<PAGE>
                                                                   EXHIBIT 10.46

                                 AMR CORPORATION

                    1998 LONG TERM INCENTIVE PLAN, AS AMENDED

         SECTION 1. Purpose, Definitions.

         The purpose of the AMR Corporation 1998 Long Term Incentive Plan, as
amended (the "Plan") is to enable AMR Corporation (the "Company") to attract,
retain and reward key employees of the Company and its Subsidiaries and
Affiliates, and strengthen the mutuality of interests between such key employees
and the Company's shareholders, by offering such key employees performance-
based stock incentives and/or other equity interests or equity-based incentives
in the Company, as well as performance-based incentives payable in cash.

         For purposes of the Plan, the following terms shall be defined as set
forth below:

         (a) "Affiliate" means any entity other than the Company and its
Subsidiaries that is designated by the Board as a participating employer under
the Plan, provided that the Company directly or indirectly owns at least twenty
percent (20%) of the combined voting power of all classes of stock of such
entity or at least twenty percent (20%) of the ownership interests in such
entity.

         (b) "Board" means the Board of Directors of the Company.

         (c) "Book Value" means, as of any given date, on a per share basis (i)
the Stockholders' Equity in the Company as of the end of the immediately
preceding fiscal year as reflected in the Company's audited consolidated balance
sheet, subject to such adjustments as the Committee shall specify, divided by
(ii) the number of then outstanding shares of Stock as of such year-end date (as
adjusted by the Committee for subsequent events).

         (d) "Cause" means a felony conviction of a participant or the failure
of a participant to contest prosecution for a felony, or a participant's willful
misconduct or dishonesty, any of which is directly and materially harmful to the
business or reputation of the Company or any Subsidiary or Affiliate.

         (e) "Code" means the Internal Revenue Code of 1986, as amended from
time to time, and any successor thereto.

         (f) "Committee" means the Committee referred to in Section 2 of the
Plan. If at any time no Committee shall be in office, then the functions of the
Committee specified in the Plan shall be exercised by the Board.

         (g) "Company" means AMR Corporation, a corporation organized under the
laws of the State of Delaware, or any successor corporation.

                                       1
<PAGE>

         (h) "Deferred Stock" means the right to receive Stock at the end of a
specified deferral period pursuant to Section 8.

         (i) "Disability" means disability as determined under procedures
established by the Committee for purposes of this Plan.

         (j) "Early Retirement" means retirement, with the express consent for
purposes of this Plan of the Company at or before the time of such retirement,
from active employment with the Company and any Subsidiary or Affiliate.

         (k) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor thereto.

         (l) "Fair Market Value" means, as of any given date, unless otherwise
determined by the Committee in good faith, the mean between the highest and
lowest quoted selling price, regular way, of the Stock on the New York Stock
Exchange or, if no such sale of Stock occurs on the New York Stock Exchange on
such date, the fair market value of the Stock as determined by the Committee in
good faith.

         (m) "Incentive Stock Option" means any Stock Option intended to be and
designated as an "Incentive Stock Option" within the meaning of Section 422 of
the Code.

         (n) "Non-Qualified Stock Option" means any Stock Option that is not an
Incentive Stock Option.

         (o) "Normal Retirement" means retirement from active employment with
the Company and any Subsidiary or Affiliate pursuant to the applicable
retirement provisions of the applicable pension plan of such entity.

         (p) "Other Stock Based Award" means an award under Section 10 below
that is valued in whole or in part by reference to, or is otherwise based on,
Stock.

         (q) "Performance Related Awards" means an award made pursuant to
Section 11 of Restricted Stock or Deferred Stock or Other Stock Based Awards
upon the determination by the Committee that performance objectives established
by the Committee have been attained, in whole or in part.

         (r) "Plan" means this AMR Corporation 1998 Long Term Incentive Plan, as
it may be amended from time to time.

         (s) "Restricted Stock" means shares of Stock that are subject to
restrictions under Section 7 below.

         (t) "Retirement" means Normal or Early Retirement.

                                       2
<PAGE>

         (u) "Stock" means the Common Stock, $1.00 par value per share, of the
Company.

         (v) "Stock Appreciation Right" means the right pursuant to an award
granted under Section 6 below to surrender to the Company all (or a portion) of
a Stock Option in exchange for an amount equal to the difference between: (i)
the Fair Market Value, as of the date such Stock Option (or such portion
thereof) is surrendered, of the shares of Stock covered by such Stock Option (or
such portion thereof), subject, where applicable, to the pricing provisions in
Section 6(b)(ii); and (ii) the aggregate exercise price of such Stock Option (or
such portion thereof).

         (w) "Stock Option" or "Option" means any option to purchase shares of
Stock (including Restricted Stock and Deferred Stock, if the Committee so
determines) granted pursuant to Section 5 below.

         (x) "Stock Purchase Right" means the right to purchase Stock pursuant
to Section 9.

         (y) "Subsidiary" means any corporation (other than the Company) in an
unbroken chain of corporations beginning with the Company if each of the
corporations (other than the last corporation in the unbroken chain) owns stock
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in the chain.

         In addition, the terms "LTIP Awards," "Performance Criteria", "Change
in Control," "Potential Change in Control" and "Change in Control Price" shall
have the meanings set forth, respectively, in Sections 2, 11(a), 12(b), (c) and
(d) below.

         SECTION 2. Administration.

