EXHIBIT 10.25
                    

                              AMENDED AND RESTATED
                          APRIA HEALTHCARE GROUP INC.
                           1997 STOCK INCENTIVE PLAN



            Includes Amendment 1998-1 Made by the Board of Directors

                              As of June 30, 1998


<PAGE>
                          APRIA HEALTHCARE GROUP INC.
                            1997 STOCK INCENTIVE PLAN



ARTICLE I.   THE PLAN.

     Section 1.1. Purpose.

     The  purpose  of this Plan is to  promote  the  success  of the  Company by
providing an additional means through the grant of Awards to attract,  motivate,
retain and reward key employees,  including officers,  whether or not directors,
of the  Company  with  awards  and  incentives  for high  levels  of  individual
performance  and improved  financial  performance of the Company and to attract,
motivate  and  retain  experienced  and  knowledgeable   independent  directors.
"Corporation"  means Apria  Healthcare Group Inc., a Delaware  corporation,  and
"Company" means the Corporation and its Subsidiaries,  collectively. These terms
and other capitalized terms are defined in Article VII.

     Section 1.2. Administration and Authorization; Power and Procedure.

     (a)  Committee.  This  Plan  shall be  administered  by and all  Awards  to
Eligible Persons shall be authorized by the Committee.  Subject to the bylaws of
this Corporation,  action of the Committee with respect to the administration of
this Plan shall be taken  pursuant to a majority  vote or by  unanimous  written
consent of its members.

     (b) Plan  Awards;  Interpretation;  Powers  of  Committee.  Subject  to the
express provisions of this Plan, the Committee shall have the authority:

          (i) to determine  from among those  persons  eligible  the  particular
     Eligible Persons who will receive any Awards;

          (ii) to grant Awards to Eligible Persons, determine the price at which
     securities  will be offered or awarded and the amount of  securities  to be
     offered or awarded to any of such  persons,  determine  the other  specific
     terms and conditions of such Awards  consistent  with the express limits of
     this Plan,  establish the  installments (if any) in which such Awards shall
     become   exercisable   or  shall  vest,   or  determine   that  no  delayed
     exercisability  or  vesting  is  required,  and  establish  the  events  of
     termination or reversion of such Awards;

          (iii) to  approve  the forms of Award  Agreements  (which  need not be
     identical either as to type of award or among Participants);

          (iv) to construe and interpret this Plan and any  agreements  defining
     the rights and obligations of the Company and Participants,  further define
     the terms used in this Plan,  and  prescribe,  amend and rescind  rules and
     regulations relating to the administration of this Plan;

          (v) to cancel,  modify, or waive the Corporation's rights with respect
     to, or modify,  discontinue,  suspend,  or terminate any or all outstanding
     Awards held by Eligible  Persons,  subject to any  required  consent  under
     Section 6.6;

          (vi) to accelerate or extend the  exercisability or extend the term of
     any or all such  outstanding  Awards  within the maximum  ten-year  term of
     Awards under Section 1.6; and

          (vii) to make all other  determinations  and take such other action as
     contemplated  by this  Plan or as may be  necessary  or  advisable  for the
     administration of this Plan and the effectuation of its purposes.

     (c)  Binding  Determinations.  Any  action  taken by, or  inaction  of, the
Corporation,  any Subsidiary, the Board or the Committee relating or pursuant to
this Plan shall be within the  absolute  discretion  of that  entity or body and
shall be  conclusive  and binding  upon all  persons.  No member of the Board or
Committee, or officer of the Corporation or any Subsidiary,  shall be liable for
any such action or inaction of the entity or body, of another  person or, except
in  circumstances  involving bad faith,  of himself or herself.  Subject only to
compliance with the express  provisions  hereof, the Board and Committee may act
in their absolute  discretion in matters within their authority  related to this
Plan.

     (d) Reliance on Experts.  In making any  determination  or in taking or not
taking any action under this Plan,  the Committee or the Board,  as the case may
be, may obtain and may rely upon the advice of experts,  including  professional
advisors to the Corporation.  No director, officer or agent of the Company shall
be liable for any such action or determination  taken or made or omitted in good
faith.

     (e) Delegation.  The Committee may delegate ministerial,  non-discretionary
functions to a third-party  administrator  or to individuals who are officers or
employees of the Company.

     Section 1.3. Participation.

     Awards may be  granted  by the  Committee  only to those  persons  that the
Committee  determines to be Eligible  Persons.  An Eligible  Person who has been
granted an Award may, if otherwise eligible, be granted additional Awards if the
Committee shall so determine.

     Section 1.4. Shares Available for Awards; Share Limits.

     (a) Shares Available. Subject to the provisions of Section 6.2, the capital
stock that may be delivered under this Plan shall be shares of the Corporation's
authorized but unissued  Common Stock and any shares of its Common Stock held as
treasury shares. The shares may be delivered for any lawful consideration.

     (b) Share Limits.  The aggregate  maximum  number of shares of Common Stock
that may be delivered  pursuant to Awards  (including  Incentive  Stock Options)
granted  under this Plan and which are  required  to be charged or  reserved  by
provisions of Section 1.4(c) (the "Maximum  Aggregate Limit") shall be 2,500,000
shares,  plus in each calendar year,  commencing in 1998,  occurring  during the
term of this Plan, 1% of the issued and outstanding  shares of the Corporation's
Common  Stock as of  December 31 of the  preceding  calendar  year.  The maximum
number of shares of Common  Stock  that may be  delivered  pursuant  to  Options
qualified as Incentive  Stock  Options  granted under Article II of this Plan is
7,500,000  shares.  The  maximum  number of shares  subject to Options and Stock
Appreciation  Rights that are granted during any calendar year to any individual
shall be limited to 100,000 shares. Each of the three foregoing numerical limits
shall be subject to adjustment as  contemplated  by this Section 1.4 and Section
6.2.

     (c) Share  Reservation;  Replenishment  and Reissue of Unvested Awards.  No
Award may be granted  under this Plan unless,  on the date of grant,  the sum of
(i) the maximum  number of shares  issuable at any time  pursuant to such Award,
plus (ii) the number of shares  that have  previously  been  issued  pursuant to
Awards  granted  under this Plan,  other than  reacquired  shares  available for
reissue consistent with any applicable legal limitations, plus (iii) the maximum
number  of  shares  that may be  issued  at any time  after  such  date of grant
pursuant  to Awards  that are  outstanding  on such  date,  does not  exceed the
Maximum  Aggregate  Limit.  Shares that are subject to or underlie  Awards which
expire or for any reason are cancelled or  terminated,  are  forfeited,  fail to
vest, or for any other reason are not paid or delivered under this Plan, as well
as reacquired  shares,  shall again,  except to the extent prohibited by law, be
available for subsequent  Awards under the Plan. Except as limited by law, if an
Award is or may be settled only in cash,  such Award need not be counted against
any of the limits under this Section 1.4.

     Section 1.5. Grant of Awards.

     Subject  to the  express  provisions  of this  Plan,  the  Committee  shall
determine the number of shares of Common Stock subject to each Award,  the price
(if any) to be paid for the shares or the Award and, in the case of  Performance
Share Awards, in addition to matters  addressed in Section 1.2(b),  the specific
objectives, goals and performance criteria (such as an increase in sales, market
value,  earnings or book value over a base period,  the years of service  before
vesting,  the relevant job  classification  or level of  responsibility or other
factors)  that further  define the terms of the  Performance  Share Award.  Each
Award  shall  be  evidenced  by an  Award  Agreement  signed  on  behalf  of the
Corporation  and, if required by the Committee,  by the  Participant.  The Award
Agreement  shall set  forth  the  material  terms  and  conditions  of the Award
established  by the Committee  consistent  with the specific  provisions of this
Plan. The Award Agreement may be executed on behalf of the Corporation by a duly
authorized officer by manual or facsimile signature.

