GENTA INCORPORATED

                            1998 STOCK INCENTIVE PLAN




                                Table of Contents
                                                                          Page
                                    ARTICLE I
                                     GENERAL

1.1     Purpose.........................................................   1
1.2     Administration..................................................   1
1.3     Persons Eligible for Awards.....................................   2
1.4     Types of Awards Under Plan......................................   2
1.5     Shares Available for Awards.....................................   2
1.6     Definitions of Certain Terms....................................   4

                                   ARTICLE II
                              AWARDS UNDER THE PLAN

2.1     Agreements Evidencing Awards....................................   5
2.2     No Rights as a Shareholder......................................   6
2.3     Grant of Stock Options, Stock Appreciation
          Rights and Reload Options.....................................   6
2.4     Exercise of Options and Stock Appreciation Rights...............   8
2.5     Termination of Employment; Death................................   8
2.6     Grant of Restricted Stock.......................................   9
2.7     Grant of Restricted Stock Units.................................  10
2.8     Other Stock-Based Awards........................................  10
2.9     Grant of Dividend Equivalent Rights.............................  11
2.10    Right of Recapture                  11

                                   ARTICLE III
                                  MISCELLANEOUS

3.1     Amendment of the Plan; Modification of Awards...................  11
3.2     Tax Withholding.................................................  12
3.3     Restrictions....................................................  12
3.4     Nonassignability................................................  13
3.5     Requirement of Notification of Election
          Under Section 83(b) of the Code...............................  13
3.6     Requirement of Notification Upon Disqualifying Disposition 
          Under Section 421(b) of the Code..............................  13
3.7     Change in Control, Dissolution, Liquidation, Merger.............  13
3.8     Right of Discharge Reserved.....................................  15
3.9     Nature of Payments..............................................  15
3.10    Non-Uniform Determinations......................................  16
3.11    Other Payments or Awards........................................  16
3.12    Section Headings................................................  16
3.13    Effective Date and Term of Plan.................................  16
3.14    Governing Law...................................................  16


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                                    ARTICLE I
                                     GENERAL

1.1     Purpose

               The purpose of the Genta  Incorporated  1998 Stock Incentive Plan
(the "Plan") is to provide for officers,  other  employees and directors of, and
consultants  to, Genta  Incorporated  (the  "Company") and its  subsidiaries  an
incentive  (a) to enter into and remain in the  service of the  Company,  (b) to
enhance  the  long-term  performance  of  the  Company,  and  (c) to  acquire  a
proprietary interest in the success of the Company.

1.2     Administration

               1.2.1 Subject to Section 1.2.6, the Plan shall be administered by
the  Compensation  Committee (the  "Committee") of the board of directors of the
Company (the "Board"),  which shall consist of not less than two directors.  The
members of the  Committee  shall be appointed  by, and serve at the pleasure of,
the Board. To the extent required for transactions under the Plan to qualify for
the exemptions  available under Rule 16b-3 ("Rule 16b-3")  promulgated under the
Securities Exchange Act of 1934 (the "1934 Act"), all actions relating to awards
to  persons  subject  to  Section 16 of the 1934 Act shall be taken by the Board
unless  each person who serves on the  Committee  is a  "non-employee  director"
within the meaning of Rule 16b-3 or such actions are taken by a sub-committee of
the Committee (or the Board) comprised solely of  "non-employee  directors".  To
the extent required for  compensation  realized from awards under the Plan to be
deductible  by the Company  pursuant to section  162(m) of the Internal  Revenue
Code of 1986 (the  "Code"),  the  members  of the  Committee  shall be  "outside
directors" within the meaning of section 162(m).

               1.2.2 The Committee  shall have the authority (a) to exercise all
of the  powers  granted to it under the Plan;  (b) to  construe,  interpret  and
implement the Plan and any plan agreements executed pursuant to Section 2.1; (c)
to prescribe,  or amend and rescind rules and regulations  relating to the Plan,
including  rules governing its own  operations;  (d) to make all  determinations
necessary  or advisable in  administering  the Plan;  (e) to correct any defect,
supply any omission and reconcile any  inconsistency  in the Plan;  (f) to amend
the Plan to reflect changes in applicable law; (g) to determine whether, to what
extent and under what circumstances  awards may be settled or exercised in cash,
Shares of Common Stock,  other  securities,  other awards or other property,  or
canceled,  forfeited or suspended  and the method or methods by which awards may
be settled,  canceled,  forfeited or suspended; and (h) to determine whether, to
what extent and under what  circumstances  cash,  shares of Common Stock,  other
securities,  other  awards or other  property  and other  amounts  payable  with
respect to an award shall be deferred either automatically or at the election of
the holder thereof or of the Committee.

               1.2.3  Actions of the  Committee  shall be taken by the vote of a
majority of its members.  Any action may be taken by a written instrument signed
by a majority of the  Committee  members,  and action so taken shall be fully as
effective as if it had been taken by a vote at a meeting.

               1.2.4 The  determination of the Committee on all matters relating
to the Plan or any plan agreement shall be final, binding and conclusive.

               1.2.5 No member of the  Committee  shall be liable for any action
or  determination  made in good  faith  with  respect  to the Plan or any  award
thereunder.

               1.2.6 Notwithstanding  anything to the contrary contained herein:
(a) until the Board shall appoint the members of the  Committee,  the Plan shall
be administered by the Board; and (b) the Board may, in its sole discretion,  at
any time and from time to time,  grant awards or resolve to administer the Plan.
In either of the foregoing events, the Board shall have all of the authority and
responsibility granted to the Committee herein.