         The Plan shall be administered by a committee of not less than two
members of the Board, who shall be appointed by, and serve at the pleasure of,
the Board. In selecting the members of the Committee, the Board shall take into
account the requirements for the members of the Committee to be treated as
"Outside Directors" within the meaning of Section 162(m) of the Code and
"Non-Employee Directors" for purposes of Rule 16b-3, as promulgated under
Section 16 of the Exchange Act. The functions of the Committee specified in the
Plan shall be exercised by the Board, if and to the extent that no Committee
exists which has the authority to so administer the Plan, or to the extent that
the Committee is not comprised solely of Non-Employee Directors for purposes of
Rule 16b-3, as promulgated under Section 16 of the Exchange Act.

         The Committee shall have full authority to grant, pursuant to the terms
of the Plan, to officers and other key employees eligible under Section 4: (i)
Stock Options and Incentive Stock Options; (ii) Stock Appreciation Rights; (iii)
Restricted Stock; (iv) Deferred Stock; (v) Stock Purchase Rights; (vi) Other
Stock Based Awards; and/or (vii) Performance Related Awards (collectively, the
"LTIP Awards").

                                       3
<PAGE>

         In particular the Committee shall have the authority:

                  (a) to select the officers and other key employees of the
         Company and its Subsidiaries and Affiliates to whom LTIP Awards may
         from time to time be granted hereunder;

                  (b) to determine whether and to what extent LTIP Awards, or
         any combination thereof, are to be granted hereunder to one or more
         eligible employees;

                  (c) subject to the provisions of Sections 3, 5 and 11, to
         determine the number of shares to be covered by each such award granted
         hereunder;

                  (d) to determine the terms and conditions, not inconsistent
         with the terms of the Plan, of any award granted hereunder (including,
         but not limited to, the share price and any restriction or limitation,
         or any vesting acceleration or waiver of forfeiture restrictions
         regarding any Stock Option or other award and/or the shares of Stock
         relating thereto, based in each case on such factors as the Committee
         shall determine in its sole discretion);

                  (e) to determine whether, to what extent and under what
         circumstances a Stock Option may be settled in cash, Restricted Stock
         and/or Deferred Stock under Section 5(k) or 5(1), as applicable,
         instead of Stock;

                  (f) to determine whether, to what extent and under what
         circumstances an award of Restricted Stock or Deferred Stock may be
         settled in cash;

                  (g) to determine whether, to what extent and under what
         circumstances Option grants and/or other awards under the Plan and/or
         other cash awards made by the Company are to be made, and operate, on a
         tandem basis vis-a-vis other awards under the Plan and/or cash awards
         made outside of the Plan, or on an additive basis;

                  (h) to determine whether, to what extent and under what
         circumstances Stock and other amounts payable with respect to an award
         under this Plan shall be deferred either automatically or at the
         election of the participant (including providing for and determining
         the amount (if any) of any deemed earnings on any deferred amount
         during any deferral period);

                  (i) to determine the terms and restrictions applicable to
         Stock Purchase Rights and the Stock purchased by exercising such
         Rights;

                  (j) with respect to an award of Restricted Stock, to determine
         whether the right to vote will be granted with such award and/or
         whether any dividends declared with respect to such award will be paid
         in cash, additional Restricted Stock, Deferred Stock, Other Stock Based
         Awards, or not at all;

                                       4
<PAGE>

                  (k) with respect to an award of Deferred Stock, to determine
         whether any dividends declared with respect to such award will be paid
         in cash, Restricted Stock, additional Deferred Stock, Other Stock Based
         Awards, or not at all; and

                  (l) to determine the terms and conditions pursuant to which an
         LTIP Award may vest on a pro rata basis or be terminated.

         The Committee shall have the authority: to adopt, alter and repeal such
rules, guidelines and practices governing the Plan as it shall, from time to
time, deem advisable; to interpret the terms and provisions of the Plan and any
award issued under the Plan (and any agreements relating thereto); and to
otherwise supervise the administration of the Plan.

         All decisions made by the Committee pursuant to the provisions of the
Plan shall be made in the Committee's sole discretion and shall be final and
binding on all persons, including the Company and Plan participants.

         SECTION 3. Stock Subject to Plan.

         The total number of shares of Stock reserved and available for
distribution under the Plan shall be 5,000,000 shares, plus any shares remaining
available for issuance under the 1988 Long Term Incentive Plan, as amended, as
of the Effective Date hereof. Such shares may consist, in whole or in part, of
authorized and unissued shares or treasury shares.

         Subject to Section 6(b)(iv) below, if any shares of Stock that have
been optioned cease to be subject to a Stock Option, or if any such shares of
Stock that are subject to any Restricted Stock or Deferred Stock award, Stock
Purchase Right, Other Stock Based Award or Performance Related Award granted
hereunder or granted under the 1988 Long Term Incentive Plan, as amended, are
forfeited or any such award otherwise terminates without a payment being made to
the participant in the form of Stock, such shares shall again be available for
distribution in connection with future awards under the Plan.

         In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split or other change in corporate
structure affecting the Stock, such substitution or adjustment shall be made in
the aggregate number of shares reserved for issuance under the Plan, in the
number and option price of shares subject to outstanding Options granted under
the Plan, in the number and purchase price of shares subject to outstanding
Stock Purchase Rights under the Plan, and in the number of shares subject to
other outstanding awards granted under the Plan as may be determined to be
appropriate by the Committee, in its sole discretion, provided that the number
of shares subject to any award shall always be a whole number. Such adjusted
option price shall also be used to determine the amount payable by the Company
upon the exercise of any Stock Appreciation Right associated with any Stock
Option.

