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                                                                   EXHIBIT 10.38
                                        
                    SECURITY ASSOCIATES INTERNATIONAL, INC.
                               STOCK OPTION PLAN
                                        

I.       PURPOSE AND DEFINITIONS

         A.       PURPOSE OF THE PLAN

                  The Plan is intended to encourage ownership of Shares by Key
                  Employees and Key Non-Employees in order to attract and retain
                  such Key Employees in the employ of the Company or an
                  Affiliate, or to attract such Key Non-Employees to provide
                  services to the Company or an Affiliate, and to provide
                  additional incentive for such persons to promote the success
                  of the Company or an Affiliate.

         B.       DEFINITIONS

Unless otherwise specified or unless the context otherwise requires, the
     following terms, as used in this Plan, have the following meanings:

                  1.       AFFILIATE means a corporation which, for purposes of
                           Section 422 of the Code, is a parent or subsidiary of
                           the Company, direct or indirect.

                  2.       BOARD means the Board of Directors of the Company.

                  3.       CODE means the Internal Revenue
                           Code of 1986, as amended.

                  4.       COMMITTEE means the committee to which the Board
                           delegates the power to act under or pursuant to the
                           provisions of the Plan, or the Board if no committee
                           is selected. If the Board delegates powers to a
                           committee, then, such committee shall consist
                           initially of not less than two (2) members of the
                           Board, each member of which must be a "non-employee
                           director," within the meaning of the applicable rules
                           promulgated pursuant to the Exchange Act. In
                           addition, no member of the Committee shall receive
                           any Option pursuant to the Plan or any similar plan
                           of the Company or any Affiliate while serving on the
                           Committee unless the Board determines that the grant
                           of such an Option satisfies the then current Rule
                           16b-3 requirements under the Exchange Act.
                           Notwithstanding anything herein to the contrary, and
                           insofar as the Board determines that it is necessary
                           in order for compensation recognized by Participants
                           pursuant to the Plan to be fully deductible to the
                           Company for federal income tax purposes, each member
                           of the Committee also shall be an "outside director"
                           (as defined in regulations or other guidance issued
                           by the Internal Revenue Service under Code Section
                           162(m)).


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                  5.       COMPANY means Security Associates International, 
                           Inc., a Delaware corporation, and includes any
                           successor or assignee corporation or corporations
                           into which the Company may be merged, changed, or
                           consolidated; any corporation for whose securities
                           the securities of the Company shall be exchanged; and
                           any assignee of or successor to substantially all of
                           the assets of the Company.

                  6.       DISABILITY or DISABLED means permanent and total 
                           disability as defined in Section 22(e)(3) of the
                           Code.

                  7.       EXCHANGE ACT means the Securities Exchange Act of
                           1934, as amended from time to time, or any successor
                           statute thereto.

                  8.       INCENTIVE OPTION means an Option which, when granted,
                           is intended to be an "incentive stock option," as
                           defined in Section 422 of the Code.

                  9.       KEY EMPLOYEE means an employee of the Company or of
                           an Affiliate (including, without limitation, an
                           employee who also is serving as an officer or
                           director of the Company or of an Affiliate),
                           designated by the Board or the Committee as being
                           eligible to be granted one or more Options under the
                           Plan.

                  10.      KEY NON-EMPLOYEE means a non-employee director,
                           consultant, or independent contractor of the Company
                           or of an Affiliate who is designated by the Board or
                           the Committee as being eligible to be granted one or
                           more Options under the Plan.

                  11.      NONSTATUTORY OPTION means an Option which, when
                           granted, is not intended to be an "incentive stock
                           option," as defined in Section 422 of the Code.

                  12.      OPTION means a right or option granted under the 
                           Plan.

                  13.      OPTION AGREEMENT means an agreement between the
                           Company and a Participant executed and delivered
                           pursuant to the Plan.

                  14.      PARTICIPANT means a Key Employee to whom one or more
                           Incentive Options or Nonstatutory Options are granted
                           under the Plan, and a Key Non-Employee to whom one or
                           more Nonstatutory Options are granted under the Plan.

