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                                                                   EXHIBIT 10.40

                                BWAY CORPORATION
                           THIRD AMENDED AND RESTATED
                         1995 LONG-TERM INCENTIVE PLAN
                         -----------------------------

                                    Recitals
                                    --------

     This third amendment amends and restates the Amended and Restated 1995
Long-Term Incentive Plan established in June 1995 and amended in August 1996 and
November 1997 to increase the aggregate number of shares of common stock that
may be issued under this Plan to 1,825,000 shares.

1.   Purpose.
     -------

     This plan shall be known as the BWAY Corporation Third Amended and Restated
1995 Long-Term Incentive Plan (the "Plan").  The purpose of the Plan shall be to
promote the long-term growth and profitability of BWAY Corporation (the
"Company") and its subsidiaries by (i) providing certain directors, officers,
employees and consultants of the Company and its subsidiaries with incentives to
maximize stockholder value and otherwise contribute to the success of the
Company and (ii) enabling the Company to attract, retain and reward the best
available persons for positions of substantial responsibility.  Grants of
incentive or nonqualified stock options, stock appreciation rights ("SARs") in
tandem with options, restricted stock, performance awards, or any combination of
the foregoing may be made under the Plan.

2.   Definitions.
     -----------

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

     (b) "Cause" means the occurrence of one of the following events:
          -----
          (i) Conviction of a felony or any crime or offense lesser than a
     felony involving the property of the Company or a subsidiary; or

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

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

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

          (i) if any "person" or "group" as those terms are used in Sections
     13(d) and 14(d) of the Securities Exchange Act of 1934, as amended
     ("Exchange Act"), other than an Exempt Person, is or becomes the
     "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
     directly or indirectly, of securities of the Company representing 50% or
     more of the combined voting power of the Company's then outstanding
     securities; or

          (ii) during any period of two consecutive years, individuals who at
     the beginning of such period constitute the Board and any new director
     whose election by the Board or nomination for election by the Company's
     stockholders was approved by at least two-thirds (2/3) of the directors
     then still in office who either were directors at the beginning of the
     period or whose election was previously so approved, cease for any reason
     to constitute a majority thereof; or

          (iii) the stockholders of the Company approve a merger or
     consolidation of the Company with any other corporation, other than a
     merger or consolidation which would result in all or a portion of the
     voting securities of the Company outstanding immediately prior thereto
     continuing to represent (either by remaining outstanding or by being
     converted into voting securities of the surviving entity) more than 50% of
     the combined voting power of the voting securities of the Company or such
     surviving entity outstanding immediately after such merger or
     consolidation, or the stockholders of the Company approve a plan of
     complete liquidation of the Company or an agreement for the sale or
     disposition by the Company of all or substantially all the Company's
     assets, other than a sale to an Exempt Person.

     (d) "Code" means the Internal Revenue Code of 1986, as amended.
          ----
     (e) "Committee" means the compensation committee of the Board. The
          ---------
membership of the Committee shall be constituted so as to comply at all times
with the applicable requirements of Rule 16b-3 under the Exchange Act and
Section 162(m) of the Code.

     (f) "Competition" is deemed to occur if a person whose employment with the
          -----------
Company or its subsidiaries has terminated obtains a position as a full time or
part-time

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employee of, as a member of the board of directors of, or as a consultant or
advisor with or to, or acquires an ownership interest in excess of 5% of, a
corporation, partnership, firm or other entity that engages in any of the
businesses of the Company or any subsidiary with which the person was involved
in a management role at any time during his or her last five years of employment
with the Company or any subsidiary.

     (g) "Disability" means a permanent and total disability as defined in the
          ----------
Company's Long-Term Disability Plan or as otherwise approved by the Committee.

     (h) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
          ------------
     (i) "Exempt Person" means (i) the Chairman of the Company on the effective
          -------------
date of this Plan, (ii) any person who owns 15% or more of the outstanding
shares of Common Stock on the effective date of this Plan, (iii) any person (or
group of related persons) that becomes the owner of 15% or more of the
outstanding shares of Common Stock as a result of a gift or bequest from a
person included in (i) or (ii) above, (iv) any person, entity or group under the
control of any party included in clause (i), (ii) or (iii), and (v) a trustee or
other fiduciary holding securities under an employee benefit plan of the
Company.

