Exhibit 10.9











                                     AMENDED

                              U.S. INDUSTRIES, INC.

                                STOCK OPTION PLAN

                      Initially Effective February 8, 1996

         (Incorporating Amendments Effective on or before June 11, 1998)










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                                TABLE OF CONTENTS
                                -----------------

                                                                          Page

ARTICLE I.        PURPOSE...................................................1

ARTICLE II.       DEFINITIONS...............................................1

ARTICLE III.      ADMINISTRATION............................................5

ARTICLE IV.       SHARE AND OTHER LIMITATIONS...............................7

ARTICLE V.        ELIGIBILITY..............................................11

ARTICLE VI.       EMPLOYEE STOCK OPTION GRANTS.............................11

ARTICLE VII.      RESTRICTED STOCK AWARDS..................................14

ARTICLE VIII.     NON-EMPLOYEE DIRECTOR STOCK AWARDS AND STOCK
                  OPTION GRANTS............................................16

ARTICLE IX.       NON-TRANSFERABILITY......................................21

ARTICLE X.        CHANGE IN CONTROL PROVISIONS.............................22

ARTICLE XI.       TERMINATION OR AMENDMENT OF THE PLAN.....................24

ARTICLE XII.      UNFUNDED PLAN............................................25

ARTICLE XIII.     GENERAL PROVISIONS.......................................25

ARTICLE XIV.      AMENDED EFFECTIVE DATE OF PLAN...........................28

ARTICLE XV.       TERM OF PLAN.............................................28

ARTICLE XVI.      NAME OF PLAN.............................................28



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                          Amended U.S. Industries, Inc.
                                Stock Option Plan


                                   ARTICLE I.

                                    PURPOSE

      The purpose of this Amended U.S. Industries, Inc. Stock Option Plan (the
"Plan") is to enhance the profitability and value of U.S. Industries, Inc. for
the benefit of its stockholders by enabling the Company (1) to offer key
employees of the Company and Designated Subsidiaries, Stock Options and, during
the Company's 1995 Fiscal Year, Restricted Stock in the Company, thereby
creating a means to raise the level of stock ownership by key employees in order
to attract, retain and reward such key employees and strengthen the mutuality of
interests between key employees and the Company's stockholders and (2) to pay
non-employee directors of the Company their current annual retainer fee in the
form of shares of Common Stock, and to make awards and grants of Common Stock
and Stock Options to non-employee directors thereby attracting, retaining and
rewarding such non-employee directors, and strengthening the mutuality of
interests between non-employee directors and the Company's stockholders. The
Plan is effective as of the date set forth in Article XIV and is an amendment
and restatement of the U.S. Industries, Inc. Stock Option Plan (the "Initial
Plan"), which was initially effective April 13, 1995.


                                   ARTICLE II.

                                   DEFINITIONS

      For purposes of this Plan, the following terms shall have the following
meanings:

            2.1 "Amended Effective Date" shall mean the effective date of the
      Plan as defined in Article XIV.

            2.2 "Award" shall mean any award under this Plan of any Stock
      Option, Restricted Stock or, solely as provided in Article VIII, Common
      Stock. All Awards, other than Common Stock awarded pursuant to Article
      VIII, shall be confirmed by, and subject to the terms of, a written
      agreement executed by the Company and the Participant.

            2.3 "Board" shall mean the Board of Directors of the Company.

            2.4 "Cause" shall mean, with respect to a Participant's Termination
      of Employment, (1) in the case where there is no employment agreement




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      between the Company or a Designated Subsidiary and the Participant in
      effect at the time of the relevant grant or where there is an employment
      agreement in effect at such time, but such agreement does not define cause
      (or words of like import), termination due to a Participant's dishonesty,
      fraud, insubordination, willful misconduct, refusal to perform services
      (for any reason other than illness or incapacity) or materially
      unsatisfactory performance of his or her duties for the Company or a
      Designated Subsidiary; or (2) in the case where there is an employment
      agreement between the Company or a Designated Subsidiary and the
      Participant in effect at the time of grant that defines cause (or words of
      like import), termination that is or would be deemed to be for cause (or
      words of like import) as defined under such employment agreement at the
      time of grant. With respect to a Participant's Termination of
      Directorship, Cause shall mean an act or a failure to act that constitutes
      "cause" for removal of a director under applicable Delaware law.

            2.5 "Change in Control" shall have the meaning set forth in Article
      X.

            2.6 "Code" shall mean the Internal Revenue Code of 1986, as amended.

            2.7 "Committee" shall mean a committee of the Board appointed from
      time to time by the Board, which committee shall be intended to consist of
      two or more non-employee directors, each of whom shall be, to the extent
      required by Rule 16b-3 promulgated under Section 16(b) of the Exchange Act
      as then in effect or any successor provisions ("Rule 16b-3") and for the
      exceptions for performance based compensation under Section 162(m) of the
      Code and any regulations thereunder ("Section 162(m) of the Code"), a
      "non-employee director" as defined in Rule 16b-3 and an "outside director"
      as defined under Section 162(m) of the Code, except that, if and to the
      extent that no Committee exists which has the authority to administer the
      Plan, the functions of the Committee shall be exercised by the Board. If
      for any reason the appointed Committee does not meet the requirements of
      Rule 16b-3 or Section 162(m) of the Code, such noncompliance with the
      requirements of Rule 16b-3 or Section 162(m) of the Code shall not affect
      the validity of the awards, grants, interpretations or other actions of
      the Committee.

            2.8 "Common Stock" means the Common Stock, $.01 par value per share,
      of the Company.

            2.9   "Company" shall mean U.S. Industries, Inc. and any successor
      by merger, consolidation or otherwise.

            2.10 "Designated Subsidiary" shall mean a subsidiary as defined in
      Section 424(f) of the Code, of the Company which has been designated from
      time to time by the Board to participate in the Plan.



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            2.11 "Disability" shall mean (1) in the case where there is no
      employment agreement between the Company or a Designated Subsidiary and
      the Participant in effect at the time of the relevant grant, or where
      there is an employment agreement in effect at such time, but such
      agreement does not define disability, total and permanent disability, as
      defined in Section 22(e)(3) of the Code; or (2) in the case where there is
      an employment agreement between the Company or a Designated Subsidiary and
      the Participant at the time of the relevant grant that defines disability,
      disability as defined under such employment agreement at the time of
      grant.

            2.12 "Eligible Employees" shall mean the employees of the Company
      and the Designated Subsidiaries who are eligible pursuant to Section 5.1
      to be granted Awards under this Plan.

            2.13 "Exchange Act" shall mean the Securities Exchange Act of 1934.

            2.14 "Fair Market Value" for purposes of this Plan, unless otherwise
      required by any applicable provision of the Code or any regulations issued
      thereunder, shall mean, as of any date, the last sales price reported for
      the Common Stock on the applicable date, (i) as reported by the principal
      national securities exchange in the United States on which it is then
      traded, or (ii) if not traded on any such national securities exchange, as
      quoted on an automated quotation system sponsored by the National
      Association of Securities Dealers, or if the Common Stock shall not have
      been reported or quoted on such date, on the first day prior thereto on
      which the Common Stock was reported or quoted. If the Common Stock is not
      readily tradable on a national securities exchange or any system sponsored
      by the National Association of Securities Dealers, its Fair Market Value
      shall be set in good faith by the Committee on the advice of a registered
      investment adviser (as defined under the Investment Advisers Act of 1940).

            2.15 "Good Reason" shall mean, with respect to a Participant's
      Termination of Employment, (1) in the case where there is no employment
      agreement between the Company or a Designated Subsidiary and the
      Participant in effect at the time of the relevant grant, or where there is
      an employment agreement in effect at such time, but such agreement does
      not define good reason (or words of like import), a voluntary termination
      due to good reason, as the Committee, in its sole discretion, decides to
      treat as a Good Reason termination; or (2) in the case where there is an
      employment agreement between the Company or a Designated Subsidiary and
      the Participant in effect at the time of the relevant grant that defines
      good reason (or words of like import), a termination due to good reason
      (or words of like import), as defined in such employment agreement at the
      time of grant.