     Section 1.6. Award Period.

     Each Award and all executory rights or obligations  under the related Award
Agreement  shall  expire  on such  date (if any) as shall be  determined  by the
Committee,  but in the case of Options or other  rights to acquire  Common Stock
not later than ten (10) years after the Award Date.

     Section 1.7. Limitations on Exercise and Vesting of Awards.

     (a)  Provisions  for  Exercise.  Unless the Committee  otherwise  expressly
provides,  no Award shall be exercisable or shall vest until at least six months
after the  initial  Award  Date,  and once  exercisable  an Award  shall  remain
exercisable until the expiration or earlier termination of the Award.

     (b) Procedure.  Any exercisable  Award shall be deemed to be exercised when
the Secretary of the Corporation or his designee receives written notice of such
exercise  from the  Participant,  together  with any  required  payment  made in
accordance with Section 2.2(a).

     (c) Fractional Shares/Minimum Issue. Fractional share interests shall be
disregarded,  but may be accumulated.  The Committee,  however, may determine in
the case of Eligible Persons that cash, other securities, or other property will
be paid or transferred in lieu of any fractional share interests.  No fewer than
100 shares may be  purchased  on  exercise  of any Award at one time  unless the
number  purchased is the total number at the time  available for purchase  under
the Award.

     Section 1.8. No Transferability;Limited Exception to Transfer Restrictions.

     (a) Limit on Exercise and Transfer.  Unless otherwise expressly provided in
(or pursuant to) this Section 1.8, by applicable law and by the Award Agreement,
as the same may be amended, (i) all Awards are non-transferable and shall not be
subject in any manner to sale, transfer, anticipation,  alienation,  assignment,
pledge,  encumbrance  or charge;  (ii)  Awards  shall be  exercised  only by the
Participant;  and (iii) amounts payable or shares issuable  pursuant to an Award
shall be delivered only to (or for the account of) the Participant.

     (b) Exceptions. The Committee may permit Awards to be exercised by and paid
to certain  persons or  entities  related to the  Participant  pursuant  to such
conditions and procedures as the Committee may establish. Any permitted transfer
shall  be  subject  to  the  condition  that  the  Committee   receive  evidence
satisfactory  to it that the  transfer  is  being  made for  estate  and/or  tax
planning  purposes or a gratuitous or donative  basis and without  consideration
(other than nominal  consideration).  Notwithstanding  the foregoing,  Incentive
Stock  Options  and  Restricted  Stock  Awards  shall be  subject to any and all
applicable transfer restrictions under the Code.

     (c) Further  Exceptions  to Limits On  Transfer.  The exercise and transfer
restrictions in Section 1.8(a) shall not apply to:

          (i) transfers to the Corporation,

          (ii) the designation of a beneficiary to receive benefits in the event
     of the Participant's death or, if the Participant has died, transfers to or
     exercise by the Participant's beneficiary,  or, in the absence of a validly
     designated  beneficiary,  transfers  by will or the  laws  of  descent  and
     distribution,

          (iii) transfers pursuant to a QDRO order,

          (iv) if the Participant has suffered a disability, permitted transfers
     or   exercises  on  behalf  of  the   Participant   by  his  or  her  legal
     representative, or

          (v)  the  authorization  by  the  Committee  of  "cashless   exercise"
     procedures with third parties who provide  financing for the purpose of (or
     who otherwise facilitate) the exercise of Awards consistent with applicable
     laws and the express authorization of the Committee.

Notwithstanding  the foregoing,  Incentive  Stock Options and  Restricted  Stock
Awards shall be subject to all applicable transfer restrictions under the Code.

     Section 1.9. Acceptance of Notes to Finance Exercise.

     The  Corporation  may, with the  Committee's  approval,  accept one or more
notes from any Eligible Person in connection with the exercise or receipt of any
outstanding Award; provided that any such note shall be subject to the following
terms and conditions:

     (a) The  principal  of the note shall not exceed the amount  required to be
paid to the Corporation upon the exercise or receipt of one or more Awards under
the  Plan and the  note  shall  be  delivered  directly  to the  Corporation  in
consideration of such exercise or receipt.

     (b) The  initial  term of the note shall be  determined  by the  Committee;
provided  that the term of the note,  including  extensions,  shall not exceed a
period of five years.

     (c) The note shall provide for full recourse to the  Participant  and shall
bear  interest  at a rate  determined  by the  Committee  but not less  than the
interest rate necessary to avoid the imputation of interest under the Code.

     (d) If the employment of the Participant  terminates,  the unpaid principal
balance of the note shall become due and payable on the 10th  business day after
such termination;  provided,  however, that if a sale of such shares would cause
such Participant to incur liability under Section 16(b) of the Exchange Act, the
unpaid  balance  shall become due and payable on the 10th business day after the
first day on which a sale of such shares could have been made without  incurring
such liability  assuming for these purposes that there are no other transactions
(or deemed  transactions  in securities of this  Corporation) by the Participant
subsequent to such termination.

     (e) If required by the  Committee or by  applicable  law, the note shall be
secured by a pledge of any shares or rights financed  thereby in compliance with
applicable law.

     (f) The terms,  repayment provisions,  and collateral release provisions of
the note and the pledge  securing the note shall conform with  applicable  rules
and regulations of the Federal Reserve Board as then in effect.

     Section 1.10. Limitations on Grants of Awards to Non-Employee Directors.

     Notwithstanding anything else contained herein to the contrary, the maximum
number of shares subject to Nonqualified Stock Options granted to a Non-Employee
Director in any calendar year shall not exceed 30,000 shares.

ARTICLE II. OPTIONS.

     Section 2.1. Grants.

     One or more  Options  may be  granted  under this  Article to any  Eligible
Person.  Each  Option  granted  shall  be  designated  in the  applicable  Award
Agreement  by the  Committee  as either an  Incentive  Stock  Option  subject to
Section 2.3, or a Non-Qualified Stock Option.

     Section 2.2. Option Price.

     (a)  Pricing  Limits.  The  purchase  price per share of the  Common  Stock
covered by each Option shall be  determined  by the Committee at the time of the
Award,  but in the case of Incentive  Stock  Options shall not be less than 100%
(110% in the case of a Participant  described in Section 2.4) of the Fair Market
Value of the Common Stock on the date of grant.

     (b) Payment  Provisions.  The  purchase  price of any shares  purchased  on
exercise of an Option  granted  under this Article  shall be paid in full at the
time of each purchase in one or a combination of the following  methods:  (i) in
cash or by electronic funds transfer;  (ii) by check payable to the order of the
Corporation; (iii) if authorized by the Committee or specified in the applicable
Award  Agreement,  by a promissory note of the  Participant  consistent with the
requirements  of Section  1.9;  (iv) by notice and third  party  payment in such
manner as may be authorized by the Committee;  or (iv) by the delivery of shares
of Common Stock of the Corporation  already owned by the Participant,  provided,
however,   that  the  Committee  may  in  its  absolute   discretion  limit  the
Participant's  ability to  exercise  an Award by  delivering  such  shares,  and
provided  further that any shares  delivered which were initially  acquired upon
exercise of an Option must have been owned by the  Participant  for at least six
months as of the date of  delivery.  Shares of Common  Stock used to satisfy the
exercise  price of an Option  shall be valued at their Fair Market  Value on the
date of exercise.

