VARLEN CORPORATION
              1998 LONG-TERM EQUITY INCENTIVE PLAN
                 (as amended May 27, 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 suchparticipant 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 the participant's options and SARs which are
then vested shall remain exercisable for 90 days after the date
of Retirement, 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 90-day 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.