            2.16 "1995 Fiscal Year" shall mean the Company's fiscal year ending
      September 30, 1995.



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            2.17 "Participant" shall mean the following persons to whom an Award
      has been made pursuant to this Plan: Eligible Employees of the Company and
      Designated Subsidiaries and non-employee directors of the Company;
      provided, however, that non-employee directors shall be Participants for
      purposes of the Plan solely with respect to awards of shares of Common
      Stock and Stock Options pursuant to Article VIII.

            2.18 "Restricted Stock" shall mean an award of shares of Common
      Stock under the Plan that is subject to restrictions under Article VII.

            2.19 "Restriction Period" shall have the meaning set forth in
      Subsection 7.3(a) with respect to Restricted Stock for Eligible Employees.

            2.20 "Retirement" shall mean Termination of Employment without Cause
      from the Company and/or a Designated Subsidiary by a Participant who has
      attained (1) at least age sixty-five (65); (2) at least age sixty-two (62)
      and performed ten (10) or more years of service with the Company (or its
      predecessors) and/or a Designated Subsidiary; or (3) such earlier date
      after age fifty-five (55) as approved by the Committee with regard to such
      Participant.

            2.21 "Stock Option" or "Option" shall mean any Option to purchase
      shares of Common Stock granted to Eligible Employees pursuant to Article
      VI and non-employee directors pursuant to Article VIII.

            2.22 "Termination of Directorship" shall mean, with respect to a
      non-employee director, that the non-employee director has ceased to be a
      director of the Company.

            2.23 "Termination of Employment" shall mean (1) a termination of
      service (for reasons other than a military or personal leave of absence
      granted by the Company) of a Participant from the Company and its
      subsidiaries, as defined under Section 424(f) of the Code; or (2) when an
      entity which is employing a Participant ceases to be a subsidiary, as
      defined under Section 424(f) of the Code, unless the Participant thereupon
      becomes employed by the Company or another subsidiary.

            2.24 "Transfer" or "Transferred" shall mean anticipate, alienate,
      attach, sell, assign, pledge, encumber, charge or otherwise transfer.

            2.25 "Withholding Election" shall have the meaning set forth in
Section 13.4.




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                                 ARTICLE III.

                                ADMINISTRATION

      3.1 The Committee. The Plan shall be administered and interpreted by the
Committee.

      3.2 Awards. The Committee shall have full authority to grant, pursuant to
the terms of this Plan, Stock Options and Restricted Stock to Eligible
Employees. Common Stock and Stock Options shall be granted to non-employee
directors pursuant to Article VIII. In particular, the Committee shall have the
authority:

            (a) to select the Eligible Employees to whom Stock Options and
      Restricted Stock may from time to time be granted hereunder;

            (b) to determine whether and to what extent Stock Options and
      Restricted Stock, or any combination thereof, are to be granted hereunder
      to one or more Eligible Employees;

            (c) to determine the number of shares of Common Stock to be covered
      by each Award to an Eligible Employee granted hereunder;

            (d) to determine the terms and conditions, not inconsistent with the
      terms of this Plan, of any Award granted hereunder to an Eligible Employee
      (including, but not limited to, the share price, any restriction or
      limitation, any vesting schedule or acceleration thereof, or any
      forfeiture restrictions or waiver thereof, regarding any Stock Option or
      Restricted Stock, and the shares of Common Stock relating thereto, based
      on such factors, if any, as the Committee shall determine, in its sole
      discretion);

            (e) to determine whether and under what circumstances a Stock Option
      may be settled in cash, Common Stock and/or Restricted Stock under
      Subsection 6.2(d);

            (f) to determine whether, to what extent and under what
      circumstances to provide loans (which shall be on a recourse basis and
      shall bear a reasonable rate of interest) to Eligible Employees in order
      to purchase shares of Common Stock under the Plan; and

            (g) to determine whether to require an Eligible Employee, as a
      condition of the granting of an Award, to not sell or otherwise dispose of
      shares acquired pursuant to the exercise of an Option or as an Award for a
      period of time as determined by the Committee, in its sole discretion,
      following the date of the acquisition of such Option or Award.



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      3.3 Guidelines. Subject to Article XI hereof, the Committee shall have the
authority to adopt, alter and repeal such administrative rules, guidelines and
practices governing this Plan and perform all acts, including the delegation of
its administrative responsibilities, as it shall, from time to time, deem
advisable; to construe and interpret the terms and provisions of this Plan and
any Award issued under this Plan (and any agreements relating thereto); and to
otherwise supervise the administration of this Plan. The Committee may correct
any defect, supply any omission or reconcile any inconsistency in this Plan or
in any agreement relating thereto in the manner and to the extent it shall deem
necessary to carry this Plan into effect but only to the extent any such action
would be permitted under the applicable provisions of both Rule 16b-3 and
Section 162(m) of the Code. The Committee may adopt special guidelines and
provisions for persons who are residing in, or subject to, the taxes of,
countries other than the United States to comply with applicable tax and
securities laws. To the extent applicable, this Plan is intended to comply with
Section 162(m) of the Code and the applicable requirements of Rule 16b-3 and
shall be limited, construed and interpreted in a manner so as to comply
therewith.

      3.4 Decisions Final. Any decision, interpretation or other action made or
taken in good faith by or at the direction of the Company, the Board, or the
Committee (or any of its members) arising out of or in connection with the Plan
shall be within the absolute discretion of all and each of them, as the case may
be, and shall be final, binding and conclusive on the Company and all employees
and Participants and their respective heirs, executors, administrators,
successors and assigns.

      3.5 Reliance on Counsel. The Company, the Board or the Committee may
consult with legal counsel, who may be counsel for the Company or other counsel,
with respect to its obligations or duties hereunder, or with respect to any
action or proceeding or any question of law, and shall not be liable with
respect to any action taken or omitted by it in good faith pursuant to the
advice of such counsel.

      3.6 Procedures. If the Committee is appointed, the Board of Directors
shall designate one of the members of the Committee as chairman and the
Committee shall hold meetings, subject to the By-Laws of the Company, at such
times and places as it shall deem advisable. A majority of the Committee members
shall constitute a quorum. All determinations of the Committee shall be made by
a majority of its members. Any decision or determination reduced to writing and
signed by all the Committee members in accordance with the By-Laws of the
Company, shall be fully as effective as if it had been made by a vote at a
meeting duly called and held. The Committee shall keep minutes of its meetings
and shall make such rules and regulations for the conduct of its business as it
shall deem advisable.



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      3.7   Designation of Consultants/Liability.

            (a) The Committee may designate employees of the Company and
      professional advisors to assist the Committee in the administration of the
      Plan and may grant authority to employees to execute agreements or other
      documents on behalf of the Committee.

            (b) The Committee may employ such legal counsel, consultants and
      agents as it may deem desirable for the administration of the Plan and may
      rely upon any opinion received from any such counsel or consultant and any
      computation received from any such consultant or agent. Expenses incurred
      by the Committee or Board in the engagement of any such counsel,
      consultant or agent shall be paid by the Company. The Committee, its
      members and any person designated pursuant to paragraph (a) above shall
      not be liable for any action or determination made in good faith with
      respect to the Plan. To the maximum extent permitted by applicable law, no
      officer of the Company or member or former member of the Committee or of
      the Board shall be liable for any action or determination made in good
      faith with respect to the Plan or any Award granted under it. To the
      maximum extent permitted by applicable law or the Certificate of
      Incorporation or By-Laws of the Company and to the extent not covered by
      insurance, each officer and member or former member of the Committee or of
      the Board shall be indemnified and held harmless by the Company against
      any cost or expense (including reasonable fees of counsel reasonably
      acceptable to the Company) or liability (including any sum paid in
      settlement of a claim with the approval of the Company), and advanced
      amounts necessary to pay the foregoing at the earliest time and to the
      fullest extent permitted, arising out of any act or omission to act in
      connection with the Plan, except to the extent arising out of such
      officer's, member's or former member's own fraud or bad faith. Such
      indemnification shall be in addition to any rights of indemnification the
      officers, directors or members or former officers, directors or members
      may have under applicable law or under the Certificate of Incorporation or
      By-Laws of the Company or Designated Subsidiary. Notwithstanding anything
      else herein, this indemnification will not apply to the actions or
      determinations made by an individual with regard to Awards granted to him
      or her under this Plan.


