Document:

<PAGE>

                                                                    Exhibit 10.1

                               WGL HOLDINGS, INC.
                             1997 STOCK OPTION PLAN

         1.  PURPOSES

         WGL HOLDINGS, INC., a Delaware corporation (the "Company"), desires to
afford certain of its key employees, and the key employees of any parent
corporation or subsidiary corporation of the Company now existing or hereafter
formed or acquired, who are responsible for the continued growth of the Company,
an opportunity to acquire a proprietary interest in the Company, and thus to
create in such key employees an increased interest in and a greater concern for
the welfare of the Company and its subsidiaries.

         The Company, by means of this 1997 Stock Option Plan (the "Plan"),
seeks to retain the services of persons now holding key positions and to secure
the services of persons capable of filling such positions.

         The stock options ("Options") offered pursuant to the Plan are a matter
of separate inducement and are not in lieu of any salary or other compensation
for the services of any key employee.

         The Options granted under the Plan are intended to be either incentive
stock options ("Incentive Options") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or options that do not
meet the requirements of Incentive Options ("Non-Qualified Options"). The
Company makes no warranty, however, as to the qualification of any Option as an
Incentive Option.

         2.  NUMBER OF SHARES SUBJECT TO THE PLAN

         The total number of shares of common stock of the Company which may be
purchased or acquired pursuant to the exercise of Options granted under the Plan
shall not exceed, in the aggregate, 2,400,000 shares of the authorized common
stock, par value $.001 per share, of the Company (the "Shares").

                                       1
<PAGE>

         Shares available for issuance acquired under the Plan may be either
authorized but unissued Shares or Shares of issued stock held in the Company's
treasury, or both, at the discretion of the Company. If and to the extent that
Options granted under the Plan expire or terminate without having been
exercised, the Shares covered by such expired or terminated Options may again be
subject to an Option under the Plan.

         Except as provided in Articles 18 and 22 and subject to Article 3, the
Company may, from time to time during the period beginning on September 16, 1997
(the "Effective Date") and ending on September 15, 2007 (the "Termination
Date"), grant Incentive Options and Non-Qualified Options to certain key
employees of the Company or any subsidiary corporation of the Company under the
terms hereinafter set forth.

         As used in the Plan, the terms "parent corporation" and "subsidiary
corporation" shall mean a corporation within the definitions of such terms
contained in Sections 424(e) and 424(f) of the Code, respectively.

         3.  ADMINISTRATION

         The board of directors of the Company (the "Board of Directors") shall
administer the Plan, provided that the Board of Directors may, from time to
time, designate from any of its members a Compensation Committee, which shall be
the Compensation Committee of the Board of Directors (the "Committee"), to
administer the Plan. A majority of the members of the Committee shall constitute
a quorum, and the act of a majority of the members of the Committee shall be the
act of the Committee. Any member of the Committee may be removed at any time
either with or without cause by resolution adopted by the Board of Directors,
and any vacancy on the Committee at any time may be filled by resolution adopted
by the Board of Directors. If the Board of Directors administers the Plan, then
reference herein, or in any option agreement granting Options pursuant to the
Plan, to the Committee shall mean the Committee or the Board of Directors, as
appropriate.

         Subject to the express provisions of the Plan, the Committee shall have
authority, in its discretion, to determine the key employees to whom Options
shall be granted (the "Optionholders"), the time when such Options shall be
granted, the number of Shares which shall be subject to each Option, the
purchase price or exercise price of each Option, the period(s) during which such
Options shall be

                                       2
<PAGE>

exercisable (whether in whole or in part) and the other terms and provisions
thereof (which need not be identical).

         Subject to the express provisions of the Plan, the Committee also shall
have authority to construe the Plan and the Options granted thereunder, to amend
the Plan and the Options granted thereunder, to prescribe, amend and rescind
rules and regulations relating to the Plan, to determine the terms and
provisions of the Options (which need not be identical) granted thereunder and
to make all other determinations necessary or advisable for administering the
Plan.

         The Committee may establish performance standards for determining the
periods during which Options shall be exercisable, including without limitation
standards based on the earnings of the Company and its subsidiaries for various
fiscal periods. The Committee shall define such performance criteria and, from
time to time, the Committee in its sole discretion and in administering the Plan
may make adjustments to such performance criteria for any fiscal period so that
extraordinary or unusual charges or credits, acquisitions, mergers,
consolidations, and other corporate transactions and other elements of or
factors influencing the calculations of earnings or any other performance
standard do not distort or affect the operation of the Plan in a manner
inconsistent with the achievement of its purpose.

         The determination of the Committee on matters referred to in this
Article 3 shall be conclusive.

         The Committee may employ such legal counsel, consultants and agents as
it may deem desirable for the administration of the Plan and may rely upon any
opinion or computation received from any such legal counsel, consultant or
agent. Expenses incurred by the Committee in the engagement of such counsel,
consultant or agent shall be paid by the Company. No member or former member of
the Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any award of Options granted hereunder.

                                       3

<PAGE>

         4.  ELIGIBILITY

         Options may be granted only to key employees of the Company or any
subsidiary corporation of the Company.

         The Plan does not create a right in any employee to participate in the
Plan, nor does it create a right in any employee to have any Options granted to
him or her.

         5.  OPTION PRICE AND PAYMENT

         The price for each Share purchasable under any Option granted hereunder
shall be such amount as the Committee shall determine in good faith to be the
fair market value (as defined below) per Share at the date the Option is
granted; PROVIDED, HOWEVER, that the exercise price shall not be less than $1.00
per share; and PROVIDED FURTHER, that in the case of an Incentive Option granted
to a key employee who, at the time such Incentive Option is granted, owns stock
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or any subsidiary corporation or parent
corporation of the Company, the purchase price for each Share shall not be less
than one hundred ten percent (110%) of the fair market value per Share at the
date the Incentive Option is granted. In determining the stock ownership of a
key employee for any purpose under the Plan, the rules of Section 424(d) of the
Code shall be applied, and the Committee may rely on representations of fact
made to it by the key employee and believed by it to be true.

         For purposes of the Plan, "fair market value," with respect to any date
of determination, means:

                  (i) if the Shares are listed or admitted to trading on a
         national securities exchange in the United States or reported through
         The Nasdaq Stock Market ("Nasdaq") then the closing sale price on such
         exchange or Nasdaq on such date or, if no trading occurred or
         quotations were available on such date, then on the closest preceding
         date on which the Shares were traded or quoted; or

                  (ii) if not so listed or reported but a regular, active public
         market for the Shares exists (as determined in the sole discretion of
         the Committee, whose decision shall be conclusive and binding), then
         the average of the

                                       4
<PAGE>

         closing bid and ask quotations per Share in the over-the-counter market
         for such Shares in the United States on such date or, if no such
         quotations are available on such date, then on the closest date
         preceding such date. For purposes of the foregoing, a market in which
         trading is sporadic and the ask quotations generally exceed the bid
         quotations by more than 15% shall not be deemed to be a "regular,
         active public market."

         If the Committee determines that a regular, active public market does
not exist for the Shares, the Committee shall determine the fair market value of
the Shares in its good faith judgment based on the total number of shares of
Common Stock then outstanding, taking into account all outstanding options,
warrants, rights or other securities exercisable or exchangeable for, or
convertible into, shares of Common Stock.

         For purposes of this Plan, the determination by the Committee of the
fair market value of a Share shall be conclusive.

         Upon the exercise of an Option granted hereunder, the Company shall
cause the purchased Shares to be issued only when it shall have received the
full purchase price for the Shares in cash or by certified check; PROVIDED,
HOWEVER, that in lieu of cash, the holder of an Option may, if and to the extent
the terms of such Option so provide and to the extent permitted by applicable
law, exercise an Option in whole or in part, by delivering to the Company (a)
shares of common stock of the Company (in proper form for transfer and
accompanied by all requisite stock transfer tax stamps or cash in lieu thereof)
owned by such holder having a fair market value equal to the exercise price
applicable to that portion of the Option being exercised or (b) such other form
of payment as the Committee shall permit in its sole discretion at the time of
grant of the Option.

         6.  USE OF PROCEEDS

         The cash proceeds of the sale of Shares pursuant to the Plan are to be
added to the general funds of the Company and used for its general corporate
purposes as the Board of Directors shall determine.

         7.  TERM OF OPTIONS AND LIMITATIONS ON THE RIGHT OF EXERCISE

         An Option shall be exercisable at such times, in such amounts and
during such period or periods as the Committee shall determine at the date of
the grant of

                                       5
<PAGE>

such Option; PROVIDED, HOWEVER, that an Option shall not be exercisable after
the expiration of ten (10) years from the date such Option is granted; and
PROVIDED, FURTHER, that an Incentive Option granted to a key employee who, at
the time such Incentive Option is granted, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or any subsidiary corporation or parent corporation of the Company,
shall not be exercisable after the expiration of five (5) years from the date
such Incentive Option is granted.

         The Committee shall have the right to accelerate, in whole or in part,
from time to time, conditionally or unconditionally, rights to exercise any
Option granted hereunder.

         To the extent that an Option is not exercised within the period of
exercisability specified therein, it shall expire as to the then unexercised
part.

         Except as otherwise provided under the Code, to the extent that the
aggregate fair market value of stock for which Incentive Options (under all
stock option plans of the Company and of any parent corporation or subsidiary
corporation of the Company) are exercisable for the first time by a key employee
during any calendar year exceeds one hundred thousand dollars ($100,000), such
Options shall be treated as Non-Qualified Options. For purposes of this
limitation, (a) the fair market value of the stock is determined as of the time
the Option is granted, and (b) Options will be taken into account in the order
in which they were granted.

         In no event shall an Option granted hereunder be exercised for a
fraction of a Share.

         8.  EXERCISE OF OPTIONS

         Options granted under the Plan shall be exercised by the Optionholder
as to all or part of the Shares covered thereby by the giving of written notice
of the exercise thereof to the Corporate Secretary of the Company at the
principal business office of the Company, specifying the number of Shares to be
purchased and specifying a business day not more than fifteen (15) days from the
date such notice is given for the payment of the purchase price against delivery
of the Shares being purchased. Subject to the terms of Articles 13, 14, 15 and
16, the Company shall cause certificates for the Shares so purchased to be
delivered to the

                                       6
<PAGE>

Optionholder at the principal business office of the Company, against payment of
the full purchase price, on the date specified in the notice of exercise.

         9.  NON-TRANSFERABILITY OF OPTIONS

         No Option granted hereunder shall be transferable, whether by operation
of law or otherwise, other than by will or the laws of descent and distribution
and any Option granted hereunder shall be exercisable during the lifetime of the
Optionholder only by such Optionholder. Except to the extent provided above,
Options may not be assigned, transferred, pledged, hypothecated or disposed of
in any way (whether by operation of law or otherwise) and shall not be subject
to execution, attachment or similar process, and any purported assignment in
contravention hereof shall be void and of no effect. Notwithstanding the
foregoing, at the discretion of the Committee, a Non-Qualified Option may be
transferred by a key employee solely to such key employee's spouse, siblings,
parents, children and grandchildren or trusts for the benefit of such persons or
partnerships, corporations, limited liability companies or other entities owned
solely by such persons, subject to any restrictions included in the award of the
Non-Qualified Option.

         10.  TERMINATION OF EMPLOYMENT

         Upon termination of employment of any Optionholder with the Company and
all subsidiary corporations, an Option previously granted to the Optionholder,
unless otherwise specified by the Committee in the Option, shall, to the extent
not theretofore exercised, terminate and become null and void, provided that:

                  (a) if the Optionholder shall die while in the employ of such
         corporation or during either the six (6) month or thirty (30) day
         period, whichever is applicable, specified in clauses (b) and (c)
         below, and at a time when such Optionholder was entitled to exercise an
         Option as herein provided, the legal representative of such
         Optionholder, or such person who acquired such Option by bequest or
         inheritance or by reason of the death of the Optionholder, shall have
         the right to exercise such Option so granted, to the extent not
         theretofore exercised, in respect of any or all of such number of
         Shares that such Optionholder is entitled to purchase pursuant to such
         Option at the time of such Optionholder's death, at any time up to and
         including one (1) year after the date of death;

                                       7
<PAGE>

                  (b) if the employment of any Optionholder to whom such Option
         shall have been granted shall terminate by reason of the Optionholder's
         disability (as defined below), and while such Optionholder is entitled
         to exercise such Option as herein provided, such Optionholder shall
         have the right to exercise such Option so granted, to the extent not
         theretofore exercised, in respect of any or all of such number of
         Shares that such Optionholder is entitled to purchase pursuant to such
         Option at the time of such termination, at any time up to and including
         six (6) months after the date of termination of employment; and

                  (c) if the employment of any Optionholder to whom such Option
         shall have been granted shall terminate by reason of dismissal by the
         employer other than for cause (as defined below), and while such
         Optionholder is entitled to exercise such Option as herein provided,
         such Optionholder shall have the right to exercise such Option so
         granted, to the extent not theretofore exercised, in respect of any or
         all of such number of Shares that such Optionholder is entitled to
         purchase pursuant to such Option at the time of such termination, at
         any time up to and including thirty (30) days after the date of
         termination of employment.

         If an Optionholder (i) voluntarily terminates his or her employment,
UNLESS such termination is a voluntary retirement from the Company and the Board
of Directors approves such retirement, or (ii) is discharged for cause, any
Option granted hereunder shall, unless otherwise specified by the Committee in
the Option, forthwith terminate with respect to any unexercised portion thereof.

         If an Option granted hereunder shall be exercised by the legal
representative of a deceased or disabled Optionholder, or by a person who
acquired an Option granted hereunder by bequest or inheritance or by reason of
death of any Optionholder, written notice of such exercise shall be accompanied
by a certified copy of letters testamentary or equivalent proof of the right of
such legal representative or other person to exercise such Option.

         For all purposes of the Plan, the term "for cause" shall mean, (i) with
respect to an Optionholder who is a party to a written employment agreement with
the Company, which agreement contains a definition of "for cause" or "cause" (or
words of like import) for purposes of termination of employment thereunder by
the Company, "for cause" or "cause" as defined in the most recent of such
agreements, or (ii) in all other cases, as determined by the Committee, in its
sole

                                       8
<PAGE>

discretion, that one or more of the following has occurred: (A) any intentional
or willful failure, or failure due to bad faith, by such Optionholder to
substantially perform his or her employment duties which shall not have been
corrected within 30 days following written notice thereof, (B) any misconduct by
such Optionholder which is significantly injurious to the Company or any of its
subsidiaries or affiliates, (C) any breach by such Optionholder of any covenant
contained in the instrument pursuant to which an Option is granted, (D) such
Optionholder's conviction of, or entry of a plea of NOLO CONTENDERE in respect
of, any felony or a misdemeanor which results in, or is reasonably expected to
result in, economic or reputational injury to the Company or any of its
subsidiaries or affiliates.

         For all purposes of the Plan, the term "disability" means (i) with
respect to an Optionholder who is a party to a written employment agreement with
the Company, which agreement contains a definition of "disability" or "permanent
disability" (or words of like import) for purposes of termination of employment
thereunder by the Company, "disability" or "permanent disability" as defined in
the most recent of such agreements, or (ii) in all other cases, means such
Optionholder's inability to perform substantially his or her duties and
responsibilities to the Company or any of its subsidiaries by reason of physical
or mental illness, injury, infirmity or condition: (A) for a continuous period
for 120 days or one or more periods aggregating 150 days in any twelve-month
period; (B) at such time as such Optionholder is eligible to receive disability
income payments under any long-term disability insurance plan maintained by the
Company or any of its subsidiaries; or (C) at such earlier time as such
Optionholder or the Company submits medical evidence, in the form of a
physician's certification, that such Optionholder has a physical or mental
illness, injury, infirmity or condition that will likely prevent such
Optionholder from substantially performing his duties and responsibilities for
120 days or longer.

