Exhibit 10.2

                           THIRD AMENDED AND RESTATED
                            PLAYBOY ENTERPRISES, INC.
                            1995 STOCK INCENTIVE PLAN
                        (as amended through May 23, 2007)

Playboy Enterprises, Inc., a corporation organized under the laws of the State
of Delaware (the "Company"), hereby adopts this Second Amended and Restated
Playboy Enterprises, Inc. 1995 Stock Incentive Plan.

            The purposes of this Plan are as follows:

            (1) To further the growth,  development and financial success of the
Company by  providing  additional  incentives  to  certain of its key  employees
through the  ownership of Company  stock  and/or  rights  which  recognize  such
growth, development and financial success.

            (2) To enable the  Company to obtain and retain the  services of key
employees  considered  essential  to the  long-range  success of the  Company by
providing and offering them an  opportunity  to own stock in the Company  and/or
rights which will reflect the growth,  development and financial  success of the
Company.

                                    ARTICLE I

                                   DEFINITIONS

            Whenever the  following  terms are used in this Plan they shall have
the meaning specified below, unless the context clearly indicates otherwise.

            Section 1.1 Board.  "Board" shall mean the Board of Directors of the
Company.

            Section  1.2 Change of Control.  "Change of Control"  shall mean the
occurrence of any of the following events: (i) except in a transaction described
in clause (iii) below, Hugh M. Hefner,  Christie Hefner, the Hugh M. Hefner 1991
Trust (for so long as Hugh M. Hefner and Christie  Hefner are joint  trustees or
one of them is sole trustee),  and the Hugh M. Hefner Foundation (for so long as
Hugh M.  Hefner and  Christie  Hefner are joint  trustees or one of them is sole
trustee) cease  collectively to own a majority of the total number of votes that
may be cast for the  election of  directors  of the  Company;  or (ii) a sale of
Playboy magazine by the Company;  or (iii) the liquidation or dissolution of the
Company,  or any merger,  consolidation  or other  reorganization  involving the
Company  unless  (x)  the  merger,  consolidation  or  other  reorganization  is
initiated  by the  Company,  and (y) is one in  which  the  stockholders  of the
Company   immediately   prior  to  such   reorganization   become  the  majority
stockholders  of a  successor  or  ultimate  parent  corporation  of the Company
resulting  from such  reorganization  and (z) in  connection  with  such  event,
provision  is made for an  assumption  of  outstanding  Options  and rights or a
substitution  thereof of a new  Option or right in such  successor  or  ultimate
parent of substantially equivalent value.

            Section 1.3 Code.  "Code"  shall mean the  Internal  Revenue Code of
1986, as amended.

            Section 1.4  Committee.  "Committee"  shall mean a committee  of the
Board of  Directors  comprised  of persons who are both  non-employee  directors
within the meaning of Rule 16b-3 which has been  adopted by the  Securities  and
Exchange  Commission under the Securities  Exchange Act of 1934, as amended,  as
such  rule or its  equivalent  is then in effect  ("Rule  16b-3")  and  "outside
directors" within the meaning of Section 162(m) of the Code.

            Section  1.5 Common  Stock.  "Common  Stock"  shall mean the Class B
Common Stock, par value $.01 per share, of the Company.

            Section 1.6 Company. "Company" shall mean Playboy Enterprises, Inc.,
a Delaware corporation.

            Section 1.7 Deferred Stock. "Deferred Stock" shall mean Common Stock
awarded under Article VII of the Plan.

<PAGE>

            Section 1.8 Director. "Director" shall mean a member of the Board.

            Section  1.9  Employee.  "Employee"  shall mean any officer or other
employee (as defined in accordance with the Regulations and Revenue Rulings then
applicable under Section 3401(c) of the Code) of the Company or any Subsidiary.

            Section  1.10  ERISA.  "ERISA"  shall mean the  Employee  Retirement
Income Security Act of 1974, as amended.

            Section 1.11 Exchange Act.  "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.

            Section 1.12  Grantee.  "Grantee"  shall mean an Employee  granted a
Performance   Award,   Stock   Payment,   Section  162(m)   Performance   Award,
Section162(m)  Stock  Payment,  or an award of Deferred  Stock or Section 162(m)
Deferred Stock, under this Plan.

            Section 1.13 Incentive Stock Option.  "Incentive Stock Option" shall
mean an Option which conforms to the applicable provisions of Section 422 of the
Code and which is designated as an Incentive Stock Option by the Committee.

            Section 1.14 Non-Qualified Option. "Non-Qualified Option" shall mean
an Option which is not designated as an Incentive Stock Option by the Committee.

            Section  1.15  Officer.  "Officer"  shall  mean  an  officer  of the
Company.

            Section  1.16  "Option"  shall  mean a stock  option  granted  under
Article III of this Plan. An Option granted under this Plan shall, as determined
by the Committee,  be either a Non-Qualified  Stock Option or an Incentive Stock
Option.

            Section 1.17 Optionee.  "Optionee" shall mean an Employee to whom an
Option is granted under the Plan.

            Section 1.18  Performance  Award.  "Performance  Award" shall mean a
cash bonus,  stock bonus or other performance or incentive award that is paid in
cash,  Common Stock or a combination of both,  awarded under Article VII of this
Plan.

            Section 1.18A  Performance  Criteria.  "Performance  Criteria" shall
mean  objective  performance  criteria  established  pursuant  to this Plan with
respect to awards of Section 162(m) Restricted Stock, Section 162(m) Performance
Awards,  Section  162(m)  Stock  Payments  and Section  162(m)  Deferred  Stock.
Performance  Criteria shall be measured in terms of one or more of the following
objectives,  described as such objectives relate to corporation-wide  objectives
or objectives that are related to the performance of the individual  Employee or
of the  Subsidiary,  division,  department  or  function  with  the  Company  or
Subsidiary in which the participant is employed:

                              (i) market value;

                              (ii) book value;

                              (iii) earnings per share;

                              (iv) market share;

                              (v) operating profit;

                              (vi) net income;

                              (vii) cash flow;


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<PAGE>

                              (viii) return on capital;

                              (ix) return on assets;

                              (x) return on equity;

                              (xi) margins;

                              (xii) shareholder return;

                              (xiii) sales or product volume growth;

                              (xiv) productivity improvement; or

                              (xv) costs or expenses.

            Each  grant of  Section  162(m)  Restricted  Stock,  Section  162(m)
Performance Awards,  Section 162(m) Stock Payments,  and Section 162(m) Deferred
Stock  shall  specify  the  Performance  Criteria  to  be  achieved,  a  minimum
acceptable  level of  achievement  below which no payment or award will be made,
and a formula for  determining  the amount of any payment or award to be made if
performance is at or above the minimum  acceptable  level but fall short of full
achievement of the specified Performance Criteria.

            If  the  Committee   determines  that  a  change  in  the  business,
operations,  corporate  structure or capital  structure  of the Company,  or the
manner in which it  conducts  its  business,  or other  events or  circumstances
render the Performance Criteria to be unsuitable,  the Committee may modify such
Performance Criteria or the related minimum acceptable level of achievement,  in
whole or in part, as the Committee deems  appropriate  and equitable;  provided,
however, that no such modification shall be made if the effect would be to cause
the award to fail to qualify for the performance-based compensation exception to
Section  162(m) of the Code.  In  addition,  at the time the  award  subject  to
Performance Criteria is made and performance goals established, the Committee is
authorized  to determine  the manner in which the  Performance  Criteria will be
calculated  or  measured to take into  account  certain  factors  over which the
Employees  have no or  limited  control  including  market  related  changes  in
inventory value, changes in industry margins,  changes in accounting principles,
and extraordinary changes to income.

            Section 1.19 Plan. "Plan" shall mean the Second Amended and Restated
Playboy Enterprises, Inc. 1995 Stock Incentive Plan.

            Section 1.20 Restricted Stock.  "Restricted Stock" shall mean Common
Stock awarded under Article VII of this Plan.

            Section 1.21 Restricted Stockholder.  "Restricted Stockholder" shall
mean an Employee  granted an award of Restricted  Stock under Article VI of this
Plan.

            Section 1.22 Secretary.  "Secretary" shall mean the Secretary of the
Company.

            Section  1.22A  Section  162(m)  Deferred  Stock.   "Section  162(m)
Deferred  Stock" shall mean Common Stock  awarded  under  Article  VII-A of this
Plan.

