VARLEN CORPORATION
            1998 LONG-TERM EQUITY INCENTIVE PLAN
               (as amended November 20, 1998)
            
              
1.   Purpose.

          This plan shall be known as the Varlen Corporation 1998
Long-Term Equity Incentive Plan (the "Plan").  The purpose of the
Plan shall be to promote the long-term growth and profitability
of Varlen Corporation (the "Company") and its Subsidiaries by (i)
providing certain directors, officers and other employees of, and
certain other individuals who perform significant services for,
the Company and its Subsidiaries with incentives to maximize
stockholder value and otherwise contribute to the success of the
Company and (ii) enabling the Company to attract, retain and
reward the best available persons for positions of substantial
responsibility.  Grants of incentive or nonqualified stock
options, stock appreciation rights ("SARs"), either alone or in
tandem with options, restricted stock, performance awards, or any
combination of the foregoing may be made under the Plan.

2.   Definitions.

          (a)  "Board of Directors" and "Board" mean the
board of directors of Varlen Corporation.

          (b)  "Cause" means the occurrence of one of the
following events:

              (i)   Conviction of a felony or any crime or
offense lesser than a felony involving the property of the
Company or a Subsidiary; or

             (ii)   Conduct that has caused demonstrable and
serious injury to the Company or a Subsidiary, monetary or
otherwise; or

             (iii)   Willful refusal to perform, or
substantial disregard of, duties properly assigned, as determined
by the Company; or

             (iv)   Breach of duty of loyalty to the Company or a
Subsidiary or other act of fraud or dishonesty with respect to
the Company or a Subsidiary.

          (c)  "Change in Control" means the occurrence of
one of the following events:

              (i)   if any "person" or "group" as those terms are
used in Sections 13(d) and 14(d) of the Exchange Act, other than
an Exempt Person, is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing 50% or more
of the combined voting power of the Company's then outstanding
securities; or

             (ii)   during any period of two consecutive years,
individuals who at the beginning of such period constitute the
Board and any new directors whose election by
the Board or nomination for election by the Company's
stockholders was approved by at least two-thirds of the directors
then still in office who either were directors at the beginning
of the period or whose election was previously so approved, cease
for any reason to constitute a majority thereof; or

            (iii)   the stockholders of the Company approve a
merger or consolidation of the Company with any other
corporation, other than a merger or consolidation (A) which would
result in all or a portion of the voting securities of the
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 50% of
the combined voting power of the voting securities of the Company
or such surviving entity outstanding immediately after such
merger or consolidation or (B) following which the Company's
chief executive officer and directors retain their positions with
the surviving entity (and constitute at least a majority of the
surviving entity's board of directors); or

             (iv)   the stockholders of the Company approve a
plan of complete liquidation of the Company or an agreement for
the sale or disposition by the Company of all or substantially
all the Company's assets, other than a sale to an Exempt Person.

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

          (e)  "Committee" means the Compensation Committee of
the Board, which shall consist solely of two or more members of
the Board, or a subcommittee thereof consisting solely of two or
more members of the full Committee, as appointed by the Board.

          (f)  "Common Stock" means the common stock, par value
$.10 per share, of the Company, and any other shares into which
such stock may be changed by reason of a recapitalization,
reorganization, merger, consolidation or any other change in the
corporate structure or capital stock of the Company.

          (g)  "Competition" is deemed to occur if a person whose
employment with the Company or its Subsidiaries has terminated
obtains a position as a full-time or part-time employee of, as a
member of the board of directors of, or as a consultant or
advisor with or to, or acquires an ownership interest in excess
of 5% of, a corporation, partnership, firm or other entity that
engages in any of the businesses of the Company or any Subsidiary
with which the person was involved in a management role at any
time during his or her last five years of employment with or
other service for the Company or any Subsidiaries.

          (h)  "Disability" means a disability that would entitle
an eligible participant to payment of monthly disability payments
under any Company disability plan or as otherwise determined by
the Committee.

          (i)  "Exchange Act" means the Securities Exchange Act
of 1934, as amended.

          (j)  "Exempt Person" means any employee benefit plan of
the Company or a trustee or other administrator or
fiduciary holding securities under an employee benefit plan of
the Company.

