
        exercise of related  identified  Awards,  and limiting the percentage of
        Awards which may from time to time be exercised by a Grantee.

        (d)  Committee Determinations Final.  The determination of the Committee
             ------------------------------
on all matters relating to the Plan or any  Award Agreement shall be conclusive 
and final.  No member of the  Committee  shall be  liable  for  any  action  or 
determination made in good faith with respect to the Plan or any Award.

       5.  Eligibility.  Awards may be granted to any employee of the Company or
           -----------
any of its  Subsidiaries.  In selecting  the  individuals  to whom Awards may be
granted, as well as in determining the number of shares of Stock subject to, and
the other terms and conditions  applicable to, each Award,  the Committee  shall
take into  consideration  such  factors as it deems  relevant in  promoting  the
purposes of the Plan.


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       6.       Conditions to Grants.
                --------------------

        (a)     General Conditions.
                ------------------

                (i) The  Grant  Date of an Award  shall be the date on which the
        Committee grants the Award or such later date as specified in advance by
        the Committee.

                (ii) The term of each Award  (subject to Articles  6(c) and 6(d)
        with   respect  to   incentive   stock   options  and  Reload   Options,
        respectively) shall be a period of not more than 12 years from the Grant
        Date, and shall be subject to earlier termination as herein provided.

                (iii)  A  Grantee  may,  if  otherwise   eligible,   be  granted
        additional Awards in any combination.

                (iv) The  Committee  may grant Awards with terms and  conditions
        which differ among the Grantees thereof.  To the extent not set forth in
        the Plan,  the terms and  conditions of each Award shall be set forth in
        an Award Agreement.

        (b) Grant of  Options  and  Option  Price.  The  Committee  may,  in its
            -------------------------------------
discretion, grant options (which may be options to acquire unrestricted Stock or
restricted Stock) to any employee eligible under Article 5 to receive Awards. No
later than the Grant Date of any  option,  the  Committee  shall  determine  the
Option  Price;  provided  that the Option  Price  shall,  except as  provided in
subsection (c) below and in Article 15, not be less than 100% of the Fair Market
Value of the Stock on the Grant Date.

        (c) Grant of Incentive  Stock  Options.  At the time of the grant of any
            ----------------------------------
option,  the Committee  may designate  that such option shall be made subject to
additional  restrictions to permit it to qualify as an "incentive  stock option"
under the  requirements of Section 422 of the Internal  Revenue Code. Any option
designated as an incentive stock option:

                (i) shall have an Option  Price of (A) not less than 100% of the
        Fair Market Value of the Stock on the Grant Date or (B) in the case of a
        10% Owner,  not less than 110% of the Fair Market  Value of the Stock on
        the Grant Date;

                (ii) shall have a term of not more than 10 years (five years, in
        the case of a 10% Owner)  from the Grant  Date,  and shall be subject to
        earlier  termination  as  provided  herein  or in the  applicable  Award
        Agreement;

                (iii) shall not have an aggregate Fair Market Value  (determined
        for each incentive stock option at its Grant Date) of Stock with respect
        to which  incentive  stock options are exercisable for the first time by
        such  Grantee  during any  calendar  year  (under the Plan and any other
        employee  stock option plan of the  Grantee's  employer or any parent or
        subsidiary  thereof ("Other Plans")),  determined in accordance with the
        provisions of Section 422 of the Internal

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        Revenue Code, which exceeds $100,000 (the "$100,000 Limit");

                (iv)  shall,  if  the  aggregate  Fair  Market  Value  of  Stock
        (determined  on the Grant  Date)  with  respect to all  incentive  stock
        options  previously  granted  under the Plan and any Other Plans ("Prior
        Grants") and any incentive  stock options under such grant (the "Current
        Grant")  which are  exercisable  for the first time during any  calendar
        year would exceed the $100,000 Limit, be exercisable as follows:

                         (A) the portion of the Current  Grant  exercisable  for
                the first time by the  Grantee  during any  calendar  year which
                would  be,  when  added  to any  portions  of any  Prior  Grants
                exercisable  for the  first  time  by the  Grantee  during  such
                calendar  year  with  respect  to  stock  which  would  have  an
                aggregate  Fair Market Value  (determined  as of the  respective
                Grant Date for such  options)  in excess of the  $100,000  Limit
                shall,  notwithstanding  the  terms  of the  Current  Grant,  be
                exercisable  for the  first  time by the  Grantee  in the  first
                subsequent   calendar  year  or  years  in  which  it  could  be
                exercisable  for the first time by the Grantee when added to all
                Prior Grants without exceeding the $100,000 Limit; and

