U.S. ENERGY SYSTEMS, INC.

                   2000 EXECUTIVE INCENTIVE COMPENSATION PLAN

1.        Purpose. The  purpose of this 2000  Executive  Incentive  Compensation
Plan (the "Plan")is to assist U.S. ENERGY  SYSTEMS, INC., a Delaware corporation
(the "Company")  and  its  subsidiaries  in  attracting,  motivating,  retaining
and rewarding high-quality executives and other  employees, officers,  Directors
and independent contractors by enabling such  persons to  acquire or  increase a
proprietary  interest in the Company in order to  strengthen  the  mutuality  of
interests  between such persons and the  Company's  stockholders,  and providing
such persons with annual and long term  performance  incentives  to expend their
maximum efforts in the creation of stockholder  value. The Plan is also intended
to qualify  certain  compensation  awarded under the Plan for tax  deductibility
under  Section  162(m) of the Code (as  hereafter  defined) to the extent deemed
appropriate  by the  Committee  (or any  successor  committee)  of the  Board of
Directors of the Company.

2.        Definitions. For  purposes  of  the Plan, the following terms shall be
defined as set  forth  below, in  addition to  such terms  defined  in Section 1
hereof.

         (a) "Annual  Incentive  Award" means a  conditional  right granted to a
Participant under Section 8(c) hereof to receive a cash payment,  Stock or other
Award,  unless  otherwise  determined  by  the  Committee,  after  the  end of a
specified fiscal year.

         (b) "Award" means any Option, SAR (including  Limited SAR),  Restricted
Stock,  Deferred  Stock,  Stock granted as a bonus or in lieu of another  award,
Dividend  Equivalent,  Other  Stock-Based  Award,  Performance  Award or  Annual
Incentive  Award,  together  with any  other  right or  interest,  granted  to a
Participant under the Plan.

         (c) "Beneficiary" means the person, persons, trust or trusts which have
been  designated by a Participant in his or her most recent written  beneficiary
designation filed with the Committee to receive the benefits specified under the
Plan upon  such  Participant's  death or to which  Awards  or other  rights  are
transferred if and to the extent permitted under Section 10(b) hereof.  If, upon
a  Participant's  death,  there  is  no  designated   Beneficiary  or  surviving
designated  Beneficiary,  then the term Beneficiary  means the person,  persons,
trust or trusts  entitled  by will or the laws of descent  and  distribution  to
receive such benefits.

         (d)   "Beneficial   Owner",   "Beneficially   Owning"  and  "Beneficial
Ownership"  shall have the  meanings  ascribed to such terms in Rule 13d-3 under
the Exchange Act and any successor to such Rule.

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

         (f) "Change in Control" means Change in Control as defined with related
terms in Section 9 of the Plan.


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         (g) "Change in Control Price" means the amount calculated in accordance
with Section 9(c) of the Plan.

         (h) "Code"  means the Internal  Revenue  Code of 1986,  as amended from
time to time,  including  regulations  thereunder  and successor  provisions and
regulations thereto.

         (i) "Committee" means a committee designated by the Board to administer
the Plan;  provided,  however,  that the Committee shall consist of at least two
directors,  and each  member  of which  shall be (i) a  "non-employee  director"
within the meaning of Rule 16b-3 under the Exchange Act,  unless  administration
of the Plan by  "non-employee  directors"  is not  then  required  in order  for
exemptions under Rule 16b-3 to apply to transactions under the Plan, and (ii) an
"outside  director"  within the  meaning of Section  162(m) of the Code,  unless
administration of the Plan by "outside  directors" is not then required in order
to qualify for tax deductibility under Section 162(m) of the Code.

         (j) "Corporate Transaction" means a Corporate Transaction as defined in
Section 9 (b) (i) of the Plan.

         (k)  "Covered  Employee"  means an  Eligible  Person  who is a  Covered
Employee as specified in Section 8(e) of the Plan.

         (l)  "Deferred  Stock" means a right,  granted to a  Participant  under
Section 6(e) hereof, to receive Stock, cash or a combination  thereof at the end
of a specified deferral period.

         (m) "Director" means a member of the Board.

         (n)  "Disability"  means a permanent and total  disability  (within the
meaning  of  Section  22(e) of the  Code),  as  determined  by a medical  doctor
satisfactory to the Committee.

         (o) "Dividend Equivalent" means a right, granted to a Participant under
Section 6(g) hereof,  to receive  cash,  Stock,  other Awards or other  property
equal in value to dividends paid with respect to a specified number of shares of
Stock, or other periodic payments.

         (p) "Effective  Date" means the effective date of the Plan, which shall
be May 4, 2000.

         (q) "Eligible  Person" means each Executive  Officer of the Company (as
defined under the Exchange Act) and other  officers,  Directors and employees of
the Company or of any Subsidiary,  and independent  contractors with the Company
or any Subsidiary. The foregoing notwithstanding,  only employees of the Company
or any  Subsidiary  shall be Eligible  Persons for  purposes  of  receiving  any
Incentive  Stock  Options.  An employee on leave of absence may be considered as
still in the employ of the Company or a Subsidiary  for purposes of  eligibility
for participation in the Plan.


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         (r)  "Exchange  Act"  means the  Securities  Exchange  Act of 1934,  as
amended from time to time,  including rules thereunder and successor  provisions
and rules thereto.

         (s) "Executive  Officer"  means an executive  officer of the Company as
defined under the Exchange Act.

         (t) "Fair Market Value" means the fair market value of Stock, Awards or
other property as determined by the Committee or the Board, or under  procedures
established by the Committee or the Board.  Unless  otherwise  determined by the
Committee  or the  Board,  the Fair  Market  Value of Stock as of any given date
shall be the closing sale price per share reported on a  consolidated  basis for
stock listed on the principal  stock exchange or market on which Stock is traded
on the date as of which such value is being  determined  or, if there is no sale
on that date, then on the last previous day on which a sale was reported.

         (u) "Incentive  Stock Option" or "ISO" means any Option  intended to be
designated as an incentive stock option within the meaning of Section 422 of the
Code or any successor provision thereto.

         (v) "Incumbent  Board" means the Incumbent  Board as defined in Section
9(b) (ii) of the Plan.

         (w) "Limited SAR" means a right granted to a Participant  under Section
6(c) hereof.

         (x) "Option" means a right granted to a Participant  under Section 6(b)
hereof,  to purchase Stock or other Awards at a specified price during specified
time periods.

         (y) "Other  Stock-Based  Awards" means Awards  granted to a Participant
under Section 6(h) hereof.

         (z) "Parent Corporation" means any corporation (other than the Company)
in an unbroken  chain of  corporations  ending with the Company,  if each of the
corporations in the chain (other than the Company) owns stock  possessing 50% or
more of the  combined  voting  power of all classes of stock in one of the other
corporations in the chain.

         (aa)  "Participant"  means a person who has been granted an Award under
the Plan  which  remains  outstanding,  including  a person  who is no longer an
Eligible Person.

         (bb) "Performance  Award" means a right,  granted to an Eligible Person
under  Section 8 hereof,  to  receive  Awards  based upon  performance  criteria
specified by the Committee or the Board.

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         (cc) "Person"  shall have the meaning  ascribed to such term in Section
3(a) (9) of the Exchange Act and used in Sections 13(d) and 14(d)  thereof,  and
shall include a "group" as defined in Section 13(d) thereof.

         (dd)  "Restricted  Stock" means Stock  granted to a  Participant  under
Section 6(d) hereof,  that is subject to certain  restrictions  and to a risk of
forfeiture.