          (k)  "Fair Market Value" of a share of Common Stock of
the Company means, as of the date in question, the officially-
quoted closing selling price of the stock (or if no selling price
is quoted, the bid price) on the principal securities exchange on
which the Common Stock is then listed for trading (including for
this purpose the Nasdaq National Market) (the "Market") for the
immediately preceding trading day or, if the Common Stock is not
then listed or quoted in the Market, the Fair Market Value shall
be the fair value of the Common Stock determined in good faith by
the Committee; provided, however, that when shares received upon
exercise of an option are immediately sold in the open market,
the net sale price received may be used to determine the Fair
Market Value of any shares used to pay the exercise price or
withholding taxes and to compute the withholding taxes.

          (l)  "Incentive Stock Option" means an option
conforming to the requirements of Section 422 of the Code and any
successor thereto.

          (m)  "Non-Employee Director" has the meaning given to
such term in Rule 16b-3 under the Exchange Act.

          (n)  "Nonqualified Stock Option" means any stock option
other than an Incentive Stock Option.

          (o)  "Other Company Securities" mean securities of the
Company other than Common Stock, which may include, without
limitation, unbundled stock units or components thereof,
debentures, preferred stock, warrants and securities convertible
into or exchangeable for Common Stock or other property.

          (p)  "Retirement" means retirement as defined under any
Company pension plan or retirement program or termination of
one's employment on retirement with the approval of the
Committee.

          (q)  "Subsidiary" means a corporation or other entity
of which outstanding shares or ownership interests representing
50% or more of the combined voting power of such corporation or
other entity entitled to elect the management thereof, or such
lesser percentage as may be approved by the Committee, are owned
directly or indirectly by the Company.

3.   Administration.
          The Plan shall be administered by the Committee;
provided that the Board may, in its discretion, at any time and
from time to time, resolve to administer the Plan, in which case
the term "Committee" shall be deemed to mean the Board for all
purposes herein.  The Committee shall consist of at least two
directors.  Subject to the provisions of the Plan, the Committee
shall be authorized to (i) select persons to participate in the
Plan, (ii) determine the form and substance of grants made under
the Plan to each participant, and the conditions and
restrictions, if any, subject to which such grants will be made,
(iii) modify the terms of grants made under the Plan, (iv)
interpret the Plan and grants made thereunder, (v) make any
adjustments necessary or desirable in connection with grants made
under the Plan to eligible participants located outside the
United States and (vi) adopt, amend, or rescind such rules and
regulations, and make such other determinations, for carrying out
the Plan as it may deem appropriate.  Decisions of the Committee
on all matters relating to the Plan shall be in the Committee's
sole discretion and shall be conclusive and binding on all
parties.  The validity, construction, and effect of the Plan and
any rules and regulations relating to the Plan shall be
determined in accordance with applicable federal and state laws
and rules and regulations promulgated pursuant thereto.  No
member of the Committee and no officer of the Company shall be
liable for any action taken or omitted to be taken by such
member, by any other member of the Committee or by any officer of
the Company in connection with the performance of duties under
the Plan, except for such person's own willful misconduct or as
expressly provided by statute.

          The expenses of the Plan shall be borne by the Company.
The Plan shall not be required to establish any special or
separate fund or make any other segregation of assets to assume
the payment of any award under the Plan, and rights to the
payment of such awards shall be no greater than the rights of the
Company's general creditors.

4.   Shares Available for the Plan.

          Subject to adjustments as provided in Section 15, an
aggregate of 500,000 shares of Common Stock (the "Shares") may be
issued pursuant to the Plan.  Such Shares may be in whole or in
part authorized and unissued, or shares which are held by the
Company as treasury shares.  If any grant under the Plan expires
or terminates unexercised, becomes unexercisable or is forfeited
as to any Shares, such unpurchased or forfeited Shares shall
thereafter be available for further grants under the Plan unless,
in the case of options granted under the Plan, related SARs are
exercised.

          Without limiting the generality of the foregoing
provisions of this Section 4 or the generality of the provisions
of Sections 3, 6 or 17 or any other section of this Plan, the
Committee may, at any time or from time to time, and on such
terms and conditions (that are consistent with and not in
contravention of the other provisions of this Plan) as the
Committee may, in its sole discretion, determine, enter into
agreements (or take other actions with respect to the options)
for new options containing terms (including exercise prices) more
(or less) favorable than the outstanding options.