            Section 1.22B Section  162(m)  Performance  Award.  "Section  162(m)
Performance Award" shall mean a cash bonus, stock bonus, or other performance or
incentive  award that is paid in cash,  Common Stock or a  combination  of both,
awarded under Article VII-A of this Plan.

            Section 1.22C  Section  162(m)  Restricted  Stock.  "Section  162(m)
Restricted  Stock" shall mean Common Stock  awarded  under  Section VI-A of this
Plan.

            Section 1.22D Section 162(m) Restricted Stockholder. "Section 162(m)
Restricted  Stockholder"  shall  mean an  Employee  granted  an award of Section
162(m) Restricted Stock under Article VI-A of this Plan.


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<PAGE>

            Section 1.22E Section  162(m) Stock Payment.  "Section  162(m) Stock
Payment" shall mean (i) a payment in the form of Common Stock, or (ii) an option
or other  right to  purchase  shares  of  Common  Stock,  as part of a  deferred
compensation   arrangement,   made  in  lieu  of  all  or  any  portion  of  the
compensation,  including without  limitation,  salary,  bonuses and commissions,
that would  otherwise  become  payable to a key Employee in cash,  awarded under
Article VII-A of this Plan.

            Section  1.23  Securities  Act.  "Securities  Act"  shall  mean  the
Securities Act of 1933, as amended.

            Section 1.24 Stock Payment. "Stock Payment" shall mean (i) a payment
in the form of  shares  of Common  Stock,  or (ii) an  option or other  right to
purchase shares of Common Stock, as part of a deferred compensation arrangement,
made  in lieu  of all or any  portion  of the  compensation,  including  without
limitation, salary, bonuses and commissions, that would otherwise become payable
to a key Employee in cash, awarded under Article VII-A of this Plan.

            Section 1.25 Subsidiary.  "Subsidiary" shall mean any corporation in
an  unbroken  chain of  corporations  beginning  with the Company if each of the
corporations  other than the last  corporation  in the unbroken  chain then owns
stock  possessing 50% or more of the total combined  voting power of all classes
of stock in one of the other corporations in such chain.

            Section 1.26 Termination of Employment.  "Termination of Employment"
shall  mean  the  time  when  the  employee-employer  relationship  between  the
Optionee,   Grantee,   Restricted  Stockholder,  or  Section  162(m)  Restricted
Stockholder  and the Company or any  Subsidiary is  terminated,  voluntarily  or
involuntarily,  for any  reason,  with or  without  Cause  (as  defined  below),
including,  but  not  by  way  of  limitation,  a  termination  by  resignation,
discharge,  death, disability or retirement, but excluding any termination where
there  is a  simultaneous  reemployment  by the  Company  or a  Subsidiary.  The
Committee,  subject to the definition of Cause below, shall determine the effect
of all other  matters and  questions  relating  to  Termination  of  Employment,
including,  but not by way of  limitation,  the  question of whether  particular
leaves of absence  constitute  Terminations  of Employment;  provided,  however,
that,  with  respect  to  Incentive  Stock  Options,  a leave of  absence  shall
constitute a Termination of Employment if, and to the extent that, such leave of
absence interrupts  employment for the purposes of Section 422(a)(2) of the Code
and the then applicable  regulations and revenue rulings under said Section. For
purposes of the Plan,  "Cause" shall mean an Employee's (a) gross  negligence in
the performance of the  responsibilities  of such Employee's office or position;
(b) any act of dishonesty or moral turpitude  materially adversely affecting the
Company or the  Company's  reputation;  (c)  commission  of any other willful or
intentional  act that could  reasonably  be  expected to injure  materially  the
reputation, business or business relationships of the Company or any Subsidiary;
or (d) conviction of a felony or of any crime involving moral  turpitude,  fraud
or misrepresentation.

                                   ARTICLE II

                             SHARES SUBJECT TO PLAN

            Section 2.1 Shares  Subject to Plan. (a) The shares of stock subject
to Options,  or awards of Restricted  Stock,  Section 162(m)  Restricted  Stock,
Performance Awards,  Section 162(m) Performance Awards,  Deferred Stock, Section
162(m) Deferred Stock, Stock Payments, or Section 162(m) Stock Payments shall be
Common Stock.  The aggregate  number of shares which may be issued upon exercise
of such  Options  or rights  or upon any such  awards  under the Plan  shall not
exceed 7,703,000 shares of Common Stock.

                  (b) The maximum  number of shares of Common Stock which may be
subject  to  Options,  rights  or other  awards  granted  under  the Plan to any
Employee  in any  calendar  year  shall not  exceed  650,000,  and the method of
counting   such  shares  shall  conform  to  any   requirements   applicable  to
performance-based  compensation  under Section 162(m) of the Code. The shares of
Common Stock  issuable  upon exercise of such Options or rights or upon any such
awards may be either  previously  authorized  but  unissued  shares or  treasury
shares.

                  (c) With regard to Section 162(m)  Performance Awards that are
cash bonuses or other  performance or incentive  awards expressed as cash awards
(without  regard to whether  such bonuses or awards are  ultimately  paid in the
form of cash,  stock, or a combination of both as described in Section 7.7A), an
Employee  may not be  granted  during  any  calendar  year such  Section  162(m)
Performance Awards in an amount in excess of $1,000,000.

            Section 2.2 Unexercised  Options and Awards. If any Option, or other
right to acquire  shares of Common  Stock under any other award under this Plan,
expires  or  is  cancelled  without  having  been  fully  exercised


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<PAGE>

(including  Restricted Stock, Section 162(m) Restricted Stock or any other award
that is forfeited  before  applicable  vesting  requirements are met or transfer
restrictions have lapsed),  the number of shares subject to such Option or other
right but as to which such Option or other right was not exercised (or vested or
delivered  without  restriction,  as the case may be) prior to its expiration or
cancellation may again be optioned, granted or awarded hereunder, subject to the
limitations of Section 2.1.

            Section 2.3 Adjustments in Outstanding Options or Rights. Subject to
Section  4.2(c),  in the event that the  outstanding  shares of the Common Stock
subject to Options or other rights are changed into or exchanged for a different
number or kind of shares of the  Company or other  securities  of the Company by
reason of a recapitalization,  reclassification,  stock split, stock dividend or
combination  of shares or  similar  transaction,  the  Committee  shall  make an
appropriate  and  equitable  adjustment  in the  number and kind of shares as to
which all outstanding  Options or rights,  or portions thereof then unexercised,
shall  be   exercisable,   so  that  the   Optionee's,   Grantee's,   Restricted
Stockholder's or Section 162(m) Restricted Stockholder's  proportionate interest
shall be maintained.  Such adjustment  shall be made without change in the total
price  applicable to the unexercised  portion of the Option or right (except for
any  change  in  the  aggregate  price  resulting  from  rounding-off  of  share
quantities or prices) and with any necessary  corresponding  adjustment in price
per share; provided, however, that, in the case of Incentive Stock Options, each
such  adjustment   shall  be  made  in  such  manner  as  not  to  constitute  a
"modification"  within the meaning of Section  424(h)(3)  of the Code.  Any such
adjustment  made by the Committee shall be final and binding upon all Optionees,
Grantees, Restricted Stockholders,  Section 162(m) Restricted Stockholders,  the
Company  or any  Subsidiary,  their  representatives  and all  other  interested
persons.  Such  adjustments  will  also  be  made  in  determining  Section  2.1
limitations on maximum number and kind of shares which may be issued on exercise
of Options,  Restricted Stock,  Section 162(m) Restricted Stock or other awards.
The shares of Class B Common Stock  reserved  under this Plan will be reduced as
Options,  Restricted Stock,  Section 162(m) Restricted Stock or other awards are
granted or issued so that the aggregate number of any single Class of Stock will
never exceed the total amount of shares authorized under the Plan.

                                   ARTICLE III

                               GRANTING OF OPTIONS

            Section  3.1  Eligibility.  Any key  Employee  of the  Company  or a
Subsidiary except Hugh M. Hefner shall be eligible to be granted Options.

            Section 3.2  Qualification of Incentive Stock Options.  No Incentive
Stock Option shall be granted unless such Option, when granted,  qualifies as an
"incentive  stock option" under Section 422 of the Code.  Without  limitation of
the foregoing,  no person shall be granted an Incentive  Stock Option under this
Plan if such person,  at the time the  Incentive  Stock Option is granted,  owns
stock  possessing more than ten percent (10%) of the total combined voting power
of all  classes of stock of the  Company  unless  such  Incentive  Stock  Option
conforms to the applicable provisions of Section 422 of the Code.

