<PAGE>

                                QUIXOTE CORPORATION
                   1993 LONG-TERM STOCK OWNERSHIP INCENTIVE PLAN
                             As Amended August 21, 1998

       THE PLAN.  Quixote Corporation, a Delaware corporation (the 
"Company"), hereby amends and restates the substantive provisions of the 
Quixote Corporation 1991 Incentive Stock Option Plan (the "1991 Plan"), to 
establish the Quixote Corporation 1993 Long-Term Stock Ownership Incentive 
Plan as set forth herein and as may from time to time be amended (the 
"Plan"), in order to add provisions which will provide the Company with the 
ability to provide its senior executives with stock-based retirement benefits 
linked to increases in the value of the Company's Stock.  The Plan is 
effective as of June 30, 1993 subject to the approval by a majority of the 
stockholders at the first annual meeting of stockholders held after the 
Effective Date.  Until such time as stockholder approval of the Plan is 
obtained, the 1991 Plan will continue to exist and operate independently of 
the Plan.  Options granted and outstanding under the 1991 Plan following 
stockholder approval of the Plan shall be governed by the provisions of the 
Plan.  Nothing in this Plan is intended to, or shall be deemed to, modify, 
amend or alter any of the rights and benefits of holders of options granted 
under the 1991 Plan or provide any additional benefits to such holders.

1.     PURPOSE

       The purposes of the Plan are to encourage selected employees of the 
Company and its Subsidiaries who are capable of having an impact on the 
performance of the Company to acquire a long-term proprietary interest in the 
growth and performance of the Company, to generate an increased incentive to 
contribute to the Company's future success and prosperity (thus enhancing the 
value of the Company for the benefit of its stockholders), and to enhance the 
ability of the Company and its Subsidiaries to attract and retain qualified 
individuals upon whom the sustained progress, growth, and profitability of 
the Company depend.  It is further intended that options issued pursuant to 
this Plan shall constitute "incentive stock options" within the meaning of 
Sec. 422A of the Internal Revenue Code (such options are referred to herein 
as "Incentive Stock Options").  In the event that stock options granted 
pursuant to this Plan do not satisfy the requirements specified under 
Internal Revenue Code Sec. 422A, such options shall be "nonqualified stock 
options."

2.     DEFINITIONS

       As used in the Plan, terms defined immediately after their use shall 
have the respective meanings provided by such definitions and the terms set 
forth below shall have the following meanings (such meanings to be equally 
applicable to both the singular and plural forms of the terms defined):

(a)    "Affiliate" is a person that directly or indirectly through one or 
more intermediaries, controls, or is controlled by, or is under common 
control with the Company.

(b)    "Award" means options, Retirement Stock Awards or Retirement Cash 
Awards granted under the Plan.  


<PAGE>

(c)    "Award Agreement" has the meaning specified in Section 4(b)(v).

(d)    "Board" means the Board of Directors of the Company.

(e)    "Code" means the Internal Revenue Code of 1986, as amended.  
References to a particular section of the Code shall include references to 
successor provisions.

(f)    "Committee" means the committee of the Board appointed pursuant to 
Section 4.

(g)    "Company" has the meaning set forth in the introductory paragraph.

(h)    "Current Market Price" of the Stock means at any date the average of 
the daily closing prices for thirty (30) consecutive business days commencing 
no more than forty-five (45) business days before the day in question.  The 
closing price for each day shall be the last reported sales price determined 
in the regular way or, in case no such reported sales takes place on such 
day, the average of the last reported bid and asked prices determined in the 
regular way, in either case on the principal national securities exchange on 
which the Stock is admitted to trading or listed, or if not listed or 
admitted to trading on any national securities exchange, the average of the 
closing bid and asked prices as reported by NASDAQ or other similar 
organization if NASDAQ is no longer reporting such information, or if not so 
available, the fair market price as determined by the Board.  

(i)    "Disability" means, as relates to the exercise of an Incentive Stock 
Option after termination of employment, a disability within the meaning of 
Section 22(e)(3) of the Code, and for all other purposes, a mental or 
physical condition which, in the opinion of the Committee, renders a Grantee 
unable or incompetent to carry out the job responsibilities which such 
Grantee held or the tasks to which such Grantee was assigned at the time the 
disability was incurred, and which is expected to be permanent or for an 
indefinite duration exceeding one year.

(j)    "Effective Date" means June 30, 1993; provided that the Plan and any 
Retirement Awards granted prior to the 1993 annual meeting of the Company's 
stockholders are subject to approval of the Plan by the stockholders at such 
annual meeting.

(k)    "Grant Date" means the date on which the Committee grants the Award or 
such later date as specified in advance by the Committee; provided however, 
that references to the Grant Date of an option under this Plan shall, with 
respect to options granted under the 1991 Plan prior to stockholder approval 
of the Plan, refer to the date of grant of such option under the 1991 Plan.

(l)    "Grantee" means an individual who has been granted an Award.

(m)    "Including" or "includes" means "including, without limitation," or 
"includes, without limitation."

(n)    "1934 Act" means the Securities Exchange Act of 1934, as amended. 
References to a particular section of, or rule under, the 1934 Act shall 
include references to successor provisions.


                                      2

<PAGE>

(o)    "Option Price" means the per share purchase price of Stock subject to 
an option.

(p)    "Plan" has the meaning set forth in the introductory paragraph.

(q)    "Retirement" means a termination of employment with the Company and 
its Subsidiaries any time after attaining age 60. 

