Document:

EXHIBIT 10.1

HARCOURT GENERAL, INC.

(Formerly GENERAL CINEMA CORPORATION)

1988 STOCK INCENTIVE PLAN

1.     Purposes of the Plan.

       The purposes of the 1988 Stock Incentive Plan are to provide a means to attract and retain competent personnel and to provide to participating officers and other key employees long-term
incentive for high levels of performance and for unusual efforts to improve the financial performance of the Company.  These purposes may be achieved through the grant of options to purchase Common Stock of General Cinema Corporation, the grant of Stock
Appreciation Rights, and the grant of other Stock-Based Awards, as described below.

2.     Definitions.

       (a)     "Affiliate" means any corporation or other entity which is not a parent or subsidiary corporation (as defined in Section 425 of the Code) and (i) with
respect to which the Company possesses a direct or indirect ownership interest in, and has the power to exercise management control over, such corporation or entity, or (ii) which possesses a direct or indirect ownership interest in, and has the power to
exercise management control over, the Company. 

       (b)     "Board" means the Board of Directors of General Cinema Corporation or the Executive Committee thereof.

       (c)     "Code" means the Internal Revenue Code of 1986, as it may be amended from time to time.

       (d)     "Committee" means the Compensation Committee of the Board, or any other committee the Board may subsequently appoint to administer the Plan, as herein defined.
The Committee shall be composed entirely of members of the Board who meet the requirements of Section 4(a) hereof.

       (e)     "Common Stock" means the common stock of the Company having a par value of $1.00 per share.

       (f)     "Company" means General Cinema Corporation, and any present or future parent or subsidiary corporations (as defined in Section 425 of the Code) or any successor
to such corporations.

       (g)     "Employee" means any employee of the Company or its Affiliates.

       (h)     "Fair Market Value" means the closing price of Common Stock as quoted on the Composite Tape as published in The Wall Street Journal on the date as of which the
fair market value is to be determined, or if there is no trading of Common Stock on such date, the closing price of Common Stock as quoted on such Composite Tape on the next preceding date on which there was trading in such shares.

       (i)     "Incentive Award" means a Stock Option, Stock Appreciation Right or Stock-Based Award granted under the Plan, as herein defined.

       (j)     "Incentive Stock Option" means a Stock Option that is intended to meet the requirements of Section 422A of the Code and regulations thereunder. 

       (k)    "Non-Qualified Stock Option" means a Stock Option other than an Incentive Stock Option. 

       (l)     "Participant" means any key Employee selected to receive an Incentive Award under the Plan.

       (m)     "Plan" means The General Cinema Corporation 1988 Stock Incentive Plan as set forth herein, as it may be amended from time to time.

       (n)     "Stock Appreciation Right" means the right to receive an amount up to the excess of the Fair Market Value of a share of Common Stock (as determined on the date
of exercise), over (i) if the Stock Appreciation 

Right is granted without relationship to a Stock Option, the Fair Market Value of a share of Common Stock on the date the Stock Appreciation Right was granted, or (ii) if the Stock Appreciation Right is related to a Stock Option, the
purchase price of a share of Common Stock specified in the related Stock Option.

       (o)     "Stock-Based Award" means any award granted under Section 8.

       (p)     "Stock Option" means a right to purchase Common Stock.

3.     Shares of Common Stock Subject to the Plan.

       (a)     Subject to the provisions of Section 3(c) and Section 9 of the Plan, the aggregate number of shares of Common Stock that may be issued or transferred pursuant to
Incentive Awards under the Plan will not exceed 2,500,000 shares.

       (b)     The Common Stock to be delivered under the Plan will be made available, at the discretion of the Board or the Committee, either from authorized but unissued
shares of Common Stock or from previously issued shares of Common Stock reacquired by the Company, including shares purchased on the open market.

       (c)     If any Incentive Award shall expire or terminate for any reason, without being exercised or paid, shares of Common Stock subject to such Incentive Award shall
again be available for grant under subsequent Incentive Awards.  Shares of Common Stock reserved for issuance upon payment of a Stock-Based Award when payment of the Stock-Based Award is made in cash shall be available for grant under subsequent Incentive
Awards.  Shares as to which a Stock Option has been surrendered in connection with the exercise of a related Stock Appreciation Right will not be available for grant under subsequent Incentive Awards.

      (d)     Subject to the general limitations contained in Sections 6, 7, 9 and 11, the Committee may make any adjustment in the exercise price, the number of shares subject to,
or the terms of, a Non-Qualified Stock Option or Stock Appreciation Right by cancellation of an outstanding Non-Qualified Stock Option or Stock Appreciation Right and a subsequent regranting of a Non-Qualified Stock Option or Stock Appreciation Right, by
amendment or by substitution of an outstanding Non-Qualified Stock Option or Stock Appreciation Right.  Such amendment, substitution, or regrant may result in an exercise price that is higher or lower than the exercise price of the Non-Qualified Stock
Option or Stock Appreciation Right, provide for a greater or lesser number of shares subject to the Non-Qualified Stock Option or Stock Appreciation Right, or provide for a longer or shorter term than the prior Non-Qualified Stock Option or Stock
Appreciation Right; provided, however, that the Committee may not adversely affect the rights of any Participant to previously granted Incentive Awards without the consent of such Participant.  If such action is effected by amendment, the effective date
of such amendment may be the date of the original grant.

4.     Administration of the Plan.

       (a)     The Plan will be administered by the Committee, which will consist of three or more persons (i) who are not eligible to receive Incentive Awards under the Plan,
and (ii) who have not been eligible within one year before appointment to the Committee, for selection as persons to whom Incentive Awards may be granted pursuant to the Plan, or to whom shares may be allocated or stock options, stock appreciation rights
or other stock-based awards may be granted pursuant to any other plan of the Company entitling the participants to acquire stock, stock appreciation rights, stock options or stock-based rights in the Company.