                  15.      PLAN means this Stock Option Plan, as amended from 
                           time to time.

                  16.      SHARES means the following shares of the capital
                           stock of the Company as to which Options have been or
                           may be granted under the Plan: treasury shares


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                           or authorized but unissued Common Stock, $.001 par
                           value, or any shares of capital stock into which the
                           Shares are changed or for which they are exchanged
                           within the provisions of Article VI of the Plan.

II.      SHARES SUBJECT TO THE PLAN

         The aggregate number of Shares as to which Options may be granted from
         time to time shall be One Million Eight Hundred Thousand (1,800,000)
         Shares (subject to adjustment for stock splits, stock dividends, and
         other adjustments described in Article VI hereof); provided, however,
         that, in accordance with Section 162(m) of the Code, the aggregate
         number of Shares as to which Options may be granted in any calendar
         year to any one Key Employee shall not exceed Four Hundred Thousand
         (400,000) (subject to adjustment for stock splits, stock dividends, and
         other adjustments described in Article VI hereof).

         If an Option ceases to be "outstanding," in whole or in part, the
         Shares which were subject to such Option, if the Option was not
         exercised, shall be available for the granting of other Options. Any
         Option shall be treated as "outstanding" until such Option is exercised
         in full, terminates or expires under the provisions of the Plan or
         Option Agreement, or is canceled by agreement of the Company and the
         Participant.

         Subject to the provisions of Article VI, the aggregate number of Shares
         as to which Incentive Options may be granted shall be subject to change
         only by means of an amendment of the Plan duly adopted by the Company
         and approved by the stockholders of the Company within one year before
         or after the date of the adoption of any such amendment.

III.     ADMINISTRATION OF THE PLAN

         The Plan shall be administered by the Committee. A majority of the
         Committee shall constitute a quorum at any meeting thereof (including
         by telephone conference) and the acts of a majority of the members
         present, or acts approved in writing by a majority of the entire
         Committee without a meeting, shall be the acts of the Committee for
         purposes of this Plan. The Committee may authorize one or more of its
         members or an officer of the Company to execute and deliver documents
         on behalf of the Committee. A member of the Committee shall not
         exercise any discretion respecting himself or herself under the Plan.
         The Board shall have the authority to remove, replace or fill any
         vacancy of any member of the Committee upon notice to the Committee and
         the affected member. Any member of the Committee may resign upon notice
         to the Board. The Committee may allocate among one or more of its
         members, or may delegate to one or more of its agents, such duties and
         responsibilities as it determines.

         Subject to the provisions of the Plan, the Committee is authorized to:

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         A.       interpret the provisions of the Plan or of any Option or
                  Option Agreement and to make all rules and determinations
                  which it deems necessary or advisable for the administration
                  of the Plan;

         B.       determine which employees of the Company or of an Affiliate
                  shall be designated as Key Employees and which of the Key
                  Employees shall be granted Options;

         C.       determine the Key Non-Employees to whom Nonstatutory Options
                  shall be granted;

         D.       determine whether the Option to be granted shall be an
                  Incentive Option or Nonstatutory Option;

         E.       determine the number of Shares for which an Option or Options
                  shall be granted;

         F.       provide for the acceleration of the right to exercise an
                  Option (or portion thereof); and

         G.       specify the terms and conditions upon which Options may be
                  granted;

         provided, however, that with respect to Incentive Options, all such
         interpretations, rules, determinations, terms, and conditions shall be
         made and prescribed in the context of preserving the tax status of the
         Incentive Options as incentive stock options within the meaning of
         Section 422 of the Code.

         All determinations of the Committee shall be reduced to writing and
         signed by or on behalf of the Committee. No member of the Committee
         shall be liable for any action or determination made in good faith with
         respect to the Plan or any Option.

