ARCH COAL, INC.
                            1997 STOCK INCENTIVE PLAN
                 (As Amended and Restated on February 28, 2002)
 
                                    SECTION 1
 
                              Statement of Purpose
 
1.1.  The Arch  Coal,  Inc.  1997 Stock  Incentive  Plan (the  "Plan")  has been
established  by Arch Mineral  Corporation,  which  pursuant to the Agreement and
Plan of Merger by and between the Company and Ashland Coal,  Inc.,  et. al, will
change its name to Arch Coal, Inc., to become effective at the Effective Time as
defined herein in order to:
 
     (a) attract and retain executive, managerial and other salaried employees;
 
     (b) motivate participating  employees,  by means of appropriate incentives,
to achieve long-range goals;
 
     (c) provide incentive compensation  opportunities that are competitive with
those of other major corporations; and
 
     (d) further identify a Participant's  interests with those of the Company's
other  stockholders  through  compensation  based on the Company's common stock;
thereby  promoting  the  long-term  financial  interest  of the  Company and its
Related  Companies,  including the growth in value of the  Company's  equity and
enhancement of long-term stockholder return.
 
                                    SECTION 2
 
                                   Definitions
 
2.1. Unless the context indicates otherwise,  the following terms shall have the
meaning set forth below:
 
     (a) Acquiring Corporation.  The term "Acquiring Corporation" shall mean the
surviving,  continuing successor or purchasing  corporation in an acquisition or
merger with the Company in which the Company is not the surviving corporation.
 
     (b) Award.  The term "Award" shall mean any award or benefit granted to any
Participant under the Plan, including, without limitation, the grant of Options,
Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance
Stock,  Performance Units, Merit Awards, Phantom Stock Awards and Stock acquired
through purchase under Section 12.
 
 
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     (c)  Board.  The term  "Board"  shall  mean the Board of  Directors  of the
Company  acting as such but shall not include the Committee or other  committees
of the Board acting on behalf of the Board.
 
     (d) Cause.  The term "Cause"  shall mean (a) the  continued  failure by the
Participant to  substantially  perform his or her duties with the Company (other
than any such failure  resulting  from his or her  incapacity due to physical or
mental  illness),  or (b) the engaging by the  Participant  in conduct  which is
demonstrably and materially injurious to the Company, monetarily or otherwise.
 
     (e) Change in Control. A "Change in Control" shall mean a change in control
of the Company of a nature that would be required to be reported  (assuming such
event has not been "previously  reported") in response to Item 1(a) of a Current
Report on Form 8-K  pursuant  to Section 13 or 15(d) of the  Exchange  Act as in
effect on the date this Plan is approved  by the  shareholders  of the  Company;
provided that, without  limitation,  such a Change in Control shall be deemed to
have occurred (1) upon the approval of the Board (or if approval of the Board is
not  required as a matter of law,  the  shareholders  of the Company) of (A) any
consolidation  or  merger  of the  Company  in  which  the  Company  is not  the
continuing or surviving  corporation  or pursuant to which shares of Stock would
be converted  into cash,  securities or other  property,  other than a merger in
which the  holders of the Stock  immediately  prior to the merger will have more
than  50% of  the  ownership  of  common  stock  of  the  surviving  corporation
immediately after the merger,  (B) any sale,  lease,  exchange or other transfer
(in one transaction or a series of related transactions) of all or substantially
all of the assets of the  Company,  or (C)  adoption of any plan or proposal for
the  liquidation  or  dissolution  of the Company,  or (2) when any "person" (as
defined  in  Section  13(d)  of the  Exchange  Act),  other  than a  Significant
Stockholder,  or any subsidiary of the Company or employee benefit plan or trust
maintained  by  the  Company  or  any  of its  subsidiaries,  shall  become  the
"beneficial  owner" (as defined in Rule 13d-3 under the Exchange Act),  directly
or indirectly,  of more than 20% of the Stock  outstanding at the time,  without
the prior approval of the Board.
 
     (f) Code.  The term "Code"  means the  Internal  Revenue  Code of 1986,  as
amended. A reference to any provision of the Code shall include reference to any
successor provision of the Code.
 
     (g)  Committee.  The term  "Committee"  means  the  committee  of the Board
selected in accordance with the provisions of Subsection 4.2.
 
     (h)  Company.  The  term  "Company"  means  Arch  Coal,  Inc.,  a  Delaware
corporation,  which  prior  to the  Effective  Date was  known  as Arch  Mineral
Corporation.
 
     (i) Date of Termination. A Participant's "Date of Termination" shall be the
date on which his or her employment with all Employers and Related Companies
 
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terminates  for any reason;  provided  that for  purposes  of this Plan only,  a
Participant's  employment  shall not be deemed to be  terminated  by reason of a
transfer of the Participant between the Company and a Related Company (including
Employers) or between two Related Companies (including  Employers);  and further
provided that a Participant's  employment shall not be considered  terminated by
reason of the  Participant's  leave of  absence  from an  Employer  or a Related
Company that is approved in advance by the Participant's Employer.
 
