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                                   AEROPOSTALE

                          2002 LONG-TERM INCENTIVE PLAN


1.       Purpose.

         This plan shall be known as the Aeropostale 2002 Long-Term Incentive
Plan (the "Plan"). The purpose of the Plan shall be to promote the long-term
growth and profitability of Aeropostale (the "Company") and its Subsidiaries by
(i) providing certain directors, officers and employees of, and certain other
individuals who perform services for, or to whom an offer of employment has been
extended by, the Company and its Subsidiaries with incentives to maximize
stockholder value and otherwise contribute to the success of the Company and
(ii) enabling the Company to attract, retain and reward the best available
persons for positions of responsibility. Grants of incentive or non-qualified
stock options, stock appreciation rights ("SARs"), either alone or in tandem
with options, restricted stock, performance awards, or any combination of the
foregoing may be made under the Plan.

2.       Definitions.

                  (a) "Board of Directors" and "Board" mean the board of
directors of the Company.

                  (b) "Cause" means the occurrence of one or more of the
following events:

                           (i) Conviction of a felony or any crime or offense
lesser than a felony involving the property of the Company or a Subsidiary; or

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

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

                           (iv) Breach of duty of loyalty to the Company or a
Subsidiary or other act of fraud or dishonesty with respect to the Company or a
Subsidiary.

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

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


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

                           (iii) the stockholders of the Company approve a
merger or consolidation of the Company with any other corporation, other than a
merger or consolidation (A) which would result in all or a portion of the voting
securities of the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into voting
securities of the surviving entity) more than 50% of the combined voting power
of the voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation or (B) by which the corporate
existence of the Company is not affected and following which the Company's chief
executive officer and directors retain their positions with the Company (and
constitute at least a majority of the Board); or

(iv) the stockholders of the Company approve a plan of complete liquidation of
the Company or an agreement for the sale or disposition by the Company of all or
substantially all the Company's assets, other than a sale to an Exempt Person.

                  (d) "Code" means the Internal Revenue Code of 1986, as
amended.

                  (e) "Committee" means the Compensation Committee of the Board,
which shall consist solely of two or more members of the Board.

                  (f) "Common Stock" means the Common Stock, par value $.01 per
share, of the Company, and any other shares into which such stock may be changed
by reason of a recapitalization, reorganization, merger, consolidation or any
other change in the corporate structure or capital stock of the Company.

                  (g) "Competition" is deemed to occur if a person whose
employment with the Company or its Subsidiaries has terminated obtains a
position as a full-time or part-time employee of, as a member of the board of
directors of, or as a consultant or advisor with or to, or acquires an ownership
interest in excess of 5% of, a corporation, partnership, firm or other entity
that engages in any of the businesses of the Company or any Subsidiary with
which the person was involved in a management role at any time during his or her
last five years of employment with or other service for the Company or any
Subsidiaries.

                  (h) "Disability" means a disability that would entitle an
eligible participant to payment of monthly disability payments under any Company
disability plan or as otherwise determined by the Committee.

                  (i) "Exchange Act" means the Securities Exchange Act of 1934,
as amended.


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                  (j) "Exempt Person" means (i) Bear Stearns Merchant Banking,
(ii) any person, entity or group under the control of any party included in
clause (i), or (iii) any employee benefit plan of the Company or a trustee or
other administrator or fiduciary holding securities under an employee benefit
plan of the Company.

                  (k) "Family Member" has the meaning given to such term in
General Instructions A.1(a)(5) to Form S-8 under the Securities Act of 1933, as
amended, and any successor thereto.

                  (l) "Fair Market Value" of a share of Common Stock of the
Company means, as of the date in question, the officially-quoted closing selling
price of the stock (or if no selling price is quoted, the bid price) on the
principal securities exchange on which the Common Stock is then listed for
trading (including for this purpose the Nasdaq National Market) (the "Market")
for the applicable trading day or, if the Common Stock is not then listed or
quoted in the Market, the Fair Market Value shall be the fair value of the
Common Stock determined in good faith by the Board; provided, however, that when
shares received upon exercise of an option are immediately sold in the open
market, the net sale price received may be used to determine the Fair Market
Value of any shares used to pay the exercise price or applicable withholding
taxes and to compute the withholding taxes.

                  (m) "Incentive Stock Option" means an option conforming to the
requirements of Section 422 of the Code and any successor thereto.