5.   Participation.

          Participation in the Plan shall be limited to those
directors (including Non-Employee Directors) and officers
(including non-employee officers) of, and employees and other
individuals performing significant services for (including non-
employees to whom offers of employment have been extended by),
the Company and its Subsidiaries, in each case as selected by the
Committee (including participants located outside the United
States).  Nothing in the Plan or in any grant thereunder shall
confer any right on a participant to continue in the employ of,
or the performance of services for the Company or shall interfere
in any way with the right of the Company to terminate the
employment or performance of services of a participant at any
time.  By accepting any award under the Plan, each participant
and each person claiming under or through him or her shall be
conclusively deemed to have indicated his or her acceptance and
ratification of, and consent to, any action taken under the Plan
by the Company, the Board or the Committee.

          Incentive Stock Options or Nonqualified Stock Options,
SARs , alone or in tandem with options, restricted stock awards,
performance awards, or any combination thereof, may be granted to
such persons and for such number of Shares as the Committee shall
determine (such individuals to whom grants are made being
sometimes herein called "optionees" or "grantees," as the case
may be). Determinations made by the Committee under the Plan need
not be uniform and may be made selectively among eligible
individuals under the Plan, whether or not such individuals are
similarly situated.  A grant of any type made hereunder in any
one year to an eligible participant shall neither guarantee nor
preclude a further grant of that or any other type to such
participant in that year or subsequent years.

6.   Incentive and Nonqualified Options.

          The Committee may from time to time grant to eligible
participants Incentive Stock Options, Nonqualified Stock Options,
or any combination thereof; provided that the Committee may grant
Incentive Stock Options only to eligible employees of the Company
or its subsidiaries (as defined for this purpose in Section
424(f) of the Code).  In any one calendar year, the Committee
shall not grant to any one participant options or SARs to
purchase a number of shares of Common Stock in excess of 10% of
the total number of shares authorized under the Plan.  The
options granted shall take such form as the Committee shall
determine, subject to the following terms and conditions.

          It is the Company's intent that Nonqualified Stock
Options granted under the Plan not be classified as Incentive
Stock Options, that Incentive Stock Options be consistent with
and contain or be deemed to contain all provisions required under
Section 422 of the Code and any successor thereto, and that any
ambiguities in construction be interpreted in order to effectuate
such intent.  If an Incentive Stock Option granted under the Plan
does not qualify as such for any reason, then to the extent of
such nonqualification, the stock option represented thereby shall
be regarded as a Nonqualified Stock Option duly granted under the
Plan, provided that such stock option otherwise meets the Plan's
requirements for Nonqualified Stock Options.

          (a)  Price. The price per Share deliverable upon the
exercise of each option ("exercise price") shall be established
by the Committee, except that in the case of the grant of any
option, the exercise price may not be less than 100% of the Fair
Market Value of a share of Common Stock as of the date of grant
of the option, and in the case of the grant of any Incentive
Stock Option to an employee who, at the time of the grant, owns
more than 10% of the total combined voting power of all classes
of stock of the Company or any of its Subsidiaries, the exercise
price may not be less that 110% of the Fair Market Value of a
share of Common Stock as of the date of grant of the option, in
each case unless otherwise permitted by Section 422 of the Code.

          (b)  Payment.  Options may be exercised, in whole or in
part, upon payment of the exercise price of the Shares
to be acquired. Unless otherwise determined by the Committee,
payment shall be made (i) in cash (including check, bank draft or
money order), (ii) by delivery of outstanding shares of Common
Stock with a Fair Market Value on the date of exercise equal to
the aggregate exercise price payable with respect to the options'
exercise, (iii) by simultaneous sale through a broker reasonably
acceptable to the Committee of Shares acquired on exercise, as
permitted under Regulation T of the Federal Reserve Board, (iv)
by authorizing the Company to withhold from issuance a number of
Shares issuable upon exercise of the options which, when
multiplied by the Fair Market Value of a share of Common Stock on
the date of exercise is equal to the aggregate exercise price
payable with respect to the options so exercised or (v) by any
combination of the foregoing. Options may also be exercised upon
payment of the exercise price of the Shares to be acquired by
delivery of the optionee's promissory note, but only to the
extent specifically approved by and in accordance with the
policies of the Committee.