     (j) "Fair Market Value" of a share of Common Stock of the Company means,
          -----------------
with respect to the date in question, the officially-quoted closing selling
price of the stock on the Nasdaq National Market (the "Market") or if the Common
Stock is not listed or quoted in the Market, the Fair Market Value shall be the
fair value of the Common Stock determined in good faith by the Board; provided,
however, that when shares received upon exercise of an option are immediately
sold in the open market, the net sale price received may be used to determine
the Fair Market Value of any shares used to pay the exercise price or
withholding taxes and to compute the withholding taxes.

     (k) "Incentive Stock Option" means an option conforming to the requirements
          ----------------------
of Section 422 of the Code.

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

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

                                      -3-
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     (n) "Retirement" means retirement as defined under the Company's Pension
          ----------
Plan or termination of one's employment on retirement with the approval of the
Committee.

     (o) "Subsidiary" means a corporation or other entity of which outstanding
          ----------
shares or ownership interest representing 50% or more of the combined voting
power of such corporation or other entity are owned directly or indirectly by
the Company.

3.   Administration.
     --------------

     The Plan shall be administered by the Committee. The Committee shall
consist of at least two Non-Employee Directors. Subject to the provisions of the
Plan, the Committee shall be authorized to (i) select persons to participate in
the Plan, (ii) determine the form and substance of grants made under the Plan to
each participant, and the conditions and restrictions, if any, subject to which
such grants will be made, (iii) interpret the Plan and (iv) adopt, amend, or
rescind such rules and regulations for carrying out the Plan as it may deem
appropriate. Decisions of the Committee on all matters relating to the Plan
shall be in the Committee's sole discretion and shall be conclusive and binding
on all parties. The validity, construction, and effect of the Plan and any rules
and regulations relating to the Plan shall be determined in accordance with
applicable federal and state laws and rules and regulations promulgated pursuant
thereto.

4.   Shares Available for the Plan.
     ------------------------------

     Subject to adjustments as provided in Section 15, an aggregate of 1,825,000
shares of Common Stock, par value $.01 per share, of the Company (hereinafter
the "Shares") may be issued pursuant to the Plan. Such Shares may be in whole or
in part authorized and unissued, or shares which have been reacquired by the
Company and held as treasury shares. If any grant under the Plan expires or
terminates unexercised, becomes unexercisable or is forfeited as to any Shares,
such unpurchased or forfeited Shares shall thereafter be available for further
grants under the Plan unless, in the case of options granted under the Plan,
related SARs are exercised.

     Without limiting the generality of the foregoing provisions of this Section
4 or the generality of the provisions of Sections 3, 6 or 17 or any other
section of this Plan, the Committee may, at any time or from time to time, and
on such terms and conditions (that are consistent

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with and not in contravention of the other provisions of this Plan) as the
Committee may, in its sole discretion, determine, enter into agreements (or take
other actions with respect to the options) for new options containing terms
(including exercise prices) more (or less) favorable than the outstanding
options.

5.   Participation.
     -------------

     Participation in the Plan shall be limited to those directors (including
Non-Employee Directors) and officers, employees and consultants of the Company
and its Subsidiaries selected by the Committee. Nothing in the Plan or in any
grant thereunder shall confer any right on an employee to continue in the employ
of the Company or shall interfere in any way with the right of the Company to
terminate an employee at any time.

     Incentive Stock Options or Nonqualified Stock Options, SARs in tandem with
options, restricted stock awards, performance awards, or any combination
thereof, may be granted to such persons and for such number of Shares as the
Committee shall determine (such individuals to whom grants are made being
sometimes herein called "optionees" or "grantees" as the case may be). A grant
of any type made hereunder in any one year to an eligible employee shall neither
guarantee nor preclude a further grant of that or any other type to such
employee in that year or subsequent years.

6.   Incentive and Nonqualified Options.
     ----------------------------------

     The Committee may from time to time grant to eligible participants
Incentive Stock Options, Nonqualified Stock Options, or any combination thereof.
In any one calendar year, the Committee shall not grant to any one participant,
options to purchase a number of shares of Common Stock in excess of 375,000. The
options granted shall take such form as the Committee shall determine, subject
to the following terms and conditions.

