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                                                                   EXHIBIT 10.39


                    INTELECT COMMUNICATIONS SYSTEMS LIMITED
                              STOCK INCENTIVE PLAN


1.       PURPOSE.

         The purposes of the Stock Incentive Plan (the "Plan") are to enable
Intellect Communications Systems Limited (the "Company") and its Subsidiaries,
if any, to attract and retain directors and key employees and to provide them
with additional incentive to advance the interests of the Company.  For the
purposes of the Plan, the term "Subsidiary" means any corporation or other
entity in which the Company has, directly or indirectly, an equity interest
representing 50% or more of the capital stock thereof or equity interests
therein.

2.       ADMINISTRATION.

                 (a)      The Plan shall be administered by a committee (the
         "Committee") appointed by the Board of Directors of the Company (the
         "Board") and consisting of not less than two members of the Board,
         each of whom at the time of appointment to the Committee and at all
         times during service as a member of the Committee shall be a
         "disinterested person" as then defined under Rule 16b-3 under the
         Securities Exchange Act of 1934, as amended (the "1934 Act"), or any
         successor rule.

                 (b)      The Committee shall interpret the Plan and prescribe
         such rules, regulations and procedures in connection with the Plan as
         it shall deem to be necessary and advisable for the administration of
         the Plan.

3.       ELIGIBILITY.

                 (a)      Officers and other key employees of the Company or
         any Subsidiary shall be eligible to be granted stock options and to
         receive restricted shares, restricted share units, performance units
         or bonus share awards as described herein.

                 (b)      Non-employee directors shall be eligible to receive
         under the Plan only non-qualified options (i.e., options that do not
         qualify under Section 422 or 423 of the Internal Revenue Code of 1986
         (the "Code") ) in accordance with the provisions of Section 5(b)
         hereof.

4.       SHARES AVAILABLE.

         The aggregate number of shares of the Company's Common Stock, $.01 par
value ("Common Stock"), which may be issued and as to which grants or awards of
stock options, restricted shares, restricted share units, performance units or
bonus shares may be made under the Plan is 3,000,000 shares (of which no more
than 1,000,000 shares shall be available for the grant of restricted shares or
restricted share units), subject to adjustment and substitution as set
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forth in Section 8.  If any stock option granted under the Plan is cancelled by
mutual consent or terminates or expires for any reason without having been
exercised in full, the number of shares subject thereto shall again be
available for purposes of the Plan.  If Common Shares or the right to receive
shares of Common Shares are forfeited to the Company pursuant to the
restrictions applicable to restricted shares or restricted share units awarded
under the Plan, the shares so forfeited or covered by such right shall not
again be available for the purposes of the Plan.  To the extent any award of
performance units is not earned or is paid in cash rather than shares, the
number of shares covered thereby shall again be available for purposes of the
Plan. The shares which may be issued under the Plan may be either authorized
but unissued shares or treasury shares or partly each, as shall be determined
from time to time by the Board.

5.       GRANTS AND AWARDS.

                 (a)      With respect to officers and other key employees, the
         Committee shall have authority, in its discretion, to grant incentive
         stock options pursuant to Section 422 of the Code and non-qualified
         stock options, and to award restricted shares, restricted share units,
         performance units and bonus shares.

                 Notwithstanding any other provision contained in the Plan or
         in any stock option agreement, the aggregate fair market value,
         determined on the date of grant, of the shares with respect to which
         incentive stock options are exercisable for the first time by an
         employee during any calendar year under all plans of the corporation
         employing such employee, any parent or subsidiary corporation of such
         corporation and any predecessor corporation of any such corporation
         shall not exceed $100,000; provided, however, that all or any portion
         of a stock option which cannot be exercised because of such limitation
         shall be treated as a nonqualified option.

                 The maximum number of shares covered by all grants or awards
         in any fiscal year of the Company to any participant shall not exceed
         350,000 (subject to adjustment and substitution as set forth in
         Section 8).

                 (b)      On the date on which the Board appoints, or the
         shareholders of the Company elect, a person who is not an employee of
         the Company as a member of the Board for the first time, such director
         shall be awarded a non-qualified option under this Plan to purchase
         5,000 Common Shares.  Immediately after the completion of each annual
         meeting of the shareholders of the Company, each such director shall
         be awarded a non-qualified option to purchase 1,000 Common Shares.
         Such options shall have an exercise price per share equal to the fair
         market value of the shares of the Company on the date of such award.
         Except as otherwise specifically provided in this Section 5 (b), the
         terms of this Plan, including the vesting provisions of Section 6(e),
         shall apply to all options granted pursuant to this Section 5(b).
         This Section 5(b) shall not be amended more than once every six
         months, other than to comport with changes in the Code, the Employee
         Retirement Income Security Act, or the rules thereunder.





