INTERSTATE BAKERIES CORPORATION
                         1996 STOCK INCENTIVE PLAN
 
 
                             TABLE OF CONTENTS
 
                                                                        PAGE
 
ARTICLE I  PURPOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
     1.1  Purpose. . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
     1.2  Establishment. . . . . . . . . . . . . . . . . . . . . . . . . .1
 
ARTICLE II  DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . .1
     2.1  Award. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
     2.2  Award Notice . . . . . . . . . . . . . . . . . . . . . . . . . .1
     2.3  Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
     2.4  Change of Control Event. . . . . . . . . . . . . . . . . . . . .2
     2.5  Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
     2.6  Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . .2
     2.7  Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . .3
     2.8  Corporation. . . . . . . . . . . . . . . . . . . . . . . . . . .3
     2.9  Date of Grant. . . . . . . . . . . . . . . . . . . . . . . . . .3
     2.10 Director Options . . . . . . . . . . . . . . . . . . . . . . . .3
     2.11 Director Awards. . . . . . . . . . . . . . . . . . . . . . . . .3
     2.12 Eligible Employee. . . . . . . . . . . . . . . . . . . . . . . .3
     2.13 Employee Director. . . . . . . . . . . . . . . . . . . . . . . .3
     2.14 Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . .3
     2.15 Fair Market Value. . . . . . . . . . . . . . . . . . . . . . . .3
     2.16 Incentive Stock Option . . . . . . . . . . . . . . . . . . . . .3
     2.17 Non-Employee Directors . . . . . . . . . . . . . . . . . . . . .3
     2.18 Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3
     2.19 Other Incentive Award. . . . . . . . . . . . . . . . . . . . . .3
     2.20 Participant. . . . . . . . . . . . . . . . . . . . . . . . . . .4
     2.21 Performance Share Award. . . . . . . . . . . . . . . . . . . . .4
     2.22 Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
     2.23 Restricted Stock Award . . . . . . . . . . . . . . . . . . . . .4
     2.24 Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . .4
 
ARTICLE III  ADMINISTRATION. . . . . . . . . . . . . . . . . . . . . . . .4
     3.1  Administration by Committee. . . . . . . . . . . . . . . . . . .4
     3.2  Committee to Make Rules and Interpret Plan . . . . . . . . . . .5
     3.3  Committee Members Ineligible . . . . . . . . . . . . . . . . . .5
 
ARTICLE IV  GRANT OF AWARDS; SHARES
     SUBJECT TO THE PLAN . . . . . . . . . . . . . . . . . . . . . . . . .5
 
ARTICLE V  ELIGIBILITY . . . . . . . . . . . . . . . . . . . . . . . . . .6
 
ARTICLE VI  STOCK OPTIONS. . . . . . . . . . . . . . . . . . . . . . . . .6
     6.1  Grant of Options . . . . . . . . . . . . . . . . . . . . . . . .6
     6.2  Conditions of Options. . . . . . . . . . . . . . . . . . . . . .7
     6.3  Options to Non-Employee Directors. . . . . . . . . . . . . . . .8
 
ARTICLE VII  PERFORMANCE SHARE AWARDS. . . . . . . . . . . . . . . . . . .9
     7.1  Grant of Performance Shares. . . . . . . . . . . . . . . . . . .9
     7.2  Conditions of Performance Share Awards . . . . . . . . . . . . .9
 
<PAGE>
 
ARTICLE VIII  RESTRICTED STOCK AWARDS. . . . . . . . . . . . . . . . . . 10
     8.1  Grant of Restricted Stock Awards . . . . . . . . . . . . . . . 10
     8.2  Conditions of Restricted Stock Awards. . . . . . . . . . . . . 11
 
ARTICLE IX  OTHER INCENTIVE AWARDS . . . . . . . . . . . . . . . . . . . 11
     9.1  Grant of Other Incentive Awards. . . . . . . . . . . . . . . . 11
     9.2  Conditions of Other Incentive Awards . . . . . . . . . . . . . 11
 
ARTICLE X  NON-EMPLOYEE DIRECTOR AWARDS. . . . . . . . . . . . . . . . . 12
     10.1 Awards to Non-Employee Directors . . . . . . . . . . . . . . . 12
     10.2 Common Stock in Lieu of Retainer . . . . . . . . . . . . . . . 12
 
ARTICLE XI  STOCK ADJUSTMENTS. . . . . . . . . . . . . . . . . . . . . . 12
 
ARTICLE XII  GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . 13
     12.1 Amendment or Termination of Plan . . . . . . . . . . . . . . . 13
     12.2 Dividends and Dividend Equivalents . . . . . . . . . . . . . . 14
     12.3 Termination of Employment. . . . . . . . . . . . . . . . . . . 14
     12.4 Withholding Taxes. . . . . . . . . . . . . . . . . . . . . . . 14
     12.5 Forfeiture . . . . . . . . . . . . . . . . . . . . . . . . . . 15
     12.6 Change of Control. . . . . . . . . . . . . . . . . . . . . . . 15
     12.7 Amendments to Awards . . . . . . . . . . . . . . . . . . . . . 15
     12.8 Regulatory Approval and Listings . . . . . . . . . . . . . . . 15
     12.9 Right to Continued Employment. . . . . . . . . . . . . . . . . 15
     12.10     Beneficiaries . . . . . . . . . . . . . . . . . . . . . . 16
     12.11     Indemnification . . . . . . . . . . . . . . . . . . . . . 16
     12.12     Reliance on Reports . . . . . . . . . . . . . . . . . . . 16
     12.13     Relationship to Other Benefits. . . . . . . . . . . . . . 16
     12.14     Compliance with the Exchange Act. . . . . . . . . . . . . 17
     12.15     Expenses. . . . . . . . . . . . . . . . . . . . . . . . . 17
     12.16     Construction. . . . . . . . . . . . . . . . . . . . . . . 17
     12.17     Governing Law . . . . . . . . . . . . . . . . . . . . . . 17
 
