Document:

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                                                                    EXHIBIT 10.2

                              SUPERIOR TELECOM INC.

                           STOCK COMPENSATION PLAN FOR
                             NON-EMPLOYEE DIRECTORS

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                                             TABLE OF CONTENTS

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                                                                                                                 PAGE
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<S>                <C>                                                                                            <C>
 ARTICLE  I.       .................................................................................PURPOSE        1

 ARTICLE  II.      .............................................................................DEFINITIONS        1

 ARTICLE  III.     ..........................................................................ADMINISTRATION        3

 ARTICLE  IV.      ..................................................SHARES; ADJUSTMENT UPON CERTAIN EVENTS        4

 ARTICLE  V.       ...............................................................................ELECTIONS        5

 ARTICLE  VI.      ........................................................................RESTRICTED STOCK        7

 ARTICLE  VII.     ...........................................................................STOCK OPTIONS        9

 ARTICLE  VIII.    .............................................................TERMINATION OF DIRECTORSHIP        10

 ARTICLE  IX.      .....................................................................NON-TRANSFERABILITY        11

 ARTICLE  X.       ............................................................CHANGE IN CONTROL PROVISIONS        11

 ARTICLE  XI.      ....................................................TERMINATION OR AMENDMENT OF THE PLAN        12

 ARTICLE  XII.     ...........................................................................UNFUNDED PLAN        13

 ARTICLE  XIII.    ......................................................................GENERAL PROVISIONS        13

 ARTICLE XIV.      ............................................................................TERM OF PLAN        16
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                              SUPERIOR TELECOM INC.
               STOCK COMPENSATION PLAN FOR NON-EMPLOYEE DIRECTORS
               (AMENDED AND RESTATED EFFECTIVE AS OF MAY 1, 2000)

                                    ARTICLE I

                                     PURPOSE

         The purpose of the Plan is to enhance the profitability and value of
the Company for the benefit of its stockholders by enabling the Company to: (i)
require Non-Employee Directors to elect either shares of Restricted Stock or
Stock Options with respect to 50% of their Retainer Fees; and (ii) permit
Non-Employee Directors to elect either shares of Restricted Stock or Stock
Options, in lieu of cash payment of their Retainer Fees or Meeting Fees, thereby
attracting, retaining and rewarding Non-Employee Directors and strengthening the
mutuality of interests between Non-Employee Directors and the Company's
stockholders.

                                   ARTICLE II

                                   DEFINITIONS

         For purposes of this Plan, the following terms shall have the following
meanings:

         II.1 "AWARD" shall mean any award under this Plan of any:
(i) Restricted Stock; or (ii) Stock Option.

         II.2 "BOARD" shall mean the Board of Directors of the Company.

         II.3 "CAUSE" shall mean an act or failure to act that constitutes
"cause" for removal of a director under applicable Delaware law.

         II.4 "CHANGE IN CONTROL" shall have the meaning set forth Section 10.2.

         II.5 "CODE" shall mean the Internal Revenue Code of 1986, as amended.
Any reference to any section of the Code shall also be a reference to any
successor provision

         II.6 "COMMON STOCK" shall mean common stock, $.01 par value per share,
of the Company.

         II.7 "COMPANY" shall mean Superior TeleCom Inc. or any successor
corporation by merger, consolidation or transfer of assets substantially as
a whole.

         II.8 "EFFECTIVE DATE" shall mean January 1, 1999. The amendments
contained herein shall become effective on May 1, 2000.

         II.9 "EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.

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         II.10 "FAIR MARKET VALUE" shall mean for purposes of this Plan, unless
otherwise required by any applicable provision of the Code or any regulations
issued thereunder, as of any date, the last sales price reported for the Common
Stock on the applicable date: (i) as reported by the principal national
securities exchange in the United States on which it is then traded or the
Nasdaq Stock Market, Inc.; or (ii) if not traded on any such national securities
exchange or the Nasdaq Stock Market, Inc., as quoted on an automated quotation
system sponsored by the National Association of Securities Dealers. If the
Common Stock is not readily tradable on a national securities exchange, the
Nasdaq Stock Market, Inc. or any system sponsored by the National Association of
Securities Dealers, its Fair Market Value shall be set in good faith by the
Board on the advice of a registered investment adviser (as defined under the
Investment Advisers Act of 1940). Notwithstanding anything herein to the
contrary, if selected by the Board, "Fair Market Value" means the price for
Common Stock set by the Board in good faith based on reasonable methods set
forth under Section 422 of the Code and the regulations thereunder including,
without limitation, a method utilizing the average of prices of the Common Stock
reported on the principal national securities exchange on which it is then
traded during a reasonable period designated by the Board.

         II.11 "MEETING FEE(S)" shall mean any fees to which a Non-Employee
Director is entitled for attending Board meetings (including by telephonic
means) or for attending the meetings of any Board committee (including by
telephonic means) of which the Non-Employee Director is a member. Meeting Fees
shall not include expense reimbursements, amounts realized upon the exercise of
a Stock Option, Restricted Stock or any other amounts paid to the Non-Employee
Director.

         II.12 "NON-EMPLOYEE DIRECTOR" shall mean any non-employee director of
the Company who is not an employee of the Company. Any director who acts on
behalf of the Company as an officer but who does not receive any compensation
for such services shall be treated as a non-employee for purposes of eligibility
hereunder.

         II.13 "PLAN" shall mean the Superior TeleCom Inc. Stock Compensation
Plan for Non-Employee Directors, as may be amended from time to time.

         II.14 "RESTRICTED STOCK" shall mean an Award of shares of Common Stock
under this Plan that is subject to the restrictions under Article VI.

         II.15 "RETAINER FEE(S)" shall mean the fee to which a Non-Employee
Director is entitled for service on the Board as a director during a fiscal year
of the Company. Retainer Fees shall not include expense reimbursements, amounts
realized upon the exercise of a Stock Option, Restricted Stock or any other
amounts paid to the Non-Employee Director.

         II.16 "RETIREMENT" shall mean a Non-Employee Director's attainment of
age sixty-five (65).

         II.17 "RULE 16B-3" shall mean Rule 16b-3 under Section 16(b) of the
Exchange Act as then in effect or any successor provisions.

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         II.18 "STOCK OPTION" shall mean an option to purchase shares of Common
Stock granted to Non-Employee Directors pursuant to this Plan. No Stock Option
awarded under this Plan is intended to be an "incentive stock option" within the
meaning of Section 422 of the Code.

         II.19 "TERMINATION OF DIRECTORSHIP" shall mean that the Non-Employee
Director has ceased to be a director (whether as a non-employee director or an
employee director) of the Company.

         II.20 "TRANSFER" or "TRANSFERRED" shall mean anticipate, alienate,
attach, sell, assign, pledge, encumber, charge or otherwise transfer.

                                   ARTICLE III

                                 ADMINISTRATION

         III.1 THE BOARD.  The Plan shall be administered and interpreted by
the Board.

         III.2 DUTIES OF THE BOARD. The Board shall have full authority to
interpret the Plan and to decide any questions and settle all controversies and
disputes that may arise in connection with the Plan; to establish, amend and
rescind rules for carrying out the Plan; to administer the Plan, subject to its
provisions; to prescribe the form or forms of instruments evidencing Awards and
any other instruments required under the Plan and to change such forms from time
to time; and to make all other determinations and to take all such steps in
connection with the Plan and the Awards as the Board, in its sole discretion,
deems necessary or desirable.

         III.3 ADVISORS. The Company or the Board may employ such legal counsel,
consultants and agents as it may deem desirable for the administration of the
Plan, and may rely upon any advice or opinion received from any such counsel or
consultant and any computation received from any such consultant or agent.
Expenses incurred for the engagement of such counsel, consultant or agent shall
be paid by the Company.

         III.4 DECISIONS FINAL. Any decision, interpretation or other action
made or taken in good faith by or at the direction of the Company or the Board
(or any of its members) arising out of or in connection with the Plan shall be
within the absolute discretion of the Company or the Board, as the case may be,
and shall be final, binding and conclusive on the Company and all Non-Employee
Directors and their respective heirs, executors, administrators, successors and
assigns.

                                   ARTICLE IV

                     SHARES; ADJUSTMENT UPON CERTAIN EVENTS

         IV.1  SHARES TO BE DELIVERED. Shares to be issued under the Plan shall
be made available only from issued shares of Common Stock reacquired by the
Company and held in treasury.

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         IV.2  ADJUSTMENTS UPON CERTAIN EVENTS.

                  (a) ADJUSTMENTS. The existence of the Plan and any Award
         granted hereunder shall not affect in any way the right or power of the
         Board or the stockholders of the Company to make or authorize any
         adjustment, recapitalization, reorganization or other change in the
         Company's capital structure or its business, any merger or
         consolidation of the Company, any issue of bonds, debentures, preferred
         or prior preference stocks ahead of or affecting Common Stock, the
         dissolution or liquidation of the Company or any sale or transfer of
         all or part of the assets or business of the Company, or any other
         corporate act or proceeding.

