Document:

RESTATED

                                     BY-LAWS

                                       OF

                        GYRODYNE COMPANY OF AMERICA, INC.

                    (Incorporated under the Laws of New York)

                                    ARTICLE 1

                                     OFFICES

Section 1. OFFICES. The principal office shall be in the village of St. James,
Town of Smithtown, County of Suffolk, State of New York. The Corporation may
have offices and places of business at such other places, both within and
without the State of New York, as may be determined by the Board of Directors.

                                   ARTICLE II

                                  STOCKHOLDERS

Section 1. PLACE OF MEETINGS. Annual meetings and special meetings shall be held
at such place, within or without the State of New York, as the directors may,
from time to time, fix. Whenever the directors shall fail to fix such place, or
whenever shareholders entitled to call a special meeting shall call the same,
the meeting shall be held at the office of the Corporation in the State of New
York.

Section 2. ANNUAL MEETINGS. The annual meeting of stockholders of the
Corporation commencing in 1993 shall be held during the month of October each
year on the last Friday at 11:30 A.M. other than a legal holiday, or at such
other date and time as shall be designated from time to time by the Board of
Directors. At each duly constituted annual meeting, the stockholders shall elect
a Board of Directors by a plurality vote, and transact such other business as
may properly came before the meeting.

Section 3. ANNUAL ELECTION OF DIRECTORS. The Board of Directors, or, if the
Board shall not have made the appointment, the Chairman presiding at any meeting
of shareholders, shall have the power to appoint one or more persons to act as
inspectors of election at the meeting or any adjournment thereof, but no
candidate for the office of director shall be appointed as an inspector at any
meeting for or the election of directors. The inspectors shall be sworn
faithfully to perform their duties and shall make a written certificate of the
result of the elections.
<PAGE>

Section 4. SPECIAL MEETINGS. Special meetings of the stockholders for any
purpose or purposes, unless otherwise prescribed by statute, may be called by
the President, and shall be called by the President or Secretary at the request
in writing of a majority of the Board of Directors. Such request shall state the
purpose or purposes of the proposed meeting. The business transacted at all
special meetings shall be confined to the subjects stated in the call.

Section 5. NOTICES. Written notice of annual and special meetings of
stockholders, stating the time, place and subject thereof, shall be given by or
at the direction of the Board of Directors. Such notice shall be mailed, postage
prepaid, at least thirty (30) days before such meeting, to each stockholder of
record entitled to vote thereat at such address as appears on the books of the
Corporation, except such as may in writing waive such notice. Notice of any
special meeting shall state the purpose or purposes for which the meeting is
called.

Section 6. QUORUM. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person, or represented by proxy, shall
be requisite and shall constitute a quorum at all meetings of the stockholders
for the transaction of business, except as otherwise provided by law. If,
however, such majority shall not be present or represented at any meeting of the
stockholders, the stockholders entitled to vote thereat, present in person or
represented by proxy, shall have the power to adjourn the meeting from time to
time, without notice other than announcement at the meeting, until the requisite
amount of voting stock shall be present. At such adjourned meetings at which the
requisite amount of voting stock shall be represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed.

Section 7. VOTING. At any meeting of the shareholders, every registered owner of
shares entitled to vote may vote in person or by proxy and, except as otherwise
provided by statute, in the Certificate of Incorporation or these By-Laws, shall
have one vote for each such share standing in his name on the books of the
Corporation. Shareholders are not entitled to cumulative voting as permitted by
Section 618 of the Business Corporation Law of New York State. Except as
otherwise required by statute, the Certificate of Incorporation or these
By-Laws, all corporate action, other than the election of directors, to be taken
by vote of the shareholders shall be authorized by a majority of the votes cast
at such meeting by the holders of shares entitled to vote thereon, a quorum
being present.

Section 8. SECRETARY OF MEETING. The Secretary or Assistant Secretary of the
Corporation shall act as secretary of all meetings of the shareholders. In the
absence of the Secretary or Assistant Secretary, the Chairman of the meeting
shall appoint any other person to act as secretary of the meeting.

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<PAGE>

                                   ARTICLE III

                                    DIRECTORS

Section 1. NUMBER, QUALIFICATION, NOMINATION, AND TERM. The property and
business of the Corporation shall be managed by its Board of Directors,
consisting of not more than nineteen (19) persons and not less than three (3).
The number of directors may be changed from time to time within the limits
herein set forth by resolution of the Board of Directors. Directors need not be
stockholders. Candidates for the Board of Directors, exclusive of sitting
directors, may be nominated by shareholders of record serving notice of such
nomination on the Secretary of the Corporation no later than one hundred fifty
(150) days prior to the annual meeting of shareholders, in accordance with the
notice provision of Securities and Exchange Commission Rule 14a-8 and the
procedural requirements of such rule. The directors in office shall be divided,
with respect to the time for which they severally hold office, into three
classes: Class I, Class II and Class III. The term of office of the Class I
directors will expire at the 1997 annual meeting of shareholders, the term of
office of the Class II directors will expire at the 1998 annual meeting of
shareholders and the term of office of the Class III directors will expire at
the 1999 annual meeting of shareholders following their election. Directors
shall hold office until their successors have been duly elected and qualified.
At each annual meeting of shareholders, commencing with the 1997 annual meeting,
directors elected to succeed the directors whose terms then expire shall be
elected for a term of office to expire at the third succeeding annual meeting of
shareholders following their election, and shall hold office until their
successors have been duly elected and qualified, provided, however, that a
director may resign. If the number of directors is not evenly divisible into
thirds, the Board shall determine which Class or Classes shall have one extra
director. Any additional director of any Class elected to the Board of Directors
to fill a vacancy from an increase in such Class shall hold office for the term
that expires as to that Class. The tenure of a director shall not be affected by
any decrease in the number of directors so made by the Board.

