KEYSPAN ENERGY
                             LONG-TERM PERFORMANCE
                          INCENTIVE COMPENSATION PLAN

1. ADOPTION AND PURPOSE

MarketSpan  Corporation  d/b/a KeySpan Energy (the "Company") hereby adopts this
Long-Term  Performance  Incentive  Compensation  Plan,  subject to the  approval
required under Section 17 (the "Plan").  The purposes of the Plan are to promote
the  interests  of the  Company  and  its  stockholders  by (a)  attracting  and
retaining  key  employees,  directors  and  consultants  of the  Company and its
Subsidiaries  (as  defined  below);  (b)  motivating  such  persons  by means of
performance-related  incentives to achieve long-range performance goals; and (c)
enabling  such persons to  participate  in the  long-term  growth and  financial
success of the Company.

2. DEFINITIONS

The  following  words and phrases  shall have the  following  meanings  unless a
different meaning is plainly required by the context:

"Award" means,  individually or  collectively,  a grant under this Plan of Stock
Options or  Restricted  Shares or a  Performance  Stock  Award.  The issuance of
Restricted Shares pursuant to a Performance Stock Award shall not be a new Award
under this Plan.

"Award Agreement" means a written agreement entered into between the Company and
a Participant  setting  forth the terms and  conditions of an Award made to such
Participant under this Plan, in the form prescribed by the Committee.

"Beneficial  Owner or Beneficial  Ownership"  shall have the meaning ascribed to
such terms in Rule 13d-3 of the General Rules and Regulations under the Exchange
Act.

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

"Business Combination" shall have the meaning specified in Section 12(b)(iii).

"Change of Control" shall have the meaning specified in Section 12(b).

"Code"  means the  Internal  Revenue  Code of 1986,  as amended.  Reference to a
specific section of the Code or regulation thereunder shall include such section
or regulation,  any valid  regulation  promulgated  under such section,  and any
comparable   provision  of  any  future  legislation  or  regulation   amending,
supplementing or superseding such section or regulation.

"Committee"  means the  Compensation  and Nominating  Committee of the Board, or
such other  committee  appointed  by the Board,  each member of which shall be a
"Non-Employee  Director" within the meaning of Rule 16b-3 under the Exchange Act
and shall be an "outside  director"  within the meaning of Section 162(m) of the
Code. The Committee shall be composed of at least two (2) such directors.

"Common Stock" means the common stock of the Company.

"Company"  means  MarketSpan  Corporation  d/b/a  KeySpan  Energy,  a  New  York
corporation.

"Consultant"  means any  Person  who is not a  Director  or an  employee  of the
Company or a Subsidiary  and who provides bona fide services to the Company or a
Subsidiary,  provided that such services are not rendered in connection with the
offer or sale of securities in a capital-raising transaction.



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"Director"  means a  member  of the  Board  of  Directors  of the  Company  or a
Subsidiary who is not an employee of the Company or a Subsidiary.

"Effective Date" means the effective date of this Plan as defined in Section 17.

"Employee" means a key employee of the Company or a Subsidiary.

"Exchange Act" means the Securities Exchange Act of 1934, as amended.  Reference
to a specific section of the Exchange Act or regulation thereunder shall include
such section or regulation, any valid regulation promulgated under such section,
and any comparable  provision of any future legislation or regulation  amending,
supplementing or superseding such section or regulation.

"Fair Market  Value" means the closing  price of the Common Stock as reported on
the New York Stock Exchange on the relevant  valuation date or, if there were no
Common Stock  transactions  on the valuation date, on the next preceding date on
which there were Common Stock transactions.

"Incentive Stock Option" has the meaning specified in Section 6(b).

"Incumbent Board" shall have the meaning specified in Section 12(b)(ii).

"Negative  Discretion"  means other  factors to be applied by the  Committee  in
reducing the number of Restricted  Shares to be issued pursuant to a Performance
Stock  Award if the  Performance  Goals  have  been met or  exceeded  if, in the
Committee's  sole judgment,  such  application is appropriate in order to act in
the best interest of the Company and its shareholders.

"Outstanding  Company Common Stock" shall have the meaning  specified in Section
12(b)(i).

"Outstanding  Company  Voting  Securities"  shall have the meaning  specified in
Section 12(b)(i).

