Document:

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                                                                    EXHIBIT 10.7

                              EMPLOYMENT AGREEMENT

         This EMPLOYMENT AGREEMENT (the "Agreement"), effective as of December
31, 2001, is made and entered into by and between FLOWERS FOODS, INC., a Georgia
corporation ("Flowers") and G. ANTHONY CAMPBELL, an individual resident of
Georgia (herein referred to as the "Employee"):

                                  WITNESSETH:

                  WHEREAS, Flowers desires to retain Employee to serve in the
capacity of Director of Governmental Affairs to Flowers, upon the terms and
conditions hereinafter set forth; and

                  WHEREAS, Employee desires to enter into this Agreement with
respect to Employee's services upon the terms and conditions hereinafter set
forth;

                  NOW, THEREFORE, in consideration of the mutual covenants and
obligations contained herein, Flowers and Employee agree as follows:

         1.       Resignation. Flowers and Employee agree that Employee has
voluntarily resigned as Secretary and General Counsel and director of Flowers
and in all other officer positions relating to any affiliate of Flowers as of
December 31, 2001 (the "Effective Date"). After the Effective Date, Employee's
employment with Flowers shall be governed solely by this Agreement.

         2.       Termination of Prior Agreements. Flowers and Employee mutually
agree that any and all employment, separation or similar agreements between
Flowers and Employee (and/or any of their respective affiliates) prior to the
date hereof are hereby terminated effective on the Effective Date, it being
understood that the 2001 Nonqualified Stock Option Agreement by and between
Flowers and Employee (the "Option Agreement") continues in full force and
effect.

         3.       Employment. Flowers agrees to retain Employee, and Employee
agrees to serve Flowers, for a period commencing on the Effective Date and
terminating on April 30, 2005 (the "Employment Period"). Employee agrees during
the Employment Period to make himself available by telephone and in person at
the offices of Flowers or any other reasonable location for advice and
consultation with management of Flowers on governmental affairs. Such services
shall be provided at such times during normal business hours as may be mutually
agreed upon by Flowers and Employee consistent with Employee's other commitments
and schedule. Employee will not, during the Employment Period, engage in
activities which are detrimental to the business of Flowers, and will use his
best efforts to promote good relations between Flowers and the employees,
shareholders, brokers, suppliers, contractors, and customers of Flowers.

         4.       Compensation.

         (a)      In consideration of the services to be rendered by Employee
during the Employment Period under this Agreement, Employee shall be entitled to
compensation pursuant to the attached Schedule A.
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         (b)      In addition, Flowers shall pay or reimburse Employee, in
accordance with Flowers' standard policies and procedures, for reasonable travel
and other business related expenses, if any, incurred solely in the performance
of his duties as an Employee.

         (c)      From the Effective Date through the date of the Employee's
termination on April 30, 2005, or earlier death, Employee shall have the status
of a full-time salaried employee and Flowers shall provide to Employee medical,
dental and life benefits (but not disability benefits) on the same basis as
provided to other full-time salaried employees at the time in question. Employee
shall be responsible for and pay the cost (which, to the extent practicable,
shall be the cost generally applicable to similarly situated employees of
Flowers) of all premiums due under such plans attributable to any covered
dependents and shall promptly reimburse Flowers for any premiums paid on behalf
of such dependents.

         5.       Relationship Between Parties. During the Employment Period,
Employee's relation to Flowers shall be that of an employee, but he shall be
free to dispose of such portion of his time, energy, and skill, to the extent
not obligated to devote same to Flowers pursuant to Section 3 above, as he sees
fit, and to such persons, firms or corporations as he deems advisable, subject
to the terms of this Agreement. During the Employment Period, Employee is not
required to observe any regular hours of work for Flowers or attend any regular
conferences with any personnel of Flowers, except as requested by Flowers in
accordance with the terms of Section 3 of this Agreement.

