CYTOGEN CORPORATION


                          2006 EQUITY COMPENSATION PLAN



                                            Adopted by Cytogen Corporation
                                            Board of Directors on April 19, 2006

                                            Approved by Cytogen Corporation
                                            Stockholders on
                                                           ---------------------

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                               CYTOGEN CORPORATION
                               -------------------

                          2006 EQUITY COMPENSATION PLAN
                          -----------------------------


     1.  PURPOSE
         -------

     The purpose of the Cytogen  Corporation  2006 Omnibus  Equity  Compensation
Plan (the "Plan") is to provide (i) designated  employees of Cytogen Corporation
(the "Company") and its subsidiaries, and (ii) non-employee members of the board
of  directors  of the Company with the  opportunity  to receive  grants of stock
options,  stock units, stock awards,  and other stock-based  awards. The Company
believes that the Plan will encourage the participants to contribute  materially
to the growth of the Company,  thereby  benefitting the Company's  stockholders,
and will align the  economic  interests  of the  participants  with those of the
stockholders.  The Plan  shall be  effective  as of April 19,  2006,  subject to
approval by the stockholders of the Company.

     2.  DEFINITIONS
         -----------

     Whenever used in this Plan,  the following  terms will have the  respective
meanings set forth below:

     (a)  "BOARD" means the Company's Board of Directors.

     (b)  "CHANGE OF CONTROL" shall be deemed to have occurred if:

          (i)    Any "person" (as such term is used in sections  13(d) and 14(d)
     of the Exchange Act) becomes a "beneficial owner" (as defined in Rule 13d-3
     under the Exchange  Act),  directly or  indirectly,  of  securities  of the
     Company  representing  more  than  50%  of the  voting  power  of the  then
     outstanding  securities  of the Company;  provided that a Change of Control
     shall  not be deemed  to occur as a result  of a  transaction  in which the
     Company  becomes  a  subsidiary  of  another  corporation  and in which the
     stockholders of the Company,  immediately  prior to the  transaction,  will
     beneficially own, immediately after the transaction,  shares entitling such
     stockholders to more than 50% of all votes to which all stockholders of the
     parent corporation would be entitled in the election of directors;

          (ii)   The  consummation  of  (i)  a  merger or  consolidation  of the
     Company with another  corporation  where the  stockholders  of the Company,
     immediately  prior to the merger or  consolidation,  will not  beneficially
     own,  immediately after the merger or consolidation,  shares entitling such
     stockholders to more than 50% of all votes to which all stockholders of the
     surviving corporation would be entitled in the election of directors,  (ii)
     a sale or other  disposition of all or  substantially  all of the assets of
     the Company, or (iii) a liquidation or dissolution of the Company; or

          (iii)  After  the  date  on   which  this  Plan  is  approved  by  the
     stockholders of the Company,  directors are elected such that a majority of
     the members of the Board shall have been members of the Board for less than
     two years,  unless the  election  or  nomination  for  election of each new
     director who was not a director at the  beginning of such  two-year  period
     was approved


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     by a vote of at least  two-thirds of the directors then still in office who
     were directors at the beginning of such period.

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

     (d)  "COMMITTEE" means the committee or Board that administers the Plan, as
described in Section 3.

     (e)  "COMPANY" means Cytogen Corporation and any successor corporation.

     (f)  "COMPANY STOCK" means the common stock of the Company.

     (g)  "EFFECTIVE DATE" of the Plan means April 19, 2006, subject to approval
of the Plan by the stockholders of the Company.

     (h)  "EMPLOYEE" means an employee of the Employer  (including an officer or
director who is also an employee).

     (i)  "EMPLOYER" means the Company and its subsidiaries.

     (j)  "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

     (k)  "EXERCISE  PRICE" means the per share price at which shares of Company
Stock may be purchased under an Option, as designated by the Committee.

     (l)  "FAIR MARKET  VALUE" of Company  Stock  means,  unless  the  Committee
determines  otherwise with respect to a particular  Grant,  (i) if the principal
trading  market for the Company Stock is a national  securities  exchange or the
Nasdaq  National  Market,  the last  reported sale price of Company Stock on the
relevant  date or (if there were no trades on that  date) the  latest  preceding
date  upon  which  a sale  was  reported,  (ii)  if  the  Company  Stock  is not
principally  traded  on such  exchange  or  market,  the mean  between  the last
reported  "bid" and "asked"  prices of Company  Stock on the relevant  date,  as
reported on Nasdaq or, if not so reported,  as reported in a customary financial
reporting service, as the Committee determines, or (iii) if the Company Stock is
not  publicly  traded  or,  if  publicly  traded,  is not  subject  to  reported
transactions or "bid" or "asked"  quotations as set forth above, the Fair Market
Value per share shall be as determined by the Committee.

     (m)  "GRANT"  means an Option,  Stock  Unit,  Stock  Award,  SAR,  or Other
Stock-Based Award granted under the Plan.

     (n)  "GRANT  AGREEMENT"  means the  written instrument  that sets forth the
terms and conditions of a Grant, including all amendments thereto.