       (b)     The Committee has and may exercise such powers and authority of the Board as may be necessary or appropriate for the Committee to carry out its functions as
described in the Plan.  The Committee has authority in its discretion to determine the key Employees to whom and the time or times at which Incentive Awards may be granted or sold, to determine the number of shares of Common Stock, Stock Appreciation
Rights or the number and type of Stock-Based Awards that make up each Incentive Award and to grant Incentive Awards.  Each Incentive Award will be evidenced by a written instrument and may include any other terms and conditions consistent with the Plan,
as the Committee may determine.  The Committee also has authority to interpret the Plan, to determine the terms and provisions of the respective Incentive Award agreements and to make all other determinations necessary or advisable for Plan
administration.  The Committee has authority to prescribe, amend, and rescind rules and regulations relating to the Plan.  All interpretations, determinations and actions by the Committee will be final, conclusive and binding upon all parties. Any action
of the Committee with respect to the administration of the Plan shall be taken pursuant to a majority vote or by the unanimous written consent of its members.

       (c)     No member of the Board or the Committee and no Employee will be liable for any action taken, or determination or omission made, in good faith by the Board, the
Committee or any Employee with respect to the Plan or any Incentive Award granted under it.

5.     Participation.

       (a)     The Committee shall from time to time designate those key Employees, if any, to be granted Incentive Awards under the Plan, the type of awards granted, the
number of shares, options, rights or units, as the case may be, which shall be granted to each such Employee, and any other terms or conditions relating to the awards as it may deem appropriate, consistent with the provisions of the Plan.  Participants
may be designated at any time, and it shall not be necessary that all Participants be designated at the same meeting of the Committee. An individual who has been granted an Incentive Award may, if otherwise eligible, be granted additional Incentive Awards
if the Committee so determines. 

       (b)     No person will be eligible for the grant of any Incentive Stock Option who owns or would own immediately before the grant of such Stock Option, directly or
indirectly, stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company.  This restriction does not apply if, at the time such Incentive Stock Option is granted, the Incentive Stock Option exercise
price is at least 110% of the Fair Market Value on the date of grant and the Incentive Stock Option by its terms is not exercisable after the expiration of five years from the date of grant.

       (c)     In no event may any member of the Board who is not an officer or other Employee be granted an Incentive Award under the Plan. 

6.     Terms and Conditions of Stock Options. 

       (a)     Non-Qualified Stock Options may be granted to any key Employee selected by the Committee.  Incentive Stock Options may be granted only to key Employees of the
Company as selected by the Committee. 

       (b)     The purchase price of Common Stock under each Stock Option will be determined by the Committee, but may not be less than the Fair Market Value on the date of grant
 .

       (c)     Stock Options may be exercised as determined by the Committee but in no event after ten years from the date of grant in the case of Incentive Stock Options, or
after ten years and one day from the date of grant in the case of Non-Qualified Stock Options. 

       (d)     Upon the exercise of a Stock Option, the purchase price will be payable in full in cash or its equivalent acceptable to the Company.  To the extent provided by
the Stock Option, the purchase price may be paid by the assignment and delivery to the Company of shares of Common Stock or Series A Stock or a combination of cash and such shares equal in value to the exercise price.  Any shares so assigned and delivered
to the Company in payment or partial payment of the purchase price will be valued at their Fair Market Value on the exercise date. 

       (e)     Notwithstanding any other provision of the Plan, any Participant who disposes of shares of Common Stock acquired on the exercise of an Incentive Stock Option by
sale or exchange either (i) within two years after the date of the grant of the Stock Option under which the stock was acquired or (ii) within one year after the transfer of such shares to him pursuant to exercise shall notify the Company of such
disposition and of the amount realized and of his adjusted basis in such shares. 

       (f)     The Fair Market Value (determined at the time the Incentive Stock Option is granted) of the shares of Common Stock with respect to which an Incentive Stock
Option is exercisable for the first time by an Employee during any calendar year under this Plan or any other stock option plan of the Company will not exceed $100,000. 

       (g)     No fractional shares will be issued pursuant to the exercise of a Stock Option; payment for the fractional shares will be made in cash. 

       (h)     A Stock Option granted under this Plan shall, by its terms, be non-transferable by a Participant other than by will or the laws of descent and distribution, and
shall be exercisable during the Participant's lifetime solely by the Participant or the Participant's duly appointed guardian or personal representative. 

7.     Terms and Conditions of Stock Appreciation Rights. 

       (a)     A Stock Appreciation Right may be granted in connection with a Stock Option, either at the time of grant or at any time thereafter during the term of the Stock
Option, or may be granted unrelated to a Stock Option. 

       (b)     A Stock Appreciation Right related to a Stock Option shall require the holder, upon exercise, to surrender such Stock Option with respect to the number of shares
as to which such Stock Appreciation Right is exercised, in order to receive payment of an amount computed pursuant to Section 7(e).  Such Stock Option will, to the extent surrendered, then cease to be exercisable. 

       (c)     In the case of Stock Appreciation Rights granted in relation to Stock Options, if the Stock Appreciation Right covers as many shares as the related Stock Option,
the exercise of a related Stock Option shall cause the number of shares covered by the Stock Appreciation Right to be reduced by the number of shares with respect to which the related Stock Option is exercised.  If the Stock Appreciation Right covers
fewer shares than the related Stock Option, when a portion of the related Stock Option is exercised, the number of shares subject to the unexercised Stock Appreciation Right shall be reduced only to the extent necessary so that the number of remaining
shares subject to the Stock Appreciation Right is not more than the remaining shares subject to the Stock Option. 