          In the event a grantee elects to pay the exercise price
payable with respect to an option pursuant to clause (ii) above,
(A) only a whole number of share(s) of Common Stock (and not
fractional shares of Common Stock) may be tendered in payment,
(B) such grantee must present evidence acceptable to the Company
that he or she has owned any such shares of Common Stock tendered
in payment of the exercise price (and that such tendered shares
of Common Stock have not been subject to any substantial risk of
forfeiture) for at least six months prior to the date of
exercise, and (C) Common Stock must be delivered to the Company.
Delivery for this purpose may, at the election of the grantee, be
made either by (A) physical delivery of the certificate(s) for
all such shares of Common Stock tendered in payment of the price,
accompanied by duly executed instruments of transfer in a form
acceptable to the Company, or (B) direction to the grantee's
broker to transfer, by book entry, such shares of Common Stock
from a brokerage account of the grantee to a brokerage account
specified by the Company.  When payment of the exercise price is
made by delivery of Common Stock, the difference, if any, between
the aggregate exercise price payable with respect to the option
being exercised and the Fair Market Value of the share(s) of
Common Stock tendered in payment (plus any applicable taxes)
shall be paid in cash.  No grantee may tender shares of Common
Stock having a Fair Market Value exceeding the aggregate exercise
price payable with respect to the option being exercised (plus
any applicable taxes).

          In the event a grantee elects to pay the exercise price
payable with respect to an option pursuant to clause (iv) above,
(A) only a whole number of Share(s) (and not fractional Shares)
may be withheld in payment and (B) such grantee must present
evidence acceptable to the Company that he or she has owned a
number of shares of Common Stock at least equal to the number of
Shares to be withheld in payment of the exercise price (and that
such owned shares of Common Stock have not been subject to any
substantial risk of forfeiture) for at least six months prior to
the date of exercise.  When payment of the exercise price is made
by withholding of Shares, the difference, if any, between the
aggregate exercise  price payable with respect to the option
being exercised and the Fair Market Value of the Share(s)
withheld in payment (plus any applicable taxes) shall be paid in
cash.  No grantee may authorize the withholding of
Shares having a Fair Market Value exceeding the aggregate
exercise price payable with respect to the option being exercised
(plus any applicable taxes).  Any withheld Shares shall no longer
be issuable under such option.

          (c)  Terms of Options.  The term during which each
option may be exercised shall be determined by the Committee,
but, except as otherwise provided herein, in no event shall an
option be exercisable in whole or in part, in the case of a
Nonqualified Stock Option or an Incentive Stock Option (other
than as described below), more than ten years from the date it is
granted or, in the case of an Incentive Stock Option granted to
an employee who at the time of the grant owns more than 10% of
the total combined voting power of all classes of stock of the
Company or any of its Subsidiaries, if required by the Code, more
than five years from the date it is granted.  All rights to
purchase Shares pursuant to an option shall, unless sooner
terminated, expire at the date designated by the Committee. The
Committee shall determine the date on which each option shall
become exercisable and may provide that an option shall become
exercisable in installments.  The Shares constituting each
installment may be purchased in whole or in part at any time
after such installment becomes exercisable, subject to such
minimum exercise requirements as may be designated by the
Committee.  Unless otherwise provided herein or in the terms of
the related grant, an optionee may exercise an option only if he
or she is, and has continuously since the date the option was
granted, been a director, officer or employee of, or performed
other services for, the Company or a Subsidiary.  Prior to the
exercise of an option and delivery of the Shares represented
thereby, the optionee shall have no rights as a stockholder with
respect to any Shares covered by such outstanding option
(including any dividend or voting rights).

          (d)  Limitations on Grants. If required by the Code,
the aggregate Fair Market Value (determined as of the grant date)
of Shares for which an Incentive Stock Option is exercisable for
the first time during any calendar year under all equity
incentive plans of the Company and its Subsidiaries (as defined
in Section 422 of the Code) may not exceed $100,000.

          (e)  Termination; Change in Control.

              (i)   If a participant ceases to be a director,
officer or employee of, or to perform other services for, the
Company and any Subsidiary due to death or Disability, all of the
participant's options and SARs shall become fully vested and
exercisable and shall remain so for a period of one year from the
date of such death or Disability, but in no event after the
expiration date of the options or SARs.  Notwithstanding the
foregoing, if the Disability giving rise to the termination of
employment is not within the meaning of Section 422(e)(3) of the
Code, Incentive Stock Options not exercised by such participant
within 90 days after the date of termination of employment will
cease to qualify as Incentive Stock Options and will be treated
as Nonqualified Stock Options under the Plan if required to be so
treated under the Code.