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                 (c)      If a grantee of a stock option, restricted share or
         performance unit engages in the operation or management of a business
         (whether as owner, partner, officer, director, employee or otherwise
         and whether during or after termination of employment) which is in
         competition with the Company or any of its Subsidiaries, the Committee
         may immediately terminate all outstanding stock options held by the
         grantee, declare forfeited all restricted shares or restricted share
         units held by the grantee as to which the restrictions have not yet
         lapsed and terminate all outstanding performance unit awards held by
         the grantee for which the applicable Performance Period has not been
         completed; provided, however, that this sentence shall not apply if
         the exercise period of a stock option following termination of
         employment has been extended as provided in Section 9(c), if the lapse
         of the restrictions applicable to restricted shares or restricted
         share units has been accelerated as provided in Section 9(d), or if a
         performance unit has been deemed to have been earned as provided in
         Section 9 (e).  Whether a grantee has engaged in the operation or
         management of a business which is in competition with the Company or
         any of its Subsidiaries shall be determined by the Committee in its
         discretion, and any such determination shall be final and binding.

6.       TERMS AND CONDITIONS OF STOCK OPTIONS.

         Stock options granted under the Plan shall be subject to the following
terms and conditions:

                 (a)      The purchase price at which each stock option may be
         exercised (the "option price") shall not be less than one hundred
         percent (100%) of the fair market value per share of the Common Shares
         covered by the stock option on the date of grant; provided, however,
         that in the case of an incentive stock option granted to an employee
         who, immediately prior to such grant, owns stock possessing more than
         ten percent (10%) of the total combined voting power of all classes of
         stock of the Company or a Subsidiary (a "Ten Percent Employee"), the
         option price shall not be less than one hundred ten percent (110%) of
         such fair market value on the date of grant.  For purposes of this
         Section 6(a), an individual (i) shall be considered as owning not only
         shares of stock owned individually but also all shares of stock that
         are at the time owned, directly or indirectly. by or for the spouse,
         ancestors, lineal descendants and brothers and sisters (whether by the
         whole or half blood) of such individual and (ii) shall be considered
         as owning proportionately any shares owned, directly or indirectly, by
         or for any company, partnership, estate or trust in which such
         individual is a shareholder, partner or beneficiary.

                 (b)      The option price for each non-qualified stock option
         shall be determined by the Committee but may not be less than 25%
         (twenty-five percent) of the fair market value of the Common Shares on
         the date the stock option is granted.

                 (c)      The option price for each stock option shall be paid
         in full upon exercise and shall be payable in cash in United States
         dollars (including check, bank draft or





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         money order), which may include cash forwarded through a broker or
         other agent-sponsored exercise or financing program; provided,
         however, that in lieu of such cash the person exercising the stock
         option may pay the option price in whole or in part by delivering to
         the Company Common Shares having a fair market value on the date of
         exercise of the stock option equal to the option price for the shares
         being purchased; except that (i) any portion of the option price
         representing a fraction of a share shall in any event be paid in cash
         and (ii) no Common Shares which have been held for less than six
         months may be delivered in payment of the option price of a stock
         option. Notwithstanding any procedure of a broker or other
         agent-sponsored exercise or financing program, if the option price is
         paid in cash, the exercise of the stock option shall not be deemed to
         occur and no Common Shares will be issued until the Company has
         received full payment in cash (including check, bank draft or money
         order) for the option price from the broker or other agent.  The date
         of exercise of a stock option shall be determined under procedures
         established by the Committee, and as of the date of exercise the
         person exercising the stock option shall be considered for all
         purposes to be the owner of the shares with respect to which the stock
         option has been exercised. Payment of the option price with shares
         shall not increase the number of Common Shares available for issuance
         under the Plan.

                 (d)      No stock option shall be exercisable during the first
         six months of its term, except that this limitation on exercise shall
         not apply if Section 9(b) becomes applicable. No stock option shall be
         exercisable after the expiration of ten years (five years in the case
         of an incentive stock option granted to a Ten Percent Employee) from
         the date of grant. To the extent it is exercisable, a stock option may
         be exercised at any time in whole or in part.

