Exhibit 10.1
                                               Amended and Restated as of 4/3/01

                          LEHMAN BROTHERS HOLDINGS INC.
                         1994 MANAGEMENT OWNERSHIP PLAN


1.       Purpose

         The purpose of this Plan is to strengthen Lehman Brothers Holdings Inc.
(the   "Company")  by  providing  an  incentive  to  its  officers,   employees,
consultants and directors and thereby encouraging them to devote their abilities
to increase  shareholder  value and to sustain  excellence.  It is intended that
this be achieved by  extending  to Eligible  Individuals  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,  Non-qualified
Stock Options,  Stock Appreciation  Rights,  Restricted Stock,  Restricted Stock
Units,  Performance  Units and  Performance  Shares (as each term is hereinafter
defined).

2.       Administration

         2.1 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.  A quorum shall consist
of not less than three  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.  Each member of the
Committee shall be a Disinterested Director. 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.  The Company
hereby  agrees  to  indemnify  each  member of the  Committee  as  permitted  by
applicable law, for 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.

         2.2 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
Non-qualified  Stock  Options to be granted to each Eligible  Individual  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

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                  (b) select those Eligible  Individuals to whom Awards shall be
granted under the Plan and to determine the number of Stock Appreciation Rights,
Performance  Units,  Performance  Shares,  and/or Shares of Restricted  Stock or
Restricted  Stock  Units to be granted  pursuant  to each  Award,  the terms and
conditions of each Award,  including the  restrictions  or performance  criteria
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.

         2.3 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  thereunder  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 to make the Plan fully effective;

                  (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; and

                  (c) to resolve all questions of  interpretation  arising under
or in connection with the administration of the Plan, to exercise its discretion
with  respect to the  powers and rights  granted to it as set forth in the Plan,
and  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.

         2.4 All decisions and  determinations  by the Committee in the exercise
of the  powers  conferred  upon it under the Plan  shall be final,  binding  and
conclusive upon the Company, its Subsidiaries,  Eligible Individuals, Optionees,
Grantees and all other persons having any interest therein.

3.       Stock Subject to the Plan

         3.1 The  maximum  number  of  Shares  that may be made the  subject  of
Options and Awards granted under the Plan (other than Restricted  Stock Units to
be granted to Non-employee  Directors pursuant to Section 9.4) is 16,500,000 for
all  Eligible  Individuals.  The  maximum  number of Shares that may be made the
subject  of  Restricted  Stock  Units to be granted  to  Non-employee  Directors
pursuant to Section 9.4 is 150,000.  Upon a Change in Capitalization the maximum
number of Shares  available on an aggregate and Eligible  Individual basis shall
be adjusted in number and kind pursuant to Section 11. 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.  The  maximum  number  of Shares
available  for Options  Stock  Appreciation  Rights or other  Awards that may be
granted to an Eligible  Individual  shall not exceed  1,650,000 over the life of
the Plan.

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         3.2 Upon the  granting  of an Option or an Award,  the number of Shares
available under Section 3.1 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)  Notwithstanding  Section 3.2(a),  the exercise of a Stock
Appreciation  Right  granted  in tandem  with an Option  shall be  treated,  for
purposes  of this  Section 3,  solely as though  the  Option had been  exercised
through the purchase of Shares,  with the result that the number of Shares shall
be reduced  by the  number of Shares so  purchased.  No other  reduction  in the
number of Shares  shall be made on  account  of such  Stock  Appreciation  Right
exercise.

                  (c) 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
Performance Unit is granted.

         3.3  Whenever  any  outstanding  Option  or  Award or  portion  thereof
expires,  is canceled 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,  canceled or otherwise  terminated
portion of the Option or Award shall again be  available  for grant  pursuant to
Options or Awards  granted  hereunder  to the fullest  extent  permitted by Rule
16b-3 under the Exchange  Act. In  addition,  during the period that any Options
and Awards remain  outstanding under the Plan, the Committee may make good faith
adjustments upon a Change in Capitalization 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,  and the  exceptions  provided
pursuant to Section 162(m) of the Code, will not be adversely affected thereby.

4.       Option Grants for Eligible Individuals

         4.1 Authority of Committee.  Subject to the provisions of the Plan, the
Committee  shall  have  full  and  final  authority  to  select  those  Eligible
Individuals who will receive Options, 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.