         A termination of employment shall not be deemed to occur by reason of
(i) the transfer of an Optionholder from employment by the Company to employment
by a subsidiary corporation of the Company or (ii) the transfer of an
Optionholder from employment by a subsidiary corporation of the Company to
employment by the Company or by another subsidiary corporation of the Company.

         Notwithstanding anything to the contrary contained in this Article 10,
in no event shall any person be entitled to exercise any Option after the
expiration of the period of exercisability of such Option as specified therein.

                                       9
<PAGE>

         11.  ADJUSTMENT OF SHARES; EFFECT OF CERTAIN
              TRANSACTIONS

         For purposes of this Plan, a "change in control" of the Company occurs
if: (a) any "Person" (as such term is used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended ("Exchange Act")), other than DLJ
Merchant Banking II, Inc. or any of its affiliates or any combination thereof
(collectively, the "DLJ Entities"), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of more
than 50% of the total combined voting power of all classes of capital stock of
the Company normally entitled to vote for the election of directors of the
Company; or (b) the Board of Directors shall approve a sale of all or
substantially all of the assets of the Company, in one transaction or a series
of related transactions, other than to an entity owned or controlled by the DLJ
Entities; or (c) the Board of Directors shall approve any merger or
consolidation of the Company in which the shareholders of the Company
immediately prior to such transaction own, in the aggregate, less than 50% of
the total combined voting power of all classes of capital stock of the surviving
entity normally entitled to vote for the election of directors of the surviving
entity.

         Upon the occurrence of a transaction described in the preceding
paragraph, each Option may, at the discretion of the Committee, be terminated
within a specified number of days after notice to the holder of such Option, and
each such holder will receive, in respect of each Share for which such Option
then is exercisable, an amount equal to the excess of the then fair market value
of such Share over the exercise price per Share, payable in the same
consideration received by the shareholders of the Company upon the closing of
such transaction.

         In the event of any change in the outstanding Shares through merger,
consolidation, reorganization, recapitalization, stock dividend, stock split,
reverse split, split-up, split-off, spin-off, combination of shares, exchange of
shares, or other like change in capital structure of the Company, the Committee
shall make such adjustments to each outstanding Option that it, in its sole
discretion, deems appropriate. The term "Shares" after any such change shall
refer to the securities, cash and/or property then receivable upon exercise of
an Option. In addition, in the event of any such change, the Committee shall
make any further adjustment as may be appropriate to the maximum number of
Shares which may be acquired under the Plan pursuant to the exercise of Options,
the maximum number of Shares for which Options may be granted to any individual
under the Plan, the minimum

                                       10
<PAGE>

exercise price per Share for Options to be granted under the Plan, and the
number of Shares and prices per Share subject to outstanding Options as shall be
equitable to prevent dilution or enlargement of rights under such Options, and
the determination of the Committee as to these matters shall be conclusive.

         12.  RIGHT TO TERMINATE EMPLOYMENT

         The Plan shall not impose any obligation on the Company or on any
subsidiary corporation thereof to continue the employment of any Optionholder
and it shall not impose any obligation on the part of any Optionholder to remain
in the employ of the Company or of any subsidiary corporation thereof.

         13.  SECURITIES LAW MATTERS

         Except as hereinafter provided, the Committee may require an
Optionholder, as a condition upon exercise of any Option granted hereunder, to
execute and deliver to the Company a written statement, in form satisfactory to
the Committee, in which the Optionholder represents and warrants that Shares are
being acquired for such Optionholder's own account for investment only and not
with a view to the resale or distribution thereof. The Optionholder shall, at
the request of the Committee, be required to represent and warrant in writing
that any subsequent resale or distribution of Shares by the Optionholder shall
be made only pursuant to either (i) a Registration Statement on an appropriate
form under the Securities Act of 1933, as amended (the "Securities Act"), which
Registration Statement has become effective and is current with regard to the
Shares being sold, or (ii) a specific exemption from the registration
requirements of the Securities Act, but in claiming such exemption the
Optionholder shall, prior to any offer of sale or sale of such Shares, obtain a
prior favorable written opinion of counsel, in form and substance satisfactory
to counsel for the Company, as to the application of such exemption thereto. The
foregoing restriction shall not apply to (i) issuances by the Company so long as
the Shares being issued are registered under the Securities Act and a prospectus
in respect thereof is current or (ii) re-offerings of Shares by affiliates of
the Company (as defined in Rule 405 or any successor rule or regulation
promulgated under the Securities Act) if the Shares being re-offered are
registered under the Securities Act and a prospectus in respect thereof is
current.

                                       11
<PAGE>

         14.      ISSUE OF CERTIFICATES, LEGENDS, PAYMENT OF EXPENSES

         Subject to Articles 13, 15 and 16, upon any exercise of an Option which
may be granted hereunder and payment of the purchase price, a certificate or
certificates for the Shares shall be issued by the Company in the name of the
person exercising the Option and shall be delivered to or upon the order of such
person.

         The Company may endorse such legend or legends upon the certificates
for Shares issued pursuant to the Plan and, if a transfer agent has been engaged
by the Company, may issue such "stop transfer" instructions to its transfer
agent in respect of such Shares as, in its discretion, it determines to be
necessary or appropriate to (i) prevent a violation of, or to perfect an
exemption from, the registration requirements of the Securities Act, or (ii)
implement the provisions of the Plan and any agreement between the Company and
the Optionholder with respect to such Shares, or (iii) permit the Company to
determine the occurrence of a disqualifying disposition, as described in Section
421(b) of the Code, of Shares transferred upon exercise of an Incentive Option
granted under the Plan.

         The Company shall pay all issue or transfer taxes with respect to the
issuance or transfer of Shares, as well as all fees and expenses necessarily
incurred by the Company in connection with such issuance or transfer.

         All Shares issued as provided herein shall be fully paid and
non-assessable to the extent permitted by law.

         15.  WITHHOLDING TAXES

         The Company will require, as a condition to an Optionholder exercising
an Option granted hereunder, that the Optionholder reimburse the corporation
that employs such Optionholder for any taxes required by any government 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 that
employs such Optionholder 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
Optionholder upon such terms and conditions as the Committee shall prescribe.
The corporation that employs such Optionholder may, in its discretion, hold the
stock certificate to which such Optionholder is entitled upon the exercise of an

                                       12
<PAGE>

Option as security for the payment of such withholding tax liability, until cash
sufficient to pay that liability has been accumulated.

         16.  LISTING OF SHARES AND RELATED MATTERS

         The Committee may delay the issuance or delivery of Shares pursuant to
any Option granted hereunder if it determines that listing, registration or
qualification of Shares or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in connection
with, the grant of an Option under the Plan or the issuance of Shares
thereunder, until such listing, registration, qualification, consent or approval
shall have been effected or obtained, or otherwise provided for, free of any
conditions not acceptable to the Committee.

         17.  AMENDMENT OF THE PLAN

         The Committee may, from time to time, amend the Plan, provided that no
amendment shall be made, without the approval of the stockholders of the
Company, that will (i) increase the total number of Shares reserved for Options
under the Plan or the amount of Options that may be granted to any key employee
(in each case, other than an increase resulting from an adjustment provided for
in Article 11), (ii) reduce the exercise price of any Option granted hereunder
below the price required by Article 5, (iii) modify the provisions of the Plan
relating to eligibility, or (iv) materially increase the benefits accruing to
participants under the Plan. The rights and obligations under any Option granted
before amendment of the Plan or any unexercised portion of such Option shall not
be adversely affected by amendment of the Plan or such Option without the
consent of the holder of such Option.

         18.  TERMINATION OR SUSPENSION OF THE PLAN

         The Board of Directors may at any time suspend or terminate the Plan.
The Plan, unless sooner terminated by action of the Board of Directors, shall
terminate at the close of business on the Termination Date. Options may not be
granted while the Plan is suspended or after it is terminated. Rights and
obligations under any Option granted while the Plan is in effect shall not be
altered or impaired by suspension or termination of the Plan, except upon the
consent of the person to whom the Option was granted. The power of the Committee
to construe and administer any Options granted prior to the termination or
suspension of the Plan

                                       13
<PAGE>

under Article 3 nevertheless shall continue after such termination or during
such suspension.

         19. GOVERNING LAW

         The Plan and such Options as may be granted thereunder and all related
matters shall be governed by, and construed and enforced in accordance with, the
laws of the State of Delaware from time to time obtaining.

         20.  PARTIAL INVALIDITY

         The invalidity or illegibility of any provision hereof shall not be
deemed to affect the validity of any other provision.

         21.  EFFECTIVE DATE

         The Plan shall become effective at 9:00 a.m., New York City Time, on
the Effective Date, provided the Plan is approved by the stockholders of the
Company at an annual meeting or any special meeting of stockholders of the
Company within 12 months of the Effective Date, and such approval of
stockholders shall be a condition to the right of each eligible key employee to
receive any Options under the Plan. Any Options granted under the Plan prior to
such approval of stockholders shall be effective as of the date of the grant
(unless, with respect to any Option, the Committee specifies otherwise at the
time of the grant), but no such Option may be exercised prior to such
stockholder approval, and if stockholders fail to approve the Plan as specified
hereunder, any such Option shall be cancelled.

                                       14
<PAGE>

                                                               "STANDARD" OPTION

                               WGL Holdings, Inc.
                               10,000 Wehrle Drive
                            Clarence, New York 14031

                                                         _________________, 1997

[Name of Optionee]
[Address]

                  Re:      GRANT OF INCENTIVE STOCK OPTION

Dear _________________:

        The Board of Directors of WGL Holdings, Inc. (the "COMPANY") has
authorized and approved the 1997 Stock Option Plan (the "PLAN"), which will be
submitted to the stockholders of the Company for their approval. The Plan
provides for the grant of options to certain key employees of the Company and
any parent and subsidiary corporations of the Company. Pursuant to the Plan, the
Compensation Committee of the Board of Directors of the Company (the
"COMMITTEE") has approved, subject to stockholder approval, the grant to you of
an option to purchase shares of Common Stock, par value $.001 per share, of the
Company (the "SHARES") on the terms and subject to the conditions set forth in
the Plan and in this grant letter. A copy of the Plan is annexed hereto as
Exhibit A and shall be deemed a part hereof as if fully set forth herein. Unless
the context otherwise requires, all terms defined in the Plan shall have the
same meanings when used herein. The Shares purchasable pursuant to this Option
are subject to restrictions set forth in the Stockholders Agreement (as defined
in Paragraph 8 hereof). Such Shares may be required to be surrendered to the
Company under certain circumstances described in the Stockholders Agreement.

        1. GRANT OF OPTION. The Company hereby grants to you, as a matter of
separate inducement and not in lieu of any salary or other compensation for your
services, the right and option (the "OPTION") to purchase, in accordance

<PAGE>

with the terms and conditions set forth in the Plan, but subject to the
limitations set forth herein and in the Plan, an aggregate of __________ Shares
of the Company (the "TOTAL SHARES") at a price of $1.00 per Share, such option
price being, in the judgment of the Committee, not less than one hundred percent
(100%) of the fair market value of such Share at the date hereof. The Option is
intended to qualify as an "incentive stock option" within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended, but it is specifically
understood that no warranty is made to you as to such qualification.

        2. VESTING OF OPTION. Subject to the provisions and limitations of the
Plan, the number of Shares of stock for which this Option may be exercised shall
be determined in accordance with this Section 2.

                           a. ESTABLISHMENT OF EBITDA TARGETS. For each of the
                  fiscal years ending on December 31 of 1997, 1998, 1999, 2000
                  and 2001, the Company has established target amounts (each a
                  "TARGET AMOUNT"), floor amounts (each, a "FLOOR AMOUNT") and
                  ceiling amounts (each, a "CEILING AMOUNT") for EBITDA (as
                  defined below) set forth below:

                       FLOOR AMOUNT   TARGET AMOUNT   CEILING AMOUNT

        1997         $15,000,000       $16,200,000       $17,400,000

        1998         $17,000,000       $18,600,000       $20,200,000

        1999         $22,000,000       $26,000,000       $30,000,000

        2000         $25,000,000       $29,000,000       $33,000,000

        2001         $28,000,000       $34,000,000       $40,000,000

                           b. IF EBITDA EQUALS TARGET AMOUNT. If the EBITDA of
                  the Company for a fiscal year is equal to the Target Amount
                  for such fiscal year, this Option may be exercised to purchase
                  __________ Shares (I.E., 20% of the Total Shares), subject to
                  adjustment in accordance with Section 2(f) and subject to
                  Section 2(g).

                           c. IF EBITDA IS AT LEAST EQUAL TO FLOOR AMOUNT BUT
                  LESS THAN TARGET AMOUNT. If the EBITDA of the Company for a
                  fiscal year is at least equal to the Floor Amount, but less
                  than the Target Amount, for such fiscal year, then, subject to
                  adjustment in accordance

                                       2
<PAGE>

                  with Section 2(f) and subject to Section 2(g), this Option may
                  be exercised to purchase a number of Shares equal to the sum
                  of (i) __________ (I.E., 15% of the Total Shares) plus (ii)
                  that number of Shares equal to the product of (x) __________
                  (I.E., 5% of the Total Shares) and (y) a fraction, the
                  numerator of which shall be equal to the excess of the EBITDA
                  of the Company for such fiscal year over the Floor Amount for
                  such fiscal year and the denominator of which is equal to the
                  excess of Target Amount for such fiscal year over the Floor
                  Amount for such fiscal year.

                           d. IF EBITDA EXCEEDS TARGET AMOUNT. If the EBITDA of
                  the Company for a fiscal year exceeds the Target Amount for
                  such fiscal year, then, subject to adjustment in accordance
                  with Section 2(f) and subject to Section 2(g), this Option may
                  be exercised to purchase a number of Shares equal to the sum
                  of (i) __________ (I.E., 20% of the Total Shares) plus (ii)
                  that number of shares equal to the product of (x) __________
                  (I.E., 5% of the Total Shares) and (y) a fraction (which shall
                  not be greater than 1), the numerator of which shall be equal
                  to the excess of the EBITDA of the Company for such fiscal
                  year over the Target Amount for such fiscal year and the
                  denominator of which shall be equal to the excess of the
                  Ceiling Amount for such fiscal year over the Target Amount for
                  such fiscal year.

                           e. IF EBITDA EXCEEDS CEILING AMOUNT; CARRYBACK TO
                  PRIOR YEAR. If the EBITDA of the Company for such fiscal year
                  exceeds the Target Amount for such fiscal year (such excess,
                  an "EXCESS AMOUNT"), and the Target Amount for the immediately
                  preceding fiscal year (the "PRIOR YEAR") exceeded the EBITDA
                  of the Company for the Prior Year (such excess, a "PRIOR YEAR
                  SHORTFALL AMOUNT"), the (i) Excess Amount for such fiscal year
                  may be carried back to the Prior Year (but in an amount not in
                  excess of the Prior Year Shortfall Amount), (ii) the EBITDA
                  for such Prior Year shall be redetermined, and (iii) the
                  number of Shares for which this Option may be exercised shall
                  be increased based upon the EBITDA for the Prior Year as so
                  redetermined.

                           f. IF EBITDA IS LESS THAN FLOOR AMOUNT; CARRYFORWARD
                  FROM PRIOR YEAR. If the Floor Amount for a fiscal year (a
                  "CURRENT YEAR") exceeds the EBITDA of the Company for such
                  Current Year, this Option shall

                                       3
<PAGE>

                  not become exercisable for any Shares in respect of such
                  Current Year; PROVIDED, HOWEVER, that if the EBITDA of the
                  Company for the Prior Year exceeded the Target Amount for the
                  Prior Year (such excess, a "CARRYFORWARD AMOUNT"), then you
                  may elect that (i) the Carryforward Amount for the Prior Year
                  shall be carried forward to such Current Year (but in an
                  amount not in excess of the amount by which the Target Amount
                  for the Current Year exceeds the EBITDA of the Company for
                  such Current Year), (ii) the EBITDA for the Current Year shall
                  be redetermined to be an amount equal to the sum of the EBITDA
                  for such Current Year and the amount so carried forward
                  pursuant to clause (i), (iii) the EBITDA for the Prior Year
                  shall be redetermined to be an amount equal to the EBITDA for
                  such Prior Year, reduced by the amount carried forward
                  pursuant to clause (i), and (iv) the number of Shares for
                  which this Option may be exercised shall be adjusted based
                  upon the EBITDA for the Current Year and the Prior Year as so
                  redetermined in accordance with clauses (ii) and (iii),
                  respectively.

