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                                SEALY CORPORATION
                             1998 STOCK OPTION PLAN


                                    ARTICLE I

                                 PURPOSE OF PLAN

     The 1998 Stock Option Plan (the "PLAN") of Sealy Corporation (the
"COMPANY"), adopted by the Board of Directors and shareholders of the Company
effective December 18, 1997, is intended to advance the best interests of the
Company by providing executives and other key employees of the Company or any
Subsidiary (as defined below) who have substantial responsibility for the
management and growth of the Company or any Subsidiary with additional
incentives by allowing such employees to acquire an ownership interest in the
Company. The Plan is a compensatory benefit plan within the meaning of Rule 701
under the Securities Act of 1933, as amended (the "SECURITIES ACT") and, unless
and until the Class A Common (as defined below) is publicly traded, the issuance
of stock purchase options ("OPTIONS") for shares of Class A Common pursuant to
the Plan and the issuance of shares of Class A Common pursuant to such Options
is intended to qualify for the exemption from registration under the Securities
Act provided by Rule 701.


                                   ARTICLE II

                                   DEFINITIONS

     For purposes of the Plan the following terms have the indicated meanings:

     "AFFILIATE" means, when used with reference to a specified Person, any
Person that directly or indirectly controls or is controlled by or is under
common control with the specified Person. As used in this definition, "control"
(including, with its correlative meanings, "controlled by" and "under common
control with") shall mean possession, directly or indirectly, of power to direct
or cause the direction of management or policies (whether through ownership of
securities or partnership or other ownership interests, by contract or
otherwise). With respect to any Person who is an individual, "Affiliates" shall
also include, without limitation, any member of such individual's Family Group.

     "BOARD" means the Company's Board of Directors.

     "CLASS A COMMON" means the Company's Class A Common Stock, par value $.01
per share.

     "CODE" means the Internal Revenue Code of 1986, as amended, and any
successor statute.


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     "COMMITTEE" means the Compensation Committee or such other committee of the
Board as the Board may designate to administer the Plan or, if for any reason
the Board has not designated such a committee, the Board. The Committee, if
other than the Board, shall be composed of two or more directors as appointed
from time to time by the Board.

     "COMMON STOCK" means, collectively, the Class A Common and any other common
stock authorized by the Company.

     "FAIR MARKET VALUE" per share of any class of Common Stock as of any given
date shall be as determined by the Board based on such factors as the members
thereof, in the exercise of their business judgment, consider relevant.

     "FAMILY GROUP" means Executive's spouse and descendants (whether natural or
adopted) and any trust solely for the benefit of Executive and/or Executive's
spouse and/or descendants.

     "INDEPENDENT THIRD PARTY" means any Person who, immediately prior to the
contemplated transaction, does not own in excess of 5% of the Common Stock on a
fully diluted basis, who is not controlling, controlled by or under common
control with any such 5% owner of the Common Stock and who is not the spouse or
descendant (by birth or adoption) of any such 5% owner of the Common Stock.

     "ISSUED STOCK" shall mean (i) all shares of Common Stock issued upon the
proper exercise of an Option and (ii) all shares of Common Stock issued with
respect to the Common Stock referred to in clause (i) above by way of stock
dividend or stock split or in connection with any conversion, merger,
consolidation or recapitalization or other reorganization affecting the Common
Stock. Unless provided otherwise herein or in the Participant's Option
Agreement, Issued Stock will continue to be Issued Stock in the hands of any
holder other than the Participant (except for the Company), and each such
transferee thereof will succeed to the rights and obligations of a holder of
Issued Stock hereunder.

     "MEASUREMENT DATE" means the date on which any taxable income resulting
from the exercise of an Option is determined under applicable federal income tax
law.

     "OPTION SHARES" shall mean (i) all shares of Class A Common issuable upon
the exercise of an Option and (ii) all shares of any other class of Common Stock
issuable upon the exercise of an Option as a result of an adjustment to such
Option pursuant to any provision hereof.