                  (b) CAPITAL STRUCTURE. In the event of (i) any such change in
         the capital structure or business of the Company by reason of any stock
         dividend or distribution, stock split or reverse stock split,
         recapitalization, reorganization, merger, consolidation, split-up,
         combination or exchange of shares, distribution with respect to its
         outstanding Common Stock or capital stock other than Common Stock, sale
         or transfer of all or part of its assets or business, reclassification
         of its capital stock, or any similar change affecting the Company's
         capital structure or business and (ii) the Board determines an
         adjustment is appropriate under the Plan, then the aggregate number and
         kind of shares which thereafter may be issued under this Plan, the
         number and kind of shares to be issued upon exercise of an outstanding
         Stock Option granted under this Plan and the purchase price thereof
         shall be appropriately adjusted consistent with such change in such
         manner as the Board may deem equitable to prevent substantial dilution
         or enlargement of the rights granted to, or available for, Non-Employee
         Directors under this Plan or as otherwise necessary to reflect the
         change, and any such adjustment determined by the Board shall be
         binding and conclusive on the Company and all Non-Employee Directors
         and employees and their respective heirs, executors, administrators,
         successors and assigns.

                  (c) FRACTIONAL SHARES. Fractional shares of Common Stock
         resulting from any adjustment in Awards pursuant to Section 4.2(a) or
         (b) shall be aggregated until, and eliminated at, the time of exercise
         by rounding-down for fractions less than one-half (1/2) and rounding-up
         for fractions equal to or greater than one-half (1/2). No cash
         settlements shall be made with respect to fractional shares eliminated
         by rounding. Notice of any adjustment shall be given by the Board to
         each Non-Employee Director whose Award has been adjusted and such
         adjustment (whether or not such notice is given) shall be effective and
         binding for all purposes of the Plan.

                  (d) ACQUISITION EVENTS. If the Company shall not be the
         surviving corporation in any merger or consolidation, or if the Company
         is to be dissolved or liquidated, then, unless the surviving
         corporation assumes the Stock Options or substitutes new Stock Options
         which are determined by the Board in its sole discretion to be
         substantially similar in nature and equivalent in terms and value for
         Stock Options then outstanding, upon the effective date of such merger,
         consolidation, liquidation or dissolution, any unexercised Stock
         Options shall expire without additional compensation

                                      -4-
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          to the holder thereof; provided, that, the Board shall deliver notice
          to each non-employee director at least twenty days prior to the date
          of consummation of such merger, consolidation, dissolution or
          liquidation which would result in the expiration of the Stock Options
          and during the period from the date on which such notice of
          termination is delivered to the consummation of the merger,
          consolidation, dissolution or liquidation, such Non-Employee Director
          shall have the right to exercise in full effective as of such
          consummation all Stock Options that are then outstanding (without
          regard to limitations on exercise otherwise contained in the Stock
          Options) but contingent on occurrence of the merger, consolidation,
          dissolution or liquidation, and, provided that, if the contemplated
          transaction does not take place within a ninety day period after
          giving such notice for any reason whatsoever, the notice, accelerated
          vesting and exercise shall be null and void and, if and when
          appropriate, new notice shall be given as aforesaid.

                                    ARTICLE V

                                    ELECTIONS

         V.1  NON-EMPLOYEE DIRECTOR ELECTIONS.

                  (a) The Company shall pay 50% of a Non-Employee Director's
         Retainer Fees in the form of Restricted Stock or Stock Options, as
         elected by the Non-Employee Director in accordance with Section 5.2
         below.

                  (b) Each Non-Employee Director may also elect, in accordance
         with Section 5.2 below, to receive Awards of Restricted Stock or Stock
         Options in lieu of receiving (i) a cash payment of all or a portion of
         Retainer Fees not covered by Section 5.1(a); or (ii) a cash payment of
         all or a portion of Meeting Fees.

         V.2  TIMING AND MANNER OF ELECTION.

                  (a) METHOD OF ELECTION. Any election to receive Restricted
         Stock or Stock Options as payment of Retainer Fees or Meeting Fees
         shall be made in writing to the Board (on a form prescribed by the
         Board) prior to the first day of the Company's fiscal year during which
         the Retainer Fees or Meeting Fees are earned; provided, however, that
         with respect to the 1999 fiscal year, any election under Section 5.1
         shall be made in writing to the Board prior to the first regularly
         scheduled meeting of the Board, but in no event later than January 31,
         1999. Each election, which shall be made in a manner as determined by
         the Board in its sole and absolute discretion, shall designate (i)
         whether the election applies to Retainer Fees or Meeting Fees; (ii)
         whether the Retainer Fees or Meeting Fees, as applicable, are to be
         awarded in cash, Restricted Stock or Stock Options; and (iii) the
         applicable percentage of Retainer Fees or Meeting Fees to be awarded in
         cash, Restricted Stock or Stock Options.

                  (b) IRREVOCABLE ELECTION. An election under this Article V is
         irrevocable and, except with respect to the 1999 fiscal year, is valid
         only for the Company's fiscal year commencing immediately following the
         date of the election.

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                  (c) DEFAULT ELECTIONS. If no election is made or if a new
         election is not made with respect to any subsequent fiscal year
         pursuant to Section 5.1(a), the Non-Employee Director shall be deemed
         to have made an election to receive an Award of Restricted Stock for
         purposes of Section 5.1(a). If no election is made or if a new election
         is not made with respect to any subsequent fiscal year pursuant to
         Section 5.1(b), the Non-Employee Director shall be deemed to have made
         an election to receive all Retainer Fees not covered by Section 5.1(a)
         and all Meeting Fees in cash.

                  (d) MID-YEAR PARTICIPATION. An individual who becomes a
         Non-Employee Director after the date by which an election would
         otherwise be required to be made hereunder with respect to a fiscal
         year may elect to receive an Award during that fiscal year by making an
         election, in the form required hereunder, within thirty days after the
         individual becomes a Non-Employee Director and such election shall
         become effective the first day of the month following the date of the
         election.

         V.3  DATE OF GRANT. Awards that are attributable to Retainer Fees shall
be made as of the first business day of each quarter of the Company's fiscal
year, which shall be treated as the dates of grant for such Awards. Awards that
are attributable to Meeting Fees shall be made as of the dates of the Board
meetings and/or committee meetings with respect to which such Awards relate,
which shall be treated as the dates of grant for such Awards. Unless the Board
decides to take specific action at grant with respect to an Award (provided that
it is consistent with the Plan's terms), any grant of an Award hereunder shall
be automatic after giving effect to the election made by an Non-Employee
Director pursuant to Section 5.1 hereof without further action by the Board or
the stockholders of the Company.

                                   ARTICLE VI

                                RESTRICTED STOCK

         VI.1 RESTRICTED STOCK. As of each date of grant, as determined in
accordance with Section 5.3 above, each Non-Employee Director shall receive that
number of shares of Restricted Stock determined by dividing (a) the amount of
Retainer Fees or Meeting Fees that the Non-Employee Director elected to receive
in Restricted Stock, by (b) the lesser of: (i) 100% of the Fair Market Value of
the Common Stock on the first business day of the Company's fiscal year and (ii)
100% of the Fair Market Value of the Common Stock at the time of grant of the
Restricted Stock. Any fractional shares of Restricted Stock resulting from the
division of (a) by (b) shall be eliminated by rounding-down for fractions less
than one-half (1/2) and rounding-up for fractions equal to or greater than
one-half (1/2). No cash settlements shall be made with respect to fractional
shares eliminated by rounding.

         VI.2 AWARDS OF RESTRICTED STOCK.  Restricted Stock granted under this
Article VI shall be subject to the following terms and conditions:

                  (a) PURCHASE PRICE. The purchase price of shares of Restricted
         Stock shall be their par value or, to the extent permitted by
         applicable law, zero.

                                      -6-
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                  (b) AGREEMENT. Awards of Restricted Stock shall be evidenced
         by an agreement entered into between the Company and the Non-Employee
         Director. In the event that the Non-Employee Director is required to
         pay the purchase price for Restricted Stock in accordance with Section
         6.2(a), such agreement must be accepted within a period of ninety days
         (or such shorter period as the Board may specify at grant) after the
         Award date by executing a Restricted Stock Award agreement and by
         paying the purchase price, if any.

                  (c) VESTING. Except as otherwise provided in Article VIII or
         X, shares of Restricted Stock granted to a Non-Employee Director shall
         be fully vested as of the third anniversary of the date the Award is
         granted (the "Restriction Period"). Upon a Non-Employee Director's
         Retirement, all Restricted Stock held by such Non-Employee Director and
         still subject to restrictions shall become fully vested and the
         restrictions thereon shall lapse.

                  (d) LEGEND. Each Non-Employee Director receiving shares of
         Restricted Stock granted under this Article VI shall be issued a stock
         certificate in respect of such shares of Restricted Stock, unless the
         Board elects to use another system, such as book entries by the
         transfer agent, as evidencing ownership of shares of Restricted Stock.
         Such certificate shall be registered in the name of the Non-Employee
         Director and shall bear an appropriate legend, to the extent required
         by applicable law, as the Company may determine, referring to the
         terms, conditions and restrictions applicable to such Award,
         substantially in the following form:

                  "The anticipation, alienation, attachment, sale, transfer,
                  assignment, pledge, encumbrance or charge of the shares of
                  stock represented hereby are subject to the terms and
                  conditions (including forfeiture) of the Superior TeleCom Inc.
                  (the "Company") Stock Compensation Plan for Non-Employee
                  Directors (the "Plan") and an Agreement entered into between
                  the registered owner and the Company dated         . Copies
                  of such Plan and Agreement are on file at the principal office
                  of the Company."