         (ee) "Rule  16b-3"  and "Rule  16a-1 (c) (3)" means Rule 16b-3 and Rule
l6a-1 (c) (3),  as from time to time in effect  and  applicable  to the Plan and
Participants,  promulgated  by the  Securities  and  Exchange  Commission  under
Section 16 of the Exchange Act

         (ff)  "Stock"  means  the  Company's   Common  Stock,  and  such  other
securities  as may be  substituted  (or  resubstituted)  for Stock  pursuant  to
Section 10(c) hereof.

         (gg) "Stock  Appreciation  Rights" or "SAR" means a right  granted to a
Participant under Section 6(c) hereof.

         (hh)  "Subsidiary"  means any  corporation or other entity in which the
Company has a direct or indirect  ownership interest of 50% or more of the total
combined  voting power of the then  outstanding  securities or interests of such
corporation  or other  entity  entitled  to vote  generally  in the  election of
directors  or in which the  Company  has the right to receive 50% or more of the
distribution  of  profits  or 50%  or  more  of the  assets  on  liquidation  or
dissolution.

3.        Administration.

         (a) Authority of the Committee.  The Plan shall be  administered by the
Committee;  provided,  however,  that except as otherwise  expressly provided in
this Plan or in order to comply with Code Section 162(m) or Rule 16b-3 under the
Exchange  Act,  the Board may  exercise  any power or  authority  granted to the
Committee  under this Plan. The Committee or the Board shall have full and final
authority,  in each case subject to and  consistent  with the  provisions of the
Plan, to select Eligible Persons to become Participants, grant Awards, determine
the type,  number  and other  terms and  conditions  of,  and all other  matters
relating to, Awards, prescribe Award agreements (which need not be identical for
each Participant) and rules and regulations for the  administration of the Plan,
construe and interpret the Plan and Award agreements and correct defects, supply
omissions or reconcile  inconsistencies therein, and to make all other decisions
and determinations as the Committee or the Board may deem necessary or advisable
for the  administration of the Plan. In exercising any discretion granted to the
Committee or the Board under the Plan or pursuant to any Award, the Committee or
the  Board  shall not be  required  to follow  past  practices,  act in a manner
consistent  with  past  practices,  or treat  any  Eligible  Person  in a manner
consistent with the treatment of other Eligible Persons.

         (b) Manner of Exercise of Committee Authority.  The Committee,  and not
the Board,  shall exercise sole and exclusive  discretion on any matter relating
to a Participant then subject to


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Section  16 of the  Exchange  Act with  respect  to the  Company  to the  extent
necessary in order that  transactions by such Participant  shall be exempt under
Rule 16b-3 under the  Exchange  Act.  Any action of the  Committee  or the Board
shall be final,  conclusive  and binding on all persons,  including the Company,
its subsidiaries,  Participants,  Beneficiaries, transferees under Section 10(b)
hereof or other  persons  claiming  rights  from or through a  Participant,  and
stockholders.  The express  grant of any specific  power to the Committee or the
Board, and the taking of any action by the Committee or the Board,  shall not be
construed as limiting any power or authority of the Committee or the Board.  The
Committee  or the Board may  delegate  to officers or managers of the Company or
any subsidiary,  or committees thereof, the authority,  subject to such terms as
the  Committee  or the Board  shall  determine,  (i) to  perform  administrative
functions,  (ii) with respect to  Participants  not subject to Section 16 of the
Exchange Act, to perform such other  functions as the Committee or the Board may
determine,  and (iii) with  respect to  Participants  subject to Section  16, to
perform such other  functions of the  Committee or the Board as the Committee or
the Board may determine to the extent  performance  of such  functions  will not
result in the loss of an  exemption  under Rule 16b-3  otherwise  available  for
transactions  by such  persons,  in  each  case to the  extent  permitted  under
applicable  law and subject to the  requirements  set forth in Section 8(d). The
Committee  or the Board may  appoint  agents to assist it in  administering  the
Plan.

         (c)  Limitation  of Liability.  The  Committee and the Board,  and each
member thereof, shall be entitled to, in good faith, rely or act upon any report
or other  information  furnished to him or her by any executive  officer,  other
officer or employee of the Company or a Subsidiary,  the  Company's  independent
auditors, consultants or any other agents assisting in the administration of the
Plan. Members of the Committee and the Board, and any officer or employee of the
Company or a subsidiary acting at the direction or on behalf of the Committee or
the Board, shall not be personally liable for any action or determination  taken
or made in good  faith  with  respect  to the Plan,  and  shall,  to the  extent
permitted by law, be fully indemnified and protected by the Company with respect
to any such action or determination.

4.       Stock Subject to Plan.

         (a) Limitation on Overall  Number of Shares Subject to Awards.  Subject
to adjustment as provided in Section 10(c) hereof, the total number of shares of
Stock  reserved and available  for delivery in connection  with Awards under the
Plan  shall be the sum of (i)  10,000,000  plus (ii) the  number of shares  with
respect to Awards previously granted under the Plan that terminate without being
exercised,  expire, are forfeited or canceled, and the number of shares of Stock
that are surrendered in payment of any Awards or any tax withholding with regard
thereto.  Any shares of Stock delivered under the Plan may consist,  in whole or
in part,  of  authorized  and  unissued  shares or treasury  shares.  Subject to
adjustment as provided in Section 10(c) hereof,  in no event shall the aggregate
number of shares of Stock which may be issued pursuant to ISOs exceed 10,000,000
shares.

         (b)  Application of  Limitations.  The limitation  contained in Section
4(a) shall  apply not only to Awards  that are  settleable  by the  delivery  of
shares of Stock but also to Awards relating to


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shares  of Stock but  settleable  only in cash  (such as  cash-only  SARs).  The
Committee  or the Board  may  adopt  reasonable  counting  procedures  to ensure
appropriate  counting,  avoid double  counting (as, for example,  in the case of
tandem or  substitute  awards) and make  adjustments  if the number of shares of
Stock actually delivered differs from the number of shares previously counted in
connection with an Award.

5.       Eligibility: Per-Person Award Limitations.

         Awards  Under the Plan.  Awards may be  granted  under the Plan only to
Eligible  Persons.  In each  fiscal year during any part of which the Plan is in
effect,  an  Eligible  Person may not be granted  Awards  relating  to more than
2,500,000  shares of Stock,  subject to adjustment as provided in Section 10(c),
under  each of  Sections  6 (b), 6 (c), 6 (d), 6 (e), 6 (f), 6 (g), 6 (h), 8 (b)
and 8 (c).

6.       Specific Terms of Awards.

         (a)  General.  Awards may be granted  on the terms and  conditions  set
forth in this Section 6. In addition,  the  Committee or the Board may impose on
any Award or the exercise thereof,  at the date of grant or thereafter  (subject
to Section 10(e)),  such additional terms and conditions,  not inconsistent with
the  provisions  of the Plan,  as the  Committee  or the Board shall  determine,
including  terms  requiring  forfeiture of Awards in the event of termination of
employment  by the  Participant  and  terms  permitting  a  Participant  to make
elections  relating to his or her Award. The Committee or the Board shall retain
full power and discretion to accelerate,  waive or modify, at any time, any term
or condition of an Award that is not mandatory  under the Plan.  Except in cases
in which the  Committee  or the Board is  authorized  to require  other forms of
consideration under the Plan, or to the extent other forms of consideration must
be paid to satisfy the requirements of Delaware law, no consideration other than
services may be required for the grant (but not the exercise) of any Award.