IV.      ELIGIBILITY FOR PARTICIPATION

         The Committee may at any time and from time to time grant one or more
         Options to one or more Key Employees or Key Non-Employees and may
         designate the number of Shares to be subject to each Option so granted,
         provided, however, that (i) each Participant receiving an Incentive
         Option must be a Key Employee of the Company or of an Affiliate at the
         time an Incentive Option is granted; (ii) no Incentive Options shall be
         granted after the expiration of ten (10) years from the earlier of the
         date of the adoption of the Plan by the Company or the approval of the
         Plan by the stockholders of the Company; and (iii) the fair market
         value of the Shares (determined at the time the Option is granted) as
         to which Incentive Options are exercisable for the first time by any
         Key Employee during any single calendar year (under the Plan and under
         any other incentive option plan of the Company or an Affiliate) shall
         not exceed $100,000.

         Notwithstanding the foregoing, no individual who is a member of the
         Committee shall be eligible to receive an Option, unless the Board
         determines that the grant of the Option satisfies the then current Rule
         16b-3 requirements under the Exchange Act. If, at any time,

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         the Company is no longer subject to Section 16 of the Exchange Act,
         then no individual who is a member of the Committee shall be eligible
         to receive an Option under the Plan unless the granting of such Option
         shall be approved by the Committee, with all of the members voting
         thereon being disinterested members. For the purpose of this Article
         IV, a "disinterested member" shall be any member who shall not then be,
         or at any time within the year prior thereto have been, granted an
         Option under the Plan or any other plan of the Company or an Affiliate,
         other than an Option granted under a formula plan established by the
         Company or an Affiliate.

         Notwithstanding any of the foregoing provisions, the Committee may
         authorize the grant of an Option to a person not then in the employ of
         or serving as a director, consultant, or independent contractor of the
         Company or of an Affiliate, conditioned upon such person becoming
         eligible to become a Participant at or prior to the execution of the
         Option Agreement evidencing the actual grant of such Option.

V.       TERMS AND CONDITIONS OF OPTIONS

         Each Option shall be set forth in an Option Agreement, duly executed on
         behalf of the Company and by the Participant to whom such Option is
         granted. Except for the setting of the Option price under Paragraph A,
         no Option shall be granted and no purported grant of any Option shall
         be effective until such Option Agreement shall have been duly executed
         on behalf of the Company and by the Participant. Each such Option
         Agreement shall be subject to at least the following terms and
         conditions:

         A.       OPTION PRICE

                  The exercise price of the Shares covered by each Option
                  granted under the Plan shall be determined by the Committee.
                  The Option price per share shall be such amount as may be
                  determined by the Committee in its sole discretion on the date
                  of the grant of the Option. In the case of an Incentive
                  Option, if the optionee owns directly or by reason of the
                  applicable attribution rules ten percent (10%) or less of the
                  total combined voting power of all classes of share capital of
                  the Company, the Option price (per share) of the Shares
                  covered by each Incentive Option shall be not less than the
                  "fair market value" of the Shares on the date of the grant of
                  the Incentive Option. In all other cases of Incentive Options,
                  the Option price shall be not less than one hundred ten
                  percent (110%) of the said fair market value on the date of
                  grant. If the Shares are listed on any national securities
                  exchange, the fair market value shall be the closing sales
                  price, if any, on the largest such exchange on the date of the
                  grant of the Option, or, if none, on the most recent trade
                  date thirty (30) days or less prior to the date of the grant
                  of the Option. If the Shares are not then listed on any such
                  exchange, the fair market value of such Shares shall be the
                  closing sales price if such is reported or otherwise the mean
                  average of the closing "Bid" and the closing "Ask" prices, if
                  any, as reported on the National Association of Securities
                  Dealers Automated Quotation System ("NASDAQ") for the date of
                  the grant of the Option, or if none, on the most recent trade
                  date thirty (30) days or less



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                  prior to the date of the grant of the Option for which such
                  quotations are reported. If the Shares are not then either
                  listed on any such exchange or quoted on NASDAQ, the fair
                  market value shall be the mean between the average of the
                  "Bid" and the average of the "Ask" prices, if any, as reported
                  in the National Daily Quotation Service for the date of the
                  grant of the Option, or, if none, for the most recent trade
                  date thirty (30) days or less prior to the date of the grant
                  of the Option for which such quotations are reported. If the
                  fair market value cannot be determined under the preceding
                  three sentences, it shall be determined in good faith by the
                  Committee.

