<PAGE>





                                       AMENDED

                                U.S. INDUSTRIES, INC.

                                  STOCK OPTION PLAN




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                                  TABLE OF CONTENTS


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

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

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

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

ARTICLE V     ELIGIBILITY................................................... 10

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.................................. 21

ARTICLE XI    TERMINATION OR AMENDMENT OF THE PLAN.......................... 23

ARTICLE XII   UNFUNDED PLAN................................................. 24

ARTICLE XIII  GENERAL PROVISIONS............................................ 24

ARTICLE XIV   AMENDED EFFECTIVE DATE OF PLAN................................ 27

ARTICLE XV    TERM OF PLAN.................................................. 27

ARTICLE XVI   NAME OF PLAN.................................................. 27




                     
                                        i


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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. (the
"Company") 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 

<PAGE>


    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  "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.

         2.10 "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


                                       2

<PAGE>


    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. 

         2.11 "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.

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

         2.13 "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).

         2.14 "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.

         2.15 "1995 Fiscal Year" shall mean the Company's fiscal year ending
    September 30, 1995.

         2.16 "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

                                       3
                                    

<PAGE>

    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. 

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

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

         2.19 "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.

         2.20 "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.

         2.21 "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.

         2.22 "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.

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

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


                                       4


<PAGE>


                                     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.


                                       5

<PAGE>


    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.


                                       6


<PAGE>


    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 5.35 million shares (subject to any
    increase or decrease pursuant to Section 4.2) which may be either
    authorized and unissued Common Stock


                                       7

<PAGE>

 
    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 150,000 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. 1997
    Restricted Stock Plan and subject to a Vesting Period (as defined in the
    U.S. Industries, Inc. 1997 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

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<PAGE>


    other 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.

                                       9

<PAGE>


         (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.

    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.


                                      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.

                                       10


<PAGE>

                                     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.

         (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

                                       11
<PAGE>

    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 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.

                                       12

<PAGE>

         (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.

         (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

                                       13

<PAGE>

    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.

    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

                                       14

<PAGE>

    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:

         (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.

                                       15

<PAGE>

         (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 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 1,000 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

                                       16

<PAGE>

    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 5,000 shares of Common Stock upon the later of (1) the date
         the non-employee 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 2,500 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;

                                       17

<PAGE>


              (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.

         (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.

                                       18

<PAGE>


              (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.

              (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

                                       19

<PAGE>
      
         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) 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

                                       20

<PAGE>


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.


                                      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

                                       21

<PAGE>

    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

         (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 (not including any
    period prior to the date of the consummation of the spinoff of the Company
    to shareholders of

                                       22 

<PAGE>
    
    Hanson PLC pursuant to a demerger (the "Spinoff Date")), 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 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.


                                     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

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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.


                                     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.

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<PAGE>

    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 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 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

                                       25

<PAGE>


    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.

    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.

                                       26
<PAGE>


    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.


                                     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 became effective on February 8, 1996.  The Plan was
restated effective December 3, 1996.  This restatement incorporating Amendment
Number Two and Amendment Number Three to the Plan is effective on February 6,
1997.


                                     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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