                  (n) "Initial Public Offering" means an underwritten initial
public offering and sale of any shares of Common Stock pursuant to an effective
registration statement under the Securities Act..

                  (o) "Non-Employee Director" has the meaning given to such term
in Rule 16b-3 under the Exchange Act and any successor thereto.

                  (p) "Non-qualified Stock Option" means any stock option other
than an Incentive Stock Option.

                  (q) "Other Company Securities" mean securities of the Company
other than Common Stock, which may include, without limitation, unbundled stock
units or components thereof, debentures, preferred stock, warrants and
securities convertible into or exchangeable for Common Stock or other property.

                  (r) "Retirement" means retirement as defined under any Company
pension plan or retirement program or termination of one's employment on
retirement with the approval of the Committee.

                  (s) "Subsidiary" means a corporation or other entity of which
outstanding shares or ownership interests representing 50% or more of the
combined voting power of such


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corporation or other entity entitled to elect the management thereof, or such
lesser percentage as may be approved by the Committee, are owned directly or
indirectly by the Company.

3.       Administration.

                  The Plan shall be administered by the Committee; provided that
the Board may, in its discretion, at any time and from time to time, resolve to
administer the Plan, in which case the term "Committee" shall be deemed to mean
the Board for all purposes herein. Subject to the provisions of the Plan, the
Committee shall be authorized to (i) select persons to participate in the Plan,
(ii) determine the form and substance of grants made under the Plan to each
participant, and the conditions and restrictions, if any, subject to which such
grants will be made, (iii) certify that the conditions and restrictions
applicable to any grant have been met, (iv) modify the terms of grants made
under the Plan, (v) interpret the Plan and grants made thereunder, (vi) make any
adjustments necessary or desirable in connection with grants made under the Plan
to eligible participants located outside the United States and (vii) adopt,
amend, or rescind such rules and regulations, and make such other
determinations, for carrying out the Plan as it may deem appropriate. Decisions
of the Committee on all matters relating to the Plan shall be in the Committee's
sole discretion and shall be conclusive and binding on all parties. The
validity, construction, and effect of the Plan and any rules and regulations
relating to the Plan shall be determined in accordance with applicable federal
and state laws and rules and regulations promulgated pursuant thereto. No member
of the Committee and no officer of the Company shall be liable for any action
taken or omitted to be taken by such member, by any other member of the
Committee or by any officer of the Company in connection with the performance of
duties under the Plan, except for such person's own willful misconduct or as
expressly provided by statute.

                  The expenses of the Plan shall be borne by the Company. The
Plan shall not be required to establish any special or separate fund or make any
other segregation of assets to assume the payment of any award under the Plan,
and rights to the payment of such awards shall be no greater than the rights of
the Company's general creditors.

4.       Shares Available for the Plan.

                  Subject to adjustments as provided in Section 15, an aggregate
of 1,735,556 shares of Common Stock, which represents the number of shares equal
to five percent (5%) of the number of shares of Common Stock outstanding
immediately following the consummation of the Company's Initial Public Offering
(the "Shares"), may be issued pursuant to the Plan. Such Shares may be in whole
or in part authorized and unissued or held by the Company as treasury shares. If
any grant under the Plan expires or terminates unexercised, becomes
unexercisable or is forfeited as to any Shares, or is tendered or withheld as to
any shares in payment of the exercise price of the grant or the taxes payable
with respect to the exercise, then such unpurchased, forfeited, tendered or
withheld Shares shall thereafter be available for further grants under the Plan
unless, in the case of options granted under the Plan, related SARs are
exercised.


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                  Without limiting the generality of the foregoing provisions of
this Section 4 or the generality of the provisions of Sections 3, 6 or 17 or any
other section of this Plan, the Committee may, at any time or from time to time,
and on such terms and conditions (that are consistent with and not in
contravention of the other provisions of this Plan) as the Committee may, in its
sole discretion, determine, enter into agreements (or take other actions with
respect to the options) for new options containing terms (including exercise
prices) more (or less) favorable than the outstanding options.