     (o)  "INCENTIVE  STOCK OPTION" means an Option that is intended to meet the
requirements of an incentive stock option under section 422 of the Code.


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     (p)  "NON-EMPLOYEE  DIRECTOR"  means a member  of the  Board  who is not an
employee of the Employer.

     (q)  "NONQUALIFIED STOCK OPTION" means an Option that is not intended to be
taxed as an incentive stock option under section 422 of the Code.

     (r)  "OPTION" means a Nonqualified Stock Option or Incentive Stock Option.

     (s)  "OTHER STOCK-BASED  AWARD"  means any Grant  based on or  measured  by
Company  Stock  other than a Grant  described  in  Sections 7, 8, 9 or 10 of the
Plan.

     (t)  "PARTICIPANT" means  an Employee or  Non-Employee  Director designated
by the Committee to participate in the Plan.

     (u)  "PLAN" means  this Cytogen Corporation  2006 Equity Compensation Plan,
as in effect from time to time.

     (v)  "SAR" means a stock appreciation right.

     (w)  "STOCK AWARD" means an award of shares of Company Stock.

     (x)  "STOCK  UNIT"  means a phantom  unit  representing  a share of Company
Stock.

     3.  ADMINISTRATION
         --------------

     (a)  Committee.  The Plan  shall be  administered  and  interpreted  by the
          ---------
Compensation  Committee of the Board or another committee appointed by the Board
to administer  the Plan with respect to grants to  Employees.  The Plan shall be
administered and interpreted by the Board with respect to grants to Non-Employee
Directors.  The Board or  committee,  as  applicable,  that has  authority  with
respect to a specific Grant shall be referred to as the "Committee" with respect
to that  Grant.  With  respects to Grants  that are  intended  to be  "qualified
performance-based  compensation" under section 162(m) of the Code, the Committee
shall consist of two or more persons  appointed by the Board,  all of whom shall
be "outside  directors" as defined under section  162(m) of the Code and related
Treasury   regulations.   Ministerial   functions   may  be   performed   by  an
administrative  committee  comprised  of  Company  employees  appointed  by  the
Committee.

     (b)  Committee Authority. The  Committee shall have  the sole authority  to
          -------------------
(i) determine the Participants to whom Grants shall be made under the Plan, (ii)
determine  the type,  size and terms and  conditions of the Grants to be made to
each such Participant, (iii) determine the time when the grants will be made and
the duration of any  applicable  exercise or restriction  period,  including the
criteria for exercisability  and the acceleration of exercisability,  (iv) amend
the  terms  and  conditions  of any  previously  issued  Grant,  subject  to the
provisions  of Section  18 below,  and (v) deal with any other  matters  arising
under the Plan.

     (c)  Committee  Determinations.  The  Committee  shall  have full power and
          -------------------------
express  discretionary  authority to administer  and interpret the Plan, to make
factual determinations and to


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adopt  or  amend  such  rules,  regulations,   agreements  and  instruments  for
implementing  the Plan and for the conduct of its business as it deems necessary
or advisable,  in its sole discretion.  The Committee's  interpretations  of the
Plan and all determinations  made by the Committee pursuant to the powers vested
in it  hereunder  shall be  conclusive  and  binding on all  persons  having any
interest  in the Plan or in any  awards  granted  hereunder.  All  powers of the
Committee shall be executed in its sole discretion,  in the best interest of the
Company, not as a fiduciary,  and in keeping with the objectives of the Plan and
need not be uniform as to similarly situated Participants.

     4.  GRANTS
         ------

     (a)  Grants  under the Plan may consist of Options  as described in Section
7, Stock Units as  described  in Section 8, Stock Awards as described in Section
9, SARs as described in Section 10, or Other Stock-Based  Awards as described in
Section  11. All Grants  shall be  subject to such terms and  conditions  as the
Committee deems  appropriate and as are specified in writing by the Committee to
the Participant in the Grant Agreement.

     (b)  All  Grants  shall  be  made   conditional   upon  the   Participant's
acknowledgement,  in writing or by acceptance  of the Grant,  that all decisions
and  determinations  of  the  Committee  shall  be  final  and  binding  on  the
Participant, his or her beneficiaries and any other person having or claiming an
interest  under such Grant.  Grants under a particular  Section of the Plan need
not be uniform as among the Participants.

     5.  SHARES SUBJECT TO THE PLAN
         --------------------------

     (a)  Shares  Authorized.  The total  aggregate  number of shares of Company
          ------------------
Stock  that  may be  issued  under  the Plan is  1,500,000  shares,  subject  to
adjustment as described in subsection (e) below.

     (b)  Source of Shares.  Shares issued under the Plan may be authorized  but
          ----------------
unissued  shares  of  Company  Stock or  reacquired  shares  of  Company  Stock,
including shares purchased by the Company on the open market for purposes of the
Plan.  If and to the extent  Options or SARs granted  under the Plan  terminate,
expire, or are canceled, forfeited, exchanged or surrendered without having been
exercised,  and if and to the extent that any Stock Awards, Stock Units or Other
Stock-Based  Awards are  forfeited or  terminated,  or otherwise are not paid in
full, the shares  reserved for such Grants shall again be available for purposes
of the Plan.  SARs to be settled in shares of Company  Stock shall be counted in
full  against  the  number  of  shares  available  for  Grants  under  the Plan,
regardless  of the number of shares of Company  Stock issued upon  settlement of
the SAR.

