Document:

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                                                                   EXHIBIT 10.37

                             Employment Agreement
                                for James Lewis

                              Levi Strauss & Co.
                                  April 2000

                          Revised as of May 15, 2000
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Contents

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Section 1. Term of Employment                                             1

Section 2. Definitions                                                    1

Section 3. Position and Responsibilities                                  4

Section 4. Standard of Care                                               4

Section 5. Compensation                                                   4

Section 6. Expenses                                                       6

Section 7. Employment Terminations                                        6

Section 8. Change in Control                                              9

Section 9. Assignment                                                    10

Section 10. Legal Fees and Notice                                        11

Section 11. Miscellaneous                                                11

Section 12. Confidentiality and Noncompetition                           12

Section 13. Governing Law                                                13

Section 14. Indemnification                                              13

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Levi Strauss
Employment Agreement for James Lewis

   This EMPLOYMENT AGREEMENT is made, entered into, and is effective as of this
24th day of April 2000 (herein referred to as the "Effective Date"), by and
between Levi Strauss & Co. (hereinafter referred to as the "Company"), a
Delaware corporation having its principal offices in California and James Lewis
(hereinafter referred to as the "Executive").

   WHEREAS, the Executive will be employed by the Company in the capacity of
President, Levi Strauss Americas.

   WHEREAS, the Executive will possess considerable experience and knowledge of
the business and affairs of the Company, its policies, methods, personnel, and
operations;

   WHEREAS, the Company recognized that the Executive's contribution will be
substantial and meritorious and, as such, the Executive has unique
qualifications to act in an executive capacity for the Company; and

   WHEREAS, the Company is desirous of assuring the employment of the Executive
in the above stated capacity, and the Executive is desirous of such assurance.

   NOW THEREFORE, in consideration of the foregoing and of the mutual covenants
and agreements of the parties set forth in this Agreement, and of other good and
valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:

Section 1. Term of Employment

   The Company hereby agrees to employ the Executive and the Executive hereby
agrees to continue to serve the Company in accordance with the terms and
conditions set forth herein, for a period of five (5) years, commencing as of
the Effective Date of this Agreement as indicated above; subject however, to
earlier termination as expressly provided herein.

   Either party may terminate this Agreement prior to the end of the five (5)
year period by giving the other party sixty (60) days prior written notice.

Section 2. Definitions

   2.1  "Agreement" means this Employment Agreement for James Lewis.

   2.2  "Annual Bonus" means the annual bonus to be paid to the Executive in
        accordance with the Company's annual bonus program as described in
        Section 5.2 herein.

   2.3  "Base Salary" means the salary of record paid to the Executive as annual
        salary, pursuant to Section 5.1, excluding amounts received under
        incentive or other bonus plans, whether or not deferred.

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   2.4  "Beneficial Owner" shall have the meaning ascribed to such term in Rule
        13d-3 of the General Rules and Regulations under the Securities Exchange
        Act.

   2.5  "Beneficiary" means the persons or entities designated or deemed
        designated by the Executive pursuant to Section 11.6 herein.

   2.6  "Board" or "Board of Directors" means the Board of Directors of the
        Company.

   2.7  "Cause" means the Executive's:

        (a)  Willful and continued failure to substantially perform his duties
             with the Company (other than any such failure resulting from
             Disability or occurring after issuance by the Executive of a Notice
             of Termination for Good Reason), after a written demand for
             substantial performance is delivered to the Executive that
             specifically identifies the manner in which the Company believes
             that the Executive has willfully failed to substantially perform
             his duties, and after the Executive has failed to resume
             substantial performance of his duties on a continuous basis within
             thirty (30) calendar days of receiving such demand;
        (b)  Conviction of a felony involving a crime of moral turpitude; or

        (c)  Willfully engaging in illegal conduct or gross misconduct which is
             materially and demonstrably injurious to the Company.

   For purposes of determining Cause, no act or omission by the Executive shall
be considered "willful" unless it is done or omitted in bad faith or without
reasonable belief that the Executive's action or omission was in the best
interests of the Company. Any act or failure to act based upon: (a) authority
given pursuant to a resolution duly adopted by the Board, or (b) advice of
counsel for the Company, shall be conclusively presumed to be done or omitted to
be done by the Executive in good faith and in the best interests of the Company.

   2.8  "Change in Control" or "CIC" of the Company shall be deemed to have
        occurred as of the first day that any of the following conditions is
        satisfied: there is consummated: (i) a plan of complete liquidation of
        the Company; or (ii) a sale or disposition of assets that generated
        fifty (50%) percent or more of the Company's total net sales (as set
        forth in the audited financial statements for the most recently ended
        fiscal year) in one or a series of related transactions over the
        immediately preceding twenty-four (24) month period; or (iii) a merger,
        consolidation, or reorganization of the Company with or involving any
        other corporation, other than a merger, consolidation, or reorganization
        that 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 sixty-five (65%) percent of the combined
        voting power of the voting securities of the Company (or such surviving
        entity) outstanding immediately after such merger, consolidation, or
        reorganization.

        However, in no event shall a Change in Control be deemed to have
        occurred, with respect to the Executive, if the Executive is part of a
        purchasing group, which consummates the

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        Change-in-Control transaction. The Executive shall be deemed "part of a
        purchasing group" for purposes of the preceding sentence if the
        Executive is an equity participant in the purchasing company or group
        except for: (i) passive ownership of less than three (3%) percent of the
        stock of the purchasing company, or (ii) ownership of equity
        participation in the purchasing company or group which is otherwise not
        significant, as determined prior to the Change in Control by a majority
        of the nonemployee continuing Directors.

   2.9  "CIC Severance Benefits" means the payment of severance compensation
        associated with a Qualifying Termination occurring subsequent to a
        Change in Control, as described in Section 8.3.

   2.10 "Code" means the United States Internal Revenue Code of 1986, as
        amended.

   2.11 "Company" means Levi Strauss & Co., a Delaware corporation (including
        any and all subsidiaries), or any successor thereto as provided in
        Section 9.1 herein.

   2.12 "Director" means any individual who is a member of the Board of
        Directors of the Company.

   2.13 "Disability" or "Disabled" means for all purposes of this Agreement,
        the incapacity of the Executive, due to injury, illness, disease, or
        bodily or mental infirmity, to engage in the performance of
        substantially all of the usual duties of employment with the Company.

   2.14 "Effective Date" means April 24, 2000, or such other date as the Board
        shall designate.

   2.15 "Effective Date of Termination" means the date on which a termination
        occurs which triggers the payment of Severance Benefits or CIC Severance
        Benefits hereunder.

   2.16 "Executive" means James Lewis.

   2.17 "Good Reason" shall mean, without the Executive's express written
        consent, a material reduction in job responsibilities including, but not
        limited to, a change in the Executive's reporting relationships to the
        Chief Executive Officer (CEO).

   2.18 "Leadership Shares" means the award granted under the Company's long-
        term incentive plan.

   2.19 "Levi Strauss Deferred Compensation Plan" means the Company's deferred
        compensation plan.

   2.20 "Notice of Termination" means a written notice which shall indicate the
        specific termination provision in this Agreement relied upon, and shall
        set forth in reasonable detail the facts and circumstances claimed to
        provide a basis for termination of the Executive's employment under the
        provisions so indicated.

