EXHIBIT 4.1






                              SHERWOOD BRANDS, INC.

              Amended and Restated 1998 Incentive Compensation Plan







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                              SHERWOOD BRANDS, INC.

              Amended and Restated 1998 Incentive Compensation Plan
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1.   Purpose.....................................................................................................1

2.   Definitions.................................................................................................1

3.   Administration..............................................................................................3
     (a) Authority of the Committee..............................................................................3
     (b) Manner of Exercise of Committee Authority...............................................................3
     (c) Limitation of Liability.................................................................................4

4.   Stock Subject to Plan.......................................................................................4
     (a) Limitation on Overall Number of Shares Subject to Awards................................................4
     (b) Application of Limitations..............................................................................4

5.   Eligibility; Per-Person Award Limitations...................................................................4

6.   Specific Terms of Awards....................................................................................4
     (a) General.................................................................................................4
     (b) Options.................................................................................................5
     (c) Stock Appreciation Rights...............................................................................6
     (d) Restricted Stock........................................................................................6
     (e) Deferred Stock..........................................................................................7
     (f) Bonus Stock and Awards in Lieu of Obligations...........................................................7
     (g) Dividend Equivalents....................................................................................7
     (h) Other Stock-Based Awards................................................................................8

7.   Certain Provisions Applicable to Awards.....................................................................8
     (a) Stand-Alone, Additional, Tandem, and Substitute Awards..................................................8
     (b) Term of Awards..........................................................................................8
     (c) Form and Timing of Payment Under Awards; Deferrals......................................................8
     (d) Exemptions from Section 16(b) Liability.................................................................9

8.   Performance and Annual Incentive Awards.....................................................................9
     (a) Performance Conditions..................................................................................9
     (b) Performance Awards Granted to Designated Covered Employees..............................................9
     (c) Annual Incentive Awards Granted to Designated Covered Employees.........................................10
     (d) Written Determinations..................................................................................11
     (e) Status of Section 8(b) and Section 8(c) Awards Under Code Section 162(m)................................11

9.   Change in Control...........................................................................................11
     (a) Effect of "Change in Control."..........................................................................11
     (b) Definition of "Change in Control."......................................................................12
     (c) Definition of "Change in Control Price."................................................................12

10.  General Provisions..........................................................................................12
     (a) Compliance With Legal and Other Requirements............................................................12
     (b) Limits on Transferability; Beneficiaries................................................................13
     (c) Adjustments.............................................................................................13
     (d) Taxes...................................................................................................13
</TABLE>

                                      (i)
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     (e) Changes to the Plan and Awards..........................................................................14
     (f) Limitation on Rights Conferred Under Plan...............................................................14
     (g) Unfunded Status of Awards; Creation of Trusts...........................................................14
     (h) Nonexclusivity of the Plan..............................................................................14
     (i) Payments in the Event of Forfeitures; Fractional Shares.................................................14
     (j) Governing Law...........................................................................................15
     (k) Plan Effective Date and Stockholder Approval; Termination of Plan.......................................15
</TABLE>

                                      (ii)
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                              SHERWOOD BRANDS, INC.

              Amended and Restated 1998 Incentive Compensation Plan

         1. Purpose. The purpose of this Amended and Restated 1998 Incentive
Compensation Plan (the "Plan") is to assist Sherwood Brands, Inc. (the
"Company") and its subsidiaries in attracting, motivating, retaining and
rewarding high-quality executives and other employees, officers, Directors and
independent contractors enabling such persons to acquire or increase a
proprietary interest in the Company in order to strengthen the mutuality of
interests between such persons and the Company's stockholders, and providing
such persons with annual and long term performance incentives to expend their
maximum efforts in the creation of shareholder value. The Plan is also intended
to qualify certain compensation awarded under the Plan for tax deductibility
under Section 162(m) of the Code (as hereafter defined) to the extent deemed
appropriate by the Committee (or any successor committee) of the Board of
Directors of the Company.

         2. Definitions. For purposes of the Plan, the following terms shall be
defined as set forth below, in addition to such terms defined in Section 1
hereof.

                  (a) "Annual Incentive Award" means a conditional right granted
to a Participant under Section 8(c) hereof to receive a cash payment, Stock or
other Award, unless otherwise determined by the Committee, after the end of a
specified fiscal year.

                  (b) "Award" means any Option, SAR (including Limited SAR),
Restricted Stock, Deferred Stock, Stock granted as a bonus or in lieu of another
award, Dividend Equivalent, Other Stock-Based Award, Performance Award or Annual
Incentive Award, together with any other right or interest granted to a
Participant under the Plan.

                  (c) "Beneficiary" means the person, persons, trust or trusts
which have been designated by a Participant in his or her most recent written
beneficiary designation filed with the Committee to receive the benefits
specified under the Plan upon such Participant's death or to which Awards or
other rights are transferred if and to the extent permitted under Section 10(b)
hereof. If, upon a Participant's death, there is no designated Beneficiary or
surviving designated Beneficiary, then the term Beneficiary means the person,
persons, trust or trusts entitled by will or the laws of descent and
distribution to receive such benefits.

                  (d) "Beneficial Owner", "Beneficially Owning" and "Beneficial
Ownership" shall have the meanings ascribed to such terms in Rule 13d-3 under
the Exchange Act and any successor to such Rule.

                  (e) "Board" means the Company's Board of Directors.

                  (f) "Change in Control" means Change in Control as defined
with related terms in Section 9 of the Plan.

                  (g) "Change in Control Price" means the amount calculated in
accordance with Section 9(c) of the Plan.

                  (h) "Code" means the Internal Revenue Code of 1986, as amended
from time to time, including regulations thereunder and successor provisions and
regulations thereto.

                  (i) "Committee" means a committee designated by the Board to
administer the Plan; provided, however, that the Committee shall consist solely
of at least two directors, each of whom shall be (i) a "non-employee director"
within the meaning of Rule 16b-3 under the Exchange Act, unless administration
of the Plan by "non-employee directors" is not then required in order for
exemptions under Rule 16b-3 to apply to transactions under the Plan, and (ii) an
"outside director" within the meaning of Section 162(m) of the Code, unless
administration of the Plan by "outside directors" is not then required in order
to qualify for tax deductibility under Section 162(m) of the Code.

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                  (j) "Corporate Transaction" means a Corporate Transaction as
defined in Section 9(b)(i) of the Plan.

                  (k) "Covered Employee" means an Eligible Person who is a
Covered Employee as specified in Section 8(e) of the Plan.

                  (l) "Deferred Stock" means a right, granted to a Participant
under Section 6(e) hereof, to receive Stock, cash or a combination thereof at
the end of a specified deferral period.

                  (m) "Director" means a member of the Board.

                  (n) "Disability" means a permanent and total disability
(within the meaning of Section 22(e) of the Code), as determined by a medical
doctor satisfactory to the Committee.

                  (o) "Dividend Equivalent" means a right, granted to a
Participant under Section 6(g) hereof, to receive cash, Stock, other Awards or
other property equal in value to dividends paid with respect to a specified
number of shares of Stock, or other periodic payments.