     (c)  Individual  Limits.  All Grants  under the Plan shall be  expressed in
          ------------------
shares of Company Stock. The maximum aggregate number of shares of Company Stock
with  respect to which all  Grants may be made under the Plan to any  individual
during any  calendar  year shall be 300,000  shares,  subject to  adjustment  as
described in subsection (e) below.

     (d)  Adjustments. If there is any change in the number or kind of shares of
          -----------
Company  Stock  outstanding  (i)  by  reason  of  a  stock  dividend,   spinoff,
recapitalization, stock split, or


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combination or exchange of shares, (ii) by reason of a merger, reorganization or
consolidation,  (iii) by reason of a reclassification or change in par value, or
(iv) by  reason  of any other  extraordinary  or  unusual  event  affecting  the
outstanding   Company  Stock  as  a  class  without  the  Company's  receipt  of
consideration,  or if the  value  of  outstanding  shares  of  Company  Stock is
substantially  reduced as a result of a spinoff or the  Company's  payment of an
extraordinary dividend or distribution,  the maximum number of shares of Company
Stock  available for issuance  under the Plan,  the maximum  number of shares of
Company  Stock for which any  individual  may  receive  Grants in any year,  the
number of shares covered by outstanding Grants, the kind of shares issued and to
be issued under the Plan, and the price per share or the applicable market value
of such Grants may be  appropriately  adjusted by the  Committee  to reflect any
increase or decrease in the number of, or change in the kind or value of, issued
shares of Company Stock to preclude, to the extent practicable,  the enlargement
or dilution of rights and benefits under such Grants;  provided,  however,  that
any fractional  shares resulting from such adjustment  shall be eliminated.  Any
adjustments determined by the Committee shall be final, binding and conclusive.

     6.  ELIGIBILITY FOR PARTICIPATION
         -----------------------------

     (a)  Eligible Persons.  All Employees, including Employees who are officers
          ----------------
or members of the Board,  and all  Non-Employee  Directors  shall be eligible to
participate in the Plan.

     (b)  Selection of Participants. The  Committee shall  select the  Employees
          -------------------------
and  Non-Employee  Directors to receive Grants and shall determine the number of
shares of Company Stock subject to each Grant.

     7.  OPTIONS
         -------

     (a)  General Requirements.  The Committee may  grant Options to an Employee
          --------------------
or  Non-Employee  Director upon such terms and conditions as the Committee deems
appropriate. The Committee shall determine the number of shares of Company Stock
that will be subject to each Grant of  Options  to  Employees  and  Non-Employee
Directors.

     (b)  Type of Option, Price and Term.
          ------------------------------

          (i)    The Committee may grant Incentive Stock Options or Nonqualified
Stock Options or any  combination  of the two, all in accordance  with the terms
and conditions set forth herein.  Incentive Stock Options may be granted only to
Employees of the Company or its parents or  subsidiaries,  as defined in section
424 of the Code.  Nonqualified  Stock  Options  may be granted to  Employees  or
Non-Employee Directors.

          (ii)   The Exercise Price  of Company Stock subject to an Option shall
be  determined  by the  Committee  and may be equal to or greater  than the Fair
Market  Value of a share of  Company  Stock on the date the  Option is  granted;
provided,  however,  that an  Incentive  Stock  Option  may not be granted to an
Employee who, at the time of grant,  owns stock  possessing more than 10% of the
total combined voting power of all classes of stock of the Company or any parent
or subsidiary, as defined in section 424 of the Code, unless the Exercise


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Price per share is not less than 110% of the Fair  Market  Value of the  Company
Stock on the date of grant.

          (iii)  The Committee shall  determine  the term of each Option,  which
shall not exceed ten years from the date of grant.  However,  an Incentive Stock
Option  that is granted to an  Employee  who,  at the time of grant,  owns stock
possessing  more than 10% of the total  combined  voting power of all classes of
stock of the Company or any parent or  subsidiary,  as defined in section 424 of
the Code, may not have a term that exceeds five years from the date of grant.

     (c)  Exercisability of Options.
          -------------------------

          (i)    Options shall become  exercisable in accordance with such terms
and  conditions as may be determined by the Committee and specified in the Grant
Agreement.  The  Committee  may  accelerate  the  exercisability  of  any or all
outstanding Options at any time for any reason.

          (ii)   Options granted  to persons who  are non-exempt employees under
the Fair Labor Standards Act of 1938, as amended,  may not be exercisable for at
least six months  after the date of grant  (except  that such Options may become
exercisable,  as  determined by the  Committee,  upon the  Participant's  death,
Disability  or  retirement,  or upon a Change of Control or other  circumstances
permitted by applicable regulations).

