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                                                                    EXHIBIT 10.3


                             PICTURETEL CORPORATION

                              EQUITY INCENTIVE PLAN

                      (AS AMENDED THROUGH OCTOBER 18, 1996)


1.         PURPOSE

           The purpose of this Equity Incentive Plan (the "Plan") is to advance
the interests of Picturetel Corporation (the "Company") by enhancing its ability
to (a) attract and retain employees who are in a position to make significant
contributions to the success of the Company and its subsidiaries: (b) reward
employees for such contributions: (c) encourage employees to take into account
the long-term interests of the Company through ownership of shares of the
Company's common stock ("Stock"); and (d) attract other persons or entities who
are in a position to make a significant contribution to the success of the
Company.

           The Plan is intended to accomplish these goals by enabling the
Company to grant Awards to eligible employees. Awards may be in the form of
Options, Stock Appreciation Rights (as described in Section 6.2), Restricted
Stock or Unrestricted Stock Awards (as described in Section 6.3), Deferred Stock
Awards (as described in Section 6.4), Performance Awards (as described in
Section 6.5), Loans or Supplemental Grants (as described in Section 6.6), or
combinations thereof.

2.         ADMINISTRATION

           The Plan will be administered by a committee of at least two persons
(the "Committee") appointed by the Board of Directors of the Company (the
"Board"), all of the members of which Committee must be disinterested persons
within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934 (the
"1934 Act"). Alternatively, the Board may serve as the Committee so long as a
majority of the members of the Board are disinterested persons within the
meaning of Rule 16b-3.

           The Committee will have authority, not inconsistent with the express
provisions of the Plan and in addition to other authority granted under the
Plan, to (a) grant Awards at such time or times as it may choose; (b) determine
the size of each Award, including the number of shares of Stock subject to the
Award; (c) determine the type or types of each Award: (d) determine the terms
and conditions of each Award; (e) waive compliance by a Participant (as defined
below) with any obligations to be performed by the Participant under an Award
and waive any term or condition of an Award; (f) with the consent of the
Participant, cancel an existing Award in whole or in part and grant the
Participant another Award in its place; (g) prescribe the form or forms of
instruments that are required under the Plan, including any written notices and
elections required of Participants, or are deemed appropriate by the Committee,
and change such forms from time to time; (h) adopt, amend and rescind rules and
regulations for the administration of the Plan; and (i) interpret the Plan and
decide any questions and settle all



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controversies and disputes that may arise in connection with the Plan. Such
determinations and actions of the Committee, and all other determinations and
actions of the Committee made or taken under authority granted by any provision
of the Plan, will be conclusive and will bind all parties. A majority of the
members of the Committee will constitute a quorum, and all determinations of the
Committee must be made by a majority of its members.

3.         EFFECTIVE DATE AND TERM OF PLAN

           The Plan will become effective on the date on which it is approved by
the stockholders of the Company. Grants of Awards under the Plan may be made
prior to that date (but after Board adoption of the Plan), subject to such
approval of the Plan.

           No Award may be granted under the Plan after November 14, 1999, but
Awards previously granted may extend beyond that date.

4.         SHARES SUBJECT TO THE PLAN

           Subject to adjustment as provided in Section 8.6 below, the aggregate
number of shares of Stock that may be delivered under the Plan will be
9,000,000. If any Award requiring exercise by the Participant for delivery of
Stock terminates without having been exercised in full, or if any Award payable
in Stock or cash is satisfied in cash rather than Stock, the number of shares of
Stock as to which such Award was not exercised or for which cash was substituted
will be available for future grants.

           Subject to adjustment as provided in Section 8.6 below, no one
individual participating in the Plan may be granted stock options for more than
500,000 shares of Stock in the aggregate in any fiscal year.

           Stock delivered under the Plan may be either authorized but unissued
stock or previously issued Stock acquired by the Company and held in treasury.
No fractional shares of stock will be delivered under the Plan.

5.         ELIGIBILITY AND PARTICIPATION

           Those eligible to receive Awards under the Plan will be (i) persons
in the employ of the Company or any of its subsidiaries ("Employees") who, in
the opinion of the Committee, are in a position to make a significant
contribution to the success of the Company or its subsidiaries, and (ii) such
other persons or entities who, in the opinion of the Committee or the Board, are
in a position to make a significant contribution to the success of the Company
or its Subsidiaries ("Participants"). A "subsidiary" for purposes of the Plan
will be a corporation in which the Company owns directly or indirectly, stock
possessing 50% or more of the total combined voting power of all classes of
stock.