                                  ARTICLE IV.

                          SHARE AND OTHER LIMITATIONS

      4.1 Shares.

            (a) General Limitation. The aggregate number of shares of Common
      Stock which may be issued under this Plan or with respect to which other
      Awards may be granted shall not exceed 8.025 million shares (subject to
      any increase or decrease pursuant to Section 4.2) which may be either
      authorized and unissued Common Stock


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      or Common Stock held in or acquired for the treasury of the Company or
      both. If, before or after the Amended Effective Date, any Option granted
      under this Plan shall expire, terminate or be cancelled for any reason
      without having been exercised in full or if, before or after the Amended
      Effective Date, the Company repurchases any Option pursuant to Section
      6.2(e) or shares of Common Stock issued upon exercise of an Option, the
      number of unpurchased shares of Common Stock and the repurchased shares of
      Common Stock shall again be available for the purposes of Awards under the
      Plan. If any shares of Restricted Stock awarded under this Plan to a
      Participant are forfeited or repurchased by the Company for any reason,
      whether before or after the Amended Effective Date, the number of
      forfeited or repurchased shares of Restricted Stock shall again be
      available for the purposes of Awards under the Plan.

            (b) Individual Participant Limitations. The maximum number of shares
      of Common Stock subject to any Option which may be granted under this Plan
      to each Participant shall not exceed 225,000 shares (subject to any
      increase or decrease pursuant to Section 4.2) during each fiscal year of
      the Company during the entire term of the Plan other than the Company's
      1995 Fiscal Year. With respect to the Company's 1995 Fiscal Year, the
      maximum number of shares of Common Stock subject to any Option which may
      be granted under this Plan during such fiscal year to each Participant
      shall not exceed 1.2 million shares (subject to any increase or decrease
      pursuant to Section 4.2). The maximum number of shares of Restricted Stock
      which may be granted under this Plan to each Participant shall not exceed
      510,000 shares (subject to any increase or decrease pursuant to Section
      4.2) for the Company's 1995 Fiscal Year. No awards of Restricted Stock may
      be granted under this Plan after the Company's 1995 Fiscal Year. To the
      extent that shares of Common Stock for which Options are permitted to be
      granted to a Participant pursuant to Section 4.1(b) during a fiscal year
      are not covered by a grant of an Option to a Participant issued in such
      fiscal year (other than with respect to the 1995 Fiscal Year) such shares
      of Common Stock shall automatically increase the number of shares
      available for grant of Options to such Participant in the subsequent
      fiscal years during the term of the Plan. To the extent that shares of
      Common Stock for which Options are permitted to be granted to a
      Participant pursuant to Section 4.1(b) during the 1995 Fiscal Year are not
      covered by a grant of an Option issued in the 1995 Fiscal Year, such
      shares of Common Stock shall not be available for grant or issuance to the
      Participant in any subsequent fiscal year during the term of the Plan for
      a grant of Options.

            (c) Additional Limitation. Notwithstanding the foregoing, no Awards
      may be granted hereunder if such grant would cause the number of shares of
      Common Stock which are (i) granted under this Plan and subject to a
      Restriction Period, (ii) granted under the U.S. Industries, Inc.
      Restricted Stock Plan and subject to a Vesting Period (as defined in the
      U.S. Industries, Inc. Restricted Stock Plan) or, (iii) in the case of an
      Option granted under this Plan, may be acquired pursuant to an exercise of
      such Option, to exceed 9.9 percent of the total number of shares of Common
      Stock issued and outstanding (assuming full dilution for all other
      outstanding Awards and other



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      equity convertible into Common Stock, including, without limitation
      warrants), determined as of the close of the most recent fiscal quarter of
      the Company, in accordance with generally accepted accounting principles.

      4.2   Changes.

            (a) The existence of the Plan and the Awards granted hereunder shall
      not affect in any way the right or power of the Board or the stockholders
      of the Company to make or authorize any adjustment, recapitalization,
      reorganization or other change in the Company's capital structure or its
      business, any merger or consolidation of the Company or Designated
      Subsidiaries, any issue of bonds, debentures, preferred or prior
      preference stock ahead of or affecting Common Stock, the dissolution or
      liquidation of the Company or Designated Subsidiaries, any sale or
      transfer of all or part of its assets or business or any other corporate
      act or proceeding.

            (b) In the event of any such change in the capital structure or
      business of the Company by reason of any stock dividend or distribution,
      stock split or reverse stock split, recapitalization, reorganization,
      merger, consolidation, split-up, combination or exchange of shares,
      distribution with respect to its outstanding Common Stock of capital stock
      other than Common Stock, reclassification of its capital stock, issuance
      of warrants or options to purchase any Common Stock or securities
      convertible into Common Stock, or any similar change affecting the
      Company's capital structure or business, then the aggregate number and
      kind of shares which thereafter may be issued under this Plan, the number
      and kind of shares or other property (including cash) to be issued upon
      exercise of an outstanding Option granted under this Plan and the purchase
      price thereof, the number and kind of shares subject to awards of
      Restricted Stock granted under this Plan and the number of shares of
      Common Stock to be awarded pursuant to Article VIII hereof shall be
      appropriately adjusted consistent with such change in such manner as the
      Committee may deem equitable to prevent substantial dilution or
      enlargement of the rights granted to, or available for, Participants under
      this Plan, and any such adjustment determined by the Committee in good
      faith shall be binding and conclusive on the Company and all Participants
      and employees and their respective heirs, executors, administrators,
      successors and assigns.

            (c) Fractional shares of Common Stock resulting from any adjustment
      in Options pursuant to Section 4.2(a) or (b) shall be aggregated until,
      and eliminated at, the time of exercise by rounding-down for fractions
      less than one-half (1/2) and rounding-up for fractions equal to or greater
      than one-half (1/2). No cash settlements shall be made with respect to
      fractional shares eliminated by rounding. Notice of any adjustment shall
      be given by the Committee to each Participant whose Option has been
      adjusted and such adjustment (whether or not such notice is given) shall
      be effective and binding for all purposes of the Plan. In the case of
      other Awards, fractional shares resulting from adjustment pursuant to
      Sections 4.2(a) or (b) shall be awarded under the Plan pursuant to the
      terms of the Plan.



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            (d) In the event of a merger or consolidation in which the Company
      is not the surviving entity or in the event of any transaction that
      results in the acquisition of substantially all of the Company's
      outstanding Common Stock by a single person or entity or by a group of
      persons and/or entities acting in concert, or in the event of the sale or
      transfer of all or substantially all of the Company's assets (all of the
      foregoing being referred to as "Acquisition Events"), then the Committee
      may, in its sole discretion, terminate all outstanding Options of Eligible
      Employees, effective as of the date of the Acquisition Event, by
      delivering notice of termination to each such Participant at least twenty
      (20) days prior to the date of consummation of the Acquisition Event;
      provided, that during the period from the date on which such notice of
      termination is delivered to the consummation of the Acquisition Event,
      each such Participant shall have the right to exercise in full all of his
      or her Options that are then outstanding (without regard to any
      limitations on exercisability otherwise contained in the Option) but
      contingent on occurrence of the Acquisition Event, and, provided that, if
      the Acquisition Event does not take place within a specified period after
      giving such notice for any reason whatsoever, the notice and exercise
      shall be null and void.

            Notwithstanding the foregoing, at the discretion of the Committee,
      the provisions contained in this subsection shall be adjusted as they
      apply to Options granted to Eligible Employees within six (6) months
      before the occurrence of an Acquisition Event if the holder of such Award
      is subject to the reporting requirements of Section 16(a) of the Exchange
      Act in such manner as determined by the Committee, including without
      limitation, terminating Options at specific dates after the Acquisition
      Event, in order to give the holder the benefit of the Option. If an
      Acquisition Event occurs, to the extent the Committee does not terminate
      the outstanding Options pursuant to this Section 4.2(d), then the
      provisions of Section 4.2(b) shall apply.

