WESTERBEKE CORPORATION
                           1986 STOCK OPTION PLAN
              AS AMENDED ON JANUARY 6, 1987 AND ON MAY 26, 1988
              -------------------------------------------------

      1.    Purposes of Plan.  The purposes of this Plan, which shall be
known as the 1986 Stock Option Plan and is hereinafter referred to as the
"Plan", are (i) to provide incentives for key employees of Westerbeke
Corporation (the "Company") and its subsidiary or parent corporations
(within the respective meanings of Section 425(f ) and 425(e) of the
Internal Revenue Code of 1986, as amended (the "Code"), and referred to
herein as "Subsidiary" and "Parent", respectively) by encouraging their
ownership of the common stock, $.01 par value, of the Company (the "Stock")
and (ii) to aid the Company in retaining such key employees, upon whose
efforts the Company's success and future growth depends, and attracting
other such employees.

      2.    Administration.  The Plan shall be administered by a Stock
Option Committee (the "Committee") of the Board of Directors, as hereinafter
provided.  For purposes of administration, the Committee, subject to the
terms of the Plan, shall have plenary authority to establish such rules and
regulations, make such determinations and interpretations, and take such
other administrative actions as it deems necessary or advisable.  All
determinations and interpretations made by the Committee shall be final,
conclusive and binding on all persons, including Optionees (as hereinafter
defined) and their legal representatives and beneficiaries.

      The Committee shall be appointed from time to time by the Board of
Directors and shall consist of not fewer than three of its members.  Unless
otherwise determined by the Board of Directors, no member of the Board of
Directors who serves on the Committee shall be eligible to participate in
the Plan.  The Board of Directors shall designate one of the members of the
Committee as its Chairman.  The Committee shall hold its meetings at such
times and places as it may determine.  A majority of its members shall
constitute a quorum.  All determinations of the Committee shall be made by a
majority of its members.  Any decision or determination reduced to writing
and signed by all members shall be as effective as if it had been made by a
majority vote at a meeting duly called and held.  The Committee may appoint
a secretary (who need not be a member of the Committee).  No member of the
Committee shall be liable for any act or omission with respect to his
service on the Committee, if he acts in good faith and in a manner he
reasonably believes to be in or not opposed to the best interests of the
Company.  Service on the Committee shall constitute service as a director of
the Company for all purposes.

      3.    Stock Available for Options.  There shall be available for
options under the Plan a total of 300,000 shares of Stock, subject to any
adjustments which may be made pursuant to Section 5(f ) hereof.  Shares of
Stock used for purposes of the Plan may be either authorized and unissued
shares, or previously issued shares held in the treasury of the Company, or
both.  Shares of Stock covered by options which have terminated or expired
prior to exercise shall be available for further options hereunder.

      4.    Eligibility.  Options under the Plan may be granted to key
employees of the Company or any Subsidiary or Parent, including officers or
directors of the Company or any Subsidiary or Parent.  Options may be
granted to eligible employees whether or not they hold or have held options
previously granted under the Plan or otherwise granted or assumed by the
Company.  In selecting employees for options, the Committee may take into
consideration any factors it may deem relevant, including its estimate of
the employee's present and potential contributions to the success of the
Company and its Subsidiaries.  Service as a director or officer of the
Company or any Parent or Subsidiary shall be considered employment for
purposes of the Plan.

      5.    Terms and Conditions of Options.  The Committee shall, in its
discretion, prescribe the terms and conditions of the options to be granted
hereunder, which terms and conditions need not be the same in each case,
subject to the following:

      (a)    Option Price.  The price at which each share of Stock covered
by an option granted under the Plan may be purchased shall be determined by
the Committee and shall not be less than the lesser of (i) the tangible book
value per share of Stock, determined in accordance with generally accepted
accounting principles, as of the end of the fiscal quarter of the Company
immediately preceding the fiscal quarter in which the option is granted, or
(ii) the market value per share of Stock on the date of grant of an option
as determined pursuant to Section 5(c).  The date of the grant of an option
shall be the date specified by the Committee in its grant of the option.