                                       5
<PAGE>

         SECTION 4. Eligibility.

         Officers and other key employees of the Company and its Subsidiaries
and Affiliates (but excluding members of the Committee and any person who serves
only as a director) who are responsible for, or contribute to, the management,
growth and/or profitability of the business of the Company and/or its
Subsidiaries and Affiliates are eligible for awards under the Plan.

         SECTION 5. Stock Options.

         Stock Options may be granted alone, in addition to, or in tandem with,
other awards granted under the Plan. Any Stock Option granted under the Plan
shall be in such form as the Committee may from time to time approve.

         Stock Options granted under the Plan may be of two types: (i) Incentive
Stock Options; and (ii) Non-Qualified Stock Options.

         The Committee shall have the authority to grant to any optionee
Incentive Stock Options, Non-Qualified Stock Options, or both types of Stock
Options (in each case with or without Stock Appreciation Rights); provided that,
in no event shall the number of shares of Stock subject to any Stock Options
granted to any employee during any calendar year exceed 250,000 shares, as such
number may be adjusted pursuant to Section 3.

         Options granted under the Plan shall be subject to the following terms
and conditions and shall contain such additional terms and conditions, not
inconsistent with the terms of the Plan, as the Committee shall deem desirable:

         (a) Option Price. The option price per share of Stock purchasable under
a Stock Option shall be determined by the Committee at the time of grant;
provided, that such option price may not be less than the Fair Market Value of
the Stock on the date the Stock Option is granted.

         (b) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Stock Option shall be exercisable more than ten (10) years
after the date the Option is granted.

         (c) Exercisability. Stock Options shall be exercisable at such time or
times and subject to such terms and conditions as shall be determined by the
Committee; provided, however, that except as determined by the Committee, no
Stock Option shall be exercisable prior to the first anniversary date of the
granting of the Option. If the Committee provides, in its sole discretion, that
any Stock Option is exercisable only in installments, the Committee may waive
such installment exercise provisions at any time in whole or in part, based on
such factors as the Committee shall determine, in its sole discretion.

         (d) Method of Exercise. Subject to whatever installment exercise
provisions apply under Section 5(c) and subject to whatever restrictions may be
imposed by the Company, Stock Options may be exercised in whole or in part at
any time during the option period, by giving written notice of exercise to the
Company specifying the number of shares to be purchased.

                                       6
<PAGE>

         Such notice shall be accompanied by payment in full of the purchase
price. Without limiting the generality of the foregoing, payment of the option
price may be made: (i) in cash or its equivalent; (ii) by exchanging shares of
Stock owned by the optionee (which are not the subject of any pledge or other
security interest), including in the case of a Non-Qualified Stock Option,
Restricted Stock or Deferred Stock subject to an award hereunder (or an award
under the terms of the 1988 Long Term Incentive Plan, as amended); (iii) through
an arrangement with a broker approved by the Company whereby payment of the
exercise price is accomplished with the proceeds of the sale of Stock; or (iv)
by any combination of the foregoing, provided that the combined value of all
cash and cash equivalents paid and the Fair Market Value of any such Stock so
tendered to the Company, valued as of the date of such tender, is at least equal
to such option price.

         If payment of the option exercise price of a Non-Qualified Stock Option
is made in whole or in part in the form of Restricted Stock or Deferred Stock,
such Restricted Stock or Deferred Stock (and any replacement shares relating
thereto) shall remain (or be) restricted or deferred, as the case may be, in
accordance with the original terms of the Restricted Stock award or Deferred
Stock award in question, and any additional Stock received upon the exercise
shall be subject to the same forfeiture restrictions or deferral limitations,
unless otherwise determined by the Committee, in its sole discretion.

         No shares of Stock shall be issued upon exercise of a stock option
until full payment therefor has been made. An optionee shall generally have the
rights to dividends or other rights of a shareholder with respect to shares
subject to the Option when the optionee has given written notice of exercise,
has paid in full for such shares, and, if requested, has given the
representation described in Section 15(a).

         (e) Transferability of Options. Unless the Committee shall permit (on
such terms and conditions as it shall establish) an Option to be transferred to
a member of the participant's immediate family or to a trust or similar vehicle
for the benefit of such immediate family members, no Option shall be assignable
or transferable except by will or the laws of descent and distribution, and
except to the extent required by law, no right or interest of any participant
shall be subject to any lien, obligation or liability of the participant.

         (f) Termination by Death. Subject to Section 5(j), if an optionee's
employment by the Company and any Subsidiary or Affiliate terminates by reason
of death, any Stock Option held by such optionee may thereafter be exercised in
accordance with the terms and conditions established by the Committee.

         (g) Termination by Reason of Disability. Subject to Section 5(j), if an
optionee's employment by the Company and any Subsidiary or Affiliate terminates
by reason of Disability, any Stock Option held by such optionee may thereafter
be exercised by the optionee in accordance with the terms and conditions
established by the Committee. In the event of termination of employment by
reason of Disability, if an Incentive Stock Option is exercised after the
expiration of the exercise periods that apply for purposes of Section 422 of the
Code, such Stock Option will thereafter be treated as a Non-Qualified Stock
Option.