5.       Participation.

                  Participation in the Plan shall be limited to those directors
(including Non-Employee Directors), officers (including non-employee officers)
and employees of, and other individuals performing services for, or to whom an
offer of employment has been extended by, the Company and its Subsidiaries
selected by the Committee (including participants located outside the United
States). Nothing in the Plan or in any grant thereunder shall confer any right
on a participant to continue in the employ as a director or officer of or in the
performance of services for the Company or shall interfere in any way with the
right of the Company to terminate the employment or performance of services or
to reduce the compensation or responsibilities of a participant at any time. By
accepting any award under the Plan, each participant and each person claiming
under or through him or her shall be conclusively deemed to have indicated his
or her acceptance and ratification of, and consent to, any action taken under
the Plan by the Company, the Board or the Committee.

                  Incentive Stock Options or Non-qualified Stock Options, SARs
alone or in tandem with options, restricted stock awards, performance awards, or
any combination thereof, may be granted to such persons and for such number of
Shares as the Committee shall determine (such individuals to whom grants are
made being sometimes herein called "optionees" or "grantees," as the case may
be). Determinations made by the Committee under the Plan need not be uniform and
may be made selectively among eligible individuals under the Plan, whether or
not such individuals are similarly situated. A grant of any type made hereunder
in any one year to an eligible participant shall neither guarantee nor preclude
a further grant of that or any other type to such participant in that year or
subsequent years.

6.       Incentive and Non-qualified Options and SARs.

                  The Committee may from time to time grant to eligible
participants Incentive Stock Options, Non-qualified Stock Options, or any
combination thereof; provided that the Committee may grant Incentive Stock
Options only to eligible employees of the Company or its subsidiaries (as
defined for this purpose in Section 424(f) of the Code or any successor
thereto). In any one calendar year, the Committee shall not grant to any one
participant options or SARs to purchase a number of shares of Common Stock in
excess of 10% of the total number of Shares authorized under the Plan pursuant
to Section 4. The options granted shall take such form as the Committee shall
determine, subject to the following terms and conditions.


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                  It is the Company's intent that Non-qualified Stock Options
granted under the Plan not be classified as Incentive Stock Options, that
Incentive Stock Options be consistent with and contain or be deemed to contain
all provisions required under Section 422 of the Code and any successor thereto,
and that any ambiguities in construction be interpreted in order to effectuate
such intent. If an Incentive Stock Option granted under the Plan does not
qualify as such for any reason, then to the extent of such non-qualification,
the stock option represented thereby shall be regarded as a Non-qualified Stock
Option duly granted under the Plan, provided that such stock option otherwise
meets the Plan's requirements for Non-qualified Stock Options.

                  (a) Price. The price per Share deliverable upon the exercise
of each option ("exercise price") shall be established by the Committee, except
that in the case of (i) the grant of any Option to any employee possibly covered
by Section 162(m) of the Code or any successor thereof or (ii) the grant of any
Incentive Stock Option, the exercise price may not be less than 100% of the Fair
Market Value of a share of Common Stock as of the date of grant of the option,
and in the case of the grant of any Incentive Stock Option to an employee who,
at the time of the grant, owns more than 10% of the total combined voting power
of all classes of stock of the Company or any of its Subsidiaries, the exercise
price may not be less than 110% of the Fair Market Value of a share of Common
Stock as of the date of grant of the option, in each case unless otherwise
permitted by Section 422 of the Code or any successor thereto.

                  (b) Payment. Options may be exercised, in whole or in part,
upon payment of the exercise price of the Shares to be acquired. Unless
otherwise determined by the Committee, payment shall be made (i) in cash
(including check, bank draft, money order or wire transfer of immediately
available funds), (ii) by delivery of outstanding shares of Common Stock with a
Fair Market Value on the date of exercise equal to the aggregate exercise price
payable with respect to the options' exercise, (iii) by simultaneous sale
through a broker reasonably acceptable to the Committee of Shares acquired on
exercise, as permitted under Regulation T of the Federal Reserve Board, (iv) by
authorizing the Company to withhold from issuance a number of Shares issuable
upon exercise of the options which, when multiplied by the Fair Market Value of
a share of Common Stock on the date of exercise, is equal to the aggregate
exercise price payable with respect to the options so exercised or (v) by any
combination of the foregoing. Options may also be exercised upon payment of the
exercise price of the Shares to be acquired by delivery of the optionee's
promissory note, but only to the extent specifically approved by and in
accordance with the policies of the Committee.