     Section 2.3. Limitations on Grant and Terms of Incentive Stock Options.

     (a) $100,000  Limit.  To the extent that the aggregate Fair Market Value of
stock with respect to which incentive stock options first become  exercisable by
a Participant  in any calendar year exceeds  $100,000,  taking into account both
Common  Stock  subject  to  Incentive  Stock  Options  under this Plan and stock
subject to incentive  stock  options under all other plans of the Company or any
parent corporation, such options shall be treated as Nonqualified Stock Options.
For this purpose, the Fair Market Value of the stock subject to options shall be
determined  as of the date the options were  awarded.  In reducing the number of
options treated as incentive stock options to meet the $100,000 limit,  the most
recently  granted  options shall be reduced first.  To the extent a reduction of
simultaneously  granted  options is necessary to meet the  $100,000  limit,  the
Committee may, in the manner and to the extent permitted by law, designate which
shares of Common  Stock are to be treated  as shares  acquired  pursuant  to the
exercise of an Incentive Stock Option.

     (b) Option Period.  Each Option and all rights  thereunder  shall expire no
later than ten years after the Award Date.

     (c) Other  Code  Limits.  Incentive  Stock  Options  may only be granted to
Eligible  Employees who are actually employed by the Corporation or a Subsidiary
and that satisfy the other eligibility  requirements of the Code. There shall be
imposed in any Award  Agreement  relating to Incentive  Stock Options such other
terms and  conditions as from time to time are required in order that the Option
be an  "incentive  stock  option" as that term is defined in Section  422 of the
Code.

     Section 2.4. Limits on 10% Holders.

     No Incentive Stock Option may be granted to any person who, at the time the
Option is granted,  owns (or is deemed to own under Section  424(d) of the Code)
shares  of  outstanding  Common  Stock  possessing  more  than 10% of the  total
combined  voting  power of all classes of stock of the  Corporation,  unless the
exercise  price of such Option is at least 110% of the Fair Market  Value of the
stock  subject  to the Option  and such  Option by its terms is not  exercisable
after the expiration of five years from the date such Option is granted.

     Section 2.5. Cancellation and Regrant/Waiver of Restrictions.

     Subject to Section 1.4 and the specific  limitations on Awards contained in
this  Plan,  the  Committee  from time to time may  authorize,  generally  or in
specific  cases only,  for the benefit of any Eligible  Person any adjustment in
the  exercise or purchase  price,  the  vesting  schedule,  the number of shares
subject to, the  restrictions  upon or the term of, an Award  granted under this
Article by cancellation of an outstanding  Award and a subsequent  regranting of
an Award, by amendment, by substitution of an outstanding Award, by waiver or by
other legally valid means. Such amendment or other action may result among other
changes  in an  exercise  or  purchase  price  which is higher or lower than the
exercise or purchase price of the original  Award or prior Award,  provide for a
greater or lesser number of shares subject to the Award, or provide for a longer
or shorter vesting or exercise period.

     Section 2.6. Options and Rights in Substitution for Stock Options Granted
                  by Other Corporations.

     Options and Stock  Appreciation  Rights may be granted to Eligible  Persons
under this Plan in  substitution  for employee  stock  options  granted by other
entities to persons who are or who will  become  Eligible  Persons in respect of
the Company,  in connection with a distribution,  merger or reorganization by or
with the granting  entity or an affiliated  entity,  or the  acquisition  by the
Company,  directly or indirectly,  of all or a substantial  part of the stock or
assets of the other entity.

ARTICLE III. STOCK APPRECIATION RIGHTS.

     Section 3.1. Grants.

     In its discretion,  the Committee may grant a Stock  Appreciation  Right to
any Eligible  Person either  concurrently  with the grant of another Award or in
respect of an outstanding  Award, in whole or in part, or  independently  of any
other  Award.  Any  Stock  Appreciation  Right  granted  in  connection  with an
Incentive  Stock  Option  shall  contain such terms as may be required to comply
with the provisions of Section 422 of the Code and the  regulations  promulgated
thereunder, unless the holder otherwise agrees.

     Section 3.2. Exercise of Stock Appreciation Rights.

     (a)  Exercisability.  Unless the Award Agreement or the Committee otherwise
provides,  a  Stock  Appreciation  Right  related  to  another  Award  shall  be
exercisable  at such time or times,  and to the extent,  that the related  Award
shall be exercisable.

     (b) Effect on  Available  Shares.  To the extent that a Stock  Appreciation
Right is exercised,  the number of underlying shares of Common Stock theretofore
subject to a related Award shall be charged against the maximum amount of Common
Stock that may be delivered  pursuant to Awards  under this Plan.  The number of
shares  subject to the Stock  Appreciation  Right and the related  Option of the
Participant  shall be reduced by the number of underlying shares as to which the
exercise related, unless the Award Agreement otherwise provides.

     (c) Stand-Alone SARs. A Stock Appreciation  Right granted  independently of
any  other  Award  shall be  exercisable  pursuant  to the  terms  of the  Award
Agreement but in no event  earlier than six months after the Award Date,  except
in the case of death or Total Disability.

     Section 3.3. Payment.

     (a) Amount.  Unless the Committee  otherwise  provides,  upon exercise of a
Stock Appreciation Right and the attendant  surrender of an exercisable  portion
of any related Award, the Participant shall be entitled to receive payment of an
amount determined by multiplying

          (i) the  difference  obtained by  subtracting  the exercise  price per
     share of Common  Stock  under the  related  Award  (if  applicable)  or the
     initial share value  specified in the Award from the Fair Market Value of a
     share of Common  Stock on the date of  exercise  of the Stock  Appreciation
     Right, by

          (ii) the number of shares with respect to which the Stock Appreciation
     Right shall have been exercised.

     (b) Form of Payment. The Committee, in its sole discretion, shall determine
the form in which payment shall be made of the amount  determined  under Section
3.3(a) above, either solely in cash, solely in shares of Common Stock (valued at
Fair Market Value on the date of exercise of the Stock  Appreciation  Right), or
partly in such shares and partly in cash, provided that the Committee shall have
determined that such exercise and payment are consistent with applicable law. If
the Committee  permits the  Participant to elect to receive cash or shares (or a
combination  thereof) on such  exercise,  any such election  shall be subject to
such conditions as the Committee may impose.

ARTICLE IV. RESTRICTED STOCK AWARDS.

     Section 4.1. Grants.

     The Committee may, in its discretion,  grant one or more  Restricted  Stock
Awards to any Eligible  Person.  Each  Restricted  Stock Award  Agreement  shall
specify  the number of shares of Common  Stock to be issued to the  Participant,
the date of such issuance,  the consideration for such shares (but not less than
the minimum lawful consideration under applicable state law) by the Participant,
the extent to which the Participant  shall be entitled to dividends,  voting and
other  rights in  respect of the shares  prior to vesting  and the  restrictions
imposed  on  such  shares  and  the  conditions  of  release  or  lapse  of such
restrictions.  Such  restrictions  shall not lapse earlier than six months after
the Award Date, except to the extent the Committee may otherwise provide.  Stock
certificates  evidencing  shares of  Restricted  Stock  pending the lapse of the
restrictions  ("restricted  shares")  shall  bear a  legend  making  appropriate
reference  to the  restrictions  imposed  hereunder  and  shall  be  held by the
Corporation  or  by  a  third  party  designated  by  the  Committee  until  the
restrictions  on such shares  shall have lapsed and the shares shall have vested
in accordance with the provisions of the Award and Section 1.7. Upon issuance of
the  Restricted  Stock Award,  the  Participant  may be required to provide such
further  assurance  and  documents as the  Committee  may require to enforce the
restrictions.

