EXHIBIT 10.4


                                                      As amended through 8/8/00

                         VANGUARD HEALTH SYSTEMS, INC.
                             1998 STOCK OPTION PLAN

     1. Purpose; Types of Options; Construction. The purpose of the Vanguard
Health Systems, Inc. 1998 Stock Option Plan is to afford an incentive to
executive officers, other key employees, directors and consultants of Vanguard
Health Systems, Inc. (the "Company"), or any subsidiary of the Company which
now exists or hereafter is organized or acquired by the Company, to acquire a
proprietary interest in the Company, to continue as employees, directors or
consultants, to increase their efforts on behalf of the Company and to promote
the success of the Company's business.

     2. Definitions. As used in this Plan, the following words and phrases
shall have the meanings indicated:

     "Acceleration Date" shall have the meaning set forth in Section 11.

     "Board" shall mean the Board of Directors of the Company.

     "Carry Option Plan" shall mean the Carry Option Plan adopted by the
Company on the date hereof, as the same may be amended from time to time.

     "Code" shall mean the Internal Revenue Code of 1986, as amended from time
to time.

     "Committee" shall mean the Compensation Committee of the Board or such
other committee established by the Board to administer the Plan, provided if no
such Committee is established by the Board, Committee shall mean the entire
Board.

     "Common Stock" shall mean shares of common stock, par value $.01 per
share, of the Company.

     "Company" shall mean Vanguard Health Systems, Inc. a corporation organized
under the laws of the State of Delaware, or any successor corporation.

     "Disability" shall mean a Grantee's inability to perform his duties with
the Company or any of its affiliates by reason of any medically determinable
physical or mental impairment, as determined by a physician selected by the
Grantee and acceptable to the Company.

     "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended
from time to time, and as now or hereafter construed, interpreted and applied
by regulations, rulings and cases.

     "Fair Market Value" per share as of a particular date shall mean (i) the
closing sales price per share of Common Stock on the national securities
exchange on which the

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Common Stock is principally traded for the last preceding date on which there
was a sale of such Common Stock on such exchange (or, on the date of an initial
sale of Common Stock pursuant to an effective registration statement under the
Securities Act of 1933, as amended (other than a registration statement on Form
S-4 or Form S-8 or any successor or similar form), the per share initial sale
price to the public), or (ii) if the shares of Common Stock are then traded in
an over-the-counter market, the average of the closing bid and asked prices for
the shares of Common Stock in such over-the-counter market for the last
preceding date on which there was a sale of such Common Stock in such market,
or (iii) if the shares of Common Stock are not then listed on a national
securities exchange or traded in an over-the-counter market, such value as the
Committee, in its sole discretion, shall determine.

     "First Exercise Termination Period" shall have the meaning set forth in
Section 7(f) hereof.

     "Forfeiture Liquidity Event" shall mean a Liquidity Event that results in
a Net MSCP IRR that is less than or equal to 12.50%.

     "Grantee" shall mean a person who receives a grant of Options under the
Plan.

     "Incentive Stock Option" shall mean any Option intended to be, and
designated as, an incentive stock option within the meaning of Section 422 of
the Code.

     "Insider" shall mean a Grantee who is subject to the reporting
requirements of Section 16(a) of the Exchange Act.

     "Liquidity Event" shall have the meaning set forth in the Shareholders
Agreements.

     "Liquidity Event Options" shall mean those Options that are forfeited and
canceled pursuant to Section 6 hereof if a Forfeiture Liquidity Event shall
have occurred.

     "Management Investor" shall have the meaning set forth in the Shareholders
Agreements.

     "Maximum Share Number" shall have the meaning set forth in Section 5
hereof.

     "Net MSCP Exit Multiple" shall have the meaning set forth in the Carry
Option Plan.

     "Net MSCP IRR" shall have the meaning set forth in the Carry Option Plan.

     "Non-Liquidity Event Option" shall mean any Option that is not a Liquidity
Event Option.

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     "Non-qualified Stock Option" shall mean any Option other than an Incentive
Stock Option.

