Document:

COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

                        1999 INCENTIVE COMPENSATION PLAN

1.0  DEFINITIONS

     The following  terms shall have the following  meanings  unless the context
     indicates otherwise:

1.1  "Award"  shall mean either a Stock Option,  an SAR, a Stock Award,  a Stock
     Unit, a Performance Share, a Performance Unit, or a Cash Award.

1.2  "Award  Agreement" shall mean a written  agreement  between the Company and
     the Participant that establishes the terms, conditions, restrictions and/or
     limitations  applicable to an Award in addition to those established by the
     Plan and by the Committee's exercise of its administrative powers.

1.3  "Board" shall mean the Board of Directors of the Company.

1.4  "Cash Award" shall mean the  grant by the Committee to a Participant  of an
     award of cash as described in Section 11 below.

1.5  "Cause" shall mean  (i) willful  malfeasance  or willful  misconduct by the
     Employee in connection  with his  employment,  (ii)  continuing  failure to
     perform  such  duties  as  are   requested   by  the  Company   and/or  its
     subsidiaries, (iii) failure by the Employee to observe material policies of
     the Company and/or its subsidiaries  applicable to the Employee or (iv) the
     commission  by the  Employee  of (x)  any  felony  or (y)  any  misdemeanor
     involving moral turpitude.

1.6  "Change in Control of the Company" shall mean the  occurrence of any of the
     following events:

     (a)       any Person, as such term is used for purposes of Section 13(d) or
          14(d) of the Exchange Act, or any successor  section  thereto,  (other
          than (i) the  Company,  (ii) any  trustee or other  fiduciary  holding
          securities  under an employee  benefit plan of the Company,  (iii) any
          Subsidiaries  of the  Company,  (iv) any  company  owned,  directly or
          indirectly,  by the stockholders of the Company in  substantially  the
          same proportions as their ownership of stock of the Company or (v) IMS
          Health  Incorporated  or its  Subsidiaries),  becomes  the  beneficial
          owner,   directly  or   indirectly,   of  securities  of  the  Company
          representing 35% or more of the combined voting power of the Company's
          then-outstanding securities; provided however, that the acquisition of
          securities  in a bona fide  public  offering or private  placement  of
          securities by an investor who is acquiring such securities for passive
          investment purposes only shall not constitute a "Change in Control".

     (b)       during any period of twenty-four  months,  individuals who at the
          beginning of such period  constitute  the Board,  and any new director
          (other than (i) a director  nominated by a Person who has entered into
          an  agreement  with the Company to effect a  transaction  described in
          Sections 1.6 (a), (c) or (d) of the Plan, (ii) a director nominated by
          any Person (including the Company) who publicly announces an intention
          to take or to consider taking actions (including,  but not limited to,
          an actual or threatened  proxy  contest)  which if  consummated  would
          constitute  a Change in Control or (iii) a director  nominated  by any
          Person  who  is the  beneficial  owner,  directly  or  indirectly,  of
          securities of the Company

                                      -1-
<PAGE>

          representing 10% or more of the combined voting power of the Company's
          securities)  whose election by the Board or nomination for election by
          the  Company's  shareholders  is or was approved by a vote of at least
          two-thirds (2/3) of the directors then still in office who either were
          directors  at the  beginning  of  the  period  or  whose  election  or
          nomination  for election was  previously,  so approved,  cease for any
          reason to constitute at least a majority thereof;

      (c)      the effective date or date of  consummation of any transaction or
          series of  transactions  (other than a  transaction  to which only the
          Company and one or more of its  subsidiaries  are parties) under which
          the Company is merged or  consolidated  with any other company,  other
          than a merger or  consolidation  (i) 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 66
          2/3% of the  combined  voting  power of the voting  securities  of the
          Company or such surviving entity  outstanding  immediately  after such
          merger or  consolidation  and (ii) after which no Person  holds 35% or
          more of the combined voting power of the  then-outstanding  securities
          of the Company or such surviving entity; or

      (d)      the  shareholders  of the  Company  approve  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;

1.7   "Code" shall mean the Internal  Revenue Code of 1986, as amended from time
      to time.

1.8   "Committee"  shall mean (i) the Board or (ii) a committee or  subcommittee
      of the Board appointed by the Board from among its members.  The Committee
      may be the Board's  Compensation  Committee.  Unless the Board  determines
      otherwise,  the Committee  shall be comprised  solely of not less than two
      members who each shall qualify as:

      (a)      a "Non-Employee Director" within the meaning of  Rule 16b-3(b)(3)
          (or any successor rule) under the Exchange Act, and

      (b)      an "outside  director"  within the meaning of Code Section 162(m)
          and the Treasury Regulations thereunder.

1.9   "Common  Stock"  shall mean the Class A common  stock,  $.01 par value per
      share, of the Company.

1.10  "Company"  shall  mean  Cognizant  Technology  Solutions  Corporation,   a
      Delaware corporation.

1.11  "Disability"  shall  mean  shall  mean  the  inability  to  engage  in any
      substantial  gainful  activity  by  reason  of  a  medically  determinable
      physical or mental  impairment  which  constitutes  a permanent  and total
      disability,  as defined in Section 22(e) (3) of the Code (or any successor
      section thereto).  The determination  whether a Participant has suffered a
      Disability  shall be made by the Committee  based upon such evidence as it
      deems  necessary and  appropriate,  and shall be conclusive and binding on
      the Participant.  A Participant shall not be considered disabled unless he
      or she

                                      -2-
<PAGE>

      furnishes  such  medical  or  other  evidence  of  the  existence  of  the
      Disability as the Committee, in its sole discretion, may require.

1.12  "Dividend  Equivalent  Right"  shall  mean the right to  receive an amount
      equal to the amount of any dividend paid with respect to a share of Common
      Stock  multiplied  by the number of shares of Common Stock  underlying  or
      with respect to a Stock Option, a SAR, a Stock Unit or a Performance Unit,
      and which shall be payable in cash, in Common Stock,  in the form of Stock
      Units  or  Performance  Units,  or a  combination  of  any  or  all of the
      foregoing.

1.13  "Effective  Date"  shall mean the date on which the Plan is adopted by the
      Board.

1.14  "Employee"  shall mean an  employee of the  Company or any  Subsidiary  as
      described in Treasury Regulation Section 1.421-7(h).

1.15  "Exchange Act" shall mean the Securities  Exchange Act of 1934, as amended
      from time to time, including applicable regulations thereunder.

1.16  "Fair Market Value of the Common Stock" shall mean:

      (a)      if the Common Stock is readily tradable on a national  securities
          exchange or other market system, the closing price of the Common Stock
          on the date of calculation  (or on the last preceding  trading date if
          Common Stock was not traded on such date), or

      (b)      if the  Common  Stock  is  not  readily  tradable  on a  national
          securities exchange or other market system:

          (i)       the book value of a share of Common Stock as of the last day
               of the  last  completed  fiscal  quarter  preceding  the  date of
               calculation; or

          (ii)      any other value as otherwise determined in good faith by the
               Board.

1.17  "Independent  Contractor"  shall mean a person (other than a person who is
      an Employee or a Nonemployee  Director) or an entity that renders services
      to the Company.

1.18  "ISO" shall mean an "incentive  stock option" as such term is used in Code
      Section 422.

1.19  "Nonemployee  Director"  shall  mean a member  of the  Board who is not an
      Employee.

1.20  "Nonqualified  Stock  Option"  shall  mean a Stock  Option  that  does not
      qualify as an ISO.

1.21  "Participant" shall mean any Employee, Nonemployee Director or Independent
      Contractor  to whom an Award has been granted by the  Committee  under the
      Plan.

1.22  "Performance-Based  Award" shall mean an Award subject to the  achievement
      of certain performance goal or goals as described in Section 12 below.

                                      -3-
<PAGE>

1.23  "Performance Share" shall mean the grant by the Committee to a Participant
      of an Award as described in Section 10.1 below.

1.24  "Performance  Unit" shall mean the grant by the Committee to a Participant
      of an Award as described in Section 10.2 below.

1.25  "Plan" shall mean the  Cognizant  Technology  Solutions  Corporation  1999
      Incentive Compensation Plan.

1.26  "SAR" shall mean the grant by the  Committee to a  Participant  of a stock
      appreciation right as described in Section 8 below.

1.27  "Stock Award" shall mean the grant by the Committee to a Participant of an
      Award of Common Stock as described in Section 9.1 below.

1.28  "Stock  Option" shall mean the grant by the Committee to a Participant  of
      an option to purchase Common Stock as described in Section 7 below.

1.29  "Stock Unit" shall mean the grant by the Committee to a Participant  of an
      Award as described in Section 9.2 below.

1.30  "Subsidiary"  shall mean a  corporation  of which the Company  directly or
      indirectly  owns more than 50  percent  of the  Voting  Stock or any other
      business  entity  in which  the  Company  directly  or  indirectly  has an
      ownership interest of more than 50 percent.

