

                        VIDEO LOTTERY TECHNOLOGIES, INC.
                            1992 STOCK INCENTIVE PLAN



          1. Purpose.
             -------

          The purpose of this Plan is to strengthen Video Lottery  Technologies,
Inc.  (the  "Company")  by  providing  an  incentive  to its key  employees  and
directors and thereby encouraging them to devote their abilities and industry to
the success of the  Company's  business  enterprise.  It is  intended  that this
purpose be achieved by extending to directors,  key employees,  consultants  and
advisors  of the  Company  an  added  long-term  incentive  for high  levels  of
performance  and unusual  efforts  through the grant of Incentive Stock Options,
Nonqualified  Stock  Options,  Stock  Appreciation  Rights,   Restricted  Stock,
Performance Units and Performance Shares (as each term is hereinafter defined).

          2. Effect on Other Plans.
             ---------------------

          Upon approval of this Plan by the stockholders of the Company pursuant
to Section 20, no further stock options shall be granted under the Video Lottery
Technologies,  Inc. 1991 Stock Option Plan (the "1991 Plan").  All stock options
outstanding  under the 1991 Plan shall  continue  to be governed by the terms of
the 1991 Plan and the relevant  stock option  agreement  pertaining to each such
stock option.  However, all Shares which would otherwise be available for future
stock  option  grants  under the 1991  Plan on or after the date of  stockholder
approval of this Plan (including,  without  limitation,  Shares which would have
been  available  for  future  grants  due  to  the  forfeiture,   expiration  or
termination  of stock  options  granted  under the 1991 Plan) shall no longer be
available  for stock  option  grants  under the 1991 Plan and shall  instead  be
available  for the  grant of  Options  and  Awards  pursuant  to the  terms  and
provisions of this Plan, as provided in Section 5.

          3. Definitions.
             -----------

          For purposes of the Plan:

               3.1 "Adjusted Fair Market Value" means,  in the event of a Change
in Control,  the  greater of (i) the highest  price per Share paid to holders of
the  Shares in any




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transaction (or series of transactions) constituting or resulting in a Change in
Control or (ii) the highest  Fair Market Value of a Share during the ninety (90)
day period ending on the date of a Change in Control.

               3.2 "Agreement"  means the written  agreement between the Company
and an  Optionee  or  Grantee  evidencing  the  grant of an  Option or Award and
setting forth the terms and conditions thereof.

               3.3  "Award"  means  a  grant  of  Stock   Appreciation   Rights,
Restricted Stock, a Performance Award or any or all of them.

               3.4  "Awardee"  means a  person  to whom any  Stock  Appreciation
Rights, Restricted Stock or Performance Award has been granted under the Plan.

               3.5 "Board" means the Board of Directors of the Company.

               3.6  "Cause"  means  the   commission  of  an  act  of  fraud  or
intentional  misrepresentation  or an act of embezzlement,  misappropriation  or
conversion of assets or opportunities of the Company or any Subsidiary.

               3.7 "Change in Capitalization" means any increase or reduction in
the number of Shares, or any change (including,  but not limited to, a change in
value) in the Shares or  exchange  of Shares for a  different  number or kind of
shares or other  securities  of the  Company,  by reason of a  reclassification,
recapitalization,  merger,  consolidation,  reorganization,  spin-off, split-up,
issuance of warrants or rights or  debentures,  stock  dividend,  stock split or
reverse stock split, cash dividend,  property dividend,  combination or exchange
of shares, repurchase of shares, change in corporate structure or otherwise.

               3.8 A "Change in Control"  shall mean the  occurrence  during the
term of the Plan of:

                    (i) The "acquisition" by any "Person" (as the term person is
          used for purposes of Section 13(d) or 14(d) of the Securities Exchange
          Act of 1934, as amended (the "Exchange Act") of "Beneficial Ownership"
          (within the meaning of Rule 13d-3  promulgated under the Exchange Act)
          of any securities of the Company which  generally  entitles the holder
          thereof the vote for the  election of  directors  of the

                                      -2-

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          Company  (the  "Voting  Securities")  which,  when added to the Voting
          Securities then "Beneficially  Owned" by such person,  would result in
          such Person  "Beneficially  Owning" forty percent (40%) or more of the
          combined  voting  power  of  the  Company's  then  outstanding  Voting
          Securities;  provided,  however,  that for purposes of this  paragraph
          (i),  a Person  shall not be deemed  to have  made an  acquisition  of
          Voting Securities if such Person:  (a) acquires Voting Securities as a
          result  of  a  stock  split,   stock   dividend  or  other   corporate
          restructuring  in which all  stockholders  of the class of such Voting
          Securities  are treated on a pro rata basis;  (b)  acquires the Voting
          Securities directly from the Company; (c) becomes the Beneficial Owner
          of more than the permitted percentage of Voting Securities solely as a
          result of the  acquisition of Voting  Securities by the Company which,
          by reducing the number of Voting Securities outstanding, increases the
          proportional  number of shares  Beneficially Owned by such Person; (d)
          is the Company or any  corporation or other Person of which a majority
          of its voting  power or its equity  securities  or equity  interest is
          owned directly or indirectly by the Company (a "Controlled Entity") or
          (e) acquires  Voting  Securities  in  connection  with a  "Non-Control
          Transaction" (as defined in paragraph (iii) below); or

                    (ii) The individuals  who, as of August 26, 1992 are members
          of the Board of  Directors  of the Company  (the  "Incumbent  Board"),
          cease for any reason to constitute at least two-thirds of the Board of
          Directors  of the  Company;  provided,  however,  that if  either  the
          election of any new director or the nomination for election of any new
          director by the  Company's  stockholders  was approved by a vote of at
          least  two-thirds of the Incumbent  Board,  such new director shall be
          considered  as a member  of the  Incumbent  Board;  provided  further,
          however,  that no  individual  shall be  considered  a  member  of the
          Incumbent  Board if such  individual  initially  assumed  office  as a
          result  of  either an actual  or  threatened  "Election  Contest"  (as
          described in Rule 14a-11  promulgated under the Exchange Act) or other
          actual or  threatened  solicitation  of proxies or  consents  by or on
          behalf  of a Person  other  than  the  Board of  Directors  (a  "Proxy
          Contest")  including by reason of any  agreement  intended to avoid or
          settle any Election Contest or Proxy Contest; or

                                      -3-

<PAGE>

                    (iii) Approval by stockholders of the Company of:

                    (a) A merger,  consolidation or reorganization involving the
          Company (a "Business Combination"), unless

                    (1) the stockholders of the Company,  immediately before the
          Business   Combination,   own,  directly  or  indirectly   immediately
          following the Business  Combination,  at least fifty-one percent (51%)
          of the combined voting power of the outstanding  voting  securities of
          the  corporation   resulting  from  the  Business   Combination   (the
          "Surviving Corporation") in substantially the same proportion as their
          ownership  of the Voting  Securities  immediately  before the Business
          Combination, and

                    (2) the  individuals who were members of the Incumbent Board
          immediately prior to the execution of the agreement  providing for the
          Business Combination  constitute at least a majority of the members of
          the Board of Directors of the Surviving Corporation, and

                    (3) no Person  (other  than the  Company  or any  Controlled
          Entity, a trustee or other fiduciary  holding  securities under one or
          more employee  benefit plans or  arrangements  (or any trust forming a
          part thereof) maintained by the Company, the Surviving  Corporation or
          any Controlled  Entity,  or any Person who,  immediately  prior to the
          Business Combination,  had Beneficial Ownership of forty percent (40%)
          or more of the then  outstanding  Voting  Securities)  has  Beneficial
          Ownership of forty percent (40%) or more of the combined  voting power
          of the Surviving  Corporation's  then outstanding voting securities (a
          transaction described in this subparagraph (a) shall be referred to as
          a "Non-Control Transaction");

                    (b) A complete liquidation or dissolution of the Company; or

                    (c) An agreement for the sale or other disposition of all or
          substantially  all of the assets of the  Company to any Person  (other
          than a transfer to a Controlled Entity).