         (b) Options.  The  Committee  and the Board each is authorized to grant
Options to Participants on the following terms and conditions;

                           (i) Exercise  Price.  The exercise price per share of
                  Stock  purchasable  under an Option shall be determined by the
                  Committee  or the Board,  provided  that such  exercise  price
                  shall not, in the case of  Incentive  Stock  Options,  be less
                  than 100% of the Fair Market Value of the Stock on the date of
                  grant of the Option and shall not, in any event,  be less than
                  the par value of a share of Stock on the date of grant of such
                  Option.  If an employee owns or is deemed to own (by reason of
                  the attribution  rules  applicable under Section 424(d) of the
                  Code)  more  than  10% of the  combined  voting  power  of all
                  classes of stock of the Company or any Parent  Corporation and
                  an  Incentive  Stock Option is granted to such  employee,  the
                  option  price of such  Incentive  Stock  Option (to the extent
                  required  by the Code at the time of  grant)  shall be no less
                  than 110% of the Fair Market Value of the Stock on the date
                  such Incentive Stock Option is granted.

<PAGE>


                           (ii) Time and Method of  Exercise.  The  Committee or
                  the Board  shall  determine  the time or times at which or the
                  circumstances  under which an Option may be exercised in whole
                  or in part  (including  based on  achievement  of  performance
                  goals and/or future service  requirements),  the time or times
                  at  which  Options  shall  cease to be or  become  exercisable
                  following  termination of employment or upon other conditions,
                  the methods by which such exercise price may be paid or deemed
                  to be paid  (including  in the  discretion of the Committee or
                  the Board a  cashless  exercise  procedure),  the form of such
                  payment,  including,  without  limitation,  cash, Stock, other
                  Awards or awards  granted  under other plans of the Company or
                  any subsidiary,  or other property  (including  notes or other
                  contractual  obligations of  Participants to make payment on a
                  deferred  basis),  and the  methods by or forms in which Stock
                  will be delivered or deemed to be delivered to Participants.

                           (iii) ISOS.  The terms of any ISO  granted  under the
                  Plan  shall  comply in all  respects  with the  provisions  of
                  Section 422 of the Code.  Anything in the Plan to the contrary
                  notwithstanding,   no  term  of  the  Plan  relating  to  ISOs
                  (including any SAR in tandem  therewith) shall be interpreted,
                  amended or  altered,  nor shall any  discretion  or  authority
                  granted  under  the  Plan be  exercised,  so as to  disqualify
                  either  the Plan or any ISO  under  Section  422 of the  Code,
                  unless the  Participant  has first  requested  the change that
                  will  result  in such  disqualification.  Thus,  if and to the
                  extent  required  to  comply  with  Section  422 of the  Code,
                  Options granted as Incentive Stock Options shall be subject to
                  the following special terms and conditions:

                           (A) the Option shall not be exercisable more than ten
                           years after the date such  Incentive  Stock Option is
                           granted;  provided,  however,  that if a  Participant
                           owns  or  is  deemed   to  own  (by   reason  of  the
                           attribution rules of Section 424(d) of the Code) more
                           than 10% of the combined  voting power of all classes
                           of stock of the Company or any Parent Corporation and
                           the  Incentive   Stock  Option  is  granted  to  such
                           Participant,  the term of the Incentive  Stock Option
                           shall be (to the extent  required  by the Code at the
                           time of the  grant)  for no more than five years from
                           the date of grant; and

                           (B) the aggregate Fair Market Value (determined as of
                           the date the  Incentive  Stock  Option is granted) of
                           the shares of stock with  respect to which  Incentive
                           Stock  Options  granted  under the Plan and all other
                           option plans of the Company or its Parent Corporation
                           during any calendar  year  exercisable  for the first
                           time by the  Participant  during  any  calendar  year
                           shall not (to the extent  required by the Code at the
                           time of the grant) exceed $100,000.


<PAGE>


         (c) Stock  Appreciation  Rights.  The  Committee  and the Board each is
authorized to grant SAR's to Participants on the following terms and conditions.

                           (i)  Right to  Payment.  A SAR  shall  confer  on the
                  Participant  to whom it is  granted a right to  receive,  upon
                  exercise  thereof,  the excess of (A) the Fair Market Value of
                  one share of stock on the date of exercise (or, in the case of
                  a "Limited  SAR" that may be exercised  only in the event of a
                  Change  in  Control,  the  Fair  Market  Value  determined  by
                  reference  to the Change in Control  Price,  as defined  under
                  Section 9(c)  hereof),  over (B) the grant price of the SAR as
                  determined by the  Committee or the Board.  The grant price of
                  an SAR shall not be less than the Fair Market Value of a share
                  of Stock on the date of grant except as provided under Section
                  7(a) hereof.

                           (ii) Other  Terms.  The  Committee or the Board shall
                  determine  at the  date of grant  or  thereafter,  the time or
                  times at which and the circumstances  under which a SAR may be
                  exercised in whole or in part (including  based on achievement
                  of performance goals and/or future service requirements),  the
                  time or times  at  which  SARs  shall  cease  to be or  become
                  exercisable  following termination of employment or upon other
                  conditions, the method of exercise, method of settlement, form
                  of consideration payable in settlement,  method by or forms in
                  which Stock will be  delivered  or deemed to be  delivered  to
                  Participants,  whether  or not a SAR  shall be in tandem or in
                  combination  with any other  Award,  and any  other  terms and
                  conditions of any SAR. Limited SARs that may only be exercised
                  in  connection  with a Change  in  Control  or other  event as
                  specified  by the  Committee  or the Board,  may be granted on
                  such terms,  not  inconsistent  with this Section 6(c), as the
                  Committee  or the Board may  determine.  SARs and Limited SARs
                  may be either freestanding or in tandem with other Awards.

         (d) Restricted Stock. The Committee and the Board each is authorized to
grant Restricted Stock to Participants on the following terms and conditions.

                           (i) Grant and Restrictions. Restricted Stock shall be
                  subject  to  such  restrictions  on  transferability,  risk of
                  forfeiture and other restrictions, if any, as the Committee or
                  the Board may impose,  which restrictions may lapse separately
                  or in  combination  at such  times,  under such  circumstances
                  (including  based on achievement  of performance  goals and/or
                  future  service   requirements),   in  such   installments  or
                  otherwise,  as the Committee or the Board may determine at the
                  date of grant or thereafter.  Except to the extent  restricted
                  under the terms of the Plan and any Award  agreement  relating
                  to the  Restricted  Stock,  a Participant  granted  Restricted
                  Stock shall have all of the rights of a stockholder, including
                  the  right  to vote  the  Restricted  Stock  and the  right to
                  receive   dividends   thereon   (subject   to  any   mandatory
                  reinvestment or other requirement  imposed by the Committee or
                  the Board).  During the  restricted  period  applicable to the
                  Restricted


<PAGE>


                  Stock,  subject to Section 10 (b) below,  the Restricted Stock
                  may not be sold, transferred, pledged, hypothecated,  margined
                  or otherwise encumbered by the Participant.

                           (ii)  Forfeiture.  Except as otherwise  determined by
                  the  Committee  or the  Board at the time of the  Award,  upon
                  termination   of  a   Participant's   employment   during  the
                  applicable  restriction  period, the Participant's  Restricted
                  Stock that is at that time  subject to  restrictions  shall be
                  forfeited  and  reacquired  by the Company;  provided that the
                  Committee or the Board may provide,  by rule or  regulation or
                  in any Award  agreement,  or may  determine in any  individual
                  case, that restrictions or forfeiture  conditions  relating to
                  Restricted  Stock  shall be  waived in whole or in part in the
                  event of terminations  resulting from specified.  causes,  and
                  the  Committee  or the Board may in other cases waive in whole
                  or in part the forfeiture of Restricted Stock.