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   2.21 "Person" shall have the meaning ascribed to such term in Section 3(a)(9)
        of the Securities Exchange Act and used in Sections 13(d) and 14(d)
        thereof, including a "group" as defined in Section 13(d) thereof.

   2.22 "Personnel Committee" means the Personnel Committee of the Board, or any
        other committee appointed by the Board to perform the functions of the
        Personnel Committee.

   2.23 "Qualifying Termination" means any of the events described in Section
        8.2 herein, the occurrence of which triggers the payment of CIC
        Severance Benefits hereunder.

   2.24 "Retirement Benefit SERP" means the nonqualified benefit arrangement
        maintained by the Company which provides various retirement benefits to
        certain executives of the Company.

   2.25 "Securities Exchange Act" means the United States Securities Exchange
        Act of 1934, as amended.

   2.26 "Severance Benefits" means the payment of severance compensation as
        provided in Section 7.4 herein, and not payable due to a Change in
        Control of the Company.

Section 3. Position and Responsibilities

   During the term of this Agreement, the Executive agrees to serve as
President, Levi Strauss Americas. In his capacity as President, Levi Strauss
Americas, the Executive shall report directly to the Chief Executive Officer of
the Company, Philip Marineau, and shall maintain the level of duties and
responsibilities as in effect as of the Effective Date, or such higher level of
duties and responsibilities as he may be assigned during the term of this
Agreement or any subsequent term.

Section 4. Standard of Care

   During the term of this Agreement or any subsequent term, the Executive
agrees to devote substantially his full time, attention, and energies to the
Company's business and shall not be engaged in any other business activity,
whether or not such business activity is pursued for gain, profit, or other
pecuniary advantage. However, subject to Section 12 herein, the Executive may
serve as a director of other companies so long as it is approved by the Chief
Executive Officer of the Company. The Executive covenants, warrants, and
represents that he shall:

   (a) Devote his full and best efforts to the fulfillment of his employment
       obligations; and

   (b) Exercise the highest degree of loyalty and the highest standards of
       conduct in the performance of his duties.

Section 5. Compensation

   As remuneration for all services to be rendered by the Executive during the
term of this Agreement, and as consideration for complying with the covenants
herein, the Company shall pay and provide to the Executive the following:

   5.1  Base Salary. The Company shall pay the Executive a Base Salary in an
amount which shall be established from time to time by the Board of Directors of
the Company or the Board's

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designee; provided, however, that such Base Salary shall not be less than
$750,000 per year. This Base Salary shall be paid to the Executive in equal
installments throughout the year, consistent with the normal payroll practices
of the Company. The Base Salary shall be reviewed at least annually following
the Effective Date of this Agreement in accordance with the salary review policy
of the Company, while this Agreement is in force, to ascertain whether, in the
judgment of the Board or the Board's designee, such Base Salary should be
increased based primarily on the performance of the Executive during the year.
If so increased, the Base Salary as stated above shall, likewise, be increased
for all purposes of this Agreement and shall not, in any event, be decreased in
any year.

   5.2  Annual Bonus. In addition to his Base Salary, the Executive shall be
entitled to participate in the Company's short-term incentive program, as such
program may exist from time to time, at a level commensurate with his position,
as determined at the sole discretion of the Company's Personnel Committee;
provided, however, that the minimum targeted short-term incentive opportunity in
any one fiscal year shall be 55% percent of the Executive's Base Salary and the
maximum incentive opportunity shall be 110% of the Executive's Base Salary.

       For 2000, the Executive is guaranteed his minimum targeted annual bonus
of 55% of Base Salary ($412,500).

   5.3  Long-Term Incentives. The Executive shall be eligible to participate in
the Company's long-term incentive plans as such shall be amended or superseded
from time to time, at a level commensurate with his position, as determined in
the sole discretion of the Company's Personnel Committee.

   For the 2000 grant, the Company will grant to the Executive 108,000
Leadership Shares under the Company's Leadership Shares Plan. This award
reflects three elements: a regular annual grant of 42,500 shares, a special sign
on grant of 40,000 shares and a replacement for options forfeited upon leaving
his previous employer of 25,500 shares. In addition, the Executive will be
compensated for the 23,300 Transformation Shares of his restricted stock
forfeited at his previous employer, which shall be paid no later than January
31, 2001.

   5.4  Retirement Benefits. The Company shall provide to the Executive
participation in all Company qualified defined benefit and defined contribution
retirement plans, subject to the eligibility and participation requirements of
such plans. In addition, the Company shall provide to the Executive
participation in all other nonqualified retirement programs typically offered to
executives at the Company.

   Nothing in this paragraph shall be construed as obligating the Company to
refrain from changing, and/or amending the nonqualified retirement programs, so
long as such changes are similarly applicable to all executives generally.

   5.5  Employee Benefits. During the term of this Agreement, and as otherwise
provided within the provisions of each of the respective plans, the Company
shall provide to the Executive all benefits to which other executives and
employees of the Company are entitled to receive, as commensurate with his
position, subject to the eligibility requirements and other provisions of such
arrangements as applicable to executives of the Company generally. Such benefits
shall include, but

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shall not be limited to, group term life insurance, comprehensive health and
major medical insurance, dental insurance, and short-term and long-term
disability.

   The Executive shall be entitled to participate in the Company's Deferred
Compensation Plan.

   The Executive shall be entitled to paid vacation in accordance with the
standard written policy of the Company with regard to vacations of employees.

   The Executive shall likewise participate in any additional benefit as may be
established during the term of this Agreement, by standard written policy of the
Company.

   5.6  Retirement Benefit SERP. If the Executive remains with the Company for
the entire term of this Agreement, with Philip Marineau serving as the Chief
Executive Officer, the Executive will receive full vesting in his Retirement
Benefit SERP with an additional fifteen (15) years credited service added to his
account.

   If the Executive remains with the Company for the entire term of this
Agreement, and Philip Marineau is no longer serving as the Chief Executive
Officer, the Executive will receive full vesting in his Retirement Benefit SERP
with an additional twenty (20) years credited service added to his account.

   5.7  Perquisites. The Company shall provide to the Executive, at the
Company's cost, all perquisites which are suitable to the position of President,
Levi Strauss Americas including, for 2000, a company car allowance of $7,000 per
year for leasing a car plus gas/maintenance, insurance and parking and an annual
allowance of $12,500 to include health club, tax prep, financial counseling and
non-covered medical expenses. The Company will use independent surveys to set
such perquisite amounts, if any, in future years. Any amounts paid under this
Section 5.7 will be included in the Executive's gross income for tax purposes.

   5.8  Right to Change Plans. The Company shall not be obligated to institute,
maintain, or refrain from changing, amending, or discontinuing any benefit plan,
program, or perquisite, so long as such changes are similarly applicable to
executive employees generally.

Section 6. Expenses

   Upon presentation of appropriate documentation, the Company shall pay, or
reimburse the Executive for all ordinary and necessary expenses, in a reasonable
amount, which the Executive incurs in performing his duties under this Agreement
including, but not limited to, travel, entertainment, professional dues and
subscriptions, and all dues, fees, and expenses associated with membership in
various professional, business, and civic associations and societies in which
the Executive's participation is in the best interest of the Company.

Section 7. Employment Terminations

   7.1  Termination Due to Death. In the event the Executive's employment is
terminated while this Agreement is in force by reason of death, the Company's
obligation under this Agreement shall immediately expire.