1.3     Persons Eligible for Awards


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               Awards  under the Plan may be made to such  directors  (including
directors who are not  employees),  officers and other  employees of the Company
and its  subsidiaries  (including  prospective  employees  conditioned  on their
becoming  employees),  and to such  consultants,  advisers and other independent
contractors of the Company and its subsidiaries  (collectively,  "key persons"),
as the Committee shall select in its discretion.


1.4     Types of Awards Under Plan

               Awards  may be made  under the Plan in the form of (a)  incentive
stock options (within the meaning of section 422 of the Code); (b) non-qualified
stock options;  (c) stock appreciation  rights; (d) dividend  equivalent rights;
(e) restricted  stock;  (f) restricted  stock units;  and (g) other  stock-based
awards, all as more fully set forth in Article II. The term "award" means any of
the foregoing.  No incentive  stock option (other than an incentive stock option
that may be assumed or issued by the Company in connection with a transaction to
which section  424(a) of the Code applies) may be granted to a person who is not
an employee of the Company on the date of grant.

1.5     Shares Available for Awards

               1.5.1  Total  shares  available.  The  total  number of shares of
common stock of the Company,  par value $.001 per share ("Common Stock"),  which
may be  transferred  pursuant to awards  granted under the Plan shall not exceed
6,750,000; provided, however, that such number of shares may be increased at any
time or from time to time, at the  discretion  of the Board of Directors,  by an
aggregate  amount  up to the  product  of (x)  .15  and  (y)  the sum of (1) the
difference  between  (A) the  number  of shares  of  Common  Stock  which may be
obtained upon conversion of the Series D Convertible Preferred Stock pursuant to
the  modification  in the conversion  price effected by the Reset, as defined in
the fifth paragraph of Subsection 4 (a) of the  Certificate of Designations  for
the Series D Convertible  Preferred  Stock, as amended from time to time, or any
contractual modification to such Reset (collectively,  the "Reset"); and (B) the
number of shares of Common  Stock  obtainable  upon  conversion  of the Series D
Convertible  Preferred Stock  immediately prior to such Reset and (2) the number
of shares of Common Stock which may be obtained upon the exercise of any Penalty
Warrants (as defined in the  Company's  Annual  Report on Form 10-K for the year
ended December 31, 1997).  Notwithstanding  the  foregoing,  the total number of
incentive  stock options (as defined in Section  1.6.2) which may be granted may
not exceed 5,000,000  shares.  Such shares may be authorized but unissued Common
Stock or authorized  and issued  Common Stock held in the Company's  treasury or
acquired by the Company for the purposes of the Plan.  The  Committee may direct
that any stock  certificate  evidencing shares issued pursuant to the Plan shall
bear a legend setting forth such restrictions on transferability as may apply to
such shares  pursuant to the Plan. If, after the effective date of the Plan, any
award is forfeited or any award otherwise terminates or is cancelled without the
delivery of shares of Common Stock,  then the shares covered by such award or to
which such award relates shall again become  available for transfer  pursuant to
awards  granted or to be granted  under  this Plan.  Any shares of Common  Stock
delivered  by the  Company,  any shares of Common  Stock  with  respect to which
awards are made by the  Company and any shares of Common  Stock with  respect to
which the Company becomes  obligated to make awards,  through the assumption of,
or in substitution for,  outstanding  awards  previously  granted by an acquired
entity,  shall not be counted against the shares available for awards under this
Plan.

               1.5.2  Individual  Limit.  The  total  number of shares of Common
Stock with respect to which stock options and stock  appreciation  rights may be
granted to any one employee of the Company or a  subsidiary  during any two-year
period shall not exceed 8,000,000 shares.

               1.5.3  Adjustments.   Subject  to  any  required  action  by  the
shareholders  of the Company,  the number of shares of Common  Stock  covered by
each outstanding award, the number of shares available for awards, the number of
shares  that may be  subject  to awards to any one  employee,  and the price per
share  of  Common  Stock  covered  by  each  such  outstanding  award  shall  be
proportionately  adjusted  for any  increase or decrease in the number of issued
shares of Common Stock resulting from a stock split,  reverse stock split, stock
dividend,  combination  or  reclassification  of the Common Stock,  or any other
increase or decrease in the number


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of issued shares of Common Stock effected  without receipt of  consideration  by
the Company; provided, however, that conversion of any convertible securities of
the  Company  shall  not be deemed to have been  "effected  without  receipt  of
consideration."   Such  adjustment  shall  be  made  by  the  Committee,   whose
determination in that respect shall be final, binding and conclusive.  Except as
expressly  provided herein or in the applicable  plan agreement,  no issuance by
the  Company of shares of stock of any class,  or  securities  convertible  into
shares of stock of any class,  shall affect, and no adjustment by reason thereof
shall be made with  respect  to, the  number or price of shares of Common  Stock
subject to an award.  After any adjustment  made pursuant to this Section 1.5.3,
the number of shares subject to each  outstanding  award shall be rounded to the
nearest whole number.

               1.5.4  Except as  provided  in this  Section  1.5 and in  Section
2.3.8,  there  shall be no limit on the  number  or the  value of the  shares of
Common Stock that may be subject to awards to any individual under the Plan.

1.6     Definitions of Certain Terms

               1.6.1 The "Fair  Market  Value" of a share of Common Stock on any
day shall be determined as follows.

                    (a) If the  principal  market  for  the  Common  Stock  (the
"Market")  is a national  securities  exchange or the  National  Association  of
Securities  Dealers  Automated  Quotation System  ("NASDAQ")  National Market or
Small Cap Market, the last sale price or, if no reported sales take place on the
applicable date, the average of the high bid and low asked price of Common Stock
as  reported  for such Market on such date or, if no such  quotation  is made on
such date, on the next  preceding day on which there were  quotations,  provided
that such  quotations  shall have been made  within the ten (10)  business  days
preceding the applicable date;

                    (b) If the Common Stock is actively traded but paragraph (a)
does not apply, the average of the high bid and low asked price for Common Stock
on the applicable  date, or, if no such quotations  shall have been made on such
date, on the next  preceding day on which there were  quotations,  provided that
such quotations shall have been made within the ten (10) business days preceding
the applicable date; or,

                   (c) In the event  that  neither  paragraph  (a) nor (b) shall
apply,  the Fair  Market  Value of a share of  Common  Stock on any day shall be
determined in good faith by the Committee.

