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                                                                   EXHIBIT 10.14
 
                         PENNCORP FINANCIAL GROUP, INC.
                     1996 STOCK AWARD AND STOCK OPTION PLAN
 
1. DEFINITIONS
 
     The following terms shall have the following meanings unless the context
indicates otherwise:
 
          1.1 "Award" shall mean either a Stock Award or a Stock Option.
 
          1.2 "Board" shall mean the Board of Directors of the Company.
 
          1.3 "Cause" shall mean the Participant:
 
             (A) is convicted of a felony;
 
             (B) engages in conduct that constitutes gross neglect or gross
        misconduct in carrying out his or her duties as an Employee;
 
             (C) engages in fraud, embezzlement, theft or dishonesty against the
        Company or any Subsidiary;
 
             (D) commits a willful or grossly negligent material violation of
        law in connection with or in the course of the Participant's duties or
        employment with the Company or any Subsidiary; or
 
             (E) commits a willful or grossly negligent breach of any stated
        material employment policy of the Company.
 
          1.4 "Code" shall mean the Internal Revenue Code of 1986, as amended
     from time to time.
 
          1.5 "Committee" shall mean the Stock Award and Stock Option Committee
     of the Board, or such other Board committee as may be designated by the
     Board to administer the Plan; provided, however, that such committee shall
     be comprised solely of not less than two Nonemployee Directors each of whom
     qualifies as (i) a "disinterested person" (as such term is used in Rule
     16b-3 under the Exchange Act) and (ii) an "outside director" (as such term
     is used in Treasury Regulation Section 1.162-27(e)(3)).
 
          1.6 "Common Stock" shall mean the common stock, $.01 par value per
     share, of the Company.
 
          1.7 "Company" shall mean PennCorp Financial Group, Inc., a Delaware
     corporation.
 
          1.8 "Disability" shall mean a disability as determined under the
     Company's then existing long-term disability plan or program.
 
          1.9 "Employee" shall mean a salaried employee of the Company or any
     Subsidiary as described in Treasury Regulation Section 1.421-7(h).
 
          1.10 "ERISA" shall mean the Employee Retirement Income Security Act of
     1974, as amended from time to time, including regulations thereunder and
     successor provisions and regulations thereto.
 
          1.11 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
     amended from time to time, including regulations thereunder and successor
     provisions and regulations thereto.
 
          1.12 "Executive Committee" shall mean the Executive Committee of the
     Board.
 
          1.13 "Fair Market Value" shall mean:
 
             (A) the closing price of the Common Stock on the date of
        calculation (or on the last preceding trading date if Common Stock was
        not traded on the date of calculation) if Common Stock is readily
        tradeable on a national securities exchange or other market system; or
 
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             (B) an amount determined in good faith by the Committee as the fair
                 market value of the Common Stock on the date of determination
                 if Common Stock is not readily tradeable on a national
                 securities exchange or other market system.
 
          1.14 "ISO" shall mean an "incentive stock option" as such term is used
     in Code Section 422.
 
          1.15 "Nonemployee Director" shall mean a member of the Board who is
     not an Employee.
 
          1.16 "Nonqualified Stock Option" shall mean a Stock Option that does
     not qualify as an ISO.
 
          1.17 "Participant" shall mean any Employee to whom an Award has been
     granted by the Committee under the Plan.
 
        1.18 "Pecuniary Interest" shall mean "pecuniary interest" as such term
     is used in Rule 16a-1(a)(2)(i) under the Exchange Act.
 
          1.19 "Plan" shall mean the PennCorp Financial Group, Inc. 1996 Stock
     Award and Stock Option Plan.
 
          1.20 "Retirement" shall mean a termination of employment from the
     Company or any Subsidiary which constitutes a retirement under any
     defined-benefit pension plan or defined-contribution pension plan
     maintained by the Company or any Subsidiary which is either a tax-qualified
     plan under Code Section 401(a) or is identified in writing by the Committee
     as a defined-benefit pension plan or defined-contribution benefit plan.
 
          1.21 "SEC" shall mean the Securities and Exchange Commission.
 
          1.22 "Stock Award" shall mean the grant of Common Stock by the Company
     to a Participant pursuant to Section 8 below or the grant of Common Stock
     by the Company to a Nonemployee Director pursuant to Sections 10 and/or 11
     below.
 
