The DII Group, Inc.

                            1994 STOCK INCENTIVE PLAN
                         As Amended through May 6, 1999

I.   PURPOSES AND SCOPE OF PLAN

     The DII Group,  Inc. (the  "Company")  desires to afford  certain  salaried
officers and other  salaried key  employees of the Company and its  subsidiaries
who are in a position to affect  materially the  profitability and growth of the
Company and its subsidiaries an opportunity to acquire a proprietary interest in
the  Company,  and thus to  create  in such  persons  interest  in and a greater
concern for the welfare of the Company. Directors who are salaried key employees
within the meaning of the  foregoing  are  eligible to  participate  in the 1994
Stock Incentive Plan (the "Plan"). These objectives will be promoted through the
granting to such key  employees of equity  instruments  including  (i) incentive
stock options ("Incentive  Options") which are intended to qualify under Section
422 of the Internal Revenue Code of 1986, as amended (the "Code");  (ii) options
which are not intended to so qualify  ("NQSOs");  and (iii)  performance  shares
("Performance Shares").

     The  awards  offered  pursuant  to  this  Plan  are a  matter  of  separate
inducement and are not in lieu of any salary or other compensation for services.

     The Company,  by means of the Plan, seeks to retain the services of persons
now  holding key  positions  and to secure the  services  of persons  capable of
filling such positions.

II.  AMOUNT OF STOCK SUBJECT TO THE PLAN

     The total  number  of shares of the  Company  reserved  and  available  for
distribution  pursuant to options and awards granted hereunder shall not exceed,
in the aggregate,  5,500,000 shares, S$0.01 par value, per share, of the Company
(the "Shares"), subject to adjustment described below.

     Shares  which  may be  acquired  under  the Plan  shall be  authorized  but
unissued  Shares.  Whenever any  outstanding  option or award or portion thereof
expires,  is canceled,  is forfeited or is otherwise  terminated  for any reason
without  having  been  exercised  or payment  having been made in respect of the
entire option or award, the Shares allocable to the expired, canceled, forfeited
or otherwise  terminated portion of the option or award may again be the subject
of options or awards granted hereunder.

     In the event of any stock dividend, stock split, combination or exchange of
Shares,  recapitalization  or  other  change  in the  capital  structure  of the
Company,  corporate  separation  or  division  (including,  but not  limited to,
split-up,  spin-off or distribution to Company  shareholders other than a normal
cash  dividend),  sale by the  Company  of all or a  substantial  portion of its
assets,  rights offering,  merger,  consolidation,  reorganization or partial or
complete  liquidation,  or any other  corporate  transaction  or event having an
effect similar to any of the foregoing,  the aggregate number of Shares reserved
for issuance  under the Plan,  the number and option price of Shares  subject to
outstanding options, the financial  performance goals of the Shares contained in
a Performance  Share award, the number of Shares subject to a Performance  Share
award agreement and any other characteristics or terms of the options and awards
as the Committee (as hereinafter defined) shall deem necessary or appropriate to
reflect  equitably  the  effects of such  changes to the  holders of options and
awards,  shall be  appropriately  substituted  for new  shares or  adjusted,  as
determined by the Committee in its  discretion.  Notwithstanding  the foregoing,
(i) each such adjustment  with respect to an Incentive  Option shall comply with
the  rules of  Section  424(a)  of the  Code,  and (ii) in no  event  shall  any
adjustment be made which would render any  Incentive  Option  granted  hereunder
other than an  incentive  stock  option for  purposes of Section 422 of the Code
without the consent of the grantee.

III. ADMINISTRATION

     The Compensation Committee (the "Committee"),  or the Board of Directors of
the Company (the "Board of Directors") if there is no Committee,  will have sole
and exclusive authority to administer the Plan. The Committee


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shall consist of no fewer than two (2) members of the Board of  Directors,  each
of whom shall be a "non-employee  Director"  within the meaning of Rule 16b-3 or
any successor rule or regulation ("Rule 16b-3") promulgated under the Securities
Exchange Act of 1934,  as amended (the  "Exchange  Act").  The  Committee  shall
administer  the Plan so as to comply at all times with Rule 16b-3. A majority of
the members of the Committee shall constitute a quorum,  and a resolution passed
by a majority  of the  members of the  Committee  shall be a  resolution  of the
Committee.  Any member of the Committee may be removed at any time,  either with
or without cause, by resolution adopted by a majority of the Board of Directors,
and any vacancy on the Committee may at any time be filled by resolution adopted
by a majority of the Board of Directors.