                                      -4-

<PAGE>


          Notwithstanding  the  foregoing,  (x) a Change in Control shall not be
          deemed to occur solely because forty percent (40%) or more of the then
          outstanding  Voting Securities is Beneficially  Owned by (A) a trustee
          or other  fiduciary  holding  securities  under  one or more  employee
          benefit  plans or  arrangements  (or any trust forming a part thereof)
          maintained  by  the  Company  or any  Controlled  Entity  or  (B)  any
          corporation  which,  immediately  prior  to its  acquisition  of  such
          interest,  is owned directly or indirectly by the  stockholders of the
          Company  in the same  proportion  as their  ownership  of stock in the
          Company immediately prior to such acquisition;  and (y) if an Eligible
          Employee's  employment  is  terminated  and  the  employer  reasonably
          demonstrates  that such  termination (A) was at the request of a third
          party  who has  indicated  an  intention  or  taken  steps  reasonably
          calculated to effect a Change in Control and who  effectuates a Change
          in  Control  or (B)  otherwise  occurred  in  connection  with,  or in
          anticipation of, a Change in Control which actually  occurs,  then for
          all purposes  hereof,  the date of a Change in Control with respect to
          the Eligible  Employee  shall mean the date  immediately  prior to the
          date of such termination of employment.

               3.9 "Code" means the Internal Revenue Code of 1986, as amended.

               3.10 "Committee" means a committee consisting of at least two (2)
Disinterested  Directors  appointed by the Board to  administer  the Plan and to
perform the functions set forth herein.

               3.11 "Company" means Video Lottery Technologies, Inc.

               3.12  "Director  Option"  means an  Option  granted  pursuant  to
Section 6.

               3.13  "Disability"  means a physical  or mental  infirmity  which
impairs the Optionee's ability to perform  substantially his or her duties for a
period of one hundred eighty (180) consecutive days.

               3.14 "Disinterested Director" means a director of the Company who
is "disinterested" within the meaning of Rule 16b-3 under the Exchange Act.

                                      -5-

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               3.15 "Division"  means any of the operating units or divisions of
the Company designated as a Division by the Committee.

               3.16 "Eligible  Employee" means any officer or other key employee
or  consultant  or advisor  of the  Company or a  Subsidiary  designated  by the
Committee as eligible to receive Options or Awards subject to the conditions set
forth herein.

               3.17  "Employee  option"  means an  Option  granted  pursuant  to
Section 7.

               3.18 "Exchange Act" means the Securities Exchange Act Of 1934, as
amended.

               3.19 "Fair  Market  Value" on any date  means the  average of the
high and low sales prices of the Shares on such date on the  principal  national
securities  exchange on which such Shares are listed or admitted to trading,  or
if such Shares are not so listed or admitted to trading,  the arithmetic mean of
the per Share  closing bid price and per Share  closing asked price on such date
as quoted on the National  Association of Securities Dealers Automated Quotation
System or such other market in which such prices are  regularly  quoted,  or, if
there have been no published bid or asked  quotations  with respect to Shares on
such date, the Fair Market Value shall be the value  established by the Board in
good faith and in accordance with Section 422 of the Code.

               3.20  "Grantee"  means a person to whom an Award has been granted
under the Plan.

               3.21  "Incentive  Stock  Option" means an Option  satisfying  the
requirements  of Section 422 of the Code and  designated  by the Committee as an
Incentive Stock Option.

               3.22 "1991 Plan" means the Video Lottery Technologies,  Inc. 1991
Stock Option Plan.

               3.23  "Nonemployee  Director" means a director of the Company who
is not an employee of the Company or any  Subsidiary and who is first elected or
appointed to serve as a director of the Company after August 26, 1992.

               3.24 "Nonqualified  Stock Option" means an Option which is not an
Incentive Stock Option.

               3.25 "Option"  means a Employee  Option,  a Director  Option,  or
either or both of them.

                                      -6-

<PAGE>


               3.26 "Optionee" means a person to whom an Option has been granted
under the Plan.

               3.27 "Parent" means any corporation which is a parent corporation
(within the meaning of Section 424(e) of the Code) with respect to the Company.

               3.28 "Performance  Awards" means Performance  Units,  Performance
Shares or either or both of them.

               3.29  "Performance  Cycle" means the time period specified by the
Committee  at  the  time  a  Performance  Award  is  granted  during  which  the
performance of the Company, a Subsidiary or a Division will be measured.

               3.30  "Performance  Shares" means Shares issued or transferred to
an Eligible  Employee under Section 11.3 which are subject to restrictions  that
lapse if and when certain prescribed performance goals are met.

               3.31  "Performance  Unit" means  Performance  Units granted under
Section 11.2.

               3.32 "Restricted  Stock" means Shares issued or transferred to an
Eligible Employee pursuant to Section 10 which are subject to restrictions which
lapse over time without regard to the  performance of the Company,  a Subsidiary
or a Division.

               3.33 "Plan" means the Video Lottery Technologies, Inc. 1992 Stock
Incentive Plan.

               3.34 "Shares"  means the common stock,  par value $.0l per share,
of the Company.

               3.35 "Stock  Appreciation  Right" means a right to receive all or
some portion of the increase in the value of the Shares  subject to an Option as
provided in Section 9.

               3.36  "Subsidiary"  means any  corporation  which is a subsidiary
corporation  (within the meaning of Section  424(f) of the Code) with respect to
the Company.

               3.37 "Successor Corporation" means a corporation,  or a parent or
subsidiary  thereof  within the  meaning of  Section  424(a) of the Code,  which
issues or assumes a stock option in a transaction to which Section 424(a) of the
Code applies.

                                      -7-

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               3.38 "Ten-Percent  Stockholder" means an Eligible Employee,  who,
at the time an  Incentive  Stock  Option is to be  granted  to him or her,  owns
(within the meaning of Section  422(b)(6)of the Code) stock possessing more than
ten percent (10%) of the total combined  voting power of all classes of stock of
the Company, or of a Parent or a Subsidiary.

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

               4.1 The Plan shall be  administered  by the Committee which shall
hold meetings at such times as may be necessary for the proper administration of
the Plan.  The  Committee  shall keep  minutes of its  meetings.  A quorum shall
consist of not less than two members of the Committee and a majority of a quorum
may authorize any action.  Any decision or determination  reduced to writing and
signed by a majority of all of the  members  shall be as fully  effective  as if
made by a majority  vote at a meeting  duly called and held.  Each member of the
Committee shall be a Disinterested Director. No member of the Committee shall be
liable for any action,  failure to act,  determination or interpretation made in
good faith with respect to this Plan or any  transaction  hereunder,  except for
liability arising from his or her own willful  misfeasance,  gross negligence or
reckless  disregard of his or her duties. The Company hereby agrees to indemnify
each  member of the  Committee  for all costs and  expenses  and,  to the extent
permitted by applicable law, any liability incurred in connection with defending
against,  responding to,  negotiation for the settlement of or otherwise dealing
with any claim,  cause of action or dispute  of any kind  arising in  connection
with any  actions  in  administering  this  Plan or in  authorizing  or  denying
authorization to any transaction hereunder.