     (d)  Termination of Employment or Service.  Except as provided in the Grant
          ------------------------------------
Agreement,  an Option may only be exercised while the Participant is employed by
the Employer,  or providing  service as a Non-Employee  Director.  The Committee
shall determine in the Grant Agreement under what  circumstances and during what
time  periods  a  Participant  may  exercise  an  Option  after  termination  of
employment or service.

     (e)  Exercise of Options.  A  Participant  may  exercise an Option that has
          -------------------
become  exercisable,  in whole or in part, by delivering a notice of exercise to
the Company.  The Participant shall pay the Exercise Price for the Option (i) in
cash, (ii) if permitted by the Committee,  by delivering shares of Company Stock
owned by the  Participant and having a Fair Market Value on the date of exercise
equal to the Exercise  Price or by attestation to ownership of shares of Company
Stock having an aggregate Fair Market Value on the date of exercise equal to the
Exercise Price,  (iii) by payment through a broker in accordance with procedures
permitted by Regulation T of the Federal  Reserve  Board,  or (iv) by such other
method as the Committee may approve. Shares of Company Stock used to exercise an
Option shall have been held by the Participant for the requisite  period of time
to avoid  adverse  accounting  consequences  to the Company  with respect to the
Option.  Payment  for the  shares  pursuant  to the  Option,  and  any  required
withholding  taxes,  must be received  by the time  specified  by the  Committee
depending  on the type of  payment  being  made,  but in all cases  prior to the
issuance of the Company Stock.

     (f)  Limits on Incentive Stock Options.  Each Incentive  Stock Option shall
          ---------------------------------
provide that, if the aggregate Fair Market Value of the stock on the date of the
grant with respect to which  Incentive  Stock  Options are  exercisable  for the
first time by a Participant during any


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calendar year, under the Plan or any other stock option plan of the Company or a
parent or subsidiary,  as defined in section 424 of the Code,  exceeds $100,000,
then the Option,  as to the  excess,  shall be treated as a  Nonqualified  Stock
Option.  An Incentive Stock Option shall not be granted to any person who is not
an Employee of the Company or a parent or subsidiary,  as defined in section 424
of the Code.

     8.  STOCK UNITS
         -----------

     (a)  General  Requirements.  The  Committee  may  grant  Stock  Units to an
          ---------------------
Employee  or  Non-Employee  Director,  upon  such  terms and  conditions  as the
Committee  deems  appropriate.  Each Stock Unit shall represent the right of the
Participant  to receive a share of Company Stock or an amount based on the value
of a share of Company  Stock.  All Stock Units shall be credited to  bookkeeping
accounts on the Company's records for purposes of the Plan.

     (b)  Terms of Stock Units.  The  Committee  may grant  Stock Units that are
          --------------------
payable on terms and conditions  determined by the Committee,  which may include
payment based on achievement of  performance  goals.  Stock Units may be paid at
the end of a specified vesting or performance period, or payment may be deferred
to a date authorized by the Committee.  The Committee shall determine the number
of Stock  Units to be  granted  and the  requirements  applicable  to such Stock
Units.

     (c)  Payment  With Respect to Stock  Units.  Payment  with respect to Stock
          -------------------------------------
Units shall be made in cash, in Company  Stock,  or in a combination of the two,
as determined by the Committee.  The Grant  Agreement  shall specify the maximum
number of shares that can be issued under the Stock Units.

     (d) Requirement of Employment or Service.  The Committee shall determine in
         ------------------------------------
the Grant  Agreement  under what  circumstances  a Participant  may retain Stock
Units after  termination  of the  Participant's  employment or service,  and the
circumstances under which Stock Units may be forfeited.

     9.  STOCK AWARDS
         ------------

     (a)  General Requirements.  The Committee may issue shares of Company Stock
          --------------------
to an Employee or Non-Employee Director under a Stock Award, upon such terms and
conditions as the Committee  deems  appropriate.  Shares of Company Stock issued
pursuant  to  Stock  Awards  may  be  issued  subject  to   restrictions  or  no
restrictions,  as  determined  by the  Committee.  The  Committee  may establish
conditions under which restrictions on Stock Awards shall lapse over a period of
time or according to such other  criteria as the  Committee  deems  appropriate,
including restrictions based upon the achievement of specific performance goals.
The Committee shall determine the number of shares of Company Stock to be issued
pursuant to a Stock Award.

     (b)  Requirementof Employment or Service.  The Committee shall determine in
          -----------------------------------
the Grant  Agreement  under what  circumstances  a Participant  may retain Stock
Awards after  termination of the  Participant's  employment or service,  and the
circumstances under which Stock Awards may be forfeited.


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<PAGE>


     (c)  Restrictions  on  Transfer.   While  a  Stock   Award  is  subject  to
          --------------------------
restrictions,  a Participant may not sell, assign, transfer, pledge or otherwise
dispose of the shares  subject to the Stock Award except upon death as described
in Section 15(a).  Each certificate for a share of a Stock Award shall contain a
legend  giving  appropriate  notice  of  the  restrictions  in  the  Grant.  The
Participant  shall be entitled to have the legend removed when all  restrictions
on  such  shares  have  lapsed.   The  Company  may  retain  possession  of  any
certificates for Stock Awards until all restrictions on such shares have lapsed.