                  (p) "Effective Date" means the effective date of the Plan,
which shall be May 4, 1998.

                  (q) "Eligible Person" means each Executive Officer of the
Company (as defined under the Exchange Act) and other officers, Directors and
employees of the Company or of any Subsidiary, and independent contractors with
the Company or any Subsidiary. The foregoing notwithstanding, only employees of
the Company or any Subsidiary shall be an Eligible Persons for purposes of
receiving any Incentive Stock Options. An employee on leave of absence may be
considered as still in the employ of the Company or a Subsidiary for purposes of
eligibility for participation in the Plan.

                  (r) "Exchange Act" means the Securities Exchange Act of 1934,
as amended from time to time, including rules thereunder and successor
provisions and rules thereto.

                  (s) "Executive Officer" means an executive officer of the
Company as defined under the Exchange Act.

                  (t) "Fair Market Value" means the fair market value of Stock,
Awards or other property as determined by the Committee or the Board, or under
procedures established by the Committee or the Board. Unless otherwise
determined by the Committee or the Board, the Fair Market Value of Stock as of
any given date shall be the closing sale price per share reported on a
consolidated basis for stock listed on the principal stock exchange or market on
which Stock is traded on the date as of which such value is being determined or,
if there is no sale on that date, then on the last previous day on which a sale
was reported.

                  (u) "Incentive Stock Option" or "ISO" means any Option
intended to be designated as an incentive stock option within the meaning of
Section 422 of the Code or any successor provision thereto.

                  (v) "Incumbent Board" means the Incumbent Board as defined in
Section 9(b)(ii) of the Plan.

                  (w) "Limited SAR" means a right granted to a Participant under
Section 6(c) hereof.

                  (x) "Option" means a right granted to a Participant under
Section 6(b) hereof, to purchase Stock or other Awards at a specified price
during specified time periods.

                  (y) "Other Stock-Based Awards" means Awards granted to a
Participant under Section 6(h) hereof.

                  (z) "Parent Corporation" means any corporation (other than the
Company)

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in an unbroken chain of corporations ending with the Company, if each of the
corporations in the chain (other than the Company) owns stock possessing 50% or
more of the combined voting power of all classes of stock in one of the other
corporations in the chain.

                  (aa) "Participant" means a person who has been granted an
Award under the Plan which remains outstanding, including a person who is no
longer an Eligible Person.

                  (bb) "Performance Award" means a right, granted to a Eligible
Person under Section 8 hereof, to receive Awards based upon performance criteria
specified by the Committee or the Board.

                  (cc) "Person" shall have the meaning ascribed to such term in
Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and 14(d)
thereof, and shall include a "group" as defined in Section 13(d) thereof.

                  (dd) "Restricted Stock" means Stock granted to a Participant
under Section 6(d) hereof, that is subject to certain restrictions and to a risk
of forfeiture.

                  (ee) "Rule 16b-3" and "Rule 16a-1(c)(3)" means Rule 16b-3 and
Rule 16a-1(c)(3), as from time to time in effect and applicable to the Plan and
Participants, promulgated by the Securities and Exchange Commission under
Section 16 of the Exchange Act

                  (ff) "Stock" means the Company's Common Stock, and such other
securities as may be substituted (or resubstituted) for Stock pursuant to
Section 10(c) hereof.

                  (gg) "Stock Appreciation Rights" or "SAR" means a right
granted to a Participant under Section 6(c) hereof.

                  (hh) "Subsidiary" means any corporation or other entity in
which the Company has a direct or indirect ownership interest of 50% or more of
the total combined voting power of the then outstanding securities or interests
of such corporation or other entity entitled to vote generally in the election
of directors or in which the Company has the right to receive 50% or more of the
distribution of profits or 50% or more of the assets on liquidation or
dissolution.

         3. Administration.

                  (a) Authority of the Committee. The Plan shall be administered
by the Committee; provided, however, that except as otherwise expressly provided
in this Plan or in order to comply with Code Section 162(m) or Rule 16b-3 under
the Exchange Act, the Board may exercise any power or authority granted to the
Committee under this Plan. The Committee or the Board shall have full and final
authority, in each case subject to and consistent with the provisions of the
Plan, to select Eligible Persons to become Participants, grant Awards, determine
the type, number and other terms and conditions of, and all other matters
relating to, Awards, prescribe Award agreements (which need not be identical for
each Participant) and rules and regulations for the administration of the Plan,
construe and interpret the Plan and Award agreements and correct defects, supply
omissions or reconcile inconsistencies therein, and to make all other decisions
and determinations as the Committee or the Board may deem necessary or advisable
for the administration of the Plan. In exercising any discretion granted to the
Committee or the Board under the Plan or pursuant to any Award, the Committee or
the Board shall not be required to follow past practices, act in a manner
consistent with past practices, or treat any Eligible Person in a manner
consistent with the treatment of other Eligible Persons.

                  (b) Manner of Exercise of Committee Authority. The Committee,
and not the Board, shall exercise sole and exclusive discretion on any matter
relating to a Participant then subject to Section 16 of the Exchange Act with
respect to the Company to the extent necessary in order that transactions by
such Participant shall be exempt under Rule 16b-3 under the Exchange Act. Any
action of the Committee or the Board shall be final, conclusive and binding on
all persons, including the Company, its subsidiaries, Participants,
Beneficiaries, transferees under Section 10(b) hereof or other persons claiming
rights from or through a Participant, and stockholders. The express grant of any
specific power to the Committee or the Board, and the taking of any action by
the Committee or the Board, shall not be construed as limiting any power or
authority of the Committee or the

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Board. The Committee or the Board may delegate to officers or managers of the
Company or any subsidiary, or committees thereof, the authority, subject to such
terms as the Committee or the Board shall determine, (i) to perform
administrative functions, (ii) with respect to Participants not subject to
Section 16 of the Exchange Act, to perform such other functions as the Committee
or the Board may determine, and (iii) with respect to Participants subject to
Section 16, to perform such other functions of the Committee or the Board as the
Committee or the Board may determine to the extent performance of such functions
will not result in the loss of an exemption under Rule 16b-3 otherwise available
for transactions by such persons, in each case to the extent permitted under
applicable law and subject to the requirements set forth in Section 8(d). The
Committee or the Board may appoint agents to assist it in administering the
Plan.

                  (c) Limitation of Liability. The Committee and the Board, and
each member thereof, shall be entitled to, in good faith, rely or act upon any
report or other information furnished to him or her by any executive officer,
other officer or employee of the Company or a Subsidiary, the Company's
independent auditors, consultants or any other agents assisting in the
administration of the Plan. Members of the Committee and the Board, and any
officer or employee of the Company or a subsidiary acting at the direction or on
behalf of the Committee or the Board, shall not be personally liable for any
action or determination taken or made in good faith with respect to the Plan,
and shall, to the extent permitted by law, be fully indemnified and protected by
the Company with respect to any such action or determination.