               4.2 Subject to the express terms and conditions set forth herein,
the Committee shall have the power from time to time to:

                    (a) determine  those  individuals  to whom Employee  Options
shall be granted under the Plan and the number of Incentive Stock Options and/or
Nonqualified  Stock  Options  to be  granted to each  Eligible  Employee  and to
prescribe  the  terms  and  conditions  (which  need not be  identical)  of each
Employee Option, including the purchase price per Share subject to each Employee
Option, and make any amendment or modification to any Agreement  consistent with
the terms of the Plan; and

                    (b) select those Eligible  Employees to whom Awards shall be
granted  under  the Plan and to  determine  the  number  of  Performance  Units,
Performance Shares, Shares of

                                      -8-

<PAGE>

Restricted  Stock,  and/or Stock  Appreciation  Rights to be granted pursuant to
each Award,  the terms and conditions of each Award,  including the restrictions
or performance  criteria relating to such Units,  Shares or Rights,  the maximum
value of each Performance  Unit and Performance  Share and make any amendment or
modification to any Agreement consistent with the terms of the Plan.

               4.3 Subject to the express terms and conditions set forth herein,
the Committee shall have the power from time to time:

                    (a) to  construe  and  interpret  the Plan and  Options  and
Awards  granted  thereunder  and  to  establish,  amend  and  revoke  rules  and
regulations for the administration of the Plan,  including,  but not limited to,
correcting   any  defect  or  supplying  any  omission,   or   reconciling   any
inconsistency  in the Plan or in any Agreement,  in the manner and to the extent
it shall deem necessary or advisable to make the Plan fully  effective,  and all
decisions  and  determinations  by the  Committee  in the exercise of this power
shall be final, binding and conclusive upon the Company,  its Subsidiaries,  the
Optionees and Grantees and all other persons having any interest therein;

                    (b) to  determine  the  duration  and purposes for leaves of
absence  which may be granted to an Optionee or Grantee on an  individual  basis
without  constituting a termination of employment or service for purposes of the
Plan;

                    (c) to exercise  its  discretion  with respect to the powers
and rights granted to it as set forth in the Plan; and

                    (d)  generally,  to exercise such powers and to perform such
acts as are deemed  necessary or advisable to promote the best  interests of the
Company with respect to the Plan.

          5. Stock Subject to the Plan.
             -------------------------

               5.1 The maximum  number of Shares that may be made the subject of
Options and Awards granted under the Plan is 360,940, plus all Shares that would
have been available for the granting of stock options under the 1991 Plan due to
the  forfeiture,  expiration or termination  of stock options  granted under the
1991 Plan,  but for the  prospective  termination  of that plan as  provided  in
Section 2. Upon a Change in Capitalization the maximum number of Shares shall be
adjusted in number and kind  pursuant to Section 13. The Company  shall

                                      -9-

<PAGE>

reserve for the purposes of the Plan, out of its authorized but unissued  Shares
or out of Shares held in the  Company's  treasury,  or partly out of each,  such
number of Shares as shall be determined by the Board.

               5.2 Whenever any  outstanding  Option or Award or portion thereof
expires,  is  cancelled or is otherwise  terminated  for any reason,  the Shares
allocable  to the  cancelled or  otherwise  terminated  portion of the Option or
Award may again be the subject of Options or Awards granted hereunder.  Whenever
a Stock  Appreciation  Right is exercised  (for cash or Shares or a  combination
thereof)  the  excess of the  number of  Shares  in  respect  of which the Stock
Appreciation  Right was  granted  over the  number of Shares,  if any,  actually
issued or  transferred  to the Awardee as a result of such exercise may again be
the subject of Options or Awards  granted  hereunder;  provided,  however,  that
future  transactions  involving such Shares (including without  limitation,  the
grant of Options or Awards in respect of such Shares)  shall be eligible for the
exemptions  provided under Rule 16b-3 promulgated under the Exchange Act only to
the extent permitted under that Rule with respect to such securities.

          6. Option Grants for Nonemployee Directors.
             ---------------------------------------

               6.1 Grant.  Subject to the  availability of an adequate number of
Shares  designated  under the Plan,  each  Nonemployee  Director shall receive a
one-time grant of an Option to purchase  10,000 Shares (subject to adjustment as
provided  in Section  13)  effective  as of the date which is the earlier of the
date on which he or she is  initially  elected to serve as a Director by vote of
the holders of Shares or the date on which he or she is  initially  appointed to
serve as a  Director  by the  members of the Board,  pursuant  to the  Company's
bylaws and articles of incorporation, as then in effect (a "Director Option").

               6.2  Purchase  Price.  The  purchase  price for Shares under each
Director  Option  shall be equal to 100% of the Fair Market Value of such Shares
on the date immediately preceding the date of grant.

               6.3  Vesting.  Subject to  Sections  6.4 and 8.4,  each  Director
Option  shall  become  exercisable  with  respect to 50% of the  Shares  subject
thereto effective  immediately as of the grant date and shall become exercisable
with respect to an additional 25% of the Shares subject thereto  effective as of
each of the first and second anniversaries of the grant date; provided, however,
that the Optionee continues to serve as a

                                      -10-

<PAGE>

Director as of such dates.  If an Optionee ceases to serve as a Director for any
reason,  the  Optionee  shall have no rights with  respect to that  portion of a
Director option which has not then vested pursuant to the preceding sentence and
the Optionee  shall  automatically  forfeit that portion of the Director  Option
which remains unvested.

               6.4 Duration.  Each Director  Option shall  terminate on the date
which is the tenth anniversary of the grant date,  unless terminated  earlier as
follows:

                    (a) If an Optionee's  service as a Director  terminates  for
any reason other than Disability,  death or Cause, the Optionee may for a period
of three (3) months  after such  termination  exercise  his or her Option to the
extent,  and only to the extent,  that such Option or portion thereof was vested
and exercisable as of the date the Optionee's service as a Director  terminated,
after which time the Option shall automatically terminate in full.

                    (b) If an  optionee's  service as a Director  terminates  by
reason  of  the  Optionee's  resignation  or  removal  from  the  Board  due  to
Disability,  the  Optionee  may,  for a  period  of  one  (1)  year  after  such
termination,  exercise his or her Option to the extent,  and only to the extent,
that such Option or portion thereof was vested and  exercisable,  as of the date
the Optionee's service as Director terminated, after which time the Option shall
automatically terminate in full.

                    (c) If an Optionee's  service as a Director  terminates  for
Cause, the Option granted to the Optionee hereunder shall immediately  terminate
in full and no rights thereunder may be exercised.

                    (d) If an Optionee dies while a Director or within three (3)
months after  termination of service as a Director as described in clause (a) or
(b) of this Section 6.4, the Option  granted to the Optionee may be exercised at
any time within twelve (12) months after the  Optionee's  death by the person or
person to whom such rights under the Option  shall pass by will,  or by the laws
of descent or distribution, after which time the Option shall terminate in full;
provided,  however,  that an Option may be exercised to the extent,  and only to
the extent,  that the Option or portion  thereof was  exercisable on the date of
death or earlier termination of the Optionee's services as a Director.

                                      -11-

<PAGE>


          7. Option Grants for Eligible Employees.
             ------------------------------------

               7.1 Authority of Committee. Subject to the provisions of the Plan
and to Section 5.1 above,  the Committee  shall have full and final authority to
select  those  Eligible  Employees  who will receive  Options  (each a "Employee
Option"),  the terms and conditions of which shall be set forth in an Agreement;
provided,  however,  that no person shall  receive any  Incentive  Stock Options
unless he or she is an employee of the Company,  a Parent or a Subsidiary at the
time the Incentive Stock Option is granted.