                           g. MAXIMUM LIMITATION. Notwithstanding anything to
                  the contrary set forth herein, (i) in no event shall the
                  Option become exercisable for more than __________ (I.E., 100%
                  of the Total Shares) Shares in the aggregate and (ii) in no
                  event shall the Option become exercisable pursuant to Section
                  2(e) or Section 2(f) for more than ___________ Shares (I.E.,
                  40% of the Total Shares) in the aggregate in any two-year
                  period.

                           h. DEFINITION OF EBITDA. For purposes of this Section
                  2, "EBITDA" for a fiscal year (i) shall mean the consolidated
                  net income of the Company and its subsidiaries for such fiscal
                  year, determined in accordance with U.S. generally accepted
                  accounting principles consistently applied in accordance with
                  the accounting methodologies and procedures of the Company and
                  its subsidiaries plus (a) provisions for taxes based on income
                  or profits to the extent deducted in computing such
                  consolidated net income, plus (b) consolidated interest
                  expense of the Company and its subsidiaries for such period,
                  whether paid or accrued, to the extent any such expense was
                  deducted in computing such consolidated net income, plus (c)
                  depreciation, amortization and other non-cash expenses of the
                  Company and its subsidiaries for such period (excluding any
                  non-cash expenses to the extent it

                                       4
<PAGE>

                  represents an accrual or reserve for cash expenses in any
                  future period or amortization of a prepaid cash expenses paid
                  in a prior period) to the extent any such expense was deducted
                  in computing such consolidated net income, and (ii) shall be
                  subject to adjustment as set forth in paragraph i. below.

                           i. DETERMINATIONS OF THE COMMITTEE. From time to
                  time, the Committee in its sole discretion and in
                  administering the Plan may make adjustments in the EBITDA for
                  a fiscal year so that extraordinary or unusual charges or
                  credits, acquisitions, mergers, consolidations and other
                  corporate transactions and other elements of or factors
                  influencing the calculation of EBITDA do not distort or affect
                  the operation of the Plan in a manner inconsistent with its
                  purpose. The decisions of the Committee as to the computation
                  of EBITDA and other determinations to be made under the Plan
                  shall be final, conclusive and binding on all parties,
                  including optionholders.

                           j. NOTICE. As soon as practicable following receipt
                  by the Company of audited financial statements of the Company
                  for a fiscal year, the Company shall notify you of the amount
                  of EBITDA achieved by the Company for such fiscal year. Upon
                  receipt of such notice by you, this Option shall become
                  exercisable in respect of the number of Shares determined in
                  accordance with Section 2 hereof.

                           k. VESTING OF REMAINING SHARES. Notwithstanding
                  anything to the contrary herein, on _________________, 2007
                  (I.E., the date which is 90 days prior to the tenth
                  anniversary of the date of grant) this Option shall become
                  exercisable for the excess of (i) the number of Total Shares
                  over (ii) the number of Shares, if any, for which this Option
                  shall have become exercisable pursuant to paragraphs b., c.,
                  d. or e. of this Section 2.

                           l. FRACTIONAL SHARES. In no event shall you exercise
                  this Option for a fraction of a Share.

                           3. TERMINATION OF OPTION. The unexercised portion of
         the Option granted herein will automatically and without notice
         terminate and become null and void upon the earliest to occur of the
         following:

                                       5
<PAGE>

                           a. the expiration of ten (10) years from the date of
                  grant of this Option;

                           b. the date of termination of your employment if your
                  employment (i) is terminated by you, unless you voluntarily
                  retire from the Company or a subsidiary corporation of the
                  Company and the Board of Directors approves such retirement,
                  or (ii) is terminated by the Company or subsidiary corporation
                  of the Company for cause (as defined in the Plan);

                           c. the expiration of 30 days from the date of
                  termination by the Company or its subsidiaries of your
                  employment other than for cause (as defined in the Plan),
                  except that this Option will be exercisable during such 30-day
                  period only to the extent that it would have been exercisable
                  immediately prior to the termination of your employment;

                           d. the expiration of 6 months after the termination
                  of your employment by reason of your disability (as defined in
                  the Plan), except that this Option will be exercisable during
                  such 6-month period only to the extent that it would have been
                  exercisable immediately prior to the termination of your
                  employment;

                           e. the expiration of one (1) year after your death if
                  your death occurs during your employment or during the six (6)
                  month or thirty (30) day period, as the case may be, specified
                  in clauses (c) and/or (d) above, except that this Option will
                  be exercisable during such 1-year period only to the extent
                  that it would have been exercisable immediately prior to your
                  death; or

                           f. as determined by the Committee in accordance with
                  the Plan, upon a Change of Control (as defined in the Plan);

PROVIDED, HOWEVER, that none of the events described above shall extend the
period of exercisability of this Option beyond the day immediately preceding the
tenth anniversary of the date hereof.

                           4. NON-TRANSFERABILITY OF OPTION. This Option is not
         transferable by you otherwise than by will or the laws of descent and
         distribution, and is exercisable, during

                                       6
<PAGE>

your lifetime, only by you. This Option may not be assigned, transferred (except
by will or the laws of descent and distribution), pledged or hypothecated in any
way (whether by operation of law or otherwise) and shall not be subject to
execution, attachment or similar proceeding. Any attempted assignment, transfer,
pledge, hypothecation or other disposition of this Option contrary to the
provisions hereof, and the levy of any attachment or similar proceeding upon the
Option, shall be null and void and without effect.

                           5. EXERCISE OF OPTION.

                           a. PURCHASE OF SHARES. Any exercise of this Option
                  shall be in writing addressed to the Secretary of the Company
                  at the principal place of business of the Company, shall be
                  substantially in the form attached hereto as Exhibit B and
                  shall be accompanied by a certified or bank cashier's check to
                  the order of the Company in the full amount of the purchase
                  price of the Shares so purchased.

                           b. LEGENDS. If the Company, in its sole discretion,
                  shall determine that it is necessary, to comply with
                  applicable securities laws, the certificate or certificates
                  representing the Shares purchased pursuant to the exercise of
                  this Option shall bear an appropriate legend in form and
                  substance, as determined by the Company, giving notice of
                  applicable restrictions on transfer under or in respect of
                  such laws. Further, you hereby acknowledge that the Company
                  may endorse a legend upon the certificate evidencing the
                  Shares as the Company, in its sole discretion, determines to
                  be necessary and appropriate to implement the terms of the
                  Plan.

                           c. INVESTMENT INTENT. You hereby covenant and agree
                  with the Company that if, at the time of exercise of this
                  Option, there does not exist a Registration Statement on an
                  appropriate form under the Securities Act of 1933, as amended
                  (the "ACT"), which Registration Statement shall have become
                  effective and shall include a prospectus which is current with
                  respect to the Shares subject to this Option (i) that you will
                  represent that you are purchasing the Shares for your own
                  account and not with a view to the resale or distribution
                  thereof and (ii) that any subsequent offer for sale or sale of
                  any such Shares shall be made either pursuant to (x) a
                  Registration Statement on an

                                       7
<PAGE>

                  appropriate form under the Act, which Registration Statement
                  shall have become effective and shall be current with respect
                  to the shares being offered and sold, or (y) a specific
                  exemption from the registration requirements of the Act, but
                  in claiming such exemption, you shall, if requested by the
                  Company, prior to any offer for sale or sale of such Shares,
                  obtain a favorable written opinion from counsel for or
                  approved by the Company as to the applicability of such
                  exemption.

                           6. WITHHOLDING TAXES. As provided in the Plan, the
         Company may withhold or cause to be withheld from sums due or to become
         due to you from the Company or a subsidiary corporation or affiliate
         thereof an amount necessary to satisfy its obligation (if any) to
         withhold taxes incurred by reason of the exercise of this Option or the
         disposition of Shares acquired hereunder, or may require you to
         reimburse the Company in such amount and may make such reimbursement a
         condition to the delivery of the Shares pursuant to the exercise of
         this Option.

                           7. AGREEMENT SUBJECT TO THE PLAN. You and the Company
          agree that this agreement is subject to, and that you and the Company
          will both be bound by, all terms, conditions, limitations and
          restrictions contained in the Plan, which shall be controlling in the
          event of any conflicting or inconsistent provisions.

                           8. STOCKHOLDERS AGREEMENT. It is a condition to the
          effectiveness of this Option and the obligation of the Company to
          issue any Shares hereunder that you shall have executed, on or prior
          to the date hereof, the Stockholders Agreement, dated as of July 16,
          1997, by and among the Company and the stockholders named therein (the
          "STOCKHOLDERS AGREEMENT"). If you have not executed the Stockholders
          Agreement on or before the date hereof, this Option shall
          automatically and without further notice terminate and be null and
          void.

                                       8
<PAGE>

        Please indicate your acceptance of all the terms and conditions of this
Option and the Plan by signing and returning a copy of this letter.

                                           Very truly yours,

                                           WGL HOLDINGS, INC.

                                           By:
                                              --------------------------------

ACCEPTED:

------------------------------------
Signature of Employee

------------------------------------
Name of Employee - Please Print

Date:                         , 1997
     ------------------------

                                       9
<PAGE>

                                    EXHIBIT A

                         1997 Employee Stock Option Plan

                                       10
<PAGE>

                                    EXHIBIT B

                                 Exercise Letter

                                                                       [Date]

WGL Holdings, Inc.
10,000 Wehrle Drive
Clarence, New York 14031

Attention:  Corporation Secretary

         Re:      Standard Incentive Stock Option
                  UNDER THE 1997 STOCK OPTION PLAN

Dear Sir:

          I am the holder of a "Standard" Option granted to me under the above-
referenced Plan by WGL Holdings, Inc. (the "COMPANY") on _______, 199_ to
purchase ____________ shares of Common Stock of the Company ("SHARES") at a
price of $1.00 per share. I hereby exercise that option with respect to
___________ Shares, the total purchase price for which is $____________.

          On_______________ [a business day not more than 15 days from the date
of this letter], I will present a certified check payable to the order of the
Company in the amount of $_____________ representing the total purchase price
for the Shares. The certificate or certificates representing the Shares should
be registered in my name and upon the presentation of that check [and
___________ shares of Common Stock], the Shares should be [delivered to me]
[forwarded to me at the address indicated below].

          I hereby agree to pay the full amount of all withholding taxes which
the Company or any subsidiary or parent corporation is required to withhold in
connection with the exercise of this option or the disposition of Shares
acquired hereunder and further authorize the Company, or the subsidiary or
parent corporation, to withhold from any cash compensation paid to me or in my
behalf an amount sufficient to discharge the Federal, State or local income or
employment tax withholding obligation to which the Company, or the subsidiary or
parent corporation, becomes

                                       11
<PAGE>

subject by reason of the exercise of this option. I agree that the corporation
by which I am employed may, in its discretion, hold the stock certificate to
which I become entitled upon exercise of this option, as security for the
payment of the aforementioned withholding tax liability, until cash sufficient
to pay that liability has been accumulated.

        Please acknowledge receipt of the exercise of my stock option on the
attached copy of this letter.

                                             Very truly yours,

                                             -----------------------------------
                                             Signature

                                             -----------------------------------
                                             Please Print Name

                                             -----------------------------------
                                             Address

                                             -----------------------------------

                                             -----------------------------------

                                             -----------------------------------
                                             Social Security Number

RECEIPT ACKNOWLEDGED:
WGL HOLDINGS, INC.

By:
   -----------------------------------

                                       12
<PAGE>

                                                                "SPECIAL" OPTION

                               WGL Holdings, Inc.
                               10,000 Wehrle Drive
                            Clarence, New York 14031

                                                         _________________, 1997

[Name of Optionee]
[Address]

                  Re:      GRANT OF NONQUALIFIED OPTION

Dear _____________________:

        The Board of Directors of WGL Holdings, Inc. (the "COMPANY") has
authorized and approved the 1997 Stock Option Plan (the "PLAN"), which will be
submitted to the stockholders of the Company for their approval. The Plan
provides for the grant of options to certain key employees of the Company and
any parent and subsidiary corporations of the Company. Pursuant to the Plan, the
Compensation Committee of the Board of Directors of the Company (the
"COMMITTEE") has approved, subject to stockholder approval, the grant to you of
an option to purchase shares of Common Stock, par value $.001 per share, of the
Company (the "SHARES") on the terms and subject to the conditions set forth in
the Plan and in this grant letter. A copy of the Plan is annexed hereto as
Exhibit A and shall be deemed a part hereof as if fully set forth herein. Unless
the context otherwise requires, all terms defined in the Plan shall have the
same meanings when used herein. The Shares purchasable pursuant to this Option
are subject to restrictions set forth in the Stockholders Agreement (as defined
in Paragraph 8 hereof). Such Shares may be required to be surrendered to the
Company under certain circumstances described in the Stockholders Agreement.

        1. GRANT OF OPTION. The Company hereby grants to you, as a matter of
separate inducement and not in lieu of any salary or other compensation for your
services, the right and option (the "OPTION") to purchase, in accordance

<PAGE>

with the terms and conditions set forth in the Plan, but subject to the
limitations set forth herein and in the Plan,an aggregate of __________ Shares
of the Company (the "TOTAL SHARES") at a price of $1.00 per Share, such option
price being, in the judgment of the Committee, not less than one hundred percent
(100%) of the fair market value of such Share at the date hereof. The Option is
not intended to qualify as an "incentive stock option" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended, but it is
specifically understood that no warranty is made to you as to such
qualification.

        2. VESTING OF OPTION. Subject to the provisions and limitations of the
Plan, the number of Shares of stock for which this Option may be exercised shall
be determined in accordance with this Section 2:

                           a. LIQUIDITY EVENTS. If a Sale Event (as described
                  below) occurs and the consummation of such Sale Event would
                  result in a Liquidity Event (as defined below), the Company
                  shall provide you with notice of such occurrence (the
                  "LIQUIDITY EVENT NOTICE"). This Option shall become
                  immediately exercisable in full for such period of time as is
                  specified in the Liquidity Event Notice. The Liquidity Event
                  Notice may provide that this Option shall terminate within a
                  specified number of days after notice to the holder.

                           b. PRO RATA LIQUIDITY EVENTS. If a Partial Sale Event
                  (as described below) occurs and the consummation of such
                  Partial Sale Event would result in a Pro Rata Liquidity Event
                  (as defined below), the Company shall provide you with notice
                  of such occurrence (the "PRO RATA LIQUIDITY EVENT NOTICE").
                  This Option shall become immediately exercisable for a number
                  of Shares equal to the Pro Rata Option Amount (as defined
                  below), less the number of Shares for which this Option shall
                  have previously become exercisable, for such period of time as
                  is specified in the Pro Rata Liquidity Event Notice. In the
                  event of any exercise or termination of this Option pursuant
                  to this paragraph b., the number of Total Shares shall be
                  reduced by the number of Shares for which this Option was so
                  exercised or as to which this Option so terminated.