     "PARTICIPANT" means any executive or other key employee of the Company or
any Subsidiary who has been selected to participate in the Plan by the Committee
or the Board.

     "PERSON" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, a governmental entity or any
department, agency or political subdivision thereof or any other entity or
organization.


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     "PUBLIC OFFERING" means a public offering and sale of the Common Stock
pursuant to an effective registration statement under the Securities Act;
provided that a Public Offering shall not include an offering made in connection
with a business acquisition or combination or an employee benefit plan.

     "QUALIFIED INITIAL PUBLIC OFFERING" means the initial sale by the Company
of any class or classes of the Common Stock in an offering registered under the
Securities Act, other than an offering made solely in connection with a business
acquisition or combination or an employee benefit plan, but only if the
aggregate gross proceeds received by the Company and/or its majority stockholder
in such initial sale or series of such sales in the aggregate are in excess of
$100 million.

     "SALE OF THE COMPANY" means any transaction involving the Company and an
Independent Third Party or affiliated group of Independent Third Parties
pursuant to which such party or parties acquire (i) a majority of the
outstanding shares of capital stock of the Company entitled to vote generally in
the election of the Board (whether by merger, consolidation, sale of the
Company's capital stock or otherwise) or (ii) all or substantially all of the
Company's assets determined on a consolidated basis.

     "SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, limited liability company, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors thereof is at the time owned or controlled, directly
or indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof, or (ii) if a partnership, limited liability
company, association or other business entity, a majority of the partnership or
other similar ownership interest thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more Subsidiaries of that
Person or a combination thereof. For purposes hereof, a Person or Persons shall
be deemed to have a majority ownership interest in a partnership, limited
liability company, association or other business entity if such Person or
Persons shall be allocated a majority of partnership, limited liability company,
association or other business entity gains or losses or shall be or control the
managing director, managing member, manager or a general partner of such
partnership, limited liability company, association or other business entity.

     "TERMINATION DATE" shall mean, with respect to any Participant, the date
that such Participant ceases to be employed by the Company or any of its
Subsidiaries for any reason.

     "VALUATION DATE" shall mean, with respect to any Repurchase Option, the
date, if any, that the Company delivers a Repurchase Notice to a holder of
Issued Stock.


                                   ARTICLE III

                                 ADMINISTRATION

     The Plan shall be administered by the Committee. Subject to the limitations
of the Plan, the Committee shall have the sole and complete authority to: (i)
select Participants, (ii) grant Options to Participants in such forms and
amounts and with such exercise price as it shall 

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determine, (iii) impose such limitations, restrictions and conditions upon
such Options as it shall deem appropriate, (iv) interpret the Plan and adopt,
amend and rescind administrative guidelines and other rules, procedures and
regulations relating to the Plan, (v) correct any defect or omission or
reconcile any inconsistency in the Plan or in any Options granted under the Plan
and (vi) make all other determinations and take all other actions necessary or
advisable for the implementation and administration of the Plan. The Committee's
determinations on matters within its authority shall be conclusive and binding
upon the Participants, the Company and all other Persons. All expenses
associated with the administration of the Plan shall be borne by the Company.
The Committee may, as approved by the Board and to the extent permissible by
law, delegate any of its authority hereunder to such Persons as it deems
appropriate.


                                   ARTICLE IV

                         LIMITATION ON AGGREGATE SHARES

     The number of shares of Class A Common with respect to which Options may be
granted under the Plan shall not exceed, in the aggregate, 5,000,000 shares,
subject to adjustment in accordance with Section 6.4 and 6.5. To the extent any
Options expire unexercised or are canceled, terminated or forfeited in any
manner without the issuance of Class A Common thereunder, the shares with
respect to which such Options were granted shall again be available under the
Plan. Similarly, if any shares of Class A Common issued hereunder upon exercise
of the Options are repurchased hereunder, such shares shall again be available
under the Plan for reissuance as Options. The shares of Class A Common available
under the Plan may be either authorized and unissued shares, treasury shares or
a combination thereof, as the Committee shall determine.