     Subject to the express  provisions  of the Plan,  the Board of Directors or
the Committee, as the case may be, shall have authority,  in its discretion,  to
(i) select  employees of the Company as  recipients  of options or awards;  (ii)
determine  the  number  and type of  options  or  awards  to be  granted;  (iii)
determine the terms and conditions,  not inconsistent  with the terms hereof, of
any options or awards granted;  (iv) adopt, alter and repeal such administrative
rules,  guidelines  and practices  governing the Plan as it shall,  from time to
time, deem advisable; (v) interpret the terms and provisions of the Plan and any
option or award granted and any agreements relating thereto;  and (vi) otherwise
supervise the administration of the Plan.

     The  determination of the Board of Directors or the Committee,  as the case
may be, on matters referred to in this Article III shall be conclusive.

     The Board of  Directors  or the  Committee,  as the case may be, may employ
such legal  counsel,  consultants  and agents as it may deem  desirable  for the
administration  of the Plan and may rely upon any opinion received from any such
counsel or consultant and any  computation  received from any such consultant or
agent.  Expenses  incurred by the Board of  Directors  or the  Committee  in the
engagement of such counsel, consultant or agent shall be paid by the Company. No
member or former member of the  Committee or of the Board of Directors  shall be
liable for any action or  determination  made in good faith with  respect to the
Plan or any option or award granted hereunder.

     The Company shall  indemnify each member of the Committee for all costs and
expenses and, to the extent permitted by applicable law, any liability  incurred
in connection  with  defending any  proceedings  arising in connection  with any
actions in administering the Plan or in authorizing or denying  authorization to
any transaction hereunder in which judgment is given in his favor or in which he
is  acquitted  or in  connection  with  any  application,  in  relation  to such
liability, in which relief is granted to him by the court.

IV.  ELIGIBILITY

     Options  and  Performance  Share  awards  may be  granted  only to  certain
salaried  officers  and other  salaried  key  employees  of the  Company and its
subsidiaries  who are not  members of the  Committee;  provided,  that no person
shall be  eligible  for any award if the  granting  of such award to such person
would prevent the satisfaction by the Plan of the general  exemptive  conditions
of Rule  16b-3.  No  employee  shall be  granted  or  awarded  stock  option and
Performance  Shares  covering,  in  aggregate,  more than 300,000  Shares in any
fiscal year of the Company (subject to adjustment as provided in II. above).

V.   SHARE OPTIONS

     1.  General.  Options may be granted  alone or in addition to other  awards
granted  under the Plan.  Any  options  granted  under the Plan shall be on such
terms as the Committee  may from time to time approve and the  provisions of the
option  grants  need not be the same  with  respect  to each  optionee.  Options
granted under the Plan may be either  Incentive  Options or NQSOs. The Committee
may grant to any optionee Incentive Options, NQSOs or both types of options.

     Options  granted under the Plan shall be subject to the following terms and
conditions  and  shall  contain  such   additional   terms  and  conditions  not
inconsistent  with the terms of the Plan,  as the Committee  deems  appropriate.
Each option grant shall be  evidenced by an agreement  executed on behalf of the
Company by an officer  designated by the Committee and accepted by the optionee.
Such  agreement  shall  describe  the  options  and state that such


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options  are  subject  to all the  terms  and  provisions  of the Plan and shall
contain  such  other  terms and  provisions,  consistent  with the Plan,  as the
Committee may approve.