         B.       NUMBER OF SHARES

                  Each Option shall state the number of Shares to which it
                  pertains.

         C.       TERM OF OPTION

                  Each Incentive Option shall terminate not more than ten (10)
                  years from the date of the grant thereof, or at such earlier
                  time as the Option Agreement may provide, and shall be subject
                  to earlier termination as herein provided, except that if the
                  Option price is required under Paragraph A of this Article V
                  to be at least one hundred ten percent (110%) of fair market
                  value, each such Incentive Option shall terminate not more
                  than five (5) years from the date of the grant thereof, and
                  shall be subject to earlier termination as herein provided.

         D.       DATE OF EXERCISE

                  Upon the authorization of the grant of an Option, or at any
                  time thereafter, the Committee may, subject to the provisions
                  of Paragraph C of this Article V, prescribe the date or dates
                  on which the Option becomes exercisable, and may provide that
                  the Option rights become exercisable in installments over a
                  period of years, or upon the attainment of stated goals.

         E.       MEDIUM OF PAYMENT

                  The Option price shall be paid on the date of purchase
                  specified in the notice of exercise, as set forth in Paragraph
                  I. It shall be paid in such form (permitted by Section 422 of
                  the Code in the case of Incentive Options) as the Committee
                  shall, either by rules promulgated pursuant to the provisions
                  of Article III of the Plan, or in the particular Option
                  Agreement, provide.

         F.       TERMINATION OF EMPLOYMENT

                  1.       A Participant who ceases to be an employee or Key
                           Non-Employee of the Company or of an Affiliate for
                           any reason other than death, Disability, or
                           termination for cause, may exercise any Option
                           granted to such Participant,

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                           to the extent that the right to purchase Shares
                           thereunder has become exercisable on the date of such
                           termination, but only within three (3) months after
                           such date, or, if earlier, within the originally
                           prescribed term of the Option, and subject to the
                           condition that no Option shall be exercisable after
                           the expiration of the term of the Option. A
                           Participant's employment shall not be deemed
                           terminated by reason of a transfer to another
                           employer which is the Company or an Affiliate.

                  2.       A Participant who ceases to be an employee or Key
                           Non-Employee for cause shall, upon such termination,
                           cease to have any right to exercise any Option. For
                           purposes of this Plan, cause shall be deemed to
                           include (but shall not be limited to) wrongful
                           appropriation of funds of the Company or an
                           Affiliate, divulging confidential information about
                           the Company or an Affiliate to the public, the
                           commission of a gross misdemeanor or felony, or the
                           performance of any similar action that the Board or
                           the Committee, in their sole discretion, may deem to
                           be sufficiently injurious to the interests of the
                           Company or an Affiliate to constitute substantial
                           cause for termination. The determination of the Board
                           or the Committee as to the existence of cause shall
                           be conclusive and binding upon the Participant and
                           the Company.

                  3.       A Participant who is absent from work with the
                           Company or an Affiliate because of temporary
                           disability (any disability other than a permanent and
                           total Disability as defined at Paragraph B(6) of
                           Article I hereof), or who is on leave of absence for
                           any purpose permitted by any authoritative
                           interpretation (i.e., regulation, ruling, case law,
                           etc.) of Section 422 of the Code, shall not, during
                           the period of any such absence, be deemed, by virtue
                           of such absence alone, to have terminated his
                           employment or relationship with the Company or with
                           an Affiliate, except as the Committee may otherwise
                           expressly provide or determine.