         6.       Company Stock Transactions. Flowers and Employee recognize and
agree that any and all warrants, options or derivative securities involving
Flowers common stock will remain outstanding during the Employment Period, in
accordance with the respective terms of agreements covering such warrants,
options or derivative securities. Furthermore, for purposes of the Option
Agreement under the Flowers Foods, Inc. 2001 Equity and Performance Incentive
Plan, Flowers hereby confirms that its Compensation Committee has determined
that Employee's position under this Agreement is not a "demotion from the
position of employment held" by the Employee prior to the date of this
Agreement, and Employee agrees with such determination.

         7.       Termination. The following provisions relate solely to
termination of the Employee's employment during the Employment Period:

         (a)      Death. Subject to Section 8 below, this Agreement shall
terminate automatically upon the Employee's death.

         (b)      Cause. Flowers may terminate the Employee's employment for
"Cause." For purposes of this Agreement, "Cause" means (i) an act or acts of
dishonesty, moral turpitude or willful misconduct taken by the Employee and
intended to result in substantial personal enrichment of the Employee at the
expense of Flowers or any of its affiliates or which have a material adverse
impact on the business or reputation of Flowers or any of its affiliates, or
(ii) repeated violations by the Employee of the Employee's obligations under
Section 3 of this Agreement which are demonstrably willful and deliberate on the
Employee's part and which have a material adverse impact on the business or
reputation of Flowers or any of its affiliates.

         (c)      Notice of Termination. Any termination by the Employer for
Cause shall be

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<PAGE>

communicated by Notice of Termination to the other party hereto given in
accordance with Section 17 of this Agreement. For purposes of this Agreement, a
"Notice of Termination" means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) sets forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Employee's employment under the provision so indicated, and
(iii) if the termination date is other than the date of receipt of such notice,
specifies the termination date (which date shall be not more than 15 days after
the giving of such notice).

         (d)      Date of Termination. "Date of Termination" means the date of
receipt of the Notice of Termination by the Employee or any later date specified
therein, as the case may be. If the Employee's employment is terminated by
Flowers in breach of this Agreement, the Date of Termination shall be the date
on which Flowers notifies the Employee of such termination.

         8.       Obligations of Flowers Upon Termination. The following
provisions apply only in the event the Employee is terminated during the
Employment Period:

         (a)      Death. If the Employee's employment is terminated by reason of
the Employee's death, this Agreement shall terminate without further obligation
to the Employee's legal representatives under this Agreement other than those
payment amounts accrued and payable hereunder at the date of the Employee's
death.

         (b)      Cause. If the Employee's employment shall be terminated for
Cause, Flowers shall pay the Employee any amounts then accrued and payable
hereunder through the Date of Termination and shall provide the Employee,
through the Date of Termination, such welfare benefits, fringe benefits, and
other perquisites as were provided to the Employee immediately prior to delivery
to Employee of the Notice of Termination. Flowers shall have no further
obligation to the Employee under this Agreement.

         (c)      Other Than for Cause. If Flowers shall terminate the
Employee's employment with Flowers other than for Cause,

                  (i)      Flowers shall pay to the Employee in a lump sum in
         cash within 30 days after the Date of Termination any amounts then
         accrued and payable hereunder through the Date of Termination; and

                  (ii)     Flowers shall, promptly upon submission by the
         Employee of supporting documentation, pay or reimburse to the Employee
         any business-related costs and expenses paid or incurred by Employee on
         or before the Date of Termination or within 30 days after the Date of
         Termination which would have been payable under Section 4(b) if the
         Employee's employment had not terminated.

         9.       Standstill; Voting of Capital Stock.

         (a)      Employee covenants and agrees that for the duration of the
Employment Period, Employee shall not without the prior specific written consent
of Flowers (i) make, or in any way participate in any solicitation of proxies
with respect to any securities of Flowers, whether equity or debt securities or
any direct or indirect options or other rights to acquire any such securities
("Securities") (including by the execution of action by written consent), become
a participant in

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any election contest with respect to Flowers, seek to influence any person with
respect to any Securities or demand a copy of Flowers' list of its stockholders
or other books and records; (ii) participate in or encourage the formation of
any partnership, syndicate, or other group which owns or seeks or offers to
acquire beneficial ownership of any Securities or which seeks to effect control
of Flowers or for the purpose of circumventing any provision of this Agreement;
(iii) otherwise act, alone or in concert with others (including by providing
financing for another person), to seek or to offer to control or influence, in
any manner, the management, Board of Directors or policies of Flowers, or any
affiliate of Flowers, or (iv) propose or publicly announce or otherwise disclose
an intent to propose, or enter into or agree to enter into, singly or with any
other person or directly or indirectly, (1) any form of business combination,
acquisition or other transaction relating to Flowers or any affiliate thereof,
(2) any form of restructuring, recapitalization or similar transaction with
respect to Flowers or any such affiliate, or (3) any demand, request or proposal
to amend, waive or terminate any provision of this Section.