             (ii)   If a participant ceases to be a director,
officer or employee of, or to perform other services for, the
Company and any Subsidiary upon the occurrence of his or her
Retirement, all of theparticipant's options and SARs which are then
vested shall remainexercisable for 90 days after the date of Retirement
or at such later date as determined in the discretion of the Committee,
but in no event after the expiration date of the options or SARs,
provided that the participant does not engage in Competition
during such 90-day period unless he or she receives written
consent to do so from the Committee. Upon the occurrence of such
Retirement, all of the participant's options and SARs which are
not yet vested shall become fully vested and exercisable only at
the discretion of, and on the terms prescribed by, the Committee.

            (iii)    If a participant ceases to be a director,
officer or employee of, or to perform other services for, the
Company or a Subsidiary due to Cause, all of the participant's
options and SARs shall be forfeited immediately upon such
cessation, whether or not then exercisable.

             (iv)   Unless otherwise determined by the Committee,
if a participant ceases to be a director, officer or employee of,
or to otherwise perform services for, the Company or a Subsidiary
for any reason other than death, Disability, Retirement or Cause,
(A) all of the participant's options and SARs that were
exercisable on the date of such cessation shall remain
exercisable for, and shall otherwise terminate at the end of, a
period of 90 days after the date of such cessation, but in no
event after the expiration date of the options or SARs, provided
that the participant does not engage in Competition during such
90day period unless he or she receives written consent to do so
from the Committee and (B) all of the participant's options and
SARs that were not exercisable on the date of such cessation
shall be forfeited immediately upon such cessation.

              (v)   Unless the Committee decides to otherwise
provide for the accelerated vesting of all options and SARs in
the event of a Change in Control, if there is a Change in Control
of the Company and participant is terminated from being a
director, officer or employee of, or from performing other
services for, the Company or any Subsidiary within one year
following such Change in Control, all of the participant's
options and SARs shall become fully vested and exercisable
immediately upon the date of such cessation and shall remain so
for a period of one year from the date of such cessation, but in
no event after the expiration date of the options or SARs.
Notwithstanding the foregoing, Incentive Stock Options not
exercised by such participant within 90 days after the date of
termination of employment will cease to qualify as Incentive
Stock Options and will be treated as Nonqualified Stock Options
under the Plan if required to be so treated under the Code.

          (f)  Grant of Reload Options.  The Committee may
provide (either at the time of grant or exercise of an option),
in its discretion, for the grant to a grantee who exercises all
or any portion of an option  ("Exercised Options") and who pays
all or part of such exercise price with shares of Common Stock,
of an additional option (a "Reload Option") for a number of
shares of Common Stock equal to the sum (the "Reload Number") of
the number of shares of Common Stock tendered or withheld in
payment of such exercise price for the Exercised Options plus, if
so provided by the Committee, the number of shares of Common
Stock, if any, tendered or withheld by the grantee or withheld by
the Company in connection with the exercise of the Exercised
Options  to satisfy any federal, state or local tax withholding
requirements.  The terms of each Reload Option, including the
date of its expiration and the terms and conditions of its
exercisability and transferability, shall be the same as the
terms of the Exercised Option to which it relates, except that
(i) the grant date for each Reload Option shall be the date of
exercise of the Exercised Option to which it relates and (ii) the
exercise price for each Reload Option shall be the Fair Market
Value of the Common Stock on the grant date of the Reload Option.


7.   Stock Appreciation Rights.

          The Committee shall have the authority to grant SARs
under this Plan, either alone or to any optionee in tandem with
options (either at the time of grant of the related option or
thereafter by amendment to an outstanding option).  SARs shall be
subject to such terms and conditions as the Committee may
specify.

          No SAR may be exercised unless the Fair Market Value of
a share of Common Stock of the Company on the date of exercise
exceeds the exercise price of the SAR or, in the case of SARs
granted in tandem with options, any options to which the SARs
correspond.  Prior to the exercise of the SAR and delivery of the
cash and/or Shares represented thereby, the participant shall
have no rights as a stockholder with respect to Shares covered by
such outstanding SAR (including any dividend or voting rights).

          SARs granted in tandem with options shall be
exercisable only when, to the extent and on the conditions that
any related option is exercisable.  The exercise of an option
shall result in an immediate forfeiture of any related SAR to the
extent the option is exercised, and the exercise of an SAR shall
cause an immediate forfeiture of any related option to the extent
the SAR is exercised.

