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EXHIBIT 4.1



                           POTOMAC ENERGY CORPORATION
                         NON-QUALIFIED STOCK OPTION PLAN


                                    ARTICLE I

                               GENERAL PROVISIONS

         On JANUARY 28, 1998, Potomac Energy Corporation (the "Company")
adopted the Potomac Energy Corporation Non-Qualified Stock Option Plan (the
"Plan").

         1.1 PURPOSE. The purpose of the Plan shall be to attract, retain and
motivate directors, executive officers, key employees and independent
contractors and consultants of the Company and its subsidiaries ("Eligible
Persons") by way of granting (i) non-qualified stock options ("Stock
Options") with stock appreciation rights attached ("Stock Option SARs"). For
the purpose of this Plan, Stock Option SARs are sometimes herein called
"SARs." The Stock Options to be granted are intended to be "non-qualified
stock options" as described in Sections 83 and 421 of the Internal Revenue
Code of 1986, as amended (the "Code"). Furthermore, under the Plan, the terms
"parent" and "subsidiary" shall have the same meaning as set forth in
Subsections (e) and (f) of Section 425 of the Code unless the context herein
clearly indicates to the contrary.

         1.2 GENERAL. The terms and provisions of this Article I shall be
applicable to Stock Options and SARs unless the context herein clearly
indicates to the contrary.

         1.3 ADMINISTRATION OF THE PLAN. The Plan shall be administered by
the Board of Directors (the "Board") of the Company.

                  1.3.1 BOARD ADMINISTRATION. The Board shall have the power
         where consistent with the general purpose and intent of the Plan to
         (i) modify the requirements of the Plan to conform with the law or
         to meet special circumstances not anticipated or covered in the
         Plan, (ii) suspend or discontinue the Plan, (iii) establish
         policies, and (iv) adopt rules and regulations and prescribe forms
         for carrying out the purposes and provisions of the Plan including
         the form of any "stock option agreements" ("Stock Option
         Agreements").

                  1.3.2 PLAN INTERPRETATION. Unless otherwise provided in the
         Plan, the Board shall have the authority to interpret and construe
         the Plan, and determine all questions arising under the Plan and any
         agreement made pursuant to the Plan. Any interpretation, decision or
         determination made by the Board shall be final, binding and
         conclusive.

                  1.3.3 SELECTION OF PARTICIPANTS. In designating and
         selecting Eligible Persons ("Participants") for participation in the
         Plan, the Board may consult with and give consideration to the
         recommendations and criticisms submitted by appropriate managerial
         and executive officers of the Company. The Board also shall take
         into account the duties and responsibilities of the Eligible
         Persons, their past, present and potential contributions to the
         success of the Company and such other factors as the Board shall
         deem relevant in connection with accomplishing the purpose of the
         Plan.

         1.4 SHARES SUBJECT TO THE PLAN. Shares of stock ("Stock") covered by
Stock Options and SARs shall consist of 950,000 shares of the Common Stock,
$.01 par value, of the Company, subject to adjustment pursuant to Section 1.7
of the Plan, which may be either authorized and unissued shares or treasury
shares, as determined in the sole discretion of the Board. If any Option for
shares of Stock, granted to a Participant lapses, or is otherwise terminated,
the Board may grant Stock Options and SARs for such shares of Stock to other
Participants. However, Stock Options and SARs shall not be granted again for
shares of Stock which have been (i) subject to SARs which are surrendered in
exchange for cash or shares of Stock issued pursuant to the exercise of SARs
as provided in Article II hereof and (ii) shares withheld for tax withholding
requirements.

         1.5 PARTICIPATION IN THE PLAN. The Board shall determine from time
to time those Eligible Persons who are to be granted Stock Options and SARs
and the number of shares of Stock covered thereby. The maximum number of
shares of

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Stock for which an employee-Director may be granted Stock Options in any
calendar year shall not exceed 25 percent of the aggregate number of shares
of Stock with respect to which Options may be granted under the Plan.