                                    ARTICLE V

                                     AWARDS

     5.1 GRANT OF OPTIONS. The Committee may grant Options to Participants from
time to time in accordance with this Article V. Options granted under the Plan
may be nonqualified stock options or "incentive stock options" within the
meaning of Section 422 of the Code or any successor provision as specified by
the Committee; PROVIDED, HOWEVER, that no incentive stock option may be granted
to any Participant who, at the time of grant, owns stock of the Company (or any
Subsidiary) representing more than 10% of the total combined voting power of all
classes of capital stock of the Company (or any Subsidiary), unless such
incentive stock option shall at the time of grant (a) have a termination date
not later than the fifth anniversary of the issuance date and (b) have an
exercise price per share equal to at least 110% of the Fair Market Value of a
share of Class A Common on the date of grant. The exercise price per share of
Class A Common under each Option shall be determined by the Committee or the
Board at the time of grant; PROVIDED, HOWEVER, that the exercise price per share
of Class A Common under each incentive stock option shall be fixed by the
Committee at the time of grant of the Option and shall equal at least 100% of
the Fair Market Value of a share of Class A Common on the date of grant, but not
less than the par value per share (as adjusted pursuant to Section 6.4 or 6.5).
Subject to 

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Section 5.6, Options shall be exercisable at such time or times as the
Committee shall determine; PROVIDED, HOWEVER, that any Option intended to be an
incentive stock option shall be treated as an incentive stock option only to the
extent that the aggregate Fair Market Value of the Class A Common (determined as
of the date of Option grant) with respect to which incentive stock options (but
not nonqualified options) are exercisable for the first time by any Participant
during any calendar year (under all stock option plans of the Company and its
Subsidiaries) does not exceed $100,000. The Committee shall determine the term
of each Option, which term shall not exceed ten years from the date of grant of
the Option.

     5.2 EXERCISE PROCEDURE. Options shall be exercisable, to the extent they
are vested, by written notice to the Company (to the attention of the Company's
Secretary) accompanied by payment in full of the applicable exercise price.
Payment of such exercise price shall be made in cash (including check, bank
draft, money order or wire transfer of immediately available funds).

     5.3 WITHHOLDING TAX REQUIREMENTS.

          (a) AMOUNT OF WITHHOLDING. It shall be a condition of the exercise of 
any Option that the Participant exercising the Option make appropriate payment 
or other provision acceptable to the Company with respect to any withholding tax
requirement arising from such exercise. The amount of withholding tax required,
if any, with respect to any Option exercise (the "WITHHOLDING AMOUNT") shall be
determined by the Treasurer or other appropriate officer of the Company, and the
Participant shall furnish such information and make such representations as such
officer requires to make such determination.

          (b) WITHHOLDING PROCEDURE. If the Company determines that withholding 
tax is required with respect to any Option exercise, the Company shall notify 
the Participant of the Withholding Amount, and the Participant shall pay to the
Company an amount not less than the Withholding Amount. All amounts paid to the
Company pursuant to this Section 5.3 shall be deposited in accordance with
applicable law by the Company as withholding tax for the Participant's account.
If the Treasurer or other appropriate officer of the Company determines that no
withholding tax is required with respect to the exercise of any Option (because
such option is an incentive stock option or otherwise), but subsequently it is
determined that the exercise resulted in taxable income as to which withholding
is required (as a result of a disposition of shares or otherwise), the
Participant shall promptly, upon being notified of the withholding requirement,
pay to the Company, by means acceptable to the Company, the amount required to
be withheld; and at its election the Company may condition the transfer of any
shares issued upon exercise of an incentive stock option upon receipt of such
payment.