                                       7
<PAGE>

         (h) Termination by Reason of Retirement. Subject to Section 5(j), if an
optionee's employment by the Company and any Subsidiary or Affiliate terminates
by reason of Normal or Early Retirement, any Stock Option held by such optionee
may thereafter be exercised by the optionee in accordance with the terms and
conditions established by the Committee. In the event of termination of
employment by reason of Retirement, if an Incentive Stock Option is exercised
after the expiration of the exercise periods that apply for purposes of Section
422 of the Code, such Stock Option will thereafter be treated as a Non-Qualified
Stock Option.

         (i) Other Termination. Unless otherwise determined by the Committee, if
an optionee's employment by the Company or any Subsidiary or Affiliate
terminates for any reason other than death, Disability or Normal or Early
Retirement, the Stock Option shall thereupon terminate.

         (j) Incentive Stock Options. Anything in the Plan to the contrary
notwithstanding, no term of this Plan relating to Incentive Stock Options shall
be interpreted, amended or altered, nor shall any discretion or authority
granted under the Plan be so exercised, so as to disqualify the Plan under
Section 422 of the Code, or, without the consent of the optionee(s) affected, to
disqualify any Incentive Stock Option under such Section 422.

         (k) Buyout Provisions. The Committee may at any time offer to buy out
for a payment in cash, Stock, Deferred Stock or Restricted Stock, an option
previously granted hereunder, based on such terms and conditions as the
Committee shall establish and communicate to the participant at the time that
such offer is made.

         (l) Settlement Provisions. If the option agreement so provides at grant
or is amended after grant, and prior to the exercise, to so provide (with the
optionee's consent), the Committee may require that all or part of the shares to
be issued with respect to the spread value of an exercised Option take the form
of Deferred or Restricted Stock, which shall be valued on the date of exercise
on the basis of the Fair Market Value (as determined by the Committee) of such
Deferred or Restricted Stock determined without regard to the deferral
limitations and/or the forfeiture restrictions involved.

         SECTION 6. Stock Appreciation Rights.

         (a) Grant and Exercise. Stock Appreciation Rights may be granted in
conjunction with all or part of any Stock Option granted under the Plan. In the
case of a Non-Qualified Stock Option, such rights may be granted either at or
after the time of the grant of such Stock Option. In the case of an Incentive
Stock Option, such rights may be granted only at the time of grant of such Stock
Option.

         A Stock Appreciation Right or applicable portion thereof granted with
respect to a given Stock Option shall terminate and no longer be exercisable
upon the termination or exercise of the related Stock Option, subject to such
provisions as the Committee may specify at grant where a Stock Appreciation
Right is granted with respect to less than the full number of shares covered by
a related Stock Option.

                                       8
<PAGE>

         A Stock Appreciation Right may be exercised by an optionee, subject to
Section 6(b), in accordance with the procedures established by the Committee for
such purposes. Upon such exercise, the optionee shall be entitled to receive an
amount determined in the manner prescribed in Section 6(b). Stock Options
relating to exercised Stock Appreciation Rights shall no longer be exercisable
to the extent that the related Stock Appreciation Rights have been exercised.

         (b) Terms and Conditions. Stock Appreciation Rights shall be subject to
such terms and conditions, not inconsistent with the provisions of the Plan, as
shall be determined from time to time by the Committee, including the following:

                  (i) Stock Appreciation Rights shall be exercisable only at
         such time or times and to the extent that the Stock Options to which
         they relate shall be exercisable in accordance with the provisions of
         Section 5 and this Section 6 of the Plan.

                  (ii) Upon the exercise of a Stock Appreciation Right, an
         optionee shall be entitled to receive an amount in cash and/or shares
         of Stock equal in value to the excess of the Fair Market Value of one
         share of Stock over the option price per share specified in the related
         Stock Option multiplied by the number of shares in respect of which the
         Stock Appreciation Right shall have been exercised, with the Committee
         having the right to determine the form of payment. When payment is to
         be made in shares, the number of shares to be paid shall be calculated
         on the basis of the Fair Market Value of the shares on the date of
         exercise.

                  (iii) Stock Appreciation Rights shall be transferable only
         when and to the extent that the underlying Stock Option would be
         transferable under Section 5(e) of the Plan.

                  (iv) Upon the exercise of a Stock Appreciation Right, the
         Stock Option or part thereof to which such Stock Appreciation Right is
         related shall be deemed to have been exercised for the purpose of the
         limitation set forth in Section 3 of the Plan on the number of shares
         of Stock exercised under the Plan, but only to the extent of the number
         of shares issued under the Stock Appreciation Right at the time of
         exercise based on the value of the Stock Appreciation Right at such
         time.

                  (v) The Committee, in its sole discretion, may provide that,
         in the event of a Change in Control and/or a Potential Change in
         Control, the amount to be paid upon the exercise of a Stock
         Appreciation Right shall be based on the Change in Control Price,
         subject to such terms and conditions as the Committee may specify at
         grant.

         SECTION 7. Restricted Stock

         (a) Administration. Shares of Restricted Stock may be issued either
alone, in addition to, or in tandem with, other awards granted under the Plan
and/or awards made outside of the Plan. The Committee shall determine the
eligible persons to whom, and the time or times at which,


                                       9
<PAGE>

grants of Restricted Stock will be made, the number of shares to be awarded, the
price (if any) to be paid by the recipient of Restricted Stock (subject to
Section 7(b)), the time or times within which such awards may be subject to
forfeiture, and all other terms and conditions of the awards.

         The Committee may condition the grant of Restricted Stock upon the
attainment of specified Performance Criteria or such other factors as the
Committee may determine, in its sole discretion.

         The provisions of Restricted Stock awards need not be the same with
respect to each recipient.