      (b)    Option Period.  The period for exercise of an option shall in
no event be more than ten years from the date of grant, or, in the case of
any option intended to be an incentive stock option pursuant to Section 6
granted to an Optionee owning, on the date of grant, stock possessing more
than 10% of the total combined voting power of all classes of stock of the
Company or of any Parent or Subsidiary, more than five years from the date
of grant.  Options may, in the discretion of the Committee, be made
exercisable in installments during the option period.  Any shares not
purchased on any applicable installment date may be purchased thereafter at
any time before the expiration of the option period.

      (c)    Exercise of Options.  In order to exercise an option, the
holder thereof (the "Optionee") shall deliver to the Company written notice
specifying the number of shares of Stock to be purchased, together with cash
or a certified or bank cashier's check payable to the order of the Company
in the full amount of the purchase price therefor; provided that, for the
purpose of assisting an Optionee to exercise an option, the Company may make
loans to the Optionee or guarantee loans made by third parties to the
Optionee, on such terms and conditions as the Board of Directors may
authorize; and provided further that such purchase price may be paid in
shares of Stock owned by the Optionee having a market value on the date of
exercise equal to the aggregate purchase price, or in a combination of cash
and Stock.  For purposes of the Plan, the market value per share of Stock
shall be the last sale price regular way on the date of reference, or, in
case no sale takes place on such day, the average of the closing high bid
and low asked prices regular way, in either case on the principal national
securities exchange on which the stock is listed or admitted to trading, or
if the Stock is not listed or admitted to trading on any national securities
exchange, the average of the closing high bid and low asked prices of the
Stock in the over-the-counter market on such date, as reported on the
National Association of Securities Dealers Automated Quotation System
("NASDAQ"), or if there are no such prices reported on NASDAQ on such date,
as furnished to the Committee by any New York Stock Exchange member selected
from time to time by the Committee for such purpose.  If there is no bid or
asked price reported on any such date, the market value shall be determined
by the Committee in accordance with the regulations promulgated under
Section 2031 of the Code, or by any other appropriate method selected by the
Committee.  If the Optionee so requests, shares of Stock purchased upon
exercise of an option may be issued in the name of the Optionee or another
person.  An Optionee shall have none of the rights of a stockholder until
the shares of Stock are issued to him.  An option may not be exercised for
less than ten shares of Stock, or the number of shares of Stock remaining
subject to such option, whichever is smaller.

      (d)    Effect of Termination of Employment.  An option may not be
exercised after the Optionee has ceased to be in the employ of the Company
or any Subsidiary or Parent, except in the following circumstances:

      (i)    If the Optionee's employment is terminated by action of his
employer, or by reason of disability or retirement under any retirement plan
maintained by the Company or any Subsidiary or Parent, the option may be
exercised by the Optionee within three months after such termination, but
only as to any shares exercisable on the date the Optionee's employment so
terminates;

      (ii)    In the event of the death of the Optionee during the three
month period after termination of employment covered by (i) above, the
person or persons to whom his rights are transferred by will or the laws of
descent and distribution shall have a period of one year from the date of
his death to exercise any options which were exercisable by the Optionee at
the time of his death;

      (iii)    In the event of the death of the Optionee while employed, the
option shall thereupon become exercisable in full, and the person or persons
to whom the Optionee's rights are transferred by will or the laws of descent
and distribution shall have a period of one year from the date of the
Optionee's death to exercise such option.  The application of the foregoing
sentence to any outstanding options which are incentive stock options shall
be limited as required by Section 422A(b)(7) of the Code and such
outstanding options in excess of such limitation shall, immediately upon the
occurrence of the event described in the foregoing sentence, be treated for
all purposes of the plan as nonstatutory stock options.

      Nothing in the Plan or in any option granted pursuant to the Plan (in
the absence of an express provision to the contrary) shall confer on any
individual any right to continue in the employ of the Company or any
Subsidiary or Parent or interfere in any way with the right of the Company
to terminate his employment at any time.

