1999 BROOKDALE LIVING COMMUNITIES, INC.

                              STOCK INCENTIVE PLAN


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                                TABLE OF CONTENTS


Section                                                                     Page
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1.  PURPOSE OF PLAN............................................................1

2.  DEFINITIONS................................................................1

3.  STOCK SUBJECT TO PLAN......................................................4
         3.1      Stock Subject to Plan........................................4
         3.2      Unexercised Options..........................................4
         3.3      Changes in Company Capitalization............................4

4.  GRANTING OF OPTIONS........................................................4
         4.1      Eligibility..................................................4
         4.2      Incentive Stock Options......................................4
         4.3      Granting of Options..........................................5
         4.4      Administration Of the Plan...................................5

5.  TERMS OF OPTIONS...........................................................6
         5.1      Option Agreement.............................................6
         5.2      Vesting of Options...........................................7
         5.3      Option Exercise Price........................................7
         5.4      Exercise Periods.............................................7
         5.5      Requirement of Continued Employment..........................9
         5.6      Adjustments in Outstanding Options...........................9
         5.7      Merger, Consolidation, Acquisition,
                   Liquidation or Dissolution..................................9
         5.8      No Right to Continued Employment............................10

6.  EXERCISE OF OPTIONS.......................................................10
         6.1      Person Eligible to Exercise.................................10
         6.2      Partial Exercise............................................10
         6.3      Manner of Exercise..........................................10
         6.4      Conditions to Issuance of Stock Certificates................11
         6.5      Rights as Stockholders......................................12
         6.6      Transfer Restrictions.......................................12

7.  ADDITIONAL PROVISIONS.....................................................12
         7.1      Approval of Plan by Stockholders............................12
         7.2      Nontransferability..........................................13
         7.3      Death or Disability of Optionee.............................13
         7.4      Securities Act..............................................13
         7.5      Withholding of Tax..........................................13
         7.6      Termination and Amendment of Plan...........................13
         7.7      Duties of the Company.......................................14

8.  GENERAL PROVISIONS........................................................14




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                           SECTION 1. PURPOSE OF PLAN

         The  purpose  of the 1999  Brookdale  Living  Communities,  Inc.  Stock
Incentive  Plan (the  "Plan")  is to provide a means by which  Brookdale  Living
Communities,  Inc. (the "Company") may attract and retain  directors,  executive
officers and other key employees with outstanding qualifications and consultants
and advisers who provide  substantial and important services to the Company,  by
affording  those  individuals  with  incentives to exert maximum efforts for the
success of the  Company  through  opportunities  to  participate  in the growth,
development and financial success of the Company.

                             SECTION 2. DEFINITIONS

         Wherever the  following  capitalized  terms are used in the Plan,  they
shall have the following respective meanings:

         2.1 "Board of Directors" means the Board of Directors of the Company.

         2.2 "Change in Control" shall be deemed to have occurred if

                  (a) any "person"  (as such term is used in Sections  13(d) and
         14(d) of the  Exchange  Act),  other than a trustee or other  fiduciary
         holding  securities  under an employee  benefit plan of the Company,  a
         corporation  owned  directly or indirectly by the  stockholders  of the
         Company in substantially the same proportions as their ownership of the
         Common  Stock,  Michael W. Reschke or The Prime  Group,  Inc. or any of
         their respective affiliates, becomes the "beneficial owner" (as defined
         in Rule 13d-3  under the  Exchange  Act),  directly or  indirectly,  of
         securities of the Company  representing 50% or more of the total voting
         power  represented by the Company's then  outstanding  securities which
         vote  generally  in the  election of  directors  (referred to herein as
         "Voting Securities");

                  (b) during any period of two  consecutive  years,  individuals
         who at the beginning of such period  constitute  the Board of Directors
         and any new  directors  whose  election  by the Board of  Directors  or
         nomination for election by the Company's stockholders was approved by a
         vote of at least two-thirds (2/3) of the directors then still in office
         who  either  were  directors  at the  beginning  of the period or whose
         election or nomination for election was  previously so approved,  cease
         for any reason to constitute a majority of the Board of Directors;

                  (c) the  stockholders  of the  Company  approve  a  merger  or
         consolidation of the Company with any other  corporation,  other than a
         merger or consolidation  which would result in the Voting Securities of
         the  Company  outstanding   immediately  prior  thereto  continuing  to
         represent  (either by remaining  outstanding or by being converted into
         Voting  Securities of the surviving  entity) more than 50% of the total
         voting power  represented  by the Voting  Securities  of the Company or
         such  surviving  entity  outstanding  immediately  after such merger or
         consolidation; or


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                  (d) the stockholders of the Company approve a plan of complete
         liquidation  of the Company or an agreement for the sale or disposition
         by the Company (in one transaction or a series of  transactions) of all
         or substantially all of the Company's assets.

