MICROAGE, INC.
                          1997 LONG-TERM INCENTIVE PLAN


         ARTICLE 1         PURPOSE

         1.1 GENERAL. The purpose of the MicroAge, Inc. 1997 Long-Term Incentive
Plan (the "Plan") is to promote the success, and enhance the value, of MicroAge,
Inc.  (the  "Company")  by  linking  the  personal  interests  of its  officers,
associates  and  independent  contractors  or  consultants  to those of  Company
shareholders  and  by  providing  its  officers,  key  associates,   independent
contractors and consultants with an incentive for outstanding  performance.  The
Plan is further intended to provide flexibility to the Company in its ability to
motivate,  attract,  and  retain the  services  of such  individuals  upon whose
judgment,  interest,  and special effort the successful conduct of the Company's
operation  is largely  dependent.  Accordingly,  the Plan  permits  the grant of
incentive  awards  from  time to time to  officers,  other key  associates,  and
independent contractors and consultants.

         ARTICLE 2         EFFECTIVE DATE

         2.1 EFFECTIVE DATE. The Plan is effective as of September 25, 1997 (the
"Effective  Date).  Within one year after the Effective  Date, the Plan shall be
submitted to the  shareholders of the Company for their approval.  The Plan will
be deemed to be approved by the shareholders if it receives the affirmative vote
of the holders of a majority of the shares of stock of the Company  present,  or
represented,  and  entitled to vote at a meeting  duly held in  accordance  with
applicable  provisions of the Delaware General Corporation Law and the Company's
By-Laws and  Certificate  of  Incorporation.  Any Awards  granted under the Plan
prior to  shareholder  approval are  effective  when made (unless the  Committee
specifies  otherwise  at the time of grant),  but no Award may be  exercised  or
settled and no restrictions  relating to any Award may lapse before  shareholder
approval.  If the  shareholders  fail to approve the Plan, any Award  previously
made shall be automatically canceled without any further act.

         ARTICLE 3         DEFINITIONS AND CONSTRUCTION.

         3.1  DEFINITIONS.  When a word or phrase  appears in this Plan with the
initial letter capitalized, and the word or phrase does not commence a sentence,
the word or phrase shall  generally be given the meaning  ascribed to it in this
Section or in Sections 1.1 or 2.1 unless a clearly different meaning is required
by the  context.  The  following  words and  phrases  shall  have the  following
meanings:

                  (a)  "Award"  means  any  Option,  Stock  Appreciation  Right,
         Restricted Stock Award,  Performance Share Award, or  Performance-Based
         Award granted to a Participant under the Plan.

                  (b) "Award Agreement" means any written  agreement,  contract,
         or other instrument or document evidencing an Award.
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                  (c) "Board" means the Board of Directors of the Company.

                  (d)  "Change  of  Control"  means  and  includes  each  of the
         following:

                           (1) A change of  control  of the  Company of a nature
                  that would be required to be reported in response to Item 6(e)
                  of Schedule 14A of the  Securities  Exchange  Act of 1934,  as
                  amended  ("1934  Act")  regardless  of whether  the Company is
                  subject to such reporting requirement;

                           (2) A change  of  control  of the  Company  through a
                  transaction  or series of  transactions,  such that any person
                  (as that term is used in Section 13 and  14(d)(2)  of the 1934
                  Act),  excluding affiliates of the Company as of the Effective
                  Date, is or becomes the beneficial owner (as that term is used
                  in Section 13(d) of the 1934 Act) directly or  indirectly,  of
                  securities  of the  Company  representing  20% or  more of the
                  combined  voting  power  of  the  Company's  then  outstanding
                  securities;

                           (3) The  individuals  who, as of the Effective  Date,
                  constitute  the Board (the  "Incumbent  Board")  cease for any
                  reason  to  constitute  at least 80% of the  Board;  provided,
                  however,  that  any  person  becoming  a member  of the  Board
                  subsequent to the Effective Date whose election, or nomination
                  for election by the Company's stockholders,  was approved by a
                  vote  of at  least  80% of the  members  then  comprising  the
                  Incumbent  Board (other than an election or  nomination  of an
                  individual whose initial assumption of office is in connection
                  with an actual or threatened  election contest relating to the
                  election of directors  of the Company,  as such terms are used
                  in Rule 14a-11 of Regulation  14A  promulgated  under the 1934
                  Act or any successor provision thereto) shall be, for purposes
                  of this  paragraph,  considered  as though  such person were a
                  member of the Incumbent Board;

                           (4) Any  consolidation  or liquidation of the Company
                  in  which  the  Company  is not the  continuing  or  surviving
                  corporation or pursuant to which Stock would be converted into
                  cash, securities or other property, other than a merger of the
                  Company   in  which  the   holders  of  the  shares  of  Stock
                  immediately  before  the  merger  have the same  proportionate
                  ownership  of  common  stock  of  the  surviving   corporation
                  immediately after the merger;

                           (5) The  shareholders of the Company approve any plan
                  or proposal for the liquidation or dissolution of the Company;
                  or

                           (6)  Substantially  all of the assets of the  Company
                  are sold or  otherwise  transferred  to  parties  that are not
                  within a  "controlled  group of  corporations"  (as defined in
                  Section 1563 of the Code) in which the Company is a member.

                  (e)  "Code"  means  the  Internal  Revenue  Code of  1986,  as
         amended.

