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                                                                   EXHIBIT 10.24



                           THIRD AMENDED AND RESTATED


              1992 STOCK OPTION PLAN GLOBAL TELESYSTEMS GROUP, INC.


                           (as of September 25, 1997)


         1. PURPOSES OF THE PLAN. The purposes of the Third Amended and Restated
1992 Stock Option Plan of Global TeleSystems Group, Inc. are to attract and
retain the best available personnel for positions of substantial responsibility,
to provide additional incentives to Employees of the Company and its Parent or
Subsidiaries, and to promote the success of the business of the Company and its
Parent or Subsidiaries. At the discretion of the Committee, Options granted
hereunder may be either Incentive Stock Options or Nonstatutory Stock Options.


         2. DEFINITIONS. As used herein, and in any Option granted hereunder,
the following definitions shall apply:


                  (a) "Board" shall mean the Board of Directors of the Company.

                  (b) "Code" shall mean the Internal Revenue Code of 1986, as
                      amended.

                  (c) "Common Stock" shall mean the Common Stock of the Company,
                      par value $.0001 per share.

                  (d) "Company" shall mean Global TeleSystems Group, Inc, a
                      Delaware corporation, including any Parent, Subsidiary or
                      affiliate, and except as provided in Section 11 below, its
                      successors in interest.

                  (e) "Committee" shall mean the Compensation Committee
                      appointed by the Board in accordance with Section 4 of the
                      Plan. If the Board does not appoint or ceases to maintain
                      a Committee, the term "Committee" shall refer to the
                      Board.

                  (f) "Continuous Employment" shall mean the absence of any
                      interruption or termination of service as an Employee by
                      the Company. For purposes of the preceding sentence,
                      service shall not be considered interrupted during any
                      period of vacation, sick leave, military leave or any
                      other absence approved by the Board and shall not be
                      considered terminated as a result of a transfer between
                      locations within the Company or its Parent or any
                      Subsidiary or among the Company, its Parent and any
                      Subsidiary.

                  (g) "Employee" shall mean any person, including any officer
                      (whether or not he or she is a director of the Company),
                      employed by the Company.




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                  (h) "Exchange Act" shall mean the Securities Exchange Act of
                      1934, as amended.

                  (i) "Incentive Stock Option" shall mean any option granted
                      under this Plan and any other option granted to an
                      Employee in accordance with the provisions of Section 422
                      of the Code and the regulations promulgated thereunder.

                  (j) "Non-Employee Director" shall mean a "non-employee
                      director" within the meaning of Rule 16b-3 promulgated
                      under the Exchange Act.

                  (k) "Nonstatutory Stock Option" shall mean any Option granted
                      under the Plan that is not an Incentive Stock Option.

                  (l) "Option" shall mean a stock option granted pursuant to the
                      Plan.

                  (m) "Option Agreement" shall mean a written agreement between
                      the Company and the Optionee or the Trust regarding the
                      grant and exercise of Options to purchase Shares and the
                      terms and conditions thereof as determined by the
                      Committee pursuant to the Plan.

                  (n) "Optioned Shares" shall mean the Common Stock subject to
                      an Option.

                  (o) "Optionee" shall mean an Employee who receives an Option
                      under the Plan, either directly or as a beneficiary of the
                      Trust.

                  (p) "Parent" shall mean a "parent corporation," whether now or
                      hereafter existing, as defined in Section 424(e) of the
                      Code.

                  (q) "Plan" shall mean this Third Amended and Restated 1992
                      Stock Option Plan of Global TeleSystems Group, Inc.

                  (r) "Registration Date" shall mean the effective date of the
                      first registration statement filed by the Company,
                      pursuant to Section 12(g) of the Exchange Act, with
                      respect to any class of the Company's equity securities.

                  (s) "Securities Act" shall mean the Securities Act of 1933, as
                      amended.

                  (t) "Share" shall mean a share of the Common Stock, as
                      adjusted in accordance with Section 11 of the Plan.


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                  (u) "Subsidiary" shall mean a "subsidiary corporation,"
                      whether now or hereafter existing, as defined in Section
                      424(f) of the Code.

                  (v) "Trust" shall mean the GTS Employee Stock Option Plan
                      Trust, as may be amended from time to time.