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6.         TYPES OF AWARDS

           6.1       OPTIONS.

           (a) Nature of Options. An Option is an Award entitling the recipient
on exercise thereof to purchase Stock at a specified exercise price.

           Both "incentive stock options," as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), and Options that are not
incentive stock options, may be granted under the Plan. Any Option intended to
qualify as an incentive stock option will be referred to in the Plan as an
"ISO." Instruments evidencing ISOs must contain such provisions as are required
under applicable provisions of the Code. Once an ISO has been granted, no action
by the Committee that would cause the Option to lose its status under the Code
as an incentive stock option will be effective without the consent of the Option
holder.

           (b) Exercise Price. The exercise price of an Option will be
determined by the Committee subject to the following:

           (1) The exercise price of an Option which is not an ISO may be either
(i) any amount which is not less than 50% of the fair market value (as defined
in Section 8.8) per share of the Stock at the time the Option is granted or (ii)
the par value per share of the Stock.

           (2) The exercise price of an ISO may not be less than 100% (110% in
the case of an ISO granted to a ten-percent shareholder) of the fair market
value per share of the Stock at the time the Option is granted. A "ten-percent
shareholder" is any person who at the time of grant owns directly or indirectly,
or is deemed to own by reason of the attribution rules of section 425(d) of the
Code, Stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company or of any of its subsidiaries.

           (3) In no case may the exercise price paid for Stock which is part of
an original issue of authorized Stock be less than the par value per share of
the Stock.

           (4) The committee may reduce the exercise price of an Option at any
time after the time of grant with the consent of the Participant, but the Option
will be treated as a new Option granted on the date of the reduction.

           (c) Duration of Options. The latest date on which an Option may be
exercised will be the tenth anniversary (fifth anniversary, in the case of an
ISO granted to a ten-percent shareholder) of the day immediately preceding the
date the Option was granted, or such earlier date as may have been specified by
the Committee at the time the Option was granted.



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           (d) Exercise of Options. An option will become exercisable at such
time or times, and on such conditions, as the Committee may specify. The
committee may at any time accelerate the time at which all or any part of the
Option may be exercised. Any exercise of an Option must be in writing, signed by
the proper person and delivered or mailed to the Company, accompanied by (1) any
documents required by the Committee and (2) payment in full in accordance with
paragraph (e) below or the number of shares for which the Option is exercised.

           (e) Payment for Stock. Stock purchased on exercise of an Option must
be paid for as follows: (1) in cash or by check (acceptable to the Company in
accordance with guidelines established for this purpose), bank draft or money
order payable to the order of the Company or (2) if so permitted by the
instrument evidencing the Option (or in the case of an Option which is not an
ISO, by the Committee at or after grant of the Option, (i) through the delivery
of shares of Stock which have been outstanding for at least six months (unless
the Committee expressly approves a shorter period) and which have a fair market
value on the last business day preceding the date of exercise equal to the
exercise price, or (ii) by delivery of a promissory note of the Option holder to
the Company, payable on such terms as are specified by the Committee (provided
that, if the Stock delivered upon exercise of the Option is an original issue of
authorized Stock, at least so much of the exercise price as represents the par
value of such Stock must be paid in cash), or (iii) by delivery of an
unconditional and irrevocable undertaking by a broker to deliver promptly to the
Company sufficient funds to pay the exercise price, or (iv) by any combination
of the permissible forms of payment.

           (f) Discretionary Payments. If the market price of shares of Stock
subject to an Option (other than an Option which is in tandem with a Stock
Appreciation Right as described in Section 6.2 below) exceeds the exercise price
of the Option at the time of its exercise, the Committee may cancel the Option
and cause the Company to pay in cash or in shares of Common Stock (at a price
per share equal to the fair market value per share) to the person exercising the
Option an amount equal to the difference between the fair market value of the
Stock which would have been purchased pursuant to the exercise (determined on
the date the Option is canceled) and the aggregate exercise price which would
have been paid. The Committee may exercise its discretion to take such action
only if it has received a written request from the person exercising the Option,
but such a request will not be binding on the Committee.

           6.2.      STOCK  APPRECIATION RIGHTS.

           (a) Nature of Stock Appreciation Rights. A Stock Appreciation Right
is an Award entitling the recipient on exercise of the Right to receive an
amount, in cash or Stock or a combination thereof (such form to be determined by
the Committee), determined in whole or in part by reference to appreciation in
Stock value.