(r)    "SEC" means the Securities and Exchange Commission.

(s)    "Section 16 Grantee" means a person subject to potential liability 
under Section 16(b) of the 1934 Act with respect to transactions involving 
equity securities of the Company.

(t)    "Stock" means the common stock  of the Company, $0.01-2/3 par value.

(u)    "Subsidiary" means (i) with respect to Incentive Stock Options, a 
corporation as defined in Section 424(f) of the Code with the Company being 
treated as the employer corporation for purposes of this definition, and (ii) 
for all other purposes any entity in which the Company directly or through 
intervening subsidiaries owns at least a majority interest of the total 
combined voting power or value of all classes of stock or, in the case of an 
unincorporated entity, at least a majority in the capital and profits.

(v)    "10% Owner" means a person who owns stock (including stock treated as 
owned under Section 424(d) of the Code) possessing more than 10% of the total 
combined voting power of all classes of stock of the Company.

3.     SCOPE OF THE PLAN

(a)    An aggregate of One Million Two Hundred and Eighty Thousand 
(1,280,000) shares of Stock are hereby made available and reserved for 
delivery on account of Awards and the exercise of Awards, with Nine Hundred 
and Thirty Thousand (930,000) shares of Stock being made available and 
reserved for delivery on account of options and Three Hundred Fifty Thousand 
(350,000) shares of stock being made available and reserved for delivery on 
account of Retirement Stock Awards.  The limitations established by the 
preceding sentences shall be subject to adjustment as provided in Section 18 
of the Plan.

       Such shares may be treasury shares, newly issued shares, or shares 
purchased on the open market (including private purchases) in accordance with 
applicable securities laws, or any combination of the foregoing, as may be 
determined from time to time by the Board or the Committee.

(b)    To the extent an Award shall expire or terminate for any reason 
without having been exercised in full (including a cancellation and re-grant 
of an option), or shall be forfeited, without, in either case, the Grantee 
having enjoyed any of the benefits of Stock ownership (other than voting 
rights or dividends that are also forfeited), the shares of Stock (including 
Retirement Stock) associated with such Award shall become available for other 
Awards.

(c)    For purposes of this Section 3, 


                                      3

<PAGE>

(i)    The aggregate number of shares covered by a Retirement Award Agreement 
shall be counted on the Grant Date of such Award (without respect to the 
timing of the Company's obligation to issue and deliver such shares) against 
the aggregate number of shares of Stock available for granting Retirement 
Stock Awards under the Plan; and

(ii)   the shares of Stock underlying outstanding options (without respect to 
any vesting schedule) shall be counted while the Award is outstanding against 
the aggregate number of shares of Stock available for granting Awards under 
the Plan; and

(iii)  in the event of a stock-for-stock exercise of an option, the gross 
number of shares of Stock subject to the option exercised, not the net number 
of shares actually issued upon exercise shall be counted against the 
aggregate number of shares of Stock available for granting Awards under the 
Plan. 

       4.     ADMINISTRATION

              (a)    Subject to Section 4(b), the Plan shall be administered 
by a committee ("Committee") which shall consist of not less than three 
persons who are Directors of the Company and who are not employees of the 
Company. Membership on the Committee shall be subject to such other 
limitations as the Board deems appropriate to permit transactions in Stock 
pursuant to the Plan to be exempt from liability under Section 16(b) of the 
1934 Act pursuant to Rule 16b-3 thereunder.  Unless the Board adopts a 
resolution naming other individuals to serve on the Committee, the Committee 
shall consist of all Directors of the Company who are not employees of the 
Company.  The Board may from time to time remove members from, or add members 
to the Committee.  Vacancies on the Committee, however caused, shall be 
filled by the Board.  The Committee shall select one of its members as 
Chairman, and shall hold meetings at such times and places as it may 
determine.  A majority of the Committee at which a quorum is present, or acts 
approved in writing by all of the members of the Committee, shall be the 
valid acts of the Committee.  No member of the Committee shall be eligible to 
receive any grant of any Awards under this Plan.  

              (b)    The Committee, unless otherwise determined by the Board, 
shall have full and final authority, in its discretion, but subject to the 
express provisions of the Plan, as follows:

                     (i)    to grant Awards;

                     (ii)   to determine (A) when Awards may be granted, and 
(B) whether or not specific Awards shall be identified with other specific 
Awards, and if so, whether they shall be exercisable cumulatively with or 
alternatively to such other specific Awards;

                     (iii)  to interpret the Plan and to make all 
determinations necessary or advisable for the administration of the Plan;

                     (iv)   to prescribe, amend, and rescind rules and 
regulations relating to the Plan, including rules with respect to the 
exercisability and non-forfeitability of Awards upon the termination of 
employment of a Grantee;


                                      4

<PAGE>

                     (v)    to determine the terms and provisions and any 
restrictions or conditions (including specifying such performance criteria as 
the Committee deems appropriate, and imposing restrictions with respect to 
Stock acquired upon exercise of an option or Retirement Award, which 
restrictions may continue beyond the Grantee's termination of employment) of 
the written agreements by which all Awards shall be evidenced ("Award 
Agreements") which need not be identical and, with the consent of the Grantee 
where required by contract law, to modify any such Award Agreement at any 
time;

                     (vi)   to impose, incidental to an Award, conditions 
with respect to competitive employment or other activities, to the extent 
such conditions do not conflict with the Plan; 