     (a) Price. The price per Share deliverable upon the exercise of each option
         -----
("exercise price") shall be established by the Committee, except that in the
case of the grant of any Incentive Stock Option, the exercise price may not be
less than 100% of the Fair Market Value of the Shares at the close of the market
on the day next preceding grant of the option unless otherwise permitted by
Section 422 of the Code. In the case of the grant of any Incentive Stock Option
to an employee who, at the time of the grant, owns

                                      -5-
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more than 10% of the total combined voting power of all classes of stock of the
Company or any of its Subsidiaries, such price per Share, if required by the
Code, shall not be less that 110% of the Fair Market Value of the Shares at the
close of the market on the day next preceding grant of the option.

     (b) Payment. Options may be exercised in whole or in part, upon payment of
         -------
the exercise price of the Shares to be acquired. Payment shall be made in cash
(including check, bank draft or money order) or, in the discretion of the
Committee, (i) in cash and/or shares of Common Stock and/or by delivery of the
optionee's promissory note (if in accordance with policies approved by the
Committee), or (ii) by special arrangement through a broker selected by the
Committee. The fair market value of shares of Common Stock tendered on exercise
of options shall be the Fair Market Value of such shares as of the close of the
market on the day next preceding exercise of the option.

     (c) Withholding Tax. Unless otherwise determined by the Committee, a
         ---------------
participant may elect to deliver shares of Common Stock (or have the company
withhold shares acquired upon exercise of the option) to satisfy in whole or in
part, the amount the Company is required to withhold for taxes in connection
with the exercise of an option. Such election must be made on or before the date
the amount of tax to be withheld is determined. Once made, the election shall be
irrevocable. The fair market value of the shares to be withheld or delivered
will be the Fair Market Value as of the close of the market on the day next
preceding the date the amount of tax to be withheld is determined.

     (d) Terms of Options. The term during which each option may be exercised
         ----------------
shall be determined by the Committee, but, except as otherwise provided herein,
in no event shall an option be exercisable in whole or in part in the case of a
Nonqualified Stock Option, more than ten years and one day from the date it is
granted or, in the case of an Incentive Stock Option, ten years from the date it
is granted; and, in the case of the grant of an Incentive Stock Option to an
employee who at the time of the grant owns more than 10% of the total combined
voting power of all classes of stock of the Company or any of its Subsidiaries,
in no event shall such option be exercisable, if required by the Code, more than
five years from the date of the grant. All rights to purchase shares pursuant to
an option shall, unless sooner terminated, expire at the date designated by the
Committee. The Committee shall determine the date on which each option shall
become exercisable and may provide

                                      -6-
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that an option shall become exercisable in installments. The shares constituting
each installment may be purchased in whole or in part at any time after such
installment becomes exercisable, subject to such minimum exercise requirements
as are designated by the Committee. Unless otherwise provided herein or in the
terms of the related grant, an optionee may exercise an option only if he or she
is, and has been continuously since the date the option was granted, a director,
officer or employee of the Company or a Subsidiary. Prior to the exercise of the
option and delivery of the Shares represented thereby, the optionee shall have
no right to any dividends or be entitled to any voting rights on any Shares
covered by outstanding options.

     (e) Limitations on Grants. If required by the Code, the aggregate Fair
         ---------------------
Market Value (determined as of the grant date) of Shares for which an Incentive
Stock Option is exercisable for the first time during any calendar year may not
exceed $100,000.

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

          (ii) If a participant ceases to be a director, officer or employee of
     the Company or a Subsidiary upon the occurrence of his or her Retirement,
     (A) each of his or her options and SARs that was exercisable on the date of
     Retirement shall remain exercisable for, and shall otherwise terminate at
     the end of, a period of up to five years after the date of Retirement, but
     in no event after the expiration date of the option; provided that the
     participant does not engage in Competition during such five-year period
     unless he or she receives written consent to do so from the Board or the
     Committee, and (B) all of the participant's options and SARs that were not
     exercisable on the date of Retirement shall be forfeited immediately upon
     such cessation.

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<PAGE>

     Notwithstanding the foregoing, Incentive Stock Options not exercised by
     such participant within 90 days after Retirement will cease to qualify as
     Incentive Stock Options and will be treated as Nonqualified Stock Options
     under the Plan if required to be so treated under the Code.