           In general, a Stock Appreciation Right entitles the Participant to
receive, with respect to each share of Stock as to which the Right is exercised,
the excess of the share's fair market value on the date of exercise over its
fair market value on the date the Right was granted. However, the Committee may
provide at the time of grant



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that the amount the recipient is entitled to receive will be adjusted upward or
downward under rules established by the Committee to take into account the
performance of the Stock in comparison with the performance of other stocks or
an index of other stocks.

           (b) Grant of Stock of Appreciation Rights. Stock Appreciation Rights
may be granted in tandem with, or independently of, Options granted under the
Plan. A Stock Appreciation Right granted in tandem with an Option which is not
an ISO may be granted either at or after the time the Option is granted. A Stock
Appreciation Right granted in tandem with an ISO may be granted only at the time
the Option is granted.

           (c) Rules Applicable to Tandem Awards. When Stock Appreciation Rights
are granted in tandem with Options, the following will apply:

           (1) The Stock Appreciation Right will be exercisable only at such
time or times, and to the extent, that the related Option is exercisable and
will be exercisable in accordance with the procedure required for exercise of
the related Option.

           (2) The Stock Appreciation Right will terminate and no longer be
exercisable upon the termination or exercise of the related Option, except that
a Stock Appreciation Right granted with respect to less than the full number of
shares covered by an Option will not be reduced until the number of shares as to
which the related Option has been exercised or has terminated exceeds the number
of shares not covered by the Stock Appreciation Right.

           (3) The Option will terminate and no longer to exercisable upon the
exercise of the related Stock Appreciation Right.

           (4) The Stock Appreciation Right will be transferable only with the
related Option.

           (5) A Stock Appreciation Right granted in tandem with an ISO may be
exercised only when the market price of the Stock subject to the Option exceeds
the exercise price of such option.

           (d) Exercise of Independent Stock Appreciation Rights. A Stock
Appreciation Right not granted in tandem with an Option will become exercisable
at such time or times, and on such conditions, as the Committee may specify. The
Committee may at any time accelerate the time at which all or any part of the
Right may be exercised.

           Any exercise of an independent Stock Appreciation Right must be in
writing, signed by the proper person and delivered or mailed to the Company,
accompanied by any other documents required by the Committee.



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           6.3.      RESTRICTED AND UNRESTRICTED STOCK.

           (a) Nature of Restricted Stock Award. A Restricted Stock Award
entitles the recipient to acquire shares of Stock subject to the restrictions
described in paragraph (d) below ("Restricted Stock") for a price which may be
either (i) any amount which is not less than 50% of the fair market value of the
Stock at the time of purchase or (ii) the par value per share of the Stock.

           (b) Acceptance of Award. A Participant who is granted a Restricted
Stock Award will have no rights with respect to such Award unless, within 60
days (or such shorter period as the Committee may specify) following the date of
the Award, the Participant accepts the Award by written instrument delivered or
mailed to the Company accompanied by payment in full of the specified purchase
price, if any, of the shares covered by the Award. Payment may be by certified
or bank check or other instrument acceptable to the Committee.

           (c) Rights as a Stockholder. A Participant who receives Restricted
Stock will have all the rights of a stockholder with respect to the Stock,
including voting and dividend rights, subject to the restrictions described in
paragraph (d) below and any other conditions imposed by the Committee at the
time of grant. Unless the Committee otherwise determines, certificates
evidencing shares of Restricted Stock Restricted Stock will remain in the
possession of the Company until such shares are free of all restrictions under
the Plan.

           (d) Restrictions. Except as otherwise specifically provided by the
Plan, until these restrictions lapse, Restricted Stock may not be sold,
assigned, transferred, pledged or otherwise encumbered or disposed of, and if
the Participant ceases to be an Employee for any reason, must be offered to the
Company for purchase for the amount of cash paid for the Stock, or forfeited to
the Company if no cash was paid. The restrictions will lapse at such time or
times, and on such conditions, as the Committee may specify. The Committee may
at any time accelerate the time at which the restrictions on all or any part of
the shares will lapse.

           (e) Notice of Election. Any Participant making an election under
Section 83(b) of the Code with respect to Restricted Stock must provide a copy
thereof to the Company within 10 days of the filing of such election with the
Internal Revenue Service.

           (f) Other Awards Settled with Restricted Stock.. The Committee may,
at the time any Award described in this Section 6 is granted, provide that any
or all the Stock delivered pursuant to the Award will be Restricted Stock.

           (g) Unrestricted Stock. The Committee may, in its sole discretion,
sell to any Participant shares of Stock free of restrictions under the Plan for
a price which may be either (i) any amount which is not less than 50% of the
fair market value of the Stock at the time of purchase or (ii) the par value per
share of the Stock.