                     (vii)  to cancel, with the consent of the Grantee, 
outstanding Awards and to grant new Awards in substitution therefor; 
provided, however, that any cancellation of outstanding options and grant of 
new option awards so as to specify a lower price shall be made to no more 
than ten percent (10%) of the options outstanding at such time;

                     (viii) to accelerate the exercisability of, and to 
accelerate or waive any or all of the restrictions and conditions applicable 
to any Award or any group of Awards;

                     (ix)   subject to Section 6(c), to extend the time 
during which any Award or group of Awards may be exercised;

                     (x)    to make such adjustments or modifications to 
Awards to Grantees working outside the United States as are necessary and 
advisable to fulfill the purposes of the Plan which are not in conflict with 
the Plan; and

                     (xi)   to impose such additional conditions, 
restrictions, and limitations upon the grant, exercise or retention of Awards 
as the Committee may, before or concurrently with the grant thereof, deem 
appropriate, including requiring simultaneous exercise of related identified 
Awards, and limiting the percentage of Awards which may from time to time be 
exercised by a Grantee.

       The determination of the Committee on all matters relating to the Plan 
or any Award Agreement shall be conclusive and final.  No member of the 
Committee or the Board shall be liable for any action or determination made 
in good faith with respect to the Plan or any Award.

              (c)    The Board may, in its discretion, reserve to itself or 
delegate to another committee of the Board, any or all of the authority and 
responsibility of the Committee with respect to Awards to Grantees who are 
not Section 16 Grantees at the time any such delegated authority or 
responsibility is exercised.  Such other committee may consist of two or more 
Directors who may, but need not be, officers or employees of the Company or 
of any of its Subsidiaries.  To the extent that the Board has reserved to 
itself or delegated to such other committee the authority and responsibility 
of the Committee, all references to the Committee in the Plan shall be to the 
Board or such other committee.


                                      5

<PAGE>

       5.     ELIGIBILITY

       Awards may be granted to any key employee (including any officer) of 
the Company or any of its Subsidiaries; provided, however, that Retirement 
Awards may be granted only to executive officers of the Company or its 
Subsidiaries who have completed 10 years of continuous service for the 
Company or its Subsidiaries; provided further that the Committee may, under 
appropriate circumstances and in its discretion, waive the requirement of ten 
years continuous service for a particular executive officer.  In selecting 
the individuals to whom Awards may be granted, as well as in determining the 
number of shares of Stock subject to, and the other terms and conditions 
applicable to, each Award, the Committee shall take into consideration such 
factors as it deems relevant in promoting the purposes of the Plan.

       6.     TERMS AND CONDITIONS OF OPTION GRANTS

       Stock options granted by the Committee pursuant to the Plan shall be 
evidenced by Award Agreements in such form as the Committee shall from time 
to time approve, which agreements shall comply with and be subject to the 
following terms and conditions:

              (a)    Each option shall state the number of shares to which it 
pertains.  
              
              (b)    The Option Price of any option shall not be less than 
100% of the Current Market Price of the Stock on the Grant Date.

              (c)    Any option granted under this Plan may be considered a 
Incentive Stock Option to the extent that it:

                     (i)    shall only be granted to individuals who are 
employed by the Company or any of its Subsidiaries on the Grant Date; 

                     (ii)   shall not be granted to a 10% Owner unless the 
Option Price is at least 110% of the Current Market Price of the Stock 
subject to such option on the Grant Date and shall be exercisable for a 
period of not more than five (5) years from the Grant Date;

                     (iii)  except as provided in (ii) above, shall be 
exercisable for a period of not more than 10 years from the Grant Date, and 
shall be subject to earlier termination as provided herein or in the 
applicable Award Agreement;

                     (iv)   shall not have an aggregate fair market value 
(determined for each Incentive Stock Option at its Grant Date) of Stock with 
respect to which Incentive Stock Options are exercisable for the first time 
by such Grantee during any calendar year (under the Plan and any other 
employee stock option plan of the Grantee's employer or any parent or 
Subsidiary thereof determined in accordance with the provisions of Section 
422 of the Code), which exceeds $100,000; and

                     (v)    shall require the Grantee to notify the Company 
of any disposition of any Stock issued pursuant to the exercise of the 
Incentive


                                      6

<PAGE>

Stock Option under the circumstances described in Section 421(b) of the Code 
(relating to certain disqualifying dispositions), within 10 days of such 
disposition.

       Subject to the foregoing, the Committee shall have full authority and 
discretion in fixing the Option Price and the terms and conditions of the 
option Awards and shall be fully protected in doing so.

              (d)    All options shall be granted on or before August 19, 
2001.

              (e)    Options shall not be assignable or transferable other 
than by will or the laws of descent and distribution and may be exercised 
during the Grantee's lifetime only by the Grantee; provided, however, that 
the Grantee may, to the extent provided in the Plan in any manner specified 
by the Committee, designate in writing a beneficiary to exercise his/her 
option after the Grantee's death.

              (f)    Subject to Section 4(b)(viii) and such terms and 
conditions as the Committee may impose, each option shall be exercisable in 
one or more installments.  Each option shall be exercised by delivery to the 
Company of written notice of intent to purchase a specific number of shares 
of Stock subject to the option.  The Option Price of any shares of Stock as 
to which an option shall be exercised shall be paid in full at the time of 
the exercise. Payment may, at the election of the Grantee, be made in any one 
or any combination of the following:

                     (i)    United States dollars in cash or by check;

                     (ii)   Stock held by the Grantee for at least 6 months 
prior to exercise of the option, valued at its Current Market Price on the 
date of written notice of optionee's election to exercise the option; or

                     (iii)  with the approval of the Committee, shares of 
Retirement Stock held by the Grantee for at least 6 months prior to exercise 
of the option, valued at the Current Market Price of a share of Stock on the 
date of exercise.

