Exhibit 10.7

                           VITAL SIGNS INVESTMENT PLAN
               (as amended and restated through October 23, 1996)

                  (Note:  unless  and until the  shareholders  of the
                  Corporation  approve  this amended and restated plan,
                  any stock options  granted to directors  pursuant to
                  this plan shall be granted subject to shareholder
                  approval)

                 ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION

     1.1  Establishment  of the Plan.  Vital Signs,  Inc., a New Jersey  corpor-
ation (hereinafter  referred to as the "Company"),  pursuant to authorization by
its Board of Directors,  hereby  establishes  a stock  purchase and stock option
plan to be known as the "Vital Signs Investment Plan"  (hereinafter  referred to
as the  "Plan"),  as set forth in this  document.  The Plan permits the grant of
options to eligible Employees and Directors upon the purchase of Plan Shares.

     Subject to approval of appropriate regulatory  authorities,  the Plan shall
become effective as of January 21, 1994 (the "Effective Date"), and shall remain
in effect as provided in Section 1.3 hereof.

     1.2 Purpose of the Plan. The purpose of the Plan is to promote the success,
and  enhance the value,  of the  Company by linking the  personal interests of
Participants  to those of Company  shareholders,  and by providing Participants
with an incentive for outstanding performance.

     The Plan is further  intended to provide  flexibility to the Company in its
ability to motivate, attract, and retain the services of Participants upon whose
judgment,  interest,  and special effort the successful  conduct of its business
largely is dependent.

     1.3 Duration of the Plan. The Plan shall commence on the Effective Date, as
described  in Section 1.1  hereof,  and shall  remain in effect,  subject to the
right of the Board of Directors to  terminate  the Plan at any time  pursuant to
Article 12 hereof,  until all Shares  subject to it shall have been purchased or
acquired  according  to the Plan's  provisions.  In the absence of an  amendment
adopted  by the Board to extend  the Plan,  the Plan shall end ten years and one
day after the Effective Date.

                             ARTICLE 2. DEFINITIONS

     Wherever used in the Plan, the following  terms shall have the meanings set
forth below and, when the meaning is intended, the initial letter of the word is
capitalized:

     (a)  "Award Agreement" means an agreement to be entered into by and between
          the  Company  and  each  Participant,  setting  forth  the  terms  and
          conditions  applicable to each purchase of Plan Shares under the Plan,
          and of the corresponding grant of Options.

     (b)  "Board" or "Board of  Directors"  means the Board of  Directors of the
          Company.

     (c)  "Base Salary" with respect to a particular  Window Period means (i) in
          the case of an  Employee  who has been  employed by the Company or its
          subsidiaries  for at least  one year  prior to the  first  day of such
          Window  Period,  the aggregate  amount of income set forth on the Form
          W-2 provided to a Participant by the Company or its  subsidiaries  for
          the  calendar  year  prior to the  calendar  year in which the  Window
          Period  occurs,  and (ii) in the case of an Employee  who has not been
          employed  by the  Company  or its  subsidiaries  for at least one year
          prior to the first day of such  Window  Period,  the annual  salary of
          such   Employee   at  the   commencement   of  such   Window   Period.
          Determinations  of Base Salary  shall be made by the  Committee in its
          sole  discretion  or, upon  delegation by the  Committee,  by the Plan
          Administrator.

    (d)  "Change in Control" shall mean any of the following events:

          (i)  the acquisition by any one person, or more  than
               one person acting as  a  group, of  ownership of
               stock of the Company,  other  than any person or
               group of  persons  who  held  such total  voting
               power  on  the  date that  this  Plan  was first
               adopted by the Board, possessing 33-1/3% or more
               more of the total voting  power of  the  capital
               stock of the Company;

         (ii)  the approval by  the stockholders of the Company
               of  (i)  any  consolidation  or  merger  of  the
               Company in which the holders of voting stock  of
               the Company immediately before the consolidation
               or merger will not own 50% or more of the voting
               shares of the continuing or  surviving  corpora-
               tion  immediately  after  such  consolidation or
               merger,  or  (ii) any sale, lease,  exchange  or
               other transfer  (in  one transaction  or  series
               of related transactions) of all or substantially
               all of the assets of the Company; or

        (iii)  a  change  of 50%  (rounded  to  the  next whole
               percent) in  the  membership  of  the  Board  of
               Directors  within a 12-month period,  unless the
               election or  nomination for  election  by stock-
               holders of each new director  within such period
               was approved  by the vote of 80% (rounded to the
               next whole person) of  the  directors then still
               in office who were in office at the beginning of
               the 12-month period.

    (e)   "Code"  means the Internal  Revenue Code of 1986,  as amended
          from time to time.

