PUBLIC STORAGE, INC.
                      1996 STOCK OPTION AND INCENTIVE PLAN

     Public Storage, Inc., a California corporation (the "Company"),  sets forth
herein the terms of its 1996 Stock  Option and  Incentive  Plan (the  "Plan") as
follows:

     1. PURPOSE

     The Plan is intended to enhance the Company's ability to attract and retain
highly qualified officers, key employees,  outside directors,  and other persons
to advance the interests of the Company by providing  such persons with stronger
incentives  to  continue to serve the  Company  and its  affiliates  (as defined
herein)  and to expend  maximum  effort to  improve  the  business  results  and
earnings of the Company.  The Plan is intended to accomplish  this  objective by
providing  to eligible  persons an  opportunity  to acquire or increase a direct
proprietary  interest in the operations  and future  success of the Company.  To
this end, the Plan provides for the grant of stock options, restricted stock and
restricted  stock  units in  accordance  with the terms  hereof.  Stock  options
granted under the Plan may be  non-qualified  stock  options or incentive  stock
options,  as  provided  herein,  except  that stock  options  granted to outside
directors shall in all cases be non-qualified stock options.

     2. DEFINITIONS

     For  purposes of  interpreting  the Plan and related  documents  (including
Award Agreements), the following definitions shall apply:

     2.1 "affiliate" of, or person "affiliated" with, a person means any company
or other trade or business  that  controls,  is controlled by or is under common
control  with such person  within the meaning of Rule 405 of  Regulation C under
the 1933 Act (as defined herein).

     2.2 "Award  Agreement" means the stock option  agreement,  restricted stock
agreement,  restricted stock unit agreement or other written  agreement  between
the Company and a Grantee that  evidences and sets out the terms and  conditions
of a Grant.

     2.3  "Benefit  Arrangement"  shall have the meaning set forth in Section 14
hereof.

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

     2.5 "Code" means the Internal  Revenue Code of 1986, as now in effect or as
hereafter amended.

     2.6  "Committee"  means a Committee of, and designated from time to time by
resolution  of, the Board,  which shall  consist of no fewer than two members of
the Board,  none of whom shall be an officer or other  salaried  employee of the
Company or any  affiliate,  and each of whom shall  qualify in all respects as a
"non-employee  director" within the meaning of Rule 16b-3 under the Exchange Act
or any successor rule or regulation. Commencing on the Effective Date, and until
such time as the Board shall  determine  otherwise,  the Committee  shall be the
Audit Committee of the Board.

     2.7 "Company" means Public Storage, Inc.

     2.8 "Effective  Date" means August 13, 1996, the date on which the Plan was
adopted by the Board.

     2.9  "Exchange  Act" means the  Securities  Exchange Act of 1934, as now in
effect or as hereafter amended.

     2.10 "Fair Market Value" means the value of a share of Stock, determined as
follows: if on the Grant Date or other determination date the Stock is listed on
an established national or regional stock exchange,  is admitted to quotation on
the Nasdaq National Market,  or is publicly traded on an established  securities
market,  the Fair Market Value of a share of Stock shall be the closing price of
the Stock on such  exchange or in such market (the highest such closing price if
there is more than one such  exchange or market) on the Grant Date or such other
determination  date (or if there is no such  reported  closing  price,  the Fair
Market  Value shall be the mean  between the highest bid and lowest asked prices
or between the high and low sale prices on such  trading  day) or, if no sale of
Stock is reported for such trading day, on the next  preceding  day on which any
sale shall have been  reported.  If the Stock is not listed on such an exchange,
quoted on such system or traded on such a market, Fair Market Value shall be the
value of the Stock as determined by the Committee in good faith.
<PAGE>
     2.11 "Grant"  means an award of an Option,  Restricted  Stock or Restricted
Stock Units under the Plan.

     2.12  "Grant  Date"  means (a) for  Grants  other  than  Grants to  Outside
Directors,  the later of (i) the date as of which  the  Committee  approves  the
Grant or (ii) the  date as of which  the  Grantee  and the  Company  or  Service
Provider  enter  into  the  relationship  resulting  in the  Grantee's  becoming
eligible to receive a Grant, and (b) for Grants to Outside  Directors,  the date
on which such Grant is made in accordance with Section 7 hereof.

     2.13 "Grantee"  means a person who receives or holds an Option,  Restricted
Stock or Restricted Stock Units under the Plan.

     2.14 "Incentive  Stock Option" means an "incentive stock option" within the
meaning  of  Section  422 of the Code,  or the  corresponding  provision  of any
subsequently enacted tax statute, as amended from time to time.

     2.15  "Option"  means an option  to  purchase  one or more  shares of Stock
pursuant to the Plan.

     2.16 "Option Period" means the period during which Options may be exercised
as set forth in SECTION 11 hereof.

     2.17  "Option  Price"  means the  purchase  price  for each  share of Stock
subject to an Option.

     2.18  "Other  Agreement"  shall  have the  meaning  set forth in SECTION 14
hereof.

     2.19 "Outside  Director"  means a member of the Board who is not an officer
or employee of the Company.

     2.20 "Plan" means the Public Storage,  Inc. 1996 Stock Option and Incentive
Plan.

     2.21  "Reporting  Person"  means a person who is required  to file  reports
under Section 16(a) of the Exchange Act.

     2.22 "Restricted  Period" means the period during which Restricted Stock or
Restricted  Stock Units are subject to  restrictions  or conditions  pursuant to
SECTION 13.2 hereof.

     2.23  "Restricted  Stock"  means  shares  of  Stock,  awarded  to a Grantee
pursuant to SECTION 13 hereof, that are subject to restrictions and to a risk of
forfeiture.

     2.24 "Restricted  Stock Unit" means a unit awarded to a Grantee pursuant to
SECTION 13 hereof,  which  represents a conditional  right to receive a share of
Stock in the  future,  and which is  subject  to  restrictions  and to a risk of
forfeiture.

     2.25 "Securities Act" means the Securities Act of 1933, as now in effect or
as hereafter amended.
<PAGE>
     2.26 "Service  Provider"  means a consultant  or adviser to the Company,  a
manager  of the  Company's  properties  or  affairs,  or other  similar  service
provider or affiliate of the Company, and employees of any of the foregoing,  as
such persons may be designated  from time to time by the  Committee  pursuant to
Section 6 hereof.

     2.27  "Stock"  means the common  stock,  par value $0.10 per share,  of the
Company.

     2.28 "Subsidiary" means any "subsidiary  corporation" of the Company within
the meaning of Section 425(f) of the Code.