                 (e)      The Committee shall have the power to set the time or
         times within which each option shall be exercisable, and to accelerate
         the time or times of exercise.  Unless the stock option agreement
         otherwise provides, the option shall become exercisable on a
         cumulative basis as to 33-1/3% of the total number of shares covered
         thereby on each of the first, second, and third anniversary dates of
         the date of grant of the option.

                 (f)      No stock option shall be transferable by the grantee
         otherwise than by will, or if the grantee dies intestate, by the laws
         of descent and distribution of the state of domicile of the grantee at
         the time of death.  All stock options shall be exercisable during the
         lifetime of the grantee only by the grantee.

                 (g)      Unless the Committee, in its discretion, shall
         otherwise determine:

                          (i)     If the employment or directorship of a
                 grantee who is not disabled within the meaning of Section 422
                 (c) (6) of the Code (a "Disabled Grantee") is voluntarily
                 terminated with the consent of the Company or a Subsidiary or
                 a grantee retires under any retirement plan of the Company or
                 a Subsidiary, any then outstanding incentive stock option held
                 by such grantee shall be exercisable





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                 by the grantee (but only to the extent exercisable by the
                 grantee immediately prior to such termination) at any time
                 prior to the expiration date of such incentive stock option or
                 within three months after the date of such termination,
                 whichever is the shorter period;

                          (ii)    If the employment or directorship of a
                 grantee who is not a Disabled Grantee is voluntarily
                 terminated with the consent of the Company or a Subsidiary or
                 a grantee retires under any retirement plan of the Company or
                 a Subsidiary, any then outstanding non-qualified stock option
                 held by such grantee shall be exercisable by the grantee (but
                 only to the extent exercisable by the grantee immediately
                 prior to such termination) at any time prior to the expiration
                 date of such nonstatutory stock option or within one year
                 after the date of termination of employment, whichever is the
                 shorter period;

                          (iii)   If the employment or directorship of a
                 grantee who is a Disabled Grantee is voluntarily terminated
                 with the consent of the Company or a Subsidiary, any then
                 outstanding stock option held by such grantee shall be
                 exercisable by the grantee in full (whether or not so
                 exercisable by the grantee immediately prior to such
                 termination) by the grantee at any time prior to the
                 expiration date of such stock option or within one year after
                 the date of such termination, whichever is the shorter period;

                          (iv)    Following the death of a grantee during
                 employment or while serving as a director, any outstanding
                 stock option held by the grantee at the time of death shall be
                 exercisable in full (whether or not so exercisable by the
                 grantee immediately prior to the death of the grantee) by the
                 person entitled to do so under the will of the grantee, or, if
                 the grantee shall fail to make testamentary disposition of the
                 stock option or shall die intestate, by the legal
                 representative of the grantee at any time prior to the
                 expiration date of such stock option or within one year after
                 the date of death, whichever is the shorter period;

                          (v)     Following the death of a grantee after
                 termination of employment or his or her directorship during a
                 period within which a stock option is exercisable, any
                 outstanding stock option held by the grantee at the time of
                 death shall be exercisable by such person entitled to do so
                 under the will of the grantee or by such legal representative
                 (but only to the extent the stock option was exercisable by
                 the grantee immediately prior to the death of the grantee) at
                 any time prior to the expiration date of such stock option or
                 within one year after the date of death, whichever is the
                 shorter period; and

                          (vi)    Unless the exercise period of a stock option
                 following termination of employment or directorship has been
                 extended as provided in Section 9(c), if the employment or
                 directorship of a grantee terminates for any reason other than
                 voluntary termination with the consent of the Company or a
                 Subsidiary,





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                 retirement under any retirement plan of the Company or a
                 Subsidiary or death, all outstanding stock options held by the
                 grantee at the time of such termination shall automatically
                 terminate.

         Whether termination of employment or directorship is a voluntary
termination with the consent of the Company or a Subsidiary and whether a
grantee is a Disabled Grantee shall be determined in each case by the Committee
in its discretion and any such determination by the Committee shall be final
and binding.

                 (h)      All stock options shall be confirmed by an agreement,
         which shall be executed on behalf of the Company by an executive
         officer authorized by the Committee and by the grantee.

                 (i)      The term "fair market value" for all purposes of the
         Plan shall mean the market price of the Common Shares, determined by
         the Committee as follows:

                          (i)     If the Common Shares are traded on a stock
                 exchange, then the Fair Market Value shall be equal to the
                 closing price reported by the applicable
                 composite-transactions report for such date;

                          (ii)    If the Common Shares are traded in the Nasdaq
                 Stock Market and is classified as a national market issue,
                 then the Fair Market Value shall be equal to the
                 last-transaction price quoted by the Nasdaq National Market
                 system for such date;

                          (iii)   If the Common Shares are traded in the Nasdaq
                 Stock Market, but is not classified as a national market
                 issue, then the Fair Market Value shall be equal to the mean
                 between the last reported representative bid and asked prices
                 quoted by the Nasdaq system for such date; and

                          (iv)    If none of the foregoing provisions is
                 applicable, then the Fair Market Value shall be determined by
                 the Committee in good faith on such basis as it deems
                 appropriate.