            Section 3.3 Granting of Options.  (a) The Committee  shall from time
to time, in its absolute discretion:

                        (i) Determine  which  Employees are "key  Employees" and
      select  from  among the key  Employees  (including  those to whom  Options
      and/or  rights have been  previously  granted  under the Plan or any other
      stock option or other plan of the Company)  such of them as in its opinion
      should be granted Options; and

                        (ii) Determine for each Employee the number of shares to
      be subject to such Options; and

                        (iii) Determine whether such Options are to be Incentive
      Stock Options or Non-Qualified Options; and

                        (iv) Determine the terms and conditions of such Options,
      consistent with the Plan.


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<PAGE>

                  (b) Upon the  selection  of a key  Employee  to be  granted an
Option,  the Committee shall instruct the Secretary or other authorized  officer
to execute and deliver a Stock Option Agreement,  and may impose such conditions
on the grant of such Option as it deems appropriate,  not inconsistent with this
Plan. Without limiting the generality of the preceding  sentence,  the Committee
may, in its discretion and on such terms as it deems  appropriate,  require as a
condition on the grant of an Option to an Employee  that the Employee  surrender
for cancellation  some or all of the unexercised  Options,  awards of Restricted
Stock,  Section  162(m)  Restricted  Stock,  Deferred  Stock or  Section  162(m)
Deferred Stock,  Performance Awards,  Section 162(m) Performance  Awards,  Stock
Payments  or Section  162(m)  Stock  Payments  or other  rights  which have been
previously  granted to him. An Option,  the grant of which is  conditioned  upon
such surrender, may have an Option price lower (or higher) than the Option price
of the surrendered Option, may cover the same (or a lesser or greater) number of
shares as the surrendered  Option, may contain such other terms as the Committee
deems appropriate and be exercised in accordance with its terms,  without regard
to the number of shares,  price, Option period or any other term or condition of
such surrendered Option or award.

                  (c) Stock Option Agreements evidencing Incentive Stock Options
shall  contain  such  terms  and  conditions  as may be  necessary  to meet  the
applicable  provisions of Section 422 of the Code.  Any  Incentive  Stock Option
granted  under this Plan may be modified by the  Committee  to  disqualify  such
option from  treatment as an  "incentive  stock option" under Section 422 of the
Code.

                  (d) Options granted  hereunder shall be consideration  for the
future  performance  of services by the Optionee to the Company or a Subsidiary,
as applicable.

                                   ARTICLE IV

                                TERMS OF OPTIONS

            Section  4.1 Option  Price.  (a) The price of the shares  subject to
each  Non-Qualified  Option shall not be less than 100% of the fair market value
of such shares at the end of the business day upon which such Option is granted.

                  (b) For  purposes of the Plan,  the fair market  value  ("Fair
Market Value") of a share of the Company's Common Stock as of a given date shall
be: (i) the closing price of a share of such class of the Company's Common Stock
on the principal exchange on which shares of the Company's Common Stock are then
trading,  if any, on such date, or, if shares were not traded on such date, then
on the next subsequent  trading day during which a sale occurs;  or (ii) if such
Common Stock is not traded on an exchange but is quoted on NASDAQ or a successor
quotation  system,  (1) the last sales price (if the  Company's  Common Stock is
then listed as a National Market Issue under the NASD National Market System) or
(2) the mean  between the closing  representative  bid and asked  prices (in all
other cases) for the  Company's  Common Stock on such date as reported by NASDAQ
or such  successor  quotation  system;  or  (iii)  if such  Common  Stock is not
publicly traded on an exchange and not quoted on NASDAQ or a successor quotation
system,  the mean  between the closing  bid and asked  prices for the  Company's
Common Stock,  on such date, as  determined in good faith by the  Committee;  or
(iv) if the Company's Common Stock is not publicly traded, the fair market value
established by the Committee acting in good faith.

                  (c) The price of the shares subject to Incentive Stock Options
shall not be less than the  greater  of (i) 100% of the Fair  Market  Value of a
share of Common Stock on the date the Incentive Stock Option is granted, or (ii)
110% of the  fair  market  value  of a share of  Common  Stock on the date  such
Incentive  Stock  Option is granted  in the case of an  individual  then  owning
(within  the  meaning of Section  424(d) of the Code) more than 10% of the total
combined voting power of all classes of stock of the Company or any Subsidiary.

            Section 4.2 Commencement of Exercisability;  Change of Control.  (a)
Subject to the  provisions  of Sections  4.2(b) and 9.3,  Options  shall  become
exercisable at such times and in such installments  (which may be cumulative) as
the Committee  shall provide in the terms of each individual  Option;  provided,
however,  that by a resolution  adopted after an Option is granted the Committee
may, on such terms and  conditions  as it may  determine to be  appropriate  and
subject to Sections 4.2 and 9.3, accelerate the time at which such Option or any
portion  thereof  may  be  exercised;   provided  further,   however,  that  all
outstanding  Options shall become fully vested and exercisable as of immediately
prior to a Change of Control.

                  (b)  No  portion  of  an  Option  which  is  unexercisable  at
Termination of Employment shall thereafter become exercisable,  except as may be
otherwise provided by the Committee either in the Stock Option


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<PAGE>

Agreement or in a resolution  adopted following the grant of the Option.  Except
as  limited  by  requirements  of Section  422 of the Code and  regulations  and
rulings  thereunder  applicable to Incentive  Stock  Options,  the Committee may
extend the term of any outstanding  Option in connection with any Termination of
Employment of the Optionee,  or amend any other term or condition of such Option
relating to such a termination.

                  (c) To the extent  that the  aggregate  Fair  Market  Value of
stock with respect to which  "incentive  stock  options"  (within the meaning of
Section 422 of the Code,  but without  regard to Section 422(d) of the Code) are
exercisable  for the first time by an Optionee  during any calendar  year (under
the Plan and all other  incentive  stock  option  plans of the  Company  and any
subsidiary)  exceeds  $100,000,  such Options shall be treated as  Non-Qualified
Options to the extent required by Section 422 of the Code. The rule set forth in
the preceding  sentence  shall be applied by taking  Options into account in the
order in which they were granted.  For purposes of this Section 4.2(c), the Fair
Market Value of stock shall be determined as of the time the Option with respect
to such stock is granted.

            Section  4.3  Expiration  of Options.  (a) Unless an Option  expires
earlier or later pursuant to the terms of a Stock Option Agreement,  each Option
may be exercised any time until the first of the following  events,  after which
such Option will become unexercisable:

                        (i) The  expiration  of ten (10) years from the date the
      Option was granted if the Employee is still employed by the Company or any
      Subsidiary; or

                        (ii)  The  expiration  of  three  (3)  months  from  the
      Employee's  Termination  of Employment if such  Termination  of Employment
      results  from  such  Employee's   retirement  or  such  Employee's   being
      discharged not for Cause, unless the Employee dies within said three-month
      period; or

                        (iii)  The  effective  date  of  (i)  a  Termination  of
      Employment for Cause, (ii) the Employee's  resignation,  or (iii) a Change
      of Control specified in clause (iii) of the definition of such term; or

                        (iv) In the case of an Optionee who is disabled  (within
      the meaning of Section  22(e)(3) of the Code),  the  expiration of one (1)
      year from the date of the Optionee's Termination of Employment;  provided,
      however,  that subsection (iv) shall not apply if the Optionee dies within
      said one-year period; or

                        (v) One (1) year from the date of the Optionee's death.

                  (b) Subject to the provisions of Section 4.3(a), the Committee
shall provide,  in the terms of each individual Option, when such Option expires
and  becomes  unexercisable;   and  (without  limiting  the  generality  of  the
foregoing)  the Committee  may provide in the terms of  individual  Options that
said Options expire immediately upon a Termination of Employment for any reason.

                  (c) The term of any  Incentive  Stock Option shall not be more
than five (5) years from such date if the  Incentive  Stock Option is granted to
an  individual  then owning  (within the meaning of Section  424(d) of the Code)
more than 10% of the total combined voting power of all classes of capital stock
of the Company or any Subsidiary.