1.31  "Treasury  Regulations"  shall mean the regulations  promulgated under the
      Code by the United States Department of the Treasury, as amended from time
      to time.

1.32  "Vest" shall mean:

      (a)      with respect to Stock Options and SARs,  when the Stock Option or
          SAR  (or a  portion  of  such  Stock  Option  or  SAR)  first  becomes
          exercisable  and  remains   exercisable   subject  to  the  terms  and
          conditions of such Stock Option or SAR; or

      (b)      with  respect to Awards other than Stock  Options and SARs,  when
          the Participant has:

          (i)       an  unrestricted  right,  title and  interest to receive the
               compensation   (whether  payable  in  Common  Stock,  cash  or  a
               combination  of both)  attributable  to an Award (or a portion of
               such Award) or to otherwise  enjoy the benefits  underlying  such
               Award; and

          (ii)      a right to transfer an Award  subject to no  Company-imposed
               restrictions  or  limitations  other  than  restrictions   and/or
               limitations imposed by Section 14 below.

1.33  "Vesting Date" shall mean the date or dates on which an Award Vests.

                                      -4-
<PAGE>

1.34  "Voting Stock" shall mean the capital stock of any class or classes having
      general  voting  power  under  ordinary  circumstances,  in the absence of
      contingencies, to elect the directors of a corporation.

2.0   PURPOSE AND TERM OF PLAN

2.1   Purpose.  The  purpose  of the  Plan  is to  motivate  certain  Employees,
      Nonemployee  Directors and  Independent  Contractors  to put forth maximum
      efforts toward the growth,  profitability,  and success of the Company and
      Subsidiaries  by  providing  incentives  to  such  Employees,  Nonemployee
      Directors and Independent  Contractors either through cash payments and/or
      through the ownership and  performance  of the Common Stock.  In addition,
      the Plan is intended to provide  incentives  which will attract and retain
      highly qualified individuals as Employees and Nonemployee Directors and to
      assist  in  aligning  the  interests  of such  Employees  and  Nonemployee
      Directors with those of its stockholders.

2.2   Term.  The Plan shall be effective  as of the  Effective  Date;  provided,
      however,  that  the Plan  shall be  approved  by the  stockholders  of the
      Company at an annual meeting or any special meeting of stockholders of the
      Company  within 12 months  before or after the  Effective  Date,  and such
      approval by the  stockholders  of the Company  shall be a condition to the
      right of each Participant to receive Awards  hereunder.  Any Award granted
      under the Plan prior to the  approval by the  stockholders  of the Company
      shall be effective as of the date of grant (unless the Committee specifies
      otherwise at the time of grant),  but no such Award may Vest, be paid out,
      or otherwise  be disposed of prior to such  stockholder  approval.  If the
      stockholders  of the Company fail to approve the Plan in  accordance  with
      this Section 2.2, any Award granted under the Plan shall be cancelled. The
      Plan shall terminate on the 10th anniversary of the Effective Date (unless
      sooner terminated by the Board under Section 16.1 below.

3.0   ELIGIBILITY AND PARTICIPATION

3.1   Eligibility.  All Employees of the Company, all Nonemployee  Directors and
      all Independent  Contractors  shall be eligible to participate in the Plan
      and to receive Awards.

3.2   Participation.  Participants shall consist of such Employees,  Nonemployee
      Directors  and  Independent  Contractors  as the  Committee  in  its  sole
      discretion  designates to receive Awards under the Plan.  Designation of a
      Participant  in any year shall not require the Committee to designate such
      person  or  entity  to  receive  an  Award  in any  other  year  or,  once
      designated,  to receive the same type or amount of Award as granted to the
      Participant in any other year.  The Committee  shall consider such factors
      as it deems  pertinent in selecting  Participants  and in determining  the
      type and amount of their respective Awards.

4.0   ADMINISTRATION

4.1   Responsibility.  The Committee shall have the responsibility,  in its sole
      discretion,  to  control,  operate,  manage  and  administer  the  Plan in
      accordance with its terms.

                                      -5-
<PAGE>

4.2  Award Agreement. Each Award granted under the Plan shall be evidenced by an
     Award Agreement which shall be signed by the Committee and the Participant;
     provided, however, that in the event of any conflict between a provision of
     the Plan and any provision of an Award Agreement, the provision of the Plan
     shall prevail.

4.3  Authority of the Committee.  The Committee shall have all the discretionary
     authority  that may be necessary  or helpful to enable it to discharge  its
     responsibilities with respect to the Plan, including but not limited to the
     following:

     (a)       to determine eligibility for participation in the Plan;

     (b)       to determine eligibility for and the  type  and  size of an Award
          granted under the Plan;

     (c)       to supply  any omission,  correct any  defect, or  reconcile  any
          inconsistency  in the  Plan in such  manner  and to such  extent as it
          shall deem  appropriate in its sole  discretion to carry the same into
          effect;

     (d)       to issue  administrative  guidelines as an aid to administer  the
          Plan and make changes in such guidelines as it from time to time deems
          proper;

     (e)       to make rules for  carrying  out and  administering  the Plan and
          make changes in such rules as it from time to time deems proper;

     (f)       to the extent  permitted  under the Plan,  grant  waivers of Plan
          terms, conditions, restrictions, and limitations;

     (g)       to  accelerate  the  Vesting  of any Award  when  such  action or
          actions would be in the best interest of the Company;

     (h)       to grant Award in replacement of Awards previously  granted under
          this Plan or any other executive compensation plan of the Company; and

     (i)       to take any and all other actions it deems necessary or advisable
          for the proper operation or administration of the Plan.

4.4  Action by the  Committee.  The  Committee may act only by a majority of its
     members. Any determination of the Committee may be made, without a meeting,
     by a writing or writings signed by all of the members of the Committee.  In
     addition,  the  Committee  may  authorize any one or more of its members to
     execute and deliver documents on behalf of the Committee.

4.5  Delegation of  Authority.  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;  provided,  however,  that any such delegation  shall be in
     writing. In addition, the Committee, or any person to whom it has delegated
     duties  under this  Section  4.5,  may employ one or more persons to render
     advice with respect to any  responsibility the Committee or such person may
     have under the Plan.  The Committee may employ such legal or other counsel,
     consultants and agents as it may deem

                                      -6-
<PAGE>

     desirable for the  administration of the Plan and may rely upon any opinion
     or  computation  received  from  any such  counsel,  consultant  or  agent.
     Expenses  incurred by the  Committee  in the  engagement  of such  counsel,
     consultant or agent shall be paid by the Company,  or the Subsidiary  whose
     employees have benefited from the Plan, as determined by the Committee.

4.6  Determinations and Interpretations by the Committee. All determinations and
     interpretations  made by the Committee  shall be binding and  conclusive on
     all Participants and their heirs, successors, and legal representatives.

4.7  Liability.  No member of the  Board,  no  member  of the  Committee  and no
     employee  of the  Company  shall be liable  for any act or  failure  to act
     hereunder,  except in circumstances  involving his or her bad faith,  gross
     negligence  or  willful  misconduct,  or  for  any  act or  failure  to act
     hereunder by any other member or employee or by any agent to whom duties in
     connection with the administration of the Plan have been delegated.

4.8  Indemnification.  The Company shall indemnify  members of the Committee and
     any agent of the Committee  who is an employee of the Company,  against any
     and all liabilities or expenses to which they may be subjected by reason of
     any act or  failure to act with  respect  to their  duties on behalf of the
     Plan,  except in  circumstances  involving  such person's bad faith,  gross
     negligence or willful misconduct.

5.0  SHARES SUBJECT TO PLAN

5.1  Available  Shares.  The  aggregate  number of shares of Common  Stock which
     shall be  available  for grants or payments of Awards under the Plan during
     its term shall be 3,000,000  shares.  Such shares of Common Stock available
     for issuance under the Plan may be either  authorized but unissued  shares,
     shares of issued  stock held in the  Company's  treasury,  or both,  at the
     discretion  of  the  Company,  and  subject  to  any  adjustments  made  in
     accordance  with Section 5.2 below.  Any shares of Common Stock  underlying
     Awards which terminate by expiration, forfeiture, cancellation or otherwise
     without the issuance of such shares shall again be available  for grants of
     Awards under the Plan. Awards that are payable only in cash are not subject
     to this Section 5.1.