     Section 4.2. Restrictions.

     (a)  Pre-Vesting  Restraints.  Except as  provided  in Section 4.1 and 1.8,
restricted  shares  comprising  any  Restricted  Stock  Award  may not be  sold,
assigned,  transferred,  pledged or otherwise disposed of or encumbered,  either
voluntarily or involuntarily,  until the restrictions on such shares have lapsed
and the shares have become vested.

     (b) Dividend and Voting Rights. Unless otherwise provided in the applicable
Award  Agreement,  a  Participant  receiving a  Restricted  Stock Award shall be
entitled to cash  dividend and voting  rights for all shares  issued even though
they are not vested, provided that such rights shall terminate immediately as to
any restricted shares which cease to be eligible for vesting.

     (c) Cash  Payments.  If the  Participant  shall have paid or received  cash
(including any dividends) in connection  with the  Restricted  Stock Award,  the
Award  Agreement  shall  specify  whether  and to what extent such cash shall be
returned (with or without an earnings factor) as to any restricted  shares which
cease to be eligible for vesting.

     Section 4.3. Return to the Corporation.

     Unless the Committee otherwise  expressly provides,  restricted shares that
remain subject to  restrictions  at the time of termination of employment or are
subject to other  conditions to vesting that have not been satisfied by the time
specified in the applicable Award Agreement shall not vest and shall be returned
to the  Corporation  in such  manner  and on such terms as the  Committee  shall
therein provide.

ARTICLE V. PERFORMANCE SHARE AWARDS AND STOCK BONUSES.

     Section 5.1. Grants of Performance Share Awards.

     The Committee may, in its  discretion,  grant  Performance  Share Awards to
Eligible Persons based upon such factors as the Committee shall deem relevant in
light of the  specific  type and terms of the award.  An Award  Agreement  shall
specify the  maximum  number of shares of Common  Stock (if any)  subject to the
Performance Share Award, the consideration (but not less than the minimum lawful
consideration)  to be  paid  for  any  such  shares  as may be  issuable  to the
Participant, the duration of the Award and the conditions upon which delivery of
any  shares or cash to the  Participant  shall be based.  The  amount of cash or
shares or other property that may be deliverable pursuant to such Award shall be
based upon the degree of  attainment  over a  specified  period (a  "performance
cycle")  as may be  established  by the  Committee  of  such  measure(s)  of the
performance  of the Company (or any part thereof) or the  Participant  as may be
established  by the  Committee.  The  Committee  may provide for full or partial
credit,  prior to completion of such performance  cycle or the attainment of the
performance   achievement   specified  in  the  Award,   in  the  event  of  the
Participant's  death, or Total Disability,  a Change in Control Event or in such
other  circumstances  as the Committee  consistent with Section  6.10(c)(2),  if
applicable, may determine.

     Section 5.2. Special Performance-Based Share Awards.

     Without  limiting  the  generality  of the  foregoing,  and in  addition to
Options and Stock  Appreciation  Rights  granted under other  provisions of this
Plan  which  are  intended  to  satisfy  the  exception  for  "performance-based
compensation"  under  Section  162(m) of the Code (with such Awards  hereinafter
referred to as a "Qualifying Option" or a "Qualifying Stock Appreciation Right,"
respectively),  other  performance-based  awards  within the  meaning of Section
162(m)  of  the  Code  ("Performance-Based  Awards"),  whether  in the  form  of
restricted stock, performance stock, phantom stock, or other rights, the vesting
or  exercisability  of  which  depends  on  the  degree  of  achievement  of the
Performance Goals relative to preestablished targeted levels for the Corporation
or the  Corporation  and one or more of its  Subsidiaries  or divisions,  may be
granted under this Plan. Any Qualifying Option or Qualifying Stock  Appreciation
Right shall be subject only to the requirements of subsections (a) and (c) below
in order for such  Awards to  satisfy  the  requirements  for  Performance-Based
Awards under this Section 5.2.  With the exception of any  Qualifying  Option or
Qualifying  Stock  Appreciation  Right, an Award that is intended to satisfy the
requirements  of this  Section 5.2 shall be  designated  as a  Performance-Based
Award at the time of grant.

     (a) Eligible  Class.  The eligible  class of persons for  Performance-Based
Awards under this Section shall be the executive officers of the Corporation.

     (b)  Performance  Goal  Alternatives.  The specific  performance  goals for
Performance-Based  Awards  granted  under this  Section  (other than  Qualifying
Options and Qualifying  Stock  Appreciation  Rights) shall be, on an absolute or
relative  basis,  one or more  of the  Performance  Goals,  as  selected  by the
Committee  in  its  sole  discretion.  The  Committee  shall  establish  in  the
applicable Award Agreement the specific  performance  target(s)  relative to the
Performance  Goal(s) which must be attained  before the  compensation  under the
Performance-Based   Award  becomes  payable.   The  specific  targets  shall  be
determined  within the time period  permitted  under Section  162(m) of the Code
(and any regulations  issued  thereunder) so that such targets are considered to
be  preestablished  and so that the attainment of such targets is  substantially
uncertain  at the  time  of  their  establishment.  The  applicable  performance
measurement period may not be less than one nor more than 10 years.

     (c) Maximum Performance-Based Award. Notwithstanding any other provision of
the Plan to the  contrary,  in no event shall grants in any  calendar  year to a
Participant  under this Section 5.2 relate to more than 100,000 shares of Common
Stock  (subject to  adjustment  under Section 6.2) or a cash amount of more than
$1,000,000.  Awards that are cancelled  during the year shall be counted against
this limit to the extent required by Section 162(m) of the Code.

     (d) Committee Certification.  Before any Performance-Based Award under this
Section 5.2 (other than  Qualifying  Options or  Qualifying  Stock  Appreciation
Rights) is paid,  the  Committee  must certify in writing  that the  Performance
Goal(s)  and any  other  material  terms  of the  Performance-Based  Award  were
satisfied; provided, however, that a Performance-Based Award may be paid without
regard to the satisfaction of the applicable  Performance Goal in the event of a
Change in Control Event in accordance with Section 6.2(d).

     (e) Terms and Conditions of Awards.  The Committee will have the discretion
to determine the  restrictions  or other  limitations of the  individual  Awards
granted under this Section 5.2 including the authority to reduce Awards, payouts
or  vesting  or to pay no  Awards,  in its  sole  discretion,  if the  Committee
preserves  such authority at the time of grant by language to this effect in its
authorizing resolutions or otherwise.