Section 2. REMOVAL AND VACANCIES. Any director or directors may be removed at
any time, but only for "cause" by the affirmative vote of two-thirds (2/3) of
the directors then in office. "Cause" for purposes hereof shall be defined as
criminal acts, misfeasance of office or other similar acts. If the office of any
director or directors becomes vacant by reason of death, resignation,
retirement, disqualification, removal from office, increase in the authorized
number of directors, or otherwise, the remaining directors, though less than a
quorum or by the sole remaining director shall choose a successor, successors or
additional directors who shall hold office for the remainder of the term of the
vacant office. In the event of a vacancy, the Board of Directors, may, in its
discretion, reduce the number of directors by allowing the vacated office to
remain vacant. In the event that the Board of Directors increases the number of
directors, such new directors will be elected by the Board of Directors to a
Class or Classes of directors so designated by the Board for the term(s) to
expire at the annual meeting(s) of the Corporation next electing such Class or
Classes.

                                       3
<PAGE>

Section 3. ADDITIONAL POWERS. In addition to the powers and authorities by these
By-Laws expressly conferred upon it, the Board of Directors may exercise all
such powers of the Corporation and do all such lawful acts and things as are not
by statute or by the Certificate of Incorporation or by these By-Laws directed
or required to be exercised or done by the stockholders.

Section 4. MEETING OF THE BOARD OF DIRECTORS. A regular meeting of the Board of
Directors shall be held without call or notice immediately after the annual
meeting of stockholders at the same place at which such meeting is held, or at
such other place within or without the State of New York as the directors shall
designate; thereafter regular meetings of the Board of Directors shall be held
on such day of the month as may be set at the previous meeting of the Board of
Directors. Such regular meeting may be held at such time and such place as the
Board of Directors shall designate.

Special meetings of the Board of Directors may be held at any time and at any
place upon the call of the President and shall be called by the President or
Secretary or other officer performing his duties, on the request of two
directors, which request need not be in writing. Notice of special meetings
shall be given by the Secretary or other officer performing his duties, orally
or by telegraph or by mail. Such notice shall be given or sent or mailed not
less than five (5) days before the meeting. Meetings may be held at any time or
any place without notice if all of the directors are present or if those not
present waive notice of the meeting in writing either before or after the
meeting.

Section 5. EXECUTIVE COMMITTEE. The Board of Directors may appoint three or more
of its directors to act as an Executive Committee. The Committee shall be
comprised of the Chairman and non-employee directors. Such Committee shall, when
the Board of Directors is not meeting, assume such duties and perform such
services as may be assigned to it by the Board of Directors, with the same force
and effect as though the Board of Directors had performed the same. A quorum of
the Executive Committee shall be constituted when a majority of the same are
present.

The Executive Committee has all the authority of the Board of Directors, except
with respect to certain matters that by statute may not be delegated by the
Board of Directors. The Committee acts only in the intervals between meetings of
the full Board of Directors. It acts usually in those cases where it is not
feasible to convene a special meeting of the Board or where the agenda is the
technical completion of undertakings already approved in principle by the Board.

All action by the Executive Committee shall be reported to the Board of
Directors at its meeting next succeeding such action, and shall be subject to
revision or alteration by the Board of Directors; provided that no rights or
acts of third parties shall be affected by any such revision or alteration.

The Executive Committee shall fix its own rules of procedure and shall meet
where and as provided by such rules, or by resolution of the Board

                                       4
<PAGE>

of Directors, but in every case the presence of a majority of its members shall
be necessary to constitute a quorum.

In every case, the affirmative vote of a majority of all members of the
Committee present at the meeting shall be necessary to its adoption of any
resolution.

Section 6. OTHER COMMITTEES OF THE BOARD. The Board of Directors may appoint
directors to comprise one or more of the following Committees who shall serve at
the pleasure of the Board.

            Audit Committee. The Committee shall be comprised of non-employee
directors. The duties of the Committee include recommendation of the independent
accountants to be appointed by the Board; approval of the scope of the
accountants' examination and other services; review of financial statements,
including auditors' opinions and management letters, and reporting to the Board
the Committee's recommendation with respect thereto; review of financial and/or
fiscal policies and policy decisions; determination of the duties and
responsibilities of the officer with internal auditing responsibility; approval
of the scope of such officer's work and review of the results thereof and,
through review of the results of internal and external audits, monitoring of
internal programs to ensure compliance with laws, regulations and the Company's
responsibilities for financial reporting to the public.

            Executive Compensation Committee. The Committee shall be comprised
of non-employee directors. The duties of the Committee include approval of
salaries to be paid to senior executive officers; approval of or delegation to
the President of the authority to approve the salaries of all other officers;
and the annual review of all significant financial relationships which directors
and officers have with the Company, directly or indirectly. The duties also
include investigation of any complaints concerning possible conflicts of
interests involving directors or officers of the Company, recommendations to the
Board of actions to be taken to remove any such conflicts and recommendation of
policies or procedures designed to avoid any such conflicts of interest.