       (d)     Subject to Section 7(k) and to such rules and restrictions as the Committee may, in its discretion and for any reason whatsoever, impose, a Stock Appreciation
Right granted in connection with a Stock Option will be exercisable at such time or times, and only to the extent that a related Stock Option is exercisable, and will not be transferable except to the extent that such related Stock Option may be
transferable. 

       (e)     Upon the exercise of a Stock Appreciation Right related to a Stock Option, the holder will be entitled to receive payment of an amount determined by multiplying:

               (i)     The difference obtained by subtracting the purchase price of a share of Common Stock specified in

                      the related Stock Option from the Fair Market Value of a share of Common Stock on the date of

                      exerciseof such Stock Appreciation Right, by

               (ii)    The number of shares as to which such Stock Appreciation Right will have been exercised.

       (f)     A Stock Appreciation Right granted without relationship to a Stock Option will be exercisable as determined by the Committee but in no event after ten years from
the date of grant. 

       (g)     A Stock Appreciation Right granted without relationship to a Stock Option will entitle the holder, upon exercise of the Stock Appreciation Right, to receive
payment of an amount determined by multiplying:

              (i)     The difference obtained by subtracting the Fair Market Value of a share of Common Stock on the date

                     the Stock Appreciation Right is granted from the Fair Market Value of a share of Common Stock on

                     the date of exercise of such Stock Appreciation Right, by 

              (ii)    The number of shares as to which such Stock Appreciation Right will have been exercised. 

       (h)     Notwithstanding subsections (e) and (g) above, the Committee may place a limitation on the amount payable upon exercise of a Stock Appreciation Right.  Any such
limitation must be determined as of the date of grant and noted on the instrument evidencing the Participant's Stock Appreciation Right granted hereunder. 

       (i)     Payment of the amount determined under subsections (e) and (g) above may be made solely in whole shares of Common Stock valued at their Fair Market Value on the
date of exercise of the Stock Appreciation Right or alternatively, in the sole discretion of the Committee, solely in cash or a combination of cash and shares as the Committee deems advisable.  If the Committee decides to make full payment in shares of
Common Stock, and the amount payable results in a fractional share, payment for the fractional share will be made in cash.

       (j)     A Stock Appreciation Right granted under this Plan shall, by its terms, be non-transferable by a Participant other than by will or the laws of descent and
distribution and shall be exercisable during the Participant's lifetime solely by the Participant or the Participant's duly appointed guardian or personal representative. 

       (k)     So long as required by the federal securities laws, no Stock Appreciation Right granted to an Employee subject to Section 16 of the Securities Exchange Act of
1934, as amended, may be exercised before six months after the date of grant except in the event death or disability of such employee occurs before the expiration of the six-month period; any exercise of a Stock Appreciation Right for cash will be made
only during the period beginning on the third business day following the date of release for publication of the Company's regular quarterly or annual summary statement of revenues and income (assuming such financial data appears on a wire service, in a
financial news service, or in a newspaper of general circulation, or is otherwise made publicly available) and ending on the twelfth business day following such date. 

       (l)     The Committee may impose such additional conditions or limitations on the exercise of a Stock Appreciation Right as it may deem necessary or desirable to secure
for holders of Stock Appreciation Rights the benefits of Rule 16b-3 promulgated under Section 16(b) of the Securities Exchange Act of 1934, as amended, or any successor provision in effect at the time of grant or exercise of a Stock Appreciation Right or
as it may otherwise deem advisable. 

       (m)     The Committee may, in its discretion, defer payment with respect to an exercise of a Stock Appreciation Right to some later time, but in no event later than 12
months after the exercise of the Stock Appreciation Right; provided, however, the Committee may not defer payment with respect to a Stock Appreciation Right which is related to an Incentive Stock Option.

8.     Stock-Based Awards

       The Committee may grant awards of shares, share units, or cash payments valued with reference to the Fair Market Value of Common Stock, including (without limitation) restricted shares,
restricted share units, performance shares, performance share units, and tax-offset payments.  Subject to the provisions of the Plan, the Committee shall have complete discretion to determine the terms and conditions applicable to such awards.  Such terms
and conditions may require, among other things, continued employment and/or attainment of specified performance objectives.  The Committee shall determine whether awards granted under this Section 8 shall be settled in cash, Common Stock or a combination
of cash and Common Stock. 

9.     Adjustment Provisions. 

       (a)     If the outstanding shares of Common Stock are increased, decreased or exchanged for a different number or kind of shares or other securities, or if additional
shares or new or different shares or other securities are distributed with respect to such shares of Common Stock or other securities, through merger, consolidation, sale of all or substantially all the property of the Company, reorganization,
recapitalization, reclassification, stock dividend, stock split, reverse stock split or other distribution with respect to such shares of Common Stock, or other securities, an appropriate and proportionate adjustment may be made in (i) the maximum  number
and kind of shares provided in Section 3, (ii) the number and kind of shares or other securities subject to the then-outstanding Incentive Awards, and (iii) the price for each share or other unit of any other securities subject to then-outstanding
Incentive Awards without change in the aggregate purchase price or value as to which such Incentive Awards remain exercisable or subject to restrictions. 

       (b)     Adjustments under paragraph (a) will be made by the Committee, whose determination as to what adjustments will be made and the extent thereof will be made and
the extent thereof will be final, binding, and conclusive.  No fractional interest will be issued under the Plan on account of any such adjustments.