                  In the event a grantee elects to pay the exercise price
payable with respect to an option pursuant to clause (ii) above, (A) only a
whole number of share(s) of Common Stock (and not fractional shares of Common
Stock) may be tendered in payment, (B) such grantee must present evidence
acceptable to the Company that he or she has owned any such shares of Common
Stock tendered in payment of the exercise price (and that such tendered shares
of Common Stock have not been subject to any substantial risk of forfeiture) for
at least six months prior to the date of exercise, and (C) Common Stock must be
delivered to the Company. Delivery for this purpose may, at the election of the
grantee, be made either by (A) physical delivery of the certificate(s) for all
such shares of Common Stock tendered in payment of the


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price, accompanied by duly executed instruments of transfer in a form acceptable
to the Company, or (B) direction to the grantee's broker to transfer, by book
entry, of such shares of Common Stock from a brokerage account of the grantee to
a brokerage account specified by the Company. When payment of the exercise price
is made by delivery of Common Stock, the difference, if any, between the
aggregate exercise price payable with respect to the option being exercised and
the Fair Market Value of the shares of Common Stock tendered in payment (plus
any applicable minimum statutory taxes) shall be paid in cash. No grantee may
tender shares of Common Stock having a Fair Market Value exceeding the aggregate
exercise price payable with respect to the option being exercised (plus any
applicable minimum statutory taxes).

                  In the event a grantee elects to pay the exercise price
payable with respect to an option pursuant to clause (iv) above, (A) only a
whole number of Share(s) (and not fractional Shares) may be withheld in payment
and (B) such grantee must present evidence acceptable to the Company that he or
she has owned a number of shares of Common Stock at least equal to the number of
Shares to be withheld in payment of the exercise price (and that such owned
shares of Common Stock have not been subject to any substantial risk of
forfeiture) for at least six months prior to the date of exercise. When payment
of the exercise price is made by withholding of Shares, the difference, if any,
between the aggregate exercise price payable with respect to the option being
exercised and the Fair Market Value of the Shares withheld in payment (plus any
applicable minimum statutory taxes) shall be paid in cash. No grantee may
authorize the withholding of Shares having a Fair Market Value exceeding the
aggregate exercise price payable with respect to the option being exercised
(plus any applicable minimum statutory taxes). Any withheld Shares shall no
longer be issuable under such option (except pursuant to any Reload Option (as
defined below) with respect to any such withheld Shares).

                  (c) Terms of Options. The term during which each option may be
exercised shall be determined by the Committee, but if required by the Code and
except as otherwise provided herein, no option shall be exercisable in whole or
in part more than ten years from the date it is granted, and no Incentive Stock
Option granted to an employee who at the time of the grant owns more than 10% of
the total combined voting power of all classes of stock of the Company or any of
its Subsidiaries shall be exercisable more than five years from the date it is
granted. All rights to purchase Shares pursuant to an option shall, unless
sooner terminated, expire at the date designated by the Committee. The Committee
shall determine the date on which each option shall become exercisable and may
provide that an option shall become exercisable in installments. The Shares
constituting each installment may be purchased in whole or in part at any time
after such installment becomes exercisable, subject to such minimum exercise
requirements as may be designated by the Committee. Prior to the exercise of an
option and delivery of the Shares represented thereby, the optionee shall have
no rights as a stockholder with respect to any Shares covered by such
outstanding option (including any dividend or voting rights).

                  (d) Limitations on Grants. If required by the Code, the
aggregate Fair Market Value (determined as of the grant date) of Shares for
which an Incentive Stock Option is exercisable for the first time during any
calendar year under all equity incentive plans of the


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Company and its Subsidiaries (as defined in Section 422 of the Code or any
successor thereto) may not exceed $100,000.

                  (e) Termination; Forfeiture.

                           (i) Death or Disability. If a participant ceases to
be a director, officer or employee of, or to perform other services for, the
Company and any Subsidiary due to death or Disability, the exercisable portion
of all of the participant's options and SARs shall remain so until the
expiration date of the options or SARs. Notwithstanding the foregoing, if the
Disability giving rise to the termination of employment is not within the
meaning of Section 22(e)(3) of the Code or any successor thereto, Incentive
Stock Options not exercised by such participant within 90 days after the date of
termination of employment will cease to qualify as Incentive Stock Options and
will be treated as Non-qualified Stock Options under the Plan if required to be
so treated under the Code.