<PAGE>
 
                       INTERSTATE BAKERIES CORPORATION
                         1996 STOCK INCENTIVE PLAN
 
                                 ARTICLE I
 
                                  PURPOSE
 
     1.1  Purpose.  The Plan is designed to enable Employee-Directors, Non-
Employee Directors, executive officers and employees of the Corporation to
acquire or increase their equity interests in the Corporation on such
reasonable terms as the Board or the Committee shall determine.  The
opportunity so provided is intended to foster in participants a strong
incentive to put forth maximum effort for the continued success and growth of
the Corporation, to aid in retaining individuals who put forth such efforts,
and to assist in attracting the best available individuals in the future.  So
that the appropriate incentive can be provided, the Plan provides for granting
(i) Stock Options, Restricted Stock Awards, Performance Shares, and/or Other
Incentive Awards to employees of the Corporation and its Subsidiaries on the
terms and subject to the conditions set forth in the Plan, and (ii) Director
Options and Director Awards to Non-Employee Directors of the Company as
approved by the Board.
 
     1.2  Establishment.  The Plan is effective as of the date it is
approved by the shareholders of the Corporation (the "Effective Date"), and
subject to the provisions of Section 12.1, Awards may be granted hereunder for
a period of ten years after such date.
     
     The Plan shall continue in effect until all matters relating to the
payment of awards and administration of the Plan have been settled.
 
                                ARTICLE II
 
                                DEFINITIONS
 
     2.1  "Award" means, individually, collectively or in tandem, any
Option, Restricted Stock Award, Performance Share Award, or Other Incentive
Award granted under the Plan by the Committee pursuant to such terms,
conditions, restrictions, and/or limitations, if any, as the Committee (or the
Board, with respect to Director Options and Director Awards) may establish by
an Award Notice or otherwise.
 
     2.2  "Award Notice" means any written instrument that establishes the
terms, conditions, restrictions, and/or limitations applicable to an Award in
addition to those established by this Plan and by the Committee's exercise of
its administrative powers.
 
     2.3  "Board" means the Board of Directors of the Corporation.
 
     2.4  "Change of Control Event" means each of the following:
 
          (a)  any person or entity is or becomes the beneficial owner (as
     defined in the Exchange Act), directly or indirectly, of securities of
     the Corporation (excluding securities acquired directly from the      
     Corporation or its affiliates) representing 25% or more of the combined
     voting power of the Corporation's then outstanding securities (other
     than any beneficial owner of such percentage or more of such voting
     power existing as of the Effective Date); or 
<PAGE>
          (b)  during any period of two consecutive years (not including
     any period prior to the Effective Date of the Plan), individuals who at
     the beginning of such period constitute the Board, and any new director
     (other than a director designated by a person or entity who has entered
     into an agreement with the Corporation to effect a transaction described
     in clause (a), (c) or (d) of this paragraph) whose election by the Board
     or nomination for election by the Corporation's shareholders was      
     approved by a vote of at least two-thirds of the directors then still in
     office who either were directors at the beginning of the period or whose
     election or nomination for election was previously approved, cease for
     any reason to constitute a majority thereof; or
 
          (c)  the shareholders of the Corporation approve a merger or
     consolidation of the Corporation with any other corporation, other than
     (i) a merger or consolidation which would result in the voting   
     securities of the Corporation outstanding immediately prior thereto
     continuing to represent (either by remaining outstanding or by being
     converted into voting securities of the surviving entity), in    
     combination with the ownership of any trustee or other fiduciary holding
     securities under an employee benefit plan of the Corporation, at least
     75% of the combined voting power of the voting securities of the      
     Corporation or such surviving entity outstanding immediately after such
     merger or consolidation, or (ii) a merger or consolidation effected to
     implement a recapitalization of the Corporation (or similar transaction)
     in which no person or entity acquires more than 50% of the combined
     voting power of the Corporation's then outstanding securities; or 
 
          (d)  the shareholders of the Corporation approve a plan of
     complete liquidation of the Corporation or an agreement for the sale or
     disposition by the Corporation of all or substantially all the   
     Corporation's assets.
 
     2.5  "Code" means the Internal Revenue Code of 1986, as amended. 
Reference in the Plan to any section of the Code shall be deemed to include
any amendments or successor provisions to such section and any regulations
under such section.
 
     2.6  "Committee" means the Compensation Committee of the Board, or such
other committee designated by the Board, authorized to administer the Plan
under Article III hereof.  The Committee shall consist of not less than two
members, each of whom is a Non-Employee Director within the meaning of Rule
16b-3 promulgated under Section 16 of the Exchange Act.
 
                                    2
 
     2.7  "Common Stock" means the common stock, par value $0.01 per share,
of the Corporation, and after substitution, such other stock as shall be
substituted therefor as provided in Article XI.
 
     2.8  "Corporation" means Interstate Bakeries Corporation.
 
     2.9  "Date of Grant" means the date on which the granting of an Award
is authorized or such later date as may be specified in such authorization.
 
     2.10 "Director Options" means non-qualified Options awarded under
Section 6.3 of the Plan.
 
<PAGE>
 
     2.11 "Director Awards" means an Award granted or Common Stock issued
under Article X of the Plan.
 
     2.12 "Eligible Employee" means any employee of the Corporation or a
Subsidiary who satisfies all of the requirements of Article V.
 
     2.13 "Employee Director" shall mean a director of the Corporation who
is not a Non-Employee Director.
 