       (c)     Notwithstanding anything to the contrary in this Plan, upon any Change of Control, any time periods, conditions or contingencies relating to the exercise or realization of, or
lapse of restrictions under, any Incentive Award shall be automatically accelerated or waived so that the Incentive Award may be immediately exercised or realized in full.

       A Change of Control means the occurrence of any of the following:

              (i)  any "person" or "group" (as described in the Securities Exchange Act of 1934, as amended) becomes or

              is the beneficial owner of 25% or more of the combined voting power of the then outstanding voting

              securities with respect to the election of the Board (counting each share of Class B Stock, par value $1.00 

              per share, of the Company (the "Class B Stock") as having ten votes per share), and also holds more of

              such combined voting power than any group or person who is the beneficial owner, on June 16, 2000, of

              over 20% of the combined voting power of the then outstanding voting securities with respect to the

              election of the Board.  "Person" does not include any Company employee benefit plan, any company the

              shares of which are held by the Company shareholders in substantially the same proportion as such

              shareholders held  the stock of the Company immediately prior to acquiring the shares of such company, or

              any testamentary  trust or estate;

              (ii)  any merger, consolidation, amalgamation, plan of arrangement, reorganization or similar transaction

               involving the Company, other than, in the case of any of the foregoing, a transaction in which the

               Company  shareholders immediately prior to the transaction hold immediately thereafter, in the same

               proportion as  immediately prior to the transaction, not less than 66 2/3% of the combined voting power of

               the then  outstanding voting securities with respect to the election of the board of directors of the resulting

               entity (it  being understood that if the Class B Stock shall remain outstanding following such transaction,

               each share of Class B Stock shall be counted as having ten votes per share for purposes of such

               calculation);

              (iii)  any change in a majority of the Board within a 24-month period unless the change was approved by a

               majority of the Incumbent Directors.  "Incumbent Director" means a member of the Board at the beginning 

              of the period in question, including any director who was not a member of the Board at the beginning of

              such period but was elected or nominated to the Board by, or on the recommendation of or with the 

              approval of, at least two-thirds of the directors who then qualified as Incumbent Directors (so long as such

              director was not nominated by a person who has expressed an intent to effect a Change of Control or 

              engage in a proxy or other control contest);

              (iv)  any liquidation or sale of all or substantially all of the assets of the Company; or

              (v)  any other transaction so denominated by the Board.

10.    General Provisions.

       (a)     Nothing in the Plan or in any instrument executed pursuant to the Plan will confer upon any Participant any right to continue in the employ of the Company or its
Affiliates or affect the right of the Company or its Affiliates to terminate the employment of any Participant at any time for any reason.

       (b)     No shares of Common Stock will be issued or transferred pursuant to an Incentive Award unless and until all then-applicable requirements imposed by federal and
state securities and other laws, rules and regulations and by any regulatory agencies having jurisdiction and by any stock exchanges upon which the Common Stock may be listed, have been fully met.  As a condition precedent to the issuance of shares
pursuant to the grant or exercise of an Incentive Award, the Company may require the Participant to take any reasonable action to meet such requirements.

       (c)     No Participant and no beneficiary or other person claiming under or through such Participant will have any right, title or interest in or to any shares of Common
Stock allocated or reserved under the Plan or subject to any Incentive Award except as to such shares of Common Stock, if any, that have been issued or transferred to such Participant, beneficiary or other person. 

       (d)     The Company may make such provisions as it deems appropriate to withhold any taxes the Company determines it is required to withhold in connection with any
Incentive Award.  The Company may require the Participants to satisfy any relevant tax requirements before authorizing any issuance of Common Stock to the Participant.

       The Committee may provide that, if and to the extent withholding of any federal, state or local tax is required in connection with the exercise of an option, the optionee may elect, at such time
and in such manner as the Committee shall prescribe, to have the Company hold back from the shares to be delivered stock having a value calculated to satisfy such withholding obligation.  Notwithstanding the foregoing, in the case of an optionee subject
to the reporting requirements of Section 16(a) of the Securities Exchange Act of 1934, no such election shall be effective unless made in compliance with any applicable requirements of Rule 16b-3(e) or any successor Rule under such Act.

       (e)     No Incentive Award and no right under the Plan, contingent or otherwise, will be assignable or subject to any encumbrance, pledge or charge of any nature except
that, under such rules and regulations as the Company may establish pursuant to the terms of the Plan, a beneficiary may be designated with respect to an Incentive Award in the event of death of a Participant.  If such beneficiary is the executor or
administrator of the estate of the Participant, any rights with respect to such incentive Award may be transferred to the person or persons or entity (including a trust) entitled thereto under the will of the holder of such Incentive Award.

       (f)     The Committee shall have sole discretion to determine the time or times and conditions under which Stock Options or Stock Appreciation Rights may be exercised
and, as provided in Section 8, the terms and conditions of Stock-Based Awards and the extent to which Participants or their beneficiaries may exercise Stock Appreciation Rights and receive payment with respect to, or otherwise obtain the benefits of
Stock-Based Awards upon any particular Participant's retirement, death or other termination of the Participant's employment with the Company or its Affiliates.  The provisions applicable to the Stock Options, Stock Appreciation Rights and/or Stock-Based
Awards of a particular Participant upon the Participant's termination of employment with the Company or its Affiliates will be set forth in each agreement under which an Incentive Award is made.