                  (w) "Trustee" shall mean the trustee of the Trust, as may be
                      designated from time to time in accordance with the terms
                      and provisions of the Trust.

         3. STOCK SUBJECT TO THE PLAN. Without limiting the application of
Section 11 of the Plan, the maximum aggregate number of Shares which may be
optioned and sold under the Plan is 18.5% of the total number of Shares
outstanding at the beginning of each calendar year. The Shares may include
authorized but unissued or reacquired Common Stock. If an Option is surrendered
for cash or other consideration or expires or becomes unexercisable for any
reason without having been exercised in full, the Shares which were subject to
the Option but as to which the Option was not exercised shall become available
for future Option grants under the Plan, unless the Plan shall have been
terminated. Shares subject to an Option that is forfeited or settled in cash or
otherwise terminated without a delivery of Shares to the Optionee, including
Shares withheld in payment of taxes relating to awards and the number of Shares
equal to the number of Shares surrendered in payment of the exercise price of
Options (or any other awards in the nature of purchase rights) or taxes relating
to awards, will again be available for awards under the Plan.

                  The Committee may adopt reasonable counting procedures to
ensure appropriate counting, avoid double counting and make adjustments if the
number of Shares actually delivered differs from the number of Shares previously
counted in connection with an award.


                  The Company intends that as long as it is not subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act and is not an
investment company registered or required to be registered under the Investment
Company Act of 1940, all offers and sales of Options and Common Stock issuable
upon exercise of any Option shall be exempt from registration under the
provisions of Section 5 of the Securities Act, and the Plan and the Trust shall
be administered in such a manner so as to preserve such exemption. The Company
intends that the Plan shall constitute a written compensatory benefit plan
within the meaning of Rule 701(b) of 17 CFR Section 230.701 promulgated by the
Securities and Exchange Commission pursuant to such Act. The Committee shall
designate which Options granted under the Plan by the Company are intended to be
granted in reliance on Rule 701.


         4. ADMINISTRATION OF THE PLAN.


            (a)       Procedure. The Plan shall be administered by the Board.
                      The Board may appoint a Compensation Committee consisting
                      of not less than two (2) members of the Board to
                      administer the Plan, subject to the direction of the
                      Board and such terms and conditions as the Board may
                      prescribe.


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                      Once appointed, the Committee shall continue to serve
                      until otherwise directed by the Board.


                      From time to time, the Board may increase the size of the
                      Committee and appoint additional members thereof, remove
                      members (with or without cause) and appoint new members in
                      substitution therefor, fill vacancies, however caused, and
                      remove all members of the Committee and, thereafter,
                      directly administer the Plan. Members of the Board or
                      Committee who are either eligible for Options or have been
                      granted Options (either directly or as a beneficiary of
                      the Trust) may vote on any matters affecting the
                      administration of the Plan or the grant of Options
                      pursuant to the Plan, except that no such member shall act
                      upon the granting of an Option to such member (either
                      directly or as a beneficiary of the Trust) but any such
                      member may be counted in determining the existence of a
                      quorum at any meeting of the Board or the Committee during
                      which action is taken with respect to the granting of an
                      Option to such member (either directly or as a beneficiary
                      of the Trust).


                      The Committee shall meet at such times and places and upon
                      such notice as the Chairperson determines. A majority of
                      the Committee shall constitute a quorum. Any acts by the
                      Committee may be taken at any meeting at which a quorum is
                      present and shall be by majority vote of those members
                      entitled to vote. Additionally, any acts reduced to
                      writing or approved in writing by all of the members of
                      the Committee shall be valid acts of the Committee.


            (b)       Procedure After Registration Date.  Notwithstanding
                      subsection (a) above, after the Registration Date, the
                      Plan shall be administered either by: (i) the full Board;
                      or (ii) a Committee of two (2) or more directors, each of
                      whom is a Non-Employee Director. After the Registration
                      Date, the Board shall take all action necessary to
                      administer the Plan in accordance with the then effective
                      provisions of Rule 16b-3 promulgated under the Exchange
                      Act, provided that any amendment to the Plan required for
                      compliance with such provisions shall be made in
                      accordance with Section 13 of the Plan.