          Upon the exercise of an SAR, the participant shall be
entitled to a distribution in an amount equal to the difference
between the Fair Market Value of a share of Common Stock on the
date of exercise and the exercise price of the SAR or, in the
case of SARs granted in tandem with options, any option to which
the SAR is related, multiplied by the number of Shares as to
which the SAR is exercised. The Committee shall decide whether
such distribution shall be in cash, in Shares having a Fair
Market Value equal to such amount, in Other Company Securities
having a Fair Market Value equal to such amount or in a
combination thereof.

          All SARs will be exercised automatically on the last
day prior to the expiration date of the SAR or, in the case of
SARs granted in tandem with options, any related option, so long
as the Fair Market Value of a share of Common Stock on that date
exceeds the exercise price of the SAR or any related option, as
applicable.  An SAR granted in tandem with options shall expire
at the same time as any related option expires and shall be
transferable only when, and under the same conditions as, any
related option is transferable.

8.   Restricted Stock.

          The Committee may at any time and from time to time
grant Shares of restricted stock under the Plan to such
participants and in such amounts as it determines.  Each grant of
restricted stock shall specify the applicable restrictions on
such Shares, the duration of such restrictions (which shall be at
least six months except as otherwise provided in the third
paragraph of this Section 8), and the time or times at which such
restrictions shall lapse with respect to all or a specified
number of Shares that are part of the grant.

           The participant will be required to pay the
Company the aggregate par value of any Shares of restricted stock
(or such larger amount as the Board may determine to constitute
capital under Section 154 of the Delaware General Corporation
Law, as amended) within ten days of the date of grant, unless
such Shares of restricted stock are treasury shares.  Unless
otherwise determined by the Committee, certificates representing
Shares of restricted stock granted under the Plan will be held in
escrow by the Company on the participant's behalf during any
period of restriction thereon and will bear an appropriate legend
specifying the applicable restrictions thereon, and the
participant will be required to execute a blank stock power
therefor.  Except as otherwise provided by the Committee, during
such period of restriction the participant shall have all of the
rights of a holder of Common Stock, including but not limited to
the rights to receive dividends and to vote, and any stock or
other securities received as a distribution with respect to such
participant's restricted stock shall be subject to the same
restrictions as then in effect for the restricted stock.

          Unless the Committee decides to otherwise provide for
the lapse of all restrictions in the event of a Change in
Control, if there is a Change in Control and participant is
terminated from being a director, officer or employee of, or from
performing other services for, the Company and any Subsidiary
within one year following such Change in Control or at such time
as a participant ceases to be a director, officer or employee of,
or to otherwise perform services for, the Company and its
Subsidiaries due to death or Disability during any period of
restriction, all restrictions on Shares granted to such
participant shall lapse.  Except as otherwise provided by the
Committee, at such time as a participant ceases to be a director,
officer or employee of, or to otherwise perform services for, the
Company or its Subsidiaries for any other reason, all Shares of
restricted stock granted to such participant on which the
restrictions have not lapsed or do not thereupon lapse shall be
immediately forfeited to the Company.  Upon the occurrence of
Retirement prior to the end of any period of restriction, the
Committee, at its discretion, may allow such restrictions to
lapse.

9.   Performance Awards.

          Performance awards may be granted to participants at
any time and from time to time as determined by the Committee.
The Committee shall have complete discretion in determining the
size and composition of performance awards so granted to a
participant and the appropriate period over which performance is
to be measured (a "performance cycle"). Performance awards may
include (i) specific dollar-value
target awards (ii) performance units, the value of each such unit
being determined by the Committee at the time of issuance, and/or
(iii) performance Shares, the value of each such Share being
equal to the Fair Market Value of a share of Common Stock.

          The value of each performance award may be fixed or it
may be permitted to fluctuate based on a performance factor
(e.g., return on equity) selected by the Committee.

          The Committee shall establish performance goals and
objectives for each performance cycle on the basis of such
criteria and objectives as the Committee may select from time to
time, including, without limitation, the performance of the
participant, the Company, one or more of its Subsidiaries or
divisions or any combination of the foregoing.  During any
performance cycle, the Committee shall have the authority to
adjust the performance goals, objectives and/or cycle duration
for such cycle for such reasons as it deems equitable.

          The Committee shall determine the portion of each
performance award that is earned by a participant on the basis of
the Company's performance over the performance cycle in relation
to the performance goals for such cycle. The earned portion of a
performance award may be paid out in Shares, cash, Other Company
Securities, or any combination thereof, as the Committee may
determine.