                         (B) if, viewed as of the date of the Current Grant, any
                portion  of a Current  Grant  could not be  exercised  under the
                provisions  of the  immediately  preceding  sentence  during any
                calendar year  commencing  with the calendar year in which it is
                first  exercisable  through and including the last calendar year
                in which it may by its terms be  exercised,  such portion of the
                Current Grant shall not be an incentive stock option,  but shall
                be exercisable as a separate option at such date or dates as are
                provided in the Current Grant;

                (v) shall be  granted  within 10 years  from the  earlier of the
        date  the Plan is  adopted  or the  date  the  Plan is  approved  by the
        stockholders of the Company; and

                (vi) shall  require the Grantee to notify the  Committee  of any
        disposition  of  any  Stock  issued  pursuant  to  the  exercise  of the
        incentive  stock  option  under the  circumstances  described in Section
        421(b) of the Internal  Revenue Code (relating to certain  disqualifying
        dispositions), within 10 days of such disposition.

Notwithstanding  the foregoing and Article  4(c)(v),  the Committee may take any
action with  respect to any option,  including  but not limited to an  incentive
stock  option,  without the  consent of the  Grantee,  in order to prevent  such
option from being treated as an incentive stock option.

        (d) Grant of Reload  Options.  The  Committee  may  provide  in an Award
            ------------------------
Agreement  that a Grantee  who  exercises  all or any  portion  of an option for
shares of Stock  which have a Fair  Market  Value equal to not less than 100% of
the Option Price for such options ("Exercised  Options") and who paid the Option
Price with shares of Stock shall be granted, subject to Article 3, an additional
option  ("Reload  Option")  for a number  of  shares  of stock  equal to the sum
("Reload Number") of

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the  number of shares of Stock  tendered  or  withheld  in payment of the Option
Price for the  Exercised  Options  plus,  if so provided by the  Committee,  the
number of shares of Stock,  if any,  retained by the Company in connection  with
the exercise of the Exercised Options to satisfy any federal, state or local tax
withholding requirements.

        Reload Options shall be subject to the following terms and conditions:

                (i)  the Grant Date for each Reload Option shall be the date of
        exercise of the Exercised Option to which it relates;

                (ii) subject to Article  6(d)(iii)  below, the Reload Option may
        be  exercised  at any time during the  unexpired  term of the  Exercised
        Option (subject to earlier  termination  thereof as provided in the Plan
        and in the applicable Award Agreement); and

                (iii) the terms of the  Reload  Option  shall be the same as the
        terms of the Exercised  Option to which it relates,  except that (A) the
        Option  Price shall be the Fair  Market  Value of the Stock on the Grant
        Date of the  Reload  Option and (B) no Reload  Option  may be  exercised
        within one year from the Grant Date thereof.

        (e)     Grant of Shares of Restricted Stock.
                -----------------------------------

                (i) The  Committee  may,  in its  discretion,  grant  shares  of
        restricted  Stock to any employee  eligible  under  Article 5 to receive
        Awards.

                (ii)  Before the grant of any shares of  restricted  Stock,  the
        Committee shall determine, in its discretion:

                         (A) whether the  certificates  for such shares shall be
                delivered  to the Grantee or held  (together  with a stock power
                executed in blank by the Grantee) in escrow by the  Secretary of
                the  Company  until such  shares  become  nonforfeitable  or are
                forfeited,

                         (B) the per share purchase price of such shares, which
                may be zero provided, however, that

                                  (1) the per share  purchase  price of all such
                         shares (other than  treasury  shares) shall not be less
                         than the Minimum Consideration for each such share; and

                                  (2) if  such  shares  are to be  granted  to a
                         Section 16 Grantee, the per share purchase price of any
                         such  shares  shall  also be at  least  50% of the Fair
                         Market Value of the Stock on the Grant Date unless such
                         shares are granted for no  monetary  consideration  (in
                         which case treasury shares are to be delivered) or with
                         a  purchase  price  per  share  equal  to  the  Minimum
                         Consideration for the

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                         Stock, and

                         (C)      the restrictions applicable to such grant;

                (iii)  Payment of the purchase  price (if greater than zero) for
        shares of restricted  Stock shall be made in full by the Grantee  before
        the  delivery of such  shares  and, in any event,  no later than 10 days
        after the Grant Date for such shares.  Such payment may, at the election
        of the Grantee, be made in any one or any combination of the following:

                         (A) cash,

                         (B) Stock  valued at its Fair Market  Value on the date
                of payment or, if the date of payment is not a business day, the
                next succeeding business day, or

                         (C) with  the  approval  of the  Committee,  shares  of
                restricted  Stock,  each  valued at the Fair  Market  Value of a
                share of Stock on the date of payment or, if the date of payment
                is not a business day, the next succeeding business day

        provided, however, that, in the case of payment in Stock or restricted 
        Stock,

                                  (1) the use of  Stock or  restricted  Stock in
                         payment of such purchase  price by a Section 16 Grantee
                         is subject to (i) the  availability  of an exemption of
                         such  use  of  stock  from  potential  liability  under
                         Section   16(b)   of  the   1934   Act,   or  (ii)  the
                         inapplicability of such Section;

                                  (2) in the discretion of the Committee and to
                         the extent permitted by law, payment may  also be made
                         in accordance with Article 9; and

                                  (3) if the purchase price for restricted Stock
                         ("New  Restricted   Stock")  is  paid  with  shares  of
                         restricted   Stock  ("Old   Restricted   Stock"),   the
                         restrictions  applicable  to the New  Restricted  Stock
                         shall  be the same as if the  Grantee  had paid for the
                         New Restricted Stock in cash unless, in the judgment of
                         the Committee,  the Old Restricted Stock was subject to
                         a greater risk of forfeiture, in which case a number of
                         shares of New  Restricted  Stock equal to the number of
                         shares of Old Restricted  Stock tendered in payment for
                         New  Restricted  Stock  may  in the  discretion  of the
                         Committee  be subject to the same  restrictions  as the
                         Old Restricted  Stock,  determined  immediately  before
                         such payment.

                (iv) The  Committee  may, but need not,  provide that all or any
        portion of a Grantee's Award of restricted Stock shall be forfeited

                         (A)      except as otherwise specified in the Award 
        Agreement, upon the

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                Grantee's Termination of Employment within a specified time 
                period after the Grant Date, or

                         (B) if the  Company  or the  Grantee  does not  achieve
                specified performance goals within a specified time period after
                the  Grant  Date  and  before  the  Grantee's   Termination   of
                Employment, or

                         (C) upon failure to satisfy such other  restrictions as
                the Committee may specify in the Award Agreement.

                (v)  If a share of restricted Stock is forfeited, then

                         (A) the  Grantee  shall be deemed to have  resold  such
                share of  restricted  Stock to the  Company at the lesser of (1)
                the  purchase  price paid by the Grantee  (such  purchase  price
                shall be deemed to be zero dollars ($0) if no purchase price was
                paid)  or (2) the Fair  Market  Value of a share of Stock on the
                date of such forfeiture;

                         (B) the Company shall pay to  the G rantee the  amount 
                determined  under clause  (A) of this  sentence as  soon  as is 
                administratively practical; and

                         (C) such share of  restricted  Stock  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 Company's tender of the payment  specified in clause
                (B) of this sentence,  whether or not such tender is accepted by
                the Grantee.

                (vi) Any share of  restricted  Stock  shall bear an  appropriate
        legend specifying that such share is non-transferable and subject to the
        restrictions  set forth in the Plan. If any shares of  restricted  Stock
        become  nonforfeitable,  the Company shall cause  certificates  for such
        shares to be issued or reissued without such legend and delivered to the
        Grantee or, at the request of the Grantee, shall cause such shares to be
        credited to a brokerage account specified by the Grantee.

        (f)     Grant of Unrestricted Stock.  The Committee may, in its 
                ---------------------------
discretion, grant shares of unrestricted Stock to any employee eligible 
under Article 5 to receive Awards.

       7.  Non-transferability.  Except as otherwise  provided in the terms of a
           -------------------
specific grant,  each Award (other than  unrestricted  Stock) granted  hereunder
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.  Each  share  of  restricted  Stock  shall  be
non-transferable  until such share becomes  nonforfeitable.  Notwithstanding the
foregoing,  the Grantee may, to the extent  provided in the Plan and in a manner
specified by the  Committee,  (a) designate in writing a beneficiary to exercise
his options after the Grantee's death, and (b) transfer an option (other than an
incentive stock option) to a revocable, inter vivos trust as to which the

                                       -10-


<PAGE>



Grantee is both the settlor and the trustee.