     2.14 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
 
     2.15 "Fair Market Value" means the closing sales price of the Common
Stock on the New York Stock Exchange (or such other exchange that the Common
Stock is then traded) on the day for which such value is to be determined, or
if no sale of the Common Stock shall have been made on such exchange that day,
on the next preceding day on which there was a sale of such Common Stock.
 
     2.16 "Incentive Stock Option" means an Option meeting the requirements
of Section 422 of the Code.
 
     2.17 "Non-Employee Directors" means a director who is not, at the time
of determination of such status, an officer or otherwise employed by the
Corporation, or a subsidiary of the Corporation, does not receive compensation
directly or indirectly from the Corporation or a subsidiary of the
Corporation, for services rendered as a consultant or in any capacity other
than as a director, except for an amount for which disclosure would not be
required pursuant to Item 404(a) of Regulation S-K; does not possess an
interest in any other transactions for which disclosure would be required
pursuant to Item 404(a) of Regulation S-K; and is not engaged in a business
relationship for which disclosure would be required pursuant to Item 404(b) of
Regulation S-K.
 
     2.18 "Option" means an Award granted under Article VI of the Plan and
includes both non-qualified Options and Incentive Stock Options.
 
     2.19 "Other Incentive Award" means an Award granted under Article IX of
the Plan.
 
                                    3
 
     2.20 "Participant" means an Eligible Employee of the Corporation or a
Subsidiary to whom an Award has been granted by the Committee under this Plan.
 
     2.21 "Performance Share Award" means an Award granted under Article VII
of the Plan.
 
     2.22 "Plan" means the Interstate Bakeries Corporation 1996 Stock
Incentive Plan.
 
     2.23 "Restricted Stock Award" means an Award granted under Article VIII
of the Plan.
 
     2.24 "Subsidiary" means any corporation of which a majority of the
outstanding voting stock or voting power is beneficially owned directly or
indirectly by the Corporation.
 
<PAGE>
 
                               ARTICLE III
 
                              ADMINISTRATION
 
     3.1  Administration by Committee.  The Committee shall administer the
Plan, provided that any Director Options or Director Awards shall be approved
by the Board (with the director being granted such Director Option or Director
Awards abstaining from any approval thereof).  Unless otherwise provided in
the bylaws of the Corporation or the resolutions adopted from time to time by
the Board establishing the Committee, the Board may from time to time remove
members from, or add members to, the Committee; vacancies on the Committee,
howsoever caused, shall be filled by the Board.  The Committee shall designate
one of its members as Chairman.  It shall hold its meetings at such times and
places as it may determine.  A majority of its members shall constitute a
quorum, and all determinations of the Committee shall be made by a majority of
its members at the time in office.  Any determination reduced to writing and
signed by all members shall be fully as effective as if it had been made by a
majority vote at a meeting duly called and held.  The Committee may appoint a
Secretary, who need not be a member of the Committee, and may establish and
amend such rules and regulations for the conduct of its business as it shall
deem advisable.
 
     Subject to the provisions of the Plan, the Committee shall have the
power to:
 
          (a)  Select the Eligible Employees to participate in the Plan.
 
          (b)  Determine the time or times when Awards will be made.
 
          (c)  Determine the form of an Award, whether a Stock Option, a
     Restricted Stock Award, a Performance Share Award, or Other Incentive
     Award, the number of shares of Common Stock subject to the Award or with
     reference to which the Award is determined, all the terms, conditions
     (including performance requirements), restrictions and/or limitations,
     if any, of an Award, including the time and conditions of exercise or
     vesting, and the terms of any Award Notice, which may include the waiver 
     or amendment of prior terms and conditions or acceleration or early 
 
                                    4
 
     vesting or payment of an Award under certain circumstances determined by
     the Committee.
 
          (d)  Determine whether Awards will be granted singly, in
     combination or in tandem.
 
          (e)  Grant waivers of Plan terms, conditions, restrictions and
     limitations.
 
          (f)  Accelerate the vesting, exercise, or payment of an Award or
     the performance period of an Award when such action or actions would be
     in the best interest of the Corporation.
 
          (g)  Take any and all other action it deems necessary or
     advisable for the proper operation or administration of the Plan.
 
<PAGE>
 
     The Committee shall also have the authority to grant Awards in
replacement of Awards previously granted under this Plan or any other
executive compensation plan of the Corporation or a Subsidiary.
 
     3.2  Committee to Make Rules and Interpret Plan.  The Committee shall
have the authority, subject to the provisions of the Plan, to establish,
adopt, or revise such rules and regulations and to make all such
determinations relating to the Plan as it may deem necessary or advisable for
the administration of the Plan.  The Committee's interpretation of the Plan or
any Awards granted pursuant thereto and all decisions and determinations by
the Committee with respect to the Plan shall be final, binding, and conclusive
on all parties unless otherwise determined by the Board.
 
     3.3  Committee Members Ineligible.  No Committee member shall be
eligible to participate in the Plan except to the extent set forth in Sections
6.3 and Article X.
 
 
                                ARTICLE IV
 
                          GRANT OF AWARDS; SHARES
                            SUBJECT TO THE PLAN
 
     Awards to one or more Eligible Employees and Non-Employee Directors may
be made; provided, however, that:
 
          (a)  Subject to Article XI, an aggregate of 6,841,500 shares of
     Common Stock are hereby reserved for use in connection with Awards under
     the Plan, which amount shall be the maximum number of shares with
     respect to which Options may be granted to any one employee during the
     term of the Plan.
 
                                    5
 
          (b)  Any Awards which terminate by expiration, forfeiture,
     cancellation, or otherwise without the issuance of shares of Common
     Stock, are settled in cash in lieu of Common Stock, or are exchanged in
     the Committee's discretion for Awards not involving Common Stock, shall
     be available again for grant under the Plan, so long as the holder of
     any such Award received no benefits of Common Stock ownership (including
     but not limited to dividends) from the shares of Common Stock related to
     such Award.
 