              (g)    Except as expressly provided in this Plan or the Award 
Agreement, no option may be exercised prior to twelve months from its Grant 
Date.  Subject to the right of cumulation provided in the next sentence of 
this Section 6(g), each option shall be exercisable to the extent provided 
for in the Award Agreement as determined by the Committee in its discretion.  
To the extent not exercised, installments shall accumulate and be 
exercisable, in whole or in part, in any subsequent period, prior to the 
expiration of the term described in the Award Agreement, provided that no 
option may be exercised more than ten years from its Grant Date.  
Notwithstanding the preceding sentence, in the event that the optionee is a 
10% Owner (determined on the Grant Date) of the Company, no option intended 
to qualify as an Incentive Stock Option may be exercised more than five years 
from the date it is granted.  During the lifetime of the optionee, the option 
shall be exercisable only by him and shall not be assignable or transferable 
by him and no other person shall acquire any rights therein.


                                      7

<PAGE>

              (h)    In the event that an optionee shall cease to be employed 
by the Company for any reason other than his death, Disability, or 
Retirement, subject to the condition that no option shall be exercisable 
after the expiration of ten years from its Grant Date (five years for an 
option which is intended to qualify as an Incentive Stock Option that is 
granted to a 10% Owner on the Grant Date), such optionee may, at the 
discretion of the Committee, be granted the right to exercise the option at 
any time within thirty (30) days after such termination of employment to the 
extent his right to exercise such option had not expired pursuant to Section 
6(g) of this Plan, had vested and had not previously been exercised; 
provided, however, that if the employment of the optionee is terminated by 
the Company or any of its Subsidiaries for cause, fraud, breach of fiduciary 
duty, or other dishonesty, the optionee's rights to exercise the option 
otherwise provided herein shall expire on the last day of his employment.  
Whether authorized leave of absence or absence for military or governmental 
service, or any other reason, shall constitute termination of employment, for 
the purposes of the Plan, shall be determined by the Committee, which 
determination shall be final and conclusive.

              (i)    (i)    In the event an optionee terminates his 
employment with the Company or any Subsidiary because of a Disability, the 
Disabled optionee or a lawfully appointed custodian thereof may exercise an 
option granted pursuant to this Plan for a period of twelve months from the 
date of termination of employment to the extent his right to exercise such 
option had not expired pursuant to Section 6(g) of this Plan and had not 
previously been exercised at the date of such termination.

                     (ii)   If the employment of an optionee with the Company 
or any Subsidiary is terminated by reason of the optionee's Retirement and 
the optionee has been in the employ of either the Company or a Subsidiary 
continuously from the date such option was granted until such Retirement 
(except for leaves of absence approved in writing by the President of the 
Company or the President of the Subsidiary for which the optionee works), the 
entire unexercised portion of such option may be exercised by the optionee at 
any time or times in whole or in part during the three-month period after 
such retirement to the extent that such three-month period is included in the 
remainder of such option's term.

              (j)    If the optionee shall die while in the employ of the 
Company or any Subsidiary and shall not have fully exercised the option, the 
unexercised portion of an option may be exercised at any time within one year 
after the optionee's death by the executors or administrators of the optionee 
or by any person or persons who shall have acquired the option directly from 
the optionee by bequest or inheritance, subject to the condition that no 
option shall be exercisable after the expiration of ten years from its Grant 
Date (five years for an optionee under an Incentive Stock Option who is a 10% 
Owner on the Grant Date).

              No option shall be transferable by the optionee otherwise than 
by will or the laws of descent and distribution.  

       7.     TERMS AND CONDITIONS OF RETIREMENT AWARDS


                                      8

<PAGE>

       Grants of Stock and cash Awards intended to fund retirement benefits 
for senior executives (the "Retirement Stock Awards" and "Retirement Cash 
Awards" (each more fully described below), respectively, and collectively the 
"Retirement Awards") pursuant to the Plan shall be authorized by the 
Committee and shall be evidenced by agreements in such form as the Committee 
shall from time to time approve (each a "Retirement Award Agreement"), which 
agreements shall comply with and be subject to the following terms and 
conditions:

              (a)    The Committee may grant Retirement Awards to any 
individual eligible under Section 5 to receive such Retirement Awards.

              (b)    The Committee shall, in its discretion, determine the 
amount, if any, that a Grantee shall pay for shares of Retirement Stock.  
Awards shall be granted for no cash consideration or for such minimal cash 
consideration as may be required by applicable law.  If any such cash 
consideration is required, payment shall be made in full by the Grantee 
before the delivery of the shares and in any event no later than 10 days 
after the Grant Date for such shares.  In the discretion of the Committee and 
to the extent permitted by law, payment may also be made in accordance with 
Section 11.

              (c)    Each Retirement Award Agreement shall state the number 
of shares of Stock and the amount of cash to which it pertains.