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           6.4       DEFERRED STOCK.

           (a) Nature of Deferred Stock Award. A Deferred Stock Award entitles
the recipient to receive shares of Deferred Stock, which is Stock to be
delivered in the future. Delivery of the Stock will take place at such time or
times, and on such conditions, as the Committee may specify. The Committee may
at any time accelerate the time at which delivery of all or any part of the
Stock will take place.

           (b) Other Awards Settled with Deferred Stock. The committee may at
the time any Award described in this Section 6 is granted, provide that, at the
time Stock would otherwise be delivered pursuant to the Award, the Participant
will instead receive an instrument evidencing the Participant's right to future
delivery of Deferred Stock.

           6.5       PERFORMANCE AWARDS; PERFORMANCE GOALS

           (a) Nature of Performance Awards. A Performance Award entitles the
recipient to receive, without payment, an amount, in cash or Stock or a
combination thereof (such form to be determined by the Committee), following the
attainment of Performance Goals. Performance Goals may be related to personal
performance, corporate performance, departmental performance or any other
category of performance deemed by the Committee to be important to the success
of the Company. The Committee will determine the Performance Goals, the period
or period during which performance is to be measured and all other terms and
conditions applicable to the Award.

           6.6       LOANS AND SUPPLEMENTAL GRANTS.

           (a) Loans. The Company may make a loan to a Participant ('Loan"),
either on the date of or after the grant of any Award to the Participant. A Loan
may be made either in connection with the purchase of Stock under the Award or
with the payment of any Federal, state and local income tax with respect to
income recognized as a result of the Award. The Board will have full authority
to decide whether to make a Loan and to determine the amount, terms and
conditions of the Loan, including the interest rate (which may be zero), whether
the Loan is to be secured or unsecured or with or without recourse against the
borrower, the terms on which the Loan is to be repaid and the conditions, if
any, under which it may be forgiven. However, no Loan may have a term (including
extensions) exceeding ten years in duration.

           (b) Supplemental Grants. In connection with any Award, the Committee
may at the time such Award is made or at a later date, provide for and grant a
cash award to the Participant ("Supplemental Grant") not to exceed an amount
equal to (1) the amount of any federal, state and local income tax on ordinary
income for which the Participant will be liable with respect to the Award, plus
(2) an additional amount on a grossed-up basis necessary to make the Participant
whole after tax, discharging all the Participant's income tax liabilities
arising from all



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payments under this Section 6. Any payments under this subsection (c) will be
made at the time the Participant incurs Federal income tax liability with
respect to the Award.

7.         EVENTS AFFECTING OUTSTANDING AWARDS

           7.1       RETIREMENT.

           The following will apply if a Participant ceases to be an Employee by
reason of retirement with consent of the Company (a) after attainment of age 65,
(b) prior to attainment of age 65 in the case of ISOs or (c) prior to attainment
of age 65 in the case of all other Awards only if the Committee so specifies at
or prior to such retirement.

           (a) Subject to paragraph (c) below each Option and Stock Appreciation
Right held by the Participant when the Participant's employment ended will
immediately become exercisable in full and will continue to be exercisable until
the earlier of (1) the first anniversary of the date on which such employment
ended or (2) the date on which the Award would have terminated had the
Participant remained an Employee. If the Participant dies after such
Participant's employment has ended, the Award may be exercised within such
limits by the Participant's executor or administrator or by the person or
persons to whom the Award is transferred by will or the applicable laws descent
and distribution (the Participant's "legal representative").

           (b) Subject to paragraph (c) below are each share of Restricted Stock
held by the Participant when the Participant's employment ended will immediately
become free of the restrictions.

           (c) If when the Participant's employment ended the exercise of an
Option or Stock Appreciation Right or lapse of restrictions on Restricted Stock
was subject to performance or other conditions (other than conditions relating
to the mere passage of time and continued employment) which had not been
satisfied at such time, the Committee may remove or modify such conditions or
provide that the Participant will receive the benefit of the Award if and when
the conditions are subsequently satisfied. If the Committee does not take such
action, however, such Award will terminate as of the date on which the
Participant's employment ended.

           (d) Any payment or benefit under a Deferred Stock Award, Performance
Award, or Supplemental Grant to which the Participant has not become irrevocably
entitled will be forfeited and the Award canceled as of the date on which the
Participant's employment ended unless otherwise provided in the instrument
evidencing the Award or otherwise agreed to by the Committee.