          (c)  Any shares of Common Stock issued by the Corporation through
     the assumption or substitution of outstanding grants from an acquired
     company shall reduce the shares available for grants under the Plan.  
 
          (d)  Common Stock delivered by the Corporation in payment of any
     Award under the Plan may be authorized and unissued Common Stock or
     Common Stock held in the treasury of the Corporation or may be purchased
     on the open market or by private purchase.
 
          (e)  The Committee shall, in its sole discretion, determine the
     manner in which fractional shares arising under this Plan shall be
     treated.
 
<PAGE>
 
                                 ARTICLE V
 
                                ELIGIBILITY
 
     Awards may be granted under the Plan to any employee of the Corporation
or a Subsidiary.  Officers shall be employees for this purpose, whether or not
they are also directors.  Awards may also be granted to Non-Employee
Directors, but only in the manner and to the extent set forth in Sections 6.3
and Article X hereof.  Awards may be granted to Eligible Employees whether or
not they have received prior Awards under the Plan or under any previously
adopted plan, and whether or not they are participants in other benefit plans
of the Corporation.
 
     Subject to the provisions of the Plan, the Committee shall, from time to
time, select from the Eligible Employees those to whom Awards shall be granted
and shall determine the type or types of Awards to be made and shall establish
in the related Award Notices the terms, conditions, restrictions and/or
limitations, if any, applicable to the Awards in addition to those set forth
in the Plan and the administrative rules and regulations issued by the
Committee.
 
 
                                ARTICLE VI
 
                               STOCK OPTIONS
 
     6.1  Grant of Options.  The Committee may, from time to time, subject
to the provisions of the Plan and such other terms and conditions as it may
determine, grant Options to Eligible Employees.  These Options may be
Incentive Stock Options or non-qualified Options, or a combination of both.  
 
                                    6
 
Each grant of an Option shall be evidenced by an Award Notice executed by the
Corporation and the Participant, and shall contain such terms and conditions
and be in such form as the Committee may from time to time approve, subject to
the requirements of Section 6.2.
 
     6.2  Conditions of Options.  Each Option so granted shall be subject to
the following conditions:
 
          (a)  Exercise price.  As limited by Section 6.2(e) below, each
     Option shall state the exercise price which shall be set by the
     Committee at the Date of Grant, which price shall not be less than 100%
     of the Fair Market Value of the Common Stock on the Date of Grant. 
 
          (b)  Form of payment.  The exercise price of an Option may be
     paid: (i) in cash or by check, bank draft or money order payable to the
     order of the Corporation; (ii) in shares of Common Stock; (iii) a
     combination of the foregoing; or (iv) such other consideration as the
     Committee may deem appropriate.  In addition to the foregoing, subject
     to the discretion of the Committee, any Option granted under the Plan
     may be exercised by a broker-dealer acting on behalf of a Participant if
     (A) the broker-dealer has received from the Participant or the
     Corporation a fully- and duly-endorsed agreement evidencing such Option
     and instructions signed by the Participant requesting the Corporation to
 
<PAGE>
 
     deliver the shares of Common Stock subject to such Option to the broker-
     dealer on behalf of the Participant and specifying the account into
     which such shares should be deposited, (B) adequate provision has been
     made with respect to the payment of any withholding taxes due upon such
     exercise, and (C) the broker-dealer and the Participant have otherwise
     complied with Section 220.3(e)(4) of Regulation T, 12 CFR, Part 220 and
     any successor rules and regulations applicable to such exercise
     ("Cashless Exercise").  The Committee shall establish appropriate
     methods for accepting Common Stock, and may impose such conditions as it
     deems appropriate on the use of such Common Stock in payment of the
     exercise price.  Common Stock used to exercise an Option shall be valued
     at its then Fair Market Value.
     
          (c)  Exercise of Options.  Options granted under the Plan shall
     be exercisable, in whole or in installments, and at such times, and
     shall expire at such time, as shall be provided by the Committee in the
     Award Notice.  Exercise of an Option shall be by written notice stating
     the election to exercise in the form and manner determined by the
     Committee.  Every share of Common Stock acquired through the exercise of
     an Option shall be deemed to be fully paid at the time of exercise and
     payment of the exercise price.
 
          (d)  Other terms and conditions.  Among other conditions that may
     be imposed by the Committee, if deemed appropriate, are those relating
     to: (i) the period or periods and the conditions of exercisability of
     any Option; (ii) the minimum periods during which Participants must be
     employed by the Corporation or its Subsidiaries, or must hold Options
     before they may be exercised; (iii) the minimum periods during which
     shares acquired upon exercise must be held before sale or transfer shall
     be permitted; (iv) conditions under which such Options or shares may be
     subject to forfeiture; (v) restrictions on transferability; and (vi) the
     frequency of exercise or the minimum or maximum number of shares that
     may be acquired at any one time.
 
                                    7
 
          (e)  Special restrictions relating to Incentive Stock Options. 
     Options issued in the form of Incentive Stock Options shall, in addition
     to being subject to all applicable terms, conditions, restrictions
     and/or limitations established by the Committee, comply with the
     requirements of Section 422 of the Code (or any successor section
     thereto), including, without limitation, the requirement that the
     exercise price of an Incentive Stock Option not be less than 100% of the
     Fair Market Value of the Common Stock on the Date of Grant, the
     requirement that each Incentive Stock Option, unless sooner exercised,
     terminated, or canceled, expire no later than ten years from its Date of
     Grant, and the requirement that the aggregate Fair Market Value
     (determined on the Date of Grant) of the Common Stock with respect to
     which Incentive Stock Options are exercisable for the first time by a
     Participant during any calendar year (under this Plan or any other Plan
     of the Corporation or any Subsidiary) not exceed $100,000.
 