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   Notwithstanding the foregoing, the Company shall be obligated to pay to the
Executive's Beneficiary or estate the following:

       (a)  Base Salary through the effective date of the Executive's employment
            termination;

       (b)  An amount equal to the Executive's unpaid targeted Annual Bonus
            award, established for the year in which the Executive's effective
            date of employment termination occurs, multiplied by a fraction, the
            numerator of which is the number of completed days in the then-
            existing fiscal year through the effective date of termination, and
            the denominator of which is three hundred sixty-five (365);

       (c)  Accrued vacation pay through the effective date of termination; and

       (d)  All other rights and benefits the Executive is vested in, pursuant
            to other plans and programs of the Company.

   The benefits described above shall be paid in cash to the Executive's
Beneficiary or estate in a single lump sum as soon as practicable following the
Executive's death. Any other payments due shall be paid in accordance with the
terms of such applicable plans or programs.

   7.2  Termination Due to Disability. In the event that the Executive becomes
Disabled during the term of this Agreement and is, therefore, unable to perform
his duties herein for a period of more than ninety (90) calendar days in the
aggregate, during any period of twelve (12) consecutive months, or in the event
of the Board's reasonable expectation that the Executive's Disability will exist
for more than a period of ninety (90) calendar days, the Company shall have the
right to terminate the Executive's active employment as provided in this
Agreement. However, the Board shall deliver written notice to the Executive of
the Company's intent to terminate for Disability at least thirty (30) calendar
days prior to the effective date of such termination.

   If the Executive and the Company shall not be in agreement as to whether the
Executive has suffered a Disability for the purposes of this Agreement, the
matter shall be referred to a panel of three medical doctors, one of which shall
be selected by the Executive, one of which shall be selected by the Company, and
one of which shall be selected by the two doctors as so selected, and the
decision of a majority of the panel with respect to the question of whether the
Executive has suffered a Disability shall be binding upon the Executive and the
Company. The expenses of any such referral shall be borne by the party against
whom the decision of the panel is rendered. The Executive may be required by the
Company to submit to medical examination at any time during the period of his
employment hereunder, but not more often than quarter-annually, to determine
whether a Disability exists for the purposes of this Agreement.

   Notwithstanding the foregoing, the Company shall be obligated to pay to the
Executive the following:

       (a)  Base Salary through the effective date of the Executive's employment
            termination;

       (b)  An amount equal to the Executive's unpaid targeted Annual Bonus
            award, established for the year in which the Executive's effective
            date of employment
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            termination occurs, multiplied by a fraction, the
            numerator of which is the number of completed days in the then-
            existing fiscal year through the effective date of termination, and
            the denominator of which is three hundred sixty-five (365);

       (c)  Accrued vacation pay through the effective date of termination; and

       (d)  All other rights and benefits the Executive is vested in, pursuant
            to other plans and programs of the Company.

   The benefits described above shall be paid in cash to the Executive in a
single lump sum as soon as practicable following the Executive's employment
termination, but in no event beyond thirty (30) days from such date. Any other
payments due to the Executive upon termination of employment shall be paid in
accordance with the terms of such applicable plans or agreements.

   7.3  Voluntary Termination by the Executive. The Executive may terminate this
Agreement at any time by giving the Chief Executive Officer and the Board of
Directors of the Company written notice of his intent to terminate, delivered at
least sixty (60) calendar days prior to the effective date of such termination.
The termination shall automatically become effective upon the expiration of the
sixty (60) day notice period.

   Upon the effective date of such termination, following the expiration of the
sixty (60) day notice period, the Company shall pay the Executive his full Base
Salary and accrued vacation pay, at the rate then in effect, through the
effective date of termination, plus all other benefits to which the Executive
has a vested right to at that time (for this purpose, the Executive shall not be
paid an Annual Bonus with respect to the fiscal year in which voluntary
termination under this section occurs). With the exception of the covenants
contained in Section 12 herein (which shall survive such termination), the
Company and the Executive thereafter shall have no further obligations under
this Agreement.

   7.4  Involuntary Termination by the Company without Cause or Termination by
the Executive for Good Reason. At all times during the term of this Agreement,
the Chief Executive Officer with the Board's approval may terminate the
Executive's employment for reasons other than death, Disability, Retirement, or
for Cause, by providing to the Executive a Notice of Termination, at least sixty
(60) calendar days prior to the Effective Date of Termination. Furthermore, at
all times during the term of this Agreement, the Executive may terminate his
employment for Good Reason by providing to the Company a Notice of Termination,
at least sixty (60) calendar days prior to the Effective Date of Termination.

   Upon the Effective Date of Termination, following the expiration of the sixty
(60) day notice period, the Company shall pay to the Executive in a lump sum an
amount equal to two times (2x) the sum of the Executive's annual Base Salary
plus two times (2x) the Executive's most recent targeted Annual Bonus
established for the fiscal year in which the Executive's Effective Date of
Termination occurs.

   In addition, the Executive will also be entitled to an amount equal to any
gain on the vested portion of the Executive's Leadership Shares. Provided,
however, that if the Executive terminates

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employment for Good Reason, all Leadership Shares will immediately vest and will
be paid out according to the terms of the Leadership Shares plan.

   Finally, the Company shall pay the Executive all other benefits to which the
Executive has a vested right at the time, according to the provisions of the
governing plan or program. Provided that in the event the Executive terminates
employment for Good Reason, the Executive will be immediately vested in the
Retirement Benefit SERP as described in Section 5.6 above.

   The Company and the Executive thereafter shall have no further obligations
under this Agreement.

   The benefits described in this Section 7.4 shall be paid in cash to the
Executive in a single lump sum as soon as practicable following the Executive's
employment termination, but in no event beyond thirty (30) days from such date.
Any payments made under the Leadership Shares plan will be made in accordance
with the provisions of such plan. All other payments due to the Executive upon
termination of employment shall be paid in accordance with the terms of such
applicable plans or agreement.

   7.5  Termination for Cause. Nothing in this Agreement shall be construed to
prevent the Chief Executive Officer with the Board's approval from terminating
the Executive's employment under this Agreement for Cause.

   In the event this Agreement is terminated by the Chief Executive Officer and
the Board for Cause, the Company shall pay the Executive his Base Salary and
accrued vacation pay through the effective date of the employment termination,
and the Executive shall immediately thereafter forfeit all rights and benefits
(other than vested benefits) he would otherwise have been entitled to receive
under this Agreement. The Company and the Executive thereafter shall have no
further obligations under this Agreement, except for the provisions set forth in
Section 12, which shall survive such termination.

Section 8. Change in Control

   8.1  Employment Termination within twelve (12) calendar months following a
Change in Control. During the term of this Agreement, the Executive shall be
entitled to receive from the Company CIC Severance Benefits if there has been a
Change in Control of the Company and if, within twelve (12) calendar months
following the Change in Control, a Notice of Termination for a Qualifying
Termination of the Executive has been delivered. The Executive shall not be
entitled to receive CIC Severance Benefits if he is terminated for Cause (as
provided in Section 7.5 herein), or if his employment with the Company ends due
to death, Disability, or Retirement or due to voluntary termination of
employment by the Executive without Good Reason. CIC Severance Benefits shall be
paid in lieu of all other benefits provided to the Executive under the terms of
this Agreement.