     2. Exercise Price and Payment. The price per Share under any option granted
hereunder  shall be such amount as the Board of Directors or the  Committee,  as
the case may be, shall determine,  provided,  however, that such price shall not
be less than one hundred  percent  (100%) of the fair market value of the Shares
subject to such option,  as determined  below, at the date the option is granted
(110% in the case of an Incentive  Option granted to any person who, at the time
the option is granted, owns shares of the Company or any subsidiary or parent of
the Company  possessing more than ten percent (10%) of the total combined voting
power of all classes of shares of the Company or of any  subsidiary or parent of
the Company (a "10%  Shareholder")),  and provided  further that in no event may
the price be less than the par value of a Share.

     If the Shares are listed on a national  securities  exchange  in the United
States on the date any option is granted,  the fair market value per Share shall
be deemed to be the  highest  sales  price at which such Shares are sold on such
national  securities  exchange  in the United  States on the date upon which the
option is  granted,  but if the  Shares  are not  traded on such  date,  or such
national  securities  exchange is not open for  business on such date,  the fair
market value per Share shall be the closing price per share determined as of the
closest  preceding date on which such exchange shall have been open for business
and the Shares were  traded.  If the Shares are listed on more than one national
securities exchange in the United States on the date any such option is granted,
the Board of Directors  or the  Committee,  as the case may be, shall  determine
which national  securities exchange shall be used for the purpose of determining
the fair  market  value per  Share.  If the  Shares are not listed on a national
securities  exchange but are reported on the National  Association of Securities
Dealers,  Inc. Automated Quotation System ("Nasdaq"),  the fair market value per
share shall be deemed to be the average of the high bid and low asked  prices on
the date upon which the option is granted as reported by Nasdaq.

     For purposes of this Plan, the  determination  by the Board of Directors or
the Committee,  as the case may be, of the fair market value of a Share shall be
conclusive.

     3. Term of Options and  Limitations  on the Right of Exercise.  The term of
each option will be for such period as the Board of Directors or the  Committee,
as the case may be, shall determine, provided that, except as otherwise provided
herein,  in no event may any option granted  hereunder be exercisable  more than
ten (10) years from the date of grant of such option  (five years in the case of
an  Incentive  Option  granted to a 10%  Shareholder).  Each option shall become
exercisable in such  installments  and at such times as may be designated by the
Board of  Directors or the  Committee,  as the case may be, and set forth in the
agreement  related  to the  grant  of  options.  To the  extent  not  exercised,
installments  shall  accumulate and be exercisable,  in whole or in part, at any
time after becoming exercisable, but not later than the date the option expires.

     The Board of Directors or the Committee, as the case may be, shall have the
right to limit,  restrict or prohibit,  in whole or in part,  from time to time,
conditionally  or  unconditionally,   rights  to  exercise  any  option  granted
hereunder.

     To the  extent  that an  option  is not  exercised  within  the  period  of
exercisability  specified  therein,  it shall expire as to the then  unexercised
part.

     4. Exercise of Options.  Options  granted under the Plan shall be exercised
by the optionee as to all or part of the Shares covered thereby by the giving of
written notice of the exercise thereof to the Company at the principal  business
office  of the  Company,  specifying  the  number  of  Shares  to be  purchased,
accompanied by payment  therefor made to the Company for the full purchase price
of such Shares.  The date of actual  receipt by the Company of such notice shall
be deemed the date of exercise of the option  with  respect to the Shares  being
purchased.

     Upon the exercise of an option granted  hereunder,  the Company shall cause
the  purchased  Shares to be issued  only when it shall have  received  the full
purchase price for the Shares in cash.


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     Notwithstanding  the foregoing,  the Company,  in its sole discretion,  may
establish cashless exercise procedures whereby an option holder,  subject to the
requirements  of Rule 16b-3,  Regulation T, federal  income tax laws,  and other
federal,  state and local tax and  securities  laws, can exercise an option or a
portion  thereof  without  making a direct  payment of the  option  price to the
Company,  including a program  whereby  option shares would be sold on behalf of
and at the request of an option  holder by a designated  broker and the exercise
price would be satisfied  out of the sale proceeds and delivered to the Company.
If the Company so elects to establish a cashless exercise  program,  the Company
shall  determine,  in  its  sole  discretion,   and  from  time  to  time,  such
administrative  procedures  and  policies  as  it  deems  appropriate  and  such
procedures and policies shall be binding on any option holder wishing to utilize
the cashless exercise program.