         2.3 "Code" means the Internal Revenue Code of 1986, as amended.

         2.4 "Committee" means as specified in Section 4.4.

         2.5 "Common  Stock" means the Common  Stock of the  Company,  par value
$0.01 per share.

         2.6 "Company"  means  Brookdale  Living  Communities,  Inc., a Delaware
corporation.  In addition,  "Company"  shall mean any corporation  assuming,  or
issuing new employee stock options in substitution for,  Incentive Stock Options
outstanding under the Plan, in a transaction to which Section 424(a) of the Code
applies.

         2.7  "Date of  Grant"  means  the date as of which an  Option  has been
granted pursuant to the Plan.

         2.8 "Disability"  means,  with respect to an individual,  a physical or
mental condition  resulting from any medically  determinable  physical or mental
impairment that renders such individual incapable of engaging in any substantial
gainful  employment  and that can be  expected  to  result  in death or that has
lasted or can be expected to last for a continuous  period of not less than four
consecutive months.

         2.9  "Eligible  Individual"  means  (i) any  director,  officer  or key
employee of the Company or a  Subsidiary,  (ii) any officer or key employee of a
partnership in which the Company owns directly or indirectly at least 50% of the
capital  or  profits  interest  or (iii)  any  consultant  or  adviser  whom the
Committee determines provides substantial and important service to the Company.

         2.10  "Exchange  Act" means the  Securities  Exchange  Act of 1934,  as
amended.

         2.11 "Fair Market  Value" means the per share value of the Common Stock
as of a given date, determined as follows:

                  (a)  If the Common  Stock is listed or admitted for trading on
         the New York Stock Exchange (or if not, on another national  securities
         exchange upon which the Common Stock is listed),  the Fair Market Value
         of the Common  Stock is the closing  quotation  for such stock based on
         composite  transactions  for the New  York  Stock  Exchange  (or if not
         listed on it,  such other  national  securities  exchange)  on the last
         trading day for such stock prior to such given date.

                  (b)  If  the  Common  Stock  is not  traded  on  any  national
         securities  exchange,  but is quoted on the Nasdaq  Stock Market or any
         similar  system of automated  dissemination  of quotations of prices in
         common use, the Fair Market Value of the

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         Common  Stock is the  average of the last sales  price (if the stock is
         then listed as a national  market  issue on the Nasdaq  Stock Market or
         the mean  between the closing  representative  bid and asked prices (in
         all other  cases)  for the  stock on the last 5  trading  days for such
         stock  preceding such given date as reported by the Nasdaq Stock Market
         (or such similar quotation system).

                  (c) If neither  clause (a) nor clause (b) of this Section 2.11
         is  applicable,  the Fair Market  Value of the Common Stock is the fair
         market value per share as of such valuation  date, as determined by the
         Board  of  Directors  in good  faith  and in  accordance  with  uniform
         principles consistently applied.

         2.12  "Incentive  Stock Option" means an Option which  qualifies  under
Section 422 of the Code and which is designated as an Incentive  Stock Option by
the Company or the Committee.

         2.13  "Non-Qualified  Option" means an Option which is not an Incentive
Stock Option and which is designated as a Non-Qualified Option by the Company or
the Committee.

         2.14 "Option" means any Incentive Stock Option or Non-Qualified  Option
granted under this Plan.

         2.15  "Optionee"  means an  Eligible  Individual  to whom an  Option is
granted under this Plan.

         2.16 "Plan" means the 1999  Brookdale  Living  Communities,  Inc. Stock
Incentive Plan, as it may be amended from time to time.

         2.17 "Secretary" means the Secretary of the Company.

         2.18 "Securities Act" means the Securities Act of 1933, as amended.

         2.19 "Severance Date" means (i) as to an Eligible  Individual who is an
employee of the Company, a Subsidiary or a Company-owned  partnership,  the date
the individual ceases to be so employed,  (ii) as to an Eligible  Individual who
is a director of the Company or a  Subsidiary  but not an employee  described in
(i) next above, the date the individual  ceases to be such a director,  or (iii)
as to an Eligible  Individual who is not included in (i) or (ii) above, the date
specified in the applicable Stock Option Agreement.

         2.20 "Stock Option Agreement" means the agreement  reflecting the terms
and conditions of an Option pursuant to Section 5.1.

         2.21 "Subsidiary"  means a subsidiary of the Company within the meaning
of Section 424(f) of the Code.

