Document:

EXHIBIT (10) B(3)

                           CHANGE-IN-CONTROL AGREEMENT
                          (First Senior Vice President)

     THIS EMPLOYMENT AGREEMENT (the "Agreement"),  is made as of this 1st day of
January,   1995,  among  VALLEY  NATIONAL  BANK  ("Bank"),  a  national  banking
association with its principal office at 615 Main Avenue,  Passaic,  New Jersey,
VALLEY NATIONAL BANCORP ("Valley"), a New Jersey Corporation which maintains its
principal  office at 1445 Valley Road,  Wayne,  New Jersey  (Valley and the Bank
collectively are the "Company") and ROBERT J. MULLIGAN (the "Executive").

                                   BACKGROUND

     WHEREAS,  the Executive has been  continuously  employed by the Bank for at
least three full years;

     WHEREAS,  the Executive  throughout his tenure has worked diligently in his
position in the business of the Bank and Valley;

     WHEREAS,  the Board of  Directors  of the Bank and Valley  believe that the
future  services of the  Executive are of great value to the Bank and Valley and
that it is  important  for the  growth  and  development  of the  Bank  that the
Executive continue in his position;

     WHEREAS,  if  the  Company  receives  any  proposal  from  a  third  person
concerning a possible  business  combination  with, or  acquisition  of equities
securities of, the Company,  the Board of Directors of the Company (the "Board")
believes  it is  imperative  that the Company and the Board be able to rely upon
the Executive to continue in his position,  and that they be able to receive and
rely  upon his  advice,  if they  request  it, as to the best  interests  of the
Company  and its

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shareholders,  without  concern that the  Executive  might be  distracted by the
personal uncertainties and risks created by such a proposal;

     WHEREAS, to achieve that goal, and to retain the Executive's services prior
to any such  activity,  the Board of Directors and the Executive  have agreed to
enter into this Agreement to govern the Executive's  termination benefits in the
event of a Change in Control of the Company, as hereinafter defined.

     NOW,  THEREFORE,  to assure  the  Company  that it will have the  continued
dedication  of the  Executive  and the  availability  of his advice and  counsel
notwithstanding  the  possibility,  threat or  occurrence  of a bid to take over
control of the Company,  and to induce the  Executive to remain in the employ of
the Company, and for other good and valuable consideration,  the Company and the
Executive, each intending to be legally bound hereby agree as follows:

     1. Definitions

     a. Base  Salary.  "Base  Salary",  as used in  Section 9 hereof,  means the
annual  cash base  salary  (excluding  any  bonus  and the  value of any  fringe
benefits)  paid to the  Executive at the time of the  termination  of employment
unless such  amount has been  reduced  after a Change in Control,  in which case
such  amount  shall be the highest  base  salary in effect  during the 18 months
prior to the Change in Control.

     b.  Cause.  For  purposes of this  Agreement  "Cause"  with  respect to the
termination by the Company of Executive's  employment shall mean (i) willful and
continued  failure by the  Executive to perform his duties for the Company under
this Agreement after at least

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one  warning  in  writing  from the  Company's  Board of  Directors  identifying
specifically  any such  failure;  (ii) the willful  engaging by the Executive in
misconduct which causes material injury to the Company as specified in a written
notice to the Executive  from the Board of Directors;  or (iii)  conviction of a
crime,  other than a traffic  violation,  habitual  drunkenness,  drug abuse, or
excessive  absenteeism other than for illness,  after a warning (with respect to
drunkenness  or  absenteeism  only) in writing  from the Board of  Directors  to
refrain  from  such  behavior.  No act or  failure  to  act on the  part  of the
Executive shall be considered willful unless done, or omitted to be done, by the
Executive  not in good faith and  without  reasonable  belief that the action or
omission was in the best interest of the Company.

     c.  Change in  Control.  "Change  in  Control"  means any of the  following
events:  (i) when Valley or a  Subsidiary  acquires  actual  knowledge  that any
person (as such term is used in  Sections  13(d) and  14(d)(2)  of the  Exchange
Act),  other than an affiliate of Valley or a Subsidiary or an employee  benefit
plan  established  or  maintained  by  Valley,  a  Subsidiary  or any  of  their
respective  affiliates,  is or becomes the beneficial  owner (as defined in Rule
13d-3 of the Exchange  Act)  directly or  indirectly,  of  securities  of Valley
representing more than twenty-five percent (25%) of the combined voting power of
Valley's then outstanding  securities (a "Control Person"),  (ii) upon the first
purchase of Valley's  common stock pursuant to a tender or exchange offer (other
than a tender or  exchange  offer made by Valley,  a  Subsidiary  or an employee
benefit plan  established or maintained by Valley,  a Subsidiary or any of their
respective affiliates),  (iii) upon the approval by Valley's stockholders of (A)
a merger or consolidation of Valley with or into

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another  corporation (other than a merger or consolidation  which is approved by
at least two-thirds of the Continuing  Directors (as hereinafter defined) or the
definitive  agreement  for  which  provides  that  at  least  two-thirds  of the
directors  of the  surviving  or  resulting  corporation  immediately  after the
transaction   are   Continuing   Directors  (in  either  case,  a   "Non-Control
Transaction")),  (B) a  sale  or  disposition  of all  or  substantially  all of
Valley's  assets or (C) a plan of liquidation or dissolution of Valley,  (iv) if
during any period of two (2) consecutive years, individuals who at the beginning
of such period  constitute the Board (the "Continuing  Directors") cease for any
reason to constitute  at least  two-thirds  thereof or,  following a Non-Control
Transaction,  two-thirds of the board of directors of the surviving or resulting
corporation;  provided that any  individual  whose  election or  nomination  for
election as a member of the Board (or, following a Non-Control Transaction,  the
board of directors of the surviving or resulting  corporation) was approved by a
vote of at least two-thirds of the Continuing  Directors then in office shall be
considered a Continuing Director,  or (v) upon a sale of (A) common stock of the
Bank if after such sale any  person  (as such term is used in Section  13(d) and
14(d)(2)  of the  Exchange  Act) other than  Valley,  an employee  benefit  plan
established  or maintained by Valley or a Subsidiary,  or an affiliate of Valley
or a  Subsidiary,  owns a  majority  of the  Bank's  common  stock or (B) all or
substantially  all of the Bank's  assets  (other than in the ordinary  course of
business). No person shall be considered a Control Person for purposes of clause
(i) above if (A) such person is or becomes  the  beneficial  owner,  directly or
indirectly,  of more than ten percent  (10%) but less than  twenty-five  percent
(25%) of the combined  voting power of Valley's then  outstanding  securities if
the  acquisition  of all voting  securities  in excess of ten

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percent (10%) was approved in advance by a majority of the Continuing  Directors
then in office or (B) such person acquires in excess of ten percent (10%) of the
combined  voting  power  of  Valley's  then  outstanding  voting  securities  in
violation of law and by order of a court of competent  jurisdiction,  settlement
or otherwise,  disposes or is required to dispose of all securities  acquired in
violation of law.

     d. Continuously Employed.  "Continuously  employed",  as used in Section 9,
means continuously employed by the Bank but excludes any period of employment by
a bank or financial institution acquired by or merged into the Bank and excludes
any  period  of  employment  by the Bank if such  period is  separated  from the
current employment with the Bank by a break in service (other a break in service
resulting solely from illness, disability or family leave).

     e. Contract Period.  "Contract Period" shall mean the period commencing the
day  immediately  preceding a Change in Control and ending on the earlier of (i)
the first  anniversary  of the Change in Control or (ii) the date the  Executive
would attain age 65 or (iii) the death of the Executive. For the purpose of this
Agreement,  a Change in  Control  shall be deemed to have  occurred  at the date
specified in the definition of Change-in-Control.

     f. Exchange Act. "Exchange Act" means the Securities  Exchange Act of 1934,
as amended.

     g. Good  Reason.  When used with  reference to a voluntary  termination  by
Executive of his  employment  with the Company,  "Good Reason" shall mean any of
the following, if taken without Executive's express written consent:

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          (1) The  assignment to Executive of any duties  inconsistent  with, or
     the reduction of powers or functions associated with, Executive's position,
     duties, responsibilities and status with the Company immediately prior to a
     Change in Control.  A change in title or positions  resulting merely from a
     merger of the Company into or with  another bank or company  which does not
     downgrade in any way the Executive's  powers,  duties and  responsibilities
     shall not meet the requirements of this paragraph;

          (2) A reduction by the Company in Executive's annual base compensation
     as in effect  immediately  prior to a Change in Control  or the  failure to
     award Executive annual increases in accordance herewith;

          (3) A failure  by the  Company  to  continue  any bonus  plan in which
     Executive  participated  immediately  prior to the  Change in  control or a
     failure by the Company to continue  Executive as a participant in such plan
     on at least the same basis as Executive  participated in such plan prior to
     the Change in Control;

          (4) The Company's transfer of Executive to another geographic location
     more than 35 miles from his present  office  location,  except for required
     travel on the Company's business to an extent substantially consistent with
     Executive's business travel obligations immediately prior to such Change in
     Control;

          (5) The  failure by the  Company to  continue  in effect any  employee
     benefit plan,  program or arrangement  (including,  without  limitation the
     Company's  retirement plan, benefit equalization plan, life insurance plan,
     health and accident plan,  disability