         4.2  Purchase  Price.  The  purchase  price or the  manner in which the
purchase  price is to be  determined  for  Shares  under  each  Option  shall be
determined by the Committee and set forth in the Agreement;  provided,  however,
that the purchase price per Share under each Incentive Stock Option shall not be
less than  100% of the Fair  Market  Value of a Share on the date the  Incentive
Stock Option is granted (110% in the case of an Incentive  Stock Option


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granted to a  Ten-Percent  Stockholder)  and the  purchase  price per Share
under  each Non-qualified  Stock Option shall not be less than 100% of the Fair
Market Value of a Share on the date the Non-qualified Stock Option is granted.

         4.3 Maximum Duration.  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-Percent   Stockholder)  and  a  Non-qualified  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 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.

         4.4 Vesting.  Each 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 Option expires.
The Committee may accelerate the exercisability of any Option or portion thereof
at any time.

         4.5  $100,000  Limitation.  If the  aggregate  Fair Market Value of the
Shares with respect to which  Incentive  Stock Options are  exercisable  for the
first  time by any  Optionee  during a  calendar  year  (under  all plans of the
Company and its Parents and Subsidiaries) exceeds $100,000, such Incentive Stock
Options shall be treated,  to the extent of such excess, as Non-qualified  Stock
Options.  For purposes of the preceding  sentence,  the Fair Market Value of the
Shares shall be determined at the time the Incentive Stock Options covering such
Shares were granted.

5.       Terms and Conditions Applicable to All Options

         5.1 Method of Exercise. The exercise of an Option shall be made only by
a written notice  delivered in person,  by facsimile  transmission or by mail to
the  Secretary  of the  Company at the  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.  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, (ii) transferring Shares to the Company
upon  such  terms  and  conditions  as  determined  by the  Committee  or  (iii)
transferring  Awards to the  Company  if  permitted  by, and 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 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 Option. The written notice
pursuant to this Section 5.1 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


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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 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.

         5.2 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.

         5.3  Limited  Rights.  An  Optionee  may,  in  the  discretion  of  the
Committee,  have the right (a "Limited  Right") to  surrender  the Option or any
portion  thereof to the Company within 30 days following a Change in Control and
to receive  from the  Company in exchange  therefor a cash  payment in an amount
equal to (a) the number of  unexercised  Shares under the Option which are being
surrendered  multiplied  by (b) the excess of (i) the greater of (A) the highest
price per Share paid in connection with the Change in Control or (B) the highest
Fair  Market  Value  per Share in the 90 day  period  preceding  such  Change in
Control,  over  (ii)  the  purchase  price  of the  Option  as set  forth in the
Agreement.

6.       Stock Appreciation Rights

         6.1  Authority of  Committee.  The  Committee  may, in its  discretion,
either  alone  or in  connection  with  the  grant  of an  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
Option, a Stock Appreciation Right shall cover the same number of Shares covered
by the Option (or such lesser number of Shares as the  Committee may  determine)
and shall,  except as provided in this Section 6.1, be subject to the same terms
and conditions as the related Option.

         6.2 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 Option,  either at the
time of grant, or at any time thereafter during the term of the Option.

         6.3      Stock Appreciation Right Related to an Option.
                  ---------------------------------------------

                  (a)  Exercise.  Subject to Section  6.7, a Stock  Appreciation
Right granted in connection  with an Option shall be exercisable at such time or
times and only to the extent that the related  Option is  exercisable,  and will
not be transferable except to the extent the related Option may be transferable.


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                  (b) Amount Payable.  Upon the exercise of a Stock Appreciation
Right  related to an Option and subject to the  provisions  of Section  6.6, 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 of exercise of such Stock
Appreciation  Right over the per Share purchase price under the related  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 Option,  the Option  shall be  canceled to the extent of the
number of Shares as to which the Stock Appreciation Right is exercised, and upon
the exercise of an Option granted in connection with a Stock  Appreciation Right
or the surrender of such Option pursuant to Section 6.5, the Stock  Appreciation
Right  shall be  canceled  to the extent of the number of Shares as to which the
Option is exercised or surrendered.