            Stock Option Committee. The Committee shall be comprised of
non-employee directors not eligible to participate in the Company's 1993 Stock
Incentive Plan or other stock option plans for the benefit of Company employees.
The duties of the Committee involve the review and administration of employee
stock option plans for the benefit of officers and employees maintained by the
Company, including the granting of options and awards with respect thereto.

            Nominating Committee. The Committee shall be comprised of the
Chairman of the Board and non-employee directors. The duties of the Committee
include recommendation to the Board with respect to nominees for election as
directors; and recommendation to the Board with respect to the composition of
all Committees of the Board other than the Executive and Nominating Committees.

A majority of the number of members of any Committee shall constitute a quorum
for the transaction of business. The action of a majority of

                                       5
<PAGE>

members present at a Committee meeting at which a quorum is present shall
constitute the act of the Committee.

Section 7. QUORUM. A majority of the directors shall constitute a quorum at any
meeting, except when otherwise provided by law, but a less number may adjourn
any meeting from time to time and the meeting may be held as adjourned without
further notice.

                                   ARTICLE IV

                               OFFICERS AND AGENTS

Section 1. ELECTION AND APPOINTMENT. The Board of Directors, as soon as may be
after each annual meeting of stockholders, shall choose a President of the
Corporation, one or more Vice Presidents, a Secretary and one or more Assistant
Secretaries, a Treasurer and one or more Assistant Treasurers, a comptroller and
one or more Assistant Comptrollers, and from time to time appoint such other
officers, agents and employees as it may deem proper. The Board of Directors
will elect, at a minimum, a President, a Secretary and a Treasurer.

The office of Secretary and Treasurer may be held by the same person. However,
the President of the Corporation may not contemporaneously hold the office of
Secretary. The President shall be chosen from among the directors. The rest of
the officers of the Corporation need not be directors.

Section 2. TERM OF OFFICE. The President shall hold office, unless he shall
become disqualified or sooner removed by a vote of a majority of all of the
members of the Board of Directors, for the term of one year and until his
successor shall be chosen. All other officers shall hold office at the pleasure
of the Board.

Section 3. POWERS AND DUTIES OF THE PRESIDENT. The President shall be the chief
executive officer of the Corporation and shall have the general management and
supervision of the affairs of the Corporation. He shall preside at all meetings
as Chairman of the Board of Directors unless the Board of Directors shall choose
a Chairman other than the President. He shall preside at all meetings, both
annual and special, of the stockholders, but may appoint a person to act in his
stead thereat. To the extent that the duties of the other officers of the
Corporation are not specially prescribed by the By-Laws or by the rules or
regulations of the Board of Directors, the President may prescribe the same. He
shall have and may exercise any and all powers and shall perform any and all
duties pertaining to the office of President or conferred or imposed upon his
office by the By-Laws or by the Board of Directors.

Subject to such limitations as the Board of Directors may from time to time
prescribe, the President shall have power to appoint and dismiss all such agents
and employees of the Corporation as he may deem proper, including those
appointed by the Board, except that he may not without the permission of the
Board of Directors, dismiss any officer of this

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<PAGE>

Company chosen by the Board of Directors. He may prescribe the duties of any
employee or agent of the Company and subject to like limitations may from time
to time delegate to other officers of the Company any of the powers and duties
conferred upon him by the By-Laws or by the Board of Directors.

Section 4. POWERS AND DUTIES OF THE VICE PRESIDENTS. The Vice Presidents shall
perform such duties as are prescribed for them by the Board of Directors and
will, in the order of their seniority, in the absence or disability of the
President, perform the duties and exercise the powers of the President, and
shall perform such other duties as may be prescribed by the Board of Directors.

Section 5. POWERS AND DUTIES OF THE SECRETARY. The Secretary shall attend all
sessions of the Board and all meetings of the stockholders and act as Clerk
thereof, and record all votes and minutes of all proceedings in a book to be
kept for that purpose, and shall perform like duties for any Committee of the
Board when required. He shall cause to be given notice of all meetings of
stockholders and directors and shall perform such other duties as pertain to his
office. He shall keep in safe custody the seal of the Corporation and when
authorized by the Board of Directors, affix it when required to any instrument.

The Board of Directors may from time to time appoint one or more Assistant
Secretaries who shall perform such duties as may be assigned to them by the
Board or by the Secretary.

Section 6. POWERS AND DUTIES OF THE TREASURER. The Treasurer shall have the
custody of all the corporate funds and securities and shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
Corporation and shall deposit all monies and other valuable effects in the name
and to the credit of the Corporation in such depositories as may be designated
by the Board of Directors. He shall disburse the funds of the Corporation as may
be ordered by the Board, taking proper vouchers for such disbursements and shall
render to the President and directors at the regular meetings of the Board, or
whenever they may require it, an account of all his transactions as Treasurer
and of the financial condition of the Corporation.

The Board of Directors may from time to time appoint one or more Assistant
Treasurers who shall perform such duties as may be assigned to them by the Board
or by the Treasurer.

Section 7. POWERS AND DUTIES OF COMPTROLLER. The Comptroller shall be the chief
accounting officer of the Corporation and shall keep full and accurate control
of all accounting procedures and shall report to the President the condition of
the same. He shall from time to time make to the President or to the Board of
Directors such suggestions as he may deem necessary to properly reflect the
condition of the Company.