                  (f) "Committee"  means the committee of the Board described in
         Article 4.
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                  (g)  "Covered  Employee"  means an Employee  who is a "covered
         employee" within the meaning of Section 162(m) of the Code.

                  (h)  "Disability  shall mean any illness or other  physical or
         mental  condition  of  a  Participant  which  renders  the  Participant
         incapable of performing his customary and usual duties for the Company,
         or any  medically  determinable  illness  or other  physical  or mental
         condition  resulting from a bodily injury,  disease or mental  disorder
         which in the judgment of the Committee is permanent  and  continuous in
         nature.  The Committee may require such medical or other evidence as it
         deems necessary to judge the nature and permanency of the Participant's
         condition.

                  (i) "Fair Market Value" means,  as of any given date, the fair
         market value of Stock or other  property  determined by such methods or
         procedures as may be  established  from time to time by the  Committee.
         Unless otherwise determined by the Committee,  the Fair Market Value of
         Stock  as of any date  shall  be the  closing  price  for the  Stock as
         reported  on the NASDAQ  National  Market  System  (or on any  national
         securities  exchange  on which the Stock is then  listed) for that date
         or, if no closing price is so reported for that date, the closing price
         on the next preceding date for which a closing price was reported.

                  (j) "Incentive  Stock Option" means an Option that is intended
         to meet the  requirements  of Section 422 of the Code or any  successor
         provision thereto.

                  (k)  "Non-Employee  Director" means of member of the Board who
         qualifies as a "Non-Employee  Director" as defined in Rule  16b-3(b)(3)
         of the Exchange Act, or any successor definition adopted by the Board.

                  (l)  "Non-Qualified  Stock Option" means an Option that is not
         intended to be an Incentive Stock Option.

                  (m)  "Option"  means a right  granted to a  Participant  under
         Article 7 of the Plan to  purchase  Stock at a specified  price  during
         specified  time  periods.  An Option may be either an  Incentive  Stock
         Option or a Non-Qualified Stock Option.

                  (n)  "Participant"  means a person  who,  as an  officer,  key
         associate,  independent  contractor or consultant of the Company or any
         Subsidiary, has been granted an Award under the Plan.

                  (o)  "Performance-Based  Awards"  means the  Restricted  Stock
         Awards  and  Performance  Share  Awards  granted  to  selected  Covered
         Employees  pursuant  to Articles 9 and 10, but which are subject to the
         terms and  conditions  set forth in Article  11. All  Performance-Based
         Awards are  intended  to qualify  as  "performance-based  compensation"
         under Section 162(m) of the Code.

                  (p)  "Performance   Criteria"  means  the  criteria  that  the
         Committee  selects for purposes of establishing the Performance Goal or
         Performance  Goals for a  Participant  for a  Performance  Period.  The
         Performance  Criteria that will be used to establish  Performance Goals
         are limited to the following:  pre- or after-tax net earnings,  revenue
         growth, operating income, operating cash flow,
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         return on net assets, return on shareholders' equity, return on assets,
         return on capital,  Stock price growth,  shareholder returns,  gross or
         net profit margin,  earnings per share,  price per share of Stock,  and
         market share,  any of which may be measured either in absolute terms or
         as  compared to any  incremental  increase or as compared to results of
         one or more companies or of a peer group. The Committee  shall,  within
         the time  prescribed  by  Section  162(m)  of the  Code,  define  in an
         objective fashion the manner of calculating the Performance Criteria it
         selects to use for such Performance Period for such Participant.

                  (q) "Performance  Goals" means, for a Performance  Period, the
         goals  established  in writing  by the  Committee  for the  Performance
         Period  based  upon  the   Performance   Criteria.   Depending  on  the
         Performance  Criteria  used to  establish  such  Goal,  the Goal may be
         expressed in terms of overall Company performance or the performance of
         an operating unit or the performance of the individual.  The Committee,
         in its discretion, may, within the time prescribed by Section 162(m) of
         the Code,  adjust or modify the  calculation of  Performance  Goals for
         such Performance Period in order to prevent the dilution or enlargement
         of the rights of Participants,  (i) in the event of, or in anticipation
         of, any unusual or extraordinary corporate item, transaction, event, or
         development;  (ii) in recognition of, or in anticipation  of, any other
         unusual or nonrecurring  events affecting the Company, or the financial
         statements of the Company;  or (iii) in response to, or in anticipation
         of, changes in applicable laws, regulations,  accounting principles, or
         business conditions.

                  (r)  "Performance  Period"  means the one or more  periods  of
         time,  which  may  be of  varying  and  overlapping  durations,  as the
         Committee  may  select,  over  which  the  attainment  of one  or  more
         Performance  Goals will be measured  for the purpose of  determining  a
         Participant's right to, and the payment of, a Performance-Based Award.

                  (s) "Performance Share" means a right granted to a Participant
         under Article 9, to receive cash,  Stock, or other Awards,  the payment
         of  which  is  contingent  upon  achieving  certain  performance  goals
         established by the Committee.

                  (t) "Plan" means the MicroAge,  Inc. 1997 Long-Term  Incentive
         Plan, as amended from time to time.

                  (u)  "Restricted   Stock  Award"  means  Stock  granted  to  a
         Participant  under  Article 10 that is subject to certain  restrictions
         and to risk of forfeiture.