                           (iii) Certificate for Stock. Restricted Stock granted
                  under  the  Plan  may  be  evidenced  in  such  manner  as the
                  Committee  or  the  Board  shall  determine.  If  certificates
                  representing  Restricted  Stock are  registered in the name of
                  the  Participant,  the Committee or the Board may require that
                  such certificates bear an appropriate  legend referring to the
                  terms,   conditions  and   restrictions   applicable  to  such
                  Restricted Stock, that the Company retain physical  possession
                  of the certificates,  and that the Participant deliver a stock
                  power to the  Company,  endorsed  in  blank,  relating  to the
                  Restricted Stock.

                           (iv)  Dividends  and Splits.  As a  condition  to the
                  grant of an Award of  Restricted  Stock,  the Committee or the
                  Board may require that any cash  dividends  paid on a share of
                  Restricted  Stock be  automatically  reinvested  in additional
                  shares of  Restricted  Stock or  applied  to the  purchase  of
                  additional Awards under the Plan. Unless otherwise  determined
                  by the Committee or the Board, Stock distributed in connection
                  with a Stock  split  or Stock  dividend,  and  other  property
                  distributed  as a dividend,  shall be subject to  restrictions
                  and a risk of forfeiture to the same extent as the  Restricted
                  Stock with  respect to which such Stock or other  property has
                  been distributed.

         (e) Deferred  Stock.  The Committee and the Board each is authorized to
grant Deferred Stock to Participants,  which are rights to receive Stock,  cash,
or a combination  thereof at the end of a specified deferral period,  subject to
the following terms and conditions:

                           (i) Award and Restrictions.  Satisfaction of an Award
                  of Deferred Stock shall occur upon  expiration of the deferral
                  period  specified for such Deferred  Stock by the Committee or
                  the Board (or, if permitted by the Committee or the Board,  as
                  elected by the Participant). In addition, Deferred Stock shall
                  be subject to such  restrictions  (which may include a risk of
                  forfeiture) as the Committee or
<PAGE>

                  the Board may impose, if any, which  restrictions may lapse at
                  the expiration of the deferral period or at earlier  specified
                  times  (including  based on achievement  of performance  goals
                  and/or  future   service   requirements),   separately  or  in
                  combination, in installments or otherwise, as the Committee or
                  the Board may  determine.  Deferred  Stock may be satisfied by
                  delivery of Stock,  cash equal to the Fair Market Value of the
                  specified  number of shares of Stock  covered by the  Deferred
                  Stock,  or  a  combination   thereof,  as  determined  by  the
                  Committee  or the  Board at the  date of grant or  thereafter.
                  Prior to  satisfaction of an Award of Deferred Stock, an Award
                  of  Deferred  Stock  carries  no voting or  dividend  or other
                  rights associated with share ownership.

                           (ii)  Forfeiture.  Except as otherwise  determined by
                  the   Committee   or  the  Board,   upon   termination   of  a
                  Participant's employment during the applicable deferral period
                  thereof to which  forfeiture  conditions apply (as provided in
                  the  Award  agreement  evidencing  the  Deferred  Stock),  the
                  Participant's  Deferred  Stock that is at that time subject to
                  deferral  (other  than  a  deferral  at  the  election  of the
                  Participant)  shall be forfeited;  provided that the Committee
                  or the  Board may  provide,  by rule or  regulation  or in any
                  Award agreement, or may determine in any individual case, that
                  restrictions  or  forfeiture  conditions  relating to Deferred
                  Stock  shall be  waived  in  whole or in part in the  event of
                  terminations   resulting  from  specified   causes,   and  the
                  Committee or the Board may in other cases waive in whole or in
                  part the forfeiture of Deferred Stock.

                           (iii)   Dividend   Equivalents.    Unless   otherwise
                  determined  by the  Committee  or the  Board at date of grant,
                  Dividend  Equivalents  on the  specified  number  of shares of
                  Stock  covered by an Award of  Deferred  Stock shall be either
                  (A) paid with respect to such  Deferred  Stock at the dividend
                  payment date in cash or in shares of unrestricted Stock having
                  a Fair Market Value equal to the amount of such dividends,  or
                  (B)  deterred  with  respect  to such  Deferred  Stock and the
                  amount or value  thereof  automatically  deemed  reinvested in
                  additional  Deferred Stock,  other Awards or other  investment
                  vehicles,  as the  Committee  or the Board shall  determine or
                  permit the Participant to elect.

         (f) Bonus Stock and Awards in Lieu of  Obligations.  The  Committee and
the Board each is  authorized  to grant  Stock as a bonus,  or to grant Stock or
other  Awards  in lieu of  Company  obligations  to pay  cash or  deliver  other
property  under  the Plan or under  other  plans or  compensatory  arrangements,
provided that, in the case of Participants subject to Section 16 of the Exchange
Act, the amount of such grants remains within the discretion of the Committee to
the extent  necessary to ensure that  acquisitions  of Stock or other Awards are
exempt from  liability  under Section 16(b) of the Exchange Act. Stock or Awards
granted hereunder shall be subject to such other terms as shall be determined by
the Committee or the Board.

         (g) Dividend Equivalents. The Committee  and  the  Board each is
authorized to grant

<PAGE>

Dividend Equivalents to a Participant entitling the Participant to receive cash,
Stock,  other Awards,  or other  property  equal in value to dividends paid with
respect to a specified  number of shares of Stock,  or other periodic  payments.
Dividend  Equivalents may be awarded on a  free-standing  basis or in connection
with  another  Award.  The  Committee  or the Board may  provide  that  Dividend
Equivalents shall be paid or distributed when accrued or shall be deemed to have
been reinvested in additional Stock, Awards, or other investment  vehicles,  and
subject to such restrictions on transferability and risks of forfeiture,  as the
Committee or the Board may specify.

         (h) Other  Stock-Based  Awards.  The  Committee  and the Board  each is
authorized,   subject  to  limitations   under   applicable  law,  to  grant  to
Participants  such other Awards that may be denominated or payable in, valued in
whole or in part by reference  to, or otherwise  based on, or related to, Stock,
as deemed by the  Committee or the Board to be  consistent  with the purposes of
the Plan,  including,  without  limitation,  convertible  or  exchangeable  debt
securities, other rights convertible or exchangeable into Stock, purchase rights
for Stock,  Awards with value and payment  contingent  upon  performance  of the
Company or any other  factors  designated  by the  Committee  or the Board,  and
Awards valued by reference to the book value of Stock or the value of securities
of or the performance of specified subsidiaries or business units. The Committee
or the Board shall  determine  the terms and  conditions  of such Awards.  Stock
delivered  pursuant to an Award in the nature of a purchase  right granted under
this Section 6 (h) shall be purchased for such  consideration,  paid for at such
times, by such methods, and in such forms, including,  without limitation, cash,
Stock,  other  Awards or other  property,  as the  Committee  or the Board shall
determine.  Cash awards, as an element of or supplement to any other Award under
the Plan, may also be granted pursuant to this Section 6(h).

7.       Certain Provisions Applicable to Awards.

         (a)  Stand-Alone,  Additional,  Tandem and  Substitute  Awards.  Awards
granted under the Plan may, in the discretion of the Committee or the Board,  be
granted  either alone or in addition to, in tandem with, or in  substitution  or
exchange  for, any other Award or any award  granted  under  another plan of the
Company, any subsidiary, or any business entity to be acquired by the Company or
a subsidiary,  or any other right of a Participant  to receive  payment from the
Company or any subsidiary.  Such additional,  tandem, and substitute or exchange
Awards  may be granted at any time.  If an Award is granted in  substitution  or
exchange for another  Award or award,  the  Committee or the Board shall require
the surrender of such other Award or award in consideration for the grant of the
new Award.  In  addition,  Awards  may be granted in lieu of cash  compensation,
including  in lieu of cash amounts  payable  under other plans of the Company or
any  subsidiary,  in which the value of Stock subject to the Award is equivalent
in value to the cash  compensation  (for example,  Deferred  Stock or Restricted
Stock),  or in which the exercise  price,  grant price or purchase  price of the
Award in the nature of a right that may be exercised is equal to the Fair Market
Value  of  the  underlying  Stock  minus  the  value  of the  cash  compensation
surrendered (for example, Options granted with an exercise price "discounted" by
the amount of the cash compensation surrendered).