    (f)   "Committee"  means a committee  of the Board  of Directors
          consisting  of Terence D. Wall and Barry Wicker or such other
          individuals as the Board  shall designate  from time to time.

    (g)   "Company"  means Vital  Signs, Inc., a New Jersey corporation,
          or any successor thereto as provided in Article 15 hereof.

    (h)   "Director"  means any individual who is a member of the Board
          of Directors of the Company.

    (i)   "Disability"  shall mean total and  permanent  disability  as
          determined by the Committee.

    (j)   "Disqualifying  Termination"  for the  purposes  of this Plan
          shall  be  determined  by the  Committee,  and  shall  mean a
          termination  of employment of an Employee or  termination  of
          service as a Director  for: (i) an act or acts of  dishonesty
          committed  by  a  Participant;   or  (ii)   violations  by  a
          Participant  of the  policies and  procedures  of the Company
          applicable  to the  Participant's  employment or job category
          or status as a Director  which are: (A) grossly  negligent or
          (B) willful and deliberate.

    (k)   "Employee"  means any  employee  of the Company or any of its
          subsidiaries.   The  term   "Employee"   shall   include  any
          employee who is also a Director.

    (l)   "Exchange Act" means the Securities Exchange Act of 1934,  as
          amended  from time to time, or any successor act thereto.

    (m)   "Fair Market  Value" means the closing sales price for Shares
          as  quoted on the  National  Market  System  of the  National
          Association of Securities Dealers Automated  Quotation System
          on the  relevant  date,  or if  there  were no  sales on such
          date,  the  closing  sales  price for Shares as quoted on the
          National  Market  System  of  the  National   Association  of
          Securities  Dealers  Automated  Quotation System on the first
          immediately preceding date on which such price is quoted.

     (n)  "Fully Paid" means that a Participant  has satisfied the full
          purchase  price for Plan  Shares by either (i) paying cash in
          one lump sum to the Plan  Administrator  or (ii) by paying in
          full, as determined by the Plan  Administrator  in accordance
          with any payroll  deduction  program as shall be  implemented
          by  the  Plan   Administrator   with  the   approval  of  the
          Committee.  All such  determinations  shall be subject to the
          provisions of Section 6.4 hereof.

     (o)  "Option" means  an  option  to purchase  Shares granted under
          Article 7  hereof.   It  is intended  that Options under this
          Plan shall not be incentive  stock options for federal income
          tax purposes.

     (p)  "Option  Price"  means  the  price  at  which a Share  may be
          purchased  by  a  Participant   pursuant  to  an  Option,  as
          determined by the Committee.

     (q)  "Participant"  means an  Employee  or Director of the Company
          who has  purchased  Plan  Shares and who has  outstanding  an
          Option granted under the Plan.

     (r)  "Plan Administrator" means the individual or committee desig-
          nated  by the  Committee  to administer this Plan; or the
          Committee if no such designation has been made.

     (s)  "Plan   Shares"  means  Shares   purchased  by   Participants
          pursuant to the terms of Article 6 hereof.

     (t)  "Retirement"  shall have the same meaning herein as under the
          Company's 401(k) plan.

     (u)  "Shares" means the shares of common stock of the Company.

     (v)  "Window  Period"  means  the time  period  designated  by the
          Board,  during which  eligible  Employees  and  Directors may
          purchase  Plan  Shares,  pursuant  to the terms of  Article 6
          hereof.  The initial  Window  Period shall begin  January 21,
          1994,  and end February 7, 1994.  Subsequent  Window  Periods
          shall last approximately  fifteen days each, and shall occur,
          at times  designated by the Board;  it is currently  intended
          that Window Periods will occur at six months intervals.

                            ARTICLE 3. ADMINISTRATION

     3.1 The Committee. The Plan shall be administered by the Committee, or by a
Plan Administrator  appointed by the Committee.  The Plan Administrator shall be
appointed  from  time to time by,  and shall  serve at the  discretion  of,  the
Committee.  The  Committee and the Plan  Administrator  shall,  in turn,  retain
independent  agents to  purchase  Shares in the market for  purposes of the Plan
unless the  Committee  determines  from time to time that such  Shares  shall be
issued directly by the Company.