          (iii) If a participant ceases to be a director, officer or employee of
     the Company or a Subsidiary due to Cause, all of his or her options and
     SARs shall be forfeited immediately upon such cessation.

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

          (v) If there is a Change in Control of the Company, all of the
     participant's options and SARs shall become fully vested and exercisable.

7.   Stock Appreciation Rights.
     -------------------------

     The Committee shall have the authority to grant SARs under this Plan to any
optionee, either at the time of grant of an option or thereafter by amendment to
an option. The exercise of an option shall result in an immediate forfeiture of
its related SAR to the extent the option is exercised, and the exercise of an
SAR shall cause an immediate forfeiture of its related option to the extent the
SAR is exercised. SARs shall be subject to such other terms and conditions as
the Committee may specify. An SAR shall expire at the same time as the related
option expires and shall be transferable only when, and under the same
conditions as, the related option is transferable.

     SARs shall be exercisable only when, to the extent and on the conditions
that the related option is exercisable. No SAR may be exercised unless the Fair
Market Value of a share of Common Stock of the Company on the date of exercise

                                      -8-
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exceeds the exercise price of the option to which the SAR corresponds.

     Upon the exercise of an SAR, the optionee shall be entitled to a
distribution in an amount equal to the difference between the Fair Market Value
of a share of Common Stock of the Company on the date of exercise and the
exercise price of the option to which the SAR is related multiplied by the
number of Shares as to which the SAR is exercised. The Committee shall decide
whether such distribution shall be in cash, in shares, or in a combination
thereof.

     All SARs will be exercised automatically on the last day prior to the
expiration date of the related option, so long as the Fair Market Value of a
share of the Company's Common Stock on that date exceeds the exercise price of
the related option.

8.   Restricted Stock.
     ----------------

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

     The participant will be required to deposit Shares with the Company during
any period of restriction thereon and to execute a blank stock power therefor.
Except as otherwise provided by the Committee, during such period of restriction
the participant shall have all of the rights of a holder of Common Stock,
including but not limited to the rights to receive dividends (or amounts
equivalent to dividends) and to vote.

     Except as otherwise provided by the Committee, on a Change in Control or on
termination of a grantee's employment due to death, Disability or Retirement
with the consent of the Company during any period of restriction all
restrictions on Shares granted to such grantee shall lapse. On termination of a
grantee's employment for any other reason, all restricted stock granted to such
grantee on which the restrictions have not lapsed shall be forfeited to the
Company.

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9.   Performance Awards.
     ------------------

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

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

     The Committee shall establish performance goals and objectives for each
performance cycle on the basis of such criteria and objectives as the Committee
may select from time to time. During any performance cycle, the Committee shall
have the authority to adjust the performance goals and objectives for such cycle
for such reasons as it deems equitable.

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

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

     In the event of a Change in Control, a participant shall earn no less than
the portion of the performance award that the participant would have earned if
the performance

                                      -10-
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cycle(s) had terminated as of the date of the Change in Control.

10.  Withholding Taxes.
     -----------------

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

11.  Written Agreement; Vesting.
     --------------------------

     Each employee to whom a grant is made under the Plan shall enter into a
written agreement with the Company that shall contain such provisions, including
without limitation vesting requirements, consistent with the provisions of the
Plan, as may be approved by the Committee. Unless the Committee determines
otherwise, no grant under this Plan may be exercised within six months of the
date such grant is made.

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12.  Transferability.
     ---------------

     Except as set forth in the next sentence of this Section 12, and unless the
agreement pursuant to which a grant is made provides otherwise, an option,
tandem SAR, performance award, or restricted stock granted under the Plan shall
not be transferable by an employee other than by operation of a death
beneficiary designation made by the employee in accordance with rules
established by the Committee, by will or the applicable laws of descent and
distribution and shall be exercisable during the employee's lifetime only by him
or her or his or her guardian or legal representative if the employee is legally
incompetent. Notwithstanding the foregoing, except to the extent that it would
cause the Plan to fail to meet the conditions required to be met under Rule 16b-
3 under the Exchange Act, the Committee shall have the power and authority to
provide, as a term of any Nonqualified Stock Option granted under the Plan, that
such Nonqualified Stock Option may be transferred without consideration by the
Non-Employee Director or the optionee, as applicable, to a member or members of
his or her immediate family (i.e., a child, children, grandchild, grandchildren
or spouse) and/or to a trust or trusts for the benefit of an immediate family
member or family members.

