Exhibit 10.12

                            FINLAY ENTERPRISES, INC.
                          1997 LONG TERM INCENTIVE PLAN
                   (as last amended as of September 29, 2001)

     1. Purpose of the Plan

     The  purpose  of the  1997  Long  Term  Incentive  Plan is to  promote  the
interests of Finlay  Enterprises,  Inc. (the "Corporation") and its stockholders
by providing an incentive  and reward for  executive  officers,  directors,  key
employees,  consultants  and other  persons who are in a position to  contribute
substantially   to  the  progress  and  success  of  the   Corporation  and  its
subsidiaries and thereby encourage such persons to seek such results; to closely
align the  interests of such  employees  and other persons with the interests of
stockholders  of  the   Corporation  by  linking  rewards   hereunder  to  stock
performance;  to retain in the Corporation and its  subsidiaries the benefits of
the services of such persons;  and to attract to the service of the  Corporation
and  its  subsidiaries  new  executive  officers,   directors,   key  employees,
consultants and other such persons of high quality.

     2. Definitions

     Unless otherwise required by the context, the terms used in this Plan shall
have the meanings ascribed to such terms in this Section 2.

     "Award"  shall  mean an award  granted  under  the Plan in one of the forms
provided in Section 6.

     "Beneficiary,"  as applied to a participant,  shall mean a person or entity
(including a trust or the estate of the  participant)  designated  in writing by
the participant on such forms as the Committee may prescribe to receive benefits
under the Plan in the event of the death of the participant;  provided, however,
that if, at the death of a participant,  there shall not be any living person or
entity in existence so designated,  the term "beneficiary"  shall mean the legal
representative of the participant's estate.

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

     "Code" shall mean the Internal  Revenue Code of 1986,  as amended from time
to time.  References  to any  provision  of the Code  shall be deemed to include
regulations  and proposed  regulations  thereunder and successor  provisions and
regulations thereto.

     "Committee"  shall  mean  the  Compensation   Committee  of  the  Board  of
Directors,  and/or any other committee or subcommittee  the Board may appoint to
administer the Plan as provided  herein.  A Committee  composed solely of two or
more  members of the Board who meet (i) the  definition  of  "outside  director"
under Section 162(m) of the Code, (ii) the definition of "non-employee director"
under  Section 16 of the Exchange  Act and (iii) any similar or  successor  laws
hereinafter enacted,  shall administer the Plan with respect to participants who
are Covered  Employees  or who are subject to Section 16 of the  Exchange Act at
the time of the relevant Committee action;  provided,  however,  that if, at any
time,  no Committee  shall be in office,  then the  functions  of the  Committee
specified in this Plan shall be exercised by the Board or by any other committee
appointed by the Board.

     "Common  Stock"  shall mean the Common Stock of the  Corporation,  $.01 par
value,  or such other class of shares or other  securities  as may be applicable
pursuant to the provisions of Section 8.

     "Covered Employee" shall mean any employee of the Corporation or any of its
Subsidiaries  who is deemed to be a "covered  employee"  within  the  meaning of
Section 162(m) of the Code.

     "Detrimental  Activity"  shall mean any activity by a participant or former
participant  in the Plan that is determined  by the  Executive  Committee of the
Corporation  in its sole  discretion to be  deleterious  to the interests of the
Corporation or any Subsidiary.

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     "Disability" shall mean the permanent and total disability as defined by
Section 22(e)(3) of the Code.

     "Exchange Act" shall mean the Securities  Exchange Act of 1934, as amended.
References  to any  provision of the Exchange Act shall be deemed to include the
rules  and  regulations  thereunder  and  successor  provisions  and  rules  and
regulations thereto.

     "Incentive  Stock  Option" shall mean any stock option  designated  as, and
qualified as, an "incentive  stock option"  within the meaning of Section 422 of
the Code.

     "Limited Stock  Appreciation  Right" shall mean a right granted pursuant to
paragraph  6.6 to receive  cash  based on the  increase  in Market  Value of the
shares of Common Stock  subject to such right in the limited  circumstances  set
forth therein.

     "Market Value", as applied to any date, shall mean the volume weighted
average trading price of the Common Stock on the principal national securities
exchange or the Nasdaq National Market, as the case may be, on which such stock
is listed and traded for such date or, if there is no sale on that date, then on
the last preceding date on which a sale was reported. If the Common Stock is not
quoted or listed on an exchange or on the Nasdaq National Market, or
representative quotes are not otherwise available, the Market Value shall mean
the amount determined by the Committee to be the fair market value based upon a
good faith attempt to value the Common Stock accurately and computed in
accordance with applicable regulations of the Internal Revenue Service.

     "Non-Employee  Director"  shall  mean a member  of the  Board who is not an
employee of the Corporation or any of its Subsidiaries.

     "Nonqualified  Stock  Option" shall mean an Option that is not an Incentive
Stock Option.

     "Option"  or "Stock  Option"  shall  mean an option to  purchase  shares of
Common Stock granted pursuant to paragraph 6.3.

     "Performance  Unit"  shall mean a  contingent  right  granted  pursuant  to
paragraph 6.5 to receive an award, payable either in cash or in Common Stock, if
specific goals prescribed by the Committee are attained.