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                        SECTION 3. STOCK SUBJECT TO PLAN

         3.1 Stock Subject to Plan

                  The  stock  subject  to an  Option  shall  be  shares  of  the
Company's  Common Stock. The aggregate number of such shares which may be issued
upon  exercise of Options  granted  under Section 4 of the Plan shall not exceed
200,000  unless  and  until a larger  number  shall  have been  approved  by the
Company's stockholders pursuant to Section 7.6.

         3.2 Unexercised Options

                  If any Option  expires or is  cancelled  without  having  been
fully  exercised,  a new  Option or  Options  for the number of shares of Common
Stock that would have been issued upon  exercise of the  unexercised  portion of
such  Option may be  granted  under this  Plan,  subject to the  limitations  of
Section 3.1.

         3.3 Changes in Company Capitalization

                  In the event that the  outstanding  shares of Common Stock are
hereafter  changed into or exchanged for a different number or kind of shares or
other  securities  of the  Company,  or of  another  corporation,  by  reason of
reorganization,  merger, consolidation,  recapitalization,  reclassification, or
the number of shares is increased or decreased by reason of a stock split, stock
dividend,  combination of shares or any other increase or decrease in the number
of such shares of Common Stock effected  without receipt of consideration by the
Company  (provided,  however,  that conversion or exchange of any convertible or
exchangeable  securities  of the  Company  shall  not be  deemed  to  have  been
"effected  without  receipt  of   consideration"),   the  Committee  shall  make
appropriate  adjustments  in the number and kind of shares for the  purchase  of
which  Options may be  granted,  including  adjustments  of the  limitations  in
Section 3.1 and Section 4.1.

                         SECTION 4. GRANTING OF OPTIONS

         4.1 Eligibility

                  The  maximum  number of shares  of  Common  Stock  that may be
subject to Options  granted  during any calendar year to any one Optionee  shall
not exceed 200,000. Options granted to an Eligible Individual who is an employee
of the  Company  or a  Subsidiary  may be  either  Incentive  Stock  Options  or
Non-Qualified Options. Options granted to any other Eligible Individual may only
be Non-Qualified Options.

         4.2 Incentive Stock Options

                  No Incentive Stock Option shall be granted unless it qualifies
as an  "incentive  stock  option"  under  Section 422 of the Code on the Date of
Grant.

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         4.3 Granting of Options

                  (a) Subject to the  availability  of shares as provided  under
         Sections 3.1 and 7.6,  the  Committee  shall from time to time,  in its
         absolute discretion:

                        (i)  Determine  who are  the  Eligible  Individuals  and
                  select from among them those to be granted Options;

                       (ii) Determine the number of shares to be subject to such
                  Options  granted  to  such  selected  individuals,  and to the
                  extent permitted by the Code,  determine  whether such Options
                  are to be Incentive  Stock Options or  Non-Qualified  Options;
                  and

                      (iii)  Determine the terms and conditions of such Options,
                  consistent with the Plan.

                  (b) Upon the  selection  of an  individual  to be  granted  an
         Option, the Committee shall instruct the Secretary to issue such Option
         and may impose such  conditions on the grant of such Option as it deems
         appropriate. Without limiting the generality of the preceding sentence,
         the  Committee  may,  in its  discretion  and on such terms as it deems
         appropriate,  require  as a  condition  on the grant of an Option to an
         individual that the individual  surrender for cancellation  some or all
         of the unexercised  Options which have been previously  granted to him.
         An Option the grant of which is  conditioned  upon such  surrender  may
         have an Option  price  lower (or higher)  than the Option  price of the
         surrendered  Option, may cover the same (or a lesser or greater) number
         of shares as the  surrendered  Option,  may contain such other terms as
         the Committee deems  appropriate and shall be exercisable in accordance
         with its terms,  without regard to the number of shares,  price, Option
         period or any other term or condition of the surrendered Option.

         4.4 Administration Of the Plan

                  (a)  The  Plan  shall  be  administered  by  the  Compensation
         Committee  of the Board,  or by any other  Committee  appointed  by the
         Board, which Committee (unless otherwise determined by the Board) shall
         satisfy the "nonemployee director" requirements of Rule 16b-3 under the
         Exchange Act and the  regulations  of Rule 16b-3 under the Exchange Act
         and the "outside  director"  provisions of Code Section 162(m),  or any
         successor regulations or provisions. The members of the Committee shall
         be  appointed  from time to time by, and shall serve at the  discretion
         of, the Board of Directors.  Committee members may resign by delivering
         written notice to the Secretary.

