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                               DEPARTMENT 56, INC.
                            1995 STOCK INCENTIVE PLAN
                                  (AS AMENDED)


1.       PURPOSE.

The purpose of this Plan is to strengthen Department 56, Inc., a Delaware
corporation (the "Company"), by providing an incentive to its officers,
employees, consultants, directors and advisors and thereby encouraging them to
devote their abilities and industry to the success of the Company's business
enterprise. It is intended that this purpose be achieved by extending to
officers, employees, consultants and directors of the Company and its
subsidiaries an added long-term incentive for high levels of performance and
unusual efforts through the grant of Incentive Stock Options, Nonqualified Stock
Options, Stock Appreciation Rights, Restricted Stock, Performance Units,
Performance Shares and Dividend Equivalent Rights (as each term is hereinafter
defined).

2.       DEFINITIONS.

For purposes of the Plan:

         2.1 "Adjusted Fair Market Value" means, in the event of a Change in
         Control, the greater of (i) the highest price per Share paid to holders
         of the Shares in any transaction (or series of transactions)
         constituting or resulting in a Change in Control or (ii) the highest
         Fair Market Value of a Share during the ninety (90) day period ending
         on the date of a Change in Control.

         2.2 "Agreement" means the written agreement between the Company and an
         Optionee or Grantee evidencing the grant of an Option or Award and
         setting forth the terms and conditions thereof.

         2.3 "Award" means a grant of Restricted Stock, a Stock Appreciation
         Right, a Performance Award, a Dividend Equivalent Right or any or all
         of them.

         2.4 "Board" means the Board of Directors of the Company.

         2.5 "Cause" means the commission of an act of fraud or intentional
         misrepresentation or an act of embezzlement, misappropriation or
         conversion of assets or opportunities of the Company or any Subsidiary.

         2.6 "Change in Capitalization" means any increase or reduction in the
         number of Shares, or any change (including, but not limited to, a
         change in value) in the


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         Shares or exchange of Shares for a different number or kind of shares
         or other securities of the Company, by reason of a reclassification,
         recapitalization, merger, consolidation, reorganization, spin-off,
         split-up, issuance of warrants or rights or debentures, stock dividend,
         stock split or reverse stock split, cash dividend, property dividend,
         combination or exchange of shares, repurchase of shares, change in
         corporate structure or otherwise.

         2.7 A "Change in Control" shall mean the occurrence during the term of
         the Plan of:

                  (a) An acquisition (other than directly from the Company) of
                  any voting securities of the Company (the "Voting Securities")
                  by any 'Person' (as the term person is used for purposes of
                  Section 13(d) or 14(d) of the Exchange Act), other than
                  Department 56 Partners, L.P. or Forstmann Little & Co.
                  Subordinated Debt and Equity Management Buyout Partnership IV
                  or any of their affiliates (individually or in the aggregate),
                  immediately after which such Person has 'Beneficial Ownership'
                  (within the meaning of Rule 13d-3 promulgated under the
                  Exchange Act) of fifty-one percent (51%) or more of the
                  combined voting power of the Company's then outstanding Voting
                  Securities; provided, however, in determining whether a Change
                  in Control has occurred, Voting Securities which are acquired
                  in a 'Non-Control Acquisition' (as hereinafter defined) shall
                  not constitute an acquisition which would cause a Change in
                  Control. A 'Non-Control Acquisition' shall mean an acquisition
                  by (i) an employee benefit plan (or a trust forming a part
                  thereof) maintained by (A) the Company or (B) any corporation
                  or other Person of which a majority of its voting power or its
                  voting equity securities or equity interest is owned, directly
                  or indirectly, by the Company (for purposes of this
                  definition, a 'Subsidiary'), (ii) the Company or its
                  Subsidiaries, or (iii) any Person in connection with a
                  'Non-Control Transaction' (as hereinafter defined);

                  (b) The individuals who, as of June 1, 1993, are members of
                  the Board (the "Incumbent Board"), cease for any reason to
                  constitute at least two-thirds of the members of the Board;
                  provided, however, that if the election, or nomination for
                  election by the Company's common stockholders, of any new
                  director was approved by a vote of at least two-thirds of the
                  Incumbent Board, such new director shall, for purposes of this
                  Plan, be considered as a member of the Incumbent Board;
                  provided further, however, that no individual shall be
                  considered a member of the Incumbent Board if such individual
                  initially assumed office as a result of either an actual or
                  threatened 'Election Contest' (as described in Rule 14a-11
                  promulgated under the Exchange Act) or other actual or
                  threatened solicitation of proxies or consents by or on behalf
                  of a Person other than the Board (a "Proxy Contest") including
                  by reason of any agreement intended to avoid or settle

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                  any Election Contest or Proxy Contest; or

                  (c)    Approval by stockholders of the Company of:

                         (i)   A merger, consolidation or reorganization
                               involving the Company, unless (A) the
                               stockholders of the Company, immediately
                               before such merger, consolidation or
                               reorganization, own, directly or indirectly
                               immediately following such merger,
                               consolidation or reorganization, at least
                               sixty percent (60%) of the combined voting
                               power of the outstanding voting securities
                               of the corporation resulting from such
                               merger or consolidation or reorganization
                               (the "Surviving Corporation") in
                               substantially the same proportion as their
                               ownership of the Voting Securities
                               immediately before such merger,
                               consolidation or reorganization, (B) the
                               individuals who were members of the
                               Incumbent Board immediately prior to the
                               execution of the agreement providing for
                               such merger, consolidation or reorganization
                               constitute at least two-thirds of the
                               members of the board of directors of the
                               Surviving Corporation, or a corporation
                               beneficially owing a majority of the Voting
                               Securities of the Surviving Corporation, (C)
                               no Person other than the Company, any
                               Subsidiary, any employee benefit plan (or
                               any trust forming a part thereof) maintained
                               by the Company, the Surviving Corporation,
                               or any Subsidiary, or any Person who,
                               immediately prior to such merger,
                               consolidation or reorganization had
                               Beneficial Ownership of fifty-one percent
                               (51%) or more of the then outstanding Voting
                               Securities owns, directly or indirectly
                               fifty-one percent (51%) or more of the
                               combined voting power of the Surviving
                               Corporation's then outstanding voting
                               securities, and (D) a transaction described
                               in clauses (A) through (C) shall herein be
                               referred to as a 'Non-Control Transaction';

                         (ii)  A complete liquidation or dissolution of the
                               Company; or

                         (iii) An agreement for the sale or other disposition of
                               all or substantially all of the assets of the
                               Company to any Person (other than a transfer to a
                               Subsidiary).

                  Notwithstanding the foregoing, a Change in Control shall not
                  be deemed to occur solely because any Person (the "Subject
                  Person") acquired Beneficial Ownership of more than the
                  permitted amount of the outstanding Voting Securities as a
                  result of the acquisition of Voting Securities by the Company
                  which, by reducing the number of Voting Securities
                  outstanding, increases the proportional number of shares
                  Beneficially Owned by the Subject Persons, provided that if a
                  Change in Control would occur (but for the

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                  operation of this sentence) as a result of the acquisition of
                  Voting Securities by the Company, and after such share
                  acquisition by the Company, the Subject Person becomes the
                  Beneficial Owner of any additional Voting Securities which
                  increases the percentage of the then outstanding Voting
                  Securities Beneficially Owned by the Subject Person, then a
                  Change in Control shall occur.

         2.8 "Code" means the Internal Revenue Code of 1986, as amended.

         2.9 "Committee" means a committee consisting of one or more Directors
         appointed by the Board to administer the Plan and to perform the
         functions set forth herein.

         2.10 "Company" means Department 56, Inc.

         2.11 "Director Option" means an Option granted pursuant to Section 6.

         2.12 "Disability" means a physical or mental infirmity which impairs
         the Optionee's ability to perform substantially his or her duties for a
         period of one hundred eighty (180) consecutive days.

         2.13 "Disinterested Director" means a director of the Company who is a
         "non-employee director" within the meaning of Rule 16b-3 under the
         Exchange Act.

         2.14 "Dividend Equivalent Right" means a right to receive all or some
         portion of the cash dividends that are or would be payable with respect
         to Shares.

         2.15 "Division" means any of the operating units or divisions of the
         Company designated as a Division by the Committee.

         2.16 "Eligible Individual" means any officer, employee, consultant or
         advisor of the Company or a Subsidiary designated by the Committee as
         eligible to receive Options or Awards subject to the conditions set
         forth herein.