     (d)  Right to Vote and to Receive  Dividends. The Committee shall determine
          ---------------------------------------
to what extent, and under what conditions,  the Participant shall have the right
to vote shares  subject to a Stock Award and to receive any  dividends  or other
distributions paid on such shares during the restriction period.

     10.  STOCK APPRECIATION RIGHTS
          -------------------------

     (a)  General  Requirements.  The Committee may grant SARs to an Employee or
          ---------------------
Non-Employee Director separately or in tandem with an Option.

     (b)  Base Amount.  The Committee shall establish the base amount of the SAR
          -----------
at the time the SAR is  granted.  The base  amount may not be less than the Fair
Market Value of a share of Company Stock on the date of Grant of the SAR.

     (c)  Tandem SARs. The Committee  may grant  tandem SARs  either at the time
          -----------
the  Option  is  granted  or at any time  thereafter  while the  Option  remains
outstanding;  provided, however, that, in the case of an Incentive Stock Option,
SARs may be granted only at the date of the grant of the Incentive Stock Option.
In the case of tandem  SARs,  the number of SARs granted to a  Participant  that
shall be  exercisable  during a specified  period shall not exceed the number of
shares of Company Stock that the  Participant  may purchase upon the exercise of
the related Option during such period.  Upon the exercise of an Option, the SARs
relating to the Company Stock covered by such Option shall  terminate.  Upon the
exercise of SARs, the related  Option shall  terminate to the extent of an equal
number of shares of Company Stock.

     (d)  Exercisability.  An  SAR  shall  be  exercisable  during  the   period
          --------------
specified by the  Committee in the Grant  Agreement and shall be subject to such
vesting and other  restrictions as may be specified in the Grant Agreement.  The
Committee may grant SARs that are subject to achievement of performance goals or
other conditions.  The Committee may accelerate the exercisability of any or all
outstanding  SARs at any time for any reason.  The Committee  shall determine in
the  Grant  Agreement  under  what  circumstances  and  during  what  periods  a
Participant  may exercise an SAR after  termination of employment or service.  A
tandem SAR shall be exercisable  only while the Option to which it is related is
exercisable.

     (e)  Grants to  Non-Exempt  Employees.  SARs  granted  to  persons  who are
           -------------------------------
non-exempt employees under the Fair Labor Standards Act of 1938, as amended, may
not be exercisable  for at least six months after the date of grant (except that
such SARs may become  exercisable,  as  determined  by the  Committee,  upon the
Participant's  death,  Disability or retirement,  or upon a Change of Control or
other circumstances permitted by applicable regulations).


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<PAGE>


     (f)  Value of SARs.  When a Participant  exercises  SARs,  the  Participant
          -------------
shall  receive in  settlement  of such SARs an amount  equal to the value of the
stock appreciation for the number of SARs exercised.  The stock appreciation for
an SAR is the amount by which the Fair Market  Value of the  underlying  Company
Stock on the date of  exercise  of the SAR exceeds the base amount of the SAR as
described in subsection (b).

     (g)  Form of Payment.  The  Committee  shall  determine  whether  the stock
          ---------------
appreciation  for an SAR shall be paid in the form of shares of  Company  Stock,
cash or a  combination  of the two.  For purposes of  calculating  the number of
shares of Company Stock to be received,  shares of Company Stock shall be valued
at their Fair  Market  Value on the date of  exercise  of the SAR.  If shares of
Company  Stock  are to be  received  upon  exercise  of an SAR,  cash  shall  be
delivered in lieu of any fractional share.

     11.  OTHER STOCK-BASED AWARDS.
          ------------------------

     The  Committee  may grant other awards not specified in Sections 7, 8, 9 or
10 above  that are  based on or  measured  by  Company  Stock to  Employees  and
Non-Employee  Directors,  on such terms and  conditions as the  Committee  deems
appropriate.  Other Stock-Based  Awards may be granted subject to achievement of
performance  goals or other  conditions  and may be payable in Company  Stock or
cash,  or in a  combination  of the two, as  determined  by the Committee in the
Grant Agreement.

     12.  QUALIFIED PERFORMANCE-BASED COMPENSATION
          ----------------------------------------

     (a)  Designation as Qualified Performance-Based Compensation. The Committee
          -------------------------------------------------------
may determine that Stock Units, Stock Awards or Other Stock-Based Awards granted
to an Employee shall be considered  "qualified  performance-based  compensation"
under section  162(m) of the Code, in which case the  provisions of this Section
12 shall apply.