     3.2  Authority  of the  Committee.  The  Committee  shall have the power to
establish performance measures which will govern the number of Options available
in connection  with  purchases of Plan Shares,  to determine the degree to which
the  predesignated  performance  measures are  attained by the  Company,  and to
determine  the terms and  conditions  applicable to purchases of Plan Shares and
grants  of  Options  in a manner  consistent  with the  Plan;  to  construe  and
interpret the Plan and any agreement or instrument  entered into under the Plan;
to  establish,   amend,   or  waive  rules  and   regulations   for  the  Plan's
administration;  and (subject to the  provisions  of Article 12 hereof) to amend
the terms and conditions of any  outstanding  Plan Share or Option to the extent
such terms and conditions are within the discretion of the Committee as provided
in the Plan. Further,  the Committee shall make all other  determinations  which
may be necessary or advisable for the  administration of the Plan. The Committee
may delegate its authority as identified  hereunder to a Plan  Administrator  or
such other persons as it may deem appropriate.

     3.3 Decisions Binding. All interpretations of the Plan,  determinations and
decisions  made by the Committee  pursuant to the provisions of the Plan and all
related  orders  or  resolutions  of the  Board of  Directors  shall  be  final,
conclusive, and binding on all Participants.

                      ARTICLE 4. SHARES SUBJECT TO THE PLAN

     4.1 Number of Shares.  Subject to  adjustment  as  provided  in Section 4.3
hereof, the total number of Shares available for purchase as Plan Shares and for
grant under Options  pursuant to the Plan may not exceed 300,000.  These 300,000
Shares  may be either  authorized  but  unissued,  or  reacquired,  Shares.  The
following  rules will apply for purposes of the  determination  of the number of
Shares available for grant under the Plan:

       (a)      the  sale  of  plan  shares  shall  reduce  the shares
                available for  purchase  and/or  grant  under the plan
                plan by the number of shares sold; and

       (b)      unless  and  until an  Option  is  canceled, lapses,
                expires, or terminates,  it shall be counted  against
                the authorized  pool  of Shares.

     4.2 Lapsed  Awards.  If any Plan Share  purchase or Option grant under this
Plan is canceled, terminates, expires, or lapses for any reason, any Plan Shares
and/or any Shares  subject to such Option shall again be available  for purchase
and/or grant under the Plan.

     4.3  Adjustments  in  Authorized  Shares.  In  the  event  of  any  merger,
reorganization, consolidation,  recapitalization, separation, liquidation, stock
dividend,  split-up,  share  combination,  or  other  change  in  the  corporate
structure of the Company affecting the Shares,  such adjustment shall be made in
the number and class of Shares which may be  purchased  or  delivered  under the
Plan, and in the number and class of and/or price of outstanding Plan Shares and
Shares  subject  to  outstanding  Options  granted  under  the  Plan,  as may be
determined  to be  appropriate  and  equitable  by the  Committee,  in its  sole
discretion,  to prevent dilution or enlargement of rights; and provided that the
number of Plan  Shares and the Shares  subject to any Option  shall  always be a
whole number.

                            ARTICLE 5. PARTICIPATION

     All persons who are Employees or Directors  during a Window Period shall be
given the  opportunity  to  purchase  Plan Shares  during  such  Window  Period,
provided  that such  purchases  are within  the limits set forth in Section  6.2
hereof and provided  that in the event that the Board  terminates  the Plan,  no
Employee or Director  shall have the right to purchase  Plan Shares  pursuant to
Article 6 hereof in any Window Period commencing subsequent to such termination.
Each  Participant's  eligibility  for  grants of Options  pursuant  to Article 7
hereof shall be contingent upon the Participant's purchasing Plan Shares, as set
forth in Article 6 hereof.

                       ARTICLE 6. PURCHASES OF PLAN SHARES

     6.1 Plan Share Purchases. An Employee or Director shall only be entitled to
purchase  Plan Shares  during a Window Period if such Employee or Director is an
Employee or Director,  as the case may be, during such Window Period.  Each Plan
Share  purchased by a Participant  under this Plan shall entitle the Participant
to be granted an Option to purchase a specified  number of Shares,  as set forth
in Article 7 herein.  Purchases of Shares by Participants other than pursuant to
this Plan shall not entitle  Participants to receive option grants under Article
7 herein.

     6.2 Maximum  and Minimum  Plan Share  Purchases.  All Plan Share  purchases
shall occur  during a Window  Period.  The Fair Market  Value of the Plan Shares
purchased shall be determined  pursuant to the provisions of Section 6.3 hereof.
For each Window Period,  the maximum  aggregate Fair Market Value of Plan Shares
which may be  purchased  by an  Employee  or  Director  is  $50,000,  unless the
Committee  approves  a higher  limit on a  case-by-case  basis  with  respect to
specific  Employees or Directors.  For any Window  Period,  no Employee shall be
permitted to purchase Plan Shares having an aggregate Fair Market Value equal to
less than one half of one percent of Base Salary for that Window Period. For any
Window  Period,  there shall be no minimum  number of Plan Shares  which must be
purchased  by  Directors,  provided  that the number of shares  purchased by any
Director must be a whole number.