         6.4 (a) 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  6.7),  vesting and
duration as the  Committee  shall  determine,  but in no event shall they have a
term  of  greater  than  ten  (10)  years.  The  Committee  may  accelerate  the
exercisability of any Stock  Appreciation  Right at any time. 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 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.

                  (b) Limited SAR Rights.  A Grantee may, in the  discretion  of
the  Committee,  have the right (a "Limited SAR Right") to  surrender  the Stock
Appreciation  Right  or any  portion  thereof  to the  Company  within  30  days
following  a Change in Control  and to  receive  from the  Company  in  exchange
therefor a cash payment in an amount equal to (a) the number of Shares under the
Stock Appreciation Right which are being exercised, multiplied by (b) the excess
of (i) the greater of (A) the highest  price per Share paid in  connection  with
the Change in Control or (B) the highest  Fair Market  Value per Share in the 90
day period preceding such Change in Control,  over (ii) the Fair Market Value of
a Share on the date the Stock Appreciation Right was granted as set forth in the
Agreement.

         6.5 Method of Exercise. Stock Appreciation Rights shall be exercised by
a  Grantee  only  by  a  written  notice  delivered  in  person,   by  facsimile
transmission,  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

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Committee,  the  Grantee  shall  deliver  the  Agreement  evidencing  the  Stock
Appreciation  Right being  exercised  and the Agreement  evidencing  any related
Option to the Secretary of the Company who shall  endorse  thereon a notation of
such exercise and return such Agreement to the Grantee.

         6.6 Form of Payment.  Payment of the amount  determined  under Sections
6.3(b) or 6.4 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 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.

         6.7  Restrictions.  In the case of any  Grantee  who may be  subject to
liability under Section 16(b) of the Exchange Act, no Stock  Appreciation  Right
may be exercised before the date six (6) months after the date it is granted.

7.       Restricted Stock

         7.1 Grant.  The Committee may grant to Eligible  Individuals  Awards of
Restricted  Stock, and may issue Shares of Restricted Stock in payment of vested
Performance  Units (as  hereinafter  provided  in Section  8.2),  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 7.

         7.2 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 Restricted Stock Award Agreement,  appropriate  blank stock powers
and such other documents which the Committee may require are not executed by the
Grantee 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.

         7.3  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 7.4, such Shares shall

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 not be sold, transferred or otherwise disposed of and  shall not be  pledged
or  otherwise  hypothecated,  nor  shall  they be delivered to the Grantee.

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

         7.5  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, at the  discretion  of
the  Committee,  (i) paid in cash to the  Grantee  or (ii)  deferred  until  the
lapsing of the restrictions imposed upon such Shares and held by the Company for
the  account  of the  Grantee  until such  time.  In the event  that  payment of
dividends  is to  be  deferred,  the  Committee  shall  determine  whether  such
dividends  are to be  reinvested  in  shares  of Stock  (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.

         7.6 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.
Notwithstanding  the preceding,  the Committee may withhold sufficient Shares to
pay taxes.

8.       Performance Awards

         8.1  Performance  Objectives.  Performance  objectives for  Performance
Awards  may be  expressed  in terms of (i)  earnings  per  Share,  (ii)  pre-tax
profits,  (iii) net earnings or net worth,  (iv) absolute and/or relative return
on equity or assets,  (v) any  combination of the  foregoing,  or (vi) any other
standard or standards deemed  appropriate by the Committee at the time the Award
is granted.  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 and/or relative
and may be expressed in terms of a progression  within a specified range.  Prior
to the end of a Performance  Cycle, with respect to any Eligible  Individual the
deductibility of whose  Performance  Award will not, in the reasonable belief of
the  Committee,  be subject to Section 162(m) of the Code, the Committee may, in
its  discretion,  adjust  the  performance  objectives  to  reflect  a Change in
Capitalization,  a change in the book tax rate of the Company or any  Subsidiary
or any other event which may materially affect the performance of the Company, a
Subsidiary or a Division,  including, but not limited to, market conditions or a
significant  acquisition  or  disposition  of  assets or other  property  by the
Company,

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 a Subsidiary or a Division. With respect to any Eligible Individual the
deductibility  of  whose  compensation  may,  in the  reasonable  belief  of the
Committee,  be  subject  to  Section  162(m) of the Code,  the  Committee  shall
exercise the  discretion  conferred  upon it in the  preceding  sentence in such
manner as shall be approved  by the  Company's  auditors  and will not result in
loss of deductibility under such Section 162(m).  Notwithstanding the foregoing,
the  Committee  shall,  in such  manner as shall be  approved  by the  Company's
auditors, adjust the performance objectives for all Grantees to whom Performance
Units have been  granted  to offset  the impact of any change in the  applicable
corporate tax rate under the Code.