     2.29  "Termination  Date"  shall be the date  upon  which an  Option  shall
terminate or expire, as set forth in SECTION 11.2 hereof.

     3. ADMINISTRATION OF THE PLAN

     3.1 GENERAL. The Plan shall be administered by the Committee. The Board may
remove  members,  add members,  and fill vacancies on the Committee from time to
time, all in accordance with the Company's articles of incorporation and by-laws
and applicable law; provided,  however,  that each member of the Committee shall
at all times  qualify in all respects as a  "non-employee  director"  within the
meaning  of  Rule  16b-3  under  the  Exchange  Act or  any  successor  rule  or
regulation.

     3.2 PLENARY AUTHORITY OF THE COMMITTEE.  Subject to Section 3.4 hereof, the
Committee shall have such powers and authorities  related to the  administration
of the Plan as are consistent with the Company's  articles of incorporation  and
by-laws and applicable law. The Committee shall have full power and authority to
take all actions and to make all  determinations  required or provided for under
the Plan,  any  Grant or any Award  Agreement,  and  shall  have full  power and
authority to take all such other  actions and  determinations  not  inconsistent
with the specific terms and  provisions of the Plan that the Committee  deems to
be necessary or appropriate to the  administration of the Plan, any Grant or any
Award Agreement. All such actions and determinations shall be by the affirmative
vote of a majority  of the members of the  Committee  present at a meeting or by
unanimous  consent of the Committee  executed in writing in accordance  with the
Company's  articles  of  incorporation  and  by-laws  and  applicable  law.  The
interpretation  and  construction by the Committee of any provision of the Plan,
any Grant or any Award Agreement shall be final and conclusive.

     3.3  DISCRETIONARY  GRANTS.  Subject to Section 3.4 hereof and to the other
terms  and  conditions  of the Plan,  the  Committee  shall  have full and final
authority to designate Grantees,  (i) to determine the type or types of Grant to
be made to a  Grantee,  (ii) to  determine  the  number of shares of Stock to be
subject to a Grant,  (iii) to establish  the terms and  conditions of each Grant
(including, but not limited to, the exercise price of any Option, the nature and
duration of any  restriction  or  condition  (or  provision  for lapse  thereof)
relating to the vesting,  exercise,  transfer,  or  forfeiture of a Grant or the
shares  of  Stock  subject  thereto,  and any  terms or  conditions  that may be
necessary to qualify Options as Incentive Stock Options),  (iv) to prescribe the
form of each Award Agreement  evidencing a Grant, and (v) to amend,  modify,  or
supplement  the terms of any  outstanding  Grant;  provided,  however,  that the
Committee  shall not have the  authority  to reduce  the  exercise  price of any
outstanding  Option  other than  pursuant to Section 17 hereof.  Such  authority
specifically includes the authority,  in order to effectuate the purposes of the
Plan but without amending the Plan, to modify Grants to eligible individuals who
are foreign  nationals or are  individuals  who are employed  outside the United
States to  recognize  differences  in local law,  tax  policy,  or custom.  As a
condition to any subsequent  Grant,  the Committee  shall have the right, at its
discretion,  to require  Grantees  to return to the  Company  Grants  previously
awarded under the Plan.  Subject to the terms and  conditions  of the Plan,  any
such new Grant shall be upon such terms and  conditions  as are specified by the
Committee at the time the new Grant is made.

     3.4  GRANTS TO  OUTSIDE  DIRECTORS.  With  respect  to Grants of Options to
Outside Directors pursuant to Section 7 hereof, the Committee's responsibilities
under the Plan  shall be  limited  to  taking  all legal  actions  necessary  to
<PAGE>
document the Options so granted,  to interpret the Award  Agreements  evidencing
such  Options,  to  maintain  appropriate  records and  reports  regarding  such
Options,  and to take all acts  authorized by this Plan or otherwise  reasonably
necessary to effect the purposes hereof.

     3.5 NO  LIABILITY.  No  member of the  Board or of the  Committee  shall be
liable for any action or  determination  made in good faith with  respect to the
Plan or any Grant or Award Agreement.

     3.6  APPLICABILITY  OF RULE 16B-3.  Those  provisions of the Plan that make
express  reference  to Rule 16b-3  under the  Exchange  Act shall  apply only to
Reporting Persons.

     4. STOCK SUBJECT TO THE PLAN

     Subject to  adjustment  as  provided  in  Section 17 hereof,  the number of
shares of Stock available for issuance under the Plan shall be 3,850,000.  Stock
issued or to be issued under the Plan shall be authorized  but unissued  shares.
If any shares  covered by a Grant are not  purchased or are  forfeited,  or if a
Grant otherwise  terminates without delivery of any Stock subject thereto,  then
the number of shares of Stock  counted  against the  aggregate  number of shares
available  under the Plan with respect to such Grant shall, to the extent of any
such forfeiture or  termination,  again be available for making Grants under the
Plan.

     5. EFFECTIVE DATE AND TERM OF THE PLAN

     5.1 EFFECTIVE  DATE. The Plan shall be effective as of the Effective  Date,
subject to  approval  of the Plan within one year of the  Effective  Date,  by a
majority  of the  votes  cast on the  proposal  at a  meeting  of  shareholders,
provided that the total votes cast  represent a majority of all shares  entitled
to vote.  Upon  approval of the Plan by the  shareholders  of the Company as set
forth above, all Grants made under the Plan on or after the Effective Date shall
be fully  effective as if the  shareholders of the Company had approved the Plan
on the Effective Date. If the  shareholders  fail to approve the Plan within one
year after the Effective  Date, any Grants made hereunder shall be null and void
and of no effect.

     5.2 TERM. The Plan has no termination  date;  however,  no Incentive  Stock
Option may be granted on or after the tenth anniversary of the Effective Date.

     6. DISCRETIONARY GRANTS

     6.1 COMPANY OR SUBSIDIARY EMPLOYEES.  Grants (including Grants of Incentive
Stock  Options)  may be made under the Plan to any employee of the Company or of
any Subsidiary, including any such employee who is an officer or director of the
Company or of any  Subsidiary,  as the Committee  shall  determine and designate
from time to time.

     6.2  SERVICE  PROVIDERS.  Grants may be made under the Plan to any  Service
Provider whose participation in the Plan is determined by the Committee to be in
the  best  interests  of the  Company  and is so  designated  by the  Committee;
provided, however, that Grants to Service Providers who are not employees of the
Company or of any Subsidiary shall not be Incentive Stock Options.

     6.3 SUCCESSIVE  GRANTS. An eligible person may receive more than one Grant,
subject to such restrictions as are provided herein.