                           c.  DEFINITIONS.  For purposes of this Option:

                                       2
<PAGE>

                           (i) A "SALE EVENT" shall occur if (A) the
                  stockholders of the Company shall execute an agreement that
                  provides for the sale of all the then outstanding capital
                  stock of the Company to third parties that are not affiliated
                  with the Initial Stockholders, (B) the Board of Directors
                  shall approve a sale of all or substantially all of the assets
                  of the Company, in one transaction or a series of related
                  transactions, other than to an entity owned or controlled by
                  the Initial Stockholders, (C) the Board of Directors shall
                  approve any merger or consolidation or the Company the result
                  of which would be the occurrence of any event described in
                  clause (A) or (B) of this sentence or (D) the Board of
                  Directors shall reject any Bona Fide Offer for the merger or
                  consolidation or the Company the result of which, if not so
                  rejected, would be the occurrence of any event described in
                  clause (A) or (B) of this sentence;

                           (ii) A "LIQUIDITY EVENT" shall mean the realization
                  by the Initial Stockholders of the Company, as a result of a
                  Sale Event, of an amount of cash which in the aggregate equals
                  or exceeds (A) 300% of the Initial Aggregate Equity Investment
                  by the Initial Stockholders, if the Sale Event occurs on or
                  prior to July 10, 2000, (B) 400% of the Initial Aggregate
                  Equity Investment by the Initial Stockholders, if the Sale
                  Event occurs subsequent to July 10, 2000 and no later than
                  July 10, 2001, (C) 500% of the Initial Aggregate Equity
                  Investment by the Initial Stockholders, if the Sale Event
                  occurs subsequent to July 10, 2001 and no later than July 10,
                  2002 and (D) 700% of the Initial Aggregate Equity Investment
                  by the Initial Stockholders, if the Sale Event occurs
                  subsequent to July 10, 2002;

                           (iii) "INITIAL AGGREGATE EQUITY INVESTMENT" by the
                  Initial Stockholders shall mean $35,500,000;

                           (iv) "INITIAL STOCKHOLDERS" shall mean DLJ Merchant
                  Banking Partners II, L.P., a Delaware limited partnership,
                  DLJMB Funding II, Inc., a Delaware corporation, DLJ Merchant
                  Banking Partners II-A, L.P., a Delaware limited partnership,
                  DLJ Diversified Partners, L.P., a Delaware limited
                  partnership, DLJ Diversified Partners-A, L.P., a Delaware
                  limited partnership, DLJ Millennium Partners, L.P., a Delaware
                  limited partnership, DLJ First ESC L.L.C., a Delaware

                                       3
<PAGE>

                  limited liability company, DLJ Offshore Partners II, C.V., a
                  Netherlands Antilles limited partnership, DLJ EAB Partners,
                  L.P., a Delaware limited partnership and UK Investment Plan
                  1997 Partners, a Delaware partnership;

                           (v) "BONA FIDE OFFER" shall mean an offer that, as
                  determined by the Board of Directors of the Company, is fully
                  financed, unconditional and made by a credible acquirer
                  capable of consummating the proposed transaction in an
                  expeditious manner;

                           (vi) A "PARTIAL SALE EVENT" shall mean a sale by the
                  Initial Stockholders of less than all the then outstanding
                  capital stock of the Company beneficially owned by the Initial
                  Stockholders to third parties that are not affiliated with the
                  Initial Stockholders;

                           (vii) A "PRO RATA LIQUIDITY EVENT" shall mean the
                  Partial Sale Event that results in the realization by the
                  Initial Stockholders of an amount of cash which, when
                  aggregated with the cash proceeds received by the Initial
                  Stockholders from prior sales of outstanding capital stock of
                  the Company to third parties that are not affiliated with the
                  Initial Stockholders, equals or exceeds (A) 300% of the Pro
                  Rata Initial Aggregate Equity Investment (as defined below) by
                  the Initial Stockholders, if the Partial Sale Event occurs on
                  or prior to July 10, 2000, (B) 400% of the Pro Rata Initial
                  Aggregate Equity Investment by the Initial Stockholders, if
                  the Partial Sale Event occurs subsequent to July 10, 2000 and
                  no later than July 10, 2001, (C) 500% of the Pro Rata Initial
                  Aggregate Equity Investment by the Initial Stockholders, if
                  the Partial Sale Event occurs subsequent to July 10, 2001 and
                  no later than July 10, 2002 and (D) 700% of the Pro Rata
                  Initial Aggregate Equity Investment by the Initial
                  Stockholders, if the Partial Sale Event occurs subsequent to
                  July 10, 2002;

                           (viii) "PRO RATA FRACTION" shall mean, in connection
                  with the sale of shares of Common Stock by the Initial
                  Stockholders, a fraction, the numerator of which is the total
                  number of shares of Common Stock which the Initial
                  Stockholders shall have sold to third parties that are not
                  affiliated with the Initial Stockholders in such sale and all
                  other prior sale

                                       4
<PAGE>

                  transactions made after July 16, 1997, and the denominator of
                  which shall be 35,500,000 (as such number shall be adjusted
                  from time to time as a result of any stock split or similar
                  recapitalization event);

                           (ix) "PRO RATA INITIAL AGGREGATE EQUITY INVESTMENT"
                  by the Initial Stockholders shall mean, for any Partial Sale
                  Event, the product of the Initial Aggregate Equity Investment
                  and the Pro Rata Fraction; and

                           (x) "PRO RATA OPTION AMOUNT" shall mean a number of
                  Shares equal to the number of Total Shares MULTIPLIED BY the
                  Pro Rata Fraction.

                           d. VESTING OF REMAINING SHARES. Notwithstanding
                  anything to the contrary herein, on _________________, 2007
                  (I.E., the date which is 90 days prior to the expiration of
                  the Option) this Option shall become exercisable for the
                  excess of (i) the number of Total Shares over (ii) the
                  aggregate number of shares, if any, for which this Option
                  shall have become exercisable pursuant to paragraph a. or
                  paragraph b. of this Section 2.

                           e. FRACTIONAL SHARES. In no event shall you exercise
                  this Option for a fraction of a Share.

        3. TERMINATION OF OPTION. The unexercised portion of the Option granted
herein will automatically and without notice terminate and become null and void
upon the earliest to occur of the following:

                           a. the expiration of ten (10) years from the date of
                  grant of this Option;

                           b. the date of termination of your employment if your
                  employment (i) is terminated by you, unless you voluntarily
                  retire from the Company or a subsidiary corporation of the
                  Company and the Board of Directors approves such retirement,
                  or (ii) is terminated by the Company or a subsidiary
                  corporation of the Company for cause (as defined in the Plan);

                           c. the expiration of 30 days from the date of
                  termination by the Company or its subsidiaries of your
                  employment other than for cause (as defined in the Plan),
                  except that this Option will be exercisable

                                       5
<PAGE>

                  during such 30-day period only to the extent that it would
                  have been exercisable immediately prior to the termination of
                  your employment;

                           d. the expiration of 6 months after the termination
                  of your employment by reason of your disability (as defined in
                  the Plan), except that this Option will be exercisable during
                  such 6-month period only to the extent that it would have been
                  exercisable immediately prior to the termination of your
                  employment;

                           e. the expiration of one (1) year after your death if
                  your death occurs during your employment or during the six (6)
                  month or thirty (30) day period, as the case may be specified
                  in clauses (c) and/or (d) above, except that this Option will
                  be exercisable during such 1-year period only to the extent
                  that it would have been exercisable immediately prior to your
                  death; or

                           f. as determined by the Committee in accordance with
                  the plan, upon a Change of Control (as defined in the Plan);

PROVIDED, HOWEVER, that none of the events described above shall extend the
period of exercisability of this Option beyond the day immediately preceding the
tenth anniversary of the date hereof.

        4. NON-TRANSFERABILITY OF OPTION. This Option is not transferable by you
otherwise than by will or the laws of descent and distribution, and is
exercisable, during your lifetime, only by you. This Option may not be assigned,
transferred (except by will or the laws of descent and distribution), pledged or
hypothecated in any way (whether by operation of law or otherwise) and shall not
be subject to execution, attachment or similar proceeding. Any attempted
assignment, transfer, pledge, hypothecation or other disposition of this Option
contrary to the provisions hereof, and the levy of any attachment or similar
proceeding upon the Option, shall be null and void and without effect.

        5.       EXERCISE OF OPTION.

                           a. PURCHASE OF SHARES. Any exercise of this Option
                  shall be in writing addressed to the Secretary of the Company
                  at the principal place of business of

                                       6
<PAGE>

                  the Company, shall be substantially in the form attached
                  hereto as Exhibit B and shall be accompanied by a certified or
                  bank cashier's check to the order of the Company in the full
                  amount of the purchase price of the Shares so purchased.

                           b. LEGENDS. If the Company, in its sole discretion,
                  shall determine that it is necessary, to comply with
                  applicable securities laws, the certificate or certificates
                  representing the Shares purchased pursuant to the exercise of
                  this Option shall bear an appropriate legend in form and
                  substance, as determined by the Company, giving notice of
                  applicable restrictions on transfer under or in respect of
                  such laws. Further, you hereby acknowledge that the Company
                  may endorse a legend upon the certificate evidencing the
                  Shares as the Company, in its sole discretion, determines to
                  be necessary and appropriate to implement the terms of the
                  Plan.

                           c. INVESTMENT INTENT. You hereby covenant and agree
                  with the Company that if, at the time of exercise of this
                  Option, there does not exist a Registration Statement on an
                  appropriate form under the Securities Act of 1933, as amended
                  (the "ACT"), which Registration Statement shall have become
                  effective and shall include a prospectus which is current with
                  respect to the Shares subject to this Option (i) that you will
                  represent that you are purchasing the Shares for your own
                  account and not with a view to the resale or distribution
                  thereof and (ii) that any subsequent offer for sale or sale of
                  any such Shares shall be made either pursuant to (x) a
                  Registration Statement on an appropriate form under the Act,
                  which Registration Statement shall have become effective and
                  shall be current with respect to the shares being offered and
                  sold, or (y) a specific exemption from the registration
                  requirements of the Act, but in claiming such exemption, you
                  shall, if requested by the Company, prior to any offer for
                  sale or sale of such Shares, obtain a favorable written
                  opinion from counsel for or approved by the Company as to the
                  applicability of such exemption.

        6. WITHHOLDING TAXES. As provided in the Plan, the Company may withhold
or cause to be withheld from sums due or to become due to you from the Company
or a subsidiary corporation or affiliate thereof an amount necessary to

                                       7
<PAGE>

satisfy its obligation (if any) to withhold taxes incurred by reason of the
exercise of this Option or the disposition of Shares acquired hereunder, or may
require you to reimburse the Company in such amount and may make such
reimbursement a condition to the delivery of the Shares pursuant to the exercise
of this Option.

        7. AGREEMENT SUBJECT TO THE PLAN. You and the Company agree that this
agreement is subject to, and that you and the Company will both be bound by, all
terms, conditions, limitations and restrictions contained in the Plan, which
shall be controlling in the event of any conflicting or inconsistent provisions.

        8. STOCKHOLDERS AGREEMENT. It is a condition to the effectiveness of
this Option and the obligation of the Company to issue any Shares hereunder that
you shall have executed, on or prior to the date hereof, the Stockholders
Agreement, dated as of July 16, 1997, by and among the Company and the
stockholders named therein (the "STOCKHOLDERS AGREEMENT"). If you have not
executed the Stockholders Agreement on or before the date hereof, this Option
shall automatically and without further notice terminate and be null and void.

        Please indicate your acceptance of all the terms and conditions of this
Option and the Plan by signing and returning a copy of this letter.

                                            Very truly yours,

                                            WGL HOLDINGS, INC.

                                            By:
                                               ---------------------------------

ACCEPTED:

----------------------------------------
Signature of Employee

----------------------------------------
Name of Employee - Please Print

Date:              , 1997
       -------- ---

                                       8
<PAGE>

                                    EXHIBIT A

                         1997 Employee Stock Option Plan

                                       9
<PAGE>

                                    EXHIBIT B

                                 Exercise Letter

                                                                       [Date]

WGL Holdings, Inc.
10,000 Wehrle Drive
Clarence, New York 14031

Attention:  Corporation Secretary

         Re:      Nonqualified Special Stock Option
                  UNDER THE 1997 STOCK OPTION PLAN

Dear Sir:

        I am the holder of a "Special" Option granted to me under the above-
referenced Plan by WGL Holdings, Inc. (the "COMPANY") on _______, 199_ to
purchase ____________ shares of Common Stock of the Company ("SHARES") at a
price of $1.00 per share. I hereby exercise that option with respect to
___________ Shares, the total purchase price for which is $____________.

        On _______________ [a business day not more than 15 days from the date
of this letter], I will present a certified check payable to the order of the
Company in the amount of $_____________ representing the total purchase price
for the Shares. The certificate or certificates representing the Shares should
be registered in my name and upon the presentation of that check [and
___________ shares of Common Stock], the Shares should be [delivered to me]
[forwarded to me at the address indicated below].

        I hereby agree to pay the full amount of all withholding taxes which the
Company or any subsidiary or parent corporation is required to withhold in
connection with the exercise of this option or the disposition of Shares
acquired hereunder and further authorize the Company, or the subsidiary or
parent corporation, to withhold from any cash compensation paid to me or in my
behalf an amount sufficient to discharge the Federal, State or local income or
employment tax withholding obligation to which the Company, or the subsidiary or
parent corporation, becomes subject by reason of the exercise of this option. I
agree that the corporation by which I am employed may, in its discretion, hold
the stock certificate to which I become entitled upon exercise of this option,
as security for the payment of the aforementioned withholding tax liability,
until cash sufficient to pay that liability has been accumulated.

                                       10
<PAGE>

        Please acknowledge receipt of the exercise of my stock option on the
attached copy of this letter.

                                           Very truly yours,

                                           ------------------------------------
                                           Signature

                                           ------------------------------------
                                           Please Print Name

                                           ------------------------------------
                                           Address

                                           ------------------------------------

                                           ------------------------------------

                                           ------------------------------------
                                           Social Security Number

RECEIPT ACKNOWLEDGED:
WGL HOLDINGS, INC.

By:
   --------------------------------------<PAGE>

                                                                     Exhbit 10.2

                               WGL HOLDINGS, INC.
                             1998 STOCK OPTION PLAN

      1. PURPOSES

      WGL HOLDINGS, INC., a Delaware corporation (the "Company"), desires to
afford certain of its key employees, and the key employees of any parent
corporation or subsidiary corporation of the Company now existing or hereafter
formed or acquired, who are responsible for the continued growth of the Company,
an opportunity to acquire a proprietary interest in the Company, and thus to
create in such key employees an increased interest in and a greater concern for
the welfare of the Company and its subsidiaries.

      The Company, by means of this 1998 Stock Option Plan (the "Plan"), seeks
to retain the services of persons now holding key positions and to secure the
services of persons capable of filling such positions.

      The stock options ("Options") offered pursuant to the Plan are a matter of
separate inducement and are not in lieu of any salary or other compensation for
the services of any key employee.

      The Options granted under the Plan are intended to be either incentive
stock options ("Incentive Options") within the meaning of Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), or options that do not
meet the requirements of Incentive Options ("Non-Qualified Options"). The
Company makes no warranty, however, as to the qualification of any Option as an
Incentive Option.

      2. NUMBER OF SHARES SUBJECT TO THE PLAN

      The total number of shares of common stock, par value $.001 per share, of
the Company (the "Shares") which may be purchased or acquired pursuant to the
exercise of Options granted under the Plan shall not exceed at any time during
the applicable period, (i) pursuant to Options granted in any single calendar
year, an aggregate of 1,220,000 Shares and (ii) pursuant to all Options granted
during the Term (as defined below) of this Plan, an aggregate of 6,100,000
Shares.

                                       1
<PAGE>

      Shares available for issuance acquired under the Plan may be either
authorized but unissued Shares or Shares of issued stock held in the Company's
treasury, or both, at the discretion of the Company. If and to the extent that
Options granted under the Plan expire or terminate without having been
exercised, the Shares covered by such expired or terminated Options may again be
subject to an Option under the Plan.

      Except as provided in Articles 18 and 22 and subject to Article 3, the
Company may, from time to time during the period (the "Term") beginning on
September 1, 1998 (the "Effective Date") and ending on August 31, 2008 (the
"Termination Date"), grant Incentive Options and Non-Qualified Options to
certain key employees of the Company or any subsidiary corporation of the
Company under the terms hereinafter set forth.

      As used in the Plan, the terms "parent corporation" and "subsidiary
corporation" shall mean a corporation within the definitions of such terms
contained in Sections 424(e) and 424(f) of the Code, respectively.