         2.17 "Employee Option" means an Option granted pursuant to Section 5.

         2.18 "Exchange Act" means the Securities Exchange Act of 1934, as
         amended.

         2.19 "Fair Market Value" on any date means the average of the high and
         low sales prices of the Shares on such date on the principal national
         securities exchange on which such Shares are listed or admitted to
         trading, or if such Shares are not so listed or admitted to trading,
         the arithmetic mean of the per Share closing bid price and per Share
         closing asked price on such date as quoted on the National Association
         of Securities Dealers Automated Quotation System or such other

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         market in which such prices are regularly quoted, or, if there have
         been no published bid or asked quotations with respect to Shares on
         such date, the Fair Market Value shall be the value established by the
         Board in good faith and, in the case of an Incentive Stock Option, in
         accordance with Section 422 of the Code.

         2.20 "Grantee" means a person to whom an Award has been granted under
         the Plan.

         2.21 "Incentive Stock Option" means an Option satisfying the
         requirements of Section 422 of the Code and designated by the Committee
         as an Incentive Stock Option.

         2.22 "Nonemployee Director" means a director of the Company who is not
         an employee of the Company or any Subsidiary.

         2.23 "Nonqualified Stock Option" means an Option which is not an
         Incentive Stock Option.

         2.24 "Option" means an Employee Option, a Director Option, or either or
         both of them.

         2.25 "Optionee" means a person to whom an Option has been granted under
         the Plan.

         2.26 "Outside Director" means a director of the Company who is an
         "outside director" within the meaning of Section 162(m) of the Code and
         the regulations promulgated thereunder.

         2.27 "Parent" means any corporation which is a parent corporation
         (within the meaning of Section 424(e) of the Code) with respect to the
         Company.

         2.28 "Performance Awards" means Performance Units, Performance Shares
         or either or both of them.

         2.29 "Performance Cycle" means the time period specified by the
         Committee at the time a Performance Award is granted during which the
         performance of the Company, a Subsidiary or a Division will be
         measured.

         2.30 "Performance Objectives" has the meaning set forth in Section
         10.1.

         2.31 "Performance Shares" means Shares issued or transferred to an
         Eligible Individual under Section 10.3.

         2.32 "Performance Unit" means Performance Units granted to an Eligible

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         Individual under Section 10.2.

         2.33 "Plan" means the Department 56, Inc. 1995 Stock Incentive Plan.

         2.34 "Pooling Transaction" means an acquisition of or by the Company in
         a transaction which is intended to be treated as a "pooling of
         interests" under generally accepted accounting principles.

         2.35 "Restricted Stock" means Shares issued or transferred to an
         Eligible Individual pursuant to Section 9.

         2.36 "Shares" means the common stock, par value $.01 per share, of the
         Company.

         2.37 "Stock Appreciation Right" means a right to receive all or some
         portion of the increase in the value of the Shares as provided in
         Section 8 hereof.

         2.38 "Stockholders Agreement" means a stockholders agreement governing
         the rights, duties and obligations of present or future employees or
         directors, as the case may be, of the Company or its Subsidiaries with
         respect to Shares granted or sold to such persons, or issued pursuant
         to options or other awards granted to such persons, in such form as is
         in use by the Company at the time of exercise of an Option or any part
         thereof or the issuance of Shares pursuant to an Award and which the
         Company elects to require an Optionee or Grantee to execute in
         connection with the issuance of Shares.

         2.39 "Subsidiary" means any corporation which is a subsidiary
         corporation (within the meaning of Section 424(f) of the Code) with
         respect to the Company.

         2.40 "Successor Corporation" means a corporation, or a parent or
         subsidiary thereof within the meaning of Section 424(a) of the Code,
         which issues or assumes a stock option in a transaction to which
         Section 424(a) of the Code applies.

         2.41 "Ten-Percent Stockholder" means an Eligible Individual, who, at
         the time an Incentive Stock Option is to be granted to him or her, owns
         (within the meaning of Section 422(b)(6) of the Code) stock possessing
         more than ten percent (10%) of the total combined voting power of all
         classes of stock of the Company, or of a Parent or a Subsidiary.

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3.       ADMINISTRATION.

         3.1 The Plan shall be administered by the Committee which shall hold
         meetings at such times as may be necessary for the proper
         administration of the Plan. The Committee shall keep minutes of its
         meetings. Except as provided in Section 3.4, a quorum shall consist of
         not less than two members of the Committee and a majority of a quorum
         may authorize any action. Any decision or determination reduced to
         writing and signed by a majority of all of the members shall be as
         fully effective as if made by a majority vote at a meeting duly called
         and held. Except as provided in Section 3.4, the Committee shall
         consist of at least two (2) Directors and may consist of the entire
         Board; PROVIDED, HOWEVER, that (A) except as provided in clause (B)
         below, (i) if the Committee consists of less than the entire Board,
         each member shall be a Nonemployee Director and (ii) to the extent
         necessary for any Option or Award intended to qualify as
         performance-based compensation under Section 162(m) of the Code to so
         qualify, each member of the Committee, whether or not it consists of
         the entire Board, shall be an Outside Director and (B) the Board may,
         by resolution, authorize a committee consisting of one or more
         Directors to make grants of Employee Options to Eligible Individuals
         who are not officers of the Company, subject to such restrictions and
         limitations as the Board shall set forth in such resolution and as
         otherwise provided in the Plan. No member of the Committee shall be
         liable for any action, failure to act, determination or interpretation
         made in good faith with respect to this Plan or any transaction
         hereunder, except for liability arising from his or her own willful
         misfeasance, gross negligence or reckless disregard of his or her
         duties. The Company hereby agrees to indemnify each member of the
         Committee for all costs and expenses and, to the extent permitted by
         applicable law, any liability incurred in connection with defending
         against, responding to, negotiation for the settlement of or otherwise
         dealing with any claim, cause of action or dispute of any kind arising
         in connection with any actions in administering this Plan or in
         authorizing or denying authorization to any transaction hereunder.

         3.2 Subject to the express terms and conditions set forth herein, the
         Committee shall have the power from time to time to:

                  (a) determine those individuals to whom Options shall be
                  granted under the Plan and the number of Incentive Stock
                  Options and/or Nonqualified Stock Options to be granted to
                  each Eligible Individual or Nonemployee Director and to
                  prescribe the terms and conditions (which need not be
                  identical) of each Option, including the purchase price per
                  Share subject to each Option, and make any amendment or
                  modification to any Agreement consistent with the terms of the
                  Plan; and

                  (b) select those Eligible Individuals to whom Awards shall be
                  granted under the Plan and to determine the number of Stock
                  Appreciation Rights,

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                  Performance Units, Performance Shares, and/or Shares of
                  Restricted Stock to be granted pursuant to each Award, the
                  terms and conditions of each Award, including the restrictions
                  or Performance Objectives relating to such Units or Shares,
                  the maximum value of each Performance Unit and Performance
                  Share and make any amendment or modification to any Agreement
                  consistent with the terms of the Plan.

                  3.3 Subject to the express terms and conditions set forth
                  herein, the Committee shall have the power from time to time:

                  (a) to construe and interpret the Plan and the Options and
                  Awards granted hereunder and to establish, amend and revoke
                  rules and regulations for the administration of the Plan,
                  including, but not limited to, correcting any defect or
                  supplying any omission, or reconciling any inconsistency in
                  the Plan or in any Agreement, in the manner and to the extent
                  it shall deem necessary or advisable so that the Plan complies
                  with applicable law including Rule 16b-3 under the Exchange
                  Act and the Code to the extent applicable, and otherwise to
                  make the Plan fully effective. All decisions and
                  determinations by the Committee in the exercise of this power
                  shall be final, binding and conclusive upon the Company, its
                  Subsidiaries, the Optionees and Grantees and all other persons
                  having any interest therein;

                  (b) to determine the duration and purposes for leaves of
                  absence which may be granted to an Optionee or Grantee on an
                  individual basis without constituting a termination of
                  employment or service for purposes of the Plan;

                  (c) to exercise its discretion with respect to the powers and
                  rights granted to it as set forth in the Plan; and

                  (d) generally, to exercise such powers and to perform such
                  acts as are deemed necessary or advisable to promote the best
                  interests of the Company with respect to the Plan.