                 (j)      The obligation of the Company to issue Common Shares
         under the Plan shall be subject to (i) the effectiveness of a
         registration statement under the Securities Act of 1933, as amended,
         with respect to such shares, if deemed necessary or appropriate by
         counsel for the Company, (ii) the condition that the shares shall have
         been listed (or authorized for listing upon official notice of
         issuance) upon each stock exchange, if any, on which the Common Shares
         may then be listed and (iii) all other applicable laws, regulations,
         rules and orders which may then be in effect.

         Subject to the foregoing provisions of this Section and the other
provisions of the Plan, any stock option granted under the Plan may be
exercised at such times and in such amounts and





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be subject to such restrictions and other terms and conditions, if any, as
shall be determined, in its discretion, by the Committee and set forth in the
agreement referred to in Section 6(j), or an amendment thereto.

7.       TERMS AND CONDITIONS OF RESTRICTED SHARE, RESTRICTED SHARE UNIT,
         PERFORMANCE UNIT AND BONUS SHARE AWARDS.

                 (a)      Restricted Shares and Units.  Restricted share or
         restricted share unit awards shall be evidenced by a written agreement
         in the form prescribed by the Committee in its discretion, which shall
         set forth the number of restricted Common Shares or restricted share
         units entitling the holder to receive Common Shares awarded, the
         restrictions imposed thereon (including, without limitation,
         restrictions on the right of the grantee to sell, assign, transfer or
         encumber such shares or units while such shares or units are subject
         to other restrictions imposed under this Section 7), the duration of
         such restrictions, events (which may, in the discretion of the
         Committee, include performance-based events) the occurrence of which
         would cause a forfeiture of restricted shares or restricted share
         units and such other terms and conditions as the Committee in its
         discretion deems appropriate.  Restricted share or restricted share
         unit awards shall be effective only upon execution of the applicable
         restricted share or restricted share unit agreement on behalf of the
         Company by the Chief Executive Officer (if other than the President),
         the President or any Vice President, and by the grantee.

                 Restricted shares or restricted share units may be issued for
         no consideration other than for services to be rendered or for such
         consideration as shall be determined at the time of award by the
         Committee.

                 Except as otherwise specified by the Committee at the time of
         award of restricted shares or restricted share units, restricted
         shares or restricted share units issued shall vest (i.e., become
         non-forfeitable,) as follows: 33 1/3% on the date of the first
         anniversary of the date of issuance of the restricted shares or
         restricted share units and an additional 33 1/3% on each anniversary
         date thereafter.  If prior to full vesting of the restricted shares or
         restricted share units the employment of the holder thereof is
         voluntarily terminated with the consent of the Company or Subsidiary
         or the holder retires under any retirement plan of the Company or a
         Subsidiary or dies during employment, the Committee may in its
         absolute discretion determine to vest all or any part of the
         restricted shares or restricted share units except as otherwise
         provided in Section 9(e).  If the employment of the holder of
         restricted shares or





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         restricted share units terminates for any reason other than voluntary
         termination with the consent of the Company or a Subsidiary,
         retirement under any retirement plan of the Company or a Subsidiary or
         death, all unvested restricted shares or restricted share units shall
         be forfeited.  Whether the termination of employment is a voluntary
         termination with the consent of the Company or a Subsidiary shall be
         determined by the Committee in its discretion, and a determination by
         the Committee on any matter with respect to restricted shares or
         restricted share units shall be final and binding on both the Company
         and the holder of restricted shares or restricted share units.

                 Following a restricted share award and prior to the lapse or
         termination of the applicable restrictions, the Committee shall
         deposit share certificates for such restricted shares in escrow (which
         may be an escrow in the custody of an officer of the Company). Upon
         the lapse or termination of the applicable restrictions (and not
         before such time), the grantee shall be issued or transferred share
         certificates for such restricted shares.  From the date a restricted
         share award is effective, the grantee shall be a shareholder with
         respect to all the shares represented by such certificates and shall
         have all the rights of a shareholder with respect to all such shares,
         including the right to vote such shares and to receive all dividends
         and other distributions paid with respect to such shares, subject only
         to the restrictions imposed by the Committee.  The grantee of
         restricted share units shall not have any rights as a shareholder
         until the delivery to the grantee of shares on lapse of the
         restrictions imposed.