     7. GRANTS TO OUTSIDE DIRECTORS

     7.1 INITIAL  GRANTS OF OPTIONS.  Each  Outside  Director  who is  initially
elected to the Board on or after the Effective Date shall,  upon the date of his
or her  initial  election  by the  Board  or the  shareholders  of the  Company,
automatically  be awarded a Grant of an Option,  which shall not be an Incentive
Stock Option,  to purchase 15,000 shares of Stock (which amount shall be subject
to adjustment as provided in Section 17 hereof).
<PAGE>
     7.2 SUBSEQUENT GRANTS OF OPTIONS. Immediately following each Annual Meeting
of  Shareholders  of the Company  held after the  Effective  Date,  each Outside
Director then duly elected and serving (other than an Outside Director initially
elected to the Board at such Annual Meeting of Shareholders) shall automatically
be awarded a Grant of an Option,  which shall not be an Incentive  Stock Option,
to purchase  2,500 shares of Stock (which  amount shall be subject to adjustment
as provided in Section 17 hereof);  provided,  however, that no Outside Director
shall be  eligible to receive a Grant of Options  under this  Section 7.2 unless
such person attended,  in person or by telephone,  at least seventy-five percent
of the meetings held by the Board during the immediately preceding calendar year
(or such portion thereof during which the Outside Director served on the Board).

     8. LIMITATIONS ON GRANTS

     8.1 LIMITATION ON SHARES OF STOCK SUBJECT TO GRANTS.  The maximum number of
shares of Stock  subject  to Options  that can be awarded  under the Plan to any
person eligible for a Grant under Section 6 hereof is 2,500,000 during the first
ten years after the Effective Date and 250,000 per year thereafter.  The maximum
number  of  shares  of  Restricted  Stock  that can be  awarded  under  the Plan
(including for this purpose any shares of Stock  represented by Restricted Stock
Units) to any person  eligible for a Grant under Section 6 hereof is 250,000 per
year.

     8.2 LIMITATIONS ON INCENTIVE STOCK OPTIONS.  An Option shall  constitute an
Incentive  Stock Option only (i) if the Grantee of such Option is an employee of
the Company or any  Subsidiary of the Company;  (ii) to the extent  specifically
provided  in the  related  Award  Agreement;  and (iii) to the  extent  that the
aggregate  Fair Market Value  (determined  at the time the Option is granted) of
the shares of Stock with respect to which all  Incentive  Stock  Options held by
such Grantee  become  exercisable  for the first time during any  calendar  year
(under  the  Plan  and  all  other  plans  of the  Grantee's  employer  and  its
affiliates) does not exceed $100,000. This limitation shall be applied by taking
Options into account in the order in which they were granted.

     9. AWARD AGREEMENT

     Each Grant  pursuant to the Plan shall be evidenced by an Award  Agreement,
to be executed by the Company and by the  Grantee,  in such form or forms as the
Committee shall from time to time determine.  Award Agreements granted from time
to time or at the same time need not  contain  similar  provisions  but shall be
consistent with the terms of the Plan.  Each Award Agreement  evidencing a Grant
of Options shall specify  whether such Options are intended to be  non-qualified
stock options or Incentive Stock Options.

     10. OPTION PRICE

     The Option Price of each Option shall be fixed by the  Committee and stated
in the Award  Agreement  evidencing  such Option.  The Option Price shall be the
aggregate  Fair Market Value on the Grant Date of the shares of Stock subject to
the Option; PROVIDED,  HOWEVER, that in the event that a Grantee would otherwise
be ineligible to receive an Incentive  Stock Option by reason of the  provisions
of Sections 422(b)(6) and 424(d) of the Code (relating to ownership of more than
ten percent of the Company's  outstanding  Stock), the Option Price of an Option
granted to such Grantee  that is intended to be an Incentive  Stock Option shall
be not less than the greater of the par value of a share of Stock or 110 percent
of the Fair Market Value of a share of Stock on the Grant Date. In no case shall
the Option Price of any Option be less than the par value of a share of Stock.
<PAGE>
     11. VESTING, TERM AND EXERCISE OF OPTIONS

     11.1 VESTING AND OPTION  PERIOD.  Each Option  granted under the Plan shall
become exercisable in accordance with the following  schedule:  (i) prior to the
first  anniversary of the Grant Date, the Option shall not be exercisable;  (ii)
on the first anniversary of the Grant Date, the Option shall become  exercisable
with respect to one-third of the shares of Stock  subject to such Option;  (iii)
on the second anniversary of the Grant Date, the Option shall become exercisable
with respect to an  additional  one-third of the shares of Stock subject to such
Option and (iv) on the third  anniversary  of the Grant Date,  the Option  shall
become exercisable with respect to the remaining shares of Stock subject to such
Option  and  shall  remain  exercisable  in full up to (but not  including)  the
Termination  Date (as  defined in SECTION  11.2  hereof).  For  purposes of this
SECTION 11.1,  fractional  numbers of shares of Stock subject to an Option shall
be rounded down to the next nearest  whole  number.  The period during which any
Option shall be  exercisable  in accordance  with the foregoing  schedule  shall
constitute the "Option Period" with respect to such Option.

     11.2 TERM.  Each Option  granted  under the Plan shall  terminate,  and all
rights to purchase shares of Stock thereunder  shall cease,  upon the expiration
of ten years from the date such Option is granted,  or under such  circumstances
and on such date prior thereto as is set forth in the Plan or as may be fixed by
the  Committee  and stated in the Award  Agreement  relating to such Option (the
"Termination Date"); provided, however, that in the event that the Grantee would
otherwise be  ineligible  to receive an Incentive  Stock Option by reason of the
provisions of Sections  422(b)(6) and 424(d) of the Code  (relating to ownership
of more than ten percent of the  outstanding  Stock),  an Option granted to such
Grantee  that  is  intended  to  be an  Incentive  Stock  Option  shall  not  be
exercisable after the expiration of five years from its Grant Date.

     11.3 ACCELERATION. Any limitation on the exercise of an Option contained in
any Award  Agreement may be rescinded,  modified or waived by the Committee,  in
its sole  discretion,  at any time and from time to time after the Grant Date of
such Option,  so as to accelerate the time at which the Option may be exercised.
Notwithstanding  any other provision of the Plan, no Option shall be exercisable
in whole or in part prior to the date the Plan is approved  by the  shareholders
of the Company as provided in Section 5.1 hereof.