     "Plan" shall mean the 1997 Long Term Incentive Plan of the  Corporation set
forth herein, as such may be amended and supplemented from time to time.

     "Restricted  Stock" shall mean shares of Common Stock issued or transferred
subject to restrictions  precluding a sale or other  disposition for a period of
time (other than as specifically  may be permitted) and requiring as a condition
to retention  compliance with any other terms and conditions that may be imposed
by the Committee.

     "Retirement"  shall mean the  termination of the  participant's  employment
with the  Corporation  and its  Subsidiaries  for  retirement  purposes  if such
termination  occurs on or after his normal  retirement date as defined under the
Corporation's Retirement Income Plan.

     "Rule 16b-3," as applied on a specific  date,  shall mean Rule 16b-3 of the
General  Rules and  Regulations  under the Exchange Act as then in effect or any
other provision that may have replaced such Rule and be then in effect.

     "Stock Appreciation Right" shall mean a right granted pursuant to paragraph
6.4 to receive cash or Common Stock based on the increase in Market Value of the
shares of Common Stock subject to such right.

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     "Stock Award" shall mean a form of Award granted pursuant to paragraph 6.2.

     "Subsidiary" shall mean a corporation or other form of business association
of which shares (or other ownership  interests) having 50% or more of the voting
power are owned or controlled, directly or indirectly, by the Corporation.

     "Year" shall mean the Corporation's then applicable fiscal year.

     3. Scope of the Plan; Eligibility

     3.1. The Plan shall apply to the  Corporation and  Subsidiaries  other than
those specifically excluded by the Board of Directors.

     3.2. Awards may be made or granted, subject to applicable law, to executive
officers, directors, key employees, consultants and other persons who are deemed
to render significant services to the Corporation or its Subsidiaries and/or who
are deemed to have the  potential  to  contribute  to the future  success of the
Corporation.  The term  "employees"  shall include officers who are employees of
the  Corporation  or  of a  Subsidiary,  as  well  as  other  employees  of  the
Corporation and its Subsidiaries.  No Incentive Stock Option shall be granted to
any person who is not an  employee  of the  Corporation  or a  "subsidiary"  (as
defined in Section 424 of the Code) at the time of grant.

     4. Administration

     4.1.  The Plan  shall be  administered  by the  Committee.  Subject  to the
express  provisions  of the Plan,  the  Committee  shall  have the full power to
interpret  and  administer  the  Plan,  including,   but  without  limiting  the
generality of the foregoing,  determining who shall be participants in the Plan,
the amount to be awarded to each  participant  and the form,  manner of payment,
conditions,  time and terms of  payment  of Awards.  The  interpretation  by the
Committee  of the  terms  and  provisions  of the  Plan  and the  administration
thereof, as well as all actions taken by the Committee,  shall be final, binding
and  conclusive  on  the  Corporation,  its  stockholders,   Subsidiaries,   all
participants and employees, and upon their respective Beneficiaries,  successors
and assigns, and upon all other persons claiming under or through any of them.

     4.2. The Committee may adopt such rules and  regulations,  not inconsistent
with  the   provisions  of  the  Plan,  as  it  deems   necessary  to  determine
participation in the Plan, the form and distribution of benefits  thereunder and
the proper  administration of the Plan, and may amend or revoke any such rule or
regulation.

     4.3. Unless  authority is  specifically  reserved to the Board of Directors
under the terms of the Plan, the  Corporation's  Certificate of Incorporation or
By-laws,  or  applicable  law,  the  Committee  shall  have sole  discretion  in
exercising  authority  under the Plan.  The  Committee  shall  select one of its
members as its chairman and shall hold meetings at such times

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     and places as it shall deem advisable. Any action of the Committee shall be
     taken with the approval of a majority of its members  present and voting at
     a meeting duly called and held at which a quorum is present.  A majority of
     the Committee's  members shall constitute a quorum. Any action may be taken
     by a written  instrument  signed by all members of the  Committee  and such
     action shall be fully as effective as if taken by a majority of the members
     at a meeting duly called and held.  The  Committee may delegate to officers
     or managers of the  Corporation  or any Subsidiary of the  Corporation  the
     authority,  subject  to such terms as the  Committee  shall  determine,  to
     perform  administrative  functions  and, with respect to  participants  not
     subject to Section 16 of the Exchange Act, to perform such other  functions
     as the Committee may determine,  to the extent  permitted  under Rule 16b-3
     and applicable law.

     4.4. Each member of the Committee  shall be entitled to rely or act in good
faith upon any report or other  information  furnished  to him by any officer or
other  employee  of  the  Corporation  or  any  Subsidiary,   the  Corporation's
independent  certified  public  accountants,   or  any  executive   compensation
consultant,  legal counsel or other professional  retained by the Corporation to
assist in the  administration  of the Plan. No member of the Committee,  nor any
officer or employee of the  Corporation or a Subsidiary  acting on behalf of the
Committee,  shall  be  personally  liable  for  any  action,   determination  or
interpretation  taken or omitted to be taken or made in good faith with  respect
to the Plan,  and such persons shall,  to the extent  permitted by law, be fully
indemnified  and protected by the  Corporation  with respect to any such action,
determination or interpretation.