     6.3 Purchase Price.  The price of each Plan Share purchased under this Plan
shall  equal the Fair  Market  Value of a Share on the last  trading  day of the
applicable Window Period.

     6.4  Procedure for  Purchasing  Plan Shares.  A Participant  who desires to
purchase  Plan Shares shall notify the Plan  Administrator,  in writing,  of the
number of Plan Shares to be purchased,  and of the desired  manner of paying for
the Plan  Shares.  Subject to  Section  6.2  hereof,  all  applicable  rules and
regulations  of the United States  Securities and Exchange  Commission,  and the
Plan Administrator's ability to reduce the number of Plan Shares to be purchased
to a whole  number,  the Plan  Administrator  shall  cause to be issued from the
Company  or shall  purchase,  on behalf of the  Participant,  the number of Plan
Shares  indicated by the  Participant,  within thirty (30) days after the end of
the applicable Window Period. The Plan Administrator  shall establish an account
in the name of each  Participant,  for the  purpose  of  administering  the Plan
Shares  purchased by each  Participant.  The Plan  Administrator  shall have the
discretion  to establish  rules and  procedures  for  purchasing  Plan Shares on
behalf  of  Participants,  and for  administering  the Plan  Share  accounts  of
Participants.

     In addition,  the Plan  Administrator  shall provide each  Participant  who
purchases  Plan  Shares  with an Award  Agreement,  setting  forth the terms and
provisions  applicable to the Plan Shares purchased,  and the Options granted to
the  Participant  in  connection  with the  purchase of Plan  Shares.  Purchases
requested  by Employees  or  Directors  who fail to execute the Award  Agreement
tendered  by the Plan  Administrator  may be voided  by the Plan  Administrator.
Subject to the terms of the Plan and any terms approved by the Committee, and to
the conditions placed on each Plan Share purchase opportunity,  each Participant
shall satisfy the purchase  price for Plan Shares by paying cash in one lump sum
to the Plan Administrator.  If permitted by the Plan Administrator,  an Employee
may satisfy the purchase  price for Plan Shares by a combination  of paying cash
and payroll deductions.

     In the event that any Participant  whom the Plan  Administrator  permits to
pay for Plan Shares through  payroll  deductions  subsequently  directs the Plan
Administrator  to cease making payroll  deductions  before all Plan Shares which
the Participant previously indicated he desired to purchase are Fully Paid, then
(i) the Participant  will forfeit all Plan Shares which are not then Fully Paid,
(ii) the  Participant  will forfeit all Options related to any Plan Shares which
are not then  Fully  Paid and (iii) all  Options  related to any Fully Paid Plan
Shares will be subject to the Option forfeiture  provisions contained in Article
8 hereof.  The  Participant's  Award  Agreement  will be revised to indicate the
forfeited  Plan  Shares  and  Options  and the  Option  forfeiture  requirements
described in Article 8 applicable to any other Options.

     6.5 Holding Period for Plan Shares.  Subject to the terms of this Plan, all
Plan Shares which have been purchased  shall be delivered two (2) years from the
date of purchase, provided that such Shares are Fully Paid. To the extent that a
Plan Share is Fully Paid  prior to the end of the two (2) year  holding  period,
and subject to the option forfeiture provisions set forth in Article 8 hereof, a
Participant  who is an  Employee  or  Director  at  the  time  of the  requested
transfer,  shall be  entitled to sell or  otherwise  transfer or convey the Plan
Shares  (it  being  understood  that  the Plan  Administrator  shall  have  sole
discretion  to  determine  the extent to which a Plan Share is Fully Paid during
the two (2) year holding period subject to Section 6.4 hereof).

     Participants  desiring to sell, transfer,  or otherwise convey a Fully Paid
Plan Share prior to the end of the two (2) year  holding  period  shall submit a
request in writing to the Plan Administrator for delivery of a Share certificate
representing  such  Plan  Share.  Such  request  shall  be  accompanied  by  the
Participant's  Award Agreement,  representing the grant of Options in connection
with the purchase of the Plan Share. If the Plan  Administrator  determines that
the Plan Share is Fully Paid, then the Plan  Administrator  shall deliver to the
Participant a fully executed Share  certificate,  representing  such Plan Share,
and shall document in the Award Agreement of the  Participant the  corresponding
change in Option forfeiture  requirements of the Plan (as set forth in Article 8
hereof).

     In the event that prior to the end of the two (2) year  holding  period,  a
Participant's  employment  with the  Company or  service  as a  Director  of the
Company  terminates,  as the case may be,  the terms of  Article 9 hereof  shall
govern the treatment of outstanding Plan Shares.