     (f) Adjustments for Changes in  Capitalization  and other Material Changes.
In the event of a change in corporate  capitalization,  such as a stock split or
stock dividend,  or a corporate  transaction,  such as a merger,  consolidation,
spinoff, reorganization or similar event, or any partial or complete liquidation
of the  Corporation,  or any similar event  consistent with  regulations  issued
under Section 162(m) of the Code  including,  without  limitation,  any material
change in accounting  policies or practices affecting the Corporation and/or the
Performance  Goals or targets,  then the Committee may make  adjustments  to the
Performance Goals and targets relating to outstanding  Performance-Based  Awards
to the extent such  adjustments  are made to reflect the  occurrence  of such an
event;  provided,  however, that adjustments described in this subsection may be
made only to the extent that the  occurrence  of an event  described  herein was
unforeseen  at  the  time  the  targets  for  a  Performance-Based   Award  were
established by the Committee.

     (g)  Stock  Payout  Features.  In lieu of cash  payment  of an  Award,  the
Committee  may require or allow a portion of the Award to be part in the form of
shares of Common Stock, restricted shares or an Option.

     Section 5.3. Grants of Stock Bonuses.

     The  Committee  may grant a Stock  Bonus to any  Eligible  Person to reward
exceptional or special services, contributions or achievements in the manner and
on such terms and  conditions  (including  any  restrictions  on such shares) as
determined  from time to time by the Committee.  The number of shares so awarded
shall be determined by the Committee.  The Award may be granted independently or
in lieu of a cash bonus.

     Section 5.4. Deferred Payments.

     The  Committee  may  authorize  for the benefit of any Eligible  Person the
deferral  of any  payment  of cash or  shares  that  may  become  due or of cash
otherwise  payable under this Plan, and provide for accredited  benefits thereon
based  upon  such  deferment,  at  the  election  or  at  the  request  of  such
Participant,  subject to the other terms of this Plan.  Such  deferral  shall be
subject  to  such  further  conditions,  restrictions  or  requirements  as  the
Committee may impose, subject to any then vested rights of Participants.

ARTICLE VI. OTHER PROVISIONS.

     Section 6.1. Rights of Eligible Persons, Participants and Beneficiaries.

     (a) Employment Status.  Status as an Eligible Person shall not be construed
as a  commitment  that any Award  will be made  under  this Plan to an  Eligible
Person or to Eligible Persons generally.

     (b) No Employment Contract. Nothing contained in this Plan (or in any other
documents  related to this Plan or to any Award)  shall confer upon any Eligible
Person or other Participant any right to continue in the employ or other service
of the Company or  constitute  any contract or agreement of  employment or other
service,  nor shall interfere in any way with the right of the Company to change
such person's  compensation  or other benefits or to terminate the employment of
such person,  with or without cause,  but nothing  contained in this Plan or any
document related hereto shall adversely affect any independent contractual right
of such person without his or her consent thereto.

     (c) Plan Not  Funded.  Awards  payable  under this Plan shall be payable in
shares or from the general assets of the Corporation, and no special or separate
reserve,  fund or deposit  shall be made to assure  payment of such  Awards.  No
Participant, Beneficiary or other person shall have any right, title or interest
in any fund or in any specific asset (including  shares of Common Stock,  except
as  expressly  otherwise  provided)  of the  Company  by  reason  of  any  Award
hereunder.  Neither the  provisions of this Plan (or of any related  documents),
nor the creation or adoption of this Plan,  nor any action taken pursuant to the
provisions of this Plan shall create,  or be construed to create, a trust of any
kind or a  fiduciary  relationship  between  the  Company  and any  Participant,
Beneficiary or other person.  To the extent that a  Participant,  Beneficiary or
other  person  acquires  a  right  to  receive  payment  pursuant  to any  Award
hereunder,  such  right  shall be no  greater  than the  right of any  unsecured
general creditor of the Company.

     Section 6.2. Adjustments; Acceleration.

     (a) Adjustments.  If there shall occur any extraordinary  dividend or other
extraordinary  distribution  in respect of the Common Stock (whether in the form
of  cash,  Common  Stock,   other  securities,   or  other  property),   or  any
reclassification,  recapitalization, stock split (including a stock split in the
form  of  a  stock  dividend),  reverse  stock  split,  reorganization,  merger,
combination,  consolidation,  split-up,  spin-off,  combination,  or exchange of
Common Stock or other  securities of the  Corporation,  or there shall occur any
other like  corporate  transaction  or event in respect of the Common Stock or a
sale of substantially all the assets of the Corporation as an entirety, then the
Committee  shall,  in  such  manner  and to such  extent  (if  any) as it  deems
appropriate  and  equitable  (1)  proportionately  adjust  any or all of (i) the
number and type of shares of Common Stock (or other securities) which thereafter
may be made the subject of Awards  (including the specific numbers of shares set
forth  elsewhere  in this Plan),  (ii) the number,  amount and type of shares of
Common Stock (or other securities or property) subject to any or all outstanding
Awards, (iii) the grant,  purchase,  or exercise price of any or all outstanding
Awards, (iv) the securities, cash or other property deliverable upon exercise of
any  outstanding  Awards,  or (v) the performance  standards  appropriate to any
outstanding  Awards,  or (2) in the case of an  extraordinary  dividend or other
distribution,   recapitalization,   reclassification,   merger,  reorganization,
consolidation,  combination,  sale of assets,  split up, exchange,  or spin off,
make provision for a cash payment or for the  substitution or exchange of any or
all outstanding  Awards or the cash,  securities or property  deliverable to the
holder  of any  or  all  outstanding  Awards  based  upon  the  distribution  or
consideration  payable to holders of the Common Stock of the Corporation upon or
in respect of such event; provided,  however, in each case, that with respect to
Awards of Incentive Stock Options,  no such adjustment shall be made which would
cause the Plan to violate Section 424(a) of the Code or any successor provisions
thereto without the written  consent of holders  materially  adversely  affected
thereby.  In any of such events, the Committee may take such action sufficiently
prior to such event if  necessary  to permit  the  Participant  to  realize  the
benefits  intended to be conveyed with respect to the  underlying  shares in the
same manner as is available to stockholders generally.

     (b)  Acceleration of Awards Upon Change in Control.  As to any Participant,
unless prior to a Change in Control Event the Committee  determines  that,  upon
its  occurrence,  there shall be no  acceleration  of benefits  under  Awards or
determines  that  only  certain  or  limited  benefits  under  Awards  shall  be
accelerated  and  the  extent  to  which  they  shall  be  accelerated,   and/or
establishes a different time in respect of such Change in Control Event for such
acceleration,  then upon the  occurrence  of a Change in Control  Event (i) each
Option and Stock Appreciation Right shall become immediately  exercisable,  (ii)
Restricted Stock shall  immediately  vest free of  restrictions,  and (iii) each
Performance  Share  Award shall  become  payable to the  Participant;  provided,
however,  that in no event shall any Award be  accelerated  as to any Section 16
Person to a date less than six months  after the Award Date of such  Award.  The
Committee may override the limitations on acceleration in this Section 6.2(b) by
express  provision in the Award  Agreement and may accord any Eligible  Person a
right to refuse any  acceleration,  whether  pursuant to the Award  Agreement or
otherwise,  in such circumstances as the Committee may approve. Any acceleration
of Awards  shall  comply  with  applicable  regulatory  requirements,  including
without limitation Section 422 of the Code.

     (c) Possible  Early  Termination of  Accelerated  Awards.  If any Option or
other right to acquire  Common Stock under this Plan has been fully  accelerated
as permitted by Section  6.2(b) but is not exercised  prior to (i) a dissolution
of the  Corporation,  or (ii) an event  described  in  Section  6.2(a)  that the
Corporation does not survive, or (iii) the consummation of an event described in
Section  6.2(a) that results in a Change in Control Event approved by the Board,
such Option or right shall  thereupon  terminate,  subject to any provision that
has  been  expressly  made  by the  Committee  for the  survival,  substitution,
exchange or other settlement of such Option or right.