            Section 4.4 No Right to Continued  Employment.  Nothing in this Plan
or in any Stock Option  Agreement  hereunder  shall confer upon any Optionee any
right to  continue  in the  employ  of the  Company  or any  Subsidiary  or as a
director  of the  Company,  or shall  interfere  with or restrict in any way the
rights of the Company and any of its  Subsidiaries,  which are hereby  expressly
reserved, to discharge any Optionee at any time for any reason whatsoever,  with
or without Cause.

            Section 4.5 Reload  Options.  Options may, in the  discretion of the
Committee,  be granted  under the Plan to permit a  participant  to reaquire any
shares such  participant  delivered  to the  Company as payment of the  exercise
price (as described in Section 5.3) in connection with the exercise of an Option
hereunder  or to  reaquire  any shares  retained  by the  Company to satisfy the
participant's  withholding  obligation  in  connection  with the  exercise of an
Option  hereunder  (a "Reload  Option").  The terms of a Reload  Option shall be
identical in all  material  respects to the terms of the Option as to which such
Reload Option was granted,  provided  however,  that the exercise price for each
share  granted under the Reload Option shall be the Fair Market Value of a share
at the time such Reload Option is granted.


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<PAGE>

                                    ARTICLE V

                               EXERCISE OF OPTIONS

            Section  5.1 Person  Eligible  to  Exercise.  (a) Subject to 5.1(b),
during the  lifetime of an Optionee,  only such  Optionee may exercise an Option
(or any  portion  thereof)  granted  to such  Optionee.  After  the death of the
Optionee,  any  exercisable  portion  of an Option  may,  within  the time frame
allowed, be exercised by his personal  representative or by any person empowered
to do so under the deceased Optionee's will or under the then applicable laws of
descent and  distribution.  To the extent  Rule 16b-3 as then in effect  permits
transfers  of  Options,   the  Committee  may  approve  such  transfers  in  its
discretion.

                  (b) Should the Optionee be determined  under applicable law to
have become a disabled person or the equivalent thereof, the then-vested portion
of the Option  may,  prior to the time when such  Option  becomes  unexercisable
pursuant to the Plan or the applicable Stock Option  Agreement,  be exercised by
the Optionee's guardian or by any other person empowered to do so under the then
applicable laws of guardianship.  For purposes of this section 5.1(b), "disabled
person" shall mean a person who (i) because of mental  deterioration or physical
incapacity is not fully able to manage such person's person or estate or (ii) is
mentally ill and who because of such person's  mental  illness is not fully able
to manage such person's person or estate.

            Section 5.2 Partial Exercise. An exercisable Option may be exercised
in whole or in part. However, an Option shall not be exercisable with respect to
fractional  shares and the Committee may require that, by terms of the Option, a
partial exercise be with respect to a number of shares.

            Section 5.3 Manner of Exercise.  All or a portion of an  exercisable
Option shall be deemed  exercised  upon  delivery of all of the following to the
Secretary of the Company or the Secretary's office:

                  (a) A written  notice  signed by the Optionee (or other person
then entitled to exercise  such Option or portion),  stating that such Option or
portion  thereof is being exercised and such notice complies with all applicable
rules established by the Committee; and

                  (b) Payment in full for the exercised shares:

                        (i) In cash or by certified or cashier's check; or

                        (ii) In shares of the same class of the Company's Common
      Stock owned by the Optionee;  provided, however, that the Optionee may use
      Common Stock in payment of the  exercise  price only if the shares so used
      are  considered  "mature" for purposes of  generally  accepted  accounting
      principles,  i.e.,  (x) they have been held by the Optionee free and clear
      for at least six months  prior to the use thereof to pay part of an Option
      exercise price, (y) they have been purchased by the Optionee in other than
      a compensatory  transaction,  or (z) they meet any other  requirements for
      "mature" shares as may exist on the date of the use thereof to pay part of
      an  Option  exercise  price,  as  determined  by  the  Committee;  further
      provided,  however,  that the  Optionee may use Common Stock in payment of
      the exercise price by means of attestation to the Company of his ownership
      of sufficient shares in a manner  reasonably  acceptable to the Committee.
      Shares  actually  delivered  to the  Company  (i.e.,  shares for which the
      attestation  mechanism is not used) must be duly  endorsed for transfer to
      the Company.  Shares used to pay all or part of the Option  exercise price
      pursuant to this  provision will be credited at their Fair Market Value on
      the date of delivery; or

                        (iii) With the consent of the  Committee and at the sole
      discretion  of the Company,  by a full  recourse  promissory  note bearing
      interest (at no less than such rate as shall then preclude the  imputation
      of interest  under the Code or successor  provision) and payable upon such
      terms  as may be  prescribed  by the  Committee.  The  Committee  may also
      prescribe  the form of such  note and the  security  to be given  for such
      note.  No Option may,  however,  be  exercised by delivery of a promissory
      note or by a loan  from  the  Company  when or  where  such  loan or other
      extension of credit is prohibited by law; or


                                       8
<PAGE>

                        (iv) With the consent of the  Committee  and at the sole
      discretion of the Company,  by a "net  exercise" via the forfeiture to the
      Company  of a portion  of the  Option  pertaining  to shares  with a value
      (based on the Fair Market Value of such  underlying  Option  shares on the
      date of  forfeiture)  equal to the  exercise  price of the  portion of the
      Option being exercised plus the applicable tax withholding amount; or

                        (v) Any combination of the consideration provided in the
      foregoing subsections (i), (ii), (iii) and (iv); or

                        (vi) To the  extent  permitted  by law  (including  then
      existing  interpretations of Rule 16b-3) a "cashless  exercise  procedure"
      satisfactory  to the  Committee  which  permits the Optionee to deliver an
      exercise  notice to a  broker-dealer,  who then sells the  Option  shares,
      delivers  the  exercise  price and  withholding  taxes to the  Company and
      delivers the excess funds less  commission  and  withholding  taxes to the
      Optionee; and

                  (c) Such  representations  and documents as the Committee,  in
its absolute discretion,  deems necessary or advisable to effect compliance with
all  applicable  provisions of the Securities Act and any other federal or state
securities laws or regulations.  The Committee may, in its absolute  discretion,
also take  whatever  additional  actions  it deems  appropriate  to effect  such
compliance including, without limitation,  placing legends on share certificates
and issuing stop-transfer orders to transfer agents and registrars; and

                  (d)  Appropriate  proof of the right of such person or persons
to  exercise  the  option or  portion  thereof  in the event  that the Option or
portion  thereof  shall be  exercised  pursuant  to Section 5.1 by any person or
persons other than the Optionee; and

                  (e) Full payment of all amounts which, under federal, state or
local law,  it is required to  withhold  upon  exercise of the Option.  With the
consent of the  Committee,  shares of the  Company's  Common  Stock owned by the
Employee  duly  endorsed  for transfer or shares of the  Company's  Common Stock
issuable to the Employee upon exercise of the Option,  valued in accordance with
Section 4.1(b) of the Plan at the date of Option  exercise,  may be used to make
all or part of such payment.

            Section 5.4 [RESERVED]

            Section 5.5 Additional Conditions to Issuance of Stock Certificates.
The shares of Common Stock able and  deliverable  upon the exercise of an Option
shall be fully paid and  non-assessable.  In  addition  to  satisfaction  of the
conditions  specified in Section 5.3, the Company shall not be required to issue
or deliver any  certificate or  certificates  for shares of stock purchased upon
the exercise of any Option or portion thereof prior to fulfillment of all of the
following conditions:

                  (a) The completion of any registration or other  qualification
of such  shares  under  any  state  or  federal  law or  under  the  rulings  or
regulations  of  the  Securities  and  Exchange   Commission  or  of  any  other
governmental  regulatory  body,  which  the  Committee  shall,  in its  absolute
discretion, deem necessary or advisable; and

                  (b) The obtaining of any approval or other  clearance from any
state or federal  governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable; and

                  (c) The lapse of such reasonable  period of time following the
exercise of the Option as the Committee or Board may establish from time to time
for reasons of administrative convenience.

            Section 5.6 Rights as Stockholders. The holders of Options shall not
be, nor have any of the rights or privileges of,  stockholders of the Company in
respect of any shares  purchasable  upon the  exercise  of any part of an Option
unless and until  certificates  representing such shares have been issued by the
Company to such holders or the Company's stock record books reflect the Optionee
as a stockholder pursuant to any book entry procedure approved by the Secretary.