     6.6 Voting  Rights.  During the two (2) year  holding  period  described in
Section  6.5  hereof  and  until  such  Shares  are  transferred   and/or  sold,
Participants  who have  purchased Plan Shares shall be entitled to exercise full
voting rights with respect to such Plan Shares.

     6.7  Dividends  and Other  Distributions.  During the two (2) year  holding
period  described in Section 6.5 hereof,  Participants  who have  purchased Plan
Shares shall be entitled to receive all  dividends and other  distributions  (if
any) paid with respect to such Plan Shares while they are so held, provided that
any  such  distributions  or  dividends  may  be  subject  to the  terms  of any
outstanding  purchase loan programs.  If any such dividends or distributions are
paid in Shares,  the Shares shall be converted into additional Plan Shares,  and
shall be subject to the same restrictions on transferability  and forfeitability
as the Plan Shares with respect to which they were paid.

     6.8 Award Agreement.  Each purchase of Plan Shares shall be evidenced by an
Award Agreement,  setting forth relevant terms and provisions  applicable to the
Plan Shares and to the corresponding grant of Options.

                            ARTICLE 7. STOCK OPTIONS

     7.1 Option Grants. Subject to the terms and provisions of the Plan, Options
shall be granted to Participants upon the purchase of Plan Shares as of the last
day of the Window Period during which such Plan Shares have been purchased.  The
number of Options to be granted in connection  with each purchase of Plan Shares
shall be a function  of the degree to which the  Company  attains  predesignated
performance goals.

     The Board's or the Committee's  determination with respect to the degree of
achievement of the  predesignated  performance  goals shall govern the number of
Shares under option  which shall be granted in  connection  with each Plan Share
purchased. The minimum number of Shares to be granted under option in connection
with the  purchase of each Plan Share shall be one (1),  and the maximum  number
shall be three (3).

     The multiple selected by the Board or the Committee shall apply to all Plan
Share  purchases  during  the  applicable  Window  Period.  Prior  to or at  the
beginning of the relevant  Window Period,  the multiple shall be communicated to
all Employees and Directors.

     7.2 Option Price.  The Option Price for each option granted under this Plan
shall  equal the Fair  Market  Value of a Share on the last  trading  day of the
Window Period during which the Option shall have been granted.

     7.3  Duration of  Options.  Each  Option  shall  expire at such time as the
Committee  shall  determine  at the time of grant;  provided,  however,  that no
option  shall be  exercisable  later than ten years and one day from the date on
which the Option was granted.

     7.4  Exercise  of  Options.   Options  granted  under  the  Plan  shall  be
exercisable  at such  times  and  shall  be  subject  to such  restrictions  and
conditions as the Committee  shall in each instance  approve,  which need not be
the same for each  grant or for each  Participant;  provided,  however,  that no
Option shall be  exercisable  within two years after the date of its grant other
than in  connection  with a Change in Control;  and  provided  further  that the
exercise provisions of each Option shall be consistent with Article 8 hereof.

     7.5 Payment. Options shall be exercised by the delivery of a written notice
of exercise to the Plan  Administrator,  setting forth the number of Shares with
respect to which the Option is to be exercised,  accompanied by full payment for
the Shares.

     The  Option  Price  upon  exercise  of any  Option  shall be payable to the
Company  in  full  either:  (a) in cash or its  equivalent  or (b) by  tendering
previously  acquired Shares having an aggregate Fair Market Value at the time of
exercise  equal to the total Option Price,  or (c) by a combination of both such
approaches.

     The  Committee  also may allow  cashless  exercises as permitted  under the
Federal Reserve Board's Regulation T, subject to applicable legal  restrictions,
or by any other means which the Committee  determines to be consistent  with the
Plan's purposes and applicable law.

     As soon as practicable after receipt of a written  notification of exercise
and  full  payment,  the  Company  shall  deliver  to  the  Participant,  in the
Participant's name, Share certificates in an appropriate amount,  based upon the
number of Shares purchased under the Option(s).

     7.6 Restrictions on Share Transferability.  The Committee shall impose such
restrictions on any Shares acquired  pursuant to the exercise of an Option under
the Plan as it may deem advisable,  including, without limitation,  restrictions
under  applicable  Federal  securities laws, under the requirements of NASDAQ or
any stock  exchange  or market  upon which such  Shares are then  listed  and/or
traded,  and  under any blue sky or state  securities  laws  applicable  to such
Shares.

     7.7  Nontransferability of Options. No Option granted under the Plan may be
sold,  transferred,  pledged,  assigned, or otherwise alienated or hypothecated,
other  than  by will  or by the  laws of  descent  and  distribution.  During  a
Participant's  lifetime,  all Options  granted to a  Participant  under the Plan
shall be exercisable  only by such  Participant,  except as set forth in Section
7.9 hereof.