          1.23 "Stock Award Agreement" shall mean a written agreement between
     the Company and the Participant that establishes the terms, conditions,
     restrictions and/or limitations applicable to a Stock Award in addition to
     those established by the Plan and by the Committee's exercise of its
     administrative powers.
 
          1.24 "Stock Option" shall mean the grant by the Company of an option
     to purchase Common Stock to a Participant pursuant to Section 9 below.
 
          1.25 "Stock Option Agreement" shall mean a written agreement between
     the Company and the Participant that establishes the terms, conditions,
     restrictions and/or limitations applicable to a Stock Option in addition to
     those established by the Plan and by the Committee's exercise of its
     administrative powers.
 
          1.26 "Subsidiary" shall mean a corporation of which the Company
     directly or indirectly owns more than 50 percent of the Voting Stock or any
     other business entity in which the Company directly or indirectly has an
     ownership interest of more than 50 percent.
 
          1.27 "Treasury Regulations" shall mean the regulations promulgated
     under the Code by the United States Department of Treasury, as amended from
     time to time.
 
          1.28 "Voting Stock" shall mean capital stock of any class or classes
     having general voting power under ordinary circumstances, in the absence of
     contingencies, to elect the directors of a corporation.
 
2. PURPOSE
 
     The purpose of the Plan is:
 
          (a) to provide incentives which will attract, retain and motivate key
     officers, Employees and Nonemployee Directors whose present and potential
     contributions are important to the success of the Company and its
     Subsidiaries;
 
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          (b) to align the interests of key officers, Employees and Nonemployee
     Directors with that of shareholders by providing incentives to such key
     officers, Employees and Nonemployee Directors to enhance the performance of
     the Common Stock through equity ownership in the Company; and
 
          (c) to ensure that compensation paid under the Plan (other than
     compensation attributable to ISOs) will be fully deductible for federal
     income tax purposes.
 
3. TERM OF PLAN
 
     The Plan shall be effective as of January 1, 1996, subject to approval by
the Company's shareholders at the 1996 annual meeting of shareholders. The Plan
shall terminate at the close of business on December 31, 2005, unless terminated
earlier by the Board pursuant to Section 16.
 
4. ADMINISTRATION
 
     (a) The Plan shall be administered by the Committee. The Committee is
authorized, subject to the provisions of the Plan, to establish such rules and
regulations as it deems necessary for the proper administration of the Plan and
to make such determinations and interpretations and to take such actions in
connection with the Plan and any Awards granted hereunder as it deems necessary
or advisable. All determinations and interpretations made by the Committee shall
be binding and conclusive on all Participants and their legal representatives.
No member of the Board, no member of the Committee and no Employee shall be
liable for any act or failure to act hereunder, except in circumstances
involving his or her bad faith, gross negligence or willful misconduct, or for
any act or failure to act hereunder by any other Board or Committee member or
Employee or by any agent to whom duties in connection with the administration of
the Plan have been delegated. The Company shall indemnify members of the
Committee and any agent of the Committee against any and all liabilities or
expenses to which they may be subjected by reason of any act or failure to act
with respect to their duties on behalf of the Plan, except in circumstances
involving such person's bad faith, gross negligence or willful misconduct.
 
     (b) The Committee may delegate to one or more of its members, or to one or
more agents, such administrative duties as it may deem advisable, and the
Committee, or any person to whom it has delegated duties as aforesaid, may
employ one or more persons to render advice with respect to any responsibility
the Committee or such person may have under the Plan. The Committee may employ
such legal or other counsel, consultants and agents as it deems desirable for
the administration of the Plan and may rely upon any opinion or computation
received from any such counsel, consultant or agent. Expenses incurred by the
Committee in the engagement of such counsel, consultant or agent shall be paid
by the Company or the Subsidiary whose Employees have benefitted from the Plan,
as determined by the Committee.
 
5. ELIGIBILITY
 
     Participants shall consist of such officers and Employees of the Company
and its Subsidiaries as the Committee in its sole discretion determines to be
significantly responsible for the success and future growth and profitability of
the Company and whom the Committee may designate from time to time to receive
Awards under the Plan. In addition, all Nonemployee Directors of the Company
shall participate in the Plan, but only to the extent provided in Sections 10
and 11 below. Designation of a Participant in any year shall not require the
Committee to designate such person as a Participant in any other year or, once
designated, to receive the same type or amount of Award as granted to the
Participant in any other year.
 