               7.2 Purchase Price. The purchase price or the manner in which the
purchase price is to be determined  for Shares under each Employee  Option shall
be determined by the Committee and set forth in the Agreement, provided that the
purchase  price per Share under each  Incentive  Stock  Option shall not be less
than 100% of the Fair Market  Value of a Share on the date the  Incentive  Stock
Option is granted  (110% in the case of an Incentive  Stock Option  granted to a
Ten-Percent   Stockholder)   and  the  purchase   price  per  Share  under  each
Nonqualified Stock Option shall not be less than 75% of the Fair Market Value of
a Share on the date the Nonqualified Stock Option is granted.

               7.3 Maximum Duration. Employee options granted hereunder shall be
for such term as the Committee shall determine, provided that an Incentive Stock
option shall not be exercisable  after the expiration of ten (10) years from the
date it is  granted  (five (5) years in the case of an  Incentive  Stock  Option
granted to a Ten-Percent  Stockholder) and a Nonqualified Stock Option shall not
be  exercisable  after the  expiration of fifteen (15) years from the date it is
granted.  The Committee may,  subsequent to the granting of any Employee Option,
extend the term thereof but in no event shall the term as so extended exceed the
maximum term provided for in the preceding sentence.

               7.4 Vesting.  Subject to Section 8.4 hereof, each Employee Option
shall become  exercisable in such installments  (which need not be equal) and at
such times as may be designated by the Committee and set forth in the Agreement.
To the extent not exercised,  installments  shall accumulate and be exercisable,
in whole or in part, at any time after becoming exercisable,  but not later than
the  date  the  Employee  Option  expires.  The  Committee  may  accelerate  the
exercisability of any Option or portion thereof at any time.

                                      -12-

<PAGE>



               7.5  Modification  or  Substitution.  The  Committee  may, in its
discretion,  modify  outstanding  Employee  Options or accept the  surrender  of
outstanding Employee Options (to the extent not exercised) and grant new Options
in substitution for them.  Notwithstanding the foregoing,  no modification of an
Employee Option shall adversely alter or impair any rights or obligations  under
the Employee Option without the Optionee's consent.

          8. Terms and Conditions Applicable to All Options.
             ----------------------------------------------

               8.1  Non-transferability.  No Option granted  hereunder  shall be
transferable by the Optionee to whom granted  otherwise than by will or the laws
of descent and distribution,  and an Option may be exercised during the lifetime
of  such  Optionee  only  by  the  optionee  or his or  her  guardian  or  legal
representative.  The terms of such Option shall be final, binding and conclusive
upon the beneficiaries,  executors,  administrators, heirs and successors of the
Optionee.

               8.2 Method of  Exercise.  The exercise of an option shall be made
only by a written notice  delivered in person or by mail to the Secretary of the
Company at the Company's  principal  executive office,  specifying the number of
Shares to be purchased  and  accompanied  by payment  therefor and  otherwise in
accordance  with the  Agreement  pursuant to which the Option was  granted.  The
purchase  price for any Shares  purchased  pursuant to the exercise of an Option
shall be paid in full  upon such  exercise  by any one or a  combination  of the
following: (i) cash, (ii) transferring Shares to the Company upon such terms and
conditions as determined by the Committee or (iii) by delivering  the Optionee's
promissory  note  (provided  that the par value of the  Shares  subject  to such
exercise shall be paid in cash),  which shall provide for interest at a rate not
less than the minimum rate required to avoid the imputation of income,  original
issue  discount or a  below-market-rate  loan  pursuant to Sections 483, 1274 or
7872 of the Code or any successor provisions thereto. The Optionee's  promissory
note shall be a recourse liability of the optionee and may, at the discretion of
the Committee, be secured by a pledge of the Shares being purchased.  Until such
person  has been  issued the Shares  subject to such  exercise,  he or she shall
possess no rights as a stockholder with respect to such Shares.  Notwithstanding
the foregoing,  the Committee  shall have discretion to determine at the time of
grant of each Employee Option or at any later date (up to and including the date
of exercise)  the form of payment  acceptable in respect of the exercise of such
Employee  Option.  The  written  notice  pursuant  to this  Section 8.2 may also
provide  instructions  from the

                                      -13-

<PAGE>

optionee to the Company that upon receipt of the purchase price in cash from the
Optionee's  broker or  dealer,  designated  as such on the  written  notice,  in
payment  for any Shares  purchase  pursuant to the  exercise  of an option,  the
Company shall issue such Shares directly to the designated broker or dealer. Any
Shares  transferred  to the  Company as payment of the  purchase  price under an
Option shall be valued at their Fair Market Value on the day  preceding the date
of exercise of such Option.  If requested by the  Committee,  the Optionee shall
deliver the Agreement  evidencing the Option to the Secretary of the Company who
shall endorse  thereon a notation of such exercise and return such  Agreement to
the  Optionee.  No fractional  Shares (or cash in lieu thereof)  shall be issued
upon  exercise of an Option and the number of Shares that may be purchased  upon
exercise shall be rounded to the nearest number of whole Shares.

               8.3 Rights of Option No Optionee  shall be deemed for any purpose
to be the owner of any Shares  subject  to any  Option  unless and until (i) the
Option shall have been exercised pursuant to the terms thereof, (ii) the Company
shall  have  issued  and  delivered  the  Shares to the  Optionee  and (iii) the
Optionee's  name shall have been entered as a stockholder of record on the books
of the Company.  Thereupon,  the Optionee  shall have full voting,  dividend and
other ownership rights with respect to such Shares.

               8.4  Effect  of  Change  in  Control.   Notwithstanding  anything
contained in the Plan or an Agreement to the contrary,  in the event of a Change
in Control,  (i) all Options  outstanding  on the date of such Change in Control
shall become  immediately  and fully  exercisable  and (ii) an Optionee  will be
permitted to surrender for cancellation within sixty (60) days after such Change
in Control,  any Option or portion of an Option to the extent not yet  exercised
and the  Optionee  will be entitled to receive a cash payment in an amount equal
to the excess,  if any, of (x) (A) in the case of a  Nonqualified  Stock Option,
the  greater of (1) the Fair Market  Value,  on the date  preceding  the date of
surrender, of the Shares subject to the Option or portion thereof surrendered or
(2) the  Adjusted  Fair  Market  Value of the  Shares  subject  to the Option or
portion thereof surrendered or (B) in the case of an Incentive Stock Option, the
Fair Market Value,  on the date  preceding the date of surrender,  of the Shares
subject to the Option or portion  thereof  surrendered,  over (y) the  aggregate
purchase price for such Shares under the Option or portion thereof  surrendered;
provided,  however,  that in the case of an Option granted within six (6) months
prior to the Change in Control to any  Optionee  who may be subject to liability
under Section  16(b) of the

                                      -14-

<PAGE>

Exchange  Act,such  Optionee shall be entitled to surrender for cancellation his
or her Option during the sixty (60) day period commencing upon the expiration of
six (6) months from the date of grant of any such Option.

          9. Stock Appreciation Rights.

               9.1 Grant.  The Committee may, in its  discretion,  in connection
with  the  grant  of an  Employee  Option,  grant to  Eligible  Employees  Stock
Appreciation  Rights the terms and  conditions of which shall be set forth in an
Agreement. A Stock Appreciation Right shall cover the same Shares covered by the
Option (or such lesser  number of Shares as the  Committee  may  determine)  and
shall,  except as provided  in this  Section 9, be subject to the same terms and
conditions as the related Option.

               9.2 Time of Grant.  A Stock  Appreciation  Right  may be  granted
either at the time of the related Option grant, or at any time thereafter during
the term of the Option.