               1.6.2 The term  "incentive  stock option" means an option that is
intended  to qualify  for  special  federal  income tax  treatment  pursuant  to
sections 421 and 422 of the Code, as now constituted or subsequently amended, or
pursuant to a successor provision of the Code, and which is so designated in the
applicable plan agreement.  Any option that is not specifically designated as an
incentive stock option shall under no  circumstances  be considered an incentive
stock  option.  Any option that is not an incentive  stock option is referred to
herein as a "nonqualified stock option."

               1.6.3 The term "employment" means, in the case of a grantee of an
award  under  the Plan who is not an  employee  of the  Company,  the  grantee's
association with the Company or a subsidiary as a director, consultant, adviser,
other independent contractor or otherwise.

               1.6.4  A  grantee  shall  be  deemed  to have a  "termination  of
employment"  upon  ceasing  to be  employed  by  the  Company  and  all  of  its
subsidiaries  or by a  corporation  assuming  awards in a  transaction  to which
section  424(a)  of the  Code  applies.  The  Committee  may  in its  discretion
determine  (a)  whether  any  leave of  absence  constitutes  a  termination  of
employment for purposes of the Plan;  (b) the impact,  if any, of any such leave
of absence on awards theretofore made under the Plan; and (c) when a change in a
non-employee's  association  with  the  Company  constitutes  a  termination  of
employment  for  purposes  of the Plan.  The  Committee  shall have the right to
determine whether a grantee's termination of employment is a dismissal for cause
and


<PAGE>

the date of termination in such case, which date the Committee may retroactively
deem  to  be  the  date  of  the  action  that  is  cause  for  dismissal.  Such
determinations of the Committee shall be final, binding and conclusive.

               1.6.5 The term "cause," when used in connection with  termination
of  a   grantee's   employment,   shall  have  the  meaning  set  forth  in  any
then-effective  employment  agreement  between  the grantee and the Company or a
subsidiary  thereof. In the absence of such an employment  agreement  provision,
"cause" means: (a) conviction of any crime (whether or not involving the Company
or its  subsidiaries)  constituting a felony in the jurisdiction  involved;  (b)
engaging in any act which, in each case,  subjects,  or if generally known would
subject,  the Company or its  subsidiaries to public ridicule or  embarrassment;
(c) material violation of the Company's or a subsidiary's  policies,  including,
without  limitation,  those  relating to sexual  harassment or the disclosure or
misuse of  confidential  information;  (d) serious  neglect or misconduct in the
performance  of the grantee's  duties for the Company or a subsidiary or willful
or  repeated  failure  or  refusal  to  perform  such  duties;  in each  case as
determined by the Committee,  which  determination  shall be final,  binding and
conclusive.


                                   ARTICLE II
                              AWARDS UNDER THE PLAN

2.1     Agreements Evidencing Awards

               Each  award   granted   under  the  Plan   (except  an  award  of
unrestricted stock) shall be evidenced by a written agreement ("plan agreement")
which shall contain such  provisions as the  Committee in its  discretion  deems
necessary or desirable.  Such  provisions  may include,  without  limitation,  a
requirement  that the grantee become a party to a  shareholders'  agreement with
respect  to any  shares  of Common  Stock  acquired  pursuant  to the  award,  a
requirement  that the  grantee  acknowledge  that such shares are  acquired  for
investment  purposes  only,  and a right of  first  refusal  exercisable  by the
Company in the event that the grantee  wishes to transfer any such  shares.  The
Committee may grant awards in tandem with or in substitution for any other award
or awards  granted  under this Plan or any award granted under any other plan of
the Company or any  subsidiary.  Payments or transfers to be made by the Company
or any subsidiary upon the grant, exercise or payment of an award may be made in
such form as the Committee shall  determine,  including  cash,  shares of Common
Stock,  other  securities,  other awards or other  property and may be made in a
single payment or transfer, in installments or on a deferred basis, in each case
in accordance  with rules  established by the  Committee.  By accepting an award
pursuant to the Plan, a grantee  thereby  agrees that the award shall be subject
to all of  the  terms  and  provisions  of the  Plan  and  the  applicable  plan
agreement.

2.2     No Rights as a Shareholder

               No  grantee  of an option or stock  appreciation  right (or other
person  having the right to exercise such award) shall have any of the rights of
a shareholder  of the Company with respect to shares subject to such award until
the issuance of a stock  certificate  to such person for such shares.  Except as
otherwise  provided in Section 1.5.3, no adjustment shall be made for dividends,
distributions or other rights (whether ordinary or extraordinary, and whether in
cash,  securities  or other  property) for which the record date is prior to the
date such stock certificate is issued.

2.3     Grant of Stock Options, Stock Appreciation
        Rights and Reload Options

               2.3.1  The  Committee  may  grant  incentive  stock  options  and
nonqualified  stock  options  (collectively,  "options")  to purchase  shares of
Common Stock from the Company,  to such key persons, in such amounts and subject
to  such  terms  and  conditions,  as  the  Committee  shall  determine  in  its
discretion, subject to the provisions of the Plan.