6. SHARES SUBJECT TO PLAN
 
     (a) Available Shares. The aggregate number of shares of Common Stock which
shall be available for grants of Awards under the Plan during its term shall be
2,800,000. Such shares of Common Stock available for issuance under the Plan may
be either authorized but unissued shares, shares of issued stock held in the
Company's treasury, or both, at the discretion of the Company, and subject to
any adjustments made in accordance with Section 6(c) below. Shares of Common
Stock underlying Stock Awards or Stock Options which terminate by expiration,
forfeiture, cancellation or otherwise without the issuance of such shares shall
 
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again be available for grants of Stock Awards and Stock Options under the Plan,
to the extent permitted by Rule 16b-3 under the Exchange Act. The number of
shares of Common Stock available for issuance under the Plan shall not be
reduced to reflect any dividends or dividend equivalents that are reinvested
into additional shares of Common Stock.
 
     (b) Maximum Aggregate Number of Shares Underlying Stock Awards and Stock
Options Granted Under the Plan to Any Single Participant. The maximum aggregate
number of shares of Common Stock underlying Stock Awards that may be granted to
any single Participant during the life of the Plan shall be 1,500,000, subject
to adjustment as provided in Section 6(c) below. The maximum aggregate number of
shares of Common Stock underlying Stock Options that may be granted to any
single Participant during the life of the Plan shall be 1,500,000, subject to
adjustment as provided in Section 6(c) below. For purposes of the preceding
sentence, shares of Common Stock underlying Stock Options that are cancelled
shall continue to be counted in determining the maximum aggregate number of
shares of Common Stock that may be granted to any single Participant.
 
     (c) Adjustment to Shares. If there is any change in the number of
outstanding shares of Common Stock through the declaration of stock dividends,
stock splits or the like, the number of shares of Common Stock underlying Stock
Awards and the number of shares of Common Stock underlying Stock Options and the
exercise prices of such Stock Options shall be automatically adjusted. If there
is any change in the number of outstanding shares of Common Stock through any
change in the capital account of the Company, or through a merger,
consolidation, separation (including a spinoff or other distribution of stock or
property), reorganization (whether or not such reorganization comes within the
meaning of such term in Code Section 368(a)) or partial or complete liquidation,
the Committee shall make appropriate adjustments in the number of shares of
Common Stock which may be issued under the Plan and to any single Participant,
and any adjustments and/or modifications to outstanding Stock Awards and Stock
Options as it deems appropriate. In the event of any other change in the capital
structure of the Company or in the Common Stock, the Committee shall also be
authorized to make such appropriate adjustments in the number of shares of
Common Stock available for issuance under the Plan and to any single
Participant, and any adjustments and/or modifications to outstanding Stock
Awards and Stock Options as it deems appropriate; provided, however, that (i)
each such adjustment with respect to an ISO shall comply with the rules of Code
Section 424(a) (or any successor provision) and (ii) in no event shall any
adjustment be made which would render any ISO granted hereunder other than an
ISO. In addition, the number of shares of Common Stock available for issuance
under the Plan shall be automatically adjusted to the extent necessary to
reflect any dividend equivalents paid in the form of Common Stock.
 
7. PERFORMANCE-BASED COMPENSATION
 
     The Committee may condition the grant of any Award under the Plan to the
achievement of preestablished performance goals, and the Committee may subject
the vesting of any Award under the Plan to the achievement of preestablished
performance goals, in order to comply with the requirements of Code Section
162(m). In addition, the Committee may take whatever other actions shall be
necessary in order to qualify compensation attributable to Awards as
"performance-based compensation" under Code Section 162(m). Performance goals
shall be based on (i) any one or combination of the following financial measures
or (ii) growth in any one or combination of the following financial measures:
 
     (a) revenue;
 
     (b) cash flow;
 
     (c) EBITDA;
 
     (d) net income;
 
     (e) earnings per share;
 
     (f) return on assets; and/or
 
     (g) return on equity.
 
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8. STOCK AWARDS
 
     (a) Terms and Conditions. The Committee is authorized to grant Stock Awards
to Employees, subject to such terms, conditions, restrictions and/or
limitations, if any, as the Committee deems appropriate, including, but not
limited to, restrictions on transferability and continued employment; provided,
however, that such terms, conditions, restrictions and/or limitations are not
inconsistent with the Plan. The Committee may require the Participant to deliver
a duly signed stock power, endorsed in blank, relating to the Common Stock
underlying such Stock Award, and may also require that the stock certificates
evidencing such shares be held in custody or bear restrictive legends until the
restrictions thereon, if any, shall have lapsed. The Committee may accelerate
the date a Stock Award becomes transferable under such circumstances as it deems
appropriate.
 