                  (e) CUSTODY. The Board may require that any stock certificates
         evidencing such shares be held in custody by the Company until the
         restrictions thereon shall have lapsed and that, as a condition to the
         grant of such Award of Restricted Stock, the Non-Employee Director
         shall have delivered a duly signed stock power, endorsed in blank,
         relating to the Common Stock covered by such Award.

         VI.3 OWNERSHIP. Except to the extent otherwise set forth in the
Restricted Stock agreement, the Non-Employee Director shall possess all
incidents of ownership of such shares of Common Stock, subject to this Article
VI, including the right to receive dividends with respect to such shares of
Common Stock, the right to vote such shares of Common Stock, and, subject to and
conditioned upon the full vesting of Restricted Stock, the right to tender such
shares of

                                      -7-
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Common Stock. Any stock dividend that is issued on Restricted Stock or if
Restricted Stock is split or any other shares, securities, moneys or property
representing a dividend is issued on Restricted Stock (other than regular cash
dividends which will be paid when any such cash dividends are distributed to the
Company's stockholders) or represents a distribution or return of capital upon
or in respect of Restricted Stock or any part thereof, or results from a
split-up, reclassification or other like changes of Restricted Stock, or
otherwise is issued in exchange therefor, and any warrants, rights or options
issued in respect of Restricted Stock shall be subject to the same restrictions,
including that of this Article VI, as Restricted Stock with regard to which they
are issued and shall herein be encompassed within the term "Restricted Stock."

         VI.4 LAPSE OF RESTRICTIONS. If and when the Restriction Period expires
without a prior forfeiture of the Restricted Stock subject to such Restriction
Period, the certificates for such shares shall be delivered to the Non-Employee
Director. All legends shall be removed from said certificates at the time of
delivery to the Non-Employee Director except as otherwise required by applicable
law.

                                   ARTICLE VII

                                  STOCK OPTIONS

         VII.1 STOCK OPTIONS. As of each date of grant, as determined in
accordance with Section 5.3 above, each Non-Employee Director shall receive that
number of Stock Options determined by dividing (i) the amount of Retainer Fees
or Meeting Fees that the Non-Employee Director elected to receive in the form of
Stock Options, by (ii) the value of one Stock Option on the date of grant as
determined in good faith by the Board, based on the purchase price per share of
Common Stock determined in accordance with Section 7.2(a) and a Black-Scholes
Option pricing model (calculated by an accounting, investment banking or
appraisal firm selected by the Board) and such other factors as the Board deems
appropriate. Any fractional number of Stock Options resulting from the division
of (i) by (ii) shall be eliminated by rounding-down for fractions less than
one-half (1/2) and rounding-up for fractions equal to or greater than one-half
(1/2). No cash settlements shall be made with respect to fractional shares
eliminated by rounding.

         VII.2 TERMS OF STOCK OPTIONS. Stock Options granted under this Article
VII shall be subject to the following terms and conditions and shall be in such
form and contain such additional terms and conditions, not inconsistent with
terms of this Plan, as the Board shall deem desirable:

                  (a) STOCK OPTION PRICE. The purchase price per share of Common
         Stock deliverable upon the exercise of a Stock Option granted pursuant
         to Section 7.1 shall be the lesser of: (i) 100% of the Fair Market
         Value of such Common Stock on the first business day of the Company's
         fiscal year; and (ii) 100% of the Fair Market Value of such Common
         Stock at the time of the grant of the Stock Option.

                  (b) AGREEMENT. Awards of Stock Options shall be evidenced by
         an agreement entered into between the Company and the Non-Employee
         Director.

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                  (c) OPTION TERM. If not previously exercised each Stock Option
         shall expire upon the tenth anniversary of the date of the grant
         thereof.

                  (d) EXERCISABILITY. Except as otherwise provided in Article
         VIII or X, any Stock Option granted under this Article VII shall vest
         and become fully exercisable as of the third anniversary of the date
         the Award is granted. Upon a Non-Employee Director's Retirement, all
         Stock Options held by such Non-Employee Director and not previously
         exercisable shall become fully vested and exercisable.

                  (e) METHOD FOR EXERCISE. Subject to the vesting provisions of
         Section 7.2(d), Stock Options may be exercised in whole or in part at
         any time during the Stock Option term, by giving written notice of
         exercise to the Company specifying the number of shares to be
         purchased. Such notice shall be accompanied by payment in full of the
         purchase price in cash, in the form of Common Stock owned by the
         Non-Employee Director for at least 6 months (and for which the
         Non-Employee Director has good title free and clear of any liens and
         encumbrances) based on the Fair Market Value of the Common Stock on the
         payment date, in a combination thereof or such other arrangement for
         the satisfaction of the purchase price, as the Board may accept. No
         shares of Common Stock shall be issued until payment, as provided
         herein, therefor has been made or provided for.

                                  ARTICLE VIII

                           TERMINATION OF DIRECTORSHIP

         VIII.1 TERMINATION OF DIRECTORSHIP BY REASON OF DEATH. If a
Non-Employee Director's Termination of Directorship is by reason of death, upon
such Termination of Directorship (i) all Restricted Stock held by such
Non-Employee Director and still subject to restrictions shall become fully
vested and the restrictions thereon shall lapse; and (ii) all Stock Options held
by such Non-Employee Director and not previously exercisable shall become fully
vested and exercisable. All Stock Options shall remain exercisable by the
Non-Employee Director's estate or by the person given authority to exercise such
Stock Options by his or her will or by operation of law, for the remainder of
the stated term of such Stock Option.

         VIII.2 TERMINATION OF DIRECTORSHIP FOR CAUSE. If a Non-Employee
Director's Termination of Directorship is for Cause or if the Company obtains or
discovers information after Termination of Directorship that such Non-Employee
Director had engaged in conduct that would have justified a removal for Cause
during such directorship, (i) all Restricted Stock subject to restriction held
by such Non-Employee Director shall be forfeited; and (ii) all Stock Options
held by such Non-Employee Director shall thereupon terminate and expire as of
the date of such Termination of Directorship or the date the Company obtains or
discovers such information.

         VIII.3 TERMINATION OF DIRECTORSHIP BY REASON OTHER THAN DEATH OR FOR
CAUSE. If a Non-Employee Director's Termination of Directorship is by any reason
other than death or for Cause, including, without limitation, Retirement,
disability, resignation, or failure to stand for

                                      -9-
<PAGE>

reelection (i) all Restricted Stock subject to restriction held by such
Non-Employee Director shall be forfeited; and (ii) all Stock Options held by
such Non-Employee Director may be exercised, to the extent exercisable at the
Non-Employee Director's Termination of Directorship, by the Non-Employee
Director for the remainder of the stated term of such Stock Option.

         VIII.4 CANCELLATION OF STOCK OPTIONS. Subject to Section 8.3(b), no
Stock Options that were not vested during the period such person serves as a
director shall thereafter become exercisable upon a Termination of Directorship
for any reason or no reason whatsoever, and such Stock Options shall terminate
and become null and void upon a Termination of Directorship.

         VIII.5 FORFEITURE. A Non-Employee Director shall be entitled to no
compensation upon the forfeiture of rights to Restricted Stock, other than
repayment of par value paid for such Restricted Stock, if any.

                                   ARTICLE IX

                               NON-TRANSFERABILITY

         No Stock Option shall be Transferable by the Non-Employee Director
otherwise than by will or by the laws of descent and distribution. All Stock
Options shall be exercisable, during the Non-Employee Director's lifetime, only
by the Non-Employee Director. Shares of Restricted Stock under Article VI may
not be Transferred prior to the date on which such shares are issued, or, if
later, the date on which the Restriction Period lapses. No Award shall, except
as otherwise specifically provided by law or herein, be Transferable in any
manner, and any attempt to Transfer any such Award shall be void, and no such
Award shall in any manner be liable for or subject to the debts, contracts,
liabilities, engagements or torts of any person who shall be entitled to such
Award nor shall it be subject to attachment or legal process for or against such
person. Notwithstanding the foregoing, the Board may determine at the time of
grant or thereafter, that a Stock Option granted pursuant to Article VII that is
otherwise not Transferable pursuant to this Article IX is Transferable in whole
or part and in such circumstances, and under such conditions, as specified by
the Board.

                                    ARTICLE X

                          CHANGE IN CONTROL PROVISIONS

         X.1 BENEFITS. Upon a Change in Control of the Company (as defined
below): (i) Stock Options granted and not previously exercisable shall vest and
become fully exercisable; and (ii) shares of Restricted Stock shall fully vest
and the restrictions thereon shall lapse.