               9.3 Payment.  A Stock Appreciation Right shall entitle the holder
thereof,  upon exercise of the Stock  Appreciation Right or any portion thereof,
to receive payment of an amount computed pursuant to Section 9.5.

               9.4 Exercise.  A Stock Appreciation Right shall be exercisable at
such  time  or  times  and  only  to the  extent  that  the  related  Option  is
exercisable,  and will not be  transferable  except to the  extent  the  related
Option may be  transferable.  A Stock  Appreciation  Right granted in connection
with an  Incentive  Stock Option  shall be  exercisable  only if the Fair Market
Value of a Share on the  date of  exercise  exceeds  the  purchase  price of the
related Incentive Stock Option.

               9.5 Amount  Payable.  upon the  exercise of a Stock  Appreciation
Right,  the  Grantee  shall be  entitled  to  receive  an amount  determined  by
multiplying  (A) the  excess  of the  Fair  Market  Value of a Share on the date
preceding  the date of  exercise of such Stock  Appreciation  Right over the per
Share purchase price under the related Option, by (B) the number of Shares as to
which such Stock  Appreciation  Right is being  exercised.  Notwithstanding  the
foregoing, the Committee may limit in any manner the amount payable with respect
to any  Stock  Appreciation  Right by  including  such a limit in the  Agreement
evidencing the Stock Appreciation Right at the time it is granted.

                                      -15-

<PAGE>


               9.6 Treatment of Related  Options and Stock  Appreciation  Rights
Upon  Exercise.  Upon the exercise of a Stock  Appreciation  Right,  the related
Option  shall be cancelled to the extent of the number of Shares as to which the
Stock  Appreciation  Right is  exercised,  and upon the  exercise  of an  Option
granted in connection with a Stock  Appreciation  Right or the surrender of such
Option pursuant to Section 8.4, the Stock  Appreciation Right shall be cancelled
to the  extent of the number of Shares as to which the  Option is  exercised  or
surrendered.

               9.7  Method  of  Exercise.  Stock  Appreciation  Rights  shall be
exercised by a Grantee only by a written  notice  delivered in person or by mail
to the Secretary of the Company at the  Company's  principal  executive  office,
specifying  the number of Shares  with  respect to which the Stock  Appreciation
Right is being  exercised.  If requested  by the  Committee,  the Grantee  shall
deliver the Agreement  evidencing the Stock  Appreciation  Right being exercised
and the Agreement  evidencing any related option to the Secretary of the Company
who shall endorse  thereon a notation of such exercise and return such Agreement
to the Grantee.

               9.8 Form of  Payment.  Payment  of the  amount  determined  under
Section  9.5 may be made in the  discretion  of the  Committee,  solely in whole
Shares in a number  determined at their Fair Market Value on the date  preceding
the date of exercise of the Stock Appreciation Right, or solely in cash, or in a
combination of cash and Shares. If the Committee decides to make full payment in
Shares and the amount  payable  results in a fractional  Share,  payment for the
fractional Share will be made in cash. Notwithstanding the foregoing, no payment
in the form of cash may be made upon the exercise of a Stock  Appreciation Right
pursuant  to Section  9.5 to an officer of the  Company or a  Subsidiary  who is
subject to Section 16 of the  Exchange  Act,  unless the  exercise of such Stock
Appreciation Right is made during the period beginning on the third business day
and  ending on the  twelfth  business  day  following  the date of  release  for
publication  of the  Company's  quarterly  or  annual  statements  of sales  and
earnings.

               9.9 Restrictions . No Stock  Appreciation  Right may be exercised
before the date six (6) months after the date it is granted.

               9.10  Modification or  Substitution.  Subject to the terms of the
Plan, the Committee may modify outstanding  Awards of Stock Appreciation  Rights
or accept the surrender of outstanding Awards of Stock  Appreciation  Rights (to
the  extent

                                      -16-

<PAGE>


not exercised) and grant new Awards in  substitution  for them.  Notwithstanding
the foregoing,  no  modification of an Award shall adversely alter or impair any
rights or obligations under the Agreement without the Grantee's consent.

          10. Restricted Stock.
              ----------------

               10.1 Grant. The Committee may grant to Eligible  Employees Awards
of  Restricted  Stock,  and may issue Shares of  Restricted  Stock in payment in
respect of vested  Performance Units (as hereinafter  provided in Section 11.2),
which shall be evidenced  by an  Agreement  between the Company and the Grantee.
Each  Agreement  shall contain such  restrictions,  terms and  conditions as the
Committee may, in its discretion, determine and (without limiting the generality
of the foregoing)  such  Agreements  may require that an  appropriate  legend be
placed on Share certificates. Awards of Restricted Stock shall be subject to the
terms and provisions set forth below in this Section 10.

               10.2  Rights of  Grantee.  Shares  of  Restricted  Stock  granted
pursuant  to an Award  hereunder  shall be issued in the name of the  Grantee as
soon as  reasonably  practicable  after the Award is granted  provided  that the
Grantee has executed an Agreement  evidencing the Award,  the appropriate  blank
stock powers and, in the  discretion of the Committee,  an escrow  agreement and
any other  documents  which the  Committee  may  require as a  condition  to the
issuance  of such  Shares.  If a Grantee  shall  fail to execute  the  Agreement
evidencing a Restricted Stock Award, the appropriate  blank stock powers and, in
the discretion of the  Committee,  an escrow  agreement and any other  documents
which the  Committee  may  require  within  the time  period  prescribed  by the
Committee at the time the Award is granted, the Award shall be null and void. At
the discretion of the Committee,  Shares issued in connection  with a Restricted
Stock Award shall be  deposited  together  with the stock  powers with an escrow
agent  (which  may be the  Company)  designated  by the  Committee.  Unless  the
Committee determines otherwise and as set forth in the Agreement,  upon delivery
of the Shares to the escrow agent, the Grantee shall have all of the rights of a
stockholder with respect to such Shares,  including the right to vote the Shares
and to receive all dividends or other distributions paid or made with respect to
the Shares.

               10.3 Non-transferability.  Until any restrictions upon the Shares
of  Restricted  Stock  awarded to a Grantee  shall have lapsed in the manner set
forth in Section 10.4,  such Shares shall not be sold,  transferred or otherwise
disposed of and shall not be pledged or otherwise  hypothecated,  nor shall they
be delivered to the Grantee.

                                      -17-

<PAGE>


               10.4 Lapse of Restrictions.
                    ---------------------

                    (a) Generally.  Restrictions upon Shares of Restricted Stock
awarded  hereunder  shall  lapse at such  time or times  and on such  terms  and
conditions as the Committee may determine, which restrictions shall be set forth
in the Agreement evidencing the Award.

                    (b) Effect-of  Change in Control.  Notwithstanding  anything
contained in the Plan, unless the Agreement evidencing the Award provides to the
contrary,  in the event of a Change in Control, all restrictions upon any Shares
of  Restricted  Stock shall lapse  immediately  and all such Shares shall become
fully vested in the Grantee.

               10.5  Modification or  Substitution.  Subject to the terms of the
Plan, the Committee may modify  outstanding Awards of Restricted Stock or accept
the  surrender  of  outstanding  Awards of  Restricted  Stock (to the extent not
exercised) and grant new Awards in substitution  for them.  Notwithstanding  the
foregoing,  no  modification  of an Award  shall  adversely  alter or impair any
rights or obligations under the Agreement without the Grantee's consent.