The Board of Directors may from time to time appoint one or more Assistant
Comptrollers who shall perform such duties as may be assigned to them by the
Board or by the Comptroller.

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<PAGE>

Section 8. POWERS AND DUTIES OF OTHER OFFICERS. All other officers shall have
such duties and exercise such powers as generally pertain to their respective
offices as well as such duties and powers as from time to time may be prescribed
by the President or the Board of Directors.

Section 9. DUTIES OF CHAIRMAN. The Chairman of the Board of Directors shall
preside at all meetings of the Board and shall assume such other duties as are
assigned to him by the Board of Directors.

                                    ARTICLE V

                          STOCK AND STOCK CERTIFICATES

Section 1. STOCK CERTIFICATES. Certificates of stock shall be signed by the
President or a Vice President and the Secretary, or an Assistant Secretary, or
by the Treasurer or an Assistant Treasurer, and shall be sealed with the
corporate seal.

The signatures of the officers and the seal of the Corporation as affixed to the
stock certificate may be in facsimile.

Section 2. TRANSFERS. The shares of stock of the Corporation shall be
transferable on the books of the Corporation, which books may be maintained by a
transfer agent selected by the Board of Directors.

The Board of Directors shall have power and authority to make all such rules and
regulations that they may deem expedient concerning the issuance, transfer and
registration of certificates of the shares of the capital stock of the
Corporation.

The Board of Directors may appoint one or more transfer agents and one or more
registrars of the capital stock of this Corporation, and may require all stock
certificates to bear the signature of a transfer agent and a registrar.

Section 3. CLOSING OF BOOKS. Previous to any meeting of the stockholders, the
Board of Directors may in its discretion fix a date for the closing of the
transfer books of the Corporation, after which date no transfers may be effected
until after the meeting. In the absence of any such date being fixed by the
Board of Directors, the transfer books need not be closed.

Should the Board of Directors determine to close the books prior to any meeting
of the stockholders, such date shall not be in violation of any provision of the
statutes of the State of New York or the provisions of the Certificate of
Incorporation of this Corporation.

Section 4. REGISTERED STOCKHOLDERS. The Corporation shall be entitled to treat
the holder of record of any share or shares of any class of the stock of this
Corporation as the holder in fact thereof, and shall not be bound to recognize
any equitable or other claim to or interest in such shares on the part of any
other person, whether or not it shall

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<PAGE>

have express or other notice thereof, save as expressly provided by the laws of
the State of New York.

Section 5. LOST STOCK CERTIFICATES. Any person claiming a certificate of stock
to be lost or destroyed shall make an affidavit or affirmation of that fact and
may be required to advertise the same in such manner as the Board of Directors
may require, and shall, if the Board of Directors so requires, give the
Corporation a bond of indemnity, sufficient to indemnify the Corporation against
any claim that may be made against it on account of the alleged loss or
destruction of any such certificate, whereupon a new certificate may be issued
of the same class and for the same number of shares as the one alleged to be
lost or destroyed.

                                   ARTICLE VI

                                 CORPORATE SEAL

Section 1. CORPORATE SEAL. The seal of the Corporation shall be circular in form
and shall contain the name of the Corporation, the year "1946" and the words
"Corporate Seal, New York".

                                   ARTICLE VII

                                     FINANCE

Section 1. FISCAL YEAR. The fiscal year of the Corporation shall begin on May 1
and end on April 30 of each year, unless otherwise provided by the Board of
Directors.

Section 2. CHECKS. The monies of the Corporation shall be deposited in the name
of the Corporation in such bank or banks, or trust company or trust companies,
either within or without the State of New York, as the Board of Directors shall
designate, and shall be drawn out only by check signed by such persons as may be
designated from time to time by the Board of Directors.

Section 3. DIVIDENDS. Dividends upon the capital stock of the Corporation may be
declared by the Board of Directors at any regular or special meeting from the
net earnings or surplus of the Corporation, in the manner and on the terms and
conditions as they in their sole discretion may decide.

Before payment of any dividend or making any distribution of profits, there may
be set aside out of the surplus or net profits of the Corporation such sum or
sums as the directors from time to time, in their absolute discretion, may think
proper as a reserve fund to meet contingencies, or for equalizing dividends, or
for repairing or maintaining any property of the Corporation, or for such other
purposes as the directors shall think to be in the best interests of the
Corporation.

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<PAGE>

                                  ARTICLE VIII

                                 INDEMNIFICATION

Section 1. INDEMNITY OF OFFICERS AND DIRECTORS. To the full extent permitted by
law, the Corporation shall indemnify each person made or threatened to be made a
party to any civil or criminal action or proceeding by reason of the fact he, or
his testator, administrator or executor, is or was a director or officer of the
Corporation or served any other corporation of any type or kind, domestic or
foreign, in any capacity at the request of the Corporation.

                                   ARTICLE IX

                                WAIVER OF NOTICE

Section 1. WAIVER OF NOTICE. Any stockholder, officer or director may waive any
notice required to be given under these By-Laws.

Whenever under the provision of these By-Laws notice is required to be given to
any director, officer or stockholder, it shall not be construed to mean personal
notice, but such notice may be given an writing by depositing the same in a post
office or letter box, in a post-paid, sealed wrapper, addressed to such
stockholder, officer or director, at such address as appears on the books of the
Corporation, or in default of other address to such stockholder at the general
post office in the Borough of Manhattan, and such notice shall be deemed to have
been given at the time when the same was thus mailed.