         X.2 CHANGE IN CONTROL.  A "Change in Control" shall be deemed to have
occurred:

                  (a) upon any "person" as such term is used in Sections 13(d)
         and 14(d) of the Exchange Act (other than the Company, any trustee or
         other fiduciary holding securities under any employee benefit plan of
         the Company, any company owned, directly or indirectly, by the
         stockholders of the Company in substantially the same proportions as

                                      -10-
<PAGE>

         their ownership of Common Stock of the Company, as a group or
         individually by Steven S. Elbaum or The Alpine Group, Inc.), becoming
         the owner (as defined in Rule 13d-3 under the Exchange Act), directly
         or indirectly, of securities of the Company representing twenty-five
         percent (25%) or more of the combined voting power of the Company's
         then outstanding securities (including, without limitation, securities
         owned at the time of any increase in ownership);

                  (b) during any period of two consecutive years, individuals
         who at the beginning of such period constitute the Board, and any new
         director (other than a director designated by a person who has entered
         into an agreement with the Company to effect a transaction described in
         paragraph (a), (c), or (d) of this section) or a director whose initial
         assumption of office occurs as a result of either an actual or
         threatened election contest (as such terms are used in Rule 14a-11 of
         Regulation 14A promulgated under the Exchange Act) or other actual or
         threatened solicitation of proxies or consents by or on behalf of a
         person other than the Board whose election by the Board or nomination
         for election by the Company's stockholders was approved by a vote of at
         least two-thirds of the directors then still in office who either were
         directors at the beginning of the two-year period or whose election or
         nomination for election was previously so approved, cease for any
         reason to constitute at least a majority of the Board.

                  (c) upon the merger or consolidation of the Company with any
         other corporation, other than a merger or consolidation which would
         result in the voting securities of the Company outstanding immediately
         prior thereto continuing to represent (either by remaining outstanding
         or by being converted into voting securities of the surviving entity)
         more than fifty percent (50%) of the combined voting power of the
         voting securities of the Company or such surviving entity outstanding
         immediately after such merger or consolidation; provided, however, that
         a merger or consolidation effected to implement a recapitalization of
         the Company (or similar transaction) in which no person (other than
         those covered by the exceptions in (a) above) acquires more than
         twenty-five percent (25%) of the combined voting power of the Company's
         then outstanding securities shall not constitute a Change in Control of
         the Company; or

                  (d) upon the stockholder's of the Company approval of a plan
         of complete liquidation of the Company or an agreement for the sale or
         disposition by the Company of all or substantially all of the Company's
         assets other than the sale of all or substantially all of the assets of
         the Company to a person or persons who beneficially own, directly or
         indirectly, at least fifty percent (50%) or more of the combined voting
         power of the outstanding voting securities of the Company at the time
         of the sale.

                                      -11-
<PAGE>

                                   ARTICLE XI

                      TERMINATION OR AMENDMENT OF THE PLAN

         Notwithstanding any other provision of this Plan, the Board may at any
time, and from time to time, amend, in whole or in part, any or all of the
provisions of the Plan, or suspend or terminate it entirely, retroactively or
otherwise; provided, however, that, unless otherwise required by law or
specifically provided herein, the rights of a Non-Employee Director with respect
to Awards granted prior to such amendment, suspension or termination, may not be
impaired without the consent of such Non-Employee Director.

         The Board may amend the terms of any Award granted, prospectively or
retroactively, but, subject to Articles VIII and X above or as otherwise
specifically provided herein, no such amendment or other action by the Board
shall impair the rights of any Non-Employee Director without the Non-Employee
Director's consent.

                                   ARTICLE XII

                                  UNFUNDED PLAN

         This Plan is intended to constitute an "unfunded" plan for incentive
compensation. With respect to any payments as to which a Non-Employee Director
has a fixed and vested interest but which are not yet made to a Non-Employee
Director by the Company, nothing contained herein shall give any such
Non-Employee Director any rights that are greater than those of a general
creditor of the Company.

                                  ARTICLE XIII

                               GENERAL PROVISIONS

         XIII.1 REPRESENTATION AND LEGEND. The Board may require each person
receiving shares pursuant to the exercise of an Award under the Plan to
represent to and agree with the Company in writing that the Non-Employee
Director is acquiring the shares without a view to distribution thereof. In
addition to any legend required by this Plan, the certificates for such shares
may include any legend which the Board deems appropriate to reflect any
restrictions on Transfer.

         All certificates for shares of Common Stock delivered under the Plan
shall be subject to such stock transfer orders and other restrictions as the
Board may deem advisable under the rules, regulations and other requirements of
the Securities and Exchange Commission, any stock exchange upon which the Common
Stock is then listed or any national securities association system upon whose
system the Common Stock is then quoted, any applicable Federal or state
securities law, and any applicable corporate law, and the Board may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.

         XIII.2 OTHER PLANS. Nothing contained in this Plan shall prevent the
Board from

                                      -12-
<PAGE>

adopting other or additional compensation arrangements, subject to stockholder
approval if such approval is required; and such arrangements may be either
generally applicable or applicable only in specific cases.

         XIII.3 NO RIGHT TO DIRECTORSHIP. Neither this Plan nor the grant of any
Award hereunder shall impose any obligations on the Company to retain any
Non-Employee Director as a director nor shall it impose on the part of any
Non-Employee Director any obligation to remain as a director of the Company.

         XIII.4 WITHHOLDING OF TAXES. The Company shall have the right to deduct
from any payment to be made to a Non-Employee Director, or to otherwise require,
prior to the issuance or delivery of any shares of Common Stock or the payment
of any cash hereunder, payment by the Non-Employee Director, of, any Federal,
state or local taxes required by law to be withheld.

         The Board may permit any such withholding obligation with regard to any
Non-Employee Director to be satisfied by reducing the number of shares of Common
Stock otherwise deliverable or by delivering shares of Common Stock already
owned. Any fraction of a share of Common Stock required to satisfy such tax
obligations shall be disregarded and the amount due shall be paid instead in
cash by the Non-Employee Director.

         Notwithstanding anything hereunder to the contrary, to the extent
permitted under the Code or other applicable law, the Company may, in its sole
and absolute discretion, reduce the number of shares of Common Stock otherwise
deliverable to a Non-Employee Director in an amount that would be withheld if
taxes were required to be withheld and, if the Company so reduces the shares
otherwise deliverable, the Company shall remit such amount to any such
applicable Federal, state or local taxing authority.

         XIII.5  LISTING AND OTHER CONDITIONS.

                  (a) As long as the Common Stock is listed on a national
         securities exchange or system sponsored by a national securities
         association, the issue of any shares of Common Stock pursuant to the
         exercise of an Award shall be conditioned upon such shares being listed
         on such exchange or system. The Company shall have no obligation to
         issue such shares unless and until such shares are so listed, and the
         right to exercise any Stock Option with respect to such shares shall be
         suspended until such listing has been effected.

                  (b) If at any time counsel to the Company shall be of the
         opinion that any sale or delivery of shares of Common Stock pursuant to
         an Award is or may in the circumstances be unlawful or result in the
         imposition of excise taxes on the Company under the statutes, rules or
         regulations of any applicable jurisdiction, the Company shall have no
         obligation to make such sale or delivery, or to make any application or
         to effect or to maintain any qualification or registration under the
         Securities Act of 1933, as amended, or otherwise with respect to shares
         of Common Stock or Awards and the right to exercise any Stock Option
         shall be suspended until, in the opinion of said counsel, such sale or
         delivery shall be lawful or will not result in the imposition of excise
         taxes on the

                                      -13-
<PAGE>

         Company.

                  (c) Upon termination of any period of suspension under this
         Section 13.5, any Award affected by such suspension which shall not
         then have expired or terminated shall be reinstated as to all shares
         available before such suspension and as to shares which would otherwise
         have become available during the period of such suspension, but no such
         suspension shall extend the term of any Stock Option.

         XIII.6 GOVERNING LAW. This Plan shall be governed and construed in
accordance with the laws of the State of Delaware (regardless of the law that
might otherwise govern under applicable Delaware principles of conflict of
laws).

         XIII.7 CONSTRUCTION. Wherever any words are used in this Plan in the
masculine gender they shall be construed as though they were also used in the
feminine gender in all cases where they would so apply, and wherever any words
are used herein in the singular form they shall be construed as though they were
also used in the plural form in all cases where they would so apply.

         XIII.8 OTHER BENEFITS. No Award payment under this Plan shall be deemed
compensation for purposes of computing benefits under any retirement plan of the
Company or its subsidiaries nor affect any benefits under any other benefit plan
now or subsequently in effect under which the availability or amount of benefits
is related to the level of compensation.

         XIII.9 COSTS. The Company shall bear all expenses included in
administering this Plan, including expenses of issuing Common Stock pursuant to
any Award hereunder.

         XIII.10 NO RIGHT TO SAME BENEFITS. The provisions of Awards need not be
the same with respect to each Non-Employee Director, and such Awards granted to
individual Non-Employee Directors need not be the same in subsequent years.

         XIII.11 DEATH/DISABILITY. The Board may in its discretion require the
transferee of a Non-Employee Director to supply it with written notice of the
Non-Employee Director's death or disability and to supply it with a copy of the
will (in the case of a Non-Employee Director's death) or such other evidence as
the Board deems necessary to establish the validity of the transfer of an Award.
The Board may also require that the agreement of the transferee to be bound by
all of the terms and conditions of the Plan.