         (b) Awards and Certificates. The prospective recipient of a Restricted
Stock award shall not have any rights with respect to such award, unless and
until the Company and such recipient have executed an agreement evidencing the
award and the recipient has delivered a fully executed copy thereof to the
Company, and has otherwise complied with the applicable terms and conditions of
such award.

                  (i) The purchase price for shares of Restricted Stock shall be
         equal to or less than their par value and may be zero.

                  (ii) Awards of Restricted Stock must be accepted within a
         reasonable period (or such specific period as the Committee may specify
         at grant) after the award date, by executing a Restricted Stock award
         agreement and paying whatever price (if any) is required under Section
         7(b)(i).

                  (iii) Each participant receiving a Restricted Stock award
         shall be issued a stock certificate in respect of such shares of
         Restricted Stock. Such certificate shall be registered in the name of
         such participant, and shall bear an appropriate legend referring to the
         terms, conditions, and restrictions applicable to such award.

                  (iv) The Committee shall require that the stock certificates
         evidencing such shares be held in custody by the Company until the
         restrictions thereon shall have lapsed, and that, as a condition of any
         Restricted Stock award, the participant shall have delivered a stock
         power, endorsed in blank, relating to the Stock covered by such award.

         (c) Terms and Conditions. The shares of Restricted Stock awarded
pursuant to this Section 7 shall be subject to the following terms and
conditions:

                  (i) Subject to the provisions of this Plan and the award
         agreement, during a period set by the Committee commencing with the
         date of such award (the "Restriction Period"), the participant shall
         not be permitted to sell, transfer, pledge or assign shares of
         Restricted Stock awarded under the Plan. Within these limits and
         subject to Sections 7(c)(iv) and/or 7(c)(v), the Committee, in its sole
         discretion, may provide for the lapse of such restrictions in
         installments and may accelerate or waive such restrictions in whole or


                                       10
<PAGE>

         in part, based on service, Performance Criteria and/or such other
         factors as the Committee may determine, in its sole discretion.

                  (ii) If and when the Restriction Period expires without a
         prior forfeiture of the Restricted Stock subject to such Restriction
         Period, certificates for an appropriate number of unrestricted shares
         of Stock shall be delivered to the participant promptly (unless the
         Committee decides pursuant to Section 2(f) to settle the award in
         cash).

                  (iii) The voting rights and/or dividend rights, if any, of the
         Restricted Stock award shall be established by the Committee pursuant
         to Section 2(j).

                  (iv) An award of Restricted Stock, where the Restriction
         Period is based on Performance Criteria, shall have a Restriction
         Period of at least one (1) year.

                  (v) An award of Restricted Stock, where the Restriction Period
         is based on service, shall have a Restriction Period of at least three
         (3) years.

         (d) Minimum Value Provisions. In order to better ensure that award
payments actually reflect the performance of the Company and service of the
participant, the Committee may provide, in its sole discretion, for a tandem
performance-based or other award designed to guarantee a minimum value, payable
in cash or Stock to the recipient of a Restricted Stock award, subject to such
Performance Criteria, future service, deferral and other terms and conditions as
may be specified by the Committee.

         SECTION 8. Deferred Stock.

         (a) Administration. Deferred Stock may be awarded either alone, in
addition to, or in tandem with, other awards granted under the Plan and/or
awards made outside of the Plan. The Committee shall determine the eligible
persons to whom and the time or times at which Deferred Stock shall be awarded,
the number of shares of Deferred Stock to be awarded to any person, the duration
of the period (the "Deferral Period") during which, and the conditions under
which, receipt of the Stock will be deferred, and the other terms and conditions
of the award in addition to those set forth in Section 8(b).

         The Committee may condition the grant of Deferred Stock upon the
attainment of specified Performance Criteria or such other factors or criteria
as the Committee shall determine, in its sole discretion.

         The provisions of Deferred Stock awards need not be the same with
respect to each recipient.

         (b) Terms and Conditions. The shares of Deferred Stock awarded pursuant
to this Section 8 shall be subject to the following terms and conditions:

                                       11
<PAGE>

                  (i) Subject to the provisions of this Plan and the award
         agreement referred to in Section 8(b)(iv) below, Deferred Stock awards
         may not be sold, assigned, transferred, pledged or otherwise encumbered
         during the Deferral Period. At the expiration of the Deferral Period
         (or the Elective Deferral Period referred to in Section 8(b)(iii),
         where applicable), stock certificates shall be delivered to the
         participant, or his legal representative, in a number equal to the
         shares covered by the Deferred Stock award (unless the Committee
         decides pursuant to Section 2(f) to settle the award in cash).

                  (ii) Subject to Sections 8(b)(vi) and/or 8(b)(vii), the
         Committee may accelerate the vesting of all or any part of any Deferred
         Stock award and/or waive the deferral limitations in whole or in part,
         based on service, Performance Criteria and/or such other factors as the
         Committee may determine, in its sole discretion.

                  (iii) A participant may elect to further defer receipt of an
         award (or an installment of an award) for a specified period or until a
         specified event (the "Elective Deferral Period"), subject in each case
         to such terms as are determined by the Committee, all in its sole
         discretion. Subject to any exceptions adopted by the Committee, such
         election must generally be made at least twelve (12) months prior to
         completion of the Deferral Period for such Deferred Stock award (or
         such installment).

                  (iv) Each award shall be confirmed by, and subject to the
         terms of, a Deferred Stock agreement executed by the Company and the
         participant.