"Participant" means an Employee,  Director or Consultant who has been granted an
Award under this Plan.

"Performance Goals" means, with respect to any Performance  Period,  performance
goals based on any of the following  criteria and  established  by the Committee
prior to the beginning of such Performance  Period or performance goals based on
any of the  following  criteria  and  established  by the  Committee  after  the
beginning of such Performance Period that meet the requirements to be considered
pre-established  performance goals under Section 162(m) of the Code: earnings or
earnings growth;  earnings per share; return on equity, assets, capital employed
or investment; revenues or revenue growth; gross profit; gross margin; operating
profit;  operating  margin;  operating cash flow;  stock price  appreciation and
total  shareholder  return.  Such  Performance  Goals  may  be  particular  to a
Participant or the division, department, branch, line of business, Subsidiary or
other unit in which the Participant works, or may be based on the performance of
the Company generally.

"Performance  Period"  means the  period  of time  designated  by the  Committee
applicable to a Performance Stock Award during which the Performance Goals shall
be measured.

"Performance Stock Award" shall have the meaning specified in Section 6(d).

"Person" shall have the meaning  ascribed to such term in Section 3(a)(9) of the
Exchange Act and used in Sections 13(d) and 14(d) thereof,  including a group as
defined in Section 13(d) thereof.

"Plan" means this KeySpan Energy Long-Term  Performance  Incentive  Compensation
Plan.




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"Plan Year" means an annual period coinciding with the Company's fiscal year.

"Reporting  Person"  means an officer or director of the Company  subject to the
reporting requirements of Section 16 of the Exchange Act.

"Restricted Shares" shall have the meaning specified in Section 6(c).

"Restriction Period" shall have the meaning specified in Section 6(c).

"Securities  Act" means the Securities  Act of 1933, as amended.  Reference to a
specific  section of the Securities Act or regulation  thereunder  shall include
such section or regulation, any valid regulation promulgated under such section,
and any comparable  provision of any future legislation or regulation  amending,
supplementing or superseding such section or regulation.

"Stock Option" has the meaning specified in Section 6(a).

"Subsidiary" means any corporation or other entity, whether domestic or foreign,
in which the Company  has or obtains,  directly  or  indirectly,  a  proprietary
interest of more than 50% by reason of stock ownership or otherwise.

3. ELIGIBILITY

Any Employee,  Director or  Consultant  selected by the Committee is eligible to
receive an Award.

4. PLAN ADMINISTRATION

(a) This Plan  shall be  administered  by the  Committee.  The  Committee  shall
periodically make determinations with respect to participation in this Plan and,
except as  otherwise  required  by law or this Plan,  the grant  terms of Awards
including vesting schedules, price, performance standards (including Performance
Goals), length of relevant performance,  restriction or option period,  dividend
rights,  post-retirement  and  termination  rights,  and such  other  terms  and
conditions as the Committee deems  appropriate.  Except as otherwise required by
this Plan,  the  Committee  shall have  authority to interpret  and construe the
provisions  of this  Plan  and the  Award  Agreements  and  make  determinations
pursuant to any Plan provision or Award Agreement, which determinations shall be
final and binding on all persons.

(b) The Committee, in its sole discretion and on such terms and conditions as it
may provide, may delegate all or any part of its authority and powers under this
Plan to one or more  directors  or officers of the Company;  provided,  however,
that the Committee may not delegate its authority and powers (i) with respect to
Reporting  Persons,  or (ii) in any  way  which  would  jeopardize  this  Plan's
qualification  under  Section  162(m) of the Code or Rule 16b-3 of the  Exchange
Act.

(c) All  determinations  and decisions made by the Committee,  the Board and any
delegate of the Committee  pursuant to Section 4(b) shall be final,  conclusive,
and binding on all persons,  and shall be given the maximum deference  permitted
by law.

5. STOCK SUBJECT TO THE PROVISIONS OF THIS PLAN

(a) The stock  subject to the  provisions of this Plan shall either be shares of
authorized  but unissued  Common Stock,  shares of Common Stock held as treasury
stock or  previously  issued  shares of Common Stock  reacquired by the Company,
including  shares  purchased  on the  open  market.  Subject  to  adjustment  in
accordance  with the  provisions  of Section  10, the total  number of shares of
Common Stock with respect to which Awards may be granted under this Plan may not
exceed 10,500,000 shares.