     5. Shares Subject to the Plan.

     5.1.  Subject to  adjustment  as  provided  in Section 8 hereof,  the total
number of shares of Common  Stock  reserved  for  delivery  to  participants  in
connection  with  Awards  under the Plan  shall be  1,850,000.  If any shares of
Common Stock subject to an Award at or after the effective  date of the Plan are
forfeited or such Award is settled in cash or otherwise terminates or is settled
without  delivery of shares of Common Stock to the  participant,  such number of
shares shall be available for new Awards under the Plan.

     5.2. No Award  (including an Award that may only be settled in cash) may be
granted  if the number of shares of Common  Stock to which  such Award  relates,
when added to the number of shares  previously  delivered under the Plan and the
number of shares to which  other  then-outstanding  Awards  relate,  exceeds the
number of shares of Common  Stock  deemed  available  under this  Section 5. The
Committee may adopt  procedures  for the counting of shares under this Section 5
to ensure appropriate counting,  avoid double counting (in the case of tandem or
substitute Awards),  and provide for adjustments in any case in which the number
of shares  actually  delivered  differs  from the  number  of shares  previously
counted  in  connection  with an Award.  Any  shares of Common  Stock  delivered
pursuant  to an Award  may  consist,  in whole or in  part,  of  authorized  and
unissued shares or treasury shares.

     6. Terms of Awards

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     6.1. Grants of Awards.  Awards may be granted,  in whole or in part, in one
or more following forms:

          (a) A Stock Award in accordance with paragraph 6.2;

          (b) An Option, in accordance with paragraph 6.3;

          (c) A Stock Appreciation Right, in accordance with paragraph 6.4.

          (d) A Performance Unit in accordance with paragraph 6.5.

          (e) A Limited Stock Appreciation Right in accordance with paragraph
              6.6.

     6.2.  Stock Awards.  Awards granted as Stock Awards shall be in the form of
an  issuance  of (i) shares of  Restricted  Stock or (ii)  shares  which are not
subject to any  restrictions  on sale or  disposition.  Such Stock  Awards shall
contain such terms and conditions as the Committee shall  determine,  including,
with  respect to a Stock  Award of  Restricted  Stock,  provisions  relating  to
forfeiture  of all or any  part of the  Restricted  Stock  upon  termination  of
employment  prior  to  expiration  of a  designated  period  of time or upon the
occurrence of other events; provided,  however, that upon the issuance of shares
pursuant to a Stock Award of  Restricted  Stock,  the  participant  shall,  with
respect to such shares, be and become a stockholder of the Corporation  entitled
to receive dividends,  to vote and to exercise all other rights of a stockholder
except to the extent  otherwise  specifically  provided in the Stock Award.  The
certificate  for any shares of Common Stock issued or  transferred as Restricted
Stock shall either be deposited in escrow or carry an appropriate  legend as the
Committee shall determine.

     6.3.  Options.  Awards granted as Options shall be subject to the following
provisions:

          (a)  Options  granted  shall be  either  Incentive  Stock  Options  or
          Nonqualified Stock Options, as the Committee shall specify at the time
          the Option is granted.

          (b) The price at which shares of Common  Stock  covered by each Option
          may be purchased  pursuant thereto shall be determined in each case by
          the Committee, but shall not be less than the par value of such shares
          or, with respect to Incentive Stock Options, not less than 100% of the
          Market  Value of the Common  Stock on the date the Option is  granted.
          Notwithstanding  the  foregoing,  in the  case of an  Incentive  Stock
          Option  granted to a  participant  who  (applying the rules of Section
          424(d) of the Code) owns stock  possessing more than ten percent (10%)
          of the total

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          combined  voting  power  of all  classes  of  stock  of  the  employer
          corporation (or a "parent" or "subsidiary" of such corporation  within
          the meaning of Section 424 of the Code) (a "Ten-Percent Stockholder"),
          the  exercise  price per share  shall not be less than one hundred and
          ten percent (110%) of the Market Value of the Common Stock on the date
          on which the Option is granted.

          (c)  Each  Option  shall  expire  at such  time as the  Committee  may
          determine  at the time such Option is granted,  but not later,  in the
          case of Incentive  Stock  Options,  than ten years (or, in the case of
          Incentive  Stock  Options  granted to a Ten-Percent  Stockholder,  not
          later than five years) from the date such Option is granted.  The term
          of any  Nonqualified  Stock Option may, with the consent of the holder
          of the Option,  be extended by the  Committee at any time prior to the
          expiration  of  the  Option  without  further   consideration  to  the
          Corporation and, except to the extent otherwise  provided in the Code,
          such  extension  shall not be deemed the grant of a new or  additional
          Option for any purpose under the Plan or otherwise.