         XIII.12 SECTION 16(b) OF THE EXCHANGE ACT. All elections and
transactions under the Plan by persons subject to Section 16 of the Exchange Act
involving shares of Common Stock are intended to comply with any applicable
condition under Rule 16b-3. The Board may establish and adopt written
administrative guidelines, designed to facilitate compliance with Section 16(b)
of the Exchange Act, as it may deem necessary or proper for the administration
and operation of the Plan and the transaction of business thereunder.

         XIII.13 SEVERABILITY OF PROVISIONS. If any provision of the Plan shall
be held invalid or unenforceable, such invalidity or unenforceability shall not
affect any other provisions hereof,

                                      -14-
<PAGE>

and the Plan shall be construed and enforced as if such provisions had not been
included.

         XIII.14 HEADINGS AND CAPTIONS. The headings and captions herein are
provided for reference and convenience only, shall not be considered part of the
Plan, and shall not be employed in the construction of the Plan.

                                   ARTICLE XIV

                                  TERM OF PLAN

         No Award shall be granted pursuant to the Plan on or after the tenth
anniversary of the Effective Date, but Awards granted prior to such tenth
anniversary may extend beyond that date.

                                      -15-<PAGE>

                                                                  Exhibit 10.2

                          U.S. FRANCHISE SYSTEMS, INC.
                              EMPLOYMENT AGREEMENT

         This Employment Agreement (the "Agreement"), is made as of June 30,
2000, by and between U.S. FRANCHISE SYSTEMS, INC., a Delaware corporation
having its principal place of business in Atlanta, Georgia (the "Company");
and MICHAEL A. LEVEN, an individual resident of the State of Georgia
("Employee"). This Agreement shall become effective upon the Effective Date.
Company desires to continue the employment of Employee and Employee desires
to continue to be employed by Company, on the terms and conditions set forth
in this Agreement. Accordingly, both parties, in consideration of the mutual
and exchanged promises and agreements contained herein and of wages paid and
services rendered hereunder and other consideration the receipt and
sufficiency of which are acknowledged, hereby agree as follows:

         Section 1. Definitions. For purposes hereof, the following terms shall
be defined as follows:

         a. "Affiliate" shall mean, with respect to a specified entity, an
entity that directly, or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with, the entity specified. For
purposes of this definition, the term "control" (including the terms "controlled
by" and "under common control with") means possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
an entity, whether through ownership of voting securities, by contract, or
otherwise.

         b. "Board" or "Board of Directors" shall mean Board of Directors of the
Company.

         c. "Cause" shall mean:

            (i) the conviction of or plea of guilty or nolo contendere by
       Employee of any felony other than a traffic-related offense;

            (ii) fraud, theft, embezzlement or intentional misappropriation by
       Employee of funds of the Company or the Group;

            (iii) repeated neglect by Employee of his duties hereunder (other
       than on account of Disability); provided, however, that Cause as defined
       in this clause (iii) shall in no event mean:

                  (a) bad judgment or incompetence;

                  (b) negligence other than repeated neglect of duty or gross
             negligence;

                  (c) dissatisfaction by the Company with the Employee's
             performance of his duties hereunder (other than as a result of any
             of the occurrences set forth in

<PAGE>

              clauses (i), (ii) or (iii) set forth above) or a bona fide
              disagreement over corporate policy;

                     (d) any act or omission believed by the Employee in good
              faith to have been in the interest of the Company (without intent
              of the Employee to gain therefrom, directly or indirectly, a
              profit to which the Employee was not legally entitled), unless
              such act or omission is in contravention of a lawful and
              reasonable direction of the Company's Board of Directors;

              (iv) a willful and material breach of Employee's obligations
         pursuant to this Employment Agreement.

Notwithstanding the foregoing, the Employee shall not be deemed to have
repeatedly neglected his duties within the meaning of clause (iii) or materially
breached his obligations under this Employment Agreement within the meaning of
clause (iv) above unless (a) the Company gives written notice to the Employee
thereof specifying in detail the event or events which the Company asserts
constitutes "Cause", (b) the Employee fails to remedy the matter within 30 days
after receiving such notice and (c) there is delivered to Employee, a written
copy of a resolution, duly adopted by the affirmative vote of not less than a
majority of the entire membership of the Board of Directors of the Company at a
meeting of the Board called and held for that purpose (after reasonable notice
to Employee has been given and an opportunity for Employee, together with his
counsel, to be heard before the Board at such meeting has been provided),
finding in the good faith opinion of the Board, that Employee's action, inaction
or breach (specifying in detail such action, inaction or breach) constitutes
"Cause" within the meaning of clause (iii) or (iv) and Employee has failed to
correct the action, inaction or breach in accordance with clause (b) after
receipt of the notice described in clause (c).

         d.       "Change of Control" shall mean any one of the following events
                  occurring after the Effective Date:

                  (i) Any "Person" (having the meaning ascribed to such term in
         Section 3(a)(9) of the Exchange Act and used in Sections 13(d) and
         14(d) thereof, including a "group" within the meaning of Section
         13(d)(3)) other than a member of the Investor Group acquires
         "Beneficial Ownership" (within the meaning of Rule 13d-3 under the
         Exchange Act) of 50% or more of the combined voting power of the
         Company's then outstanding voting securities entitled to vote generally
         in the election of directors ("Voting Securities") or of 25% or more of
         the combined voting power of the Voting Securities if any such Voting
         Securities are acquired after the Investor Group owns less than 50% of
         such combined voting power; provided, however, that in determining
         whether a Change of Control has occurred, Voting Securities which are
         held or acquired by (i) the Company or any of its subsidiaries or (ii)
         an employee benefit plan (or a trust forming a part thereof) maintained
         by the Company or any of its subsidiaries shall not constitute a Change
         of Control;

                  (ii) Consummation of a merger, consolidation or reorganization
         or approval by the Company's stockholders of a liquidation or
         dissolution of the Company or the

<PAGE>

         occurrence of a liquidation or dissolution of the Company ("Business
         Combination"), unless, following such Business Combination:

                           (a) the Persons with Beneficial Ownership of the
                  Company, immediately before such Business Combination, have
                  Beneficial Ownership of more than 25% of the combined voting
                  power of the then outstanding voting securities entitled to
                  vote generally in the election of directors of the corporation
                  (or in the election of a comparable governing body of any
                  other type of entity) resulting from such Business Combination
                  (including, without limitation, an entity which as a result of
                  such transaction owns the Company or all or substantially all
                  of the Company's assets either directly or through one or more
                  subsidiaries) (the "Surviving Company") and the Investor Group
                  owns at least 20% of such voting securities;

                           (b) the individuals who were members of the Incumbent
                  Board immediately prior to the execution of the initial
                  agreement providing for such Business Combination constitute
                  more than 50% of the members of the board of directors (or
                  comparable governing body of a noncorporate entity) of the
                  Surviving Company; and

                           (c) no Person (other than the Company, any of its
                  subsidiaries or any employee benefit plan (or any trust
                  forming a part thereof) maintained by the Company, the
                  Surviving Company or any Person who immediately prior to
                  such Business Combination had Beneficial Ownership of 25%
                  or more of the then outstanding Voting Securities) has
                  Beneficial Ownership of 50% or more of the then combined
                  voting power of the Surviving Company's then outstanding
                  voting securities;

provided that no Change of Control shall be deemed to have occurred under this
subparagraph (ii) if the Investor Group shall continue to have Beneficial
Ownership of more than 25% of the then combined voting power of the then
Outstanding Voting Securities and no other Person has Beneficial Ownership of a
greater percentage of the then combined voting power.

                  (iii) Approval by the Company's stockholders of an agreement
         for the assignment, sale, conveyance, transfer, lease or other
         disposition of all or substantially all of the assets of the Company to
         any Person (other than a subsidiary of the Company or other entity, the
         Persons with Beneficial Ownership of which are the same Persons with
         Beneficial Ownership of the Company and such Beneficial Ownership is in
         substantially the same proportions), or the occurrence of the same.

         e. "Disability" shall be defined as the inability for a continuous
period of six (6) months or for a total of six (6) months in any twelve (12)
month period of Employee to render substantial services to the Company due to
accident, illness, sickness, or other physical or mental condition, as certified
to the Company by a physician licensed to practice medicine in the State of
Georgia.