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(b) Subject to adjustment in accordance  with Section 10, and subject to Section
5(a),  the total  number of shares of Common  Stock with  respect to which Stock
Options  and  Performance  Stock  Awards  may be granted in any Plan Year to any
Participant shall not exceed 750,000 shares.

(c) For  purposes  of  calculating  the total  number of shares of Common  Stock
available for grants of Awards,  the grant of an Award of Restricted Shares or a
Performance  Stock Award  shall be deemed to be equal to the  maximum  number of
shares of Common Stock which may be issued under the Award.

(d) Subject to Section  5(b),  there shall again be  available  for Awards under
this Plan,  all of the  following:  (i) shares of Common  Stock  represented  by
Awards which have been canceled,  forfeited,  surrendered,  terminated or expire
unexercised  during preceding Plan Years; and (ii) the excess amount of variable
Awards which become fixed at less than their maximum limitations.

6. AWARDS UNDER THIS PLAN

Subject to the  provisions of this Plan,  the Committee  shall have the sole and
complete authority to determine the Employees, Directors and Consultants to whom
Awards shall be granted and the type, terms and conditions of such Awards (which
need not be the same for each Participant).  As the Committee may determine, the
following  types of Awards  may be  granted  under  this Plan on a stand  alone,
combination or tandem basis:

(a) Stock Option. A right to buy a specified number of shares of Common Stock at
a fixed exercise price during a specified  time, and subject to such other terms
and conditions,  all as the Committee may determine;  provided that the exercise
price of any Stock  Option  shall not be less than 100% of the Fair Market Value
of the Common Stock on the date of grant of the Award.

(b)  Incentive  Stock  Option.  An  award in the  form of a Stock  Option  to an
Employee which shall comply with the  requirements of Section 422 of the Code or
any successor Section as it may be amended from time to time.

(c)  Restricted  Shares.  A transfer of shares of Common Stock to a Participant,
for such consideration and subject to such restrictions,  if any, on transfer or
other  incidents of  ownership,  for such periods of time (with  respect to each
Award,  a  "Restriction  Period")  as the  Committee  may  determine.  The stock
certificate or certificates  representing  Restricted Shares shall be registered
in the name of the  Participant to whom such  Restricted  Shares shall have been
awarded. During the Restriction Period, certificates representing the Restricted
Shares  shall bear a  restrictive  legend to the effect  that  ownership  of the
Restricted  Shares,  and the enjoyment of all rights  appurtenant  thereto,  are
subject to the restrictions,  terms and conditions  provided in the Plan and the
applicable Award Agreement. Such certificates shall remain in the custody of the
Company and the Participant shall deposit with the Company stock powers or other
instruments of assignment, each endorsed in blank, so as to permit retransfer to
the  Company  of all or any  portion  of the  Restricted  Shares  that  shall be
forfeited or otherwise  not become  vested in  accordance  with the Plan and the
applicable Award Agreement.

Restricted Shares shall constitute issued and outstanding shares of Common Stock
for all corporate  purposes.  The  Participant  will have the right to vote such
Restricted Shares, to receive and retain all dividends and distributions paid or
distributed on such Restricted Shares, and to exercise all other rights,  powers
and  privileges  of a holder of Common  Stock with  respect  to such  Restricted
Shares;  except that (i) the Participant will not be entitled to delivery of the
stock certificate or certificates  representing such Restricted Shares until the
Restriction Period shall have expired and unless all other vesting  requirements
with respect thereto shall have been fulfilled or waived;  (ii) the Company will
retain  custody  of the  stock  certificate  or  certificates  representing  the
Restricted  Shares during the Restriction  Period;  (iii) any such dividends and
distributions paid in shares of Common Stock shall constitute  Restricted Shares
and be subject to all of the same restrictions  during the Restriction Period as
the Restricted Shares with respect to which they were paid; (iv) the Participant
may not sell, assign,  transfer,  pledge,  exchange,  encumber or dispose of the
Restricted  Shares or his or her interest in any of them during the  Restriction
Period; and (v) a breach of any restrictions, terms



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or conditions  provided in the Plan or established by the Committee with respect
to any Restricted  Shares will cause a forfeiture of such  Restricted  Shares on
the terms and conditions established by the Committee.