      3. ADMINISTRATION

      The board of directors of the Company (the "Board of Directors") shall
administer the Plan, provided that the Board of Directors may, from time to
time, designate from any of its members a Compensation Committee, which shall be
the Compensation Committee of the Board of Directors (the "Committee"), to
administer the Plan. A majority of the members of the Committee shall constitute
a quorum, and the act of a majority of the members of the Committee shall be the
act of the Committee. Any member of the Committee may be removed at any time
either with or without cause by resolution adopted by the Board of Directors,
and any vacancy on the Committee at any time may be filled by resolution adopted
by the Board of Directors. If the Board of Directors administers the Plan, then
reference herein, or in any option agreement granting Options pursuant to the
Plan, to the Committee shall mean the Committee or the Board of Directors, as
appropriate.

      Subject to the express provisions of the Plan, the Committee shall have
authority, in its discretion, to determine the key employees to whom Options
shall be granted (the "Optionholders"), the time when such Options shall be
granted, the number of Shares which shall be subject to each Option, the
purchase price or exercise price of each Option, the period(s) during which such
Options shall be

                                       2
<PAGE>

exercisable (whether in whole or in part) and the other terms and provisions
thereof (which need not be identical).

      Subject to the express provisions of the Plan, the Committee also shall
have authority to construe the Plan and the Options granted thereunder, to amend
the Plan and the Options granted thereunder, to prescribe, amend and rescind
rules and regulations relating to the Plan, to determine the terms and
provisions of the Options (which need not be identical) granted thereunder and
to make all other determinations necessary or advisable for administering the
Plan.

      The Committee may establish performance standards for determining the
periods during which Options shall be exercisable, including without limitation
standards based on the earnings of the Company and its subsidiaries for various
fiscal periods. The Committee shall define such performance criteria and, from
time to time, the Committee in its sole discretion and in administering the Plan
may make adjustments to such performance criteria for any fiscal period so that
extraordinary or unusual charges or credits, acquisitions, mergers,
consolidations, and other corporate transactions and other elements of or
factors influencing the calculations of earnings or any other performance
standard do not distort or affect the operation of the Plan in a manner
inconsistent with the achievement of its purpose.

      The determination of the Committee on matters referred to in this Article
3 shall be conclusive.

      The Committee may employ such legal counsel, consultants and agents as it
may deem desirable for the administration of the Plan and may rely upon any
opinion or computation received from any such legal counsel, consultant or
agent. Expenses incurred by the Committee in the engagement of such counsel,
consultant or agent shall be paid by the Company. No member or former member of
the Committee shall be liable for any action or determination made in good faith
with respect to the Plan or any award of Options granted hereunder.

                                       3
<PAGE>

      4. ELIGIBILITY

      Options may be granted only to key employees of the Company or any
subsidiary corporation of the Company.

      The Plan does not create a right in any employee to participate in the
Plan, nor does it create a right in any employee to have any Options granted to
him or her.

      5. OPTION PRICE AND PAYMENT

      The price for each Share purchasable under any Option granted hereunder
shall be such amount as the Committee shall determine in good faith to be the
fair market value (as defined below) per Share at the date the Option is
granted; provided, however, that the exercise price shall not be less than $1.00
per share; and provided further, that in the case of an Incentive Option granted
to a key employee who, at the time such Incentive Option is granted, owns stock
possessing more than ten percent (10%) of the total combined voting power of all
classes of stock of the Company or any subsidiary corporation or parent
corporation of the Company, the purchase price for each Share shall not be less
than one hundred ten percent (110%) of the fair market value per Share at the
date the Incentive Option is granted. In determining the stock ownership of a
key employee for any purpose under the Plan, the rules of Section 424(d) of the
Code shall be applied, and the Committee may rely on representations of fact
made to it by the key employee and believed by it to be true.

      For purposes of the Plan, "fair market value," with respect to any date of
determination, means:

            (i) if the Shares are listed or admitted to trading on a national
      securities exchange in the United States or reported through The Nasdaq
      Stock Market ("Nasdaq") then the closing sale price on such exchange or
      Nasdaq on such date or, if no trading occurred or quotations were
      available on such date, then on the closest preceding date on which the
      Shares were traded or quoted; or

            (ii) if not so listed or reported but a regular, active public
      market for the Shares exists (as determined in the sole discretion of the
      Committee, whose decision shall be conclusive and binding), then the
      average of the

                                       4
<PAGE>

      closing bid and ask quotations per Share in the over-the-counter market
      for such Shares in the United States on such date or, if no such
      quotations are available on such date, then on the closest date preceding
      such date. For purposes of the foregoing, a market in which trading is
      sporadic and the ask quotations generally exceed the bid quotations by
      more than 15% shall not be deemed to be a "regular, active public market."

      If the Committee determines that a regular, active public market does not
exist for the Shares, the Committee shall determine the fair market value of the
Shares in its good faith judgment based on the total number of shares of Common
Stock then outstanding, taking into account all outstanding options, warrants,
rights or other securities exercisable or exchangeable for, or convertible into,
shares of Common Stock.

      For purposes of this Plan, the determination by the Committee of the fair
market value of a Share shall be conclusive.

      Upon the exercise of an Option granted hereunder, the Company shall cause
the purchased Shares to be issued only when it shall have received the full
purchase price for the Shares in cash or by certified check; provided, however,
that in lieu of cash, the holder of an Option may, if and to the extent the
terms of such Option so provide and to the extent permitted by applicable law,
exercise an Option in whole or in part, by delivering to the Company (a) shares
of common stock of the Company (in proper form for transfer and accompanied by
all requisite stock transfer tax stamps or cash in lieu thereof) owned by such
holder for at least six months having a fair market value at the date of
exercise (together with any portion of the exercise price paid in cash) equal to
the exercise price applicable to that portion of the Option being exercised or
(b) such other form of payment as the Committee shall permit in its sole
discretion at the time of grant of the Option.

      6. USE OF PROCEEDS

      The cash proceeds of the sale of Shares pursuant to the Plan are to be
added to the general funds of the Company and used for its general corporate
purposes as the Board of Directors shall determine.

      7. TERM OF OPTIONS AND LIMITATIONS ON THE RIGHT OF EXERCISE

                                       5
<PAGE>

      An Option shall be exercisable at such times, in such amounts and during
such period or periods as the Committee shall determine at the date of the grant
of such Option; provided, however, that an Option shall not be exercisable after
the expiration of ten (10) years from the date such Option is granted; and
provided, further, that an Incentive Option granted to a key employee who, at
the time such Incentive Option is granted, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or any subsidiary corporation or parent corporation of the Company,
shall not be exercisable after the expiration of five (5) years from the date
such Incentive Option is granted.

      The Committee shall have the right to accelerate, in whole or in part,
from time to time, conditionally or unconditionally, rights to exercise any
Option granted hereunder.

      To the extent that an Option is not exercised within the period of
exercisability specified therein, it shall expire as to the then unexercised
part.

      Except as otherwise provided under the Code, to the extent that the
aggregate fair market value of stock for which Incentive Options (under all
stock option plans of the Company and of any parent corporation or subsidiary
corporation of the Company) are exercisable for the first time by a key employee
during any calendar year exceeds one hundred thousand dollars ($100,000), such
Options shall be treated as Non-Qualified Options. For purposes of this
limitation, (a) the fair market value of the stock is determined as of the time
the Option is granted, and (b) Options will be taken into account in the order
in which they were granted.

      In no event shall an Option granted hereunder be exercised for a fraction
of a Share.

      8. EXERCISE OF OPTIONS

      Options granted under the Plan shall be exercised by the Optionholder as
to all or part of the Shares covered thereby by the giving of written notice of
the exercise thereof to the Corporate Secretary of the Company at the principal
business office of the Company, specifying the number of Shares to be purchased
and specifying a business day not more than fifteen (15) days from the date such
notice is given for the payment of the purchase price against delivery of the
Shares

                                       6
<PAGE>

being purchased. Subject to the terms of Articles 13, 14, 15 and 16, the Company
shall cause certificates for the Shares so purchased to be delivered to the
Optionholder at the principal business office of the Company, against payment of
the full purchase price, on the date specified in the notice of exercise.

      9. NON-TRANSFERABILITY OF OPTIONS

      No Option granted hereunder shall be transferable, whether by operation of
law or otherwise, other than by will or the laws of descent and distribution and
any Option granted hereunder shall be exercisable during the lifetime of the
Optionholder only by such Optionholder. Except to the extent provided above,
Options may not be assigned, transferred, pledged, hypothecated or disposed of
in any way (whether by operation of law or otherwise) and shall not be subject
to execution, attachment or similar process, and any purported assignment in
contravention hereof shall be void and of no effect. Notwithstanding the
foregoing, at the discretion of the Committee, a Non-Qualified Option may be
transferred by a key employee solely to such key employee's spouse, siblings,
parents, children and grandchildren or trusts for the benefit of such persons or
partnerships, corporations, limited liability companies or other entities owned
solely by such persons, subject to any restrictions included in the award of the
Non-Qualified Option.

      10. TERMINATION OF EMPLOYMENT

      Upon termination of employment of any Optionholder with the Company and
all subsidiary corporations, an Option previously granted to the Optionholder,
unless otherwise specified by the Committee in the Option, shall, to the extent
not theretofore exercised, terminate and become null and void, provided that:

            (a) if the Optionholder shall die while in the employ of such
      corporation or during either the six (6) month or thirty (30) day period,
      whichever is applicable, specified in clauses (b) and (c) below, and at a
      time when such Optionholder was entitled to exercise an Option as herein
      provided, the legal representative of such Optionholder, or such person
      who acquired such Option by bequest or inheritance or by reason of the
      death of the Optionholder, shall have the right to exercise such Option so
      granted, to the extent not theretofore exercised, in respect of any or all
      of such number of Shares that such Optionholder is entitled to purchase
      pursuant to such

                                       7
<PAGE>

      Option at the time of such Optionholder's death, at any time up to and
      including one (1) year after the date of death;

            (b) if the employment of any Optionholder to whom such Option shall
      have been granted shall terminate by reason of the Optionholder's
      disability (as defined below), and while such Optionholder is entitled to
      exercise such Option as herein provided, such Optionholder shall have the
      right to exercise such Option so granted, to the extent not theretofore
      exercised, in respect of any or all of such number of Shares that such
      Optionholder is entitled to purchase pursuant to such Option at the time
      of such termination, at any time up to and including six (6) months after
      the date of termination of employment; and

            (c) if the employment of any Optionholder to whom such Option shall
      have been granted shall terminate by reason of dismissal by the employer
      other than for cause (as defined below), and while such Optionholder is
      entitled to exercise such Option as herein provided, such Optionholder
      shall have the right to exercise such Option so granted, to the extent not
      theretofore exercised, in respect of any or all of such number of Shares
      that such Optionholder is entitled to purchase pursuant to such Option at
      the time of such termination, at any time up to and including thirty (30)
      days after the date of termination of employment.

      If an Optionholder (i) voluntarily terminates his or her employment,
unless such termination is a voluntary retirement from the Company and the Board
of Directors approves such retirement, or (ii) is discharged for cause, any
Option granted hereunder shall, unless otherwise specified by the Committee in
the Option, forthwith terminate with respect to any unexercised portion thereof.

      If an Option granted hereunder shall be exercised by the legal
representative of a deceased or disabled Optionholder, or by a person who
acquired an Option granted hereunder by bequest or inheritance or by reason of
death of any Optionholder, written notice of such exercise shall be accompanied
by a certified copy of letters testamentary or equivalent proof of the right of
such legal representative or other person to exercise such Option.

      For all purposes of the Plan, the term "for cause" shall mean, (i) with
respect to an Optionholder who is a party to a written employment agreement with
the Company, which agreement contains a definition of "for cause" or "cause" (or

                                       8
<PAGE>

words of like import) for purposes of termination of employment thereunder by
the Company, "for cause" or "cause" as defined in the most recent of such
agreements, or (ii) in all other cases, as determined by the Committee, in its
sole discretion, that one or more of the following has occurred: (A) any
intentional or willful failure, or failure due to bad faith, by such
Optionholder to substantially perform his or her employment duties which shall
not have been corrected within 30 days following written notice thereof, (B) any
misconduct by such Optionholder which is significantly injurious to the Company
or any of its subsidiaries or affiliates, (C) any breach by such Optionholder of
any covenant contained in the instrument pursuant to which an Option is granted,
(D) such Optionholder's conviction of, or entry of a plea of nolo contendere in
respect of, any felony or a misdemeanor which results in, or is reasonably
expected to result in, economic or reputational injury to the Company or any of
its subsidiaries or affiliates.

      For all purposes of the Plan, the term "disability" means (i) with respect
to an Optionholder who is a party to a written employment agreement with the
Company, which agreement contains a definition of "disability" or "permanent
disability" (or words of like import) for purposes of termination of employment
thereunder by the Company, "disability" or "permanent disability" as defined in
the most recent of such agreements, or (ii) in all other cases, means such
Optionholder's inability to perform substantially his or her duties and
responsibilities to the Company or any of its subsidiaries by reason of physical
or mental illness, injury, infirmity or condition: (A) for a continuous period
for 120 days or one or more periods aggregating 150 days in any twelve-month
period; (B) at such time as such Optionholder is eligible to receive disability
income payments under any long-term disability insurance plan maintained by the
Company or any of its subsidiaries; or (C) at such earlier time as such
Optionholder or the Company submits medical evidence, in the form of a
physician's certification, that such Optionholder has a physical or mental
illness, injury, infirmity or condition that will likely prevent such
Optionholder from substantially performing his duties and responsibilities for
120 days or longer.

      A termination of employment shall not be deemed to occur by reason of (i)
the transfer of an Optionholder from employment by the Company to employment by
a subsidiary corporation of the Company or (ii) the transfer of an Optionholder
from employment by a subsidiary corporation of the Company to employment by the
Company or by another subsidiary corporation of the Company.

                                       9
<PAGE>

      Notwithstanding anything to the contrary contained in this Article 10, in
no event shall any person be entitled to exercise any Option after the
expiration of the period of exercisability of such Option as specified therein.

      11. ADJUSTMENT OF SHARES; EFFECT OF CERTAIN TRANSACTIONS

      For purposes of this Plan, a "change in control" of the Company occurs if:
(a) any "Person" (as such term is used in Sections 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934, as amended ("Exchange Act")), other than DLJ
Merchant Banking II, Inc. or any of its affiliates or any combination thereof
(collectively, the "DLJ Entities"), is or becomes the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of more
than 50% of the total combined voting power of all classes of capital stock of
the Company normally entitled to vote for the election of directors of the
Company; or (b) the Board of Directors shall approve a sale of all or
substantially all of the assets of the Company, in one transaction or a series
of related transactions, other than to an entity owned or controlled by the DLJ
Entities; or (c) the Board of Directors shall approve any merger or
consolidation of the Company in which the shareholders of the Company
immediately prior to such transaction own, in the aggregate, less than 50% of
the total combined voting power of all classes of capital stock of the surviving
entity normally entitled to vote for the election of directors of the surviving
entity.

      Upon the occurrence of a transaction described in the preceding paragraph,
each Option may, at the discretion of the Committee, be terminated within a
specified number of days after notice to the holder of such Option, and each
such holder will receive, in respect of each Share for which such Option then is
exercisable, an amount equal to the excess of the then fair market value of such
Share over the exercise price per Share, payable in the same consideration
received by the shareholders of the Company upon the closing of such
transaction.

      In the event of any change in the outstanding Shares through merger,
consolidation, reorganization, recapitalization, stock dividend, stock split,
reverse split, split-up, split-off, spin-off, combination of shares, exchange of
shares, or other like change in capital structure of the Company, the Committee
shall make such adjustments to each outstanding Option that it, in its sole
discretion, deems appropriate. The term "Shares" after any such change shall
refer to the securities, cash and/or property then receivable upon exercise of
an Option. In addition, in

                                       10
<PAGE>

the event of any such change, the Committee shall make any further adjustment as
may be appropriate to the maximum number of Shares which may be acquired under
the Plan pursuant to the exercise of Options, the maximum number of Shares for
which Options may be granted to any individual under the Plan, the minimum
exercise price per Share for Options to be granted under the Plan, and the
number of Shares and prices per Share subject to outstanding Options as shall be
equitable to prevent dilution or enlargement of rights under such Options, and
the determination of the Committee as to these matters shall be conclusive.