         (b)      Employee covenants and agrees that for the duration of the
Employment Period, at all annual or special meetings of shareholders of Flowers
or any written consent action to be taken by the shareholders of Flowers,
Employee shall take all actions necessary to vote all shares of Flowers common
stock currently owned of record or beneficially owned or hereafter directly or
indirectly acquired (of record or beneficially) by Employee in a manner
consistent with the recommendation of the Board of Directors of Flowers with
respect to any proposal (including nominees for election of directors).

         (c)      As used in this Agreement, (a) the terms or phrases
"affiliate," "beneficial owner," "election contest," "equity security," "group,"
"participant," "person," "proxy," and "security," (and the plurals thereof) will
be ascribed meanings no less broad than the broadest definition or meaning of
such terms under the Securities Exchange Act of 1934, as amended, (the "Exchange
Act") and the rules and regulations promulgated thereunder and (b) the term
"immediate family" shall mean the spouse, lineal descendant, father, mother,
brother or sister of Employee.

         10.      Confidentiality.

         (a)      Each of the parties to this Agreement represents and agrees
that it will keep the terms, amount and facts of this Agreement completely
confidential, and that it will not hereafter disclose any information concerning
this Agreement to anyone other than, in the case of the Employee, his immediate
family and professional representatives and, in the case of Flowers, its
professional representatives, who, in each case, will be informed of and bound
by this confidentiality clause; provided, however, that Employee shall be free
to disclose to others any information relating to the terms, amount and facts of
this Agreement to the extent Flowers discloses any such information to the
public, including, without limitation, any information disclosed in Flowers'
filings with the Securities and Exchange Commission and Flowers shall be
permitted to disclose such information as it shall deem appropriate in its
filings with the Securities and Exchange Commission.

         (b)      Employee shall maintain in confidence and shall not, either
during or at any time after the Employment Period, communicate or disclose to,
or use for the benefit of Employee or any other person, firm, association or
corporation any proprietary or confidential information, trade secret or
know-how belonging to Flowers (together, the "Proprietary Information"), whether
or

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not such information is in written or permanent form. Such Proprietary
Information includes, but is not limited to, techniques, processes, plans, or
methods of Flowers in the manufacturing, distribution, marketing and sale of
bakery products, pies, bread, or bread-type rolls, and technical and business
information relating to Flowers' inventions or products, research and
development, finances, existing and potential customers and suppliers,
marketing, and future business plans. Notwithstanding the foregoing, the term
Proprietary Information shall not include any information that was in the public
domain at the time it was disclosed or subsequently becomes in the public
domain, including information that is publicly known or generally utilized by
others engaged in the same business or activities as that in the course of which
Flowers utilized, developed or otherwise acquired such information, other than
as a result of a disclosure by Employee in violation of this Agreement. Employee
hereby acknowledges and agrees that the prohibitions against disclosure of
Proprietary Information recited herein are in addition to, and not in lieu of,
any rights or remedies that Flowers may have available pursuant to the laws of
any jurisdiction or common law or judicial precedent to prevent the disclosure
of trade secrets or proprietary information, and the enforcement by Flowers of
its rights and remedies pursuant to this Agreement shall not be construed as a
waiver of any other rights or available remedies that it may possess in law or
equity absent this Agreement.

         (c)      All Proprietary Information consisting of records, reports,
notes, compilations or other recorded matter, and copies or reproductions
thereof, relating to Flowers' operations, activities or business, made or
received by Employee during the Employment Period are and shall be Flowers'
exclusive property, and Employee shall keep the same at all times in his custody
and subject to his control, and will surrender the same to Flowers at the
termination of the Employment Period, if not before.