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     plan,  deferred  compensation  plan or long term stock  incentive  plan) in
     which Executive is participating  immediately  prior to a Change in Control
     (except  that the Company may  institute  or  continue  plans,  programs or
     arrangements providing Executive with substantially similar benefits);  the
     taking  of  any  action  by  the  Company  which  would  adversely   affect
     Executive's  participation  in or materially  reduce  Executive's  benefits
     under,  any of  such  plans,  programs  or  arrangements;  the  failure  to
     continue, or the taking of any action which would deprive Executive, of any
     material  fringe  benefit  enjoyed by Executive  immediately  prior to such
     Change in Control;  or the failure by the Company to provide Executive with
     the  number  of  paid  vacation  days  to  which   Executive  was  entitled
     immediately prior to such Change in Control;

          (6) The failure by the Company to obtain an  assumption  in writing of
     the  obligations  of the Company to perform this Agreement by any successor
     to the Company and to provide such assumption to the Executive prior to any
     Change in Control; or

          (7) Any purported termination of Executive's employment by the Company
     during the term of this Agreement which is not effected  pursuant to all of
     the requirements of this Agreement; and, for purposes of this Agreement, no
     such purported termination shall be effective.

     h. Pro-rata Bonus Amount.  "Pro-rata  Bonus Amount",  as used in Section 9,
means an amount  equal to a  "portion"  of the  highest  cash  bonus paid to the
Executive  in the  three  calendar  years  immediately  prior to the  Change  in
Control. The "portion" of such cash bonus shall be a fraction,  the numerator of
which is the number of calendar  months or part thereof  which the

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Executive  has worked in the calendar year in which the  termination  occurs and
the denominator of which is 12.

     i. Subsidiary.  "Subsidiary"  means any corporation in an unbroken chain of
corporations,  beginning with Valley, if each of the corporations other than the
last  corporation in the unbroken chain owns stock possessing 50% or more of the
total  combined  voting  power  of all  classes  of  stock  in one of the  other
corporations in such chain.

     2. Employment.  The Company hereby agrees to employ the Executive,  and the
Executive hereby accepts  employment,  during the Contract Period upon the terms
and conditions set forth herein.

     3. Position.  During the Contract Period the Executive shall be employed by
the bank as a Senior  Officer,  or such other  corporate  or  divisional  profit
center as shall then be the  principal  successor  to the  business,  assets and
properties of the Company, with substantially the same title and the same duties
and responsibilities as before the Change in Control. The Executive shall devote
his full time and attention to the business of the Company, and shall not during
the Contract  Period be engaged in any other business  activity.  This paragraph
shall not be construed as preventing the Executive from managing any investments
of his which do not  require any  service on his part in the  operation  of such
investments.

     4. Cash Compensation.  The Company shall pay to the Executive  compensation
for his services during the Contract Period as follows:

          a. Base Salary.  A base annual  salary  equal to the annual  salary in

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     effect as of the Change in Control.  The annual  salary shall be payable in
     installments in accordance with the Company's usual payroll method.

          b. Annual Bonus. An annual cash bonus equal to at least the average of
     the bonuses paid to the Executive in the three years prior to the Change in
     Control. The bonus shall be payable at the time and in the manner which the
     Company paid such bonuses prior to the Change in Control.

          c. Annual  Review.  The Board of Directors  of the Company  during the
     Contract Period shall review annually,  or at more frequent intervals which
     the Board determines is appropriate, the Executive's compensation and shall
     award him additional  compensation to reflect the Executive's  performance,
     the performance of the Company and competitive  compensation levels, all as
     determined in the discretion of the Board of Directors.

     5. Expenses and Fringe Benefits.

     a. Expenses. During the Contract Period, the Executive shall be entitled to
reimbursement  for all  business  expenses  incurred by him with  respect to the
business  of the  Company  in the same  manner  and to the same  extent  as such
expenses were previously  reimbursed to him  immediately  prior to the Change in
Control.

     b. Benefit  Equalization Plan. During the Contract Period, if the Executive
was entitled to benefits under the Company's  Benefit  Equalization Plan ("BEP")
prior to the Change in Control,  the  Executive  shall be entitled to  continued
benefits  under  the BEP after the  Change  in  Control  and such BEP may not be
modified to reduce or eliminate such benefits during

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the Contract Period.

     c. Club Membership and Automobile.  If prior to the Change in Control,  the
Executive  was  entitled to  membership  in a country  club and/or the use of an
automobile,  he  shall  be  entitled  to the same  membership  and/or  use of an
automobile at least  comparable to the  automobile  provided to him prior to the
Change in Control.

     d. Other  Benefits.  The Executive  also shall be entitled to vacations and
sick days, in accordance  with the practices and  procedures of the Company,  as
such  existed  immediately  prior to the Change in Control.  During the Contract
Period,  the Executive also shall be entitled to hospital,  health,  medical and
life  insurance,  and any other benefits  enjoyed,  from time to time, by senior
officers of the Company,  all upon terms as favorable as those  enjoyed by other
senior officers of the Company.  Notwithstanding anything in this paragraph 5(d)
to the contrary,  if the Company adopts any change in the benefits  provided for
senior  officers of the  Company,  and such policy is  uniformly  applied to all
officers of the Company (and any successor or acquiror of the Company,  if any),
then no such change shall be deemed to be contrary to this paragraph.

     6. Termination for Cause. The Company shall have the right to terminate the
Executive for Cause,  upon written notice to him of the termination which notice
shall specify the reasons for the  termination.  In the event of termination for
Cause the  Executive  shall not be entitled to any further  benefits  under this
Agreement.

     7.  Disability.  During  the  Contract  Period  if  the  Executive  becomes
permanently  disabled,  or is unable  to  perform  his  duties  hereunder  for 4
consecutive  months  in any

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12 month period,  the Company may terminate the employment of the Executive.  In
such event,  the Executive  shall not be entitled to any further  benefits under
this Agreement.

     8. Death Benefits.  Upon the Executive's  death during the Contract Period,
his estate shall not be entitled to any further benefits under this Agreement.

     9.  Termination  Without Cause or Resignation for Good Reason.  The Company
may terminate the Executive  without Cause during the Contract Period by written
notice to the Executive  providing  four weeks notice.  The Executive may resign
for Good Reason during the Contract  Period upon four weeks'  written  notice to
the  Company  specifying  facts and  circumstances  claimed to support  the Good
Reason. The Executive shall be entitled to give a Notice of Termination that his
or her  employment  is being  terminated  for Good Reason at any time during the
Contract  Period,  not later than twelve months after any occurrence of an event
stated to constitute  Good Reason.  If the Company  terminates  the  Executive's
employment  during the Contract Period without Cause or if the Executive Resigns
for Good Reason, the Company shall, subject to section 12 hereof:

          a. Within 20 business days of the  termination  of employment  pay the
     Executive a lump sum equal to: (i), if the Executive has been  continuously
     employed by the Bank for 6 full years or more, two (2) years of Base Salary
     plus  a  Pro-rata   Bonus  Amount  or  (ii),  if  the  Executive  has  been
     continuously  employed by the Bank for less than 6 full years but more than
     three years, then one (1) year of Base Salary plus a Pro-rata Bonus Amount;
     and

          b.  Continue to provide the Executive  with  medical,  dental and life
     insurance

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     for the period equal to the equivalent lump sum payment (e.g. 1 or 2 years)
     as were  provided at the time of  termination  of his  employment  with the
     Company, at the Company's cost. Upon expiration of benefit coverages,  full
     COBRA benefits (18 months) will be made available to Executive.

     The Executive shall not have a duty to mitigate the damages suffered by him
in connection  with the  termination  by the Company of his  employment  without
Cause or a  resignation  for Good  Reason  during the  Contract  Period.  If the
Company  fails to pay the  Executive the lump sum amount due him hereunder or to
provide him with the health,  hospitalization  and insurance  benefits due under
this section, the Executive, after giving 10 days' written notice to the Company
identifying the Company's failure, shall be entitled to recover from the Company
all of his reasonable  legal fees and expenses  incurred in connection  with his
enforcement  against the Company of the terms of this  Agreement.  The Executive
shall be denied  payment of his legal fees and  expenses  only if a court  finds
that the Executive sought payment of such fees without reasonable cause.

     10.  Resignation  Without Good Reason.  The Executive  shall be entitled to
resign from the  employment of the Company at any time during the Contact Period
without  Good  Reason,  but upon such  resignation  the  Executive  shall not be
entitled to any additional compensation for the time after which he ceases to be
employed by the Company,  and shall not be entitled to any of the other benefits
provided  hereunder.  No such  resignation  shall be effective unless in writing
with four weeks' notice thereof.

     11. Non-Disclosure of Confidential Information.

     a. Non-Disclosure of Confidential Information.  Except in the course of

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his  employment  with the  Company  and in the  pursuit of the  business  of the
Company or any of its  subsidiaries  or affiliates,  the Executive shall not, at
any  time  during  or  following  the  Contract  Period,  disclose  or use,  any
confidential  information  or  proprietary  data  of the  Company  or any of its
subsidiaries or affiliates.  The Executive agrees that, among other things,  all
information  concerning  the identity of and the  Company's  relations  with its
customers is confidential information.

     b. Specific Performance. Executive agrees that the Company does not have an
adequate  remedy at law for the breach of this  section and agrees that he shall
be subject to injunctive relief and equitable remedies as a result of the breach
of this section.  The  invalidity or  unenforceability  of any provision of this
Agreement shall not affect the force and effect of the remaining valid portions.

     c. Survival.  This section shall survive the termination of the Executive's
employment hereunder and the expiration of this Agreement.