   8.2  Qualifying Termination. The occurrence of any one or more of the
following events within twelve (12) calendar months following the effective date
of a CIC of the Company shall trigger the payment of CIC Severance Benefits to
the Executive under this Agreement:

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       (a)  An involuntary termination of the Executive's employment by the
            Company for reasons other than Cause, death, Disability, or
            Retirement as evidenced by a Notice of Termination delivered by the
            Company to the Executive;

       (b)  A voluntary termination by the Executive for Good Reason as
            evidenced by a Notice of Termination delivered to the Company by the
            Executive; or

       (c)  The Company or any successor company materially breaches any
            material provision of this Agreement.

   8.3  Severance Benefits Paid upon a Qualifying Termination. In the event the
Executive becomes entitled to receive CIC Severance Benefits, the Company shall
pay to the Executive and provide him the following:

       (a)  A lump-sum amount equal to two (2x) times the Executive's annual
            Base Salary in effect at the time of the Executive's Effective Date
            of Termination.

       (b)  A lump-sum amount equal to two (2x) times the Executive's targeted
            Annual Bonus award established for the plan year in which the
            Executive's Effective Date of Termination occurs.

       (c)  Accelerated vesting of all long-term incentive plans including the
            Executive's Leadership Shares and full vesting, with the additional
            years of service as described in Section 5.6 above, with respect to
            the Executive's Retirement Benefit SERP; and

       (d)  The aggregate benefits accrued by the Executive as of the Effective
            Date of Termination under any savings and retirement plan sponsored
            by the Company, shall be distributed pursuant to the terms of the
            applicable plan. Compensation which has been deferred under the Levi
            Strauss & CO. Deferred Compensation Plan or other plans sponsored by
            the Company, as applicable, together with all interest that has been
            credited with respect to any such deferred compensation balances,
            shall be distributed pursuant to the terms of the applicable plan.

   8.4  Form and Timing of Severance Benefit. The CIC Severance Benefit
described in Section 8.3(a) through (d) shall be paid in cash to the Executive
in a single lump sum as soon as practicable following the Executive's Effective
Date of Termination, but in no event beyond thirty (30) days from such event;
provided, however, that the Leadership Shares shall be paid out in accordance
with the terms of the Leadership Shares plan. All other payments due to the
Executive upon termination of employment shall be paid in accordance with the
terms of such applicable plans or programs.

   8.5  Excise Tax. To the extent any of the payments under this Section 8 are
considered parachute payments under Section 280G of the Code, the Executive may
elect to receive all of the payments in Section 8 in full (as described above)
or he may elect to be capped for excise tax purposes under Section 4999 of the
Code.

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Section 9. Assignment

   9.1  Assignment by Company. This Agreement may and shall be assigned or
transferred to, and shall be binding upon and shall inure to the benefit of, any
successor of the Company, and any such successor shall be deemed substituted for
all purposes of the "Company" under the terms of this Agreement. As used in this
Agreement, the term "successor" shall mean any person, firm, corporation, or
business entity which at any time, whether by merger, purchase, or otherwise,
acquires assets that generated fifty (50%) percent or more of the Company's
total net sales (as set forth in the audited financial statements for the most
recently ended fiscal year) in one or a series of related transactions over the
immediately preceding twenty-four (24) month period. Notwithstanding such
assignment, the Company shall remain, with such successor, jointly and severally
liable for all its obligations hereunder.

   Failure of the Company to obtain the agreement of any successor to be bound
by the terms of this Agreement prior to the effectiveness of any such succession
shall be a breach of this Agreement, and shall immediately entitle the Executive
to benefits from the Company in the same amount and on the same terms as the
Executive would be entitled to receive in the event of a termination of
employment without Cause as provided in Section 7.4 (failure not related to a
Change in Control) or 8.3 (if the failure of assignment follows or is in
connection with a Change in Control). Except as herein provided, this Agreement
may not otherwise be assigned by the Company.

   9.2  Assignment by Executive. This Agreement shall inure to the benefit of
and be enforceable by the Executive's personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees, and
legatees. If the Executive dies while any amount would still be payable to him
hereunder had he continued to live, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement, to the
Executive's Beneficiary. If the Executive has not named a Beneficiary, then such
amounts shall be paid to the Executive's devisee, legatee, or other designee, or
if there is no such designee, to the Executive's estate.

Section 10. Legal Fees and Notice

   10.1  Payment of Legal Fees. The Company shall not pay any of the legal fees
or other expenses incurred by the Executive as a result of the Executive
contesting the validity, enforceability, or interpretation of this Agreement.

   10.2  Notice. Any notices, requests, demands, or other communications
provided by this Agreement shall be sufficient if in writing and if sent by
registered or certified mail to the Executive at the last address he has filed
in writing with the Company or, in the case of the Company, at its principal
offices.

Section 11. Miscellaneous

   11.1  Entire Agreement. This Agreement supersedes any prior agreements or
understandings, oral or written, between the parties hereto or between the
Executive and the Company, with respect to the subject matter hereof, and
constitutes the entire agreement of the parties with respect thereto.

   11.2  Modification. This Agreement shall not be varied, altered, modified,
canceled, changed, or in any way amended except by mutual agreement of the
parties in a written instrument executed by the parties hereto or their legal
representatives.

                                      11
<PAGE>

   11.3  Severability. In the event that any provision or portion of this
Agreement shall be determined to be invalid or unenforceable for any reason, the
remaining provisions of this Agreement shall be unaffected thereby and shall
remain in full force and effect.

   11.4  Counterparts. This Agreement may be executed in one (1) or more
counterparts, each of which shall be deemed to be an original, but all of which
together will constitute one and the same Agreement.

   11.5  Tax Withholding. The Company may withhold from any benefits payable
under this Agreement all federal, state, city, or other taxes as may be required
pursuant to any law or governmental regulation or ruling.

   11.6  Beneficiaries. Any payments or benefits hereunder due to the Executive
at the time of his death shall nonetheless be paid or provided and the Executive
may designate one or more persons or entities as the primary and/or contingent
beneficiaries of any amounts to be received under this Agreement. Such
designation must be in the form of a signed writing acceptable to the Board or
the Board's designee. The Executive may make or change such designation at any
time.

   11.7  Payment Obligation Absolute. The Company's obligation to make the
payments and the arrangement provided for herein shall be absolute and
unconditional, and shall not be affected by any circumstances, including,
without limitation, any offset, counterclaim, recoupment, defense, or other
right which the Company may have against the Executive or anyone else. All
amounts payable by the Company hereunder shall be paid without notice or demand.
Subject to the provisions set forth in Sections 7.4, 8.4, and all of Section 12,
each and every payment made hereunder by the Company shall be final, and the
Company shall not seek to recover all or any part of such payment from the
Executive or from whomsoever may be entitled thereto, for any reasons
whatsoever.

   11.8  Contractual Rights to Benefits. Subject to approval by the Company's
Personnel Committee and ratification by the Board of Directors, this Agreement
establishes and vests in the Executive a contractual right to the benefits to
which he is entitled hereunder. However, nothing herein contained shall require
or be deemed to require, or prohibit or be deemed to prohibit, the Company to
segregate, earmark, or otherwise set aside any funds or other assets, in trust
or otherwise, to provide for any payments to be made or required hereunder.