     (b)  Performance  Goals.  When  Grants are made under this  Section 12, the
          ------------------
Committee  shall establish in writing (i) the objective  performance  goals that
must be met, (ii) the period during which  performance  will be measured,  (iii)
the maximum amounts that may be paid if the performance  goals are met, and (iv)
any other  conditions that the Committee  deems  appropriate and consistent with
the requirements of section 162(m) of the Code for "qualified  performance-based
compensation."   The  performance  goals  shall  satisfy  the  requirements  for
"qualified  performance-based  compensation," including the requirement that the
achievement  of the  goals  be  substantially  uncertain  at the  time  they are
established and that the  performance  goals be established in such a way that a
third party with knowledge of the relevant facts could determine  whether and to
what extent the  performance  goals have been met. The Committee  shall not have
discretion  to increase  the amount of  compensation  that is  payable,  but may
reduce the amount of compensation that is payable, pursuant to Grants identified
by the Committee as "qualified performance-based compensation."

     (c)  Criteria Used for Objective Performance Goals. The Committee shall use
          ---------------------------------------------
objectively determinable performance goals based on one or more of the following
criteria:  stock  price,  earnings  per  share,  price-earnings  multiples,  net
earnings, operating earnings,


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<PAGE>


revenue, number of days sales outstanding in accounts receivable,  productivity,
margin, EBITDA (earnings before interest, taxes, depreciation and amortization),
net capital employed,  return on assets,  stockholder return,  return on equity,
return on capital  employed,  growth in assets,  unit volume,  sales, cash flow,
market  share,  relative  performance  to a comparison  group  designated by the
Committee,  or strategic business criteria  consisting of one or more objectives
based on meeting specified revenue goals,  market  penetration  goals,  customer
growth  goals,  geographic  business  expansion  goals,  cost  targets  or goals
relating to acquisitions or  divestitures.  The performance  goals may relate to
one or more business units or the  performance of the Company as a whole, or any
combination  of the  foregoing.  Performance  goals need not be uniform as among
Participants.

     (d)  Timing of  Establishment of Goals.  The Committee  shall establish the
          ---------------------------------
performance  goals in writing  either  before the  beginning of the  performance
period or during a period  ending no later than the earlier of (i) 90 days after
the  beginning  of the  performance  period or (ii) the date on which 25% of the
performance period has been completed,  or such other date as may be required or
permitted under applicable regulations under section 162(m) of the Code.

     (e)  Certification of Results.  The Committee shall certify the performance
          ------------------------
results for the  performance  period  specified in the Grant Agreement after the
performance period ends. The Committee shall determine the amount, if any, to be
paid pursuant to each Grant based on the  achievement of the  performance  goals
and the satisfaction of all other terms of the Grant Agreement.

     (f)  Death, Disability or Other Circumstances. The Committee may provide in
          ----------------------------------------
the Grant Agreement that Grants under this Section 12 shall be payable, in whole
or in part, in the event of the Participant's  death or disability,  a Change of
Control or under other  circumstances  consistent with the Treasury  regulations
and rulings under section 162(m) of the Code.

     13.  DEFERRALS
          ---------

     The Committee  may permit or require a Participant  to defer receipt of the
payment of cash or the  delivery  of shares that would  otherwise  be due to the
Participant in connection with any Stock Units or Other Stock-Based  Awards. The
Committee   shall  establish  rules  and  procedures  for  any  such  deferrals,
consistent with applicable requirements of section 409A of the Code.

     14.  WITHHOLDING OF TAXES
          --------------------

     (a)  Required  Withholding.  All Grants  under the Plan shall be subject to
          ---------------------
applicable   federal   (including   FICA),   state  and  local  tax  withholding
requirements.  The Company  may require  that the  Participant  or other  person
receiving  or  exercising  Grants pay to the Company the amount of any  federal,
state or local taxes that the Company is  required to withhold  with  respect to
such Grants,  or the Company may deduct from other wages paid by the Company the
amount of any withholding taxes due with respect to such Grants.


                                       10
<PAGE>


     (b)  Election  to  Withhold  Shares.  If   the  Committee  so   permits,  a
          ------------------------------
Participant may elect to satisfy the Company's tax  withholding  obligation with
respect to Grants paid in Company Stock by having shares  withheld,  at the time
such  Grants  become  taxable,  up to an amount that does not exceed the minimum
applicable  withholding tax rate for federal  (including FICA),  state and local
tax  liabilities.  The election  must be in a form and manner  prescribed by the
Committee.

     15.  TRANSFERABILITY OF GRANTS
          -------------------------

     (a)  Restrictions on Transfer. Except as described in subsection (b) below,
          ------------------------
only the Participant may exercise rights under a Grant during the  Participant's
lifetime.  A Participant  may not transfer those rights except by will or by the
laws of  descent  and  distribution,  or,  with  respect  to Grants  other  than
Incentive  Stock  Options,  if permitted in any specific case by the  Committee,
pursuant to a domestic  relations order.  When a Participant dies, the successor
designated by will or by the laws of descent and  distribution may exercise such
rights in accordance  with the terms of the Plan. A successor must furnish proof
satisfactory  to the  Company of his or her right to receive the Grant under the
Participant's will or under the applicable laws of descent and distribution.