                 (b)      Performance Units.  The Committee may award
         performance units which shall be earned by an awardee based on the
         level of performance over a specified period of time by the Company, a
         Subsidiary or Subsidiaries, any branch, department or other portion
         thereof or the awardee individually, as determined by the Committee.
         For the purposes of the grant of performance units, the following
         definitions shall apply:

                          (i)     "Performance unit" shall mean an award,
                 expressed in dollars or Common Shares, granted to an awardee
                 with respect to a Performance Period.  Awards expressed in
                 dollars may be established as fixed dollar amounts, as a
                 percentage of salary, as a percentage of a pool based on
                 earnings of the Company, a Subsidiary or Subsidiaries or any
                 branch, department or other portion thereof or in any other
                 manner determined by the Committee in its discretion, provided
                 that the amount thereof shall be capable of being determined
                 as a fixed dollar amount as of the close of the Performance
                 Period.

                          (ii)    "Performance Period" shall mean an accounting
                 period of the Company or a Subsidiary of not less than one
                 year, as determined by the Committee in its discretion.

                          (iii)   "Performance Target" shall mean that level of
                 performance established by the Committee which must be met in
                 order for the performance unit to be fully earned.  The
                 Performance Target may be expressed in terms of earnings per
                 share, return on assets, asset growth, ratio of capital to
                 assets or such other level or levels of accomplishment by the
                 Company, a Subsidiary or Subsidiaries, any branch, department
                 or other portion thereof or the awardee individually as may be
                 established or revised from time to time by the Committee.





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                          (iv)    "Minimum Target" shall mean a minimal level
                 of performance established by the Committee which must be met
                 before any part of the performance unit is earned.  The
                 Minimum Target may be the same as or less than the Performance
                 Target in the discretion of the Committee.

                 An awardee shall earn the performance unit in full by meeting
         the Performance Target for the Performance Period.  If the Minimum
         Target has not been attained at the end of the Performance Period, no
         part of the performance unit shall have been earned by the awardee.
         If the Minimum Target is attained but the Performance Target is not
         attained, the portion of the performance unit earned by the awardee
         shall be determined on the basis of a formula established by the
         Committee.

                 Payment of earned performance units shall be made to awardees
         following the close of the Performance Period as soon as practicable
         after the time the amount payable is determined by the Committee.
         Payment in respect of earned performance units, whether expressed in
         dollars or shares, may be made in cash, in Common Shares, or partly in
         cash and partly in Common Shares, as determined by the Committee at
         the time of payment.  For this purpose, performance units expressed in
         dollars shall be converted to shares, and performance units expressed
         in shares shall be converted to dollars, based on the fair market
         value of the Common Shares, as of the date the amount payable is
         determined by the Committee.

                 If prior to the close of the Performance Period the awardee of
         performance units is voluntarily terminated with the consent of the
         Company or a Subsidiary or the awardee retires under any retirement
         plan of the Company or a Subsidiary or the awardee dies during
         employment, the Committee may in its absolute discretion determine to
         pay all or any part of the performance unit based upon the extent to
         which the Committee determines the Performance Target or Minimum
         Target has been achieved as of the date of termination of employment,
         retirement or death, the period of time remaining until the close of
         the Performance Period and/or such other factors as the Committee may
         deem relevant.  If the Committee in its discretion determines that all
         or any part of the performance unit shall be paid, payment shall be
         made to the awardee or his or her estate as promptly as practicable
         following such determination and may be made in cash, in Common
         Shares, or partly in cash and partly in Common Shares, as determined
         by the Committee at the time of payment.  For this purpose,
         performance units expressed in dollars shall be converted to shares,
         and performance units expressed in shares shall be converted to
         dollars, based on the fair market value of the Common Shares as of the
         date the amount payable is determined by the Committee.

                 Except as otherwise provided in Section 9(e), if the
         employment of an awardee of performance units terminates prior to the
         close of a Performance Period for any reason other than voluntary
         termination with the consent of the Company or a Subsidiary or
         retirement under any retirement plan of the Company or a Subsidiary or
         death, the performance units of the awardee shall be deemed not to
         have been earned, and no





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         portion of such performance units may be paid.  Whether termination of
         employment is a voluntary termination with the consent of the Company
         or a Subsidiary shall be determined, in its discretion, by the
         Committee.  Any determination by the Committee on any matter with
         respect to performance units shall be final and binding on both the
         Company and the awardee.