            (e) Upon consummation of the mergers (the "Mergers") contemplated by
      the Agreement and Plan of Merger dated February 16, 1998, as amended,
      among U.S. Industries, Inc., USI, Inc., Blue Merger Corp., Zoro Merger
      Corp., and Zurn Industries, Inc. (the "Merger Agreement") the Plan shall
      be assumed by USI, Inc. ("New USI") and upon the assumption of this Plan
      by New USI: (i) Common Stock as used in this Plan shall mean the Common
      Stock, $.01 par value per share, of New USI, (ii) the Board shall mean the
      Board of New USI, and (iii) each share of Company Common Stock awarded
      pursuant to this Plan shall automatically be converted into shares of New
      USI Common Stock in accordance with Section 2.8 of the Merger Agreement.

      4.3 Purchase Price. Notwithstanding any provision of this Plan to the
contrary, if authorized but previously unissued shares of Common Stock are
issued under this Plan, such shares shall not be issued for a consideration
which is less than par value.




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                                  ARTICLE V.

                                  ELIGIBILITY

      5.1 Senior officers, senior management and key employees of the Company
and its Designated Subsidiaries are eligible to be granted Options and
Restricted Stock under this Plan.
Eligibility under this Plan shall be determined by the Committee.

      5.2 Non-employee directors are eligible to receive an award of shares of
Common Stock and a grant of Stock Options in accordance with Article VIII of the
Plan.


                                  ARTICLE VI.

                         EMPLOYEE STOCK OPTION GRANTS

      6.1 Options. Stock Options granted hereunder shall be non-qualified
Options and are not intended to be Incentive Stock Options that satisfy the
requirements of Section 422 of the Code. The terms of this Article VI shall
apply only to Options granted to Eligible Employees.

      6.2 Terms of Options. Options granted under this Plan shall be subject to
the following terms and conditions, and, shall be in such form and contain such
additional terms and conditions, not inconsistent with the terms of this Plan,
as the Committee shall deem desirable:

            (a) Option Price. The purchase price of shares subject to a
      non-qualified Stock Option shall be determined by the Committee but shall
      not be less than the par value of the shares of Common Stock.

            (b) Option Term. The term of each Stock Option shall be fixed by the
      Committee, but no Stock Option shall be exercisable more than ten (10)
      years after the date the Option is granted.

            (c) Exercisability. Stock Options shall be exercisable at such time
      or times and subject to such terms and conditions as shall be determined
      by the Committee at grant. If the Committee provides, in its discretion,
      that any Stock Option is exercisable subject to certain limitations
      (including, without limitation, that it is exercisable only in
      installments or within certain time periods), the Committee may waive such
      limitations on the exercisability at any time at or after grant in whole
      or in part (including, without limitation, the Committee may waive the
      installment exercise provisions or accelerate the time at which Options
      may be exercised), based on such factors, if any, as the Committee shall
      determine, in its sole discretion.




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<PAGE>



            (d) Method of Exercise. Subject to whatever installment exercise and
      waiting period provisions apply under subsection (c) above, Stock Options
      may be exercised in whole or in part at any time during the Option term,
      by giving written notice of exercise to the Company specifying the number
      of shares to be purchased. Such notice shall be accompanied by payment in
      full of the purchase price in such form, or such other arrangement for the
      satisfaction of the purchase price, as the Committee may accept. If and to
      the extent determined by the Committee in its sole discretion at or after
      grant, payment in full or in part may also be made in the form of Common
      Stock owned by the Participant (and for which the Participant has good
      title free and clear of any liens and encumbrances) or Restricted Stock
      based in each case on the Fair Market Value of the Stock on the payment
      date as determined by the Committee (without regard to any forfeiture
      restrictions applicable to such Restricted Stock). No shares of Common
      Stock shall be issued until payment, as provided herein, therefor has been
      made or provided for. If payment in full or in part has been made in the
      form of Restricted Stock an equivalent number of shares of Common Stock
      issued on exercise of the Option shall be subject to the same restrictions
      and conditions, during the remainder of the Restriction Period applicable
      to the Restricted Stock surrendered therefor.

            (e) Buy Out and Settlement Provisions. The Committee may at any time
      on behalf of the Company offer to buy out an Option previously granted,
      based on such terms and conditions as the Committee shall establish and
      communicate to the Participant at the time that such offer is made.

            (f) Form, Modification, Extension and Renewal of Options. Subject to
      the terms and conditions and within the limitations of the Plan, an Option
      shall be evidenced by such form of agreement as is approved by the
      Committee, and the Committee may modify, extend or renew outstanding
      Options granted under the Plan, or accept the surrender of outstanding
      Options (up to the extent not theretofore exercised) and authorize the
      granting of new Options in substitution therefor (to the extent not
      theretofore exercised). Notwithstanding the foregoing, on or after
      September 1, 1995, an outstanding Option may not be modified to reduce the
      exercise price thereof nor may a new Option at a lower price be
      substituted for a surrendered Option, provided that the foregoing shall
      not apply to adjustments or substitutions in accordance with Section 4.2
      of the Plan.

            (g) Other Terms and Conditions. Options may contain such other
      provisions, which shall not be inconsistent with any of the foregoing
      terms of the Plan, as the Committee shall deem appropriate including,
      without limitation, permitting "reloads" such that the same number of
      Options are granted as the number of Options exercised, shares used to pay
      for the exercise price of Options or shares used to pay withholding taxes
      ("Reloads"). With respect to Reloads, the exercise price of the new Stock
      Option shall be the Fair Market Value on the date of the "reload" and the
      term of the Stock



                                      12

<PAGE>



      Option shall be the same as the remaining term of the Options that are
      exercised, if applicable, or such other exercise price and term as
      determined by the Committee.

      6.3 Termination of Employment. The following rules apply with regard to
Options upon the Termination of Employment of a Participant:

            (a) Termination by Reason of Death. If a Participant's Termination
      of Employment is by reason of death, any Stock Option held by such
      Participant, unless otherwise determined by the Committee at grant or, if
      no rights of the Participant's estate are reduced, thereafter, may be
      exercised, to the extent exercisable at the Participant's death, by the
      legal representative of the estate, at any time within a period of one (1)
      year from the date of such death, but in no event beyond the expiration of
      the stated term of such Stock Option.

            (b) Termination by Reason of Disability. If a Participant's
      Termination of Employment is by reason of Disability, any Stock Option
      held by such Participant, unless otherwise determined by the Committee at
      grant or, if no rights of the Participant are reduced, thereafter, may be
      exercised, to the extent exercisable at the Participant's termination, by
      the Participant (or the legal representative of the Participant's estate
      if the Participant dies after termination) at any time within a period of
      one (1) year from the date of such termination, but in no event beyond the
      expiration of the stated term of such Stock Option.

            (c) Termination by Reason of Retirement. If a Participant's
      Termination of Employment is by reason of Retirement, any Stock Option
      held by such Participant, unless otherwise determined by the Committee at
      grant, or, if no rights of the Participant are reduced, thereafter, shall
      be fully vested and may thereafter be exercised by the Participant at any
      time within a period of one (1) year from the date of such termination,
      but in no event beyond the expiration of the stated term of such Stock
      Option; provided, however, that, if the Participant dies within such
      exercise period, any unexercised Stock Option held by such Participant
      shall thereafter be exercisable, to the extent to which it was exercisable
      at the time of death, for a period of twelve (12) months (or such other
      period as the Committee may specify at grant or, if no rights of the
      Participant's estate are reduced, thereafter) from the date of such death,
      but in no event beyond the expiration of the stated term of such Stock
      Option.

            (d) Involuntary Termination Without Cause or Termination for Good
      Reason. If a Participant's Termination of Employment is by involuntary
      termination without Cause or for Good Reason, any Stock Option held by
      such Participant, unless otherwise determined by the Committee at grant
      or, if no rights of the Participant are reduced, thereafter, may be
      exercised, to the extent exercisable at termination, by the Participant at
      any time within a period of ninety (90) days from the date of such
      termination, but in no event beyond the expiration of the stated term of
      such Stock Option.