               10.6  Treatment of Dividends.  At the time the Award of Shares of
Restricted  Stock is granted,  the Committee may, in its  discretion,  determine
that the payment to the Grantee of dividends,  or a specified  portion  thereof,
declared or paid on such Shares by the Company  shall be (i) deferred  until the
lapsing  of the  restrictions  imposed  upon  such  Shares  and (ii) held by the
Company  for the account of the  Grantee  until such time.  In the event of such
deferral,  there may be credited  at the end of each year (or  portion  thereof)
interest on the amount of the account at the beginning of the year at a rate per
annum as the Committee,  in its discretion,  may determine.  Payment of deferred
dividends,  together  with  interest  accrued  thereon,  shall be made  upon the
lapsing of  restrictions  imposed on such  Shares,  and any  dividends  deferred
(together  with any  interest  accrued  thereon)  in  respect  of any  Shares of
Restricted Stock shall be forfeited upon the forfeiture of such Shares.

               10.7 Delivery of Shares.  Upon the lapse of the  restrictions  on
Shares of Restricted  Stock, the Committee shall cause a stock certificate to be
delivered to the Grantee with respect to such Shares,  free of all  restrictions
hereunder.

                                      -18-

<PAGE>


          11. Performance Awards.
              ------------------

               11.1   Performance   Objectives.   Performance   objectives   for
Performance  Awards may be expressed  in terms of (i)  earnings per Share,  (ii)
pre-tax  profits,  (iii) net  earnings  or net worth,  (iv)  return on equity or
assets,  (v) any  combination  of the  foregoing,  or (vi) any other standard or
standards deemed  appropriate by the Committee at the time the Award is granted.
Performance  objectives may be in respect of the  performance of the Company and
its  Subsidiaries  (which may be on a  consolidated  basis),  a Subsidiary  or a
Division.  Performance  objectives  may  be  absolute  or  relative  and  may be
expressed in terms of a progression  within a specified range.  Prior to the end
of a  Performance  Cycle,  the  Committee,  in its  discretion,  may  adjust the
performance  objectives to reflect a Change in the  Capitalization,  a change in
the tax rate or book tax rate of the  Company  or any  Subsidiary,  or any other
event which may materially  affect the performance of the Company,  a Subsidiary
or a Division, including, but not limited to, market conditions or a significant
acquisition  or  disposition  of  assets or other  property  by the  Company,  a
Subsidiary or a Division.

               11.2 Performance Units. The Committee may grant Performance Units
to Eligible  Employees,  the terms and conditions of which shall be set forth in
an Agreement  between the Company and the Grantee.  Each Performance Unit shall,
contingent upon the attainment of specified  performance  objectives  within the
Performance  Cycle,  represent one (1) Share.  Each Agreement  shall specify the
number of the Performance Units to which it relates, the performance  objectives
which  must be  satisfied  in order  for the  Performance  Units  to  vest,  the
Performance Cycle within which such objectives must be satisfied.

                    (a) Vesting--and  Forfeiture.  A Grantee shall become vested
with  respect  to the  Performance  Units to the  extent  that  the  performance
objectives set forth in the Agreement are satisfied for the Performance Cycle.

                    (b)  Payment of  Awards.  Payment  of  Performance  Units to
Grantees in respect of vested  Performance Units shall be made within sixty (60)
days after the last day of the  Performance  Cycle to which  such Award  relates
unless the Agreement  evidencing the Award provides for the deferral of payment,
in which event the terms and  conditions  of the deferral  shall be set forth in
the  Agreement.  Subject to Section 11.4,  such payments may be made entirely in
Shares,  entirely  in cash,  or in such  combination  of Shares  and cash as

                                      -19-

<PAGE>


the  Committee  in its  discretion,  shall  determine  at any time prior to such
payment;  Provided,  however, that if the Committee in its discretion determines
to make such payment  entirely or partially in Shares of Restricted  Stock,  the
Committee  must  determine the extent to which such payment will be in Shares of
Restricted Stock at the time the Award is granted. Except as provided in Section
11.4, if payment is made in the form of cash,  the amount  payable in respect of
each vested  Performance Unit shall be equal to the Fair Market Value of one (1)
Share on the last day of the  Performance  Cycle or on such  other  date (or the
average  over  some  period)  specified  by the  Committee  and set forth in the
Agreement.

               11.3 Performance  Shares. The Committee,  in its discretion,  may
grant  Awards  of  Performance  Shares to  Eligible  Employees,  which  shall be
evidenced by an Agreement  between the Company and the Grantee.  Each  Agreement
shall  contain such  restrictions,  if any, and the terms and  conditions as the
Committee may, in its discretion,  require, and (without limiting the generality
of the foregoing)  such  Agreements  may require that an  appropriate  legend be
placed on Share  certificates.  Awards of Performance Shares shall be subject to
the following terms and provisions:

                    (a) Rights of Grantee.  The  Committee  shall provide at the
time an Award of  Performance  Shares  is made,  the time or times at which  the
Performance  Shares granted  pursuant to such Award hereunder shall be issued in
the name of the Grantee; Provided,  however, that no Performance Shares shall be
issued  until the Grantee has executed an Agreement  evidencing  the Award,  the
appropriate  blank stock  powers and, in the  discretion  of the  Committee,  an
escrow  agreement and any other  documents  which the Committee may require as a
condition to the issuance of such Performance Shares. If a Grantee shall fail to
execute the Agreement evidencing an Award of Performance Shares, the appropriate
blank stock powers and, in the discretion of the Committee,  an escrow agreement
and any other  documents  which the Committee may require within the time period
prescribed by the Committee at the time the Award is granted, the Award shall be
null and void. At the discretion of the  Committee,  Shares issued in connection
with an Award of Performance  Shares shall be deposited  together with the stock
powers  with an  escrow  agent  (which  may be the  Company)  designated  by the
Committee.  Except as restricted by the terms of the Agreement, upon delivery of
the Shares to the escrow agent, the Grantee shall have, in the discretion of the
Committee,  all of the rights of a  stockholder  with  respect  to such  Shares,
including  the right to vote the shares and to receive  all  dividends  or other
distributions paid or made with respect to the shares.

                                      -20-

<PAGE>


                    (b)  Non-transferability.  Until any  restrictions  upon the
Performance  Shares  awarded to a Grantee  shall  have  lapsed in the manner set
forth in Sections  11.3(c) or 11.4, such  Performance  Shares shall not be sold,
transferred  or  otherwise  disposed  of and shall not be pledged  or  otherwise
hypothecated, nor shall they be delivered to the Grantee. The Committee may also
impose such other restrictions and conditions on the Performance Shares, if any,
as it deem appropriate.

                    (c)  Lapse  of   Restrictions.   Subject  to  Section  11.4,
restrictions  upon  Performance  Shares awarded  hereunder  shall lapse and such
Performance  Shares shall become vested at such time or times and on such terms,
conditions and  satisfaction of performance  objectives as the Committee may, in
its discretion, determine at the time an Award is granted.

                    (d)  Treatment  of  Dividends.  At the  time  the  Award  of
Performance Shares is granted,  the Committee may, in its discretion,  determine
that the payment to the Grantee of dividends,  or a specified  portion  thereof,
declared  or paid on  Performance  Shares  issued by the  Company to the Grantee
shall be (i) deferred  until the lapsing of the  restrictions  imposed upon such
Performance  Shares and (ii) held by the  Company for the account of the Grantee
until such time. In the event of such deferral, there may be credited at the end
of each year (or portion  thereof)  interest on the amount of the account at the
beginning of the year at a rate per annum as the Committee,  in its  discretion,
may determine.  Payment of deferred  dividends,  together with interest  accrued
thereon as aforesaid,  shall be made upon the lapsing of restrictions imposed on
such Performance  Shares,  except that any dividends deferred (together with any
interest  accrued  thereon)  in  respect  of any  Performance  Shares  shall  be
forfeited upon the forfeiture of such Performance Shares.