                  (b)  Except as  otherwise  provided  in the Plan and except as
         otherwise expressly stated to the contrary in the Company's Articles of
         Incorporation,  Bylaws, or elsewhere, the Committee shall have the sole
         discretionary  authority (i) to select the Eligible Individuals who are
         to be granted  Options under the Plan,  (ii) to determine the number of
         Options to be granted to any Eligible  Individual at any time, (iii) to
         authorize

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         the  granting  of  Options,   (iv)  to  impose  such   conditions   and
         restrictions on Options as it determines appropriate,  (v) to interpret
         the Plan,  (vi) to prescribe,  amend and rescind rules and  regulations
         relating to the Plan, and (vii) to take any other actions in connection
         with  the  Plan  as  it  may  deem   necessary  or  advisable  for  the
         administration of the Plan. The  determinations of the Committee on the
         matters referred to in this Section 4 shall be conclusive.

                  (c)  A  majority  of  the  members  of  the  Committee   shall
         constitute a quorum.  All determinations of the Committee shall be made
         by a majority of its members. Any decision or determination  reduced to
         writing  and  signed by all of the  members of the  Committee  shall be
         fully  effective as if it had been made by a majority vote at a meeting
         duly called and held.

                  (d) The  Committee  may delegate to one or more persons any of
         its powers,  other than its power to authorize the granting of Options,
         or designate  one or more persons to do or perform  those matters to be
         done or performed by the  Committee,  including  administration  of the
         Plan.  Any person or persons  delegated or  designated by the Committee
         shall be subject to the same  obligations and  requirements  imposed on
         the Committee and its members under the Plan.

                  (e) Members of the Committee  shall receive such  compensation
         for their  services  as  members as may be  determined  by the Board of
         Directors.  All  expenses  and  liabilities  incurred by members of the
         Committee in connection  with the  administration  of the Plan shall be
         borne by the Company. The Committee may employ attorneys,  consultants,
         accountants,  appraisers,  brokers or other persons. The Committee, the
         Company and the Board of  Directors  shall be entitled to rely upon the
         advice, opinions or valuations of any such persons. All elections taken
         and all  interpretations  and  determinations  made by the Committee in
         good faith shall be final and binding upon all  Optionees,  the Company
         and all other interested  persons.  No member of the Committee shall be
         personally liable for any action,  determination or interpretation made
         in good faith with respect to the Plan.  Members of the  Committee  and
         each person or persons  designated or delegated by the Committee  shall
         be  entitled  to  indemnification  by the Company for any action or any
         failure to act in connection with services performed by or on behalf of
         the  Committee  for the benefit of the  Company to the  fullest  extent
         provided or  permitted  by the  Company's  Articles  of  Incorporation,
         Bylaws,  any  insurance  policy  or other  agreement  intended  for the
         benefit of the Committee, or by any applicable law.


                           SECTION 5. TERMS OF OPTIONS

         5.1 Option Agreement

                  Each  Option  shall be  evidenced  by a written  Stock  Option
Agreement,  which shall be executed by the Optionee and an authorized officer of
the  Company  and which shall  indicate  the Date of the Grant and contain  such
terms and  conditions  as the  Committee  shall  determine  with respect to such
Option,  consistent with the Plan. Stock Option Agreements

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evidencing  Incentive  Stock Options shall contain such terms and  conditions as
may be  necessary to qualify such Options as  "incentive  stock  options"  under
Section 422 of the Code.

         5.2 Vesting of Options

                  (a) Options granted under the Plan shall vest as determined by
         the Committee and set forth in the respective Stock Option Agreement.

                  (b) Unless otherwise  provided in the Stock Option  Agreement,
         in the  event  of a Change  in  Control  on or  before  the  Optionee's
         Severance  Date, each  outstanding  Option held by such Optionee to the
         extent not  theretofore  vested shall fully vest as of the date of such
         Change in Control.

                  (c) Subject to the  provisions  of Section 7.3,  Options which
         have been  granted but not yet vested  under this  Section 5.2 as of an
         Optionee's  Severance Date shall be forfeited unless otherwise provided
         in the Stock Option Agreement.

         5.3 Option Exercise Price

                  The  exercise  price per share for Options  granted  under the
Plan shall be set by the Committee;  provided, however, that the price per share
shall be not less than 100% of the Fair  Market  Value of such share on the Date
of Grant; provided, further, that, in the case of an Incentive Stock Option, the
price per share  shall  not be less than 110% of the Fair  Market  Value of such
share on the Date of Grant in the case of an individual  then owning (within the
meaning  of  Section  424(d)  of the Code)  more than 10% of the total  combined
voting power of all classes of stock of the Company or any Subsidiary.