                  (v)   "Retirement"   means  a  Participant's   termination  of
         employment  with  the  Company  after  attaining  any  normal  or early
         retirement  age  specified  in any  pension,  profit  sharing  or other
         retirement program sponsored by the Company.

                  (w)  "Stock"  means the common  stock of the  Company and such
         other  securities  of the  Company  that may be  substituted  for Stock
         pursuant to Article 13.

                  (x) "Stock  Appreciation Right" or "SAR" means a right granted
         to a  Participant  under  Article 8 to  receive a payment  equal to the
         difference between the Fair Market Value of a share of
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         Stock as of the date of exercise of the SAR over the grant price of the
         SAR, all as determined pursuant to Article 8.

                  (y) "Subsidiary"  means any corporation of which a majority of
         the  outstanding  voting  stock or voting power is  beneficially  owned
         directly or indirectly by the Company.

         ARTICLE 4         ADMINISTRATION

         4.1 COMMITTEE.  The Plan shall be  administered  by a Committee that is
appointed  by, and shall serve at the  discretion  of, the Board.  The Committee
shall  consist  of at least two  individuals,  each of whom  qualifies  as (i) a
Non-Employee  Director, and (ii) an "outside director" under Code Section 162(m)
and  the  regulations   issued  thereunder.   Subject  to  the  foregoing,   the
Compensation  Committee of the Board shall constitute the Committee,  unless the
Board determines otherwise.

         4.2  ACTION  BY  THE  COMMITTEE.  A  majority  of the  Committee  shall
constitute  a quorum.  The acts of a  majority  of the  members  present  at any
meeting at which a quorum is present and acts  approved in writing by a majority
of the Committee in lieu of a meeting shall be deemed the acts of the Committee.
Each member of the Committee is entitled to, in good faith, rely or act upon any
report or other  information  furnished  to that  member by any officer or other
associate of the Company or any Subsidiary,  the Company's independent certified
public  accountants,   or  any  executive   compensation   consultant  or  other
professional  retained  by the  Company to assist in the  administration  of the
Plan.

         4.3  AUTHORITY OF COMMITTEE.  The  Committee  has the exclusive  power,
authority and discretion to:

                  (a) Designate Participants to receive Awards;

                  (b)  Determine  the type or types of Awards to be  granted  to
         each Participant;

                  (c)  Determine  the  number of Awards  to be  granted  and the
         number of shares of Stock to which an Award will relate;

                  (d)  Determine  the terms and  conditions of any Award granted
         under the Plan including but not limited to, the exercise price,  grant
         price, or purchase price, any restrictions or limitations on the Award,
         any schedule for lapse of forfeiture  restrictions  or  restrictions on
         the  exercisability  of an Award, and accelerations or waivers thereof,
         based in each case on such  considerations as the Committee in its sole
         discretion determines;  provided, however, that the Committee shall not
         have the authority to accelerate the vesting,  or waive the forfeiture,
         of any Performance-Based Awards;

                  (e)  Determine  whether,   to  what  extent,  and  under  what
         circumstances  an Award may be settled in, or the exercise  price of an
         Award may be paid in, cash, Stock, other Awards, or other property,  or
         an Award may be canceled, forfeited, or surrendered;

                  (f) Prescribe the form of each Award Agreement, which need not
         be identical for each Participant;
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                  (g)  Decide  all  other  matters  that must be  determined  in
         connection with an Award;

                  (h) Establish, adopt or revise any rules and regulations as it
         may deem necessary or advisable to administer the Plan; and

                  (i) Make all other  decisions and  determinations  that may be
         required  under  the  Plan  or as  the  Committee  deems  necessary  or
         advisable to administer the Plan.

         4.4 DECISIONS  BINDING.  All decisions and  determinations  made by the
Committee with respect to any Award granted under the Plan, any Award Agreement,
or the  interpretation  of the Plan are final,  binding  and  conclusive  on all
parties.

         ARTICLE 5         SHARES SUBJECT TO THE PLAN

         5.1 NUMBER OF SHARES.  Subject to adjustment  provided in Section 13.1,
the aggregate  number of shares of Stock  reserved and available for grant under
the Plan shall be 2,000,000.

         5.2 LAPSED AWARDS. To the extent that an Award  terminates,  expires or
lapses for any  reason,  any shares of Stock  subject to the Award will again be
available for the grant of an Award under the Plan and shares subject to SARs or
other Awards  settled in cash will be available  for the grant of an Award under
the Plan.

         5.3 STOCK DISTRIBUTED.  Any Stock distributed  pursuant to an Award may
consist,  in whole or in part, of authorized and unissued Stock,  treasury Stock
or Stock purchased on the open market.

         5.4 LIMITATION ON NUMBER OF SHARES  SUBJECT TO AWARDS.  Notwithstanding
any  provision in the Plan to the  contrary,  and subject to the  adjustment  in
Section 13.1,  the maximum number of shares of Stock with respect to one or more
Awards that may be granted to any one Participant  during any fiscal year of the
Company shall be 200,000.

         ARTICLE 6         ELIGIBILITY AND PARTICIPATION

         6.1  ELIGIBILITY.  Persons eligible to participate in this Plan include
all officers, key associates and independent  contractors and consultants of the
Company or a Subsidiary,  as determined by the Committee,  including  associates
who are also members of the Board, but excluding those Board members who are not
also associates of the Company or a Subsidiary.