         3.4      BOARD RESERVATION AND DELEGATION.

         (a) The Board may, in its discretion, reserve to itself or delegate to
         another committee of the Board any or all of the authority and
         responsibility of the Committee with respect to Options and Awards
         granted hereunder to Eligible Individuals who are not subject to
         Section 16 of the Exchange Act or Section 162(m) of the Code at the
         time any such delegated authority or responsibility is exercised. Such
         other committee may consist of one or more directors who may, but need
         not be, officers or employees of the Company or of any of its
         Subsidiaries. To the extent that the Board has reserved to itself or
         delegated the authority and


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         responsibility of the Committee to such other committee, all references
         to the Committee in the Plan shall be to the Board or to such other
         committee.
         (b) The Board may, by resolution, authorize a committee (the "Director
         Option Grant Committee") consisting of one or more directors of the
         Company to make grants of Director Options which are intended to
         satisfy the conditions for exemption from Section 16b of the Exchange
         Act pursuant to Rule 16b-3(d)(3). The authority of the Director Option
         Grant Committee shall be subject to such restrictions and limitations
         as the Board shall set forth in such resolution and as otherwise
         provided in the Plan. References to the term Committee in Section 6
         shall be deemed to include the Director Option Grant Committee wherever
         it is used insofar as it relates to the Committee's authority and
         responsibility to make grants and establish the terms of Director
         Options but only to the extent the Director Option Grant Committee is
         acting within the scope of its authority as established by the Board.

4.       STOCK SUBJECT TO THE PLAN.

         4.1 The maximum number of Shares that may be made the subject of
         Options and Awards granted under the Plan is 600,000; PROVIDED,
         HOWEVER, that, in the aggregate, not more than one-third of the number
         of allotted shares may be made the subject of Restricted Stock Awards
         under the Plan and, PROVIDED, FURTHER, HOWEVER, that the maximum number
         of Shares that any Eligible Individual may receive during the term of
         the Plan in respect of Options and Awards may not exceed 400,000 Shares
         and the maximum dollar amount that any Eligible Individual may receive
         during the term of the Plan in respect of Performance Units denominated
         in dollars may not exceed $5,000,000. Upon a Change in Capitalization
         the maximum number of Shares shall be adjusted in number and kind
         pursuant to Section 13. The Company shall reserve for the purposes of
         the Plan, out of its authorized but unissued Shares or out of Shares
         held in the Company's treasury, or partly out of each, such number of
         Shares as shall be determined by the Board.

         4.2 Upon the granting of an Option or an Award, the number of Shares
         available under Section 4.1 for the granting of further Options and
         Awards shall be reduced as follows:

                  (a) In connection with the granting of an Option or an Award
                  (other than the granting of a Performance Unit denominated in
                  dollars), the number of Shares shall be reduced by the number
                  of Shares in respect of which the Option or Award is granted
                  or denominated.

                  (b) In connection with the granting of a Performance Unit
                  denominated in dollars, the number of Shares shall be reduced
                  by an amount equal to the quotient of (i) the dollar amount in
                  which the Performance Unit is denominated, divided by (ii) the
                  Fair Market Value of a Share on the date the

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                  Performance Unit is granted.

         4.3 Whenever any outstanding Option or Award or portion thereof
         expires, is cancelled or is otherwise terminated for any reason without
         having been exercised or payment having been made in respect of the
         entire Option or Award, the Shares allocable to the expired, cancelled
         or otherwise terminated portion of the Option or Award may again be the
         subject of Options or Awards granted hereunder.

         4.4 Notwithstanding anything contained in this Section 4, the number of
         Shares available for Options and Awards at any time under the Plan
         shall be reduced to such lesser amount as may be required pursuant to
         the methods of calculation necessary so that the exemptions provided
         pursuant to Rule 16b-3 under the Exchange Act will continue to be
         available for transactions involving all current and future Options and
         Awards. In addition, during the period that any Options and Awards
         remain outstanding under the Plan, the Committee may make good faith
         adjustments with respect to the number of Shares attributable to such
         Options and Awards for purposes of calculating the maximum number of
         Shares available for the granting of future Options and Awards under
         the Plan, provided that following such adjustments the exemptions
         provided pursuant to Rule 16b-3 under the Exchange Act will continue to
         be available for transactions involving all current and future Options
         and Awards.

5.       OPTION GRANTS FOR ELIGIBLE INDIVIDUALS.

         5.1 AUTHORITY OF COMMITTEE. Subject to the provisions of the Plan and
         to Section 4.1 above, the Committee shall have full and final authority
         to select those Eligible Individuals who will receive Options (each, an
         "Employee Option"), the terms and conditions of which shall be set
         forth in an Agreement; PROVIDED, HOWEVER, that no person shall receive
         any Incentive Stock Options unless he or she is an employee of the
         Company, a Parent or a Subsidiary at the time the Incentive Stock
         Option is granted.

         5.2 PURCHASE PRICE. The purchase price or the manner in which the
         purchase price is to be determined for Shares under each Employee
         Option shall be determined by the Committee and set forth in the
         Agreement; PROVIDED, HOWEVER, that the purchase price per Share under
         each Employee Option shall not be less than 100% of the Fair Market
         Value of a Share on the date the Employee Option is granted (110% in
         the case of an Incentive Stock Option granted to a Ten-Percent
         Stockholder).

         5.3 MAXIMUM DURATION. Employee Options granted hereunder shall be for
         such term as the Committee shall determine, provided that an Incentive
         Stock Option shall not be exercisable after the expiration of ten (10)
         years from the date it is granted (five (5) years in the case of an
         Incentive Stock Option granted to a Ten-


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         Percent Stockholder) and a Nonqualified Stock Option shall not be
         exercisable after the expiration of ten (10) years from the date it is
         granted. The Committee may, subsequent to the granting of any Employee
         Option, extend the term thereof but in no event shall the term as so
         extended exceed the maximum term provided for in the preceding
         sentence.

         5.4 VESTING. Subject to Section 7.4 hereof, each Employee Option shall
         become exercisable in such installments (which need not be equal) and
         at such times as may be designated by the Committee and set forth in
         the Agreement. To the extent not exercised, installments shall
         accumulate and be exercisable, in whole or in part, at any time after
         becoming exercisable, but not later than the date the Employee Option
         expires. The Committee may accelerate the exercisability of any Option
         or portion thereof at any time.

         5.5 MODIFICATION OR SUBSTITUTION. The Committee may, in its discretion,
         modify outstanding Employee Options or accept the surrender of
         outstanding Employee Options (to the extent not exercised) and grant
         new Employee Options in substitution for them; PROVIDED, HOWEVER, that,
         no modification or substitution may reduce or have the effect of
         reducing the per share purchase price of any outstanding Employee
         Option. Notwithstanding the foregoing, no modification of an Employee
         Option shall adversely alter or impair any rights or obligations under
         the Employee Option without the Optionee's consent.

6.       NONEMPLOYEE DIRECTOR PROVISIONS.

         6.1 OPTION GRANTS FOR NONEMPLOYEE DIRECTORS. Subject to the provisions
         of the Plan and to Section 4.1, the Committee may grant Director
         Options to any Nonemployee Director on such terms and conditions,
         including option price, exercisability and duration, as the Committee
         in its discretion shall determine. The Committee shall determine the
         number of Shares subject to each Director Option.

              6.2      ELECTION TO RECEIVE SHARES IN LIEU OF DIRECTORS' FEES.

                            (a) ELECTION. Each Nonemployee Director may elect,
                  on a form provided for such purpose by the Committee, to have
                  all or any part (but only in 25% increments) of his or her
                  Directors' Fees converted into, and transferred to him or her,
                  in the form of Shares (an "Election"). For purposes of this
                  Section 6.2, "Directors' Fees" means all cash annual retainer
                  and meeting fees payable by the Company to an Nonemployee
                  Director with respect to services rendered by such Nonemployee
                  Director.

                            (b) TIME OF ELECTION; EFFECTIVE DATE OF ELECTION. An
                  Nonemployee Director may make an Election at any time during
                  any particular year during his or her directorship. An
                  Election made on or prior

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                  to June 10 shall be effective with respect to Directors' Fees
                  payable on or after July 1 of such year. An Election made on
                  or prior to December 10 shall be effective with respect to
                  Directors' Fees payable on or after January 1 of the following
                  year.