                                      13

<PAGE>



            (e) Termination Without Good Reason. If a Participant's Termination
      of Employment is voluntary but without Good Reason and occurs prior to, or
      more than ninety (90) days after, the occurrence of an event which would
      be grounds for Termination of Employment by the Company for Cause (without
      regard to any notice or cure period requirements), any Stock Option held
      by such Participant, unless otherwise determined by the Committee at grant
      or, if no rights of the Participant are reduced, thereafter, may be
      exercised, to the extent exercisable at termination, by the Participant at
      any time within a period of thirty (30) days from the date of such
      termination, but in no event beyond the expiration of the stated term of
      such Stock Option.

            (f) Other Termination. Unless otherwise determined by the Committee
      at grant or, if no rights of the Participant are reduced, thereafter, if a
      Participant's Termination of Employment is for any reason other than
      death, Disability, Retirement, Good Reason, involuntary termination
      without Cause or voluntary termination as provided in subsection (e)
      above, any Stock Option held by such Participant shall thereupon terminate
      and expire as of the date of termination, provided that (unless the
      Committee determines a different period upon grant or, if, no rights of
      the Participant are reduced, thereafter) in the event the termination is
      for Cause or is a voluntary termination without Good Reason within ninety
      (90) days after occurrence of an event which would be grounds for
      Termination of Employment by the Company for Cause (without regard to any
      notice or cure period requirement), any Stock Option held by the
      Participant at the time of occurrence of the event which would be grounds
      for Termination of Employment by the Company for Cause shall be deemed to
      have terminated and expired upon occurrence of the event which would be
      grounds for Termination of Employment by the Company for Cause.


                                 ARTICLE VII.

                            RESTRICTED STOCK AWARDS

      7.1 Awards of Restricted Stock. Shares of Restricted Stock may be issued
to Eligible Employees either alone or in addition to other Awards granted under
the Plan. The Committee shall determine the eligible persons to whom, and the
time or times at which, grants of Restricted Stock will be made, the number of
shares to be awarded, the price (if any) to be paid by the recipient (subject to
Section 7.2), the time or times within which such Awards may be subject to
forfeiture, the vesting schedule and rights to acceleration thereof, and all
other terms and conditions of the Awards. The Committee may condition the grant
of Restricted Stock upon the attainment of specified performance goals or such
other factors as the Committee may determine, in its sole discretion.
Notwithstanding anything herein to the contrary, no awards of Restricted Stock
may be granted under the Plan after the Company's 1995 Fiscal Year.




                                      14

<PAGE>



      7.2 Awards and Certificates. The prospective Participant selected to
receive a Restricted Stock Award shall not have any rights with respect to such
Award, unless and until such Participant has delivered a fully executed copy of
the Restricted Stock Award agreement evidencing the Award to the Company and has
otherwise complied with the applicable terms and conditions of such Award.
Further, such Award shall be subject to the following conditions:

            (a) Purchase Price. The purchase price of Restricted Stock shall be
      fixed by the Committee. Subject to Section 4.3, the purchase price for
      shares of Restricted Stock may be zero to the extent permitted by
      applicable law, and, to the extent not so permitted, such purchase price
      may not be less than par value.

            (b) Acceptance. Awards of Restricted Stock must be accepted within a
      period of sixty (60) days (or such shorter period as the Committee may
      specify at grant) after the Award date, by executing a Restricted Stock
      Award agreement and by paying whatever price (if any) the Committee has
      designated thereunder.

            (c) Legend. Each Participant receiving a Restricted Stock Award
      shall be issued a stock certificate in respect of such shares of
      Restricted Stock, unless the Committee elects to use another system, such
      as book entries by the transfer agent, as evidencing ownership of a
      Restricted Stock Award. Such certificate shall be registered in the name
      of such Participant, and shall bear an appropriate legend referring to the
      terms, conditions, and restrictions applicable to such Award,
      substantially in the following form:

            "The anticipation, alienation, attachment, sale, transfer,
      assignment, pledge, encumbrance or charge of the shares of stock
      represented hereby are subject to the terms and conditions (including
      forfeiture) of the U.S. Industries, Inc. (the "Company") Stock Option Plan
      and an Agreement entered into between the registered owner and the Company
      dated . Copies of such Plan and Agreement are on file at the principal
      office of the Company."

            (d) Custody. If stock certificates are issued in respect of shares
      of Restricted Stock, the Committee may require that the stock certificates
      evidencing such shares be held in custody by the Company until the
      restrictions thereon shall have lapsed, and that, as a condition of any
      Restricted Stock Award, the Participant shall have delivered a duly signed
      stock power, endorsed in blank, relating to the Common Stock covered by
      such Award.

      7.3 Restrictions and Conditions on Restricted Stock Awards. The shares of
Restricted Stock awarded pursuant to this Plan shall be subject to Article IX
and the following restrictions and conditions:



                                      15

<PAGE>



            (a) Restriction Period; Vesting and Acceleration of Vesting. The
      Restricted Stock awarded under this Plan shall be subject to forfeiture
      (or, if a purchase price had been paid pursuant to Section 7.2(a) above,
      repurchase for the purchase price) during a period set by the Committee
      commencing with the date of such Award (the "Restriction Period") as set
      forth in the Restricted Stock Award agreement and such agreement shall set
      forth a vesting schedule and any events which would accelerate vesting of
      the shares of Restricted Stock. Within these limits, based on service,
      performance and/or such other factors or criteria as the Committee may
      determine in its sole discretion, the Committee may provide for the lapse
      of such restrictions in installments in whole or in part, or may
      accelerate the vesting of all or any part of any Restricted Stock Award
      and/or waive the deferral limitations for all or any part of such Award.

            (b) Rights as a Stockholder. Except as provided in this subsection
      (b) and subsection (a) above, the Participant shall have, with respect to
      the shares of Restricted Stock, all of the rights of a holder of shares of
      Common Stock of the Company including, without limitation, the right to
      receive any dividends and the right to vote or tender such shares. The
      Committee, in its sole discretion, as determined at the time of Award, may
      permit or require the payment of dividends to be deferred.

            (c) Lapse of Restrictions. If and when the Restriction Period
      expires without a prior forfeiture of the Restricted Stock subject to such
      Restriction Period, the certificates for such shares shall be delivered to
      the Participant. All legends shall be removed from said certificates at
      the time of delivery to the Participant, except as otherwise required by
      applicable law.

      7.4 Termination of Employment for Restricted Stock. Subject to the
applicable provisions of the Restricted Stock Award agreement and this Plan,
upon a Participant's Termination of Employment for any reason during the
relevant Restriction Period, all Restricted Stock still subject to restriction
will vest or be forfeited in accordance with the terms and conditions
established by the Committee at grant or thereafter.


                                 ARTICLE VIII.

          NON-EMPLOYEE DIRECTOR STOCK AWARDS AND STOCK OPTION GRANTS

      8.1 Common Stock Award for Non-Employee Directors. An award of shares of
Common Stock shall be made under this Plan to each non-employee director of the
Company. Except with respect to such award of shares of Common Stock and Stock
Options granted pursuant to this Article VIII, no other Award under the Plan
shall be made available to or granted to non-employee directors of the Company.
Notwithstanding anything contained



                                      16

<PAGE>



herein to the contrary, the following provisions shall apply to the award of
shares of Common Stock to non-employee directors of the Company:

            (a) Initial Award. A non-employee director of the Company shall
      receive an award of 1,500 shares of Common Stock upon the later of (i) the
      date the non-employee director begins service as a non-employee director
      on the Board (even if previously an employee director); or (ii) five (5)
      business days after the Common Stock opens for regular trading on a
      national securities exchange.

            (b) Annual Awards. On the first business day of each calendar
      quarter in each fiscal year of the Company commencing with the first
      calendar quarter after the Amended Effective Date of the Plan, each
      non-employee director who is a director of the Company on such date shall
      receive an award of Common Stock pursuant to the Plan calculated by
      dividing $6,250 by the Fair Market Value of the Common Stock on the first
      business day of the fiscal year. In the event that such quotient is other
      than a whole number of Common Stock, the value of the fractional Common
      Stock shall be paid to the non-employee director in cash.