              (d)    The Retirement Award Agreement shall provide for an 
aggregate Award of Retirement Stock which the Company will agree to issue and 
deliver to the Grantee.  Such Retirement Stock Award will be issued and 
delivered to the Grantee in equal annual installments commencing with the 
Grant Date and continuing over a period of years to be determined by the 
Committee and set forth in the Retirement Award Agreement, subject to the 
requirement that the Grantee be employed by the Company or any Subsidiary on 
the last day of the fiscal year in which Retirement Stock is issued and 
delivered; provided however, the Retirement Award Agreement may include a 
provision which excepts from this requirement the Grantee's death, disability 
or other involuntary termination of employment (excluding for cause) which 
occurs during the same fiscal year. Unless otherwise provided in the 
Agreement, the Retirement Award Agreement will have an initial term of five 
(5) years.  In its discretion, the Committee may provide that the term of a 
Retirement Award Agreement be automatically extended for additional one-year 
periods until the Company gives the Grantee notice of its intention not to 
extend the Agreement at the end of its then-current term.

              (e)    The Grantee may not sell, transfer, pledge, hypothecate, 
or otherwise transfer any shares of Retirement Stock he or she receives under 
the Plan during any period in which he or she is employed by the Company or 
any Subsidiary; provided, however, that following the earlier of (i) 
termination of the employment of the Grantee with the Company or any 
Subsidiary or (ii) the Grantee's attainment of normal retirement age (whether 
or not Grantee actually retires), all such restrictions with respect to 
Retirement Stock which has been issued and delivered to such Grantee prior to 
such time shall terminate. Notwithstanding the above, no Grantee may sell, 
transfer, pledge, hypothecate any shares of Retirement Stock he or she 
receives during the six months immediately following the later of Grant Date 
or the date the Plan is approved by the Company's stockholders unless the 
Grantee dies before the


                                      9

<PAGE>

expiration of the six month period.  Each share of Retirement Stock subject 
to such restrictions shall bear an appropriate legend specifying that such 
share is non-transferable and subject to the restrictions set forth in the 
Plan and the Retirement Award Agreement.  When all applicable restrictions 
have ended, the Company shall cause certificates for such shares to be issued 
or reissued without such legend.

              (f)    In connection with any Retirement Stock Award, the 
Committee may grant cash bonus awards ("Retirement Cash Awards") to Grantees 
solely in order to, and in an amount it determines will, cover the federal 
and state income tax liability, and any other tax liability, to the Grantee, 
created by, or arising in connection with, the receipt of the Retirement 
Award by the Grantee.  The Retirement Award Agreement shall provide that 
Retirement Cash Awards will be calculated annually at the time of the 
issuance of an annual installment of Retirement Stock to which the Retirement 
Cash Award relates by using the same maximum marginal federal and state 
income tax percentage which was used in the prior year and the Current Market 
Price of the Retirement Stock being issued in such year on the date of such 
issuance (unless the Committee approves an adjustment to that formula).

              (g)    The Retirement Award shall be issued and delivered to 
the Grantee in accordance with the terms set forth in the Retirement Award 
Agreement; provided, however, that the Company shall have no obligation to 
issue or deliver any Retirement Award under a Retirement Award Agreement to 
any Grantee following (i) the termination of his employment with the Company 
or its Subsidiaries or (ii) any breach of the Grantee's obligations under the 
Retirement Award Agreement.

              (h)    Any other provision of the Plan or the Retirement Award 
Agreement to the contrary notwithstanding, the Committee may at any time 
remove or limit any restrictions, if it determines that conditions, including 
but not limited to, changes in the economy, changes in competitive 
conditions, changes in laws or government regulations, changes in generally 
accepted accounting principles, changes in the Company's accounting policies, 
acquisitions or dispositions, or the occurrence of other unusual, unforseen, 
or extraordinary events, so warrant.

              (i)    Notwithstanding the fact that the Company delivers 
notice of its intention not to extend the term of a Retirement Award 
Agreement at the end of its then current term (if such Agreement provides for 
such a notice), the Company shall remain obligated to issue and deliver all 
scheduled annual Retirement Awards in accordance with the Retirement Award 
Agreement.

       8.     NOTIFICATION UNDER CODE SECTION 83(b)

       The Committee may, on the Grant Date or any later date, prohibit a 
Grantee from making the election described in this Section 8.  If the 
Committee has not prohibited such Grantee from making such election, and the 
Grantee, in connection with the exercise of any option or the grant of 
Retirement Stock, makes the election permitted under Section 83(b) of the 
Code (i.e., an election to include in such Grantee's gross income in the year 
of transfer the amounts specified in Section 83(b) of the Code), such Grantee 
shall notify the Company of such election within 10 days of filing notice of 
the election with the Internal Revenue Service, in addition to any filing and 


                                      10

<PAGE>

notification required pursuant to regulations issued under the authority of 
Section 83(b) of the Code.

       9.     MANDATORY WITHHOLDING OF TAXES

              (a)    Whenever under the Plan, cash or shares of Stock are to 
be delivered upon exercise or payment of an Award or any other event occurs 
which subjects the Grantee to income taxes with respect to rights and 
benefits hereunder, the Company shall be entitled to require as a condition 
of delivery of the Award (i) that the Grantee remit an amount sufficient to 
satisfy all federal, state, and local withholding tax requirements related 
thereto, (ii) the withholding of such sums from compensation otherwise due to 
the Grantee or from any shares of Stock due to the Grantee under the Plan, or 
(iii) any combination of the foregoing.