         11.      Non-competition Covenant.

         (a)      Covenant Not to Compete. The Employee covenants and agrees
that he will not compete with Flowers, directly or indirectly, by engaging in or
carrying on a business that is substantially similar to the Business (as defined
below) anywhere in the fifty states of the United States and the District of
Columbia (the "Proscribed Territory") for the term of the Employment Period plus
a period of two (2) years.

         (b)      "Compete" Defined. For purposes of this Section, the term
"compete" shall mean, in each case with respect to "carrying on a business that
is substantially similar to the Business": (i) entering into or attempting to
enter into any business substantially similar to the Business in the Proscribed
Territory; (ii) calling on, soliciting, or actively taking away as a customer -
- or attempting to call on, solicit, or actively take away as a customer -- any
individual, partnership, corporation, or association that was a customer of
Flowers immediately prior to the date hereof for purpose of a business
substantially similar to the Business; (iii) hiring, soliciting, actively taking
away - - or attempting to hire, solicit or actively take away - - either on the
Employee's behalf or on behalf of any other person or entity, any person serving
immediately prior to the date hereof as an employee, or, to the extent not an
employee, any person providing substantial services as a director or officer of
Flowers, in connection with the Business; or (iv) entering into or attempting to
enter into any business substantially similar to or competing in any way with
the Business, either alone or with any individual, partnership, corporation,
limited liability company, or other legal entity.

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<PAGE>

         (c)      "Directly or Indirectly" Defined. For purposes this Section,
the words "directly or indirectly" as they modify the word "compete" shall mean:
(i) acting as an agent, representative, consultant, officer, director,
independent contractor, or employee of any entity or enterprise that is
competing (as defined above) with the Business; (ii) participating in any entity
or enterprise that is competing with the Business as an owner, partner, limited
partner, member, manager, joint venturer, creditor, or shareholder (except as a
shareholder holding less than a five-percent (5%) interest in a corporation
whose shares are actively traded on a regional or national securities exchange
or in the over-the-counter market); and (iii) communicating to any entity or
enterprise that is competing with the Business the names or addresses or any
other information concerning any past, present, or currently identified
prospective client or customer of Flowers.

         (d)      "Business" Defined. For purposes of this Agreement, the term
"Business" shall mean the operations of Flowers, as conducted on the Effective
Date of this Agreement, including, without limitation, the manufacturing,
distribution, marketing and sale of bakery products, pies, bread, or bread-type
rolls.

         12.      Future Cooperation. During the term of this Agreement and with
the exception of litigation wherein Employee is an individually-named and
properly served defendant and wishes to take such actions as he deems
appropriate to defend himself, Employee shall, upon request by and at the
expense of Flowers, assist and cooperate with Flowers in any complaints brought
or threatened by any party (other than Employee) against Flowers or any
affiliate, successor or subsidiary thereof in any lawsuits, disputes,
differences, grievances, claims, charges, or complaints brought or threatened by
any party or brought by Flowers or any affiliate, successor or subsidiary
thereof, against any party

         13.      Successors Bound; Assignability. This Agreement shall be
binding upon Employee, Flowers and their respective successors in interest,
including without limitation, any corporation into which Flowers may be merged
or by which it or all or any substantial portion of its assets or business may
be acquired. This Agreement is non-assignable except that the rights, duties and
obligations of Flowers under this Agreement may be assigned to any affiliate of
it and to any acquiror of the business conducted by Flowers, in the event
Flowers is merged, liquidated, acquired or sells substantially all of the assets
used in such business.

         14.      Severability. In the event that any one or more of the
provisions of this Agreement or any word, phrase, clause, sentence, or other
portion thereof shall be deemed to be illegal or unenforceable for any reasons,
such provision or portion thereof shall be modified or deleted in such a manner
as to make this Agreement as modified legal and enforceable to the fullest
extent permitted under applicable laws.

         15.      Entire Agreement. This Agreement constitutes the entire
Agreement between the parties hereto with regard to the subject matter hereof
and supersedes all other agreements relating to the subject matter hereof. There
are no agreements, understandings, specific restrictions, warranties or
representations relating to said subject matter between the parties other than
those set forth herein or herein provided.