         6.2 ACTUAL  PARTICIPATION.  Subject to the  provisions of the Plan, the
Committee  may,  from time to time,  select from among all eligible  associates,
those to whom Awards shall be granted and shall  determine the nature and amount
of each Award.  No  associate  shall have any right to be granted an Award under
this Plan.
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         ARTICLE 7         STOCK OPTIONS

         7.1  GENERAL.   The   Committee  is  authorized  to  grant  Options  to
Participants on the following terms and conditions:

                  (a)  EXERCISE  PRICE.  The  exercise  price per share of Stock
         under an Option shall be  determined  by the Committee and set forth in
         the Award  Agreement.  The  exercise  price for any Option shall not be
         less than the Fair Market Value as of the date of grant.

                  (b) TIME AND  CONDITIONS  OF  EXERCISE.  The  Committee  shall
         determine  the time or times at which an  Option  may be  exercised  in
         whole or in part. The Committee also shall determine the performance or
         other conditions,  if any, that must be satisfied before all or part of
         an Option may be exercised.

                  (c) PAYMENT.  The  Committee  shall  determine  the methods by
         which the exercise price of an Option may be paid, the form of payment,
         including, without limitation, cash, shares of Stock, or other property
         (including  broker-assisted "cashless exercise" arrangements),  and the
         methods by which  shares of Stock  shall be  delivered  or deemed to be
         delivered to Participants.

                  (d)  EVIDENCE OF GRANT.  All Options  shall be  evidenced by a
         written Award Agreement  between the Company and the  Participant.  The
         Award  Agreement  shall include such  provisions as may be specified by
         the Committee.

         7.2 INCENTIVE  STOCK OPTIONS.  The terms of any Incentive Stock Options
granted under the Plan must comply with the following additional rules:

                  (a)  EXERCISE  PRICE.  The  exercise  price per share of Stock
         shall be set by the Committee, provided that the exercise price for any
         Incentive Stock Option may not be less than the Fair Market Value as of
         the date of the grant.

                  (b) EXERCISE.  In no event,  may any Incentive Stock Option be
         exercisable for more than ten years from the date of its grant.

                  (c) LAPSE OF OPTION.  An  Incentive  Stock  Option shall lapse
         under the following circumstances:

                           (1) The Incentive  Stock Option shall lapse ten years
                  from the date it is granted,  unless an earlier time is set in
                  the Award Agreement.

                           (2)  The  Incentive   Stock  Option  shall  lapse  in
                  accordance with the Option Agreement, but shall in no event be
                  exercisable  for a period  exceeding  three  months  after the
                  Participant's  termination  of  employment,   other  than  for
                  Disability or death,  in which case the Incentive Stock Option
                  shall lapse no later than 12 months after such  Disability  or
                  death.
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                  (d) INDIVIDUAL  DOLLAR  LIMITATION.  The aggregate Fair Market
         Value  (determined  as of the time an Award is made) of all  shares  of
         Stock  with  respect  to  which   Incentive  Stock  Options  are  first
         exercisable  by a  Participant  in any  calendar  year  may not  exceed
         $100,000.00  or such other  dollar  limitation  as set forth in Section
         422(d)  of the  Code or any  successor  provision.  If for  any  reason
         Incentive Stock Options that are first  exercisable for any Participant
         in any calendar year exceed this  limitation,  the excess Options shall
         be deemed to be Non-Qualified Stock Options.

                  (e) TEN PERCENT  OWNERS.  An  Incentive  Stock Option shall be
         granted  to any  individual  who,  at the  date of  grant,  owns  stock
         possessing  more than ten percent of the total combined voting power of
         all classes of Stock of the Company only if such Option is granted at a
         price  that is not less than 110% of Fair  Market  Value on the date of
         grant and the  Option is  exercisable  for no more than five years from
         the date of grant.

                  (f)  EXPIRATION  OF INCENTIVE  STOCK  OPTIONS.  No Award of an
         Incentive  Stock  Option  may be made  pursuant  to this Plan after the
         tenth anniversary of the Effective Date.

                  (g) RIGHT TO EXERCISE.  During a  Participant's  lifetime,  an
         Incentive Stock Option may be exercised only by the Participant.

         7.3 MANAGEMENT EQUITY PROGRAM

                  (a)  ELIGIBILITY.  In addition to any other Award granted to a
         Participant under the Plan, the Committee may, in its sole and absolute
         discretion,  select  one or more  Participants  to  participate  in the
         Management  Equity  Program.   Under  the  Management  Equity  Program,
         selected  Participants  may receive  Awards of Options  pursuant to the
         terms and conditions set forth in this Section 7.3

                  (b) RECEIPT OF AWARDS.  A Participant  selected to participate
         in the  Management  Equity  Program shall receive  Awards of Options in
         exchange  for the  Participant's  irrevocable  waiver  of a  designated
         amount or  percentage of the  Participant's  base salary or any bonuses
         otherwise  payable  during the  period  the  waiver is in  effect.  The
         receipt of the Options pursuant to the Management  Equity Program shall
         be subject to such terms and  conditions as determined by the Committee
         in its sole and  absolute  discretion  and as set forth in a Management
         Equity Program Award Agreement.