     (b)  Transfer  of  Nonqualified  Stock  Options to or for  Family  Members.
          ---------------------------------------------------------------------
Notwithstanding the foregoing,  the Committee may provide, in a Grant Agreement,
that a Participant may transfer Nonqualified Stock Options to family members, or
one or more  trusts  or other  entities  for the  benefit  of or owned by family
members, consistent with the applicable securities laws, according to such terms
as the  Committee  may  determine;  provided  that the  Participant  receives no
consideration  for the  transfer of an Option and the  transferred  Option shall
continue to be subject to the same terms and  conditions  as were  applicable to
the Option immediately before the transfer.

     16.  CONSEQUENCES OF A CHANGE OF CONTROL
          -----------------------------------

     In the event of a Change of Control, the Committee may take any one or more
of the following actions with respect to any or all outstanding Grants,  without
the consent of any Participant: (a) the Committee may determine that outstanding
Options and SARs shall be fully  exercisable,  and  restrictions  on outstanding
Stock  Awards  and Stock  Units  shall  lapse,  as of the date of the  Change of
Control or at such other time as the Committee determines, (b) the Committee may
require  that  Participants  surrender  their  outstanding  Options  and SARs in
exchange for one or more  payments by the Company,  in cash or Company  Stock as
determined by the Committee,  in an amount equal to the amount by which the then
Fair Market Value of the shares of Company  Stock  subject to the  Participant's
unexercised  Options and SARs exceeds the Exercise Price or base amount,  and on
such  terms as the  Committee  determines,  (c)  after  giving  Participants  an
opportunity  to exercise their  outstanding  Options and SARs, the Committee may
terminate any or all unexercised  Options and SARs at such time as the Committee
deems appropriate, (d) with respect to Participants holding Stock Units or Other
Stock-Based  Awards,  the Committee may determine that such  Participants  shall
receive  one or more  payments  in  settlement  of such  Stock  Units  or  Other
Stock-Based  Awards, in cash or Company Stock as determined by the Committee and
on such terms as may be determined by the Committee, or (e)


                                       11
<PAGE>


the Committee may determine that Grants that remain outstanding after the Change
of Control shall be converted to similar grants of the surviving corporation (or
a  parent  or  subsidiary  of the  surviving  corporation).  Such  acceleration,
surrender, termination, settlement or conversion shall take place as of the date
of the Change of Control or such other date as the Committee may specify.

     (a)  Other Transactions.  The Committee  may provide  in a Grant  Agreement
          ------------------
that a sale or other  transaction  involving a subsidiary or other business unit
of the Company  shall be considered a Change of Control for purposes of a Grant,
or the Committee may establish other  provisions that shall be applicable in the
event of a specified transaction.

     17.  REQUIREMENTS FOR ISSUANCE OF SHARES
          -----------------------------------

     No Company  Stock shall be issued in  connection  with any Grant unless and
until all legal  requirements  applicable  to the issuance of such Company Stock
have been  complied with to the  satisfaction  of the  Committee.  The Committee
shall have the right to condition any Grant made to any Participant hereunder on
such  Participant's  undertaking in writing to comply with such  restrictions on
his or her  subsequent  disposition  of such  shares  of  Company  Stock  as the
Committee shall deem necessary or advisable, and certificates  representing such
shares  may  be  legended  to  reflect  any  such   restrictions.   Certificates
representing  shares of Company  Stock  issued under the Plan will be subject to
such  stop-transfer  orders  and  other  restrictions  as  may  be  required  by
applicable laws, regulations and interpretations, including any requirement that
a legend be placed thereon. No Participant shall have any right as a stockholder
with respect to Company  Stock  covered by a Grant until shares have been issued
to the Participant.

     18.  AMENDMENT AND TERMINATION OF THE PLAN
          -------------------------------------

     (a)  Amendment.  The  Board may  amend or  terminate  the Plan at any time;
          ---------
provided,  however,  that the Board shall not amend the Plan without approval of
the  stockholders of the Company if such approval is required in order to comply
with the Code, or to comply with  applicable  stock  exchange  requirements.  No
amendment  or  termination  of this  Plan  shall,  without  the  consent  of the
Participant,  materially  impair  any  rights  or  obligations  under  any Grant
previously  made to the Participant  under the Plan,  unless such right has been
reserved  in the Plan or the Grant  Agreement,  or except as provided in Section
19(b) below. Notwithstanding anything in the Plan to the contrary, the Board may
amend the Plan in such manner as it deems  appropriate  in the event of a change
in applicable law or regulations.

     (b)  No Repricing Without Stockholder Approval. Notwithstanding anything in
          -----------------------------------------
the Plan to the contrary, the Committee may not reprice Options or SARs, nor may
the Board  amend the Plan to permit  repricing  of Options  or SARs,  unless the
stockholders  of the Company  provide  prior  approval  for such  repricing.  An
adjustment described in Section 5(d) above shall not be considered a repricing.

     (c)  Stockholder  Approval for  "Qualified Performance-Based Compensation."
          --------------------------------------------------------------------
If Grants are made under  Section 12 above,  the Plan must be  reapproved by the
Company's  stockholders no later than the first stockholders meeting that occurs
in the  fifth  year  following  the year in which  the  stockholders  previously
approved the provisions of Section 12, if additional


                                       12
<PAGE>


Grants are to be made under Section 12 and if required by section  162(m) of the
Code or the regulations thereunder.