     11.4 TERMINATION OF EMPLOYMENT OR OTHER RELATIONSHIP.  Upon the termination
(i) of the employment of a Grantee with the Company or a Service Provider,  (ii)
of a Service  Provider's  relationship with the Company,  or (iii) of an Outside
Director's  service to the Company,  other than, in the case of individuals,  by
reason of death or  "permanent  and total  disability"  (within  the  meaning of
Section  22(e)(3)  of the  Code),  any Option or  portion  thereof  held by such
Grantee that has not vested in  accordance  with the  provisions of Section 11.1
hereof shall terminate  immediately,  and any Option or portion thereof that has
vested in accordance with the provisions of Section 11.1 hereof but has not been
exercised  shall  terminate  at the  close  of  business  on the  thirtieth  day
following  the  Grantee's   termination   of  service,   employment,   or  other
relationship, unless the Committee, in its discretion, extends the period during
which the Option may be exercised  (which period may not be extended  beyond the
original term of the Option).  Upon termination of an Option or portion thereof,
the Grantee shall have no further right to purchase  shares of Stock pursuant to
such Option or portion thereof.  Whether a leave of absence or leave on military
or government  service shall constitute a termination of employment for purposes
of the Plan shall be determined by the Committee,  which  determination shall be
final and  conclusive.  For purposes of the Plan, a termination  of  employment,
service  or other  relationship  shall not be deemed to occur if the  Grantee is
immediately  thereafter employed with the Company or any other Service Provider,
or is  engaged as a Service  Provider  or an Outside  Director  of the  Company.
Whether  a  termination  of  a  Service  Provider's  or  an  Outside  Director's
relationship  with the Company  shall have  occurred  shall be determined by the
Committee, which determination shall be final and conclusive.

     11.5 RIGHTS IN THE EVENT OF DEATH.  If a Grantee dies while employed by the
Company or a Service  Provider,  or while  serving as a Service  Provider  or an
Outside  Director,  all Options  granted to such Grantee shall fully vest on the
date of death, and the executors or  administrators  or legatees or distributees
<PAGE>
of such Grantee's estate shall have the right, at any time within one year after
the date of such Grantee's death (or such longer period as the Committee, in its
discretion,  may determine prior to the expiration of such one-year  period) and
prior to termination of the Option  pursuant to Section 11.2 above,  to exercise
any Option held by such Grantee at the date of such Grantee's death.

     11.6 RIGHTS IN THE EVENT OF DISABILITY.  If a Grantee terminates employment
with the Company or a Service Provider, or (if the Grantee is a Service Provider
who is an individual or is an Outside  Director)  ceases to provide  services to
the Company,  in either case by reason of the "permanent  and total  disability"
(within  the  meaning of Section  22(e)(3)  of the Code) of such  Grantee,  such
Grantee's Options shall continue to vest, and shall be exercisable to the extent
that  they are  vested,  for a period  of one year  after  such  termination  of
employment  or  service  (or  such  longer  period  as  the  Committee,  in  its
discretion,  may determine  prior to the  expiration  of such one-year  period),
subject to earlier  termination of the Option as provided in Section 11.2 above.
Whether a termination  of employment or service is to be considered by reason of
"permanent and total disability" for purposes of the Plan shall be determined by
the Committee, which determination shall be final and conclusive.

     11.7 LIMITATIONS ON EXERCISE OF OPTION. Notwithstanding any other provision
of the Plan, in no event may any Option be exercised, in whole or in part, prior
to the date the Plan is approved by the  shareholders of the Company as provided
herein,  or after ten years following the date upon which the Option is granted,
or after the  occurrence  of an event  referred  to in Section  17 hereof  which
results in termination of the Option.

     11.8 METHOD OF EXERCISE.  An Option that is exercisable may be exercised by
the  Grantee's  delivery  to the  Company of written  notice of  exercise on any
business day, at the Company's  principal office,  addressed to the attention of
the  Committee.  Such  notice  shall  specify the number of shares of Stock with
respect  to which the  Option is being  exercised  and shall be  accompanied  by
payment in full of the Option  Price of the shares for which the Option is being
exercised. The minimum number of shares of Stock with respect to which an Option
may be  exercised,  in whole or in part,  at any time shall be the lesser of (i)
100 shares or such lesser number set forth in the applicable Award Agreement and
(ii) the maximum number of shares available for purchase under the Option at the
time of exercise.  Payment of the Option Price for the shares purchased pursuant
to the exercise of an Option  shall be made (i) in cash or in cash  equivalents;
(ii) through the tender to the Company of shares of Stock, which shares shall be
valued,  for  purposes of  determining  the extent to which the Option Price has
been paid thereby, at their Fair Market Value on the date of exercise;  or (iii)
by a  combination  of the methods  described in (i) and (ii).  The Committee may
provide,  by  inclusion  of  appropriate  language in an Award  Agreement,  that
payment in full of the Option  Price need not  accompany  the written  notice of
exercise  provided that the notice of exercise  directs that the  certificate or
certificates  for the  shares  of Stock for which  the  Option is  exercised  be
delivered to a licensed  broker  acceptable  to the Company as the agent for the
individual   exercising  the  Option  and,  at  the  time  such  certificate  or
certificates  are  delivered,  the broker  tenders to the Company  cash (or cash
equivalents  acceptable to the Company) equal to the Option Price for the shares
of Stock  purchased  pursuant to the  exercise of the Option plus the amount (if
any) of federal  and/or  other taxes which the Company may in its  judgment,  be
required to withhold  with respect to the exercise of the Option.  An attempt to
exercise  any Option  granted  hereunder  other than as set forth above shall be
invalid and of no force and effect.  Unless  otherwise  stated in the applicable
Award Agreement,  an individual  holding or exercising an Option shall have none
of the  rights of a  shareholder  (for  example,  the right to  receive  cash or
dividend  payments or distributions  attributable to the subject shares of Stock
or to direct  the  voting of the  subject  shares of Stock ) until the shares of
Stock  covered  thereby are fully paid and issued to him.  Except as provided in
Section 17 hereof,  no adjustment shall be made for dividends,  distributions or
other rights for which the record date is prior to the date of such issuance.

     11.9  DELIVERY OF STOCK  CERTIFICATES.  Promptly  after the  exercise of an
Option by a Grantee and the payment in full of the Option  Price,  such  Grantee
shall  be  entitled  to the  issuance  of a stock  certificate  or  certificates
evidencing his or her ownership of the shares of Stock subject to the Option.
<PAGE>
     12. TRANSFERABILITY OF OPTIONS

     Each  Option  granted  pursuant  to this  Plan  shall,  during a  Grantee's
lifetime,   be  exercisable  only  by  the  Grantee  or  his  or  her  permitted
transferees,   and  neither  the  Option  nor  any  right  thereunder  shall  be
transferable by the Grantee, by operation of law or otherwise, other than as may
be provided in the Award Agreement  evidencing such Option or as may be provided
by will or the laws of descent  and  distribution.  Except as may be provided in
the Award  Agreement  evidencing  an  Option,  no  Option  shall be  pledged  or
hypothecated  (by  operation  of law or  otherwise)  or  subject  to  execution,
attachment or similar processes.