          (d) Each Option shall first become  exercisable  at such time or times
          as the  Committee  may  determine  at the time such Option is granted,
          except that:

          (i) In the event the  employment  of a  participant  is  terminated by
     reason of Retirement,  death or Disability,  all unexercised  Options shall
     thereupon,  subject to the other  provisions  below of this  paragraph 6.3,
     become  exercisable  for  the  period  provided  in  connection  with  such
     termination in paragraph (e); and

          (ii) Options granted shall not be affected by any change in the nature
     of the  participant's  employment so long as he continues to be employed by
     the  Corporation or a Subsidiary.  Approved  leaves of absence shall not be
     considered a termination or  interruption  of full-time  employment for any
     purpose of the Plan.

          (e) The  Committee  shall  determine  and  set  forth  in each  option
          agreement  governing  an  Option  granted  under the Plan  rules  that
          specify the period,  if any, after  termination  of employment  during
          which an Option shall be exercisable,  provided that in the case of an
          Incentive  Stock Option,  such Option shall in no event be exercisable
          more than ten years  (or,  in the case of an  Incentive  Stock  Option
          granted to a  Ten-Percent  Stockholder,  five years) after the date of
          grant.

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          (f)  Subject to the  provisions  of  paragraphs  6.3(c),  (d) and (e),
          Options  may be  exercised,  in part or in whole,  at any time or from
          time to time during the term of the Option.

          (g) An Option shall be considered exercised under the Plan on the date
          written notice is mailed to the Secretary of the Corporation,  postage
          prepaid,  or  delivered  in person to the  Secretary,  advising of the
          exercise of a particular Option and transmitting payment of the Option
          price for the shares involved, plus any withholding tax required under
          any federal,  state and local statutes;  provided,  however, that this
          provision shall not preclude exercise of an Option by any other proper
          legal method.

          (h) Options are not transferable  other than by will or by the laws of
          descent and  distribution,  and during a  participant's  lifetime  are
          exercisable only by him.

          (i) The Committee may place such conditions on the exercise of Options
          and on the  transferability  of  shares  received  on  exercise  of an
          Option,  in  addition  to those  contained  herein,  as it shall  deem
          appropriate.

          (j) No shares  shall be  issued or  transferred  upon  exercise  of an
          Option  until full  payment of the  exercise  price  therefor has been
          made.  Such exercise price may be paid (i) in cash, (ii) to the extent
          authorized by the Committee,  in whole shares of Common Stock owned by
          the  participant  prior to exercising the Option,  (iii) to the extent
          authorized  by the  Committee,  by having the  Corporation  withhold a
          number of shares from the exercise  having a Market Value equal to the
          exercise price,  (iv) by delivery of any other property  acceptable to
          the Corporation or (v) by any combination thereof. Notwithstanding the
          preceding sentence, the Corporation and the participant may agree upon
          any other  reasonable  manner of providing for payment of the exercise
          price of the Option.  For the purpose of such payment,  the sum of the
          Market Value of the shares of Common Stock and any such other property
          on the date of exercise  plus any cash payment  shall not be less than
          the option price of the shares to be issued or  transferred.  Payments
          of the exercise price of an Option that are made in the form of Common
          Stock  (which  shall be  valued at  Market  Value)  may be made by (i)
          delivery  of stock  certificates  in  negotiable  form or (ii)  unless
          otherwise  determined by the Committee,  delivery of the participant's
          representation  that,  on the date of exercise,  he owns the requisite
          number of  shares  and,  unless  such  shares  are  registered  in the
          participant's  name as verified  by the  records of the  Corporation's
          transfer  agent,  a  representation   executed  by  the  participant's
          brokerage  firm  or  other  entity  in  whose  name  such  shares  are
          registered that on the date of

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          exercise the  participant  beneficially  owns the requisite  number of
          shares ("Certificateless Exercise"). Delivery of such a representation
          pursuant  to a  Certificateless  Exercise  shall  be  treated  as  the
          delivery of the specified number of shares of Common Stock;  provided,
          however,  that the  number of shares  issued to the  participant  upon
          exercise  of the  Option  shall be  reduced  by the  number  of shares
          specified in the representation.

     6.4. Stock Appreciation Rights. Awards granted as Stock Appreciation Rights
shall be the subject of the following provisions:

          (a) Stock  Appreciation  Rights may be granted only in connection with
          an Option (the "Related  Option"),  either at the time of the grant of
          such Option or at any time thereafter during the term of the Option.

          (b) Each  Stock  Appreciation  Right  shall  provide  that the  holder
          thereof may exercise the same by  surrendering  the Related  Option or
          any portion thereof, to the extent unexercised, and upon such exercise
          and  surrender  shall be entitled  to receive  other cash or shares of
          Common  Stock in the  amount  determined  pursuant  to clause  (ii) of
          paragraph  6.4(c).  Such Option shall,  to the extent so  surrendered,
          thereupon cease to be exercisable.

          (c)  Stock  Appreciation  Rights  shall  be  further  subject  to  the
          following terms and conditions and to such other terms and conditions,
          not  inconsistent  with the Plan, as the Committee  shall from time to
          time approve:

               (i) Stock  Appreciation  Rights shall be exercisable at such time
     or times and to the extent, but only to the extent, that the Related Option
     shall be exercisable.