     Section 6.3. Effect of Termination of Employment.

     The  Committee  shall  establish  in respect  of each  Award  granted to an
Eligible  Person the effect of a  termination  of  employment  on the rights and
benefits  thereunder and in so doing may make distinctions  based upon the cause
of  termination.  In  addition,  in the  event  of,  or in  anticipation  of,  a
termination of employment with the Company for any reason,  other than discharge
for cause,  the Committee  may, in its  discretion,  increase the portion of the
Participant's Award available to the Participant,  or Participant's  Beneficiary
or Personal Representative, as the case may be, or, subject to the provisions of
Section 1.6, extend the  exercisability  period upon such terms as the Committee
shall  determine  and  expressly  set  forth  in or by  amendment  to the  Award
Agreement.

     Section 6.4. Compliance with Laws.

     This Plan,  the  granting  and  vesting  of Awards  under this Plan and the
offer,  issuance  and  delivery of shares of Common  Stock and/or the payment of
money  under  this  Plan or  under  Awards  granted  hereunder  are  subject  to
compliance  with all applicable  federal and state laws,  rules and  regulations
(including  but not  limited to state and  federal  securities  law and  federal
margin  requirements)  and to  such  approvals  by any  listing,  regulatory  or
governmental authority as may, in the opinion of counsel for the Corporation, be
necessary or advisable in connection  therewith.  Any securities delivered under
this Plan shall be subject to such  restrictions,  and the person acquiring such
securities  shall, if requested by the Corporation,  provide such assurances and
representations  to the  Corporation  as the  Corporation  may deem necessary or
desirable to assure compliance with all applicable legal requirements.

     Section 6.5. Tax Withholding.

     Upon any exercise, vesting, or payment of any Award or upon the disposition
of shares of Common  Stock  acquired  pursuant to the  exercise of an  Incentive
Stock Option prior to satisfaction of the holding period requirements of Section
422 of the Code,  the Company  shall have the right at its option to (i) require
the Participant (or Personal Representative or Beneficiary,  as the case may be)
to pay or provide  for  payment of the amount of any taxes which the Company may
be  required  to  withhold  with  respect to such Award event or payment or (ii)
deduct from any amount payable in cash the amount of any taxes which the Company
may be required to withhold with respect to such cash payment. In any case where
a tax is required to be withheld in  connection  with the  delivery of shares of
Common Stock under this Plan,  the  Committee may in its sole  discretion  grant
(either at the time of the Award or thereafter) to the  Participant the right to
elect,  pursuant to such rules and subject to such  conditions  as the Committee
may  establish,  to have the  Corporation  reduce  the  number  of  shares to be
delivered by (or otherwise reacquire) the appropriate number of shares valued at
their then Fair Market Value, to satisfy such withholding obligation.

     Section 6.6. Plan Amendment, Termination and Suspension.

     (a) Board  Authorization.  The Board may, at any time,  terminate  or, from
time to time, amend, modify or suspend this Plan, in whole or in part. No Awards
may be granted during any  suspension of this Plan or after  termination of this
Plan, but the Committee shall retain  jurisdiction as to Awards then outstanding
in accordance with the terms of this Plan.

     (b) Stockholder Approval.  Any amendment that would (i) materially increase
the benefits accruing to Participants under this Plan, (ii) materially  increase
the aggregate  number of securities that may be issued under this Plan, or (iii)
materially  modify the requirements as to eligibility for  participation in this
Plan, shall be subject to stockholder  approval only to the extent then required
by Section 422 of the Code or applicable  law, or deemed  necessary or advisable
by the Board.

     (c) Amendments to Awards.  Without limiting any other express  authority of
the  Committee  under  but  subject  to the  express  limits of this  Plan,  the
Committee by agreement or resolution  may waive  conditions of or limitations on
Awards to  Eligible  Persons  that the  Committee  in the prior  exercise of its
discretion has imposed, without the consent of a Participant, and may make other
changes to the terms and  conditions  of Awards that do not affect in any manner
materially  adverse to the Participant,  his or her rights and benefits under an
Award.

     (d) Limitations on Amendments to Plan and Awards. No amendment,  suspension
or  termination  of the Plan or change of or  affecting  any  outstanding  Award
shall,  without  written  consent  of the  Participant,  affect  in  any  manner
materially  adverse to the Participant any rights or benefits of the Participant
or obligations of the Corporation  under any Award granted under this Plan prior
to the effective date of such change.  Changes contemplated by Section 6.2 shall
not be deemed to constitute  changes or amendments  for purposes of this Section
6.6.

     Section 6.7. Privileges of Stock Ownership.

     Except as otherwise  expressly  authorized by the Committee or this Plan, a
Participant  shall not be entitled to any privilege of stock ownership as to any
shares of Common  Stock not  actually  delivered to and held of record by him or
her. No adjustment  will be made for dividends or other rights as a stockholders
for which a record date is prior to such date of delivery.

     Section 6.8. Effective Date of the Plan.

     This Plan shall be effective  as of February  28,  1997,  the date of Board
approval, subject to stockholder approval within 12 months thereafter.

     Section 6.9. Term of the Plan.

     No Award shall be granted more than ten years after the  effective  date of
this Plan (the "termination date").  Unless otherwise expressly provided in this
Plan or in an  applicable  Award  Agreement,  any  Award  granted  prior  to the
termination date may extend beyond such date, and all authority of the Committee
with respect to Awards  hereunder,  including  the  authority to amend an Award,
shall continue  during any suspension of this Plan and in respect of outstanding
Awards on the termination date.

     Section 6.10. Governing Law/Construction/Severability.

     (a) Choice of Law. This Plan, the Awards,  all documents  evidencing Awards
and all  other  related  documents  shall  be  governed  by,  and  construed  in
accordance with the laws of the state of incorporation of the Corporation.

     (b)  Severability.  If any provision  shall be held by a court of competent
jurisdiction to be invalid and unenforceable,  the remaining  provisions of this
Plan shall continue in effect.

     (c) Plan Construction.

          (1) Rule 16b-3. It is the intent of the Corporation that  transactions
     in and  affecting  Awards  in the  case of  Participants  who are or may be
     subject to Section  16 of the  Exchange  Act  satisfy  any then  applicable
     requirements  of Rule 16b-3 so that such  persons  (unless  they  otherwise
     agree) will be entitled  to the  benefits of Rule 16b-3 or other  exemptive
     rules under Section 16 of the Exchange Act in respect of these transactions
     and  will  not be  subjected  to  avoidable  liability  thereunder.  If any
     provision  of this  Plan  or of any  Award  would  otherwise  frustrate  or
     conflict  with the intent  expressed  above,  that  provision to the extent
     possible shall be interpreted so as to avoid such conflict. If the conflict
     remains  irreconcilable,  the  Committee  may disregard the provision if it
     concludes  that to do so furthers  the interest of the  Corporation  and is
     consistent  with  the  purposes  of this  Plan as to  such  persons  in the
     circumstances.

          (2)  Section  162(m).  It is the further  intent of the  Company  that
     Options or Stock  Appreciation  Rights  with an  exercise or base price not
     less than Fair  Market  Value on the date of grant  and  Performance  Share
     Awards  under  Section  5.2 of this Plan that are  granted  to or held by a
     Section 16 Person shall  qualify as  performance-based  compensation  under
     Section 162(m) of the Code,  and this Plan shall be interpreted  consistent
     with such intent.