     13. RESTRICTED STOCK

     13.1 GRANT OF RESTRICTED STOCK OR RESTRICTED STOCK UNITS. The Committee may
from time to time grant  Restricted  Stock or Restricted  Stock Units to persons
eligible  to receive  such  Grants as set forth in Section 6 hereof,  subject to
such restrictions, conditions and other terms as the Committee may determine.

     13.2  RESTRICTIONS.  At the time a Grant of Restricted  Stock or Restricted
Stock  Units is made,  the  Committee  shall  establish  a period  of time  (the
"Restricted  Period")  applicable to such Restricted  Stock or Restricted  Stock
Units. The minimum  Restricted Period which may be provided for by the Committee
with respect to Restricted  Stock or Restricted Stock Units the vesting of which
is subject solely to the passage of time and/or  continued  employment  shall be
three years,  subject to earlier  expiration of the  Restricted  Period upon the
death, disability, retirement or other termination of service of the Grantee, or
upon a change in control of the Company,  in accordance  with the  provisions of
the Plan.  Each  Grant of  Restricted  Stock or  Restricted  Stock  Units may be
subject  to a  different  Restricted  Period.  The  Committee  may,  in its sole
discretion, at the time a Grant of Restricted Stock or Restricted Stock Units is
made, prescribe  restrictions in addition to or other than the expiration of the
Restricted  Period,  including  the  satisfaction  of  corporate  or  individual
performance  objectives,  which may be  applicable  to all or any portion of the
Restricted Stock or Restricted Stock Units. Such performance objectives shall be
established  in writing by the Committee  prior to the ninetieth day of the year
in which the Grant is made and while the  outcome  is  substantially  uncertain.
Performance  objectives  shall be based on Stock  price,  market  share,  sales,
earnings  per  share,  return on equity or  costs.  Performance  objectives  may
include  positive  results,  maintaining  the  status quo or  limiting  economic
losses.  Subject to the second sentence of this Section 13.2, the Committee also
may, in its sole discretion, shorten or terminate the Restricted Period or waive
any other restrictions applicable to all or a portion of the Restricted Stock or
Restricted Stock Units.  Neither Restricted Stock nor Restricted Stock Units may
be sold, transferred,  assigned,  pledged or otherwise encumbered or disposed of
during  the  Restricted  Period  or  prior  to the  satisfaction  of  any  other
restrictions  prescribed by the Committee with respect to such Restricted  Stock
or Restricted Stock Units.

     13.3 RESTRICTED STOCK CERTIFICATES. The Company shall issue, in the name of
each  Grantee to whom  Restricted  Stock has been  granted,  stock  certificates
representing  the total  number of shares of  Restricted  Stock  granted  to the
Grantee,  as soon as reasonably  practicable after the Grant Date. The Secretary
of the Company shall hold such certificates for the Grantee's benefit until such
time as the Restricted  Stock is forfeited to the Company,  or the  restrictions
lapse.

     13.4 RIGHTS OF HOLDERS OF RESTRICTED STOCK.  Unless the Committee otherwise
provides in an Award Agreement, holders of Restricted Stock shall have the right
to vote such Stock and the right to receive any dividends  declared or paid with
respect to such Stock.  The  Committee  may provide that any  dividends  paid on
Restricted Stock must be reinvested in shares of Stock,  which may or may not be
subject to the same  vesting  conditions  and  restrictions  applicable  to such
Restricted Stock. All distributions,  if any, received by a Grantee with respect
to Restricted Stock as a result of any stock split, stock dividend,  combination
of shares,  or other similar  transaction  shall be subject to the  restrictions
applicable to the original Grant.

     13.5 RIGHTS OF HOLDERS OF  RESTRICTED  STOCK  UNITS.  Unless the  Committee
otherwise  provides in an Award  Agreement,  holders of  Restricted  Stock Units
shall have no rights as stockholders  of the Company.  The Committee may provide
<PAGE>
in an Award  Agreement  evidencing  a Grant of  Restricted  Stock Units that the
holder of such  Restricted  Stock Units  shall be entitled to receive,  upon the
Company's  payment of a cash dividend on its  outstanding  Stock, a cash payment
for each Restricted Stock Unit held equal to the per-share  dividend paid on the
Stock.  Such Award  Agreement  may also  provide  that such cash payment will be
deemed reinvested in additional Restricted Stock Units at a price per unit equal
to the Fair Market  Value of a share of Stock on the date that such  dividend is
paid.

     13.6 TERMINATION OF EMPLOYMENT OR OTHER RELATIONSHIP.  Upon the termination
of the employment of a Grantee with the Company or a Service  Provider,  or of a
Service Provider's  relationship with the Company, in either case other than, in
the case of individuals,  by reason of death or "permanent and total disability"
(within the meaning of Section  22(e)(3) of the Code),  any Restricted  Stock or
Restricted Stock Units held by such Grantee that has not vested, or with respect
to which all  applicable  restrictions  and  conditions  have not lapsed,  shall
immediately  be deemed  forfeited,  unless  the  Committee,  in its  discretion,
determines  otherwise.  Upon forfeiture of Restricted  Stock or Restricted Stock
Units,  the Grantee  shall have no further  rights  with  respect to such Grant,
including but not limited to any right to vote Restricted  Stock or any right to
receive dividends with respect to shares of Restricted Stock or Restricted Stock
Units.  Whether a leave of absence or leave on  military or  government  service
shall  constitute a termination  of employment for purposes of the Plan shall be
determined by the Committee,  which determination shall be final and conclusive.
For  purposes  of the  Plan,  a  termination  of  employment,  service  or other
relationship  shall  not be  deemed  to  occur  if the  Grantee  is  immediately
thereafter  employed  with the  Company  or any other  Service  Provider,  or is
engaged as a Service  Provider.  Whether a termination  of a Service  Provider's
relationship  with the Company  shall have  occurred  shall be determined by the
Committee, which determination shall be final and conclusive.