          (f)  Application of funds.  The proceeds received by the
     Corporation from the sale of Common Stock pursuant to Options will be
     used for general corporate purposes.
 
<PAGE>
 
     6.3  Options to Non-Employee Directors.  
 
          (a)  Special restrictions relating to Incentive Stock Options. 
     Notwithstanding any other provision herein, no Options shall be granted
     hereunder to Non-Employee Directors other than the Director Options
     granted pursuant to this Section 6.3.  Director Options may be awarded
     at the discretion and with the approval of the Board with the recipient
     of such Award abstaining from the vote.  Such Director Options shall be
     granted at such time, in such number and with such restrictions as
     determined by the Board.
 
          (b)  Special restrictions relating to Incentive Stock Options. 
     Each Director Option shall be evidenced by an Award Notice executed by
     the Corporation and the Non-Employee Director, and shall include the
     following terms and provisions:
 
               (i)  The Option exercise price per share shall be equal to
          the Fair Market Value of one share of Common Stock on the date the
          Director Option is granted.  The period within which each Option
          may be exercised shall expire ten years from the date the option
          is granted (the "Option Period"), unless it expires sooner due to
          the death or termination of the directorship of the optionee, or
          if fully exercised prior to the end of such ten year period.  
 
               (ii) If the directorship of an optionee is terminated
          within the Option Period for any reason other than (i) the death
          of the optionee or (ii) on account of any act of fraud,
          intentional misrepresentation, embezzlement, misappropriation, or
          conversion of assets or opportunities of the Corporation or any of
          its Subsidiaries, the Director Option may be exercised by the
          optionee, to the extent the optionee was able to do so at the date
          of termination of the directorship, within the Option Period.
 
               (iii)     If an optionee dies during the Option Period while a
          Non-Employee Director of the Corporation, or if an optionee dies
          within three months of serving as a Non-Employee Director, the 
 
                                    8
 
          Director Option may be exercised, to the extent the optionee was
          entitled to exercise such Option at the date of his or her death,
          within one year after such death (if otherwise within the Option
          Period), by the executor or the administrator of the estate of the
          optionee, or by the person or persons who shall have lawfully
          acquired the Director Option directly from the optionee.  
 
               (iv) If the directorship of the optionee is terminated
          within the Option Period for any of the reasons enumerated in
          Section 6.3(b)(ii), such Director Options shall automatically
          terminate as of the date of termination of such directorship.
 
               (v)  Form of payment.  The exercise price of an Option may
          be paid:  (A) in cash or by check, bank draft or money order
          payable to the order of the Corporation; (B) in shares of Common
          Stock; (C) a combination of the foregoing; or (D) such other
 
<PAGE>
 
          consideration as the Board may deem appropriate.  In addition to
          the foregoing, subject to the discretion of the Board, any Option
          granted under the Plan may be exercised by Cashless Exercise.  The
          Board shall establish appropriate methods for accepting Common
          Stock, and may impose such conditions as it deems appropriate on
          the use of such Common Stock in payment of the exercise price. 
          Common Stock used to exercise an Option shall be valued at its
          then Fair Market Value.
 
 
                                ARTICLE VII
 
                         PERFORMANCE SHARE AWARDS
 
     7.1  Grant of Performance Shares.  Grants of Performance Share Awards
may be made by the Committee to any Eligible Employee during the term of the
Plan.  Each Performance Share Award shall be evidenced by an Award Notice. 
There may be more than one award in existence at any one time for any
Participant and performance periods for separate Performance Share Awards may
differ.
 
     The Performance Shares may be paid out in full or in part on the basis
of performance of the Corporation following the beginning of the Corporation's
fiscal year in which the Performance Share Award is made as hereinafter set
forth.  In determining the size of Performance Share Awards, the Committee may
take into account a Participant's responsibility level, performance,
potential, and cash compensation level, as well as such other considerations
as it deems appropriate. 
 
     7.2  Conditions of Performance Share Awards.  A Performance Share Award
shall be subject to the following terms and conditions:
 
                                    9
 
          (a)  Performance Share Account.  Performance Share Awards shall
     be credited to a Performance Share account to be maintained for each
     holder.  A Performance Share Award under the Plan shall only constitute
     a contractual right and shall not entitle the holder to any interest in
     the Common Stock or to any dividend, voting or other rights of a
     shareholder. 
 
          (b)  Performance Period and Criteria.  Performance Shares shall
     be contingent upon the attainment during a performance period of certain
     performance objectives.  The length of the performance period for each
     Performance Share Award, the performance objectives to be achieved
     during the Performance Share Award period and the measure of whether and
     to what degree such objectives have been attained shall be conclusively
     determined by the Committee in the exercise of its discretion.  The
     Committee may revise performance objectives at such times as it deems
     appropriate during the Performance Share Award period in order to take
     into account or into consideration any unforeseen events or changes in
     circumstances; provided, however, that any such revision which is
     adverse to the holder of a Performance Share Award shall require the
     holder's consent.
 
<PAGE>
 
          (c)  Payment of Award.  Following the end of the Performance
     Share Award period, the holder of a Performance Share Award shall be
     entitled to receive payment of an amount based on the achievement of the
     performance measures for such Performance Share Award period. 
 
          The Committee may authorize payment of a Performance Share Award
     in any combination of cash and Common Stock or all in cash or all in
     Common Stock, as it deems appropriate.  Such shares may include any
     restrictions on transfer and forfeiture provisions as the Committee,
     from time to time, deems appropriate.
 