                           (ii) Retirement. If a participant ceases to be a
director, officer or employee of, or to perform other services for, the Company
and any Subsidiary upon the occurrence of his or her Retirement, (A) all of the
participant's options and SARs that were exercisable on the date of Retirement
shall remain exercisable for, and shall otherwise terminate at the end of, a
period of 90 days after the date of Retirement, but in no event after the
expiration date of the options or SARs; provided that the participant does not
engage in Competition during such 90-day period unless he or she receives
written consent to do so from the Board or the Committee, and (B) all of the
participant's options and SARs that were not exercisable on the date of
Retirement shall be forfeited immediately upon such Retirement; provided,
however, that such options and SARs may become fully vested and exercisable in
the discretion of the Committee. Notwithstanding the foregoing, Incentive Stock
Options not exercised by such participant within 90 days after Retirement will
cease to qualify as Incentive Stock Options and will be treated as Non-qualified
Stock Options under the Plan if required to be so treated under the Code.

                           (iii) Discharge for Cause. If a participant ceases to
be a director, officer or employee of, or to perform other services for, the
Company or a Subsidiary due to Cause, or if a participant does not become a
director, officer or employee of, or does not begin performing other services
for, the Company or a Subsidiary for any reason, all of the participant's
options and SARs shall expire and be forfeited immediately upon such cessation
or non-commencement, whether or not then exercisable.

                           (iv) Other Termination. Unless otherwise determined
by the Committee, if a participant ceases to be a director, officer or employee
of, or to otherwise perform services for, the Company or a Subsidiary for any
reason other than death, Disability, Retirement or Cause, (A) all of the
participant's options and SARs that were exercisable on the date of such
cessation shall remain exercisable for, and shall otherwise terminate at the end
of, a period of 30 days after the date of such cessation, but in no event after
the expiration date of the options or SARs; provided that the participant does
not engage in Competition during such


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30-day period unless he or she receives written consent to do so from the Board
or the Committee, and (B) all of the participant's options and SARs that were
not exercisable on the date of such cessation shall be forfeited immediately
upon such cessation.

                           (v) Change in Control. If there is a Change in
Control of the Company and a participant is terminated from being a director,
officer or employee of, or from performing other services for, the Company or a
subsidiary within one year after such Change in Control, all of the
participant's options and SARs shall become fully vested and exercisable upon
such termination and shall remain so for up to one year after the date of
termination, but in no event after the expiration date of the options or SARS.
In addition, the Committee shall have the authority to grant options that become
fully vested and exercisable automatically upon a Change in Control, whether or
not the grantee is subsequently terminated.

                  (f) Grant of Reload Options. The Committee may provide (either
at the time of grant or exercise of an option), in its discretion, for the grant
to a grantee who exercises all or any portion of an option ("Exercised Options")
and who pays all or part of such exercise price with shares of Common Stock, of
an additional option (a "Reload Option") for a number of shares of Common Stock
equal to the sum (the "Reload Number") of the number of shares of Common Stock
tendered or withheld in payment of such exercise price for the Exercised Options
plus, if so provided by the Committee, the number of shares of Common Stock, if
any, tendered or withheld by the grantee or withheld by the Company in
connection with the exercise of the Exercised Options to satisfy any federal,
state or local tax withholding requirements. The terms of each Reload Option,
including the date of its expiration and the terms and conditions of its
exercisability and transferability, shall be the same as the terms of the
Exercised Option to which it relates, except that (i) the grant date for each
Reload Option shall be the date of exercise of the Exercised Option to which it
relates and (ii) the exercise price for each Reload Option shall be the Fair
Market Value of the Common Stock on the grant date of the Reload Option.

7.       Stock Appreciation Rights.

                  The Committee shall have the authority to grant SARs under
this Plan, either alone or to any optionee in tandem with options (either at the
time of grant of the related option or thereafter by amendment to an outstanding
option). SARs shall be subject to such terms and conditions as the Committee may
specify.

                  No SAR may be exercised unless the Fair Market Value of a
share of Common Stock of the Company on the date of exercise exceeds the
exercise price of the SAR or, in the case of SARs granted in tandem with
options, any options to which the SARs correspond. Prior to the exercise of the
SAR and delivery of the cash and/or Shares represented thereby, the participant
shall have no rights as a stockholder with respect to Shares covered by such
outstanding SAR (including any dividend or voting rights).