          A participant must be a director, officer or employee
of, or otherwise perform services for, the Company or its
Subsidiaries at the end of the performance cycle in order to be
entitled to payment of a performance award issued in respect of
such cycle; provided, however, that, except as otherwise
determined by the Committee, if a participant ceases to be a
director, officer or employee of, or to otherwise perform
services for, the Company and its Subsidiaries upon his or her
death, Retirement, or Disability prior to the end of the
performance cycle, the participant shall earn a proportionate
portion of the performance award based upon the elapsed portion
of the performance cycle and the Company's performance over that
portion of such cycle.

          If there is a Change in Control and participant is
terminated from being a director, officer or employee of, or from
performing other services for, the Company or any Subsidiary
within one year following such Change in Control, a participant
shall earn no less than the proportionate portion of the
performance award that the participant would have earned if the
performance cycle(s) had terminated as of the date of such
cessation following the Change in Control.

10.  Withholding Taxes.

(a)       Participant Election.  Unless otherwise determined
by the Committee, a participant may elect to deliver shares of
Common Stock (or have the Company withhold shares acquired upon
exercise of an option or SAR or deliverable upon grant or vesting
of restricted stock, as the case may be) to satisfy, in whole or
in part, the amount the Company is required to withhold for taxes
in connection with the exercise of an option or SAR or the
delivery of restricted stock upon grant or vesting, as the case
may be.  Such election must be made on or before the date the
amount of tax to be withheld is determined.  Once made, the
election
shall be irrevocable.  The fair market value of the shares to be
withheld or delivered will be the Fair Market Value as of the
date the amount of tax to be withheld is determined. In the event
a participant elects to deliver shares of Common Stock pursuant
to this Section 10(a), such delivery must be made subject to the
conditions and pursuant to the procedures set forth in Section
6(b) with respect to the delivery of Common Stock in payment of
the exercise price of options.

(b)       Company Requirement.  The Company may require, as
a condition to any grant or exercise under the Plan or to the
delivery of certificates for Shares issued hereunder, that the
grantee make provision for the payment to the Company, either
pursuant to Section 10(a) or this Section 10(b), of any federal,
state or local taxes of any kind required by law to be withheld
with respect to any grant or any delivery of Shares.  The
Company, to the extent permitted or required by law, shall have
the right to deduct from any payment of any kind (including
salary or bonus) otherwise due to a grantee, an amount equal to
any federal, state or local taxes of any kind required by law to
be withheld with respect to any grant or to the delivery of
Shares under the Plan, or to retain or sell without notice a
sufficient number of the Shares to be issued to such grantee to
cover any such taxes, the payment of which has not otherwise been
provided for in accordance with the terms of the Plan, provided
that the Company shall not sell any such Shares if such sale
would be considered a sale by such grantee for purposes of
Section 16 of the Exchange Act that is not exempt from matching
thereunder.

11.  Written Agreement; Vesting.

          Each employee to whom a grant is made under the Plan
shall enter into a written agreement with the Company that shall
contain such provisions, including without limitation vesting
requirements, consistent with the provisions of the Plan, as may
be approved by the Committee. Unless the Committee determines
otherwise and except as otherwise provided in Sections 6, 7, 8
and 9 in connection with a Change in Control or certain
occurrences of termination, no grant under this Plan may be
exercised, and no restrictions relating thereto may lapse, within
six months of the date such grant is made.

12.  Transferability.

          Unless the Committee determines otherwise, no option,
SAR, performance award, or restricted stock granted under the
Plan shall be transferable by a participant otherwise than by
will or the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Code.
Unless the Committee determines otherwise, an option, SAR, or
performance award may be exercised only by the optionee or
grantee thereof or his guardian or legal representative; provided
that Incentive Stock Options may be exercised by such guardian or
legal representative only if permitted by the Code and any
regulations promulgated thereunder.

13.  Listing, Registration and Qualification.

          If the Committee determines that the listing,
registration or qualification upon any securities exchange or
under any law of Shares subject to any option, SAR,
performance award or restricted stock grant is necessary or
desirable as a condition of, or in connection with, the granting
of same or the issue or purchase of Shares thereunder, no such
option or SAR may be exercised in whole or in part, no such
performance award may be paid out and no Shares may be issued
unless such listing, registration or qualification is effected
free of any conditions not acceptable to the Committee.