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<PAGE>

         16.      Counterparts. This Agreement may be executed in two or more
counterparts, each of which will take effect as an original, and all of which
shall evidence one and the same Agreement.

         17.      Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be delivered by hand or
mailed by registered or certified mail, return receipt requested, first class
postage prepaid, or sent by Federal Express or similarly recognized overnight
delivery service with receipt acknowledged, addressed as follows:

                  If to Employee:

                           G. Anthony Campbell, Esq.
                           101 Winslow Drive
                           Thomasville, GA  31792

                  If to Flowers:

                           Flowers Foods, Inc.
                           1919 Flowers Circle
                           Thomasville, Georgia  31757
                           Attn: General Counsel

                  with a copy to:

                           Lizanne Thomas, Esq.
                           Jones, Day, Reavis & Pogue
                           3500 SunTrust Plaza
                           303 Peachtree Street, N.E.
                           Atlanta, Georgia 30308-3242

         If delivered personally, the date on which a notice, request,
instruction or document is delivered shall be the date on which such delivery is
made and, if delivered by mail or by overnight delivery service, the date on
which such notice, request, instruction or document is received shall be the
date of delivery. In the event any such notice, request, instruction or document
is mailed or shipped by overnight delivery service to a party in accordance with
this Section and is returned to the sender as nondeliverable, then such notice,
request, instruction or document shall be deemed to have been delivered or
received on the fifth day following the deposit of such notice, request,
instruction, or document in the United States mails or the delivery to the
overnight delivery service. Any party may change its address specified for
notices herein by designating a new address by notice in accordance with this
Section.

         18.      Remedies. Each party acknowledges that a breach by any party
of the covenants contained in this Agreement cannot reasonably or adequately be
compensated in damages in an action at law; and that a breach by any party of
any of his or its covenants contained in this Agreement will cause the other
party and their respective businesses irreparable injury and damage. By reason
thereof, each party shall be entitled, in addition to any other remedies he, she

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<PAGE>

or it may have under this Agreement or otherwise, to preliminary and permanent
injunctive and other equitable relief, without the necessity of providing any
proof that monetary damages would be inadequate, to prevent or curtail any
breach of this Agreement by the other party; provided, however, that no
specification in this Agreement of a specific legal or equitable remedy shall be
construed as a waiver or prohibition against the pursuing of other legal or
equitable remedies in the event of such a breach.

         19.      Amendment and Modification. This Agreement may only be
amended, modified or terminated prior to the end of its term by the mutual
agreement of the parties.

         20.      Governing Law. The terms of this Agreement shall be governed
by and construed in accordance with the laws of the State of Georgia.

                         [SIGNATURES ON FOLLOWING PAGE]

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<PAGE>

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

                                    "EMPLOYEE"

                                    /s/ G. Anthony Campbell
                                    -------------------------------------------
                                    G. ANTHONY CAMPBELL

                                    FLOWERS FOODS, INC.

                                    By: /s/ Jimmy M. Woodward
                                        ---------------------------------------
                                    Name:   Jimmy M. Woodward
                                          -------------------------------------
                                           V. P. and CFO

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<PAGE>

                                   SCHEDULE A
                              COMPENSATION SCHEDULE

         Compensation for the period from the Effective Date through October 5,
2002, is to be paid consistent with Flowers' then applicable payroll practices,
including, without limitation, applicable withholding, and is to be based upon a
per annum salary of $265,200, payable on the following dates:

<TABLE>
<CAPTION>
         PERIOD END DATE        PAY DATE
         -------------------------------
         <S>                    <C>
               1/12/2002        01/17/02
               1/26/2002        01/31/02
                2/9/2002        02/14/02
               2/23/2002        02/28/02
                3/9/2002        03/14/02
               3/23/2002        03/28/02
                4/6/2002        04/11/02
               4/20/2002        04/25/02
                5/4/2002        05/09/02
               5/18/2002        05/23/02
                6/1/2002        06/06/02
               6/15/2002        06/20/02
               6/29/2002        07/05/02
               7/13/2002        07/18/02
               7/27/2002        08/01/02
               8/10/2002        08/15/02
               8/24/2002        08/29/02
                9/7/2002        09/12/02
               9/21/2002        09/26/02
               10/5/2002        10/10/02 (this check will include 1 weeks pay for
                                         last week in Sept. & 1 weeks pay for first
                                         week in Oct.)
</TABLE>