     "Option" or "Options" shall mean a grant to a Grantee of an option or
options to purchase shares of Common Stock. Options granted by the Committee
pursuant to the Plan shall constitute either (i) Incentive Stock Options or
Non-qualified Stock Options and (ii) Liquidity Event Options or Non-Liquidity
Event Options.

     "Option Agreement" shall mean an agreement entered into between the
Company and a Grantee in connection with a grant under the Plan.

     "Option Price" shall mean the exercise price per share of Common Stock
covered by an Option, as calculated pursuant to Section 7(c) hereof.

     "Parent" shall mean any company (other than the Company) in an unbroken
chain of companies ending with the Company if, at the time of granting an
Option, each of the companies other than the Company owns stock possessing
fifty percent (50%) or more of the total combined voting power of all classes
of stock in one of the other companies in such chain.

     "Plan" means this Vanguard Health Systems, Inc. 1998 Stock Option Plan, as
further amended from time to time.

     "Second Exercise Termination Period" shall have the meaning set forth in
Section 7(f) hereof.

     "Shareholders Agreements" shall mean the Shareholders Agreement dated as
of June 1, 1998 among the Company and the shareholders of the Company, and the
Surviving Shareholders Agreement dated as of June 1, 1998 among the Company and
the shareholders of the Company, in each case as amended from time to time.

     "Subscription Agreement" means the Amended and Restated Subscription
Agreement dated as of June 1, 2000 among the Company and the investors party
thereto, as it exists on the date hereof.

     "Subsidiary" shall mean any company (other than the Company) in an
unbroken chain of companies beginning with the Company if, at the time of
granting an Option, each of the companies other than the last company in the
unbroken chain owns stock possessing in excess of fifty percent (50%) of the
total combined voting power of all classes of stock in one of the other
companies in such chain.

     "Ten Percent Stockholder" shall mean a Grantee who, at the time an
Incentive Stock Option is granted, owns stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or any Parent or Subsidiary.

     3. Administration. The Plan shall be administered by the Committee. The
Committee shall have the authority in its discretion, subject to and not
inconsistent with the express provisions of the Plan, to administer the Plan
and to exercise all the powers and

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authorities either specifically granted to it under the Plan or necessary or
advisable in the administration of the Plan, including, without limitation, the
authority to grant Options, to determine which Options shall constitute
Incentive Stock Options and which Options shall constitute Non-qualified Stock
Options; to determine the purchase price of the shares of Common Stock covered
by each Option; to determine the persons to whom, and the time or times at
which Options shall be granted; to determine the number of shares to be covered
by each Option; to interpret the Plan; to prescribe, amend and rescind rules
and regulations relating to the Plan; to determine the terms and provisions of
the Option Agreements (which need not be identical); to accelerate
exercisability of Options; and to grant waivers of or cancel or suspend
Options, as necessary; and to make all other determinations deemed necessary or
advisable for the administration of the Plan.

     The Committee may delegate to one or more of its members or to one or more
agents such administrative duties as it may deem advisable, and the Committee
or any person to whom it has delegated duties as aforesaid may employ one or
more persons to render advice with respect to any responsibility the Committee
or such person may have under the Plan. All decisions, determinations and
interpretations of the Committee shall be final and binding on all Grantees of
any Options under this Plan.

     No member of the Board or Committee shall be liable for any action taken
or determination made in good faith with respect to the Plan or any Option
granted hereunder.

     4. Eligibility. Options may be granted to directors, executive officers
and other key employees and consultants of the Company or its Subsidiaries,
including officers and directors who are employees. In determining the persons
to whom Options shall be granted and the number of shares to be covered by each
Option, the Committee shall take into account the duties of the respective
persons, their present and potential contributions to the success of the
Company and such other factors as the Committee shall deem relevant in
connection with accomplishing the purpose of the Plan.