            (c)       Powers of the Committee.  Subject to the provisions of the
                      Plan, the Committee shall have discretionary authority:
                      (i) to determine, upon review of relevant information, the
                      fair market value of the Common Stock; (ii) to determine
                      the exercise price of Options to be granted, the persons
                      (including the Trust) to whom and the time or times at
                      which Options shall be granted, and the number of Shares
                      to be represented by each Option; (iii) to interpret the
                      Plan; (iv) to prescribe, amend and rescind rules and
                      regulations relating to the Plan; (v) to establish the



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                      terms and conditions of each Option granted under the Plan
                      (which terms and conditions need not be identical in any
                      two Options) and, with the consent of the holder thereof,
                      to modify or amend any Option; (vi) to authorize any
                      person to execute on behalf of the Company any instruments
                      required to effect the grant of an Option awarded by the
                      Committee; (vii) to accelerate or (with the consent of an
                      Optionee) to defer an exercise date of any Option subject
                      to the provisions of Section 9(a) of the Plan; (viii) to
                      determine whether Options granted under the Plan will be
                      Incentive Stock Options or Nonstatutory Stock Options; and
                      (ix) to make all other determinations deemed necessary or
                      advisable for the administration of the Plan.


            (d)       Effect of Committee's Decision. All decisions,
                      determinations and interpretations of the Committee shall
                      be final and binding on all potential or actual Optionees,
                      any other holder of an Option or other equity security of
                      the Company and all other persons. In any controversy
                      regarding the administration of the Plan, any arbitrator
                      or court reviewing any decision, determination or
                      interpretation by the Committee shall not set aside or
                      modify such decision, determination or interpretation
                      unless it is arbitrary, capricious or clearly contrary to
                      the terms of the Plan.


         5. ELIGIBILITY.


            (a)       Persons Eligible to Participate. Options under the Plan
                      may be granted only to Employees or the Trust for the
                      benefit of Employees whom the Committee may designate from
                      time to time. Each Employee in certain jurisdictions, as
                      designated by the Committee from time to time, must be a
                      beneficiary of the Trust in order to be a participant
                      under this Plan. Incentive Stock Options may be granted
                      only to Employees. An Optionee who has been granted an
                      Option may receive an additional Option or Options, if he
                      or she is otherwise eligible for such grant. Such
                      additional Option or Options may be granted to the Trust
                      for the benefit of such eligible Optionee. However, the
                      aggregate fair market value (determined in accordance with
                      the provisions of Section 8(a) of the Plan) of the Shares
                      subject to one or more Incentive Stock Options that are
                      exercisable for the first time by an Optionee during any
                      calendar year (under all stock option plans of the
                      Company) shall not exceed $100,000 (determined as of the
                      grant date).


            (b)       No Right to Continuing Employment. Neither the
                      establishment nor operation of the Plan or the Trust shall
                      confer upon any Optionee or any other person any right
                      with respect to continuation of employment or other
                      service with the Company, nor shall the Plan or the Trust
                      interfere


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                      in any way with the right of the Optionee or other person
                      or the right of the Company to terminate such employment
                      or service at any time.


         6. TERM OF PLAN. This Third Amended and Restated Plan shall become
effective upon its adoption by the Board. The Plan shall continue until November
14, 2004 unless sooner terminated under Section 13 of the Plan.


         7. TERM OF OPTION. Unless the Committee determines otherwise, at the
time of the grant of an Option, the term of each Nonstatutory Stock Option
granted under the Plan shall be ten (10) years and one (1) day from the date of
grant; and the term of each Incentive Stock Option shall be ten (10) years from
the date of grant. No Option shall be exercisable after the expiration of its
term. In all cases the terms of an Option shall be set forth in the Option
Agreement.


         8.       OPTION PRICE, CONSIDERATION AND RESTRICTIONS.


                  (a)     Option Price.  Except as provided in subsection 8(b),
                          the option price for the Shares to be issued pursuant
                          to any Option shall be such price as is determined by
                          the Committee which, in the case of Incentive Stock
                          Options, shall in no event be less than the fair
                          market value of such Shares on the date the Option is
                          granted. Fair market value of the Common Stock shall
                          be determined by the Committee using such criteria as
                          it deems relevant; provided, however, that where there
                          is a public market for the Common Stock, the fair
                          market value per Share shall be the average of the
                          last reported bid and asked prices of the Common Stock
                          on the date of grant, as reported in The Wall Street
                          Journal (or, if not so reported, as otherwise reported
                          by the National Association of Securities Dealers
                          Automated Quotation ("NASDAQ") System; or, in the
                          event the Common Stock is listed on a national
                          securities exchange, within the meaning of Section 6
                          of the Exchange Act, the fair market value per Share
                          shall be the closing price on such exchange on the
                          date of grant of the Option, as reported in The Wall
                          Street Journal.