            (c) Special Back Annual Award. On the Amended Effective Date of the
      Plan, each non-employee director shall receive an award of Common Stock
      pursuant to the Plan, calculated by dividing $8,334 by the Fair Market
      Value of the Common Stock on September 29, 1995 plus an award of Common
      Stock pursuant to the Plan calculated by dividing $12,500 by the Fair
      Market Value of the Common Stock on October 2, 1995.

            (d) Purchase Price. Subject to Section 4.3, the purchase price of a
      share of Common Stock shall be zero to the extent permitted by applicable
      law and, to the extent not so permitted, such purchase price shall be par
      value.

            (e) Legend. Each non-employee director receiving shares of Common
      Stock under this Article VIII shall be issued a stock certificate in
      respect of such shares of Common Stock. Such certificate shall be
      registered in the name of such non-employee director, and shall bear an
      appropriate legend, to the extent required by applicable law as the
      Company may determine upon advice of counsel, referring to the legal
      restrictions applicable to such shares. An award of shares of Common Stock
      shall be subject to the requirements of Section 13.1.

      8.2 Stock Options. The terms of this Section 8.2 shall apply only to
Options granted to non-employee directors.

            (a) Without further action by the Board or the stockholders of the
      Company, each non-employee director shall:

                  (i) subject to the terms of the Plan, be granted Options to
            purchase 7,500 shares of Common Stock upon the later of (1) the date
            the non-employee



                                      17

<PAGE>



            director begins service as a director on the Board (even if
            previously an employee director); or (2) the Amended Effective Date
            of the Plan as defined in Article XIV hereof; provided that if such
            date in any year is a date on which the New York Stock Exchange is
            not open for trading, the grant shall be made on the first day
            thereafter on which the New York Stock Exchange is open for trading;

                  (ii) subject to the terms of the Plan, on each Annual Date of
            Grant (as hereinafter defined) be automatically granted Options to
            purchase 3,750 shares of Common Stock (provided that the annual
            grant to be made on June 1, 1996 and June 1, 1997 shall each be for
            1000 shares of Common Stock);

                  (iii) subject to the terms of the Plan, on December 3, 1996 be
            automatically granted Options to purchase 1,250 shares of Common
            Stock;

                  (iv) subject to the terms of the Plan, on June 1, 1997 be
            automatically granted Options to purchase an additional 250 shares
            of Common Stock; and

                  (v) notwithstanding the foregoing provisions of Sections
            8.2(a)(i) through (a)(iv), no such Option shall be granted if on the
            date of grant the Company has liquidated, dissolved or merged or
            consolidated with another entity in such a manner that it is not the
            surviving entity (unless the Plan has been assumed by such surviving
            entity with regard to future grants).

            (b) Annual Date of Grant. Annual grants shall be made initially on
      June 1, 1996 (the "Initial Grant Date") and on June 1, 1997. Thereafter,
      annual grants shall be made on October 1, 1997 and each anniversary
      thereof (the Initial Grant Date, June 1, 1997, October 1, 1997 and each
      anniversary of October 1, 1997 being referred to as an "Annual Date of
      Grant"); provided that if such date in any year is a date on which the New
      York Stock Exchange is not open for trading, the grant shall be made on
      the first day thereafter on which the New York Stock Exchange is open for
      trading and, further provided that if the grants would violate the
      limitation set forth in Section 4.1(c), such grants shall be
      proportionately reduced to an amount that would not violate such
      limitation and, subject to the next sentence, an additional make-up grant
      shall be made on the first day of the first month commencing at least
      twenty (20) days after such limitation is no longer exceeded. Such make-up
      grant shall be made only to each non-employee director who is still a
      director of the Company and shall be made only in the amount of the prior
      reduction. The date of the make-up grant shall be considered an Annual
      Grant Date for all purposes other than the amount of Options to be issued.
      Notwithstanding the foregoing, in the event no Fair Market Value can be
      determined pursuant to the provisions hereof (without regard to the last
      sentence of Section 2.13), no annual grant shall be made for such fiscal
      year.



                                      18

<PAGE>



            (c) Option Agreement. Stock Options granted under this Section 8.2
      shall be non-qualified Options. Such Options shall be evidenced by Option
      agreements in substantially the form annexed hereto as Exhibit A.

            (d) Terms of Options:

                  (i) Option Price. The purchase price per share ("Purchase
            Price") deliverable upon the exercise of an Option shall be 100% of
            the Fair Market Value of such Common Stock at the time of the grant
            of the Option, or the par value of the Common Stock, whichever is
            greater.

                  (ii) Exercisability. Except as otherwise provided herein, each
            Option granted under this Plan shall be exercisable on or after six
            (6) months and one (1) day after the date of grant.

                  (iii) Method for Exercise. A non-employee director electing to
            exercise one or more Options shall give written notice to the
            Company of such election and of the number of Options he or she has
            elected to exercise. Common Stock purchased pursuant to the exercise
            of Options shall be paid for at the time of exercise in cash or by
            delivery of unencumbered Common Stock owned by the non-employee
            director for at least six (6) months (or such longer period as
            required by applicable accounting standards to avoid a charge to
            earnings) or a combination thereof.

            (e) Expiration. Except as otherwise provided herein, if not
      previously exercised each Option shall expire upon the tenth anniversary
      of the date of the grant thereof.

            (f) The following rules apply with regard to Options upon a
      Termination of Directorship:

                  (i) Death, Disability or Otherwise Ceasing to be a Director
            Other than for Cause. Except as otherwise provided herein, upon the
            Termination of Directorship, on account of Disability, death,
            resignation, failure to stand for reelection or failure to be
            reelected or otherwise other than as set forth in (ii) below, all
            outstanding Options then exercisable and not exercised by the
            Participant prior to such Termination of Directorship shall remain
            exercisable, to the extent exercisable at the Termination of
            Directorship, by the Participant or, in the case of death, by the
            Participant's estate or by the person given authority to exercise
            such Options by his or her will or by operation of law, for a three
            (3) year period commencing on the date of the Termination of
            Directorship, provided that such three (3) year period shall not
            extend beyond the stated term of such Options.




                                      19

<PAGE>



                  (ii) Cause. Upon removal, failure to stand for reelection or
            failure to be renominated for Cause, or if the Company obtains or
            discovers information after Termination of Directorship that such
            Participant had engaged in conduct that would have justified a
            removal for Cause during such directorship, all outstanding Options
            of such Participant shall immediately terminate and shall be null
            and void.

                  (iii) Acceleration of Exercisability Upon Death. All Options
            granted and not previously exercisable shall become fully
            exercisable immediately upon a Termination of Directorship due to
            death.

                  (iv) Cancellation of Options. Except as otherwise provided
            herein, no Options that were not exercisable during the period such
            person serves as a director shall thereafter become exercisable upon
            a Termination of Directorship for any reason or no reason
            whatsoever, and such Options shall terminate and become null and
            void upon a Termination of Directorship.

      8.3 Changes. (i) The Awards to a non-employee director shall be subject to
Sections 4.2(a), (b) and (c) of the Plan and this Section 8.3, but shall not be
subject to Section 4.2(d).