                                    ARTICLE X

                                   AMENDMENTS

Section 1. AMENDMENTS. These By-Laws may be altered or amended or repealed by
the affirmative vote of a majority of the stock issued and outstanding and
entitled to vote thereat, at any regular meeting of the stockholders or at any
special meeting of the stockholders if notice of the proposed alteration or
amendment or repeal be contained in the notice of such special meeting, or by
the affirmative vote of a majority of the Board of Directors at any regular
meeting of the Board of Directors, or at any special meeting of the Board of
Directors if notice of the proposed alteration or amendment or repeal be
contained in the notice of such special meeting.

                                       10Exhibit 4.3

                        GYRODYNE COMPANY OF AMERICA, INC.
                  1993 STOCK INCENTIVE PLAN AS APPROVED BY THE
                                  SHAREHOLDERS
                                OCTOBER 29, 1993

The purposes of the Company's 1993 Stock Incentive Plan are generally (1) to
secure for the Company the benefits of incentives inherent in ownership of the
Company's common stock ("Common Stock") by key employees (see "Participation");
(2) to encourage key employees to increase their interest in the Company's
future growth and to stimulate and sustain constructive and imaginative
thinking; (3) to further the identity of interests of key employees with the
interests of the Company's shareholders; and (4) to induce the employment or
continued employment of key employees and to enable the Company to compete with
other organizations offering incentives in obtaining and retaining the services
of competent executives.

The following is a summary of certain provisions of the Plan and the incentives
granted thereunder and does not purport to be complete. The summary is qualified
in its entirety by reference to the provisions of the Plan and such incentives.

Administration

The Plan is administered by a committee ("Committee") of the Company's Board of
Directors. No member of the Committee may be a person who is eligible to
participate in the Plan or any other stock option, stock bonus stock
appreciation right or similar plan of the Company or any affiliate of the
Company or who was eligible during any portion of the year prior to serving on
the Committee if such eligibility would prevent such member from being a
"disinterested person," with respect to the Plan for purposes of Rule 16b3 under
the Securities Exchange Act of 1934.

Participation

The Plan provides that incentives may be granted to "key employees of the
Company and its subsidiaries. For purposes of the Plan, "key employees" are
those the Committee deems able to contribute significantly to growth and
successful operations, and a "subsidiary" is generally any entity with respect
to which the Company holds 50% or more of the voting power or similar management
rights. Options (other than Incentive Stock Options, described below) may also
be granted to consultants (including directors who are consultants).

Stock Incentives

The Plan generally authorizes the grant of stock incentives in the form of stock
awards, options (including Incentive Stock options or "ISO's") with or without
stock appreciation rights ("SARS") or limited stock appreciation rights
("LSARS"), or a combination of an award and an option. If an option is an ISO,
its terms will so indicate.

                                     Options

An option, other than an ISO, granted under the Plan provides for the purchase
of Common Stock at a price determined by the Committee ("purchase price"). The
purchase price of ISO's granted

<PAGE>

under the Plan to a key employee who owns more then 10% of the total combined
voting power of all classes of stock of the Company is equal to 110% of the fair
market value of the common Stock on the date of grant. The purchase price of
ISO's granted to all other persons is the fair market value of the Common Stock
on the date of grant. With respect to ISO's the aggregate fair market value of
the shares of Common Stock subject to each installment of all options becoming
exercisable for the first time by any individual in any calendar year is limited
to $100,000.

The following paragraphs summarize the principal features of options granted
under the Plans.

                                Incentive Kicker

Options granted under the plan (other than ISOS) that became exercisable in
installments may contain an "incentive kicker", whereby additional option shares
are granted with respect to each installment if the fair market value of the
Common Stock on each date on which an installment first becomes exercisable
exceeds the original purchase price of the option on the date of grant by at
least 50% and the optionee exercises his option on such date The percentage
increase in the number of option shares covered by each installment shall equal
the percentage increase in the fair market value of the Common Stock. The
purchase price for the additional option shares shall be the purchase price of
the original option.

                                 Reload Options

Options granted under the plan (other than ISO's) that become exercisable in
installments may contain a "reload option" feature providing that, upon exercise
of the option by payment of the purchase price in shares of Common Stock held
for more than six months, the recipient shall automatically be granted a new
option for the number of shares of Common Stock used to exercise the original
option (including, to the extent authorized by the Committee, the number of
shares used to satisfy any tax withholding requirement) that is subject to the
same terms and conditions concerning duration and vesting as the original
option. The purchase price of such new option shall be equal to the fair market
value of the Common Stock on the date the original option was exercised

                          When Options May Be Exercised

An option granted under the Plan becomes exercisable in whole or in part after
one year of continued employment by the Company, at such time or times as the
Committee determines, and (except as provided below) only during the continuance
of the holder's employment with the Company. All options granted under the Plan
shall become fully exercisable upon a "Change in Control" of the Company. Once
an option or a portion thereof becomes exercisable, it may be exercised at any
time in whole or in part until the option expires or terminates. An option may
not be exercised more than six years after the date of grant. In the case of an
ISO held by a key employee who owns more than 10% of the total combined voting
power of all classes of stock of the Company, the maximum period during which
the ISO may be exercised is five years from the date of grant.