5.2  Adjustment  to Shares.  If there is any  change in the Common  Stock of the
     Company, through merger, consolidation,  reorganization,  recapitalization,
     stock  dividend,  stock split,  reverse stock split,  split-up,  split-off,
     spin-off,  combination of shares,  exchange of shares,  dividend in kind or
     other like change in capital  structure or distribution  (other than normal
     cash dividends) to stockholders of the Company, an adjustment shall be made
     to each outstanding  Award so that each such Award shall thereafter be with
     respect to or exercisable for such  securities,  cash and/or other property
     as would have been  received in respect of the Common Stock subject to such
     Award  had  such  Award  been  paid,   distributed  or  exercised  in  full
     immediately prior to such change or distribution.  Such adjustment shall be
     made  successively  each time any such change shall occur. In addition,  in
     the event of any such change or distribution,  in order to prevent dilution
     or enlargement of Participants'  rights under the Plan, the Committee shall
     have the authority to adjust, in an equitable  manner,  the number and kind
     of shares that may be issued under the Plan,  the number and kind of shares
     subject to outstanding Awards, the exercise price applicable to outstanding
     Stock  Options,  and the Fair  Market  Value of the Common  Stock and other
     value   determinations   applicable  to  outstanding  Awards.   Appropriate
     adjustments may also be made by

                                      -7-
<PAGE>

     the Committee in the terms of any Awards  granted under the Plan to reflect
     such changes or distributions  and to modify any other terms of outstanding
     Awards on an equitable basis, including  modifications of performance goals
     and changes in the length of performance periods;  provided,  however, that
     with respect to Performance-Based Awards, such modifications and/or changes
     do  not   disqualify   compensation   attributable   to  such   Awards   as
     "performance-based  compensation"  under Code Section 162(m).  In addition,
     the Committee is authorized to make adjustments to the terms and conditions
     of, and the  criteria  included  in,  Awards in  recognition  of unusual or
     nonrecurring  events  affecting the Company or the financial  statements of
     the Company, or in response to changes in applicable laws, regulations,  or
     accounting principles.  Notwithstanding anything contained in the Plan, any
     adjustment with respect to an ISO due to a change or distribution described
     in this Section 5.2 shall comply with the rules of Code Section 424(a), and
     in no event shall any adjustment be made which would render any ISO granted
     hereunder other than an incentive stock option for purposes of Code Section
     422.

6.0  MAXIMUM INDIVIDUAL AWARDS

6.1  Maximum  Aggregate Number of Shares Underlying  Stock-Based  Awards Granted
     Under the Plan to Any Single  Participant.  The maximum aggregate number of
     shares of Common Stock  underlying all Awards  measured in shares of Common
     Stock (whether payable in Common Stock, cash or a combination of both) that
     may be granted to any single  Participant during the life of the Plan shall
     be 750,000 shares,  subject to adjustment as provided in Section 5.2 above.
     For purposes of the preceding  sentence,  such Awards that are cancelled or
     repriced shall continue to be counted in determining such maximum aggregate
     number  of  shares  of  Common  Stock  that may be  granted  to any  single
     Participant during the life of the Plan.

6.2  Maximum Dollar Amount  Underlying  Cash-Based Awards Granted Under the Plan
     to Any Single  Participant.  The maximum  dollar amount that may be paid to
     any single Participant with respect to all Awards measured in cash (whether
     payable in Common Stock,  cash or a combination of both) during the life of
     the Plan shall be $10,000,000.

7.0  STOCK OPTIONS

7.1  In General. The Committee may, in its sole discretion,  grant Stock Options
     to Employees, Nonemployee Directors and Independent Contractors on or after
     the Effective Date. The Committee shall, in its sole discretion,  determine
     the Employees,  the Nonemployee  Directors and Independent  Contractors who
     will  receive  Stock  Options  and the  number of  shares  of Common  Stock
     underlying  each  Stock  Option.  With  respect  to  Employees  who  become
     Participants,   the   Committee  may  grant  such   Participants   ISOs  or
     Nonqualified  Stock  Options  or a  combination  of both.  With  respect to
     Nonemployee Directors and Independent  Contractors who become Participants,
     the Committee may grant such Participants only Nonqualified  Stock Options.
     Each Stock Option shall be subject to such terms and conditions  consistent
     with the Plan as the  Committee  may impose from time to time. In addition,
     each Stock Option shall be subject to the  following  terms and  conditions
     set forth in Sections 7.2 through 7.8 below.

7.2  Exercise  Price.  The Committee  shall  specify the exercise  price of each
     Stock  Option  in the  Award  Agreement;  provided,  however,  that (i) the
     exercise  price of any ISO shall not be less than 100  percent  of the Fair
     Market  Value  of the  Common  Stock  on the  date of  grant,  and (ii) the
     exercise

                                      -8-
<PAGE>

     price of any  Nonqualified  Stock Option shall not be less than 100 percent
     of the Fair Market  Value of the Common  Stock on the date of grant  unless
     the  Committee  in its sole  discretion  and due to  special  circumstances
     determines otherwise on the date of grant.

7.3  Term of Stock Option.  The  Committee  shall specify the term of each Stock
     Option in the Award Agreement;  provided, however, that (i) no ISO shall be
     exercised  after the 10th  anniversary of the date of grant of such ISO and
     (ii) no  Nonqualified  Stock  Option  shall  be  exercised  after  the 10th
     anniversary of the date of grant of such  Nonqualified  Stock Option.  Each
     Stock Option shall terminate at such earlier times and upon such conditions
     or circumstances as the Committee shall, in its sole discretion,  set forth
     in the Award Agreement on the date of grant.

7.4  Vesting Date. The Committee  shall specify the Vesting Date with respect to
     each Stock Option in the Award  Agreement.  The  Committee  may grant Stock
     Options that are Vested,  either in whole or in part, on the date of grant.
     If the Committee fails to specify a Vesting Date in the Award Agreement, 25
     percent of such Stock Option shall become  exercisable on each of the first
     4 anniversaries of the date of grant and shall remain exercisable following
     such anniversary date until the Stock Option expires in accordance with its
     terms under the Award Agreement or under the terms of the Plan. The Vesting
     of a Stock  Option may be subject to such  other  terms and  conditions  as
     shall  be  determined  by the  Committee,  including,  without  limitation,
     accelerating the Vesting if certain performance goals are achieved.

7.5  Exercise of Stock Options.  The Stock Option  exercise price may be paid in
     cash or, in the sole discretion of the Committee, by the delivery of shares
     of Common Stock then owned by the Participant, by the withholding of shares
     of  Common  Stock  for  which  a  Stock  Option  is  exercisable,  or  by a
     combination  of these  methods.  In the sole  discretion of the  Committee,
     payment may also be made by delivering a properly  executed exercise notice
     to the Company together with a copy of irrevocable instructions to a broker
     to deliver  promptly to the Company the amount of sale or loan  proceeds to
     pay the exercise price. To facilitate the foregoing,  the Company may enter
     into  agreements  for  coordinated  procedures  with one or more  brokerage
     firms.  The Committee may prescribe any other method of paying the exercise
     price that it  determines  to be  consistent  with  applicable  law and the
     purpose of the Plan, including, without limitation, in lieu of the exercise
     of a Stock  Option by  delivery  of shares of Common  Stock then owned by a
     Participant,  providing the Company with a notarized statement attesting to
     the number of shares owned by the Participant,  where upon  verification by
     the Company,  the Company would issue to the Participant only the number of
     incremental  shares to which the  Participant  is entitled upon exercise of
     the Stock Option. In determining which methods a Participant may utilize to
     pay the exercise  price,  the  Committee  may  consider  such factors as it
     determines are appropriate;  provided,  however, that with respect to ISOs,
     all such discretionary determinations by the Committee shall be made at the
     time of grant and specified in the Award Agreement.

7.6  Restrictions  Relating to ISOs.  In addition to being  subject to the terms
     and  conditions  of this  Section  7,  ISOs  shall  comply  with all  other
     requirements under Code Section 422. Accordingly,  ISOs may be granted only
     to  Participants  who are employees  (as  described in Treasury  Regulation
     Section  1.421-7(h))  of the  Company or of any  "Parent  Corporation"  (as
     defined in Code  Section  424(e)) or of any  "Subsidiary  Corporation"  (as
     defined in Code Section 424(f)) on the date of grant.  The aggregate market
     value  (determined  as of the time the ISO is granted) of the Common  Stock
     with  respect to which ISOs  (under all option  plans of the Company and of
     any Parent

                                      -9-
<PAGE>

     Corporation  and of any Subsidiary  Corporation)  are  exercisable  for the
     first  time by a  Participant  during  any  calendar  year shall not exceed
     $100,000.  For purposes of the preceding sentence,  (i) ISOs shall be taken
     into  account in the order in which they are granted and (ii) ISOs  granted
     before 1987 shall not be taken into account. ISOs shall not be transferable
     by the  Participant  otherwise  than  by will or the  laws of  descent  and
     distribution and shall be exercisable,  during the Participant's  lifetime,
     only by  such  Participant.  The  Committee  shall  not  grant  ISOs to any
     Employee who, at the time the ISO is granted,  owns stock possessing (after
     the application of the attribution  rules of Code Section 424(d)) more than
     10 percent of the total  combined  voting  power of all classes of stock of
     the Company or of any Parent  Corporation or of any Subsidiary  Corporation
     unless the exercise  price of the ISO is fixed at not less than 110 percent
     of the Fair Market  Value of the Common  Stock on the date of grant and the
     exercise of such ISO is prohibited  by its terms after the 5th  anniversary
     of the  ISO's  date of  grant.  In  addition,  no ISO  shall be issued to a
     Participant  in tandem  with a  Nonqualified  Stock  Option  issued to such
     Participant  in accordance  with Treasury  Regulation  Section  14a.422A-1,
     Q/A-39.