                  SARs granted in tandem with options shall be exercisable only
when, to the extent and on the conditions that any related option is
exercisable. The exercise of an option shall result in an immediate forfeiture
of any related SAR to the extent the option is exercised, and the


                                      -9-
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exercise of an SAR shall cause an immediate forfeiture of any related option to
the extent the SAR is exercised.

                  Upon the exercise of an SAR, the participant shall be entitled
to a distribution in an amount equal to the difference between the Fair Market
Value of a share of Common Stock on the date of exercise and the exercise price
of the SAR or, in the case of SARs granted in tandem with options, any option to
which the SAR is related, multiplied by the number of Shares as to which the SAR
is exercised. The Committee shall decide whether such distribution shall be in
cash, in Shares having a Fair Market Value equal to such amount, in Other
Company Securities having a Fair Market Value equal to such amount or in a
combination thereof.

                  All SARs will be exercised automatically on the last day prior
to the expiration date of the SAR or, in the case of SARs granted in tandem with
options, any related option, so long as the Fair Market Value of a share of
Common Stock on that date exceeds the exercise price of the SAR or any related
option, as applicable. An SAR granted in tandem with options shall expire at the
same time as any related option expires and shall be transferable only when, and
under the same conditions as, any related option is transferable.

8.       Restricted Stock.

                  The Committee may at any time and from time to time grant
Shares of restricted stock under the Plan to such participants and in such
amounts as it determines. Each grant of restricted stock shall specify the
applicable restrictions on such Shares, the duration of such restrictions (which
shall be at least six months except as otherwise determined by the Committee or
provided in the third paragraph of this Section 8), and the time or times at
which such restrictions shall lapse with respect to all or a specified number of
Shares that are part of the grant. In any one calendar year, the Committee shall
not grant to any one participant shares of restricted stock in excess of 10% of
the total number of Shares authorized under the Plan pursuant to Section 4.

                  The participant will be required to pay the Company the
aggregate par value of any Shares of restricted stock (or such larger amount as
the Board may determine to constitute capital under Section 154 of the Delaware
General Corporation Law, as amended, or any successor thereto) within ten days
of the date of grant, unless such Shares of restricted stock are treasury
shares. Unless otherwise determined by the Committee, certificates representing
Shares of restricted stock granted under the Plan will be held in escrow by the
Company on the participant's behalf during any period of restriction thereon and
will bear an appropriate legend specifying the applicable restrictions thereon,
and the participant will be required to execute a blank stock power therefor.
Except as otherwise provided by the Committee, during such period of restriction
the participant shall have all of the rights of a holder of Common Stock,
including but not limited to the rights to receive dividends and to vote, and
any stock or other securities received as a distribution with respect to such
participant's restricted stock shall be subject to the same restrictions as then
in effect for the restricted stock.


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                  Except as otherwise provided by the Committee, immediately
prior to a Change in Control or at such time as a participant ceases to be a
director, officer or employee of, or to otherwise perform services for, the
Company and its Subsidiaries due to death, Disability or Retirement during any
period of restriction, all restrictions on Shares granted to such participant
shall lapse. At such time as a participant ceases to be, or in the event a
participant does not become, a director, officer or employee of, or otherwise
performing services for, the Company or its Subsidiaries for any other reason,
all Shares of restricted stock granted to such participant on which the
restrictions have not lapsed shall be immediately forfeited to the Company.

9.       Performance Awards.

                  Performance awards may be granted to participants at any time
and from time to time as determined by the Committee. The Committee shall have
complete discretion in determining the size and composition of performance
awards granted to a participant and the appropriate period over which
performance is to be measured (a "performance cycle"). Performance awards may
include (i) specific dollar-value target awards (ii) performance units, the
value of each such unit being determined by the Committee at the time of
issuance, and/or (iii) performance Shares, the value of each such Share being
equal to the Fair Market Value of a share of Common Stock. In any one calendar
year, the Committee shall not grant to any one participant performance awards in
excess of 10% of the total number of Shares authorized under the Plan pursuant
to Section 4.

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

                  The Committee shall establish performance goals and objectives
for each performance cycle on the basis of such criteria and objectives as the
Committee may select from time to time, including, without limitation, the
performance of the participant, the Company, one or more of its Subsidiaries or
divisions or any combination of the foregoing. During any performance cycle, the
Committee shall have the authority to adjust the performance goals and
objectives for such cycle for such reasons as it deems equitable.