   11.9  Specific Performance. The Executive acknowledges that the obligations
undertaken by him pursuant to this Agreement are unique and that the Company
will likely have no adequate remedy at law if the Executive shall fail to
perform any of his obligations hereunder. The Executive therefore confirms that
the Company's right to specific performance of the terms of this Agreement is
essential to protect the rights and interests of the Company. Accordingly, in
addition to any other remedies that the Company may have at law or in equity,
the Company shall have the right to have all obligations, covenants, agreements,
and other provisions of this Agreement specifically performed by the Executive
and the Company shall have the right to obtain preliminary injunctive relief to
secure specific performance and to prevent a breach or contemplated breach of
this Agreement by Executive.

                                      12
<PAGE>

Section 12. Confidentiality and Noncompetition

   12.1  Disclosure of Information. The Executive recognizes that he has access
to and knowledge of confidential and proprietary information of the Company
which is essential to the performance of his duties under this Agreement. The
Executive will not, during or after the term of his employment by the Company,
in whole or in part, disclose such information to any person, firm, corporation,
association, or other entity for any reason or purpose whatsoever, nor shall he
make use of any such information for his own purposes, so long as such
information has not otherwise been disclosed to the public or is not otherwise
in the public domain except as required by law or pursuant to administrative or
legal process.

   12.2  Covenants Regarding Other Employees. During the term of this Agreement,
and for a period of twelve (12) months following the Executive's termination of
employment for any reason, the Executive agrees not to attempt to induce any
employee of the Company to terminate his or her employment with the Company or
to interfere in a similar manner with the business of the Company.

   12.3  Noncompete Following a Termination of Employment. From the Effective
Date of this Agreement until twelve (12) months following the Executive's
termination of employment as set forth in Sections 7.4 or 8.2 , the Executive
will not: (a) be an employee, agent, director, advisor, or consultant to or for
any competitor of the Company, whether on his own behalf or on behalf of any
person; or (b) undertake any action to induce or cause any customer or client to
discontinue any part of its business with the Company.

Section 13. Governing Law

   The internal laws of the State of California, United States of America
without reference to any principles concerning conflicts of law, shall govern
the validity of this Agreement.

Section 14. Indemnification

   Subject to Section 10, the Company hereby covenants and agrees to indemnify
and hold harmless the Executive fully, completely, and absolutely against and in
respect to any and all actions, suits, proceedings, claims, demands, judgements,
costs, expenses, losses, and damages resulting from the Executive's good faith
performance of his duties and obligations under the terms of this Agreement.

                                       Executive:

                                       ---------------------------
                                       James Lewis

                                       Levi Strauss & Co.:

                                       ---------------------------
                                       Philip A. Marineau
                                       President and Chief Executive Officer

                                      13<PAGE>

                             NEW WORLD PASTA COMPANY
                       1999 STOCK OPTION PLAN, AS AMENDED

         1.       Purpose: Types of Awards.
                  ------------------------

         The purposes of the 1999 New World Pasta Company Long-Term Incentive
Plan (the "Plan") are to afford an incentive to selected employees, directors
and consultants of New World Pasta Company (the "Company") or any Subsidiary or
Affiliate that now exists or hereafter is organized or acquired, to continue as
employees, directors or consultants, as the case may be, to increase their
efforts on behalf of the Company and to promote the success of the Company's
business. Pursuant to the Plan, there may be granted stock options (including
"incentive stock options" and "nonqualified stock options"), stock appreciation
rights (either in connection with stock options granted under the Plan or
independently of stock options) and restricted stock.

         2.       Definitions.

         For purposes of the Plan, the following terms shall be defined as set
forth below:

          (a) "Affiliate" means an affiliate of the Company, as defined in Rule
     12b-2 promulgated under Section 12 of the Exchange Act.

          (b) "Award" means any Option granted under the Plan.

          (c) "Award Agreement" means any written agreement, contract, or other
     instrument or document evidencing an Award.

          (d) "Beneficial Owner" means any beneficial owner of securities within
     the meaning of Rule 1 3d-3 promulgated under the Exchange Act.

          (e) "Board" means the Board of Directors of the Company.

          (f) "Cause" (i) for any person receiving an Award under the Plan who
     also has an employment agreement with the Company, shall have the meaning
     set forth in such employment agreement and (ii) for any other person
     receiving an Award under the Plan, means the determination, in good faith,
     by the Board, after notice to Grantee and a reasonable opportunity to cure,
     that one or more of the following events has occurred:

               (i) Grantee has failed to perform his material duties for the
          Company in a reasonably satisfactory manner;

               (ii) any reckless or grossly negligent act by Grantee materially
          injuring the interest, business or reputation of the Company, or any
          of its parent, Subsidiaries or Affiliates;
<PAGE>

               (iii) Grantee's commission of any felony (including entry of a
          nolo contendere plea); or
          ---- ----------

               (iv) any misappropriation or embezzlement of the property of the
          Company, or any of its parent, Subsidiaries or Affiliates.

          (g) "Change in Control" means the occurrence of any of the following
     events:

               (i) any Person, other than New World Pasta, LLC, a Delaware
          limited liability company, or its Affiliates, becomes a Beneficial
          Owner of more than fifty percent (50%) of the combined voting power of
          the then outstanding voting securities of the Company entitled to vote
          generally in the election of directors;

               (ii) there is consummated a merger or consolidation of the
          Company or any direct or indirect subsidiary of the Company with any
          other Company, other than a merger or consolidation that would result
          in the voting securities of the Company outstanding immediately prior
          to such merger or consolidation continuing to represent (either by
          remaining outstanding or by being converted into voting securities of
          the surviving entity or any parent thereof) at least fifty percent
          (50%) of the combined voting power of the securities of the Company or
          such surviving entity or any parent thereof outstanding immediately
          after such merger or consolidation;

               (iii) the stockholders of the Company approve a plan of complete
          liquidation or dissolution of the Company or there is consummated an
          agreement for the sale or disposition by the Company of all or
          substantially all of the Company's assets; or

               (iv) the following individuals cease for any reason to constitute
          a majority of the number of directors then serving: individuals who,
          as of January 30, 1999, constitute the Board and any new director
          (other than a director whose initial assumption of office is in
          connection with an actual or threatened election contest, including
          but not limited to a consent solicitation, relating to the election of
          directors of the Company) whose appointment or election by the Board
          or nomination for election by the Company's stockholders was approved
          or recommended by a vote of at least a majority of the directors then
          still in office who either were directors on January 30, 1999 or whose
          appointment, election or nomination for election was previously so
          approved or recommended.

          (h) "Code" means the Internal Revenue Code of 1986, as amended from
     time to time.

          (i) "Committee" means the Compensation Committee established by the
     Board.

                                       2
<PAGE>

          (j) "Company" means New World Pasta Company or any successor
     corporation.

          (k) "Effective Date" means January 28, 1999, the date that the Plan
     was adopted by the Board.

          (l) "Exchange Act" means the Securities Exchange Act of 1934, as
     amended from time to time, and as now or hereafter construed, interpreted
     and applied by regulations, rulings and cases.

          (m) "Fair Market Value" means, with respect to Stock or other
     property, the fair market value of such Stock or other property determined
     by such methods or procedures as shall be established from time to time by
     the Committee. Unless otherwise determined by the Committee in good faith,
     the per share Fair Market Value of Stock as of a particular date shall mean
     (i) the closing sales price per share of Stock on the national securities
     exchange on which the Stock is principally traded, for the last preceding
     date on which there was a sale of such Stock on such exchange, or (ii) if
     the shares of Stock are then traded in an over-the-counter market, the
     average of the closing bid and asked prices for the shares of Stock in such
     over-the-counter market for the last preceding date on which there was a
     sale of such Stock in such market, or (iii) if the shares of Stock are not
     then listed on a national securities exchange or traded in an
     over-the-counter market, such value as the Committee, in its reasonable
     discretion, shall determine.