     5. Stock. The maximum number of shares of Common Stock reserved for the
grant of Options under the Plan (the "Maximum Share Number") shall be 13,306
shares of Common Stock: provided, however, notwithstanding the foregoing, until
a Liquidity Event should occur and a recalculation of the Maximum Share Number
is made pursuant to the following sentence hereof (or, prior thereto,
circumstances should change and an amendment of this Section 5 should be
necessary to restore some or all of the suspended shares), the Committee shall
not grant Options in respect of 2,977 of these 13,306 shares (such 2,977 shares
being deemed to be in suspense until such time); provided, further, that in no
event shall the number of shares of Common Stock with respect to which Options
are granted hereunder exceed 50% of the number of shares of Common Stock
authorized as of the effective date of this Plan. If an Liquidity Event should
occur, the Maximum Share Number shall be recomputed pursuant to the following
formula and if, pursuant to such recalculation, the Maximum Share Number shall
be in excess of 10,329 shares of Common Stock, then such number of shares in
excess of 10,329 (but not in excess of an additional 2,977 shares) shall come
out of suspense and be fully authorized for the grant of Options in respect
thereto under this Plan:

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     the remainder of (A) 13,306 minus (B) the Special Share Number (as defined
     below).

Such shares may, in whole or in part, be authorized but unissued shares or
shares that shall have been or may be reacquired by the Company. The maximum
number of shares with respect to which Options may be granted during any
calendar year to any individual shall be 10,000.

     If any outstanding Option under the Plan should, for any reason expire, be
canceled or be forfeited without having been exercised in full, other than any
cancellation or forfeiture of a Liquidity Event Option pursuant to Section 6
hereof, the shares of Common Stock allocable to the unexercised, canceled or
terminated portion of such Option shall (unless the Plan shall have been
terminated) become available for subsequent grants of Options under the Plan.

     The term "Special Share Number" shall mean the quotient of (A) the
"Incremental After -Tax Special Cost" divided by (B) the remainder of (i) the
price of one share (on a pre-split basis) of the Common Stock in the Liquidity
Event minus (ii) $1,701.18. The term "Incremental After-Tax Special Cost" shall
mean the sum of the Option Cost (as defined below) and the Bonus Cost (as
defined below). The term "Option Cost" shall mean the remainder of
(A)$6,730,162 minus (B) the product of (i) $6,730,162 times (ii) the "Tax Rate"
(as defined below); provided, however, notwithstanding the following, that in
the event there is as a result of the Liquidity Event both (A) a Net MSCP Exit
Multiple equal to or greater than 3.0x and (B) a Net MSCP IRR equal to or
greater than 25%, then the term "Option Cost" shall mean $0.00. The term "Bonus
Cost" shall mean the remainder of (A)$1,854,863 minus (B) the product of (i)
$1,854,863 times (ii) the Tax Rate. The term "Tax Rate" shall mean the marginal
income tax rate of the Company at the time of the Liquidity Event, as
determined by the Committee.

     6. Forfeiture in Certain Instances. Notwithstanding any other provision
herein to the contrary, at no time shall Options representing shares of Common
Stock in excess of 25% of the Maximum Share Number be granted, outstanding or
exercisable under the Plan at any time which are not Liquidity Event Options.
Upon the occurrence of such a Forfeiture Liquidity Event, all Liquidity Event
Options shall, without any action by any party, be irrevocably and
unconditionally forfeited and canceled without any consideration payable to the
Grantee and the Grantee shall have no further right or interest therein.

     7. Terms and Conditions of Options. Each Option granted pursuant to the
Plan shall be evidenced by an Option Agreement, in the form of Exhibit A hereto
if it is a Non-qualified Stock Option, or in such other form and containing
such terms and conditions as the Committee shall from time to time approve.
Each Option shall be subject to the following terms and conditions, except to
the extent otherwise specifically provided in such Option Agreement:

          (a) Number of Shares. Each Option Agreement shall state the number of
     shares of Common Stock to which the Option relates.

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          (b) Type of Option. Each Option Agreement shall specifically state
     whether the Option is (i) an Incentive Stock Option or a Non-qualified
     Stock Option and (ii) a Liquidity Event Option or a Non-Liquidity Event
     Option.