         5.4 Exercise Periods

                  (a) No Option  may be  exercised  in whole or in part until it
         has vested, except as may be provided in Section 5.7.

                  (b) Subject to the provisions of Sections 5.4(c), 5.7 and 7.3,
         Options shall become exercisable at such times and in such installments
         (which may be cumulative)  as the Committee  shall provide in the terms
         of each individual Stock Option Agreement;  provided, however, that, by
         resolution  adopted after an Option is granted,  the Committee  may, on
         such terms and  conditions  as it may determine to be  appropriate  and
         subject to Sections 5.4(c),  5.7 and 7.3,  accelerate the time at which
         such Option or any portion thereof may be exercised.

                  (c) To the extent  that the  aggregate  Fair  Market  Value of
         stock with respect to which Incentive Stock Options (within the meaning
         of Section 422 of the Code, but without regard to Section 422(d) of the
         Code) are  exercisable  for the first  time by an  Optionee  during any
         calendar  year  (under the Plan and all other  incentive  stock  option
         plans of the Company) exceeds  $100,000,  such Options shall be treated
         as Non-Qualified  Options. The rule set forth in the preceding sentence
         shall be applied by taking  Options

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         into account in the order in which they were  granted.  For purposes of
         this  Section  5.4(c),  the Fair Market  Value of Common Stock shall be
         determined  as of the time the Option with respect to such Common Stock
         is granted.

                  (d) No Option may be  exercised  to any extent by anyone after
         the first to occur of the following events:

                        (i)  In the case of an Incentive Stock Option,

                             (A) the  expiration  of ten years  from the Date of
                           Grant; or

                             (B) in the case of an Optionee  owning  (within the
                           meaning of Section  424(d) of the Code),  at the Date
                           of Grant,  more than 10% of the total combined voting
                           power of all  classes of stock of the  Company or any
                           subsidiary  of the Company,  the  expiration  of five
                           years from the Date of Grant; or

                             (C)  except  in the  case  of any  Optionee  who is
                           disabled  (within the meaning of Section  22(e)(3) of
                           the Code),  the  expiration  of three months from the
                           Optionee's   Severance   Date   unless   either  such
                           Severance Date occurs due to such Optionee's death or
                           the Optionee dies within said three-month period; or

                             (D) in the  case  of an  Optionee  who is  disabled
                           (within the meaning of Section 22(e)(3) of the Code),
                           the  expiration  of  one  year  from  the  Optionee's
                           Severance  Date  unless  either such  Severance  Date
                           occurs due to such  Optionee's  death or the Optionee
                           dies within said one-year period; or

                             (E) the expiration of one year from the date of the
                           Optionee's death.

                       (ii)  In the case of a Non-Qualified Option,

                             (A) the  expiration  of ten years  from the Date of
                           Grant; or

                             (B) the  expiration of one year from the Optionee's
                           Severance  Date unless the Optionee  dies within said
                           one-year period; or

                             (C) the expiration of one year from the date of the
                           Optionee's death.

                  (e) Subject to the provisions of Section 5.4(d), the Committee
         shall provide,  in the terms of each individual Stock Option Agreement,
         when such Option expires and becomes unexercisable.

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         5.5 Requirement of Continued Employment

                  An Option shall be forfeited if the Optionee's  Severance Date
occurs within one year from the Date of Grant unless such  Severance Date occurs
due to a Change in Control.

         5.6 Adjustments in Outstanding Options

                  In the event  that the  outstanding  shares  of  Common  Stock
subject to Options are changed into or exchanged for a different  number or kind
of shares of the Company or other securities of the Company by reason of merger,
consolidation,  recapitalization,  reclassification,  or the number of shares is
increased  or  decreased  by  reason  of  a  stock  split-up,   stock  dividend,
combination  of shares or any other  increase  or decrease in the number of such
shares of Common Stock effected  without receipt of consideration by the Company
(provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been "effected  without receipt of  consideration"),
the  Committee  shall  make  appropriate  adjustments  in the number and kind of
shares  as  to  which  all  outstanding   Options,   or  portions  thereof  then
unexercised,  shall  be  exercisable,  to the end  that  after  such  event  the
Optionee's  proportionate  interest shall be maintained as before the occurrence
of such event.  Such  adjustment in an outstanding  Option shall be made without
change in the total price applicable to the Option or the unexercised portion of
the  Option  (except  for any  change  in the  aggregate  price  resulting  from
rounding-off of share quantities or prices) and with any necessary corresponding
adjustment in Option price per share;  provided,  however,  that, in the case of
Incentive Stock Options,  each such  adjustment  shall be made in such manner as
not to constitute a  "modification"  within the meaning of Section  424(h)(3) of
the Code. Any such  adjustment  made by the Committee shall be final and binding
upon all Optionees, the Company and all other interested persons.