         8.2 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
8.2(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 objectives must be satisfied.

                  (a) Vesting and Forfeiture. 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.  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 or
Restricted  Stock Units,  the Committee  must determine the extent to which such
payment will be in Shares of Restricted  Stock or Restricted Stock Units and the
terms of such Restricted  Stock or Restricted  Stock Units at the time the Award
is granted.

         8.3 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.
Performance  Shares shall be


                                       9
<PAGE>


denominated in Shares or Restricted Stock Units, as
determined by the Committee.  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 or Restricted  Stock Units  represented  by such Award shall be issued in
the name of the Grantee, and the number of such Shares or Restricted Stock Units
so issuable at different levels of performance goal attainment.

                  (b)  Non-transferability.  Until  any  restrictions  upon  the
Performance  Shares  awarded to a Grantee  shall  have  lapsed in the manner set
forth in Section 8.3(d) 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) Treatment of Dividend  Equivalents.  At the time the Award
of  Performance  Shares  is  granted,  the  Committee  may,  in its  discretion,
determine that the Grantee shall have the right to receive  payments  equivalent
in value to  dividends or other  distributions  paid or made with respect to the
underlying  Shares  (which  may  include,  in the  case  of  Performance  Shares
denominated in Restricted  Stock Units,  the Shares  underlying  such Restricted
Stock Units)  ("Dividend  Equivalents").  The payment to the Grantee of Dividend
Equivalents,  or a specified portion thereof, shall be, at the discretion of the
Committee, (i) paid in cash to the Grantee or (ii) deferred until the lapsing of
the restrictions  imposed upon such  Performance  Shares and held by the Company
for the account of the  Grantee  until such time.  In the event that  payment of
Dividend  Equivalents is to be deferred,  the Committee shall determine  whether
such Dividend  Equivalents  are to be reinvested in shares of Stock (which shall
be held as additional  Performance Shares) or held in cash. If deferred Dividend
Equivalents  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  Dividend  Equivalents in respect of Performance
Shares (with interest accrued  thereon,  if any), shall be made upon the lapsing
of  restrictions  imposed  on the  Performance  Shares in  respect  to which the
deferred Dividend  Equivalents were paid, and any Dividend  Equivalents deferred
(together  with any  interest  accrued  thereon)  in respect of any  Performance
Shares shall be forfeited upon the forfeiture of such Performance Shares.

                  (d)  Delivery  of  Shares.   Upon  the   satisfaction  of  the
performance goals on Performance Shares awarded  hereunder,  the Committee shall
cause a stock  certificate  to be  delivered to the Grantee with respect to such
Performance  Shares,  free  of all  restrictions  hereunder.  Alternatively,  if
specified  in the Award  Agreement,  the  Committee  may  determine  that earned
Performance  Shares be  conveyed  to a Grantee in the form of  Restricted  Stock
Units and/or an amount of cash sufficient to satisfy anticipated tax obligations
to be incurred in connection with such Shares.


                                       10
<PAGE>

         8.4      Non-transferability.  No Performance  Awards shall be
transferable by the Grantee  otherwise than by will or the laws of descent
and distribution.

         8.5  Modification.  Subject to the terms of the Plan, the Committee may
modify outstanding Performance Awards;  provided,  however, that no modification
may be made with respect to Performance  Awards held by Executive Officers (such
term is as defined in the  Exchange  Act).  Notwithstanding  the  foregoing,  no
modification  of  a  Performance  Award  shall  materially  adversely  alter  or
materially  impair any rights or  obligations  under the  Agreement  without the
Grantee's consent.

9.       Restricted Stock Units

         9.1 Grant.  The Committee may grant to Eligible  Individuals  Awards of
Restricted  Stock Units 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 in accordance
with the following  provisions of this Section 9. A Restricted  Stock Unit shall
represent  the  right  to  receive  one  Share  upon  lapse  of  the  conditions
established in the grant.