                  (c) FORMULA. The number of Non-Qualified Stock Options granted
         to the Participant  pursuant to this Section 7.3 shall be determined by
         multiplying  the  total  dollar  amount of the base  salary or  bonuses
         waived by the  Participant  under a  Management  Equity  Program  Award
         Agreement by a  leveraging  factor and dividing the product by the Fair
         Market  Value of one share of Stock as of the first day of the calendar
         year for which the  Participant's  waiver is first effective,  or as of
         the  original  effective  date of the  waiver  if the  waiver  is first
         effective as of some date other than the first day of a calendar year.

                  (d) MANAGEMENT EQUITY PROGRAM AWARD AGREEMENT. Subsequent to a
         Participant  being selected to  participate  in the  Management  Equity
         Program, such Participant shall
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         enter into a Management Equity Program Award Agreement in such form and
         at such time as the Committee shall require.

                  (e)  WAIVER   REQUIREMENTS  AND   RESTRICTIONS.   In  any  one
         Management  Equity Program Award Agreement,  a Participant shall not be
         allowed to waive his base  salary or any  bonuses for more than a three
         (3) year period, except that bonuses may be waived over a longer period
         as may be required,  up to the maximum of a ten (10) year  period.  The
         Committee shall  determine,  in its sole and absolute  discretion,  the
         minimum or maximum percentage of base salary or any bonuses that may be
         waived  by a  Participant,  the  leveraging  factor  to be  used in the
         formula set forth in Section 7.3(c) and all other matters the Committee
         deems  necessary or advisable for  implementing  the Management  Equity
         Program.  Any and all  rules or  procedures  adopted  by the  Committee
         pursuant  to the  preceding  sentence  shall be in writing and shall be
         communicated  to  all  Participants   selected  by  the  Committee  for
         participation in the Management Equity Program.

         ARTICLE 8         STOCK APPRECIATION RIGHTS

         8.1  GRANT  OF SARs.  The  Committee  is  authorized  to grant  SARs to
Participants on the following terms and conditions:


                  (a)  RIGHT  TO   PAYMENT.   Upon  the   exercise  of  a  Stock
         Appreciation Right, the Participant to whom it is granted has the right
         to receive the excess, if any, of:

                           (1) The Fair Market  Value of a share of Stock on the
                  date of exercise; over

                           (2) The grant price of the Stock  Appreciation  Right
                  as determined by the  Committee,  which shall not be less than
                  the Fair Market Value of a share of Stock on the date of grant
                  in the case of any SAR related to any Incentive Stock Option.

                  (b) OTHER TERMS. All awards of Stock Appreciation Rights shall
         be evidenced  by an Award  Agreement.  The terms,  methods of exercise,
         methods of settlement, form of consideration payable in settlement, and
         any other terms and conditions of any Stock Appreciation Right shall be
         determined  by the  Committee at the time of the grant of the Award and
         shall be reflected in the Award Agreement.

         ARTICLE 9         PERFORMANCE SHARES

         9.1 GRANT OF PERFORMANCE  SHARES.  The Committee is authorized to grant
Performance  Shares  to  Participants  on such  terms and  conditions  as may be
selected by the Committee.  The Committee shall have the complete  discretion to
determine the number of  Performance  Shares  granted to each  Participant.  All
Awards of Performance Shares shall be evidenced by an Award Agreement.

         9.2  RIGHT TO  PAYMENT.  Upon the  Award of a  Performance  Share,  the
Participant  has the  right to  receive  the  cash,  stock,  or  other  property
evidenced by the Award Agreement.  The Committee shall set performance goals and
other terms or conditions to payment of the Performance Shares in its discretion
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which,  depending on the extent to which they are met, will determine the number
and value of Performance  Shares that will be paid to the Participant,  provided
that the time period during which the  performance  goals must be met shall,  in
all cases, exceed six months.

         9.3 OTHER TERMS.  Performance  Shares may be payable in cash, Stock, or
other  property,  and have such other terms and  conditions as determined by the
Committee and reflected in the Award Agreement.

         ARTICLE 10        RESTRICTED STOCK AWARDS

         10.1 GRANT OF  RESTRICTED  STOCK.  The  Committee is authorized to make
Awards of Restricted  Stock to  Participants in such amounts and subject to such
terms  and  conditions  as may be  selected  by the  Committee.  All  Awards  of
Restricted Stock shall be evidenced by a Restricted Stock Award Agreement.

         10.2 ISSUANCE AND  RESTRICTIONS.  Restricted  Stock shall be subject to
such restrictions on transferability and other restrictions as the Committee may
impose  (including,  without  limitation,  limitations  on  the  right  to  vote
Restricted  Stock or the right to receive  dividends on the  Restricted  Stock).
These  restrictions may lapse separately or in combination at such times,  under
such  circumstances,  in  such  installments,  or  otherwise,  as the  Committee
determines at the time of the grant of the Award or thereafter.

         10.3 FORFEITURE. Except as otherwise determined by the Committee at the
time of the grant of the Award or  thereafter,  upon  termination  of employment
during the applicable restriction period,  Restricted Stock that is at that time
subject to  restrictions  shall be  forfeited  and  reacquired  by the  Company,
provided,  however,  that the Committee may provide in any Award  Agreement that
restrictions  or  forfeiture  conditions  relating to  Restricted  Stock will be
waived in whole or in part in the event of terminations resulting from specified
causes,  and  the  Committee  may in  other  cases  waive  in  whole  or in part
restrictions or forfeiture conditions relating to Restricted Stock.