(d)  Performance  Stock Awards.  A right,  granted to a Participant,  to receive
Restricted  Shares (as defined in Section 6(c) hereof) that are not to be issued
to the Participant  until after the satisfaction of the Performance Goals during
a Performance Period.

7. PERFORMANCE STOCK AWARDS

(a)  Administration.  Performance  Stock  Awards may be granted to  Participants
either  alone or in  addition  to other  Awards  granted  under this  Plan.  The
Committee shall  determine the  Participants  to whom  Performance  Stock Awards
shall be awarded for any  Performance  Period,  the  duration of the  applicable
Performance  Period, the number of Restricted Shares to be awarded at the end of
a  Performance  Period  to  Participants  if the  Performance  Goals  are met or
exceeded (which  Restricted  Shares may, but need not,  contain  restrictions on
transfer or other incidents of ownership as permitted in Section 6(c)),  and the
terms  and  conditions  of the  Performance  Stock  Award in  addition  to those
contained in this Section 7.

(b)  Payment  of Award.  During or after the end of a  Performance  Period,  the
financial  performance  of the Company during such  Performance  Period shall be
measured against the Performance Goals. If the Performance Goals are not met, no
Restricted  Shares shall be issued pursuant to the  Performance  Stock Award. If
the Performance Goals are met or exceeded, the Committee shall certify that fact
in writing in the  Committee  minutes or  elsewhere  and  certify  the number of
Restricted  Shares to be issued under each Performance Stock Award in accordance
with the related Award  Agreement.  The Committee  may, in its sole  discretion,
apply Negative Discretion to reduce the number of Restricted Shares to be issued
under a Performance Stock Award.

8. OTHER TERMS AND CONDITIONS

(a)  Assignability.  Except as otherwise  determined by the Committee,  no Stock
Option or Performance Stock Award shall be assignable or transferable  except by
will or by the laws of descent  and  distribution  and during the  lifetime of a
Participant, Stock Options shall be exercisable only by such Participant.

(b) Award  Agreement.  Each Award under this Plan shall be evidenced by an Award
Agreement.

(c) Rights as a Shareholder. Except as otherwise provided in this Plan or in any
Award  Agreement,  a  Participant  shall  have no rights as a  shareholder  with
respect  to  shares  of  Common  Stock  covered  by an Award  until the date the
Participant is the holder of record of such shares.

(d) No Obligation to Exercise.  The grant of an Award shall impose no obligation
upon the Participant to exercise the Award.

(e) Payments by Participants.  The Committee may determine that Awards for which
a payment  is due from a  Participant  may be  payable:  (i) in U.S.  dollars by
personal  check,  bank draft or money order payable to the order of the Company,
by money transfers or direct account debits; (ii) through the delivery or deemed
delivery  based on attestation to the ownership of shares of Common Stock with a
Fair Market Value equal to the total payment due from the Participant;  (iii) by
a combination  of the methods  described in (i) and (ii) above;  or (iv) by such
other methods as the Committee may deem appropriate.

(f) Tax Withholding. The Company shall have the power and the right to deduct or
withhold, or require a Participant to remit to the Company, an amount sufficient
to satisfy  federal,  state and local taxes  (including the  Participant's  FICA
obligation) required to be withheld with respect to an Award or any dividends or
other distributions payable with respect thereto. Subject to the requirements of
Rule 16b-3 of the Exchange Act, the Committee, in its



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sole  discretion and pursuant to such  procedures as it may specify from time to
time, may permit a Participant to satisfy such tax  withholding  obligation,  in
whole  or in  part,  by (i)  electing  to have the  Company  withhold  otherwise
deliverable  shares of Common Stock having a Fair Market Value not exceeding the
minimum amount required to be withheld, or (ii) delivering to the Company shares
of Common  Stock then owned by the  Participant.  The amount of the  withholding
obligation  satisfied by shares of Common Stock  withheld or delivered  shall be
the Fair Market  Value of such shares  determined  as of the date that the taxes
are required to be withheld.