       8.   Exercise.
            --------

        (a) Exercise of Options.  Subject to Articles 4(c)(vii),  14 and 17, and
            -------------------
such terms and  conditions  as the  Committee  may impose,  each option shall be
exercisable  in one or more  installments  commencing not earlier than the first
anniversary  of the Grant Date of such option.  Options shall not be exercisable
for twelve months following a hardship  distribution that is subject to Treasury
Regulation  ss.  1.401(k)-1(d)(2)(iv)(B)(4),  except  to  the  extent  permitted
thereunder.  Options shall not be  exercisable  for less than 25 shares of Stock
unless  the  exercise  represents  the  entire  remaining  balance of a grant or
grants.  Each option  shall be  exercised  by delivery to the Company of written
notice of intent to purchase a specific  number of shares of Stock or restricted
Stock  subject  to the  option.  The  Option  Price  of any  shares  of Stock or
restricted  Stock as to which an option shall be exercised shall be paid in full
at the time of the  exercise.  Payment may, at the  election of the Grantee,  be
made in any one or any combination of the following forms:

                (i)  check in such form as may be satisfactory to the Committee,

                (ii)  Stock  valued  at its  Fair  Market  Value  on the date of
        exercise  or, if the date of  exercise is not a business  day,  the next
        succeeding business day,

                (iii) with the approval of the  Committee,  shares of restricted
        Stock,  each valued at the Fair Market  Value of a share of Stock on the
        date of exercise or, if the date of exercise is not a business  day, the
        next succeeding business day,

                (iv)  through  simultaneous  sale  through a broker of shares of
        unrestricted Stock acquired on exercise, as permitted under Regulation T
        of the Federal Reserve Board, or

                 (v) by authorizing  the Company in his or her written notice of
        exercise to withhold from issuance a number of shares of Stock  issuable
        upon exercise of such option which,  when  multiplied by the Fair Market
        Value  of  Common  Stock  on the date of  exercise  (or,  if the date of
        exercise is not a business day, the next  succeeding  business  day), is
        equal to the  aggregate  Option Price payable with respect to the option
        so exercised.

        In the  event a Grantee  elects to pay the  Option  Price  payable  with
respect to an option  pursuant to clause (ii) above,  (A) only a whole number of
share(s)  of Stock  (and not  fractional  shares of Stock)  may be  tendered  in
payment,  (B) such Grantee must present evidence  acceptable to the Company that
he or she has owned any such  shares of Stock  tendered in payment of the Option
Price  (and that such  shares of Stock  tendered  have not been  subject  to any
substantial  risk of  forfeiture)  for at least six months  prior to the date of
exercise,  and (C) Stock must be delivered to the Company.  Delivery may, at the
election of the Grantee,  be made either by (I)  delivery of the  certificate(s)
for  all  such  shares  of  Stock  tendered  in  payment  of the  Option  Price,
accompanied by duly executed instruments of transfer in a form acceptable to the
Company, or (II) direction to the Grantee's broker

                                        -11-


<PAGE>



to transfer, by book entry, such shares of Stock from a brokerage account of the
Grantee to a brokerage  account  specified by the  Company.  When payment of the
Option Price is made by tender of Stock,  the  difference,  if any,  between the
aggregate  Option Price  payable with respect to the option being  exercised and
the Fair Market  Value of the  share(s) of Stock  tendered in payment  (plus any
applicable  taxes) shall be paid by check. No Grantee may tender shares of Stock
having a Fair Market Value  exceeding  the  aggregate  Option Price payable with
respect to the Option being exercised

        In the  event a Grantee  elects to pay the  Option  Price  payable  with
respect to an option  pursuant to clause (v) above,  (A) only a whole  number of
share(s)  of Stock  (and not  fractional  shares of Stock)  may be  withheld  in
payment and (B) such  Grantee must present  evidence  acceptable  to the Company
that he or she has  owned a number  of  shares  of  Stock at least  equal to the
number of shares of Stock to be  withheld  in payment  of the Option  Price (and
that such owned shares of Stock have not been subject to any substantial risk of
forfeiture) for at least six months prior to the date of exercise.  When payment
of the  Option  Price  is  made by the  withholding  of  shares  of  Stock,  the
difference,  if any,  between the aggregate Option Price payable with respect to
the option  being  exercised  and the Fair Market Value of the share(s) of Stock
withheld  in payment  (plus any  applicable  taxes)  shall be paid by check.  No
Grantee may  authorize the  withholding  of shares of Stock having a Fair Market
Value  exceeding the  aggregate  Option Price payable with respect to the option
being exercised.  Any withheld shares of Stock shall no longer be issuable under
such option.