                 Performance unit awards shall be evidenced by a written
         agreement in the form prescribed by the Committee which shall set
         forth the amount or manner of determining the amount of the
         performance unit, the Performance Period, the Performance Target and
         any Minimum Target and such other terms and conditions as the
         Committee in its discretion deems appropriate.  Performance unit
         awards shall be effective only upon execution of the applicable
         performance unit agreement on behalf of the Company by the Chief
         Executive Officer (if other than the President), the President or any
         Vice President, and by the awardee.

                 (c)      Bonus Shares.  The Committee shall have the authority
         in its discretion to award bonus Common Shares to eligible employees
         from time to time in recognition of the contribution of the awardee to
         the performance of the Company, a Subsidiary or Subsidiaries, or any
         branch, department or other portion thereof, in recognition of the
         awardee's individual performance or on the basis of such other factors
         as the Committee may deem relevant.

8.       ADJUSTMENT AND SUBSTITUTION OF SHARES.

         If a dividend or other distribution shall be declared upon the Common
Shares payable in Common Shares, the number of Common Shares then subject to
any outstanding stock options, restricted share units or performance unit
awards and the number of Common Shares which may be issued under the Plan but
are not then subject to outstanding stock options or awards shall be adjusted
by adding thereto the number of Common Shares which would have been
distributable thereon if such shares had been outstanding on the date fixed for
determining the shareholders entitled to receive such stock dividend or
distribution.  Common Shares so distributed with respect to any restricted
shares held in escrow shall be held by the Company in escrow and shall be
subject to the same restrictions as are applicable to the restricted shares on
which they were distributed.

         If the outstanding Common Shares shall be changed into or exchangeable
for a different number or kind of shares of stock or other securities of the
Company or another company, whether through reorganization, reclassification,
recapitalization, stock split-up, combination of shares, merger or
consolidation, then there shall be substituted for each share of the Common
Shares subject to any then outstanding stock option, restricted share unit or
performance unit award, and for each share of the Common Shares which may be
issued under the Plan but which is not then subject to any outstanding stock
option or award, the number and kind of shares of stock or other securities
into which each outstanding share of the Common Shares shall be so changed or
for which each such share shall be exchangeable.  Unless otherwise determined
by





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the Committee in its discretion, any such stock or securities, as well as any
cash or other property, into or for which any restricted shares held in escrow
shall be changed or exchangeable in any such transaction shall also be held by
the Company in escrow and shall be subject to the same restrictions as are
applicable to the restricted shares in respect of which such stock, securities,
cash or other property was issued or distributed.

         In case of any adjustment or substitution as provided for in this
Section 8, the aggregate option price for all shares subject to each then
outstanding stock option prior to such adjustment or substitution shall be the
aggregate option price for all shares of stock or other securities (including
any fraction) to which such shares shall have been adjusted or which shall have
been substituted for such shares.  Any new option price per share shall be
carried to at least three decimal places with the last decimal place rounded
upwards to the nearest whole number.

         No adjustment or substitution provided for in this Section 8 shall
require the Company to issue or sell a fraction of a share or other security.
Accordingly, all fractional shares or other securities which result from any
such adjustment or substitution shall be eliminated and not carried forward to
any subsequent adjustment or substitution.  Owners of restricted shares held in
escrow shall be treated in the same manner as owners of Common Shares not held
in escrow with respect to fractional shares created by an adjustment or
substitution of shares, except that, unless otherwise determined by the
Committee in its discretion, any cash or other property paid in lieu of a
fractional share shall be subject to restrictions similar to those applicable
to the restricted shares exchanged therefor.

         If any such adjustment or substitution provided for in this Section 8
requires the approval of shareholders in order to enable the Company to grant
incentive stock options, then no such adjustment or substitution shall be made
without the required shareholder approval. Notwithstanding the foregoing, in
the case of incentive stock options, if the effect of any such adjustment or
substitution would be to cause the stock option to fail to continue to qualify
as an incentive stock option or to cause a modification, extension or renewal
of such stock option within the meaning of Section 424 of the Code, the
Committee may elect that such adjustment or substitution not be made but rather
shall use reasonable efforts to effect such other adjustment of each then
outstanding stock option as the Committee, in its discretion, shall deem
equitable and which will not result in any disqualification, modification,
extension or renewal (within the meaning of Section 424 of the Code) of such
incentive stock option.