          (c) Option Price. (i) Each Option Agreement shall state the Option
     Price which shall be $1,701.18 for each share of Common Stock covered by
     such Option unless, prior to the exercise of any such Option, a Liquidity
     Event shall have occurred that results in (x) a Net MSCP Exit Multiple
     equal to or greater than 3.0x and (y) a Net MSCP IRR equal to or greater
     than 25%, in which case the Option Price for each share of Common Stock
     covered by any such unexercised Option shall be the greater of (1) $425.32
     and (2) ten percent (10%) of the Fair Market Value of each share of Common
     Stock covered by the Option on the date of grant; provided, that in the
     case of an Incentive Stock Option, the Option Price shall be the greater
     of (x) $1,701.18 and (y) one hundred percent (100%) of the Fair Market
     Value of each share of Common Stock covered by the Option on the date of
     grant; and

               (ii) The Option Price shall be subject to adjustment as provided
     in Section 11 hereof. The date as of which the Committee adopts a
     resolution expressly granting an Option shall be considered the day on
     which such Option is granted.

          (d) Medium and Time of Payment. The Option Price shall be paid in
     full, at the time of exercise, in cash or, if permitted by the Committee,
     in shares of Common Stock having a Fair Market Value equal to such Option
     Price or, if permitted by the Committee, in a combination of cash and
     Common Stock or in such other manner as the Committee shall determine
     including, without limitation, a cashless exercise procedure through a
     broker-dealer.

          (e) Term and Exercisability of Options. Each Option Agreement shall
     provide the exercise schedule for the Option as determined by the
     Committee (which may include a requirement for achieving performance
     goals), provided that, subject to Sections 7(g) and 7(h) hereof, the
     Committee shall have the authority to accelerate the exercisability of any
     outstanding Option at such time and under such circumstances as it, in its
     sole discretion, deems appropriate. Subject to Sections 7(g) and 7(h)
     hereof, the exercise period will be ten (10) years from the date of the
     grant of the Option unless otherwise determined by the Committee;
     provided, however, that in the case of an Incentive Stock Option, such
     exercise period shall not exceed ten (10) years from the date of grant of
     such Option. The exercise period shall be subject to earlier termination
     as provided in Section 7(f) hereof. An Option may be exercised, as to any
     or all full shares of Common Stock as to which the Option has become
     exercisable, by written notice delivered in person or by mail to the
     Secretary of the Company, specifying the number of shares of Common Stock
     with respect to which the Option is being exercised.

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          (f) Termination. Except as provided in this Section 7(f), an Option
     may not be exercised unless (x) the Option is vested, (y) the Grantee is
     then in the employ of or is a director or is maintaining a consultant
     relationship with the Company or a Subsidiary thereof (or a company or a
     Parent or Subsidiary company of such company issuing or assuming the
     Option in a transaction to which Section 424(a) of the Code applies), and
     (z) the Grantee has remained continuously so employed or in the director
     or consultant relationship since the date of grant of the Option. In the
     event that the employment or director or consultant relationship of a
     Grantee shall terminate, (i) all Non-Liquidity Event Options of such
     Grantee that are vested or exercisable at the time of such termination
     may, unless earlier terminated or forfeited in accordance with their
     terms, be exercised within ninety (90) days after the date of such
     termination (or such longer period as the Committee shall prescribe) (such
     90-day period, a "First Exercise Termination Period"), (ii) all Liquidity
     Event Options of such Grantee that are vested shall remain outstanding,
     but shall not be exercisable until the occurrence of a Liquidity Event, at
     which time all such Liquidity Event Options shall be exercisable for a
     period of 90 days after the occurrence of such Liquidity Event (such
     90-day period, the "Second Exercise Termination Period") unless such
     Liquidity Event is a Forfeiture Liquidity Event in which case such Options
     shall be forfeited and canceled pursuant to Section 6 hereof and (iii) all
     other Options that are unvested or nonexercisable at the time of such
     termination shall terminate at such time.