         1.6 DETERMINATION OF FAIR MARKET VALUE. As used in the Plan, "fair
market value" shall mean on any particular day (i) if the Stock is listed or
admitted for trading on any national securities exchange or the SmallCap
Market System or the National Market System of NASDAQ Stock Market, Inc.
("NASDAQ"), the last sale price, or if no sale occurred, the mean between the
closing high bid and low asked quotations, for such day of the Stock, (ii) if
Stock is not traded on any national securities exchange but is quoted on an
automated quotation system or any similar system of automated dissemination
of quotations or securities prices in common use, the mean between the
closing high bid and low asked quotations for such day of the Stock on such
system, (iii) if neither clause (i) nor (ii) is applicable, the mean between
the high bid and low asked quotations for the Stock as reported by the
National Daily Quotation Bureau, Incorporated if at least two securities
dealers have inserted both bid and asked quotations for shares of the Stock
on at least five (5) of the ten (10) preceding days, (iv) in lieu of the
above, if actual transactions in the shares of Stock are reported on a
consolidated transaction reporting system, the last sale price of the shares
of Stock on such system or, (v) if none of the conditions set forth above is
met, the fair market value of shares of Stock as determined by the Board.
Provided, however, for purposes of determining "fair market value" of the
Common Stock of the Company, such value shall be determined without regard to
any restriction other than a restriction which will never lapse.

         1.7 ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. The grants of Stock
Options shall in no way affect the right of the Company to adjust,
reclassify, reorganize or otherwise change its capital or business structure
or to merge, consolidate, dissolve, liquidate or sell or transfer all or any
part of its assets or business. The aggregate number of shares of Stock under
Stock Options granted under the Plan, the Option Price and the total number
of shares of Stock which may be purchased by a Participant on exercise of a
Stock Option shall be appropriately adjusted by the Board to reflect any
recapitalization, stock split, merger, consolidation, reorganization,
combination, liquidation, stock dividend or similar transaction involving the
Company. Provided, however, and notwithstanding the foregoing, (i) a
dissolution or liquidation of the Company, (ii) a merger or consolidation in
which the Company is not the surviving or the resulting corporation or (iii)
a reverse merger in which the Company is the surviving entity but in which
the securities possessing more than 50 percent of the total combined voting
power of the Company's outstanding securities are transferred to a person or
persons different from those who held such securities immediately prior to
the merger (collectively referred to herein as a "Corporate Transaction"),
shall cause the Plan and any Stock Option or SAR granted thereunder, to
terminate upon the effective date of such dissolution, liquidation, merger or
consolidation, subject to Section 1.21 of the Plan. Provided, further, that
for the purposes of this Section 1.7, if any merger, consolidation or
combination occurs in which the Company is not the surviving corporation and
is the result of a mere change in the identity, form or place of organization
of the Company accomplished in accordance with Section 368(a)(1)(F) of the
Code, then, such event will not cause a termination of the Plan. Appropriate
adjustment may also be made by the Board in the terms of a SAR to reflect any
of the foregoing changes.

         1.8 AMENDMENT AND TERMINATION OF THE PLAN. The Plan shall terminate
at midnight, DECEMBER 31, 2008, but prior thereto may be altered, changed,
modified, amended or terminated by written amendment approved by the Board.
Provided, that no action of the Board may amend the Plan in any manner which
would impair the applicability of Rule 16b-3 under the Securities Exchange
Act of 1934, as amended, to the Plan. Except as provided in this Article I,
no amendment, modification or termination of the Plan shall in any manner
adversely affect any Stock Option or SAR theretofore granted under the Plan
without the consent of the affected Participant.

         1.9 EFFECTIVE DATE. The Plan shall be effective JUNE 12, 1998 (the
"Effective Date").

         1.10 SECURITIES LAW REQUIREMENTS. The Company shall have the right,
but not the obligation to cause the shares of Stock issuable upon exercise of
the Options to be registered under the Securities Act of 1933, as amended
(the "Securities Act") or the securities laws of any state or jurisdiction.

                  1.10.1 RESTRICTIONS ON TRANSFERABILITY AND LEGEND ON
         CERTIFICATES. As a condition precedent to the grant of any Stock
         Option or the issuance or transfer of shares pursuant to the
         exercise of any Stock Option, the Company may require the
         Participant or holder to take any reasonable action to meet such
         requirements or to obtain such approvals. The Company shall have the
         right to restrict the transferability of shares of Stock issued or
         transferred upon exercise of the Stock Options in such manner as it
         deems necessary or appropriate to insure the availability of any
         exemption from registration under the Securities Act and any other
         applicable securities laws or regulations that may be available,
         including the endorsement with a legend reading as follows:

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         The shares of Common Stock evidenced by this certificate have been
         issued to the registered owner in reliance upon written
         representations that these shares have been purchased solely for
         investment purposes. These shares may not be sold, transferred or
         assigned unless in the opinion of the Company and its legal counsel
         such sale, transfer or assignment will not be in violation of the
         Securities Act of 1933, as amended, and the rules and regulations
         thereunder.