               (ii) Upon  exercise  of Stock  Appreciation  Rights,  the  holder
     thereof shall receive, at the option of the Corporation, either (i) cash in
     an  amount  equal to the  excess of the  Market  Value of a share of Common
     Stock on the date of such  exercise  over the  exercise  price per share of
     Common  Stock  subject to the Related  Option  multiplied  by the number of
     shares of Common  Stock in respect of which the Stock  Appreciation  Rights
     are exercised  (the  "Settlement  Amount") or (ii) such number of shares of
     Common Stock as shall be  determined by dividing the  Settlement  Amount by
     the Market  Value of a share of Common Stock on the date of exercise of the
     Stock Appreciation Rights.

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          (d) To the extent that Stock  Appreciation  Rights shall be exercised,
          the  Related  Option  shall be deemed to have been  exercised  for the
          purpose of the maximum limitation set forth in paragraph 5.1.

          (e) Stock  Appreciation  Rights may be exercised by the form of notice
          provided for the exercise of an Option under paragraph 6.3(g).

          (f) Any  provision of this Section 6 to the contrary  notwithstanding,
          no payment or exercise of Stock  Appreciation  Rights by a participant
          subject to the  Exchange  Act shall be made  other than in  compliance
          with Rule 16b-3.

          (g) Stock Appreciation  Rights are not transferable other than by will
          or the laws of descent and  distribution,  and during a  participant's
          lifetime are exercisable only by him.

     6.5.  Performance  Units.  Awards  granted as  Performance  Units  shall be
subject to the following provisions:

          (a) The performance  period for the attainment of the performance goal
          shall be a cycle of not less than two nor more than five fiscal  years
          of the Corporation,  as determined by the Committee. The Committee may
          establish more than one cycle for any particular Performance Unit.

          (b) The Committee shall establish a dollar value for each  Performance
          Unit,  the principal and minimum  performance  goals to be attained in
          respect  of the  Performance  Unit,  the  various  percentages  of the
          Performance Unit value to be paid out upon the attainment, in whole or
          in part,  of the  performance  goals and such other  Performance  Unit
          terms, conditions and restrictions as the Committee deems appropriate.
          The  business  criteria  used by the  Committee in  establishing  such
          performance  goals shall include (i) return on equity,  (ii) operating
          income,  (iii) earnings and (iv) return on invested  capital,  and any
          such  performance  goals may be modified by the  Committee  during the
          course  of a  performance  cycle  to  take  into  account  changes  in
          conditions that occur. Notwithstanding the foregoing, in the case of a
          Performance Unit granted to a Covered  Employee,  no business criteria
          other than those  enumerated  herein may be used in  establishing  the
          performance  goal for such  Performance  Unit, and no such performance
          goal  may  be  modified  by  the  Committee  during  the  course  of a
          performance  cycle except in  accordance  with  Section  162(m) of the
          Code. As soon as practicable  after the termination of the performance
          period,  the Committee shall determine what, if any, payment is due on
          the Performance Unit in accordance with the terms thereof.

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          (c) In the event of a participant's Retirement prior to the expiration
          of the performance  cycle established for any Performance Units he may
          have been awarded,  such units shall,  to the extent that they are not
          fully vested at the time of Retirement,  thereupon become fully vested
          and be payable  on  expiration  of the  performance  cycle;  provided,
          however,  that the percentage of the  Performance  Unit to be paid out
          upon the  attainment  of the  performance  goals  shall be  reduced by
          multiplying  that amount by a fraction,  the numerator of which is the
          number of months remaining in the performance cycle following the date
          of  Retirement  and the  denominator  of which is the total  number of
          months in the performance  cycle.  If a participant's  employment with
          the Corporation and its Subsidiaries shall be terminated for any other
          reason prior to the expiration of the  performance  cycle  established
          for any  Performance  Units he has been  awarded,  such units shall be
          canceled  automatically unless the Committee,  in its sole discretion,
          and subject to  limitations  as it may deem  advisable,  determines to
          make full or partial payment with respect to such  Performance  Units,
          whether  at  the  time  of  termination,  at  the  expiration  of  the
          performance cycle or otherwise. Without limiting the generality of the
          foregoing,  any unpaid portion of a Performance Unit otherwise payable
          to a terminated  participant shall be forfeited if such participant at
          any  time  engages  in  Detrimental   Activity.   Notwithstanding  the
          foregoing,  in the  case  of  Performance  Units  granted  to  Covered
          Employees,  this  paragraph  6.5(c) shall not be given effect if, as a
          result  thereof,  such  Performance  Units  shall lose the  protection
          afforded by Section 162(m) of the Code.

          (d) Payment of  Performance  Units shall be made, at the discretion of
          the Committee, either in cash in the amount of the dollar value of the
          Performance  Units awarded or in Common Stock having a Market Value at
          the time such award is paid equal to such dollar amount. Payments made
          in the form of Common  Stock  shall be  charged  against  the  maximum
          limitations for shares of Common Stock provided in paragraph 5.1.

          (e) Performance  Units are not  transferable  other than by will or by
          the laws of  descent  and  distribution  and  during  a  participant's
          lifetime  payments  in  respect  thereof  shall  be  made  only to the
          participant.