         10.4 CERTIFICATES FOR RESTRICTED STOCK.  Restricted Stock granted under
the Plan may be evidenced in such manner as the Committee  shall  determine.  If
certificates  representing shares of Restricted Stock are registered in the name
of the Participant,  certificates  must bear an appropriate  legend referring to
the terms, conditions, and restrictions applicable to such Restricted Stock, and
the Company shall retain physical  possession of the certificate until such time
as all applicable restrictions lapse.
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         ARTICLE 11        PERFORMANCE-BASED AWARDS

         11.1  PURPOSE.  The  purpose  of  this  Article  11 is to  provide  the
Committee  the ability to qualify the  Restricted  Stock Awards under Article 10
and  the  Performance  Share  Awards  under  Article  9  as   "performance-based
compensation"  under  Section  162(m)  of the  Code.  If the  Committee,  in its
discretion,  decides to grant a  Performance-Based  Award to a Covered Employee,
the  provisions  of this Article 11 shall  control  over any contrary  provision
contained in Articles 9 or 10.

         11.2  APPLICABILITY.  This Article 11 shall apply only to those Covered
Employees  selected by the Committee to receive  Performance-Based  Awards.  The
Committee may, in its discretion,  grant  Restricted Stock Awards or Performance
Share Awards to Covered  Employees that do not satisfy the  requirements of this
Article  11.  The  designation  of a Covered  Employee  as a  Participant  for a
Performance Period shall not in any manner entitle the Participant to receive an
Award  for  the  period.  Moreover,  designation  of  a  Covered  Employee  as a
Participant for a particular Performance Period shall not require designation of
such Covered Employee as a Participant in any subsequent  Performance Period and
designation  of  one  Covered  Employee  as  a  Participant  shall  not  require
designation of any other Covered Employees as a Participant in such period or in
any other period.

         11.3 DISCRETION OF COMMITTEE WITH RESPECT TO PERFORMANCE  AWARDS.  With
regard  to a  particular  Performance  Period,  the  Committee  shall  have full
discretion  to  select  the  length  of such  Performance  Period,  the  type of
Performance-Based  Awards to be issued, the kind and/or level of the Performance
Goal, and whether the Performance Goal is to apply to the Company,  an operating
unit of the Company, or the Participant individually.

         11.4 PAYMENT OF PERFORMANCE  AWARDS.  Unless otherwise  provided in the
relevant  Award  Agreement,  a Participant  must be employed by the Company or a
Subsidiary  on the last  day of the  Performance  Period  to be  eligible  for a
Performance Award for such Performance Period.  Furthermore, a Participant shall
be eligible to receive payment under a Performance-Based Award for a Performance
Period only if the Performance Goals for such period are achieved.

         In  determining  the  actual  size of an  individual  Performance-Based
Award, the Committee may reduce or eliminate the amount of the Performance-Based
Award earned for the Performance Period, if in its sole and absolute discretion,
such reduction or elimination is appropriate.

         11.5 MAXIMUM AWARD PAYABLE.  Notwithstanding any provision contained in
the Plan to the contrary, the maximum Performance-Based Award payable to any one
Participant under the Plan for a Performance Period is 200,000 Shares, or in the
event   the   Performance-Based   Award   is  paid   in   cash,   such   maximum
Performance-Based Award shall be determined by multiplying 200,000 Shares by the
Fair Market Value of one Share as of the date of grant of the  Performance-Based
Award.

         ARTICLE 12        PROVISIONS APPLICABLE TO AWARDS

         12.1 STAND-ALONE,  TANDEM, AND SUBSTITUTE AWARDS.  Awards granted under
the Plan may, in the discretion of the Committee,  be granted either alone or in
addition to, in tandem with,  or in  substitution  for, any other Award  granted
under the Plan. If an Award is granted in substitution for
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another  Award,  the  Committee may require the surrender of such other Award in
consideration of the grant of the new Award. Awards granted in addition to or in
tandem  with  other  Awards  may be  granted  either at the same time as or at a
different time from the grant of such other Awards.

         12.2  EXCHANGE  PROVISIONS.  The  Committee  may at any  time  offer to
exchange or buy out any previously  granted Award for a payment in cash,  Stock,
or another Award  (subject to Section  12.1),  based on the terms and conditions
the Committee  determines and  communicates  to the  Participant at the time the
offer is made.

         12.3 TERM OF AWARD.  The term of each Award  shall be for the period as
determined  by the  Committee,  provided  that in no event shall the term of any
Incentive Stock Option or a Stock  Appreciation Right granted in tandem with the
Incentive Stock Option exceed a period of ten years from the date of its grant.

         12.4 FORM OF PAYMENT FOR  AWARDS.  Subject to the terms of the Plan and
any applicable law or Award  Agreement,  payments or transfers to be made by the
Company or a Subsidiary on the grant or exercise of an Award may be made in such
forms as the  Committee  determines  at or after  the time of  grant,  including
without  limitation,  cash,  Stock,  other  Awards,  or other  property,  or any
combination,  and may be made in a single payment or transfer,  in installments,
or on a deferred basis, in each case determined in accordance with rules adopted
by, and at the discretion of, the Committee.