     5.  Nontransferability of Options. An option granted hereunder shall not be
transferable,  whether by operation of law or  otherwise,  other than by will or
the laws of descent and distribution,  and any option granted hereunder shall be
exercisable, during the lifetime of the holder, only by such holder.

     The option of any person to  acquire  Shares and all his rights  thereunder
shall terminate immediately if the holder: (a) attempts to or does sell, assign,
transfer,  pledge,  hypothecate or otherwise dispose of the option or any rights
thereunder  to any  other  person  except as  permitted  above;  or (b)  becomes
insolvent  or bankrupt  or becomes  involved in any manner so that the option or
any rights  thereunder  becomes  subject to being  taken from him to satisfy his
debts or liabilities.

     6. Termination of Employment.  Upon termination of employment of any option
holder,  any option previously  granted to such option holder,  unless otherwise
specified by the Board of Directors or the Committee, as the case may be, shall,
to the extent not  theretofore  exercised,  terminate  and become null and void,
provided that:

          (a) if the option  holder shall die while in the employ of the Company
     or any  subsidiary  of the  Company,  and at a time when such  employee was
     entitled  to  exercise  an  option as herein  provided,  his  estate or the
     legatees or  distributees  of his estate or of the option,  as the case may
     be, of such option holder,  may,  within one (1) year following the date of
     death,  but not beyond that time and in no event later than the  expiration
     date of the option,  exercise  such option,  to the extent not  theretofore
     exercised,  in  respect  of any or all of such  number of Shares  which the
     option holder was entitled to purchase; and

          (b) if the  employment  of any option holder to whom such option shall
     have  been  granted  shall  terminate  by  reason  of the  option  holder's
     retirement  on or after he  reaches  the age of 60 years in such  manner as
     would entitle him to receive full Social Security  benefits if he were then
     65 years of age, or  disability  (as  described in Section  22(e)(3) of the
     Code),  and while such  employee is  entitled  to  exercise  such option as
     herein provided,  such option holder shall have the right to purchase under
     the option the number of Shares,  if any, which he was entitled to purchase
     at the time of such termination,  at any time up to and including three (3)
     months after the date of such  termination  of  employment,  but not beyond
     that  time and in no event  shall an  option be  exercised  later  than the
     expiration date of the option.

     In no event shall any person be entitled to exercise  any option  after the
expiration of the period of exercisability of such option as specified therein.

     Except as otherwise  determined by the Board of Directors or the Committee,
as the case may be,  and other  than as set  forth  above,  if an option  holder
voluntarily  terminates  his or her  employment,  or is  discharged,  any option
granted  hereunder shall be canceled and the option holder shall have no further
rights  to  exercise  any such  option  and all of the  option  holder's  rights
thereunder  shall  terminate as of the  effective  date of such  termination  of
employment.

     If  an  option   granted   hereunder   shall  be  exercised  by  the  legal
representative  of a  deceased  option  holder or former  option  holder or by a
person who acquired an option granted  hereunder by bequest or inheritance or by
reason of the death of any option holder or former option holder, written notice
of  such  exercise   shall  be  accompanied  by  a  certified  copy  of  letters
testamentary or equivalent  proof of the right of such legal  representative  or
other person to exercise such option.


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     For the purposes of the Plan, an employment relationship shall be deemed to
exist  between  an  individual  and  a  corporation  if,  at  the  time  of  the
determination, the individual was an "employee" of such corporation for purposes
of Section 422(a) of the Code.

     A termination  of employment  shall not be deemed to occur by reason of (i)
the transfer of an employee  from  employment  by the Company to employment by a
subsidiary of the Company or (ii) the transfer of an employee from employment by
a  subsidiary  of the  Company  to  employment  by  the  Company  or by  another
subsidiary of the Company.