                  1.10.2 REGISTRATION STATEMENT. If a registration statement
         covering the shares of Stock issuable upon exercise of the Stock
         Options granted under the Plan is filed under the Securities Act,
         and is declared effective the Securities and Exchange Commission,
         the provisions of Section 1.10.1 shall terminate during the period
         of time that such registration statement, as periodically amended,
         remains effective.

         1.11 SEPARATE CERTIFICATES. Separate certificates representing the
Common Stock of the Company to be delivered to a Participant upon the
exercise of any Stock Option and SAR will be issued to such Participant.

         1.12  PAYMENT FOR STOCK; RECEIPT OF STOCK OR CASH IN LIEU OF PAYMENT.

                  1.12.1 PAYMENT FOR STOCK. Payment for shares of Stock
         purchased under this Plan shall be made (i) in full and in cash or
         check made payable to the Company or (ii) may also be made in Common
         Stock of the Company held for the requisite period necessary to
         avoid a charge to the Company's reported earnings and valued at fair
         market value on the date of exercise of the Option, or (iii) a
         combination of cash and Common Stock of the Company. In the event
         that Common Stock of the Company is utilized in consideration for
         the purchase of Stock upon the exercise of an Option, such Common
         Stock shall be valued at the "fair market value" as defined in
         Section 1.6 of the Plan.

                  1.12.2 RECEIPT OF STOCK IN LIEU OF CASH PAYMENT.
         Furthermore, a Participant may exercise an Option without payment of
         the Option Price in the event that the exercise is pursuant to
         rights under an SAR attached to the Option and such SAR is
         exercisable on the date of exercise of the Stock Option to which it
         is attached. In the event a Stock Option with an SAR attached is
         exercised without payment of the Option Price in cash or by check or
         Common Stock of the Company, the Participant shall be entitled to
         receive either (i) a cash payment from the Company equal to the
         excess of the total fair market value of the shares of Stock on such
         date as determined with respect to which the Stock Option is being
         exercised over the total cash Option Price of such shares of Stock
         as set forth in the Stock Option SAR or (ii) that number of whole
         shares of Stock as is determined by dividing (A) an amount equal to
         the fair market value per share of Stock on the date of exercise
         into (B) an amount equal to the excess of the total fair market
         value of the shares of Stock on such date with respect to which the
         Stock Option SAR is being exercised over the total cash Option Price
         of such shares of Stock as set forth in the Stock Option SAR, and
         fractional shares will be rounded to the next lowest number and the
         Participant will receive cash in lieu thereof.

         1.13 INCURRENCE OF DISABILITY AND RETIREMENT. A Participant shall be
deemed to have terminated his employment as an employee, his independent
contractor arrangement or consulting arrangement with the Company and
incurred a disability ("Disability") if such Participant suffers a physical
or mental condition which, in the judgment of the Board, totally and
permanently prevents a Participant from engaging in any substantial gainful
employment with or the providing of services or consulting for the Company or
a subsidiary. A Participant shall be deemed to have terminated employment as
an employee, independent contractor or a consultant due to retirement
("Retirement") if such Participant ceases to be an employee, independent
contractor or a consultant of the Company or its subsidiary, without cause,
after attaining the age of 55.

         1.14 STOCK OPTIONS GRANTED SEPARATELY. Because the Board is
authorized to grant Stock Options and SARs to Participants, the grant thereof
and Stock Option Agreements relating thereto will be made separately and
totally independent of each other.

         1.15 GRANTS OF OPTIONS AND STOCK OPTION AGREEMENT. Each Stock Option
and Stock Option SAR granted under this Plan shall be evidenced by the
minutes of a meeting of the Board or by the written consent of the Board and
by a written Stock Option Agreement effective on the date of grant and
executed by the Company and the Participant. Each Stock Option and Stock
Option SAR granted hereunder shall contain such terms, restrictions and
conditions as the Board may determine, which terms, restrictions and
conditions may or may not be the same in each case.

         1.16 USE OF PROCEEDS. The proceeds received by the Company from the
sale of Stock pursuant to the exercise of Stock Options granted under the Plan
shall be added to the Company's general funds and used for general corporate
purposes.

