1996 STOCK OPTION PLAN
                            THE FORSCHNER GROUP, INC.



     SECTION 1. Establishment. There is hereby established the 1996 Stock Option
Plan (this "Plan"),  pursuant to which officers,  directors and key employees of
THE FORSCHNER GROUP, INC. (hereinafter the "Company") and its subsidiaries,  and
persons  or  entities  who have  been or may be in a  position  to  benefit  the
Company,  may be  granted  options  to  purchase  shares of common  stock of the
Company,  par value $.10 per share  ("Common  Stock"),  and thereby share in the
future growth of the business.  The subsidiaries of the Company included in this
Plan (the  "Subsidiaries")  shall be any subsidiary of the Company as defined in
Section 424 of the Internal Revenue Code of 1986, as amended (the "Code").

     SECTION 2. Status of Options.  The options which may be granted pursuant to
this Plan will constitute  either  incentive stock options within the meaning of
Section 422 of the Code  ("Incentive  Stock  Options") or options  which are not
Incentive Stock Options ("Non-incentive Stock Options"). Incentive Stock Options
and  Non-incentive  Stock  Options shall be  collectively  referred to herein as
options.

     SECTION 3. Eligibility. All employees and members of the Board of Directors
of the Company or any of its Subsidiaries (including officers),  and any persons
or entities who have been or may be in a position to benefit the Company,  shall
be  eligible to be granted  Non-incentive  Stock  Options to purchase  shares of
Common  Stock  under  this  Plan.  All  employees  of the  Company or any of its
Subsidiaries who are employed at the time of adoption of this Plan or thereafter
shall be eligible to receive grants of Incentive Stock Options  pursuant to this
Plan.

     SECTION 4. Number of Shares covered by Options;  No Preemptive  Rights. The
total number of shares which may be issued and sold pursuant to options  granted
under this Plan  shall be  1,000,000  shares of Common  Stock (or the number and
kind of shares of stock or other securities  which, in accordance with Section 8
of this Plan,  shall be substituted  for such shares of Common Stock or to which
said shares shall be adjusted;  hereinafter,  all references to shares of Common
Stock are deemed to be  references  to said shares or shares so  adjusted).  The
issuance of said shares shall be free from any preemptive or preferential  right
of subscription or purchase on the part of any  stockholder.  If any outstanding
option  granted under this Plan expires or is  terminated,  for any reason,  the
shares of Common Stock  subject to the  unexercised  portion of such option will
again be available for options issued under this Plan.

     SECTION  5.  Administration.

          (a) This Plan shall be administered by the committee (the "Committee")
     referred  to in  paragraph  (b) of this  Section.  Subject  to the  express
     provisions of this Plan, the Committee  shall have complete  authority,  in
     its  discretion,  to interpret  this Plan, to prescribe,  amend and rescind
     rules and regulations relating to it, to determine the terms and provisions
     of the  respective  option  agreements  (which need not be  identical),  to
     determine  to whom,  the times and the  prices  at which  options  shall be
     granted, the option periods, the number of shares of the Common Stock to be
     subject to each option and whether each option shall be an Incentive  Stock
     Option  or  a   Non-incentive   Stock   Option,   and  to  make  all  other
     determinations  necessary or advisable for the  administration of the Plan;
     provided,  however,  that  from  the  date of  approval  of the Plan by the
     stockholders  of the Company to the first  anniversary of such date options
     to purchase no more than  333,333  shares of Common  Stock shall be granted
     under  the Plan and from  the date of  approval  of the Plan to the  second
     anniversary of such date options to purchase no more than 666,666 shares of
     Common Stock in the aggregate  shall be granted under the Plan. Each option
     shall be  clearly  identified  at the time of grant as to its  status as an
     Incentive  Stock  Option or  Non-incentive  Stock  Option.  In making  such
     determinations,  the  Committee  may take into  account  the  nature of the
     services rendered by the respective individuals or entities,  their present
     and  potential  contributions  to the success of the Company and such other
     factors as the  Committee,  in its  discretion,  shall deem  relevant.  The
     Committee's determination on all of the matters referred to in this Section
     5 shall be conclusive.