                    (e) Delivery of Shares.  Upon the lapse of the  restrictions
on  Performance  Shares  awarded  hereunder,  the Committee  shall cause a stock
certificate to be delivered to the Grantee with respect to such Shares,  free of
all restrictions hereunder.

               11.4  Effect  of  Change  in  Control.  Notwithstanding  anything
contained in the Plan or any Agreement to the contrary, in the event of a Change
in Control:

                    (a) With respect to the Performance Units, the Grantee shall
(i) become  vested in a percentage  of  Performance  Units as  determined by the
Committee at the time of

                                      -21-

<PAGE>


the Award of such  Performance  Units and as set forth in the Agreement and (ii)
be entitled to receive in respect of all  Performance  Units which become vested
as a result of a Change in Control,  a cash  payment  within ten (10) days after
such Change in Control equal to the product of the Adjusted Fair Market Value of
a Share  multiplied  by the number of  Performance  Units which become vested in
accordance with this Section 11.4.

                    (b) With respect to the Performance Shares, all restrictions
shall  lapse  immediately  on all or a  portion  of the  Performance  Shares  as
determined by the Committee at the time of the Award of such Performance  Shares
and as set forth in the Agreement.

                    (c)  The  Agreements   evidencing   Performance  Shares  and
Performance  Units shall  provide for the  treatment of such Awards (or portions
thereof)  which do not  become  vested as the  result  of a Change  in  Control,
including,  but not limited to,  provisions  for the  adjustment  of  applicable
performance objectives.

               11.5   Non-transferability.   No  Performance   Awards  shall  be
transferable  by the Grantee  otherwise  than by will or the laws of descent and
distribution.

               11.6  Modification or  Substitution.  Subject to the terms of the
Plan,  the Committee  may modify  outstanding  Performance  Awards or accept the
surrender of outstanding  Performance Awards and grant new Performance Awards in
substitution  for them.  Notwithstanding  the foregoing,  no  modification  of a
Performance  Award  shall  adversely  alter or impair any rights or  obligations
under the Agreement without the Grantee's consent.

          12. Effect of a Termination  of Employment.  The Agreement  evidencing
              --------------------------------------
the grant of each  Employee  Option and each Award shall set forth the terms and
conditions  applicable  to such Employee  Option or Award upon a termination  or
change  in the  status of the  employment  of the  Optionee  or  Grantee  by the
Company,  a Subsidiary or a Division,  as the Committee may, in its  discretion,
determine at the time the Employee Option or Award is granted or thereafter.

          13. Adjustment Upon Changes in Capitalization.
              -----------------------------------------

               (a) In the event of a Change  in  Capitalization,  the  Committee
shall  conclusively  determine the appropriate  adjustments,  if any, to the (i)
maximum number and class of

                                      -22-

<PAGE>

Shares or other stock or securities  with respect to which Options or Awards may
be granted under the Plan, (ii) the number and class of Shares or other stock or
securities  which are subject to Director  Options issuable under Section 6; and
(iii) the  number  and class of Shares or other  stock or  securities  which are
subject  to  outstanding  Options  or Awards  granted  under  the Plan,  and the
purchase price therefor, if applicable.

               (b)  Any  such  adjustment  in  the  Shares  or  other  stock  or
securities  subject  to  outstanding  Incentive  Stock  Options  (including  any
adjustments  in the  purchase  price)  shall  be made in such  manner  as not to
constitute a modification  as defined by Section  424(h)(3) of the Code and only
to the extent otherwise permitted by Sections 4222 and 424 of the Code.

               (c)  Any  stock  adjustment  in the  Shares  or  other  stock  or
securities subject to outstanding Director Options (including any adjustments in
the purchase  price) shall be made only to the extent  necessary to maintain the
proportionate  interest of the Optionee and  preserve,  without  exceeding,  the
value of such Director Option.

               (d) If, by reason of a Change in Capitalization,  a Grantee of an
Award  shall be  entitled  to, or an  Optionee  shall be entitled to exercise an
Option  with  respect  to,  new,  additional  or  different  shares  of stock or
securities,  such new additional or different  shares shall thereupon be subject
to all of the  conditions,  restrictions  and  performance  criteria  which were
applicable  to the Shares  subject  to the Award or Option,  as the case may be,
prior to such Change in Capitalization.

          14. Effect of Certain  Transactions.  Subject to Sections 8.4, 10.4(b)
              -------------------------------
and 11.4, in the event of (i) the  liquidation  or dissolution of the Company or
(ii) a merger or  consolidation of the Company (a  "Transaction"),  the Plan and
the Options and Awards issued  hereunder  shall continue in effect in accordance
with their  respective  terms and each Optionee and Grantee shall be entitled to
receive in respect of each Share subject to any  outstanding  Options or Awards,
as the case may be,  upon  exercise  of any  Option or payment  or  transfer  in
respect  of any Award,  the same  number  and kind of stock,  securities,  cash,
property,  or other  consideration  that each holder of a Share was  entitled to
receive in the Transaction in respect of a Share.

                                      -23-

<PAGE>


          15. Termination and Amendment of the Plan.

               The  Plan  shall   terminate  on  the  day  preceding  the  tenth
anniversary  of the date of its adoption by the Board and no Option or Award may
be granted thereafter. The Board may sooner terminate the Plan and the Board may
at any time and from time to time amend,  modify or suspend the Plan;  provided,
however, that:

                    (a)  No  such   amendment,   modification,   suspension   or
termination  shall impair or adversely  alter any Options or Awards  theretofore
granted under the Plan, except with the consent of the Optionee or Grantee,  nor
shall  any  amendment,  modification,  suspension  or  termination  deprive  any
Optionee or Grantee of any Shares which he or she may have  acquired  through or
as a result of the Plan;

                    (b) To the  extent  necessary  under  Section  16(b)  of the
Exchange  Act and the  rules and  regulations  promulgated  thereunder  or other
applicable  law,  no  amendment  shall  be  effective  unless  approved  by  the
stockholders of the Company in accordance  with applicable law and  regulations;
and

                    (c) The  provisions  of Section 6 shall not be amended  more
often than once every six (6) months,  other than to comport with changes in the
Code, the Employee  Retirement  Income Security Act of 1974, as amended,  or the
rules and regulations promulgated thereunder.

          16. Non-Exclusivity of the Plan.
              ---------------------------

               The  adoption of the Plan by the Board shall not be  construed as
amending,  modifying or rescinding any previously approved incentive arrangement
or as  creating  any  limitations  on the power of the Board to adopt such other
incentive arrangements as it may deem desirable,  including, without limitation,
the  granting  of  stock  options  otherwise  than  under  the  Plan,  and  such
arrangements may be either applicable generally or only in specific cases.

          17. Limitation of Liability.
              -----------------------

          As illustrative  of the  limitations of liability of the Company,  but
not intended to be  exhaustive  thereof,  nothing in the Plan shall be construed
to:

               (i) give any  person  any right to be  granted an Option or Award
other than at the sole discretion of the Committee;

                                      -24-

<PAGE>


               (ii) give any person any rights whatsoever with respect to Shares
except as specifically provided in the Plan;

               (iii) limit in any way the right of the Company to terminate  the
employment of any person at any time; or

               (iv) be evidence of any agreement or understanding,  expressed or
implied,  that the  Company  will  employ any person at any  particular  rate of
compensation or for any particular period of time.