          (d)  Additional terms and conditions.  The Committee may, by way
     of the Award Notice or otherwise, determine such other terms,
     conditions, restrictions and/or limitations, if any, of any Performance
     Share Award, provided they are not inconsistent with the Plan.
 
                               ARTICLE VIII
 
                          RESTRICTED STOCK AWARDS
 
     8.1  Grant of Restricted Stock Awards.  The Committee may grant a
Restricted Stock Award to any Eligible Employee.  Restricted Stock Awards
shall be awarded in such number and at such times during the term of the Plan
as the Committee shall determine.  Each Restricted Stock Award may be
evidenced in such manner as the Committee deems appropriate, including,
without limitation, book-entry registration or issuance of a stock certificate
or certificates, and by an Award Notice setting forth the terms of such
Restricted Stock Award.
 
                                    10
 
     8.2  Conditions of Restricted Stock Awards.  The grant of a Restricted
Stock Award shall be subject to the following:
 
          (a)  Restriction period.  The Committee shall determine the
     restriction period (the "Restriction Period") which shall apply to the
     shares of Common Stock covered by each Restricted Stock Award or portion
     thereof.  At the end of the Restriction Period the restrictions imposed
     hereunder shall lapse with respect to the shares of Common Stock covered
     by the Restricted Stock Award.  
 
          (b)  Restrictions.  The holder of a Restricted Stock Award may
     not sell, transfer, pledge, exchange, hypothecate or otherwise dispose
     of the shares of Common Stock during any applicable Restriction Period. 
     The Committee shall impose such other restrictions on any shares of
     Common Stock covered by a Restricted Stock Award as it may deem
     advisable including, without limitation, restrictions under applicable
     Federal or state securities laws, and may legend the certificates
     representing Restricted Stock to give appropriate notice of such
     restrictions.
 
<PAGE>
 
          (c)  Rights as shareholders.  During any Restriction Period, the
     Committee may, in its discretion, grant to the holder of a Restricted
     Stock Award all or any of the rights of a shareholder with respect to
     said shares, including, but not by way of limitation, the right to vote
     such shares and to receive dividends.  If any dividends or other
     distributions are paid in shares of Common Stock, all such shares shall
     be subject to the same restrictions on transferability as the shares of
     Restricted Stock with respect to which they were paid.
 
 
                                ARTICLE IX
 
                          OTHER INCENTIVE AWARDS
 
     9.1  Grant of Other Incentive Awards.  The Committee may, in its
discretion, grant other types of awards of, or based on, the Common Stock,
including stock appreciation rights.  Such awards may also include grants of
debt securities convertible into or exchangeable for shares of the Common
Stock upon such conditions, including attainment of performance goals, as the
Committee shall determine.
 
     9.2  Conditions of Other Incentive Awards.  Each grant of an Other
Incentive Award shall be evidenced by an Award Notice executed by the
Corporation and the Participant, and shall contain such terms and conditions
and be in such form as the Committee may from time to time approve.  The
recipient of an Other Incentive Award will have the rights of a shareholder
only to the extent, if any, specified in the Award Notice governing such Other
Incentive Award.
 
                                    11
 
                                 ARTICLE X
 
                       NON-EMPLOYEE DIRECTOR AWARDS
 
     10.1 Awards to Non-Employee Directors.
 
               (a)  Shares of restricted or unrestricted Common Stock may
          be awarded to Non-Employee Directors at the discretion and with
          the approval of the Board, with the recipient of such shares
          abstaining from such vote.  Such Awards shall be granted at such
          time, in such number and with such restrictions as determined by
          the Board.  The Board may also, in its discretion, approve other
          types of Awards for Non-Employee Directors which are based on the
          Common Stock, including stock appreciation rights, stock
          performance rights and other incentive awards
 
               (b)  Each Director Award shall be evidenced by an Award
          Notice executed by the Corporation and the Non-Employee Director
          containing the terms, conditions and restrictions of each Director
          Award.
 
<PAGE>
     10.2 Common Stock in Lieu of Retainer.  Any member of the Board may
elect to receive shares of the Common Stock in lieu of their usual and
customary cash retainer provided that such election is made at least six
months after the date of the most recent election with respect to a Plan
transaction that was a volitional disposition by the Participant and  results
in either (i) an intra-plan transfer involving a Common Stock fund or (ii) a
cash distribution funded by a volitional disposition of Common Stock.  If an
election to receive shares of Common Stock in lieu of a cash retainer is made,
the electing Board member shall receive that number of shares of Common Stock
equal to the amount of the retainer divided by the Fair Market Value
calculated as of the date of payment of the retainer.  An election to receive
shares in lieu of cash which is made in connection with the Participant s
death, disability, retirement or termination of employment need not meet the
requirements of this Section 10.2.
 
                                ARTICLE XI
 
                             STOCK ADJUSTMENTS
 
     In the event that the shares of Common Stock, as presently constituted,
shall be changed into or exchanged for a different number or kind of shares of
stock or other securities of the Corporation or of another corporation
(whether by reason of merger, consolidation, recapitalization,
reclassification, stock split, combination of shares or otherwise), or if the
number of such shares of Common Stock shall be increased through the payment
of a stock dividend, or a dividend on the shares of Common Stock or rights or
warrants to purchase securities of the Corporation shall be made, then there
shall be substituted for or added to each share available under and subject to
the Plan as provided in Article IV hereof, and each share theretofore 
 