          (n) "Grantee" means a person who, as an employee or director of, or
     independent contractor with respect to, the Company, a Subsidiary or an
     Affiliate, has been granted an Award under the Plan.

          (o) "ISO" means any Option intended to be and designated as an
     incentive stock option within the meaning of Section 422 of the Code.

          (p) "NQSO" means any Option that is designated as a nonqualified stock
     option.

          (q) "Option" means a right, granted to a Grantee under Section 6(c),
     to purchase shares of Stock. An Option may be either an ISO or an NQSO;
     provided that ISOs may be granted only to employees of the Company or a
     Subsidiary.

          (r) "Person" means any person within the meaning of Section 13(d)(3)
     or 14(d)(2) of the Exchange Act.

          (s) "Plan" means this New World Pasta Company 1999 Long-Term Incentive
     Plan, as amended from time to time.

          (t) "Stock" means shares of the common stock, par value $.01 per
     share, of the Company.

                                       3
<PAGE>

          (u) "Stockholders Agreement" means the Stockholders Agreement, dated
     as of January 28, 1999, among the Company, New World Pasta LLC, Miller
     Pasta LLC, Hershey Foods Corporation and the other signatories thereto.

          (v) "Subsidiary" means any corporation in an unbroken chain of
     corporations beginning with the Company if, at the time of granting of an
     Award, each of the corporations (other than the last corporation in the
     unbroken chain) owns stock possessing 50% or more of the total combined
     voting power of all classes of stock in one of the other corporations in
     the chain.

          (w) "Ten Percent Stockholder" means a Grantee who, at the time an ISO
     is granted, owns stock possessing more than ten percent (10%) of the total
     combined voting power of all classes of stock of the Company.

         3.       Administration.

         The Plan shall be administered by the Committee. The Committee shall
have the authority in its discretion, subject to and not inconsistent with the
express provisions of the Plan, to administer the Plan and to exercise all the
powers and authorities either specifically granted to it under the Plan or
necessary or advisable in the administration of the Plan, including, without
limitation, the authority to grant Awards; to determine the persons to whom and
the time or times at which Awards shall be granted; to determine the type and
number of Awards to be granted, the number of shares of Stock to which an Award
may relate and the terms, conditions and restrictions relating to any Award; to
determine whether, to what extent, and under what circumstances an Award may be
settled, cancelled, forfeited, exchanged, or surrendered; to make adjustments in
the terms and conditions applicable to Awards; to designate Affiliates; to
construe and interpret the Plan and any Award; to prescribe, amend and rescind
rules and regulations relating to the Plan; to determine the terms and
provisions of the Award Agreements (which need not be identical for each
Grantee); and to make all other determinations deemed necessary or advisable for
the administration of the Plan.

         The Committee may appoint a chairperson and a secretary and may make
such rules and regulations for the conduct of its business as it shall deem
advisable, and shall keep minutes of its meetings. All determinations of the
Committee shall be made by a majority of its members either present in person or
participating by conference telephone at a meeting or by written consent. The
Committee may delegate to one or more of its members or to one or more agents
such administrative duties as it may deem advisable, and the Committee or any
person to whom it has delegated duties as aforesaid may employ one or more
persons to render advice with respect to any responsibility the Committee or
such person may have under the Plan. All decisions, determinations and
interpretations of the Committee shall be final and binding on all persons,
including, without limitation, the Company, and any Subsidiary, Affiliate or
Grantee (or any person claiming any rights under the Plan from or through any
Grantee) and any stockholder.

         No member of the Board or Committee shall be liable for any action
taken or determination made in good faith with respect to the Plan or any Award
granted hereunder.

                                       4
<PAGE>

         4.       Eligibility.
                  ------------

         Awards may be granted to selected employees, directors and consultants
of the Company and its present or future Subsidiaries and Affiliates, in the
discretion of the Committee. In determining the persons to whom Awards shall be
granted and the type of any Award (including the number of shares to be covered
by such Award), the Committee shall take into account such factors as the
Committee shall deem relevant in connection with accomplishing the purposes of
the Plan.

         5.       Stock Subject to the Plan.
                  --------------------------

                   (a) Number. The maximum number of shares of Stock reserved
                       ------
         for the grant or settlement of Awards under the Plan shall be
         1,057,232, subject to adjustment as provided herein. Such shares may,
         in whole or in part, be authorized but unissued shares or shares that
         shall have been or may be reacquired by the Company in the open market,
         in private transactions or otherwise. If any shares subject to an Award
         are forfeited, cancelled, exchanged or surrendered or if an Award
         otherwise terminates or expires without a distribution of shares to the
         Grantee, the shares of stock with respect to such Award shall, to the
         extent of any such forfeiture, cancellation, exchange, surrender,
         termination or expiration, again be available for Awards under the
         Plan. Upon the exercise of any Award granted in tandem with any other
         Awards or awards, such related Awards or awards shall be cancelled to
         the extent of the number of shares of Stock as to which the Award is
         exercised and, notwithstanding the foregoing, such number of shares
         shall no longer be available for Awards under the Plan.

                  (b) Certain Adjustments. In the event that any dividend or
                      -------------------
         other distribution (whether in the form of cash, Stock or other
         property), recapitalization, Stock split, reverse split,
         reorganization, merger, consolidation, spin-off, combination,
         repurchase, or share exchange, or other similar corporate transaction
         or event, affects the Stock such that an adjustment is appropriate
         under the Plan, then the Committee shall make such equitable changes or
         adjustments as it deems necessary or appropriate in the exercise of its
         reasonable discretion to any or all of (i) the number and kind of
         shares of Stock or other property (including cash) that may thereafter
         be issued in connection with Awards, (ii) the number and kind of shares
         of Stock or other property (including cash) issued or issuable in
         respect of outstanding Awards, (iii) the exercise price, grant price or
         purchase price relating to any Award; provided that, with respect to
         ISOs, such adjustment shall be made in accordance with Section 424(h)
         of the Code, and (iv) the individual limitations applicable to Awards.

                  (c) Certain Reduction to Awards. In the event that, at any
                      ---------------------------
         time or from time to time, the Company wishes to hire one or more
         additional employees after the date hereof and the Committee, with the
         concurrence of the Chief Executive officer, believes that such employee
         or employees should be granted Awards hereunder, such Awards shall be
         made, to the greatest extent possible, with respect to Stock which
         remains available for issuance under the Plan as a result of the
         forfeiture, cancellation, exchange, surrender,

                                       5
<PAGE>

         termination or expiration of Awards previously granted under the Plan.
         To the extent that there is not sufficient Stock available to make any
         such Award, the number of shares of Stock issuable upon exercise of
         all then outstanding Options shall be reduced pro rata among all
         holders thereof in order to provide sufficient shares of Stock to
         grant such Award(s); provided, however, that in no event shall the
                              --------  -------
         number of shares of Stock initially issuable upon exercise of any
         Option be reduced by more than 15% in the aggregate.

         Notwithstanding the foregoing, the reduction provided hereby shall not
apply in order to grant Awards to new employees of the Company hired in
connection with any material acquisition by the Company of assets or stock of
one or more companies, whether by merger otherwise.