(g)  Restrictions on Sale and Exercise.  If and to the extent required to comply
with rules  promulgated  under  Section  16 of the  Exchange  Act,  (i) no Award
providing for exercise, a vesting period, a Restriction Period or the attainment
of performance standards shall permit unrestricted ownership of shares of Common
Stock by the  Participant  for at least six months  from the date of grant,  and
(ii) shares of Common Stock  acquired  pursuant to an Award  granted  under this
Plan may not be sold or otherwise  disposed of for at least six months after the
date of the grant of the Award.

(h)  Requirements  of Law.  The granting of Awards and the issuance of shares of
Common  Stock upon the  exercise  of Awards  shall be subject to all  applicable
requirements  imposed by federal and state  securities and other laws, rules and
regulations and by any regulatory agencies having jurisdiction, and by any stock
exchanges upon which the Common Stock may be listed. As a condition precedent to
the issuance of shares of Common  Stock  pursuant to the grant or exercise of an
Award, the Company may require the Participant to take any reasonable  action to
meet such requirements.

(i)  Non-Exclusivity  of the Plan. Neither the adoption of the Plan by the Board
nor the submission of the Plan to the  stockholders  of the Company for approval
shall be  construed  as creating  any  limitations  on the power of the Board to
adopt such other incentive  arrangements  as it may deem  desirable,  including,
without limitation,  the granting of stock options and the awarding of stock and
cash  otherwise  than  under  the  Plan,  and such  arrangements  may be  either
generally applicable or applicable only in specific cases.

(j) Unfunded Plan.  Neither the Company nor any Subsidiary  shall be required to
segregate  any cash or any  shares  of  Common  Stock  which  may at any time be
represented  by Awards and the Plan shall  constitute an "unfunded"  plan of the
Company.  Neither the Company nor any Subsidiary shall, by any provisions of the
Plan, be deemed to be a trustee of any Common Stock or any other  property,  and
the liabilities of the Company and any Subsidiary to any Participant pursuant to
the Plan shall be those of a debtor pursuant to such contract obligations as are
created  by or  pursuant  to the  Plan,  and the  rights of any  Participant  or
beneficiary  under the Plan shall be limited to those of a general  creditor  of
the  Company  or the  applicable  Subsidiary,  as the case  may be.  In its sole
discretion, the Board may authorize the creation of trusts or other arrangements
to meet the obligations of the Company under the Plan, provided,  however,  that
the  existence  of such  trusts or other  arrangements  is  consistent  with the
unfunded status of the Plan.

(k)  Legends.  In  addition to any legend  contemplated  by Section  6(c),  each
certificate  evidencing Common Stock subject to an Award shall bear such legends
as the  Committee  deems  necessary  or  appropriate  to reflect or refer to any
terms,  conditions  or  restrictions  of the Award  applicable  to such  shares,
including,  without  limitation,  any to the effect that the shares  represented
thereby may not be  disposed  of unless the  Company has  received an opinion of
counsel,  acceptable to the Company,  that such disposition will not violate any
federal or state securities laws.

(l) Company's Rights.  The grant of Awards pursuant to the Plan shall not affect
in any way  the  right  or  power  of the  Company  to  make  reclassifications,
reorganizations  or other changes of or to its capital or business  structure or
to merge,  consolidate,  liquidate, sell or otherwise dispose of all or any part
of its business or assets.

(m) Designation of Beneficiaries.  If permitted by the Committee,  a Participant
may designate a beneficiary  or  beneficiaries  in the event of the death of the
Participant  and may  change  such  designation  from  time to time by  filing a
written designation of beneficiary or beneficiaries with the Committee on a form
to be prescribed by it,  provided  that no such  designation  shall be effective
unless so filed prior to the death of such Participant.



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9. AMENDMENTS

(a)  Except  as  otherwise  provided  in this  Plan,  the  Board may at any time
terminate and, from time to time, may amend or modify this Plan. Any such action
of the Board may be taken  without the approval of the  Company's  shareholders,
but only to the  extent  that  such  shareholder  approval  is not  required  by
applicable  law or  regulation,  including  specifically  Rule  16b-3  under the
Exchange Act and Section 162(m) of the Code.