7.7  Additional  Terms and  Conditions.  The Committee  may, by way of the Award
     Agreements  or   otherwise,   establish   such  other  terms,   conditions,
     restrictions and/or limitations, if any, of any Stock Option, provided they
     are not inconsistent  with the Plan,  including,  without  limitation,  the
     requirement  that  the  Participant  not  engage  in  competition  with the
     Company.

7.8  Conversion Stock Options. The Committee may, in its sole discretion,  grant
     a Stock  Option to any holder of an option  (hereinafter  referred to as an
     "Original Option") to purchase shares of the stock of any corporation:

     (a)       the  stock  or  assets  of  which  were  acquired,   directly  or
          indirectly, by the Company or any Subsidiary, or

     (b)       which was merged with and into the Company or a Subsidiary,

     so that the Original  Option is converted into a Stock Option  (hereinafter
     referred to as a "Conversion Stock Option");  provided,  however, that such
     Conversion Stock Option as of the date of its grant (the "Conversion  Stock
     Option  Grant  Date")  shall have the same  economic  value as the Original
     Option as of the  Conversion  Stock Option Grant Date. In addition,  unless
     the Committee,  in its sole discretion determines  otherwise,  a Conversion
     Stock Option which is converting an Original  Option intended to qualify as
     an ISO  shall  have the same  terms and  conditions  as  applicable  to the
     Original  Option in  accordance  with  Code  Section  424 and the  Treasury
     Regulations  thereunder  so  that  the  conversion  (x) is  treated  as the
     issuance or assumption of a stock option under Code Section  424(a) and (y)
     is not treated as a  modification,  extension  or renewal of a stock option
     under Code Section 424(h).

8.0  SARS

8.1  In  General.  The  Committee  may,  in its sole  discretion,  grant SARs to
     Employees, Nonemployee Directors, and/or Independent Contractors. An SAR is
     a right to  receive a payment in cash,  Common  Stock or a  combination  of
     both,  in an amount equal to the excess of (x) the Fair Market Value of the
     Common Stock, or other specified valuation, of a specified number of shares
     of Common Stock on the date the SAR is  exercised  over (y) the Fair Market
     Value of the Common

                                      -10-
<PAGE>

     Stock, or other specified  valuation  (which shall be no less than the Fair
     Market  Value of the Common  Stock),  of such shares of Common Stock on the
     date the SAR is granted,  all as  determined  by the  Committee;  provided,
     however,  that  if a SAR is  granted  retroactively  in  tandem  with or in
     substitution  for a Stock Option,  the designated  Fair Market Value of the
     Common  Stock in the Award  Agreement  may be the Fair Market  Value of the
     Common Stock on the date such Stock  Option was granted.  Each SAR shall be
     subject to such terms and  conditions,  including,  but not  limited  to, a
     provision  that  automatically  converts  a SAR  into a Stock  Option  on a
     conversion  date  specified at the time of grant,  as the  Committee  shall
     impose from time to time in its sole discretion and subject to the terms of
     the Plan.

9.0  STOCK AWARDS AND STOCK UNITS

9.1  Stock Awards. The Committee may, in its sole discretion, grant Stock Awards
     to Employees,  Nonemployee  Directors,  and/or  Independent  Contractors as
     additional  compensation or in lieu of other  compensation  for services to
     the  Company.  A Stock Award shall  consist of shares of Common Stock which
     shall be subject to such terms and  conditions as the Committee in its sole
     discretion   determines   appropriate   including,    without   limitation,
     restrictions on the sale or other  disposition of such shares,  the Vesting
     Date with respect to such shares, and the right of the Company to reacquire
     such shares for no  consideration  upon  termination  of the  Participant's
     employment  within  specified  periods.   The  Committee  may  require  the
     Participant  to  deliver a duly  signed  stock  power,  endorsed  in blank,
     relating to the Common  Stock  covered by such Stock Award  and/or that the
     stock  certificates  evidencing  such  shares  be held in  custody  or bear
     restrictive legends until the restrictions  thereon shall have lapsed. With
     respect  to the  shares of  Common  Stock  subject  to a Stock  Award,  the
     Participant  shall  have all of the  rights of a holder of shares of Common
     Stock,  including  the right to receive  dividends  and to vote the shares,
     unless the Committee determines otherwise on the date of grant.

9.2  Stock Units. The Committee may, in its sole discretion, grant to Employees,
     Nonemployee  Directors,   and/or  Independent  Contractor  Stock  Units  as
     additional  compensation or in lieu of other  compensation  for services to
     the  Company.  A  Stock  Unit  is a  hypothetical  share  of  Common  Stock
     represented by a notional account  established and maintained (or caused to
     be  established  or  maintained)  by the Company for such  Participant  who
     receives a grant of Stock Units. Stock Units shall be subject to such terms
     and  conditions  as the  Committee,  in  its  sole  discretion,  determines
     appropriate  including,  without limitation,  determinations of the Vesting
     Date with  respect to such Stock Units and the  criteria for the Vesting of
     such Stock Units.  A Stock Unit granted by the Committee  shall provide for
     payment  in  shares  of  Common  Stock at such  time or times as the  Award
     Agreement  shall  specify.   The  Committee   shall  determine   whether  a
     Participant  who has been  granted a Stock Unit shall also be entitled to a
     Dividend Equivalent Right.

9.3  Payout of Stock  Units.  Subject to a  Participant's  election  to defer in
     accordance  with Section 17.3 below,  upon the Vesting of a Stock Unit, the
     shares of Common Stock  representing the Stock Unit shall be distributed to
     the Participant, unless the Committee, in its sole discretion, provides for
     the  payment  of the Stock  Unit in cash (or  partly in cash and  partly in
     shares of Common  Stock)  equal to the value of the shares of Common  Stock
     which would otherwise be distributed to the Participant.

                                      -11-
<PAGE>

10.0  PERFORMANCE SHARES AND PERFORMANCE UNITS

10.1  Performance  Shares.  The  Committee  may, in its sole  discretion,  grant
      Performance Shares to Employees, Nonemployee Directors, and/or Independent
      Contractors as additional  compensation  or in lieu of other  compensation
      for services to the Company.  A Performance Share shall consist of a share
      or  shares  of Common  Stock  which  shall be  subject  to such  terms and
      conditions  as  the  Committee,   in  its  sole   discretion,   determines
      appropriate  including,  without  limitation,  determining the performance
      goal or goals which,  depending on the extent to which such goals are met,
      will determine the number and/or value of the Performance Shares that will
      be  paid  out or  distributed  to the  Participant  who has  been  granted
      Performance Shares. Performance goals may be based on, without limitation,
      Company-wide,  divisional and/or individual performance, as the Committee,
      in its sole discretion, may determine, and may be based on the performance
      measures listed in Section 12.3 below.

10.2  Performance  Units.  The Committee may, in its sole  discretion,  grant to
      Employees,   Nonemployee   Directors,   and/or   Independent   Contractors
      Performance  Units  as  additional   compensation  or  in  lieu  of  other
      compensation  for  services  to  the  Company.  A  Performance  Unit  is a
      hypothetical  share or shares of Common  Stock  represented  by a notional
      account  which  shall be  established  and  maintained  (or  caused  to be
      established  or  maintained)  by the  Company  for  such  Participant  who
      receives a grant of Performance Units.  Performance Units shall be subject
      to such terms and  conditions as the  Committee,  in its sole  discretion,
      determines  appropriate  including,  without  limitation,  determining the
      performance  goal or goals  which,  depending  on the extent to which such
      goals are met, will  determine the number and/or value of the  Performance
      Units that will be accrued  with respect to the  Participant  who has been
      granted  Performance  Units.  Performance  goals may be based on,  without
      limitation, Company-wide, divisional and/or individual performance, as the
      Committee, in its sole discretion,  may determine, and may be based on the
      performance measures listed in Section 12.3 below.

10.3  Adjustment of Performance  Goals. With respect to those Performance Shares
      or Performance Units that are not intended to qualify as Performance-Based
      Awards (as described in Section 12 below),  the  Committee  shall have the
      authority at any time to make  adjustments  to  performance  goals for any
      outstanding  Performance  Shares or Performance  Units which the Committee
      deems necessary or desirable  unless at the time of  establishment  of the
      performance goals the Committee shall have precluded its authority to make
      such adjustments.