     13.7 RIGHTS IN THE EVENT OF DEATH.  If a Grantee dies while employed by the
Company  or a Service  Provider  or while  serving  as a Service  Provider,  all
Restricted  Stock or Restricted  Stock Units granted to such Grantee shall fully
vest on the date of death, and the shares of Stock represented  thereby shall be
deliverable  in  accordance  with  the  terms  of the  Plan  to  the  executors,
administrators, legatees or distributees of the Grantee's estate.

     13.8 RIGHTS IN THE EVENT OF DISABILITY.  If a Grantee terminates employment
with the Company or a Service Provider, or (if the Grantee is a Service Provider
who is an individual) ceases to provide services to the Company,  in either case
by reason of the "permanent and total disability" (within the meaning of Section
22(e)(3)  of the  Code) of such  Grantee,  such  Grantee's  Restricted  Stock or
Restricted  Stock Units shall continue to vest in accordance with the applicable
Award Agreement for a period of one year after such termination of employment or
service  (or  such  longer  period  as the  Committee,  in its  discretion,  may
determine  prior to the  expiration  of such  one-year  period),  subject to the
earlier  forfeiture  of such  Restricted  Stock  or  Restricted  Stock  Units in
accordance  with  the  terms  of  the  applicable  Award  Agreement.  Whether  a
termination of employment or service is to be considered by reason of "permanent
and total  disability"  for  purposes  of the Plan  shall be  determined  by the
Committee, which determination shall be final and conclusive.

     13.9  DELIVERY  OF STOCK  AND  PAYMENT  THEREFOR.  Upon the  expiration  or
termination  of  the  Restricted  Period  and  the  satisfaction  of  any  other
conditions prescribed by the Committee, the restrictions applicable to shares of
Restricted Stock or Restricted Stock Units shall lapse, and, upon payment by the
Grantee to the Company,  in cash or by check,  of the aggregate par value of the
shares of Stock  represented by such Restricted Stock or Restricted Stock Units,
a stock  certificate  for  such  shares  shall  be  delivered,  free of all such
restrictions, to the Grantee or the Grantee's beneficiary or estate, as the case
may be.
<PAGE>
     14. PARACHUTE LIMITATIONS

     Notwithstanding any other provision of this Plan or of any other agreement,
contract,  or  understanding  heretofore or hereafter  entered into by a Grantee
with  the  Company  or  any  Subsidiary,  except  an  agreement,   contract,  or
understanding  hereafter  entered  into  that  expressly  modifies  or  excludes
application of this paragraph (an "Other  Agreement"),  and  notwithstanding any
formal  or  informal  plan or  other  arrangement  for the  direct  or  indirect
provision  of  compensation  to the  Grantee  (including  groups or  classes  of
participants or beneficiaries of which the Grantee is a member),  whether or not
such compensation is deferred,  is in cash, or is in the form of a benefit to or
for the Grantee (a  "Benefit  Arrangement"),  if the Grantee is a  "disqualified
individual," as defined in Section  280G(c) of the Code, any Option,  Restricted
Stock or Restricted Stock Unit held by that Grantee and any right to receive any
payment or other benefit under this Plan shall not become  exercisable or vested
(i) to the extent that such right to  exercise,  vesting,  payment,  or benefit,
taking  into  account  all other  rights,  payments,  or  benefits to or for the
Grantee under this Plan,  all Other  Agreements,  and all Benefit  Arrangements,
would  cause  any  payment  or  benefit  to the  Grantee  under  this Plan to be
considered a "parachute payment" within the meaning of Section 280G(b)(2) of the
Code as then in  effect  (a  "Parachute  Payment")  and (ii) if,  as a result of
receiving a Parachute Payment,  the aggregate  after-tax amounts received by the
Grantee from the Company under this Plan, all Other Agreements,  and all Benefit
Arrangements  would be less than the  maximum  after-tax  amount  that  could be
received  by the  Grantee  without  causing  any such  payment  or benefit to be
considered a Parachute Payment.  In the event that the receipt of any such right
to exercise,  vesting,  payment, or benefit under this Plan, in conjunction with
all other  rights,  payments,  or benefits to or for the Grantee under any Other
Agreement or any Benefit Arrangement would cause the Grantee to be considered to
have received a Parachute  Payment under this Plan that would have the effect of
decreasing the after-tax  amount  received by the Grantee as described in clause
(ii) of the preceding  sentence,  then the Grantee shall have the right,  in the
Grantee's sole  discretion,  to designate  those rights,  payments,  or benefits
under this Plan, any Other Agreements,  and any Benefit Arrangements that should
be reduced or  eliminated  so as to avoid  having the  payment or benefit to the
Grantee under this Plan be deemed to be a Parachute Payment.

     15. REQUIREMENTS OF LAW

     15.1 GENERAL. The Company shall not be required to sell or issue any shares
of Stock under any Grant if the sale or issuance of such shares would constitute
a violation by the Grantee,  any other individual  exercising an Option,  or the
Company of any provision of any law or regulation of any governmental authority,
including   without   limitation  any  federal  or  state   securities  laws  or
regulations. If at any time the Company shall determine, in its discretion, that
the listing, registration or qualification of any shares subject to a Grant upon
any securities  exchange or under any governmental  regulatory body is necessary
or desirable as a condition of, or in connection  with, the issuance or purchase
of shares hereunder,  no shares of Stock may be issued or sold to the Grantee or
any other  individual  exercising  an Option  pursuant to such Grant unless such
listing,  registration,  qualification,  consent  or  approval  shall  have been
effected or obtained free of any conditions  not acceptable to the Company,  and
any delay caused  thereby shall in no way affect the date of  termination of the
Grant. Specifically, in connection with the Securities Act, upon the exercise of
any Option or the delivery of any shares of Restricted Stock or Stock underlying
Restricted  Stock Units,  unless a registration  statement  under such Act is in
effect with  respect to the shares of Stock  covered by such Grant,  the Company
shall not be  required  to sell or issue such shares  unless the  Committee  has
received  evidence  satisfactory to it that the Grantee or any other  individual
exercising  an Option may acquire  such shares  pursuant  to an  exemption  from
registration  under the Securities Act. Any  determination in this connection by
the Committee  shall be final,  binding,  and  conclusive.  The Company may, but
shall in no event be  obligated  to,  register  any  securities  covered  hereby
pursuant to the  Securities  Act. The Company shall not be obligated to take any
affirmative  action in order to cause the  exercise of an Option or the issuance
of shares of Stock  pursuant to the Plan to comply with any law or regulation of
any governmental  authority.  As to any jurisdiction  that expressly imposes the
requirement  that an Option shall not be  exercisable  until the shares of Stock
covered by such  Option are  registered  or are exempt  from  registration,  the
exercise  of  such  Option  (under  circumstances  in  which  the  laws  of such
jurisdiction  apply) shall be deemed  conditioned upon the effectiveness of such
registration or the availability of such an exemption.
<PAGE>
     15.2 RULE 16B-3.  It is the intent of the Company  that Grants  pursuant to
the Plan and the  exercise of Options  granted  hereunder  will  qualify for the
exemption  provided by Rule 16b-3 under the Exchange Act. To the extent that any
provision  of the Plan or  action  by the  Committee  does not  comply  with the
requirements  of Rule  16b-3,  it  shall be  deemed  inoperative  to the  extent
permitted by law and deemed advisable by the Committee, and shall not affect the
validity of the Plan.  In the event that Rule 16b-3 is revised or replaced,  the
Board may exercise its  discretion to modify this Plan in any respect  necessary
to satisfy the  requirements  of, or to take  advantage  of any features of, the
revised exemption or its replacement.