(b) No amendment,  modification  or termination of this Plan shall in any manner
adversely affect any Awards theretofore granted to a Participant under this Plan
without the consent of such  Participant.  No amendment or  modification of this
Plan may change any  Performance  Goal,  or increase  the  benefits  payable for
achievement of a Performance  Goal,  once  established  for a Performance  Stock
Award.

10.RECAPITALIZATION

The aggregate number of shares of Common Stock as to which Awards may be granted
to Participants, the number of shares thereof covered by each outstanding Award,
and the price per share thereof in each such Award, shall all be proportionately
adjusted for any  increase or decrease in the number of issued  shares of Common
Stock resulting from a stock split,  stock dividend,  combination or exchange of
shares,  exchange  for  other  securities,   reclassification,   reorganization,
redesignation, merger, consolidation, recapitalization or other such change. Any
such adjustment may provide for the elimination of fractional shares.

11.NO RIGHT TO EMPLOYMENT

No person shall have any claim or right to be granted an Award, and the grant of
an Award shall not be construed as giving a Participant the right to be retained
in the  employ of the  Company  or a  Subsidiary.  Nothing  in this  Plan  shall
interfere with or limit in any way the right of the Company or any Subsidiary to
terminate  any  Participant's  employment  at any  time,  nor  confer  upon  any
Participant  any  right  to  continue  in  the  employ  of  the  Company  or any
Subsidiary.

12.CHANGE OF CONTROL

(a)  Notwithstanding  anything  contained in this Plan or any Award Agreement to
the  contrary,  in the event of a Change  of  Control,  as  defined  below,  the
following shall occur with respect to any and all Awards  outstanding as of such
Change of Control:

(i) automatic  lapse of all  restrictions  and  acceleration of any time periods
relating to the exercise or vesting of Stock  Options and  Restricted  Shares so
that such Awards become  immediately  exercisable (and shall remain  exercisable
until the end of the original expiration period fixed in the Award Agreement) or
vested in full; and automatic  satisfaction  of Performance  Goals on a pro rata
basis with respect to the maximum number of Restricted  Shares issuable pursuant
to a Performance  Stock Award,  or on such other basis as set forth in the Award
Agreement,  so that such pro rata or other  portion  of such  Restricted  Shares
becomes immediately vested; and

(ii) all Awards become non-cancellable.

(b) A "Change of Control" of the Company  shall be deemed to have  occurred upon
the happening of any of the following events:

(i) The  acquisition  by any Person of  Beneficial  Ownership  of 20% or more of
either  (x) the then  outstanding  shares of common  stock of the  Company  (the
"Outstanding Company Common Stock") or (y) the combined voting power of the then
outstanding  voting  securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting  Securities");  provided,
however, that for purposes of this subsection (i), the following



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acquisitions  shall not  constitute  a Change of  Control:  (A) any  acquisition
directly  from  the  Company,  (B)  any  acquisition  by the  Company,  (C)  any
acquisition  by any  employee  benefit  plan (or  related  trust)  sponsored  or
maintained by the Company or any Person  controlled  by the Company,  or (D) any
acquisition by any Person pursuant to a transaction  which complies with clauses
(A), (B), and (C) of paragraph (iii) below; or

(ii)  Individuals  who,  as of the  Effective  Date,  constitute  the Board (the
"Incumbent Board") cease for any reason to constitute at least a majority of the
Board; provided,  however, that any individual becoming a director subsequent to
the Effective Date whose  election,  or nomination for election by the Company's
shareholders,  was  approved by a vote of at least a majority  of the  directors
then  comprising  the  Incumbent  Board  shall  be  considered  as  though  such
individual  were a  member  of the  Incumbent  Board,  but  excluding,  for this
purpose,  any such  individual  whose  initial  assumption of office occurs as a
result of an actual or threatened  election contest with respect to the election
or removal of directors or other actual or threatened solicitation of proxies or
consents by or on behalf of a Person other than the Board; or