               2.3.2 The Committee may grant stock  appreciation  rights to such
key persons,  in such amounts and subject to such terms and  conditions,  as the
Committee shall determine in its discretion, subject to


<PAGE>

the  provisions  of the  Plan.  Stock  appreciation  rights  may be  granted  in
connection  with all or any part of, or  independently  of, any  option  granted
under  the  Plan.  A stock  appreciation  right  granted  in  connection  with a
nonqualified  stock  option may be granted at or after the time of grant of such
option. A stock appreciation right granted in connection with an incentive stock
option may be granted only at the time of grant of such option.

               2.3.3 The  grantee of a stock  appreciation  right shall have the
right,  subject to the terms of the Plan and the applicable plan  agreement,  to
receive  from the  Company an amount  equal to (a) the excess of the Fair Market
Value  of a  share  of  Common  Stock  on the  date  of  exercise  of the  stock
appreciation right over (b) the exercise price of such right as set forth in the
plan  agreement  (or over the option  exercise  price if the stock  appreciation
right is granted in connection with an option),  multiplied by (c) the number of
shares with respect to which the stock appreciation right is exercised.  Payment
upon  exercise  of a stock  appreciation  right shall be in cash or in shares of
Common  Stock  (valued at their Fair Market Value on the date of exercise of the
stock  appreciation  right) or both, all as the Committee shall determine in its
discretion.  Upon  the  exercise  of  a  stock  appreciation  right  granted  in
connection  with an option,  the number of shares subject to the option shall be
correspondingly  reduced by the number of shares with respect to which the stock
appreciation  right is  exercised.  Upon the exercise of an option in connection
with which a stock  appreciation  right has been  granted,  the number of shares
subject to the stock appreciation right shall be correspondingly  reduced by the
number of shares with respect to which the option is exercised.

               2.3.4 Each plan  agreement  with  respect to an option  shall set
forth the amount (the  "option  exercise  price")  payable by the grantee to the
Company upon exercise of the option evidenced thereby. The option exercise price
per share shall be  determined  by the  Committee in its  discretion;  provided,
however, that the option exercise price of an incentive stock option shall be at
least 100% of the Fair Market  Value of a share of Common  Stock on the date the
option is granted  (except as permitted in  connection  with the  assumption  or
issuance  of  options  in a  transaction  to which  section  424(a)  of the Code
applies),  and provided further that in no event shall the option exercise price
be less than the par value of a share of Common Stock.

               2.3.5  Each plan  agreement  with  respect  to an option or stock
appreciation  right shall set forth the periods during which the award evidenced
thereby shall be exercisable, whether in whole or in part. Such periods shall be
determined  by the  Committee  in its  discretion;  provided,  however,  that no
incentive stock option (or a stock appreciation right granted in connection with
an incentive  stock  option) shall be  exercisable  more than 10 years after the
date of grant.

               2.3.6 The  Committee  may in its  discretion  include in any plan
agreement with respect to an option (the "original  option") a provision that an
additional option (the "additional option") shall be granted to any grantee who,
pursuant to Section 2.4.3(b), delivers shares of Common Stock in partial or full
payment of the exercise  price of the original  option.  The  additional  option
shall be for a number  of  shares  of  Common  Stock  equal to the  number  thus
delivered,  shall have an exercise  price  equal to the Fair  Market  Value of a
share of Common Stock on the date of exercise of the original option,  and shall
have an  expiration  date no later  than  the  expiration  date of the  original
option.  In the  event  that a plan  agreement  provides  for  the  grant  of an
additional option,  such Agreement shall also provide that the exercise price of
the  original  option be no less than the Fair Market Value of a share of Common
Stock on its date of grant,  and that any shares that are delivered  pursuant to
Section  2.4.3(b) in payment of such exercise  price shall have been held for at
least six months.

               2.3.7  To  the  extent  that  the  aggregate  Fair  Market  Value
(determined  as of the time the option is granted) of the stock with  respect to
which incentive stock options granted under this Plan and all other plans of the
Company and any  subsidiary  are first  exercisable  by any employee  during any
calendar  year shall exceed the maximum  limit  (currently,  $100,000),  if any,
imposed from time to time under  section 422 of the Code,  such options shall be
treated as nonqualified stock options.

               2.3.8 Notwithstanding the provisions of Sections 2.3.4 and 2.3.5,
to the extent  required under section 422 of the Code, an incentive stock option
may not be granted under the Plan to an  individual  who, at the time the option
is granted,  owns stock  possessing  more than 10% of the total combined  voting
power of all classes of stock of his  employer  corporation  or of its parent or
subsidiary corporations (as such ownership may


<PAGE>

be determined  for purposes of section  422(b)(6) of the Code) unless (a) at the
time such  incentive  stock  option is granted the option  exercise  price is at
least 110% of the Fair Market  Value of the shares  subject  thereto and (b) the
incentive stock option by its terms is not  exercisable  after the expiration of
five (5) years from the date it is granted.

2.4     Exercise of Options and Stock Appreciation Rights

               Subject to the  provisions  of this  Article  II,  each option or
stock appreciation right granted under the Plan shall be exercisable as follows:

               2.4.1 Unless the applicable plan agreement otherwise provides, an
option  or  stock   appreciation   right  shall  become   exercisable   in  four
substantially equal installments, on each of the first, second, third and fourth
anniversaries  of the date of  grant,  and  each  installment,  once it  becomes
exercisable,   shall  remain  exercisable  until  expiration,   cancellation  or
termination of the award.

               2.4.2 Unless the applicable plan agreement otherwise provides, an
option or stock  appreciation right may be exercised from time to time as to all
or part of the shares as to which such award is then  exercisable  (but,  in any
event, only for whole shares).  A stock appreciation right granted in connection
with an option may be exercised  at any time when,  and to the same extent that,
the related option may be exercised. An option or stock appreciation right shall
be  exercised by the filing of a written  notice with the Company,  on such form
and in such manner as the Committee shall prescribe.