                       Termination of Unexercised Options

Unexercised options terminate upon termination of service, except in certain
events as set forth below:

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<PAGE>

<TABLE>
<CAPTION>
                           Event                                               Date Option Terminates*
                           -----                                               -----------------------
<S>                                                             <C>
Termination of service with Committee consent or                3 months after termination of service, unless the
involuntary termination not for cause                           Committee approves a longer period **

Death, incapacity or retirement under a retirement plan         3 years after termination of service***
of the Company or a subsidiary (including death or
incapacity within 3 months after termination of
service with Committee consent or involuntary
termination not for cause)
</TABLE>

An option may be exercised alter an optionee's death by his estate or by a
person acquiring the right to do so by will or by the laws of inheritance or
pursuant to the terms of a,"qualified domestic relations order" as defined in
the Internal Revenue Code. Options may not otherwise be transferred or assigned.

Payment for Shares

Under the Plan the purchase price must be paid in cash, Common Stock previously
owned by the optionee for more than six months or a combination of the two, as
provided in the Plan or the option granted thereunder. Common Stock surrendered
for this purpose is valued at its fair market value on the date of exercise.

      *Under no circumstances may any option be exercised after its expiration
      date (see "When Options May be exercised").

      **The Committee may approve a longer period; however, such period cannot
      exceed the period which would have been applicable if the optionee had
      died, become incapacitated or retired under a retirement plan of the
      Company or a subsidiary.

      ***However, to receive favorable federal tax treatment, an ISO may need to
      be exercised within a shorter period after termination (see "Federal
      Income Tax Aspects").

                             Form of Initial Grants

It is anticipated that the initial grants of options under the Plan will be in
two alternative forms of non-qualified stock options, one of which will be
granted in tandem with an SAR (see "Stock Appreciation Rights") and the other of
which will be granted in tandem with an LSAR (see "Limited Stock Appreciation
Rights"). Both types of option grants will have an option price equal to the
fair market value of the Common Stock on the date of grant and will include an
"incentive kicker" feature.

The SAR/options shall become exercisable in three annual installments at the
rate of 50% on the first anniversary of the date of grant, 33% on the second
anniversary of such date and 17% on the third such anniversary. A stock for
stock exercise feature will be available whereby the recipient may exercise the
option by tendering shares of Common Stock he has held for more than six

                                       3
<PAGE>

months.

The second alternative type of non-qualified option that may initially be
granted under the Plan will include a tandem LSAR. This type of option shall
become exercisable in three annual installments at the rate of 34% on the first
anniversary of the date of grant and 33% on each of the second and third
anniversaries of such date. This type of option also includes a "reload option"
feature.

                           Stock Appreciation Rights

Stock Appreciation Rights ("SARs") may be granted with the grant of an option.
SARs are exercisable at such time as the Committee determines, but only upon
surrender of the related option and only to the extent that the related option
(or the portion thereof as to which an SAR is exercised) is exercisable. Upon
exercise of an SAR, the holder is entitled to receive an amount equal to the
excess of the fair market value of the shares for which the SAR is exercised
over the exercise price under the related option. All SARS granted under the
Plan shall become fully exercisable upon a change in Control of the Company and,
in this event, shall be valued on the date the holder elects to exercise his
SARS during the six month period beginning on the date that such Change in
Control occurs. It is anticipated that the SARs to be granted in tandem with the
initial option grants under the Plan shall be paid only in shares of Common
Stock which shall be treated as a grant of a restricted stock award subject to
complete forfeiture in the event the recipient resigns or is terminated by the
Company for cause during the one-year period beginning on the date the SAR is
exercised (see "Restricted Stock Awards").

                        Limited Stock Appreciation Rights

Limited Stock Appreciation Rights ("LSARs") may be granted with the grant of an
option. LSARs are subject to the same terms and conditions as SARs, except that
LSARS are payable by the Company in cash only.

                             Restricted Stock Awards

Under the Plan, a stock incentive may be granted in the form of shares of Common
Stock subject to such conditions and/or restrictions (including restrictions on
the sale or other disposition of the shares) as the Committee may determine. The
nature and duration of the conditions and restrictions may vary, and an award
may be subject to forfeiture in accordance with these conditions and
restrictions (including forfeiture if, prior to their expiration, the recipient
voluntarily terminates service or service is terminated for cause). All
Restricted Stock Awards granted under the Plan shall become fully vested and
freely transferable without restriction upon a Change in Control of the Company.
While the Award restrictions are in effect, the recipient will generally have
the right to vote and receive dividends on all shares of Common Stock subject to
an award.

Under the Plan, shares of Common Stock are issued based on the achievement of
specified earnings objectives or to reward individual performance. The shares so
issued may not be sold (except to the Company) or otherwise transferred until
they "vest" (in three installments); if shares are sold to the Company, the
proceeds equal to the fair market value of the shares sold are not paid until
the shares would have vested. If the recipient's service terminates due to
death, disability, termination without cause or, subject to certain conditions,
retirement, the restrictions terminate as

                                       4
<PAGE>

to the shares not then vested and/or proceeds from the sale of non-vested shares
to the Company; if the recipient's service terminates for any other reason the
shares not then vested and/or such proceeds are forfeited.