      12. RIGHT TO TERMINATE EMPLOYMENT

      The Plan shall not impose any obligation on the Company or on any
subsidiary corporation thereof to continue the employment of any Optionholder
and it shall not impose any obligation on the part of any Optionholder to remain
in the employ of the Company or of any subsidiary corporation thereof.

      13. SECURITIES LAW MATTERS

      Except as hereinafter provided, the Committee may require an Optionholder,
as a condition upon exercise of any Option granted hereunder, to execute and
deliver to the Company a written statement, in form satisfactory to the
Committee, in which the Optionholder represents and warrants that Shares are
being acquired for such Optionholder's own account for investment only and not
with a view to the resale or distribution thereof. The Optionholder shall, at
the request of the Committee, be required to represent and warrant in writing
that any subsequent resale or distribution of Shares by the Optionholder shall
be made only pursuant to either (i) a Registration Statement on an appropriate
form under the Securities Act of 1933, as amended (the "Securities Act"), which
Registration Statement has become effective and is current with regard to the
Shares being sold, or (ii) a specific exemption from the registration
requirements of the Securities Act, but in claiming such exemption the
Optionholder shall, prior to any offer of sale or sale of such Shares, obtain a
prior favorable written opinion of counsel, in form and substance satisfactory
to counsel for the Company, as to the application of such exemption thereto. The
foregoing restriction shall not apply to (i) issuances by the Company so long as
the Shares being issued are registered under the Securities Act and a prospectus
in respect thereof is current or (ii) re-offerings of Shares by affiliates of
the Company (as defined in Rule 405 or any successor rule or regulation
promulgated under the Securities Act) if the Shares being re-offered are
registered under the Securities Act and a prospectus in respect thereof is
current.

                                       11
<PAGE>

      14. ISSUE OF CERTIFICATES, LEGENDS, PAYMENT OF EXPENSES

      Subject to Articles 13, 15 and 16, upon any exercise of an Option which
may be granted hereunder and payment of the purchase price, a certificate or
certificates for the Shares shall be issued by the Company in the name of the
person exercising the Option and shall be delivered to or upon the order of such
person.

      The Company may endorse such legend or legends upon the certificates for
Shares issued pursuant to the Plan and, if a transfer agent has been engaged by
the Company, may issue such "stop transfer" instructions to its transfer agent
in respect of such Shares as, in its discretion, it determines to be necessary
or appropriate to (i) prevent a violation of, or to perfect an exemption from,
the registration requirements of the Securities Act, or (ii) implement the
provisions of the Plan and any agreement between the Company and the
Optionholder with respect to such Shares, or (iii) permit the Company to
determine the occurrence of a disqualifying disposition, as described in Section
421(b) of the Code, of Shares transferred upon exercise of an Incentive Option
granted under the Plan.

      The Company shall pay all issue or transfer taxes with respect to the
issuance or transfer of Shares, as well as all fees and expenses necessarily
incurred by the Company in connection with such issuance or transfer.

      All Shares issued as provided herein shall be fully paid and
non-assessable to the extent permitted by law.

      15. WITHHOLDING TAXES

      The Company will require, as a condition to an Optionholder exercising an
Option granted hereunder, that the Optionholder reimburse the corporation that
employs such Optionholder for any taxes required by any government 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 that
employs such Optionholder 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
Optionholder upon such terms and conditions as the Committee shall prescribe.
The corporation that employs such Optionholder may, in its discretion, hold the
stock certificate to which such Optionholder is entitled upon the exercise of an
Option as security for the payment of such withholding tax liability, until cash

                                       12
<PAGE>

sufficient to pay that liability has been accumulated and may, in its
discretion, effect such withholding by retaining Shares issuable upon the
exercise of the Option and having a fair market value on the date of exercise
that is equal to the amount to be withheld.

      16. LISTING OF SHARES AND RELATED MATTERS

      The Committee may delay the issuance or delivery of Shares pursuant to any
Option granted hereunder if it determines that listing, registration or
qualification of Shares or the consent or approval of any governmental
regulatory body is necessary or desirable as a condition of, or in connection
with, the grant of an Option under the Plan or the issuance of Shares
thereunder, until such listing, registration, qualification, consent or approval
shall have been effected or obtained, or otherwise provided for, free of any
conditions not acceptable to the Committee.

      17. AMENDMENT OF THE PLAN

      The Committee may, from time to time, amend the Plan, provided that no
amendment shall be made, without the approval of the stockholders of the
Company, that will (i) increase the total number of Shares reserved for Options
under the Plan or the amount of Options that may be granted to any key employee
(in each case, other than an increase resulting from an adjustment provided for
in Article 11), (ii) reduce the exercise price of any Option granted hereunder
below the price required by Article 5, (iii) modify the provisions of the Plan
relating to eligibility, or (iv) materially increase the benefits accruing to
participants under the Plan. The rights and obligations under any Option granted
before amendment of the Plan or any unexercised portion of such Option shall not
be adversely affected by amendment of the Plan or such Option without the
consent of the holder of such Option.

      18. TERMINATION OR SUSPENSION OF THE PLAN

      The Board of Directors may at any time suspend or terminate the Plan. The
Plan, unless sooner terminated by action of the Board of Directors, shall
terminate at the close of business on the Termination Date. Options may not be
granted while the Plan is suspended or after it is terminated. Rights and
obligations under any Option granted while the Plan is in effect shall not be
altered or impaired by suspension or termination of the Plan, except upon the
consent of the person to whom the Option was granted. The power of the Committee
to construe and

                                       13
<PAGE>

administer any Options granted prior to the termination or suspension of the
Plan under Article 3 nevertheless shall continue after such termination or
during such suspension.

      19. GOVERNING LAW

      The Plan and such Options as may be granted thereunder and all related
matters shall be governed by, and construed and enforced in accordance with, the
laws of the State of Delaware from time to time obtaining.

      20. PARTIAL INVALIDITY

      The invalidity or illegality of any provision hereof shall not be deemed
to affect the validity of any other provision.

      21. EFFECTIVE DATE

      The Plan shall become effective at 9:00 a.m., New York City Time, on the
Effective Date, provided the Plan is approved by the stockholders of the Company
at an annual meeting or any special meeting of stockholders of the Company
within 12 months of the Effective Date, and such approval of stockholders shall
be a condition to the right of each eligible key employee to receive any Options
under the Plan. Any Options granted under the Plan prior to such approval of
stockholders shall be effective as of the date of the grant (unless, with
respect to any Option, the Committee specifies otherwise at the time of the
grant), but no such Option may be exercised prior to such stockholder approval,
and if stockholders fail to approve the Plan as specified hereunder, any such
Option shall be cancelled.

                                       14
<PAGE>

                                                                "Special" Option

                               WGL Holdings, Inc.
                               10,000 Wehrle Drive
                            Clarence, New York 14031

                                                           _______________, 199_

[Name of Optionee]
[Address]

            Re: Grant of Nonqualified Option

Dear_______________:

      The Board of Directors of WGL Holdings, Inc. (the "Company") has
authorized and approved the 1998 Stock Option Plan (the "Plan"), which will be
submitted to the stockholders of the Company for their approval. The Plan
provides for the grant of options to certain key employees of the Company and
any parent and subsidiary corporations of the Company. Pursuant to the Plan, the
Compensation Committee of the Board of Directors of the Company (the
"Committee") has approved, subject to stockholder approval, the grant to you of
an option to purchase shares of Common Stock, par value $.001 per share, of the
Company (the "Shares") on the terms and subject to the conditions set forth in
the Plan and in this grant letter. A copy of the Plan is annexed hereto as
Exhibit A and shall be deemed a part hereof as if fully set forth herein. Unless
the context otherwise requires, all terms defined in the Plan shall have the
same meanings when used herein. The Shares purchasable pursuant to this Option
are subject to restrictions set forth in the Stockholders Agreement (as defined
in Paragraph 8 hereof). Such Shares may be required to be surrendered to the
Company under certain circumstances described in the Stockholders Agreement.

      1. Grant of Option. The Company hereby grants to you, as a matter of
separate inducement and not in lieu of any salary or other compensation for your
services, the right and option (the "Option") to purchase, in accordance with
the terms and conditions set forth in the Plan, but subject to the limitations
set forth herein and in the Plan, an aggregate of ___________ Shares of the
Company (the "Total Shares") at a price of $____ per Share, such option price
being, in the judgment of the Committee, not less than one hundred percent
(100%) of the fair market value of such Share at the date hereof. The Option is
not intended to qualify as an "incentive stock option" within the meaning of
Section 422 of the Internal Revenue Code of 1986, as amended, but it is
specifically understood that no warranty is made to you as to such
qualification.
<PAGE>

            2. Vesting of Option.

                  a. Vesting Dates and Amounts. Subject to the provisions and
            limitations of the Plan, the Option shall become exercisable for
            Shares on the dates and in the amounts set forth in the following
            table:

                                           Percentage of Original
                   Date Vested                 Option Vested
                   -----------                 -------------

            1st Anniversary of Grant                   33 1/3 %
            2nd Anniversary of Grant                   33 1/3 %
            3rd Anniversary of Grant                   33 1/3 %

                  b. Cummulative Effect of Vesting. The right to purchase Shares
            shall be cumulative so that when the right to purchase any Shares
            has vested such Shares or any part thereof may be purchased at any
            time thereafter until the expiration or termination of the Option.

                  c. Fractional Shares. In no event shall you exercise this
            Option for a fraction of a Share.

      3. Termination of Option. The unexercised portion of the Option granted
herein will automatically and without notice terminate and become null and void
upon the earliest to occur of the following:

                  a. the expiration of ten (10) years from the date of grant of
            this Option;

                  b. the date of termination of your employment if your
            employment (i) is terminated by you, unless you voluntarily retire
            from the Company or a subsidiary corporation of the Company and the
            Board of Directors approves such retirement, or (ii) is terminated
            by the Company or a subsidiary corporation of the Company for cause
            (as defined in the Plan);

                  c. the expiration of 30 days from the date of termination by
            the Company or its subsidiaries of your employment other than for
            cause (as defined in the Plan), except that this Option will be
            exercisable during such 30-day period only to the extent that it
            would have been exercisable immediately prior to the termination of
            your employment;

                  d. the expiration of 6 months after the termination of your
            employment by reason of your disability (as defined in the Plan),
            except that this Option will be exercisable during such 6-month
            period only to the extent that it would have been exercisable
            immediately prior to the termination of your employment;

                                       2
<PAGE>

                  e. the expiration of one (1) year after your death if your
            death occurs during your employment or during the six (6) month or
            thirty (30) day period, as the case may be specified in clauses (c)
            and/or (d) above, except that this Option will be exercisable during
            such 1-year period only to the extent that it would have been
            exercisable immediately prior to your death; or

                  f. as determined by the Committee in accordance with the plan,
            upon a Change of Control (as defined in the Plan);

provided, however, that none of the events described above shall extend the
period of exercisability of this Option beyond the day immediately preceding the
tenth anniversary of the date hereof.

      4. Non-transferability of Option. This Option is not transferable by you
otherwise than by will or the laws of descent and distribution, and is
exercisable, during your lifetime, only by you. This Option may not be assigned,
transferred (except by will or the laws of descent and distribution), pledged or
hypothecated in any way (whether by operation of law or otherwise) and shall not
be subject to execution, attachment or similar proceeding. Any attempted
assignment, transfer, pledge, hypothecation or other disposition of this Option
contrary to the provisions hereof, and the levy of any attachment or similar
proceeding upon the Option, shall be null and void and without effect.

            5. Exercise of Option.

                  a. Purchase of Shares. Any exercise of this Option shall be in
            writing addressed to the Secretary of the Company at the principal
            place of business of the Company, shall be substantially in the form
            attached hereto as Exhibit B and shall be accompanied by a certified
            or bank cashier's check to the order of the Company in the full
            amount of the purchase price of the Shares so purchased.

                  b. Legends. If the Company, in its sole discretion, shall
            determine that it is necessary, to comply with applicable securities
            laws, the certificate or certificates representing the Shares
            purchased pursuant to the exercise of this Option shall bear an
            appropriate legend in form and substance, as determined by the
            Company, giving notice of applicable restrictions on transfer under
            or in respect of such laws. Further, you hereby acknowledge that the
            Company may endorse a legend upon the certificate evidencing the
            Shares as the Company, in its sole discretion, determines to be
            necessary and appropriate to implement the terms of the Plan.

                  c. Investment Intent. You hereby covenant and agree with the
            Company that if, at the time of exercise of this Option, there does
            not exist a Registration Statement on an appropriate form under the
            Securities Act

                                       3
<PAGE>

             of 1933, as amended (the "Act"), which Registration Statement shall
             have become effective and shall include a prospectus which is
             current with respect to the Shares subject to this Option (i) that
             you will represent that you are purchasing the Shares for your own
             account and not with a view to the resale or distribution thereof
             and (ii) that any subsequent offer for sale or sale of any such
             Shares shall be made either pursuant to (x) a Registration
             Statement on an appropriate form under the Act, which Registration
             Statement shall have become effective and shall be current with
             respect to the shares being offered and sold, or (y) a specific
             exemption from the registration requirements of the Act, but in
             claiming such exemption, you shall, if requested by the Company,
             prior to any offer for sale or sale of such Shares, obtain a
             favorable written opinion from counsel for or approved by the
             Company as to the applicability of such exemption.

      6. Withholding Taxes. As provided in the Plan, the Company may withhold or
cause to be withheld from sums due or to become due to you from the Company or a
subsidiary corporation or affiliate thereof an amount necessary to satisfy its
obligation (if any) to withhold taxes incurred by reason of the exercise of this
Option or the disposition of Shares acquired hereunder, or may require you to
reimburse the Company in such amount and may make such reimbursement a condition
to the delivery of the Shares pursuant to the exercise of this Option.

      7. Agreement Subject to the Plan. You and the Company agree that this
agreement is subject to, and that you and the Company will both be bound by, all
terms, conditions, limitations and restrictions contained in the Plan, which
shall be controlling in the event of any conflicting or inconsistent provisions.

      8. Stockholders Agreement. It is a condition to the effectiveness of this
Option and the obligation of the Company to issue any Shares hereunder that you
shall have executed, on or prior to the date hereof, the Stockholders Agreement,
dated as of July 16, 1997, by and among the Company and the stockholders named
therein (the "Stockholders Agreement"). If you have not executed the
Stockholders Agreement on or before the date hereof, this Option shall
automatically and without further notice terminate and be null and void.

      Please indicate your acceptance of all the terms and conditions of this
Option and the Plan by signing and returning a copy of this letter.

                                         Very truly yours,

                                         WGL HOLDINGS, INC.

                                         By:____________________________________
                                         Name:__________________________________
                                         Title:_________________________________

                                       4
<PAGE>

ACCEPTED:

_______________________________
Signature of Employee

_______________________________
Name of Employee - Please Print

Date: ___ _,199_

                                       5
<PAGE>

                                    Exhibit A

                         1998 Employee Stock Option Plan

                                       6
<PAGE>

                                    Exhibit B

                                 Exercise Letter

                                                  [Date]

WGL Holdings, Inc.
10,000 Wehrle Drive
Clarence, New York 14031

Attention: Corporation Secretary
       Re: Nonqualified Special Stock Option
           Under the 1998 Stock Option Plan

Dear Sir:

      I am the holder of a "Special" Option granted to me under the above-

referenced Plan by WGL Holdings, Inc. (the "Company") on _____, 19_ to purchase
____________ shares of Common Stock of the Company ("Shares") at a price of
$____ per share. I hereby exercise that option with respect to ____________
Shares, the total purchase price for which is $____________

      On _______________ [a business day not more than 15 days from the date of
this letter], I will present a certified check payable to the order of the
Company in the amount of $_____________ representing the total purchase price
for the Shares. The certificate or certificates representing the Shares should
be registered in my name and upon the presentation of that check [and
___________ shares of Common Stock], the Shares should be [delivered to me]
[forwarded to me at the address indicated below].