               2.4.3 Any  written  notice  of  exercise  of an  option  shall be
accompanied  by payment for the shares being  purchased.  Such payment  shall be
made:  (a) by  certified  or  official  bank  check (or the  equivalent  thereof
acceptable to the Company) for the full option exercise price; or (b) unless the
applicable plan agreement  provides  otherwise,  by delivery of shares of Common
Stock (which, if acquired pursuant to exercise of a stock option,  were acquired
at least six months prior to the option  exercise date) and having a Fair Market
Value  (determined  as of the exercise  date) equal to all or part of the option
exercise price and a certified or official bank check (or the equivalent thereof
acceptable to the Company) for any remaining portion of the full option exercise
price; or (c) at the discretion of the Committee and to the extent  permitted by
law, by such other method as the Committee may from time to time prescribe.

               2.4.4  Promptly  after  receiving  payment  of  the  full  option
exercise  price,  or  after  receiving   notice  of  the  exercise  of  a  stock
appreciation  right for which payment will be made partly or entirely in shares,
the Company shall, subject to the provisions of Section 3.3 (relating to certain
restrictions),  deliver to the grantee or to such other  person as may then have
the right to exercise the award, a certificate or certificates for the shares of
Common  Stock for which the award has been  exercised.  If the method of payment
employed upon option  exercise so requires,  and if applicable  law permits,  an
optionee may direct the Company to deliver the  certificate(s) to the optionee's
stockbroker.

2.5     Termination of Employment; Death

               2.5.1 Except to the extent otherwise provided in Section 2.5.2 or
2.5.3 or in the applicable  plan agreement,  all options and stock  appreciation
rights  not  theretofore  exercised  shall  terminate  upon  termination  of the
grantee's employment for any reason (including death).

               2.5.2 Except to the extent  otherwise  provided in the applicable
plan agreement,  if a grantee's employment  terminates for any reason other than
death or dismissal for cause, the grantee may exercise any outstanding option or
stock appreciation right on the following terms and conditions: (a) exercise may
be made only to the extent that the grantee was  entitled to exercise  the award
on the date of employment termination; and (b) exercise must occur within ninety
(90) days after employment terminates,  except that this ninety day period shall
be increased to one year if the  termination is by reason of disability,  but in
no  event  after  the  expiration  date of the  award  as set  forth in the plan
agreement. In the case of an incentive stock option, the term


<PAGE>

"disability" for purposes of the preceding sentence shall have the meaning given
to it by section 422(c)(6) of the Code.

               2.5.3 Except to the extent  otherwise  provided in the applicable
plan  agreement,  if a  grantee  dies  while  employed  by  the  Company  or any
subsidiary,  or after employment  termination but during the period in which the
grantee's  awards are  exercisable  pursuant to Section 2.5.2,  any  outstanding
option or stock  appreciation  right shall be exercisable on the following terms
and conditions: (a) exercise may be made only to the extent that the grantee was
entitled to exercise the award on the date of death; and (b) exercise must occur
by the earlier of the first anniversary of the grantee's death or the expiration
date of the award.  Any such  exercise of an award  following a grantee's  death
shall be made  only by the  grantee's  executor  or  administrator,  unless  the
grantee's will specifically  disposes of such award, in which case such exercise
shall be made only by the recipient of such specific disposition. If a grantee's
personal  representative  or the recipient of a specific  disposition  under the
grantee's will shall be entitled to exercise any award pursuant to the preceding
sentence,  such  representative or recipient shall be bound by all the terms and
conditions  of the Plan and the  applicable  plan  agreement  which  would  have
applied to the grantee.

2.6     Grant of Restricted Stock

               2.6.1 The Committee may grant  restricted  shares of Common Stock
to such key persons,  in such amounts,  and subject to such terms and conditions
as the Committee shall determine in its discretion, subject to the provisions of
the Plan.  Restricted stock awards may be made independently of or in connection
with any other award under the Plan. A grantee of a restricted stock award shall
have no rights with respect to such award unless such grantee  accepts the award
within such period as the Committee  shall specify by executing a plan agreement
in such form as the Committee  shall  determine  and, if the Committee  shall so
require,  makes  payment to the Company by certified or official  bank check (or
the  equivalent  thereof  acceptable  to the  Company)  in  such  amount  as the
Committee may determine.

               2.6.2 Promptly after a grantee accepts a restricted  stock award,
the Company shall issue in the grantee's name a certificate or certificates  for
the  shares of Common  Stock  covered by the award.  Upon the  issuance  of such
certificate(s),  the grantee shall have the rights of a shareholder with respect
to the restricted  stock,  subject to the  non-transferability  restrictions and
Company  repurchase  rights  described  in Sections  2.6.4 and 2.6.5 and to such
other restrictions and conditions as the Committee in its discretion may include
in the applicable plan agreement.

               2.6.3  Unless  the  Committee  shall  otherwise  determine,   any
certificate  issued  evidencing  shares of restricted  stock shall remain in the
possession  of the  Company  until  such  shares  are  free of any  restrictions
specified in the applicable plan agreement.

               2.6.4  Shares  of  restricted  stock  may not be sold,  assigned,
transferred,   pledged  or  otherwise   encumbered  or  disposed  of  except  as
specifically  provided  in  this  Plan or the  applicable  plan  agreement.  The
Committee at the time of grant shall specify the date or dates (which may depend
upon or be related to the attainment of performance  goals and other conditions)
on which the non-transferability of the restricted stock shall lapse. Unless the
applicable plan agreement provides otherwise,  additional shares of Common Stock
or other property  distributed to the grantee in respect of shares of restricted
stock,  as dividends  or  otherwise,  shall be subject to the same  restrictions
applicable to such restricted stock.