<PAGE>

         (b) Term of Awards.  The term of each Award shall be for such period as
may be determined by the Committee or the Board; provided that in no event shall
the term of any Option or SAR exceed a period of ten years (or such shorter term
as may be required in respect of an ISO under Section 422 of the Code)

         (c) Form and Timing of Payment Under Awards; Deferrals.  Subject to the
terms of the Plan and any applicable Award agreement, payments to be made by the
Company  or a  subsidiary  upon the  exercise  of an  Option  or other  Award or
settlement  of an Award may be made in such forms as the  Committee or the Board
shall determine,  including,  without  limitation,  cash, Stock, other Awards or
other  property,   and  may  be  made  in  a  single  payment  or  transfer,  in
installments,  or on a  deferred  basis.  The  settlement  of any  Award  may be
accelerated,  and cash paid in lieu of Stock in connection with such settlement,
in the  discretion  of the  Committee or the Board or upon  occurrence of one or
more  specified  events (in  addition to a Change in  Control).  Installment  or
deferred  payments  may be required by the  Committee  or the Board  (subject to
Section  10(e) of the Plan) or permitted at the election of the  Participant  on
terms and  conditions  established  by the Committee or the Board.  Payments may
include,  without  limitation,  provisions  for the  payment or  crediting  of a
reasonable  interest rate on  installment  or deferred  payments or the grant or
crediting of Dividend  Equivalents or other amounts in respect of installment or
deferred payments denominated in Stock.

         (d) Exemptions  from Section 16(b)  Liability.  It is the intent of the
Company that this Plan comply in all respects with applicable provisions of Rule
16b-3 or Rule  16a-1(c)(3)  to the extent  necessary  to ensure that neither the
grant of any Awards to nor other  transaction by a Participant who is subject to
Section 16 of the  Exchange  Act is subject to  liability  under  Section  16(b)
thereof  (except for  transactions  acknowledged  in writing to be non-exempt by
such  Participant).  Accordingly,  if any  provision  of this  Plan or any Award
agreement  does  not  comply  with  the  requirements  of  Rule  l6b-3  or  Rule
16a-1(c)(3) as then applicable to any such  transaction,  such provision will be
construed or deemed amended to the extent necessary to conform to the applicable
requirements of Rule 16b-3 or Rule  16a-1(c)(3) so that such  Participant  shall
avoid  liability  under Section  16(b).  In addition,  the purchase price of any
Award  conferring a right to purchase Stock shall be not less than any specified
percentage  of the Fair Market  Value of Stock at the date of grant of the Award
then required in order to comply with Rule 16b-3.

8.       Performance and Annual Incentive Awards.

         (a) Performance  Conditions.  The right of a Participant to exercise or
receive a grant or  settlement  of any  Award,  and the timing  thereof,  may be
subject to such  performance  conditions as may be specified by the Committee or
the Board.  The Committee or the Board may use such business  criteria and other
measures  of  performance  as  it  may  deem  appropriate  in  establishing  any
performance  conditions,  and may exercise its  discretion to reduce the amounts
payable under any Award  subject to  performance  conditions,  except as limited
under Sections 8(b) and 8(c) hereof in the case of a Performance Award or Annual
Incentive  Award  intended to qualify  under Code Section 162 (m). If and to the
extent required under Code Section 162 (m), any power or

<PAGE>

authority  relating to a Performance Award or Annual Incentive Award intended to
qualify under Code Section  162(m),  shall be exercised by the Committee and not
the Board.

         (b) Performance Awards Granted to Designated Covered Employees.  If the
Committee  determines  that a  Performance  Award to be granted  to an  Eligible
Person who is  designated  by the  Committee as likely to be a Covered  Employee
should qualify as "performance-based  compensation" for purposes of Code Section
162(m),  then the  Committee  may, in its  discretion,  provide  that the grant,
exercise and/or  settlement of such  Performance  Award shall be contingent upon
achievement  of  preestablished  performance  goals and other terms set forth in
this Section 8 (b).

                           (i)  Performance  Goals  Generally.  The  performance
                  goals for such Performance Awards shall consist of one or more
                  business   criteria   and  a  targeted   level  or  levels  of
                  performance  with  respect  to  each  of  such  criteria,   as
                  specified by the Committee consistent with this Section 8 (b).
                  Performance  goals shall be objective and shall otherwise meet
                  the  requirements  of  Code  Section  162(m)  and  regulations
                  thereunder  including the requirement that the level or levels
                  of  performance  targeted  by  the  Committee  result  in  the
                  achievement   of   performance   goals  being   "substantially
                  uncertain." The Committee may determine that such  Performance
                  Awards  shall  be  granted,   exercised  and/or  settled  upon
                  achievement of any one performance goal or that two or more of
                  the  performance  goals must be  achieved  as a  condition  to
                  grant,  exercise and/or settlement of such Performance Awards.
                  Performance goals may differ for Performance Awards granted to
                  any one Participant or to different Participants.

                           (ii) Business Criteria.  One or more of the following
                  business  criteria for the Company,  on a consolidated  basis,
                  and/or specified subsidiaries or business units of the Company
                  (except  with  respect  to the total  stockholder  return  and
                  earnings per share criteria), shall be used exclusively by the
                  Committee   in   establishing   performance   goals  for  such
                  Performance  Awards:  (1) total stockholder  return;  (2) such
                  total  stockholder  return as compared  to total  return (on a
                  comparable  basis) of a publicly  available index such as, but
                  not limited  to, the  Standard & Poor's 500 Stock Index or the
                  S&P  Specialty  Retailer  Index;  (3) net  income;  (4) pretax
                  earnings;   (5)  earnings  before  interest  expense,   taxes,
                  depreciation and amortization;  (6) pretax operating  earnings
                  after interest  expense and before bonuses,  service fees, and
                  extraordinary  or special  items;  (7) operating  margin;  (8)
                  earnings  per  share;  (9) return on  equity;  (10)  return on
                  capital;  (11) return on investment;  (12) operating earnings;
                  (13)  working  capital  or  inventory;  (14) the  price of the
                  Company's   capital   stock;   and  (15)   ratio  of  debt  to
                  stockholders'  equity.  One or more of the foregoing  business
                  criteria  shall  also  be  exclusively  used  in  establishing
                  performance  goals for Annual  Incentive  Awards  granted to a
                  Covered  Employee  under Section 8(c) hereof that are intended
                  to  qualify  as  "performance-based  compensation  under  Code
                  Section 162(m).


<PAGE>


                           (iii)  Performance  Period;  Timing for  Establishing
                  Performance Goals. Achievement of performance goals in respect
                  of  such   Performance   Awards  shall  be  measured   over  a
                  performance  period of up to ten years,  as  specified  by the
                  Committee.  Performance  goals shall be established  not later
                  than 90 days after the  beginning  of any  performance  period
                  applicable to such Performance  Awards,  or at such other date
                  as  may  be  required  or  permitted  for   "performance-based
                  compensation" under Code Section 162(m).