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         1.17 NON-TRANSFERABILITY OF OPTIONS. Except as otherwise herein
provided, any Stock Option or Stock Option SAR granted shall not be
transferable otherwise than by will or the laws of descent and distribution
or with the consent of the Company, and the Stock Option and Stock Option SAR
may be exercised, during the lifetime of the Participant, only by him. More
particularly (but without limiting the generality of the foregoing), the
Stock Option and Stock Option SAR may not be assigned, transferred (except as
provided above), pledged or hypothecated in any way, shall not be assignable
by operation of law and shall not be subject to execution, attachment, or
similar process. Any attempted assignment, transfer, pledge, hypothecation,
or other disposition of the Stock Option or Stock Option SAR contrary to the
provisions hereof shall be null and void and without effect.

         1.18 ADDITIONAL DOCUMENTS ON DEATH OF PARTICIPANT. No transfer of a
Stock Option or Stock Option SAR by the Participant by will or the laws of
descent and distribution shall be effective to bind the Company unless the
Company shall have been furnished with written notice and an unauthenticated
copy of the will and/or such other evidence as the Board may deem necessary
to establish the validity of the transfer and the acceptance by the successor
to the Stock Option or Stock Option SAR of the terms and conditions of such
Stock Option or Stock Option SAR.

         1.19 CHANGES IN EMPLOYMENT. So long as the Participant shall
continue to be a director, an employee, an independent contractor or a
consultant of the Company or any one of its subsidiaries, any Stock Option or
Stock Option SAR granted to such Participant shall not be affected by any
change of duties or position. Nothing in the Plan or in any Stock Option
Agreement which relates to the Plan shall confer upon any Participant any
right to continue as a director or in the employ as an employee, independent
contractor or consultant of the Company or of any of its subsidiaries, or
interfere in any way with the right of the Company or any of its subsidiaries
to terminate such Participant as a director, employee or independent
contractor or consultant at any time.

         1.20 SHAREHOLDER RIGHTS. No Participant shall have a right as a
shareholder with respect to any shares of Stock subject to a Stock Option or
Stock Option SAR prior to the purchase of such shares of Stock by exercise of
the Stock Option or Stock Option SAR.

         1.21 RIGHT TO EXERCISE UPON COMPANY CEASING TO EXIST. In the event
of a Corporate Transaction, the Participant shall have the right immediately
prior to consummation of the Corporate Transaction to exercise, in whole or
in part, such Participant's then remaining Stock Options and Stock Option
SARs whether or not then exercisable, but limited to that number of shares
that can be acquired without causing the Participant to have an "excess
parachute payment" as determined under Section 280G of the Code determined by
taking into account all of Participant's "parachute payments" determined
under Section 280G of the Code. Provided, the foregoing notwithstanding,
after the Participant has been afforded the opportunity to exercise his then
remaining Stock Options and Stock Option SARs as provided in this Section
1.21, and to the extent such Stock Options and Stock Option SARs are not
timely exercised as provided in this Section 1.21, then, the terms and
provisions of this Plan and any Stock Option Agreement will thereafter
continue in effect, and the Participant will be entitled to exercise any such
remaining and unexercised Options in accordance with the terms and provisions
of this Plan and such Stock Option Agreement as such Stock Options and Stock
Option SARs thereafter become exercisable. Provided further, that for the
purposes of this Section 1.21, if any merger, consolidation or combination
occurs in which the Company is not the surviving corporation and is the
result of a mere change in the identity, form, or place of organization of
the Company accomplished in accordance with Section 368(a)(1)(F) of the Code,
then, such event shall not cause an acceleration of the exercisability of any
such Stock Options and Stock Option SARs granted hereunder.

         1.22 ASSUMPTION OF OUTSTANDING STOCK OPTIONS AND STOCK OPTION SARS.
Any successor to the Company succeeding to, or assigned the business of, the
Company as the result of or in connection with a corporate merger,
consolidation, combination, reorganization, dissolution or liquidation
transaction shall assume all Stock Options and Stock Option SARs outstanding
under the Plan or issue new Stock Options and Stock Option SARs in place of
outstanding Stock Options and/or Stock Option SARs under the Plan.