<PAGE>

         f. "Effective Date" shall be the Closing Date as defined in the
Recapitalization Agreement dated June 2, 2000, among the Company, SDI, Inc.,
Meridian Associates, L.P., and HSA Properties, Inc.

         g. "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.

         h. "Good Reason" means the occurrence of any one of the following
events:

                  (i) any material breach (which is not corrected within 30 days
         following written notice from the Employee to the Company specifying
         such breach) by the Company of its obligations under this Agreement
         (including, without limitation, (a) the refusal or failure of the
         Company to pay the compensation and/or benefits due under this
         Agreement, (b) any diminution (without the Employee's consent), other
         than an insignificant or incidental diminution, in the Employee's
         duties, authority, responsibilities or reporting requirements (whether
         or not accompanied by a change in title), (c) the failure to elect the
         Employee to and continue his membership on the Board of Directors of
         the Company, or (d) the involuntary relocation of the Employee outside
         Atlanta, Georgia, or

                  (ii) resignation by Employee at the written request of the
         Company which has been authorized by the Company's Board of Directors.

         i. "Group" shall mean the Company and any other Affiliate of the
Company controlled by the Company, including any subsidiary entity.

         j. "Investor Group " means Meridian Associates, L.P., SDI, Inc., HSA
Properties, Inc., and any and all of the lineal descendants of Nicholas J.
Pritzker, deceased, any and all trusts for their benefit or for the benefit of
any of their spouses, and any Person owned or controlled by such lineal
descendants or trusts and any Affiliate of any of the foregoing.

         k. "Non-Solicitation Period" shall mean the period of Employee's
employment with Company and a period of three (3) years after the date that
Employee's employment with Company terminates regardless of the reason therefor.

         l. "Share" shall mean a share of common stock of the Company.

         m. "Year" shall mean the twelve calendar month period commencing on the
Effective Date if the Effective Date is the first day of a given calendar month,
and as of the first day of the first calendar month immediately following if the
Effective Date is a date other than the first day of a given calendar month, and
ending on the last day of the twelfth full calendar month thereafter.

         Section 2.  Employment.

         a. Subject to the terms contained in this Agreement, Company hereby
employs Employee and Employee hereby accepts such employment. Employee shall
serve as Chief Executive Officer and Chairman of the Board of Directors of the
Company and certain of the

<PAGE>

members of the Group and shall serve and perform the duties, exercise the powers
and have the authority consistent in all respects with such positions. Employee
shall report directly to the Board of Directors of the Company and shall not be
required to report to any other officer or employee of the Company or a member
of the Group. Subject to his election or appointment as such, the Employee
agrees to serve without additional compensation during the Term as a director
and a member of any committees of the Board of Directors of the Company or any
company within the Group, provided that the Employee is indemnified for serving
in any and all such capacities on a basis no less favorable than provided to any
other director of the Company or a member of the Group. The Company agrees to
use its best efforts to cause the Employee to be elected and continued in office
throughout the Term as a member of the Board of Directors of the Company and as
Chairman of the Board of Directors of the Company and shall include him in the
management slate for election as a director of the Company at every stockholders
meeting or vote of the stockholders of the Company during the Term at which his
term as a director would otherwise expire. The Company further agrees that if
the Board of Directors of the Company shall appoint an executive committee, the
Employee shall be elected to serve as a member and chairman of such committee
during the entire Term.

         b. During the Term and unless otherwise agreed with the Company, the
Employee shall devote his primary attention to the performance of his duties and
responsibilities on a substantially full time and exclusive basis during such
business hours and such other periods and times as may be necessary for the
proper performance of his duties. Notwithstanding any other provision to the
contrary contained in this Section 2 but consistent with the commitment to
perform services for the Company on substantially a full time and exclusive
basis, nothing in this Section 2 is intended to preclude the Employee from
devoting reasonable time to (i) serving on the boards of other entities (profit
or not-for-profit), making public appearances, making speaking engagements,
writing books or articles or other similar activities and retaining all
compensation received from such activities; (ii) engaging in charitable and
community activities; and (iii) managing his own investments.

         Section 3.  Term.

         The term of Employee's employment hereunder (the "Term") shall commence
on the Effective Date and unless earlier terminated as provided in Section 5 of
this Agreement, Employee's employment hereunder shall continue for a period of
five (5) years from the Effective Date.

         Section 4.  Compensation.  During the Term, the Company shall provide
to the Employee the following:

         a. The Company shall pay Employee a basic salary of U.S. $500,000 per
year, payable bi-weekly in arrears, inclusive of any remuneration to which he
may be entitled as an officer of the Company or any other company within the
Group. All deductions and taxes required to be withheld by the Company under the
law of the United States and the State of Georgia or any other state shall be
deducted from such basic salary.

         b. The basic salary referred to in this paragraph shall be subject to
increase by the Company at annual intervals in the light of prevailing economic
circumstances and the Employee's

<PAGE>

performance but in any event such annual increases shall be at least equal to
the annual percentage increase in the Consumer Price Index for the same annual
intervals. For the purpose of this Agreement, "Consumer Price Index" shall mean
the Consumer Price Index for all Urban Consumers, U.S. City average compiled and
published by the United States Department of Labor. For the purpose of this
Agreement, Employee's basic salary shall mean Employee's basic salary
annualized, as most recently increased.

         c. Payment on behalf of the Employee of such sums as shall be required
to maintain the following benefits on behalf of Employee:

            (1) Life Insurance. The Company shall provide term life insurance
       coverage on Employee's life in an amount at least equal to $3,000,000 on
       terms no less favorable than the coverage in effect on the day preceding
       the Effective Date. Such insurance shall be transferable to the Employee
       at no cost to the Company in the event of the termination of employment
       hereunder. The Company shall also pay Employee a periodic supplemental
       cash benefit equal to 45% of the taxable income required to be reported
       by Employee by reason of the Company's payment of premiums for such
       insurance.

            (2) Health Insurance. The Company shall provide executive health,
       dental and medical insurance covering Employee, Employee's spouse and
       Employee's dependents on terms no less favorable than the coverage in
       effect on the day preceding the Effective Date. If available on
       commercially reasonable terms, such insurance shall be transferable to
       the Employee at no cost to the Company in the event of the termination of
       employment hereunder.

            (3) Long term Disability Insurance. The Company shall provide
       long-term disability insurance for the Employee with coverage in the
       annual amount of at least $250,000 payable to death with no greater than
       a 90-day waiting period and on terms no less favorable than coverage in
       effect on the day preceding the Effective Date. Such insurance shall be
       transferable to the Employee at no cost to the Company in the event of
       the termination of employment hereunder. The Company shall also pay
       Employee a periodic supplemental cash benefit equal to 45% of the taxable
       income required to be reported by Employee by reason of the Company's
       payment of premiums for such insurance.

            (4) Long Term Home Care Insurance. The Company shall provide to
       the Employee, Employee's spouse and Employee's dependents insurance
       coverage for executive home or other facility assisted care on terms no
       less favorable than the coverage in effect on the day preceding the
       Effective Date. Such insurance shall be transferable to the Employee at
       no cost to the Company in the event of the termination of employment
       hereunder. The Company shall also pay Employee a periodic supplemental
       cash benefit equal to 45% of the taxable income required to be reported
       by Employee by reason of the Company's payment of premiums for such
       insurance.

<PAGE>

         Except as specifically provided in this Agreement, the Company shall
not be required to pay any premiums with respect to any of the foregoing with
respect to periods after the termination of employment hereunder.

         d. The Employee shall be eligible for participation in all employee
welfare and benefit plans, programs and arrangements of the Company now or
hereafter made generally available to all senior executives of the Company, as
such plans, programs and arrangements may be in effect from time to time
(including, without limitation, each retirement plan, supplemental and excess
retirement plans, annual and long-term incentive compensation plans, group life
insurance, accident and death insurance, medical and dental insurance, sick
leave, pension plans and disability plans). The Employee shall also be eligible
to participate in the Company's executive perquisites in accordance with the
terms and provisions of the arrangements as generally in effect from time to
time for all of the Company's senior executives. To the extent permitted under
all applicable plans, programs, arrangements, and benefits (including, without
limitation, the benefits or plans in Section 4.c. hereof), benefits shall inure
to the Employee's spouse and eligible dependents.

         e. Prompt reimbursement of all out-of-pocket expenses properly incurred
by the Employee in the performance of his duties and as shall properly be
incurred by him and vouched for in connection with the Company's business.

         f. The Employee shall be entitled to not less than five (5) weeks
annual holiday (in addition to legal or national holidays at his location of
work) in each Year. Unusued vacation will not accumulate from year to year.

         g. In addition to the basic salary set forth above, Employee shall be
paid a performance bonus no later than 120 days after the end of each fiscal
year. Such performance bonus target shall be in an amount no less than $250,000.
Employee shall be entitled to payment of 60% of the performance bonus target
amount if the Company's financial and budgetary plan for the fiscal year is met.
For purposes of the preceding sentence, the financial and budgetary plan for a
fiscal year shall be determined by the Board acting in good faith. Employee
shall be entitled to payment of 40% of the performance bonus target amount based
upon satisfactory performance by the Employee, as reasonably determined in good
faith by the Board of Directors.

         h. Subject to stockholder approval of the requisite amendment to the
Amended and Restated 1996 Stock Option Plan, Employee shall be granted on the
Effective Date two hundred thousand (200,000) options ("Options") to purchase
shares of common stock of the Company ("Shares"). The per share exercise price
for the Shares to be issued pursuant to the exercise of the Options ("Option
Shares") shall be the "Initial Conversion Price" as defined in the provisions of
the Company's Certificate of Incorporation setting forth the terms of the
Company's Series B 6% Cumulative Convertible/Exchangeable Preferred Stock. The
Options shall become vested and exercisable with respect to twenty percent (20%)
of the Option Shares on each anniversary of the Effective Date and shall be
exercisable until the tenth anniversary of the Effective Date. Notwithstanding
the foregoing, the Options shall be vested and exercisable with respect to all
Option Shares upon the termination of Employee's employment by the Company other
than for Cause or by Executive for Good Reason, termination of Employee's
employment by death or Disability or

<PAGE>

upon a Change of Control. Employee shall be granted additional options to
purchase Shares from time to time as determined by the Board of Directors based
on his performance.