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

                  A participant must be a director, officer or employee of, or
otherwise perform services for, the Company or its Subsidiaries at the end of
the performance cycle in order to be entitled to payment of a performance award
issued in respect of such cycle; provided, however, that except as otherwise
determined by the Committee, if a participant ceases to be a director, officer
or employee of , or to otherwise perform services for, the Company and its
Subsidiaries upon his or her death, Retirement, or Disability prior to the end
of the performance cycle, the participant shall earn a proportionate portion of
the performance award based upon the elapsed


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<PAGE>
portion of the performance cycle and the Company's performance over that portion
of such cycle.

                  In the event of a Change in Control, a participant shall earn
no less than the portion of the performance award that the participant would
have earned if the applicable performance cycle(s) had terminated as of the date
of the Change in Control.

10.      Withholding Taxes.

                  (a) Participant Election. Unless otherwise determined by the
Committee, a participant may elect to deliver shares of Common Stock (or have
the Company withhold shares acquired upon exercise of an option or SAR or
deliverable upon grant or vesting of restricted stock, as the case may be) to
satisfy, in whole or in part, the amount the Company is required to withhold for
minimum statutory taxes in connection with the exercise of an option or SAR or
the delivery of restricted stock upon grant or vesting, as the case may be. Such
election must be made on or before the date the amount of tax to be withheld is
determined. Once made, the election shall be irrevocable. The fair market value
of the shares to be withheld or delivered will be the Fair Market Value as of
the date the amount of tax to be withheld is determined. In the event a
participant elects to deliver or have the Company withhold shares of Common
Stock pursuant to this Section 10(a), such delivery or withholding must be made
subject to the conditions and pursuant to the procedures set forth in Section
6(b) with respect to the delivery or withholding of Common Stock in payment of
the exercise price of options.

                  (b) Company Requirement. The Company may require, as a
condition to any grant or exercise under the Plan or to the delivery of
certificates for Shares issued hereunder, that the grantee make provision for
the payment to the Company, either pursuant to Section 10(a) or this Section
10(b), of federal, state or local taxes of any kind required by law to be
withheld with respect to any grant or delivery of Shares. The Company, to the
extent permitted or required by law, shall have the right to deduct from any
payment of any kind (including salary or bonus) otherwise due to a grantee, an
amount equal to any federal, state or local taxes of any kind required by law to
be withheld with respect to any grant or delivery of Shares under the Plan.

11.      Written Agreement; Vesting.

                  Each employee to whom a grant is made under the Plan shall
enter into a written agreement with the Company that shall contain such
provisions, including without limitation vesting requirements, consistent with
the provisions of the Plan, as may be approved by the Committee. Unless the
Committee determines otherwise and except as otherwise provided in Sections 6,
7, 8 and 9 in connection with a Change of Control or certain occurrences of
termination, no grant under this Plan may be exercised, and no restrictions
relating thereto may lapse, within six months of the date such grant is made.

12.      Transferability.


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<PAGE>
                  Unless the Committee determines otherwise, no option, SAR,
performance award or restricted stock granted under the Plan shall be
transferable by a participant other than by will or the laws of descent and
distribution or to a participant's Family Member by gift or a qualified domestic
relations order as defined by the Code. Unless the Committee determines
otherwise, an option, SAR or performance award may be exercised only by the
optionee or grantee thereof; by his or her Family Member if such person has
acquired the option, SAR or performance award by gift or qualified domestic
relations order; by his or her executor or administrator, the executor or
administrator of the estate of any of the foregoing, or any person to whom the
Option is transferred by will or the laws of descent and distribution; or by his
or her guardian or legal representative; or the guardian or legal representative
of any of the foregoing; provided that Incentive Stock Options may be exercised
by any Family Member, guardian or legal representative only if permitted by the
Code and any regulations thereunder. All provisions of this Plan shall in any
event continue to apply to any option, SAR, performance award or restricted
stock granted under the Plan and transferred as permitted by this Section 12,
and any transferee of any such option, SAR, performance award or restricted
stock shall be bound by all provisions of this Plan as and to the same extent as
the applicable original grantee.