     12. Certain Reduction of Payments by the Company.

     a. Anything in this Agreement to the contrary notwithstanding, prior to the
payment  of  any  lump  sum  amount  payable  hereunder,  the  certified  public
accountants  of the  Company  immediately  prior to a  Change  of  Control  (the
"Certified Public  Accountants)  shall determine as promptly as practical and in
any event within 20 business  days  following the  termination  of employment of
Executive  whether  any  payment or  distribution  by the  Company to or for the
benefit  of  the  Executive   (whether  paid  or  payable  or   distributed   or
distributable  pursuant  to  the  terms  of  this  Agreement  or  otherwise)  (a
"Payment")  would more  likely  than not be

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nondeductible by the Company for Federal income purposes because of Section 280G
of the Internal Revenue Code of 1986, as amended (the "Code"), and if it is then
the aggregate  present value of amounts payable or  distributable  to or for the
benefit of Executive  pursuant to this Agreement (such payments or distributions
pursuant to this Agreement are thereinafter referred to as "Agreement Payments")
shall be reduced  (but not below zero) to the reduced  Amount.  For  purposes of
this  paragraph,  the "Reduced  Amount" shall be an amount  expressed in present
value which maximizes the aggregate present value of Agreement  Payments without
causing any Payment to be  nondeductible  by the Company because of said Section
280G of the Code.

     b. If under paragraph (a) of this section the Certified Public  Accountants
determine  that any Payment would more likely than not be  nondeductible  by the
Company because of Section 280G of the Code, the Company shall promptly give the
Executive notice to that effect and a copy of the detailed  calculation  thereof
and of the  Reduced  Amount,  and the  Executive  may  then  elect,  in his sole
discretion,  which and how much of the Agreement Payments shall be eliminated or
reduced  (as long as after such  election  the  aggregate  present  value of the
Agreement  Payments equals the Reduced Amount),  and shall advise the Company in
writing of his election within 20 business days of his receipt of notice.  If no
such election is made by the Executive  within such 20-day  period,  the Company
may elect which and how much of the  Agreement  Payments  shall be eliminated or
reduced  (as long as after such  election  the  Aggregate  present  Value of the
Agreement  Payments  equals the Reduced  Amount) and shall notify the  Executive
promptly of such election.  For purposes of this paragraph,  present Value shall
be  determined  in  accordance   with  Section   280G(d)(4)  of  the  Code.  All
determinations  made by the Certified Public  Accountants

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shall be binding upon the Company and Executive shall be made within 20 business
days of a  termination  of  employment  of  Executive.  With the  consent of the
Executive, the Company may suspend part or all of the lump sum payment due under
Section 9 hereof and any other payments due to the Executive hereunder until the
Certified Public  Accountants finish the determination and the Executive (or the
Company,  as the case may be) elect how to reduce  the  Agreement  Payments,  if
necessary.  As promptly as  practicable  following  such  determination  and the
elections  hereunder,  the  Company  shall  pay to or  distribute  to or for the
benefit  of  Executive  such  amounts  as are then due to  Executive  under this
Agreement and shall  promptly pay to or distribute  for the benefit of Executive
in the future such amounts as become due to Executive under this Agreement.

     c. As a result of the uncertainty in the application of Section 280G of the
Code, it is possible that  Agreement  Payments may have been made by the Company
which should not have been made  ("Overpayment")  or that  additional  Agreement
Payments  which  will have not been  made by the  Company  could  have been made
("Underpayment"),  in each case,  consistent with the calculation of the Reduced
Amount hereunder. In the event that the Certified Public Accountants, based upon
the  assertion  of a  deficiency  by the Internal  Revenue  Service  against the
Company or Executive which said Certified Public Accountants  believe has a high
probability of success,  determines  that an Overpayment has been made, any such
Overpayment  shall be treated  for all  purposes  as a loan to  Executive  which
Executive  shall repay to the Company  together with interest at the  applicable
Federal  rate  provided  for in  Section  7872(f)(2)(A)  of the Code;  provided,
however,  that no amount shall be payable by Executive to the Company in and for
the extent such payment would not reduce the amount which is subject to taxation
under  Section  4999  of the  Code.

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<PAGE>

In the event that the  Certified  Public  Accountants,  based  upon  controlling
precedent,  determine that an Underpayment has occurred,  any such  Underpayment
shall be promptly  paid by the  Company to or for the  benefit of the  Executive
together  with interest at the  applicable  Federal rate provided for in Section
7872(f)(2)(A) of the Code.

     13. Term and Effect Prior to Change in Control.

     a. Term. Except as otherwise  provided for hereunder,  this Agreement shall
commence on the date  hereof and shall  remain in effect for a period of 3 years
from the date  hereof  (the  "Initial  Term") or until  the end of the  Contract
Period, whichever is later. The Initial Term shall be automatically extended for
an  additional  one year  period on the  anniversary  date  hereof  (so that the
Initial  Term is  always 3 years)  unless,  prior to a Change  in  Control,  the
Personnel  and  Compensation  Committee of the Bank  notifies  the  Executive in
writing  at any time that the  Contract  is not so  extended,  in which case the
Initial Term shall end upon the later of (i) 3 years after the date  hereof,  or
(ii) twenty-four  months after the date of such written notice.  Notwithstanding
anything to the contrary contained herein, the Initial Term shall cease when the
Executive attains age 65.

     b. No Effect Prior to Change in Control.  This  Agreement  shall not effect
any  rights of the  Company  to  terminate  the  Executive  prior to a Change in
Control  or any  rights  of the  Executive  granted  in any other  agreement  or
contract or plan with the  Company.  The rights,  duties and  benefits  provided
hereunder shall only become effective upon and after a Change in Control. If the
full-time  employment  of the  Executive  by the Company is ended for any reason
prior to a Change in Control,  this Agreement shall  thereafter be of no further
force and effect.

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<PAGE>

     14.  Severance  Compensation  and  Benefits  Not  in  Derogation  of  Other
Benefits. Anything to the contrary herein contained notwithstanding, the payment
or  obligation  to pay any  monies,  or  granting  of any  benefits,  rights  or
privileges  to Executive as provided in this  Agreement  shall not be in lieu or
derogation of the rights and privileges  that the Executive now has or will have
under any plans or programs of or  agreements  with the Company,  except that if
the Executive  received any payment  hereunder,  he shall not be entitled to any
payment under the Company's severance policy for officers and directors.

     15.  Miscellaneous.  This Agreement is the joint and several  obligation of
the Bank and  Valley.  The terms of this  Agreement  shall be  governed  by, and
interpreted  and construed in accordance with the provisions of, the laws of New
Jersey.  This Agreement  supersedes all prior agreements and understandings with
respect to the matters covered hereby,  including  expressly any prior agreement
with the  Company  concerning  change in  control  benefits.  The  amendment  or
termination  of this  Agreement  may be made only in a writing  executed  by the
Company and the  Executive,  and no amendment or  termination  of this Agreement
shall be effective unless and until made in such a writing. This Agreement shall
be binding upon any successor (whether direct or indirect,  by purchase,  merge,
consolidation,  liquidation  or  otherwise) to all or  substantially  all of the
assets of the  Company.  This  Agreement  is personal to the  Executive  and the
Executive  may not  assign  any of his  rights  or  duties  hereunder  but  this
Agreement  shall  be  enforceable  by  the  Executive's  legal  representatives,
executors  or  administrators.  This  Agreement  may be  executed in two or more
counterparts,  each of which  shall be deemed an  original,  and it shall not be
necessary in making proof of this  Agreement to produce or account for more than
one such counterpart.

                                       17
<PAGE>

     IN WITNESS  WHEREOF,  Valley National Bank and Valley National Bancorp each
have caused this Agreement to be signed by their duly authorized representatives
pursuant to the  authority of their Boards of  Directors,  and the Executive has
personally  executed  this  Agreement,  all as of the day and year first written
above.

ATTEST:                                         VALLEY NATIONAL BANCORP

/s/ Alan D. Eskow                               By: /s/ Gerald H. Lipkin
---------------------------------                   --------------------
Alan Eskow, Secretary                               Gerald H. Lipkin, Chairman
                                                    and Chief Executive Officer

ATTEST:                                         VALLEY NATIONAL BANK

/s/ Alan D. Eskow                               By: /s/ Gerald H. Lipkin
---------------------------------               ---------------------
Alan Eskow, Secretary                               Gerald H. Lipkin, Chairman
                                                    and Chief Executive Officer

WITNESS:

/s/ Peter Verbout                               /s/ Robert J. Mulligan
---------------------------------               --------------------------------
                                                Robert J. Mulligan, Executive

May 1, 1991
---------------------------------
"Executive" Valley
 National Bank
 Service Date

                                       18VALLEY NATIONAL BANCORP
                       1999 LONG-TERM STOCK INCENTIVE PLAN
                     (Adopted by Directors January 19, 1999)
                     (Adopted by Shareholders April 7, 1999)

     1. Purpose.  The purpose of the Plan is to provide additional  incentive to
those  officers  and key  employees  of the Company and its  Subsidiaries  whose
substantial  contributions  are essential to the continued growth and success of
the Company's  business in order to strengthen  their  commitment to the Company
and its Subsidiaries,  to motivate such officers and employees to faithfully and
diligently  perform their  assigned  responsibilities  and to attract and retain
competent and dedicated  individuals  whose efforts will result in the long-term
growth and profitability of the Company.  To accomplish such purposes,  the Plan
provides that the Company may grant Incentive Stock Options,  Nonqualified Stock
Options, Restricted Stock Awards and Stock Appreciation Rights.