..                 (c) SHARES RECEIVED IN LIEU OF FEES. On each date following
                  the effective date of an Election on which Directors' Fees
                  would otherwise be paid (a "Director Payment Date"), the
                  Directors' Fees that an Nonemployee Director would have
                  received but for his or her Election shall be converted into
                  the right to receive a number of Shares with a Fair Market
                  Value (determined as of the Director Payment Date) equal to
                  110% of such Directors' Fees. Shares shall be issued by the
                  Company to an Nonemployee Director who has made an Election as
                  promptly as practicable following each Director Payment Date.

                  (d) ELECTION EFFECTIVE UNTIL REVOKED. An Nonemployee
                  Director's Election shall remain effective until revoked. An
                  Nonemployee Director may revoke his or her Election (a
                  "Revocation") on a form provided for such purpose by the
                  Committee at any time during any particular year during his or
                  her directorship. A Revocation made on or prior to June 10
                  shall be effective with respect to Directors' Fees payable on
                  or after July 1 of such year. A Revocation made on or prior to
                  December 10 shall be effective with respect to Directors' Fees
                  payable on or after January 1 of the following year.

         6.3 LIMITATIONS ON AMENDMENT; MODIFICATION. The provisions in this
         Section 6 shall not be amended more than once every six months, other
         than to comport with changes in the Code or the rules and regulations
         thereunder. No modification of a Director Option shall adversely alter
         or impair any rights or obligations under such Director Option without
         the Optionee's consent nor shall any modification reduce or have the
         effect of reducing the per share purchase price of any outstanding
         Director Option.

7.       TERMS AND CONDITIONS APPLICABLE TO ALL OPTIONS.

         7.1 NON-TRANSFERABILITY. No Option granted hereunder shall be
         transferable by the Optionee to whom granted otherwise than by will or
         the laws of descent and distribution, and an Option may be exercised
         during the lifetime of such Optionee only by the Optionee or his or her
         guardian or legal representative. The terms of such Option shall be
         final, binding and conclusive upon the beneficiaries, executors,
         administrators, heirs and successors of the Optionee.

         7.2 METHOD OF EXERCISE. The exercise of an Option shall be made only by
         a written notice delivered in person or by mail to the Secretary of the
         Company at the

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         Company's principal executive office, specifying the number of Shares
         to be purchased and accompanied by payment therefor and otherwise in
         accordance with the Agreement pursuant to which the Option was granted
         and, if the Committee then requires, a fully executed Stockholders
         Agreement. The purchase price for any Shares purchased pursuant to the
         exercise of an Option shall be paid in full upon such exercise by any
         one or a combination of the following: (i) cash or (ii) transferring
         Shares to the Company upon such terms and conditions as determined by
         the Committee. Notwithstanding the foregoing, the Committee shall have
         discretion to determine at the time of grant of each Employee Option or
         at any later date (up to and including the date of exercise) the form
         of payment acceptable in respect of the exercise of such Employee
         Option and Options may be exercised pursuant to such cashless exercise
         procedures which are, from time to time, deemed acceptable by the
         Committee. The written notice pursuant to this Section 7.2 may also
         provide instructions from the Optionee to the Company that upon receipt
         of the purchase price in cash from the Optionee's broker or dealer,
         designated as such on the written notice, in payment for any Shares
         purchased pursuant to the exercise of an Option, the Company shall
         issue such Shares directly to the designated broker or dealer. Any
         Shares transferred to the Company as payment of the purchase price
         under an Option shall be valued at their Fair Market Value on the day
         preceding the date of exercise of such Option. If requested by the
         Committee, the Optionee shall deliver the Agreement evidencing the
         Option to the Secretary of the Company who shall endorse thereon a
         notation of such exercise and return such Agreement to the Optionee. No
         fractional Shares (or cash in lieu thereof) shall be issued upon
         exercise of an Option and the number of Shares that may be purchased
         upon exercise shall be rounded to the nearest number of whole Shares.

         7.3 RIGHTS OF OPTIONEES. No Optionee shall be deemed for any purpose to
         be the owner of any Shares subject to any Option unless and until (i)
         the Option shall have been exercised pursuant to the terms thereof,
         (ii) the Company shall have issued and delivered the Shares to the
         Optionee and (iii) the Optionee's name shall have been entered as a
         stockholder of record on the books of the Company. Thereupon, the
         Optionee shall have full voting, dividend and other ownership rights
         with respect to such Shares.

         7.4 EFFECT OF CHANGE IN CONTROL. In the event of a Change in Control,
         all Options outstanding on the date of such Change in Control shall
         become immediately and fully exercisable. In addition, to the extent
         set forth in an Agreement evidencing the grant of an Option, an
         Optionee will be permitted to surrender for cancellation within sixty
         (60) days after such Change in Control, any Option or portion of an
         Option to the extent not yet exercised and the Optionee will be
         entitled to receive a cash payment in an amount equal to the excess, if
         any, of (x) (A) in the case of a Nonqualified Stock Option, the greater
         of (1) the Fair Market Value, on the date preceding the date of
         surrender, of the Shares subject to the Option or portion


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         thereof surrendered or (2) the Adjusted Fair Market Value of the Shares
         subject to the Option or portion thereof surrendered or (B) in the case
         of an Incentive Stock Option, the Fair Market Value, on the date
         preceding the date of surrender, of the Shares subject to the Option or
         portion thereof surrendered, over (y) the aggregate purchase price for
         such Shares under the Option or portion thereof surrendered; PROVIDED,
         HOWEVER, that in the case of an Option granted within six (6) months
         prior to the Change in Control to any Optionee who may be subject to
         liability under Section 16(b) of the Exchange Act, such Optionee shall
         be entitled to surrender for cancellation his or her Option during the
         sixty (60) day period commencing upon the expiration of six (6) months
         from the date of grant of any such Option. In the event an Optionee's
         employment with the Company is terminated by the Company within two
         years following a Change in Control each Employee Option held by the
         Optionee that was exercisable as of the date of termination of the
         Optionee's employment shall remain exercisable for a period ending not
         before the earlier of the first anniversary of the termination of the
         Optionee's employment or the expiration of the ordinary term of the
         Option.

8. STOCK APPRECIATION RIGHTS. The Committee may, in its discretion, either alone
or in connection with the grant of an Employee Option, grant Stock Appreciation
Rights in accordance with the Plan and the terms and conditions of which shall
be set forth in an Agreement. If granted in connection with an Employee Option,
a Stock Appreciation Right shall cover the same Shares covered by the Employee
Option (or such lesser number of Shares as the Committee may determine) and
shall, except as provided in this Section 8, be subject to the same terms and
conditions as the related Employee Option.

         8.1 TIME OF GRANT. A Stock Appreciation Right may be granted (i) at any
         time if unrelated to an Option, or (ii) if related to an Employee
         Option, either at the time of grant, or at any time thereafter during
         the term of the Option.

         8.2      STOCK APPRECIATION RIGHT RELATED TO AN EMPLOYEE OPTION.

                  (a) EXERCISE. Subject to Section 8.6, a Stock Appreciation
                  Right granted in connection with an Employee Option shall be
                  exercisable at such time or times and only to the extent that
                  the related Employee Option is exercisable, and will not be
                  transferable except to the extent the related Employee Option
                  is transferable. A Stock Appreciation Right granted in
                  connection with an Incentive Stock Option shall be exercisable
                  only if the Fair Market Value of a Share on the date of
                  exercise exceeds the purchase price specified in the related
                  Incentive Stock Option Agreement.

                  (b) AMOUNT PAYABLE. Upon the exercise of a Stock Appreciation
                  Right related to an Employee Option, the Grantee shall be
                  entitled to receive an amount determined by multiplying (A)
                  the excess of the Fair Market Value of a Share on the date
                  preceding the date of exercise of such Stock


<Page>

                  Appreciation Right over the per Share purchase price under the
                  related Employee Option, by (B) the number of Shares as to
                  which such Stock Appreciation Right is being exercised.
                  Notwithstanding the foregoing, the Committee may limit in any
                  manner the amount payable with respect to any Stock
                  Appreciation Right by including such a limit in the Agreement
                  evidencing the Stock Appreciation Right at the time it is
                  granted.

                  (c) TREATMENT OF RELATED OPTIONS AND STOCK APPRECIATION RIGHTS
                  UPON EXERCISE. Upon the exercise of a Stock Appreciation Right
                  granted in connection with an Employee Option, the Employee
                  Option shall be cancelled to the extent of the number of
                  Shares as to which the Stock Appreciation Right is exercised,
                  and upon the exercise of an Employee Option granted in
                  connection with a Stock Appreciation Right or the surrender of
                  such Employee Option pursuant to Section 7.4, the Stock
                  Appreciation Right shall be cancelled to the extent of the
                  number of Shares as to which the Employee Option is exercised
                  or surrendered.