       (g)     (i)  If the Committee in its sole discretion determines that as a matter of law such procedure is or  may be

               desirable, it may require the Participant, on any exercise or payment of an Incentive Award, or any portion

               thereof, and as a condition to the Company's obligation to deliver to the Participant certificates

               representing shares of Common Stock, to execute and deliver to the Company a written statement, in form

               satisfactory to the Company, representing and warranting that his purchase or receipt of shares of Common

               Stock, is for his own account for investment and not with a view to resale or distribution thereof and that

               any subsequent sale or offer for sale of any of such shares shall be made pursuant to either (A) a

               Registration Statement on an appropriate form under the Securities Act of 1933, as amended, which has

               become effective and is current with respect to the shares being offered and sold or (B) a specific

               exemption from the registration requirements of the Securities Act, but in claiming such exemption the

               Participant shall, before any sale or offer for sale of such shares, obtain a favorable written opinion from

               counsel for or approved by the Company as to the availability of such exemption.

               (ii) The Company may endorse an appropriate legend referring to the foregoing restrictions or other

                restrictions which may be applied under the Plan on the certificate or certificates representing any shares

                of Common Stock issued or transferred to a Participant under any Incentive Award granted under the Plan.

       (h)     If at any time the Board shall determine in its discretion that the listing, registration or qualification of the shares of Common Stock covered by the Plan on
any national 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 to or in connection with the sale or transfer of shares of Common Stock under the
Plan, no shares will be delivered unless and until such listing, registration, qualification, consent or approval shall have been effected or obtained or otherwise provided for, free of any conditions not acceptable to the Board.

11.    Amendment and Termination of Plan; Amendment of Incentive Awards.

       (a)     The Board will have the power, in its discretion, to amend, suspend or terminate the Plan at any time.  No such amendment will, without approval of the
shareholders of the Company:

              (i)   Change the class of person eligible to receive Incentive Awards under the Plan;

              (ii)  Materially increase the benefits accruing to Participants under the Plan; 

              (iii) Increase the number of shares of Common Stock subject to the Plan; or

              (iv)  Transfer the administration of the Plan to any person who is not a "disinterested administrator" under Rule 16b.

       (b)     Except as otherwise provided by Section 3(d) and Section 9, the Committee may not, without the consent of a Participant, make modifications in the terms and
conditions of an Incentive Award which may adversely affect the Participant's Incentive Award. 

       (c)     No amendment, suspension or termination of the Plan will, without the consent of the Participant, alter, terminate, impair or adversely affect any right or
obligation under any Incentive Award previously granted under the Plan.

       (d)     The Committee may refrain from designating any Participants or may refrain from making any Incentive Awards, but such action shall not be deemed a termination of
the Plan.  No employee shall have any claim or right to be granted Incentive Awards under the Plan.

12.    Effective Date of Plan Duration of Plan.

The Plan will become effective upon adoption by the Board, subject to approval by the shareholders of General Cinema Corporation.  The Plan will terminate, unless sooner terminated under Section 11, on December 17, 1997, being the day
before the tenth anniversary of the day on which the Plan was adopted by the Board.EXHIBIT 10.2

HARCOURT GENERAL, INC.

1997 INCENTIVE PLAN

1.      DEFINED TERMS

Appendix A, which is incorporated by reference, defines the terms used in the Plan.

2.      IN GENERAL

The Plan has been established to advance the interests of the Company by giving selected Employees, directors and other persons (including both individuals and entities) who provide services to the Company or its Affiliates equity-based or cash
incentives through the grant of Awards. No Award may be granted under the Plan after December 31, 2006, but Awards previously granted may extend beyond that date.

3.     ADMINISTRATION

       The Administrator has discretionary authority, subject only to the express provisions of the Plan, to interpret the Plan; determine eligibility for and grant Awards; determine, modify or waive the terms and
conditions of any Award; prescribe forms, rules and procedures (which it may modify or waive); and otherwise do all things necessary to carry out the purposes of the Plan. Once an Award has been communicated in writing to a Participant, the Administrator
may not, without the Participant's consent, alter the terms of the Award so as to affect adversely the Participant's rights under the Award, unless the Administrator expressly reserved the right to do so. In the case of any Award intended to be eligible
for the performance-based compensation exception under Section 162(m)(4)(C) of the Code, the Committee shall exercise its discretion consistent with qualifying the Award for such exception.

4.     SHARES SUBJECT TO THE PLAN

       A.  A total of 4,000,000 shares of Stock have been reserved for issuance under the Plan. The following shares of Stock will also be available for future grants:
(i)  shares remaining under an Award that terminates without having been exercised in full (in the case of an Award requiring exercise by a Participant for delivery of Stock);

(ii)  shares subject to an Award, where cash is delivered to a Participant in lieu of such shares;

(iii)  shares of Restricted Stock that are forfeited to the Company;

(iv)  shares of Stock tendered by a Participant as payment upon exercise of an Award; and

(v)  shares of Stock held back by the Administrator, or tendered by a Participant, in satisfaction of tax withholding requirements. 

Stock delivered under the Plan may be authorized but unissued Stock or previously issued Stock acquired by the Company and held in treasury. No fractional shares of Stock will be delivered under the Plan.

       B.  The maximum number of shares for which Stock Options may be granted to any person over the life of the Plan shall be 1,500,000. The maximum number of shares subject to SARs granted to any person
over the life of the Plan shall likewise be 1,500,000. For purposes of the preceding two sentences, the repricing of a Stock Option or SAR shall be treated as a new grant to the extent required under Section 162(m) of the Code. The aggregate maximum
number of shares of Stock delivered to any person over the life of the Plan pursuant to Awards that are not Stock Options or SARs shall also be 1,500,000. Subject to these limitations, each person eligible to participate in the Plan shall be eligible in
any year to receive Awards covering up to the full number of shares then available for Awards under the Plan.

5.     ELIGIBILITY AND PARTICIPATION

       The Administrator will select Participants from among those key Employees, directors and other individuals or entities providing services to the Company or its Affiliates who, in the opinion of the
Administrator, are in a position to

[End Page]   2

make a significant contribution to the success of the Company and its Affiliates. Eligibility for ISOs is further limited to those individuals whose employment status would qualify them for the tax treatment described in Sections 421 and 422 of the Code.