     2. Definitions. For purposes of this Plan:

          (a) "Agreement" means the written agreement between the Company and an
     Optionee or Grantee  evidencing the grant of an Option or Award and setting
     forth the terms and conditions thereof.

          (b) "Award"  means a grant of Restricted  Stock or Stock  Appreciation
     Rights, or either or both of them.

          (c) "Bank" means Valley National Bank, a Subsidiary.

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

          (e)  "Cause"  means the  willful  failure by an Optionee or Grantee to
     perform his duties with the Company or with any  Subsidiary  or the willful
     engaging in conduct  which is injurious  to the Company or any  Subsidiary,
     monetarily or otherwise.

          (f) "Change in Capitalization" means any increase,  reduction,  change
     or  exchange  of Shares for a  different  number or kind of shares or other
     securities   of   the   Company   by   reason   of   a    reclassification,
     recapitalization,   merger,  consolidation,   reorganization,  issuance  of
     warrants or rights,  stock  dividend,  stock split or reverse  stock split,
     combination  or  exchange  of  shares,  repurchase  of  shares,  change  in
     corporate structure or otherwise.

          (g) "Change in Control"  means any of the following  events:  (i) when
     the Company or a Subsidiary  acquires actual  knowledge that any person (as
     such term is used in  Sections  13(d) and  14(d)(2) of the  Exchange  Act),
     other than an  affiliate  of the  Company or a  Subsidiary  or an  employee
     benefit plan established or maintained by the Company,  a Subsidiary or any
     of their  respective  affiliates,  is or becomes the  beneficial  owner (as
     defined in Rule 13d-3 of the  Exchange  Act)  directly  or  indirectly,  of
     securities of the Company  representing more than twenty-five percent (25%)
     of the combined voting power of the Company's then  outstanding  securities
     (a "Control Person"),  (ii) upon the first purchase of the Company's common
     stock  pursuant  to a tender  or  exchange  offer  (other  than a tender or
     exchange  offer made by the Company,  a Subsidiary  or an employee  benefit
     plan established or maintained by the Company, a Subsidiary or any of their
     respective   affiliates),   (iii)  upon  the  approval  by  the   Company's
     shareholders of (A) a merger or  consolidation  of the Company with or into
     another corporation (other than a merger or consolidation which is approved
     by at least two-thirds of the Continuing Directors (as hereinafter defined)
     or the definitive  agreement for which provides that at least two-thirds of
     the directors of the surviving or resulting  corporation  immediately after
     the  transaction  are Continuing  Directors (in either case, a "Non-Control
     Transaction")),  (B) a sale or disposition of all or  substantially  all of
     the Company's  assets or (C) a plan of  liquidation  or  dissolution of the
     Company,   (iv)  if  during  any  period  of  two  (2)  consecutive  years,
     individuals  who at the beginning of such period  constitute the Board (the
     "Continuing  Directors")  cease  for any  reason  to  constitute  at  least
     two-thirds thereof or, following a Non-Control  Transaction,  two-thirds of
     the board of directors of the surviving or resulting corporation;  provided
     that any  individual  whose election or nomination for election as a member
     of the  Board  (or,  following  a  Non-Control  Transaction,  the  board

                                       1
<PAGE>

     of directors of the surviving or resulting  corporation)  was approved by a
     vote of at least  two-thirds  of the  Continuing  Directors  then in office
     shall be considered a Continuing Director, or (v) upon a sale of (A) common
     stock of the Bank if after  such sale any  person  (as such term is used in
     Section 13(d) and 14(d)(2) of the Exchange Act) other than the Company,  an
     employee  benefit  plan  established  or  maintained  by the  Company  or a
     Subsidiary, or an affiliate of the Company or a Subsidiary, owns a majority
     of the Bank's  common stock or (B) all or  substantially  all of the Bank's
     assets (other than in the ordinary course of business).  No person shall be
     considered  a Control  Person for  purposes of clause (i) above if (A) such
     person is or becomes the beneficial owner, directly or indirectly,  of more
     than ten  percent  (10%) but less  than  twenty-five  percent  (25%) of the
     combined voting power of the Company's then  outstanding  securities if the
     acquisition  of all voting  securities  in excess of ten percent  (10%) was
     approved  in advance  by a majority  of the  Continuing  Directors  then in
     office or (B) such person  acquires  in excess of ten percent  (10%) of the
     combined voting power of the Company's then outstanding  voting  securities
     in  violation  of law and by order of a court  of  competent  jurisdiction,
     settlement  or  otherwise,  disposes  or is  required  to  dispose  of  all
     securities acquired in violation of law.

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

          (i) "Committee" means a committee consisting solely of two (2) or more
     directors who are  Non-Employee  Directors (as defined in Rule 16b-3 of the
     Exchange  Act as it may be amended  from time to time) of the  Company  and
     outside  directors as defined pursuant to Section 162(m) of the Code (as it
     may be amended from time to time)  appointed by the Board to administer the
     Plan and to perform the functions set forth herein.  Directors appointed by
     the Board to the Committee shall have the authority to act  notwithstanding
     the failure to be so qualified.

          (j) "Company" means Valley National Bancorp, a New Jersey corporation.

          (k) "Disability"  means the condition which results when an individual
     has become  permanently and totally  disabled within the meaning of Section
     105(d)(4) of the Code.

          (l) "Eligible Employee" means any officer or other key employee of the
     Company or a Subsidiary  designated by the Committee as eligible to receive
     Options or Awards subject to the conditions set forth herein.

          (m) "Escrow Agent" means the escrow agent under the Escrow  Agreement,
     designated by the Committee.

          (n) "Escrow  Agreement"  means an agreement  between the Company,  the
     Escrow Agent and a Grantee,  in the form specified by the Committee,  under
     which shares of Restricted  Stock awarded  pursuant hereto shall be held by
     the Escrow Agent until either (a) the restrictions  relating to such shares
     expire and the  shares  are  delivered  to the  Grantee or (b) the  Company
     reacquires the shares  pursuant  hereto and the shares are delivered to the
     Company.

          (o)  "Exchange  Act" means the  Securities  Exchange  Act of 1934,  as
     amended.

          (p) "Fair  Market  Value" means the fair market value of the Shares as
     determined by the Committee in its sole discretion; provided, however, that
     (A) if the Shares are admitted to quotation on the National  Association of
     Securities   Dealers   Automated   Quotation  System  ("NASDAQ")  or  other
     comparable  quotation  system and have been designated as a National Market
     System  ("NMS")  security,  Fair Market Value on any date shall be the last
     sale price  reported  for the Shares on such  system on such date or on the
     last day  preceding  such  date on which a sale  was  reported,  (B) if the
     Shares are admitted to  quotation on NASDAQ and have not been  designated a
     NMS  security,  Fair  Market  Value on any date shall be the average of the
     highest  bid and lowest  asked  prices of the Shares on such system on such
     date, or (C) if the Shares are admitted to trading on a national securities
     exchange,  Fair  Market  Value on any date  shall  be the last  sale  price
     reported  for the Shares on such  exchange on such date or on the last date
     preceding such date on which a sale was reported.

          (q)  "Grantee"  means a person to whom an Award has been granted under
     the Plan.

                                       2
<PAGE>

          (r)  "Incentive  Stock  Option"  means an Option within the meaning of
     Section 422 of the Code.

          (s)  "Nonqualified  Stock  Option"  means  an  Option  which is not an
     Incentive Stock Option.

          (t) "Option" means an Incentive  Stock Option,  a  Nonqualified  Stock
     Option, or either or both of them.

          (u) "Optionee" means a person to whom an Option has been granted under
     the Plan.

          (v)  "Parent"   means  any   corporation   in  an  unbroken  chain  of
     corporations  ending with the Company,  if each of the  corporations  other
     than the Company owns stock  possessing  50% or more of the total  combined
     voting  power of all classes of stock of one of the other  corporations  in
     such chain.

          (w) "Plan"  means the Valley  National  Bancorp 1999  Long-Term  Stock
     Incentive  Plan as set forth in this  instrument  and as it may be  amended
     from time to time.

          (x)  "Restricted  Stock"  means  Shares  issued or  transferred  to an
     Eligible  Employee which are subject to restrictions as provided in Section
     8 hereof.

          (aa)  "Retirement"  means the retirement from active employment by the
     Company of an employee or officer but only if such person  meets all of the
     following  requirements:  (i) he has a minimum  combined  total of years of
     service  and age equal to eighty  (80),  (ii) he is age  sixty-two  (62) or
     older,  and (iii) he provides  six (6) months prior  written  notice to the
     Company of the retirement.  An employee or officer who retires but fails to
     meet such  conditions  shall not be deemed to be within the  definition  of
     "Retirement" for any purpose under this Plan or any Award or Option granted
     thereunder.

          (ab)  "Shares"  means the common stock,  no par value,  of the Company
     (including any new,  additional or different stock or securities  resulting
     from a Change in Capitalization).

