VITAL SIGNS INVESTMENT PLAN

                 (as amended and restated through August 1,1999)



                 ARTICLE 1. ESTABLISHMENT. PURPOSE. AND DURATION

     1.1 Establishment of the Plan. Vital Signs,  Inc., a New Jersey corporation
(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:


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<PAGE>

     (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 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 corporation  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  stockholders  of each new
          director  within such period was  approved by the vote of


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          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


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     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  designated 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  pre-


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<PAGE>

designated  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 900,000.  These 900,000
Shares may be either  authorized  but  un-issued,  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 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.

     No one person  participating in the Plan may receive options under the Plan
or under any other  benefit  plan of the Company for more than an  aggregate  of
250,000  shares of Common Stock in any fiscal  year,  subject to  adjustment  as
provided in Section 4.3 hereof.

     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, re-capitalization, separation, liquidation, stock
dividend,


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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.  In such
event,  an  appropriate  adjustment  shall also be made in the maximum number of
shares  subject  to options  which may be  granted  under the Plan and under any
other benefit plan of the Company to any one person in any fiscal year.

                            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 the greater of $50,000 or
twice an Employee's  annual salary in effect on the first day of the  applicable
Window Period, and, in addition, for each two year period, the Maximum Aggregate
Fair Market  Value of Plan Shares which may be purchased by an Employee is twice
an  Employee's  annual salary in effect at any time during such two year period,
unless the Committee approves


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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)


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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


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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  pre-designated
performance goals.

     The Board's or the Committee's  determination with respect to the degree of
achievement of the  pre-designated  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.



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     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.



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                 ARTICLE 8. PREMATURE DISPOSITION OF PLAN SHARES

     Except as otherwise provided in Section 6.2 and 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 options  shall
automatically be forfeited,  unless the Committee shall  determine,  in its sole
and  absolute  discretion,  that the  Employee  has  suffered  hardship and such
hardship has caused such Employee to effect any of the actions  discussed in (i)
or  (ii)  of the  first  sentence  of  this  Article  8.  In the  event  of such
determination  by the  Committee,  and no loan  from  the  Company  was  used to
purchase such Plan Shares,  such Plan options shall not be forfeited,  provided,
however,  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.



                                 Page 11 of 16
<PAGE>

          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 forfeitable  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,  notwithstanding  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


                                 Page 12 of 16
<PAGE>

     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.

     Notwithstanding  any provision in this Plan to the  contrary,  in the event
that an employee  continues to serve as a director or  consultant to the Company
or any of its  subsidiaries  after such  employee  ceases to be  employed by the
Company  or any of its  subsidiaries,  the Board  shall have the  discretion  to
provide  that the  employee  shall,  for  purposes  of this  Plan,  be deemed to
continue in the employment of the Company


                                 Page 13 of 16
<PAGE>

until such time that such person ceases to serve as a director of, consultant to
or employee of the Company or any of its subsidiaries.

                       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


                                 Page 14 of 16
<PAGE>

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  PICA  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


                                 Page 15 of 16
<PAGE>

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.


                                 Page 16 of 16