         8.3 STOCK APPRECIATION RIGHT UNRELATED TO AN OPTION. The Committee may
         grant to Eligible Individuals Stock Appreciation Rights unrelated to
         Options. Stock Appreciation Rights unrelated to Options shall contain
         such terms and conditions as to exercisability (subject to Section
         8.6), vesting and duration as the Committee shall determine, but in no
         event shall they have a term of greater than ten (10) years. Upon
         exercise of a Stock Appreciation Right unrelated to an Option, the
         Grantee shall be entitled to receive an amount determined by
         multiplying (A) the excess of the Fair Market Value of a Share on the
         date preceding the date of exercise of such Stock Appreciation Right
         over the Fair Market Value of a Share on the date the Stock
         Appreciation Right was granted, by (B) the number of Shares as to which
         the Stock Appreciation Right is being exercised. Notwithstanding the
         foregoing, the Committee may limit in any manner the amount payable
         with respect to any Stock Appreciation Right by including such a limit
         in the Agreement evidencing the Stock Appreciation Right at the time it
         is granted.

         8.4 METHOD OF EXERCISE. Stock Appreciation Rights shall be exercised by
         a Grantee only by a written notice delivered in person or by mail to
         the Secretary of the Company at the Company's principal executive
         office, specifying the number of Shares with respect to which the Stock
         Appreciation Right is being exercised. If requested by the Committee,
         the Grantee shall deliver the Agreement evidencing the Stock
         Appreciation Right being exercised and the Agreement evidencing any
         related Employee Option to the Secretary of the Company who shall
         endorse thereon a notation of such exercise and return such Agreement
         to the Grantee.

         8.5 FORM OF PAYMENT. Payment of the amount determined under Sections
         8.2(b) or 8.3 may be made in the discretion of the Committee, solely in
         whole Shares in a number determined at their Fair Market Value on the
         date preceding the date of


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         exercise of the Stock Appreciation Right, or solely in cash, or in a
         combination of cash and Shares. If the Committee decides to make full
         payment in Shares and the amount payable results in a fractional Share,
         payment for the fractional Share will be made in cash. Notwithstanding
         the foregoing, no payment in the form of cash may be made upon the
         exercise of a Stock Appreciation Right pursuant to Sections 8.2(b) or
         8.3 to a Grantee who is an officer of the Company or a Subsidiary who
         is subject to liability under Section 16(b) of the Exchange Act, unless
         the exercise of such Stock Appreciation Right is made either (i) during
         the period beginning on the third business day and ending on the
         twelfth business day following the date of release for publication of
         the Company's quarterly or annual statements of earnings or (ii)
         pursuant to an irrevocable election to receive cash made at least six
         months prior to the exercise of such Stock Appreciation Right.

         8.6 RESTRICTIONS. No Stock Appreciation Right may be exercised before
         the date six (6) months after the date it is granted.

         8.7 MODIFICATION OR SUBSTITUTION. Subject to the terms of the Plan, the
         Committee may modify outstanding Awards of Stock Appreciation Rights or
         accept the surrender of outstanding Awards of Stock Appreciation Rights
         (to the extent not exercised) and grant new Awards in substitution for
         them. Notwithstanding the foregoing, no modification of an Award shall
         adversely alter or impair any rights or obligations under the Agreement
         without the Grantee's consent.

         8.8 EFFECT OF CHANGE IN CONTROL. In the event of a Change in Control,
         subject to Section 8.6, all Stock Appreciation Rights shall become
         immediately and fully exercisable. Notwithstanding Sections 8.3 and
         8.5, to the extent set forth in an Agreement evidencing the grant of a
         Stock Appreciation Right unrelated to an Option, upon the exercise of
         such a Stock Appreciation Right or any portion thereof during the sixty
         (60) day period following a Change in Control, the amount payable shall
         be in cash and shall be an amount equal to the excess, if any, of (A)
         the greater of (x) the Fair Market Value, on the date preceding the
         date of exercise, of the Shares subject to Stock Appreciation Right or
         portion thereof exercised and (y) the Adjusted Fair Market Value, on
         the date preceding the date of exercise, of the Shares over (B) the
         aggregate Fair Market Value, on the date the Stock Appreciation Right
         was granted, of the Shares subject to the Stock Appreciation Right or
         portion thereof exercised; PROVIDED, HOWEVER, that in the case of a
         Stock Appreciation Right granted within six (6) months prior to the
         Change in Control to any Grantee who may be subject to liability under
         Section 16(b) of the Exchange Act, such Grantee shall be entitled to
         exercise his Stock Appreciation Right during the sixty (60) day period
         commencing upon the expiration of six (6) months from the date of grant
         of any such Stock Appreciation Right.

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9.       RESTRICTED STOCK.

         9.1 GRANT. The Committee may grant to Eligible Individuals Awards of
         Restricted Stock, and may issue Shares of Restricted Stock in payment
         in respect of vested Performance Units (as hereinafter provided in
         Section 10.2), which shall be evidenced by an Agreement between the
         Company and the Grantee. Each Agreement shall contain such
         restrictions, terms and conditions as the Committee may, in its
         discretion, determine and (without limiting the generality of the
         foregoing) such Agreements may require that an appropriate legend be
         placed on Share certificates. Awards of Restricted Stock shall be
         subject to the terms and provisions set forth below in this Section 9.

         9.2 RIGHTS OF GRANTEE. Shares of Restricted Stock granted pursuant to
         an Award hereunder shall be issued in the name of the Grantee as soon
         as reasonably practicable after the Award is granted provided that the
         Grantee has executed an Agreement evidencing the Award, the appropriate
         blank stock powers and, in the discretion of the Committee, an escrow
         agreement and any other documents which the Committee may require as a
         condition to the issuance of such Shares. If a Grantee shall fail to
         execute the Agreement evidencing a Restricted Stock Award, the
         appropriate blank stock powers and, in the discretion of the Committee,
         an escrow agreement and any other documents which the Committee may
         require within the time period prescribed by the Committee at the time
         the Award is granted, the Award shall be null and void. At the
         discretion of the Committee, Shares issued in connection with a
         Restricted Stock Award shall be deposited together with the stock
         powers with an escrow agent (which may be the Company) designated by
         the Committee. Unless the Committee determines otherwise and as set
         forth in the Agreement, upon delivery of the Shares to the escrow
         agent, the Grantee shall have all of the rights of a stockholder with
         respect to such Shares, including the right to vote the Shares and to
         receive all dividends or other distributions paid or made with respect
         to the Shares.

         9.3 NON-TRANSFERABILITY. Until any restrictions upon the Shares of
         Restricted Stock awarded to a Grantee shall have lapsed in the manner
         set forth in Section 9.4, such Shares shall not be sold, transferred or
         otherwise disposed of and shall not be pledged or otherwise
         hypothecated, nor shall they be delivered to the Grantee.

         9.4 LAPSE OF RESTRICTIONS.

                  (a) GENERALLY. Restrictions upon Shares of Restricted Stock
                  awarded hereunder shall lapse at such time or times and on
                  such terms and conditions as the Committee may determine,
                  which restrictions shall be set forth in the Agreement
                  evidencing the Award.

                  (b) EFFECT OF CHANGE IN CONTROL. The Committee shall determine
                  at the

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                  time of the grant of an Award of Restricted Stock the extent
                  to which, if any, the restrictions upon Shares of Restricted
                  Stock shall lapse upon a Change in Control. The Agreement
                  evidencing the Award shall set forth such provisions.

         9.5 MODIFICATION OR SUBSTITUTION. Subject to the terms of the Plan, the
         Committee may modify outstanding Awards of Restricted Stock or accept
         the surrender of outstanding Shares of Restricted Stock (to the extent
         the restrictions on such Shares have not yet lapsed) and grant new
         Awards in substitution for them. Notwithstanding the foregoing, no
         modification of an Award shall adversely alter or impair any rights or
         obligations under the Agreement without the Grantee's consent.