                  (ii) If the Company shall not be the surviving corporation in
            any merger or consolidation, or if the Company is to be dissolved or
            liquidated, then, unless the surviving corporation assumes the
            Options or substitutes new Options which are determined by the Board
            in its sole discretion to be substantially similar in nature and
            equivalent in terms and value for Options then outstanding, upon the
            effective date of such merger, consolidation, liquidation or
            dissolution, any unexercised Options shall expire without additional
            compensation to the holder thereof; provided, that, the Committee
            shall deliver notice to each non-employee director at least twenty
            (20) days prior to the date of consummation of such merger,
            consolidation, dissolution or liquidation which would result in the
            expiration of the Options and during the period from the date on
            which such notice of termination is delivered to the consummation of
            the merger, consolidation, dissolution or liquidation, such
            Participant shall have the right to exercise in full effective as of
            such consummation all the Options that are then outstanding (without
            regard to limitations on exercise otherwise contained in the Options
            other than the requirements of Article XIV) but contingent on
            occurrence of the merger, consolidation, dissolution or liquidation,
            and, provided that, if the contemplated transaction does not take
            place within a ninety (90) day period after giving such notice for
            any reason whatsoever, the notice, accelerated vesting and exercise
            shall be null and void and, if and when appropriate, new notice
            shall be given as aforesaid. Notwithstanding the foregoing, the
            Options held by persons subject to Section 16(b) of the Exchange Act
            that would not have vested under the Plan except pursuant to Section
            10.1(a)



                                      20

<PAGE>



            prior to the effective date of such merger, consolidation,
            liquidation or dissolution shall not expire on such date if vesting
            or exercise on such date would result in the loss of Rule 16b-3
            protection with regard to such Option; but shall expire thirty (30)
            days after they would have otherwise vested under the Plan and shall
            after the effective date of such merger, consolidation, liquidation
            or dissolution represent only the right to receive the number and
            kind of shares of capital stock or other property to which the
            Participant would have been entitled if immediately prior to the
            effective date of such merger, consolidation, liquidation or
            dissolution the Participant had been the holder of record of the
            number of shares as to which such Option was then exercisable.

      8.4 Non-Employee Director Status. Notwithstanding anything contained
herein to the contrary, neither the Board, the Committee nor any person
designated to assist the Board or the Committee in the administration of the
Plan may take any action which would cause any non-employee director of the
Company to cease to be a "non-employee director" for purposes of Rule 16b-3 with
regard to this Plan or any other stock option or other equity plan of the
Company. In particular, to the extent required as aforesaid, neither the Board
nor the Committee shall have any discretion as to:

                  (i) the selection of non-employee directors who are eligible
            to receive awards of Common Stock or Stock Options; or

                  (ii) the number of shares of Common Stock or Stock Options
            awarded to any non-employee director.


                                  ARTICLE IX.

                              NON-TRANSFERABILITY

      No Stock Option shall be Transferable by the Participant otherwise than by
will or by the laws of descent and distribution. All Stock Options shall be
exercisable, during the Participant's lifetime, only by the Participant. Shares
of Restricted Stock under Article VII may not be Transferred prior to the date
on which shares are issued, or, if later, the date on which any applicable
restriction, performance or deferral period lapses. Notwithstanding the
foregoing, the Committee may determine at the time of grant or thereafter that
an Award that is otherwise not Transferable pursuant to this Article IX is
Transferable in whole or in part and in such circumstances, and under such
conditions, as specified by the Committee.




                                      21

<PAGE>



                                  ARTICLE X.

                         CHANGE IN CONTROL PROVISIONS

      10.1 Benefits. In the event of a Change in Control of the Company (as
defined below), except as otherwise provided by the Committee upon the grant of
an Award, the Participant shall be entitled to the following benefits:

            (a) Subject to paragraph (c) below with regard to Options granted to
      Eligible Employees, all outstanding Stock Options of such Participant
      (whether an Eligible Employee or non-employee director) granted prior to
      the Change in Control shall be fully vested and immediately exercisable in
      their entirety. The Committee, in its sole discretion, may, subject to
      Section 8.4, provide for the purchase of any such Stock Options by the
      Company or Designated Subsidiary for an amount of cash equal to the excess
      of the Change in Control price (as defined below) of the shares of Common
      Stock covered by such Stock Options, over the aggregate exercise price of
      such Stock Options. For purposes of this Section 10.1, Change in Control
      price shall mean the higher of (i) the highest price per share of Common
      Stock paid in any transaction related to a Change in Control of the
      Company, or (ii) the highest Fair Market Value per share of Common Stock
      at any time during the sixty (60) day period preceding a Change in
      Control.

            (b) The restrictions to which any shares of Restricted Stock of such
      Participant granted prior to the Change in Control are subject shall lapse
      as if the applicable Restriction Period had ended upon such Change in
      Control.

            (c) Notwithstanding anything to the contrary herein, unless the
      Committee provides otherwise, at the time an Option is granted to an
      Eligible Employee hereunder, no acceleration of exercisability shall occur
      with respect to such Option if the Committee reasonably determines in good
      faith, prior to the occurrence of the Change in Control, that the Options
      shall be honored or assumed, or new rights substituted therefor (each such
      honored, assumed or substituted option hereinafter called an "Alternative
      Option"), by a Participant's employer (or the parent or a subsidiary of
      such employer) immediately following the Change in Control, provided that
      any such Alternative Option must meet the following criteria:

            (i) the Alternative Option must be based on stock which is traded on
      an established securities market, or which will be so traded within thirty
      (30) days of the Change in Control;

            (ii) the Alternative Option must provide such Participant with
      rights and entitlements substantially equivalent to or better than the
      rights, terms and conditions applicable under such Option, including, but
      not limited to, an identical or better exercise schedule; and



                                      22

<PAGE>



            (iii) the Alternative Option must have economic value substantially
      equivalent to the value of such Option (determined at the time of the
      Change in Control).

      10.2 Change in Control. A "Change in Control" shall be deemed to have
occurred upon:

            (a) any "person" as such term is used in Sections 13(d) and 14(d) of
      the Exchange Act (other than the Company, any trustee or other fiduciary
      holding securities under any employee benefit plan of the Company, or any
      company owned, directly or indirectly, by the stockholders of the Company
      in substantially the same proportions as their ownership of Common Stock
      of the Company), is or becomes the owner (as defined in Rule 13d-3 under
      the Exchange Act), directly or indirectly, of securities of the Company
      representing twenty-five percent (25%) or more of the combined voting
      power of the Company's then outstanding securities;

            (b) during any period of two consecutive years, individuals who at
      the beginning of such period constitute the Board of Directors, and any
      new director (other than a director designated by a person who has entered
      into an agreement with the Company to effect a transaction described in
      paragraph (a), (c), or (d) of this section) whose election by the Board of
      Directors or nomination for election by the Company's stockholders was
      approved by a vote of at least two-thirds of the directors then still in
      office who either were directors at the beginning of the two-year period
      or whose election or nomination for election was previously so approved,
      cease for any reason to constitute at least a majority of the Board of
      Directors;

            (c) the stockholders of the Company approve a merger or
      consolidation of the Company with any other corporation, other than a
      merger or consolidation which would result in 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 fifty percent (50%) of the
      combined voting power of the voting securities of the Company or such
      surviving entity outstanding immediately after such merger or
      consolidation; provided, however, that a merger or consolidation effected
      to implement a recapitalization of the Company (or similar transaction) in
      which no person acquires more than twenty-five percent (25%) of the
      combined voting power of the Company's then outstanding securities shall
      not constitute a Change in Control of the Company; or

            (d) 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 of the Company's assets other than
      the sale or disposition of all or substantially all of the assets of the
      Company to a person or persons who beneficially own, directly or
      indirectly, at least fifty percent (50%) or more of the combined voting
      power of the outstanding voting securities of the Company at the time of
      the sale, including, but not limited to any entity which is, directly or
      indirectly, owned (based on



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<PAGE>



      normal issue voting interests or capital interests) after completion of
      the transaction at least fifty percent (50%) by the ultimate shareholders
      of the Company.


                                  ARTICLE XI.

                     TERMINATION OR AMENDMENT OF THE PLAN

      11.1 Termination or Amendment. Notwithstanding any other provision of this
Plan, the Board may at any time, and from time to time, amend, in whole or in
part, any or all of the provisions of the Plan (including any amendment deemed
necessary to ensure that the Company may comply with any regulatory requirement
referred to in Article XIII), or suspend or terminate it entirely, retroactively
or otherwise; provided, however, that, unless otherwise required by law or
specifically provided herein, the rights of a Participant with respect to Awards
granted prior to such amendment, suspension or termination, may not be impaired
without the consent of such Participant and, provided further, without the
approval of the stockholders of the Company in accordance with the laws of the
state of Delaware, to the extent required by the applicable provisions of
Section 162(m) of the Code no amendment may be made which would (i) increase the
maximum individual Participant limitations under Section 4.1(b); (ii) change the
classification of employees eligible to receive Awards under this Plan; (iii)
extend the maximum option period under Section 6.2; or (iv) require stockholder
approval in order for the Plan to continue to comply with the applicable
provisions of Section 162(m) of the Code. In no event may the Plan be amended
without the approval of the stockholders of the Company in accordance with the
applicable laws of the State of Delaware to increase the aggregate number of
shares of Common Stock that may be issued under the Plan or to make any other
amendment that would require stockholder approval under the rules of any
exchange or system on which the Company's securities are listed or traded at the
request of the Company.