          (ac) "Stock  Appreciation  Right" means a right to receive all or some
     portion of the  increase in the value of shares of Common Stock as provided
     in Section 7 hereof.

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

          (ae)  "Successor  Corporation"  means a  corporation,  or a parent  or
     subsidiary thereof, which issues or assumes a stock option in a transaction
     to which Section 425(a) of the Code applies.

          (af) "Ten-Percent Shareholder" means an eligible Employee, who, at the
     time an Incentive  Stock  Option is to be granted to him,  owns (within the
     meaning of Section  422(b)(6) of the Code) stock  possessing  more than ten
     percent (10%) of the total combined voting power of all classes of stock of
     the  Company,  a Parent or a  Subsidiary  within  the  meaning  of  Section
     422(b)(6) of the Code.

                                       3
<PAGE>

     3. Administration.

          (a) The Plan shall be  administered  by the Committee which shall hold
     meetings at such times as may be necessary for the proper administration of
     the Plan. The Committee  shall keep minutes of its meetings.  A majority of
     the  Committee  shall  constitute  a quorum and a majority  of a quorum may
     authorize any action.  Each member of the Committee shall be a Non-Employee
     Director (as defined in Rule 16b-3 of the Exchange Act as it may be amended
     from time to time) and an outside  director as defined  pursuant to Section
     162(m) of the Code as it may be amended from time to time. No failure to be
     so qualified shall invalidate any Option or Award or any action or inaction
     under the Plan. No member of the Committee  shall be personally  liable for
     any action, determination or interpretation made in good faith with respect
     to the Plan,  the Options or the Awards,  and all members of the  Committee
     shall be fully  indemnified by the Company with respect to any such action,
     determination or interpretation.

          Subject to the express  terms and  conditions  set forth  herein,  the
     Committee shall have the power from time to time:

               (1) to determine  those Eligible  Employees to whom Options shall
          be granted  under the Plan and the number of Incentive  Stock  Options
          and/or  Nonqualified  Options to be granted to each eligible  Employee
          and  to  prescribe  the  terms  and  conditions  (which  need  not  be
          identical) of each Option,  including the purchase  price per share of
          each Option;

               (2) to select  those  Eligible  Employees to whom Awards shall be
          granted  under  the Plan and to  determine  the  number  of  shares of
          Restricted  Stock  and/or  Stock  Appreciation  Rights  to be  granted
          pursuant  to each  Award,  the terms  and  conditions  of each  Award,
          including the  restrictions or performance  criteria  relating to such
          shares or rights,  the purchase price per share, if any, of Restricted
          Stock and whether Stock  Appreciation  Rights will be granted alone or
          in conjunction with an Option;

               (3) to construe and interpret the Plan and the Options and Awards
          granted  thereunder  and to  establish,  amend  and  revoke  rules and
          regulations for the  administration  of the Plan,  including,  but not
          limited  to,  correcting  any defect or  supplying  any  omission,  or
          reconciling any inconsistency in the Plan or in any Agreement,  in the
          manner and to the extent it shall deem  necessary or advisable to make
          the Plan fully effective,  and all decisions and determinations by the
          Committee  in the  exercise  of this power  shall be final and binding
          upon the Company or a Subsidiary,  the Optionees and the Grantees,  as
          the case may be;

               (4) to determine  the duration and purposes for leaves of absence
          which may be granted to an Optionee or Grantee without  constituting a
          termination of employment or service for purposes of the Plan; and

               (5)  generally,  to exercise such powers and to perform such acts
          as are deemed  necessary or advisable to promote the best interests of
          the Company with respect to the Plan.

     4. Stock Subject to Plan.

          (a) The  maximum  number of Shares  that may be issued or  transferred
     pursuant to all Options and Awards  under this Plan is  2,500,000  of which
     not more than  250,000  Shares  may be issued or  transferred  pursuant  to
     Options  and/or  Awards  to  any  one  Eligible  Employee.  Subject  to the
     foregoing aggregate limitations,  the maximum number of Shares (i) that may
     be issued or transferred  pursuant to Options or Awards for Incentive Stock
     Options, Non-Qualified Stock Options and Stock Appreciation Rights shall be
     2,000,000 and (ii) that may be issued or transferred  pursuant to Awards of
     Restricted  Stock  shall  be  500,000.  In  each  case,  upon a  Change  in
     Capitalization  after the adoption of this Plan by the Board on January 19,
     1999,  the  Shares  shall be  adjusted  to the number and kind of Shares of
     stock or other securities existing after such Change in Capitalization.

          The number of Shares set forth herein includes Shares awarded pursuant
     to all Options and Awards  issued or  transferred  under this Plan prior to
     the date of the  amendment  to this  section and the number of Shares takes
     into account all Changes in Capitalization prior to January 18, 1999.

                                       4
<PAGE>

          (b) Whenever any  outstanding  Option or portion thereof  expires,  is
     cancelled or is otherwise  terminated (other than by exercise of the Option
     or any  related  Stock  Appreciation  Right),  the  shares of Common  Stock
     allocable  to the  unexercised  portion  of such  Option  may  again be the
     subject of Options and Awards hereunder.

          (c)  Whenever  any Shares  subject to an Award or Option are resold to
     the Company,  or are forfeited for any reason  pursuant to the terms of the
     Plan, such Shares may again be the subject of Options and Awards hereunder.

     5. Eligibility.  Subject to the provisions of the Plan, the Committee shall
have full and  final  authority  to select  those  Eligible  Employees  who will
receive  Options and/or Awards but no person shall receive any Options or Awards
unless he is an employee of the Company or a  Subsidiary  at the time the Option
or Award is granted.

     6. Stock  Options.  The Committee may grant Options in accordance  with the
Plan, the terms and conditions of which shall be set forth in an Agreement. Each
Option and Option Agreement shall be subject to the following conditions:

          (a)  Purchase  Price.  The  purchase  price or the manner in which the
     purchase  price is to be  determined  for Shares under each Option shall be
     set forth in the  Agreement,  provided  that the  purchase  price per Share
     under each  Incentive  Stock Option shall not be less than 100% of the Fair
     Market Value of a Share at the time the Option is granted (110% in the case
     of an Incentive  Stock Option  granted to a  Ten-Percent  Shareholder)  and
     under each Nonqualified Stock Option shall not be less than 80% of the Fair
     Market Value of a Share at the time the Option is granted.

          (b) Duration.  Options granted hereunder shall be for such term as the
     Committee  shall  determine,  provided  that (i) no Incentive  Stock Option
     shall be  exercisable  after the expiration of ten (10) years from the date
     it is  granted  (five (5) years in the case of an  Incentive  Stock  Option
     granted to a Ten-Percent Shareholder) and (ii) no Nonqualified Stock Option
     shall be exercisable after the expiration of ten (10) years and one (1) day
     from the date it is granted.  The Committee may, subsequent to the granting
     of any Option, extend the term thereof but in no event shall the term as so
     extended exceed the maximum term provided for in the preceding sentence.

          (c)   Non-Transferability.   No  Option  granted  hereunder  shall  be
     transferable by the Optionee to whom granted  otherwise than by will or the
     laws of descent and distribution, and an Option may be exercised during the
     lifetime of such  Optionee  only by the  Optionee or his  guardian or legal
     representative.  The  terms  of such  Option  shall  be  binding  upon  the
     beneficiaries,  executors,  administrators,  heirs  and  successors  of the
     Optionee.

          (d) Stock  Options;  Vesting.  Subject to Section  6(h)  hereof,  each
     Option shall be exercisable in such installments  (which need not be equal)
     and at such times as may be  designated  by the  Committee and set forth in
     the Option Agreement.  Unless otherwise  provided in the Agreement,  to the
     extent not exercised,  installments shall accumulate and be exercisable, in
     whole or in part,  at any time after  becoming  exercisable,  but not later
     than the date the Option expires. Upon the death,  Disability or Retirement
     of  an  Optionee,   all  Options  shall  become  immediately   exercisable.
     Notwithstanding   the   foregoing,   the  Committee  may   accelerate   the
     exercisability of any Option or portion thereof at any time.

          (e) Method of  Exercise.  The exercise of an Option shall be made only
     by a written notice  delivered in person or by mail to the Secretary of the
     Company at the Company's principal executive office,  specifying the number
     of Shares to be purchased and accompanied by payment therefor and otherwise
     in accordance with the Agreement  pursuant to which the Option was granted.
     The purchase price for any shares purchased  pursuant to the exercise of an
     Option shall be paid in full upon such exercise in cash,  by check,  or, at
     the  discretion of the Committee and upon such terms and  conditions as the
     Committee shall approve, by transferring Shares to the Company.  Any Shares
     transferred to the Company as payment of the purchase price under an Option
     shall be valued at their Fair Market Value on the day preceding the date of
     exercise of such Option. If requested by the Committee,  the Optionee shall
     deliver the Agreement  evidencing  the Option and the Agreement  evidencing
     any related  Stock  Appreciation  Right to the

                                       5
<PAGE>

     Secretary  of the  Company  who shall  endorse  thereon a notation  of such
     exercise  and return  such  Agreement  to the  Optionee.  Not less than 100
     Shares may be purchased  at any time upon the exercise of an Option  unless
     the number of Shares so  purchased  constitutes  the total number of Shares
     then purchasable under the Option.