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           7.2       DEATH AND DISABILITY.

           If a Participant ceases to be an Employee by reason of death or total
and permanent disability (as determined by the Committee), the following will
apply:

           (a) All Options then held by the Participant that are not otherwise
exercisable, shall have the exercise rights thereto accelerated so that for each
full year of service with the Company, no less than twenty-five (25) percent of
the aggregate number of shares granted and outstanding shall be exercisable as
of the termination date (not to exceed one hundred (100) percent of the
aggregate number of shares); all option shares not accelerated under the
foregoing formula terminate as of the termination date. Any Awards that are so
exercisable will continue to be exercisable until the earlier of (1) the first
anniversary of the date on which the Participant's employment ended or (2) the
date on which the Award would have terminated had the Participant remained an
Employee. If the Participant has died, the Award may be exercised within such
limits by the Participant's legal representative.

           (b) All Stock Appreciation Rights held by the Participant that are
not exercisable on the thirtieth day after the termination of the Participant's
employment will terminate as of such date. Any Awards that are so exercisable
will continue to be exercisable until the earlier of (1) the first anniversary
of the date on which the Participant's employment ended or (2) the date on which
the Award would have terminated had the Participant remained an Employee. If the
Participant has died, the Award may be exercised within such limits by the
Participant's legal representative.

           (c) All Restricted Stock held by the Participant when the
Participant's employment ended must be transferred to the Company (and, in the
event the certificates representing such Restricted Stock are held by the
Company, such Restricted Stock will be so transferred without any further action
by the Participant) in accordance with Section 6.3 above.

           (d) Any payment or benefit under a Deferred Stock Award, Performance
Award, or Supplemental Grant to which the Participant has not become irrevocably
entitled will be forfeited and the Award canceled as of the date on which the
Participant's employment ended, unless otherwise provided in the instrument
evidencing the Award or otherwise agreed to by the Committee.

           7.3       OTHER TERMINATION OF EMPLOYMENT

           If a Participant ceases to be an Employee for any reason other than
those specified in Sections 7.1 or 7.2 above, the following will apply:

           (a) All Options and Stock Appreciation Rights held by the Participant
that were not exercisable when his or her employment ended will then terminate.
Any Awards that were so exercisable will continue to be exercisable 



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until the earlier of (1) the date which is three months after the date on which
his or her employment ended and (2) the date on which the Award would have
terminated had the Participant remained an Employee, unless employment was
terminated for cause, in which event any Awards that were so exercisable shall
then terminate. The Committee may, in its discretion, extend the exercise period
beyond such three-month period.

           (b) All Restricted Stock held by the Participant when the
Participant's employment ended must be transferred to the Company (and, in the
event the certificates representing such Restricted Stock are held by the
Company, such Restricted Stock will be so transferred without any further action
by the Participant) in accordance with Section 6.3 above.

           (c) Any payment or benefit under a Deferred Stock Award, Performance
Award, or Supplemental Grant to which the Participant has not become irrevocably
entitled will be forfeited and the Award canceled as of the date of such
termination of employment unless otherwise provided in the instrument evidencing
the Award or otherwise agreed to by the Committee.

           For purposes of this Section 7.3, an Employee's employment will not
be considered to have ended (1) in the case of sick leave or other bona fide
leave of absence proved for purposes of the Plan by the committee, so long as
the Employee's right to reemployment is guaranteed either by statute or by
contract, or (2) in the case of a transfer of employment between the company and
a subsidiary or between subsidiaries, or to the employment of a corporation (or
a parent or subsidiary corporation of such corporation) issuing or assuming an
Award in a transaction to which section 425(a) of the Code applies.

           7.4 A     CHANGE IN CONTROL PROVISION

           As used herein, a Change in Control and related definitions shall
have the meanings as set forth in Section 7.4 C below.

           Immediately prior to the occurrence of a Change in Control:

           (a) Each Option and Stock Appreciation Right shall automatically
become fully exercisable unless the Committee shall otherwise expressly provide
at the time of grant.

           (b) Restrictions and conditions on Restricted Stock, Deferred Stock,
Performance Units and Other Stock-based Awards shall automatically be deemed
waived to the extent, if any, specified (whether at or after time of grant) by
the Committee.

           In addition to the foregoing and Sections 6.1(d), 6.2(c) and (d),
6.3(d) and 6.4(a), the Committee may at any time prior to or after a Change in
Control accelerate the exercisability of any Options and Stock Appreciation



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Rights and may waive restrictions, limitations and conditions on Restricted
Stock, Deferred Stock, Performance Units and Other Stock-based Awards to the
extent it shall in its sole discretion determine.