      I hereby agree to pay the full amount of all withholding taxes which the
Company or any subsidiary or parent corporation is required to withhold in
connection with the exercise of this option or the disposition of Shares
acquired hereunder and further authorize the Company, or the subsidiary or
parent corporation, to withhold from any cash compensation paid to me or in my
behalf an amount sufficient to discharge the Federal, State or local income or
employment tax withholding obligation to which the Company, or the subsidiary or
parent corporation, becomes subject by reason of the exercise of this option. I
agree that the corporation by which I am employed may, in its discretion, hold
the stock certificate to which I become entitled upon exercise of this option,
as security for the payment of the aforementioned withholding tax liability,
until cash sufficient to pay that liability has been accumulated.

                                       7
<PAGE>

      Please acknowledge receipt of the exercise of my stock option on the
attached copy of this letter.

                                     Very truly yours,

                                     WGL HOLDINGS, NC.

                                     ___________________________________________
                                     Signature

                                     ___________________________________________
                                     Please Print name

                                     ___________________________________________
                                     Address

                                     ___________________________________________

                                     ___________________________________________

                                     ___________________________________________
                                     Social Security Number

RECEIPT ACKNOWLEDGED:

WGL HOLDINGS, INC.

By:_____________________________
Name:___________________________
Title:__________________________

                                       8
<PAGE>

                                                               "Standard" Option

                               WGL Holdings, Inc.
                               10,000 Wehrle Drive
                            Clarence, New York 14031

                                                           _______________, 199_

[Name of Optionee]
[Address]

            Re: Grant of Incentive Stock Option

Dear ___________________:

            The Board of Directors of WGL Holdings, Inc. (the "Company") has
authorized and approved the 1998 Stock Option Plan (the "Plan"), which will be
submitted to the stockholders of the Company for their approval. The Plan
provides for the grant of options to certain key employees of the Company and
any parent and subsidiary corporations of the Company. Pursuant to the Plan, the
Compensation Committee of the Board of Directors of the Company (the
"Committee") has approved, subject to stockholder approval, the grant to you of
an option to purchase shares of Common Stock, par value $.001 per share, of the
Company (the "Shares") on the terms and subject to the conditions set forth in
the Plan and in this grant letter. A copy of the Plan is annexed hereto as
Exhibit A and shall be deemed a part hereof as if fully set forth herein. Unless
the context otherwise requires, all terms defined in the Plan shall have the
same meanings when used herein. The Shares purchasable pursuant to this Option
are subject to restrictions set forth in the Stockholders Agreement (as defined
in Paragraph 8 hereof). Such Shares may be required to be surrendered to the
Company under certain circumstances described in the Stockholders Agreement.

            1. Grant of Option. The Company hereby grants to you, as a matter of
separate inducement and not in lieu of any salary or other compensation for your
services, the right and option (the "Option") to purchase, in accordance

                                       1
<PAGE>

with the terms and conditions set forth in the Plan, but subject to the
limitations set forth herein and in the Plan, an aggregate of __________ Shares
of the Company (the "Total Shares") at a price of $____ per Share, such option
price being, in the judgment of the Committee, not less than one hundred percent
(100%) of the fair market value of such Share at the date hereof. The Option is
intended to qualify as an "incentive stock option" within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended, but it is specifically
understood that no warranty is made to you as to such qualification.

            2. Vesting of Option. Subject to the provisions and limitations of
the Plan, the number of Shares of stock for which this Option may be exercised
shall be determined in accordance with this Section 2.

            a. Establishment of EBITDA Targets. For each of the fiscal years
            ending on December 31 of 1998, 1999, 2000, 2001 and 2002, the
            Company has established target amounts (each a "Target Amount"),
            floor amounts (each, a "Floor Amount") and ceiling amounts (each, a
            "Ceiling Amount") for EBITDA (as defined below) set forth below:

                 Floor Amount      Target Amount     Ceiling Amount
                 ------------      -------------     --------------

       1998       $20,100,000       $22,100,000       $24,100,000

       1999       $32,000,000       $36,000,000       $40,000,000

       2000       $36,000,000       $40,000,000       $44,000,000

       2001       $40,000,000       $46,000,000       $52,000,000

       2002       $44,000,000       $50,000,000       $56,000,000

            b. If EBITDA Equals Taraet Amount. If the EBITDA of the Company for
            a fiscal year is equal to the Target Amount for such fiscal year,
            this Option may be exercised to purchase _________ Shares (i.e., 20%
            of the Total Shares), subject to adjustment in accordance with
            Section 2(f) and subject to Section 2(g).

            c. If EBITDA Is At Least Equal to Floor Amount But Less Than Target
            Amount. If the EBITDA of the Company for a fiscal year is at least
            equal to the

                                       2
<PAGE>

            Floor Amount, but less than the Target Amount, for such fiscal year,
            then, subject to adjustment in accordance with Section 2(f) and
            subject to Section 2(g), this Option may be exercised to purchase a
            number of Shares equal to the sum of (i) _________ (i.e., 15% of the
            Total Shares) plus (ii) that number of Shares equal to the product
            of (x) _________ (i.e., 5% of the Total Shares) and (y) a fraction,
            the numerator of which shall be equal to the excess of the EBITDA of
            the Company for such fiscal year over the Floor Amount for such
            fiscal year and the denominator of which is equal to the excess of
            Target Amount for such fiscal year over the Floor Amount for such
            fiscal year.

            d. If EBITDA Exceeds Target Amount. If the EBITDA of the Company for
            a fiscal year exceeds the Target Amount for such fiscal year, then,
            subject to adjustment in accordance with Section 2(f) and subject to
            Section 2(g), this Option may be exercised to purchase a number of
            Shares equal to the sum of (i) _________ (i.e., 20% of the Total
            Shares) plus (ii) that number of shares equal to the product of (x)
            _________ (i.e., 5% of the Total Shares) and (y) a fraction (which
            shall not be greater than 1), the numerator of which shall be equal
            to the excess of the EBITDA of the Company for such fiscal year over
            the Target Amount for such fiscal year and the denominator of which
            shall be equal to the excess of the Ceiling Amount for such fiscal
            year over the Target Amount for such fiscal year.

            e. If EBITDA Exceeds Ceiling Amount; Carryback to Prior Year. If the
            EBITDA of the Company for such fiscal year exceeds the Target Amount
            for such fiscal year (such excess, an "Excess Amount"), and the
            Target Amount for the immediately preceding fiscal year (the "Prior
            Year") exceeded the EBITDA of the Company for the Prior Year (such
            excess, a "Prior Year Shortfall Amount"), the (i) Excess Amount for
            such fiscal year may be carried back to the Prior Year (but in an
            amount not in excess of the Prior Year Shortfall Amount), (ii) the
            EBITDA for such Prior Year shall be redetermined, and (iii) the
            number of Shares for which this Option may be exercised

                                       3
<PAGE>

            shall be increased based upon the EBITDA for the Prior Year as so
            redetermined.

            f. IF EBITDA Is Less Than Floor Amount; Carryforward from Prior
            Year. If the Floor Amount for a fiscal year (a "Current Year")
            exceeds the EBITDA of the Company for such Current Year, this Option
            shall not become exercisable for any Shares in respect of such
            Current Year; provided, however, that if the EBITDA of the Company
            for the Prior Year exceeded the Target Amount for the Prior Year
            (such excess, a "Carryforward Amount"), then you may elect that (i)
            the Carryforward Amount for the Prior Year shall be carried forward
            to such Current Year (but in an amount not in excess of the amount
            by which the Target Amount for the Current Year exceeds the EBITDA
            of the Company for such Current Year), (ii) the EBITDA for the
            Current Year shall be redetermined to be an amount equal to the sum
            of the EBITDA for such Current Year and the amount so carried
            forward pursuant to clause (i), (iii) the EBITDA for the Prior Year
            shall be redetermined to be an amount equal to the EBITDA for such
            Prior Year, reduced by the amount carried forward pursuant to clause
            (i), and (iv) the number of Shares for which this Option may be
            exercised shall be adjusted based upon the EBITDA for the Current
            Year and the Prior Year as so redetermined in accordance with
            clauses (ii) and (iii), respectively.

            g. Maximum Limitation. Notwithstanding anything to the contrary set
            forth herein, (i) in no event shall the Option become exercisable
            for more than _________ (i.e., 100% of the Total Shares) Shares in
            the aggregate and (ii) in no event shall the Option become
            exercisable pursuant to Section 2(e) or Section 2(f) for more than
            ___________ Shares (i.e., 40% of the Total Shares) in the aggregate
            in any two-year period.

            h. Definition of EBITDA. For purposes of this Section 2, "EBITDA"
            for a fiscal year (i) shall mean the consolidated net income of the
            Company and its subsidiaries for such fiscal year, determined in
            accordance with U.S. generally accepted accounting principles
            consistently applied in accordance with the accounting

                                       4
<PAGE>

            methodologies and procedures of the Company and its subsidiaries
            plus (a) provisions for taxes based on income or profits to the
            extent deducted in computing such consolidated net income, plus (b)
            consolidated interest expense of the Company and its subsidiaries
            for such period, whether paid or accrued, to the extent any such
            expense was deducted in computing such consolidated net income, plus
            (c) depreciation, amortization and other non-cash expenses of the
            Company and its subsidiaries for such period (excluding any non-cash
            expenses to the extent it represents an accrual or reserve for cash
            expenses in any future period or amortization of a prepaid cash
            expenses paid in a prior period) to the extent any such expense was
            deducted in computing such consolidated net income, and (ii) shall
            be subject to adjustment as set forth in paragraph i. below.

            i. Determinations of the Committee. From time to time, the Committee
            in its sole discretion and in administering the Plan may make
            adjustments in the EBITDA for a fiscal year so that extraordinary or
            unusual charges or credits, acquisitions, mergers, consolidations
            and other corporate transactions and other elements of or factors
            influencing the calculation of EBITDA do not distort or affect the
            operation of the Plan in a manner inconsistent with its purpose. The
            decisions of the Committee as to the computation of EBITDA and other
            determinations to be made under the Plan shall be final, conclusive
            and binding on all parties, including optionholders.

            j. Notice. As soon as practicable following receipt by the Company
            of audited financial statements of the Company for a fiscal year,
            the Company shall notify you of the amount of EBITDA achieved by the
            Company for such fiscal year. Upon receipt of such notice by you,
            this Option shall become exercisable in respect of the number of
            Shares determined in accordance with Section 2 hereof.

            k. Vesting of Remaining Shares. Notwithstanding anything to the
            contrary herein, on ________________ 2008 (i.e., the date which is
            90 days prior to the tenth anniversary of the date

                                       5
<PAGE>

            of grant) this Option shall become exercisable for the excess of (i)
            the number of Total Shares over (ii) the number of Shares, if any,
            for which this Option shall have become exercisable pursuant to
            paragraphs b., c., d. or e. of this Section 2.

            1. Fractional Shares. In no event shall you exercise this Option for
            a fraction of a Share.

            3. Termination of Option. The unexercised portion of the Option
granted herein will automatically and without notice terminate and become null
and void upon the earliest to occur of the following:

            a. the expiration of ten (10) years from the date of grant of this
            Option;

            b. the date of termination of your employment if your employment (i)
            is terminated by you, unless you voluntarily retire from the Company
            or a subsidiary corporation of the Company and the Board of
            Directors approves such retirement, or (ii) is terminated by the
            Company or subsidiary corporation of the Company for cause (as
            defined in the Plan);

            c. the expiration of 30 days from the date of termination by the
            Company or its subsidiaries of your employment other than for cause
            (as defined in the Plan), except that this Option will be
            exercisable during such 30-day period only to the extent that it
            would have been exercisable immediately prior to the termination of
            your employment;

            d. the expiration of 6 months after the termination of your
            employment by reason of your disability (as defined in the Plan),
            except that this Option will be exercisable during such 6-month
            period only to the extent that it would have been exercisable
            immediately prior to the termination of your employment;

            e. the expiration of one (1) year after your death if your death
            occurs during your employment or during the six (6) month or thirty
            (30) day period, as the case may be, specified in clauses (c) and/or
            (d) above, except that this Option will

                                       6
<PAGE>

            be exercisable during such 1-year period only to the extent that it
            would have been exercisable immediately prior to your death; or

            f. as determined by the Committee in accordance with the Plan, upon
            a Change of Control (as defined in the Plan);

provided, however, that none of the events described above shall extend the
period of exercisability of this Option beyond the day immediately preceding the
tenth anniversary of the date hereof.

            4. Non-transferability of Option. This Option is not transferable by
you otherwise than by will or the laws of descent and distribution, and is
exercisable, during your lifetime, only by you. This Option may not be assigned,
transferred (except by will or the laws of descent and distribution), pledged or
hypothecated in any way (whether by operation of law or otherwise) and shall not
be subject to execution, attachment or similar proceeding. Any attempted
assignment, transfer, pledge, hypothecation or other disposition of this Option
contrary to the provisions hereof, and the levy of any attachment or similar
proceeding upon the Option, shall be null and void and without effect.

            5. Exercise of Option.

            a. Purchase of Shares. Any exercise of this Option shall be in
            writing addressed to the Secretary of the Company at the principal
            place of business of the Company, shall be substantially in the form
            attached hereto as Exhibit B and shall be accompanied by a certified
            or bank cashier's check to the order of the Company in the full
            amount of the purchase price of the Shares so purchased.

            b. Legends. If the Company, in its sole discretion, shall determine
            that it is necessary, to comply with applicable securities laws, the
            certificate or certificates representing the Shares purchased
            pursuant to the exercise of this Option shall bear an appropriate
            legend in form and substance, as determined by the Company, giving
            notice of applicable restrictions on transfer under or in respect of
            such laws. Further, you hereby acknowledge that the Company may
            endorse a legend upon the certificate

                                       7
<PAGE>

            evidencing the Shares as the Company, in its sole discretion,
            determines to be necessary and appropriate to implement the terms of
            the Plan.

            c. Investment Intent. You hereby covenant and agree with the Company
            that if, at the time of exercise of this Option, there does not
            exist a Registration Statement on an appropriate form under the
            Securities Act of 1933, as amended (the "Act"), which Registration
            Statement shall have become effective and shall include a prospectus
            which is current with respect to the Shares subject to this Option
            (i) that you will represent that you are purchasing the Shares for
            your own account and not with a view to the resale or distribution
            thereof and (ii) that any subsequent offer for sale or sale of any
            such Shares shall be made either pursuant to (x) a Registration
            Statement on an appropriate form under the Act, which Registration
            Statement shall have become effective and shall be current with
            respect to the shares being offered and sold, or (y) a specific
            exemption from the registration requirements of the Act, but in
            claiming such exemption, you shall, if requested by the Company,
            prior to any offer for sale or sale of such Shares, obtain a
            favorable written opinion from counsel for or approved by the
            Company as to the applicability of such exemption.

            6. Withholding Taxes. As provided in the Plan, the Company may
withhold or cause to be withheld from sums due or to become due to you from the
Company or a subsidiary corporation or affiliate thereof an amount necessary to
satisfy its obligation (if any) to withhold taxes incurred by reason of the
exercise of this Option or the disposition of Shares acquired hereunder, or may
require you to reimburse the Company in such amount and may make such
reimbursement a condition to the delivery of the Shares pursuant to the exercise
of this Option.

            7. Agreement Subject to the Plan. You and the Company agree that
this agreement is subject to, and that you and the Company will both be bound
by, all terms, conditions, limitations and restrictions contained in the Plan,
which shall be controlling in the event of any conflicting or inconsistent
provisions.