         4. Stock Subject to Plan.

                  (a) Limitation on Overall Number of Shares Subject to Awards.
Subject to adjustment as provided in Section 10(c) hereof, the total number of
shares of Stock reserved and available for delivery in connection with Awards
under the Plan shall be the sum of (i) 1,500,000, plus (ii) the number of shares
with respect to Awards previously granted under the Plan that terminate without
being exercised, expire, are forfeited or canceled, and the number of shares of
Stock that are surrendered in payment of any Awards or any tax withholding with
regard thereto. Any shares of Stock delivered under the Plan may consist, in
whole or in part, of authorized and unissued shares or treasury shares. Subject
to adjustment as provided in Section 10(c) hereof, in no event shall the
aggregate number of shares of Stock which may be issued pursuant to ISOs exceed
1,500,000 shares.

                  (b) Application of Limitations. The limitation contained in
Section 4(a) shall apply not only to Awards that are settleable by the delivery
of shares of Stock but also to Awards relating to shares of Stock but settleable
only in cash (such as cash-only SARs). The Committee or the Board may adopt
reasonable counting procedures to ensure appropriate counting, avoid double
counting (as, for example, in the case of tandem or substitute awards) and make
adjustments if the number of shares of Stock actually delivered differs from the
number of shares previously counted in connection with an Award.

         5. Eligibility; Per-Person Award Limitations. Awards may be granted
under the Plan only to Eligible Persons. In each fiscal year during any part of
which the Plan is in effect, an Eligible Person may not be granted Awards
relating to more than 750,000 shares of Stock, subject to adjustment as provided
in Section 10(c), under each of Sections 6(b), 6(c), 6(d), 6(e), 6(f), 6(g),
6(h), 8(b) and 8(c). In addition, the maximum amount that may be earned as an
Annual Incentive Award or other cash Award in any fiscal year by any one
Participant shall be $2,000,000, and the maximum amount that may be earned as a
Performance Award or other cash Award in respect of a performance period by any
one Participant shall be $5,000,000.

         6. Specific Terms of Awards.

                  (a) General. Awards may be granted on the terms and conditions
set forth in this Section 6. In addition, the Committee or the Board may impose
on any Award or the exercise thereof, at the date of grant or thereafter
(subject to Section 10(e)), such additional terms and conditions, not
inconsistent with the provisions of the Plan, as the Committee or the Board
shall determine, including terms requiring forfeiture of Awards in the event of
termination of employment by the Participant and terms permitting a Participant
to make elections relating to his or her Award. The Committee or the Board shall
retain full power and discretion to accelerate, waive or modify, at any time,
any term or condition of an Award that is not mandatory under the Plan. Except
in cases in which the Committee or the Board is authorized to require other
forms of consideration under the Plan, or to the extent other

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forms of consideration must be paid to satisfy the requirements of Maryland law,
no consideration other than services may be required for the grant (but not the
exercise) of any Award.

                  (b) Options. The Committee and the Board each is authorized to
grant Options to Participants on the following terms and conditions:

                           (i) Exercise Price. The exercise price per share of
         Stock purchasable under an Option shall be determined by the Committee
         or the Board, provided that such exercise price shall not, in the case
         of Incentive Stock Options, be less than 100% of the Fair Market Value
         of the Stock on the date of grant of the Option and shall not, in any
         event, be less than the par value of a share of Stock on the date of
         grant of such Option. If an employee owns or is deemed to own (by
         reason of the attribution rules applicable under Section 424(d) of the
         Code) more than 10% of the combined voting power of all classes of
         stock of the Company or any Parent Corporation and an Incentive Stock
         Option is granted to such employee, the option price of such Incentive
         Stock Option (to the extent required by the Code at the time of grant)
         shall be no less than 110% of the Fair Market Value of the Stock on the
         date such Incentive Stock Option is granted.

                           (ii) Time and Method of Exercise. The Committee or
         the Board shall determine the time or times at which or the
         circumstances under which an Option may be exercised in whole or in
         part (including based on achievement of performance goals and/or future
         service requirements), the time or times at which Options shall cease
         to be or become exercisable following termination of employment or upon
         other conditions, the methods by which such exercise price may be paid
         or deemed to be paid (including in the discretion of the Committee or
         the Board a cashless exercise procedure), the form of such payment,
         including, without limitation, cash, Stock, other Awards or awards
         granted under other plans of the Company or any subsidiary, or other
         property (including notes or other contractual obligations of
         Participants to make payment on a deferred basis), and the methods by
         or forms in which Stock will be delivered or deemed to be delivered to
         Participants.

                           (iii) ISOs. The terms of any ISO granted under the
         Plan shall comply in all respects with the provisions of Section 422 of
         the Code. Anything in the Plan to the contrary notwithstanding, no term
         of the Plan relating to ISOs (including any SAR in tandem therewith)
         shall be interpreted, amended or altered, nor shall any discretion or
         authority granted under the Plan be exercised, so as to disqualify
         either the Plan or any ISO under Section 422 of the Code, unless the
         Participant has first requested the change that will result in such
         disqualification. Thus, if and to the extent required to comply with
         Section 422 of the Code, Options granted as Incentive Stock Options
         shall be subject to the following special terms and conditions:

                           (A)      the Option shall not be exercisable more
                                    than ten years after the date such Incentive
                                    Stock Option is granted; provided, however,
                                    that if a Participant owns or is deemed to
                                    own (by reason of the attribution rules of
                                    Section 424(d) of the Code) more than 10% of
                                    the combined voting power of all classes of
                                    stock of the Company or any Parent
                                    Corporation and the Incentive Stock Option
                                    is granted to such Participant, the term of
                                    the Incentive Stock Option shall be (to the
                                    extent required by the Code at the time of
                                    the grant) for no more than five years from
                                    the date of grant; and

                           (B)      The aggregate Fair Market Value (determined
                                    as of the date the Incentive Stock Option is
                                    granted) of the shares of stock with respect
                                    to which Incentive Stock Options granted
                                    under the Plan and all other option plans of
                                    the Company or its Parent Corporation during
                                    any calendar year exercisable for the first
                                    time by the Participant during any calendar
                                    year shall not (to the extent required by
                                    the Code at the time of the grant) exceed
                                    $100,000.

                  (c) Stock Appreciation Rights. The Committee and the Board
each is authorized to grant SAR's to Participants on the following terms and
conditions:

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                           (i) Right to Payment. A SAR shall confer on the
         Participant to whom it is granted a right to receive, upon exercise
         thereof, the excess of (A) the Fair Market Value of one share of stock
         on the date of exercise (or, in the case of a "Limited SAR" that may be
         exercised only in the event of a Change in Control, the Fair Market
         Value determined by reference to the Change in Control Price, as
         defined under Section 9(c) hereof), over (B) the grant price of the SAR
         as determined by the Committee or the Board. The grant price of an SAR
         shall not be less than the Fair Market Value of a share of Stock on the
         date of grant except as provided under Section 7(a) hereof.