          It is the intent of the Company that the Plan comply in
all respects with Section 162(m) of the Code, that awards made
hereunder comply in all respects with Rule 16b-3 under the
Exchange Act, that any ambiguities or inconsistencies in
construction of the Plan be interpreted to give effect to such
intention and that if any provision of the Plan is found not to
be in compliance with Section 162(m), such provision shall be
deemed null and void to the extent required to permit the Plan to
comply with Section 162(m), as the case may be.

14.  Transfer of Employee.

          The transfer of an employee from the Company to a
Subsidiary, from a Subsidiary to the Company, or from one
Subsidiary to another shall not be considered a termination of
employment; nor shall it be considered a termination of
employment if an employee is placed on military or sick leave or
such other leave of absence which is considered by the Committee
as continuing intact the employment relationship.

15.  Adjustments.

          In the event of a reorganization, recapitalization,
stock split, stock dividend, combination of shares, merger,
consolidation, distribution of assets, or any other change in the
corporate structure or shares of the Company, the Committee shall
make such adjustment as it deems appropriate in the number and
kind of Shares or other property reserved for issuance under the
Plan, in the number and kind of Shares or other property covered
by grants previously made under the Plan, and in the exercise
price of outstanding options and SARs.  Any such adjustment shall
be final, conclusive and binding for all purposes of the Plan. In
the event of any merger, consolidation or other reorganization in
which the Company is not the surviving or continuing corporation
or in which a Change in Control is to occur, all of the Company's
obligations regarding options, SARs performance awards, and
restricted stock that were granted hereunder and that are
outstanding on the date of such event shall, on such terms as may
be approved by the Committee prior to such event, be assumed by
the surviving or continuing corporation or canceled in exchange
for property (including cash).

          Without limitation of the foregoing, in connection with
any transaction of the type specified by clause (iii) of the
definition of a Change in Control in Section 2(c), the Committee
may, in its discretion, (i) cancel any or all outstanding options
under the Plan in consideration for payment to the holders
thereof of an amount equal to the portion of the consideration
that would have  been payable to such holders pursuant to such
transaction if their options had been fully exercised immediately
prior to such transaction, less the aggregate exercise price that
would have been payable therefor, or (ii) if the amount that
would have been payable to the option holders pursuant to such
transaction if the vested portion of their options had been fully
exercised immediately prior thereto would be less than the
aggregate exercise price that would have been payable therefor,
cancel any or all such options for no consideration or payment of
any kind.  Payment of any amount payable pursuant to the
preceding sentence may be made in cash or, in the event that the
consideration to be received in such transaction includes
securities or other property, in cash and/or securities or other
property in the Committee's discretion.

16.  Termination and Modification of the Plan.

          The Board of Directors or the Committee, without
approval of the stockholders, may modify or terminate the Plan,
except that no modification shall become effective without prior
approval of the stockholders of the Company if stockholder
approval would be required for continued compliance with the
performance-based compensation exception of Section 162(m) of the
Code or any listing requirement of the principal stock exchange
on which the Common Stock is then listed.

17.  Amendment or Substitution of Awards under the Plan.

          The terms of any outstanding award under the Plan may
be amended from time to time by the Committee in its discretion
in any manner that it deems appropriate (including, but not
limited to, acceleration of the date of exercise of any award
and/or payments thereunder or of the date of lapse of
restrictions on Shares); provided that, (i) notwithstanding
anything to the contrary contained herein, the Committee may not,
at any time, lower the exercise price of any option that is
outstanding pursuant to the Plan as of such time without first
obtaining the affirmative vote of a majority of the shares of
Common Stock then issued and outstanding and (ii) except as
otherwise provided in Section 15, no such amendment shall
adversely affect in a material manner any right of a participant
under the award without his or her written consent.  The
Committee may, in its discretion, permit holders of awards under
the Plan to surrender outstanding awards in order to exercise or
realize rights under other awards, or in exchange for the grant
of new awards, or require holders of awards to surrender
outstanding awards as a condition precedent to the grant of new
awards under the Plan.

18.  Commencement Date; Termination Date.

          The date of commencement of the Plan shall be June 1,
1998, subject to approval by the shareholders of the Company.
The Plan may terminate upon the adoption of a resolution of the
Board terminating the Plan, in which event termination of the
Plan shall not materially and adversely affect any of the rights
or obligations of any person, without his consent, under any
grant of options or other incentives theretofore granted under
the Plan.

19.  Governing Law.  The Plan shall be governed by the corporate
laws of the State of Delaware, without giving effect to any
choice of law provisions.