         Section 5.  Termination.

         Notwithstanding anything contained herein to the contrary, this
Agreement may be terminated at any time by either party in accordance with the
following terms:

         a. Death. In the event of Employee's death, this Agreement shall
terminate immediately, provided, however, the Company shall be obligated to pay
within thirty (30) days after Employee's death to Employee's family or estate a
lump sum payment equal to the basic salary, unused vacation time (not to exceed
five (5) weeks), and performance bonus actually earned or accrued as of the date
of Employee's death, and Company shall for a period of twelve (12) months from
the date of death continue for the benefit of the Employee's spouse and
dependents all of Employee's base salary, health insurance and other welfare and
benefit plans, programs and arrangements, including, without limitation, amounts
required to maintain the benefits of insurance to be provided pursuant to
Section 4c. of this Agreement in effect at such time (if available under the
plans).

         b. Disability. In the event the employment of Employee is interrupted
due to the Disability of Employee, the basic salary and other benefits payable
to Employee shall be continued by the Company for a period of six (6) full
calendar months from the date of last regular employment. Should such Disability
continue thereafter, no additional salary, performance bonus, fringe benefits,
or other benefits shall be paid to Employee, and the Company shall have the
right to terminate Employee's employment under this Agreement upon written
notice to Employee. During the period of his Disability (including any period
after the date of termination), the Employee shall be entitled to continued
participation for himself, his spouse and his dependents Employee's benefits
under the Company's health and welfare plans including, without limitation, the
insurance to be provided pursuant to Section 4c. of this Agreement, and to
continued participation in all the Company's employee benefit plans all to the
extent permitted under the plans, and all vested rights which the Employee may
have shall remain in full force and effect. Upon request, the Employee shall
submit to reasonable tests and examination by a physician on behalf of the
Company. In the event of disagreement of the two physicians consulted by
Employee and the Company, the two shall select a third physician whose
determination shall be deemed conclusive.

         c.       Termination Without Cause or For Good Reason.

                  (i) If the Company terminates Employee's employment hereunder
         without Cause effective at any time on or before the first anniversary
         of the Effective Date or Employee resigns for Good Reason effective at
         any time on or before the first anniversary of the Effective Date, the
         Company shall be obligated to pay all basic salary, fringe benefits,
         unused vacation time, and performance bonus accrued as of the date of
         termination and shall pay Employee within three days after termination
         of employment a single lump sum amount equal to the product of (a) two,
         multiplied by (b) the sum of Employee's basic salary and the Employee's
         performance bonus with respect to the fiscal year preceding such
         termination

<PAGE>

         of employment. The Company shall continue to pay Employee's health and
         other employee welfare benefits, including, without limitation, the
         amounts required to maintain the insurance to be provided pursuant to
         Section 4c. of this Agreement for two years following the effective
         date of termination of employment. During the Term (including the
         two-year period after the effective date of such termination), the
         Employee shall be entitled to continue participation for himself, his
         spouse and his dependents under the Company's health and welfare plans
         and to continued participation in all of the Company's employee benefit
         plans other than so-called executive perquisites, and all vested rights
         which the Employee may have shall remain in full force and effect and
         shall be deemed vested.

                  (ii) If the Company terminates Employee's employment hereunder
         without Cause effective at any time after the first anniversary of the
         Effective Date or Employee resigns for Good Reason effective at any
         time after the first anniversary of the Effective Date, the Company
         shall be obligated to pay all basic salary, fringe benefits, unused
         vacation time, and performance bonus accrued as of the date of
         termination and shall pay Employee within three days after termination
         of employment a single lump sum amount equal to the sum of Employee's
         basic salary and the Employee's performance bonus with respect to the
         fiscal year preceding such termination of employment. The Company shall
         continue to pay Employee's health and other employee welfare benefits,
         including, without limitation, the amounts required to maintain the
         insurance to be provided pursuant to Section 4c. of this Agreement for
         one year following the effective date of termination of employment.
         During the Term (including the one-year period after the effective date
         of such termination), the Employee shall be entitled to continue
         participation for himself, his spouse and his dependents under the
         Company's health and welfare plans and to continued participation in
         all of the Company's employee benefit plans other than so-called
         executive perquisites, and all vested rights which the Employee may
         have shall remain in full force and effect and shall be deemed vested.

         d. Resignation. In addition to Employee's right to resign for Good
Reason, Employee may resign from employment hereunder at any time by providing
Company with written notice at least six (6) months in advance of the effective
date of the resignation. If Employee resigns without Good Reason, Company shall
pay the basic salary, unused vacation time, and performance bonus actually
earned or accrued through the effective date of resignation but shall have no
further obligations under this Agreement whatsoever.

         e. Termination for Cause. Company may terminate Employee's employment
hereunder at any time effective immediately for Cause. If Company terminates
Employee for Cause, Company shall be obligated to pay Employee's basic salary
and fringe benefits accrued only through the effective date of termination and
shall not be responsible to pay any other amounts or provide any other benefits
thereafter.

         Section 6. Other Provisions Governing Termination. The Employee shall
not be required to mitigate amounts payable pursuant to Section 5 by seeking
other employment or otherwise. The Employee's acceptance of other employment
during the Term shall not, directly or indirectly, diminish or impair the
amounts payable by the Company pursuant to Section 5.

<PAGE>

         Section 7.  Non-competition:

         a. During his employment with the Company and for a period of three
years following termination of such employment, unless such termination is by
the Company without Cause or by the Employee for Good Reason, Employee will not,
directly or indirectly, Compete (as hereinafter defined) with the Company or any
other member of the Group. "Compete" means to work for, represent, consult for
or invest in (except owning less than one-half of one percent of a publicly
traded company) as an officer, director (other than serving as a director of a
company of which Employee currently serves as a director), employee, agent, or
independent contractor, for a person or entity engaged in the Business (as
hereinafter defined) anywhere within the Restricted Territory (as hereinafter
defined). "Business" means any of the following services:

                  a. Hotel franchise system marketing, advertising and/or
          promotion, including, without limitation, specific hotel franchise
          sales and solicitation; or

                  b. Hotel franchise system operation or maintenance, including,
         without limitation, system specifications, quality control and
         policing, franchisee training, system design and implementation, hotel
         site selection formats, hotel space planning, standard system
         accounting, advertising fund support and maintenance, reservation
         system support and maintenance, and creation and maintenance of
         Standards, Operations or Site Construction Manuals.

"Restricted Territory" means any area within the United States that is (i)within
a 50 mile radius surrounding the principal offices of the Company or any of its
Affiliates at the time of Employee's termination, (ii) within a 10 mile radius
surrounding any hotel licensed or franchised by the Company or any of its
Affiliates at the time of Employee's termination, (iii) within a 10 mile radius
surrounding any hotel for which the Company or any of its Affiliates is
rendering services at the time of Employee's termination, or (iv) within a 10
mile radius surrounding the site of any proposed hotel licensed or franchised by
the Company or any of its Affiliates at the time of Employee's termination.

         b. Employee acknowledges that the above covenants are a reasonable
means of protecting and preserving the Company's goodwill, its investment in
Employee and its other legitimate business interests. Employee agrees that any
breach of these covenants will result in irreparable damage and injury to the
Company and that the Company will be entitled to injunctive relief in any court
of competent jurisdiction. Employee also agrees that any such injunctive relief
shall be in addition to any damages that may be recoverable by the Company.

         c. Employee and the Company agree that Employee's obligations under the
above covenants are separate and distinct under this Agreement, and the failure
or alleged failure of the Company to perform its obligations under any other
provisions of this Agreement shall not constitute a defense to the
unenforceability of these covenants after such third anniversary.

<PAGE>

         Section 8.  Nondisclosure of Trade Secrets and Confidential
Information.

         a. During the Non-Solicitation Period, Employee will not (except where
Employee believes in good faith that disclosure is in furtherance of his
employment hereunder), directly or indirectly, copy, reproduce, disseminate,
use, exploit or disclose for the benefit of a competitor of Company (or the
Group) or for Employees' own benefit or account, or publish and abandon to the
public domain, any trade secrets of Company and the Group (regardless of whether
evidenced by a written medium of expression), including but not limited to,
those related to any of their hotel franchise systems and pending or prospective
franchisees without the prior consent of the Company, including, without
limitation:

                  (1) The identity of pending franchisees and franchise
         applications or particular prospects, regardless of whether such
         potential or pending franchisees are independently known to Employee or
         obtained or obtainable from Company's data base (provided that Company
         policy limits access to such data based on a need-to-know basis), and
         further provided that such restriction shall lapse when any such
         pending franchisee commences construction of a hotel under an executed
         franchise agreement from Company or its Affiliates, or their
         subfranchisors;

                  (2) Trade secrets included within any of the Company's
         franchise, construction, Standards, Operations or Site Construction
         Manuals;

                  (3) Hotel design, construction and space plan documents,
         including working drawings, related to the Microtel Hotel Franchise
         System owned by Company (but not the Best Hotel or Hawthorne Suites
         Systems) and any other so-called "Cookie Cutter" hotel franchise system
         operated by Company in the future during the term of this Employment
         Agreement; and

                  (4) The specific portions of any hotel reservation system
         software (constituting proprietary trade secrets) information, utilized
         by the Company, that are owned by or exclusively licensed to the
         Company, if any, that are not protected by federal patent or copyright
         registration, now or in the future.

         b. Employee acknowledges that the nondisclosure covenants contained in
this Section are a reasonable means of protecting and preserving Company's
interest in the confidentiality of this information. Employee agrees that any
breach of these covenants will result in irreparable damage and injury to
Company and that Company will be entitled to injunctive relief in any court of
competent jurisdiction. Employee also agrees that any such injunctive relief
shall be in addition to any damages that may be recoverable by Company.

         c. Employee and Company agree that Employee's obligations under these
nondisclosure covenants are separate and distinct from other provisions of this
Agreement, and a failure or alleged failure of Company to perform its
obligations under any provision of this Agreement shall not constitute a defense
to the enforceability of these nondisclosure covenants.