                           (ii) Other Terms. The Committee or the Board shall
         determine at the date of grant or thereafter, the time or times at
         which and the circumstances under which a SAR may be exercised in whole
         or in part (including based on achievement of performance goals and/or
         future service requirements), the time or times at which SARs shall
         cease to be or become exercisable following termination of employment
         or upon other conditions, the method of exercise, method of settlement,
         form of consideration payable in settlement, method by or forms in
         which Stock will be delivered or deemed to be delivered to
         Participants, whether or not a SAR shall be in tandem or in combination
         with any other Award, and any other terms and conditions of any SAR.
         Limited SARs that may only be exercised in connection with a Change in
         Control or other event as specified by the Committee or the Board, may
         be granted on such terms, not inconsistent with this Section 6(c), as
         the Committee or the Board may determine. SARs and Limited SARs may be
         either freestanding or in tandem with other Awards.

                  (d) Restricted Stock. The Committee and the Board each is
authorized to grant Restricted Stock to Participants on the following terms and
conditions:

                           (i) Grant and Restrictions. Restricted Stock shall be
         subject to such restrictions on transferability, risk of forfeiture and
         other restrictions, if any, as the Committee or the Board may impose,
         which restrictions may lapse separately or in combination at such
         times, under such circumstances (including based on achievement of
         performance goals and/or future service requirements), in such
         installments or otherwise, as the Committee or the Board may determine
         at the date of grant or thereafter. Except to the extent restricted
         under the terms of the Plan and any Award agreement relating to the
         Restricted Stock, a Participant granted Restricted Stock shall have all
         of the rights of a stockholder, including the right to vote the
         Restricted Stock and the right to receive dividends thereon (subject to
         any mandatory reinvestment or other requirement imposed by the
         Committee or the Board). During the restricted period applicable to the
         Restricted Stock, subject to Section 10(b) below, the Restricted Stock
         may not be sold, transferred, pledged, hypothecated, margined or
         otherwise encumbered by the Participant.

                           (ii) Forfeiture. Except as otherwise determined by
         the Committee or the Board at the time of the Award, upon termination
         of a Participant's employment during the applicable restriction period,
         the Participant's Restricted Stock that is at that time subject to
         restrictions shall be forfeited and reacquired by the Company; provided
         that the Committee or the Board may provide, by rule or regulation or
         in any Award agreement, or may determine in any individual case, that
         restrictions or forfeiture conditions relating to Restricted Stock
         shall be waived in whole or in part in the event of terminations
         resulting from specified causes, and the Committee or the Board may in
         other cases waive in whole or in part the forfeiture of Restricted
         Stock.

                           (iii) Certificates for Stock. Restricted Stock
         granted under the Plan may be evidenced in such manner as the Committee
         or the Board shall determine.

If certificates representing Restricted Stock are registered in the name of the
Participant, the Committee or the Board may require that such certificates bear
an appropriate legend referring to the terms, conditions and restrictions
applicable to such Restricted Stock, that the Company retain physical possession
of the certificates, and that the Participant deliver a stock power to the
Company, endorsed in blank, relating to the Restricted Stock.

                           (iv) Dividends and Splits. As a condition to the
         grant of an Award of Restricted Stock, the Committee or the Board may
         require that any cash dividends paid on a share of Restricted Stock be
         automatically reinvested in additional shares of Restricted Stock or
         applied to the purchase of additional

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         Awards under the Plan. Unless otherwise determined by the Committee or
         the Board, Stock distributed in connection with a Stock split or Stock
         dividend, and other property distributed as a dividend, shall be
         subject to restrictions and a risk of forfeiture to the same extent as
         the Restricted Stock with respect to which such Stock or other property
         has been distributed.

                  (e) Deferred Stock. The Committee and the Board each is
authorized to grant Deferred Stock to Participants, which are rights to receive
Stock, cash, or a combination thereof at the end of a specified deferral period,
subject to the following terms and conditions:

                           (i) Award and Restrictions. Satisfaction of an Award
         of Deferred Stock shall occur upon expiration of the deferral period
         specified for such Deferred Stock by the Committee or the Board (or, if
         permitted by the Committee or the Board, as elected by the
         Participant). In addition, Deferred Stock shall be subject to such
         restrictions (which may include a risk of forfeiture) as the Committee
         or the Board may impose, if any, which restrictions may lapse at the
         expiration of the deferral period or at earlier specified times
         (including based on achievement of performance goals and/or future
         service requirements), separately or in combination, in installments or
         otherwise, as the Committee or the Board may determine. Deferred Stock
         may be satisfied by delivery of Stock, cash equal to the Fair Market
         Value of the specified number of shares of Stock covered by the
         Deferred Stock, or a combination thereof, as determined by the
         Committee or the Board at the date of grant or thereafter. Prior to
         satisfaction of an Award of Deferred Stock, an Award of Deferred Stock
         carries no voting or dividend or other rights associated with share
         ownership.

                           (ii) Forfeiture. Except as otherwise determined by
         the Committee or the Board, upon termination of a Participant's
         employment during the applicable deferral period thereof to which
         forfeiture conditions apply (as provided in the Award agreement
         evidencing the Deferred Stock), the Participant's Deferred Stock that
         is at that time subject to deferral (other than a deferral at the
         election of the Participant) shall be forfeited; provided that the
         Committee or the Board may provide, by rule or regulation or in any
         Award agreement, or may determine in any individual case, that
         restrictions or forfeiture conditions relating to Deferred Stock shall
         be waived in whole or in part in the event of terminations resulting
         from specified causes, and the Committee or the Board may in other
         cases waive in whole or in part the forfeiture of Deferred Stock.

                           (iii) Dividend Equivalents. Unless otherwise
         determined by the Committee or the Board at date of grant, Dividend
         Equivalents on the specified number of shares of Stock covered by an
         Award of Deferred Stock shall be either (A) paid with respect to such
         Deferred Stock at the dividend payment date in cash or in shares of
         unrestricted Stock having a Fair Market Value equal to the amount of
         such dividends, or (B) deferred with respect to such Deferred Stock and
         the amount or value thereof automatically deemed reinvested in
         additional Deferred Stock, other Awards or other investment vehicles,
         as the Committee or the Board shall determine or permit the Participant
         to elect.

                  (f) Bonus Stock and Awards in Lieu of Obligations. The
Committee and the Board each is authorized to grant Stock as a bonus, or to
grant Stock or other Awards in lieu of Company obligations to pay cash or
deliver other property under the Plan or under other plans or compensatory
arrangements, provided that, in the case of Participants subject to Section 16
of the Exchange Act, the amount of such grants remains within the discretion of
the Committee to the extent necessary to ensure that acquisitions of Stock or
other Awards are exempt from liability under Section 16(b) of the Exchange Act.
Stock or Awards granted hereunder shall be subject to such other terms as shall
be determined by the Committee or the Board.

                  (g) Dividend Equivalents. The Committee and the Board
each is authorized to grant Dividend Equivalents to a Participant entitling the
Participant to receive cash, Stock, other Awards, or other property equal in
value to dividends paid with respect to a specified number of shares of Stock,
or other periodic payments. Dividend Equivalents may be awarded on a
free-standing basis or in connection with another Award. The Committee or the
Board may provide that Dividend Equivalents shall be paid or distributed when
accrued or shall be deemed to have been reinvested in additional Stock, Awards,
or other investment vehicles, and subject to such restrictions on
transferability and risks of forfeiture, as the Committee or the Board may
specify.