     5.4 NOTIFICATION OF INQUIRIES AND AGREEMENTS. Each Participant and each
Permitted Transferee shall notify the Company in writing within 10 days after
the date such Participant or Permitted Transferee (i) first obtains knowledge of
any Internal Revenue Service inquiry, audit, assertion, determination,
investigation, or question relating in any manner to the value of Options
granted hereunder; (ii) includes or agrees (including, without limitation, in
any settlement, closing or other similar agreement) to include in gross income
with respect to any Option granted under this Plan (A) any amount in excess of
the amount reported on Form 1099 or Form W-2 to such Participant by the Company,
or (B) if no such Form was received, any amount; and/or (iii) exercises, sells,
disposes of, or otherwise transfers an Option acquired pursuant to this Plan.
Upon 

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request, a Participant or Permitted Transferee shall provide to the Company
any information or document relating to any event described in the preceding
sentence which the Company (in its sole discretion) requires in order to
calculate and substantiate any change in the Company's tax liability as a result
of such event.

     5.5 CONDITIONS AND LIMITATIONS ON EXERCISE. At the discretion of the
Committee, exercised at the time of grant, Options may vest, in one or more
installments, upon (i) the fulfilment of certain conditions, (ii) the passage of
a specified period of time, and/or (iii) the achievement by the Company or any
Subsidiary of certain performance goals. In the event of a proposed Sale of the
Company, the Committee may provide, in its discretion, by written notice to each
applicable Participant, that any or all Options shall become immediately vested
and that any or all Options shall terminate if not exercised as of the date of
such Sale of the Company or any other designated date (the "DESIGNATED DATE") or
that any such Options shall thereafter represent only the right to receive such
consideration as the Committee shall deem equitable in the circumstances.

     5.6 EXPIRATION OF OPTIONS.

          (a) NORMAL EXPIRATION. In no event shall any part of any Option be
exercisable after the stated date of expiration thereof.

          (b) EARLY EXPIRATION UPON TERMINATION OF EMPLOYMENT. Any part of any 
Option that was not vested on a Participant's Termination Date shall expire and 
be forfeited on such date, and any part of any Option that was vested on the
Termination Date shall also expire and be forfeited to the extent not
theretofore exercised on the sixtieth (60th) day following the Termination Date
(180 days if the Termination Date occurs as a result of the death of a
Participant), but in no event after the stated date of expiration thereof.

     5.7 RIGHT TO PURCHASE ISSUED STOCK UPON TERMINATION OF EMPLOYMENT.

          (a) REPURCHASE RIGHT. If a Participant ceases to be employed by the 
Company or any of its Subsidiaries for any reason, then such Participant's
Issued Stock (whether held by such Participant or one or more transferees and
including any shares of Issued Stock acquired subsequent to such termination of
employment) will be subject to repurchase by the Company pursuant to the terms
and conditions set forth in this Section 5.7 (the "REPURCHASE OPTION") at a
price per share equal to the Fair Market Value per share of such Issued Stock
determined as of the Valuation Date, LESS the amount of any cash distributed by 
the Company with respect to such share between the applicable Valuation Date and
the closing of the applicable repurchase.

          (b) REPURCHASE PROCEDURES. The Repurchase Option is exercisable by the
Company delivering written notice (the "REPURCHASE NOTICE") to the holder or
holders of the applicable Issued Stock within 240 days after the applicable
Termination Date. The Repurchase Notice will set forth the number of shares of
Issued Stock to be acquired from such holder(s), an estimate of the aggregate
consideration to be paid for such holder's shares of Issued Stock and the time
and place for the closing of the transaction. If any shares of Issued Stock are
held by any transferees of the applicable Participant, the Company will purchase
such shares of Issued Stock elected to be purchased from such holder(s), pro
rata according to the number of shares of Issued Stock held 

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by such holder(s) at the time of delivery of such Repurchase Notice (determined
as nearly as practicable to the nearest share).