     6.6. Limited Stock Appreciation Rights.

          Awards granted as Limited Stock  Appreciation  Rights shall be subject
to the following provisions:

<PAGE>
                                     - 11 -


          (a) A  Limited  Stock  Appreciation  Right  may  be  granted  only  in
          connection with a Related  Option,  either at the time of the grant of
          such Option or at any time thereafter during the term of such Option.

          (b) Unless  otherwise  determined  by the  Committee,  a Limited Stock
          Appreciation  Right  may be  exercised  only  during  the  period  (i)
          beginning  on the first day  following  a Change of  Control  and (ii)
          ending on the  thirtieth  day (or such  other  date  specified  by the
          Committee  at the  time of  grant of the  Limited  Stock  Appreciation
          Right)  following  such date (such  period  herein  referred to as the
          "Limited Rights  Exercise  Period").  Each Limited Stock  Appreciation
          Right shall be exercisable  during the Limited Rights  Exercise Period
          only to the extent the Related Option is then  exercisable,  and in no
          event  after   termination  of  the  Related  Option.   Limited  Stock
          Appreciation  Rights  granted under the Plan shall be  exercisable  in
          whole  or in  part  in the  manner  provided  for  exercise  of  Stock
          Appreciation Rights pursuant to paragraph 6.4.

          (c) Upon the exercise of Limited Stock Appreciation Rights, the holder
          shall  receive  in cash an amount  equal to the  excess of the  Market
          Value on the date of  exercise  of each  share of  Common  Stock  with
          respect to which such  Limited  Stock  Appreciation  Rights shall have
          been  exercised  over the  exercise  price per  share of Common  Stock
          subject to the Related  Option,  multiplied by the number of shares of
          Common Stock in respect of which the Limited Stock Appreciation Rights
          are exercised.

          (d) To the extent that  Limited  Stock  Appreciation  Rights  shall be
          exercised,  the Related  Option shall be deemed to have been exercised
          for the purpose of the maximum limitation set forth in paragraph 5.1.

          (e) For purposes of this  Section 6.6, a "Change in Control"  shall be
          deemed to have occurred if:

               (i) the  stockholders of the Corporation  shall have approved (A)
     any  consolidation or merger of the Corporation in which the Corporation is
     not the continuing or surviving  corporation or pursuant to which shares of
     Common Stock would be converted  into cash,  securities or other  property,
     other than a merger of the Corporation in which the holders of Common Stock
     immediately  prior to the merger have the same  proportionate  ownership of
     common stock of the surviving corporation  immediately after the merger, or
     (B) any sale,  lease,  exchange or other transfer (in one  transaction or a
     series of related transactions) of all, or substantially all, of the assets
     of the  Corporation,  or (C) the  adoption of any plan or proposal  for the
     liquidation or dissolution of the Corporation;

<PAGE>
                                     - 12 -


               (ii) any person (as such term is defined in Sections 13(d)(3) and
     14(d)(2) of the Exchange Act),  corporation or other entity (other than the
     Corporation or any employee  benefit plan  sponsored by the  Corporation or
     any  Subsidiary)  (A) shall have  purchased any Common Stock (or securities
     convertible  into the  Common  Stock)  for cash,  securities,  or any other
     consideration  pursuant to a tender offer, without the prior consent of the
     Board of  Directors,  or (B) shall have become the  "beneficial  owner" (as
     such term is defined in Rule 13d-3  under the  Exchange  Act),  directly or
     indirectly,  of securities of the Corporation  representing fifteen percent
     (15%) or more of the issued and outstanding Common Stock; or

               (iii)  individuals  who on the date of the  adoption  of the Plan
     constituted the entire Board shall have ceased for any reason to constitute
     a majority  unless the  election,  or the  nomination  for  election by the
     Corporation's stockholders,  of each new director was approved by a vote of
     at least a majority of the directors then still in office.

     7. Limit on Awards.

     7.1.  Notwithstanding  any provision contained herein, the aggregate Market
Value of the  shares of Common  Stock  with  respect  to which  Incentive  Stock
Options are first  exercisable  by any employee  during any calendar year (under
all stock option plans of the employee's  employer  corporation and its "parent"
and  "subsidiary"  corporation  within the  meaning of Section  424 of the Code)
shall not exceed $100,000.

     7.2.  Notwithstanding any provision contained herein, no participant may be
granted  under the Plan,  during any Year,  Options or other Awards  relating to
more than 200,000  shares of Common  Stock,  subject to adjustment in accordance
with Section 8 hereof.  With respect to an Award that may be settled in cash, no
participant may be paid in respect of any fiscal year an amount that exceeds the
greater of the Market Value of the number of shares of Common Stock set forth in
the preceding  sentence at the date of grant or at the date of settlement of the
Award,  provided  that this  limitation is separate from and not affected by the
number of Awards  granted  during such fiscal year subject to the  limitation in
the preceding sentence.