         9.2 Lapse of  Restrictions.  Restrictions  upon Restricted  Stock Units
awarded  hereunder  shall lapse at such time or times and on such  conditions as
the  Committee  may  determine,  which  restrictions  shall be set  forth in the
Agreement  evidencing the Award. Upon such lapse, all Shares represented by such
Restricted Stock Unit shall vest and be payable immediately.

         9.3 Dividend  Equivalents.  At the time the Award of  Restricted  Stock
Units is granted,  the  Committee  may, in its  discretion,  determine  that the
payment to the Grantee of dividend equivalents declared or paid on Shares by the
Company shall be (i) deferred until the lapsing of the  restrictions  imposed on
such Restricted  Stock Units and (ii) held by the Company for the account of the
Grantee  until such time. In the event that the dividend  equivalents  are to be
deferred,  the  Committee  shall  determine  whether  such  dividends  are to be
reinvested in Shares (which shall be held as additional  Restricted Stock Units)
or held in cash.  If  deferred  dividends  are to be held in cash,  there may be
credited at the end of the 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
Restricted  Stock Units (whether held in cash or as additional  Restricted Stock
Units),  together with interest accrued thereon,  if any, shall be made upon the
lapsing of  restrictions  imposed on the  Restricted  Stock  Units in respect of
which the deferred  dividends  were paid, and any dividends  deferred  (together
with any  interest  accrued  thereon) in respect of any  Restricted  Stock Units
shall be forfeited upon the forfeiture of such Restricted Stock Unit.

         9.4 Units  and  Options  for  Non-employee  Directors.  Notwithstanding
anything to the contrary in the Plan,  Restricted  Stock Units and Options shall
be granted to  Non-employee  Directors  of the  Company in  accordance  with the
following provisions.  Each Non-employee Director shall receive 2,500 Restricted
Stock Units on the day of the  Company's  annual  meeting

                                       11
<PAGE>

for each year that the
Plan is in effect. At the election of each Non-employee Director,  Options in an
amount equal to three times the number of  Restricted  Stock Units paid,  may be
paid in place of the Restricted  Stock Units.  The Options shall have a ten year
term,  an exercise  price equal to Fair Market  Value on the date of payment and
shall become exercisable in one-third  increments on the first, second and third
anniversaries  of the  date  of  payment.  Restricted  Stock  Units  shall  vest
immediately upon grant. As of each date a dividend or other distribution is paid
or made on Shares,  each  Non-employee  Director holding  Restricted Stock Units
shall be credited  with a number of additional  Restricted  Stock Units equal to
the  product  of (A) the  dividend  or  other  distribution  paid on one  Share,
multiplied by (B) the number of Restricted  Stock Units held by the Non-employee
Director,  divided by (C) the  closing  price of one Share on the New York Stock
Exchange  on such  date.  Such  additional  Restricted  Stock  Units  shall vest
immediately.  In the event a Non-employee  Director's  service  terminates,  all
Options shall become  immediately  exercisable  and remain  exercisable  through
their  scheduled  term.  Restricted  Stock  Units are  payable  in  shares  upon
termination of a Non-employee Director's service on the Board.

10.      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 or change in the status of the employment 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;
provided, however, that the Committee shall have no such discretion with respect
to Restricted Stock Units granted to Non-employee  Directors pursuant to Section
9.4, the  Agreements  evidencing  which shall contain the  provisions  regarding
termination described in such Section.

11.      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 or to any individual,  and
(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;  provided, however, that with respect to
Restricted  Stock Units granted to  Non-employee  Directors  pursuant to Section
9.4,  any such  adjustments  shall be made only as  necessary  to  maintain  the
proportionate  interest of each  Non-employee  Director in Shares and  preserve,
without exceeding, the value of such Restricted Stock Units.

                  (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.

                                       12
<PAGE>

                  (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.

                  (d) The  Committee  shall  apply  this  Section 11 in a manner
consistent with the  preservation of the Company's tax deduction for the payment
or exercise of Awards under Section 162(m) of the Code.