                                      -7-
<PAGE>

                  (h) Other Stock-Based Awards. The Committee and the Board
each is authorized, subject to limitations under applicable law, to grant to
Participants such other Awards that may be denominated or payable in, valued in
whole or in part by reference to, or otherwise based on, or related to, Stock,
as deemed by the Committee or the Board to be consistent with the purposes of
the Plan, including, without limitation, convertible or exchangeable debt
securities, other rights convertible or exchangeable into Stock, purchase rights
for Stock, Awards with value and payment contingent upon performance of the
Company or any other factors designated by the Committee or the Board, and
Awards valued by reference to the book value of Stock or the value of securities
of or the performance of specified subsidiaries or business units. The Committee
or the Board shall determine the terms and conditions of such Awards. Stock
delivered pursuant to an Award in the nature of a purchase right granted under
this Section 6(h) shall be purchased for such consideration, paid for at such
times, by such methods, and in such forms, including, without limitation, cash,
Stock, other Awards or other property, as the Committee or the Board shall
determine. Cash awards, as an element of or supplement to any other Award under
the Plan, may also be granted pursuant to this Section 6(h).

         7. Certain Provisions Applicable to Awards.

                  (a) Stand-Alone, Additional, Tandem, and Substitute
Awards. Awards granted under the Plan may, in the discretion of the Committee or
the Board, be granted either alone or in addition to, in tandem with, or in
substitution or exchange for, any other Award or any award granted under another
plan of the Company, any subsidiary, or any business entity to be acquired by
the Company or a subsidiary, or any other right of a Participant to receive
payment from the Company or any subsidiary. Such additional, tandem, and
substitute or exchange Awards may be granted at any time. If an Award is granted
in substitution or exchange for another Award or award, the Committee or the
Board shall require the surrender of such other Award or award in consideration
for the grant of the new Award. In addition, Awards may be granted in lieu of
cash compensation, including in lieu of cash amounts payable under other plans
of the Company or any subsidiary, in which the value of Stock subject to the
Award is equivalent in value to the cash compensation (for example, Deferred
Stock or Restricted Stock), or in which the exercise price, grant price or
purchase price of the Award in the nature of a right that may be exercised is
equal to the Fair Market Value of the underlying Stock minus the value of the
cash compensation surrendered (for example, Options granted with an exercise
price "discounted" by the amount of the cash compensation surrendered).

                  (b) Term of Awards. The term of each Award shall be for
such period as may be determined by the Committee or the Board; provided that in
no event shall the term of any Option or SAR exceed a period of ten years (or
such shorter term as may be required in respect of an ISO under Section 422 of
the Code).

                  (c) Form and Timing of Payment Under Awards; Deferrals.
Subject to the terms of the Plan and any applicable Award agreement, payments to
be made by the Company or a subsidiary upon the exercise of an Option or other
Award or settlement of an Award may be made in such forms as the Committee or
the Board shall determine, including, without limitation, cash, Stock, other
Awards or other property, and may be made in a single payment or transfer, in
installments, or on a deferred basis. The settlement of any Award may be
accelerated, and cash paid in lieu of Stock in connection with such settlement,
in the discretion of the Committee or the Board or upon occurrence of one or
more specified events (in addition to a Change in Control). Installment or
deferred payments may be required by the Committee or the Board (subject to
Section 10(e) of the Plan) or permitted at the election of the Participant on
terms and conditions established by the Committee or the Board. Payments may
include, without limitation, provisions for the payment or crediting of a
reasonable interest rate on installment or deferred payments or the grant or
crediting of Dividend Equivalents or other amounts in respect of installment or
deferred payments denominated in Stock.

                  (d) Exemptions from Section 16(b) Liability. It is the
intent of the Company that this Plan comply in all respects with applicable
provisions of Rule 16b-3 or Rule 16a-1(c)(3) to the extent necessary to ensure
that neither the grant of any Awards to nor other transaction by a Participant
who is subject to Section 16 of the Exchange Act is subject to liability under
Section 16(b) thereof (except for transactions acknowledged in writing to be
non-exempt by such Participant). Accordingly, if any provision of this Plan or
any Award agreement does not comply with the requirements of Rule 16b-3 or Rule
16a-1(c)(3) as then applicable to any such transaction, such

                                      -8-
<PAGE>

provision will be construed or deemed amended to the extent necessary to conform
to the applicable requirements of Rule 16b-3 or Rule 16a-1(c)(3) so that such
Participant shall avoid liability under Section 16(b). In addition, the purchase
price of any Award conferring a right to purchase Stock shall be not less than
any specified percentage of the Fair Market Value of Stock at the date of grant
of the Award then required in order to comply with Rule 16b-3.

         8. Performance and Annual Incentive Awards.

                  (a) Performance Conditions. The right of a Participant to
exercise or receive a grant or settlement of any Award, and the timing thereof,
may be subject to such performance conditions as may be specified by the
Committee or the Board. The Committee or the Board may use such business
criteria and other measures of performance as it may deem appropriate in
establishing any performance conditions, and may exercise its discretion to
reduce the amounts payable under any Award subject to performance conditions,
except as limited under Sections 8(b) and 8(c) hereof in the case of a
Performance Award or Annual Incentive Award intended to qualify under Code
Section 162(m). If and to the extent required under Code Section 162(m), any
power or authority relating to a Performance Award or Annual Incentive Award
intended to qualify under Code Section 162(m), shall be exercised by the
Committee and not the Board.

                  (b) Performance Awards Granted to Designated Covered
Employees. If and to the extent that the Committee determines that a Performance
Award to be granted to an Eligible Person who is designated by the Committee as
likely to be a Covered Employee should qualify as "performance-based
compensation" for purposes of Code Section 162(m), the grant, exercise and/or
settlement of such Performance Award shall be contingent upon achievement of
preestablished performance goals and other terms set forth in this Section 8(b).

                           (i) Performance Goals Generally. The performance
         goals for such Performance Awards shall consist of one or more business
         criteria and a targeted level or levels of performance with respect to
         each of such criteria, as specified by the Committee consistent with
         this Section 8(b). Performance goals shall be objective and shall
         otherwise meet the requirements of Code Section 162(m) and regulations
         thereunder including the requirement that the level or levels of
         performance targeted by the Committee result in the achievement of
         performance goals being "substantially uncertain." The Committee may
         determine that such Performance Awards shall be granted, exercised
         and/or settled upon achievement of any one performance goal or that two
         or more of the performance goals must be achieved as a condition to
         grant, exercise and/or settlement of such Performance Awards.
         Performance goals may differ for Performance Awards granted to any one
         Participant or to different Participants.