                  (b)     Ten Percent Shareholders. No Incentive Stock Option
                          shall be granted to any Employee who, at the date such
                          Option is granted, owns (within the meaning of Section
                          424(d) of the Code) more than ten percent (10%) of the
                          total combined voting power of all classes of stock of
                          the Company, its Parent or any Subsidiary, unless the
                          option price for the Shares to be issued pursuant to
                          such Incentive Stock Option is equal to at least 110
                          percent (110%) of the fair market value of such Shares
                          on the grant date as determined by the Committee in
                          the manner set forth in subsection (a) above.


                  (c)     Consideration.  The consideration to be paid for the
                          Shares to be issued upon exercise of an Option shall
                          be payment in cash or by check or with


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                          Shares of the Company's Common Stock. The Committee
                          may also, in its discretion, authorize at the time of
                          the grant of the Option payment in some other
                          consideration or method (such as by promissory note)
                          for the issuance of Shares as may be permitted under
                          Section 157 of the General Corporation Law of the
                          State of Delaware. Any cash or other property received
                          by the Company from the sale of Common Stock pursuant
                          to the Plan shall constitute part of the general
                          assets of the Company.


         9.       EXERCISE OF OPTION.


                  (a)     Vesting Period.  Any Option granted hereunder shall be
                          exercisable at such times and under such conditions as
                          determined by the Committee and as shall be
                          permissible under the terms of the Plan, which times
                          and conditions shall be specified in the Option
                          Agreement evidencing the grant of the Option. Unless
                          the Committee specifically determines otherwise in the
                          Option Agreement, each Option shall vest and become
                          exercisable, cumulatively, by an Optionee or by the
                          Trust on behalf of an Optionee, to the extent of (i)
                          one-third (1/3) of the Optioned Shares as of the first
                          anniversary of the date on which the Option is
                          granted, (ii) two-thirds (2/3) of the Optioned Shares
                          as of the second anniversary of the date on which the
                          Option is granted, and (iii) all of the Optioned
                          Shares as of the third anniversary of the date on
                          which the Option is granted, subject to the Optionee's
                          Continuous Employment; provided, however, that the
                          Optionee must complete twelve (12) months of
                          employment to exercise an Incentive Stock Option. An
                          Option may not be exercised for fractional Shares or
                          for less than ten (10) Shares.


                  (b)     Exercise Procedures.  An Option shall be deemed to be
                          exercised when written notice of such exercise has
                          been given to the Company in accordance with the terms
                          of the Option Agreement by an Optionee or by the Trust
                          on behalf of an Optionee and full payment for the
                          Shares with respect to which the Option is exercised
                          has been received by the Company. As soon as
                          administratively practicable following the exercise of
                          an Option in the manner set forth above, the Company
                          shall issue or cause its transfer agent to issue stock
                          certificates representing the Shares purchased. Until
                          the issuance of such stock certificates (as evidenced
                          by the appropriate entry on the books of the Company
                          or of a duly authorized transfer agent of the
                          Company), no right to vote or receive dividends or any
                          other rights as a stockholder shall exist with respect
                          to the Optioned Shares notwithstanding the exercise of
                          the Option. Except as provided in Section 11 below, no
                          adjustment will be made for a dividend or other rights
                          for which the record date occurs prior to the date the
                          stock certificates are issued.