         1.23 TAX WITHHOLDINGS. The Company's obligation to deliver Stock
upon the exercise of Stock Options or Stock Option SARs under the Plan shall
be subject to the satisfaction of all applicable federal, state and local
income tax withholding requirements. The Board may in its discretion and in
accordance with the provisions of Section 1.23 and such supplemental rules as
the Board may from time to time adopt, provide any or all holders of Stock
Options or Stock Option SARs with the right to use shares of Stock in
satisfaction of all or part of the federal, state and local income tax
liabilities incurred by such holders in connection with the exercise of their
Stock Options or Stock Option SARs ("Taxes"). Such right may be provided to
any such holders of Stock Options or Stock Option SARs in either or both of
the following methods: (i) the holder of a Stock Option or Stock Option SAR
may be provided with the election, which may be subject to approval by the
Board, to have the Company withhold, from the Stock otherwise issuable upon
exercise of such Stock Option or Stock

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Option SAR, a portion of those shares of Stock with an aggregate fair market
value equal to the percentage (not to exceed 100 percent) of the applicable
Taxes designated by the holder of the Options, and/or (ii) the Board may, in
its discretion, provide the holder of the Stock Options or Stock Option SARs
with the election to deliver to the Company, at the time the Stock Option or
Stock Option SAR is exercised, one or more shares of Stock previously
acquired by such holder (other than pursuant to the transaction triggering
the Taxes) with an aggregate fair market value equal to the percentage (not
to exceed 100 percent) of the Taxes incurred in connection with such Stock
Option or Stock Option SAR exercise designated by such holder.

         1.24 GOVERNING LAW. The Plan shall be governed by and all questions
hereunder shall be determined in accordance with the laws of the State of
Oklahoma.

                                   ARTICLE II

                       TERMS OF STOCK OPTIONS AND EXERCISE

         2.1  GENERAL TERMS.

                  2.1.1 GRANT AND TERMS FOR STOCK OPTIONS. Stock Options and
         Stock Option SARs shall be granted by the Board on the following
         terms and conditions: No Stock Options and Stock Option SARs shall
         be exercisable more than 10 years after the date of grant. Subject
         to such limitation, the Board shall have the discretion to fix the
         period (the "Option Period") during which any Stock Option or Stock
         Option SAR may be exercised. Stock Options and Stock Option SARs
         granted shall not be transferable except by will or by the laws of
         descent and distribution or with the consent of the Company. Stock
         Options and Stock Option SARs shall be exercisable only by the
         Participant while serving as a Director of the Company or a
         subsidiary or while actively employed as an employee, an independent
         contractor or a consultant by the Company or a subsidiary, except
         that (i) any such Stock Option granted and which is otherwise
         exercisable, may be exercised by the personal representative of a
         deceased Participant within 12 months after the death of such
         Participant (but not beyond the Option Period of such Stock Option),
         (ii) if a Participant is terminated as a Director, an employee, an
         independent contractor or a consultant of the Company or a
         subsidiary on account of Retirement, such Participant may exercise
         any Stock Option which is otherwise exercisable at any time within
         three months of such date of termination, or (iii) if a Participant
         is terminated as a Director, as an employee, an independent
         contractor or a consultant of the Company or a subsidiary on account
         of incurring a Disability, such Participant may exercise any Stock
         Option which is otherwise exercisable at any time within 12 months
         of such date of termination. If a Participant should die during the
         applicable three-month or 12-month period following the date of such
         Participant's Retirement or termination on account of Disability,
         the rights of the personal representative of such deceased
         Participant as such relate to any Stock Options and Stock Option
         SARs granted to such deceased Participant shall be governed in
         accordance with Subsection 2.1.1(i) of this Article II.

                  2.1.2 OPTION PRICE. The option price ("Option Price") for
         shares of Stock subject to Stock Options and Stock Option SARs shall
         be determined by the Board, but in no event shall such Option Price
         be less than 85 percent of the fair market value of the Stock on the
         date of grant.

                  2.1.3 ACCELERATION OF OTHERWISE UNEXERCISABLE STOCK OPTION
         ON RETIREMENT, DEATH, DISABILITY OR OTHER SPECIAL CIRCUMSTANCES. The
         Board, in its sole discretion, may permit (i) a Participant who is
         terminated as a Director, an employee, an independent contractor or
         a consultant due to Retirement or Disability, (ii) the personal
         representative of a deceased Participant, or (iii) any other
         Participant who is terminated as a Director, an employee, an
         independent contractor or a consultant upon the occurrence of
         special circumstances (as determined by the Board), to exercise and
         purchase (within three years of such date of such Participant's
         termination) all or any part of the shares subject to Stock Options
         and Stock Option SARs on the date of the Participant's termination,
         Retirement, Disability, death, or as the Board otherwise so
         determines, notwithstanding that all installments, if any, with
         respect to such Stock Option or Stock Option SAR, had not accrued on
         such termination date.