         5.7 Merger, Consolidation, Acquisition, Liquidation or Dissolution

                  Notwithstanding the provisions of Section 5.6, in its absolute
discretion,  and on such  terms  and  conditions  as it deems  appropriate,  the
Committee  may  provide by the terms of any Option  that such  Option  cannot be
exercised after the merger or  consolidation of the Company with or into another
corporation,  the  acquisition by another  corporation or person  (excluding any
trustee or other fiduciary holding  securities under an employee benefit plan of
the Company) of all or  substantially  all of the Company's  assets or more than
50% of the Company's  then  outstanding  voting  stock,  or the  liquidation  or
dissolution  of the Company;  and if the  Committee so provides,  it may, in its
absolute  discretion and on such terms and  conditions as it deems  appropriate,
also  provide,  either by the terms of such  Option or by a  resolution  adopted
prior to the occurrence of such merger, consolidation,  acquisition, liquidation
or dissolution,  that, for some period of time prior to such event,  such Option
shall be exercisable to all shares covered thereby,  notwithstanding anything to
the contrary in Section 5.4(a), Section 5.4(b) and/or any installment provisions
of such Option.


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         5.8 No Right to Continued Employment

                  Nothing  in  this  Plan  or  in  any  Stock  Option  Agreement
hereunder  shall confer upon any Optionee any right to continued  employment  or
retention in service or shall  interfere  with or restrict in any way the rights
of the Company,  a Subsidiary  or any other person to terminate or discharge any
Optionee at any time for any reason whatsoever.

                         SECTION 6. EXERCISE OF OPTIONS

         6.1 Person Eligible to Exercise

                  During the lifetime of the  Optionee,  only such  Optionee may
exercise an Option (or any portion thereof) granted to such Optionee.  After the
death of the Optionee,  any  exercisable  portion of an Option may, prior to the
time when such portion  becomes  unexercisable  under the Plan or the applicable
Stock Option  Agreement,  be exercised  by the personal  representative  of such
Optionee or by any person empowered to do so under the deceased  Optionee's will
or under the then applicable laws of descent and distribution.

         6.2 Partial Exercise

                  At any time and from  time to time  prior to the time when any
exercisable Option or exercisable  portion thereof becomes  unexercisable  under
the Plan or the  applicable  Stock  Option  Agreement,  such  Option or  portion
thereof  may be  exercised  in  whole or in part;  provided,  however,  that the
Company shall not be required to issue fractional  shares and the Committee may,
by the terms of the Stock Option  Agreement,  require any partial exercise to be
with respect to a specified minimum number of shares.

         6.3 Manner of Exercise

                  An exercisable Option, or any exercisable portion thereof, may
be  exercised  solely by delivery to the  Secretary  or his office of all of the
following   prior  to  the  time  when  such  Option  or  such  portion  becomes
unexercisable under the Plan or the applicable Stock Option Agreement:

                  (a) notice in writing  signed by the  Optionee or other person
         then  entitled to exercise  such Option or portion,  stating  that such
         Option  or  portion  is  exercised,  such  notice  complying  with  all
         applicable rules established by the Committee; and

                  (b) (i) full payment (in cash or by check) for the shares with
                  respect to which such Option or portion is thereby  exercised;
                  or

                      (ii) if permitted  under the terms of an Optionee's  Stock
                  Option Agreement or with the consent of the Committee,  shares
                  of the  Company's  Common  Stock  owned by the  Optionee  duly
                  endorsed for transfer to the Company, other than shares of the
                  Company's  Common  Stock held for less than six months  unless
                  acquired on the open  market,  with a Fair Market Value on the
                  date of Option

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                  exercise  equal to the  aggregate  Option  price of the shares
                  with  respect  to which  such  Option or  portion  is  thereby
                  exercised; or

                      (iii) with the consent of the  Committee,  a full recourse
                  promissory note bearing  interest (at least such rate as shall
                  then preclude the imputation of interest under the Code or any
                  successor  provision)  and  payable  upon such terms as may be
                  prescribed by the Committee.  The Committee may also prescribe
                  the form of such  note and the  security  to be given for such
                  note.  No Option may,  however,  be exercised by delivery of a
                  promissory  note or by a loan from the  Company  when or where
                  such loan or other  extension of credit is  prohibited by law;
                  or

                       (iv) with the consent of the Committee,  any  combination
                  of the  consideration  provided in the  foregoing  subsections
                  (i), (ii) and (iii); and