                  (v) The dividend rights, if any, of the Deferred Stock award
         established by the Committee pursuant to Section 2(k).

                  (vi) An award of Deferred Stock, where the Deferral Period is
         based on Performance Criteria, shall have a Deferral Period of at least
         one (1) year.

                  (vii) An award of Deferred Stock, where the Deferral Period is
         based on service, shall have a Deferral Period of at least three (3)
         years.

         (c) Minimum Value Provisions. In order to better ensure that award
payments actually reflect the performance of the Company and service of the
participant, the Committee may provide, in its sole discretion, for a tandem
performance-based or other award designed to guarantee a minimum value, payable
in cash or Stock to the recipient of a Deferred Stock award, subject to such
Performance Criteria, future service, deferral and other terms and conditions as
may be specified by the Committee.

         SECTION 9. Stock Purchase Rights.

         (a) Awards and Administration. The Committee may grant eligible
participants Stock Purchase Rights which shall enable such participants to
purchase Stock (including Deferred Stock and Restricted Stock) at price(s)
determined by the Committee at or after grant, in its sole discretion.

                                       12
<PAGE>

         The Committee shall also impose such deferral, forfeiture and/or other
terms and conditions as it shall determine, in its sole discretion, on such
Stock Purchase Rights or the exercise thereof.

         The terms of Stock Purchase Rights awards need not be the same with
respect to each participant.

         Each Stock Purchase Right award shall be confirmed by, and be subject
to the terms of, a Stock Purchase Rights agreement.

         (b) Exercisability. Stock Purchase Rights shall be exercisable for such
period after grant as is determined by the Committee.

         SECTION 10. Other Stock Based Awards.

         (a) Administration. Other awards of Stock and other awards that are
valued in whole or in part by reference to, or are otherwise based on, Stock
("Other Stock Based Awards"), including, without limitation, stock purchase
rights, performance shares, convertible preferred stock, convertible debentures,
exchangeable securities and Stock awards or options valued by reference to Book
Value or subsidiary performance, may be granted either alone, in addition to, or
in tandem with, Stock Options, Stock Appreciation Rights, Restricted Stock,
Deferred Stock, Stock Purchase Rights or Performance Related Awards granted
under the Plan and/or cash awards made outside of the Plan.

         Subject to the provisions of the Plan, the Committee shall have
authority to determine the persons to whom and the time or times at which such
awards shall be made, the amount of such awards, and all other conditions of the
awards including any dividend and/or voting rights. Subject to Sections
10(b)(iv) and 10(b)(v), the Committee may also provide for the grant of Stock
upon the attainment of specified Performance Criteria or such other factors as
the Committee may determine, in its sole discretion.

         The provisions of Other Stock Based Awards need not be the same with
respect to each recipient.

         (b) Terms and Conditions. Other Stock Based Awards made pursuant to
this Section 10 shall be subject to the following terms and conditions:

                  (i) Subject to the provisions of this Plan and the award
         agreement referred to in Section 10(b)(ii) below, awards made under
         this Section 10 may not be sold, assigned, transferred, pledged or
         otherwise encumbered prior to the date on which any shares are issued
         or amounts are paid, or, if later, the date on which any applicable
         restriction, performance or deferral period lapses. Subject to Sections
         10(b)(iv) and/or 10(b)(v), the Committee, in its sole discretion, may
         accelerate the vesting of all or any part of any Other Stock Based
         Award, and/or waive any restrictions or deferral limitations in whole


                                       13
<PAGE>

         or in part, based on service, Performance Criteria and/or other factors
         as the Committee may determine, in its sole discretion.

                  (ii) Each award under this Section 10 shall be confirmed by,
         and subject to the terms of, an agreement or other instrument by the
         Company and by the participant.

                  (iii) Stock (including securities convertible into Stock)
         issued on a bonus basis under this Section 10 may be issued for no cash
         consideration. Stock (including securities convertible into Stock)
         purchased pursuant to a purchase right awarded under this Section 10
         shall be purchased at price(s) determined by the Committee, in its sole
         discretion.

                  (iv) Any Other Stock Based Award that has a Restriction Period
         or Deferral Period that is based on Performance Criteria shall have a
         Restriction Period or Deferral Period, as the case may be, of at least
         one (1) year.

                  (v) Any Other Stock Based Award that has a Restriction Period
         or Deferral Period that is based on service shall have a Restriction
         Period or Deferral Period, as the case may be, of at least three (3)
         years.

         SECTION 11. Performance Related Awards.

         (a) Performance Objectives. Notwithstanding anything else contained in
the Plan to the contrary, unless the Committee otherwise determines at the time
of grant, any award of Restricted Stock or Deferred Stock or Other Stock Based
Awards to an officer who is subject to the reporting requirements of Section
16(a) of the Exchange Act other than an award which will vest solely on the
basis of the passage of time, shall become vested, if at all, upon the
determination by the Committee that performance objectives established by the
Committee have been attained, in whole or in part (a "Performance Award"). Such
performance objectives shall be determined over a measurement period or periods
established by the Committee (which period or periods shall not be less than one
(1) year) and related to at least one of the following criteria, which may be
determined solely by reference to the performance of: (i) the Company; (ii) a
Subsidiary; (iii) an Affiliate; (iv) a division or unit of any of the foregoing
or based on comparative performance of any of the foregoing relative to past
performance or to other companies: (A) return on equity; (B) total shareholder
return; (C) revenues; (D) cash flows, revenues and/or earnings relative to other
parameters (e.g., net or gross assets); (E) operating income; (F) return on
investment; (G) changes in the value of the Stock; and (H) return on assets (the
"Performance Criteria"). Excluding Stock Options and/or Stock Appreciation
Rights granted hereunder, the maximum number of shares of Stock that may be
subject to any such Performance Award granted to any key employee in any
calendar year shall not exceed 100,000 shares, as such number may be adjusted
pursuant to Section 3.