     (b) Limited Rights as Shareholders. During the period in which any shares
of Common Stock are subject to the restrictions imposed under Section 8(a)
above, a Participant to whom such restricted shares have been awarded shall not
have the right (i) to vote such shares and (ii) to receive dividends thereon.
 
     (c) Stock Award Agreement. Any Stock Award granted under the Plan shall be
evidenced by a Stock Award Agreement which shall be signed by the Company and
the Participant.
 
9. STOCK OPTIONS
 
     (a) Terms and Conditions. The Committee is authorized to grant Stock
Options to Employees. Stock Options may be ISOs or Nonqualified Stock Options,
or a combination of both. The Committee shall, in its sole discretion but after
having taken into account the recommendations of the Executive Committee with
respect to the granting of Stock Options to Employees (other than to an Employee
who is a member of the Executive Committee), determine the Employees who will
receive Stock Options and the number of shares of Common Stock underlying each
Stock Option. In addition, the Committee shall determine the following terms and
conditions:
 
          (1) Exercise Price. The Committee, in its sole discretion, shall
     determine the exercise price of the Stock Option; provided, however, that
     the exercise price of any Stock Option shall not be less than 100 percent
     of Fair Market Value on the date of grant.
 
          (2) Expiration Date. The Committee, in its sole discretion, shall
     determine the expiration date of the Stock Option; provided, however, that
     no ISO shall be exercised after the 10th anniversary of the date of grant.
 
          (3) Exercisability. The Committee, in its sole discretion, shall
     determine a vesting schedule upon which the Stock Option shall become
     exercisable and remain exercisable; provided, however, that if the
     Committee does not determine such vesting schedule, which shall be included
     in the Stock Option Agreement pursuant to Section 9(c) below, the Stock
     Option shall become exercisable and remain exercisable in accordance with
     the vesting schedule set forth below:
 
            (A) 33 1/3 percent of the Stock Option shall become exercisable on
        the first anniversary of the date of grant and remain exercisable until
        the Stock Option expires;
 
            (B) 33 1/3 percent of the Stock Option shall become exercisable on
        the second anniversary of the date of grant and remain exercisable until
        the Stock Option expires; and
 
            (C) 33 1/3 percent of the Stock Option shall become exercisable on
        the third anniversary of the date of grant and remain exercisable until
        the Stock Option expires.
 
     (b) Restrictions Relating to ISOs. In addition to being subject to the
terms and conditions of Section 9(a) above, ISOs shall comply with all other
requirements under Code Section 422. Accordingly, ISOs may be granted only to
Participants who are Employees of the Company or one of its "subsidiary
corporations" (as defined in Code Section 424(f)) on the date of grant. The
aggregate market value (determined as of the time the option is granted) of the
Common Stock with respect to which ISOs are exercisable for the first time by a
Participant during any calendar year (under all option plans of the Company
 
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and of any "parent corporation" (as defined in Code Section 424(e)) or any
"subsidiary corporation" (as defined in Code Section 424(f)) shall not exceed
$100,000. For purposes of the preceding sentence, (i) ISOs shall be taken into
account in the order in which they are granted and (ii) ISOs granted before 1987
shall not be taken into account. ISOs shall not be transferable by the
Participant otherwise than by will or the laws of descent and distribution and
shall be exercisable, during the Participant's lifetime, only by such
Participant. The Committee shall not grant ISOs to any Employee who, at the time
the ISO is granted, owns stock possessing (after the application of the
attribution rules of Code Section 424(d)) more than 10 percent of the total
combined voting power of all classes of stock of the Company or of any "parent
corporation" (as defined in Code Section 424(e)) or any "subsidiary corporation"
(as defined in Code Section 424(f)) unless the exercise price of the ISO is
fixed at not less than 110 percent of the Fair Market Value of the Common Stock
on the date of grant and the exercise of such ISO is prohibited by its terms
after the fifth anniversary of the ISO's date of grant. In addition, no ISO
shall be issued to a Participant in tandem with a Nonqualified Stock Option
issued to such Participant.
 
     (c) Stock Options Agreements. Any Stock Option granted under the Plan shall
be evidenced by a Stock Option Agreement which shall be signed by the Company
and the Participant.
 