           7.4 B     CERTAIN CORPORATE TRANSACTIONS.

           (a) In the event of a consolidation or merger in which the Company is
not the surviving corporation or which results in the acquisition of
substantially all the Company's outstanding Stock by a single person or entity
or by a group of persons and/or entities acting in concert, or in the event of
the complete liquidation of the Company or the sale or transfer of substantially
all of the Company's assets (a "Covered Transaction"), all outstanding Options
will terminate as of the effective date of the Covered Transaction, provided
that at least twenty (20) days prior to the effective date of any such merger,
consolidation, liquidation or sale of assets, but subject to Paragraphs (c) and
(d) below, the Committee shall make all outstanding Options exercisable
immediately prior to consummation of such Covered Transaction (to the extent
that such Options are not exercisable immediately prior to the consummation of
the Covered Transaction pursuant to Section 7.4 A).

           (b) Subject to Paragraphs (c) and (d) below, the Committee may, in
its sole discretion, prior to the effective date of the Covered Transaction, (1)
remove the restrictions from each outstanding share of Restricted Stock, (2)
cause the Company to make any payment and provide any benefit under each
outstanding Deferred Stock Award, Performance Award, and Supplemental Grant
which would have been made or provided with the passage of time had the
transaction not occurred and the Participant remained an employee, and (3)
forgive all or any portion of the principal of or interest on a loan.

           (c) If an outstanding Option or Other Award is subject to performance
or other conditions (other than conditions relating the mere passage of time and
continued employment) which will not have been satisfied at the time of the
Covered Transaction, the Committee may, in its sole discretion, remove such
conditions. If it does not do so however, such Option or Other Award will
terminate, because the conditions have not been satisfied, as of the date of the
Covered Transaction notwithstanding Paragraph (a) and (b) above.

           (d) With respect to an outstanding Option or Other Award held by the
participant who, following the Covered Transaction, will be employed by a
corporation which is a surviving or acquiring corporation in such transaction or
an affiliate of such a corporation, the Committee may, in lieu of the action of
the Committee described in Paragraphs (a) or (b) above or in addition to any
Option being exercisable immediately prior to consummation of the Covered
Transaction pursuant to Section 7.4A above, arrange to have such surviving or
acquiring corporation or affiliate assume the Option or Other Award or grant to
the Participant a replacement Option or other Award which, in the judgment of
the Committee, is substantially equivalent to the Option or Other Award. In the
case of an assumed or substitute Option intended to be an Incentive Stock
Option, the requirements of Section 424 (a) of the Code shall be satisfied
except as otherwise provided by the Committee.



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           7.4 C     CHANGE IN CONTROL AND RELATED DEFINITIONS.

           A "Change in Control" shall be deemed to have occurred if the
conditions set forth in any one of the following paragraphs shall have been
satisfied:

           (a) any Person is or becomes the Beneficial Owner, directly or
indirectly, of securities of the Company representing 25% or more of the
combined voting power of the Company's then outstanding securities; or

           (b) during any period of not more than two consecutive years (not
including any period prior to October 26, 1994), individuals who at the
beginning of such period constitute the Board and any new director (other than a
director designated by a Person who has entered into an agreement with the
Company to effect a transaction described in Clause (a), (b), or (c) of Section
7.4 C) whose election by the Board or nomination for election by the Company's
stockholders was approved by a vote of at least two-thirds (2/3) of the
directors then still in office who either were directors at the beginning of the
period or whose election or nomination for election was previously so approved,
cease for any reason to constitute a majority thereof; or

           (c) the shareholders of the Company approve a merger or consolidation
of the Company with any other corporation, other than

           (1) a merger or consolidation which would result in the voting
securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or being converted into voting
securities of the surviving entity) 60% or more of the combined voting power of
the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation, or

           (2) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in which no person
acquires 25% or more of the combined voting power of the Company's then
outstanding securities; or

           (d) the shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all the Company's assets.

           "Person" shall have the meaning given in Section 3 (a) (9) of the
Securities Exchange Act of 1934, as modified and used in Sections 13 9D and 14
(d) thereof; however, a Person shall not include

           (1) the Company,

           (2) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company or



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           (3) a corporation or other entity owned, directly or indirectly, by
the shareholders of the Company in substantially the same proportions as their
ownership of stock of the Company.

           "Beneficial Owner" shall have the meaning defined in Rule 13d-3 under
the Securities Exchange Act of 1934 as amended from time to time.