     (d)  Termination of Plan. The Plan shall  terminate on the day  immediately
          -------------------
preceding  the tenth  anniversary  of its  Effective  Date,  unless  the Plan is
terminated earlier by the Board or is extended by the Board with the approval of
the  stockholders.  The  termination  of the Plan shall not impair the power and
authority of the Committee with respect to an outstanding Grant.

     19.  MISCELLANEOUS
          -------------

     (a)  Grants  in  Connection  with  Corporate  Transactions  and  Otherwise.
          ---------------------------------------------------------------------
Nothing  contained in this Plan shall be construed to (i) limit the right of the
Committee to make Grants under this Plan in connection with the acquisition,  by
purchase,  lease, merger,  consolidation or otherwise, of the business or assets
of any corporation,  firm or association,  including Grants to employees thereof
who become Employees,  or for other proper corporate purposes, or (ii) limit the
right of the Company to grant  stock  options or make other  stock-based  awards
outside of this Plan.  Without limiting the foregoing,  the Committee may make a
Grant to an employee of another corporation who becomes an Employee by reason of
a  corporate   merger,   consolidation,   acquisition   of  stock  or  property,
reorganization or liquidation  involving the Company in substitution for a grant
made by such  corporation.  The terms and conditions of the Grants may vary from
the terms and conditions  required by the Plan and from those of the substituted
stock incentives, as determined by the Committee

     (b)  Compliance  with Law.  The  Plan,  the  exercise  of  Options  and the
          --------------------
obligations  of the Company to issue or transfer  shares of Company  Stock under
Grants  shall  be  subject  to  all  applicable  laws  and to  approvals  by any
governmental  or regulatory  agency as may be required.  With respect to persons
subject to section 16 of the Exchange  Act, it is the intent of the Company that
the  Plan  and all  transactions  under  the Plan  comply  with  all  applicable
provisions of Rule 16b-3 or its successors  under the Exchange Act. In addition,
it is the intent of the Company that  Incentive  Stock  Options  comply with the
applicable  provisions  of section 422 of the Code,  that  Grants of  "qualified
performance-based compensation" comply with the applicable provisions of section
162(m) of the Code and that,  to the extent  applicable,  Grants comply with the
requirements  of  section  409A  of the  Code.  To the  extent  that  any  legal
requirement of section 16 of the Exchange Act or section 422,  162(m) or 409A of
the Code as set forth in the Plan ceases to be required  under section 16 of the
Exchange Act or section 422,  162(m) or 409A of the Code,  as  applicable,  that
Plan provision shall cease to apply. The Committee may revoke any Grant if it is
contrary to law or modify a Grant to bring it into compliance with any valid and
mandatory government regulation.

     (c)  Enforceability. The Plan shall be binding upon and enforceable against
          --------------
the Company and its successors and assigns.

     (d)  Funding  of  the  Plan;  Limitation  on  Rights. This  Plan  shall  be
          -----------------------------------------------
unfunded. The Company shall not be required to establish any special or separate
fund or to make any other  segregation  of assets to assure  the  payment of any
Grants  under  this  Plan.  Nothing  contained  in the Plan and no action  taken
pursuant hereto shall create or be construed to create a fiduciary


                                       13
<PAGE>


relationship  between the Company and any  Participant  or any other person.  No
Participant  or any other  person  shall  under any  circumstances  acquire  any
property interest in any specific assets of the Company.  To the extent that any
person  acquires a right to receive  payment  from the Company  hereunder,  such
right shall be no greater than the right of any  unsecured  general  creditor of
the Company.

     (e)  Rights  of  Participants.  Nothing  in this  Plan  shall  entitle  any
          ------------------------
Employee, Non-Employee Director or other person to any claim or right to receive
a Grant under this Plan.  Neither this Plan nor any action taken hereunder shall
be  construed  as giving any  individual  any rights to be retained by or in the
employment or service of the Employer.

     (f)  No Fractional Shares.  No fractional  shares of Company Stock shall be
          --------------------
issued or  delivered  pursuant  to the Plan or any Grant.  The  Committee  shall
determine  whether cash,  other awards or other property shall be issued or paid
in lieu of such  fractional  shares or  whether  such  fractional  shares or any
rights thereto shall be forfeited or otherwise eliminated.

     (g)  Employees Subject to Taxation Outside the United States.  With respect
          -------------------------------------------------------
to  Participants  who are subject to taxation in countries other than the United
States,  the  Committee  may make  Grants on such  terms and  conditions  as the
Committee deems appropriate to comply with the laws of the applicable countries,
and the Committee may create such procedures, addenda and subplans and make such
modifications as may be necessary or advisable to comply with such laws.

     (h)  Governing Law.  The validity, construction, interpretation  and effect
          -------------
of the Plan and Grant  Agreements  issued  under the Plan shall be governed  and
construed  by and  determined  in  accordance  with  the  laws of the  State  of
Delaware, without giving effect to the conflict of laws provisions thereof.


                                       14