     (d) Additional Terms and Conditions. The Committee may, by way of the Stock
Option Agreements or otherwise, establish such other terms, conditions,
restrictions and/or limitations, if any, of any Stock Option, provided they are
not inconsistent with the Plan.
 
     (e) Exercise. Upon exercise, the exercise price of a Stock Option may be
paid in cash, shares of Common Stock, a combination of the foregoing, or such
other consideration as the Committee may deem appropriate. The Committee shall
establish appropriate methods for accepting Common Stock, whether restricted or
unrestricted, and may impose such conditions as it deems appropriate on the use
of such Common Stock to exercise a Stock Option. The Committee may permit a
Participant to satisfy any amounts required to be withheld under applicable
federal, state and local tax laws, in effect from time to time, by electing to
have the Company withhold a portion of the shares of Common Stock to be
delivered for the payment of such taxes.
 
10. NONEMPLOYEE DIRECTOR FORMULA STOCK AWARDS
 
     (a) Initial Grants. On the date the Plan is approved by the Company's
shareholders, the following five Nonemployee Directors shall each automatically
be granted a Stock Award of 1,000 shares of Common Stock, which shall be fully
transferable and subject to no restrictions:
 
     (1) Thomas A. Player;
 
     (2) Kenneth Roman;
 
     (3) Bruce W. Schnitzer;
 
     (4) Maurice W. Slayton; and
 
     (5) David C. Smith.
 
     (b) Election Grants. Each Nonemployee Director who (i) becomes a member of
the Board for the first time after the date on which the Plan is approved by the
Company's shareholders and (ii) does not, at the time he or she first becomes a
member of the Board, directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, have or share a direct or indirect
Pecuniary Interest in more than 100,000 shares of Common Stock, shall be
automatically granted a Stock Award of 1,000 shares of Common Stock, which shall
be fully transferable and subject to no restrictions.
 
     (c) Annual Grants. Each Nonemployee Director who (i) does not, on the date
of each annual meeting of the Company's shareholders that occurs after January
1, 1997, directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, have or share a direct or indirect
Pecuniary Interest in more than 100,000 shares of Common Stock and (ii) has not
received a grant pursuant to Section 10(b) above during the 12-month period
ending on the date of the applicable annual meeting of the Company's
shareholders, shall automatically be granted on the date of such annual meeting
of shareholders a
 
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Stock Award of 1,000 shares of Common Stock, which shall be fully transferable
and subject to no restrictions.
 
11. NONEMPLOYEE DIRECTOR ANNUAL RETAINER FEES PAID IN STOCK
 
     (a) A Nonemployee Director who does not, directly or indirectly, through
any contract, arrangement, understanding, relationship or otherwise, have or
share a direct or indirect Pecuniary Interest in more than 100,000 shares of
Common Stock, may elect to forgo 50 percent of the cash compensation
attributable to the Nonemployee Director's annual retainer fees and to receive
in lieu thereof a Stock Award as determined pursuant to Section 11(b) below. Any
such election shall be in writing and must be made at least six months before
the services are rendered giving rise to such compensation. Such election may
not be revoked or changed thereafter except as to compensation for services
rendered at least six months after any such election to revoke or change is made
in writing.
 
     (b) A Nonemployee Director whose cash compensation attributable to his or
her annual retainer fees is reduced pursuant to Section 11(a) above shall
receive a Stock Award of which the number of shares of Common Stock underlying
such Stock Award shall be determined by dividing (x) amount of the cash
compensation so reduced by (y) the product of (A) the Fair Market Value of the
Common Stock on the last business day of the month in which the cash
compensation would have been paid in the absence of such reduction multiplied by
(B) 90 percent. For purposes of determining the number of shares of Common Stock
underlying Stock Awards under this Section 11(b), fractional shares shall be
disregarded.
 
12. AWARDS SUBJECT TO FOREIGN LAWS
 
     The Committee may grant Awards to individual Participants who are subject
to the tax laws of nations other than the United States, which Awards may have
terms and conditions as determined by the Committee as necessary to comply with
applicable foreign laws. The Committee may take any action which it deems
advisable to obtain approval of such Awards by the appropriate foreign
governmental entity; provided, however, that no such Awards may be granted
pursuant to this Section 12 and no action may be taken which would result in a
violation of the Exchange Act, the Code or any other applicable law.
 