6.     RULES APPLICABLE TO AWARDS

       A.  ALL AWARDS

       (1)  PERFORMANCE OBJECTIVES.  Where rights under an Award depend in whole or in part on attainment of performance objectives, actions by the Company that have an effect, however material, on such
performance objectives or on the likelihood that they will be achieved will not be deemed an amendment or alteration of the Award unless accomplished by a change in the express terms of the Award or other action that is without substantial consequence
except as it affects the Award

       (2)  ALTERNATIVE SETTLEMENT.  The Company retains the right at any time to extinguish rights under an Award in exchange for payment in cash, Stock (subject to the limitations of Section 4) or other
property on such terms as the Administrator determines, provided the holder of the Award consents to such exchange.

       (3)  TRANSFERABILITY OF AWARDS.  Except as the Administrator otherwise expressly provides, Awards (other than an Award in the form of an outright transfer of cash or Unrestricted Stock) may not be
transferred other than by will or by the laws of descent and distribution and, during a Participant's lifetime an Award requiring exercise may be exercised only by the Participant (or in the event of the Participant's incapacity, the person or persons
legally appointed to act on the Participant's behalf).

       (4)  VESTING, ETC.  The Administrator may determine the time or times at which an Award will vest (i.e., become free of restrictions) or become exercisable. Unless the Administrator expressly provides
otherwise, an Award requiring exercise will cease to be exercisable, and all other Awards to the extent not already fully vested will be forfeited, immediately upon the cessation (for any reason, including death) of the Participant's employment or other
service relationship with the Company and its Affiliates.

       (5) TAXES.  The Administrator will make such provision for the withholding of taxes as it deems necessary. The Administrator may, but need not, hold back shares from an Award or permit a Participant
to tender previously owned shares in satisfaction of tax withholding requirements.

       (6)  DIVIDEND EQUIVALENTS, ETC.  The Administrator may provide for the payment of amounts in lieu of dividends or other distributions with respect to Stock subject to an Award. 

       (7)  RIGHTS LIMITED.  Nothing in the Plan shall be construed as giving any person the right to continued employment or service with the Company or its Affiliates, nor any rights as a shareholder
except as to shares actually issued under the Plan. The loss of existing or potential profit in Awards will not constitute an element of damages in the event of termination of employment or service for any reason, even if the termination is in violation
of an obligation of the Company or Affiliate to the Participant.

       (8)  SECTION 162(M).  In the case of an Award intended to be eligible for the performance-based compensation exception under Section 162(m)(4)(C) of the Code, the Plan and such Award shall be
construed in a manner consistent with qualifying the Award for such exception. 

     B.  AWARDS REQUIRING EXERCISE

       (1) TIME AND MANNER OF EXERCISE.  Unless the Administrator expressly provides otherwise, (a) an Award requiring exercise by the holder will not be deemed to have been exercised until the Administrator receives
a written notice of exercise (in form acceptable to the Administrator) signed by the appropriate person and accompanied by any payment required under the Award; and (b) if the Award is exercised by any person other than the Participant, the Administrator
may require satisfactory evidence that the person exercising the Award has the

right to do so. 

       (2) PAYMENT OF EXERCISE PRICE, IF ANY.  Where the exercise of an Award is to be accompanied by payment, the Administrator may determine the required or permitted forms of payment either at or after the time of
the Award, subject to the following: (a) unless the Administrator expressly provides otherwise, all 

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payments will be by cash or check acceptable to the Administrator; and (b) where shares issued under an Award are part of an original issue of shares, the Award shall require an exercise price equal to at least the par value of such shares. 

       (3) RELOAD AWARDS.  The Administrator may provide that upon the exercise of an Award through the tender of previously owned shares of Stock, the Participant or other person exercising the Award will
automatically receive a new Award of like kind covering a number of shares determined by reference to the number of shares tendered in payment of the exercise price of the first Award. 

     C.  AWARDS NOT REQUIRING EXERCISE

     Awards of Restricted Stock and Unrestricted Stock may be made in return for either (i) services determined by the Administrator to have a value not less than the par value of the awarded shares, or (ii) cash or other
property having a value not less than the par value of the awarded shares plus such additional amounts (if any) as the Administrator may determine payable in such combination of cash, other property (of any kind) or services as the Administrator may
determine.

7.     EFFECT OF CERTAIN TRANSACTIONS

       A.  MERGERS, ETC.

       In the event of a consolidation or merger in which the Company is not the surviving corporation or which results in the acquisition of substantially all the Company's outstanding Stock by a single person or
entity or by a group of persons and/or entities acting in concert, or in the event of the sale or transfer of substantially all the Company's assets or a dissolution or liquidation of the Company (a "covered transaction"), all outstanding Awards requiring
exercise will cease to be exercisable, and all other Awards to the extent not fully vested (including Awards subject to performance conditions not yet satisfied or determined) will be forfeited, as of the effective time of the covered transaction. Prior
to such time the Administrator may (but need not) accelerate the vesting or exercisability of any Award or provide for substitute or replacement awards from the acquiring entity (if any). 

       B.  CHANGES IN AND DISTRIBUTIONS WITH RESPECT TO THE STOCK

       (1)  BASIC ANTIDILUTION PROVISIONS.  In the event of a stock dividend, stock split or combination of shares, recapitalization or other change in the Company's capital structure, the Administrator will
make appropriate adjustments to the maximum number of shares that may be delivered under the Plan under Section 4.a. and to the maximum share limits described in Section 4.b., and will also make appropriate adjustments to the number and kind of shares of
stock or securities subject to Awards then outstanding or subsequently granted, any exercise prices relating to Awards and any other provision of Awards affected by such change.