                           (iv)  Performance   Award  Pool.  The  Committee  may
                  establish a Performance Award pool, which shall be an unfunded
                  pool,  for  purposes  of  measuring  Company   performance  in
                  connection  with  Performance   Awards.  The  amount  of  such
                  Performance  Award pool shall be based upon the achievement of
                  a  performance  goal  or  goals  based  on one or  more of the
                  business  criteria  set  forth in  Section  8 (b) (ii)  hereof
                  during  the given  performance  period,  as  specified  by the
                  Committee in accordance  with Section 8 (b) (iii) hereof.  The
                  Committee may specify the amount of the Performance Award pool
                  as a percentage of any of such business criteria, a percentage
                  thereof in excess of a threshold  amount, or as another amount
                  which need not bear a strictly  mathematical  relationship  to
                  such business criteria.

                           (v)  Settlement of Performance  Awards;  Other Terms.
                  Settlement of such Performance Awards shall be in cash, Stock,
                  other  Awards  or other  property,  in the  discretion  of the
                  Committee.  The Committee may, in its  discretion,  reduce the
                  amount of a settlement otherwise to be made in connection with
                  such  Performance  Awards.  The  Committee  shall  specify the
                  circumstances in which such  Performance  Awards shall be paid
                  or forfeited in the event of  termination of employment by the
                  Participant  prior  to the  end  of a  performance  period  or
                  settlement of Performance Awards.

         (c) Annual Incentive Awards Granted to Designated Covered Employees. If
and to the extent that the Committee  determines that an Annual  Incentive Award
to be granted to an Eligible Person who is designated by the Committee as likely
to be a Covered Employee should qualify as "performance-based  compensation" for
purposes of Code Section 162(m),  the grant,  exercise and/or settlement of such
Annual  Incentive Award shall be contingent upon  achievement of  preestablished
performance goals and other terms set forth in this Section 8 (c).


                           (i) Annual  Incentive  Award Pool.  The Committee may
                  establish an Annual  Incentive  Award pool,  which shall be an
                  unfunded pool, for purposes of measuring  Company  performance
                  in connection with Annual Incentive Awards. The amount of such
                  Annual   Incentive   Award   pool  shall  be  based  upon  the
                  achievement  of a  performance  goal or goals  based on one or
                  more of the business  criteria set forth in Section 8 (b) (ii)
                  hereof during the given  performance  period,  as specified by
                  the

<PAGE>

                  Committee in accordance  with Section  8(b)(iii)  hereof.  The
                  Committee may specify the amount of the Annual Incentive Award
                  pool  as  a  percentage  of  any  such  business  criteria,  a
                  percentage  thereof  in excess of a  threshold  amount,  or as
                  another  amount  which need not bear a  strictly  mathematical
                  relationship to such business criteria.

                           (ii) Potential  Annual  Incentive  Awards.  Not later
                  than the end of the 90th day of each fiscal  year,  or at such
                  other  date as may be  required  or  permitted  in the case of
                  Awards intended to be  "performance-based  compensation" under
                  Code  Section  162(m),   the  Committee  shall  determine  the
                  Eligible Persons who will potentially receive Annual Incentive
                  Awards, and the amounts potentially  payable  thereunder,  for
                  that fiscal year, either out of an Annual Incentive Award pool
                  established  by such date under Section 8 (c) (i) hereof or as
                  individual  Annual Incentive Awards. In the case of individual
                  Annual Incentive Awards intended to qualify under Code Section
                  162(m), the amount potentially payable shall be based upon the
                  achievement  of a  performance  goal or goals  based on one or
                  more of the business  criteria set forth in Section 8 (b) (ii)
                  hereof in the given  performance  year,  as  specified  by the
                  Committee;  in other cases, such amount shall be based on such
                  criteria  as shall be  established  by the  Committee.  In all
                  cases,  the maximum Annual  Incentive Award of any Participant
                  shall be  subject  to the  limitation  set forth in  Section 5
                  hereof.

                           (iii) Payout of Annual  Incentive  Awards.  After the
                  end of each fiscal year,  the  Committee  shall  determine the
                  amount,  if any, of (A) the Annual  Incentive  Award pool, and
                  the maximum amount of potential Annual Incentive Award payable
                  to each Participant in the Annual Incentive Award pool, or (B)
                  the  amount of  potential  Annual  Incentive  Award  otherwise
                  payable  to  each  Participant.  The  Committee  may,  in  its
                  discretion,   determine   that  the  amount   payable  to  any
                  Participant as an Annual Incentive Award shall be reduced from
                  the amount of his or her  potential  Annual  Incentive  Award,
                  including a  determination  to make no Award  whatsoever.  The
                  Committee shall specify the  circumstances  in which an Annual
                  Incentive  Award  shall be paid or  forfeited  in the event of
                  termination of employment by the Participant  prior to the end
                  of a fiscal year or settlement of such Annual Incentive Award.

         (d) Written  Determinations.  All determinations by the Committee as to
the establishment of performance goals, the amount of any Performance Award pool
or  potential  individual  Performance  Awards  and  as to  the  achievement  of
performance  goals  relating to  Performance  Awards under Section 8(b), and the
amount  of any  Annual  Incentive  Award  pool or  potential  individual  Annual
Incentive  Awards and the amount of final Annual  Incentive Awards under Section
8(c),  shall be made in  writing  in the case of any Award  intended  to qualify
under Code Section  162(m).  The Committee  may not delegate any  responsibility
relating to such  Performance  Awards or Annual  Incentive  Awards if and to the
extent required to comply with Code Section 162(m).


<PAGE>

         (e) Status Of Section  8(b) and Section  8(c) Awards Under Code Section
162 (m).  It is the intent of the  Company  that  Performance  Awards and Annual
Incentive  Awards under Section 8(b) and 8(c) hereof  granted to persons who are
designated by the Committee as likely to be Covered Employees within the meaning
of Code Section 162(m) and regulations thereunder shall, if so designated by the
Committee,  constitute  "qualified  performance-based  compensation"  within the
meaning of Code Section  162(m) and  regulations  thereunder.  Accordingly,  the
terms of Sections 8(b),  (c), (d) and (e),  including the definitions of Covered
Employee  and  other  terms  used  therein  shall  be  interpreted  in a  manner
consistent  with Code Section 162(m) and regulations  thereunder.  The foregoing
notwithstanding, because the Committee cannot determine with certainty whether a
given  Participant will be a Covered Employee with respect to a fiscal year that
has not yet been completed,  the term Covered Employee as used herein shall mean
only a person  designated by the Committee,  at the time of grant of Performance
Awards or an Annual  Incentive  Award,  as likely to be a Covered  Employee with
respect to that  fiscal  year.  If any  provision  of the Plan or any  agreement
relating to such  Performance  Awards or Annual Incentive Awards does not comply
or is inconsistent  with the  requirements of Code Section 162(m) or regulations
thereunder,  such  provision  shall be construed or deemed amended to the extent
necessary to conform to such requirements.

9.       Change in Control.

         (a) Effect of "Change in Control". If and to the extent provided in the
Award,  in the event of a "Change in Control," as defined in Section  9(b),  the
following provisions shall apply:

                           (i) Any Award  carrying a right to exercise  that was
                  not  previously  exercisable  and vested  shall  become  fully
                  exercisable  and  vested  as of  the  time  of the  Change  in
                  Control,  subject only to applicable restrictions set forth in
                  Section 10(a) hereof;

                           (ii)  Limited  SARs (and other SARs if so provided by
                  their terms) shall become  exercisable  for amounts,  in cash,
                  determined by reference to the Change in Control Price;

                           (iii) The restrictions,  deferral of settlement,  and
                  forfeiture  conditions  applicable  to any other Award granted
                  under the Plan  shall  lapse and such  Awards  shall be deemed
                  fully  vested as of the time of the Change in Control,  except
                  to the extent of any waiver by the  Participant and subject to
                  applicable restrictions set forth in Section 10(a) hereof; and

                           (iv)  With  respect  to any  such  outstanding  Award
                  subject to  achievement  of  performance  goals and conditions
                  under the Plan, such  performance  goals and other  conditions
                  will be deemed to be met if and to the extent so  provided  by
                  the

<PAGE>

                  Committee in the Award agreement relating to such Award.