         (b) Annual Incentive Compensation. The Committee may, in addition to
the Performance Awards described above, pay cash amounts under the Plan or any
other plan or arrangement approved by the Committee, provided such other plan or
arrangement is in


                                       14
<PAGE>

conformity with the provisions of this Section 11(b), to any officer of the
Company or any Subsidiary who is subject to the reporting requirements of
Section 16(a) of the Exchange Act upon the achievement, in whole or in part, of
performance goals or objectives established in writing by the Committee with
respect to such performance periods as the Committee shall determine. Any such
goals or objectives shall be based on one or more of the Performance Criteria.
Notwithstanding anything else contained herein to the contrary, the maximum
amount of any such cash payment to any single officer with respect to any
calendar year shall not exceed the lesser of (i) $2,000,000; or (ii) twice the
officer's annual base salary as in effect on the last day of the preceding
fiscal year.

         (c) Interpretation. Notwithstanding anything else contained in the Plan
to the contrary, to the extent required to so qualify any Performance Award as
other performance based compensation within the meaning of Section 162(m)(4)(C)
of the Code, the Committee shall not be entitled to exercise any discretion
otherwise authorized under the Plan (such as the right to accelerate vesting
without regard to the achievement of the relevant performance objectives) with
respect to such Performance Award if the ability to exercise such discretion (as
opposed to the exercise of such discretion) would cause such award to fail to
qualify as other performance based compensation.

         SECTION 12. Change in Control Provisions.

         (a) Impact of Event. Notwithstanding the provisions of Sections
7(c)(iv), 7(c)(v), 8(b)(vi), 8(b)(vii), 10(b)(iv), and 10(b)(v), in the event
of:

                  (i) a "Change in Control" as defined in Section 12(b), or

                  (ii) a "Potential Change in Control" as defined in Section
         12(c), but only if and to the extent so determined by the Committee or
         the Board (subject to any right of approval expressly reserved by the
         Committee or the Board at the time of such determination):

                  (A) Any Stock Options awarded under the Plan not previously
         exercisable and vested shall become fully exercisable and vested;

                  (B) The restrictions and deferral limitations applicable to
         any Restricted Stock, Deferred Stock, Stock Purchase Rights, Other
         Stock Based Awards and Performance Related Awards, in each case to the
         extent not already vested under the Plan, shall lapse and such shares
         and awards shall be deemed fully vested and any Performance Criteria
         shall be deemed met at target; and

                  (C) The value of all outstanding LTIP Awards to the extent
         vested may at the sole discretion of the Committee at or after grant
         but prior to any Change in Control, be cashed out on the basis of the
         "Change in Control Price" as defined in Section 12(d) as of the date
         such Change in Control or such Potential Change in Control is
         determined to


                                       15
<PAGE>

         have occurred or such other date as the Committee may determine prior
         to the Change in Control.

         (b) Definition of "Change in Control". For purposes of Section 12(a), a
"Change in Control" means the happening of any of the following:

                  (i) When any "person" as defined in Section 3(a)(9) of the
         Exchange Act and as used in Sections 13(d) and 14(d) thereof, including
         a "group" as defined in Section 13(d) of the Exchange Act but excluding
         the Company, any Subsidiary or any employee benefit plan sponsored or
         maintained by the Company or any Subsidiary (including any trustee of
         such plan acting as trustee), directly or indirectly, becomes the
         "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act, as
         amended from time to time), of securities of the Company representing
         fifteen percent (15%) or more of the combined voting power of the
         Company's then outstanding securities;

                  (ii) The individuals who, as of the Effective Date of this
         Plan, 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 of
         the Plan 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 or substantially all of the
         individuals and entities who were the beneficial owners, respectively,
         of the then outstanding shares of Stock of the Company and the combined
         voting power of the then outstanding voting securities of the Company
         entitled to vote generally in the election of directors immediately
         prior to such Business Combination beneficially own, directly or
         indirectly, more than sixty percent (60%) of, respectively, the then
         outstanding shares of common stock and the combined voting power of the
         then outstanding 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); (B) no person (excluding any
         employee benefit plan (or related trust) of the Company or such
         corporation resulting from such Business Combination) beneficially
         owns, directly or indirectly, fifteen percent (15%) or more of,
         respectively, the then outstanding shares of common stock of the
         corporation resulting from such Business Combination or the combined
         voting power of the then outstanding voting securities of such
         corporation except to the extent that such


                                       16
<PAGE>

         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.

         (c) Definition of Potential Change in Control. For purposes of Section
12(a), a "Potential Change in Control" means the happening of any one of the
following:

                  (i) The approval by shareholders of an agreement by the
         Company, the consummation of which would result in a Change in Control
         of the Company as defined in Section 12(b); or

                  (ii) The acquisition of beneficial ownership, directly or
         indirectly, by any entity, person or group (other than the Company or a
         Subsidiary or any Company employee benefit plan (including any trustee
         of such plan acting as such trustee)) of securities of the Company
         representing five percent (5%) or more of the combined voting power of
         the Company's outstanding securities and the adoption by the Board of a
         resolution to the effect that a Potential Change in Control of the
         Company has occurred for purposes of this Plan.