12.      Termination and Amendment of the Plan; Modification of Awards
         -------------------------------------------------------------

                  (a) 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 or any
Option or Award; provided, however, that:

          (i) No such amendment,  modification,  suspension or termination shall
     materially  impair or  materially  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

          (ii) To the extent necessary to comply with Rule 16b-3 of the Exchange
     Act and the rules and regulations  promulgated  thereunder,  or to preserve
     the  Company's  tax  deduction  for the payment or exercise of Awards under
     Section 162(m) of the Code, no amendment shall be effective unless approved
     by the  stockholders  of the Company in accordance  with applicable law and
     regulations.


          (b)  Notwithstanding the above, the Committee shall not have the right
     to modify any outstanding Award to the extent such restriction is necessary
     to preserve  the  Company's  tax  deduction  for the payment or exercise of
     Awards under Section 162(m) of the Code.

13.      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.

                                   13
<PAGE>

14.      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.


15.      Regulations and Other Approvals; Governing Law

         15.1 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.

         15.2 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.

         15.3 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.

         15.4 The Board may make such  changes  in the Plan or any Awards 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 any tax benefits under the  applicable  provisions of the Code and
regulations promulgated thereunder.

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


                                       14
<PAGE>


         15.6 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.

         15.7  Awards  granted  under the Plan to  persons  which the  Committee
reasonably  believes  may be subject  to Section  162(m) of the Code will not be
exercisable,  and compensation under the Plan will not be paid, unless and until
any necessary  shareholder  approvals shall have been obtained and the Committee
has certified as to the attainment of any applicable  performance goals, in each
case to the extent required under said Section 162(m).

16.      Miscellaneous

         16.1 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 in addition to Options or
Awards previously granted to that Eligible Individual.

         16.2  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 of an Award,  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,  which may be accepted or rejected in the discretion of
the Committee,  to have withheld a 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 the Committee shall
accept such an election  in respect of an Optionee  subject to Section  16(b) of
the  Exchange  Act only if such  election  complies  with Rule  16b-3  under the
Exchange Act.

                                       15
<PAGE>

                  (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.

         16.3   Non-transferability.   No  Option,   Stock  Appreciation  Right,
Performance Unit denominated in Stock or Restricted Stock Unit granted hereunder
shall be transferable by the Optionee or Grantee to whom granted  otherwise than
by will or the laws of descent and  distribution  or  pursuant  to a  "qualified
domestic  relations  order," as defined by the Code or title I of ERISA,  or the
rules  thereunder,  and an Award may be  exercised  during the  lifetime of such
Optionee or Grantee only by the  Optionee or Grantee,  or his or her guardian or
legal  representative.  The  terms of such  Award  shall be final,  binding  and
conclusive  upon  the  beneficiaries,   executors,   administrators,  heirs  and
successors of the Optionee or Grantee.

         16.4  Acceleration  of Awards.  The Committee may  accelerate  vesting,
exercisability  or lapse of  restrictions  on all or any portion of any Award at
any time, other than with respect to:

                  (a) Awards of Restricted Stock Units to Non-employee Directors
pursuant to Section  9.4,  vesting of which may be  accelerated  only under such
circumstances  as will  not  cause  such  persons  to fail to be  "disinterested
persons," within the meaning of Rule 16b-3 under the Exchange Act; and

                  (b) Awards other than Options or Stock Appreciation Rights, to
the extent that such acceleration would jeopardize,  under Section 162(m) of the
Code,  the  Company's  tax  deduction  otherwise  available  for the  payment or
exercise of the Awards.

17.      Effective Date

         The effective date of the Plan shall be the date of its adoption by the
Board,  subject only to (i) 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 or (ii) subject to any other such means
of approval  which shall satisfy the Exchange Act,  within twelve (12) months of
such adoption.

18.      Definitions

         For purpose of the Plan:

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


                                       16
<PAGE>

         18.2 "Award" means a grant of Incentive  Stock  Options,  Non-qualified
Stock Options,  Restricted  Stock,  Restricted Stock Units,  Stock  Appreciation
Rights, Performance Awards or any or all of them.

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

         18.4 "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 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.