     7.8 No Rights as a Shareholder. Prior to the purchase of Shares pursuant to
an Option, a Participant shall not have the rights of a shareholder with respect
to such Shares.

     7.9 Exercise of Options With Respect to  Incapacitated  Participants.  If a
Participant,  who has met the holding period  described in Section 6.5 hereof or
has completed  five (5) years of continuous  employment or service as a Director
subsequent to the purchase of Plan Shares, is under a legal disability or in the
Committee's opinion incapacitated in any way so as to be unable to manage his or
her  financial  affairs,  the  Committee  may  allow  such  Participant's  legal
representative  to  exercise  the   Participant's   Options  on  behalf  of  the
Participant.  Actions  taken  pursuant to this  Section by the  Committee  shall
discharge all liabilities under the Plan.

                 ARTICLE 8. PREMATURE DISPOSITION OF PLAN SHARES

     Except  as  otherwise  provided  in  Section  9.1,  in  the  event  a  Plan
Participant  (i) sells,  transfers or otherwise  conveys a Fully Paid Plan Share
prior to the end of the two (2) year  holding  period  described  in Section 6.5
hereof or (ii) directs the Plan Administrator to cease making payroll deductions
before all Plan Shares which the Participant  previously indicated he desired to
purchase  are Fully  Paid,  then in each such case,  the right to  exercise  the
Options granted in connection with the purchase of a Fully Paid Plan Share shall
be contingent upon the Participant's completion of five (5) years continuous (a)
employment  with the  Company  or any of its  subsidiaries  or (b)  service as a
Director of the Company subsequent to the last day of the Window Period in which
the Participant agreed to purchase such Plan Share.

                      ARTICLE 9. TERMINATION OF EMPLOYMENT
                            OR SERVICE AS A DIRECTOR

     9.1 Termination by Reason of Death, Disability or Retirement.  In the event
the employment or service as a Director of a Participant is terminated by reason
of death, Disability, or Retirement, the following provisions shall apply:

         (a)   Treatment  of  Plan   Shares.  The  Participant  will be
               credited  with all Plan  Shares  which  are  Fully  Paid
               as of the date of employment  termination  or termination
               of  service as a  Director   (in  the case of Disability,
               the Plan Administrator  shall  determine  the   date that
               employment or  service  as a Director  is deemed  to have
               terminated).  If,  at the time of  employment termination
               or termination of  service as a Director, the Participant
               has not Fully Paid all outstanding Plan Shares purchased,
               the  number  of  Plan Shares which shall be deemed Fully
               Paid shall be determined  at the sole  discretion of the
               Plan Administrator, subject to Section 6.4 hereof.

               All  outstanding  Plan Shares  which are  not Fully  Paid
               as of the  date of employment termination  or termination
               of service as a Director   (as  determined  by  the  Plan
               Administrator, subject to Section 6.4) shall be forfeited
               to the Company,  and shall  once  again become  available
               for purchase  under the Plan.

               If a  Participant's  death,  Disability,  or Retirement
               occurs after the delivery of Plan Shares to him or her,
               such Plan Shares shall not be affected by the employment
               termination  or  termination of service as a Director.

         (b)   Treatment  of  Stock  Options.   All outstanding Options
               granted to the Participant corresponding to  Plan Shares
               Fully Paid for  prior  to  the Participant's termination
               of  employment or termination  of  service as a Director
               which are then exercisable (and, accordingly, which have
               been  held  at  least  two  years  from  the grant date)
               (collectively,  the  "Covered  Options"), shall  not be
               forfeitable  pursuant  to  Article 8 (if applicable) in
               the event of death or  Disability, but shall be forfeit-
               able pursuant to Article 8 (if applicable)  in the event
               of Retirement and,  if not so forfeitable,  shall remain
               exercisable at any time prior to their  expiration date,
               or for one (1) year after the date of death, Disability,
               or  Retirement,  whichever  period  is  shorter,  by the
               Participant  or  by  such  person  or  persons that have
               acquired the  Participant's  rights  under the Option by
               will  or  by  the laws of descent and distribution.  The
               Plan  Administrator  shall, in all cases,  determine the
               date  of   employment  termination  or  termination  of
               service  as  a Director.   All  Options granted  to  the
               Participant  pursuant to the Plan other than the Covered
               Options  shall be forfeited  and shall once again be
               available  for grant under the Plan.