(iii) Consummation of a reorganization, merger or consolidation or sale or other
disposition  of all or  substantially  all of the  assets of the  Company or the
acquisition of assets of another corporation (a "Business Combination"), in each
case, unless, following such Business Combination,  (A) all of substantially all
of the individuals and entities who were the Beneficial Owners, respectively, of
the Outstanding  Company Common Stock and Outstanding  Company Voting Securities
immediately  prior to such Business  Combination  beneficially  own, directly or
indirectly, more than 60% of, respectively, the Outstanding Company Common Stock
and the  combined  voting power of the  Outstanding  Company  Voting  Securities
entitled to vote generally in the election of directors,  as the case may be, of
the  corporation  resulting from such Business  Combination  including,  without
limitation, a corporation which as a result of such transaction owns the Company
or all or  substantially  all of the Company's assets either directly or through
one or more  subsidiaries)  in  substantially  the  same  proportions  as  their
ownership,  immediately  prior to such Business  Combination of the  Outstanding
Company Common Stock and Outstanding Company Voting Securities,  as the case may
be,  (B) no Person  (excluding  any  corporation  resulting  from such  Business
Combination  or any employee  benefit plan (or related  trust) of the Company or
such corporation  resulting from such Business  Combination)  beneficially owns,
directly or indirectly,  20% or more, of, respectively,  the Outstanding Company
Common Stock of the corporation  resulting from such Business Combination or the
combined  voting power of the  Outstanding  Company  Voting  Securities  of such
corporation  except to the  extent  that  such  ownership  existed  prior to the
Business Combination, and (C) at least a majority of the members of the Board of
Directors of the  corporation  resulting  from such  Business  Combination  were
members  of the  Incumbent  Board at the time of the  execution  of the  initial
agreement,  or  of  the  action  of  the  Board,  providing  for  such  Business
Combination; or

(iv) Approval by the  shareholders  of the Company of a complete  liquidation or
dissolution of the Company.

13.GOVERNING LAW

To the extent that federal  laws do not  otherwise  control,  this Plan shall be
construed in accordance with and governed by the law of the State of New York.

14.CAPTIONS

Captions are provided  herein for  convenience of reference  only, and shall not
serve as a basis for interpretation or construction of this Plan.

15.RESERVATION OF SHARES

The  Company,  during the term of the Plan,  will at all times  reserve and keep
available the number of shares of Common Stock as shall be sufficient to satisfy
the  requirements  of the Plan.  The  inability  of the  Company  to obtain  the
necessary  approvals from any regulatory  body having  jurisdiction  or approval
deemed necessary by the Company's


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counsel to the lawful  issuance and sale of any shares of Common Stock under the
Plan shall relieve the Company of any liability in respect of the nonissuance or
sale of such shares of Common Stock as to which such requisite  authority  shall
not have been obtained.

16.SAVINGS CLAUSE

This  Plan is  intended  to  comply  in all  respects  with  applicable  law and
regulation,  including,  with respect to those  Participants  who are  Reporting
Persons,  Rule  16b-3  under the  Exchange  Act.  In case any one or more of the
provisions of this Plan shall be held invalid,  illegal or  unenforceable in any
respect  under  applicable  law  and  regulation  (including  Rule  16b-3),  the
validity,  legality and enforceability of the remaining  provisions shall not in
any  way  be  affected  or  impaired   thereby  and  the  invalid,   illegal  or
unenforceable  provision shall be deemed null and void;  however,  to the extent
permissible  by law,  any  provision  which  could be deemed null and void shall
first be construed,  interpreted or revised retroactively to permit this Plan to
be construed in compliance with all applicable laws (including Rule 16b-3) so as
to foster the intent of this Plan.  Notwithstanding anything in this Plan to the
contrary, the Committee, in its sole and absolute discretion, may bifurcate this
Plan so as to restrict, limit or condition the use of any provision of this Plan
to Participants  who are Reporting  Persons without so restricting,  limiting or
conditioning this Plan with respect to other  Participants.  All Awards of Stock
Options and Performance  Stock Awards are intended to comply with Section 162(m)
of the Code.

17.EFFECTIVE DATE AND TERM

The effective date (the "Effective  Date") of this Plan shall be the date of its
approval by the Company's  shareholders.  If such approval is not obtained on or
before  December 31, 1999, this Plan shall terminate on such date. No new Awards
shall be granted  under this Plan after the tenth  anniversary  of the Effective
Date. Unless otherwise  expressly provided in the Plan or in an applicable Award
Agreement,  any Award granted  hereunder  may, and the authority of the Board or
the Committee  under this Plan shall,  continue after the authority for grant of
new Awards hereunder has been exhausted.