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                  (c)      Exercise of Option with Stock or Net of Exercise
                           Price. The Committee, in its discretion, may permit
                           an Optionee or the Trust on behalf of an Optionee to
                           exercise an Option in whole or in part by (i)
                           delivering whole Shares of the Company's Common Stock
                           previously owned by such Optionee or the Trust on
                           behalf of an Optionee (whether or not acquired
                           through the prior exercise of a stock option) having
                           a fair market value equal to the option price; or
                           (ii) directing the Company to withhold from the
                           Shares that would otherwise be issued upon exercise
                           of the Option that number of whole Shares having a
                           fair market value equal to the Option price. Shares
                           of the Company's Common Stock so delivered or
                           withheld shall be valued at their fair market value
                           at the close of the last business day immediately
                           preceding the date of exercise of the Option, as
                           determined by the Committee. Any balance of the
                           Option price shall be paid in cash. Any Shares
                           delivered or withheld in accordance with this
                           provision shall again become available for purposes
                           of the Plan and for Options subsequently granted
                           thereunder.


                   (d)     Termination of Status as Employee. If an Optionee
                           shall cease to be an Employee for any reason other
                           than permanent and total disability (within the
                           meaning of Section 22(e)(3) of the Code as determined
                           in the sole discretion of the Committee), retirement
                           or death, such individual's Option (irrespective of
                           whether such Option has been transferred to the
                           Trust) shall automatically terminate thirty (30) days
                           following the date he or she ceases to be an
                           Employee, unless the Committee, in its discretion,
                           determines to permit a longer post-employment
                           exercise period (which shall in no event extend
                           beyond the term of the relevant Option). Prior to
                           such termination of the Option, the Optionee or the
                           Trust on behalf of an Optionee may exercise such
                           Option to the extent that the Optionee or the Trust
                           on behalf of an Optionee was entitled to exercise on
                           the exercise date, subject to the condition that no
                           Option shall be exercised after the expiration of the
                           term of the Option.


                  (e)      Disability of Optionee.  In the event of the
                           permanent and total disability (within the meaning of
                           Section 22(e)(3) of the Code as determined in the
                           sole discretion of the Committee) during the term of
                           the Option of an Optionee who is at the time of such
                           disability, or was within the 90-day period prior
                           thereto, an Employee and who was in Continuous
                           Employment as such from the date of the grant of the
                           Option until the date of disability or termination,
                           the Option may be exercised at any time within one
                           (1) year following the date of disability (or such
                           longer period as may be established by the Committee,
                           in its discretion), but only to the extent that the
                           Optionee or the Trust was entitled to exercise the
                           Option at the time of the termination or disability,
                           whichever comes


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                           first, subject to the condition that no Option shall
                           be exercised after the expiration of the term of the
                           Option.


                  (f)      Retirement of Optionee.  In the event of the
                           retirement during the Option period of an Optionee
                           who is at the time of such retirement, or was within
                           the 90-day period prior thereto, an Employee and who
                           was in Continuous Employment as such from the date of
                           the grant of the Option until the date of the
                           retirement, the Option may be exercised by the
                           Optionee or the Trust on behalf of an Optionee at any
                           time within ninety (90) days following the retirement
                           date (or such longer period as may be established by
                           the Committee, in its discretion), but only to the
                           extent that the Optionee or the Trust was entitled to
                           exercise the Option at the time of the Optionee's
                           retirement, subject to the condition that no Option
                           shall be exercised after the expiration of the Option
                           period. For purposes of this Section 9, the term
                           "retirement" shall mean voluntary termination of
                           employment by an Employee who is at least age
                           fifty-five (55) and who has completed five (5) years
                           of employment with the Company.


                  (g)      Death of Optionee.  In the event of the death during
                           the term of the Option of an Optionee who is at the
                           time of his or her death, or was within the 90-day
                           period immediately prior thereto, an Employee and who
                           was in Continuous Employment as such from the date of
                           the grant of the Option until the date of death, the
                           Option may be exercised for a period up to one (1)
                           year following the date of death (or such longer
                           period as may be established by the Committee, in its
                           discretion), at any time prior to the expiration of
                           the term of the Option, by the Optionee's estate or
                           by a person who acquired the right to exercise the
                           Option by bequest, inheritance or otherwise as a
                           result of the Optionee's death, or by the Trust for
                           the benefit of such estate or person, but only to the
                           extent that the Optionee or Trust was entitled to
                           exercise the Option at the time of the death, subject
                           to the condition that no Option shall be exercised
                           after the expiration of the Option period.