          (g) Exercise by Certain Persons Prior to Liquidity Event.
     Notwithstanding any other provision of this Plan or any Option Agreement,
     but subject to the last sentence of Section 7(f), until the occurrence of
     a Liquidity Event, (i) no Non-Liquidity Event Option granted under the
     Plan may be exercised by a Grantee who is not a Management Investor,
     except during a First Exercise Termination Period, (ii) no Liquidity Event
     Option granted under the Plan may be exercised by a Grantee who is not a
     Management Investor, except during the Second Exercise Termination Period
     and (iii) no Option granted under the Plan may be exercised by a Grantee
     who is a Management Investor until the occurrence of a Liquidity Event.

          (h) Option Agreements for Liquidity Event Options. If the Option is a
     Liquidity Event Option, then the Option Agreement evidencing such
     Liquidity Event Option shall provide that, upon the occurrence of a
     Forfeiture Liquidity Event, without any action by any party, such Option
     shall be irrevocably and unconditionally forfeited and canceled without
     any consideration payable to the Grantee thereof and the Grantee shall
     have no further right or interest therein.

          (i) Other Provisions. The Option Agreements evidencing Options under
     the Plan shall contain such other terms and conditions not inconsistent
     with the Plan as the Committee may determine.

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     8. Certain Calculations. The Net MSCP Exit Multiple and the Net MSCP IRR
shall be calculated in all respects in the manner set forth in, and pursuant to
the definitions, terms, conditions and provisions of, the Option Carry Plan
(including, without limitation, Section 3 thereof).

     9. Non-qualified Stock Options. Options granted pursuant to this Section 9
are intended to constitute Non-qualified Stock Options and shall not be subject
to the terms and conditions of Section 10 hereof.

     10. Incentive Stock Options. Options granted pursuant to this Section 10
are intended to constitute Incentive Stock Options and shall conform to the
requirements of Section 422 of the Code (or successor to such Section) and
shall be subject to the following special terms and conditions, in addition to
the general terms and conditions specified in Section 7 hereof.

          (i) Value of Shares. The aggregate Fair Market Value (determined as
     of the date the Incentive Stock Option is granted) of the shares of Common
     Stock with respect to which Incentive Stock Options granted under this
     Plan and all other Option plans of any subsidiary become exercisable for
     the first time by any Grantee during any calendar year shall not exceed
     $100,000.

          (ii) Ten Percent Stockholder. In the case of an Incentive Stock
     Option granted to a Ten Percent Stockholder, (i) the Option Price shall
     not be less than one hundred ten percent (110%) of the Fair Market Value
     of the shares of Common Stock on the date of grant of such Incentive Stock
     Option, and (ii) the exercise period shall not exceed five (5) years from
     the date of grant of such Incentive Stock Option.

     11. Effect of Certain Changes.

          (a) In the event of any extraordinary dividend, stock dividend,
     recapitalization, reclassification, merger, consolidation, stock split, or
     combination or exchange of such shares, or other similar transactions, the
     number of shares of Common Stock available for Options, the number of such
     shares covered by outstanding Options, and the price per share of Options
     shall be equitably adjusted by the Committee to reflect such event and
     preserve (and neither increase nor decrease) the value of such Options;
     provided, however, that any fractional shares resulting from such
     adjustment shall be eliminated.

          (b) If, while any Options remain outstanding under the Plan, any of
     the following events shall occur (which events shall constitute a "Change
     in Control of the Company"):

               (i) any "person", as such term is used in Sections 13(d) and
          14(d) of the Exchange Act (other than (1) the Company or any of its
          Subsidiaries, (2) any trustee or other fiduciary holding securities
          under an employee benefit plan of the Company or any of its
          Subsidiaries, (3) an

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          underwriter temporarily holding securities pursuant to an offering of
          such securities, (4) any corporation owned, directly or indirectly,
          by the stockholders of the Company in substantially the same
          proportions as their ownership of Common Stock, or (5) any person
          that is a stockholder of the Company on the effective date of this
          Plan), is or becomes the "beneficial owner" (as defined in Rule 13d-3
          under the Exchange Act), directly or indirectly, of securities of the
          Company representing more than 50% of the combined voting power of
          the Company's then outstanding voting securities;