         9.6 TREATMENT OF DIVIDENDS. At the time the Award of Shares of
         Restricted Stock is granted, the Committee may, in its discretion,
         determine that the payment to the Grantee of dividends, or a specified
         portion thereof, declared or paid on such Shares by the Company shall
         be (i) deferred until the lapsing of the restrictions imposed upon such
         Shares and (ii) held by the Company for the account of the Grantee
         until such time. In the event that dividends are to be deferred, the
         Committee shall determine whether such dividends are to be reinvested
         in Shares (which shall be held as additional Shares of Restricted
         Stock) or held in cash. If deferred dividends are to be held in cash,
         there may be credited at the end of each year (or portion thereof)
         interest on the amount of the account at the beginning of the year at a
         rate per annum as the Committee, in its discretion, may determine.
         Payment of deferred dividends in respect of Shares of Restricted Stock
         (whether held in cash or as additional Shares of Restricted Stock),
         together with interest accrued thereon, if any, shall be made upon the
         lapsing of restrictions imposed on the Shares in respect of which the
         deferred dividends were paid, and any dividends deferred (together with
         any interest accrued thereon) in respect of any Shares of Restricted
         Stock shall be forfeited upon the forfeiture of such Shares.

         9.7 DELIVERY OF SHARES. Upon the lapse of the restrictions on Shares of
         Restricted Stock, the Committee shall cause a stock certificate to be
         delivered to the Grantee with respect to such Shares, free of all
         restrictions hereunder.

<Page>

10.      PERFORMANCE AWARDS.

         10.1     (a) PERFORMANCE OBJECTIVES. Performance Objectives for
                  Performance Awards may be expressed in terms of (i) earnings
                  per Share, (ii) pre-tax profits, (iii) net earnings, (iv)
                  return on equity or assets, (v) revenues or (vi) any
                  combination of the foregoing. Performance Objectives may be in
                  respect of the performance of the Company and its Subsidiaries
                  (which may be on a consolidated basis), a Subsidiary or a
                  Division. Performance Objectives may be absolute or relative
                  and may be expressed in terms of a progression within a
                  specified range. The Performance Objectives with respect to a
                  Performance Cycle shall be established in writing by the
                  Committee by the earlier of (i) the date on which a quarter of
                  the Performance Cycle has elapsed or (ii) the date which is 90
                  days after the commencement of the Performance Cycle.

                  (b) DETERMINATION OF PERFORMANCE. Prior to the vesting,
                  payment, settlement or lapsing of any restrictions with
                  respect to any Performance Award made to a Grantee who is
                  subject to Section 162(m) of the Code, the Committee shall
                  certify in writing that the applicable Performance Objectives
                  have been satisfied; PROVIDED, HOWEVER, that satisfaction of
                  any applicable Performance Objectives shall be made without
                  regard to any change in accounting standards that may be
                  required after the Performance Objectives are established.

         10.2 PERFORMANCE UNITS. The Committee, in its discretion, may grant
         Awards of Performance Units to Eligible Individuals, the terms and
         conditions of which shall be set forth in an Agreement between the
         Company and the Grantee. Performance Units may be denominated in Shares
         or a specified dollar amount and, contingent upon the attainment of
         specified Performance Objectives within the Performance Cycle,
         represent the right to receive payment as provided in Section 10.2(b)
         of (i) in the case of Share-denominated Performance Units, the Fair
         Market Value of a Share on the date the Performance Unit was granted,
         the date the Performance Unit became vested or any other date specified
         by the Committee, (ii) in the case of dollar-denominated Performance
         Units, the specified dollar amount or (iii) a percentage (which may be
         more than 100%) of the amount described in clause (i) or (ii) depending
         on the level of Performance Objective attainment; PROVIDED, HOWEVER,
         that the Committee may at the time a Performance Unit is granted,
         specify a maximum amount payable in respect of a vested Performance
         Unit. Each Agreement shall specify the number of the Performance Units
         to which it relates, the Performance Objectives which must be satisfied
         in order for the Performance Units to vest and the Performance Cycle
         within which such Performance Objectives must be satisfied.

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                  (a) VESTING AND FORFEITURE. Subject to Section 10.1(b) and
                  10.4, a Grantee shall become vested with respect to the
                  Performance Units to the extent that the Performance
                  Objectives set forth in the Agreement are satisfied for the
                  Performance Cycle.

                  (b) PAYMENT OF AWARDS. Payment to Grantees in respect of
                  vested Performance Units shall be made within sixty (60) days
                  after the last day of the Performance Cycle to which such
                  Award relates unless the Agreement evidencing the Award
                  provides for the deferral of payment, in which event the terms
                  and conditions of the deferral shall be set forth in the
                  Agreement. Subject to Section 10.4, such payments may be made
                  entirely in Shares valued at their Fair Market Value as of the
                  last day of the applicable Performance Cycle or such other
                  date specified by the Committee, entirely in cash, or in such
                  combination of Shares and cash as the Committee in its
                  discretion, shall determine at any time prior to such payment;
                  PROVIDED, HOWEVER, that if the Committee in its discretion
                  determines to make such payment entirely or partially in
                  Shares of Restricted Stock, the Committee must determine the
                  extent to which such payment will be in Shares of Restricted
                  Stock and the terms of such Restricted Stock at the time the
                  Award is granted.

         10.3 PERFORMANCE SHARES. The Committee, in its discretion, may grant
         Awards of Performance Shares to Eligible Individuals, the terms and
         conditions of which shall be set forth in an Agreement between the
         Company and the Grantee. Each Agreement may require that an appropriate
         legend be placed on Share certificates. Awards of Performance Shares
         shall be subject to the following terms and provisions:

                  (a) RIGHTS OF GRANTEE. The Committee shall provide at the time
                  an Award of Performance Shares is made, the time or times at
                  which the actual Shares represented by such Award shall be
                  issued in the name of the Grantee; PROVIDED, HOWEVER, that no
                  Performance Shares shall be issued until the Grantee has
                  executed an Agreement evidencing the Award, the appropriate
                  blank stock powers and, in the discretion of the Committee, an
                  escrow agreement and any other documents which the Committee
                  may require as a condition to the issuance of such Performance
                  Shares. If a Grantee shall fail to execute the Agreement
                  evidencing an Award of Performance Shares, the appropriate
                  blank stock powers and, in the discretion of the Committee, an
                  escrow agreement and any other documents which the Committee
                  may require within the time period prescribed by the Committee
                  at the time the Award is granted, the Award shall be null and
                  void. At the discretion of the Committee, Shares issued in
                  connection with an Award of Performance Shares shall be
                  deposited together with the stock powers with an escrow


<Page>

                  agent (which may be the Company) designated by the Committee.
                  Except as restricted by the terms of the Agreement, upon
                  delivery of the Shares to the escrow agent, the Grantee shall
                  have, in the discretion of the Committee, all of the rights of
                  a stockholder with respect to such Shares, including the right
                  to vote the Shares and to receive all dividends or other
                  distributions paid or made with respect to the Shares.

                  (b) NON-TRANSFERABILITY. Until any restrictions upon the
                  Performance Shares awarded to a Grantee shall have lapsed in
                  the manner set forth in Sections 10.3(c) or 10.4, such
                  Performance Shares shall not be sold, transferred or otherwise
                  disposed of and shall not be pledged or otherwise
                  hypothecated, nor shall they be delivered to the Grantee. The
                  Committee may also impose such other restrictions and
                  conditions on the Performance Shares, if any, as it deems
                  appropriate.

                  (c) LAPSE OF RESTRICTIONS. Subject to Sections 10.1(b) or
                  10.4, restrictions upon Performance Shares awarded hereunder
                  shall lapse and such Performance Shares shall become vested at
                  such time or times and on such terms, conditions and
                  satisfaction of Performance Objectives as the Committee may,
                  in its discretion, determine at the time an Award is granted.

                  (d) TREATMENT OF DIVIDENDS. At the time the Award of
                  Performance Shares is granted, the Committee may, in its
                  discretion, determine that the payment to the Grantee of
                  dividends, or a specified portion thereof, declared or paid on
                  actual Shares represented by such Award which have been issued
                  by the Company to the Grantee shall be (i) deferred until the
                  lapsing of the restrictions imposed upon such Performance
                  Shares and (ii) held by the Company for the account of the
                  Grantee until such time. In the event that dividends are to be
                  deferred, the Committee shall determine whether such dividends
                  are to be reinvested in shares of Stock (which shall be held
                  as additional Performance Shares) or held in cash. If deferred
                  dividends are to be held in cash, there may be credited at the
                  end of each year (or portion thereof) interest on the amount
                  of the account at the beginning of the year at a rate per
                  annum as the Committee, in its discretion, may determine.
                  Payment of deferred dividends in respect of Performance Shares
                  (whether held in cash or in additional Performance Shares),
                  together with interest accrued thereon, if any, shall be made
                  upon the lapsing of restrictions imposed on the Performance
                  Shares in respect of which the deferred dividends were paid,
                  and any dividends deferred (together with any interest accrued
                  thereon) in respect of any Performance Shares shall be
                  forfeited upon the forfeiture of such Performance Shares.