          (c) CLOSING OF REPURCHASE. The closing of any such repurchase
transaction will take place on the date designated by the Company in the
Repurchase Notice, which date will not be more than 60 days after the delivery
of such notice. The Company will pay for any shares of Issued Stock to be 
purchased by the Company pursuant to a Repurchase Option by delivery (i) of a 
check payable to the holder(s) of such shares of Issued Stock in an aggregate 
amount equal to one-third of the aggregate repurchase price ("Repurchase 
Price") for such shares of Issued Stock and (ii) of a note or notes for an 
aggregate principal amount equal to the remaining unpaid Repurchase Price and 
payable in two equal annual installments beginning on the first anniversary of
the closing of such purchase and bearing interest at a rate per annum equal to 
the then prevailing "prime rate". Any notes issued by the Company pursuant to
this Section 5.7(c) will be subject to any restrictive covenants to which the 
Company is subject at the time of such purchase. Notwithstanding anything to the
contrary contained in this Plan, all repurchases of shares of Issued Stock by 
the Company will be subject to applicable restrictions contained in the Delaware
General Corporation Law and in the Company's and its Subsidiaries' debt and 
equity financing agreements. If any such restrictions prohibit the repurchase of
shares of Issued Stock hereunder which the Company is otherwise entitled to 
make, the Company may make such repurchases as soon as it is permitted to do so
under such restrictions. The Company will receive customary representations and
warranties from each seller regarding the sale of shares of Issued Stock, 
including, but not limited to, the representation that such seller has good and
marketable title to such shares of Issued Stock to be transferred free and clear
of all liens, claims and other encumbrances.

          (d) Notwithstanding anything contained herein to the contrary, the 
Company shall not have a Repurchase Option with respect to any Issued Stock
issued to or on behalf of a Participant who ceases to be employed by the Company
or any of its Subsidiaries after the first to occur of a Sale of the Company or
a Qualified Initial Public Offering.

     5.8 RESTRICTIONS ON TRANSFER OF ISSUED STOCK.

          (a) TRANSFER OF ISSUED STOCK. No Participant will sell, pledge, 
transfer or otherwise dispose of (a "TRANSFER") any interest in any shares
of Issued Stock, except (i) pursuant to the provisions of Sections 5.7 or 5.10
hereof, (ii) pursuant to applicable laws of descent and distribution, or (iii)
among such Participant's Family Group; PROVIDED, that the restrictions contained
in this Section 5.8 will continue to be applicable to shares of Issued Stock
after any Transfer of the type referred to in clause (ii) or (iii) above and, as
a condition to any such Transfer, the transferees of such shares of Issued Stock
must agree in writing to be bound by the provisions of this Plan. Any transferee
of shares of Issued Stock pursuant to a Transfer in accordance with clause (ii)
or (iii) above is herein referred to as a "PERMITTED TRANSFEREE." Upon the
Proposed Transfer of any shares of Issued Stock pursuant to clause (ii) or (iii)
above, such Participant or such Permitted Transferee Transferring such shares of
Issued Stock will deliver a written notice (a "TRANSFER NOTICE") to the Company,
which discloses in reasonable detail the identity of the Permitted
Transferee(s).

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          (b) TERMINATION OF TRANSFER RESTRICTIONS. The provisions of this 
Section 5.8 will terminate upon a Qualified Initial Public Offering.

     5.9 ADDITIONAL RESTRICTIONS ON TRANSFER.

          (a) The certificates representing shares of Issued Stock will bear the
following legend:


          "THE  SECURITIES  REPRESENTED BY THIS  CERTIFICATE  HAVE NOT
          BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
          (THE  "ACT"),  AND MAY NOT BE  SOLD  OR  TRANSFERRED  IN THE
          ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT
          OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE SECURITIES
          REPRESENTED  BY  THIS   CERTIFICATE   ARE  ALSO  SUBJECT  TO
          ADDITIONAL  RESTRICTIONS  ON  TRANSFER,  CERTAIN  REPURCHASE
          OPTIONS  AND  CERTAIN  OTHER  AGREEMENTS  SET  FORTH  IN THE
          ISSUER'S  1998  STOCK  OPTION  PLAN,  A COPY OF WHICH MAY BE
          OBTAINED  BY THE  HOLDER  HEREOF AT THE  ISSUER'S  PRINCIPAL
          PLACE OF BUSINESS WITHOUT CHARGE."