It is anticipated that the initial restricted stock awards to be granted under
the Plan will "vest" while the recipient remains employed by the Company and the
restrictions on transferability will lapse in three installments, at the rate of
34% on the second anniversary of the date of grant and 33% on each of the fourth
and sixth anniversaries of the date of grant. The initial awards will also
include an "incentive kicker" feature (see "Options").

                       Shares Covered by Plans and Grants
                       Per Amendment by Board of Directors

Stock incentives covering 150,000 shares of Common Stock may be granted under
the Plan, 10,000 shares of which are reserved and available for restricted stock
awards. The maximum number of shares of Common Stock subject to stock incentives
that may be granted in any fiscal year of the Company during which the Plan is
in effect may not exceed 20,000.

If an option expires or terminates or, in certain cases, restricted shares are
forfeited or reacquired by the Company, the shares subject to the unexercised
portion of the option or such restricted shares become available for new grants.
The number of shares covered by the Plans and the options outstanding
thereunder, as well as the purchase prices of outstanding options, may be
adjusted in the event of a stock dividend or split or a recapitalization,
reclassification or reorganization of the Company.

                 Duration, Amendment and Termination of the Plan

The Plan shall automatically terminate on October 29, 2003. The Plan may be
amended by the Board of Directors (subject to shareholder approval in the case
of specified amendments). The Board may also discontinue the Plan at any time;
however, no amendment or discontinuance may adversely affect any outstanding
option, SAR, LSAR or restricted stock award without the consent of the holder
thereof.

                           Federal Income Tax Aspects

The principal federal income tax consequences of stock options, SARs, LSARs and
restricted stock awards granted under the Plans are discussed below. No taxable
income is realized by a recipient upon the grant of an ISO, NSO, SAR, LSAR or a
restricted stock award; however, in the case of a restricted stock award, a
recipient may elect to be taxed upon grant (see "Restricted Stock Awards"
below).

Except as provided below, the Company or a subsidiary is generally entitled to a
tax deduction in the amount of compensation taxable as ordinary income realized
by an optionee or recipient of an SAR, LSAR or a restricted stock award. In the
event that such optionee or recipient tenders previously owned shares of Common
Stock to satisfy any tax withholding requirement, he will have made a taxable
disposition of such shares and thus realize a capital gain (or loss).

The payment of any compensation that is contingent upon a "Change in Control" of
the Company,

                                       5
<PAGE>

including compensation resulting from the exercise of an option or a portion of
an option or tandem SARs or LSARS that became exercisable on account of a Change
in Control and compensation resulting from the accelerated vesting of a
restricted stock award, may constitute a "parachute payment" under Section 280G
of the Internal Revenue Code of 1986, as amended (the "Code") if the payment,
when aggregated with the present value of all other payments in the nature of
compensation that are payable upon a Change in Control of the Company, equals or
exceeds three times an employee's "base amount", as defined in the Code. If a
parachute payment constitutes an "excess parachute payment" because it exceeds
the portion of the employee's base amount allocated to the payment under the
Code and related Treasury regulations, then the payment is not deductible by the
Company and the recipient is subject to an excise tax (in addition to the
regular taxes due) of 20 percent of the excess parachute payment.

                             Incentive Stock Options

No taxable income (except for "alternative minimum taxable income", discussed
below) is recognized by an optionee upon the exercise of an ISO if he remains
employed by the Company or a parent or subsidiary at all times from the date of
grant until three months before the date of exercise (or one year before the
date of exercise in the case of a disabled optionee). The estate of a deceased
optionee or his heir's will not recognize taxable income upon the exercise of an
ISO held by such optionee if he was employed by the Company at the time of death
or within the three month period prior to death.

If an optionee holds Common Stock acquired pursuant to the exercise of an ISO
for at least two years from the date of grant and at least one year from the
date the Common stock is transferred to him, he will realize no income until he
sells the Common Stock; he will then realize capital gain or loss equal to the
difference between the sale price and the purchase price.

If an ISO is canceled for cash, the optionee will realize compensation, taxable
as ordinary income, in an amount equal to the cash received.

                           Disqualifying Dispositions

In general, if an optionee disposes of Common Stock acquired pursuant to the
exercise of an ISO within two years from the date of grant or within one year
from the date the Common Stock is transferred to him, he will realize ordinary
income at the time of such disqualifying disposition. If such disqualifying
disposition is a sale, (1) ordinary income tax rates will apply to any amount by
which the purchase price is exceeded by the lesser of (a) the fair market value
of the Common Stock on the exercise date and (b) the amount realized from the
sale, and (2) capital gains tax rates will apply to any excess of the amount
realized from the sale over the fair market value of the Common Stock on the
exercise date.

                    Delivery of Previously Owned Common Stock

An ISO may provide that the purchase price may be paid in cash, in shares of
previously owned Common Stock or in a combination of the two. Except as noted
below, no gain or loss will be recognized for federal income tax purposes with
respect to shares of Common Stock the optionee receives in exchange for an equal
number of shares of previously owned Common Stock. Moreover, no compensation
income or other gain will be recognized at the time of exercise with

                                       6
<PAGE>

respect to the additional shares of Common Stock received upon exercise of the
ISO.