                  (h)      Tax Withholding.  When an Optionee or the Trust on
                           behalf of an Optionee is required to pay to the
                           Company an amount with respect to income or
                           employment tax withholding obligations in connection
                           with the exercise of an Option granted under the
                           Plan, the Optionee or the Trust on behalf of an
                           Optionee may elect, prior to the date the amount of
                           such withholding is determined (the "Tax Date") to
                           make such payment, or such increased payment as the
                           Optionee or the Trust on behalf of an Optionee elects
                           to make up to the maximum federal, state and local
                           marginal tax rates (including any related obligation
                           under the Federal Insurance Contribution Act)
                           applicable to the Optionee and the particular



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                           transaction, by (i) delivering cash; (ii) delivering
                           part or all of the payment in previously owned stock
                           (whether or not acquired through the prior exercise
                           of a stock option); or (iii) subject to the consent
                           of the Committee, irrevocably directing the Company
                           to withhold from the Shares that would otherwise be
                           issued upon exercise of the Option that number of
                           whole Shares having a fair market value equal to the
                           amount of tax required or elected to be withheld (a
                           "Withholding Election"). If an Optionee's Tax Date is
                           deferred beyond the date of exercise and the Optionee
                           or the Trust on behalf of an Optionee makes a
                           Withholding Election, the Optionee or the Trust on
                           behalf of an Optionee will receive the full amount of
                           Shares otherwise issuable upon exercise of the Option
                           minus the number of Shares necessary to satisfy the
                           minimum withholding requirements measured on the date
                           the Option is exercised (or such higher payment as
                           the Optionee or the Trust may have elected to make)
                           with adjustments to be made in cash after the Tax
                           Date.


                           Any adverse consequences incurred by an Optionee with
                           respect to his or her participation in the Plan or
                           the Trust, the use of Shares to pay any part of the
                           Option price or income or employment tax arising in
                           connection with the exercise of an Option (including
                           without limitation any adverse tax consequences
                           arising as result of a disqualifying disposition
                           within the meaning of Section 422 of the Code) shall
                           be the sole responsibility of the Optionee or Trust.
                           The Company does not warrant or represent to the
                           Optionee any tax consequence of any transaction under
                           this Plan or the Trust, including the initial and
                           continuing satisfaction of the conditions for an
                           Incentive Stock Option under Section 422 of the Code.


         10.      NON-TRANSFERABILITY OF OPTIONS AND SHARES OF COMMON STOCK.


                  (a)      Options.  An Option may not be sold, pledged,
                           assigned, hypothecated, transferred or disposed of in
                           any manner other than by will or by the laws of
                           descent and distribution and may be exercised, during
                           the lifetime of the Optionee, only by the Optionee.
                           Notwithstanding the preceding sentence, (i) an
                           Optionee who is eligible to participate in the Trust
                           may transfer or direct the Company to transfer
                           Options or Optioned Shares to the Trust, subject to
                           the terms and conditions of this Plan and the Trust,
                           and (ii) the Option may be transferred to a spouse of
                           the Optionee only upon approval of the Committee,
                           providing all the conditions of exercisability and
                           vesting have been met. If the Option Agreement
                           permits, the Optionee may designate a beneficiary who
                           may (i) exercise an Option under Section 9(g) above,
                           or (ii) receive Shares issued pursuant to the
                           exercise of an Option where the death of an


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                           Optionee occurs between the date on which the
                           Optionee exercises the Option and the date the
                           Company issues the Shares.


                  (b)      Shares of Common Stock.  The Committee may impose
                           such other restrictions on Shares issued under this
                           Plan as it deems advisable. Except as otherwise
                           provided by the Committee, and except for transfers
                           of Optioned Shares to the Trust, Optioned Shares
                           acquired under an Option may not be sold, pledged,
                           assigned, hypothecated, transferred or disposed of in
                           any manner other than by will or by the laws of
                           descent and distribution (provided the assigns or
                           successors in interests to such Optioned Shares
                           remain subject to the terms and conditions of this
                           Plan and the Trust including the Company's right of
                           first refusal to repurchase the Optioned Shares)
                           without the Optionee first offering to the Company
                           the right to purchase the Optioned Shares at the fair
                           market value of the Shares on the date such offer is
                           received by the Secretary of the Company. If the
                           Company fails to accept the offer to purchase such
                           Shares within seven (7) days after receipt of such
                           offer, the Optionee shall be free to sell or transfer
                           such Shares at the same fair market value at which
                           they were offered to the Company. If the Optionee
                           does not sell or transfer such Shares within ninety
                           (90) days, then the restrictions of this Section 10
                           shall remain in effect. The certificates representing
                           the Optioned Shares shall bear a legend which shall
                           give notice of such restrictions on the
                           transferability of the Optioned Shares.