     7. Maximum  Allotment of Incentive  Options.  If the aggregate  fair market
value of Shares with respect to which Incentive  Options are exercisable for the
first time by an employee during any calendar year (under all share option plans
of the  Company  and  any  parent  or any  subsidiary  of the  Company)  exceeds
$100,000,  any options  which  otherwise  qualify as Incentive  Options,  to the
extent of the excess, will be treated as NQSOs.

VI.  PERFORMANCE SHARES

     1. General.  Performance  Shares may be granted alone or in addition to any
other awards granted under the Plan. The provisions of Performance  Share awards
need not be the same with respect to each  recipient.  Performance  Share awards
granted  under the Plan shall be in such form as the Board of  Directors  or the
Committee,  as the case may be, may from time to time  approve.  Each grant of a
Performance Share award shall be evidenced by an agreement executed on behalf of
the Company by an officer designated by the Board of Directors or the Committee,
as the case may be, and accepted by the recipient. Such agreement shall describe
the  Performance  Share  award and state  that such  award is subject to all the
terms  and  provisions  of the Plan and  shall  contain  such  other  terms  and
provisions,  consistent  with  the  Plan,  as  the  Board  of  Directors  or the
Committee, as the case may be, may approve.

     2. Price. The purchase price for Performance Shares shall be such amount as
the Board of Directors or the  Committee,  as the case may be, shall  determine,
and subject to applicable  law, such  purchase  price may be zero.  The purchase
price for Performance  Shares,  if any, shall be made in cash

     3.  Restrictions.   Each  Performance  Share  award  shall  be  subject  to
restrictions related to (A) the passage of time and/or (B) the attainment by the
Company of  specified  performance  objectives.  Company  financial  performance
objectives  may be expressed  in terms of (i)  earnings per Share,  (ii) pre-tax
profits,  (iii) net earnings or net worth, (iv) return on equity or assets,  (v)
any combination of the foregoing, or (vi) any other standard or standards deemed
appropriate by the Board of Directors or the  Committee,  as the case may be, at
the time the award is granted.  Such time periods (the "Performance Period") and
financial  performance  goals  shall  be set by the  Board of  Directors  or the
Committee, as the case may be, in its sole discretion.

     Performance Shares shall become vested in a recipient upon the lapse of the
Performance  Period,  if any, and the  attainment  of the  associated  financial
performance  goals set forth in the  agreement  between  the  recipient  and the
Company or, in the discretion of the Board of Directors or the Committee, as the
case may be, upon the death, disability or retirement of the recipient.

     4. Share Certificate and Legends. Performance Shares shall be registered in
the name of the recipient of an award  thereof,  provided that the recipient has
executed a Performance Share agreement  evidencing the award,  appropriate blank
stock powers and, in the  discretion of the Board of Directors or the Committee,
as the case may be, an escrow  agreement and any other documents which the Board
of Directors or the Committee, as the case may be, may require as a condition to
the issuance of such Shares.  If a recipient shall fail to execute the agreement
evidencing a Performance Share award, the appropriate blank stock powers and, in
the discretion of the Board of Directors or the  Committee,  as the case may be,
an escrow  agreement and any other documents which the Board of Directors or the
Committee,  as the case may be, may require within the time period prescribed by
the Board of  Directors  or the  Committee,  as the case may be, at the time the
award is granted,  the award shall be null and void.  At the  discretion  of the
Board of  Directors  or the  Committee,  as the case may be,  Shares  issued  in
connection with a Performance  Share award shall be deposited  together with the
stock powers with an escrow agent (which may be the Company)  designated  by the
Board of Directors or the Committee, as the case may be.


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     5.  Treatment  of  Dividends.  At the time the  Performance  Share award is
granted,  the Board of Directors or the  Committee,  as the case may be, may, in
its discretion,  determine that the payment to the recipient of dividends,  or a
specified portion thereof,  declared or paid on such Shares by the Company shall
be (i)  deferred  until  the  lapsing  of the  restrictions  imposed  upon  such
Performance Shares and (ii) held by the Company for the account of the recipient
until such time.  Payment of deferred dividends in respect of Performance Shares
shall be made upon the lapsing of restrictions imposed on the Performance Shares
in respect of which the deferred dividends were paid, and any dividends deferred
in respect of any  Performance  Shares shall be forfeited upon the forfeiture of
such Performance Shares.