                  (e) DELIVERY OF SHARES. Upon the lapse of the restrictions on
                  Performance Shares awarded hereunder, the Committee shall
                  cause a stock certificate to


<Page>

                  be delivered to the Grantee with respect to such Shares, free
                  of all restrictions hereunder.

         10.4     EFFECT OF CHANGE IN CONTROL.  In the event of a Change in
                  Control:

                  (a) With respect to the Performance Units, the Grantee shall
                  (i) become vested in a percentage of Performance Units as
                  determined by the Committee at the time of the Award of such
                  Performance Units and as set forth in the Agreement and (ii)
                  be entitled to receive in respect of all Performance Units
                  which become vested as a result of a Change in Control, a cash
                  payment within ten (10) days after such Change in Control in
                  an amount as determined by the Committee at the time of the
                  Award of such Performance Unit and as set forth in the
                  Agreement.

                  (b) With respect to the Performance Shares, restrictions shall
                  lapse immediately on all or a portion of the Performance
                  Shares as determined by the Committee at the time of the Award
                  of such Performance Shares and as set forth in the Agreement.

                  (c) The Agreements evidencing Performance Shares and
                  Performance Units shall provide for the treatment of such
                  Awards (or portions thereof) which do not become vested as the
                  result of a Change in Control, including, but not limited to,
                  provisions for the adjustment of applicable Performance
                  Objectives.

         10.5 MODIFICATION OR SUBSTITUTION. Subject to the terms of the Plan,
         the Committee may modify outstanding Performance Awards or accept the
         surrender of outstanding Performance Awards and grant new Performance
         Awards in substitution for them. Notwithstanding the foregoing, no
         modification of a Performance Award shall adversely alter or impair any
         rights or obligations under the Agreement without the Grantee's
         consent.
<Page>

11.      DIVIDEND EQUIVALENT RIGHTS.

Dividend Equivalent Rights may be granted to Eligible Individuals and
Nonemployee Directors in tandem with of another Award or as a separate Award.
The terms and conditions applicable to each Dividend Equivalent Right shall be
specified in the Agreement under which the Dividend Equivalent Right is granted.
Amounts payable in respect of Dividend Equivalent Rights may be payable
currently or deferred until the lapsing of restrictions on such Dividend
Equivalent Rights or until the vesting, exercise, payment, settlement or other
lapse of restrictions on the Award to which the Dividend Equivalent Rights
relate. In the event that the amount payable in respect of Dividend Equivalent
Rights are to be deferred, the Committee shall determine whether such amounts
are to be held in cash or reinvested in Shares or deemed (notionally) to be
reinvested in Shares. If amounts payable in respect of Dividend Equivalent
Rights are to be held in cash, there may be credited at the end of each year (or
portion thereof) interest on the amount of the account at the beginning of the
year at a rate per annum as the Committee, in its discretion, may determine.
Dividend Equivalent Rights may be settled in cash or Shares or a combination
thereof, in a single installment or multiple installments.

12.      EFFECT OF A TERMINATION OF EMPLOYMENT.

The Agreement evidencing the grant of each Option and each Award shall set forth
the terms and conditions applicable to such Option or Award upon a termination
of the employment or service (or other change in the status) of the Optionee or
Grantee by the Company, a Subsidiary or a Division (including a termination or
change by reason of the sale of a Subsidiary or a Division), as the Committee
may, in its discretion, determine at the time the Option or Award is granted or
thereafter.

13.      ADJUSTMENT UPON CHANGES IN CAPITALIZATION.

         (a) In the event of a Change in Capitalization, the Committee shall
         conclusively determine the appropriate adjustments, if any, to the (i)
         maximum number and class of Shares or other stock or securities with
         respect to which Options or Awards may be granted under the Plan, (ii)
         the number and class of Shares or other stock or securities which are
         subject to outstanding Options or Awards granted under the Plan, and
         the purchase price therefor, if applicable and (iii) the Performance
         Objectives relating to outstanding Awards.

         (b) Any such adjustment in the Shares or other stock or securities
         subject to outstanding Incentive Stock Options (including any
         adjustments in the purchase price) shall be made in such manner as not
         to constitute a modification as defined by Section 424(h)(3) of the
         Code and only to the extent otherwise permitted by Sections 422 and 424
         of the Code.

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         (c) If, by reason of a Change in Capitalization, a Grantee of an Award
         shall be entitled to, or an Optionee shall be entitled to exercise an
         Option with respect to, new, additional or different shares of stock or
         securities, such new additional or different shares shall thereupon be
         subject to all of the conditions, restrictions and performance criteria
         which were applicable to the Shares subject to the Award or Option, as
         the case may be, prior to such Change in Capitalization.

14. EFFECT OF CERTAIN TRANSACTIONS. Subject to Sections 7.4, 8.8, 9.4(b) and
10.4 or as otherwise provided in an Agreement, in the event of (i) the
liquidation or dissolution of the Company or (ii) a merger or consolidation of
the Company (a "Transaction"), the Plan and the Options and Awards issued
hereunder shall continue in effect in accordance with their respective terms and
each Optionee and Grantee shall be entitled to receive in respect of each Share
subject to any outstanding Options or Awards, as the case may be, upon exercise
of any Option or payment or transfer in respect of any Award, the same number
and kind of stock, securities, cash, property, or other consideration that each
holder of a Share was entitled to receive in the Transaction in respect of a
Share.

15.      INTERPRETATION.

         (a) The Plan is intended to comply with Rule 16b-3 promulgated under
         the Exchange Act and the Committee shall interpret and administer the
         provisions of the Plan or any Agreement in a manner consistent
         therewith. Any provisions inconsistent with such Rule shall be
         inoperative and shall not affect the validity of the Plan.

         (b) Unless otherwise expressly stated in the relevant Agreement, each
         Option, Stock Appreciation Right and Performance Award granted under
         the Plan is intended to be performance-based compensation within the
         meaning of Section 162(m)(4)(C) of the Code. The Committee shall not be
         entitled to exercise any discretion otherwise authorized hereunder with
         respect to such Options or Awards if the ability to exercise such
         discretion or the exercise of such discretion itself would cause the
         compensation attributable to such Options or Awards to fail to qualify
         as performance-based compensation.

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16.      POOLING TRANSACTIONS.

Notwithstanding anything contained in the Plan or any Agreement to the contrary,
in the event of a Change in Control which also constitutes a Pooling
Transaction, the Committee may take such actions which are specifically
recommended by an independent accounting firm retained by the Company to the
extent reasonably necessary in order to assure that the Pooling Transaction will
qualify as such, including but not limited to (i) deferring the vesting,
exercise, payment, settlement or lapsing of restrictions with respect to any
Option or Award, (ii) providing that the payment or settlement in respect of any
Option or Award be made in the form of cash, Shares or securities of a successor
or acquiror of the Company, or a combination of the foregoing and (iii)
providing for the extension of the term of any Option or Award to the extent
necessary to accommodate the foregoing, but not beyond the maximum term
permitted for any Option or Award.

17.      TERMINATION AND AMENDMENT OF THE PLAN.

The Plan shall terminate on the day preceding the tenth anniversary of the date
of its adoption by the Board and no Option or Award may be granted thereafter.
The Board may sooner terminate the Plan and the Board may at any time and from
time to time amend, modify or suspend the Plan; PROVIDED, HOWEVER, that:

         (a) No such amendment, modification, suspension or termination shall
         impair or adversely alter any Options or Awards theretofore granted
         under the Plan, except with the consent of the Optionee or Grantee, nor
         shall any amendment, modification, suspension or termination deprive
         any Optionee or Grantee of any Shares which he or she may have acquired
         through or as a result of the Plan; and

         (b) To the extent necessary under Section 16(b) of the Exchange Act and
         the rules and regulations promulgated thereunder or other applicable
         law, no amendment shall be effective unless approved by the
         stockholders of the Company in accordance with applicable law and
         regulations.