          18. Regulations and Other Approvals; Governing Law.
              ----------------------------------------------

               18.1  Except as to  matters  of  federal  law,  this Plan and the
rights of all persons  claiming  hereunder  shall be construed and determined in
accordance  with the laws of the  State of  Delaware  without  giving  effect to
conflicts of law principles.

               18.2 The obligation of the Company to sell or deliver Shares with
respect to Options  and  Awards  granted  under the Plan shall be subject to all
applicable  laws, rules and  regulations,  including all applicable  federal and
state  securities  laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.

               18.3 The Plan is intended  to comply with Rule 16b-3  promulgated
under the Exchange Act and the  Committee  shall  interpret and  administer  the
provisions of the Plan or any Agreement in a manner  consistent  therewith.  Any
provisions inconsistent with such Rule shall be inoperative and shall not affect
the validity of the Plan.

               18.4 The Board  may make  such  changes  as may be  necessary  or
appropriate  to  comply  with  the  rules  and  regulations  of  any  government
authority,  or to obtain for Eligible  Employees granted Incentive Stock Options
the tax benefits  under the  applicable  provisions of the Code and  regulations
promulgated thereunder.

               18.5 Each Option and Award is subject to the requirement that, if
at any time the  Committee  determines,  in its  discretion,  that the  listing,
registration  or  qualification  of  Shares  issuable  pursuant  to the  Plan is
required by any  securities  exchange or under any state or federal  law, or the
consent  or  approval  of any  governmental  regulatory  body  is  necessary  or
desirable as a condition  of, or in connection  with,  the grant of an Option or
Award or the  issuance  of  Shares,  no  Options  or Awards  shall be granted or
payment  made  or  Shares  issued,   in  whole  or  in  part,   unless  listing,
registration,  qualification,  consent or approval has been effected or obtained
free of any conditions as acceptable to the Committee.

                                      -25-

<PAGE>


               18.6  Notwithstanding  anything  contained  in  the  Plan  or any
Agreement to the contrary,  in the event that the disposition of Shares acquired
pursuant to the Plan is not  covered by a then  current  registration  statement
under the Securities Act of 1933, as amended,  and is not otherwise  exempt from
such  registration,  such Shares  shall be  restricted  against  transfer to the
extent required by the Securities Act of 1933, as amended, and Rule 144 or other
regulations  thereunder.  The  Committee  may require any  individual  receiving
Shares  pursuant to an Option or Award  granted  under the Plan,  as a condition
precedent to receipt of such Shares,  to represent and warrant to the Company in
writing that the Shares acquired by such individual are acquired  without a view
to any  distribution  thereof  and will not be sold or  transferred  other  than
pursuant to an effective  registration  thereof under said Act or pursuant to an
exemption  applicable under the Securities Act of 1933, as amended, or the rules
and regulations promulgated thereunder.  The certificates evidencing any of such
Shares shall be  appropriately  amended to reflect  their  status as  restricted
securities as aforesaid.

          19. Miscellaneous.
              -------------

               19.1 Multiple  Agreements.  The terms of each option or Award may
differ from other Options or Awards  granted under the Plan at the same time, or
at some other time.  The  Committee may also grant more than one option or Award
to a given Eligible Employee during the term of the Plan, either in addition to,
or in substitution for, one or more Options or Awards previously granted to that
Eligible Employee.

               19.2  Withholding of Taxes.  (a) The Company shall have the right
to deduct from any  distribution  of cash to any Optionee or Grantee,  an amount
equal to the federal,  state and local income taxes and other  amounts as may be
required by law to be withheld  (the  "Withholding  Taxes")  with respect to any
Option or Award.  If an Optionee or Grantee is to  experience a taxable event in
connection  with the receipt of Shares pursuant to an Option exercise or payment
of an  Award  (a  "Taxable  Event"),  the  Optionee  or  Grantee  shall  pay the
Withholding Taxes to the Company prior to the issuance,  or release from escrow,
of such Shares.  In satisfaction  of the obligation to pay Withholding  Taxes to
the  Company,  the

                                      -26-

<PAGE>


Optionee or Grantee may make a written election (the "Tax Election"),  which may
be accepted or rejected in the discretion of the  Committee,  to have withheld a
portion of the Shares  then  issuable  to him or her  having an  aggregate  Fair
Market  Value,  on the date  preceding the date of such  issuance,  equal to the
Withholding Taxes, provided that in respect of an Optionee or Grantee who may be
subject to liability under Section 16(b) of the Exchange Act either:  (i) in the
case of a Taxable Event  involving an option or an Award (A) the Tax Election is
made at least six (6) months prior to the date of the Taxable  Event and (B) the
Tax  Election is  irrevocable  with  respect to all Taxable  Events of a similar
nature  occurring  prior  to  the  expiration  of six  (6)  months  following  a
revocation of the Tax Election; or (ii) in the case of the exercise of an Option
(A) the  Optionee  makes the Tax Election at least six (6) months after the date
the Option was  granted,  (B) the  Option is  exercised  during the ten (10) day
period  beginning on the third  business day and ending on the twelfth  business
day following the release for  publication of the Company's  quarterly or annual
statement of sales and earnings (a "Window  Period") and (C) the Tax Election is
made during the window Period in which the related  Option is exercised or prior
to such Window Period and subsequent to the immediately preceding Window Period;
or (iii) in the case of a Taxable Event  relating to the payment of an Award (A)
the Grantee  makes the Tax  Election at least six (6) months  after the date the
Award was granted and (B) the Tax  Election is made (x) in the case of a Taxable
Event  occurring  within a Window Period,  during the Window Period in which the
Taxable Event occurs, or (y) in the case of a Taxable Event not occurring within
a window  period,  during the Window  Period  immediately  preceding the Taxable
Event relating to the Award.  Notwithstanding the foregoing,  the Committee may,
by the adoption of rules or otherwise, (i) modify the provisions of this Section
19.2 (other than as regards Director Options) or impose such other  restrictions
or  limitations  on Tax  Elections  as may be  necessary  to ensure that the Tax
Elections will be exempt  transactions  under Section 16(b) of the Exchange Act,
and (ii) permit Tax Elections to be made at such other times and subject to such
other conditions as the Committee determines will constitute exempt transactions
under Section 16(b) of the Exchange Act.

                    (b) If an optionee makes a  disposition,  within the meaning
of Section 424(c) of the Code and  regulations  promulgated  thereunder,  of any
Share or Shares issued to such Optionee pursuant to the exercise of an Incentive
Stock Option within the two-year period  commencing on the day after the date of
the grant or within the one-year period  commencing on the day after the date of
transfer of such

                                      -27-

<PAGE>


Share or Shares to the Optionee  pursuant to such exercise,  the Optionee shall,
within  ten (10)  days of such  disposition,  notify  the  Company  thereof,  by
delivery of written notice to the Company at its principal executive office.

                    (c) The Committee  shall have the authority,  at the time of
grant of an Employee Option under the Plan or at any time  thereafter,  to award
tax bonuses to designated Optionees,  to be paid upon their exercise of Employee
Options granted  hereunder.  The amount of any such payments shall be determined
by the  Committee.  The  Committee  shall have full  authority  in its  absolute
discretion  to  determine  the  amount  of any such tax  bonus and the terms and
conditions affecting the vesting and payment thereof.

          20.  Effective  Date. The effective date of the Plan shall be the date
               ---------------
of its adoption by the Board,  subject  only to the approval by the  affirmative
vote of the holders of a majority of the securities of the Company  present,  or
represented,  and  entitled  to vote at a meeting of  stockholders  duly held in
accordance  with the applicable laws of the State of Delaware within twelve (12)
months of such adoption.



3677m

                                      -28-