        If restricted  Stock  ("Tendered  Restricted  Stock") is used to pay the
Option Price for Stock, then a number of shares of Stock acquired on exercise of
the option equal to the number of shares of Tendered  Restricted  Stock shall be
subject to the same restrictions as the Tendered Restricted Stock, determined as
of the date of exercise of the option.  If the Option Price for restricted Stock
is paid with Tendered Restricted Stock, and if the Committee determines that the
restricted  Stock acquired on exercise of the option is subject to  restrictions
("Greater Restrictions") that cause it to have a greater risk of forfeiture than
the Tendered Restricted Stock, then notwithstanding the preceding sentence,  all
the restricted Stock acquired on exercise of the option shall be subject to such
Greater Restrictions.

        Shares of  unrestricted  Stock  acquired  by a Grantee on exercise of an
option  shall be  delivered  to the Grantee  or, at the request of the  Grantee,
shall be credited directly to a brokerage account specified by the Grantee.

        (b)  Special  Rules for Section 16  Grantees.  Subject to Article 15, no
             ---------------------------------------
option shall be  exercisable by a Section 16 Grantee during the first six months
after its Grant Date,  if such  exercise  (or the sale of shares  received  upon
exercise)  would  result in the loss of an exemption  for a grant under  Section
16(b) of the 1934 Act.

        (c)     Permissible Shares Issued.  No shares of  Stock shall  be issued
                -------------------------
hereunder upon option exercise  except shares of Stock available  under Article 
3(a).  EACH  GRANTEE, BY  ACCEPTANCE OF AN  AWARD, WAIVES ALL RIGHTS TO SPECIFIC
PERFORMANCE OR INJUNCTIVE OR OTHER EQUITABLE RELIEF AND

                                        -12-


<PAGE>



ACKNOWLEDGES THAT HE HAS AN ADEQUATE REMEDY AT LAW IN THE FORM OF DAMAGES.

       9.    Loans and Guarantees.  The Committee may, in its discretion:
             --------------------

        (a)  allow a  Grantee  to defer  payment  to the  Company  of all or any
portion of (i) the Option Price of an option, (ii) the purchase price of a share
of restricted  Stock,  or (iii) any taxes  associated  with a benefit  hereunder
which is not a cash benefit at the time such benefit is so taxable, or

        (b) cause the  Company  to  guarantee  a loan from a third  party to the
Grantee, in an amount equal to all or any portion of such Option Price, purchase
price, or any related taxes.

Any such payment deferral or guarantee by the Company pursuant to this Article 9
shall be, on a secured or unsecured  basis,  for such periods,  at such interest
rates,  and on such other terms and  conditions as the Committee may  determine.
Notwithstanding  the  foregoing,  a Grantee  shall not be  entitled to defer the
payment of such Option Price,  purchase  price,  or any related taxes unless the
Grantee (i) enters into a binding obligation to pay the deferred amount and (ii)
except with respect to treasury shares, pays upon exercise of an option or grant
of shares of restricted Stock, as the case may be, an amount equal to or greater
than  the  aggregate  Minimum  Consideration  therefor.  If  the  Committee  has
permitted a payment  deferral or caused the Company to guarantee a loan pursuant
to this  Article 9, then the  Committee  may,  in its  discretion,  require  the
immediate  payment  of such  deferred  amount or the  immediate  release of such
guarantee  upon the Grantee's  Termination of Employment or if the Grantee sells
or otherwise  transfers the Grantee's shares of Stock purchased pursuant to such
deferral or guarantee.

      10. Notification under Section 83(b). The Committee may, on the Grant Date
          --------------------------------
or any later date,  prohibit a Grantee from making the election described below.
If the Committee has not prohibited such Grantee from making such election,  and
the Grantee shall, in connection  with the exercise of any option,  or the grant
of any share of  restricted  Stock,  make the election  permitted  under Section
83(b) of the  Internal  Revenue  Code  (i.e.,  an  election  to  include in such
Grantee's gross income in the year of transfer the amounts  specified in Section
83(b) of the Internal  Revenue  Code),  such Grantee shall notify the Company of
such election  within 10 days of filing notice of the election with the Internal
Revenue Service, in addition to any filing and notification required pursuant to
regulations  issued under the authority of Section 83(b) of the Internal Revenue
Code.