     6.  Share  Restrictions.  Subject  to the  provisions  of this Plan and the
applicable  agreement,  during the period when the  Performance  Shares have not
vested, the recipient shall not be permitted to sell, transfer,  pledge,  assign
or otherwise encumber Performance Shares awarded under the Plan.

     7. Shareholder Rights. Subject to applicable laws, the recipient shall have
no  rights,  with  respect to the  Performance  Shares  until they have  vested,
including no right to vote the Performance Shares.

     8.  Termination of  Employment.  Upon  termination  of employment  with the
Company  because of death,  disability  or  retirement,  the  Committee,  at its
discretion,  may  provide  for  waiver of all or a portion  of the  restrictions
applicable to unvested  Performance  Shares. If termination occurs for any other
reason,  all shares  still  subject to  restriction  shall be  forfeited  by the
recipient.

VII. CHANGE OF CONTROL

     Notwithstanding anything to the contrary contained herein, upon a Change of
Control (as defined  below) of the Company,  (i) all options  shall  immediately
vest and become exercisable in full during the remaining term thereof, and shall
remain  so,  whether  or not the option  holder to whom such  options  have been
granted  remains an employee of the  Company or its  subsidiaries,  and (ii) the
restrictions  applicable to any or all Performance  Share awards shall lapse and
such awards shall be fully vested.

     A Change of Control shall be deemed to have taken place upon the occurrence
of any of the following events:

          (i)  any  Person  (which  shall  mean  and  include  any   individual,
     corporation,  partnership,  group,  association or other "person",  as such
     term is used in Sections 13 and 14 of the Exchange Act) is, becomes, or has
     the right to become  the  beneficial  owner,  directly  or  indirectly,  of
     securities  of the  Company  representing  20% or more of the  Shares  then
     outstanding,  whether or not such  Person  continues  to be the  beneficial
     owner of securities representing 20% or more of the outstanding Shares; or

          (ii) as the result of, or in connection  with,  any tender or exchange
     offer,  merger or other business  combination,  sale of assets or contested
     election,  any  announcement  of an intention to make any of the  foregoing
     transactions,   or  any  combination  of  the  foregoing   transactions  (a
     "Transaction"),  those persons who were directors of the Company before the
     Transaction  and were  otherwise  unaffiliated  with any other party to the
     Transaction  shall cease to constitute a majority of the Board of Directors
     of the Company or any  successor  to the Company (a "Change in the Board");
     or

          (iii)  the   shareholders   of  the   Company   approve   any  merger,
     consolidation,  reorganization, liquidation, dissolution, or sale of all or
     substantially  all of the Company's assets in which neither the Company nor
     a successor  resulting  from a change in  domicile or form of  organization
     will survive as an independent, publicly owned corporation.

     Notwithstanding anything herein to the contrary, no Change of Control (only
with  respect to the  particular  option  holder or award  grantee  referred  to
therein in the case of (i)(A) and (ii) below)  shall be deemed to have  occurred
by  virtue  of  any  event  which  results  in any of  the  following:


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          (i) the  acquisition,  directly or  indirectly,  of 20% or more of the
     outstanding  Shares by (A) the option holder or Performance Share recipient
     or a person including the option holder or Performance Share recipient, (B)
     the  Company,  or (C) any  employee  benefit  plan of the  Company  or of a
     subsidiary,  or any entity  holding  securities of the Company  recognized,
     appointed, or established by the Company or by a subsidiary for or pursuant
     to the terms of such plan; or

          (ii) a Change in the Board resulting from any Transaction in which the
     option  holder or  Performance  Share  recipient or a Person  including the
     option  holder or  Performance  Share  recipient  participates  directly or
     indirectly with any party to the Transaction other than the Company.