     16. AMENDMENT AND TERMINATION OF THE PLAN

     The  Board  may,  at any time and from  time to time,  amend,  suspend,  or
terminate  the Plan as to any shares of Stock as to which  Grants  have not been
made;  provided,  however,  that the Board  shall not,  without  approval of the
Company's  shareholders,  amend the Plan such that it does not  comply  with the
Code.  The  Company  may  retain  the  right  in an Award  Agreement  to cause a
forfeiture  of the gain  realized by a Grantee on account of the Grantee  taking
actions in  "competition  with the Company," as defined in the applicable  Award
Agreement.  Furthermore,  the  Company  may annul a Grant if the  Grantee  is an
employee of the Company or an affiliate and is terminated "for cause" as defined
in the applicable Award Agreement.  Except as permitted under this Section 16 or
Section 17 hereof, no amendment,  suspension,  or termination of the Plan shall,
without the consent of the Grantee,  alter or impair rights or obligations under
any Grant theretofore awarded under the Plan.

     17. EFFECT OF CHANGES IN CAPITALIZATION

     17.1  CHANGES  IN STOCK.  If the number of  outstanding  shares of Stock is
increased or decreased or the shares of Stock are changed into or exchanged  for
a  different  number or kind of shares or other  securities  of the  Company  on
account of any recapitalization,  reclassification,  stock split, reverse split,
combination of shares,  exchange of shares, stock dividend or other distribution
payable in capital stock,  or other increase or decrease in such shares effected
without receipt of  consideration  by the Company  occurring after the Effective
Date,  the number and kinds of shares for which  Grants of  Options,  Restricted
Stock and  Restricted  Stock  Units may be made under the Plan shall be adjusted
proportionately and accordingly by the Company. In addition, the number and kind
of shares for which Grants are outstanding shall be adjusted proportionately and
accordingly  so that  the  proportionate  interest  of the  Grantee  immediately
following  such  event  shall,  to  the  extent  practicable,  be  the  same  as
immediately before such event. Any such adjustment in outstanding  Options shall
not change the  aggregate  Option Price  payable with respect to shares that are
subject to the unexercised portion of the Option outstanding but shall include a
corresponding proportionate adjustment in the Option Price per share.

     17.2  REORGANIZATION  IN WHICH THE COMPANY IS THE  SURVIVING  ENTITY AND IN
WHICH NO CHANGE OF  CONTROL  OCCURS.  Subject  to Section  17.3  hereof,  if the
Company  shall  be the  surviving  entity  in  any  reorganization,  merger,  or
consolidation  of the  Company  with  one or more  other  entities,  any  Option
theretofore  granted  pursuant  to the Plan  shall  pertain  to and apply to the
securities  to which a holder of the  number of shares of Stock  subject to such
Option  would have been  entitled  immediately  following  such  reorganization,
merger, or consolidation,  with a corresponding  proportionate adjustment of the
Option Price per share so that the aggregate  Option Price  thereafter  shall be
the same as the aggregate  Option Price of the shares  remaining  subject to the
Option  immediately  prior to such  reorganization,  merger,  or  consolidation.
Subject to any  contrary  language in an Award  Agreement  evidencing a Grant of
Restricted  Stock,  any  restrictions  applicable to such Restricted Stock shall
apply as well to any  replacement  shares received by the Grantee as a result of
the reorganization, merger or consolidation.

     17.3  REORGANIZATION,  SALE OF ASSETS  OR SALE OF STOCK  WHICH  INVOLVES  A
CHANGE OF CONTROL.  Upon the dissolution or liquidation of the Company or upon a
merger,  consolidation,  or reorganization of the Company with one or more other
entities in which the  Company is not the  surviving  entity,  or upon a sale of
substantially  all of the assets of the Company to another  entity,  or upon any
transaction (including,  without limitation, a merger or reorganization in which
<PAGE>
the Company is the surviving  entity)  approved by the Board that results in any
person or  entity  (or  person or  entities  acting as a group or  otherwise  in
concert,  other  than B.  Wayne  Hughes  and  members  of his  family  and their
affiliates)  owning fifty  percent or more of the  combined  voting power of all
classes of securities of the Company,  (i) all outstanding  shares of Restricted
Stock  and  Restricted  Stock  Units  shall be deemed  to have  vested,  and all
restrictions  and conditions  applicable to such shares of Restricted  Stock and
Restricted Stock Units shall be deemed to have lapsed,  immediately prior to the
occurrence  of such event,  and (ii) all  Options  outstanding  hereunder  shall
become immediately exercisable for a period of fifteen days immediately prior to
the scheduled  consummation of the event.  Any exercise of an Option during such
fifteen-day  period shall be conditioned  upon the consummation of the event and
shall be effective only immediately  before the consummation of the event.  Upon
consummation  of any such event,  the Plan and all  outstanding  but unexercised
Options shall  terminate,  except to the extent  provision is made in writing in
connection  with  such  transaction  for  the  continuation  of the  Plan or the
assumption of such Options theretofore granted, or for the substitution for such
Options of new options covering the stock of a successor Company, or a parent or
subsidiary thereof,  with appropriate  adjustments as to the number and kinds of
shares  or units  and  exercise  prices,  in which  event  the Plan and  Options
theretofore  granted  shall  continue  in the  manner  and  under  the  terms so
provided.  The Committee  shall send written notice of an event that will result
in such a  termination  to all  individuals  who hold Options not later than the
time at which the Company gives notice thereof to its shareholders.

     17.4  ADJUSTMENTS.  Adjustments  under this Section 17 related to shares of
Stock  or  securities  of the  Company  shall  be made by the  Committee,  whose
determination  in that  respect  shall be  final,  binding  and  conclusive.  No
fractional  shares  or other  securities  shall be issued  pursuant  to any such
adjustment,  and any  fractions  resulting  from  any such  adjustment  shall be
eliminated in each case by rounding downward to the nearest whole share.