The legend set forth above regarding the Plan shall be removed from the
certificates evidencing any securities which cease to be Issued Stock.

          (b) No holder of Issued Stock may Transfer any shares of Issued Stock
(except pursuant to an effective registration statement under the
Securities Act) without first delivering to the Company an opinion of counsel
reasonably acceptable in form and substance to the Company (which counsel will
be reasonably acceptable to the Company) that registration under the Securities
Act is not required in connection with such Transfer. If such opinion of counsel
reasonably acceptable in form and substance to the Company further states that
no subsequent Transfer of such Issued Stock will require registration under the
Securities Act, the Company will promptly upon such Transfer deliver new
certificates for such securities which do not bear the Securities Act legend set
forth in Section 5.9(a).

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     5.10 APPROVED SALE OF THE COMPANY

          (a) If the holders of a majority of the shares of voting Common Stock
then outstanding approve a sale of all or substantially all of the
Company's assets determined on a consolidated basis or a sale of all (or, for
accounting, tax or other reasons, substantially all) of the Company's
outstanding capital stock (whether by merger, recapitalization, consolidation,
reorganization, combination or otherwise) to an Independent Third Party or group
of Independent Third Parties (each such sale, an "APPROVED SALE"), then each
holder of shares of Issued Stock will vote for, consent to and raise no
objections against such Approved Sale. If the Approved Sale is structured as (i)
a merger or consolidation, each holder of shares of Issued Stock will waive any
dissenters' rights, appraisal rights or similar rights in connection with such
merger or consolidation or (ii) a sale of stock, each holder of shares of Issued
Stock will agree to sell all of his or her Issued Stock on the terms and
conditions approved by the holders of a majority of the shares of voting Common
Stock then outstanding. Each holder of Issued Stock will take all necessary or
desirable actions in connection with the consummation of the Approved Sale as
requested by the Company.

          (b) If the Company or the holders of the Company's securities enter
into any negotiation or transaction for which Rule 506 (or any similar rule
then in effect) promulgated by the Securities and Exchange Commission may be
available with respect to such negotiation or transaction (including a merger,
consolidation or other reorganization), the holders of Issued Stock will, at the
request of the Company, appoint a purchaser representative (as such term is
defined in Rule 501) reasonably acceptable to the Company. If any holder of
Issued Stock appoints a purchaser representative designated by the Company, the
Company will pay the fees of such purchaser representative, but if any holder of
Issued Stock declines to appoint the purchaser representative designated by the
Company, such holder will appoint another purchaser representative, and such
holder will be responsible for the fees of the purchaser representative so
appointed.

          (c) Each holder of Issued Stock will bear their pro-rata share (based
upon the number of shares sold) of the costs of any sale of Issued Stock
pursuant to an Approved Sale to the extent such costs are incurred for the
benefit of all holders of Common Stock and are not otherwise paid by the Company
or the acquiring party. Costs incurred by any holder of Issued Stock on his or
her own behalf will not be considered costs of the transaction hereunder.

     5.11 HOLDBACK AGREEMENT. No holder of Issued Stock will effect any sale or
distribution of Common Stock during the seven days prior to or the 180-day
period beginning on the effective date of any underwritten Public Offering
(except as part of such underwritten registration), unless the underwriters
managing such underwritten Public Offering otherwise agree.