13.  Listing and Registration.
     ------------------------

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

14.  Transfer of Employee.
     --------------------

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

                                      -12-
<PAGE>

15.  Adjustments.
     -----------

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

16.  Termination and Modification of the Plan.
     ----------------------------------------

     The Board of Directors, without further approval of the stockholders, may
modify or terminate the Plan, except that no modification shall become effective
without prior approval of the stockholders of the Company if stockholder
approval would be required for continued compliance with the performance-based
compensation exception of Section 162(m) of the Code.

                                      -13-
<PAGE>

17.  Amendment or Substitution of Awards under the Plan.
     --------------------------------------------------

     The terms of any outstanding award under the Plan may be amended from time
to time by the Committee in its discretion in any manner that it deems
appropriate (including, but not limited to, acceleration of the date of exercise
of any award and/or payments thereunder); provided that no such amendment shall
adversely affect in a material manner any right of a participant under the award
without his written consent, unless the Committee determines in its discretion
that there have occurred or are about to occur significant changes in the
participant's position, duties or responsibilities, or significant changes in
economic, legislative, regulatory, tax, accounting or cost/benefit conditions
which are determined by the Committee in its discretion to have or to be
expected to have a substantial effect on the performance of the Company, or any
subsidiary, affiliate, division or department thereof, on the Plan or on any
award under the Plan. However, the Committee may not reduce the exercise price
of an outstanding option. The Committee may, in its discretion, permit holders
of awards under the Plan to surrender outstanding awards in order to exercise or
realize rights under other awards, or in exchange for the grant of new awards,
or require holders of awards to surrender outstanding awards as a condition
precedent to the grant of new awards under the Plan.

     The Committee may amend or modify the grant of any outstanding option,
tandem SAR, performance award, or restricted stock in any manner to the extent
that the Committee would have had the authority to make such grant as so
modified or amended, including without limitation to change the date or dates as
of which (i) an option or SAR becomes exercisable, (ii) a performance award is
to be determined or paid, or (iii) restrictions on Shares are to be removed. No
modification may be made that would materially adversely affect any grant
previously made under the Plan without the approval of the grantee. The
Committee shall be authorized to make minor or administrative modifications to
the Plan as well as modifications to the Plan that may be dictated by
requirements of federal or state laws applicable to the Company or that may be
authorized or made desirable by such laws.

                                      -14-
<PAGE>

18.  Commencement Date; Termination Date.
     -----------------------------------

     The Board and the stockholders initially approved the Plan as of June,
1995. In August 1996, the Board approved an amendment and restatement of the
Plan, which the stockholders approved in February 1997. In November 1997, the
Board approved a second amendment and restatement of the Plan, which the
stockholders approved in February 1998. In November 1998, the Board approved a
third amendment and restatement of the Plan. Unless previously terminated upon
the adoption of a resolution of the Board terminating the Plan, the Plan shall
terminate at the close of business on May 31, 2005. No termination of the Plan
shall materially and adversely affect any of the rights or obligations of any
person, without his consent, under any grant of options or other incentives
theretofore granted under the Plan.

                                      -15-
<PAGE>

                          STOCK OPTION PLAN PROPOSAL


Term

     The Plan will terminate on May 31, 2005 unless sooner terminated by the
Board. Termination of the Plan will not affect grants made prior to termination,
but no grants will be made after termination.

Administration

     The Plan is administered by the Committee. Subject to the terms of the
Plan, the Committee has authority to (i) select employees to participate in the
Plan, (ii) determine the form of grants and the conditions and restrictions, if
any, subject to which grants will be made and become payable under the Plan,
(iii) construe and interpret the Plan, and (iv) adopt, amend or rescind such
rules and regulations and make such other determinations for carrying out the
Plan, as the Committee deems necessary or appropriate.

Eligibility

     Directors, officers, employees and consultants of the Company and its
subsidiaries selected by the Committee may participate in the Plan. Selection
for participation with respect to one form of award under the Plan does not
automatically result in selection for participation with respect to other forms
of awards under the Plan unless such result is specified by the Committee or by
the terms of the Plan.

                                      -16-