VIII.    PURCHASE FOR INVESTMENT

     Except as  hereafter  provided,  the Company may require the  recipient  of
Shares pursuant to an option or award granted  hereunder,  upon receipt thereof,
to execute and deliver to the Company a written statement,  in form satisfactory
to the Company, in which such holder represents and warrants that such holder is
purchasing or acquiring  the Shares  acquired  thereunder  for such holder's own
account,  for investment  only and not with a view to the resale or distribution
thereof,  and agrees that any subsequent  offer for sale or sale or distribution
of any of such Shares shall be made only  pursuant to either (a) a  Registration
Statement on an  appropriate  form under the  Securities Act of 1993, as amended
(the "Act"),  which  Registration  Statement has become effective and is current
with regard to the Shares  being  offered or sold,  or (b) a specific  exemption
from the  registration  requirements  of the Act, but in claiming such exemption
the holder shall,  prior to any offer for sale or sale of such Shares,  obtain a
prior  favorable  written  opinion,  in form and substance  satisfactory  to the
Company, from counsel for or approved by the Company, as to the applicability of
such  exemption  thereto.  The  foregoing  restriction  shall  not  apply to (i)
issuances by the Company so long as the Shares being issued are registered under
the Act and a prospectus in respect  thereof is current or (ii)  reofferings  of
Shares by  affiliates  of the Company  (as defined in Rule 405 or any  successor
rule or regulation  promulgated under the Act) if the Shares being reoffered are
registered under the Act and a prospectus in respect thereof is current.

IX.  ISSUANCE OF CERTIFICATES; LEGENDS; PAYMENT OF EXPENSES

     The Company may endorse  such legend or legends upon the  certificates  for
Shares issued  pursuant to a grant  hereunder and may issue such "stop transfer"
instructions  to its  transfer  agent  in  respect  of such  Shares  as,  in its
discretion,  it  determines  to be  necessary  or  appropriate  to (i) prevent a
violation of, or to perfect an exemption from, the registration  requirements of
the Act, (ii) implement the provisions of the Plan and any agreement between the
Company and the optionee or grantee with respect to such Shares, or (iii) permit
the Company to determine  the  occurrence  of a  disqualifying  disposition,  as
described in Section 421(b) of the Code, of Shares  transferred upon exercise of
an Incentive Option granted under the Plan.

     The  Company  shall pay all issue or  transfer  taxes  with  respect to the
issuance  or  transfer  of Shares  upon  exercise  of an option or  issuance  of
Performance Shares, as well as all fees and expenses necessarily incurred by the
Company in connection  with such issuance or transfer,  except fees and expenses
which may be necessitated by the filing or amending of a Registration  Statement
under the Act,  which fees and expenses  shall be borne by the  recipient of the
Shares unless such Registration  Statement has been filed by the Company for its
own corporate  purposes (and the Company so states) in which event the recipient
of the Shares shall bear only such fees and expenses as are attributable  solely
to the inclusion of the Shares he or she receives in the Registration Statement,
provided  that the Company shall have no obligation to include any Shares in any
Registration Statement.

     All Shares issued as provided herein shall be fully paid and non-assessable
to the extent permitted by law.

X.   WITHHOLDING TAXES

     The  Company may require an employee  exercising  an NQSO or  disposing  of
Shares  acquired   pursuant  to  the  exercise  of  an  Incentive  Option  in  a
disqualifying  disposition (within the meaning of Section 421(b) of the Code) or
pursuant to the award of  Performance  Shares to  reimburse  the Company for any
taxes required by any  government to be withheld or otherwise  deducted and paid
by the Company in respect of the issuance or disposition



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<PAGE>


of Shares.  In lieu  thereof,  the Company  shall have the right to withhold the
amount of such taxes  from any other sums due or to become due from the  Company
to the employee upon such terms and  conditions as the Board of Directors or the
Committee,  as the case may be, shall prescribe.  Notwithstanding the foregoing,
the Committee may, by the adoption of rules or otherwise,  modify the provisions
of this Article X or impose such other  restrictions  or  limitations  as may be
necessary to ensure that the  withholding  transactions  described above will be
exempt transactions under Section 16(b) of the Exchange Act.