13. CHANGE IN CONTROL OR OWNERSHIP
 
     (a) Subject to the provisions contained in Sections 13(b) and 13(c) below,
in the event there is a change in control or a change in ownership of the
Company, the Committee may, in its sole discretion, provide that:
 
          (1) any or all nontransferable Stock Awards held by any Participant on
     the date of the change in control or change of ownership shall become
     immediately transferable as of the date of such change in control or change
     in ownership and shall remain transferable after such date;
 
          (2) any or all unexercisable Stock Options held by the Participant on
     the date of the change in control or change of ownership shall immediately
     become exercisable as of the date of the change of control or change of
     ownership and to remain exercisable until a date that occurs on or prior to
     the date the Stock Option expires; and/or
 
          (3) any or all exercisable Stock Options held by the Participant on
     the date of the change in control or change of ownership shall remain
     exercisable until a date that occurs on or prior to the date the Stock
     Option expires.
 
     (b) Six-Month Holding Period. Notwithstanding anything herein to the
contrary, the provisions contained in Section 13(a) above shall be inapplicable
to an Award granted within six months before the occurrence of such change in
control or change in ownership if the Participant who holds such Award is
subject to the reporting requirements of Section 16(a) of the Exchange Act and
no exception from liability under Section 16(b) of the Exchange Act is otherwise
available to such Participant.
 
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     (c) ISOs. Notwithstanding anything herein to the contrary, the provisions
contained in Section 13(a) above shall not be applied to an ISO if the
application of such provision would render any ISO granted hereunder other than
an ISO, including, but not limited to extending the exercise period of an ISO in
the event of a Participant's termination of employment.
 
14. TERMINATION OF EMPLOYMENT
 
     (a) Death of Participant; Termination of Participant's Employment Other
Than For Cause. In the event of the death of the Participant, or if the
Participant's employment is terminated due to Disability or Retirement, by the
Company or any Subsidiary without Cause, or by the Participant for any reason:
 
          (1) all nontransferable Stock Awards held by the Participant on the
     date of death or termination of employment, as the case may be, shall be
     immediately forfeited by the Participant;
 
          (2) all unexercisable Stock Options held by the Participant on the
     date of death or termination of employment, as the case may be, shall be
     immediately forfeited by the Participant; and
 
          (3) all exercisable Stock Options held by the Participant on the date
     of death or termination of employment, as the case may be, shall remain
     exercisable until the earlier of (i) the end of the 90-day period following
     the Participant's death or termination of employment, as the case may be,
     or (ii) the date the Stock Option expires.
 
     (b) Termination of Participant's Employment by the Company or Any
Subsidiary for Cause. In the event the Participant's employment is terminated by
the Company or any Subsidiary for Cause:
 
          (1) all nontransferable Stock Awards held by the Participant at the
     time of termination of employment shall be immediately forfeited by the
     Participant; and
 
          (2) all exercisable and unexercisable Stock Options held by the
     Participant at the time of termination of employment shall be immediately
     forfeited by the Participant.
 
     (c) Committee Discretion. Notwithstanding anything herein to the contrary
but subject to the provisions contained in Section 14(d) below, in the event of
a termination of a Participant's employment for any reason, the Committee may,
in its sole discretion, provide that:
 
          (1) any or all nontransferable Stock Awards held by the Participant on
     the date of termination of employment to become immediately transferable as
     of such date and to remain transferable after such date;
 
          (2) any or all unexercisable Stock Options held by the Participant on
     the date of termination of employment to become exercisable and to remain
     exercisable until a date that occurs on or prior to the date the Stock
     Option expires; and/or
 
          (3) any or all exercisable Stock Options held by the Participant on
     the date of termination of employment to remain exercisable until a date
     that occurs on or prior to the date the Stock Option expires.
 
     In addition, the Option Committee shall have discretion to adopt a
different definition of Cause, Retirement or Disability in connection with any
particular Award under the Plan.
 
     (d) ISOs. Notwithstanding anything herein to the contrary, (i) the
provisions contained in Section 14(c) above shall not be applied to an ISO if
the application of such provision would render any ISO granted hereunder other
than an ISO and (ii) for purposes of extending the exercise period of an ISO in
the event of a termination due to Disability pursuant to Section 14(a)(3) above,
the Participant's disability shall also satisfy the requirement of "permanent
and total disability" as defined in Code Section 22(e)(3).
 