                                       8
<PAGE>

            8. Stockholders Agreement. It is a condition to the effectiveness of
this Option and the obligation of the Company to issue any Shares hereunder that
you shall have executed, on or prior to the date hereof, the Stockholders
Agreement, dated as of July 16, 1997, by and among the Company and the
stockholders named therein (the "Stockholders Agreement"). If you have not
executed the Stockholders Agreement on or before the date hereof, this Option
shall automatically and without further notice terminate and be null and void.

            Please indicate your acceptance of all the terms and conditions of
this Option and the Plan by signing and returning a copy of this letter.

                                     Very truly yours,

                                     WGL HOLDINGS, INC.

ACCEPTED:

_______________________________
Signature of Employee

_______________________________
Name of Employee - Please Print

Date:________

                                       9
<PAGE>

                                    Exhibit A

                         1998 Employee Stock Option Plan

                                       10
<PAGE>

                                    Exhibit B

                                 Exercise Letter

                                                  [Date]

WGL Holdings, Inc.
10,000 Wehrle Drive
Clarence, New York 14031

Attention: Corporation Secretary

      Re: Standard Incentive Stock Option
          Under the 1998 Stock Option Plan

Dear Sir:

            I am the holder of a "Standard" Option granted to me under the
above-referenced Plan by WGL Holdings, Inc. (the "Company") on _____, 199_ to
purchase shares of Common Stock of the Company ("Shares") at a price of $_____
per share. I hereby exercise that option with respect to ___________ Shares, the
total purchase price for which is $____________

            On ________________ [a business day not more than 15 days from the
date of this letter], I will present a certified check payable to the order of
the Company in the amount of $_______________ representing the total purchase
price for the Shares. The certificate or certificates representing the Shares
should be registered in my name and upon the presentation of that check [and
____________ shares of Common Stock], the Shares should be [delivered to me]
[forwarded to me at the address indicated below].

            I hereby agree to pay the full amount of all withholding taxes which
the Company or any subsidiary or parent corporation is required to withhold in
connection with the exercise of this option or the disposition of Shares
acquired hereunder and further authorize the Company, or the subsidiary or
parent corporation, to withhold from any cash compensation paid to me or in my
behalf an amount sufficient to discharge the Federal, State or local income or
employment tax withholding obligation to which the Company, or the subsidiary or
parent corporation, becomes

                                       11
<PAGE>

subject by reason of the exercise of this option. I agree that the corporation
by which I am employed may, in its discretion, hold the stock certificate to
which I become entitled upon exercise of this option, as security for the
payment of the aforementioned withholding tax liability, until cash sufficient
to pay that liability has been accumulated.

            Please acknowledge receipt of the exercise of my stock option on the
attached copy of this letter.

                                     Very truly yours,

                                     ___________________________________________
                                     Signature

                                     ___________________________________________
                                     Please Print name

                                     ___________________________________________
                                     Address

                                     ___________________________________________

                                     ___________________________________________

                                     ___________________________________________
                                     Social Security Number

RECEIPT ACKNOWLEDGED:
WGL HOLDINGS, INC.

By:_____________________________

                                       12
<PAGE>

                                                             Non-Standard Option

                               WGL Holdings, Inc.
                               10,000 Wehrle Drive
                            Clarence, New York 14031

                                              September 24, 1999

Name
Address
Address

      Re: Grant of Nonqualified Option

Dear

      The Board of Directors of WGL Holdings, Inc. (the "Company") has
authorized and approved the 1998 Stock Option Plan (the "Plan"), which will be
submitted to the stockholders of the Company for their approval. The Plan
provides for the grant of options to certain key employees of the Company and
any parent and subsidiary corporations of the Company. Pursuant to the Plan, the
Compensation Committee of the Board of Directors of the Company (the
"Committee") has approved, subject to stockholder approval, the grant to you of
an option to purchase shares of Common Stock, par value $.O01 per share, of the
Company (the "Shares)") on the terms and subject to the conditions set forth in
the Plan and in this grant letter. A copy of the Plan is annexed hereto as
Exhibit A and shall be deemed a part hereof as if fully set forth herein. Unless
the context otherwise requires, all terms defined in the Plan shall have the
same meanings when used herein. The Shares purchasable pursuant to this Option
are subject to restrictions set forth in the Stockholders Agreement (as defined
in Paragraph 8 hereof). Such Shares may be required to be surrendered to the
Company under certain circumstances described in the Stockholders Agreement.

            1. Grant of Option. The Company hereby grants to you, as a matter of
separate inducement and not in lieu of any salary or other compensation for your
services, the right and option (the "Option") to purchase, in accordance with
the terms and conditions set forth in the Plan, but subject to the limitations
set forth herein and in the Plan, an aggregate of ______Shares of the Company
(the "Total Shares") at a price of $3.00 per Share, such option price being, in
the judgment of the Committee, not less than one hundred percent (100%) of the
fair market value of such Share at the date hereof. The Option will be a
Non-Qualified Option and is not intended to qualify as an "incentive stock
option" within the meaning of Section 42 of the Internal Revenue Code of 1986,
as amended.

                                       1
<PAGE>

            2. Vesting of Option

                  a. Vesting Dates and Amounts. Subject to clause (b) of this
            Section 2 and to the other provisions and limitations of the Plan,
            the Option shall become exercisable for Shares on the dates and in
            the amounts set forth in the following table:

                                                    Percentage of Original
                 Date Vested                            Option Vested
                 -----------                            -------------

            December 31,1999                               33 1/3%
            December 31,2000                               33 1/3%
            December 31,2001                               33 1/3%

                  b. Additional Limitations on Exercisability. In addition to
            the time limitations on exercisability set forth in clause (a) of
            this Section 2, the Option will not be exercisable for any Shares
            vested under said clause (a) until the first to occur of the
            following: (i) a Liquidity Event (as hereinafter defined), (ii) your
            death, retirement or termination of employment or (iii) the fifth
            anniversary of the Grant of Option. For purposes hereof, "Liquidity
            Event" shall mean a Qualified IPO (as defined in the Stockholders
            Agreement) or a Change of Control (as defined in the Plan) [on
            account of which the Committee shall have determined to terminate
            the Option].

                  c. Cumulative Effect of Vesting. The right to purchase Shares
            shall be cumulative so that when the right to purchase any Shares
            has vested under clauses (a) and (b) of this Section, such Shares or
            any part thereof may be purchased at any time thereafter until the
            expiration or termination of the Option.

                  d. Fractional Shares. In no event shall you exercise this
            Option for a fraction of a Share.

            3. Termination of Option. The unexercised portion of the Option
granted herein will automatically and without notice terminate and become null
and void upon the earliest to occur of the following:

                  a. the expiration of ten (10) years from the date of grant of
            this Option;

                  b. the date of termination of your employment if your
            employment (i) is terminated by you, unless you voluntarily retire
            from the Company or a subsidiary corporation of the Company and the
            Board of Directors approves such retirement, or (ii) is terminated
            by the Company or a subsidiary corporation of the Company for cause
            (as defined in the Plan);

                  c. the expiration of 30 days from the date of termination by
            the Company or its subsidiaries of your employment other than for
            cause (as defined in the Plan), except that this Option will be
            exercisable during such 30-day period only to the extent that it
            would have been exercisable immediately prior to the termination of
            your employment;

                                       2
<PAGE>

                  d. the expiration of 6 months after the termination of your
            employment by reason of your disability (as defined in the Plan),
            except that this Option will be exercisable during such 6-month
            period only to the extent that it would have been exercisable
            immediately prior to the termination of your employment;

                  e. the expiration of one (1) year after your death if your
            death occurs during your employment or during the six (6) month or
            thirty (30) day period, as the case may be specified in clauses (c)
            and/or (d) above, except that this Option will be exercisable during
            such 1-year period only to the extent that it would have been
            exercisable immediately prior to your death; or

                  f. as determined by the Committee in accordance with the Plan,
            upon a Change of Control (as defined in the Plan); provided however,
            that none of the events described above shall extend the period of
            exercisability of this Option beyond the day immediately preceding
            the tenth anniversary of the date hereof.

            4. Non-Transferability of Option. This Option is not transferable by
you otherwise than by will or the laws of descent and distribution, and is
exercisable, during your lifetime, only by you. This Option may not be assigned,
transferred (except by will or the laws of descent and distribution), pledged or
hypothecated in any way (whether by operation of law or otherwise) and shall not
be subject to execution, attachment or similar proceeding. Any attempted
assignment, transfer, pledge, hypothecation or other disposition of this Option
contrary to the provisions hereof, and the levy of any attachment or similar
proceeding upon the Option, shall be null and void and without effect.

            5. Exercise of Option.

                  a. Purchase of Shares. Any exercise of the Option shall be in
            writing addressed to the Secretary of the Company at the principal
            place of business of the Company, shall be substantially in the form
            attached hereto as Exhibit B and shall be accompanied by a certified
            or bank cashiers check to the order of the Company in the full
            amount of the purchase price of the Shares so purchased.

                        You may also pay the purchase price of the Shares, in
            whole or in part, by delivering to the Company shares of common
            stock of the Company owned by you for at least six months having a
            fair market value at the date of exercise of the Option (together
            with any portion of the purchase price paid in cash) equal to the
            purchase price of the Shares so purchased.

                  b. Legends. If the Company, in its sole discretion, shall
            determine that it is necessary, to comply with applicable securities
            laws, the certificate or certificates representing the Shares
            purchased pursuant to the exercise of this Option shall bear an
            appropriate legend in form and substance, as determined by the
            Company, giving notice of applicable restrictions on transfer under
            or in respect of such laws. Further, you hereby acknowledge that the
            Company may endorse a legend upon the certificate evidencing the
            Shares as the Company, in its sole discretion, determines to be
            necessary and appropriate to implement the terms of the Plan.

                                       3
<PAGE>

                  c. Investment Intent. You hereby covenant and agree with the
            Company that if, at the time of exercise of this Option, there does
            not exist a Registration Statement on an appropriate form under the
            Securities Act of 1933, as amended (the "Act") which Registration
            Statement shall have become effective and shall include a prospectus
            which is current with respect to the Shares subject to this Option
            (i) that you will represent that you are purchasing the Shares for
            your own account and not with a view to the resale of distribution
            thereof and (ii) that any subsequent offer for sale or sale of any
            such Shares shall be made either pursuant to (x) a Registration
            Statement on an appropriate form under the Act, which Registration
            Statement shall have become effective and shall be current with
            respect to the Shares being offered and sold, or (y) a specific
            exemption from the registration requirements of the Act, but in
            claiming such exemption, you shall, if requested by the Company,
            prior to any offer for sale or sale of such Shares, obtain a
            favorable written opinion from counsel for or approved by the
            Company as to the applicability of such exemption.

                  d. Restrictions Applicable Until the Company is Subject to
            Federal Reporting Requirements. Notwithstanding any other provisions
            of this Option or the Plan, you hereby acknowledge and agree that
            unless and until the Company has become a reporting company with
            respect to any class of its equity securities under the Securities
            Exchange Act of 1934, as amended: (i) this Option may not be
            exercised prior to the first day of the calendar month in which its
            expiration date occurs; (ii) at any time prior to the expiration
            date of this Option, the Company has the right, exercisable at its
            discretion, to cancel and purchase this Option (or any portion
            hereof) for an amount equal to the excess, if any, of the fair
            market value (as defined in the Plan) of the Shares subject to the
            Option over the exercise price of the Option on the date the Company
            exercises such right. The Company's right to cancel and purchase the
            Option under this paragraph is exercised when the Company gives
            written notice to you of the cancellation and purchase of the Option
            under this paragraph specifying the fair market value of the Shares
            subject to the Option on which basis the purchase price shall be
            calculated and a date, not later than the Option's expiration date,
            on which the purchase price is to be paid.

            6. Withholding Taxes. As provided in the Plan, the Company may
withhold or cause to be withheld from sums due or to become due to you from the
Company or a subsidiary corporation or affiliate thereof an amount necessary to
satisfy its obligation (if any) to withhold taxes incurred by reason of the
exercise of this Option or the disposition of Shares acquired hereunder, or may
require you to reimburse the Company in such amount and may make such
reimbursement a condition to the delivery of the Shares pursuant to the exercise
of this Option.

            7. Agreement Subject to the Plan. You and the Company agree that
this agreement is subject to, and that you and the Company will both be bound
by, all terms, conditions, limitations and restrictions contained in the Plan,
which shall be controlling in the event of any conflicting or inconsistent
provisions.

                                       4
<PAGE>

            8. Stockholders Agreement. It is a condition to the effectiveness of
this Option and the obligation of the Company to issue any Shares hereunder that
you shall have executed, on or prior to the date hereof, the Stockholders
Agreement, dated as of July 16, 1997, by and among the Company and the
stockholders named therein (the "Stockholders Agreement"). If you have not
executed the Stockholders Agreement on or before the date hereof, this Option
shall automatically and without further notice terminate and be null and void.

            9. Restrictions on Transfer. You acknowledge and agree that the
Company may require you, as a condition to the exercise of the Option, to become
bound by any reasonable agreement restricting transfer of the Shares received on
exercise of the Option or providing the Company with a right of first purchase
or other similar right.

                                       5
<PAGE>

Please indicate your acceptance of all the terms and conditions of this Option
and the Plan by signing and returning a copy of this letter.

                               Very truly yours,

                               WGL HOLDINGS, INC.

                               By:______________________________________________
                               Name: Larry T. DeAngelo
                               Title: Vice President, Administration & Secretary

ACCEPTED:

_______________________________
Signature of Employee

_______________________________
Name of Employee - Please Print

Date___________________________

                                    Exhibit A

                        1998 Employee Stock Option Plan

                                       7
<PAGE>

                                    Exhibit B

                                 Exercise Letter

                                                        Date________________

WGL Holdings, Inc.
10,000 Wehrle Drive
Clarence, New York 14031

Attention: Corporation Secretary

      Re: Nonqualified Stock Option
          Under the 1998 Stock Option Plan

Dear Sir:

      I am the holder of a "Non-Standard" Option granted to me under the above
referenced Plan by WGL Holdings, Inc. (the "Company") on _____________ to
purchase _______ shares of Common Stock of the Company ("Shares") at a price of
$3.00 per share. I hereby exercise that option with respect to ______________
Shares, the total purchase price for which is $____________________________.

      On ______________[a business day not more than 15 days from the date of
this letter], I will present a certified check payable to the order of the
Company in the amount of $___ representing the total purchase price for the
Shares. The certificate or certificates representing the Shares should be
registered in my name and upon the presentation of that check [and shares of
Common Stock]. The Shares should be [delivered to me] [forwarded to me at the
address indicated below].

      I hereby agree to pay the full amount of all withholding taxes which the
Company or any subsidiary or parent corporation is required to withhold in
connection with the exercise of this option or the disposition of Shares
acquired hereunder and further authorize the Company, or the subsidiary or
parent corporation, to withhold from any cash compensation paid to me or in my
behalf an amount sufficient to discharge the Federal, State, or local income or
employment tax withholding obligation to which the Company, or the subsidiary or
parent corporation, becomes subject by reason of the exercise of this Option. I
agree that the corporation by which I am employed may, in its discretion, hold
the stock certificate to which I become entitled upon exercise of this Option,
as security for the payment of the aforementioned withholding tax liability,
until cash sufficient to pay that liability has been accumulated.

                                       8
<PAGE>

      Please acknowledge receipt of the exercise of my stock option on the
attached copy of this letter.

                                           Very truly yours,

                                           WGL HOLDINGS, INC.

                                           --------------------------------
                                           Signature

                                           --------------------------------
                                           Please Print Name

                                           --------------------------------
                                           Address

                                           --------------------------------

                                           --------------------------------

                                           --------------------------------
                                           Social Security Number

                                           --------------------------------

RECEIPT ACKNOWLEDGED:
WGL HOLDINGS, INC.

By:
   --------------------------------

Name:
     ------------------------------

Title:
      -----------------------------

                                       9

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00010-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00010-of-00352.parquet"}]]