       (2)  CERTAIN OTHER ADJUSTMENTS.  The Administrator may also make adjustments of the type described in paragraph (1) above to take into account distributions to common stockholders other than stock
dividends or normal cash dividends, mergers, consolidations, acquisitions, dispositions or similar corporate transactions, or any other event, if the Administrator determines that adjustments are appropriate to avoid distortion in the operation of the
Plan and to preserve the value of Awards made hereunder; provided, that no such adjustment shall be made to the maximum share limits described in Section 4.b., or otherwise to an Award intended to be eligible for the performance-based exception under
Section 162(m)(4)(C) of the Code, except to the extent consistent with that exception.

     C.  CHANGE OF CONTROL

     Notwithstanding anything to the contrary in this Plan and unless specifically provided otherwise in an Award agreement, upon any Change of Control, any time periods, conditions or contingencies relating to the exercise or
realization of, or lapse of restrictions under, any Award shall be automatically accelerated or waived so that the Award may be immediately exercised or realized in full.

A Change of Control means the occurrence of any of the following:

      (i)  any "person" or "group" (as described in the Securities Exchange Act of 1934, as amended) becomes or is the beneficial owner of 25% or more of the combined voting power of the then outstanding voting
securities with respect to the election of the Board (counting each share of Class B Stock, par value $1.00 per share, of the Company (the "Class B Stock") as having ten votes per share), and also holds more of such combined voting power than any group or
person who is the beneficial owner, on June 16, 2000, of over 20% of the combined voting power of the then outstanding voting securities with respect to the election of the Board.  "Person" does not include any Company employee benefit plan, any company
the shares of which are held by the Company shareholders in substantially the same proportion as such shareholders held the stock of the Company immediately prior to acquiring the shares of such company, or any testamentary trust or estate;

      (ii)  any merger, consolidation, amalgamation, plan of arrangement, reorganization or similar transaction involving the Company, other than, in the case of any of the foregoing, a transaction in which the
Company shareholders immediately prior to the transaction hold immediately thereafter, in the same proportion as immediately prior to the transaction, not less than 66 2/3% of the combined voting power of the then outstanding voting securities with
respect to the election of the board of directors of the resulting entity (it being understood that if the Class B Stock shall remain outstanding following such transaction, each share of Class B Stock shall be counted as having ten votes per share for
purposes of such calculation);

       (iii)  any change in a majority of the Board within a 24-month period unless the change was approved by a majority of the Incumbent Directors.  "Incumbent Director" means a member of the Board at the
beginning of the period in question, including any director who was not a member of the Board at the beginning of such period but was elected or nominated to the Board by, or on the recommendation of or with the approval of, at least two-thirds of the
directors who then qualified as Incumbent Directors (so long as such director was not nominated by a person who has expressed an intent to effect a Change of Control or engage in a proxy or other control contest);

      (iv)  any liquidation or sale of all or substantially all of the assets of the Company; or

      (iv)  any other transaction so denominated by the Board."

8.     CONDITIONS ON DELIVERY OF STOCK

       The Company will not be obligated to deliver any shares of Stock pursuant to the Plan or to remove any restriction from shares previously delivered under the Plan until: the Company's counsel has approved all
legal matters in connection with the issuance and delivery of such shares; if the outstanding Stock is at the time listed on any stock exchange or national market system, the shares to be delivered have been listed or authorized to be listed on such
exchange or system upon official notice of notice of issuance; and all conditions of the Award have been satisfied or waived. If the sale of Stock has not been registered under the Securities Act of 1933, as amended, the Company may require, as a
condition to exercise of the Award, such 

[End Page]   4

representations or agreements as counsel for the Company may consider appropriate to avoid violation of such Act. The Company may require that certificates evidencing Stock issued under the Plan bear an appropriate legend reflecting any restriction on
transfer applicable to such Stock. 

9.     AMENDMENT AND TERMINATION

       Subject to the last sentence of Section 3, the Administrator may at any time or times amend the Plan or any outstanding Award for any purpose which may at the time be permitted by law, or may at any time terminate
the Plan as to any further grants of Awards, provided that (except to the extent expressly required or permitted by the Plan) no such amendment will, without the approval of the stockholders of the Company, effectuate a change for which stockholder
approval is required in order for the Plan to continue to qualify under Section 422 of the Code or for Awards to be eligible for the performance-based exception under Section 162(m)(4)(C) of the Code. 

10.    NON-LIMITATION OF THE COMPANY'S RIGHTS

       The existence of the Plan or the grant of any Award shall not in any way affect the Company's right to award a person bonuses or other compensation in addition to Awards under the Plan. 

11.    GOVERNING LAW

      The Plan shall be construed in accordance with the laws of The Commonwealth of Massachusetts.

[End Page]   5

 

APPENDIX A

DEFINITION OF TERMS

 

     The following terms, when used in the Plan, shall have the meanings and be subject to the provisions set forth below:

     "ADMINISTRATOR":  The Committee, if one has been appointed; otherwise the Board.

     "AFFILIATE":  Any corporation or other entity owning, directly or indirectly, 50% or more of the outstanding Stock of the Company, or in which the Company or any such corporation or other entity owns, directly or
indirectly, 50% of the outstanding capital stock (determined by aggregate voting rights) or other voting interests.