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15. OTHER TERMS AND CONDITIONS
 
     Any Award made under the Plan may also be subject to such other provisions
(whether or not applicable to the Award awarded to any other Participant) as the
Committee determines to be appropriate, including, without limitation:
 
          (a) for the installment purchase of Common Stock under Stock Options;
 
          (b) to assist the Participant in financing the acquisition of Common
     Stock;
 
          (c) for the forfeiture of, or restrictions on resale or other
     disposition of, Common Stock acquired under any form of Award;
 
          (d) for the payment of the value of Awards to Participants in the
     event of a change in control or a change in ownership of the Company; or
 
          (e) to comply with federal and state securities laws, or
     understandings or conditions as to the Participant's employment in addition
     to those specifically provided for under the Plan.
 
16. AMENDMENT AND TERMINATION
 
     (a) The Board may amend the Plan from time to time or suspend or terminate
the Plan at any time; provided, however, that Section 10 above, relating to
Nonemployee Director formula awards, shall not be amended more than once every
six months, other than to comport with changes in the Code or ERISA. In
addition, no amendment of the Plan shall, without approval of the shareholders
of the Company, (i) materially increase the benefits accruing to Participants
under the Plan, (ii) increase the number of securities which may be issued under
the Plan, (iii) materially modify the requirements as to eligibility for
participation in the Plan, (iv) modify the specified employees or class of
employees eligible to receive Stock Options, or (v) increase the maximum
aggregate number of shares of Common Stock underlying Stock Awards and/or Stock
Options that may be granted to any single Participant during the life of the
Plan. Termination or amendment of the Plan by the Board shall not adversely
affect any Stock Award Agreement and/or Stock Option Agreement without the
Participant's prior written consent.
 
     (b) Notwithstanding anything contained in the Plan to the contrary, the
Board may amend the Plan without shareholder approval in order to comply with
the amendments to Rule 16b-3 under the Exchange Act adopted by the SEC on May
31, 1996.
 
     (c) Subject to the terms and conditions of the Plan, the Company may amend
or modify any Stock Award Agreement or any Stock Option Agreement by mutual
agreement between the Company and the Participant or such other persons as may
then have an interest therein.
 
17. WITHHOLDING TAXES
 
     The Company, or the applicable Subsidiary, may require a Participant who
vests in a Stock Award or who exercises a Nonqualified Stock Option granted
hereunder, or disposes of shares acquired pursuant to the exercise of an ISO in
a disqualifying disposition (within the meaning of Code Section 421(b)), to
reimburse the corporation which employs such Participant for any taxes required
by any governmental regulatory authority to be withheld or otherwise deducted
and paid by such corporation in respect of the issuance or disposition of such
shares. In lieu thereof, the corporation which employs such Participant shall
have the right to withhold the amount of such taxes from any other sums due or
to become due from such corporation to the Participant upon such terms and
conditions as the Committee shall prescribe. The corporation that employs such
Participant may, in its discretion, hold the stock certificate to which such
Participant is otherwise entitled upon the vesting of a Stock Award or the
exercise of a Nonqualified Stock Option as security for the payment of such
withholding tax liability, until cash sufficient to pay that liability has been
accumulated. In addition, at any time that the Company becomes subject to a
withholding obligation under applicable law with respect to the vesting of a
Stock Award or the exercise of a Nonqualified Stock Option (the "Tax Date"),
except as set forth below, a holder of a Stock Award or Nonqualified Stock
Option may elect to satisfy, in whole or in part, the holder's related personal
tax liabilities (an "Election") by (a) directing the Company to withhold from
 
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shares of Common Stock issuable in the related vesting or exercise either a
specified number of shares or shares having a specified value (in each case not
in excess of the related personal tax liabilities), (b) tendering shares of
Common Stock previously issued pursuant to the exercise of a Nonqualified Stock
Option or other shares of Common Stock owned by the holder or (c) combining any
or all of the foregoing Elections in any fashion. An Election shall be
irrevocable. The withheld shares and other shares of Common Stock tendered in
payment shall be valued at their Fair Market Value on the Tax Date. The
Committee may disapprove of any Election, suspend or terminate the right to make
Elections or provide that the right to make Elections shall not apply to
particular shares or exercises. The Committee may impose any additional
conditions or restrictions on the right to make an Election as it shall deem
appropriate. The Committee may prescribe such rules as it determines with
respect to Participants subject to the reporting requirements of Section 16(a)
of the Exchange Act to effect such tax withholding in compliance with the rules
established by the SEC under Section 16 of the Exchange Act and the positions of
the staff of the SEC thereunder expressed in no-action letters exempting such
tax withholding from liability under Section 16(b) of the Exchange Act.
 