18.      NON-EXCLUSIVITY OF THE PLAN.

The adoption of the Plan by the Board shall not be construed as amending,
modifying or rescinding any previously approved incentive arrangement or as
creating any limitations on the power of the Board to adopt such other incentive
arrangements as it may deem desirable, including, without limitation, the
granting of stock options otherwise than under the Plan, and such arrangements
may be either applicable generally or only in specific cases.

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19.      LIMITATION OF LIABILITY.

As illustrative of the limitations of liability of the Company, but not intended
to be exhaustive thereof, nothing in the Plan shall be construed to:

         (i) give any person any right to be granted an Option or Award other
         than at the sole discretion of the Committee;

         (ii) give any person any rights whatsoever with respect to Shares
         except as specifically provided in the Plan;

         (iii) limit in any way the right of the Company to terminate the
         employment of any person at any time; or

         (iv) be evidence of any agreement or understanding, expressed or
         implied, that the Company will employ any person at any particular rate
         of compensation or for any particular period of time.

20.      REGULATIONS AND OTHER APPROVALS; GOVERNING LAW.

         20.1 Except as to matters of federal law, this Plan and the rights of
         all persons claiming hereunder shall be construed and determined in
         accordance with the laws of the State of Delaware without giving effect
         to conflicts of law principles.

         20.2 The obligation of the Company to sell or deliver Shares with
         respect to Options and Awards granted under the Plan shall be subject
         to all applicable laws, rules and regulations, including all applicable
         federal and state securities laws, and the obtaining of all such
         approvals by governmental agencies as may be deemed necessary or
         appropriate by the Committee.

         20.3 The Board may make such changes as may be necessary or appropriate
         to comply with the rules and regulations of any government authority,
         or to obtain for Eligible Individuals granted Incentive Stock Options
         the tax benefits under the applicable provisions of the Code and
         regulations promulgated thereunder.

         20.4     (a) Each Option and Award is subject to the requirement that,
                  if at any time the Committee determines, in its discretion,
                  that the listing, registration or qualification of Shares
                  issuable pursuant to the Plan is required by any securities
                  exchange or under any state or federal law, or the consent or
                  approval of any governmental regulatory body is necessary or
                  desirable as a condition of, or in connection with, the grant
                  of an Option or Award or the issuance of Shares, no Options or
                  Awards shall be granted or payment made or Shares issued, in
                  whole or in part, unless listing, registration, qualification,

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                  consent or approval has been effected or obtained free of any
                  conditions as acceptable to the Committee.

                  (b) Notwithstanding anything to the contrary contained in the
                  Plan or any Agreement, as a prerequisite to the granting,
                  vesting, payment, settlement or lapsing of restrictions with
                  respect to an Option or Award, the Committee may require the
                  Optionee or Grantee, as the case may be, to execute and
                  deliver a Stockholders Agreement in a form acceptable to the
                  Committee.

         20.5 Notwithstanding anything contained in the Plan or any Agreement to
         the contrary, in the event that the disposition of Shares acquired
         pursuant to the Plan is not covered by a then current registration
         statement under the Securities Act of 1933, as amended, and is not
         otherwise exempt from such registration, such Shares shall be
         restricted against transfer to the extent required by the Securities
         Act of 1933, as amended, and Rule 144 or other regulations thereunder.
         The Committee may require any individual receiving Shares pursuant to
         an Option or Award granted under the Plan, as a condition precedent to
         receipt of such Shares, to represent and warrant to the Company in
         writing that the Shares acquired by such individual are acquired
         without a view to any distribution thereof and will not be sold or
         transferred other than pursuant to an effective registration thereof
         under said Act or pursuant to an exemption applicable under the
         Securities Act of 1933, as amended, or the rules and regulations
         promulgated thereunder. The certificates evidencing any of such Shares
         shall be appropriately amended to reflect their status as restricted
         securities as aforesaid.

21.      MISCELLANEOUS.

         21.1 MULTIPLE AGREEMENTS. The terms of each Option or Award may differ
         from other Options or Awards granted under the Plan at the same time,
         or at some other time. The Committee may also grant more than one
         Option or Award to a given Eligible Individual during the term of the
         Plan, either in addition to, or in substitution for, one or more
         Options or Awards previously granted to that Eligible Individual.

         21.2 WITHHOLDING OF TAXES. (a) The Company shall have the right to
         deduct from any distribution of cash to any Optionee or Grantee, an
         amount equal to the federal, state and local income taxes and other
         amounts as may be required by law to be withheld (the "Withholding
         Taxes") with respect to any Option or Award. If an Optionee or Grantee
         is to experience a taxable event in connection with the receipt of
         Shares pursuant to an Option exercise or payment or vesting of an Award
         (a "Taxable Event"), the Optionee or Grantee shall pay the Withholding
         Taxes to the Company prior to the issuance, or release from escrow, of
         such Shares. In satisfaction of the obligation to pay Withholding Taxes
         to the Company, the Optionee or Grantee may make a written election
         (the "Tax Election"), which may be accepted or rejected in the
         discretion of the Committee, to have withheld a


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         portion of the Shares then issuable to him or her having an aggregate
         Fair Market Value, on the date preceding the date of such issuance,
         equal to the Withholding Taxes, provided that in respect of an Optionee
         or Grantee who may be subject to liability under Section 16(b) of the
         Exchange Act either: (i) in the case of a Taxable Event involving an
         Option or an Award (A) the Tax Election is made at least six (6) months
         prior to the date of the Taxable Event and (B) the Tax Election is
         irrevocable with respect to all Taxable Events of a similar nature
         occurring prior to the expiration of six (6) months following a
         revocation of the Tax Election; or (ii) in the case of the exercise of
         an Option (A) the Optionee makes the Tax Election at least six (6)
         months after the date the Option was granted, (B) the Option is
         exercised during the ten (10) day period beginning on the third
         business day and ending on the twelfth business day following the
         release for publication of the Company's quarterly or annual statement
         of sales and earnings (a "Window Period") and (C) the Tax Election is
         made during the Window Period in which the related Option is exercised
         or prior to such Window Period and subsequent to the immediately
         preceding Window Period; or (iii) in the case of a Taxable Event
         relating to the payment of an Award (A) the Grantee makes the Tax
         Election at least six (6) months after the date the Award was granted
         and (B) the Tax Election is made (x) in the case of a Taxable Event
         occurring within a Window Period, during the Window Period in which the
         Taxable Event occurs, or (y) in the case of a Taxable Event not
         occurring within a window period, during the Window Period immediately
         preceding the Taxable Event relating to the Award. Notwithstanding the
         foregoing, the Committee may, by the adoption of rules or otherwise,
         (i) modify the provisions of this Section 21.2 or impose such other
         restrictions or limitations on Tax Elections as may be necessary to
         ensure that the Tax Elections will be exempt transactions under Section
         16(b) of the Exchange Act, and (ii) permit Tax Elections to be made at
         such other times and subject to such other conditions as the Committee
         determines will constitute exempt transactions under Section 16(b) of
         the Exchange Act.

         (b) If an Optionee makes a disposition, within the meaning of Section
         424(c) of the Code and regulations promulgated thereunder, of any Share
         or Shares issued to such Optionee pursuant to the exercise of an
         Incentive Stock Option within the two-year period commencing on the day
         after the date of the grant or within the one-year period commencing on
         the day after the date of transfer of such Share or Shares to the
         Optionee pursuant to such exercise, the Optionee shall, within ten (10)
         days of such disposition, notify the Company thereof, by delivery of
         written notice to the Company at its principal executive office.

         (c) The Committee shall have the authority, at the time of grant of an
         Option or Award under the Plan or at any time thereafter, to award tax
         bonuses to designated Optionees or Grantees, to be paid upon their
         exercise of Employee Options or payment in respect of Awards granted
         hereunder. The amount of any such payments shall be determined by the
         Committee. The Committee shall have full


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         authority in its absolute discretion to determine the amount of any
         such tax bonus and the terms and conditions affecting the vesting and
         payment thereof.

22. EFFECTIVE DATE. The effective date of the Plan shall be as determined by the
Board, subject only to the approval by the affirmative vote of the holders of a
majority of the securities of the Company present, or represented, and entitled
to vote at a meeting of stockholders duly held in accordance with the applicable
laws of the State of Delaware within twelve (12) months of the adoption of the
Plan by the Board.