      11.   Mandatory Withholding Taxes.
            ---------------------------

        (a) Whenever under the Plan, cash or shares of Stock are to be delivered
upon  exercise  or  payment  of an  Award or upon a share  of  restricted  Stock
becoming nonforfeitable,  or any other event with respect to rights and benefits
hereunder,  the Company  shall be entitled to require as a condition of delivery
(i) that the Grantee remit an amount  sufficient to satisfy all federal,  state,
and local withholding tax requirements related thereto,  (ii) the withholding of
such sums from  compensation  otherwise due to the Grantee or from any shares of
Stock  due to the  Grantee  under  the  Plan or  (iii)  any  combination  of the
foregoing.

                                       -13-


<PAGE>



        (b) If any  disqualifying  disposition  described in Article 6(c)(vi) is
made with respect to shares of Stock  acquired  under an incentive  stock option
granted  pursuant to the Plan or any  election  described in Article 10 is made,
then the person making such disqualifying disposition or election shall remit to
the  Company an amount  sufficient  to satisfy  all  federal,  state,  and local
withholding taxes thereby incurred;  provided that, in lieu of or in addition to
the  foregoing,  the  Company  shall have the right to  withhold  such sums from
compensation otherwise due to the Grantee or from any shares of Stock due to the
Grantee under the Plan.

      12.   Elective Share Withholding.
            --------------------------

        (a) Subject to the prior approval of the Committee and to Article 12(b),
a Grantee may elect the withholding  ("Share  Withholding")  by the Company of a
portion of the shares of Stock  otherwise  deliverable  to such Grantee upon the
exercise or payment of an Award or upon a share of restricted  Stock's  becoming
nonforfeitable (each a "Taxable Event") having a Fair Market Value equal to

                (i)  the minimum amount necessary to satisfy  required federal, 
        state, or local withholding  tax liability attributable to  the Taxable 
        Event; or

                (ii) with the Committee's prior approval,  a greater amount, not
        to exceed the  estimated  total amount of such  Grantee's  tax liability
        with respect to the Taxable Event.

        (b)     Each Share Withholding election by a Grantee shall be subject 
to the following restrictions:

                (i) any Grantee's  election shall be subject to the  Committee's
        right to revoke its approval of Share Withholding by such Grantee at any
        time before the  Grantee's  election if the  Committee  has reserved the
        right to do so at the time of its approval;

                (ii) if the  Grantee is a Section  16  Grantee,  such  Grantee's
        election  shall be subject to the  disapproval  of the  Committee at any
        time, whether or not the Committee has reserved the right to do so; and

                (iii) the  Grantee's  election must be made before the date (the
        "Tax Date") on which the amount of tax to be withheld is determined.

      13.       Termination of Employment.
                -------------------------

        (a)     Restricted Stock.  Except as otherwise provided by the Committee
                ----------------
on or after the  Grant Date, a  Grantee's  shares of  restricted Stock that are 
forfeitable shall be forfeited upon the Grantee's Termination of Employment.

        (b)     Other Awards.  If a  Grantee  has a  Termination of Employment, 
                ------------
then, unless otherwise

                                        -14-


<PAGE>



provided  in  the  Grant  Agreement,   any  unexercised  option  to  the  extent
exercisable  on the  date of the  Grantee's  Termination  of  Employment  may be
exercised by the Grantee,  in whole or in part,  at any time within three months
following such Termination of Employment, except that

                         (i) if the  Grantee's  Termination  of Employment is on
        account  of  Disability,  then  any  unexercised  option  to the  extent
        exercisable  at the  date  of such  Termination  of  Employment,  may be
        exercised,  in whole or in part,  by the  Grantee at any time within two
        years after the date of such Termination of Employment; and

                         (ii) if the Grantee's  Termination  of Employment is on
        account  of  Retirement,  then  any  unexercised  option  to the  extent
        exercisable  at the  date  of such  Termination  of  Employment,  may be
        exercised,  in whole or in part,  by the Grantee at any time within five
        years after the date of such Termination of Employment; and

                         (iii) if the  Grantee's  Termination  of  Employment is
        caused by the death of the  Grantee  or if the  Grantee's  death  occurs
        during the period following  Termination of Employment  during which the
        option would be exercisable  under the preceding clause of Article 13(b)
        or under Article  13(b)(i) or (ii), then any  unexercised  option to the
        extent exercisable on the date of the Grantee's death, may be exercised,
        in whole or in part,  at any time within two years  after the  Grantee's
        death by the Grantee's personal  representative or by the person to whom
        the option is transferred by will or the applicable  laws of descent and
        distribution.