                  2.1.4 NUMBER OF STOCK OPTIONS GRANTED. Participants may be
         granted more than one Stock Option and Stock Option SAR. In making
         any such determination, the Board shall obtain the advice and
         recommendation of the officers of the Company or a subsidiary which
         have supervisory authority over such Participants. The granting of a
         Stock Option or Stock Option SAR under the Plan shall not affect any
         outstanding Stock Options or Stock Option SARs previously granted to
         a Participant under the Plan.

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                  2.1.5 NOTICE OF EXERCISE STOCK OPTION. Upon exercise of a
         Stock Option or Stock Option SAR, a Participant shall give written
         notice to the Secretary of the Company, or other officer designated
         by the Board, at the Company's main office in Oklahoma City,
         Oklahoma. No Stock shall be issued to any Participant until the
         Company receives full payment for the Stock purchased, if
         applicable, and any required Taxes as provided in the Plan and the
         Stock Option Agreement.

                                   ARTICLE III

                                      SARS

         3.1 GENERAL TERMS.

                  3.1.1 GRANT AND TERMS OF SARS. The Board grant SARs to
         Participants in connection with Stock Options granted under the
         Plan. SARs shall terminate at such time as the Board determines and
         shall be exercised only upon surrender of the related Stock Option
         and only to the extent that the related Stock Option (or the portion
         thereof as to which the SAR is exercisable) is exercised. SARs may
         be exercised only by the Participant while a director, an employee,
         an independent contractor or a consultant of the Company or a
         subsidiary except that (i) any SARs previously granted to a
         Participant which are otherwise exercisable may be exercised, with
         the approval of the Board, by the personal representative of a
         deceased Participant (but not beyond the expiration date of such
         SAR), and (ii) if a Participant is terminated as a director, an
         employee, an independent contractor or a consultant of the Company
         or a subsidiary, as the case may be, on account of Retirement or
         Disability, such Participant may exercise any SARs which are
         otherwise exercisable, with the approval of the Board, anytime
         within three months of the date of the termination by Retirement or
         within 12 months of termination by Disability. If a Participant
         should die during the applicable three-month period following the
         date of such Participant's Retirement or during the applicable 12
         month period following the date of termination on account of
         Disability, the rights of the personal representative of such
         deceased Participant as such relate to any SARs granted to such
         deceased Participant shall be governed in accordance with (i) of the
         second sentence of this Subsection 3.1.1. The applicable SAR shall
         (i) terminate upon the termination of the underlying Stock Option
         (ii) only be transferable at the same time and under the same
         conditions as the underlying Stock Option is transferable, (iii)
         only be exercised when the underlying Stock Option is exercised, and
         (iv) may be exercised only if there is a positive spread between the
         Option Price and the fair market value of the Stock for which the
         SAR is exercised.

                  3.1.2 ACCELERATION OF OTHERWISE UNEXERCISABLE SARS ON
         RETIREMENT, DEATH, DISABILITY OR OTHER SPECIAL CIRCUMSTANCES. The
         Board, in its sole discretion, may permit (i) a Participant is
         terminated as a director, an employee, an independent contractor, or
         a consultant with the Company or a subsidiary due to Retirement or
         Disability, (ii) the personal representative of such deceased
         Participant, or (iii) any other Participant who is terminated as
         director, an employee, an independent contractor or a consultant
         with the Company or a subsidiary upon the occurrence of special
         circumstances (as determined by the Board) to exercise (within three
         years of such date of such termination) all or any part of any such
         SARs previously granted to such Participant as of the date of such
         Participant's termination, Retirement, Disability, death, or as the
         Board otherwise so determines, notwithstanding that all
         installments, if any with respect to such SARs, had not accrued on
         such date.

                  3.1.3 FORM OF PAYMENT OF SARS. The Participant may request
         the method and combination of payment upon the exercise of a SAR;
         however, the Board has the final authority to determine whether the
         value of the SAR shall be paid in cash or shares of Stock or both.
         Upon exercise of a SAR, the holder is entitled to receive the excess
         amount of the fair market value of the Stock (as of the date of
         exercise) for which the SAR is exercised over the Option Price under
         the related Stock Option. All applicable Taxes will be paid by the
         Participant to the Company upon the exercise of a SAR in accordance
         with Section 1.23.

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