                  4.       Paragraph F(1) shall control and fix the rights of a
                           Participant who ceases to be an employee or Key
                           Non-Employee of the Company or of an Affiliate for
                           any reason other than death, Disability, or
                           termination for cause, and who subsequently becomes
                           Disabled or dies. Nothing in Paragraphs G and H of
                           this Article V shall be applicable in any such case
                           except that, in the event of such a subsequent
                           Disability or death within the three (3) month period
                           after the termination of employment or, if earlier,
                           within the originally prescribed term of the Option,
                           the Participant or the Participant's estate or
                           personal representative may exercise the Option
                           permitted by this Paragraph F, in the event of
                           Disability, within twelve (12) months after the date
                           that the Participant ceased to be an employee or Key
                           Non-Employee of the Company or of an Affiliate or, in
                           the event of death, within twelve (12) months after
                           the date of death of such Participant.


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         G.       TOTAL AND PERMANENT DISABILITY

                  A Participant who ceases to be an employee or Key Non-Employee
                  of the Company or of an Affiliate by reason of Disability may
                  exercise any Option granted to such Participant (i) to the
                  extent that the right to purchase Shares thereunder has become
                  exercisable on or before the date such Participant becomes
                  Disabled as determined by the Committee, and (ii) if the
                  Option becomes exercisable periodically under Paragraph D, to
                  the extent of any additional rights that would have become
                  exercisable had the Participant not become so Disabled until
                  after the close of business on the next periodic exercise
                  date.

                  A Disabled Participant shall exercise such rights, if
                  at all, only within a period of not more than twelve (12)
                  months after the date that the Participant became Disabled as
                  determined by the Committee (notwithstanding that the
                  Participant might have been able to exercise the Option as to
                  some or all of the Shares on a later date if the Participant
                  had not become Disabled) or, if earlier, within the originally
                  prescribed term of the Option.

         H.       DEATH

                  In the event that a Participant to whom an Option has
                  been granted ceases to be an employee or Key Non-Employee of
                  the Company or of an Affiliate by reason of such Participant's
                  death, such Option, to the extent that the right is
                  exercisable but not exercised on the date of death, may be
                  exercised by the Participant's estate or personal
                  representative within twelve (12) months after the date of
                  death of such Participant or, if earlier, within the
                  originally prescribed term of the Option, notwithstanding that
                  the decedent might have been able to exercise the Option as to
                  some or all of the Shares on a later date if the Participant
                  were alive and had continued to be an employee or Key
                  Non-Employee of the Company or of an Affiliate.

         I.       EXERCISE OF OPTION AND ISSUE OF STOCK

                  Options shall be exercised by giving written notice
                  to the Company. Such written notice shall: (l) be signed by
                  the person exercising the Option, (2) state the number of
                  Shares with respect to which the Option is being exercised,
                  (3) contain the warranty, if any, required by Paragraph M of
                  this Article V, and (4) specify a date (other than a Saturday,
                  Sunday or legal holiday) not less than five (5) nor more than
                  ten (10) days after the date of such written notice, as the
                  date on which the Shares will be purchased. Such tender and
                  conveyance shall take place at the principal office of the
                  Company during ordinary business hours, or at such other hour
                  and place agreed upon by the Company and the person or persons
                  exercising the Option. On the date specified in such written
                  notice (which date may be extended by the Company in order to
                  comply with any law or regulation which requires the Company
                  to take any action with respect to the Option Shares prior to
                  the issuance


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                   thereof, whether pursuant to the provisions of Article VI or
                   otherwise), the Company shall accept payment for the Option
                   Shares and shall deliver to the person or persons exercising
                   the Option in exchange therefor an appropriate certificate or
                   certificates for fully paid non-assessable Shares. In the
                   event of any failure to take up and pay for the number of
                   Shares specified in such written notice on the date set forth
                   therein (or on the extended date as above provided), the
                   right to exercise the Option shall terminate with respect to
                   such number of Shares, but shall continue with respect to the
                   remaining Shares covered by the Option and not yet acquired
                   pursuant thereto.

         J.        RIGHTS AS A STOCKHOLDER

                   No Participant to whom an Option has been granted shall have
                   rights as a stockholder with respect to any Shares covered by
                   such Option except as to such Shares as have been issued to
                   or registered in the Company's share register in the name of
                   such Participant upon the due exercise of the Option and
                   tender of the full Option price.