          (f) Rights of Optionees.  No Optionee  shall be deemed for any purpose
     to be the owner of any Shares  subject  to any Option  unless and until (i)
     the Option shall have been exercised  pursuant to the terms  thereof,  (ii)
     the Company shall have issued and delivered the Shares to the Optionee, and
     (iii) the  Optionee's  name shall have been  entered  as a  shareholder  of
     record on the books of the Company. Thereupon, the Optionee shall have full
     voting, dividend and other ownership rights with respect to such Shares.

          (g) Termination of Employment. In the event that an Optionee ceases to
     be employed by the Company or any Subsidiary,  any outstanding Options held
     by such Optionee shall, unless the Option Agreement  evidencing such Option
     provides otherwise, terminate as follows:

               (i) If the  Optionee's  termination  of  employment is due to his
          death or Disability,  the Option shall be exercisable  for a period of
          one (1) year  following  such  termination  of  employment,  and shall
          thereafter terminate;

               (ii)  If  the  Optionee's  termination  of  employment  is by the
          Company or a Subsidiary  for Cause or is by the  Optionee  (other than
          due to the Optionee's  Retirement),  the Option shall terminate on the
          date of the Optionee's termination of employment;

               (iii) If the  termination  of employment is due to the Optionee's
          Retirement, the Option shall be exercisable (to the extent exercisable
          at the  time  of  the  Optionee's  termination  of  employment  due to
          retirement)  for a period of 18 months  following such  termination of
          employment, and shall thereafter terminate. (An Optionee who exercises
          his or her  Options  more  than  90  days  after  the  termination  of
          employment  due to Retirement  shall  acknowledge  that the Options so
          exercised will not be Incentive Stock Options.); and

               (iv) If the Optionee's termination of employment is for any other
          reason (including an Optionee's ceasing to be employed by a Subsidiary
          as a result  of the sale of such  Subsidiary  or an  interest  in such
          Subsidiary),  the Option (to the extent exercisable at the time of the
          Optionee's  termination  of  employment)  shall be  exercisable  for a
          period of ninety (90) days following  such  termination of employment,
          and shall thereafter terminate.

          Notwithstanding  the foregoing,  the Committee may provide,  either at
     the time an  Option  is  granted  or  thereafter,  that the  Option  may be
     exercised  after the periods  provided for in this Section 6(g),  but in no
     event beyond the term of the Option.

          (h) Effect of Change in Control.  In the event of a Change in Control,
     all Options  outstanding on the date of such Change in Control shall become
     immediately and fully exercisable.

          (i) Substitution and  Modification.  Subject to the terms of the Plan,
     the  Committee  may modify  outstanding  Options or accept the surrender of
     outstanding  Options (to the extent not exercised) and grant new Options in
     substitution for them. Notwithstanding the foregoing, no modification of an
     Option  shall  alter or impair any rights or  obligations  under the Option
     without the Optionee's consent,  except as provided for in this Plan or the
     Agreement.

     7. Stock Appreciation Rights. The Committee may, in its discretion,  either
alone or in  connection  with the grant of an Option,  grant Stock  Appreciation
Rights in accordance  with the Plan,  the terms and conditions of which shall be
set forth in an  Agreement.  If granted in  connection  with an Option,  a Stock
Appreciation  Right shall  cover the same shares  covered by the Option (or such
lesser  number of shares as the Committee may  determine)  and shall,  except as
provided in this Section 7, be subject to the same terms and  conditions  as the
related Option.

          (a) Time of Grant. A Stock Appreciation Right may be granted:

                                       6
<PAGE>

               (i) at any time if unrelated to an Option; or

               (ii) if related to an Option,  either at the time of grant, or at
          any time thereafter during the term of the Option.

          (b) Stock Appreciation Rights Related to an Option.

               (i) Payment.  A Stock  Appreciation  Right  granted in connection
          with an Option shall entitle the holder thereof,  upon exercise of the
          Stock Appreciation Right or any portion thereof, to receive payment of
          an amount computed pursuant to Section 7(b)(iii).

               (ii)  Exercise.  Subject to Section  7(f),  a Stock  Appreciation
          Right granted in  connection  with an Option shall be  exercisable  at
          such time or times and only to the extent that the  related  Option is
          exercisable,  and will not be  transferable  except to the  extent the
          related Option may be transferable. A Stock Appreciation Right granted
          in connection with an Incentive Stock Option shall be exercisable only
          if the Fair Market  Value of a Share on the date of  exercise  exceeds
          the purchase price specified in the related Incentive Stock Option.

               (iii) Amount  Payable.  Except as  otherwise  provided in Section
          7(g),  upon the  exercise of Stock  Appreciation  Right  related to an
          Option,  the Grantee shall be entitled to receive an amount determined
          by  multiplying  (A) the excess of the Fair Market Value of a Share on
          the date of  exercise  of such Stock  Appreciation  Right over the per
          Share  purchase price under the related  Option,  by (B) the number of
          Shares as to which such Stock  Appreciation  Right is being exercised.
          Notwithstanding  the foregoing,  the Committee may limit in any manner
          the amount  payable  with respect to any Stock  Appreciation  Right by
          including  such  a  limit  in  the  Agreement   evidencing  the  Stock
          Appreciation Right at the time it is granted.

               (iv) Treatment of Related Options and Stock  Appreciation  Rights
          Upon  Exercise.  Except as provided in Section  7(b)(v),  (A) upon the
          exercise of a Stock  Appreciation  Right granted in connection with an
          Option,  the Option  shall be cancelled to the extent of the number of
          Shares as to which the Stock  Appreciation  Right is exercised and (B)
          upon the  exercise  of an Option  granted in  connection  with a Stock
          Appreciation Right or the surrender of such Option pursuant to Section
          6(h), the Stock Appreciation Right shall be cancelled to the extent of
          the  number  of  Shares  as  to  which  the  Option  is  exercised  or
          surrendered.

               (v) Simultaneous Exercise of Stock Appreciation Right and Option.
          The  Committee  may provide,  either at the time a Stock  Appreciation
          Right is granted in  connection  with a  Nonqualified  Stock Option or
          thereafter  during  the term of the Stock  Appreciation  Right,  that,
          subject to Section 7(f), upon exercise of such Option or the surrender
          of the Option pursuant to Section 6(h), the Stock  Appreciation  Right
          shall  automatically  be deemed to be  exercised  to the extent of the
          number of Shares as to which the Option is exercised  or  surrendered.
          In such  event,  the  Grantee  shall be entitled to receive the amount
          described in Section  7(b)(iii) or 7(g) hereof, as the case may be (or
          some  percentage  of  such  amount  if so  provided  in the  Agreement
          evidencing the Stock  Appreciation  Right),  in addition to the Shares
          acquired or cash received pursuant to the exercise or surrender of the
          Option. If a Stock  Appreciation Right Agreement contains an automatic
          exercise provision described in this Section 7(b)(v) and the Option or
          any portion  thereof to which it relates is  exercised  within six (6)
          months from the date the Stock  Appreciation  Right is  granted,  such
          automatic  exercise  provision  shall not be effective with respect to
          that exercise of the Option. The inclusion in an Agreement  evidencing
          a Stock  Appreciation  Right of a provision  described in this Section
          7(b)(v) may be in addition to and not in lieu of the right to exercise
          the Stock  Appreciation  Right as otherwise provided herein and in the
          Agreement.

          (c) Stock  Appreciation  Rights Unrelated to an Option.  The Committee
     may grant to Eligible  Employees  Stock  Appreciation  Rights  unrelated to
     Options.  Stock Appreciation Rights unrelated to Options shall contain such
     terms and  conditions  as to  exercisability,  vesting and  duration as the
     Committee  shall  determine,  but in no  event  shall  they  have a term of
     greater than ten (10) years. Upon the death,  Disability or Retirement of a
     Grantee,   all  Stock   Appreciation   Rights  shall   become   immediately
     exercisable.  Upon  the  death  or  Disability  of  a  Grantee,  the  Stock
     Appreciation  Rights held by that Grantee shall be exercisable for a period
     of one (1)  year  following  such  termination  of

                                       7
<PAGE>

     employment,  and  shall  thereafter  terminate.  Upon the  Retirement  of a
     Grantee,  the  Stock  Appreciation  Rights  held by that  Grantee  shall be
     exercisable for a period of ninety (90) days following such  termination of
     employment, and shall thereafter terminate. Except as otherwise provided in
     Section 7(g), the amount  payable upon exercise of such Stock  Appreciation
     Rights shall be  determined in accordance  with Section  7(b)(iii),  except
     that  "Fair  Market  Value of a Share on the date of the grant of the Stock
     Appreciation  Right" shall be  substituted  for  "purchase  price under the
     related Option."

          (d) Method of Exercise.  Stock Appreciation  Rights shall be exercised
     by a Grantee only by a written notice delivered in person or by mail to the
     Secretary  of the  Company at the  Company's  principal  executive  office,
     specifying   the  number  of  Shares  with   respect  to  which  the  Stock
     Appreciation Right is being exercised.  If requested by the Committee,  the
     Grantee shall deliver the Agreement evidencing the Stock Appreciation Right
     being  exercised and the  Agreement  evidencing  any related  Option to the
     Secretary  of the  Company  who shall  endorse  thereon a notation  of such
     exercise and return such Agreements to the Grantee.