            The  Committee,  in its absolute  discretion,  may impose such other
restrictions on the  transferability of the shares purchasable upon the exercise
of an Option as it deems  appropriate.  Any such other  restriction shall be set
forth in


                                       9
<PAGE>

the respective Stock Option Agreement and may be referred to on the certificates
evidencing  such  shares.  The  Committee  may require the  Employee to give the
Company prompt notice of any disposition of shares of Common Stock,  acquired by
exercise of an  Incentive  Stock  Option,  within (i) two years from the date of
granting  such Option or (ii) one year after the transfer of such shares to such
Employee.  The  Committee  may direct that the  certificates  evidencing  shares
acquired  by  exercise  of an Option  refer to such  requirement  to give prompt
notice of disposition.

                                   ARTICLE VI

                            AWARD OF RESTRICTED STOCK

            Section 6.1 Award of Restricted  Stock. (a) The Committee shall from
time to time, in its absolute discretion:

                        (i)  Select  from  among  the key  Employees  (including
      Employees who have previously received other awards under this Plan or any
      other  stock  option plan of the  Company)  such of them as in its opinion
      should be awarded Restricted Stock; and

                        (ii)  Determine  the purchase  price,  if any, and other
      terms and conditions applicable to such Restricted Stock,  consistent with
      this Plan.

                  (b) In all cases, legal consideration meeting the requirements
of Delaware law shall be required for each issuance of Restricted Stock.

                  (c)  Upon  the  selection  of a key  Employee  to  be  awarded
Restricted  Stock,  the Committee shall instruct the Secretary of the Company to
issue such  Restricted  Stock and may impose such  conditions on the issuance of
such Restricted Stock as it deems appropriate.

            Section 6.2 Restricted  Stock  Agreement.  Restricted Stock shall be
issued only pursuant to a written  Restricted  Stock  Agreement,  which shall be
executed by the selected key Employee and an  authorized  officer of the Company
and which  shall  contain  such  terms and  conditions  as the  Committee  shall
determine, consistent with this Plan.

            Section 6.3 No Right to Continued  Employment.  Nothing in this Plan
or in any Restricted  Stock  Agreement  hereunder shall confer on any Restricted
Stockholder any right to continue in the employ of the Company or any Subsidiary
or shall interfere with or restrict in any way the rights of the Company and any
Subsidiary,  which are hereby  expressly  reserved,  to discharge any Restricted
Stockholder at any time for any reason whatsoever, with or without good cause.

            Section 6.4 Rights as  Stockholders.  Upon delivery of any shares of
Restricted  Stock that are certificated to the escrow holder pursuant to Section
6.7, and upon issuance thereof,  if uncertificated,  the Restricted  Stockholder
shall have,  unless  otherwise  provided by the  Committee,  all the rights of a
stockholder  with respect to said  shares,  subject to the  restrictions  in the
Restricted  Stock  Agreement,  including  the right to receive all dividends and
other distributions paid or made with respect to the shares; provided,  however,
that in the discretion of the Committee,  any  extraordinary  distribution  with
respect to the Common  Stock shall be subject to the  restrictions  set forth in
Section 6.5.

            Section 6.5  Restrictions.  All shares of  Restricted  Stock  issued
under this Plan  (including any shares  received by holders thereof with respect
to shares of Restricted  Stock as a result of stock  dividends,  stock splits or
any other  form of  recapitalization)  shall,  in the  terms of each  individual
Restricted  Stock  Agreement,  be subject to such  restrictions as the Committee
shall provide, which restrictions may include, without limitation,  restrictions
concerning voting rights and  transferability and restrictions based on duration
of employment with the Company or a Subsidiary, Company performance,  individual
performance,  or a change of control;  provided,  however,  that by a resolution
adopted after the Restricted  Stock is issued,  the Committee may, on such terms
and conditions as it may determine to be  appropriate,  remove any or all of the
restrictions imposed by the terms of the Restricted Stock Agreement.  Restricted
Stock may not be sold or encumbered  until all  restrictions  are  terminated or
expire.  Unless provided otherwise by the Committee,  if no consideration (other
than  services)  was  paid  by  the  Restricted  Stockholder  upon  issuance,  a
Restricted  Stockholder's  rights in unvested  Restricted Stock shall lapse upon
Termination  of  Employment  for any reason at any time or prior to any date the
Committee may establish.


                                       10
<PAGE>

            Section 6.6 Repurchase of Restricted Stock. If consideration  (other
than services) was paid for Restricted Stock, the Committee shall provide in the
terms of each individual  Restricted Stock Agreement that the Company shall have
the right to repurchase  from the Restricted  Stockholder  the Restricted  Stock
then subject to restrictions  under the Restricted  Stock Agreement  immediately
upon a  Termination  of  Employment at a cash price per share equal to the price
paid by the Restricted Stockholder for such Restricted Stock or such other price
as may be specified in the Restricted Stock Agreement;  provided,  however, that
provision  may be made in the  Restricted  Stock  Agreement  in the  Committee's
discretion  that no such  right of  repurchase  shall  exist  in the  event of a
Termination of Employment without Cause, or following a Change in Control of the
Company  or  because  of  the  Restricted  Stockholder's  retirement,  death  or
disability, or otherwise.

            Section  6.7  Escrow.  The  Secretary  of the  Company or such other
escrow holder as the Committee may appoint shall retain physical custody of each
certificate  representing Restricted Stock until all of the restrictions imposed
under the Restricted  Stock  Agreement  with respect to the shares  evidenced by
such  certificate  expire or shall have been  removed  (or the  Secretary  shall
establish book entry procedures sufficient to prevent unauthorized  transfers of
the Restricted Stock).

            Section 6.8 Legend.  In order to enforce  the  restrictions  imposed
upon shares of Restricted Stock hereunder, the Committee shall cause a legend or
legends to be placed on certificates  representing  all  certificated  shares of
Restricted  Stock that are still subject to restrictions  under Restricted Stock
Agreements, or stop transfer instructions with respect to book entry procedures,
which legend,  legends or instructions  shall make appropriate  reference to the
conditions imposed hereby.

                                  ARTICLE VI-A

                    AWARD OF SECTION 162(m) RESTRICTED STOCK

            Section  6.1A  Award of Section  162(m)  Restricted  Stock.  (a) The
Committee shall from time to time, in its absolute discretion:

                        (i)  Select  from  among  the key  Employees  (including
      Employees who have previously received other awards under this Plan or any
      other  stock  option plan of the  Company)  such of them as in its opinion
      should be awarded Section 162(m) Restricted Stock; and

                        (ii)  Determine  the purchase  price,  if any, and other
      terms and conditions  applicable to such Section 162(m)  Restricted Stock,
      consistent with this Plan.

                  (b) In all cases, legal consideration meeting the requirements
of Delaware law shall be required for each issuance of Section 162(m) Restricted
Stock.

                  (c) Upon the selection of a key Employee to be awarded Section
162(m)  Restricted  Stock,  the  Committee  shall  instruct the Secretary of the
Company to issue  such  Section  162(m)  Restricted  Stock and may  impose  such
conditions on the issuance of such Section 162(m)  Restricted  Stock as it deems
appropriate.

            Section 6.2A Section  162(m)  Restricted  Agreement.  Section 162(m)
Restricted  Stock shall be issued  only  pursuant  to a written  Section  162(m)
Restricted Stock Agreement, which shall be executed by the selected key Employee
and an authorized  officer of the Company and which shall contain such terms and
conditions as the Committee shall determine, consistent with this Plan.

            Section 6.3A No Right to Continued Employment.  Nothing in this Plan
or in any Section 162(m)  Restricted  Stock Agreement  hereunder shall confer on
any Section 162(m) Restricted Stockholder any right to continue in the employ of
the Company or any Subsidiary or shall interfere with or restrict in any way the
rights of the Company and any Subsidiary,  which are hereby expressly  reserved,
to  discharge  any Section  162(m)  Restricted  Stockholder  at any time for any
reason whatsoever, with or without good cause.