        (c)    Amounts Subject  to  Dispute.  If  at  the   time  of  a
               Participant's death,  the  Plan Administrator  is unable
               to   determine  what  person,   persons  or   entity  is
               entitled   to   exercise  Options   on   behalf  of  the
               Participant,   the  Plan  Administrator   shall  not  be
               required  to  implement  any directions to exercise such
               Options  or deliver Plan  Shares  to  any  such  person,
               persons or entity during the  pendency  of such dispute.
               Neither  the  Plan  Administrator,  the Committee or the
               Company shall be  responsible for a failure to implement
               such  exercise  instructions  or  to  deliver  such Plan
               Shares  during  the pendency of such  dispute,  notwith-
               standing  the fact that such Plan  Shares or Options may
               diminish in value or expire during the  pendency of such
               dispute.

     9.2  Disqualifying  Termination.  In the  event  that  the  Company  or its
subsidiaries terminates the employment or service as a Director of a Participant
as a result of a  Disqualifying  Termination,  the  following  provisions  shall
apply:

        (a)     Treatment  of  Plan Shares.  The  Participant  will be
                credited  with  all Plan Shares which are  Fully  Paid
                as  of  the  date  of termination.  The number of Plan
                Shares which are Fully  Paid for as of such date shall
                be determined  according to the  guidelines  set forth
                in   Section   9.1(a)   hereof.   All outstanding Plan
                Shares which  are  not  Fully  Paid  as of the date of
                termination  shall be forfeited  to  the  Company  and
                shall  once again become  available for purchase under
                the Plan.

                Plan Shares which have been  delivered to a Participant
                prior  to  termination  shall  not be  affected by this
                provision.

        (b)     Treatment  of Stock  Options.  Upon such a  termination,
                a  Participant shall forfeit all  Options, which Options
                shall thereafter once  again  become available for grant
                under the Plan.

     9.3 Other Termination.  In the event a Participant's  employment or service
as a Director is terminated for reasons other than death, Disability, Retirement
or Disqualifying Termination, the following provisions shall apply:

        (a)     Treatment  of Plan  Shares.  The  Participant  will be
                credited  with all Plan Shares  which  are  Fully Paid
                as of the date of employment termination or termination
                of service as a  Director.  The  number of Plan  Shares
                which are Fully  Paid  for  as  of  such  date shall be
                determined  according to  the  guidelines set forth  in
                Section 9.1(a)  hereof.  All  outstanding  Plan  Shares
                which are not Fully Paid as  of  the date of employment
                termination  or  termination of  service as a Director
                shall be forfeited  to the Company and shall once again
                become available for purchase under the Plan.

                Plan Shares  which have been  delivered to a Participant
                prior  to  employment  termination  or  termination  of
                service as a  Director shall not be affected by this
                provision.

        (b)     Treatment of  Stock  Options.  Upon  such a termination,
                a Participant shall forfeit (i) all  Options  for which
                the  requirements  of Article 8 (if applicable) have not
                been met, and (ii) all  other  Options  granted  to  the
                Participant  under  the  Plan  which  do not constitute
                Covered Options.

                Covered  Options for which the  requirements of  Article
                8 (if  applicable)  have been met may be exercised by the
                Participant within the period  beginning on the effective
                date of employment  termination or termination of service
                as a Director, and ending three (3) months after such
                date.

                       ARTICLE 10. RIGHTS OF PARTICIPANTS

     Nothing in the Plan shall  interfere  with or limit in any way the right of
the Company to terminate any participating  Employee's employment at any time or
to  dismiss  any  participating  Director  at any  time,  nor  confer  upon  any
Participant  any right to continue in the employ of the Company or as a Director
of the Company.

                          ARTICLE 11. CHANGE IN CONTROL

     If the Board so determines  at any time,  the  following  provisions  shall
apply if a Change in Control occurs after such determination:

            (a)      Any  and  all  Options   granted   hereunder
                     corresponding   to  Fully  Paid  Shares  (as
                     determined by the Plan Administrator)  shall
                     become  immediately  exercisable  (and shall
                     remain  exercisable  throughout their entire
                     term);  all other Options granted  hereunder
                     shall be forfeited to the Company;

            (b)      The  Company  shall  deliver all Plan Shares
                     which  are  Fully  Paid as of the  effective
                     date of the  Change  in  Control  (the  Plan
                     Administrator  shall have the  authority  to
                     determine  the number of Plan  Shares  which
                     are Fully  Paid as of such date  subject  to
                     Section   6.4  hereof,   and  to   establish
                     procedures  for the  delivery of such Shares
                     to  Participants),  and all  remaining  Plan
                     Shares  shall be  forfeited  to the Company;
                     and

            (c)      Subject  to the  other  provisions  of  this
                     Plan, the Committee shall have the authority
                     to make any modifications to the Plan Shares
                     and  Options  as  are   determined   by  the
                     Committee  to  be  appropriate   before  the
                     effective date of the Change in Control.