           7.5       OTHER TERMINATION EVENTS.

           If a Participant, other than an Employee Participant, ceases to be
affiliated with the Company by reason of the termination of the agreement or
other arrangement with the Company pursuant to which such Participant provides
services or products or otherwise is making a contribution to the Company, then

           (a) Unless otherwise provided in the instrument evidencing the Award
granted to the Participant, all Options and Stock Appreciation Rights held by
the Participant that were not exercisable when such arrangement terminated or
expired will then terminate, and any of such Awards that were so exercisable
shall continue to be exercisable until the earlier of (1) the date which is
three months after the date on which such arrangement terminated or (2) the date
on which such Award would have terminated had the Participant remained
affiliated with the Company pursuant to the agreement or other arrangement. The
Committee may, in its discretion, in the granting instrument or at any later
time, extend the exercise period beyond such three-month period.

           (b) Unless otherwise provided in the instrument evidencing the Award
granted to the Participant, all Restricted Stock held by the Participant when
the arrangement with the Participant ended must be transferred to the Company
(and, in the event the certificates representing such Restricted Stock are held
by the Company, such Restricted Stock will be so transferred without any further
action by the Participant) in accordance with Section 6.3 above.

           (c) Any payment or benefit under a Deferred Stock Award, Performance
Award, or Supplemental Grant to which the Participant has not become irrevocably
entitled will be forfeited and the Award canceled as of the date of such
termination unless otherwise provided in the instrument evidencing the Award or
otherwise agreed to be the Committee.

8.         GENERAL PROVISIONS

           8.1       DOCUMENTATION OF AWARDS.

           Awards will be evidenced by written instruments prescribed by the
Committee from time to time. Such instruments may be in the form of agreements,
to be executed by both the Participant and the Company, or



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certificates, letters or similar instruments, which need not be executed by the
Participant but acceptance of which will evidence agreement to the terms
thereof.

           8.2       RIGHTS AS A STOCKHOLDER:  DIVIDEND EQUIVALENTS.

           Except as specifically provided by the Plan, the receipt of an Award
will not give a Participant rights as a stockholder: the Participant will obtain
such rights, subject to any limitations imposed by the Plan or the instrument
evidencing the Award, upon actual receipt of Stock. However, the Committee may,
on such conditions as it deems appropriate, provide that a Participant will
receive a benefit in lieu of cash dividends that would have been payable on any
or all Stock subject to the Participant's Award had such Stock been outstanding.
Without limitation, the Committee may provide for payment to the Participant of
amounts representing such dividends, either currently or in the future, or for
the investment of such amounts on behalf of the Participant.

           8.3       CONDITIONS ON DELIVERY OF STOCK.

           The Company will not be obligated to deliver any shares of Stock
pursuant to the Plan or to remove restriction from shares previously delivered
under the Plan (a) until all conditions of the Award have been satisfied or
removed. (b) until, in the opinion of the Company's counsel, all applicable
federal and state laws and regulation have been complied with, (c) if the
outstanding Stock is at the time listed on any stock exchange, until the shares
to be delivered have been listed or authorized to be listed on such exchange
upon official notice of notice of issuance, and (d) until all other legal
matters in connection with the issuance and delivery of such shares have been
approved by the Company's counsel. If the sale of Stock has not been registered
under the Securities Act of 1933, as amended, the Company may require, as a
condition to exercise of the Award, such representations or agreements as
counsel for the Company may consider appropriate to avoid violation of such Act
and may require that the certificates evidencing such Stock bear an appropriate
legend restricting transfer.

           If an Award is exercised by the Participant's legal representative,
the Company will be under no obligation to deliver Stock pursuant to such
exercise until the Company is satisfied as to the authority of such
representative.

           8.4       TAX WITHHOLDING.

           The Company will withhold from any cash payment made pursuant to an
Award an amount sufficient to satisfy all federal, state and local withholding
tax requirements (the "withholding requirements").

           In the case of an Award pursuant to which Stock may be delivered, the
Committee will have the right to require that the Participant or other
appropriate person remit to the Company an amount sufficient to satisfy the
withholding requirements, or make other arrangements satisfactory to the
Committee with regard to such



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requirements, prior to the delivery of any Stock. If and to the extent that such
withholding is required, the Committee may permit the Participant or such other
person to elect at such time and in such manner as the Committee provides to
have the Company hold back from the shares to be delivered, or to deliver to the
Company, Stock having a value calculated to satisfy the withholding requirement.