            Section 6.4A Rights as Stockholders.  Upon delivery of any shares of
Section  162(m)  Restricted  Stock that are  certificated  to the escrow  holder
pursuant to Section 6.7A,  and upon issuance  thereof,  if  uncertificated,  the
Section 162(m) Restricted  Stockholder shall have, unless otherwise  provided by
the  Committee,  all the rights of a  stockholder  with


                                       11
<PAGE>

respect  to said  shares,  subject to the  restrictions  in the  Section  162(m)
Restricted  Stock  Agreement,  including  the right to receive all dividends and
other distributions paid or made with respect to the shares; provided,  however,
that in the discretion of the Committee,  any  extraordinary  distribution  with
respect to the Common  Stock shall be subject to the  restrictions  set forth in
Section 6.5A.

            Section 6.5A  Restrictions.  All shares of Section 162(m) Restricted
Stock issued under this Plan  (including any shares  received by holders thereof
with respect to shares of Section 162(m)  Restricted  Stock as a result of stock
dividends,  stock splits or any other form of  recapitalization)  shall,  in the
terms of each individual  Section 162(m) Restricted Stock Agreement,  be subject
to such  restrictions as the Committee  shall provide,  which  restrictions  may
include,   without  limitation,   restrictions   concerning  voting  rights  and
transferability.  The Section 162(m)  Restricted  Stock  Agreement shall provide
that  a  Section  162(m)  Restricted  Stockholder's  rights  in  Section  162(m)
Restricted  Stock  shall  not  vest  unless  one or more  specified  Performance
Criteria  established by the Committee shall have been achieved.  Section 162(m)
Restricted  Stock  may not be sold or  encumbered  until  all  restrictions  are
terminated  or  expire.  Unless  provided  otherwise  by  the  Committee,  if no
consideration  (other than services) was paid by the Section  162(m)  Restricted
Stockholder upon issuance,  a Section 162(m) Restricted  Stockholder's rights in
unvested  Section  162(m)  Restricted  Stock  shall  lapse upon  Termination  of
Employment  for any  reason at any time or prior to any date the  Committee  may
establish.

            Section 6.6A  Repurchase  of Section  162(m)  Restricted  Stock.  If
consideration  (other  than  services)  was paid for Section  162(m)  Restricted
Stock,  the  Committee  shall  provide in the terms of each  individual  Section
162(m)  Restricted  Stock  Agreement  that the  Company  shall have the right to
repurchase  from the Section 162(m)  Restricted  Stockholder  the Section 162(m)
Restricted  Stock  then  subject  to  restrictions   under  the  Section  162(m)
Restricted  Stock  Agreement  immediately  upon a Termination of Employment at a
cash price per share  equal to the price paid by the Section  162(m)  Restricted
Stockholder for such Section 162(m)  Restricted Stock or such other price as may
be  specified  in the  Section  162(m)  Restricted  Stock  Agreement;  provided,
however,  that  provision  may be made in the Section  162(m)  Restricted  Stock
Agreement in the Committee's  discretion that no such right of repurchase  shall
exist in the event of a Termination of Employment  without Cause, or following a
Change in Control of the  Company or because of the  Section  162(m)  Restricted
Stockholder's retirement, death or disability, or otherwise.

            Section  6.7A  Escrow.  The  Secretary  of the Company or such other
escrow holder as the Committee may appoint shall retain physical custody of each
certificate  representing  Section  162(m)  Restricted  Stock  until  all of the
restrictions  imposed under the Section 162(m)  Restricted  Stock Agreement with
respect to the shares  evidenced by such  certificate  expire or shall have been
removed (or the Secretary  shall establish book entry  procedures  sufficient to
prevent unauthorized transfers of the Section 162(m) Restricted Stock).

            Section 6.8A Legend.  In order to enforce the  restrictions  imposed
upon shares of Section 162(m)  Restricted Stock  hereunder,  the Committee shall
cause a  legend  or  legends  to be  placed  on  certificates  representing  all
certificated shares of Section 162(m) Restricted Stock that are still subject to
restrictions under Section 162(m) Restricted Stock Agreements,  or stop transfer
instructions  with respect to book entry  procedures,  which legend,  legends or
instructions shall make appropriate reference to the conditions imposed hereby.

                                   ARTICLE VII

               PERFORMANCE AWARDS, DEFERRED STOCK, STOCK PAYMENTS

            Section 7.1  Performance  Award.  Any key  Employee  selected by the
Committee  may be  granted  one or more  Performance  Awards.  The value of such
Performance Awards may be linked to the market value, book value, net profits or
other  measure  of the  value of  Common  Stock or  other  specific  performance
criteria  determined  to be  appropriate  by the  Committee,  in each  case on a
specified  date or  dates  or over  any  period  or  periods  determined  by the
Committee,  or may be based  upon the  appreciation  in the market  value,  book
value, net profits or other measure of the value of a specified number of shares
of Common Stock over a fixed period or periods  determined by the Committee.  In
making such  determinations,  the  Committee  shall  consider  (among such other
factors  as it deems  relevant  in  light of the  specific  type of  award)  the
contributions,  responsibilities  and other  compensation  of the particular key
Employee.

            Section  7.2  Stock  Payments.  Any  key  Employee  selected  by the
Committee may receive Stock Payments in the manner  determined from time to time
by the  Committee.  In particular,  any person  designated by the Committee as a
participant  in the  Company's Key  Executive  Incentive  Bonus Plan (the "Bonus
Plan") or under the Company  Service Award Program (the "Service Award Program")
in  accordance  with  the  terms  thereof,  and  whose  bonus or  service  award
thereunder is comprised wholly or partially in shares of Common Stock,  shall be
deemed to have been


                                       12
<PAGE>

selected to  participate  in this Plan,  and shall  receive  such  Common  Stock
denominated bonus as a Stock Payment in accordance with and under the provisions
of this Section 7.2. The number of shares shall be  determined  by the Committee
and may be based upon the Fair Market  Value,  book value,  net profits or other
measure  of the value of Common  Stock or other  specific  performance  criteria
determined  appropriate  by the  Committee,  determined  on the date such  Stock
Payment is made or on any date thereafter.

            Section  7.3  Deferred  Stock.  Any  key  Employee  selected  by the
Committee  may be granted an award of  Deferred  Stock in the manner  determined
from time to time by the Committee. The number of shares of Deferred Stock shall
be  determined  by the  Committee  and may be linked to the market  value,  book
value,  net  profits  or other  measure  of the value of  Common  Stock or other
specific performance criteria, in each case on a specified date or dates or over
any period or periods  determined by the  Committee.  Common Stock  underlying a
Deferred  Stock  award will not be issued  until the  Deferred  Stock  award has
vested,  pursuant  to a vesting  schedule  or  performance  criteria  set by the
Committee.  Unless  otherwise  provided by the Committee,  a Grantee of Deferred
Stock  shall  have no rights  as a  Company  stockholder  with  respect  to such
Deferred  Stock  until such time as the award has  vested  and the Common  Stock
underlying the award has been issued.

            Section 7.4 Performance  Award Agreement,  Deferred Stock Agreement,
Stock Payment  Agreement.  Each Performance  Award,  Deferred Stock Award and/or
Stock Payment shall be evidenced by a written agreement, which shall be executed
by the Grantee and an authorized  Officer of the Company and which shall contain
such terms and conditions as the Committee shall determine, consistent with this
Plan.

            Section  7.5  Term.  The  term  of a  Performance  Award  Agreement,
Deferred  Stock Award and/or Stock  Payment shall be set by the Committee in its
discretion.

            Section 7.6 Exercise Upon  Termination of Employment.  A Performance
Award,  Deferred Stock Award and/or Stock Payment is exercisable or payable only
while the Grantee is an Employee; provided that the Committee may determine that
the  Performance  Award,  Deferred  Stock  Award  and/or  Stock  Payment  may be
exercised or paid  subsequent to  Termination of Employment  without  cause,  or
following a Change in Control of the Company,  or because of the Grantee's death
or disability.

            Section 7.7 Payment.  Payment of the amount determined under Section
7.1  above  shall be in cash,  in  Common  Stock or a  combination  of both,  as
determined by the Committee. To the extent any payment under this Article VII is
effected  in Common  Stock,  it shall be made  subject  to  satisfaction  of all
provisions of Sections 5.3 and 5.5.

            Section 7.8 No Right to Continued  Employment.  Nothing in this Plan
or in any agreement  hereunder shall confer on any Grantee any right to continue
in the  employ of the  Company  or any  Subsidiary  or shall  interfere  with or
restrict  in any way the rights of the  Company  and any  Subsidiary,  which are
hereby expressly  reserved,  to discharge any Grantee at any time for any reason
whatsoever, with or without good cause.