                                   ARTICLE VI

                               GENERAL PROVISIONS

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     6.1 WRITTEN AGREEMENT. Each Option granted hereunder shall be embodied in a
written agreement (the "OPTION AGREEMENT") which shall be signed by the
Participant to whom the Option is granted and shall be subject to the terms and
conditions set forth herein.

     6.2 LISTING, REGISTRATION AND LEGAL COMPLIANCE. If at any time the
Committee determines, in its discretion, that the listing, registration or
qualification of the shares subject to Options upon any securities exchange or
under any state or federal securities or other law or regulation, or the consent
or approval of any governmental regulatory body, is necessary or desirable as a
condition to or in connection with the granting of Options or the purchase or
issuance of shares thereunder, no Options may be granted or exercised, in whole
or in part, unless such listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Committee. The holders of such Options will supply the Company
with such certificates, representations and information as the Company shall
request and shall otherwise cooperate with the Company in obtaining such
listing, registration, qualification, consent or approval. In the case of
officers and other Persons subject to Section 16(b) of the Securities Exchange
Act of 1934, as amended, the Committee may at any time impose any limitations
upon the exercise of Options that, in the Committee's discretion, are necessary
or desirable in order to comply with such Section 16(b) and the rules and
regulations thereunder. If the Company, as part of an offering of securities or
otherwise, finds it desirable because of federal or state regulatory
requirements to reduce the period during which any Options may be exercised, the
Committee may, in its discretion and without the consent of the holder of any
such Option, so reduce such period on not less than 15 days' written notice to
the holders thereof.

     6.3 OPTIONS NOT TRANSFERRABLE. Options (including the right to receive
Option Shares) may not be Transferred or assigned by the Participant to whom
they were granted, other than by will or the laws of descent and distribution
and, during the lifetime of such Participant, Options may be exercised only by
such Participant (or, if such Participant is incapacitated, by such
Participant's legal guardian or legal representative). In the event of the death
of a Participant, Options which are not vested on the date of death shall
terminate; and the exercise of Options granted hereunder to such Participant,
which are vested as of the date of death, may be made only by the executor or
administrator of such Participant's estate or the Person or Persons to whom such
Participant's rights under the Options pass by will or the laws of descent and
distribution.

     6.4 ORGANIC CHANGE. Any recapitalization, reorganization, reclassification,
consolidation, merger, sale of all or substantially all of the Company's assets
or other transaction which is effected in such a way that holders of Common
Stock are entitled to receive (either directly or upon subsequent liquidation)
stock, securities or assets with respect to or in exchange for Common Stock is
referred to herein as an "ORGANIC CHANGE." Except as otherwise provided herein,
after the consummation of any Organic Change, each Option shall thereafter be
exercisable for, rather than the applicable Option Shares immediately
theretofore acquirable and receivable upon exercise of such Option, such shares
of stock, securities or assets (including cash) as may be issued or payable
with respect to or in exchange for the number and class of Option Shares
immediately theretofore acquirable and receivable upon exercise of such Option
had such Organic Change not taken place. Notwithstanding the foregoing, in the
event of any proposed Organic Change, the Board may, in its discretion, by
written notice to the Executive, terminate the Options subject to the payment of
such consideration, if any, as the Board shall deem equitable in the
circumstances.

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     6.5 ADJUSTMENT FOR CHANGE IN COMMON STOCK. In the event of a
recapitalization, reorganization, stock split, stock dividend, combination of
shares, consolidation, merger or other change in any class of Common Stock, the
Board or the Committee may, in order to prevent the dilution or enlargement of
rights under the Plan or outstanding Options, adjust (1) the number and type of
shares or other consideration as to which options may be granted under the Plan,
(2) the number and type of shares covered by outstanding Options, (3) the
exercise prices specified therein and (4) other provisions of this Plan which
specify a number of shares, all as such Board or Committee determines to be
appropriate and equitable.