9.       ADDITIONAL RIGHTS IN CERTAIN EVENTS.

                 (a)      Definitions.  For purposes of this Section 9, the
         following terms shall have the following meanings:

                          (i)     The term "Person" shall be used as that term
                 is used in Sections 13(d) and 14(d) of the 1934 Act.





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                          (ii)    Beneficial ownership shall be determined as
                 provided in Rule 13d-3 under the 1934 Act as in effect on the
                 effective date of the Plan.

                          (iii)   "Voting Shares" shall mean all securities of
                 a company entitling the holders thereof to vote in an annual
                 election of Directors (without consideration of the rights of
                 any class of stock other than the Common Shares to elect
                 Directors by a separate class vote); and a specified
                 percentage of "Voting Power" of a company shall mean such
                 number of the Voting Shares as shall enable the holders
                 thereof to cast such percentage of all the votes which could
                 be cast in an annual election of directors (without
                 consideration of the rights of any class of stock other than
                 the Common Shares to elect Directors by a separate class
                 vote).

                          (iv)    "Tender Offer" shall mean a tender offer or
                 exchange offer to acquire securities of the Company (other
                 than such an offer made by the Company or any Subsidiary),
                 whether or not such offer is approved or opposed by the Board.

                          (v)     "Section 9 Event" shall mean the date upon 
                 which any of the following events occurs:

                                  (A)      The Company acquires actual
                          knowledge that any Person has acquired the Beneficial
                          Ownership, directly or indirectly, of securities of
                          the Company entitling such Person to 20% or more of
                          the Voting Power of the Company, other than the
                          Company, a Subsidiary or any employee benefit plan(s)
                          sponsored by the Company, or a Person approved by the
                          Board that has acquired 20% or more but less than 50%
                          of the Voting Power of the Company; or

                                  (B)      A Tender Offer is made to acquire
                          securities of the Company entitling the holders
                          thereof to 20% or more of the Voting Power of the
                          Company; or

                                  (C)       A solicitation subject to Rule
                          14a-11 under the 1934 Act (or any successor Rule)
                          relating to the election or removal of 50% or more of
                          the members of any class of the Board shall be made
                          by any person other than the Company; or

                                  (D)      The shareholders of the Company
                          shall approve a merger, consolidation, share
                          exchange, division or sale or other disposition of
                          assets of the Company as a result of which the
                          shareholders of the Company immediately prior to such
                          transaction shall not hold, directly or indirectly,
                          immediately following such transaction a majority of
                          the Voting Power of (i) in the case of a merger or
                          consolidation, the surviving or resulting
                          corporation, (ii) in the case of a share exchange,
                          the acquiring





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<PAGE>   13
                          corporation or (iii) in the case of a division or a
                          sale or other disposition of assets, each surviving,
                          resulting or acquiring corporation which, immediately
                          following the transaction, holds more than 20% of the
                          consolidated assets of the Company immediately prior
                          to the transaction;

                 provided, however, that (i) if securities beneficially owned
                 by a grantee are included in determining the Beneficial
                 Ownership of a Person referred to in Section 9(a)(v)(A), (ii)
                 a grantee is required to be named pursuant to Item 2 of the
                 Schedule 14D-I (or any similar successor filing requirement)
                 required to be filed by the bidder making a Tender Offer
                 referred to in Section 9(a)(v)(B), or (iii) if a grantee is a
                 "participant" as defined in 14a-11 under the 1934 Act (or any
                 successor Rule) in a solicitation (other than a solicitation
                 by the Company) referred to in Section 9(a)(v)(C), then no
                 Section 9 Event with respect to such grantee shall be deemed
                 to have occurred by reason of such event.

                 (b)      Acceleration of the Exercise Date of Stock Options.
         Unless the agreement referred to in Section 6 (g), or an amendment
         thereto, shall otherwise provide, notwithstanding any other provision
         contained in the Plan, in case any "Section 9 Event" occurs all
         outstanding stock options (other than those held by a person referred
         to in the proviso to Section 9(a) (v) ) shall become immediately and
         fully exercisable whether or not otherwise exercisable by their terms.

                 (c)      Extension of the Expiration Date of Stock Options.
         Unless the agreement referred to in Section 6(h), or an amendment
         thereto, shall otherwise provide, notwithstanding any other provision
         contained in the Plan, all stock options held by a grantee (other than
         a grantee referred to in the proviso to Section 9(a)(v)) whose
         employment with the Company or a Subsidiary terminates within one year
         of any Section 9 Event for any reason other than voluntary termination
         with the consent of the Company or a Subsidiary, retirement under any
         retirement plan of the Company or a Subsidiary or death shall be
         exercisable for a period of three months from the date of such
         termination of employment, but in no event after the expiration date
         of the stock option.