      (e)    Nontransferability of Options.  During the lifetime of an
Optionee, options held by such Optionee shall be exercisable only by him.
No option shall be transferable other than by will or the laws of descent
and distribution.

      (f)    Adjustments for Change in Stock Subject to Plan and Other
Events.  In the event of a reorganization, recapitalization, stock split,
stock dividend, combination of shares, merger, consolidation, rights
offering, or any other change in the corporate structure or shares of the
Company, (i) except as provided in, (ii) below, the Committee shall make
such adjustments, if any, as it deems appropriate in the number and kind of
shares subject to the Plan, in the number and kind of shares covered by
outstanding options, or in the option price per share, or both and (ii) the
Board of Directors of the Company shall make such adjustments, if any, as it
deems appropriate in the maximum number of shares which may be subject to
options granted to all directors of the Company and in the maximum number of
shares which may be subject to options granted to each director, in each
case pursuant to Section 5(i) hereof, in the number and kind of shares
covered by outstanding options, or in the option price per shares, or both,
with respect to options held by directors of the Company.

      In connection with any merger or consolidation in which the Company is
not the surviving corporation or any sale or transfer by the Company of all
or substantially all its assets or any tender offer or exchange offer for or
the acquisition, directly or indirectly, by any person or group of all or a
majority of the then outstanding voting securities of the Company, all
outstanding options under the Plan shall become exercisable in full,
notwithstanding any other provision of the Plan or of any outstanding
options granted thereunder, on and after (i) 15 days prior to the effective
date of such merger, consolidation, sale, transfer or acquisition or (ii)
the date of commencement of such tender offer or exchange offer, as the case
may be.  The provisions of the foregoing sentence shall apply to any
outstanding options which are incentive stock options to the extent
permitted by Section 422A(b)(7) of the Code and such outstanding options in
excess thereof shall, immediately upon the occurrence of the event described
in clause (i) or (ii) of the foregoing sentence, be treated for all purposes
of the plan as nonstatutory stock options and shall be immediately
exercisable as such as provided in the foregoing sentence.  Notwithstanding
the foregoing, in no event shall any option be exercisable after the date of
termination of the exercise period of such option specified in Sections 5(b)
and 5(i)(2) and shall be immediately exercisable as such as provided in the
foregoing sentence.

      (g)    Registration, Listing and Qualification of  Shares of Stock.
Each option shall be subject to the requirement that if at any time the
Board of Directors shall determine that the registration, listing or
qualification of the shares of Stock covered thereby upon any securities
exchange or under any federal or state law, or the consent or approval of
any governmental regulatory body is necessary or desirable as a condition
of, or in connection with, the granting of such option or the purchase of
shares of Stock thereunder, no such option may be exercised unless and until
such registration, listing, qualification, consent or approval shall have
been effected or obtained free of any conditions not acceptable to the Board
of Directors.  The Company may require that any person exercising an option
shall make such representations and agreements and furnish such information
as it deems appropriate to assure compliance with the foregoing or any other
applicable legal requirement.

      (h)    Other Terms and Conditions.  The Committee may impose such
other terms and conditions, not inconsistent with the terms hereof, on the
grant or exercise of options, as it deems advisable.

      (i)    Terms and Conditions of Options Granted to Directors.
Notwithstanding any provision contained in this Plan to the contrary, in the
event that the Board of Directors shall determine to authorize grants of
options to members of the Committee pursuant to Section 2, then, so long as
any person serving on the Committee is not a "disinterested person" within
the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as
amended, the terms and conditions of options granted under the Plan to any
director of the Company shall be as follows:

            (1)    The price at which each share of Stock subject to an
      option may be purchased shall, subject to any adjustments which may be
      made pursuant to Section 5(f ), in no event be less than the market
      value per share of Stock on the date of grant, and provided further
      that in the event the option is intended to be an incentive stock
      option pursuant to Section 6 and the Optionee owns on the date of
      grant stock possessing more than 10% of the total combined voting
      power of all classes of stock of the Company or of any Parent or
      Subsidiary, the price per share shall not be less than 110% of the
      market value per share of Stock on the date of grant.