                           (ii) Business Criteria. One or more of the following
         business criteria for the Company, on a consolidated basis, and/or
         specified subsidiaries or business units of the Company (except with
         respect to the total stockholder return and earnings per share
         criteria), shall be used exclusively by the Committee in establishing
         performance goals for such Performance Awards: (1) total stockholder
         return; (2) such total stockholder return as compared to total return
         (on a comparable basis) of a publicly available index such as, but not
         limited to, the Standard & Poor's 500 Stock Index or the S&P Specialty
         Retailer Index; (3) net income; (4) pretax earnings; (5) earnings
         before interest expense, taxes, depreciation and amortization; (6)
         pretax operating earnings after interest expense and before bonuses,
         service fees, and extraordinary or special items; (7) operating margin;
         (8) earnings per share; (9) return on equity; (10) return on capital;
         (11) return on investment; (12) operating earnings; (13) working
         capital or inventory; and (14) ratio of debt to stockholders' equity.
         One or more of the foregoing business criteria shall also be
         exclusively used in establishing performance goals for Annual Incentive
         Awards granted to a Covered Employee under Section 8(c) hereof that are
         intended to qualify as "performanced-based compensation under Code
         Section 162(m).

                           (iii) Performance Period; Timing For Establishing
         Performance Goals. Achievement of performance goals in respect of such
         Performance Awards shall be measured over a performance period of up to
         ten years, as specified by the Committee. Performance goals shall be
         established not later than 90 days after the beginning of any
         performance period applicable to such Performance Awards, or at such
         other date as may be required or permitted for "performance-based
         compensation" under Code Section 162(m).

                                      -9-
<PAGE>

                           (iv) Performance Award Pool. The Committee may
         establish a Performance Award pool, which shall be an unfunded pool,
         for purposes of measuring Company performance in connection with
         Performance Awards. The amount of such Performance Award pool shall be
         based upon the achievement of a performance goal or goals based on one
         or more of the business criteria set forth in Section 8(b)(ii) hereof
         during the given performance period, as specified by the Committee in
         accordance with Section 8(b)(iii) hereof. The Committee may specify the
         amount of the Performance Award pool as a percentage of any of such
         business criteria, a percentage thereof in excess of a threshold
         amount, or as another amount which need not bear a strictly
         mathematical relationship to such business criteria.

                           (v) Settlement of Performance Awards; Other Terms.
         Settlement of such Performance Awards shall be in cash, Stock, other
         Awards or other property, in the discretion of the Committee. The
         Committee may, in its discretion, reduce the amount of a settlement
         otherwise to be made in connection with such Performance Awards. The
         Committee shall specify the circumstances in which such Performance
         Awards shall be paid or forfeited in the event of termination of
         employment by the Participant prior to the end of a performance period
         or settlement of Performance Awards.

                  (c) Annual Incentive Awards Granted to Designated Covered
Employees. If and to the extent that the Committee determines that an Annual
Incentive Award to be granted to an Eligible Person who is designated by the
Committee as likely to be a Covered Employee should qualify as
"performance-based compensation" for purposes of Code Section 162(m), the grant,
exercise and/or settlement of such Annual Incentive Award shall be contingent
upon achievement of preestablished performance goals and other terms set forth
in this Section 8(c).

                           (i) Annual Incentive Award Pool. The Committee may
         establish an Annual Incentive Award pool, which shall be an unfunded
         pool, for purposes of measuring Company performance in connection with
         Annual Incentive Awards. The amount of such Annual Incentive Award pool
         shall be based upon the achievement of a performance goal or goals
         based on one or more of the business criteria set forth in Section
         8(b)(ii) hereof during the given performance period, as specified by
         the Committee in accordance with Section 8(b)(iii) hereof. The
         Committee may specify the amount of the Annual Incentive Award pool as
         a percentage of any such business criteria, a percentage thereof in
         excess of a threshold amount, or as another amount which need not bear
         a strictly mathematical relationship to such business criteria.

                           (ii) Potential Annual Incentive Awards. Not later
         than the end of the 90th day of each fiscal year, or at such other date
         as may be required or permitted in the case of Awards intended to be
         "performance-based compensation" under Code Section 162(m), the
         Committee shall determine the Eligible Persons who will potentially
         receive Annual Incentive Awards, and the amounts potentially payable
         thereunder, for that fiscal year, either out of an Annual Incentive
         Award pool established by such date under Section 8(c)(i) hereof or as
         individual Annual Incentive Awards. In the case of individual Annual
         Incentive Awards intended to qualify under Code Section 162(m), the
         amount potentially payable shall be based upon the achievement of a
         performance goal or goals based on one or more of the business criteria
         set forth in Section 8(b)(ii) hereof in the given performance year, as
         specified by the Committee; in other cases, such amount shall be based
         on such criteria as shall be established by the Committee. In all
         cases, the maximum Annual Incentive Award of any Participant shall be
         subject to the limitation set forth in Section 5 hereof.

                           (iii) Payout of Annual Incentive Awards. After the
         end of each fiscal year, the Committee shall determine the amount, if
         any, of (A) the Annual Incentive Award pool, and the maximum amount of
         potential Annual Incentive Award payable to each Participant in the
         Annual Incentive Award pool, or (B) the amount of potential Annual
         Incentive Award otherwise payable to each Participant. The Committee
         may, in its discretion, determine that the amount payable to any
         Participant as an Annual Incentive Award shall be reduced from the
         amount of his or her potential Annual Incentive Award, including a
         determination to make no Award whatsoever. The Committee shall specify
         the circumstances

                                      -10-
<PAGE>

         in which an Annual Incentive Award shall be paid or forfeited in the
         event of termination of employment by the Participant prior to the end
         of a fiscal year or settlement of such Annual Incentive Award.

                  (d) Written Determinations. All determinations by the
Committee as to the establishment of performance goals, the amount of any
Performance Award pool or potential individual Performance Awards and as to the
achievement of performance goals relating to Performance Awards under Section
8(b), and the amount of any Annual Incentive Award pool or potential individual
Annual Incentive Awards and the amount of final Annual Incentive Awards under
Section 8(c), shall be made in writing in the case of any Award intended to
qualify under Code Section 162(m). The Committee may not delegate any
responsibility relating to such Performance Awards or Annual Incentive Awards if
and to the extent required to comply with Code Section 162(m).

                  (e) Status of Section 8(b) and Section 8(c) Awards Under Code
Section 162(m). It is the intent of the Company that Performance Awards and
Annual Incentive Awards under Section 8(b) and 8(c) hereof granted to persons
who are designated by the Committee as likely to be Covered Employees within the
meaning of Code Section 162(m) and regulations thereunder shall, if so
designated by the Committee, constitute "qualified performance-based
compensation" within the meaning of Code Section 162(m) and regulations
thereunder. Accordingly, the terms of Sections 8(b), (c), (d) and (e), including
the definitions of Covered Employee and other terms used therein, shall be
interpreted in a manner consistent with Code Section 162(m) and regulations
thereunder. The foregoing notwithstanding, because the Committee cannot
determine with certainty whether a given Participant will be a Covered Employee
with respect to a fiscal year that has not yet been completed, the term Covered
Employee as used herein shall mean only a person designated by the Committee, at
the time of grant of Performance Awards or an Annual Incentive Award, as likely
to be a Covered Employee with respect to that fiscal year. If any provision of
the Plan or any agreement relating to such Performance Awards or Annual
Incentive Awards does not comply or is inconsistent with the requirements of
Code Section 162(m) or regulations thereunder, such provision shall be construed
or deemed amended to the extent necessary to conform to such requirements.