                                  ARTICLE VII-A

SECTION 162(m) PERFORMANCE AWARDS, SECTION 162(m) DEFERRED STOCK, SECTION 162(m)
                                 STOCK PAYMENTS

            Section 7.1A Section  162(m)  Performance  Awards.  Any key Employee
selected by the Committee may be granted one or more Section 162(m)  Performance
Awards.  The right to a Section 162(m)  Performance  Award shall not vest unless
one or more specified  Performance  Criteria  established by the Committee shall
have been achieved.

            Section  7.2A  Section  162(m)  Stock  Payments.  Any  key  Employee
selected  by the  Committee  may be granted  one or more  Section  162(m)  Stock
Payments.  The right to a Section 162(m) Stock Payment shall not vest unless one
or more specified  Performance  Criteria established by the Committee shall have
been achieved.

            Section  7.3A  Section  162(m)  Deferred  Stock.  Any  key  Employee
selected by the  Committee  may be granted an award of Section  162(m)  Deferred
Stock.  An award of Section  162(m)  Deferred Stock shall not vest unless one or
more specified Performance Criteria established by the Committee shall have been
achieved. Common Stock underlying a Section 162(m) Deferred Stock award will not
be issued  until the Section  162(m)  Deferred  Stock  award has vested.  Unless
otherwise provided by the Committee,  a Grantee of Section 162(m) Deferred Stock
shall  have no rights as a


                                       13
<PAGE>

Company  stockholder  with respect to such Section  162(m)  Deferred Stock until
such time as the award has vested and the Common Stock  underlying the award has
been issued.

            Section 7.4A Section 162(m)  Performance  Award  Agreement,  Section
162(m) Deferred Stock Agreement,  Section 162(m) Stock Payment  Agreement.  Each
Section 162(m)  Performance  Award,  Section 162(m)  Deferred Stock Award and/or
Section  162(m) Stock Payment shall be evidenced by a written  agreement,  which
shall be executed by the  Grantee and an  authorized  Officer of the Company and
which shall contain such terms and conditions as the Committee shall  determine,
consistent with this Plan.

            Section 7.5A Term.  The term of a Section 162(m)  Performance  Award
Agreement,  Section  162(m)  Deferred  Stock Award and/or  Section  162(m) Stock
Payment shall be set by the Committee in its discretion.

            Section 7.6A  Exercise Upon  Termination  of  Employment.  A Section
162(m)  Performance  Award,  Section 162(m)  Deferred Stock Award and/or Section
162(m)  Stock  Payment is  exercisable  or payable  only while the Grantee is an
Employee;  provided that the Committee  may  determine  that the Section  162(m)
Performance  Award,  Section  162(m)  Deferred Stock Award and/or Section 162(m)
Stock  Payment  may be  exercised  or paid  following a Change in Control of the
Company, or because of the Grantee's death or disability.

            Section 7.7A Payment. Payment of the amount determined under Section
7.1A  above  shall be in cash,  in Common  Stock or a  combination  of both,  as
determined by the Committee.  To the extent any payment under this Article VII-A
is effected in Common  Stock,  it shall be made subject to  satisfaction  of all
provisions of Sections 5.3 and 5.5.

            Section 7.8A No Right to Continued Employment.  Nothing in this Plan
or in any agreement  hereunder shall confer on any Grantee any right to continue
in the  employ of the  Company  or any  Subsidiary  or shall  interfere  with or
restrict  in any way the rights of the  Company  and any  Subsidiary,  which are
hereby expressly  reserved,  to discharge any Grantee at any time for any reason
whatsoever, with or without good cause.

                                  ARTICLE VIII

                                 ADMINISTRATION

            Section 8.1 Duties and Powers of Committee.  It shall be the duty of
the  Committee to conduct the general  administration  of the Plan in accordance
with its  provisions.  The Committee  shall have the power to interpret the Plan
and the  agreements  pursuant  to which  Options,  awards of  Restricted  Stock,
Deferred  Stock,  Section 162(m)  Restricted  Stock or Section  162(m)  Deferred
Stock, Performance Awards, Stock Payments, Section 162(m) Performance Awards, or
Section  162(m)  Stock  Payments are granted and awarded and to adopt such rules
for  the  administration,  interpretation  and  application  of the  Plan as are
consistent herewith and to interpret,  amend or revoke any such rules.  Options,
awards of Section  162(m)  Restricted  Stock,  Section  162(m)  Deferred  Stock,
Section 162(m) Performance Awards and Section 162(m) Stock Payments are intended
to qualify as  performance-based  compensation under Section 162(m) of the Code,
and the Committee shall grant or award such Options, rights or other awards in a
manner consistent with the rules governing performance-based  compensation under
Section  162(m) of the  Code.  Any such  interpretations  and rules in regard to
Incentive  Stock Options shall be consistent  with the basic purpose of the Plan
to grant  "incentive  stock  options"  within the  meaning of Section 422 of the
Code.  In its  absolute  discretion,  the Board may at any time and from time to
time  exercise  any and all rights and duties of the  Committee  under this Plan
except with respect to matters  which under Rule 16b-3 or Section  162(m) of the
Code,  or any  regulations  or  rules  issued  thereunder,  are  required  to be
determined in the sole discretion of the Committee.

            Section 8.2 Majority Rule. The Committee  shall act by a majority of
its  members  in  attendance  at a meeting  at which a quorum is present or by a
memorandum or other written instrument signed by all members of the Committee.

            Section  8.3  Compensation;   Professional  Assistance;  Good  Faith
Action.  Members of the  Committee  shall  receive such  compensation  for their
services  as  members  as may be  determined  by the  Board.  All  expenses  and
liabilities  incurred  by  members  of the  Committee  in  connection  with  the
administration  of the Plan shall be borne by the  Company.  The  Committee  may
employ  attorneys,  consultants,   accountants,  appraisers,  brokers  or  other
persons.  The  Committee,  the Company and its Officers and  Directors  shall be
entitled to rely upon the advice,  opinions or  valuations  of any such persons.
All  actions  taken  and  all  interpretations  and  determinations  made by the
Committee in good faith shall be


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<PAGE>

final and binding upon all Optionees, Grantees, Restricted Stockholders, Section
162(m) Restricted Stockholders, the Company and all other interested persons. No
member  of  the   Committee   shall  be   personally   liable  for  any  action,
determination,  or interpretation made in good faith with respect to the Plan or
the Options or other  awards,  and all members of the  Committee  shall be fully
protected  by the  Company  in  respect  to any such  action,  determination  or
interpretation.

                                   ARTICLE IX

                                OTHER PROVISIONS

            Section  9.1  Options  and Other  Rights  Are Not  Transferable.  No
Options,  Performance Awards, Stock Payments, Section 162(m) Performance Awards,
Section 162(m) Stock  Payments,  Restricted  Stock,  Section  162(m)  Restricted
Stock, Deferred Stock Awards or Section 162(m) Deferred Stock Awards or interest
under this Plan or part  thereof  shall be liable for the  debts,  contracts  or
engagements of any Optionee, Grantee, Restricted Stockholder or their respective
successors  in  interest  or  shall  be  subject  to  disposition  by  transfer,
alienation,  anticipation,  pledge,  encumbrance,  assignment or any other means
whether such  disposition  be voluntary or involuntary or by operation of law by
judgment,  levy,  attachment,  garnishment  or  any  other  legal  or  equitable
proceedings (including bankruptcy),  and any attempted disposition thereof shall
be null and void and of no  effect;  provided,  however,  that  nothing  in this
Section 9.1 shall prevent  transfers by will, by the applicable  laws of descent
and  distribution  or by the  approval of the  Committee as described in Section
5.1(a) of the Plan.