               (ii) during any period of not more than two consecutive years,
          not including any period prior to the adoption of this Plan,
          individuals who at the beginning of such period constitute the Board,
          and any new director (other than a director designated by a person
          who has entered into an agreement with the Company to effect a
          transaction described in clause (i), (iii), or (iv) of this Section
          11(b)) whose election by the Board or nomination for election by the
          Company's stockholders was approved by a vote of at least two-thirds
          (2/3) of the directors then still in office who either were directors
          at the beginning of the period or whose election or nomination for
          election was previously so approved, cease for any reason to
          constitute at least a majority thereof;

               (iii) the stockholders of the Company approve a merger or
          consolidation of the Company with any other corporation, other than
          both (A)(1) a merger or consolidation which would result in the
          voting securities of the Company outstanding immediately prior
          thereto continuing to represent (either by remaining outstanding or
          by being converted into voting securities of the surviving or parent
          entity) 50% or more of the combined voting power of the voting
          securities of the Company or such surviving or parent entity
          outstanding immediately after such merger or consolidation or (2) a
          merger or consolidation in which no "person" (as hereinabove defined)
          acquired 50% or more of the combined voting power of the Company's
          then outstanding securities and (B) immediately after the
          consummation of such merger or consolidation described in clause
          (A)(1) or (A)(2) above (and for at least 180 days thereafter) any one
          of the Company's Chief Executive Officer, Chief Operating Officer and
          its Chief Financial Officer change from the people occupying such
          positions immediately prior to such merger or consolidation except as
          a result of their death or Disability and neither of such officers
          shall have changed prior to such merger or consolidation at the
          direction of a Person who has entered into an agreement with the
          Company the consummation of which will constitute a Change in Control
          of the Company; or

               (iv) the stockholders of the Company approve a plan of complete
          liquidation of the Company or an agreement for the sale or

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          disposition by the Company of all or substantially all of the
          Company's assets (or any transaction having a similar effect)

     then from and after the date on which any such Change in Control shall
     have occurred (the "Acceleration Date"), the Option covered by such
     Agreement shall be exercisable or otherwise nonforfeitable in full,
     whether or not otherwise exercisable or forfeitable; provided that, if a
     Forfeiture Liquidity Event occurs, then all Liquidity Event Options shall
     be forfeited and canceled, pursuant to and in the manner provided in
     Section 6 hereof, and this Section 11(b) shall, in such event, be without
     force and effect in respect of such Liquidity Event Options.

          (c) In the event of a change in the Common Stock of the Company as
     presently constituted that is limited to a change of all of its authorized
     shares of Common Stock into the same number of shares with a different par
     value or without par value, the shares resulting from any such change
     shall be deemed to be the Common Stock within the meaning of the Plan.

     12. Period During Which Options May Be Granted. Options may be granted
pursuant to the Plan from time to time within a period of ten (10) years from
the date the Plan is adopted by the Board.

     13. Transferability of Options. No Option shall be pledged, hypothecated
or otherwise encumbered or subject to any lien, obligation or liability of a
Grantee to any party (other than the Company or a Subsidiary); and no Option
shall be transferred or assignable, or exercisable by, anyone other than the
Grantee to whom it was granted, except (i) by law, will or the laws of descent
and distribution or (ii) that the Committee (in the form of the Option
Agreement or otherwise) may permit transfers of Options if the Grantee is
disabled or by gift or otherwise to a member of a Grantee's immediate family
and/or trusts whose beneficiaries are members of the Grantee's immediate
family, or to such other persons or entities as may be approved by the
Committee. Notwithstanding the foregoing, (a) in no event shall Incentive Stock
Options be transferable or assignable other than by will or by the laws of
descent and distribution and (b) no transfer or assignment shall be made in
violation of the provisions of the Shareholders Agreement. A beneficiary,
transferee, or other person claiming any rights under the Plan from or through
any Grantee shall be subject to all terms and conditions of the Plan and any
Option Agreement applicable to such Grantee, except as otherwise determined by
the Committee, and to any additional terms and conditions deemed necessary or
appropriate by the Committee.