10.4  Payout  of  Performance  Shares  or  Performance   Units.   Subject  to  a
      Participant's  election to defer in  accordance  with  Section 17.3 below,
      upon the Vesting of a Performance  Share or a Performance Unit, the shares
      of Common Stock representing the Performance Share or the Performance Unit
      shall be distributed to the Participant, unless the Committee, in its sole
      discretion,  provides  for  the  payment  of the  Performance  Share  or a
      Performance Unit in cash (or partly in cash and partly in shares of Common
      Stock)  equal to the  value of the  shares  of Common  Stock  which  would
      otherwise be distributed to the Participant.

                                      -12-
<PAGE>

11.0  CASH AWARDS

11.1  In General.  The Committee may, in its sole discretion,  grant Cash Awards
      to Employees,  Nonemployee  Directors,  and/or Independent  Contractors as
      additional  compensation or in lieu of other  compensation for services to
      the Company. A Cash Award shall be subject to such terms and conditions as
      the Committee,  in its sole discretion,  determines appropriate including,
      without limitation, determining the Vesting Date with respect to such Cash
      Award,  the criteria for the Vesting of such Cash Award,  and the right of
      the  Company to require the  Participant  to repay the Cash Award (with or
      without interest) upon termination of the Participant's  employment within
      specified periods.

12.0  PERFORMANCE-BASED AWARDS

12.1  In General.  The Committee,  in its sole discretion,  may designate Awards
      granted under the Plan as  Performance-Based  Awards (as defined below) if
      it determines  that such  compensation  might not be tax deductible by the
      Company due to the deduction  limitation  imposed by Code Section  162(m).
      Accordingly,  an Award  granted  under the Plan may be  granted  in such a
      manner that the compensation attributable to such Award is intended by the
      Committee to qualify as "performance-based  compensation" (as such term is
      used in Code Section 162(m) and the Treasury  Regulations  thereunder) and
      thus be exempt  from the  deduction  limitation  imposed  by Code  Section
      162(m) ("Performance-Based Awards").

12.2  Qualification of  Performance-Based  Awards.  Awards shall only qualify as
      Performance-Based Awards under the Plan if:

      (a)      at the time of grant the Committee is comprised  solely of two or
          more "outside  directors" (as such term is used in Code Section 162(m)
          and the Treasury Regulations thereunder);

      (b)      with respect to either the granting or Vesting of an Award (other
          than (i) a Nonqualified Stock Option or (ii) an SAR, which are granted
          with an exercise price at or above the Fair Market Value of the Common
          Stock on the date of grant),  such Award is subject to the achievement
          of a performance goal or goals based on one or more of the performance
          measures specified in Section 12.3 below;

      (c)      the   Committee   establishes   in  writing  (i)  the   objective
          performance-based  goals applicable to a given performance  period and
          (ii) the  individual  employees  or class of  employees  to which such
          performance-based  goals  apply  no  later  than  90  days  after  the
          commencement  of such  performance  period  (but in no event  after 25
          percent of such performance period has elapsed);

      (d)      no compensation attributable to a Performance-Based Award will be
          paid to or otherwise  received by a  Participant  until the  Committee
          certifies in writing that the performance goal or goals (and any other
          material  terms)  applicable  to such  performance  period  have  been
          satisfied; and

                                      -13-
<PAGE>

      (e)      after the  establishment  of a  performance  goal,  the Committee
          shall not revise such  performance goal (unless such revision will not
          disqualify    compensation    attributable    to    the    Award    as
          "performance-based   compensation"   under  Code  Section  162(m))  or
          increase the amount of compensation payable with respect to such Award
          upon the attainment of such performance goal.

12.3  Performance  Measures.  The Committee  may use the  following  performance
      measures  (either  individually or in any  combination) to set performance
      goals with  respect  to Awards  intended  to qualify as  Performance-Based
      Awards:  net sales;  pretax income before allocation of corporate overhead
      and bonus;  budget; cash flow;  earnings per share; net income;  division,
      group or corporate financial goals; return on stockholders' equity; return
      on  assets;   attainment   of  strategic  and   operational   initiatives;
      appreciation in and/or maintenance of the price of the Common Stock or any
      other  publicly-traded  securities  of the Company;  market  share;  gross
      profits;  earnings  before interest and taxes;  earnings before  interest,
      taxes,   depreciation  and  amortization;   economic  value-added  models;
      comparisons  with  various  stock  market  indices;  increase in number of
      customers; and/or reductions in costs.

12.4  Stockholder  Reapproval.   As  required  by  Treasury  Regulation  Section
      1.162-27(e)(vi),  the material terms of performance  goals as described in
      this  Section 12 shall be  disclosed to and  reaaproved  by the  Company's
      stockholders  no later than the first  stockholder  meeting that occurs in
      the 5th  year  following  the  year in which  the  Company's  stockholders
      previously approved such performance goals.

13.0  CHANGE IN CONTROL

13.1  Accelerated  Vesting.  Notwithstanding any other provision of this Plan to
      the  contrary,  if  there is a  Change  in  Control  of the  Company,  the
      Committee,  in its sole  discretion,  may take  such  actions  as it deems
      appropriate  with  respect  to  outstanding  Awards,  including,   without
      limitation,  accelerating  the Vesting Date and/or  payout of such Awards;
      provided,  however, that such action shall not conflict with any provision
      contained  in an Award  Agreement  unless  such  provision  is  amended in
      accordance with Section 16.3 below.

13.2  Cashout. The Committee,  in its sole discretion,  may determine that, upon
      the occurrence of a Change in Control of the Company,  all or a portion of
      certain  outstanding  Awards shall terminate  within a specified number of
      days after  notice to the holders,  and each such holder shall  receive an
      amount  equal to the  value of such  Award  on the date of the  change  in
      control, and with respect to each share of Common Stock subject to a Stock
      Option or SAR, an amount  equal to the excess of the Fair Market  Value of
      such shares of Common Stock  immediately  prior to the  occurrence of such
      change in control over the  exercise  price per share of such Stock Option
      or SAR.  Such  amount  shall be payable  in cash,  in one or more kinds of
      property  (including the property,  if any, payable in the transaction) or
      in a combination thereof, as the Committee, in its sole discretion,  shall
      determine.

13.3  Assumption or Substitution of Awards.  Notwithstanding  anything contained
      in the Plan to the contrary,  the Committee  may, in its sole  discretion,
      provide that an Award may be assumed by any entity which acquires  control
      of the  Company  or may be  substituted  by a  similar  award  under  such
      entity's compensation plans.

                                      -14-
<PAGE>

14.0  TERMINATION OF EMPLOYMENT IF PARTICIPANT IS AN EMPLOYEE

14.1  Termination  of  Employment  Due to Death or  Disability.  Subject  to any
      written   agreement   between  the  Company  and  a   Participant,   if  a
      Participant's employment is terminated due to death or Disability:

      (a)      all non-Vested  portions of Awards held by the Participant on the
          date of the Participant's  death or the date of the termination of his
          or her employment,  as the case may be, shall immediately be forfeited
          by such Participant as of such date; and

      (b)      all  Vested  portions  of  Stock  Options  and  SARs  held by the
          Participant on the date of the Participant's  death or the date of the
          termination of his or her employment, as the case may be, shall remain
          exercisable until the earlier of:

          (i)       the end of the  12-month  period  following  the date of the
               Participant's  death or the date of the termination of his or her
               employment, as the case may be, or

          (ii)      the date the Stock Option or SAR would otherwise expire.

14.2  Termination  of  Employment  for Cause.  Subject to any written  agreement
      between the Company and a Participant,  if a  Participant's  employment is
      terminated by the Company for cause,  all Awards held by a Participant  on
      the date of the  termination of his or her  employment for cause,  whether
      Vested or non-Vested,  shall  immediately be forfeited by such Participant
      as of such date.

14.3  Other Terminations of Employment. Subject to any written agreement between
      the Company and a Participant, if a Participant's employment is terminated
      for any  reason  other  than  for  cause  or  other  than  due to death or
      Disability:

      (a)      all non-Vested  portions of Awards held by the Participant on the
          date of the termination of his or her employment shall  immediately be
          forfeited by such Participant as of such date; and

      (b)      all Vested  portions  of Stock  Options  and/or  SARs held by the
          Participant  on the date of the  termination  of his or her employment
          shall  remain  exercisable  until  the  earlier  of (i) the end of the
          90-day  period   following  the  date  of  the   termination   of  the
          Participant's  employment  or (ii) the date the  Stock  Option  or SAR
          would otherwise expire.