         (b)  Definition of "Change in Control.  A "Change in Control"  shall be
deemed to have occurred upon:

                           (i) Approval by the  stockholders of the Company of a
                  reorganization,   merger,   consolidation  or  other  form  of
                  corporate transaction or series of transactions, in each case,
                  with respect to which persons who were the stockholders of the
                  Company  immediately prior to such  reorganization,  merger or
                  consolidation  or  other   transaction  do  not,   immediately
                  thereafter,  own more than 50% of the  combined  voting  power
                  entitled to vote generally in the election of directors of the
                  reorganized, merged or consolidated company's then outstanding
                  voting  securities,  or a liquidation  or  dissolution  of the
                  Company or the sale of all or substantially  all of the assets
                  of  the   Company   (unless   such   reorganization,   merger,
                  consolidation  or other  corporate  transaction,  liquidation,
                  dissolution  or sale (any such event  being  referred  to as a
                  "Corporate Transaction") is subsequently abandoned);

                           (ii)  Individuals  who,  as of the date on which  the
                  Award is granted, constitute the Board (the "Incumbent Board")
                  cease for any reason to  constitute at least a majority of the
                  Board, provided that any person becoming a director subsequent
                  to the date on which the Award was granted whose election,  or
                  nomination  for election by the  Company's  stockholders,  was
                  approved  by a vote of at least a  majority  of the  directors
                  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 the  Directors of the Company,  as
                  such  terms  are  used  in  Rule  14a-11  of  Regulation   14A
                  promulgated  under the Securities  Exchange Act) shall be, for
                  purposes of this  Agreement,  considered as though such person
                  were a member of the Incumbent Board; or

                           (iii) The  acquisition  (other than from the Company)
                  by any  person,  entity or  "group",  within  the  meaning  of
                  Section  13 (d) (3) or 14 (d) (2) of the  Securities  Exchange
                  Act, of more than 50% of either the then outstanding shares of
                  the Company's Common Stock or the combined voting power of the
                  Company's then outstanding voting securities  entitled to vote
                  generally in the election of directors  (hereinafter  referred
                  to as the ownership of a  "Controlling  Interest")  excluding,
                  for this purpose,  any  acquisitions by (1) the Company or its
                  Subsidiaries, (2) any person, entity or "group" that as of the
                  date on which the Award is granted owns  beneficial  ownership
                  (within  the  meaning  of Rule  13d-3  promulgated  under  the
                  Securities Exchange Act) of a Controlling  Interest or (3) any
                  employee benefit plan of the Company or its Subsidiaries.


<PAGE>

         (c)  Definition  of "Change in Control  Price."  The "Change in Control
Price" means an amount in cash equal to the higher of (i) the amount of cash and
fair  market  value  of  property  that is the  highest  price  per  share  paid
(including  extraordinary dividends) in any Corporate Transaction triggering the
Change in Control  under Section  9(b)(i)  hereof or any  liquidation  of shares
following a sale of substantially all of the assets of the Company,  or (ii) the
highest  Fair  Market  Value  per share at any time  during  the  60-day  period
preceding and the 60-day period following the Change in Control.

10.      General Provisions.

         (a) Compliance with Legal and Other  Requirements.  The Company may, to
the extent deemed necessary or advisable by the Committee or the Board, postpone
the issuance or delivery of Stock or payment of other  benefits  under any Award
until  completion of such  registration or  qualification of such Stock or other
required  action under any federal or state law, rule or regulation,  listing or
other required action with respect to any stock exchange or automated  quotation
system upon which the Stock or other Company securities are listed or quoted, or
compliance  with any other  obligation  of the Company,  as the Committee or the
Board,  may consider  appropriate,  and may require any Participant to make such
representations,  furnish such information and comply with or be subject to such
other conditions as it may consider  appropriate in connection with the issuance
or delivery of Stock or payment of other benefits in compliance  with applicable
laws, rules, and regulations,  listing requirements,  or other obligations.  The
foregoing  notwithstanding,  in connection with a Change in Control, the Company
shall  take or cause to be taken no  action,  and shall  undertake  or permit to
arise no legal or  contractual  obligation,  that results or would result in any
postponement  of the issuance or delivery of Stock or payment of benefits  under
any Award or the imposition of any other  conditions on such issuance,  delivery
or  payment,  to the extent  that such  postponement  or other  condition  would
represent  a  greater  burden  on a  Participant  than  existed  on the 90th day
preceding the Change in Control.

         (b) Limits on Transferability Beneficiaries. No Award or other right or
interest of a  Participant  under the Plan,  including  any Award or right which
constitutes a derivative  security as generally  defined in Rule 16a-1(c)  under
the Exchange  Act,  shall be pledged,  hypothecated  or otherwise  encumbered or
subject to any lien,  obligation or liability of such  Participant  to any party
(other than the Company or a  Subsidiary),  or assigned or  transferred  by such
Participant otherwise than by will or the laws of descent and distribution or to
a Beneficiary  upon the death or a  Participant,  and such Awards or rights that
may be  exercisable  shall be exercised  during the lifetime of the  Participant
only by the Participant or his or her guardian or legal  representative,  except
that Awards and other rights (other than ISOs and SARs in tandem  therewith) may
be  transferred to one or more  Beneficiaries  or other  transferees  during the
lifetime  of the  Participant,  and  may be  exercised  by such  transferees  in
accordance  with the terms of such  Award;  but only if and to the  extent  such
transfers and exercises are permitted by the Committee or the Board  pursuant to
the express  terms of an Award  agreement  (subject to any terms and  conditions
which the Committee or the Board may impose thereon,  and further subject to any
prohibitions or


<PAGE>

restrictions  on  such  transfers   pursuant  to  Rule  16b-3).  A  Beneficiary,
transferee,  or other person  claiming any rights under the Plan from or through
any Participant shall be subject to all terms and conditions of the Plan and any
Award agreement  applicable to such Participant,  except as otherwise determined
by the Committee or the Board, and to any additional terms and conditions deemed
necessary or appropriate by the Committee or the Board.