18. NONTRANSFERABILITY AND NONASSIGNABILITY
 
     No nontransferable Stock Award nor Stock Option granted under the Plan
shall be subject in any manner to alienation, anticipation, sale, assignment,
pledge, or encumbrance. Stock Options granted under the Plan shall not be
transferable otherwise than by will or the laws of descent and distribution.
Stock Options shall be exercisable, during the Participant's lifetime, only by
the Participant. In the event of the death of a Participant, each Stock Option
theretofore granted to him or her shall be exercisable during such period after
his or her death as the Committee shall, in its sole discretion, determine,
subject to the Plan and then only by the executor or administrator of the estate
of the deceased Participant or the person or persons to whom the deceased
Participant's rights under the Stock Option shall pass by will or the laws of
descent and distribution.
 
19. UNFUNDED PLAN
 
     Participants shall have no right, title, or interest whatsoever in or to
any investments which the Company may make to aid it in meeting its obligations
under the Plan. Nothing contained in the Plan, and no action taken pursuant to
its provisions, shall create or be construed to create a trust of any kind, or a
fiduciary relationship between the Company and any Participant, beneficiary,
legal representative or any other person. To the extent that any person acquires
a right to receive payments from the Company under the Plan, such right shall be
no greater than the right of an unsecured general creditor of the Company. Any
and all payments to be made hereunder shall be paid from the general funds of
the Company and no special or separate fund shall be established and no
segregation of assets shall be made to assure payment of such amounts except as
expressly set forth in the Plan. The Plan is not intended to be subject to
ERISA.
 
20. 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, or Awards,
or other property shall be issued or paid in lieu of fractional shares or
whether such fractional shares or any rights thereto shall be forfeited or
otherwise eliminated.
 
21. GOVERNING LAW
 
     The Plan and all Awards granted hereunder and actions taken in connection
herewith shall be governed and construed in accordance with the laws of the
State of New York without reference to principles of conflict of laws and except
as superseded by applicable federal law.
 
22. COMPLIANCE WITH RULE 16B-3
 
     With respect to persons subject to Section 16 of the Exchange Act,
transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 (or its successors) promulgated under the
 
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Exchange Act. To the extent any provision of the Plan or action by the Committee
fails to comply, it shall be deemed null and void, to the extent permitted by
law and deemed advisable by the Committee.
 
23. REGULATORY APPROVALS AND LISTINGS
 
     Notwithstanding anything herein to the contrary, the Company shall have no
obligation to issue or deliver certificates of Common Stock evidencing Stock
Awards or Stock Options resulting in the payment of Common Stock prior to (i)
the obtaining of any approval from any governmental agency which the Company
shall, in its sole discretion, determine to be necessary or advisable, (ii) the
admission of such shares to listing on the stock exchange on which the Common
Stock may be listed, and (iii) the completion of any registration or other
qualification of said shares under any state or Federal law or ruling of any
governmental body which the Company shall, in its sole discretion, determine to
be necessary or advisable.
 
24. NO RIGHT TO CONTINUED EMPLOYMENT OR GRANTS
 
     A Participant's right, if any, to continue to serve the Company or any
Subsidiary as an officer, employee, or otherwise, shall not be enlarged or
otherwise affected by his or her designation as a Participant under the Plan.
The Company or the Subsidiary reserves the right to terminate any Employee at
any time. In addition, other than as provided in Section 10 above, the adoption
of this Plan shall not be deemed to give any Employee or any other individual
any right to be selected as a Participant or to be granted an Award.
 
25. NO GUARANTEE OF TAX CONSEQUENCES
 
     No person connected with the Plan in any capacity, including, but not
limited to, the Company and its Subsidiaries and their directors, officers,
agents and employees makes any representation, commitment, or guarantee that any
tax treatment, including, but not limited to, federal, state and local income,
estate and gift tax treatment, will be applicable with respect to amounts
deferred under the Plan, or paid to or for the benefit of a Participant under
the Plan, or that such tax treatment will apply to or be available to a
Participant on account of participation in the Plan.
 
26. OTHER BENEFITS
 
     No Award granted under the Plan shall be considered compensation for
purposes of computing benefits under any retirement plan of the Company nor
affect any benefits or compensation under any other benefit or compensation plan
of the Company now or subsequently in effect.
 
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