         K.        ASSIGNABILITY AND TRANSFERABILITY OF OPTION

                   Unless otherwise permitted by the Code and by Rule 16b-3 of
                   the Exchange Act, if applicable, and approved in advance by
                   the Committee, an Option granted to a Participant shall not
                   be transferable by the Participant and shall be exercisable,
                   during the Participant's lifetime, only by such Participant
                   or, in the event of the Participant's incapacity, his
                   guardian or legal representative. Except as otherwise
                   permitted herein, such Option shall not be assigned, pledged
                   or hypothecated in any way (whether by operation of law or
                   otherwise) and shall not be subject to execution, attachment,
                   or similar process. Any attempted transfer, assignment,
                   pledge, hypothecation or other disposition of any Option or
                   of any rights granted thereunder contrary to the provisions
                   of this Paragraph K, or the levy of any attachment or similar
                   process upon an Option or such rights, shall be null and
                   void.

         L.        OTHER PROVISIONS

                   The Option Agreement for an Incentive Option shall contain
                   such limitations and restrictions upon the exercise of the
                   Option as shall be necessary in order that such Option can be
                   an "incentive stock option" within the meaning of Section 422
                   of the Code. Further, the Option Agreements authorized under
                   the Plan shall be subject to such other terms and conditions
                   including, without limitation, restrictions upon the exercise
                   of the Option, as the Committee shall deem advisable and
                   which, in the case of Incentive Options, are not inconsistent
                   with the requirements of Section 422 of the Code.

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           M.      PURCHASE FOR INVESTMENT

                   Unless the Shares to be issued upon the particular exercise
                   of an Option shall have been effectively registered under the
                   Securities Act of 1933, as now in force or hereafter amended,
                   the Company shall be under no obligation to issue the Shares
                   covered by such exercise unless and until the following
                   conditions have been fulfilled. In accordance with the
                   direction of the Committee, the persons who exercise such
                   Option shall warrant to the Company that, at the time of such
                   exercise, such persons are acquiring their Option Shares for
                   investment and not with a view to, or for sale in connection
                   with, the distribution of any such Shares, and shall make
                   such other representations, warranties, acknowledgments and
                   affirmations, if any, as the Committee may require. In such
                   event, the persons acquiring such Shares shall be bound by
                   the provisions of the following legend (or similar legend)
                   which shall be endorsed upon the certificate(s) evidencing
                   their Option Shares issued pursuant to such exercise.

                        "The shares represented by this certificate have been
                        acquired for investment and they may not be sold or
                        otherwise transferred by any person, including a
                        pledgee, in the absence of an effective registration
                        statement for the shares under the Securities Act of
                        1933 or an opinion of counsel satisfactory to the
                        Company that an exemption from registration is then
                        available."

                   Without limiting the generality of the foregoing, the Company
                   may delay issuance of the Shares until completion of any
                   action or obtaining any consent that the Company deems
                   necessary under any applicable law (including without
                   limitation state securities or "blue sky" laws).

VI.      ADJUSTMENTS UPON CHANGES IN CAPITALIZATION; SALE OF COMPANY

         In the event that the outstanding Shares of the Company are changed
         into or exchanged for a different number or kind of shares or other
         securities of the Company or of another corporation by reason of any
         reorganization, merger, consolidation, recapitalization,
         reclassification, change in par value, stock split-up, combination of
         shares or dividend payable in capital stock, or the like, appropriate
         adjustments to prevent dilution or enlargement of the rights granted
         to, or available for, Participants shall be made in the manner and kind
         of shares for the purchase of which Options may be granted under the
         Plan, and, in addition, appropriate adjustment shall be made in the
         number and kind of Shares and in the Option price per share subject to
         outstanding Options. No such adjustment shall be made which shall,
         within the meaning of Section 424 of the Code, constitute such a
         modification, extension, or renewal of an Option as to cause the
         adjustment to be considered as the grant of a new Option.