     Section 6.11. Captions.

     Captions and headings  are given to the  sections and  subsections  of this
Plan solely as a convenience to facilitate reference. Such headings shall not be
deemed in any way material or relevant to the construction or  interpretation of
the Plan or any provision thereof.

     Section 6.12. Effect of Change of Subsidiary Status.

     For purposes of this Plan and any Award  hereunder,  if an entity ceases to
be a Subsidiary a termination  of employment and service shall be deemed to have
occurred with respect to each Eligible  Person in respect of such Subsidiary who
does not continue as an Eligible  Person in respect of another entity within the
Company.

     Section 6.13. Non-Exclusivity of Plan.

     Nothing in this Plan shall limit or be deemed to limit the authority of the
Board or the Committee to grant awards or authorize any other compensation, with
or without reference to the Common Stock, under any other plan or authority.

ARTICLE VII. DEFINITIONS.

     Section 7.1. Definitions.

     "Award"  shall  mean an  award of any  Option,  Stock  Appreciation  Right,
Restricted Stock, Stock Bonus, Performance Share Award, Performance-Based Award,
dividend  equivalent  or deferred  payment right or other right or security that
would  constitute a  "derivative  security"  under Rule 16a-1(c) of the Exchange
Act, or any combination thereof,  whether alternative or cumulative,  authorized
by and granted under this Plan.

     "Award  Agreement"  shall mean any  writing  setting  forth the terms of an
Award that has been authorized by the Committee.

     "Award Date" shall mean the date upon which the  Committee  took the action
granting an Award or such later date as the  Committee  designates  as the Award
Date at the time of the Award.

     "Award Period" shall mean the period beginning on an Award
Date and ending on the expiration date of such Award.

     "Beneficiary" shall mean the person, persons, trust or trusts
designated by a  Participant  or, in the absence of a  designation,  entitled by
will or the laws of descent and distribution,  to receive the benefits specified
in the  Award  Agreement  and under  this  Plan in the event of a  Participant's
death,  and shall mean the  Participant's  executor or administrator if no other
Beneficiary is designated and able to act under the circumstances.

     "Board" shall mean the Board of Directors of the Corporation.

     "Cash Flow" shall mean cash and cash  equivalents  derived  from either (i)
net cash flow from operations or (ii) net cash flow from operations,  financings
and investing activities, as determined by the Committee at the time an Award is
granted.

     "Change in Control Event" shall mean any of the following:

          (1) Approval by the stockholders of the Corporation of the dissolution
     or liquidation of the Corporation;

          (2) Approval by the stockholders of the Corporation of an agreement to
     merge or  consolidate,  or otherwise  reorganize,  with or into one or more
     entities that are not  Subsidiaries,  as a result of which less than 50% of
     the  outstanding  voting  securities of the  surviving or resulting  entity
     immediately after the  reorganization  are, or will be, owned,  directly or
     indirectly,  by  stockholders of the  Corporation  immediately  before such
     reorganization  (assuming for purposes of such  determination that there is
     no change in the record ownership of the Corporation's  securities from the
     record  date for such  approval  until  such  reorganization  and that such
     record   owners  hold  no   securities   of  the  other   parties  to  such
     reorganization);  provided that an event described in this clause (2) shall
     not  constitute a Change in Control Event if the majority of members of the
     Board of the surviving  entity is comprised of individuals who were members
     of the Board immediately prior to such event;

          (3) Approval by the  stockholders  of the  Corporation  of the sale of
     substantially all of the  Corporation's  business and/or assets to a person
     or entity which is not a Subsidiary;

          (4) Any "person" (as such term is used in Sections  13(d) and 14(d) of
     the Exchange Act but excluding any person  described in and  satisfying the
     conditions of Rule  13d-1(b)(1)  thereunder),  becomes the beneficial owner
     (as defined in Rule 13d-3 under the Exchange Act),  directly or indirectly,
     of securities of the Corporation representing more than 50% of the combined
     voting power of the Corporation's then outstanding  securities  entitled to
     then vote generally in the election of directors of the Corporation; or

          (5) At any  time  during  the  term of this  Plan,  51% or more of the
     individuals  elected to serve,  and who are then serving,  on the Board are
     individuals  who  were  not (i)  members  of the  Board  at the time of the
     adoption of this Plan by the Board,  or (ii)  nominated or elected to their
     current  term of office as a director by a committee  of the Board which is
     authorized  to  fill  vacancies  on the  Board  (or  if  there  is no  such
     committee,  by a  majority  of the  Board  in  office  at the  time of such
     individual's  nomination  or election  by the Board to fill a vacancy),  or
     (iii)  approved  by a  majority  of  members  of the Board who were  either
     members of the Board at the time this Plan was  adopted  by the  Board,  or
     nominated or elected as described in clause (5) (ii) above.

     "Code" shall mean the Internal  Revenue Code of 1986,  as amended from time
to time.

     "Commission" shall mean the Securities and Exchange Commission.

     "Committee"  shall mean the Board or a committee  appointed by the Board to
administer  this Plan,  which  committee  shall be comprised only of two or more
directors  or  such  greater  number  of  directors  as  may be  required  under
applicable  law, each of whom, (i) in respect of any decision at a time when the
Participant  affected by the  decision  may be subject to Section  162(m) of the
Code, shall be an "outside" director within the meaning of Section 162(m) of the
Code, and (ii) in respect of any decision affecting a transaction at a time when
the Participant  involved in the transaction may be subject to Section 16 of the
Exchange  Act,  shall be a  "non-employee  director"  within the meaning of Rule
16b-3(b)(3) promulgated under the Exchange Act.

     "Common  Stock"  shall mean the Common  Stock of the  Corporation  and such
other  securities  or property  as may become the  subject of Awards,  or become
subject to Awards,  pursuant  to an  adjustment  made under  Section 6.2 of this
Plan.

     "Company" shall mean, collectively, the Corporation and its Subsidiaries.

     "Corporation"   shall  mean  Apria   Healthcare   Group  Inc.,  a  Delaware
corporation, and its successors.

     "Disinterested"   shall  mean  disinterested  within  the  meaning  of  any
applicable regulatory requirements, including Rule 16b-3.

     "EBITDA"  shall mean earnings  before  interest,  taxes,  depreciation  and
amortization.

     "Eligible  Employee"  shall mean an officer  (whether or not a director) or
key employee of the Company.

     "Eligible Person" means an Eligible Employee, or any Other Eligible Person,
as determined by the Committee in its discretion.

     "EPS"  shall  mean  earnings  per  common  share on a fully  diluted  basis
determined by dividing (i) net earnings,  less  dividends on preferred  stock of
the Corporation by (ii) the weighted  average number of common shares and common
shares equivalents outstanding.

     "ERISA" shall mean the Employee  Retirement Income Security Act of 1974, as
amended.

     "Exchange Act" shall mean the  Securities  Exchange Act of 1934, as amended
from time to time.