          (e) Form of Payment.  Payment of the amount  determined under Sections
     7(b)(iii) or 7(c),  may be made solely in whole shares of Common Stock in a
     number determined at their Fair Market Value on the date of exercise of the
     Stock Appreciation Right or,  alternatively,  at the sole discretion of the
     Committee,  solely in cash, or in a  combination  of cash and Shares as the
     Committee deems advisable.  In the event that a Stock Appreciation Right is
     exercised within the sixty-day  period  following a Change in Control,  any
     amount  payable shall be solely in cash.  If the Committee  decides to make
     full  payment in Shares,  and the amount  payable  results in a  fractional
     Share,   payment   for  the   fractional   Share  will  be  made  in  cash.
     Notwithstanding  the foregoing,  no payment in the form of cash may be made
     upon  the  exercise  of a Stock  Appreciation  Right  pursuant  to  Section
     7(b)(iii)  or 7(c) to an officer  of the  Company  or a  Subsidiary  who is
     subject to Section 16(b) of the Exchange  Act,  unless the exercise of such
     Stock  Appreciation  Right is made during the period beginning on the third
     business day and ending on the twelfth  business day  following the date of
     release for publication of the Company's  quarterly or annual statements of
     earnings.

          (f) Restrictions.  No Stock Appreciation Right may be exercised before
     the date six (6) months  after the date it is granted,  except in the event
     that the death or Disability of the Grantee occurs before the expiration of
     the six-month period.

          (g) Effect of Change in Control.  In the event of a Change in Con~~ol,
     subject  to  Section  7(f),  all Stock  Appreciation  Rights  shall  become
     immediately and fully exercisable.

     8.  Restricted  Stock.  The Committee may grant Awards of Restricted  Stock
which shall be evidenced  by an  Agreement  between the Company and the Grantee.
Each  Agreement  shall contain such  restrictions,  terms and  conditions as the
Committee may require and (without  limiting the  generality  of the  foregoing)
such  Agreements  may  require  that an  appropriate  legend  be placed on Share
certificates. Awards of Restricted Stock shall be subject to the following terms
and provisions:

          (a) Rights of Grantee.

               (i)  Shares of  Restricted  Stock  granted  pursuant  to an Award
          hereunder  shall  be  issued  in the  name of the  Grantee  as soon as
          reasonably  practicable  after the Award is granted  and the  purchase
          price,  if any, is paid by the Grantee,  provided that the Grantee has
          executed  an  Agreement  evidencing  the Award,  an Escrow  Agreement,
          appropriate  blank  stock  powers  and any other  documents  which the
          Committee,  in its absolute discretion,  may require as a condition to
          the  issuance of such Shares.  If a Grantee  shall fail to execute the
          Agreement  evidencing a Restricted Stock Award, an Escrow Agreement or
          appropriate  blank  stock  powers  or shall  fail to pay the  purchase
          price, if any, for the Restricted  Stock,  the Award shall be null and
          void.  Shares  issued in  connection  with a  Restricted  Stock Award,
          together  with the stock  powers,  shall be deposited  with the Escrow
          Agent.  Except as restricted by the terms of the  Agreement,  upon the
          delivery of the Shares to the Escrow Agent, the Grantee shall have all
          of the rights of a shareholder with respect to such Shares,  including
          the right to vote the shares and to receive,  subject to Section 8(d),
          all dividends or other  distributions paid or made with respect to the
          Shares.

                                       8
<PAGE>

               (ii) If a Grantee receives rights or warrants with respect to any
          Shares which were awarded to him as Restricted  Stock,  such rights or
          warrants or any Shares or other securities he acquires by the exercise
          of such rights or warrants may be held,  exercised,  sold or otherwise
          disposed  of by the  Grantee  free and clear of the  restrictions  and
          obligations provided by this Plan.

          (b)  Non-Transferability.  Until any  restrictions  upon the Shares of
     Restricted  Stock  awarded to a Grantee shall have lapsed in the manner set
     forth in  Section  8(c),  such  Shares  shall not be sold,  transferred  or
     otherwise  disposed of and shall not be pledged or otherwise  hypothecated,
     nor  shall  they be  delivered  to the  Grantee.  Upon the  termination  of
     employment  of the  Grantee,  all of such  Shares  with  respect  to  which
     restrictions  have not lapsed shall be resold by the Grantee to the Company
     at the same price paid by the Grantee for such Shares or shall be forfeited
     and  automatically  transferred to and reacquired by the Company at no cost
     to the  Company if no  purchase  price had been paid for such  Shares.  The
     Committee  may also impose such other  restrictions  and  conditions on the
     Shares as it deems appropriate.

          (c) Lapse of Restrictions.

               (i)   Restrictions   upon  Shares  of  Restricted  Stock  awarded
          hereunder  shall  lapse  at such  time  or  times  and on such  terms,
          conditions and  satisfaction of performance  criteria as the Committee
          may determine;  provided,  however,  that the  restrictions  upon such
          Shares  shall  lapse only if the  Grantee on the date of such lapse is
          then  and  has  continuously  been an  employee  of the  Company  or a
          Subsidiary from the date the Award was granted.

               (ii) In the event of a Change in Control,  all restrictions  upon
          any Shares of Restricted  Stock shall lapse  immediately  and all such
          Shares shall become fully vested in the Grantee thereof.

               (iii) In the event of  termination  of  employment as a result of
          death,  Disability or Retirement of a Grantee,  all restrictions  upon
          Shares of Restricted  Stock  awarded to such Grantee  shall  thereupon
          immediately  lapse.  The  Committee may also decide at any time in its
          absolute  discretion  and on such  terms  and  conditions  as it deems
          appropriate,  to remove  or modify  the  restrictions  upon  Shares of
          Restricted Stock awarded hereunder.

          (d)  Treatment  of  Dividends.  At the time of an Award of  Shares  of
     Restricted Stock, the Committee may, in its discretion,  determine that the
     payment to the  Grantee  of  dividends,  or a  specified  portion  thereof,
     declared  or paid on Shares of  Restricted  Stock by the  Company  shall be
     deferred until the earlier to occur of (i) the lapsing of the  restrictions
     imposed upon such Shares,  in which case such dividends  shall be paid over
     to the Grantee,  or (ii) the  forfeiture  of such Shares under Section 8(b)
     hereof, in which case such dividends shall be forfeited to the Company, and
     such dividends  shall be held by the Company for the account of the Grantee
     until such time. In the event of such deferral,  interest shall be credited
     on the amount of such  dividends held by the Company for the account of the
     Grantee from time to time at such rate per annum as the  Committee,  in its
     discretion,  may determine.  Payment of deferred  dividends,  together with
     interest  accrued  thereon as aforesaid,  shall be made upon the earlier to
     occur of the events specified in (i) and (ii) of the immediately  preceding
     sentence, in the manner specified therein.

          (e) Delivery of Shares. When the restrictions imposed hereunder and in
     the Plan expire or have been  cancelled  with respect to one or more shares
     of  Restricted  Stock,  the Company shall notify the Grantee and the Escrow
     Agent of same. The Escrow Agent shall then return the certificate  covering
     the Shares of  Restricted  Stock to the  Company  and upon  receipt of such
     certificate  the Company  shall  deliver to the Grantee (or such  Grantee's
     legal  representative,  beneficiary or heir) a certificate  for a number of
     shares of Common Stock,  without any legend or  restrictions  (except those
     required by any federal or state securities laws), equivalent to the number
     of Shares of Restricted Stock for which restrictions have been cancelled or
     have  expired.  A new  certificate  covering  Shares  of  Restricted  Stock
     previously  awarded to the Grantee which remain  restricted shall be issued
     to the  Grantee  and held by the  Escrow  Agent  and the  Agreement,  as it
     relates to such shares, shall remain in effect.

     9. Loans.

                                       9
<PAGE>

          (a) The  Company  or any  Subsidiary  may make  loans to a Grantee  or
     Optionee in connection  with the purchase of Shares pursuant to an Award or
     in  connection  with the  exercise of an Option,  subject to the  following
     terms and conditions  and such other terms and conditions not  inconsistent
     with the Plan,  including  the rate of interest,  if any, as the  Committee
     shall impose from time to time.

          (b) No loan  made  under  the  Plan  shall  exceed  the sum of (i) the
     aggregate  purchase  price  payable  pursuant  to the  Option or Award with
     respect to which the loan is made,  plus (ii) the amount of the  reasonably
     estimated  income taxes  payable by the Optionee or Grantee with respect to
     the Option or Award.  In no event may any such loan  exceed the Fair Market
     Value, at the date of exercise, of any such Shares.

          (c) No loan shall  have an  initial  term  exceeding  ten (10)  years;
     provided, that loans under the Plan shall be renewable at the discretion of
     the Committee; and provided, further, that the indebtedness under each loan
     shall become due and  payable,  as the case may be, on a date no later than
     (i)  one  (1)  year  after  termination  of  the  Optionee's  or  Grantee's
     employment  due to death,  retirement  or  Disability,  or (ii) the date of
     termination of the Optionee's or Grantee's  employment for any reason other
     than death, retirement or Disability.

          (d) Loans under the Plan may be  satisfied  by an Optionee or Grantee,
     as  determined  by the  Committee,  in cash  or,  with the  consent  of the
     Committee,  in whole or in part by the  transfer  to the  Company of Shares
     whose Fair  Market  Value on the date of such  payment is equal to the cash
     amount for which such Shares are transferred.

          (e) A loan shall be secured by a pledge of Shares  with a Fair  Market
     Value of not less than the  principal  amount of the  loan.  After  partial
     repayment of a loan,  pledged shares no longer  required as security may be
     released to the Optionee or Grantee.