      Except with respect to the award of Common Stock and Options to
non-employee directors under Article VIII, the Committee may amend the terms of
any Award theretofore granted, prospectively or retroactively, but, subject to
Article IV above or as otherwise specifically provided herein, no such amendment
or other action by the Committee shall impair the rights of any holder without
the holder's consent.

      With respect to the award of shares of Common Stock and Options to
non-employee directors under Article VIII hereof, the Board may at any time or
from time to time, subject to Section 8.4 and this Section 11.1, amend the Plan
to effect any amendment deemed appropriate.




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<PAGE>



                                 ARTICLE XII.

                                 UNFUNDED PLAN

      12.1 Unfunded Status of Plan. This Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments as to which a Participant has a fixed and vested interest but which are
not yet made to a Participant by the Company, nothing contained herein shall
give any such Participant any rights that are greater than those of a general
creditor of the Company.


                                 ARTICLE XIII.

                              GENERAL PROVISIONS

      13.1 Legend. The Committee may require each person receiving shares
pursuant to an Award under the Plan to represent to and agree with the Company
in writing that the Participant is acquiring the shares without a view to
distribution thereof. In addition to any legend required by this Plan, the
certificates for such shares may include any legend which the Committee deems
appropriate to reflect any restrictions on Transfer.

      All certificates for shares of Common Stock delivered under the Plan shall
be subject to such stock transfer orders and other restrictions as the Committee
may deem advisable under the rules, regulations and other requirements of the
Securities and Exchange Commission, any stock exchange upon which the Stock is
then listed or any national securities association system upon whose system the
Stock is then quoted, any applicable Federal or state securities law, and any
applicable corporate law, and the Committee may cause a legend or legends to be
put on any such certificates to make appropriate reference to such restrictions.

      13.2 Other Plans. Nothing contained in this Plan shall prevent the Board
from adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases.

      13.3 No Right to Employment/Directorship. Neither this Plan nor the grant
of any Award hereunder shall give any Participant or other employee any right
with respect to continuance of employment by the Company or any subsidiary, nor
shall they be a limitation in any way on the right of the Company or any
subsidiary by which an employee is employed to terminate his employment at any
time. Neither this Plan nor the grant of any Award hereunder shall impose any
obligations on the Company to retain any Participant as a director nor shall it
impose on the part of any Participant to remain as a director of the Company.

      13.4 Withholding of Taxes. The Company shall have the right to deduct from
any payment to be made to a Participant, or to otherwise require, prior to the
issuance or delivery



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<PAGE>



of any shares of Common Stock or the payment of any cash hereunder, payment by
the Participant of, any Federal, state or local taxes required by law to be
withheld. Upon the vesting of Restricted Stock or upon making an election under
Code Section 83(b), a Participant shall pay all required withholding to the
Company.

      The Committee may permit any such statutory withholding obligation with
regard to any Eligible Employee to be satisfied by reducing the number of shares
of Common Stock otherwise deliverable or by delivering shares of Common Stock
already owned.

      13.5  Listing and Other Conditions.

            (a) As long as the Common Stock is listed on a national securities
      exchange or system sponsored by a national securities association, the
      issue of any shares of Common Stock pursuant to an Award shall be
      conditioned upon such shares being listed on such exchange or system. The
      Company shall have no obligation to issue such shares unless and until
      such shares are so listed, and the right to exercise any Option with
      respect to such shares shall be suspended until such listing has been
      effected.

            (b) If at any time counsel to the Company shall be of the opinion
      that any sale or delivery of shares of Common Stock pursuant to an Award
      is or may in the circumstances be unlawful or result in the imposition of
      excise taxes on the Company under the statutes, rules or regulations of
      any applicable jurisdiction, the Company shall have no obligation to make
      such sale or delivery, or to make any application or to effect or to
      maintain any qualification or registration under the Securities Act of
      1933, as amended, or otherwise with respect to shares of Common Stock or
      Awards, and the right to exercise any Option shall be suspended until, in
      the opinion of said counsel, such sale or delivery shall be lawful or will
      not result in the imposition of excise taxes on the Company.

            (c) Upon termination of any period of suspension under this Section
      13.5, any Award affected by such suspension which shall not then have
      expired or terminated shall be reinstated as to all shares available
      before such suspension and as to shares which would otherwise have become
      available during the period of such suspension, but no such suspension
      shall extend the term of any Option.

      13.6 Governing Law. This Plan shall be governed and construed in
accordance with the laws of the State of Delaware (regardless of the law that
might otherwise govern under applicable Delaware principles of conflict of
laws).

      13.7 Construction. Wherever any words are used in this Plan in the
masculine gender they shall be construed as though they were also used in the
feminine gender in all cases where they would so apply, and wherever any words
are used herein in the singular form they shall be construed as though they were
also used in the plural form in all cases where they would so apply.



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<PAGE>



      13.8 Other Benefits. No Award payment under this Plan shall be deemed
compensation for purposes of computing benefits under any retirement plan of the
Company or its subsidiaries nor affect any benefits under any other benefit plan
now or subsequently in effect under which the availability or amount of benefits
is related to the level of compensation.

      13.9 Costs. The Company shall bear all expenses included in administering
this Plan, including expenses of issuing Common Stock pursuant to any Awards
hereunder.

      13.10 No Right to Same Benefits. The provisions of Awards need not be the
same with respect to each Participant, and such Awards to individual
Participants need not be the same in subsequent years.

      13.11 Death/Disability. The Committee may in its discretion require the
transferee of a Participant to supply it with written notice of the
Participant's death or Disability and to supply it with a copy of the will (in
the case of the Participant's death) or such other evidence as the Committee
deems necessary to establish the validity of the transfer of an Option. The
Committee may also require that the agreement of the transferee to be bound by
all of the terms and conditions of the Plan.

      13.12 Section 16(b) of the Exchange Act. All elections and transactions
under the Plan by persons subject to Section 16 of the Exchange Act involving
shares of Common Stock are intended to comply with all exemptive conditions
under Rule 16b-3. The Committee may establish and adopt written administrative
guidelines, designed to facilitate compliance with Section 16(b) of the Exchange
Act, as it may deem necessary or proper for the administration and operation of
the Plan and the transaction of business thereunder.

      13.13 Severability of Provisions. If any provision of the Plan shall be
held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions hereof, and the Plan shall be construed and enforced
as if such provisions had not been included.

      13.14 Headings and Captions. The headings and captions herein are provided
for reference and convenience only, shall not be considered part of the Plan,
and shall not be employed in the construction of the Plan.





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<PAGE>



                                 ARTICLE XIV.

                        AMENDED EFFECTIVE DATE OF PLAN

      The U.S. Industries, Inc. Stock Option Plan initially became effective on
April 13, 1995 and the Plan initially became effective on February 8, 1996. The
Plan was restated effective December 3, 1996 and February 3, 1997. This
restatement incorporates amendments effective on or before June 11, 1998 which
reflect, among other things, the consummation of the Mergers and the 3 for 2
stock split of the Company's Common Stock in the form of a 50% stock dividend
which was paid on September 23, 1997 and certain other amendments made as part
of this restatement.


                                  ARTICLE XV.

                                 TERM OF PLAN

      No Award shall be granted pursuant to the Plan on or after the tenth
anniversary of the earlier of the date the Initial Plan is adopted or the date
of stockholder approval, but Awards granted prior to such tenth anniversary may
extend beyond that date.


                                 ARTICLE XVI.

                                 NAME OF PLAN

      This Plan shall be known as the "Amended U.S. Industries, Inc. Stock 
Option Plan."















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