         6.       Specific Terms of Awards.
                  ------------------------

                  (a) General. The term of each Award shall be for such period
                      -------
         as may be determined by the Committee. Subject to the terms of the Plan
         and any applicable Award Agreement, payments to be made by the Company
         or a Subsidiary or Affiliate upon the grant, maturation or exercise of
         an Award may be made in such forms as the Committee shall determine at
         the date of grant or thereafter, including, without limitation, cash,
         Stock or other property, and may be made in a single payment or
         transfer, in installments or on a deferred basis. The Committee may
         make rules relating to installment or deferred payments with respect to
         Awards, including, without limitation, the rate of interest to be
         credited with respect to such payments. In addition to the foregoing,
         the Committee may impose on any Award or the exercise thereof, at the
         date of grant or thereafter, such additional terms and conditions, not
         inconsistent with the provisions of the Plan, as the Committee shall
         reasonably determine.

                  (b) Certain Restrictions. Notwithstanding anything in the Plan
                      --------------------
         to the contrary, the shares of Stock issued to any Grantee that is a
         party to the Stockholders' Agreement (or, in the case of Miller Pasta,
         LLC, the members of Miller Pasta, LLC who are officers or directors of
         the Company) (collectively, "Investor Grantees") upon exercise of each
         Option shall, to the extent of the rights, duties and obligations of
         such Grantee (or such member) under the Stockholders' Agreement, be
         subject to all terms and conditions set forth in the and, with respect
         to such persons; the Stockholders' Agreement is, to such extent, hereby
         incorporated by reference herein. As a condition to the exercise of any
         Option, (i) each Grantee that is not an Investor Grantee shall be
         required to execute and deliver to the Company executed copies of such
         documents, in form and substance reasonably satisfactory to the
         Committee, to the effect set forth in Article W (providing for
         substantially the same restrictions on Transfer as the Miller Pasta
         Controlling Members (as such terms are defined therein)) and Article V
         (but only with respect to Piggyback Registrations, as defined therein)
         of the Stockholders' Agreement and (ii) each Grantee shall be required
         to execute and deliver to the Company such written representations and
         other documents as may be necessary or reasonably desirable, in the
         opinion of the Committee, for purposes of compliance with federal or
         state securities or other laws. Any certificate or certificates
         representing shares of Stock subject to an

                                       6
<PAGE>

         Award shall bear a legend substantially to the effect of the legend set
         forth in the Stockholders Agreement.

                  (c) Awards. The Committee is authorized to grant to Grantees
                      ------
         the following Awards under the Plan, as deemed by the Committee to be
         consistent with the purposes of the Plan. The Committee shall determine
         the terms and conditions of such Awards at the date of grant or
         thereafter. The Committee is authorized to grant Options to Grantees on
         the following terms and conditions:

                           (i) Type of Award. The Award Agreement evidencing the
                               -------------
                  grant of an Option under the Plan shall designate the Option
                  as an ISO or an NQSO.

                           (ii) Exercise Price. The exercise price per share of
                                --------------
                  Stock purchasable under an Option shall be determined by the
                  Committee; provided that, of the 1,057,232 shares of Stock
                             --------
                  reserved for the grant or settlement of Awards under the Plan,
                  660,762 shall have an exercise price of $10.00 per share and
                  396,470 shall have an exercise price of $73.50, and provided
                                                                      --------
                  further that in the case of an ISO, such exercise price shall
                          ----
                  be not less than the Fair Market Value of a share of Common
                  Stock on the date of grant of such Option. The date as of
                  which the Committee adopts a resolution expressly granting an
                  Option shall be considered the day on which such Option is
                  granted. In the Committee' reasonable discretion, following
                  the Initial Public Offering (as defined in the Stockholders
                  Agreement), the exercise price for Stock subject to an Option
                  may be paid in cash or by an exchange of Stock previously
                  owned by the Grantee, or a combination of both, in an amount
                  having a combined value equal to such exercise price. In the
                  Committee's reasonable discretion, a Grantee may elect to pay
                  all or a portion of the aggregate exercise price by cashless
                  exercise as provided below by giving notice of such exercise
                  to the Company. Upon receipt of a notice of cashless exercise,
                  the Company shall deliver to the Grantee (without payment by
                  the holder of any exercise price) that number of shares of
                  Stock that is equal to the quotient obtained by dividing (x)
                  the value of the Option or portion thereof on the exercise
                  date (determined by subtracting the aggregate exercise price
                  for the shares of Stock in effect on the exercise date from
                  the aggregate Fair Market Value of the shares of Stock by (y)
                  the Fair Market Value of one share of Company Common Stock. A
                  notice of "cashless exercise" shall state the number of shares
                  of Stock as to which the Option is being exercised.

                           (iii) Term and Exercisability of Options. Options
                                 ----------------------------------
                  shall become exercisable over the exercise period (which shall
                  not exceed ten years from the date of grant), at such times
                  and upon such conditions as the Committee may determine, as
                  reflected in the Award Agreement; provided that, the Committee
                                                    --------
                  shall have the authority to accelerate the exercisability of
                  any outstanding Option at such time and under such
                  circumstances as it, in its sole discretion, deems
                  appropriate. An Option may be exercised to the extent of any
                  or all full shares of Stock as to which the Option has become
                  exercisable, by giving written notice of such exercise to the
                  Committee or its designated agent.

                                       7
<PAGE>

                           (iv) Termination of Employment, etc. An Option may
                                ------------------------------
                  not be exercised unless the Grantee is then in the employ of,
                  a director of, or maintains a consulting relationship with,
                  the Company or a Subsidiary or an Affiliate (or a company or a
                  parent or subsidiary company of such company issuing or
                  assuming the Option in a transaction to which Section 424(a)
                  of the Code applies), and unless the Grantee has remained
                  continuously so employed, or continuously maintained such
                  relationship, since the date of grant of the Option; provided
                                                                       --------
                  that, unless provided otherwise in the applicable Award
                  Agreement or otherwise determined by the Committee:

                                    (A) In case of termination of a Grantee's
                           employment or service with the Company, Affiliate or
                           a Subsidiary (i) due to the death or disability of
                           the Grantee, (ii) by the Company, Affiliate or a
                           Subsidiary without Cause or (iii) by the Grantee for
                           any reason, such Grantee's Option, only to the extent
                           then exercisable, shall remain exercisable as to the
                           number of shares of Stock for which it was
                           exercisable as of the date of termination for a
                           period of ninety days immediately following such
                           termination of employment or service and shall be
                           cancelled and terminated with respect to the
                           remainder of the shares of Stock subject thereto as
                           of the date of termination.

                                    (B) In case of termination of a Grantee's
                           employment or service with the Company, Affiliate or
                           a Subsidiary by the Company or a Subsidiary for
                           Cause, such Grantee's Option, whether or not then
                           exercisable, shall be cancelled and terminated as of
                           the date of such termination.

                                    (C) Notwithstanding anything to the contrary
                           in the Plan or any Award Agreement, in no event may
                           any Option be exercised after the expiration of the
                           term of such Option, as set forth in the applicable
                           Award Agreement.

                           (v)  Other Provisions. Options may be subject to
                                ----------------
                  such other conditions prescribe in its discretion or as may be
                  required by applicable law.

                           (vi) ISOs. Options granted as ISOs shall be subject
                                ----
                  to the following special terms and conditions, in addition to
                  the general terms and conditions specified herein.