14.4  Committee  Discretion.  Notwithstanding  anything contained in the Plan to
      the contrary, the Committee may, in its sole discretion, provide that:

      (a)      any or all non-Vested  portions of Stock Options and/or SARs held
          by the Participant on the date of the  Participant's  death and/or the
          date of the  termination  of his or her employment  shall  immediately
          become  exercisable as of such date and,  except with respect to ISOs,
          shall remain  exercisable  until a date that occurs on or prior to the
          date the Stock Option or SAR is scheduled to expire;

                                      -15-
<PAGE>

      (b)      any or all Vested portions of  Nonqualified  Stock Options and/or
          SARs held by the  Participant on the date of the  Participant's  death
          and/or  the date of the  termination  of his or her  employment  shall
          remain  exercisable  until a date that  occurs on or prior to the date
          the Stock Option or SAR is scheduled to expire; and/or

      (c)      any or all  non-Vested  portions of Stock  Awards,  Stock  Units,
          Performance Shares,  Performance Units, and/or Cash Awards held by the
          Participant on the date of the Participant's  death and/or the date of
          the  termination of his or her employment  shall  immediately  Vest or
          shall become  Vested on a date that occurs on or prior to the date the
          Award is scheduled to vest.

14.5  ISOs.  Notwithstanding anything contained in the Plan to the contrary, (i)
      the  provisions  contained  in this  Section 14 shall be applied to an ISO
      only if the application of such provision  maintains the treatment of such
      ISO as an ISO and (ii) the  exercise  period  of an ISO in the  event of a
      termination of the Participant's  employment due to Disability provided in
      Section  14.1  above  shall  be  applied  only  if  the   Participant   is
      "permanently  and  totally  disabled"  (as such  term is  defined  in Code
      Section 22(e)(3)).

15.0  TAXES

15.1  Withholding  Taxes.  With  respect  to  Employees,  the  Company,  or  the
      applicable Subsidiary,  may require a Participant who has become vested in
      his or her Stock Award, Stock Unit,  Performance Share or Performance Unit
      granted  hereunder,  or who  exercises  a  Stock  Option  or  SAR  granted
      hereunder to reimburse the corporation  which employs such Participant for
      any taxes required by any governmental regulatory authority to be withheld
      or otherwise deducted and paid by such corporation or entity in respect of
      the issuance or  disposition of such shares or the payment of any amounts.
      In lieu thereof,  the corporation or entity which employs such Participant
      shall have the right to  withhold  the amount of such taxes from any other
      sums  due  or to  become  due  from  such  corporation  or  entity  to the
      Participant  upon  such  terms  and  conditions  as  the  Committee  shall
      prescribe. The corporation or entity that employs such Participant may, in
      its discretion,  hold the stock  certificate to which such  Participant is
      entitled upon the vesting of a Stock Award, Stock Unit,  Performance Share
      or  Performance  Unit or the exercise of a Stock Option or SAR as security
      for the payment of such  withholding tax liability,  until cash sufficient
      to pay that liability has been accumulated.

15.2  Use of Common  Stock to Satisfy  Withholding  Obligation.  With respect to
      Employees,  at any time that the Company,  Subsidiary or other entity that
      employs such Participant becomes subject to a withholding obligation under
      applicable  law with respect to the vesting of a Stock Award,  Stock Unit,
      Performance  Share or  Performance  Unit or the exercise of a Nonqualified
      Stock Option (the "Tax Date"), except as set forth below, a holder of such
      Award may elect to  satisfy,  in whole or in part,  the  holder's  related
      personal tax  liabilities  (an  "Election")  by (i) directing the Company,
      Subsidiary or other entity that employs such  Participant to withhold from
      shares  issuable  in the related  vesting or  exercise  either a specified
      number of shares or shares of Common  Stock  having a specified  value (in
      each case equal to the related minimum statutory personal  withholding tax
      liabilities with respect to the applicable taxing jurisdiction in order to
      comply with

                                      -16-
<PAGE>

      the  requirements  for a "fixed plan" under  Accounting  Principals  Board
      Opinion No. 25), (ii) tendering shares of Common Stock  previously  issued
      pursuant to the  exercise of a Stock  Option or other shares of the Common
      Stock owned by the holder,  or (iii) combining any or all of the foregoing
      Elections in any fashion.  An Election shall be irrevocable.  The withheld
      shares and other  shares of Common  Stock  tendered  in  payment  shall be
      valued at their Fair Market Value of the Common Stock on the Tax Date. The
      Committee may  disapprove of any Election,  suspend or terminate the right
      to make  Elections or provide that the right to make  Elections  shall not
      apply to  particular  shares or  exercises.  The  Committee may impose any
      additional  conditions or restrictions on the right to make an Election as
      it shall deem  appropriate,  including  conditions  or  restrictions  with
      respect to Section 16 of the Exchange Act.

15.3  No Guarantee of Tax Consequences. No person connected with the Plan in any
      capacity,  including,  but not limited to, the Company and any  Subsidiary
      and  their   directors,   officers,   agents  and   employees   makes  any
      representation,   commitment,   or  guarantee   that  any  tax  treatment,
      including, but not limited to, federal, state and local income, estate and
      gift tax treatment,  will be applicable  with respect to amounts  deferred
      under the Plan, or paid to or for the benefit of a  Participant  under the
      Plan,  or that  such tax  treatment  will  apply to or be  available  to a
      Participant on account of participation in the Plan.

16.0  AMENDMENT AND TERMINATION

16.1  Termination  of Plan.  The Board may suspend or terminate  the Plan at any
      time with or  without  prior  notice;  provided,  however,  that no action
      authorized by this Section 16.1 shall reduce the amount of any outstanding
      Award or change the terms and conditions thereof without the Participant's
      consent.

16.2  Amendment  of Plan.  The  Board  may  amend  the Plan at any time  with or
      without prior notice; provided, however, that no action authorized by this
      Section  16.2 shall reduce the amount of any  outstanding  Award or change
      the terms and conditions  thereof without the  Participant's  consent.  No
      amendment of the Plan shall,  without the approval of the  stockholders of
      the Company:

      (a)      increase the total number of shares which may be issued under the
          Plan;

      (b)      increase the maximum  number of shares with respect to all Awards
          measured in Common Stock that may be granted to any  individual  under
          the Plan;

      (c)      increase the maximum  dollar amount that may be paid with respect
          to all Awards measured in cash; or

      (d)      modify the  requirements  as to eligibility  for Awards under the
          Plan.

      In  addition,  the Plan shall not be amended  without the approval of such
      amendment by the Company's  stockholders if such amendment (i) is required
      under the rules and  regulations of the stock exchange or national  market
      system on which the Common Stock is listed or (ii) will disqualify any ISO
      granted hereunder.

                                      -17-
<PAGE>

16.3  Amendment or Cancellation of Award Agreements.  The Committee may amend or
      modify any Award  Agreement  at any time by mutual  agreement  between the
      Committee  and the  Participant  or such other persons as may then have an
      interest therein.  In addition,  by mutual agreement between the Committee
      and a  Participant  or such  other  persons  as may then have an  interest
      therein,  Awards may be granted to an  Employee,  Nonemployee  Director or
      Independent   Contractor  in   substitution   and  exchange  for,  and  in
      cancellation  of,  any  Awards   previously   granted  to  such  Employee,
      Nonemployee  Director or  Independent  Contractor  under the Plan,  or any
      award  previously  granted  to  such  Employee,  Nonemployee  Director  or
      Independent  Contractor  under any  other  present  or future  plan of the
      Company or any present or future plan of an entity  which (i) is purchased
      by the Company,  (ii) purchases the Company,  or (iii) merges into or with
      the Company.

17.0  MISCELLANEOUS

17.1  Other  Provisions.  Awards  granted  under the Plan may also be subject to
      such other  provisions  (whether or not applicable to the Award granted to
      any other Participant) as the Committee determines on the date of grant to
      be  appropriate,   including,  without  limitation,  for  the  installment
      purchase of Common Stock under Stock Options, to assist the Participant in
      financing the  acquisition  of Common  Stock,  for the  forfeiture  of, or
      restrictions  on resale or other  disposition  of,  Common Stock  acquired
      under any Stock Option,  for the  acceleration of Vesting of Awards in the
      event of a change in control of the Company,  for the payment of the value
      of Awards to  Participants  in the  event of a change  in  control  of the
      Company,  or  to  comply  with  federal  and  state  securities  laws,  or
      understandings  or  conditions  as  to  the  Participant's  employment  in
      addition to those specifically provided for under the Plan.

17.2  Transferability.  Each Award granted under the Plan to a Participant shall
      not be  transferable  otherwise  than by will or the laws of  descent  and
      distribution, and Stock Options and SARs shall be exercisable,  during the
      Participant's lifetime, only by the Participant. In the event of the death
      of a Participant,  each Stock Option or SAR theretofore  granted to him or
      her shall be exercisable  during such period after his or her death as the
      Committee shall, in its sole discretion,  set forth in the Award Agreement
      on the date of grant and then only by the executor or administrator of the
      estate of the  deceased  Participant  or the person or persons to whom the
      deceased  Participant's rights under the Stock Option or SAR shall pass by
      will  or  the  laws  of  descent  and  distribution.  Notwithstanding  the
      foregoing,  the  Committee,  in  its  sole  discretion,   may  permit  the
      transferability  of a Stock  Option  (other than an ISO) by a  Participant
      solely  to  members  of the  Participant's  immediate  family or trusts or
      family  partnerships  or other  similar  entities  for the benefit of such
      persons,  and  subject  to such  terms,  conditions,  restrictions  and/or
      limitations,  if any, as the  Committee  may  establish and include in the
      Award Agreement.