               2.6.5 During the 120 days following  termination of the grantee's
employment  for any  reason,  the  Company  shall have the right to require  the
return of any shares to which restrictions on transferability apply, in exchange
for which the Company shall repay to the grantee (or the  grantee's  estate) any
amount paid by the grantee for such shares.

2.7     Grant of Restricted Stock Units


<PAGE>

               2.7.1 The Committee may grant awards of restricted stock units to
such key persons,  in such amounts,  and subject to such terms and conditions as
the Committee shall  determine in its  discretion,  subject to the provisions of
the  Plan.  Restricted  stock  units  may  be  awarded  independently  of  or in
connection with any other award under the Plan.

               2.7.2 At the time of grant,  the Committee shall specify the date
or dates on which the  restricted  stock units  shall  become  fully  vested and
nonforfeitable,  and  may  specify  such  conditions  to  vesting  as  it  deems
appropriate.  In the event of the termination of the grantee's employment by the
Company and its  subsidiaries  for any reason,  restricted stock units that have
not become nonforfeitable shall be forfeited and cancelled.

               2.7.3 At the time of  grant,  the  Committee  shall  specify  the
maturity date applicable to each grant of restricted  stock units,  which may be
determined  at the  election  of the  grantee.  Such date may be later  than the
vesting date or dates of the award.  On the  maturity  date,  the Company  shall
transfer to the grantee one  unrestricted,  fully  transferable  share of Common
Stock for each  restricted  stock unit scheduled to be paid out on such date and
not previously  forfeited.  The Committee  shall specify the purchase  price, if
any, to be paid by the grantee to the Company for such shares of Common Stock.

2.8     Other Stock-Based Awards

               The  Committee  may  grant  other  types  of  stock-based  awards
(including  the  grant of  unrestricted  shares)  to such key  persons,  in such
amounts and subject to such terms and conditions,  as the Committee shall in its
discretion  determine,  subject to the  provisions of the Plan.  Such awards may
entail the transfer of actual  shares of Common Stock to Plan  participants,  or
payment in cash or otherwise  of amounts  based on the value of shares of Common
Stock.

2.9     Grant of Dividend Equivalent Rights

               The Committee may in its discretion include in the plan agreement
with respect to any award a dividend  equivalent  right entitling the grantee to
receive amounts equal to the ordinary  dividends that would be paid,  during the
time such award is outstanding  and  unexercised,  on the shares of Common Stock
covered by such award if such shares were then outstanding.  In the event such a
provision is included in a plan agreement, the Committee shall determine whether
such  payments  shall be made in cash,  in shares of Common  Stock or in another
form,  whether they shall be conditioned upon the exercise of the award to which
they relate, the time or times at which they shall be made, and such other terms
and conditions as the Committee shall deem appropriate.

2.10    Right of Recapture

               2.10.1 If at any time  within  one year after the date on which a
participant  exercises  an  option  or  stock  appreciation  right,  or on which
restricted stock vests, or which is the maturity date of restricted stock units,
or on which income is realized by a  participant  in  connection  with any other
stock-based  award  (each  of  which  events  is  a  "realization  event"),  the
participant  (a) is  terminated  for  cause  or  (b)  engages  in  any  activity
determined  in the  discretion of the  Committee to be in  competition  with any
activity  of the  Company,  or  otherwise  inimical,  contrary or harmful to the
interests of the Company  (including,  but not limited to, accepting  employment
with or serving as a consultant,  adviser or in any other  capacity to an entity
that is in  competition  with or acting  against the  interests of the Company),
then any gain realized by the participant  from the  realization  event shall be
paid by the  participant to the Company upon notice from the Company.  Such gain
shall be determined as of the date of the realization  event,  without regard to
any subsequent  change in the Fair Market Value of a share of Common Stock.  The
Company  shall have the right to offset such gain against any amounts  otherwise
owed to the  participant  by the  Company  (whether as wages,  vacation  pay, or
pursuant to any benefit plan or other compensatory arrangement).


<PAGE>

                                   ARTICLE III
                                  MISCELLANEOUS

3.1     Amendment of the Plan; Modification of Awards

               3.1.1  The  Board  may from  time to time  suspend,  discontinue,
revise  or  amend  the  Plan  in any  respect  whatsoever,  except  that no such
amendment  shall  materially  impair  any  rights  or  materially  increase  any
obligations  under any award theretofore made under the Plan without the consent
of the grantee (or,  after the grantee's  death,  the person having the right to
exercise  the award).  For purposes of this Section 3.1, any action of the Board
or the Committee that alters or affects the tax treatment of any award shall not
be considered to materially impair any rights of any grantee.

               3.1.2 Shareholder  approval of any amendment shall be obtained to
the  extent  necessary  to comply  with  section  422 of the Code  (relating  to
incentive stock options) or other applicable law or regulation.

               3.1.3 The Committee  may amend any  outstanding  plan  agreement,
including,  without limitation,  by amendment which would accelerate the time or
times at which the award becomes  unrestricted or may be exercised,  or waive or
amend any goals, restrictions or conditions set forth in the Agreement. However,
any such amendment (other than an amendment pursuant to Section 3.7.2,  relating
to change in control) that materially impairs the rights or materially increases
the obligations of a grantee under an outstanding  award shall be made only with
the consent of the grantee (or, upon the grantee's  death, the person having the
right to exercise the award).