     17.5 NO LIMITATIONS ON COMPANY.  The making of Grants  pursuant to the Plan
shall not  affect or limit in any way the right or power of the  Company to make
adjustments,  reclassifications,  reorganizations,  or changes of its capital or
business structure or to merge, consolidate,  dissolve, or liquidate, or to sell
or transfer all or any part of its business or assets.

     18. DISCLAIMER OF RIGHTS

     No  provision  in the  Plan or in any  Grant or  Award  Agreement  shall be
construed  to confer  upon any  individual  the right to remain in the employ or
service of the Company or any  affiliate,  or to  interfere  in any way with any
contractual  or other right or authority of the Company or any Service  Provider
either to  increase  or  decrease  the  compensation  or other  payments  to any
individual  at any time, or to terminate  any  employment or other  relationship
between any  individual and the Company or a Service  Provider.  No provision in
the Plan or in any Grant awarded or Award Agreement entered into pursuant to the
Plan shall be construed to confer upon any individual the right to remain in the
service of the  Company as a director  (including  as an Outside  Director),  or
shall  interfere  with  or  restrict  in any  way the  rights  of the  Company's
shareholders to remove any director pursuant to the provisions of the California
General   Corporation   Law,  as  from  time  to  time  amended.   In  addition,
notwithstanding anything contained in the Plan to the contrary, unless otherwise
stated in the applicable Award Agreement,  no Grant awarded under the Plan shall
be affected by any change of duties or position  of the  Optionee  (including  a
transfer to or from the Company or a Service Provider),  so long as such Grantee
continues  to be a  director,  officer,  consultant,  employee,  or  independent
contractor  (as the case  may be) of the  Company  or a  Service  Provider.  The
obligation  of the  Company to pay any  benefits  pursuant to this Plan shall be
interpreted  as a contractual  obligation  to pay only those  amounts  described
herein, in the manner and under the conditions prescribed herein. The Plan shall
in no way be  interpreted  to require the  Company to transfer  any amounts to a
third party trustee or otherwise hold any amounts in trust or escrow for payment
to any participant or beneficiary  under the terms of the Plan. No Grantee shall
have any of the  rights of a  shareholder  with  respect  to the shares of Stock
subject to an Option  except to the extent the  certificates  for such shares of
Stock shall have been issued upon the exercise of the Option.
<PAGE>
     19. NONEXCLUSIVITY OF THE PLAN

     Neither  the  adoption  of the Plan nor the  submission  of the Plan to the
shareholders  of the Company for  approval  shall be  construed  as creating any
limitations  upon the  right and  authority  of the  Board to adopt  such  other
incentive compensation arrangements (which arrangements may be applicable either
generally to a class or classes of individuals or  specifically  to a particular
individual or particular  individuals) as the Board in its discretion determines
desirable,   including,  without  limitation,  the  granting  of  stock  options
otherwise than under the Plan.

     20. WITHHOLDING TAXES

     The Company, a Subsidiary or a Service Provider,  as the case may be, shall
have the right to deduct from  payments of any kind  otherwise  due to a Grantee
any Federal,  state,  or local taxes of any kind  required by law to be withheld
with  respect to the vesting of or other  lapse of  restrictions  applicable  to
Restricted Stock or Restricted Stock Units or upon the issuance of any shares of
Stock upon the exercise of an Option.  At the time of such  vesting,  lapse,  or
exercise,  the Grantee shall pay to the Company,  the  Subsidiary or the Service
Provider, as the case may be, any amount that the Company, the Subsidiary or the
Service  Provider  may  reasonably  determine  to be  necessary  to satisfy such
withholding  obligation.  Subject  to the prior  approval  of the  Company,  the
Subsidiary or the Service  Provider,  which may be withheld by the Company,  the
Subsidiary or the Service Provider,  as the case may be, in its sole discretion,
the Grantee may elect to satisfy such  obligations,  in whole or in part, (i) by
causing the Company,  the Subsidiary or the Service  Provider to withhold shares
of Stock otherwise issuable to the Grantee or (ii) by delivering to the Company,
the  Subsidiary  or the Service  Provider  shares of Stock  already owned by the
Grantee.  The shares of Stock so delivered  or withheld  shall have an aggregate
Fair Market Value equal to such withholding  obligations.  The Fair Market Value
of the shares of Stock  used to satisfy  such  withholding  obligation  shall be
determined by the Company, the Subsidiary or the Service Provider as of the date
that the amount of tax to be  withheld  is to be  determined.  A Grantee who has
made an election  pursuant to this Section 20 may satisfy his or her withholding
obligation  only with  shares of Stock that are not  subject to any  repurchase,
forfeiture, unfulfilled vesting, or other similar requirements.

     21. CAPTIONS

     The  use of  captions  in  this  Plan  or any  Award  Agreement  is for the
convenience  of reference only and shall not affect the meaning of any provision
of the Plan or such Award Agreement.

     22. OTHER PROVISIONS

     Each  Grant  awarded  under  the Plan may  contain  such  other  terms  and
conditions not inconsistent with the Plan as may be determined by the Committee,
in its sole discretion.

     23. NUMBER AND GENDER

     With respect to words used in this Plan,  the singular  form shall  include
the plural form, the masculine gender shall include the feminine  gender,  etc.,
as the context requires.

     24. SEVERABILITY

     If any provision of the Plan or any Award  Agreement shall be determined to
be  illegal  or  unenforceable  by any  court  of law in any  jurisdiction,  the
remaining  provisions  hereof and thereof shall be severable and  enforceable in
accordance with their terms, and all provisions shall remain  enforceable in any
other jurisdiction.
<PAGE>

     25. GOVERNING LAW

     The validity and  construction of this Plan and the instruments  evidencing
the  Grants  awarded  hereunder  shall be  governed  by the laws of the State of
California.

                                      * * *

     The Plan was duly  adopted and  approved by the Board of  Directors  of the
Company as of the 13th day of August, 1996.


                                                     /S/ SARAH HASS
                                                     Sarah Hass
                                                     Secretary of the Company


     The Plan was duly  approved by the  shareholders  of the Company on the 7th
day of October, 1996.


                                                     /S/ SARAH HASS
                                                     Sarah Hass
                                                     Secretary of the Company

     The Plan was duly  amended by the Board of  Directors of the Company on the
7th day of October, 1996.


                                                      /S/ SARAH HASS
                                                     Sarah Hass
                                                     Secretary of the Company