        (c) Maximum Extension.  Notwithstanding the foregoing, no Award shall be
            -----------------
exercisable beyond the maximum term permitted under the original Award Agreement
unless the Committee  explicitly  extends such original term, in which case such
term shall not be extended beyond the maximum term permitted by the Plan.

      14.  Equity  Incentive  Plans of Foreign  Subsidiaries.  The Committee may
           -------------------------------------------------
authorize any foreign  Subsidiary to adopt a plan for granting Awards  ("Foreign
Equity Incentive Plan").  All awards granted under such Foreign Equity Incentive
Plans shall be treated as grants under the Plan.  Such Foreign Equity  Incentive
Plans  shall  have such  terms  and  provisions  as the  Committee  permits  not
inconsistent  with the provisions of the Plan and which may be more  restrictive
than those  contained in the Plan.  Awards  granted  under such  Foreign  Equity
Incentive  Plans shall be governed by the terms of the Plan except to the extent
that the provisions of the Foreign Equity  Incentive Plans are more  restrictive
than the  terms of the Plan,  in which  case such  terms of the  Foreign  Equity
Incentive Plans shall control.

      15. Substituted  Awards. The Committee may grant substitute awards for any
          -------------------
cancelled  Award granted  under this Plan or any plan of any entity  acquired by
the Company or any of its  Subsidiaries  in accordance  with this Article 15. If
the  Committee  cancels any Award  (granted  under this Plan, or any plan of any
entity acquired by the Company or any of its  Subsidiaries),  and a new Award is
substituted therefor,  then the Committee may, in its discretion,  determine the
terms and

                                       -15-


<PAGE>



conditions  of such  new  Award,  and may  provide  that the  Grant  Date of the
cancelled  Award shall be the date used to determine  the earliest date or dates
for  exercising  the new  substituted  Award under  Article 8 hereof so that the
Grantee may  exercise the  substituted  Award at the same time as if the Grantee
had held the substituted Award since the Grant Date of the cancelled Award.

      16.   Securities Law Matters.
            ----------------------

        (a) If the Committee  deems  necessary to comply with the Securities Act
of 1933, the Committee may require a written investment intent representation by
the Grantee and may require that a restrictive legend be affixed to certificates
for shares of Stock.

        (b) If based upon the opinion of counsel for the Company,  the Committee
determines  that the exercise or  nonforfeitability  of, or delivery of benefits
pursuant to, any Award could violate any applicable  provision of (i) federal or
state  securities  law or regulations  or (ii) the listing  requirements  of any
national  securities  exchange on which are listed any of the  Company's  equity
securities, then the Committee may postpone any such exercise, nonforfeitability
or delivery,  as the case may be, but the Company  shall use its best efforts to
cause such  exercise,  nonforfeitability  or  delivery  to comply  with all such
provisions at the earliest practicable date.

      17.   No Funding Required.  Benefits payable under the Plan to any person
            -------------------
shall be  paid directly  by the Company.  The  Company shall not be required to 
fund, or otherwise  segregate assets to be used for payment of,  benefits under 
the Plan.

      18. No Employment  Rights.  Neither the establishment of the Plan, nor the
          ---------------------
granting  of any Award shall be  construed  to (a) give any Grantee the right to
remain employed by the Company or any of its Subsidiaries or to any benefits not
specifically  provided by the Plan or (b) in any manner  modify the right of the
Company or any of its  Subsidiaries  to modify,  amend,  or terminate any of its
employee benefit plans.

      19. Rights as a  Stockholder.  A Grantee shall not, by reason of any Award
          ------------------------
(other than  restricted  Stock) have any right as a  stockholder  of the Company
with respect to the shares of Stock which may be  deliverable  upon  exercise or
payment of such Award until such shares have been  delivered  to him.  Shares of
restricted  Stock  held by a Grantee or held 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 the Award Agreement.  The Committee,
in its  discretion,  at the time of grant of  restricted  Stock,  may  permit or
require  the  payment of cash  dividends  thereon  to be  deferred  and,  if the
Committee so determines, reinvested in additional restricted Stock to the extent
shares are available  under Article 3, or otherwise  reinvested in Stock.  Stock
dividends,  deferred cash  dividends and dividends in the form of property other
than cash,  issued with  respect to  restricted  Stock shall,  unless  otherwise
provided in the Award Agreement,  be treated as additional  shares of restricted
Stock that are subject to the same  restrictions and other terms as apply to the
shares with respect to which such  dividends are issued.  The Committee  may, in
its  discretion,  provide for crediting and payment of interest on deferred cash
dividends.