          (f) Every loan shall meet all applicable  laws,  regulations and rules
     of the  Federal  Reserve  Board and any other  governmental  agency  having
     jurisdiction.

     10. Adjustment Upon Changes in Capitalization.

          (a) In the event of a Change in  Capitalization,  the Committee  shall
     conclusively determine the appropriate adjustments,  if any, to the maximum
     number and class of shares of stock with respect to which Options or Awards
     may be granted  under the Plan,  the number and class of shares as to which
     Options or Awards have been granted under the Plan,  and the purchase price
     therefor, if applicable.

          (b) Any such adjustment in the Shares or other  securities  subject to
     outstanding  Incentive  Stock Options  (including  any  adjustments  in the
     purchase  price)  shall  be made  in such  manner  as not to  constitute  a
     modification  as defined by Section  425(h)(3)  of the Code and only to the
     extent otherwise permitted by Sections 422 and 425 of the Code.

          (c) If, by reason of a Change in Capitalization, a Grantee of an Award
     shall be  entitled  to new,  additional  or  different  shares  of stock or
     securities (other than rights or warrants to purchase securities), such new
     additional  or different  shares  shall  thereupon be subject to all of the
     conditions,  restrictions and performance criteria which were applicable to
     the  Shares  or  units  pursuant  to the  Award  prior  to such  Change  in
     Capitalization.

     11. Effect of Certain Transactions.  In the event of (i) the liquidation or
dissolution of the Company,  (ii) a merger or consolidation in which the Company
is not the  surviving  corporation  or (iii) the sale or  disposition  of all or
substantially all of the Company's assets, provision shall be made in connection
with such  transaction  for the assumption of the Plan and the Options or Awards
theretofore  granted  under the Plan,  or the  substitution  for such Options or
Awards of new options or awards of the Successor  Corporation,  with appropriate
adjustment as to the number and kind of shares and the purchase price for shares
thereunder.

     12. Release of Financial Information. A copy of the Company's annual report
to shareholders shall be delivered to each Optionee and Grantee at the time such
report is  distributed to the Company's  shareholders.  Upon

                                       10
<PAGE>

request the Company  shall  furnish to each  Optionee  and Grantee a copy of its
most recent annual  report and each  quarterly  report and current  report filed
under the Exchange Act, since the end of the Company's prior fiscal year.

     13.  Termination and Amendment of the Plan. The Plan shall terminate on the
day preceding the tenth anniversary of its effective date and no Option or Award
may be granted  thereafter.  The Board may sooner terminate or amend the Plan at
any time, and from time to time; provided,  however, that, except as provided in
Sections 10 and 11 hereof,  no amendment  shall be effective  unless approved by
the   shareholders  of  the  Company  in  accordance  with  applicable  law  and
regulations at an annual or special  meeting held within twelve months before or
after the date of adoption of such amendment, where such amendment will:

          (a) increase the number of Shares as to which Options or Awards may be
     granted under the Plan; or

          (b) change the class of persons eligible to participate in the Plan.

     The following  amendments  shall not require  Shareholder  approval  unless
required by law or regulation  to preserve the intended  benefits of the Plan to
the Company or the participants:

          (a) change the minimum purchase price of Shares pursuant to Options or
     Awards as provided herein;

          (b) extend the  maximum  period for  granting  or  exercising  Options
     provided herein; or

          (c) otherwise  materially  increase the benefits  accruing to Eligible
     Employees under the Plan.

     Except as provided in  Sections  10 and 11 hereof,  rights and  obligations
under any Option or Award granted  before any amendment of the Plan shall not be
altered or impaired by such  amendment,  except with the consent of the Optionee
or Grantee, as the case may be.

     14.  Non-Exclusivity  of the Plan.  The  adoption  of the Plan by the Board
shall not be construed  as amending,  modifying  or  rescinding  any  previously
approved  incentive  arrangement or as creating any  limitations on the power of
the Board to adopt such other  incentive  arrangements as it may deem desirable,
including,  without  limitation,  the granting of stock options  otherwise  than
under the Plan, and such arrangements may be either applicable generally or only
in specific cases.

     15.  Limitation  of  Liability.  As  illustrative  of  the  limitations  of
liability of the Company, but not intended to be exhaustive thereof,  nothing in
the Plan shall be construed to;

          (a) give any person  any right to be granted an Option or Award  other
     than at the sole discretion of the Committee;

          (b) give any  person  any  rights  whatsoever  with  respect to Shares
     except as specifically provided in the Plan;

          (c)  limit  in any way the  right  of the  Company  to  terminate  the
     employment of any person at any time; or

          (d) be  evidence  of any  agreement  or  understanding,  expressed  or
     implied, that the Company will employ any person in any particular position
     at any particular  rate of  compensation  or for any  particular  period of
     time.

                                       11
<PAGE>

     16. Regulations and Other Approvals; Governing Law.

          (a) This Plan and the rights of all persons  claiming  hereunder shall
     be construed and determined in accordance with the laws of the State of New
     Jersey  without  giving  effect to the  choice of law  principles  thereof,
     except to the extent that such law is preempted by federal law.

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

          (c) The Plan is intended to comply with Rule 16b-3  promulgated  under
     the Exchange Act and Section  162(m) of the Code (each as amended from time
     to time) and the Committee shall interpret and administer the provisions of
     the Plan or any  Agreement in a manner  consistent  therewith to the extent
     necessary.  Any provisions  inconsistent with such Rule or Section shall be
     inoperative  but shall not  affect the  validity  of the Plan or any grants
     thereunder.

          (c) Except as  otherwise  provided  in Section  13, the Board may make
     such changes as may be necessary  or  appropriate  to comply with the rules
     and  regulations  of any  government  authority  or to obtain for  Eligible
     Employees  granted  Incentive  Stock  Options  the tax  benefits  under the
     applicable provisions of the Code and regulations promulgated thereunder.

          (d) Each Option and Award is subject to the  requirement  that,  if at
     any time the Committee  determines,  in its absolute  discretion,  that the
     listing,  registration or qualification of Shares issuable  pursuant to the
     Plan is required by any  securities  exchange or under any state or federal
     law,  or the consent or approval  of any  governmental  regulatory  body is
     necessary or desirable as a condition of, or in connection  with, the grant
     of an Option or the  issuance  of Shares,  no  Options  shall be granted or
     payment  made or  Shares  issued,  in  whole or in  part,  unless  listing,
     registration,  qualification,  consent or  approval  has been  effected  or
     obtained free of any conditions unacceptable to the Committee.

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

     17. Miscellaneous.

          (a) Multiple Agreements.  The terms of each Option or Award may differ
     from other Options or Awards granted under the Plan at the same time, or at
     some other time. The Committee may also grant more than one Option or Award
     to a given  Eligible  Employee  during  the  term of the  Plan,  either  in
     addition  to,  or in  substitution  for,  one or  more  Options  or  Awards
     previously granted to that Eligible Employee. The grant of multiple Options
     and/or  Awards  may  be  evidenced  by  a  single   Agreement  or  multiple
     Agreements, as determined by the Committee.

          (b)  Withholding of Taxes.  The Company shall have the right to deduct
     from any distribution of cash to any Optionee or Grantee an amount equal to
     the federal, state and local income taxes and other amounts required by law
     to be  withheld  with  respect  to any  Option  or  Award.  Notwithstanding
     anything to the  contrary  contained  herein,  if an Optionee or Grantee is
     entitled  to receive  Shares  upon  exercise of an Option or pursuant to an
     Award,  the  Company  shall  have the right to  require  such  Optionee  or
     Grantee,  prior to the delivery of such  Shares,  to pay to the Company the
     amount of any federal,  state or local income taxes and other amounts which
     the Company is required by law to withhold.  The Agreement  evidencing  any
     Incentive  Stock Options  granted under this Plan shall provide that if the
     Optionee makes a  disposition,  within the meaning of Section 425(c) of the
     Code and regulations promulgated thereunder,  of any Share or

                                       12
<PAGE>

     Shares  issued  to him  or her  pursuant  to  his  or her  exercise  of the
     Incentive  Stock Option  within the two-year  period  commencing on the day
     after  the date of grant of such  Option  or  within  the  one-year  period
     commencing  on the day after the date of transfer of the Share or Shares to
     the  Optionee  pursuant to the  exercise of such  Option,  he or she shall,
     within ten (10) days of such  disposition,  notify the Company  thereof and
     immediately  deliver  to the  Company  any  amount of  federal  income  tax
     withholding required by law.

          (c)  Designation of  Beneficiary.  Each Optionee and Grantee may, with
     the consent of the  Committee,  designate a person or persons to receive in
     the event of  his/her  death,  any  Option or Award or any  amount  payable
     pursuant thereto, to which he/she would then be entitled.  Such designation
     will be made upon forms supplied by and delivered to the Company and may be
     revoked in  writing.  If an  Optionee  fails  effectively  to  designate  a
     beneficiary, then his/her estate will be deemed to be the beneficiary.

     18. Effective Date. The effective date of the Plan shall be the date of its
adoption by the Board, subject only to the approval by the affirmative vote of a
majority  of the votes  cast at a meeting of  shareholders  at which a quorum is
present to be held within  twelve (12)  months of such  adoption.  No Options or
Awards shall vest hereunder unless such Shareholder approval is obtained.

                                       13

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