         Notwithstanding anything herein to the contrary, the Company may, in
         its sole discretion, accelerate the timing of the exercise provisions
         of any Option in the event of a tender offer for the Company's Shares,
         the adoption of a plan of merger or consolidation under which all

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         the Shares of the Company would be eliminated, or a sale of all or
         substantially all of the Company's assets. Alternatively, the Company
         may, in its sole discretion, cancel any or all Options upon any of the
         foregoing events and provide for the payment to Participants in cash of
         an amount equal to the difference between the Option price and the
         price of a Share, as determined in good faith by the Committee, at the
         close of business on the date of such event, multiplied by the number
         of Shares subject to Option so canceled. The preceding two sentences of
         this Article VI notwithstanding, the Company shall be required to
         accelerate the timing of the exercise provisions of any Option if (i)
         any such business combination is to be accounted for as a
         pooling-of-interests under APB Opinion 16 and (ii) the timing of such
         acceleration does not prevent such pooling-of-interests treatment.

         Upon a business combination by the Company or any of its Affiliates
         with any corporation or other entity through the adoption of a plan of
         merger or consolidation or a share exchange or through the purchase of
         all or substantially all of the capital stock or assets of such other
         corporation or entity, the Board or the Committee may, in its sole
         discretion, grant Options pursuant hereto to all or any persons who, on
         the effective date of such transaction, hold outstanding options to
         purchase securities of such other corporation or entity and who, on and
         after the effective date of such transaction, will become employees or
         directors of, or consultants to, the Company or its Affiliates. The
         number of Shares subject to such substitute Options shall be determined
         in accordance with the terms of the transaction by which the business
         combination is effected. Notwithstanding the other provisions of this
         Plan, the other terms of such substitute Options shall be substantially
         the same as or economically equivalent to the terms of the options for
         which such Options are substituted, all as determined by the Board or
         by the Committee, as the case may be. Upon the grant of substitute
         Options pursuant hereto, the options to purchase securities of such
         other corporation or entity for which such Options are substituted
         shall be canceled immediately.

VII.     DISSOLUTION OR LIQUIDATION OF THE COMPANY

         Upon the dissolution or liquidation of the Company other than in
         connection with a transaction to which the preceding Article VI is
         applicable, all Options granted hereunder shall terminate and become
         null and void; provided, however, that if the rights of a Participant
         under the applicable Options have not otherwise terminated and expired,
         the Participant shall have the right immediately prior to such
         dissolution or liquidation to exercise any Option granted hereunder to
         the extent that the right to purchase shares thereunder has become
         exercisable as of the date immediately prior to such dissolution or
         liquidation.

VIII.    TERMINATION OF THE PLAN

         The Plan shall terminate (10) years from the earlier of the date of its
         adoption or the date of its approval by the stockholders. The Plan may
         be terminated at an earlier date by vote of the stockholders or the
         Board; provided, however, that any such earlier termination shall not
         affect any Options granted or Option Agreements executed prior to the
         effective date of

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         such termination. Except as may otherwise be provided for under
         Articles VI and VII, and notwithstanding the termination of the Plan,
         any Options granted prior to the effective date of the Plan's
         termination may be exercised until the earlier of (i) the date set
         forth in the Option Agreement, or (ii) ten (10) years from the date the
         Option is granted, and the provisions of the Plan with respect to the
         full and final authority of the Committee under the Plan shall continue
         to control.

IX.      AMENDMENT OF THE PLAN

         The Plan may be amended by the Board and such amendment shall become
         effective upon adoption by the Board; provided, however, that any
         amendment shall be subject to the approval of the stockholders of the
         Company at or before the next annual meeting of the stockholders of the
         Company if such stockholder approval is required by the Code, any
         federal or state law or regulation, the rules of any stock exchange or
         automated quotation system on which the Shares may be listed or quoted,
         or if the Board, in its discretion, determines to submit such changes
         to the Plan to its stockholders for approval.