     "AWARD":  Any of the following:

(i)      Options ("Stock Options") entitling the recipient to acquire shares of Stock upon payment of the exercise price. Each Stock Option (except as otherwise expressly provided by the Committee consistent with continued
qualification of the Stock Option as a performance-based award for purposes of Section 162(m) of the Code, or unless the Committee expressly determines that such Stock Option is not subject to Section 162(m) of the Code or that the Stock Option is not
intended to qualify for the performance-based exception under Section 162(m) of the Code) will have an exercise price not less than the fair market value of the Stock subject to the option, determined as of the date of grant, except that an ISO granted to
an Employee described in Section 422(b)(6) of the Code will have an exercise price not less than 110% of such fair market value. The Administrator will determine the medium in which the exercise price is to be paid, the duration of the option, the time or
times at which an option will become exercisable, provisions for continuation (if any) of option rights following termination of the Participant's employment with the Company and its Affiliates, and all other terms of the Option. No Stock Option awarded
under the Plan will be an ISO unless the Administrator expressly provides for ISO treatment.

(ii)      Rights ("SARs") entitling the holder upon exercise to receive cash or Stock, as the Administrator determines, equal to a function (determined by the Administrator using such factors as it deems appropriate) of the
amount by which the Stock has appreciated in value since the date of the Award.

(iii)     Stock subject to restrictions ("Restricted Stock") under the Plan requiring that the Stock be redelivered to the Company if specified conditions are not satisfied. The conditions to be satisfied in connection with any
Award of Restricted Stock, the terms on which such Stock must be redelivered to the Company, the purchase price of such Stock, and all other terms shall be determined by the Administrator. 

(iv)     Stock not subject to any restrictions under the Plan  ("Unrestricted Stock").

(v)     A promise to deliver Stock or other securities in the future on  such terms and conditions as the Administrator determines.

(vi)     Securities (other than Stock Options) that are convertible into or exchangeable for Stock on such terms and conditions as the Administrator determines.

(vii)     Cash bonuses tied to performance criteria as described at (viii) below ("Cash Performance Awards").

(viii)    Awards described in any of (i) through (vii) above where the right to exercisability, vesting or full enjoyment of the Award is conditioned in whole or in part on the satisfaction of specified performance criteria
("Performance Awards"). The Committee in its discretion may grant Performance Awards that are intended to qualify for the performance-based compensation exception under Section 162(m)(4)(C) of the Code and Performance Awards that are not intended so to
qualify. No more than $3,500,000 may be paid to any individual with respect to any Cash Performance Award. In applying the limitation of the 

[End Page]   6

preceding sentence: (A) multiple Cash Performance Awards to the same individual that are determined by reference to performance periods of one year or less ending with or within the same fiscal year of the Company shall be subject in the aggregate to
one $3,500,000 limit, and (B) multiple Cash Performance Awards to the same individual that are determined by reference to one or more multi-year performance periods ending in the same fiscal year of the Company shall be subject in the aggregate to a
separate limit of $3,500,000. With respect to any Performance Award other than a Cash Performance Award, Stock Option or SAR, the maximum award opportunity shall be 1,500,000 shares or their equivalent value in cash, subject to the limitations of Section
4.b. For the avoidance of doubt, any Performance Award of a type described in (i) through (vi) above shall be treated for purposes of this paragraph as a Performance Award that is not a Cash  Performance Award, even if payment is made in cash.

In the case of a Performance Award intended to qualify as performance-based for the purposes of Section 162(m) of the Code, the Committee shall in writing preestablish a specific performance goal (based solely on one or more qualified performance
criteria) no later than 90 days after the commencement of the period of service to which the performance relates (or at such earlier time as is required to qualify the award as performance-based under Code Section 162(m)(4)(C)). For purposes of the Plan,
a qualified performance criterion is any of the following: (1) earnings or earnings per share (whether on a pre-tax, after-tax, operational or other basis), (2) return on equity, (3) return on assets, (4) revenues, (5) sales, (6) expenses, (7) one or more
operating ratios, (8) stock price, (9) stockholder return, (10) market share, (11) cash flow, (12) inventory levels or inventory turn, (13) capital expenditures, (14) net borrowing, debt leverage levels or credit quality, (15) the accomplishment of
mergers, acquisitions, dispositions, public offerings or similar extraordinary business transactions or (16) any combination of the foregoing. The performance goals selected in any case need not be applicable across the Company, but may be particular to
an individual's function or business unit. Prior to payment of any Performance Award intended to qualify as performance-based under Section 162(m)(4)(C) of the Code, the Committee shall certify whether the performance goal has been attained and such
determination shall be final and conclusive. If the performance goal is not attained, no other Award shall be provided in substitution of the Performance Award.

(ix)    Grants of cash, or loans, made in connection with other Awards in order to help defray in whole or in part the economic cost (including tax cost) of the Award to the Participant. The terms of any such grant or loan shall be
determined by the Administrator.  Awards may be combined in the Administrator's discretion.

      "BOARD":  The Board of Directors of the Company.

      "CODE":  The U.S. Internal Revenue Code of 1986, as from time to time amended and in effect.

      "COMMITTEE":  A committee of the Board comprised solely of two or more outside directors within the meaning of Section 162(m) of the Code. The Committee may delegate ministerial tasks to such persons (including
Employees) as it deems appropriate.

      "COMPANY":  Harcourt General, Inc.

      "EMPLOYEE":  Any person who is employed by the Company or an Affiliate.

      "ISO":  A Stock Option intended to be an "incentive stock option" within the meaning of Section 422 of the Code.

      "PARTICIPANT":  An Employee, director or other person providing services to the Company or its Affiliates who is granted an Award under the Plan.

      "PLAN":  Harcourt General, Inc. 1997 Incentive Plan as from time to time amended and in effect.

      "STOCK":  Common Stock of the Company, par value $1.00 per share.

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