         For the period commencing October 6, 2002 and ending on April 5, 2005,
compensation of $1,000 per annum shall be paid on the following dates:

         October 1, 2003       -     $1,000.00

         October 1, 2004       -     $1,000.00

         April 1, 2005         -       $500.00<PAGE>
                                                                    EXHIBIT 10.8

                               FLOWERS FOODS, INC.

                         STOCK APPRECIATION RIGHTS PLAN

         1.       Purpose. The purposes of this Stock Appreciation Rights Plan
(the "PLAN") are to provide a means by which Flowers Foods, Inc. (the "COMPANY")
and its subsidiaries will be able to attract and retain officers, key employees,
and nonemployee directors, and to provide to such employees and directors an
opportunity to participate in increased values of shares of the Company's common
stock, par value $.01 per share, ("COMMON Stock") which their efforts,
initiative, and skills have helped to create.

         2.       Administration. The Plan shall be administered by the
Compensation Committee, or any successor thereto, of the Board of Directors of
the Company (the "COMMITTEE"). Each interpretation or construction by the
Committee of any provision of the Plan or of any award made hereunder and each
determination made by the Committee pursuant to any such provision shall be
final and conclusive. No member of the Committee (a "DIRECTOR") shall have any
liability for any such interpretation, construction or determination made in
good faith.

         3.       Participants. The Committee may from time to time select for
participation in the Plan such key employees (including officers of the Company)
whose efforts are deemed by the Committee to have an effect on the values of the
Common Stock or the Company's long-term performance and profitability
("PARTICIPANTS"). In addition, nonemployee members of the Company's Board of
Directors may elect, in advance, to convert their retainers from the Company
into Appreciation Rights, as described in paragraph 4(f) below. Said Directors
will also be Participants in the Plan.

         4.       Operation. (a) The Committee may from time to time make awards
of Appreciation Rights ("AWARDS") to Participants. Each Appreciation Right shall
represent a right of the Participant to receive (in the form and manner and
subject to the terms and conditions hereinafter set forth) the increase, if any,
in the Fair Market Value (as defined below) of one share of Common Stock from
the date of Award ("AWARD DATE") to the first date on which all terms and
conditions to payment of such Award have been satisfied ("PAYMENT DATE").

<PAGE>

                  (b)      The "FAIR MARKET VALUE" means (i) the average of the
highest and the lowest quoted selling price of a share of Common Stock as
reported on the composite tape for securities listed on the New York Stock
Exchange, or such other national securities exchange as may be designated by the
Committee, or, in the event that the Common Stock is not listed for trading on a
national securities exchange but is quoted on an automated system, on such
automated system, in any such case on the valuation date (or, if there were no
sales on the valuation date, the average of the highest and the lowest quoted
selling prices as reported on said composite tape or automated system for the
most recent day during which a sale occurred), or (ii), if clause (i) does not
apply, the fair market value of the Common Stock as determined by the Committee.

                  (c)      The Payment Date for each Award shall be not less
than one (1) years following the Award Date.

                  (d)      An Award shall be entered on the Company's books as a
grant of contingent deferred compensation to the Participant (the "ACCOUNT") and
shall not constitute the Participant as the owner or holder of the number of
shares of Common Stock that are covered by such Award. The initial entry in the
Participant's Account shall be equal to the Fair Market Value of the shares of
Common Stock covered by the Award as of the Award Date, and the value of the
Participant's Account shall be adjusted upward or downward subsequent to that
date to reflect increases or decreases in Fair Market Value subsequent to the
Award Date.

                  (e)      Although the Company may, in its discretion, make
such provision as it deems advisable for funding the ultimate payment of such
Award, no assets of the Company shall be segregated for that purpose or held in
trust for the benefit of the Participant, it being the intention of the Plan
that all Awards shall constitute at all times general unsecured obligations of
the Company.