                                    12
 
appropriated or thereafter subject or which may become subject to Awards under
the Plan, the number and kind of shares of stock or other securities into
which each outstanding share of Common Stock shall be so changed or for which
each such share shall be exchanged or to which each such share shall be
entitled, as the case may be.  In the event there shall be any other change in
the number or kind of the outstanding shares of Common Stock, or any stock or
other securities into which the Common Stock shall have been changed or for
which it shall have been exchanged, then if the Committee (or the Board with
respect to Director Options and Director Awards) shall, in its sole
discretion, determine that such change equitably requires an adjustment in the
shares available under and subject to the Plan, or in any Award theretofore
granted or which may be granted under the Plan, such adjustments shall be made
in accordance with such determination, except that no adjustment of the number
of shares of Common Stock available under the Plan or to which any Award
relates that would otherwise be required shall be made unless and until such
adjustment either by itself or with other adjustments not previously made
would require an increase or decrease of at least 1% in the number of shares
of Common Stock available under the Plan or to which any Award relates
immediately prior to the making of such adjustment (the "Minimum Adjustment"). 
Any adjustment representing a change of less than such minimum amount shall be
carried forward and made as soon as such adjustment together with other
adjustments required by this Article XI and not previously made would result
in a Minimum Adjustment.  Notwithstanding the foregoing, any adjustment
required by this Article XI which otherwise would not result in a Minimum
Adjustment shall be made with respect to shares of Common Stock relating to
any Award immediately prior to exercise, payment or settlement of such Award.
<PAGE>
 
     No fractional shares of Common Stock or units of other securities shall
be issued pursuant to any such adjustment, and any fractions resulting from
any such adjustment shall be eliminated in each case by rounding downward to
the nearest whole share.
 
 
                                ARTICLE XII
 
                                  GENERAL
 
     12.1 Amendment or Termination of Plan.  The Board may suspend or
terminate the Plan at any time.  In addition, the Board may, from time to
time, amend the Plan in any manner, but may not without shareholder approval
adopt any amendment which would:
          
          (a)  increase the aggregate number of shares of Common Stock
     available under the Plan (except by operation of Article XI); and
 
          (b)  materially modify the requirements as to eligibility for
     participation in the Plan;
 
                                    13
 
provided, that any amendment to the Plan shall require approval of the
shareholders if, in the opinion of counsel to the Corporation, such approval
is required by Section 16(b) or any other section of the Exchange Act, any
other Federal or state law or any regulations or rules promulgated thereunder
or the rules of the New York Stock Exchange (or such other exchange on which
the Common Stock is listed).
 
     12.2 Dividends and Dividend Equivalents.  The Committee or the Board
may choose, at the time of the grant of an Award or any time thereafter up to
the time of payment of such Award, to include as part of such Award an
entitlement to receive dividends or dividend equivalents subject to such
terms, conditions, restrictions, and/or limitations, if any, as the Committee
(or the Board) may establish.  Dividends and dividend equivalents granted
hereunder shall be paid in such form and manner (i.e., lump sum or
installments), and at such time as the Committee (or the Board) shall
determine.  All dividends or dividend equivalents which are not paid currently
may, at the Committee's (or the Board's) discretion, accrue interest, be
reinvested into additional shares of Common Stock or, in the case of dividends
or dividend equivalents credited in connection with a Performance Share Award,
be credited as additional Performance Shares and paid to the Participant if
and when, and to the extent that, payment is made pursuant to such Performance
Share Award.
 
     12.3 Termination of Employment.  If a Participant's employment with the
Corporation or a Subsidiary terminates for a reason other than death,
disability, retirement or any approved reason, all unexercised, unearned
and/or unpaid Awards, including, but not by way of limitation, Awards earned
but not yet paid, all unpaid dividends and dividend equivalents, and all
interest accrued on the foregoing, shall be canceled or forfeited, as the case
may be, unless the Participant's Award Notice provides otherwise.  The
Committee shall have the authority to promulgate rules and regulations to (i)
determine what events constitute disability, retirement, or termination for an
 
<PAGE>
 
approved reason for purposes of the Plan, and (ii) determine the treatment of
a Participant under the Plan in the event of his or her death, disability,
retirement, or termination for an approved reason.  Such rules and regulations
may include, without limitation, the method, if any, for prorating a
Performance Share Award, accelerating the vesting of any Options or Restricted
Stock Award, or providing for the exercise of any unexercised Options in the
event of a Participant's death, disability, retirement or termination for an
approved reason.
 
     12.4 Withholding Taxes.  The Corporation shall be entitled to deduct
from any payment under the Plan, regardless of the form of such payment, the
amount of all applicable income and employment taxes required by law to be
withheld with respect to such payment or may require the Award holder to pay
to it such tax prior to and as a condition of the making of such payment.  In
accordance with any applicable administrative guidelines it establishes, the
Committee may allow an Award holder to pay the amount of taxes required by law
to be withheld from an Award by withholding from any payment of Common Stock
due as a result of such Award, or by permitting the Award holder to deliver to
the Corporation, shares of Common Stock, having a Fair Market Value, on the
date of payment, equal to the amount of such required withholding taxes.
 
                                    14
 
     12.5 Forfeiture.  If the employment of a Participant is terminated on
account of any act of fraud, intentional misrepresentation, embezzlement,
misappropriation or conversion of assets or opportunities of the Corporation
or any of its Subsidiaries, any Award granted hereunder, whether and
regardless of the extent to which such Award is vested, earned or exercisable,
shall automatically terminate as of the date of termination of such
employment.
 
     12.6 Change of Control.  Awards granted under the Plan may, in the
discretion of the Committee (or the Board), provide that (a) such Awards shall
be immediately vested, fully earned, exercisable, and/or, in the case of
Options, converted into stock appreciation rights, as appropriate, upon a
Change of Control Event, and (b) the Corporation shall make full payment with
respect to any Award, and permit the exercise of Options, respectively,
granted hereunder.
 