          (b)  The  Committee  shall  consist  of  from  two  (2)  to  five  (5)
     individuals  who are  "outside  directors"  within  the  meaning of section
     162(m) of the Code and applicable  interpretive  authority thereunder.  The
     Committee  shall be appointed by the Board,  which may at any time and from
     time to time,  remove any member of the  Committee,  with or without cause,
     appoint  additional  members to the Committee and fill  vacancies,  however
     caused, in the Committee.  A majority of the members of the Committee shall
     constitute a quorum. All determinations of the Committee shall be made by a
     majority of its members.  Any decision or  determination  of the  Committee
     reduced to writing and signed by all of the members of the Committee  shall
     be fully as  effective  as if it had been made at a meeting duly called and
     held. Nothing contained in this Plan shall be deemed to give any individual
     or entity any right to be granted  an option to  purchase  shares of Common
     Stock  except to the extent and upon such  terms and  conditions  as may be
     determined by the Committee.

     SECTION 6. Terms of Options.  Each option  granted under this Plan shall be
evidenced by a Stock Option Agreement which shall be executed by the Company and
by the person or entity to whom such option is granted,  and shall be subject to
the following terms and conditions:

          (a) The price at which shares of Common  Stock  covered by each option
     may be purchased  pursuant  thereto shall be determined in each case on the
     date of grant by the  Committee,  but shall be an amount  not less than the
     par value of such shares. In the case of Incentive Stock Options, the price
     at which shares of Common Stock covered by each Incentive  Stock Option may
     be  purchased  pursuant  thereto  shall be an amount not less than the fair
     market  value of  shares of Common  Stock at the time the  Incentive  Stock
     Option is granted.  For purposes of this Section,  the fair market value of
     shares  of Common  Stock on any day  shall be (i) in the  event the  Common
     Stock  is not  publicly  traded,  the  fair  market  value  on such  day as
     determined  in good faith by the  Committee or (ii) in the event the Common
     Stock  is  publicly  traded,  the  last  sale  price of a share of stock as
     reported by the  principal  quotation  service on which the Common Stock is
     listed, or, if last sale prices are not reported with respect to the Common
     Stock,  the mean of the high bid and low  asked  price of a share of Common
     Stock as reported by such principal  quotation service,  or, if there is no
     such report by such quotation  service for such day, such fair market value
     shall be the  average of (i) the last sale price (or,  if last sale  prices
     are not reported with respect to the Common Stock, the mean of the high bid
     and low asked  prices) on the day next  preceding  such day for which there
     was a report and (ii) the last sale price (or,  if last sale prices are not
     reported with respect to the Common Stock, the mean of the high bid and low
     asked  prices) on the day next  succeeding  such day for which  there was a
     report,  or as otherwise  determined  by the  Committee  in its  discretion
     pursuant to any reasonable  method  contemplated by Section 422 of the Code
     and any treasury regulations issued pursuant to that Section.

          (b) The option  price of the shares to be  purchased  pursuant to each
     option shall be paid in full in cash,  or by delivery  (i.e.  surrender) of
     shares of Common  Stock of the  Company  then owned by the  optionee at the
     time of the  exercise of the option.  Shares of Common  Stock so  delivered
     will be valued on the day of delivery  for the purpose of  determining  the
     extent to which the option price has been paid thereby,  in the same manner
     as provided in paragraph (a) of this Section, or as otherwise determined by
     the  Committee,  in  its  discretion,  pursuant  to any  reasonable  method
     contemplated by Section 422 of the Code and any treasury regulations issued
     pursuant to that section.

          (c) Each Stock Option  Agreement shall provide that such option may be
     exercised  by the  optionee,  in such  parts and at such  times,  as may be
     specified in such Agreement,  within a period not exceeding ten years after
     the date on which the option is  granted  (hereinafter  called the  "option
     period") and, in any event,  in the case of employees of the Company,  only
     during the  continuance of the optionee's  employment by the Company or any
     of its Subsidiaries or, in the case of Incentive Stock Options,  during the
     period of thirty  days  after the  termination  of such  employment  to the
     extent that the right to exercise  such  options had accrued at the date of
     such termination or, in the case of Non-incentive Stock Options, during the
     period of six months after the termination of such employment to the extent
     that the right to  exercise  such  options  had accrued or the date of such
     termination;  provided,  however,  that if options as to 100 or more shares
     are held by an optionee,  then such  options may not be exercised  for less
     than 100 shares at any one time,  and if  options  for less than 100 shares
     are held by an optionee, then options for all such shares must be exercised
     at one time; and provided,  further, that, if the optionee shall die within
     the option period, the option may be exercised,  to the extent specified in
     such Stock Option Agreement,  and as herein provided, but only prior to the
     first to occur of:

          (i) the  expiration  of the  period of one year  after the date of the
     optionee's death, or

          (ii) the  expiration  of the option  period,  by the person or persons
     entitled to do so under the optionee's will, or, if the optionee shall fail
     to make testamentary disposition of said option, or shall die intestate, by
     the optionee's legal representative or representatives.

          (d)  In the  discretion  of  the  Committee,  a  single  Stock  Option
     Agreement may include both Incentive Stock Options and Non-Incentive  Stock
     Options,  or  those  options  may be  included  in  separate  Stock  Option
     Agreements.

          (e) Unless  otherwise  determined  by the  Committee  with  respect to
     options that are not Incentive  Stock  Options,  each option  granted under
     this Plan shall by its terms be  non-transferable by the optionee except by
     will or by the laws of descent and  distribution  and shall be  exercisable
     during the optionee's lifetime only by the optionee.

          (f)  Notwithstanding  the foregoing,  if an Incentive  Stock Option is
     granted to a person at any time when such person  owns,  within the meaning
     of Section 424(d) of the Code,  more than 10% of the total combined  voting
     power of all classes of stock of the employer  corporation  (or a parent or
     subsidiary  of such  corporation  within the  meaning of Section 424 of the
     Code) the price at which each share of Common Stock  covered by such option
     may be purchased pursuant to such option shall not be less than 110% of the
     fair market value  (determined  as in paragraph (a) of this Section) of the
     shares of Common  Stock at the time the option is granted,  and such option
     must be exercised  within a period  specified in the Stock Option Agreement
     relating to such options which does not exceed five years after the date on
     which such option is granted.

          (g) Each Stock  Option  Agreement  entered  into  pursuant  hereto may
     contain  such other  terms,  provisions  and  conditions  not  inconsistent
     herewith  as  shall  be  determined  by the  Committee  including,  without
     limitation,  provisions (i) requiring the giving of satisfactory assurances
     by the optionee that the shares are purchased for investment and not with a
     view to resale in connection with a distribution  of such shares,  and will
     not be  transferred  in  violation  of  applicable  securities  laws,  (ii)
     restricting the  transferability  of such shares during a specified  period
     and (iii)  requiring the resale of such shares to the Company at the option
     price if the  employment  of the optionee  terminates  prior to a specified
     time.

     SECTION 7. Limit on Option Amount.

          (a) Notwithstanding any provision contained herein, the aggregate fair
     market value  (determined  under Section 6(a) as of the time such Incentive
     Stock  Options  are  granted)  of the Common  Stock  with  respect to which
     Incentive  Stock Options are first  exercisable by any employee  during any
     calendar  year (under all stock  option  plans of the  employee's  employer
     corporation and its parent and subsidiary corporation within the meaning of
     Section  424 of the Code)  shall  not  exceed  $100,000.  The limit in this
     paragraph shall not apply to options which are designated as  Non-incentive
     Stock Options,  and, except as otherwise provided herein, there shall be no
     limit on the amount of such options which may be first  exercisable  in any
     year.

          (b) Notwithstanding any provision contained herein,  grants of options
     under this Plan to any one optionee who is an employee of the Company shall
     be limited to options to  purchase  no more than  250,000  shares of common
     stock per calendar year.