         18.5  "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)  immediately  after which such Person has  "Beneficial  Ownership"
(within the meaning of Rule 13d-3  promulgated under the Exchange Act) of thirty
percent  (30%)  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 or a trustee  thereof  acting  solely in its  capacity as trustee)
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 the effective date of the 1994
initial  public  trading  in  Company  Shares,  are  members  of the Board  (the
"Incumbent Board"),  ceasing 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 1934 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 any Election Contest or Proxy Contest; or


                                       17
<PAGE>

             (c)      Approval by stockholders of the Company of:

                           (i)  A  merger,   consolidation   or   reorganization
         involving   the   Company,   unless  such  merger,   consolidation   or
         reorganization is a "Non-Control Transaction";  i.e., meets each of the
         requirements described in (A), (B), and (C) below:

          (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 seventy
     percent  (70%)  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
     immediately  following the  consummation of such merger,  consolidation  or
     reorganization; and

          (C) no Person other than the  Company,  any  Subsidiary,  any employee
     benefit  plan (or any trust  forming a part  thereof  or a trustee  thereof
     acting solely in its capacity as trustee)  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 thirty  percent (30%) or more of the then  outstanding  Voting
     Securities has Beneficial  Ownership of thirty percent (30%) or more of the
     combined  voting  power of the  Surviving  Corporation's  then  outstanding
     voting  securities  immediately  following the consummation of such merger,
     consolidation or reorganization.

                         (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 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.


                                       18
<PAGE>

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

         18.7  "Committee"  means a committee  consisting  of at least three (3)
Disinterested  Directors  appointed by the Board to  administer  the Plan and to
perform the  functions  set forth  herein.  The  authority  of the  Committee to
administer the Plan may be delegated to a subcommittee  composed  exclusively of
two or more  individuals  who are  "outside  directors",  within the  meaning of
Section 162(m) of the Code, and proposed or final  Treasury  Regulations  issued
thereunder,  to the extent  required to satisfy the  provisions of that Section;
provided,  however,  that at all  times  such  subcommittee  shall  satisfy  the
applicable  requirements of Rule 16b-3 under the Exchange Act. References to the
Committee herein refer to such subcommittee to the extent of such a delegation.

         18.8  "Company" means Lehman Brothers Holdings Inc.

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

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

         18.11  "Dividend Equivalents" has the meaning ascribed to it in Section
8.3(c).

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

         18.13 "Eligible  Individual" means any officer,  salaried or commission
employee,  consultant and Non-employee  Director of the Company or a Subsidiary,
designated  by the  Committee  as  eligible  to  receive  Awards  subject to the
conditions set forth herein.

         18.14  "ERISA"  means the Employee  Retirement  Income  Security Act of
1974, as amended.

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

         18.16 "Fair  Market  Value" on any date means the closing  price 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  exchange is not open on
such date, the immediately  preceding date on which such exchange is open),  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  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  Committee  in good faith and,  in the case of an  Incentive
Stock Option,  in accordance with Section 422 of the Code.  Notwithstanding  the

                                       19
<PAGE>

foregoing,  for Awards and Options  granted before the  commencement  of initial
1994 regular way public trading in Shares, Fair Market Value of the Shares means
the  closing  price on the first day on which  initial  1994  regular way public
trading in the Shares commences.

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

         18.18  "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.

         18.19  "Non-employee  Director"  means a director of the Company who is
not an employee of the Company or any Subsidiary.

         18.20  "Non-qualified  Stock  Option"  means an Option  which is not an
Incentive Stock Option.

         18.21 "Option" means an Incentive Stock Option,  a Non-qualified  Stock
Option, or both of them, as the context requires.

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

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

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

         18.25  "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.

         18.26  "Performance  Shares" means Shares issued or  transferred  to an
Eligible Individual under Section 8.3 hereof.

         18.27 "Performance Unit" means Performance Units granted to an Eligible
Individual under Section 8.2 hereof.

         18.28  "Plan" means the Lehman Brothers Holdings Inc. 1994 Management
Ownership Plan.

         18.29  "Restricted  Stock" means  Shares  issued or  transferred  to an
Eligible Individual pursuant to Section 7 hereof.

         18.30  "Restricted  Stock Unit"  means an Award  granted to an Eligible
Individual to receive payment upon the lapse of all  restrictions in the form of
Shares as provided for in Section 9 hereof.


                                       20
<PAGE>

         18.31  "Shares" means the common stock, par value $.10 per share, of
the Company.

         18.32 "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 6
hereof.

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

         18.34  "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.

         18.35 "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.
                                       21