                                    (A) Value of Shares. The aggregate Fair
                                        ---------------
                           Market Value (determined as of the date ISOs are
                           granted) of the shares of Common Stock with respect
                           to which ISOs granted under this Plan and all other
                           plans of the Company become exercisable for the first
                           time by each Grantee during any calendar year shall
                           not exceed $100,000.

                                       8
<PAGE>

                                    (B) Ten Percent Stockholder. In the case of
                                        -----------------------
                           an ISO granted to a Ten Percent Stockholder, (x) the
                           exercise price shall not be less than one hundred ten
                           percent (110%) of the Fair Market Value of the shares
                           of Common Stock on the date of grant of such ISO, and
                           (y) the exercise period shall not exceed five (5)
                           years from the date of grant of such ISO.

                  (d) Change of Control. Notwithstanding any provision hereof to
                      -----------------
         the contrary, upon the occurrence of a Change of Control prior to the
         expiration of the term of any Option, such Option, whether then
         exercisable or otherwise, shall become exercisable and shall remain
         exercisable for a period of ninety days immediately following such
         Change of Control.

         7.       General Provisions.
                  ------------------

                  (a) Nontransferability. Unless otherwise provided in an Award
                      ------------------
         Agreement, Awards shall not be transferable by a Grantee except by will
         or the laws of descent and distribution or pursuant to a qualified
         domestic relations order as defined under the Code or Title I of the
         Employee Retirement Income Security Act of 1974, as amended, and shall
         be exercisable during the lifetime of a Grantee only by such Grantee or
         his guardian or legal representative.

                  (b) No Right to Continued Employment, etc. Nothing in the Plan
                      -------------------------------------
         or in any Award granted or any Award Agreement, entered into pursuant
         hereto shall confer upon any Grantee the right to continue in the
         employ of or to continue as a director or an independent contractor of
         the Company, any Subsidiary or any Affiliate or to be entitled to any
         remuneration or benefits not set forth in the Plan or such Award
         Agreement, or to interfere with or limit in any way the right of the
         Company or any such Subsidiary or Affiliate to terminate such Grantee's
         employment, director or independent contractor relationship.

                  (c) Taxes. The Company or any Subsidiary or Affiliate is
                      -----
         authorized to withhold from any Award granted, any payment relating to
         an Award under the Plan, including from a distribution of Stock, or any
         other payment to a Grantee, amounts of withholding and other taxes due
         in connection with any transaction involving an Award, and to take such
         other action as the Committee may deem advisable to enable the Company
         and Grantees to satisfy obligations for the payment of withholding
         taxes and other tax obligations relating to any Award. This authority
         shall include authority to withhold or receive Stock or other property
         and to make cash payments in respect thereof in satisfaction of a
         Grantee's tax obligations.

                  (d) Stockholder Approval: Amendment and Termination. The Plan
                      -----------------------------------------------
         shall take effect on the Effective Date but the Plan (and any grants of
         Awards made prior to the stockholder approval mentioned herein) shall
         be subject to the requisite approval of the stockholders of the
         Company, which approval must occur within twelve (12) months of the
         date that the Plan is adopted by the Board. In the event that the
         stockholders of the Company do not ratify the Plan at a meeting of the
         stockholders at which such issue is

                                       9
<PAGE>

         considered and voted upon, then upon such event the Plan and all
         rights hereunder shall immediately terminate and no Grantee (or any
         permitted transferee thereof) shall have any remaining rights under
         the Plan or any Award Agreement entered into in connection herewith.
         The Board may at any time and from time to time alter, amend, suspend,
         or terminate the Plan in whole or in part. Notwithstanding the
         foregoing, no such action shall affect adversely any of the rights of
         any Grantee, without such Grantee's consent, under any Award
         theretofore granted under the Plan. Unless earlier terminated by the
         Board pursuant to the provisions of the Plan, the power to grant
         Awards under the Plan will automatically terminate ten years after the
         adoption of the Plan by the Board. If the Plan is terminated, any
         unexercised Award shall continue to be exercisable in accordance with
         its terms and the terms of the Plan in effect immediately prior to
         such termination.

                  (e) No Rights to Awards; No Stockholder Rights. No Grantee
                      ------------------------------------------
         shall have any claim to be granted any Award under the Plan, and there
         is no obligation for uniformity of treatment of Grantees. Except as
         provided specifically herein, a Grantee or a transferee of an Award
         shall have no rights as a stockholder with respect to any shares
         covered by the Award until the date of the issuance of a stock
         certificate to him for such shares.

                  (f) Unfunded Status of Awards. The Plan is intended to
                      -------------------------
         constitute an "unfunded" plan for incentive and deferred compensation.
         With respect to any payments not yet made to a Grantee pursuant to an
         Award, nothing contained in the Plan or any Award shall give any such
         Grantee any rights that are greater than those of a general creditor of
         the Company.

                  (g) No Fractional Shares. No fractional shares of Stock shall
                      --------------------
         be issued or delivered pursuant to the Plan or any Award. The Committee
         shall determine whether cash, other Awards, or other property shall be
         issued or paid in lieu of such fractional shares.

                  (h) Regulations and Other Approvals.
                      -------------------------------

                      (i) The obligation of the Company to sell or deliver Stock
                  with respect to any Award granted under the Plan shall be
                  subject to all applicable laws, rules and regulations,
                  including all applicable federal and state securities laws,
                  and the obtaining of all such approvals by governmental
                  agencies as may be deemed necessary or appropriate by the
                  Committee.

                      (ii) Each Award is subject to the requirement that, if at
                  any time the Committee determines, in its absolute discretion,
                  that the listing, registration or qualification of Stock
                  issuable pursuant to the Plan is required by any securities
                  exchange or under any state or federal law, or the consent or
                  approval of any governmental regulatory body is necessary or
                  desirable as a condition of, or in connection with, the grant
                  of an Award or the issuance of Stock, no such Award shall be
                  granted or payment made or Stock issued, in whole or in part,
                  unless listing, registration, qualification, consent or
                  approval has been effected or obtained free of any conditions
                  not acceptable to the Committee.

                                      10
<PAGE>

                       (iii) In the event that the disposition of Stock acquired
                  pursuant to the Plan is not covered by a then current
                  registration statement under the Securities Act of 1933, as
                  amended (the "Securities Act"), and is not otherwise exempt
                  from such registration, such Stock shall be restricted against
                  transfer to the extent required by the Securities Act or
                  regulations thereunder, and the Committee may require a
                  Grantee receiving Stock pursuant to the Plan, as a condition
                  precedent to receipt of such Stock, to represent to the
                  Company in writing that the Stock acquired by such Grantee is
                  acquired for investment only and not with a view to
                  distribution.

                       (iv) Promptly after the Initial Sale Date (as defined in
                  the Stockholders Agreement), the Company shall cause to be
                  filed with the U.S. Securities and Exchange Commission, a
                  registration statement on Form S-8 or other applicable form
                  with respect to the shares of Stock to be issued upon exercise
                  of Awards. The Company will use all reasonable efforts to
                  cause such registration statement to become and remain
                  effective; it being understood that the sale of such shares of
                  Stock will remain subject to the restrictions referred to in
                  Section 6(b) hereof.

                  (i)      Governing Law. The Plan and all determinations made
                           -------------
         and actions taken pursuant hereto shall be governed by the laws of the
         State of Delaware without giving effect to the conflict of laws
         principles thereof.

                                      11

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