               ARTICLE 12. AMENDMENT, MODIFICATION AND TERMINATION

     12.1  Amendment.  Modification  and  Termination.  With the approval of the
Board, at any time and from time to time, the Committee may terminate,  amend or
modify the Plan.  Any such  termination  shall be effective  with respect to all
subsequent Window Periods.

     12.2 Awards Previously Granted.  No termination,  amendment or modification
of the Plan shall adversely affect in any material way any Plan Share previously
purchased  or Option  previously  granted  under the Plan,  without  the written
consent of the Participant holding such Plan Share or Option.

                             ARTICLE 13. WITHHOLDING

     13.1 Tax  Withholding.  The  Company  shall have the power and the right to
deduct or withhold,  or require a Participant to remit to the Company, an amount
sufficient  to  satisfy   Federal,   state,   and  local  taxes  (including  the
Participant's  FICA  obligation)  required by law to be withheld with respect to
any taxable event arising as a result of this Plan.

     13.2 Share  Withholding.  With  respect to  withholding  required  upon the
exercise of Options, upon the purchase of Plan Shares, or upon any other taxable
event  hereunder,  Participants  may  elect,  subject  to  the  approval  of the
Committee,  to satisfy  the  withholding  requirement,  in whole or in part,  by
having the Company  withhold  Shares  having a Fair Market Value on the date the
tax is to be determined equal to the minimum  statutory total tax which could be
imposed on the transaction. All elections shall be irrevocable, made in writing,
signed by the  Participant,  and comply with all  procedures  established by the
Committee for Share withholding.

     In addition,  subject to the approval of the  Committee,  Participants  may
satisfy the tax withholding  obligation arising as a result of any taxable event
occurring  hereunder,  by remitting to the Plan  Administrator  previously  held
Shares  having  an  aggregate  Fair  Market  Value  on the date the tax is to be
determined  equal to the minimum  statutory  total tax which could be imposed on
the transaction;  provided,  however, that any Shares which are so tendered must
have been  beneficially  owned by the  Participant  for at least six (6)  months
prior to the date of their tender.

                           ARTICLE 14. INDEMNIFICATION

     Each person who is or shall have been a member of the Committee, the Board,
or the Plan  Administrator,  and each agent retained by the Plan  Administrator,
shall be,  indemnified  and held  harmless by the  Company  against and from any
loss,  cost,  liability,  or  expense  that may be  imposed  upon or  reasonably
incurred by him or her in connection  with or resulting from any claim,  action,
suit,  or proceeding to which he or she may be a party or in which he or she may
be  involved  by  reason of any  action  taken in good  faith or any good  faith
failure to act under the Plan and against  and from any and all amounts  paid by
him or her in settlement thereof, with the Company's approval, or paid by him or
her in  satisfaction  of any judgment in any such action,  suit,  or  proceeding
against him or her, provided he or she shall give the Company an opportunity, at
its own expense,  to handle and defend the same before he or she  undertakes  to
handle  and  defend  it on  his  or her  own  behalf.  The  foregoing  right  of
indemnification shall not be exclusive of any other rights of indemnification to
which  such  persons  may  be  entitled  under  the  Company's   Certificate  of
Incorporation  or By-Laws,  as a matter of law, or otherwise,  or any power that
the Company may have to indemnify them or hold them harmless.

                             ARTICLE 15. SUCCESSORS

     All  obligations of the Company under the Plan, with respect to Plan Shares
purchased and Options  granted  hereunder,  shall be binding on any successor to
the Company,  whether the existence of such  successor is the result of a direct
or  indirect  purchase,   merger,   consolidation,   or  otherwise,  of  all  or
substantially all of the business and/or assets of the Company.

                         ARTICLE 16. LEGAL CONSTRUCTION

     16.1 Gender and Number.  Except where  otherwise  indicated by the context,
any masculine term used herein also shall include the feminine, the plural shall
include the singular and the singular shall include the plural.

     16.2  Severability.  In the event any  provision  of the Plan shall be held
illegal or invalid for any reason, the illegality or invalidity shall not affect
the remaining parts of the Plan, and the Plan shall be construed and enforced as
if the illegal or invalid provision had not been included.

     16.3  Requirements  of Law. The  purchase of Plan  Shares,  the granting of
Options,  and the  issuance  of Shares  under the Plan,  shall be subject to all
applicable  laws,  rules,  and  regulations,   and  to  such  approvals  by  any
governmental agencies or national securities exchanges as may be required.

     16.4  Governing Law. To the extent not pre-empted by Federal law, the Plan,
and all agreements hereunder, shall be construed in accordance with and governed
by the laws of the State of New Jersey.