     8. Adjustments.

     In the event that the Committee  shall determine that any dividend or other
distribution  (whether  in the form of cash,  shares  of  Common  Stock or other
property),  recapitalization,  forward or reverse split, reorganization, merger,
consolidation,  spin-off,  combination,  repurchase or share exchange,  or other
similar corporate  transaction or event, affects the shares of Common Stock such
that an adjustment is appropriate in order to prevent dilution or enlargement of
the rights of  participants  under the Plan,  then the Committee  shall, in such
manner as it may deem equitable, adjust any or all of (i) the number and kind of
shares which may  thereafter  be delivered in connection  with Awards,  (ii) the
number and kind of shares that may be  delivered  or  deliverable  in respect of
outstanding Awards, (iii)

<PAGE>
                                     - 13 -


the  number of shares  with  respect  to which  Awards may be granted to a given
participant and (iv) the exercise price, grant price, or purchase price relating
to any Award or, if deemed  appropriate,  make provision for a cash payment with
respect to any  outstanding  Award;  provided,  however,  that,  with respect to
Incentive Stock Options,  no such  adjustment  shall be authorized to the extent
that such  authority  would cause the Plan to violate  Section  422(b)(1) of the
Code or previously  issued  Incentive Stock Options to lose their status as such
and, with respect to Awards  granted to Covered  Employees,  no such  adjustment
shall be authorized to the extent that such adjustment would cause such Award to
lose the benefits of Section 162(m) of the Code.

     9. General Provisions.

     9.1. Compliance With Legal and Exchange Requirements. The Corporation shall
not be  obligated  to  deliver  shares  of Common  Stock  upon the  exercise  or
settlement  of any  Award  or take  other  actions  under  the  Plan  until  the
Corporation shall have determined that applicable  federal and state laws, rules
and regulations  have been complied with and such approvals of any regulatory or
governmental agency have been obtained and contractual  obligations to which the
Award may be subject have been satisfied.  The  Corporation,  in its discretion,
may  postpone the issuance or delivery of shares of Common Stock under any Award
until completion of such listing or registration or qualification of such shares
or other  required  action under any federal or state law, rule or regulation as
the  Corporation  may consider  appropriate,  and may require any participant to
make such  representations  and  furnish  such  information  as it may  consider
appropriate  in  connection  with the  issuance or delivery of shares  under the
Plan.

     9.2.  Awards  Granted  to  Foreign   Participants.   Awards  granted  to  a
participant who is subject to the laws of a country other than the United States
of America may contain terms and conditions  inconsistent with the provisions of
the Plan (except  those  necessary  to retain the benefits of Section  162(m) or
Section 422 of the Code), or may be granted under such  supplemental  documents,
as required under such laws.

     9.3.  No Right to  Continued  Employment.  Neither  the Plan nor any action
taken  hereunder  shall be  construed  as creating  any  contract of  employment
between the Corporation or any of its Subsidiaries and any employee or otherwise
giving any employee the right to be retained in the employ of the Corporation or
any of its Subsidiaries, nor shall it interfere in any way with the right of the
Corporation or any of its Subsidiaries to terminate any employee's employment at
any time.

     9.4.  Withholding  Taxes.  In the event that the  Corporation or any of its
Subsidiaries shall be required to withhold any amounts by reason of any federal,
state,  or local  tax law,  rule or  regulation  by  reason  of the  grant to or
exercise by a participant of any Award, the participant  shall make available to
the Corporation or its Subsidiaries, promptly when required, sufficient funds to
meet the Corporation's or Subsidiary's requirement of such withholding,  and the
Corporation  shall be  entitled  to take such  steps as the  Committee  may deem
advisable  in order to have  such  funds  available  to the  Corporation  or its
Subsidiary at the required time or times. This Committee authority shall include
authority to deduct and withhold such required

<PAGE>
                                     - 14 -


amounts from any other cash payment or payments to be made by the Corporation or
its Subsidiaries  (including from payroll) to such participant or to withhold or
receive shares of Common Stock or other property, on a mandatory basis or at the
election of the  participant,  and to make cash  payments in respect  thereof in
satisfaction of a participant's  tax  obligations  (which may include  mandatory
withholding  obligations  and  obligations of the  participant in excess of such
mandatory obligations relating to an Award).

     9.5. Changes to the Plan and Awards. The Board may amend,  alter,  suspend,
discontinue or terminate the Plan or the  Committee's  authority to grant Awards
under the Plan without the consent of stockholders or participants,  except that
any  such  action  shall  be  subject  to  the  approval  of  the  Corporation's
stockholders  if the Committee  determines that such approval would be necessary
to retain the  benefits  of Rule 16b-3  (with  respect to  participants  who are
subject to Section 16 of the  Exchange  Act),  Section  162(m) of the Code (with
respect  to Covered  Employees)  or  Section  422 of the Code  (with  respect to
Incentive  Stock  Options)  or if such  stockholder  approval is required by any
federal  or state  law or  regulation  or the  rules of any  stock  exchange  or
automated  quotation  system  on which  the  Common  Stock may then be listed or
quoted or if the Board of  Directors  otherwise  determines  to submit  any such
action to stockholder approval;  provided, however, that, without the consent of
an affected participant, no amendment, alteration,  suspension,  discontinuation
or termination of the Plan may materially  impair the rights of such participant
under  any  Award  theretofore  granted  to him.  The  Committee  may  waive any
conditions or rights under, or amend, alter, suspend,  discontinue or terminate,
any  Award  theretofore  granted  and  any  Award  agreement  relating  thereto;
provided, however, that, without the consent of an affected participant, no such
amendment, alteration,  suspension,  discontinuation or termination of any Award
may materially impair the rights of such participant under such Award.