     SECTION 8.  Adjustment  of Number of  Shares.  In the event that a dividend
shall be declared  upon the shares of Common  Stock  payable in shares of Common
Stock,  the number of shares of Common Stock then subject to any option  granted
hereunder and the number of shares  reserved for issuance  pursuant to this Plan
but not yet  covered by an option,  shall be  adjusted by adding to each of such
shares the number of shares which would be  distributable  thereon if such share
had been outstanding on the date fixed for determining the stockholders entitled
to receive  such stock  dividend.  In the event that the  outstanding  shares of
Common Stock shall be changed into or exchanged  for a different  number or kind
of shares of stock or other securities of the Company or of another corporation,
whether through reorganization, recapitalization, stock split-up, combination of
shares, merger or consolidation,  then there shall be substituted for each share
of Common  Stock  subject to any such option and for each share of Common  Stock
reserved for issuance pursuant to the Plan but not yet covered by an option, the
number  and  kind of  shares  of  stock  or other  securities  into  which  each
outstanding  share of Common  Stock  shall be so  changed or for which each such
share shall be exchanged;  provided, however, that in the event that such change
or exchange results from a merger or  consolidation,  and in the judgment of the
Committee such substitution cannot be effected or would be inappropriate,  or if
the Company shall sell all or substantially all of its assets, the Company shall
use reasonable  efforts to effect some other adjustment of each then outstanding
option which the Committee, in its sole discretion, shall deem equitable. In the
event that there  shall be any  change,  other than as  specified  above in this
Section 8, in the number or kind of outstanding shares of Common Stock or of any
stock or other securities into which such shares of Common Stock shall have been
changed  or for which they shall have been  exchanged,  then,  if the  Committee
shall determine that such change equitably  requires an adjustment in the number
or kind of shares theretofore reserved for issuance pursuant to the Plan but not
yet covered by an option and of the shares then subject to an option or options,
such  adjustment  shall be made by the  Committee  and  shall be  effective  and
binding  for all  purposes  of this  Plan and of each  Stock  Option  Agreement.
Notwithstanding  the foregoing,  if any adjustment in the number of shares which
may be  issued  and  sold  pursuant  to  options  is  required  by the  Code  or
regulations  promulgated  thereunder to be approved by the stockholders in order
to enable the Company to issue  Incentive  Stock Options  pursuant to this Plan,
then no such adjustment shall be made without the approval of the  stockholders.
In the case of any such  substitution  or  adjustment  as  provided  for in this
Section,  the option price in each Stock Option Agreement for each share covered
thereby prior to such  substitution or adjustment will be the total option price
for all shares of stock or other  securities  which shall have been  substituted
for each such share or to which such share shall have been adjusted  pursuant to
this Section 8. No adjustment or substitution provided for in this A - 7 Section
8 shall require the Company, in any Stock Option Agreement, to sell a fractional
share,  and the total  substitution  or  adjustment  with  respect to each Stock
Option Agreement shall be limited accordingly. Notwithstanding the foregoing, in
the case of  Incentive  Stock  Options,  if the  effect  of the  adjustments  or
substitution  is to cause  the  option  to fail to  continue  to  qualify  as an
Incentive Stock Option or to cause a modification,  extension or renewal of such
option within the meaning of Section 424 of the Code,  the  Committee  shall use
reasonable  efforts to effect  such other  adjustment  of each then  outstanding
option as the Committee, in its sole discretion, shall deem equitable.

     SECTION 9.  Amendments.  This Plan may be amended from time to time by vote
of the Committee;  provided,  however,  that no amendment which shall (i) change
the total  number of shares  which may be issued  and sold  pursuant  to options
granted under this Plan,  (ii) change the  designation of the class of employees
eligible  to receive  Incentive  Stock  Options or the class of  individuals  or
entities  eligible to receive  Non-incentive  Stock Options,  (iii) decrease the
minimum option price stated in Section 6(a) of this Plan, (iv) extend the period
during  which an option may be granted to  exercised  beyond the maximum  period
specified  in this Plan or (v) withdraw the  authority to  administer  this Plan
from the Committee, shall be effective without the approval of the stockholders.
Notwithstanding  the  foregoing,  the Plan may be  amended by the  Committee  to
incorporate or conform to  requirements  imposed by any  amendments  made to the
Code or  regulations  promulgated  thereunder  which the  Committee  deems to be
necessary  or  desirable  to  preserve  (a) incentive  stock  option  status for
outstanding  Incentive  Stock Options and the ability to issue  Incentive  Stock
Options pursuant to this Plan, and (b) the deductibility by the Company pursuant
to Section 162(m) of the Code of amounts taxed to Plan  participants as ordinary
compensation income.

     SECTION 10.  Termination.  This Plan shall  terminate on, and no additional
options shall be granted  after,  ten years from the date the Plan is adopted by
the Committee.  In addition, the Plan may be terminated at any time by a vote of
the Board of Directors.
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