         9. Change in Control.

                  (a) Effect of "Change in Control." If and to the extent
provided in the Award, in the event of a "Change in Control," as defined in
Section 9(b), the following provisions shall apply:

                           (i) Any Award carrying a right to exercise that was
         not previously exercisable and vested shall become fully exercisable
         and vested as of the time of the Change in Control, subject only to
         applicable restrictions set forth in Section 10(a) hereof;

                           (ii) Limited SARs (and other SARs if so provided by
         their terms) shall become exercisable for amounts, in cash, determined
         by reference to the Change in Control Price;

                           (iii) The restrictions, deferral of settlement, and
         forfeiture conditions applicable to any other Award granted under the
         Plan shall lapse and such Awards shall be deemed fully vested as of the
         time of the Change in Control, except to the extent of any waiver by
         the Participant and subject to applicable restrictions set forth in
         Section 10(a) hereof; and

                           (iv) With respect to any such outstanding Award
         subject to achievement of performance goals and conditions under the
         Plan, such performance goals and other conditions will be deemed to be
         met if and to the extent so provided by the Committee in the Award
         agreement relating to such Award.

                  (b) Definition of "Change in Control." A "Change in Control"
shall be deemed to have occurred upon:

                           (i) Approval by the shareholders of the Company of a
         reorganization, merger, consolidation or other form of corporate
         transaction or series of transactions, in each case, with respect to
         which persons who were the shareholders of the Company immediately
         prior to such reorganization, merger or consolidation or other
         transaction do not, immediately thereafter, own more than 50% of the

                                      -11-
<PAGE>

         combined voting power entitled to vote generally in the election of
         directors of the reorganized, merged or consolidated company's then
         outstanding voting securities, or a liquidation or dissolution of the
         Company or the sale of all or substantially all of the assets of the
         Company (unless such reorganization, merger, consolidation or other
         corporate transaction, liquidation, dissolution or sale (any such event
         being referred to as a "Corporate Transaction") is subsequently
         abandoned); or

                           (ii) Individuals who, as of the date hereof,
         constitute the Board (as of the date hereof the "Incumbent Board")
         cease for any reason to constitute at least a majority of the Board,
         provided that any person becoming a director subsequent to the date
         hereof whose election, or nomination for election by the Company's
         shareholders, was approved by a vote of at least a majority of the
         directors then comprising the Incumbent Board (other than an election
         or nomination of an individual whose initial assumption of office is in
         connection with an actual or threatened election contest relating to
         the election of the Directors of the Company, as such terms are used in
         Rule 14a-11 of Regulation 14A promulgated under the Securities Exchange
         Act) shall be, for purposes of this Agreement, considered as though
         such person were a member of the Incumbent Board.

                  (c) Definition of "Change in Control Price." The "Change in
Control Price" means an amount in cash equal to the higher of (i) the amount of
cash and fair market value of property that is the highest price per share paid
(including extraordinary dividends) in any Corporate Transaction triggering the
Change in Control under Section 9(b)(i) hereof or any liquidation of shares
following a sale of substantially all of the assets of the Company, or (ii) the
highest Fair Market Value per share at any time during the 60-day period
preceding and the 60-day period following the Change in Control.

         10. General Provisions.

                  (a) Compliance With Legal and Other Requirements. The Company
may, to the extent deemed necessary or advisable by the Committee or the Board,
postpone the issuance or delivery of Stock or payment of other benefits under
any Award until completion of such registration or qualification of such Stock
or other required action under any federal or state law, rule or regulation,
listing or other required action with respect to any stock exchange or automated
quotation system upon which the Stock or other Company securities are listed or
quoted, or compliance with any other obligation of the Company, as the Committee
or the Board, may consider appropriate, and may require any Participant to make
such representations, furnish such information and comply with or be subject to
such other conditions as it may consider appropriate in connection with the
issuance or delivery of Stock or payment of other benefits in compliance with
applicable laws, rules, and regulations, listing requirements, or other
obligations. The foregoing notwithstanding, in connection with a Change in
Control, the Company shall take or cause to be taken no action, and shall
undertake or permit to arise no legal or contractual obligation, that results or
would result in any postponement of the issuance or delivery of Stock or payment
of benefits under any Award or the imposition of any other conditions on such
issuance, delivery or payment, to the extent that such postponement or other
condition would represent a greater burden on a Participant than existed on the
90th day preceding the Change in Control.

                  (b) Limits on Transferability; Beneficiaries. No Award or
other right or interest of a Participant under the Plan, including any Award or
right which constitutes a derivative security as generally defined in Rule
16a-1(c) under the Exchange Act, shall be pledged, hypothecated or otherwise
encumbered or subject to any lien, obligation or liability of such Participant
to any party (other than the Company or a Subsidiary), or assigned or
transferred by such Participant otherwise than by will or the laws of descent
and distribution or to a Beneficiary upon the death of a Participant, and such
Awards or rights that may be exercisable shall be exercised during the lifetime
of the Participant only by the Participant or his or her guardian or legal
representative, except that Awards and other rights (other than ISOs and SARs in
tandem therewith) may be transferred to one or more Beneficiaries or other
transferees during the lifetime of the Participant, and may be exercised by such
transferees in accordance with the terms of such Award, but only if and to the
extent such transfers and exercises are permitted by the Committee or the Board
pursuant to the express terms of an Award agreement (subject to any terms and
conditions which the Committee or the Board may impose thereon, and further
subject to any prohibitions or restrictions on such transfers pursuant to Rule
16b-3). A Beneficiary, transferee, or other person claiming any rights under the
Plan from or

                                      -12-
<PAGE>

through any Participant shall be subject to all terms and conditions of the Plan
and any Award agreement applicable to such Participant, except as otherwise
determined by the Committee or the Board, and to any additional terms and
conditions deemed necessary or appropriate by the Committee or the Board.