17.3  Election to Defer  Compensation  Attributable to Award. The Committee may,
      in its sole discretion,  allow a Participant to elect to defer the receipt
      of  any  compensation  attributable  to  an  Award  under  guidelines  and
      procedures to be  established  by the Committee  after taking into account
      the advice of the Company's tax counsel.

17.4  Listing of Shares and Related Matters.  If at any time the Committee shall
      determine that the listing, registration or qualification of the shares of
      Common Stock subject to any Award on any securities  exchange or under any
      applicable law, or the consent or approval of any governmental  regulatory
      authority,  is necessary or desirable as a condition  of, or in connection
      with,  the  granting

                                      -18-
<PAGE>

      of an Award or the  issuance of shares of Common  Stock  thereunder,  such
      Award may not be exercised,  distributed  or paid out, as the case may be,
      in whole or in part,  unless such  listing,  registration,  qualification,
      consent or  approval  shall have been  effected  or  obtained  free of any
      conditions not acceptable to the Committee.

17.5  No Right, Title, or Interest in Company Assets. Participants shall have no
      right,  title, or interest  whatsoever in or to any investments  which the
      Company  may make to aid it in  meeting  its  obligations  under the Plan.
      Nothing  contained  in the  Plan,  and no  action  taken  pursuant  to its
      provisions, shall create or be construed to create a trust of any kind, or
      a  fiduciary   relationship  between  the  Company  and  any  Participant,
      beneficiary,  legal representative or any other person. To the extent that
      any person acquires a right to receive payments from the Company under the
      Plan,  such  right  shall be no  greater  than the  right of an  unsecured
      general  creditor of the Company.  All payments to be made hereunder shall
      be paid from the  general  funds of the Company and no special or separate
      fund shall be  established  and no  segregation of assets shall be made to
      assure  payment of such amounts except as expressly set forth in the Plan.
      The Plan is not intended to be subject to the Employee  Retirement  Income
      Security Act of 1974, as amended.

17.6  No  Right  to  Continued   Employment   or  Service  or  to  Grants.   The
      Participant's  rights,  if any,  to  continue  to serve the  Company  as a
      director,  officer,  employee,  independent contractor or otherwise, shall
      not be  enlarged or  otherwise  affected  by his or her  designation  as a
      Participant  under the Plan, and the Company or the applicable  Subsidiary
      reserves  the right to  terminate  the  employment  of any Employee or the
      services  of any  Independent  Contractor  or  director  at any time.  The
      adoption of the Plan shall not be deemed to give any Employee, Nonemployee
      Director,  Independent  Contractor or any other individual any right to be
      selected as a Participant or to be granted an Award.

17.7  Awards  Subject  to  Foreign  Laws.  The  Committee  may  grant  Awards to
      individual  Participants  who are subject to the tax laws of nations other
      than the United  States,  and such Awards may have terms and conditions as
      determined by the Committee as necessary to comply with applicable foreign
      laws. The Committee may take any action which it deems advisable to obtain
      approval of such Awards by the appropriate  foreign  governmental  entity;
      provided,  however,  that no such  Awards may be granted  pursuant to this
      Section  16.6 and no action may be taken which would result in a violation
      of the Exchange Act or any other applicable law.

17.8  Governing  Law. The Plan, all Awards  granted  hereunder,  and all actions
      taken  in  connection  herewith  shall be  governed  by and  construed  in
      accordance  with the laws of the State of Delaware  without  reference  to
      principles of conflict of laws, except as superseded by applicable federal
      law.

17.9  Other  Benefits.  No Award  granted  under  the Plan  shall be  considered
      compensation for purposes of computing  benefits under any retirement plan
      of the Company or any Subsidiary  nor affect any benefits or  compensation
      under  any  other  benefit  or  compensation  plan of the  Company  or any
      Subsidiary now or subsequently in effect.

17.10 No Fractional Shares. No fractional shares of Common Stock shall be issued
      or  delivered  pursuant  to the Plan or any  Award.  The  Committee  shall
      determine  whether cash,  Common Stock,  Stock Options,  or other property
      shall be  issued or paid in lieu of  fractional  shares  or  whether  such
      fractional  shares or any rights  thereto  shall be forfeited or otherwise
      eliminated.

                                      -19-<PAGE>

                                                                    EXHIBIT 10.1

                            AMENDMENT NUMBER ONE TO
                            -----------------------
                     AMENDED AND RESTATED CREDIT AGREEMENT
                     -------------------------------------

This AMENDMENT NUMBER ONE TO AMENDED AND RESTATED CREDIT AGREEMENT, dated as of
May 15, 2000 (this "Amendment"), is entered into among NATIONWIDE HEALTH
PROPERTIES, INC., a Maryland corporation (the "Borrower"), the Banks, and WELLS
FARGO BANK, NATIONAL ASSOCIATION, as agent for the Banks (in such capacity, the
"Agent").
WHEREAS, Borrower is a party to that certain Amended and Restated Credit
Agreement, dated as of July 27, 1999 (the "Credit Agreement"), with the
financial institutions listed on the signature pages thereto (each, a "Bank",
and collectively, the "Banks"), and Agent.
WHEREAS, the Borrower has requested that the Banks amend certain provisions of
the Credit Agreement as set forth herein.
WHEREAS, subject to the terms and conditions contained herein, the Banks
signatory hereto are willing to amend such provisions of the Credit Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, conditions, and
provisions hereinafter set forth, the parties hereto agree as follows:

                         DEFINITIONS FOR THIS AMENDMENT

Any and all initially capitalized terms used herein shall have the meanings
ascribed thereto in the Credit Agreement unless specifically defined herein.

                        AMENDMENTS to CREDIT AGREEMENT.

Section 1.1 of the Credit Agreement is amended by adding the following
----------------------------------------------------------------------
definitions thereto:
--------------------

          "Consolidated Total Unsecured Liabilities" means, as of any date of
           ----------------------------------------
     determination, the result of (a) Consolidated Total Liabilities, minus (b)
                                                                      -----
     the total liabilities of the Borrower and its Subsidiaries on a
     consolidated basis, as determined in accordance with GAAP, that are secured
     by a Lien on the personal property or real property of Borrower or any such
     Subsidiary.

          "GAV Adjusted EBITDA" means, as of any date of determination thereof,
           -------------------
     which date shall be the last day of a fiscal quarter, (a) if such fiscal
     quarter is the last fiscal quarter in a fiscal year, an amount equal to (i)
     EBITDA for such fiscal year, minus, (ii) the portion of such EBITDA
                                  -----
     generated by or otherwise arising from any Premises subject to a mortgage,
     deed of trust, or other Lien, or (b) if such fiscal quarter is not the last
     fiscal quarter of a fiscal year, an amount equal to (i) 4 times the result
     of (A) EBITDA for such fiscal quarter, minus, (b) the portion of such
                                            -----
     EBITDA generated by or otherwise arising from any Premises subject to a
     mortgage, deed of trust, or other Lien.

          "Gross Asset Value" means, as of any date of determination thereof,
           -----------------
     which date shall be the last day of a fiscal quarter, the sum of (a) an
     amount equal to GAV Adjusted EBITDA, as of such date of determination,
     divided by 13.0%, plus (b) the amount of Borrower's unrestricted cash on
                       ----
     hand as of such date of determination.

          "Gross Asset Value Coverage Ratio" means, as of any date of
           --------------------------------
     determination thereof, which date shall be the last day of a fiscal
     quarter, the ratio of (a) Gross Asset Value to (b) Total Unsecured
     Liabilities, in each case, as of such date of determination.