X.       EMPLOYMENT RELATIONSHIP

         Nothing herein contained shall be deemed to prevent the Company or an
         Affiliate from terminating the employment of a Participant, nor to
         prevent a Participant from terminating the Participant's employment
         with the Company or an Affiliate.

XI.      INDEMNIFICATION OF COMMITTEE

         In addition to such other rights of indemnification as they may have as
         directors or as members of the Committee, the members of the Committee
         shall be indemnified by the Company against all reasonable expenses,
         including attorneys' fees, actually and reasonably incurred in
         connection with the defense of any action, suit or proceeding, or in
         connection with any appeal therein, to which they or any of them may be
         a party by reason of any action taken by them as members of the
         Committee and against all amounts paid by them in settlement thereof
         (provided such settlement is approved by independent legal counsel
         selected by the Company) or paid by them in satisfaction of a judgment
         in any such action, suit or proceeding, except in relation to matters
         as to which it shall be adjudged in such action, suit or proceeding
         that the Committee member is liable for gross negligence or willful
         misconduct in the performance of his or her duties. To receive such
         indemnification, a Committee member must first offer in writing to the
         Company the opportunity, at its own expense, to defend any such action,
         suit or proceeding.

XII.     SAVINGS CLAUSE

         This Plan is intended to comply in all respects with applicable law and
         regulations, including, (i) with respect to those Participants who are
         officers or directors for purposes of Section 16 of the Exchange Act,
         Rule 16b-3 of the Securities and Exchange Commission, if applicable,
         and (ii) with respect to executive officers, Code Section 162(m). In
         case any

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         one or more provisions of this Plan shall be held invalid, illegal, or
         unenforceable in any respect under applicable law and regulation
         (including Rule 16b-3 and Code Section 162(m)), the validity, legality,
         and enforceability of the remaining provisions shall not in any way be
         affected or impaired thereby and the invalid, illegal, or unenforceable
         provision shall be deemed null and void; however, to the extent
         permitted by law, any provision that could be deemed null and void
         shall first be construed, interpreted, or revised retroactively to
         permit this Plan to be construed in compliance with all applicable law
         (including Rule 16b-3 and Code Section 162(m)) so as to foster the
         intent of this Plan. Notwithstanding anything herein to the contrary,
         with respect to Participants who are officers and directors for
         purposes of Section 16 of the Exchange Act, no grant of an Option to
         purchase Shares shall permit unrestricted ownership of Shares by the
         Participant for at least six (6) months from the date of the grant of
         such Option, unless the Board determines that the grant of such Option
         to purchase Shares otherwise satisfies the then current Rule 16b-3
         requirements.

XIII.    WITHHOLDING

         Except as otherwise provided by the Committee,

         A.       The Company shall have the power and right to deduct or
                  withhold, or require a Participant to remit to the Company, an
                  amount sufficient to satisfy federal, state, and local taxes
                  required by law to be withheld with respect to any grant,
                  exercise, or payment made under or as a result of this Plan;
                  and

         B.       In the case of any taxable event hereunder, a Participant may
                  elect, subject to the approval in advance by the Committee, to
                  satisfy the withholding requirement, if any, in whole or in
                  part, by having the Company withhold Shares of Common Stock
                  that would otherwise be transferred to the Participant having
                  a Fair Market Value, on the date the tax is to be determined,
                  equal to the minimum marginal tax that could be imposed on the
                  transaction. All elections shall be made in writing and signed
                  by the Participant.

XIV.     EFFECTIVE DATE

         This Plan shall become effective upon adoption by the Board, provided
         that within one (1) year before or after such adoption by the Board (or
         within such earlier time period as may be required by the Exchange Act,
         if applicable) the Plan is approved by the stockholders of the Company.
         If such approval is not obtained, then this Plan and all Options
         granted hereunder shall be null and void ab initio.

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XV.      GOVERNING LAW

This Plan shall be governed by the laws of the State of Illinois and construed
     in accordance therewith.


Adopted this 1st day of April, 1999.


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