13.      Listing, Registration and Qualification.

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

14.      Transfer of Employee.

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

15.      Adjustments.

                  In the event of a reorganization, recapitalization, stock
split, stock dividend, combination of shares, merger, consolidation,
distribution of assets, or any other change in the corporate structure or shares
of the Company, the Committee shall make such adjustment as it deems appropriate
in the number and kind of Shares or other property available for issuance under
the Plan (including, without limitation, the total number of Shares available
for issuance under the Plan pursuant to Section 4), in the number and kind of
options, SARs, Shares or other property covered by grants previously made under
the Plan, and in the exercise price of outstanding options and SARs. Any such
adjustment shall be final, conclusive and binding for


                                      -13-
<PAGE>
all purposes of the Plan. In the event of any merger, consolidation or other
reorganization in which the Company is not the surviving or continuing
corporation or in which a Change in Control is to occur, all of the Company's
obligations regarding options, SARs, performance awards, and restricted stock
that were granted hereunder and that are outstanding on the date of such event
shall, on such terms as may be approved by the Committee prior to such event, be
assumed by the surviving or continuing corporation or canceled in exchange for
property (including cash).

                  Without limitation of the foregoing, in connection with any
transaction of the type specified by clause (iii) of the definition of a Change
in Control in Section 2(c), the Committee may, in its discretion, (i) cancel any
or all outstanding options under the Plan in consideration for payment to the
holders thereof of an amount equal to the portion of the consideration that
would have been payable to such holders pursuant to such transaction if their
options had been fully exercised immediately prior to such transaction, less the
aggregate exercise price that would have been payable therefor, or (ii) if the
amount that would have been payable to the option holders pursuant to such
transaction if their options had been fully exercised immediately prior thereto
would be equal to or less than the aggregate exercise price that would have been
payable therefor, cancel any or all such options for no consideration or payment
of any kind. Payment of any amount payable pursuant to the preceding sentence
may be made in cash or, in the event that the consideration to be received in
such transaction includes securities or other property, in cash and/or
securities or other property in the Committee's discretion.

16.      Amendment and Termination of the Plan.

                  The Board of Directors or the Committee, without approval of
the stockholders, may amend or terminate the Plan, except that no amendment
shall become effective without prior approval of the stockholders of the Company
if stockholder approval would be required by applicable law or regulations,
including if required for continued compliance with the performance-based
compensation exception of Section 162(m) of the Code or any successor thereto,
under the provisions of Section 422 of the Code or any successor thereto, or by
any listing requirement of the principal stock exchange on which the Common
Stock is then listed.

17.      Amendment or Substitution of Awards under the Plan.

                  The terms of any outstanding award under the Plan may be
amended from time to time by the Committee in its discretion in any manner that
it deems appropriate (including, but not limited to, acceleration of the date of
exercise of any award and/or payments thereunder or of the date of lapse of
restrictions on Shares); provided that, except as otherwise provided in Section
15, no such amendment shall adversely affect in a material manner any right of a
participant under the award without his or her written consent, and provided
further that the Committee shall not reduce the exercise price of any options or
SARs awarded under the Plan without approval of the stockholders of the Company.
The Committee may, in its discretion, permit holders of awards under the Plan to
surrender outstanding awards in order to exercise or realize rights under


                                      -14-
<PAGE>
other awards, or in exchange for the grant of new awards, or require holders of
awards to surrender outstanding awards as a condition precedent to the grant of
new awards under the Plan.

18.      Commencement Date; Termination Date.

                  The date of commencement of the Plan shall be May 16, 2002,
subject to approval by the shareholders of the Company. If required by the Code,
the Plan will also be subject to reapproval by the shareholders of the Company
prior to May 16, 2007.

                  Unless previously terminated upon the adoption of a resolution
of the Board terminating the Plan, the Plan shall terminate at the close of
business on May 15, 2012. No termination of the Plan shall materially and
adversely affect any of the rights or obligations of any person, without his or
her written consent, under any grant of options or other incentives theretofore
granted under the Plan.

19.      Severability. Whenever possible, each provision of the Plan shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of the Plan is held to be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of the Plan.

20.      Governing Law. The Plan shall be governed by the corporate laws of the
State of Delaware, without giving effect to any choice of law provisions that
might otherwise refer construction or interpretation of the Plan to the
substantive law of another jurisdiction.


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