<PAGE>

         Section 9.  Non-Solicitation.

         a. In consideration of the compensation and benefits being paid and to
be paid by the Company to Employee hereunder or otherwise, Employee agrees that,
during the Non-Solicitation Period, he shall not, in any manner (other than as
an employee of or a consultant to the Company or an Affiliate), directly or
indirectly:

                  (1) employ or seek to employ, on his own behalf or on behalf
         of any other person or entity other than the Company or any member of
         the Group, any person who was employed by the Company or any member of
         the Group during Employee's employment with the Company or any person
         who is thereafter employed by the Company or the Group; or

                  (2) induce or attempt to induce any licensee, franchisee or
         supplier of the Company or any member of the Group to terminate it
         contractual relationship with the Company or such Group member; and

         b. In consideration for the compensation and benefits being paid and to
be paid by the Company to Employee hereunder or otherwise, Employee further
agrees that, unless his employment is terminated by the Company without Cause or
by Employee for Good Reason, Employee shall not for a period of three years
following such termination of employment solicit the Business or enter into any
contractual relationship for the Business of any person or entity who was a
franchisee or licensee of the Company or any Group member as of the termination
date, unless such person or entity was a franchisee or licensee of a competitor
of the Company as of the termination date and Employee's efforts to solicit such
Business do not violate any other covenant of this Agreement.

         c. Employee acknowledges that the above covenants are a reasonable
means of protecting and preserving Company's goodwill, its investment in
Employee and its other legitimate business interests. Employee agrees that any
breach of these covenants will result in irreparable damage and injury to
Company and that Company will be entitled to injunctive relief in any court of
competent jurisdiction. Employee also agrees that any such injunctive relief
shall be in addition to any damages that may be recoverable by Company.

         d. Employee and Company agree that Employee's obligations under the
above covenants are separate and distinct under this Agreement, and the failure
or alleged failure of Company to perform its obligations under any other
provisions of this Agreement shall not constitute a defense to the
enforceability of these covenants.

         Section 10. Indemnification. The Company shall indemnify the Employee
to the maximum extent permitted by applicable law and the Company's charter and
by-laws as currently in effect (copies of which have heretofore been provided to
the Employee) against all costs, charges and expenses (including, without
limitation, legal fees or the provision of counsel by the Company) incurred or
sustained by him in connection with any action, suit or proceeding to which he
may be made a party by reason of his being an officer, director or employee of
the Company or the Group

<PAGE>

whether or not such action, suit or proceeding is brought during the Employee's
employment by the Company. The Company will reimburse Employee for all
reasonable legal fees and disbursements incurred by Employee in connection with
the negotiation and preparation of this Agreement and all reasonable fees and
disbursements incurred by Employee in connection with any dispute over the
enforcement by Employee of his rights under this Agreement, but only if Employee
prevails in such dispute.

         Section 11. Notice. All notices or other communications hereunder shall
be in writing and shall be deemed to have been duly given (a) when delivered
personally, (b) on the business day following the day such notice or other
communication is sent by recognized overnight courier, (c) on acknowledgment of
the receipt of a facsimile of such notice or other communication, or (d) on the
fifth day following the date of deposit in the United States mail if sent first
class, postage prepaid, by registered or certified mail. The addresses for such
notices shall be as follows:

         If to the Company:

         U.S. Franchise Systems, Inc.
         13 Corporate Square
         Suite 250
         Atlanta, Georgia  30329
         Attn:___________________
         Facsimile No. __________

         With a copy to:

         Meridian Associations, L.P.
         200 West Madison Street
         Suite 3800
         Chicago, Illinois 60606
         Attn: ___________________
         Facsimile No. ___________

         If to the Employee:

         Michael A. Leven
         [Address]
         Facsimile No. [Facsimile Number]

<PAGE>

         with a copy to:

         Terry M. Schlade
         Altheimer & Gray
         10 South Wacker Drive
         Suite 4000
         Chicago, Illinois  60606

         Section 12.  Miscellaneous.

         a. Severability. The covenants set forth in this Agreement shall be
considered and construed as separate and independent covenants. Should any part
or provision of any covenant be held invalid, void or unenforceable in any court
of competent jurisdiction, such invalidity, voidness or unenforceability shall
not render invalid, void or unenforceable any other part or provision of this
Agreement. If any portion of this Agreement is found to be invalid or
unenforceable by a court of competent jurisdiction because its duration, the
territory, the definition of activities or the definition of information covered
is invalid or unreasonable in scope, the invalid or unreasonable term shall be
redefined, or a new enforceable term provided, such that the intent of Company
and Employee in agreeing to the provisions of this Agreement will not be
impaired and the provision in question shall be enforceable to the fullest
extent of the applicable laws. Without limitation of the other agreements
contained in this Section, this provision shall be considered to be Employee's
express consent to modification of any restriction or provision that is deemed
to be overbroad or otherwise unreasonable in scope.

         b. Waiver. The waiver by any party to this Agreement of a breach of any
of the provisions of this Agreement shall not operate or be construed as a
waiver of any other or subsequent breach.

         c. Governing Law. This Agreement shall be deemed to be made in and
shall in all respects be interpreted, construed and governed by and in
accordance with the laws of the State of Georgia (without giving effect to the
conflict of law principles thereof). No provision of this Agreement or any
related documents shall be construed against, or interpreted to the disadvantage
of, any party hereto, by any court or any governmental or judicial authority by
reason of such party having or being deemed to have structured or drafted such
provision.

         d. Entire Agreement. This Agreement is intended by the parties hereto
to be the final expression of their agreement with respect to the subject matter
hereof and this is the complete and exclusive statement of the terms of their
agreement with respect to the subject matter hereof, notwithstanding any
representations, statements or agreements to the contrary heretofore made. This
Agreement supersedes any former agreements, correspondence, or other
communication governing the same subject matter. This Agreement may be modified,
and its provisions may be waived, only by a written instrument signed by each of
the parties hereto.

         e. Certain Additional Payments by the Company. If Employee becomes
entitled to any payments or benefits whether pursuant to the terms of or by
reason of this Agreement or any other

<PAGE>

plan, arrangement, agreement, policy or program (including without limitation
any restricted stock, stock option, stock appreciation right or similar right,
or the lapse or termination of any restriction on the vesting or exercisability
of any of the foregoing) with the Company, any successor to the Company or to
all or a part of the business or assets of the Company (whether direct or
indirect, by purchase, merger, consolidation, spin off, or otherwise and
regardless of whether such payment is made by or on behalf of the Company or
such successor) or any person whose actions result in a change of control or any
person affiliated with the Company or such persons (in the aggregate, "Payments"
or singularly, "Payment"), which Payments are reasonably determined by the
Employee to be subject to the tax imposed by Section 4999 or any successor
provision of the Code or any similar state or local tax, (such excise tax is
hereinafter collectively referred to as the "Excise Tax"), the Company shall pay
Employee an additional amount ("Gross-Up Payment") such that the net amount
retained by Employee, after deduction or payment of (i) any Excise Tax on
Payments and (ii) any federal, state and local income tax and Excise Tax upon
the payment provided for by this Section shall be equal to the full amount of
the Payments. The Gross-Up Payment shall be paid to the Employee within ten (10)
days after the Company's receipt of written notice from the Employee after a
change of control has occurred that the Excise Tax has been paid, is or was
payable or will be payable at any time in the future. Notwithstanding the
foregoing, no Gross Up Payment shall be payable with respect to any change of
control that may result from transactions occurring on or before the Effective
Date.

         f. The employee stock purchase agreement originally executed on
September 29, 1995 and then amended and restated August 23, 1996 between the
Company and the Employee is terminated in its entirety as of the Effective Date
and no Shares held by Employee are subject to any restrictions contained
therein.

         g. Counterparts. This Agreement may be executed simultaneously in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.

COMPANY:

U.S. FRANCHISE SYSTEMS, INC.,

a Delaware corporation

By: /s/ Stephen D. Aronson
   ------------------------

EMPLOYEE:

/s/ Michael A. Leven
---------------------------
Michael A. Leven

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