                  (c) Adjustments. In the event that any dividend or other
distribution (whether in the form of cash, Stock, or other property),
recapitalization, forward or reverse split, reorganization, merger,
consolidation, spin-off, combination, repurchase, share exchange, liquidation,
dissolution or other similar corporate transaction or event affects the Stock
such that a substitution or adjustment is determined by the Committee or the
Board to be appropriate in order to prevent dilution or enlargement of the
rights of Participants under the Plan, then the Committee or the Board shall, in
such manner as it may deem equitable, substitute or adjust any or all of (i) the
number and kind of shares of Stock which may be delivered in connection with
Awards granted thereafter, (ii) the number and kind of shares of Stock by which
annual per-person Award limitations are measured under Section 5 hereof, (iii)
the number and kind of shares of Stock subject to or deliverable in respect of
outstanding Awards and (iv) the exercise price, grant price or purchase price
relating to any Award and/or make provision for payment of cash or other
property in respect of any outstanding Award. In addition, the Committee (and
the Board if and only to the extent such authority is not required to be
exercised by the Committee to comply with Code Section 162(m)) is authorized to
make adjustments in the terms and conditions of, and the criteria included in,
Awards (including Performance Awards and performance goals, and Annual Incentive
Awards and any Annual Incentive Award pool or performance goals relating
thereto) in recognition of unusual or nonrecurring events (including, without
limitation, events described in the preceding sentence, as well as acquisitions
and dispositions of businesses and assets) affecting the Company, any Subsidiary
or any business unit, or the financial statements of the Company or any
Subsidiary, or in response to changes in applicable laws, regulations,
accounting principles, tax rates and regulations or business conditions or in
view of the Committee's assessment of the business strategy of the Company, any
Subsidiary or business unit thereof, performance of comparable organizations,
economic and business conditions, personal performance of a Participant, and any
other circumstances deemed relevant; provided that no such adjustment shall be
authorized or made if and to the extent that such authority or the making of
such adjustment would cause Options, SARs, Performance Awards granted under
Section 8(b) hereof or Annual Incentive Awards granted under Section 8(c) hereof
to Participants designated by the Committee as Covered Employees and intended to
qualify as "performance-based compensation" under Code Section 162(m) and the
regulations thereunder to otherwise fail to qualify as "performance-based
compensation" under Code Section 162(m) and regulations thereunder.

                  (d) Taxes. The Company and any Subsidiary is authorized to
withhold from any Award granted, any payment relating to an Award under the
Plan, including from a distribution of Stock, or any payroll or other payment to
a Participant, amounts of withholding and other taxes due or potentially payable
in connection with any transaction involving an Award, and to take such other
action as the Committee or the Board may deem advisable to enable the Company
and Participants to satisfy obligations for the payment of withholding taxes and
other tax obligations relating to any Award. This authority shall include
authority to withhold or receive Stock or other property and to make cash
payments in respect thereof in satisfaction of a Participant's tax obligations,
either on a mandatory or elective basis in the discretion of the Committee.

                  (e) Changes to the Plan and Awards. The Board may amend,
alter, suspend, discontinue or terminate the Plan, or the Committee's authority
to grant Awards under the Plan, without the consent of stockholders or
Participants, except that any amendment or alteration to the Plan shall be
subject to the approval of the Company's stockholders not later than the annual
meeting next following such Board action if such stockholder approval is
required by any federal or state law or regulation (including, without
limitation, Rule 16b-3 or Code Section 162(m)) or the rules of any stock
exchange or automated quotation system on which the Stock may then be listed or
quoted, and the Board may otherwise, in its discretion, determine to submit
other such changes to the Plan to stockholders for approval; provided that,
without the consent of an affected Participant, no such Board action may
materially and adversely affect the rights of such Participant under any
previously granted and outstanding Award. The Committee or the Board may waive
any conditions or rights under, or amend, alter, suspend, discontinue or
terminate any Award theretofore granted and any Award agreement relating
thereto, except as otherwise provided in the Plan; provided that, without the
consent of an affected Participant, no such Committee or the Board action may
materially and adversely affect the rights of such Participant under such Award.

                                      -13-
<PAGE>

Notwithstanding anything in the Plan to the contrary, if any right under this
Plan would cause a transaction to be ineligible for pooling of interest
accounting that would, but for the right hereunder, be eligible for such
accounting treatment, the Committee or the Board may modify or adjust the right
so that pooling of interest accounting shall be available, including the
substitution of Stock having a Fair Market Value equal to the cash otherwise
payable hereunder for the right which caused the transaction to be ineligible
for pooling of interest accounting.

                  (f) Limitation on Rights Conferred Under Plan. Neither the
Plan nor any action taken hereunder shall be construed as (i) giving any
Eligible Person or Participant the right to continue as an Eligible Person or
Participant or in the employ of the Company or a Subsidiary; (ii) interfering in
any way with the right of the Company or a Subsidiary to terminate any Eligible
Person's or Participant's employment at any time, (iii) giving an Eligible
Person or Participant any claim to be granted any Award under the Plan or to be
treated uniformly with other Participants and employees, or (iv) conferring on a
Participant any of the rights of a stockholder of the Company unless and until
the Participant is duly issued or transferred shares of Stock in accordance with
the terms of an Award.

                  (g) Unfunded Status of Awards; Creation of Trusts. The Plan is
intended to constitute an "unfunded" plan for incentive and deferred
compensation. With respect to any payments not yet made to a Participant or
obligation to deliver Stock pursuant to an Award, nothing contained in the Plan
or any Award shall give any such Participant any rights that are greater than
those of a general creditor of the Company; provided that the Committee may
authorize the creation of trusts and deposit therein cash, Stock, other Awards
or other property, or make other arrangements to meet the Company's obligations
under the Plan. Such trusts or other arrangements shall be consistent with the
"unfunded" status of the Plan unless the Committee otherwise determines with the
consent of each affected Participant. The trustee of such trusts may be
authorized to dispose of trust assets and reinvest the proceeds in alternative
investments, subject to such terms and conditions as the Committee or the Board
may specify and in accordance with applicable law.

                  (h) Nonexclusivity of the Plan. Neither the adoption of the
Plan by the Board nor its submission to the stockholders of the Company for
approval shall be construed as creating any limitations on the power of the
Board or a committee thereof to adopt such other incentive arrangements as it
may deem desirable including incentive arrangements and awards which do not
qualify under Code Section 162(m).

                  (i) Payments in the Event of Forfeitures; Fractional Shares.
Unless otherwise determined by the Committee or the Board, in the event of a
forfeiture of an Award with respect to which a Participant paid cash or other
consideration, the Participant shall be repaid the amount of such cash or other
consideration. No fractional shares of Stock shall be issued or delivered
pursuant to the Plan or any Award. The Committee or the Board shall determine
whether cash, other Awards or other property shall be issued or paid in lieu of
such fractional shares or whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.

                  (j) Governing Law. The validity, construction and effect of
the Plan, any rules and regulations under the Plan, and any Award agreement
shall be determined in accordance with the laws of the State of Maryland without
giving effect to principles of conflicts of laws, and applicable federal law.

                  (k) Plan Effective Date and Stockholder Approval; Termination
of Plan. The Plan shall become effective on the Effective Date, subject to
subsequent approval within 12 months of its adoption by the Board by
stockholders of the Company eligible to vote in the election of directors, by a
vote sufficient to meet the requirements of Code Sections 162(m) and 422, Rule
16b-3 under the Exchange Act, applicable NASDAQ requirements, and other laws,
regulations, and obligations of the Company applicable to the Plan. Awards may
be granted subject to stockholder approval, but may not be exercised or
otherwise settled in the event stockholder approval is not obtained. The Plan
shall terminate at such time as no shares of Common Stock remain available for
issuance under the Plan and the Company has no further rights or obligations
with respect to outstanding Awards under the Plan.

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