     12.7 Amendments to Awards.  The Committee (or the Board) may at any
time unilaterally amend the terms of any Award Notice for any Award, whether
or not presently exercisable, earned, paid or vested, to the extent it deems
appropriate; provided, however, that any such amendment which is adverse to
the Award holder shall require the holder's consent.  Any action required to
be taken by or approved by the Board hereunder with respect to an Award to a
director of the Corporation shall be approved by a majority of the
disinterested directors of the Board.
 
     12.8 Regulatory Approval and Listings.  The Corporation shall use its
best efforts to file with the Securities and Exchange Commission as soon as
practicable following the Effective Date, and keep continuously effective and
usable, a Registration Statement on Form S-8 with respect to shares of Common
Stock subject to Awards hereunder.  Notwithstanding anything contained in this
Plan to the contrary, the Corporation shall have no obligation to issue or
deliver certificates representing shares of Common Stock evidencing Restricted
Stock Awards or any other Awards relating to shares of Common Stock prior to:
 
<PAGE>
          (a)  the obtaining of any approval from, or satisfaction of any
     waiting period or other condition imposed by, any governmental agency
     which the Committee shall, in its sole discretion, determine to be
     necessary or advisable; and
 
          (b)  the completion of any registration or other qualification of
     said shares under any state or Federal law or ruling of any governmental
     body which the Committee shall, in its sole discretion, determine to be
     necessary or advisable.
 
     12.9 Right to Continued Employment.  Participation in the Plan shall
not give any Eligible Employee any right to remain in the employ of the
Corporation or any Subsidiary.  The Corporation or, in the case of employment
with a Subsidiary, the Subsidiary, reserves the right to terminate any
Eligible Employee at any time.  Further, the adoption of this plan shall not
be deemed to give any Eligible Employee or any other individual any right to
be selected as a Participant or to be granted an Award.
 
                                    15
 
     12.10     Beneficiaries.  Each Participant and Non-Employee Director shall
file with the Committee a written designation of one or more persons as the
beneficiary (the "Beneficiary") who shall be entitled to receive the amount,
if any, payable under the Plan upon his death.  Such person may, from time to
time, revoke or change his Beneficiary designation without the consent of any
prior Beneficiary by filing a new designation with the Committee.  The last
such designation received by the Committee shall be controlling; provided,
however, that no designation, or change or revocation thereof, shall be
effective unless received by the Committee prior to the Participant's death,
and in no event shall be effective as of a date prior to such receipt.
 
     If such Beneficiary designation is not in effect at the time of an Award
holder's death, or if no designated Beneficiary survives such person, or such
designation conflicts with law, the payment of the amount, if any, payable
under the Plan upon his death shall be made to such person's estate.  If the
Committee is in doubt as to the right of any person to receive such amount,
the Committee may retain such amount, without liability or any interest
thereon, until the rights thereon are determined, or the Committee may pay
such amount into any court of appropriate jurisdiction and such payment shall
be a complete discharge of the liability of the Plan, the Corporation and the
Committee therefor.
 
     12.11     Indemnification.  Each person who is or shall have been a member
of the Committee or of the Board shall be indemnified and held harmless by the
Corporation against and from any loss, cost, liability or expense that may be
imposed upon or reasonably incurred by such person in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may
be a party or in which he or she may be involved by reason of any action or
failure to act under the Plan and against and from any and all amounts paid by
such person in satisfaction of judgment in any such action, suit, or
proceeding against such person.  He or she shall give the Corporation an
opportunity, at its own expense, to handle and defend the same before he or
she undertakes to handle and defend it on his or her own behalf.  The
foregoing right of indemnification shall not be exclusive of any other rights
of indemnification to which such persons may be entitled under the
Corporation's Articles of Incorporation or Bylaws, as a matter of law, or
otherwise, or any power that the Corporation may have to indemnify or hold
harmless any such person.
<PAGE>
 
     12.12     Reliance on Reports.  Each member of the Committee and each
member of the Board shall be fully justified in relying or acting in good
faith upon any report made by the independent public accountants of the
Corporation and its Subsidiaries and upon any other information furnished in
connection with the Plan by any person or persons other than himself.  In no
event shall any person who is or shall have been a member of the Committee or
of the Board be liable for any determination made or other action taken or
any omission to act in reliance upon any such report or information or for
any action taken, including the furnishing of information, or failure to act,
if in good faith.
 
     12.13     Relationship to Other Benefits.  No payment under the Plan shall
be taken into account in determining any benefits under any pension,
retirement, profit sharing, group insurance or other benefit plan of the
Corporation or any Subsidiary.
 
                                    16
 
     12.14     Compliance with the Exchange Act.  With respect to persons
subject to Section 16 of the Exchange Act, transactions under this Plan are
intended to comply with all applicable conditions of Rule 16b-3 or its
successors under the Exchange Act.  To the extent any provision of the Plan
or action by the Committee or the Board fails to so comply, it shall be
deemed null and void, to the extent permitted by law and deemed advisable by
the Committee or the Board.  Moreover, in the event the Plan does not include
a provision required by Rule 16b-3 to be stated therein, such provision
(other than one relating to eligibility requirements, or the price and amount
of awards) shall be deemed automatically to be incorporated by reference into
the Plan insofar as Participants and Non-Employee Directors subject to
Section 16 are concerned.
 
     12.15     Expenses.  The expenses of administering the Plan shall be borne
by the Corporation subject to such allocation to its Subsidiaries as it deems
appropriate.
 
     12.16     Construction.  Masculine pronouns and other words of masculine
gender shall refer to both men and women.  The titles and headings of the
articles and sections in the Plan are for the convenience of reference only,
and in the event of any conflict, the text of the Plan, rather than such
titles or headings, shall control.
 
     12.17     Governing Law.  The Plan shall be governed by and construed in
accordance with the laws of the State of Delaware except as superseded by
applicable Federal law.
 
<PAGE>