           If at the time an ISO is exercised the Committee determines that the
Company could be liable for withholding requirements with respect to a
disposition of the Stock received upon exercise, the Committee may require as a
condition of exercise that the person exercising the ISO agree (a) to inform the
Company promptly of any disposition (within the meaning of section 425(c) of the
Code) of Stock received upon exercise, and (b) to give such security as the
Committee deems adequate to meet the potential liability of the Company for the
withholding requirements and to augment such security from time to time in any
amount reasonably deemed necessary by the Committee to preserve the adequacy of
such security.

           8.5       NONTRANSFERABILITY OF AWARDS.

           No Award (other than an Award in the form of an outright transfer of
cash or unrestricted Stock) may be transferred other than by will or by the laws
of descent and distribution, and during an employee's lifetime an Award
requiring exercise may be exercised only by the Participant (or in the event of
the Participant's incapacity, the person or persons legally appointed to act on
the Participant's behalf).

           8.6       ADJUSTMENTS IN THE EVENT OF CERTAIN TRANSACTIONS.

           (a) In the event of a stock dividend, stock split or combination of
shares, recapitalization or other change in the Company's capitalization, or
other distribution to common stockholders other than normal cash dividends, the
Committee will make any appropriate adjustments to the maximum number of shares
that may be delivered under the Plan under Section 4 above.

           (b) In any event referred to in paragraph (a), the Committee will
also make any appropriate adjustments to the number and kind of shares of stock
or securities subject to Awards then outstanding or subsequently granted, any
exercise prices relating to Awards and any other provision of Awards affected by
such change. The Committee may also make such adjustments to take into account
material changes in law or in accounting practices or principles, mergers,
consolidations, acquisitions, dispositions or similar corporate transactions, or
any other event, if it is determined by the Committee that adjustments are
appropriate to avoid distortion in the operation of the Plan.



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           8.7.      EMPLOYMENT RIGHTS.

           Neither the adoption of the plan nor the grant of Awards will confer
upon any person any right to continued employment with the Company or any
subsidiary or affect in any way the right of the Company or subsidiary to
terminate an employment relationship at any time. Except as specifically
provided by the Committee in any particular case, the loss of existing or
potential profit in Awards granted under the Plan will not constitute an element
of damages in the event of termination of an employment relationship even if the
termination is in violation of an obligation of the Company to the Employee.

           8.8.      FAIR MARKET VALUE.

           For purposes of the Plan, fair market value of a share of Stock on
any date will be the average of the bid and asked prices in the over-the-counter
market with respect to such Stock, as reported by the National Association of
Securities Dealers, Inc. Automated Quotations System or such other similar
system then in use; or, if on any such date such Stock is not quoted by any such
organization, the average of the closing bid and asked prices with respect to
such Stock, as furnished by a professional market maker making a market in such
Stock selected by the Committee; or if such prices are not available, the fair
market value of such Stock as of such date as determined in good faith by the
Committee; or, where necessary in order to achieve the intended Federal income
tax result, the value of a share of Stock as determined by the Committee in
accordance with the applicable provisions of the Code.

           8.9       DEFERRAL OF PAYMENTS.

           The Committee may agree at any time, upon request of the Participant,
to defer the date on which any payment under an Award will be made.

           8.10.     PAST SERVICES AS CONSIDERATION.

           Where a Participant purchases Stock under an Award for a price equal
to the par value of the Stock the Committee may determine that such price has
been satisfied by past services rendered by the Participant.

9.         EFFECT, DISCONTINUANCE, CANCELLATION, AMENDMENT AND TERMINATION

           Neither adoption of the Plan nor the grant of Awards to a Participant
will affect the Company's right to grant to such Participant awards that are not
subject to the Plan, to issue to such Participant Stock as a bonus or otherwise,
or to adopt other plans or arrangements under which Stock be issued to
Employees.



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           The Committee may at any time discontinue granting Awards under the
Plan. The Board may at any time or times amend the Plan or any outstanding Award
for any purpose which may at the time be permitted by law, or may at any time
terminate the Plan as to any further grants of Awards, provided that (except to
the extent expressly required or permitted by the Plan) no such amendment will,
without the approval of the stockholders of the Company, (a) increase the
maximum number of shares available under the Plan, (b) change the group of
persons eligible to receive Awards under the Plan, (c) extend the time within
which Awards may be granted, or (d) amend the provisions of this Section 9, and
no amendment or termination of the Plan may adversely affect the rights of any
Participant (without the Participant's consent) under any Award previously
granted.


                                                         REVISION DATE: 10/18/96




















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