     9.6. No Rights to Awards; No Stockholder  Rights.  Nothing contained in the
Plan shall be deemed to give any person eligible to receive an Award  hereunder,
or any heir, distributee,  executor, administrator or personal representative of
any  such  person,  any  interest  or  title  to any  specific  property  of the
Corporation  or  any  of  its  Subsidiaries,  or any  other  right  against  the
Corporation  or any of its  Subsidiaries  other  than as set  forth in the Plan.
Neither the  establishment  of the Plan nor any other action taken now or at any
time with regard thereto shall be construed as giving any person  whatsoever any
legal or  equitable  right  against the  Corporation  unless such right shall be
specifically  provided for in the Plan. There is no obligation for uniformity of
treatment of  participants  and  employees  under the Plan.  Except as otherwise
provided in Section 6.2 with respect to Restricted  Stock, no Award shall confer
on any participant any of the rights of a stockholder of the Corporation  unless
and until shares of Common Stock are duly issued or transferred and delivered to
the participant in accordance with the terms of the Award.

     9.7.  Unfunded  Status of Awards.  The Plan is  intended to  constitute  an
"unfunded"  plan for  incentive and deferred  compensation.  With respect to any
payments not yet made to a participant  pursuant to an Award,  nothing contained
in the Plan or any Award shall

<PAGE>
                                     - 15 -


give any such  participant  any rights that are greater  than those of a general
creditor of the Corporation.

     9.9.  Nonexclusivity  of the Plan.  Neither the adoption of the Plan by the
Board nor its submission to the  stockholders  of the  Corporation  for approval
shall be  construed  as creating  any  limitations  on the power of the Board to
adopt such other incentive  arrangements  as it may deem  desirable,  including,
without limitation, the granting of stock options otherwise than under the Plan,
and such  arrangements  may be either  applicable  generally or only in specific
cases.

     9.10.  Binding Effect. The provisions of the Plan shall be binding upon the
heirs, distributees,  executors,  administrators and personal representatives of
any person  participating under the Plan. A person claiming any rights under the
Plan as a beneficiary or otherwise through a participant shall be subject to all
of the terms and conditions of the Plan and any additional  terms and conditions
as may be imposed by the Committee.

     9.11. No Fractional  Shares.  No fractional shares of Common Stock shall be
issued or  delivered  pursuant  to the Plan or any Award.  The  Committee  shall
determine  whether cash, other Awards, or other property shall be issued or paid
in lieu of such  fractional  shares or  whether  such  fractional  shares or any
rights thereto shall be forfeited or otherwise eliminated.

     9.12. Compliance with Code Section 162(m). In the event it is determined by
the  Committee  prior to the grant of an Award to a Covered  Employee  that such
Award shall constitute  "qualified  performance-based  compensation"  within the
meaning of Code Section 162(m) of the Code, then, unless otherwise determined by
the Committee,  if any provision of the Plan or any Award agreement  relating to
such an Award granted to a Covered  Employee does not comply or is  inconsistent
with  the  requirements  of  Section  162(m)  of the  Code  or  the  regulations
thereunder,  such  provision  shall be construed or deemed amended to the extent
necessary to conform to such  requirements,  and no provision shall be deemed to
confer upon the Committee or any other person  discretion to increase the amount
of compensation  otherwise  payable to a Covered Employee in connection with any
such Award upon attainment of the performance  objectives to which such Award is
subject.

     9.13.  Governing Law. The Plan and all related  documents shall be governed
by, and construed in accordance  with, the laws of the State of Delaware (except
to the extent  provisions  of federal law may be  applicable).  If any provision
hereof  shall be held by a court of  competent  jurisdiction  to be invalid  and
unenforceable,  the remaining  provisions of the Plan shall continue to be fully
effective.

     9.14. Headings.  Headings are given to the sections of the Plan solely as a
convenience  to  facilitate  reference and neither such headings or numbering or
paragraphing shall be deemed in any way material or relevant to the construction
of the Plan or any provision thereof.

<PAGE>
                                     - 16 -


     9.14. Terminology. In order to shorten and improve the understandability of
the Plan  document by  eliminating  the repeated use of the phrase "his or her",
any masculine terminology herein shall also include the feminine.

     9.15. Effective Date; Plan Termination.  The Plan shall become effective as
of March 6, 1997; provided,  however,  that the Plan shall have been approved by
the affirmative votes of the holders of a majority of voting securities  present
in person or  represented  by proxy and  entitled  to vote at the June 19,  1997
annual meeting of the Corporation's stockholders, or any adjournment thereof, in
accordance with applicable  provisions of the Delaware General  Corporation Law.
Any Awards granted under the Plan prior to such approval of  stockholders  shall
not be effective unless stockholder  approval is obtained,  and, if stockholders
fail to approve the Plan as specified  hereunder,  any previously  granted Award
shall be forfeited and cancelled.  Unless earlier  terminated  under Section 9.5
hereto,  the Plan shall  terminate on and no further Awards may be granted under
the Plan after March 5, 2007.