The Internal Revenue Service has issued proposed regulations as to how the tax
basis of the "old" shares of Common Stock should be allocated among the "new"
shares of Common Stock the optionee receives upon exercise of an ISO. In
general, (1) the number of new shares which is equal to the number of old shares
will have a tax basis equal to his tax basis for the old shares, and (2) the
remaining new shares will have a tax basis of zero. The optionee should keep
records sufficient to distinguish (1) from (2). If the optionee pays part of the
purchase price in cash, the additional new shares will have a tax basis equal to
the amount of such cash.

The optionee must retain all Common Stock acquired by him pursuant to the
exercise of an ISO for at least one year from the date such Common Stock is
transferred to him in order to prevent a disqualifying disposition. Proposed
regulations provide that if the purchase price of an ISO is paid by delivering
previously owned Common Stock, a subsequent disqualifying disposition of Common
Stock acquired pursuant to the exercise of the ISO will be treated as a
disposition of the shares with the lowest basis. If the purchase price is paid
by delivering old shares of Common Stock acquired pursuant to the exercise of an
ISO and the optionee has not held those shares for the applicable holding
periods, he will be considered to have made a disqualifying disposition of the
old shares so delivered.

                           Non-Statutory Stock Options

Unlike an ISO, the exercise of an NSO results in immediate realization of income
for federal income tax purposes. Upon exercise of an NSO, an optionee will
realize compensation, taxable as ordinary income, in an amount equal to any
excess of the fair market value of the Common Stock on the exercise date over
the purchase price. Upon cancellation of an NSO for cash or Common Stock in lieu
of exercise, an optionee will realize compensation, taxable as ordinary income,
in an amount equal to the cash or the fair market value of the Common Stock
received. An optionee' s tax basis for the Common Stock received upon exercise
or cancellation will be the price, if any, paid therefor plus the amount of
compensation realized.

If an optionee sells Common Stock acquired through the exercise or cancellation
of an NSO, the optionee will realize capital gain (or loss) equal to the amount
by which the proceeds of sale exceed (or are less than) his basis for the Common
Stock.

                    Delivery of Previously Owned Common Stock

An NSO may provide that the purchase price may be paid in cash, in shares of
previously owned Common Stock or in a combination of the two. No income, gain or
loss will be recognized with respect to shares of Common Stock the optionee
receives in exchange for an equal number of shares of previously owned Common
Stock. However, the number of "new" shares of Common Stock received in excess of
the number of old" shares delivered will constitute compensation, taxable as
ordinary income, in an amount equal to the fair market value of the excess new
shares on the exercise date.

The Internal Revenue Service has ruled that (1) the number of new shares which
is equal to the number of old shares will have a tax basis equal to that of the
old shares and (2) the excess new shares will have a tax basis equal to the
amount constituting compensation, i.e., their fair market

                                       7
<PAGE>

value on the exercise date. As discussed under "Incentive Stock Options", the
optionee should keep records sufficient to distinguish (1) from (2).

                            Stock Appreciation Rights

The grant of an SAR will not result in taxable income to the holder. At the time
of exercise of an SAR, when the holder must surrender the related option shares,
the amount of cash and fair market value of shares received by the holder, less
cash or other consideration paid (if any), if taxed to the holder as ordinary
income and the Company will receive a corresponding income tax deduction,
subject to any required income tax withholding. However, if, upon exercise of an
SAR, the holder is paid through the issuance by the company of shares that are
subject to forfeiture in the event the holder is terminated for cause or resigns
during the one year period after the SAR is exercised taxable income to the
holder will be deferred until the restrictions on the shares lapse and such
shares are no longer subject to forfeiture by the holder.

                        Limited Stock Appreciation Right

The grant of an LSAR will not result in taxable income to the holder. At the
time of exercise of an LSAR, when the holder must surrender the related option
in exchange for a cash payment equal to the difference between the fair market
value of the shares on the exercise date and the purchase price per option
share, the amount of such cash payment will be taxed to the holder as ordinary
income.

                             Restricted Stock Awards

Unless an election under Section 83(b) of the Code is made (as described below),
no federal income tax is payable by the recipient upon the grant of the award,
including an award resulting from the exercise of an SAR (see "Stock
Appreciation Rights"). At the time the restrictions lapse and shares become
transferable, the recipient realizes ordinary income equal to the difference
between the fair market value of the shares as to which the restrictions have
lapsed and the amount, if any, paid for such shares. Upon sale of the shares
subsequent to the lapse of the restrictions the recipient realizes capital gain
(or loss) equal to the amount by which the proceeds of the sale exceed (or are
less than) the fair market value of the shares on the date the restrictions
lapsed. If the recipient transfers his shares to the Company upon receipt of the
proceeds from the Company he realizes compensation taxable as ordinary income
equal to the amount of such proceeds.

If a recipient makes an election under Section 83(b) of the Code within 30 days
following the date on which the award is granted, he realizes ordinary income
upon the grant of the award equal to the difference between the fair market
value of the shares on the date of grant and the amount, if any, paid for such
shares. In the event that any shares are forfeited after a Section 83(b)
election has been made, the recipient may deduct as a capital loss only the
amount paid for the shares. Upon sale of the shares subsequent to the lapse of
the restrictions, the recipient realizes capital gain (or loss) equal to the
amount by which the proceeds of the sale exceed (or are less than) the fair
market value of the shares on the date the award was granted. If the recipient
transfers his shares to the Company, the Company believes that he will realize
capital gain (or loss) at the time he receives the proceeds equal to the
difference between the proceeds received and the fair market value of the shares
on the date the award was granted.

                                       8

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