     If an optionee makes a disposition, within the meaning of Section 424(c) of
the Code and regulations promulgated  thereunder,  of any Share or Shares issued
to such  optionee  pursuant to the  exercise of an Incentive  Option  within the
two-year period  commencing on the day after the date of the grant, the optionee
shall, within ten (10) days of such disposition,  notify the Company thereof, by
delivery of written notice to the Company at its principal executive office.

XI.  LISTING OF SHARES AND RELATED MATTERS

     If at any time the Board of Directors or the Committee, as the case may be,
shall   determine  in  its  discretion   that  the  listing,   registration   or
qualification  of the Shares  covered by the Plan upon any  national  securities
exchange  or under any state or federal  law or the  consent or  approval of any
governmental regulatory body, is necessary or desirable as a condition of, or in
connection  with, the sale or purchase of Shares under the Plan, no Shares shall
be issued unless and until such listing, registration, qualification, consent or
approval shall have been effected or obtained,  or otherwise  provided for, free
of any conditions not acceptable to the Board of Directors or the Committee,  as
the case may be.

XII. AMENDMENT OF THE PLAN

     The Board of Directors or the Committee, as the case may be, may, from time
to time, amend the Plan,  provided that no amendment shall be made,  without the
approval of the  shareholders  of the Company,  that will (i) increase the total
number of Shares  which may be issued  under the Plan  (other  than an  increase
resulting  from an  adjustment  provided  for in Article  II),  (ii)  modify the
provisions of the Plan relating to eligibility,  (iii)  materially  increase the
benefits  accruing to  participants  under the Plan,  or (iv) extend the maximum
period of the Plan. The Board of Directors or the Committee, as the case may be,
shall be authorized to amend the Plan and the awards granted hereunder to permit
the Incentive  Options  granted  hereunder to qualify as incentive stock options
within the meaning of Section 422 of the Code. The rights and obligations  under
any option or award  granted  before  amendment  of the Plan or any  unexercised
portion of such option shall not be adversely  affected by amendment of the Plan
or the option without the consent of the holder of the option.

XIII.    TERMINATION OR SUSPENSION OF THE PLAN

     The Board of  Directors  or the  Committee,  as the case may be, may at any
time suspend or terminate the Plan. The Plan, unless sooner terminated by action
of the Board of Directors or the Committee,  as the case may be, shall terminate
at the  close of  business  on March  14,  2004.  An  option or award may not be
granted  while  the Plan is  suspended  or after it is  terminated.  Rights  and
obligations  under any option or award granted while the Plan is in effect shall
not be altered or impaired by suspension or termination of the Plan, except upon
the consent of the person to whom the option or award was granted.  The power of
the Board of  Directors  or the  Committee,  as the case may be, to construe and
administer any options and awards granted prior to the termination or suspension
of the Plan under Article III nevertheless shall continue after such termination
or during such suspension.

XIV. GOVERNING LAW

     The Plan,  such  options  and awards as may be granted  thereunder  and all
related  matters  shall be governed by, and construed and enforced in accordance
with, the laws of the State of Delaware.


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<PAGE>


XV.  PARTIAL INVALIDITY

     The invalidity or illegality of any provision herein shall not be deemed to
affect the validity of any other provision.

XVI. EFFECTIVE DATE

     The  Plan  shall  become  effective  upon  the  adoption  by the  Board  of
Directors.

XVII. DEFERRAL

     An employee  may elect to defer (i) all or part of his  Performance  Shares
upon vesting or (ii) the Option Profit (as hereinafter  defined) with respect to
any Shares  subject to an NQSO,  all in  accordance  with the  provisions of the
Company's Deferred Compensation Plan. Any such deferral shall be made in writing
in accordance with the provisions of the Deferred Compensation Plan. In cases of
deferral, Shares otherwise issuable to the employee shall be issued to the Trust
established  pursuant to the Deferred  Compensation  Plan.  For purposes of this
provision, Option Profit shall mean the amount by which the fair market value of
a Share subject to an NQSO exceeds the exercise  price of an NQSO, as calculated
under the Deferred Compensation Plan.

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