         12.5 LIMITS ON TRANSFER.  No right or interest of a Participant  in any
Award may be pledged,  encumbered,  or  hypothecated to or in favor of any party
other  than the  Company  or a  Subsidiary,  or shall be  subject  to any  lien,
obligation,  or liability of such  Participant to any other party other than the
Company or a Subsidiary. Except as otherwise provided by the Committee, no Award
shall be assignable or transferable  by a Participant  other than by will or the
laws of descent and distribution.

         12.6 BENEFICIARIES. Notwithstanding Section 12.5, a Participant may, in
the manner determined by the Committee,  designate a beneficiary to exercise the
rights of the  Participant and to receive any  distribution  with respect to any
Award  upon the  Participant's  death.  A  beneficiary,  legal  guardian,  legal
representative, or other person claiming any rights under the Plan is subject to
all terms and conditions of the Plan and any Award  Agreement  applicable to the
Participant,  except  to the  extent  the Plan  and  Award  Agreement  otherwise
provide,  and to any additional  restrictions deemed necessary or appropriate by
the Committee.  If the  Participant is married,  a designation of a person other
than the  Participant's  spouse as his beneficiary  with respect to more than 50
percent  of the  Participant's  interest  in the Award  shall  not be  effective
without the written consent of the  Participant's  spouse. If no beneficiary has
been designated or survives the Participant, payment shall be made to the person
entitled  thereto  under  the  Participant's  will or the  laws of  descent  and
distribution. Subject to the foregoing, a beneficiary designation may be changed
or revoked by a  Participant  at any time  provided the change or  revocation is
filed with the Committee.

         12.7 STOCK  CERTIFICATES.  All Stock  certificates  delivered under the
Plan are  subject  to any  stop-transfer  orders and other  restrictions  as the
Committee  deems  necessary  or  advisable  to  comply  with  federal  or  state
securities laws, rules and regulations and the rules of any national  securities
exchange or automated  quotation system on with the Stock is listed,  quoted, or
traded.  The Committee may place legends on any Stock  certificate  to reference
restrictions applicable to the Stock.
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         12.8  TENDER  OFFERS.  In the event of a public  tender  for all or any
portion of the Stock, or in the event that a proposal to merge, consolidate,  or
otherwise  combine with another company is submitted for  shareholder  approval,
the Committee may in its sole discretion  declare  previously granted Options to
be immediately  exercisable.  To the extent that this provision causes Incentive
Stock Options to exceed the dollar  limitation set forth in Section 7.2(d),  the
excess Options shall be deemed to be Non-Qualified Stock Options.

         12.9 ACCELERATION UPON DEATH OR DISABILITY.  Notwithstanding  any other
provision in the Plan or any Participant's Award Agreement to the contrary, upon
the  Participant's  death  or  Disability,   all  outstanding   Options,   Stock
Appreciation  Rights,  and  other  Awards in the  nature  of rights  that may be
exercised  shall become fully  exercisable  and all  restrictions on outstanding
Awards shall lapse.  Any Option or Stock  Appreciation  Rights Awards shall then
lapse in  accordance  with  the  other  provisions  of this  Plan and the  Award
Agreement.

         12.10  ACCELERATION  UPON A CHANGE OF  CONTROL.  If a Change of Control
occurs, all outstanding Options,  Stock Appreciation Rights, and other Awards in
the nature of rights that may be exercised  shall become fully  exercisable  and
all  restrictions  on  outstanding  Awards  shall  lapse.  In the event that the
Committee  becomes  aware of an event  that will  cause a Change of  Control  to
occur,  the Committee  may give each  Participant  the right to exercise  Awards
prior to the occurrence of the event over such period as the  Committee,  in its
sole and absolute discretion, shall determine. To the extent that this provision
causes  Incentive  Stock  Options to exceed the dollar  limitation  set forth in
Section  7.2(d),  the excess Options shall be deemed to be  Non-Qualified  Stock
Options.

         ARTICLE 13        ADJUSTMENTS

         13.1 GENERAL. The Committee may make or provide for such adjustments in
the (a)  number  of  shares  of Stock  covered  by  outstanding  Awards  granted
hereunder, (b) prices per share applicable to outstanding Awards and (c) kind of
shares  covered  thereby,  as the Committee in its sole  discretion  may in good
faith  determine  to be  equitably  required  in order to  prevent  dilution  or
enlargement of the rights of  Participants  that otherwise would result from (x)
any stock  dividend,  stock split,  combination  or exchange of shares of Stock,
recapitalization  or other change in the capital  structure of the Company,  (y)
any   merger,   consolidation,    spin-off,   spin-out,   split-off,   split-up,
reorganization, partial or complete liquidation, or other distribution of assets
(other than a normal cash dividend),  issuance of rights or warrants to purchase
securities,  or (z) any other  corporate  transaction  or event having an effect
similar to any of the foregoing.  Moreover, in the event of any such transaction
or event,  the Committee may provide in substitution  for any or all outstanding
Awards under this Plan such  alternative  consideration  as it may in good faith
determine to be equitable under the  circumstances and may require in connection
therewith the  surrender of all Awards so replaced.  The Committee may also make
or provide for such  adjustments  in the number of shares of Stock  specified in
Section 5.1 as the Committee in its sole  discretion may in good faith determine
to be appropriate in order to reflect any transaction or event described in this
Section 13.1.  Any  adjustment  pursuant to this Section 13.1 will be conclusive
and binding for all purposes of the Plan.
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         ARTICLE 14        AMENDMENT, MODIFICATION AND TERMINATION

         14.1 AMENDMENT,  MODIFICATION AND TERMINATION. With the approval of the
Board, at any time and from time to time, the Committee may terminate,  amend or
modify the Plan.