The following definitions contained in Section 1.1 of the Agreement hereby are
------------------------------------------------------------------------------
amended and restated in their entirety to read as follows:
----------------------------------------------------------

          "Applicable Eurodollar Rate Margin" means, for each Eurodollar Rate
           ---------------------------------
     Portion of Loans outstanding prior to the Termination Date:

               (i) 1.65%, if Borrower has at least two of the following long-
     term senior debt ratings:  (A) Bal or less as determined by Moody's
     Investors Service (together with any

                                       1
<PAGE>

     successors thereto, "Moody's"), (B) BB+ or less as determined by Standard
     and Poor's Corporation (together with any successors thereto, "S&P"), and
     (C) BB+ or less as determined by Duff & Phelps Inc. (together with any
     successors thereto, "Duff");

               (ii) 1.275%, if Borrower has at least two of the following long-
     term senior debt ratings:  (A) Baa3 or better as determined by Moody's, (B)
     BBB- or better as determined by S&P, and (C) BBB- or better as determined
     by Duff;

               (iii)  1.15%, if the Borrower has at least two of the following
     long-term senior debt ratings:  (A) Baa2 or better as determined by
     Moody's, (B) BBB or better as determined by S&P, and (C) BBB or better as
     determined by Duff;

               (iv) 1.075%, if the Borrower has at least two of the following
     long-term senior debt ratings:  (A) Baa1 or better as determined by
     Moody's, (B) BBB+ or better as determined by S&P, and (C) BBB+ or better as
     determined by Duff; or

               (v) 1.00%, if the Borrower has at least two of the following
     long-term senior debt ratings:  (A) A3 or better as determined by Moody's,
     (B) A- or better as determined by S&P, and (C) A- or better as determined
     by Duff.

          In the event that the Borrower satisfies more than one of the ratings
     requirements clauses in the preceding sentence, the Applicable Eurodollar
     Rate Margin shall be the lowest applicable percentage amount.  In the event
     that the Borrower does not satisfy any of the ratings requirements clauses
     in the preceding sentence (due to the unavailability of any such ratings or
     otherwise), the Applicable Eurodollar Rate Margin shall be 1.65%.  Each
     change in the Applicable Eurodollar Rate Margin based on a change in such
     long-term senior debt rating shall be effective for each Interest Period of
     each Eurodollar Rate Portion of the Loans commencing on or after the second
     Business Day after the date that the Borrower provides written notice to
     the Agent of such rating change.

          "Applicable Facility Fee Rate" means, for each calendar quarter:
           ----------------------------

               (i) 0.475% per annum, if Borrower has at least two of the
     following long-term senior debt ratings:  (A) bal or less as determined by
     Moody's, (B) BB+ or less as determined by S&P, and (C) BB+ or less as
     determined by Duff;

               (ii) 0.35% per annum, if Borrower has at least two of the
     following long-term senior debt ratings:  (A) Baa3 or better as determined
     by Moody's, (B) BBB- or better as determined by S&P, and (C) BBB- or better
     as determined by Duff;

               (iii)  0.35% per annum, if the Borrower has at least two of the
     following long-term senior debt ratings:  (A) Baa2 or better as determined
     by Moody's, (B) BBB or better as determined by S&P, and (C) BBB or better
     as determined by Duff;

               (iv) 0.30% per annum, if the Borrower has at least two of the
     following long-term senior debt ratings:  (A) Baa1 or better as determined
     by Moody's, (B) BBB+ or better as determined by S&P, and (C) BBB+ or better
     as determined by Duff; or

               (v) 0.25% per annum, if the Borrower has at least two of the
     following long-term senior debt ratings:  (A) A3 or better as determined by
     Moody's, (B) A- or better as determined by S&P, and (C) A- or better as
     determined by Duff.

          In the event that the Borrower satisfies more than one of the ratings
     requirements clauses in the preceding sentence, the Applicable Facility Fee
     Rate shall be the percentage

                                       2
<PAGE>

     amount applicable to the highest ratings requirement clause met by the
     Borrower. In the event that the Borrower does not satisfy any of the
     ratings requirements clauses in the preceding sentence (due to the
     unavailability of any such ratings or otherwise), the Applicable Facility
     Fee Rate shall be 0.475%. Each change in the Applicable Facility Fee Rate
     based on a change in such long-term senior debt rating shall be effective
     for the calendar quarter commencing on or after the date that the Borrower
     provides written notice to the Agent of such rating change.

          "Termination Date" means, unless extended pursuant to Section 4.1(b),
           ----------------                                     --------------
     March 31, 2003.

Section 9.2(a) and (b) of the Credit Agreement are amended and restated in their
--------------------------------------------------------------------------------
entirety as follows:
--------------------

          (a) Leverage Ratio.  The Borrower will not permit the ratio of
              --------------
     Consolidated Total Liabilities to Consolidated Tangible Net Worth to be
     greater than 1.60 to 1.00;

          (b) Minimum Consolidated Tangible Net Worth.  The Borrower will
              ---------------------------------------
     maintain Consolidated Tangible Net Worth of not less than $475,000,000

Section 9.2 of the Credit Agreement is amended by adding the following thereto
------------------------------------------------------------------------------
as a new subsection (d):
------------------------

          (d) Gross Asset Value Coverage Ratio.  The Borrower will maintain a
              --------------------------------
     Gross Asset Value Coverage Ratio as of the last day of each fiscal quarter
     ending during each period set forth below of not less than the ratio
     corresponding thereto:

<TABLE>
<CAPTION>
                Period                                  Ratio
                -----------------------------------------------
                <S>                                   <C>
                June 30, 2000 through                 1.45:1.00
                December 31, 2000
                -----------------------------------------------
                March 31, 2001 through                1.50:1.00
                December 31, 2001
                -----------------------------------------------
                March 31, 2002 and thereafter         1.55:1.00
                -----------------------------------------------
</TABLE>

                             CONDITIONS PRECEDENT.

The effectiveness of this Amendment shall be subject to the satisfaction of the
each of the following conditions precedent:

(a)  Borrower shall pay to Agent a fee (the "Amendment Fee") in an amount equal
     to $157,000, which Amendment Fee shall be fully earned and non-refundable
     when paid, and shall be apportioned among the Lenders as follows: (1)
     $139,500 of the Amendment Fee ratably among the Lenders (other than City
     National Bank), and (2) $17,500 of the Amendment Fee to City National Bank.

(b)  Borrower shall pay to Agent, for its sole and separate account, the fees
     payable to Agent pursuant to that certain letter agreement (the "Amendment
     Fee Letter"), dated as of the date hereof.

                                 MISCELLANEOUS.

Loan Documents.  This Amendment shall be one of the Loan Documents.
-------------------------------------------------------------------

Execution.  This Amendment may be executed in any number of counterparts, each
------------------------------------------------------------------------------
of which when so executed and delivered shall be deemed an original.  All of
----------------------------------------------------------------------------
such counterparts shall constitute but one and the same instrument.  Delivery of
--------------------------------------------------------------------------------
an executed counterpart of the signature pages of this Amendment by telecopier
------------------------------------------------------------------------------
shall be equally effective as delivery of a manually executed counterpart.  Any
-------------------------------------------------------------------------------
party delivering an executed counterpart of the signature pages of this
-----------------------------------------------------------------------
Amendment by telecopier shall thereafter also promptly deliver a manually
-------------------------------------------------------------------------
executed counterpart, but the
-----------------------------

                                       3
<PAGE>

failure to deliver such manually executed counterpart shall not affect the
--------------------------------------------------------------------------
validity, enforceability, and binding effect of this Amendment.
---------------------------------------------------------------

Effectiveness.  This Amendment shall be effective only after one or more
------------------------------------------------------------------------
counterparts hereof shall have been executed by the Borrower, all the Banks, and
--------------------------------------------------------------------------------
the Agent, and shall have been delivered to the Agent.
------------------------------------------------------

No Other Amendment.  Except as expressly amended hereby, the Credit Agreement
-----------------------------------------------------------------------------
shall remain unchanged and in full force and effect.  To the extent any terms or
--------------------------------------------------------------------------------
provisions of this Amendment conflict with those of the Credit Agreement, the
-----------------------------------------------------------------------------
terms and provisions of this Amendment shall control.  This Amendment shall be
------------------------------------------------------------------------------
deemed a part of and is hereby incorporated in the Credit Agreement.
--------------------------------------------------------------------

Governing Law.  This Amendment shall be governed by, and construed and enforced
-------------------------------------------------------------------------------
in accordance with, the laws of the State of California.
--------------------------------------------------------

                 [Remainder of page intentionally left blank.]

                                       4
<PAGE>

 IN WITNESS WHEREOF, the parties have caused this Amendment to be executed and
                 delivered as of the date first above written.

                                        NATIONWIDE HEALTH PROPERTIES, INC.

                                        By:  ____________________________
                                             Title: ________________________

                                        WELLS FARGO BANK, NATIONAL ASSOCIATION,
                                        in its individual capacity and as Agent

                                        By:  ____________________________
                                             Title: ________________________

                                        BANK OF AMERICA, N.A., formerly known as
                                        NationsBank, N.A.

                                        By:  ____________________________
                                             Title: ________________________

                                        THE BANK OF NEW YORK

                                        By:  ____________________________
                                             Title: ________________________

                                        KBC BANK N.V.

                                        By:  ____________________________
                                             Title: ________________________
                                        By:  ____________________________
                                             Title: ________________________

                                        CITY NATIONAL BANK

                                        By:  ____________________________
                                             Title: ________________________

                                       5

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00012-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00012-of-00352.parquet"}]]