     "Fair  Market  Value" on any date  shall mean (i) if the stock is listed or
admitted to trade on a national  securities  exchange,  the closing price of the
stock on the  principal  national  securities  exchange on which the stock is so
listed or  admitted  to trade,  on such date,  or, if there is no trading of the
stock on such date,  then the closing  price of the stock on the next  preceding
date on which there was trading in such shares;  (ii) if the stock is not listed
or admitted to trade on a national securities  exchange,  the last price for the
stock on such date,  as  furnished  by the National  Association  of  Securities
Dealers,  Inc. ("NASD") through the NASDAQ National Market Reporting System or a
similar organization if the NASD is no longer reporting such information;  (iii)
if the  stock is not  listed  or  admitted  to trade  on a  national  securities
exchange and is not reported on the National Market Reporting  System,  the mean
between the bid and asked price for the stock on such date,  as furnished by the
NASD or a similar  organization;  or (iv) if the stock is not listed or admitted
to trade on a national  securities  exchange,  is not  reported on the  National
Market  Reporting  System  and if bid and  asked  prices  for the  stock are not
furnished by the NASD or a similar organization, the value as established by the
Committee at such time for purposes of this Plan.

     "Free Cash Flow"  shall mean cash  postings  less cost of sales,  operating
expenses (net of bad debt) and capital expenditures.

     "Incentive  Stock  Option"  shall  mean an  Option  which is  intended,  as
evidenced by its designation, as an incentive stock option within the meaning of
Section 422 of the Code, the award of which contains such provisions  (including
but not limited to the  receipt of  stockholder  approval  of this Plan,  if the
Award is made prior to such approval) and is made under such  circumstances  and
to such persons as may be necessary to comply with that section.

     "Nonqualified  Stock  Option"  shall mean an Option that is designated as a
Nonqualified  Stock Option and shall include any Option intended as an Incentive
Stock Option that fails to meet the applicable legal requirements  thereof.  Any
Option granted  hereunder  that is not  designated as an incentive  stock option
shall be deemed to be designated a nonqualified stock option under this Plan and
not an incentive stock option under the Code.

     "Non-Employee Director" shall mean a member of the Board of
Directors of the Corporation who is not an officer or employee of the Company.

     "Option" shall mean an option to purchase Common Stock granted
under this Plan. The Committee shall designate any Option granted to an Eligible
Person as a Nonqualified Stock Option or an Incentive Stock Option.

     "Other  Eligible  Person"  shall  mean  any  Non-Employee  Director  or any
individual  consultant or advisor who renders or has rendered bona fide services
(other than  services in  connection  with the offering or sale of securities of
the  Company  in a  capital  raising  transaction)  to the  Company,  and who is
selected to  participate in this Plan by the  Committee.  A  non-employee  agent
providing bona fide services to the Company  (other than as an eligible  advisor
or consultant)  may also be selected as an Other Eligible Person if such agent's
participation  in this Plan would not  adversely  affect  (i) the  Corporation's
eligibility  to use Form S-8 to register  under the  Securities  Act of 1933, as
amended,  the offering of shares issuable under this Plan by the Company or (ii)
the Corporation's compliance with any other applicable laws.

     "Participant"  shall mean an Eligible  Person who has been granted an Award
under this Plan.

     "Performance-Based  Award" shall mean an Award of a right to receive shares
of Common Stock or other  compensation  (including  cash) under Section 5.2, the
issuance or payment of which is contingent  upon,  among other  conditions,  the
attainment of performance objectives specified by the Committee.

     "Performance  Goal"  shall  mean  EBITDA or EPS or ROE or Cash Flow or Free
Cash  Flow,  or  sales  growth,  or cost  containment  or  reduction,  or  Total
Stockholder Return, and "Performance Goals" means any one or more thereof.

     "Performance  Share Award" shall mean an Award of a right to receive shares
of Common Stock made in accordance  with Section 5.1, the issuance or payment of
which is contingent upon, among other conditions,  the attainment of performance
objectives specified by the Committee.

     "Personal  Representative"  shall mean the person or persons who,  upon the
disability or  incompetence  of a Participant,  shall have acquired on behalf of
the  Participant,  by legal  proceeding or otherwise,  the power to exercise the
rights or receive  benefits  under this Plan and who shall have become the legal
representative of the Participant.

     "Plan" shall mean this 1997 Stock Incentive Plan.

     "QDRO"  shall  mean a  qualified  domestic  relations  order as  defined in
Section  414(p) of the Code or Title I, Section  206(d)(3) of ERISA (to the same
extent  as  if  this  Plan  were  subject  thereto),  or  the  applicable  rules
thereunder.

     "Restricted Stock Award" shall mean an award of a fixed number of shares of
Common  Stock  to  the  Participant   subject,   however,  to  payment  of  such
consideration,  if any, and such forfeiture provisions,  as are set forth in the
Award Agreement.

     "Restricted  Stock"  shall  mean  shares  of  Common  Stock  awarded  to  a
Participant under this Plan, subject to payment of such  consideration,  if any,
and such  conditions on vesting and such transfer and other  restrictions as are
established  in or  pursuant  to this Plan,  for so long as such  shares  remain
unvested under the terms of the applicable Award Agreement.

     "ROE" shall mean consolidated net income of the Corporation (less preferred
dividends), divided by the average consolidated common stockholders equity.

     "Rule  16b-3"  shall  mean  Rule  16b-3 as  promulgated  by the  Commission
pursuant to the Exchange Act, as amended from time to time.

     "Section  16 Person"  shall mean a person  subject to Section  16(a) of the
Exchange Act.

     "Securities  Act" shall mean the  Securities  Act of 1933,  as amended from
time to time.

     "Stock Appreciation Right" shall mean a right to receive a number of shares
of Common Stock or an amount of cash, or a combination  of shares and cash,  the
aggregate amount or value of which is determined by reference to a change in the
Fair Market Value of the Common Stock that is authorized under this Plan.

     "Stock  Bonus" shall mean an Award of shares of Common Stock  granted under
this Plan for no consideration  other than past services and without restriction
other  than  such  transfer  or other  restrictions  as the  Committee  may deem
advisable to assure compliance with law.

     "Subsidiary" shall mean any corporation or other entity a majority of whose
outstanding  voting  stock or voting  power is  beneficially  owned  directly or
indirectly by the Corporation.

     "Total Disability" shall mean a "permanent and total disability" within the
meaning  of  Section  22(e)(3)  of  the  Code  and  (except  in  the  case  of a
Non-Employee  Director)  such other  disabilities,  infirmities,  afflictions or
conditions as the Committee by rule may include.

     "Total  Stockholder  Return" shall mean with respect to the  Corporation or
other entities (if measures on a relative  basis),  the (i) change in the market
price of its  common  stock (as  quoted in the  principal  market on which it is
traded as of the  beginning  and ending of the period) plus  dividends and other
distributions  paid,  divided by (ii) the beginning  quoted market price, all of
which is adjusted for any changes in equity structure, including but not limited
to stock splits and stock dividends.

     Section 7.2. Changes in Applicable Law.  

     To the extent any terms  defined or  utilized  in this Plan are  defined by
identification to a particular statute or regulation, and if there shall occur a
change in such statutory or regulatory  definition,  then the definition of such
term  shall be deemed to have  been  amended  to  conform  to the  change in the
statutory or regulatory  definition,  unless the Committee  shall determine that
such change  would create a result which is contrary to the intents and purposes
of this Plan or work to create a hardship for either any Eligible  Person or the
Company,  in which event the Committee,  at its option,  shall have authority to
amend this Plan in a manner so as to achieve the  original  intents and purposes
of this Plan or to diminish or eliminate the hardship caused by such change in a
statutory  definition.  Any such amendment may be made retroactively to the date
of the change in the statutory or regulatory definition.