         14.2  AWARDS  PREVIOUSLY   GRANTED.  No  termination,   amendment,   or
modification  of the Plan shall  adversely  affect in any material way any Award
previously   granted  under  the  Plan,  without  the  written  consent  of  the
Participant.  The  Committee  also may modify the terms of a previously  granted
Award; provided,  however, that the Committee may not amend a previously granted
Award to the detriment of the Participant without the Participant's consent.

         ARTICLE 15        GENERAL PROVISIONS

         15.1 NO RIGHTS TO AWARDS.  No  Participant  or employee  shall have any
claim to be granted  any Award  under the Plan,  and neither the Company nor the
Committee is obligated to treat Participants and associates uniformly.

         15.2 NO STOCKHOLDERS  RIGHTS. No Award gives the Participant any of the
rights of a shareholder  of the Company  unless and until shares of Stock are in
fact issued to such person in connection with such Award.

         15.3  WITHHOLDING.  The  Company  or  any  Subsidiary  shall  have  the
authority and the right to deduct or withhold, or require a Participant to remit
to the Company, an amount sufficient to satisfy Federal,  state, and local taxes
(including the  Participant's  FICA  obligation)  required by law to be withheld
with respect to any taxable event arising as a result of this Plan.

         15.4 NO RIGHT TO EMPLOYMENT. Nothing in the Plan or any Award Agreement
shall  interfere  with or  limit  in any way the  right  of the  Company  or any
Subsidiary to terminate  any  Participant's  employment at any time,  nor confer
upon any  Participant  any right to continue in the employ of the Company or any
Subsidiary.

         15.5  UNFUNDED  STATUS  OF  AWARDS.  The  Plan  is  intended  to  be an
"unfunded" plan for incentive compensation. With respect to any payments not yet
made to a Participant pursuant to an Award, nothing contained in the Plan or any
Award  Agreement  shall give the  Participant  any rights that are greater  than
those of a general creditor of the Company or any Subsidiary.

         15.6  INDEMNIFICATION.  To the extent  allowable under  applicable law,
each  member of the  Committee  or of the Board  shall be  indemnified  and held
harmless by the Company from any loss, cost,  liability,  or expense that may be
imposed  upon or  reasonably  incurred  by such  member  in  connection  with or
resulting from any claim,  action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action or failure
to act under the Plan and against  and from any and all  amounts  paid by him or
her in satisfaction of judgment in such action,  suit, or proceeding against him
or her provided he or she gives the Company an opportunity,  at its own expense,
to handle and defend the same before he or she  undertakes  to handle and defend
it on his or her own behalf. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such persons may be
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entitled under the Company's  Articles of Incorporation or By-Laws,  as a matter
of law, or otherwise,  or any power that the Company may have to indemnify  them
or hold them harmless.

         15.7 RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan shall be
taken into account in determining  any benefits  under any pension,  retirement,
savings,  profit sharing, group insurance,  welfare or other benefit plan of the
Company or any Subsidiary.

         15.8 EXPENSES. The expenses of administering the Plan shall be borne by
the Company and its Subsidiaries.

         15.9 TITLES AND  HEADINGS.  The titles and  headings of the Sections in
the  Plan  are for  convenience  of  reference  only,  and in the  event  of any
conflict,  the text of the Plan,  rather  than such  titles or  headings,  shall
control.

         15.10 FRACTIONAL  SHARES. No fractional shares of stock shall be issued
and the Committee  shall  determine,  in its  discretion,  whether cash shall be
given in lieu of fractional  shares or whether such  fractional  shares shall be
eliminated by rounding up.

         15.11 SECURITIES LAW COMPLIANCE.  With respect to any person who is, on
the relevant  date,  obligated to file reports under Section 16 of the 1934 Act,
transactions  under  this  Plan are  intended  to  comply  with  all  applicable
conditions of Rule 16b-3 or its successors under the 1934 Act. To the extent any
provision of the Plan or action by the Committee fails to so comply, it shall be
void to the extent  permitted  by law and  voidable as deemed  advisable  by the
Committee.

         15.12 GOVERNMENT AND OTHER  REGULATIONS.  The obligation of the Company
to make  payment  of  awards  in Stock or  otherwise  shall  be  subject  to all
applicable laws,  rules,  and  regulations,  and to such approvals by government
agencies  as may be  required.  The  Company  shall be under  no  obligation  to
register under the  Securities Act of 1933, as amended (the "1933 Act"),  any of
the shares of Stock paid under the Plan.  If the shares  paid under the Plan may
in certain  circumstances  be exempt from  registration  under the 1933 Act, the
Company  may  restrict  the  transfer  of such shares in such manner as it deems
advisable to ensure the availability of any such exemption.

         15.13  GOVERNING  LAW.  The  Plan  and all  Award  Agreements  shall be
construed in accordance with and governed by the laws of the State of Delaware.
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