                  (c) the  payment  to the  Company of all  amounts  which it is
         required to withhold  under  federal,  state or local law in connection
         with the exercise of the Option; provided that, with the consent of the
         Committee,  (i)  shares  of the  Company's  Common  Stock  owned by the
         Optionee duly endorsed for transfer, other than shares of the Company's
         Common Stock held for less than six months unless  acquired on the open
         market,  or (ii) shares of the Company's  Common Stock  issuable to the
         Optionee upon exercise of the Option, valued at Fair Market Value as of
         the date of  Option  exercise,  may be used to make all or part of such
         payment,  but  only  up to  the  minimum  withholding  requirement  for
         supplemental wages; and

                  (d) such  representations  and documents as the Committee,  in
         its  absolute  discretion,  deems  necessary  or  advisable  to  effect
         compliance with all applicable provisions of the Securities Act and any
         other federal or state  securities laws or  regulations,  including the
         representation  that the shares of the Common Stock are being  acquired
         for  investment  and not resale.  The  Committee  may, in its  absolute
         discretion,  also take whatever additional actions it deems appropriate
         to  effect  such  compliance  including,  without  limitation,  placing
         legends  on share  certificates  and  issuing  stop-transfer  orders to
         transfer agents and registrars; and

                  (e) in the event that the Option or portion  thereof  shall be
         exercised  pursuant to Section 6.1 by any person or persons  other than
         the Optionee,  appropriate proof of the right of such person or persons
         to exercise the Option or portion thereof.

         6.4 Conditions to Issuance of Stock Certificates

                  The shares of Common Stock issuable and  deliverable  upon the
exercise  of an  Option,  or  any  portion  thereof,  may be  either  previously
authorized but unissued  shares or issued shares which have then been reacquired
by the  Company.  The  Company  shall not be  required  to issue or deliver  any
certificate  or  certificates  for  shares of Common  Stock  purchased  upon the
exercise of any Option or portion  thereof  prior to  fulfillment  of all of the
following conditions:

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                  (a) the  satisfaction of all requirements set forth in Section
         6.3, including payment of the exercise price; and

                  (b) the obtaining of any approval or other  clearance from any
         state or federal  governmental agency which the Committee shall, in its
         absolute discretion, determine to be necessary or advisable; and

                  (c) the lapse of such reasonable  period of time following the
         exercise of the Option as the Committee may establish from time to time
         for reasons of administrative convenience.

         6.5 Rights as Stockholders

                  The  holders  of  Options  shall  not be,  nor have any of the
rights or privileges  of,  stockholders  of the Company in respect to any shares
purchasable  upon the  exercise  of any part of an Option  unless  and until the
Option  is  exercised,  the  Option  price  has  been  paid to the  Company  and
certificates  representing  such  shares have been issued by the Company to such
holders.

         6.6 Transfer Restrictions

                  The  Committee,  in its absolute  discretion,  may impose such
restrictions on the  transferability of the shares purchasable upon the exercise
of an Option as it deems appropriate. Any such restriction shall be set forth in
the respective Stock Option Agreement and may be referred to on the certificates
evidencing  such  shares.  The  Committee  may require any  Optionee to give the
Company prompt notice of any disposition of shares of stock acquired by exercise
of an Incentive  Stock  Option,  within two years from the Date of Grant of such
Option or one year after the  acquisition of such shares by such  Optionee.  The
Committee  may  direct  that the  certificates  evidencing  shares  acquired  by
exercise  of an  Option  refer to such  requirement  to give  prompt  notice  of
disposition.

                        SECTION 7. ADDITIONAL PROVISIONS

         7.1 Approval of Plan by Stockholders

                  This Plan will be submitted  for the approval of the Company's
stockholders  within  twelve  months  before  or after  the date of the Board of
Directors'  initial  adoption of the Plan.  Options may be granted prior to such
stockholder  approval;  provided,  however,  that  such  Options  shall  not  be
exercisable  prior to the time when the Plan is  approved  by the  stockholders;
provided,  further,  that if such  approval has not been  obtained at the end of
said twelve-month  period,  all Options  previously granted under the Plan shall
thereupon be cancelled and become null and void.

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<PAGE>

         7.2 Nontransferability

                  No Option or interest or right  therein or part thereof  shall
be liable  for the  debts,  contracts  or  engagements  of the  Optionee  or any
successors  in interest to the  Optionee or shall be subject to  disposition  by
transfer, alienation, anticipation, pledge, encumbrance, assignment or any other
means whether such  disposition  be voluntary or  involuntary or by operation of
law by judgment,  levy, attachment,  garnishment or any other legal or equitable
proceedings (including bankruptcy),  and any attempted disposition thereof shall
be null and void and of no  effect;  provided,  however,  that  nothing  in this
Section 7.2 shall prevent transfers by will or by the applicable laws of descent
and distribution.