                  (f)      Nonemployee members of the Company's Board of
Directors may elect, in advance, to convert their retainers from the Company
into Appreciation Rights, in which event there will be an automatic grant of
Appreciation Rights, as of the date on which the retainer would otherwise be
paid to the Director.

         5.       Dividend Credits. If, between the Award Date and the Payment
Date of any Award, any cash dividend shall be declared on the Common Stock,
there shall be credited to the Participant's Account on the record date for such
dividend an amount equal to the per-share dividend multiplied by the number of
shares of Common Stock represented by such Award.

         6.       Vesting. (a) The Committee may determine in connection with
each Award the terms and conditions on which such Award shall be earned out by
the Participant. Such terms

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<PAGE>

and conditions may include requirements for continued employment by the
Participant with the Company and its subsidiaries for specified periods of time,
the maximum term for which such Award is to remain outstanding, the vesting
schedule (if any) applicable to such Awards, and/or achievement of economic or
financial goals specified by the Committee and may provide for the earlier
vesting of such Awards in the event of a Change in Control (as defined below) or
in the event of Retirement, Disability or death of the Participant.

                  (b)      For purposes of this Plan, (i) "RETIREMENT" means
termination of employment on or after attainment of age 65; and (ii)
"DISABILITY" means disability as determined under procedures established by the
Committee for purposes of this Plan.

         7.       Payment of Awards Earned Out. (a) The "PAYMENT VALUE" of an
Award shall equal the excess (if any) of the Fair Market Value of the shares of
Common Stock represented by such Award on the Payment Date over the Fair Market
Value of such shares on the Award Date, plus dividends credited to the
Participant's Account in respect of such shares prior to the Payment Date.

                  (b)      The Payment Value of each Award earned in accordance
with the vesting schedule (if any) as determined by the Committee shall be paid
to the Participant in cash on the Payment Date, or as soon as practicable
thereafter.

         8.       Withholding Taxes. To the extent that the Company is required
to withhold federal, state, local or foreign taxes in connection with any
payment made or benefit realized by a Participant or other person under this
Plan, and the amounts available to the Company for such withholding are
insufficient, it shall be a condition to the receipt of such payment or the
realization of such benefit that the Participant or such other person make
arrangements satisfactory to the Company for payment of the balance of such
taxes required to be withheld, which arrangements (in the discretion of the
Committee) may include relinquishment of a portion of such benefit. Benefits
shall not be withheld in excess of the minimum number required for such tax
withholding.

         9.       Adjustments. The Committee may make or provide for such
adjustments in the numbers of shares of Common Stock covered by outstanding
Awards granted hereunder, as the Committee, in its sole discretion, exercised in
good faith, may determine is equitably required to prevent dilution or
enlargement of the rights of Participants that otherwise would result from (a)
any stock dividend, stock split, combination of shares, recapitalization or
other change in the capital structure of the Company, or (b) any merger,
consolidation, spin-off, split-off, spin-out, split-up, reorganization, partial
or complete liquidation or other distribution of assets, issuance of rights or
warrants to purchase securities, or (c) any other corporate transaction or event
having an effect similar to any of the foregoing. Moreover, in the event of any
such transaction or event,

                                       3
<PAGE>

the Committee, in its discretion, may provide in substitution for any or all
outstanding awards under this Plan such alternative consideration as it, in good
faith, may determine to be equitable in the circumstances and may require in
connection therewith the surrender of all Awards so replaced.

         10.      For purposes of this Plan, except as may be otherwise
prescribed by the Committee in an agreement evidencing a grant of an Award made
under the Plan, a "CHANGE IN CONTROL" shall mean the occurrence during the term
of any of the following events, subject to the provisions of Section 11(f)
hereof:

                  (a)      the Company merges into itself, or is merged or
consolidated with, another entity and as a result of such merger or
consolidation less than 51% of the voting power of the then-outstanding voting
securities of the surviving or resulting entity immediately after such
transaction are directly or indirectly beneficially owned in the aggregate by
the former shareholders of the Company immediately prior to such transaction; or