              (b)    If any disqualifying disposition described in Section 
6(c)(v) is made with respect to shares of Stock acquired by exercising an 
Incentive Stock Option granted pursuant to the Plan or any election described 
in Section 8 is made, then the person making such disqualifying disposition 
or election shall remit to the Company an amount sufficient to satisfy all 
federal, state, and local withholding taxes thereby incurred; provided that, 
in lieu of or in addition to the foregoing, the Company shall have the right 
to withhold such sums from compensation otherwise due to the Grantee or from 
any shares of Stock due to the Grantee under the Plan.

       10.    LOANS

       With the approval of the Committee, the Grantee may borrow from the 
Company all or any portion of the funds needed to pay the Option Price or to 
pay for Retirement Stock on such terms and conditions as the Committee deems 
appropriate, provided that (i) the interest rate for any such loan by the 
Company shall not be less than the "applicable federal rate" (as defined by 
Code Section 1274(d)(1)(A)) in effect on the date of such loan or any other 
rate as necessary to avoid the imputation of interest under the Code or other 
applicable law, (ii) proceeds of the loan are used solely to pay either the 
exercise price of an option or to pay for Retirement Stock granted pursuant 
to this Plan, and (iii) the Grantee executes a promissory note and such other 
documents as the Committee deems appropriate to evidence the Grantee's 
indebtedness to the Company, and pledges the Stock received in exchange for 
such borrowed funds as Collateral for such loan.

       11.    SECURITIES LAW MATTERS

              (a)    If the Committee deems it necessary to comply with the 
Securities Act of 1933, Committee may require a written investment intent 
representation by the Grantee and may require that a restrictive legend be 
affixed to certificates for shares of Stock.

              (b)    If, based upon the opinion of counsel for the Company, 
the Committee determines that the exercise or non-forfeitability of, or 
delivery of benefits pursuant to, any Award would violate any applicable 
provision of (i) federal or state securities laws or (ii) the listing 
requirements of any national securities exchange on which are listed any of 
the Company's equity securities, then the Committee may postpone any such 
exercise, non-


                                      11

<PAGE>

forfeitability or delivery, as the case may be, but the Company shall use its 
best efforts to cause such exercise, non-forfeitability or delivery to comply 
with all such provisions at the earliest practicable date.

              (c)    With respect to Section 16 Grantees, transactions under 
this Plan are intended to comply with all applicable conditions of Rule 16b-3 
or its successors under the 1934 Act.  To the extent that any provision of 
the Plan or action by the Committee fails to so comply, it shall be deemed 
null and void, to the extent permitted by law and deemed advisable by the 
Committee.

       12.    FUNDING; RESERVES

       Cash benefits payable under the Plan to any person shall be paid 
directly by the Company.  The Company shall not be required to fund, or 
otherwise segregate assets to be used for payment of, cash benefits under the 
Plan. Neither the Plan nor any Award shall create or be construed to create a 
trust or separate fund of any kind or a fiduciary relationship between the 
Company or any Subsidiary and a Grantee or any other person.  To the extent 
that any person acquires a right to receive payments from the Company or any 
Subsidiary pursuant to an Award, such right shall be no greater than the 
right of an unsecured general creditor of the Company or any Subsidiary.  The 
Board shall cause the Company to reserve shares of Stock from its authorized 
but unissued shares for the purpose of making available shares of Stock to 
fund the Awards.

       13.    NO EMPLOYMENT RIGHTS

       Neither the establishment of the Plan, nor the granting of any Award 
nor the execution of an Award Agreement shall be construed to (a) give any 
Grantee the right to remain employed by the Company or any of its 
Subsidiaries or to any benefits not specifically provided by the Plan or an 
Award Agreement, or (b) in any manner modify the right of the Company or any 
of its Subsidiaries to modify, amend, or terminate any of its employee 
benefit plans.  Further, the Company or Subsidiary may at any time dismiss a 
Grantee from employment, free from any liability, or any claim under the 
Plan, unless otherwise expressly provided in the Plan or in any Award 
Agreement.

       14.    RIGHTS AS A STOCKHOLDER

       A Grantee shall not, by reason of any Award have any right as a 
stockholder of the Company with respect to the shares of Stock which may be 
deliverable in the future upon exercise of such Award, or otherwise as 
provided in an Award Agreement, until Stock has been actually issued and 
delivered to the Grantee.  Shares of Retirement Stock issued and delivered to 
a Grantee in accordance with the Retirement Award Agreement shall confer on 
the Grantee all rights of a stockholder of the Company, except as otherwise 
provided in the Plan or the specific Retirement Award Agreement.

       15.    NATURE OF PAYMENTS

       Any and all grants, payments of cash, or deliveries of shares of Stock 
hereunder shall constitute special incentive payments to the Grantee and 
shall not be taken into account in computing the amount of salary or 
compensation of


                                      12

<PAGE>

the Grantee for the purposes of determining any pension, retirement, death or 
other benefits under (a) any pension, retirement, profit-sharing, bonus, life 
insurance or other employee benefit plan of the Company or any of its 
Subsidiaries or (b) any agreement between the Company or any Subsidiary, on 
the one hand, and the Grantee, on the other hand, except as such plan or 
agreement shall otherwise expressly provide.