3.2     Tax Withholding

               3.2.1 As a condition to the receipt of any shares of Common Stock
pursuant  to any  award or the  lifting  of  restrictions  on any  award,  or in
connection  with  any  other  event  that  gives  rise  to a  federal  or  other
governmental  tax withholding  obligation on the part of the Company relating to
an award  (including,  without  limitation,  FICA  tax),  the  Company  shall be
entitled to require that the grantee  remit to the Company an amount  sufficient
in the opinion of the Company to satisfy such withholding obligation.

               3.2.2 If the event giving rise to the withholding obligation is a
transfer of shares of Common  Stock,  then,  unless  otherwise  specified in the
applicable  plan agreement,  the grantee may satisfy the withholding  obligation
imposed under Section 3.2.1 by electing to have the Company  withhold  shares of
Common  Stock  having  a Fair  Market  Value  equal to the  amount  of tax to be
withheld. For this purpose, Fair Market Value shall be determined as of the date
on which the amount of tax to be  withheld  is  determined  (and any  fractional
share amount shall be settled in cash).

3.3     Restrictions

               3.3.1  If the  Committee  shall at any  time  determine  that any
consent (as hereinafter defined) is necessary or desirable as a condition of, or
in connection  with,  the granting of any award under the Plan,  the issuance or
purchase of shares or other rights thereunder, or the taking of any other action
thereunder  (each such action a "plan action"),  then such plan action shall not
be taken,  in whole or in part,  unless and until such  consent  shall have been
effected or obtained to the full satisfaction of the Committee.

               3.3.2 The term  "consent" as used herein with respect to any plan
action  means  (a) any and all  listings,  registrations  or  qualifications  in
respect  thereof upon any  securities  exchange or under any  federal,  state or
local  law,  rule  or  regulation,  (b)  any  and  all  written  agreements  and
representations  by the grantee with respect to the  disposition  of shares,  or
with respect to any other matter,  which the Committee  shall deem  necessary or
desirable  to  comply  with  the  terms  of any such  listing,  registration  or
qualification  or to  obtain an  exemption  from the  requirement  that any such
listing,  qualification  or  registration  be made and (c) any and all consents,
clearances  and  approvals  in respect of a plan action by any  governmental  or
other regulatory bodies.


<PAGE>

3.4     Nonassignability

               Except to the extent  otherwise  provided in the applicable  plan
agreement,  no award or right  granted  to any  person  under the Plan  shall be
assignable  or  transferable  other than by will or by the laws of  descent  and
distribution,  and all such awards and rights  shall be  exercisable  during the
life of the grantee only by the grantee or the grantee's legal representative.

3.5     Requirement of Notification of
        Election Under Section 83(b) of the Code

               If any grantee  shall,  in  connection  with the  acquisition  of
shares of Common Stock under the Plan, make the election permitted under section
83(b) of the Code (that is, an election  to include in gross  income in the year
of transfer the amounts  specified in section 83(b)),  such grantee shall notify
the  Company  of such  election  within  ten (10) days of  filing  notice of the
election  with the  Internal  Revenue  Service,  in  addition  to any filing and
notification required pursuant to regulations issued under the authority of Code
section 83(b).

3.6     Requirement of Notification Upon Disqualifying
        Disposition Under Section 421(b) of the Code

               If any  grantee  shall make any  disposition  of shares of Common
Stock issued  pursuant to the  exercise of an  incentive  stock option under the
circumstances  described  in  section  421(b) of the Code  (relating  to certain
disqualifying  dispositions),  such  grantee  shall  notify the  Company of such
disposition within 10 days thereof.


3.7     Change in Control, Dissolution, Liquidation, Merger

               3.7.1 For  purposes  of this  Section  3.7, a "change in control"
shall have occurred if:

                    (a) any "person", as such term is used in Sections 13(d) and
14(d) of the 1934 Act (other than (i) the  shareholders of the Company as of the
effective  date of the Plan (the  "Current  Shareholders",  such term to include
their heirs or estates, or trusts or other entities the primary beneficiaries of
which are the Current  Shareholders  or persons  designated  by them),  (ii) the
Company or any subsidiary of the Company,  (iii) any trustee or other  fiduciary
holding  securities  under  an  employee  benefit  plan  of the  Company  or any
subsidiary of the Company, or (iv) any company owned, directly or indirectly, by
the shareholders of the Company in  substantially  the same proportions as their
ownership of stock of the  Company),  is or becomes the  "beneficial  owner" (as
defined in Rule 13d-3 under the 1934 Act), directly or indirectly, of securities
of the Company  representing  more than 50% of the combined  voting power of the
Company's then outstanding  securities  without the prior written consent of the
Committee or the Board; or

                    (b)  during  any  period  of  twenty-four  (24)  consecutive
months,  individuals  who at the effective date of the Plan constitute the Board
and any new director  whose  election by the Board or nomination for election by
the Company  shareholders  was  approved by a vote of at least a majority of the
directors then still in office who either were directors at the beginning of the
period or whose  election or nomination for election was previously so approved,
cease for any reason to constitute at least a majority thereof;

                    (c) the  shareholders  of the  Company  approve  a merger or
consolidation  of the Company with any other company  (other than a wholly-owned
subsidiary of the Company), other than (i) a merger or consolidation which would
result in the voting  securities of the Company  outstanding  immediately  prior
thereto  continuing to represent  (either by remaining  outstanding  or by being
converted  into voting  securities of the  surviving  entity) 50% or more of the
combined  voting  power of voting  securities  of the Company or such  surviving
entity  outstanding  immediately  after such merger or  consolidation  or (ii) a
merger or consolidation  effected to implement a recapitalization of the Company
(or similar transaction) in which no


<PAGE>

"person"  (as defined in Section  3.7.1(a)  above with the  exceptions  noted in
section  3.7.1(a))  acquires  more than 50% of the combined  voting power of the
Company's then outstanding securities; or

                    (d)  the  shareholders  of the  Company  approve  a plan  of
complete  liquidation of the Company or an agreement for the sale or disposition
by the  Company  of all or  substantially  all of the  Company's  assets (or any
transaction having a similar effect).