         7.3 Death or Disability of Optionee

                  If an  Optionee  dies  or  incurs  a  Severance  Date  due  to
Disability,  any Option of such Optionee which has been outstanding for at least
one year shall fully and  immediately  be vested.  In the event of an Optionee's
death  the  executor,  administrator  or other  personal  representative  of the
Optionee's  estate,  or any heir,  successor,  assign or other transferee of the
Optionee  receiving  such  Options  by  will  or by  the  laws  of  descent  and
distribution,  shall have the  right,  subject to the  restrictions  hereof,  to
exercise all vested  Options to acquire  shares of Common Stock  subject to such
Options at any time within one year after the date of the Optionee's death.

         7.4 Securities Act

                  No shares of Common Stock of the Company  shall be required to
be  distributed  until the Company  shall have taken such action,  if any, as is
then required to comply with the  provisions of the  Securities Act or any other
then applicable securities law. The Company reserves the right to place a legend
on any stock  certificate  issued pursuant to the Plan to assure compliance with
this Section and with the vesting requirements of Section 5.2.

         7.5 Withholding of Tax

                  The Company  shall have the right to deduct from  compensation
otherwise  payable to an Optionee  any  federal,  state or local income or other
taxes required by law to be withheld with respect to any distributions under the
Plan.

         7.6 Termination and Amendment of Plan

                  The  Committee  may at any time suspend or terminate the Plan,
or make such modifications of the Plan as it shall deem advisable, provided that
the  Plan  shall  not be so  changed  to  increase  the  cost of the Plan to the
Company.  However,  without approval of the Company's  stockholders given within
twelve  months  before or after the  action by the  Committee,  no action of the
Committee may, except as provided in Section 3.3,  increase any limit imposed in
Section 3.1 on the maximum number of shares which may be issued upon exercise of
Options,  materially modify the eligibility  requirements of Section 4.1, reduce
the  minimum  Option  price  requirements  of Section  5.3,  or extend the limit
imposed in this Section

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<PAGE>

7.6 on the period during which Options may be granted.  No Option may be granted
during any period of suspension  nor after  termination  of the Plan,  and in no
event may any Option be granted  under this Plan after the first to occur of the
following events:

                  (a) the  expiration  of ten  years  from  the date the Plan is
         adopted by the Board of Directors; or

                  (b) the  expiration  of ten  years  from  the date the Plan is
         approved by the Company's stockholders under Section 7.1.

         7.7 Duties of the Company

                  The  Company  shall,  at all  times  during  the  term of each
Option,  reserve and keep  available  for  issuance  or delivery  such number of
shares of Common Stock as will be sufficient to satisfy the  requirements of all
Options at the time outstanding, shall pay all original issue taxes with respect
to the  issuance or delivery of shares  pursuant to the  exercise of such Option
and  all  other  fees  and  expenses  necessarily  incurred  by the  Company  in
connection therewith.

                          SECTION 8. GENERAL PROVISIONS

                  (a) No individual  shall have any claim or right to be granted
         Options  under the Plan.  Neither the adoption and  maintenance  of the
         Plan nor the  granting of Options  pursuant to the Plan shall be deemed
         to  constitute  a contract  of  employment  between the Company and any
         individual or to be a condition of the employment of any person.

                  (b)  The  Company   shall  pay  all  costs  and   expenses  of
         administering the Plan.

                  (c) The  granting  of Options  and the  issuance  of shares of
         Common  Stock under the Plan shall be subject to all  applicable  laws,
         rules,  and  regulations,  and to such  approvals  by any  governmental
         agencies or  national  securities  exchanges  as may be  required.  The
         provisions of this Plan shall be  interpreted  so as to comply with the
         conditions or requirements of the Securities Act, the Exchange Act, and
         rules   and   regulations   issued   thereunder   unless   a   contrary
         interpretation   of  any  such  provision  is  otherwise   required  by
         applicable law.

                  (d) The granting of an Option shall impose no obligation  upon
         the Optionee to exercise such option.

                  (e) Whenever the context so indicates,  the singular or plural
         number,  and the  masculine,  feminine or neuter  gender  shall each be
         deemed to include the other.

                  (f) This Plan and all Option agreements  entered into pursuant
         thereto  shall be  construed  and  enforced  in  accordance  with,  and
         governed  by,  the laws of the State of  Delaware,  determined  without
         regard to its conflict of interest rules.



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