         (c) Adjustments.  In the event that any dividend or other  distribution
(whether  in the form of cash,  Stock,  or  other  property),  recapitalization,
forward  or  reverse  split,  reorganization,  merger,  consolidation,  spinoff,
combination,  repurchase,  share  exchange,  liquidation,  dissolution  or other
similar   corporate   transaction  or  event  affects  the  Stock  such  that  a
substitution  or  adjustment  is  determined by the Committee or the Board to be
appropriate  in order to  prevent  dilution  or  enlargement  of the  rights  of
Participants  under the Plan,  then the  Committee or the Board  shall,  in such
manner as it may deem  equitable,  substitute  or  adjust  any or all of (i) the
number and kind of shares of Stock which may be  delivered  in  connection  with
Awards granted thereafter,  (ii) the number and kind of shares of Stock by which
annual per-person Award  limitations are measured under Section 5 hereof,  (iii)
the number and kind of shares of Stock subject to or  deliverable  in respect of
outstanding  Awards and (iv) the exercise  price,  grant price or purchase price
relating  to any  Award  and/or  make  provision  for  payment  of cash or other
property in respect of any outstanding  Award.  In addition,  the Committee (and
the  Board  if and only to the  extent  such  authority  is not  required  to be
exercised by the Committee to comply with Code Section  162(m)) is authorized to
make  adjustments in the terms and conditions of, and the criteria  included in,
Awards (including Performance Awards and performance goals, and Annual Incentive
Awards  and any  Annual  Incentive  Award  pool or  performance  goals  relating
thereto) in recognition of unusual or nonrecurring  events  (including,  without
limitation, events described in the preceding sentence, as. well as acquisitions
and dispositions of businesses and assets) affecting the Company, any Subsidiary
or any  business  unit,  or the  financial  statements  of  the  Company  or any
Subsidiary,   or  in  response  to  changes  in  applicable  laws,  regulations,
accounting  principles,  tax rates and regulations or business  conditions or in
view of the Committee's  assessment of the business strategy of the Company, any
Subsidiary or business unit thereof,  performance  of comparable  organizations,
economic and business conditions, personal performance of a Participant, and any
other circumstances  deemed relevant;  provided that no such adjustment shall be
authorized  or made if and to the extent  that such  authority  or the making of
such  adjustment  would cause Options,  SARs,  Performance  Awards granted under
Section 8 (b) hereof or Annual  Incentive  Awards  granted  under  Section 8 (c)
hereof to  Participants  designated  by the  Committee as Covered  Employees and
intended  to  qualify as  "performance-based  compensation'  under Code  Section
162(m)  and  the  regulations   thereunder  to  otherwise  fail  to  qualify  as
"performance-based  compensation"  under Code  Section  162(m)  and  regulations
thereunder.

         (d) Taxes.  The Company and any  Subsidiary  is  authorized to withhold
from any  Award  granted,  any  payment  relating  to an Award  under  the Plan,
including  from a  distribution  of Stock,  or any payroll or other payment to a
Participant,  amounts of withholding and other taxes due or potentially  payable
in connection  with any transaction  involving an Award,  and to take such other
action as the  Committee  or the Board may deem  advisable to enable the Company
and


<PAGE>

Participants  to satisfy  obligations  for the payment of withholding  taxes and
other tax  obligations  relating  to any Award.  This  authority  shall  include
authority  to  withhold  or  receive  Stock or other  property  and to make cash
payments in respect thereof in satisfaction of a Participant's  tax obligations,
either on a mandatory or elective basis in the discretion of the Committee.

         (e)  Changes  to the Plan and  Awards.  The  Board  may  amend,  alter,
suspend,  discontinue  or terminate  the Plan, or the  Committee's  authority to
grant  Awards  under  the  Plan,   without  the  consent  of   stockholders   or
Participants,  except  that any  amendment  or  alteration  to the Plan shall be
subject to the approval of the Company's  stockholders not later than the annual
meeting  next  following  such  Board  action if such  stockholder  approval  is
required  by  any  federal  or  state  law  or  regulation  (including,  without
limitation,  Rule  16b-3 or Code  Section  162(m))  or the  rules  of any  stock
exchange or automated  quotation system on which the Stock may then be listed or
quoted,  and the Board may  otherwise,  in its  discretion,  determine to submit
other such changes to the Plan to  stockholders  for  approval;  provided  that,
without  the  consent  of an  affected  Participant,  no such  Board  action may
materially  and  adversely  affect  the  rights  of such  Participant  under any
previously  granted and outstanding  Award. The Committee or the Board may waive
any  conditions  or rights  under,  or amend,  alter,  suspend,  discontinue  or
terminate  any  Award  theretofore  granted  and any  Award  agreement  relating
thereto,  except as otherwise  provided in the Plan;  provided that, without the
consent of an affected  Participant,  no such  Committee or the Board action may
materially and adversely affect the rights of such Participant under such Award.
Notwithstanding  anything in the Plan to the  contrary,  if any right under this
Plan  would  cause a  transaction  to be  ineligible  for  pooling  of  interest
accounting  that  would,  but for the  right  hereunder,  be  eligible  for such
accounting treatment,  the Committee or the Board may modify or adjust the right
so that  pooling  of  interest  accounting  shall be  available,  including  the
substitution  of Stock  having a Fair Market  Value equal to the cash  otherwise
payable  hereunder for the right which caused the  transaction  to be ineligible
for pooling of interest accounting.

         (f) Limitation on Rights Conferred Under Plan. Neither the Plan nor any
action taken  hereunder  shall be construed as (i) giving any Eligible Person or
Participant the right to continue as an Eligible Person or Participant or in the
employ of the  Company or a  Subsidiary;  (ii)  interfering  in any way with the
right of the Company or a  Subsidiary  to  terminate  any  Eligible  Person's or
Participant's  employment  at any  time,  (iii)  giving  an  Eligible  Person or
Participant  any claim to be granted  any Award  under the Plan or to be treated
uniformly  with  other  Participants  and  employees,  or (iv)  conferring  on a
Participant  any of the rights of a stockholder  of the Company unless and until
the Participant is duly issued or transferred shares of Stock in accordance with
the terms of an Award.

         (g) Unfunded Status of Awards, Creation of Trusts. The Plan is intended
to constitute an "unfunded" plan for incentive and deferred  compensation.  With
respect to any payments not yet made to a  Participant  or obligation to deliver
Stock  pursuant to an Award,  nothing  contained  in the Plan or any Award shall
give any such  Participant  any rights that are greater  than those of a general
creditor of the Company,  provided that the Committee may authorize the creation
of trusts and deposit therein cash,  Stock,  other Awards or other property,  or
make other


<PAGE>

arrangements  to meet the Company's  obligations  under the Plan. Such trusts or
other  arrangements  shall be consistent with the "unfunded"  status of the Plan
unless the  Committee  otherwise  determines  with the consent of each  affected
Participant.  The trustee of such trusts may be  authorized  to dispose of trust
assets and  reinvest the proceeds in  alternative  investments,  subject to such
terms and conditions as the Committee or the board may specify and in accordance
with applicable law.

         (h) Nonexclusivity of the Plan. Neither the adoption of the Plan by the
Board nor its submission to the  stockholders  of the Company for approval shall
be  construed  as creating  nor any  limitations  on the power of the Board or a
committee  thereof  to adopt such other  incentive  arrangements  as it may deem
desirable including incentive arrangements and awards which do not qualify under
Code Section 162(m).

         (i) Payments in the Event of  Forfeitures:  Fractional  Shares.  Unless
otherwise determined by the Committee or the Board, in the event of a forfeiture
of  an  Award  with  respect  to  which  a   Participant   paid  cash  or  other
consideration,  the Participant shall be repaid the amount of such cash or other
consideration.  No  fractional  shares of Stock  shall be  issued  or  delivered
pursuant to the Plan or any Award.  The  Committee or the Board 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.

         (j) Governing Law. The validity,  construction  and effect of the Plan,
any rules and  regulations  under the  Plan,  and any Award  agreement  shall be
determined in accordance  with the laws of the State of Delaware  without giving
effect to principles of conflicts of laws, and applicable federal law.

         (k) Plan Effective Date and Stockholder Approval;  Termination of Plan.
The Plan shall become  effective on the  Effective  Date,  subject to subsequent
approval  within 12 months of its adoption by the Board by  stockholders  of the
Company  eligible to vote in the election of directors,  by a vote sufficient to
meet the  requirements  of Code  Sections 162 (m) and 422,  Rule 16b-3 under the
Exchange Act, applicable NASDAQ requirements,  and other laws, regulations,  and
obligations of the Company applicable to the Plan. Awards may be granted subject
to stockholder  approval,  but may not be exercised or otherwise  settled in the
event  stockholder  approval is not obtained.  The Plan shall  terminate at such
time as no shares of Common Stock remain  available for issuance  under the Plan
and the Company has no further rights or obligations with respect to outstanding
Awards under the Plan.