       16.    NON-UNIFORM DETERMINATIONS

       Determinations made by the Committee or the Board under the Plan do 
not need to be uniform and may be made by the Committee or the Board 
selectively among persons who receive, or are eligible to receive, Awards 
(whether or not such persons are similarly situated).  Without limiting the 
generality of the foregoing, the Committee shall be entitled, among other 
things, to make non-uniform and selective determinations and to enter into 
non-uniform and selective Award Agreements, as to (a) the identity of the 
Grantees, (b) the terms and provisions of Awards, and (c) the treatment under 
Section 13 of terminations of employment.  Notwithstanding the foregoing, the 
Committee's interpretation of Plan provisions shall be uniform as to 
similarly situated Grantees.

       17.    ADJUSTMENTS FOR CHANGES IN CAPITALIZATION

              (a)    Subject to any required action by the Stockholders, the 
Committee shall make such adjustment, as it shall deem equitable, to any or 
all of:

                     (i)    the aggregate numbers of shares of Stock 
available under Sections 3(a) and 3(b);

                     (ii)   the number of shares of Stock subject to an 
option or shares of Retirement Stock covered by an Award;

                     (iii)  the Option Price; 

                     (iv)   the Retirement Cash Award;

                     (v)    any other terms or provisions of any outstanding 
grants of options or Retirement Awards:

to reflect a stock dividend, stock split, reverse stock split, share 
combination, recapitalization, merger, consolidation, acquisition of property 
or shares, separation, asset spin-off, reorganization, stock rights offering, 
liquidation or similar event, of or by the Company, or, if deemed 
appropriate, the Committee may make provisions for a cash payment to the 
holder of an outstanding Award; provided, however, if the Company shall be 
the surviving corporation in any merger or consolidation, each outstanding 
option or Award Agreement shall pertain to and apply to the securities to 
which a holder of the number of shares of Stock subject to the option or 
Award Agreement would have been entitled; and provided further, upon a 
dissolution or liquidation of the Company, or a merger or consolidation in 
which the Company is not the surviving corporation, or a change in control of 
the Company, as defined in subsection (b) below, each optionee shall have the 
right to exercise his option in whole or in part notwithstanding the 
provisions of Section 6(g)


                                      13

<PAGE>

above:  (i) immediately prior to such dissolution or liquidation or merger or 
consolidation in which the Company is not the surviving corporation, and 
thereafter; or (ii) after such change of control.  However, with respect to 
Awards of Incentive Stock Options no such adjustment shall be authorized to 
the extent that the authority to make such adjustments would cause the Plan 
to violate Section 422(b)(1) of the Code or any successor provision thereto 
and the number of shares subject to any Award denominated in shares of Stock 
shall always be a whole number.

              (b)    "Change of control" of the Company shall mean a change 
in control of a nature that would be required to be reported in response to 
Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities 
Exchange Act of 1934 ("Exchange Act"); provided that, without limitation, 
such a change in control shall be deemed to have occurred if: (i) any person 
(as that term is defined in Section 13(d) and Section 14(d) of the Exchange 
Act) is or becomes the beneficial owner, directly or indirectly, of 
securities of the Company representing 20 percent, or more of the combined 
voting power of the Company's then outstanding securities; or (ii) during any 
period of two consecutive years, individuals who at the beginning of such 
period constitute all members of the Board who are not employed by the 
Company (the "Outside Directors") shall cease for any reason to constitute at 
least a majority of the Outside Directors, unless the election of each 
Outside Director, who was not an Outside Director at the beginning of such 
period, was approved by a vote of at least two-thirds of the directors then 
still in office who were directors at the beginning of such period; or, (iii) 
there shall be consummated (A) any consolidation or merger of the Company in 
which the Company is not the continuing or surviving corporation or pursuant 
to which shares of the Company's Common Stock would be converted into cash, 
securities or other property, other than a merger of the Company in which the 
holders of the Company's Stock immediately prior to the merger have the same 
proportionate ownership of common stock of the surviving corporation 
immediately after the merger, or (B) any sale, lease, exchange or other 
transfer (in one transaction or a series of related transactions) of all, or 
substantially all, of the assets of the Company, or,  (iv) the stockholders 
of the Company approve a plan or proposal for the liquidation or dissolution 
of the Company.

              (c)    In the event of a change in the Stock of the Company as 
presently constituted, which is limited to a change of all of its authorized 
shares with par value 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 Stock within the meaning of the Plan.

              (d)    Except as hereinbefore expressly provided in this 
Section 18, the Grantee shall have no rights by reason of any subdivision or 
consolidation of shares of stock of any class or the payment of any stock 
dividend or any other increase or decrease in the number of shares of stock 
of any class or by reason of any change of control, dissolution, liquidation, 
merger, or consolidation or spin-off of assets or stock of another 
corporation, and any issue of the Company of shares of stock of any class, or 
securities convertible into shares of stock of any class, shall not affect, 
and no adjustment by reason thereof shall be made with respect to, the number 
or price of shares of Stock subject to Awards.


                                      14

<PAGE>

       The grant of an Award pursuant to the Plan shall not affect in any way 
the right or power of the Company to make adjustments, reclassifications, 
reorganizations or changes of its capital or business structure or to merge, 
consolidate, dissolve, liquidate, sell, or transfer all or any part of its 
business or assets.