                                        -16-


<PAGE>



      20.  Nature  of  Payments.  Any and  all  grants,  payments  of  cash,  or
           --------------------
deliveries  of shares of Stock  hereunder  shall  constitute  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 the purposes of determining
any  pension,  retirement,  death  or  other  benefits  under  (a) any  pension,
retirement, profit-sharing, bonus, life insurance or other employee benefit plan
of the  Company or any of its  Subsidiaries  or (b) any  agreement  between  the
Company or any Subsidiary,  on the one hand, and the Grantee, on the other hand,
except as such plan or agreement shall otherwise expressly provide.

      21.  Non-Uniform  Determinations.  Neither the Committee's nor the Board's
           ---------------------------
determinations  under the Plan need be uniform and may be made by the  Committee
or the Board selectively among persons who receive,  or are eligible to receive,
Awards (whether or not such persons are similarly  situated).  Without  limiting
the generality of the foregoing,  the Committee  shall be entitled,  among other
things,  to  make  non-uniform  and  selective  determinations,  to  enter  into
non-uniform  and  selective  Award  Agreements  as to (a)  the  identity  of the
Grantees,  (b) the terms and provisions of Awards, and (c) the treatment,  under
Article 13, of Terminations of Employment.

      22.  Adjustments.  The  Committee may make such  provision with respect to
           -----------
Awards, including without limitation, equitable adjustment of

        (a)    the aggregate numbers of shares of Stock available under Articles
3(a) and 3(b),

        (b)    the number of shares of Stock or shares of restricted Stock 
covered by an Award, and

        (c)    the Option Price, or

the  termination  or  continuation  of  an  Award  as  it  may  determine  to be
appropriate  and  equitable to reflect a stock  dividend,  stock split,  reverse
stock  split,  share  combination,   recapitalization,   merger,  consolidation,
acquisition of property or shares, separation, spin-off,  reorganization,  stock
rights offering, liquidation, or similar event, of or by the Company.

      23.  Amendment  of the  Plan.  The  Board  may  from  time  to time in its
           -----------------------
discretion  amend or modify the Plan without the approval of the stockholders of
the Company,  except as such stockholder  approval may be required (a) to permit
transactions in Stock pursuant to the Plan to be exempt from potential liability
under  Section  16(b) of the 1934 Act,  (b) to permit the Company to deduct,  in
computing  its income tax liability  pursuant to the  provisions of the Internal
Revenue Code,  compensation resulting from Awards, (c) to retain incentive stock
option  treatment  under Section 422 of the Internal  Revenue Code, or (d) under
the listing  requirements of any securities  exchange on which are listed any of
the Company's equity securities.

      24.  Termination of the Plan. The Plan shall terminate on the tenth (10th)
           -----------------------
anniversary  of the  Effective  Date or at such  earlier  time as the  Board may
determine.  Any  termination,  whether in whole or in part, shall not affect (a)
any Award then outstanding  under the Plan, or (b) the Company's ability to make
adjustments to or cancel or continue Awards in accordance with Article 22.

                                       -17-


<PAGE>


      25. No Illegal  Transactions.  The Plan and all Awards granted pursuant to
          ------------------------
it are subject to all laws and regulations of any  governmental  authority which
may be applicable thereto;  and notwithstanding any provision of the Plan or any
Award, Grantees shall not be entitled to exercise Awards or receive the benefits
thereof and the Company  shall not be  obligated to deliver any Stock or pay any
benefits to a Grantee if such exercise, delivery, receipt or payment of benefits
would  constitute a violation by the Grantee or the Company of any  provision of
any such law or regulation.

      26. Controlling Law.  The law of the State of Delaware except its law with
          ---------------                  
respect to  choice of l aw, shall be c ontrolling in all  matters relating to or
arising out of the Plan or any Award.

      27. Severability.  If all or any part of the Plan is declared by any court
          ------------
or  governmental  authority  to be  unlawful or invalid,  such  unlawfulness  or
invalidity shall not serve to invalidate any portion of the Plan not declared to
be  unlawful  or  invalid.  Any  Article or part of an Article so declared to be
unlawful or invalid shall, if possible, be construed in a manner which will give
effect to the terms of such Article or part of an Article to the fullest  extent
possible while remaining lawful and valid.


                                        -18-