         (d) Change in Control Price. For the purposes of this Section 12,
"Change in Control Price" means the highest price per share paid in any
transaction reported on the New York Stock Exchange Composite Index, or paid or
offered in any bona fide transaction related to a potential or actual Change in
Control of the Company at any time during the sixty (60) day period immediately
preceding the occurrence of the Change in Control (or, where applicable, the
occurrence of the Potential Change in Control event), in each case as determined
by the Committee except that, in the case of Incentive Stock Options and Stock
Appreciation Rights relating to Incentive Stock Options, such price shall be
based only on transactions reported for the date on which the optionee exercises
such Stock Appreciation Rights or, where applicable, the date on which a cashout
occurs under Section 12(a)(ii)(C).

         SECTION 13. Amendments and Termination.

         The Board may amend, alter, or discontinue the Plan, but no amendment,
alteration, or discontinuation shall be made which would impair the rights of an
optionee or participant under an LTIP Award theretofore granted, without the
optionee's or participant's consent.

         The Committee may amend the terms of any Stock Option or other award
theretofore granted, prospectively or retroactively, but subject to Section 3
above, no such amendment shall impair the rights of any holder without the
holder's consent.

                                       17
<PAGE>

         Subject to the above provisions, the Board shall have broad authority
to amend the Plan to take into account changes in applicable securities and tax
laws and accounting rules, as well as other developments.

         SECTION 14. Unfunded Status of Plan.

         The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
participant or optionee by the Company, nothing contained herein shall give any
such participant or optionee any rights that are greater than those of a general
creditor of the Company. In its sole discretion, the Committee may authorize the
creation of trusts or other arrangements to meet the obligations created under
the Plan to deliver Stock or payments in lieu of or with respect to awards
hereunder; provided, however, that unless the Committee otherwise determines
with the consent of the affected participant, the existence of such trusts or
other arrangements is consistent with the "unfunded" status of the Plan.

         SECTION 15. General Provisions.

         (a) The Committee may require each person purchasing shares pursuant to
a Stock Option or other award under the Plan to represent to and agree with the
Company in writing that the optionee or participant is acquiring the shares
without a view to distribution thereof. The certificates for such shares may
include any legend which the Committee deems appropriate to reflect any
restrictions on transfer.

         All certificates for shares of Stock or other securities delivered
under the Plan shall be subject to such stock-transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations,
and other requirements of the Securities and Exchange Commission, any stock
exchange upon which the Stock is then listed, and any applicable federal or
state securities law, and the Committee may cause a legend or legends to be put
on any such certificates to make appropriate reference to such restrictions.

         (b) Nothing contained in this Plan shall prevent the Board from
adopting other or additional compensation arrangements, subject to stockholder
approval if such approval is required, and such arrangements may be either
generally applicable or applicable only in specific cases.

         (c) The adoption of the Plan shall not confer upon any employee of the
Company or any Subsidiary or Affiliate any right to continued employment with
the Company or a Subsidiary or Affiliate, as the case may be, nor shall it
interfere in any way with the right of the Company or a Subsidiary or Affiliate
to terminate the employment of any of its employees at any time.

         (d) Except as the participant and the Company may otherwise agree, no
later than the date as of which an amount first becomes includible in the gross
income of the participant for federal income tax purposes with respect to any
award under the Plan, the participant shall pay to the Company, or make
arrangements satisfactory to the Committee regarding the payment of, any


                                       18
<PAGE>

federal, state, or local taxes of any kind required by law to be withheld with
respect to such amount. Unless otherwise determined by the Committee,
withholding obligations may be settled with Stock, including Stock that is part
of the award that gives rise to the withholding requirement. The obligations of
the Company under the Plan shall be conditional on such payment or arrangements,
and the Company and its Subsidiaries or Affiliates shall, to the extent
permitted by law, have the right to deduct any such taxes from any payment of
any kind otherwise due to the participant.

         (e) The actual or deemed reinvestment of dividends or dividend
equivalents in additional Restricted Stock (or in Deferred Stock or other types
of Plan awards) at the time of any dividend payment shall only be permissible if
sufficient shares of Stock are available under Section 3 for such reinvestment
(taking into account then outstanding Stock Options, Stock Purchase Rights and
other Plan awards).

         (f) The Committee may permit a participant to postpone the delivery of
Stock under any award, including a Stock Option, under the Plan upon such terms
and conditions as the Committee shall determine.

         (g) The Plan and all awards made and actions taken thereunder shall be
governed by and construed in accordance with the laws of the State of Delaware.

         SECTION 16. Effective Date of Plan.

         As amended, the Plan shall be effective as of May 21, 1998.

         SECTION 17. Term of Plan.

         No LTIP Award shall be granted pursuant to the Plan on or after the
tenth anniversary of the date of shareholder approval, but awards granted prior
to such tenth anniversary may extend beyond that date, in accordance with the
terms of such awards.

         SECTION 18. Applicability to Grants under 1988 Plan.

         The provisions of the Plan relating to stock options, stock
appreciation rights, restricted stock awards, deferred stock awards, stock
purchase rights, other stock-based awards or performance related awards shall
apply to, and govern existing and subsequent stock options, stock appreciation
rights, restricted stock awards, deferred stock awards, stock purchase rights,
other stock-based awards or performance related awards granted under the 1988
Long Term Incentive Plan, as amended.


                                       19