                 (d)      Lapse of Restrictions on Restricted Share or
         Restricted Share Unit Awards. If any "Section 9 Event" occurs prior to
         the scheduled lapse of all restrictions applicable to restricted share
         or restricted share unit awards under the Plan (other than those held
         by a person referred to in the proviso to Section 9(a) (v)), all such
         restrictions shall lapse upon the occurrence of any such "Section 9
         Event" regardless of the scheduled lapse of such restrictions.

                 (e)      Payment of Performance Units.  If any "Section 9
         Event" occurs prior to the end of any Performance Period, all
         performance units awarded with respect to such Performance Period
         (other than those held by a person referred to in the proviso to
         Section 9(a)(v)) shall be deemed to have been fully earned as of the
         date of such Section 9 Event, regardless of the attainment or
         nonattainment of the Performance Target or any





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<PAGE>   14
         Minimum Target, and shall be paid to the awardees thereof as promptly
         as practicable thereafter.  If the performance unit is not expressed
         as a fixed amount in dollars or shares, the Committee may provide in
         the performance unit agreement for the amount to be paid in the case
         of a Section 9 Event.

10.      EFFECT OF THE PLAN ON THE RIGHTS OF EMPLOYEES AND EMPLOYER.

         Neither the adoption of the Plan nor any action of the Board or the
Committee pursuant to the Plan shall be deemed to give any employee any right
to be granted a stock option or to be awarded restricted shares, restricted
share units, performance units or bonus shares under the Plan.  Nothing in the
Plan, in any stock option, in any restricted share, restricted share unit,
performance unit or bonus share award under the Plan or in any agreement
providing for any of the foregoing shall confer any right to any employee to
continue in the employ of the Company or any Subsidiary or interfere in any way
with the rights of the Company or any Subsidiary to terminate the employment of
any employee at any time.

11.      AMENDMENT.

         The right to alter and amend the Plan at any time and from time to
time and the right to revoke or terminate the Plan are hereby specifically
reserved to the Board; provided that no such alteration or amendment of the
Plan shall, without shareholder approval (i) increase by more than 10% the
total number of shares which may be issued under the Plan to persons subject to
Section 16 under the 1934 Act ("Section 16 Persons"), (ii) materially increase
the benefits accruing under the Plan to Section 16 Persons, (iii) materially
modify the requirements as to eligibility for participation in the Plan by
Section 16 Persons, (iv) make any changes in the class of employees eligible to
receive incentive stock options under the Plan, or (v) increase the number of
shares with respect to which incentive stock options may be granted under the
Plan; approval of the Plan by the shareholders of the Company pursuant to
Section 12 shall also be deemed to constitute approval of any amendments to
Section 6(f) that are designed to take advantage of changes in income tax or
securities laws or regulations adopted for the purpose of reducing or
eliminating restrictions on transferability of options.  No alteration,
amendment, revocation or termination of the Plan shall, without the written
consent of the holder of a stock option, restricted shares, restricted share
units, performance units or bonus shares theretofore awarded under the Plan,
adversely affect the rights of such holder with respect thereto.

12.      EFFECTIVE DATE AND DURATION OF PLAN.

         The effective date and date of adoption of the Plan shall be December
13, 1995, the date of approval of the Plan by the Shareholders.  No stock
option may be granted, and no restricted shares, restricted share units, bonus
shares or performance units payable in performance shares may be awarded under
the Plan subsequent to December 13, 2005.





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<PAGE>   15
13.      INDEMNIFICATION.

         In addition to such other rights of indemnification as they may have
as directors, the members of the Committee administering the Plan shall be
indemnified by the Company against the reasonable expenses, including
attorneys' fees actually and necessarily incurred in connection with the
defense of any action, suit or proceeding, or in connection with any appeal
therein, to which they or any of them may be a party by reason of any action
taken or failure to act under or in connection with the Plan or any rights
granted thereunder, and against all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by
the Company) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding that such member is liable for negligence or misconduct in
the performance of such member's duties; provided that within 60 days after
institution of any such action, suit or proceeding, the member shall in writing
offer the Company the opportunity, at its own expense, to handle and defend the
same.

14.      APPROVAL OF PLAN; EFFECTIVE DATE.

         The Plan was adopted by the Board of Directors on October 18, 1995 and
approved by the Shareholders and became effective on December 13, 1995.





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