     6.6 RIGHTS OF PARTICIPANTS. Nothing in the Plan shall interfere with or
limit in any way the right of the Company or any Subsidiary to terminate any
Participant's employment at any time (with or without cause), or confer upon any
Participant any right to continue in the employ of the Company or any Subsidiary
for any period of time or to continue to receive such Participant's current (or
other) rate of compensation. No employee shall have a right to be selected as a
Participant or, having been so selected, to be selected again as a Participant.

     6.7 AMENDMENT, SUSPENSION AND TERMINATION OF PLAN. The Board or the
Committee may suspend or terminate the Plan or any portion thereof at any time
and may amend it from time to time in such respects as the Board or the
Committee may deem advisable; PROVIDED, HOWEVER, that no such amendment shall be
made without shareholder approval to the extent such approval is required by
law, agreement or the rules of any exchange upon which the Common Stock is
listed, and no such amendment, suspension or termination shall impair the rights
of Participants under outstanding Options without the consent of the
Participants affected thereby, except as provided below. No Options shall be
granted hereunder after the tenth anniversary of the adoption of the Plan.

     6.8 AMENDMENT OF OUTSTANDING OPTIONS. The Committee may amend or modify any
Option in any manner to the extent that the Committee would have had the
authority under the Plan initially to grant such Option; provided that, except
as expressly contemplated elsewhere herein or in any agreement evidencing such
Option, no such amendment or modification shall impair the rights of any
Participant under any outstanding Option without the consent of such
Participant.

     6.9 INDEMNIFICATION. In addition to such other rights of indemnification as
they may have as members of the Board or the Committee, the members of the Board
and Committee shall be indemnified by the Company against (i) all costs and
expenses reasonably incurred by them in connection with any action, suit or
proceeding to which they or any of them may be party by reason of any action
taken or failure to act under or in connection with the Plan or any Option
granted under the Plan, and (ii) all amounts paid by them in settlement thereof
(provided such settlement is approved by independent legal counsel selected by
the Company) or paid by them in satisfaction of a judgment in any such action,
suit or proceeding; PROVIDED, HOWEVER, that any such Board or
Committee member shall be entitled to the indemnification rights set forth in
this Section 6.9 only if such member (1) acted in good faith and in a manner
that such member reasonably believed to be in, and not opposed to, the best
interests of the Company, and (2) with respect to any criminal action or
proceeding, (A) had no reasonable cause to believe that such conduct was
unlawful, and (B) upon the institution of any such action, suit or proceeding a
Board 

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or Committee member shall give the Company written notice thereof and an
opportunity to handle and defend the same before such Board or Committee member
undertakes to handle and defend it on his own behalf.

     6.10 RESTRICTED SECURITIES. All Common Stock issued upon the exercise of
any Options issued pursuant to the terms of this Plan shall constitute
"restricted securities," as that term is defined in Rule 144 promulgated by the
Securities and Exchange Commission pursuant to the Securities Act, and may not
be Transferred except in compliance with the registration requirements of the
Securities Act or an exemption therefrom.

     6.11 ARBITRATION. In the event of any dispute over any Fair Market Value
determination, such dispute will be resolved by and through an arbitration
proceeding to be conducted under the auspices of the American Arbitration
Association (or any like organization successor thereto) at Cleveland, Ohio.
Such arbitration proceeding will be conducted in as expedited a manner as is
then permitted by the commercial arbitration rules (formal or informal) of the
American Arbitration Association, and the arbitrator or arbitrators in any such
arbitration will be individuals who are expert in the subject matter of the
dispute. The arbitration will be conducted before a panel of arbitrators
selected in accordance with the rules of the American Arbitration Association.
The costs of said arbitrators and the arbitration will be borne equally by the
parties to the arbitration. Both the foregoing provisions to arbitrate any and
all such disputes, and the results, determination, finding, judgment and/or
award rendered through such arbitration, will be final and binding on all
applicable parties and may be specifically enforced by legal proceedings.


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