         11.     ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. Subject to any
required action by the shareholders of the Company, the number of Shares of
Common Stock covered by each outstanding Option and the per share price thereof
in each such Option, shall be proportionately adjusted for any increase or
decrease in the number of issued Shares of Common Stock resulting from a stock
split, reverse stock split, combination, reclassification, the payment of a
stock dividend on the Common Stock or any other increase or decrease in the
number of such Shares of Common Stock effected without receipt of consideration
by the Company; provided, however, that conversion of any convertible securities
of the Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Committee, whose
determination in that respect shall be final, binding and conclusive. Except as
expressly provided herein, no issue by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall affect
(and no adjustment by reason thereof shall be made with respect to) the number
or price of Shares subject to an Option.


         The Committee may, if it so determines in the exercise of its sole
discretion, also make provision for adjusting the number or class of securities
covered by any Option, as well as the price to be paid therefor, in the event of
the Company's effecting one or more reorganizations, recapitalizations, rights
offerings, or other increases or reductions of the number of Shares of

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<PAGE>   12

its outstanding Common Stock, or in the event of the Company's being
consolidated with or merged into any other corporation.


         Unless otherwise determined by the Board, upon the dissolution or
liquidation of the Company or upon any merger or consolidation, if the Company
is not the surviving corporation, the Options (irrespective of whether such
Options have been transferred to the Trust) granted hereby shall terminate and
thereupon become null and void; provided, however, that the Optionee and the
Trust shall be given not less than ten (10) days' notice of such event and the
exercisability of each outstanding Option shall be accelerated so that the
Optionee and the Trust may within such period exercise up to the entire
unexercised portion of their respective options. Upon the occurrence of any such
event, any Option not exercised pursuant thereto shall terminate.


         12. TIME OF GRANTING OPTIONS. Unless otherwise specified by the
Committee or as may be required by applicable law, regulation or rule (including
rules of stock exchanges or other self-regulatory organizations), the date of
grant of an Option under the Plan shall be the date on which the Committee makes
the determination to grant such Option or, if later, the date on which are
satisfied any conditions precedent to such grant. As soon as feasible after the
Committee makes its determination regarding the grant of an Option, the
Committee shall notify the individual or class of persons who are the recipients
of the grant.


         13. AMENDMENT AND TERMINATION OF THE PLAN. The Board may amend or
terminate the Plan from time to time in such respects as the Board may deem
advisable, except that amendments or modifications to the Plan shall be subject
to shareholder approval (a) if such amendment or modification increases the
Shares available for issuance under the Plan or (b) to the extent required by
applicable law, regulation or rule (including rules of stock exchanges or other
self-regulatory organizations). Any amendment or termination of the Plan shall
not adversely affect any Option already granted without the relevant Optionee's
consent; and if no such consent is secured such Option shall remain in full
force and effect as if the Plan had not been amended or terminated.


         14. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued with
respect to an Option granted under the Plan unless the exercise of such Option
and the issuance and delivery of such Shares pursuant thereto shall comply with
all relevant provisions of law, including, without limitation, the Securities
Act, the Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the Shares may then be listed, and
shall be further subject to the approval of counsel for the Company with respect
to such compliance. As a condition to the exercise of an Option, the Company may
require the Optionee to represent and warrant, at the time of any such exercise,
that the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for
the Company, such a representation is required by any of the aforementioned
relevant provisions of law.



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<PAGE>   13

         15. RESERVATION OF SHARES. During the term of this Plan, the Company
will at all times reserve and keep available the number of Shares as shall be
sufficient to satisfy the requirements of the Plan. Inability of the Company to
obtain from any regulatory body having jurisdiction and authority deemed by the
Company's counsel to be necessary to the lawful issuance and sale of any Shares
hereunder shall relieve the Company of any liability in respect to the
nonissuance or sale of such Shares as to which such requisite authority shall
not have been obtained.