                  (b)      all or substantially all the assets accounted for on
the consolidated balance sheet of the Company are sold or transferred to one or
more entities or persons, and as a result of such sale or transfer less than 51%
of the voting power of the then-outstanding voting securities of such entity or
person immediately after such sale or transfer is directly or indirectly
beneficially held in the aggregate by the former shareholders of the Company
immediately prior to such transaction or series of transactions; or

                  (c)      a person, within the meaning of Section 3(a)(9) or
13(d)(3) (as in effect on the Effective Date of this Plan) of the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT") becomes the beneficial
owner (as defined in Rule 13d-3 of the Securities and Exchange Commission
pursuant to the Exchange Act) of (i) 15% or more but less than 35% of the voting
power of the then-outstanding voting securities of the Company without prior
approval of the Committee, or (ii) 35% or more of the voting power of the
then-outstanding voting securities of the Company; provided, however, that the
foregoing does not apply to any such acquisition that is made by (w) any
subsidiary; (x) any employee benefit plan of the Company or any subsidiary; or
(y) any person or group of which employees of the Company or of any subsidiary
control a greater than 25% interest unless the Committee determines that such
person or group is making a "hostile acquisition;" or (z) any person or group of
which the Company is an affiliate; or

                  (d)      a majority of the members of the Committee are not
Continuing Directors, where a "CONTINUING DIRECTOR" is any member of the
Committee who (x) was a member of the Committee on the Effective Date of this
Plan or (y) was nominated for election or elected to such Committee with the
affirmative vote of a majority of the Continuing Directors who were members of
such Committee at the time of such nomination or election; or

                  (e)      The Board determines that (A) any particular actual
or proposed merger, consolidation, reorganization, sale or transfer of assets,
accumulation of shares of the Company or other transaction or event or series of
transactions or events will, or is likely to, if carried out,

                                       4
<PAGE>

result in a Change in Control falling within Subsections (a), (b), (c) or (d)
and (B) it is in the best interests of the Company and its shareholders, and
will serve the intended purposes of this Section 11, if the provisions of awards
which provide for earlier exercise or earlier lapse of restrictions or
conditions upon a Change in Control shall thereupon become immediately
operative.

                  (f)      Notwithstanding the foregoing provisions of this
Section (11):

                           (i)      If any such merger, consolidation,
         reorganization, sale or transfer of assets, or tender offer or other
         transaction or event or series of transactions or events mentioned in
         Section (11)(e) shall be abandoned, or any such accumulations of shares
         shall be dispersed or otherwise resolved, the Board may, by notice to
         the Participant, nullify the effect thereof and reinstate the Award as
         previously in effect, but without prejudice to any action that may have
         been taken prior to such nullification.

                           (ii)     Unless otherwise determined in a specific
         case by the Board, a "Change in Control" shall not be deemed to have
         occurred for purposes of Section (11)(c) solely because (X) the
         Company, (Y) a subsidiary, or (Z) any Company-sponsored employee stock
         ownership plan or any other employee benefit plan of the Company or any
         subsidiary either files or becomes obligated to file a report or a
         proxy statement under or in response to Schedule 13D, Schedule 14D-1,
         Form 8-K or Schedule 14A (or any successor schedule, form or report or
         item therein) under the Exchange Act disclosing beneficial ownership by
         it of shares of the then-outstanding voting securities of the Company,
         whether in excess of 20% or otherwise, or because the Company reports
         that a change in control of the Company has occurred or will occur in
         the future by reason of such beneficial ownership.

         11.      General Provisions. (a) The interests of Participants in
outstanding Awards may not be transferred except by will or the laws of descent
and distribution.

                  (b)      No employee shall have any right to be granted an
Award under the Plan. Nothing in the Plan shall be construed as conferring any
right of continued employment on any Participant or as curtailing the rights of
the Company to terminated such employment.

                  (c)      The Committee may at any time amend or terminate the
Plan in whole or in part. No such amendment or termination shall, however,
adversely effect the rights of any Participant in respect of any outstanding
Award without the consent of such Participant.

                  (d)      The Plan shall become effective upon adoption by the
Board (the "EFFECTIVE DATE") and shall continue in effect until termination by
the Board.

                                       5

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