            (2)    The option may be exercised to purchase shares of Stock
      covered by the option only in accordance with the following schedule:

                                               Cumulative Percentage
                                                of Aggregate Number
                                                of Shares of Stock
                                                Covered by Option
                                                  Which May be
      Exercise Period                              Purchased
      --------------------------------------------------------------
      Within 1st year from date of grant                20%
      Beginning one year from date of grant             40%
      Beginning two years from date of grant            60%
      Beginning three years from date of grant          80%
      Beginning four years from date of grant          100%

      less, in the case of each exercise period, the number of shares of
      Stock, if any, previously purchased under the option.  The option
      shall terminate and no shares of Stock may be purchased thereunder
      more than ten years after the date of grant, provided that if the
      option is intended to be an incentive stock option pursuant to Section
      6 and the Optionee owns on the date of grant stock possessing more
      than 10% of the total combined voting power of all classes of stock of
      the Company or of any Parent or Subsidiary, the Option shall not be
      exercisable after the fifth anniversary of the date of grant.

            (3)    The maximum number of shares of Stock which may be
      subject to options granted to all directors pursuant to this Section
      5(i) shall be 75,000 shares in the aggregate and the maximum number of
      shares of Stock which may be subject to options granted to any
      director (including any options granted under this Plan to a director
      in his position as an officer or employee of the Company) shall be
      75,000 shares.

      6.    Provisions Applicable to Incentive Stock Options.  The Committee
may, in its discretion, grant options under the Plan to eligible employees
which constitute "incentive stock options" (within the meaning of Section
422A(b) of the code), provided, however, that (a) no such incentive stock
options granted before January 1, 1987 shall (i) be exercisable while there
is "outstanding" (within the meaning of Section 422A(c)(7) of the Internal
Revenue Code of 1954) any incentive stock option previously granted to the
holder thereof to purchase stock of the Company, or of any Parent or
Subsidiary, or of any predecessor of any of such corporations, or (ii) cover
a number of shares in excess of the maximum number of shares permitted to be
covered pursuant to the provisions of Section 422(a)(8) of the Internal
Revenue Code of 1954, (b) no incentive stock options granted after December
31, 1986 shall cover a number of shares of Stock in excess of the maximum
number of shares permitted to be covered pursuant to the provisions of
Section 422A(b)(7) of the Code, (c) no incentive stock option shall be
granted at an option price which is less than the market value per share of
Stock on the date of the grant, and (d) Section 5(d)(ii) hereof' shall not
apply to any incentive stock option.

      7.    Amendment and Termination.  Unless the Plan shall theretofore
have been terminated as hereinafter provided, the Plan shall terminate on,
and no option shall be granted thereunder after, ten years from adoption
provided, however, that the Board of Directors may at any time prior to that
date terminate the Plan.  The Board of Directors may at any time amend the
Plan; provided, however, that, except as contemplated in Section 5(f )
hereof, the Board of Directors shall not, without approval by a majority of
the votes cast by the stockholders of the Company at a meeting of
stockholders at which a proposal to amend the Plan is voted upon, (i)
increase the maximum number of shares of Stock for which options may be
granted under the Plan, (ii) change the formula as to minimum option prices,
(iii) extend the period during which options may be granted or exercised, or
(iv) except as otherwise provided in the Plan, amend the requirements as to
the class of employees eligible to receive options.   No termination or
amendment of the Plan may, without the consent of an Optionee, adversely
affect the rights of such Optionee under any option held by such Optionee.

      8.    Effectiveness of Plan.  The Plan will not be made effective
unless approved by a majority of the votes cast by the stockholders of the
Company at a meeting of stockholders duly called and held for such purpose
or in lieu thereof, pursuant to a unanimous written consent of stockholders,
and no option granted hereunder shall be exercisable prior to such approval.

      9.    Other Actions.  Nothing contained in the Plan shall be construed
to limit the authority of the Company to exercise its corporate rights and
powers, including but not by way of limitation, the right of the Company to
grant or assume options for proper corporate purposes other than under the
Plan with respect to any employee or other person, firm, corporation or
association.