         16. INFORMATION TO OPTIONEE. During the term of any Option granted
under the Plan, the Company shall provide or otherwise make available to each
Optionee and the Trust a copy of its annual report to shareholders and financial
information which is provided to its shareholders in accordance with the
provisions of the Company's Bylaws and applicable law.


         17. OPTION AGREEMENT. All Options granted under Plan shall be evidenced
by Option Agreements.


         18. BEST PAYMENTS. If the gross amount of any payment or benefit under
the Plan, either separately or in combination with any other payment or benefit
payable by the Company or pursuant to a plan of the Company would constitute a
parachute payment within the meaning of Code Section 280G, then the total
payments and benefits accrued and payable under this Plan shall not exceed the
amount necessary to maximize the amount received by the Optionee after payment
of all employment, income and excise taxes imposed on the Optionee with respect
to such payments and benefits. The Optionee may elect, by written notice to the
Board, which items of compensation, if any, shall be reduced so as to meet the
requirements of the preceding sentence. If there is a dispute between the
Company and the Optionee regarding (i) the extent, if any, to which any payments
or benefits to the Optionee are parachute payments or excess parachute payments,
under Code Section 280G, (ii) the base amount of such Optionee's compensation,
under Code Section 280G, or (iii) the status of such Optionee as a disqualified
individual, under Code Section 280G, such dispute shall be resolved as provided
in Section 20 below. Within 30 days of the Optionee's receiving notice of (a) a
change of control of the Company within the meaning of Code Section 280G or (b)
the Optionee's termination of service with the Company or the Company's
receiving notice of such termination, either the Optionee or the Company may
request, in accordance with Section 19 below, (a) a determination of the amount
of any parachute payment, excess parachute payment, or base amount of
compensation, or (b) a determination of the reduction necessary to maximize the
amount receivable by the Optionee as described above. Any fees, costs or
expenses incurred by the Optionee or the Trust in connection with such
determinations shall be paid by the Optionee.


         19. MANDATORY ARBITRATION. Any dispute arising out of or relating to
this Plan or any Option Agreement shall be resolved solely by arbitration before
one arbitrator in accordance with the Employee Benefit Plan Claim Rules of the
American Arbitration Association. The location of the arbitration proceeding
shall be in Washington, D.C. Judgment on the award rendered by the arbitrator
may be entered in any court having



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<PAGE>   14

jurisdiction. Each party to any dispute regarding the Plan or an Option
Agreement shall pay the costs and fees (including attorneys' fees) of presenting
his, her or its case in arbitration. All other costs of arbitration, including
the costs of any transcript of the proceedings, administrative fees and the
arbitrator's fees, shall be borne equally by the parties. All statutes of
limitation which would otherwise be applicable shall apply to any arbitration
proceeding. The provisions of this Section 20 are exclusive for all purposes and
applicable to any and all disputes arising out of or relating to the Plan or any
Option Agreement. The arbitrator who hears and decides any dispute shall have
jurisdiction and authority to award only compensatory damages to make whole a
person or entity sustaining foreseeable economic loss, and shall not have
jurisdiction or authority to make any other award of any type, including,
without limitation, punitive damages, unforeseeable economic damages, adverse
tax consequences, damages for pain, suffering or emotional distress, or any
other kind or form of damages. The remedy, if any, awarded by the arbitrator
shall be the sole and exclusive remedy for any dispute which is subject to
arbitration under this Plan.


         20. GOVERNING LAW. The validity, construction and effect of the Plan
and any agreement hereunder shall be determined in accordance with the laws of
the State of Delaware and applicable federal law.


         21. COMPLIANCE WITH RULE 16B-3. It is the intent of the Company that
this Plan and the Trust comply in all respects with applicable provisions of
Rule 16b-3 under the Exchange Act in connection with any grant of Options.
Accordingly, if any provision of this Plan or the Trust or any agreement
hereunder does not comply with the requirements of Rule 16b-3 as then applicable
to any such Optionee, such provision shall be construed or deemed amended to the
extent necessary to conform to such requirements with respect to such Optionee.
In addition, the Board shall have no authority to make any amendment,
alteration, suspension, discontinuation, or termination of the Plan or the Trust
or any agreement hereunder to take other action if and to the extent such
authority would cause an Optionee's transactions under the Plan or the Trust not
to be exempt under Rule 16b-3 of the Exchange Act.





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