     14. Approval of Stockholders. The Plan shall take effect upon its adoption
by the Board but the Plan (and any grants of Options made prior to the
stockholder approval mentioned herein) shall be subject to the approval of the
holder(s) of more than seventy-five percent (75%) of the issued and outstanding
shares of voting securities of the Company entitled to vote, which approval
must occur within twelve months of the date the Plan is adopted by the Board.

     15. Agreement by Grantee Regarding Withholding Taxes. As a condition of
exercise of an Option, each Grantee shall agree that no later than the date of
such exercise, the Grantee

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will pay to the Company or make arrangements satisfactory to the Committee
regarding payment of any federal, state or local taxes of any kind required by
law to be withheld upon such exercise. If permitted by the Committee, a Grantee
may elect, to the extent permitted or required by law, to have the Company
deduct federal, state and local taxes of any kind required by law to be
withheld upon such exercise from any payment of any kind due to the Grantee.
The withholding obligation may be satisfied by the withholding or delivery of
Common Stock valued at Fair Market Value.

     16. Amendment and Termination of the Plan. The Board may amend, modify,
suspend or terminate the Plan for the purpose of meeting or addressing any
changes in legal requirements or for any other purpose permitted by law.
Subject to changes in law or other legal requirements that would permit
otherwise, the Plan may not be amended without the consent of the holders of a
majority of the shares of Common Stock then outstanding to increase the
aggregate number of shares of Common Stock that may be issued under the Plan
(except for adjustments pursuant to Section 11(a)). Except as provided in
Section 11(a) hereof, no suspension, termination, modification or amendment of
the Plan may adversely affect any Option previously granted without the written
consent of the Grantee.

     17. Rights as a Shareholder. A Grantee or a transferee of an Option shall
have no rights as a shareholder with respect to any shares covered by the
Option until the date of the issuance of a stock certificate to him for such
shares. No adjustment shall be made for dividends (ordinary or extraordinary,
whether in cash, securities or other property) or distribution of other rights
for which the record date is prior to the date such stock certificate is
issued, except as provided in Section 11(a) hereof.

     18. Shareholders Agreements. If not already a party thereto, a Grantee
shall, as a condition precedent to the exercise or settlement of an Option,
agree to be bound by the terms of the Shareholders Agreements. Without limiting
the foregoing, any shares of Common Stock acquired upon exercise or settlement
of an Option shall be subject to the provisions in the Shareholders Agreements
regarding restrictions on transfer and the Company's rights to compel sales and
repurchase shares of Common Stock.

     19. No Rights to Employment. Nothing in the Plan or in any Option granted
or Option Agreement entered into pursuant hereto shall confer upon any Grantee
the right to continue in the employ of, or in a consultant relationship with,
the Company or any Subsidiary or to be entitled to any remuneration or benefits
not set forth in the Plan or such Option Agreement or to interfere with or
limit in any way the right of the Company or any such Subsidiary to terminate
such Grantee's employment. Options granted under the Plan shall not be affected
by any change in duties or position of a Grantee as long as such Grantee
continues to be employed by, or in a consultant relationship with, the Company
or any Subsidiary.

     20. Beneficiary. A Grantee may file with the Committee a written
designation of a beneficiary on such form as may be prescribed by the Committee
and may, from time to time, amend or revoke such designation. If no designated
beneficiary survives the Grantee, the executor or administrator of the
Grantee's estate shall be deemed to be the Grantee's beneficiary.

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     21. Governing Law. The Plan and all determinations made and actions taken
pursuant hereto shall be governed by the laws of the State of New York, without
regard to its conflicts of laws principles.

     22. Effective Date and Duration of the Plan. This Plan shall be effective
as of the date it is approved or ratified by the stockholders of the Company,
and shall terminate on the later of (a) the tenth anniversary of such date or
(b) the last expiration of Options granted hereunder.


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