       18.    AMENDMENT OF THE PLAN

       Upon recommendation of the Committee, the Board of Directors of the 
Company may insofar as permitted by law, from time to time, with respect to 
any shares at the time not subject to options or Award Agreements, suspend or 
discontinue the Plan or revise or amend it in any respect whatsoever except 
that, without approval of the stockholders, no such revision or amendment 
shall: change the number of shares subject to the Plan; change the 
designation of the class of employees eligible to receive Awards; decrease 
the price at which Options may be granted; remove the administration of the 
Plan from the Committee other than as expressly provided by the Plan; extend 
the period during which Awards may be granted; or render any member of the 
Committee eligible to receive an Awards under the Plan while serving thereon. 
  Furthermore, the Plan may not without the approval of the stockholders be 
amended in any manner that will cause Options issued under it to fail to 
qualify as Incentive Stock Options.

       Except as provided in this Section 19, the Board shall, from time to 
time, revise, modify, or amend the Plan, in part or in total, without 
approval of the stockholders, as may be necessary to satisfy the requirements 
of the Code and any amendments or revisions thereof, such that certain stock 
options which are granted under the Plan may qualify as Incentive Stock 
Options, and to satisfy all other applicable laws and regulations.

       19.    TERMINATION OF THE PLAN

       The Plan shall terminate on the tenth (10th) anniversary of the 
Effective Date or at such earlier time as the Board may determine.  Any 
termination, whether in whole or in part, shall not affect any Award then 
outstanding under the Plan.

       20.    OTHER COMPENSATION PLANS

       Nothing contained in the Plan shall prevent the Company or any 
Affiliate from adopting or continuing in effect other or additional 
compensation arrangements, and such arrangements may be either generally 
applicable or applicable only in specific cases.

       21.    NO ILLEGAL TRANSACTIONS

       The Plan and all Awards granted pursuant to it are subject to all laws 
and regulations of any governmental authority which may be applicable 
thereto; and notwithstanding any provision of the Plan or any Award, Grantees 
shall not be entitled to exercise Awards or receive the benefits thereof and 
the  Company shall not be obligated to deliver any Stock or pay any benefits 
to a Grantee if such exercise, delivery, receipt or payment of benefits would 
constitute a violation by the Grantee or the Company of any provision of any 
such law or regulation.


                                      15

<PAGE>

       22.    CONTROLLING LAW

       The law of the State of Illinois, except its law with respect to 
choice of law and except as to matters relating to corporate law (in which 
case the corporate law of the State of Delaware shall control), shall be 
controlling in all matters relating to the Plan.

       23.    TAX LITIGATION

       The Company shall have the right, but not the obligation, to contest, 
at its expense, any tax ruling or decision, administrative or judicial, on 
any issue that is related to the Plan and that the Company believes to be 
important to Grantees and to conduct any such contest or any litigation 
arising therefrom to a final decision.

       24.    SEVERABILITY

       If all or any part of the Plan is declared by any court or 
governmental authority to be unlawful or invalid, such unlawfulness or 
invalidity shall not serve to invalidate any portion of the Plan not declared 
to be unlawful or invalid.  Any Section or part of a Section so declared to 
be unlawful or invalid shall, if possible, be construed in a manner in which 
will give effect to the terms of such Section or part of a Section to the 
fullest extent possible while remaining lawful and valid.

       25.    INDEMNIFICATION

       Each person who is or at any time serves as a member of the Board or 
the Committee shall be indemnified and held harmless by the Company against 
and from: (i) any loss, cost, liability or expense, including attorneys' fees 
actually and necessarily incurred in connection with the defense of any 
action, suit or proceeding, or in connection with any appeal therein, that 
may be imposed upon or reasonably incurred by such person in connection with 
or resulting from any claim, action, suit, or proceeding to which such person 
may be a party or in which such person may be involved by reason of any 
action or failure to act under the Plan; and (ii) any and all amounts paid by 
such person in satisfaction of judgment in any such action, suit or 
proceeding relating to the Plan.  Each person covered by this indemnification 
provision shall give the Company an opportunity, at its own expense, to 
handle and defend the same before such person undertakes to handle and defend 
it on such person's own behalf.  The foregoing right of indemnification shall 
not be exclusive of any other rights of indemnification to which such persons 
may be entitled under the By-Laws of the Company, as a matter of law, or 
otherwise, or any power that the Company may have to indemnify such person or 
hold such person harmless.

       26.    RELIANCE ON REPORTS

       Each member of the Board and the Committee shall be fully justified in 
relying or acting in good faith upon any report made by the independent 
public accountants of, or counsel for, the Company and upon any other 
information furnished in connection with the Plan.  In no event shall any 
person who is or shall have been a member of the Board or the Committee be 
liable for any


                                      16

<PAGE>

determination made or other action taken or any failure to act in reliance 
upon any such report or information or for any action taken, including the 
furnishing of information, or failure to act, if done in good faith.

       27.    EXPENSES

       The Company shall bear all expenses of administering the Plan.

       28.    TITLES AND HEADINGS

       The titles and headings of the sections in the Plan are for 
convenience of reference only, and in the event of any conflict, the text of 
the Plan, rather than such titles or headings, shall control.

       29.    APPLICATION OF FUNDS

       The proceeds received by the Company from the sale of Stock pursuant 
to any Awards will be used for general corporate purposes.

Date Plan was adopted by Board of Directors:  June 30, 1993

Date Plan was approved by Stockholders:   November 16, 1993

Date Plan was amended by Board of Directors:  June 25, 1997

Date Plan was amended by Board of Directors:  August 28, 1997

Date amended Plan was approved by Stockholders: November 19, 1997

Date Plan was amended by Board of Directors: August 21, 1998

Date amended Plan was approved by stockholders: _______, 1998


                                      17