            Section  9.2  Amendment,  Suspension  or  Termination  of the  Plan;
Modification of Options.  The Board may at any time terminate the Plan. With the
express written consent of an individual participant, the Board or the Committee
may cancel or reduce or otherwise alter outstanding Options or other awards. The
Board or the Committee may, at any time, or from time to time,  amend or suspend
and, if suspended,  reinstate,  the Plan in whole or in part;  provided that any
such amendment shall be contingent on obtaining the approval of the shareholders
of the Company if the  Committee  determines  that such approval is necessary to
comply with any  requirement  of law or any rule of any stock  exchange on which
the Company's  equity  securities  are traded,  or in order for Options or other
awards to  qualify  for an  exception  from  Section  162(m) of the Code (to the
extent  they would so qualify  but for the  absence  of  shareholder  approval).
Neither the amendment, suspension nor termination of the Plan shall, without the
consent of the holder of an Option,  Restricted Stock, Section 162(m) Restricted
Stock or award, alter or impair any rights or obligations under any such Option,
Restricted  Stock,   Section  162(m)  Restricted  Stock  or  award.  No  Option,
Restricted Stock, Section 162(m) Restricted Stock or award may be granted during
any period of suspension nor after  termination of the Plan, and in no event may
any Option be granted under this Plan after the expiration of ten years from May
23,  2007,  the  date  the  Plan,  as  amended,  is  approved  by the  Company's
stockholders  under Section 9.3. An Option,  Restricted  Stock,  Section  162(m)
Restricted  Stock or award shall be subject in all events to the condition that,
if at any time the Board shall determine,  in its discretion,  that the listing,
registration  or  qualification  of any of the  Company's  securities  upon  any
securities  exchange or under any law,  regulation or other  requirement  of any
governmental  authority  is  necessary  or  desirable,  or that any  consent  or
approval from any  governmental  authority is necessary or  desirable,  then the
Board may modify  the terms of any  Option,  Restricted  Stock,  Section  162(m)
Restricted  Stock or other award granted under the Plan,  without the consent of
the Optionee,  Grantee,  Restricted  Stockholder  or Section  162(m)  Restricted
Stockholder in any manner which the Board deems  necessary or desirable in order
to  improve  the  Company's  ability  to  obtain  such  listing,   registration,
qualification, consent or approval.

            Section 9.3 Approval of Plan by Stockholders.  The Plan shall become
effective as of the date of Board approval (the  "Effective  Date"),  subject to
the approval of the Company's  stockholders within 12 months after the Effective
Date; provided,  however,  that notwithstanding  anything herein or in any award
agreement to the contrary, all Section 162(m) Performance Awards, Section 162(m)
Stock Payments,  Section 162(m)  Restricted  Stock,  and Section 162(m) Deferred
Stock awarded prior to such stockholder  approval shall be void if such approval
has not been obtained at the end of said 12-month period.

            Section 9.4 Effect of Plan Upon Other Option and Compensation Plans.
The adoption of this Plan shall not affect any other  compensation  or incentive
plans in effect for the Company or any Subsidiary. Nothing in this Plan shall be
construed to limit the right of the Company or any  Subsidiary  (a) to establish
any other forms of  incentives or  compensation  for employees of the Company or
any Subsidiary or (b) to grant or assume options  otherwise than under this Plan
in connection with any proper corporate  purpose,  including,  but not by way of
limitation,   the  grant  or  assumption  of  options  in  connection  with  the
acquisition  by purchase,  lease,  merger,  consolidation  or otherwise,  of the
business, stock or assets of any corporation, firm or association.


                                       15
<PAGE>

            Section 9.5 No  Obligation  to  Register.  The Company  shall not be
deemed, by reason of the granting of any Option or any other award hereunder, to
have any  obligation  to  register  the shares of Common  Stock  subject to such
Option  or  award  under  the  Securities  Act  or to  maintain  in  effect  any
registration  of such shares which may be made at any time under the  Securities
Act.

            Section  9.6 Tax  Withholding.  The  Company  shall be  entitled  to
require  payment in cash or deduction  from other  compensation  payable to each
Optionee,   Grantee,   Restricted   Stockholder  or  Section  162(m)  Restricted
Stockholder  of any sums  required  by  federal,  state  or local  tax law to be
withheld  with  respect to the  issuance,  vesting or  exercise  of any  Option,
Restricted Stock,  Deferred Stock,  Performance  Award,  Stock Payment,  Section
162(m)  Restricted  Stock,   Section  162(m)  Deferred  Stock,   Section  162(m)
Performance Award, or Section 162(m) Stock Payment.

            Section 9.7 Loans. The Committee may permit, in its discretion,  and
subject to the Company's  approval,  the extension by the Company of one or more
loans to key Employees in connection  with the exercise or receipt of an Option,
Performance Award,  Stock Payment,  Section 162(m) Performance Award, or Section
162(m) Stock  Payment  granted  under this Plan,  or the issuance of  Restricted
Stock,  Deferred  Stock,  Section  162(m)  Restricted  Stock,  or Section 162(m)
Deferred  Stock  awarded under this Plan.  The terms and  conditions of any such
loan shall be set by the Committee, subject to the Company's approval.

            Section  9.8  Limitations  Applicable  to  Section  16  Persons  and
Performance-Based  Compensation.  Notwithstanding  any other  provision  of this
Plan, any Option,  Performance Award, Stock Payment,  Section 162(m) Performance
Award, or Section 162(m) Stock Payment granted,  or Restricted  Stock,  Deferred
Stock,  Section  162(m)  Restricted  Stock,  or Section  162(m)  Deferred  Stock
awarded,  to a key  Employee  who is then  subject to Section 16 of the Exchange
Act, shall be subject to any additional  limitations set forth in any applicable
exemptive  rule under Section 16 of the Exchange Act (including any amendment to
Rule 16b-3 of the Exchange Act) that are  requirements  for the  application  of
such  exemptive  rule,  and this Plan  shall be  deemed  amended  to the  extent
necessary to conform to such limitations. Furthermore, notwithstanding any other
provision  of this  Plan,  any  Option,  right or award  intended  to qualify as
performance-based  compensation as described in Section 162(m)(4)(C) of the Code
shall be subject to any  additional  limitations  set forth in Section 162(m) of
the  Code  (including  any  amendment  to  Section  162(m)  of the  Code) or any
regulations or rulings issued thereunder that are requirements for qualification
as  performance-based  compensation as described in Section  162(m)(4)(C) of the
Code, and this Plan shall be deemed  amended to the extent  necessary to conform
to such requirements.

            Section  9.9  Compliance  with Laws.  This Plan,  the  granting  and
vesting of Options,  Restricted Stock awards, Deferred Stock awards, Performance
Awards, Stock Payments,  Section 162(m) Restricted Stock awards,  Section 162(m)
Deferred Stock awards,  Section  162(m)  Performance  Awards,  or Section 162(m)
Stock Payments under this Plan and the issuance and delivery of shares of Common
Stock and the  payment of money  under this Plan or under  Options,  Performance
Awards,  Stock Payments,  Section 162(m)  Performance  Awards, or Section 162(m)
Stock  Payments  granted or Restricted  Stock,  Deferred  Stock,  Section 162(m)
Restricted Stock, or Section 162(m) Deferred Stock awarded hereunder are subject
to compliance with all applicable  federal and state laws, rules and regulations
(including  but not  limited to state and  federal  securities  laws and federal
requirements)  and to such approvals by any listing,  regulatory or governmental
authority  as may, in the opinion of counsel for the  Company,  be  necessary or
advisable in connection  therewith.  Any  securities  delivered  under this Plan
shall be subject to such restrictions,  and the person acquiring such securities
shall, if requested by the Company,  provide such assurances and representations
to the  Company  as the  Company  may deem  necessary  or  desirable  to  assure
compliance with all applicable  legal  requirements.  To the extent permitted by
applicable  law, the Plan,  Options,  Restricted  Stock awards,  Deferred  Stock
awards,  Performance  Awards,  Stock Payments,  Section 162(m)  Restricted Stock
awards, Section 162(m) Deferred Stock awards, Section 162(m) Performance Awards,
or Section 162(m) Stock Payments  granted or awarded  hereunder  shall be deemed
amended to the extent necessary to conform to such laws, rules and regulations.

            Section  9.10  Noncompetition   Provisions.   The  Committee,  as  a
condition  of issuing  any award under the Plan,  may  include in any  agreement
evidencing such award such noncompetition and/or  nonsolicitation  provisions as
it may deem appropriate,  in its sole discretion,  and any award containing such
provisions  shall  not  be  effective  until  and  unless  the  grantee  thereof
acknowledges by written consent his or her obligation to be bound thereby.

            Section 9.11 Titles. Titles are provided herein for convenience only
and are not to serve as a basis for interpretation or construction of the Plan.


                                       16
<PAGE>

            Section 9.12  Governing Law. The laws of the State of Delaware shall
govern the interpretation, validity, administration, enforcement and performance
of the terms of this Agreement regardless of the law that might be applied under
principles of conflicts of laws.


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