               3.7.2  Upon the happening of a change in control:

                    (a)  notwithstanding  any other  provision of this Plan, any
option or stock  appreciation  right then outstanding  shall become fully vested
and immediately exercisable upon the subsequent termination of employment of the
grantee by the Company or its  successors  without cause within one year of such
change in control  unless  the  applicable  plan  agreement  expressly  provides
otherwise;

                    (b) to the fullest  extent  permitted by law, the  Committee
may, in its sole discretion, amend any plan agreement in such manner as it deems
appropriate, including, without limitation, by amendments that advance the dates
upon which any or all outstanding awards of any type shall terminate.

               3.7.3 In the event of the proposed  dissolution or liquidation of
the Company,  all  outstanding  awards will terminate  immediately  prior to the
consummation  of  such  proposed  action,   unless  otherwise  provided  by  the
Committee.  The  Committee  may, in the exercise of its sole  discretion in such
instances,  accelerate the date on which any award becomes  exercisable or fully
vested and/or declare that any award shall terminate as of a specified date.

               3.7.4 In the event of a merger or consolidation ("merger") of the
Company with or into any other corporation or entity ("successor  corporation"),
outstanding  awards shall be assumed or an  equivalent  option or right shall be
substituted  by such  successor  corporation  or a parent or  subsidiary of such
successor corporation,  unless the Committee determines,  in the exercise of its
sole discretion, to accelerate the date on which an award becomes exercisable or
fully vested. In the absence of an assumption or substitution of awards,  awards
shall,  to the extent not exercised,  terminate as of the date of the closing of
the merger. For the purposes of this Section 3.7.4, an award shall be considered
assumed if, for every share of Common Stock subject thereto immediately prior to
the  merger,  the grantee has the right,  following  the merger,  to acquire the
consideration  received in the merger transaction by holders of shares of Common
Stock  (and if  holders  were  offered  a choice of  consideration,  the type of
consideration  chosen by the holders of a majority of the  outstanding  shares);
provided,  however,  that if such  consideration  received in the merger was not
solely common stock of the successor  corporation  or its parent,  the Committee
may, with the consent of the successor corporation and the participant,  provide
for the  consideration  to be acquired  pursuant to the award, for each share of
Common  Stock  subject  thereto,  to be  solely  common  stock of the  successor
corporation  or  its  parent  equal  in  fair  market  value  to the  per  share
consideration  received by holders of Common  Stock in the merger.  For purposes
hereof,  the term  "merger"  shall  include  any  transaction  in which  another
corporation  acquires  all of the issued  and  outstanding  Common  Stock of the
Company.

3.8     Right of Discharge Reserved

               Nothing in the Plan or in any plan  agreement  shall  confer upon
any grantee the right to continue in the employ of the Company or any subsidiary
or affect any right which the Company or any  subsidiary  may have to  terminate
such employment.

3.9     Nature of Payments

               3.9.1 Any and all  grants of awards  and  issuances  of shares of
Common Stock under the Plan shall be in consideration of services  performed for
the Company by the grantee.


<PAGE>

               3.9.2 All such grants and  issuances  shall  constitute a special
incentive  payment  to the  grantee  and  shall  not be taken  into  account  in
computing the amount of salary or compensation of the grantee for the purpose of
determining any benefits under any pension, retirement,  profit-sharing,  bonus,
life  insurance  or other  benefit plan of the Company or of any  subsidiary  or
under any agreement with the grantee, unless such plan or agreement specifically
provides otherwise.

3.10  Non-Uniform Determinations

               The Committee's determinations under the Plan need not be uniform
and may be made by it selectively among persons who receive,  or are eligible to
receive,  awards  under the Plan  (whether  or not such  persons  are  similarly
situated). Without limiting the generality of the foregoing, the Committee shall
be  entitled,   among  other   things,   to  make   non-uniform   and  selective
determinations,  and to enter into non-uniform and selective Plan agreements, as
to (a) the  persons  to  receive  awards  under  the  Plan,  (b) the  terms  and
provisions  of awards under the Plan and (c) the  treatment of leaves of absence
pursuant to Section 1.6.4.

3.11  Other Payments or Awards

               Nothing contained in the Plan shall be deemed in any way to limit
or restrict the Company from making any award or payment to any person under any
other plan,  arrangement or understanding,  whether now existing or hereafter in
effect.

3.12  Section Headings

               The  section  headings  contained  herein are for the  purpose of
convenience  only and are not  intended  to define or limit the  contents of the
sections.

3.13  Effective Date and Term of Plan

               3.13.1  The Plan was  adopted  by the Board on May 28,  1998 (the
"effective date"), subject to approval by the Company's shareholders. All awards
under the Plan prior to such shareholder  approval are subject in their entirety
to  such  approval.  If  such  approval  is not  obtained  prior  to  the  first
anniversary  of the date of  adoption  of the  Plan,  the  Plan  and all  awards
thereunder shall terminate on that date.

               3.13.2 Unless sooner  terminated by the Board,  the provisions of
the Plan  respecting the grant of incentive stock options shall terminate on the
day before  the tenth  anniversary  of the  effective  date of the Plan,  and no
incentive  stock option  awards  shall  thereafter  be made under the Plan.  All
awards made under the Plan prior to its termination shall remain in effect until
such awards have been  satisfied or terminated in accordance  with the terms and
provisions of the Plan and the applicable plan agreements.

3.14  Governing Law

               All rights and obligations  under the Plan shall be construed and
interpreted in accordance with the laws of the State of Delaware, without giving
effect to principles of conflict of laws.