     (j)  Disability.   Except  as  otherwise  provided  by  the  Committee,   a
Participant  shall be  considered  to have a  "Disability"  during the period in
which he or she is  unable,  by reason of a  medically  determined  physical  or
mental  impairment,  to carry  out his or her  duties  with an  Employer,  which
condition, in the discretion of the Committee, shall generally be an event which
qualifies as a "long term  disability"  under  applicable  long term  disability
benefit programs of the Company.
 
     (k) Effective  Date.  The term  "Effective  Date" shall mean the "Effective
Time" of the "Merger"  under the  Agreement and Plan of Merger dated as of April
4, 1997, among the Company, Ashland Coal, Inc., and AMC Merger Corporation.
 
     (l) Employee.  The term  "Employee"  shall mean a person with an employment
relationship with an Employer.
 
     (m) Employer.  The Company and each Subsidiary  which,  with the consent of
the Company,  participates in the Plan for the benefit of its eligible Employees
are  referred  to  collectively  as  the  "Employers"  and  individually  as  an
"Employer".
 
     (n) Exchange Act. The term "Exchange Act" means the Securities Exchange Act
of 1934, as amended.
 
     (o) Exercise Price. The term "Exercise  Price" means,  with respect to each
share of Stock  subject to an Option,  the price fixed by the Committee at which
such share may be  purchased  from the Company  pursuant to the exercise of such
Option, which price at no time may be less than 100% of the Fair Market Value of
the  Stock  on  the  date  the  Option  is  granted,  except  as  permitted  and
contemplated by Section 21 of the Plan.
 
     (p) Fair Market  Value.  The "Fair Market  Value" of the Stock on any given
date shall be the last sale price,  regular  way, or, in case no such sale takes
place on such date,  the average of the closing  bid and asked  prices,  regular
way, of the Stock,  in either case as  reported  in the  principal  consolidated
transaction  reporting  system with respect to securities  listed or admitted to
trading on the NYSE or, if the Stock is not listed or admitted to trading on the
NYSE, as reported in the principal  consolidated  transaction  reporting  system
with respect to securities listed on the principal national  securities exchange
on which  the Stock is listed or  admitted  to  trading  or, if the Stock is not
listed or  admitted to trading on any  national  securities  exchange,  the last
 
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quoted sale price on such date or, if not so quoted, the average of the high bid
and low asked prices in the over-the-counter market on such date, as reported by
the National Association of Securities Dealers, Inc. Automated Quotations System
or such  other  system  then in use,  or,  if on any such  date the Stock is not
quoted by any such organization, the average of the closing bid and asked prices
on such date as furnished by a professional  market maker making a market in the
Stock. If the Stock is not publicly held or so listed or publicly traded,  "Fair
Market  Value" per share of Stock shall mean the Fair Market  Value per share as
reasonably determined by the Committee.
 
     (q) Immediate Family.  With respect to a particular  Participant,  the term
"Immediate  Family"  shall  mean,  whether  through  consanguinity  or  adoptive
relationships,  the Participant's spouse, children,  stepchildren,  siblings and
grandchildren.
 
     (r) Incentive Stock Option.  The term  "Incentive  Stock Option" shall mean
any Incentive Stock Option granted under the Plan.
 
     (s) Merit Award.  The term "Merit Award" shall mean any Merit Award granted
under the Plan.
 
     (t) Non-Employee  Director.  The term "Non-Employee  Director" shall mean a
person who  qualifies as such under Rule  16b-3(b)(3)  under the Exchange Act or
any successor  provision,  and who also qualifies as an "outside director" under
Section 162(m) of the Code.
 
     (u) Non-Qualified Stock Option. The term "Non-qualified Stock Option" shall
mean any Non-Qualified Stock Option granted under the Plan.
 
     (v) NYSE. The term "NYSE" refers to the New York Stock Exchange, Inc.
 
     (w) Option.  The term  "Option"  shall mean any  Incentive  Stock Option or
Non-Qualified Stock Option granted under the Plan.
 
     (x)  Participant.  The term  "Participant"  means an Employee  who has been
granted an award under the Plan.
 
     (y)   Performance-Based    Compensation.    The   term   "Performance-Based
Compensation"  shall have the meaning ascribed to it in Section  162(m)(4)(C) of
the Code.
 
     (z)  Performance  Goals.  The term  "Performance  Goals"  means  the  goals
established  by the  Committee  under an Award which,  if met,  will entitle the
Participant  to  payment  under  such  Award and will  qualify  such  payment as
"Performance-Based   Compensation"   as  that  term  is  used  in  Code  Section
162(m)(4)(C).  Such  goals  will be  based  upon  one or  more of the  following
business criteria: net income;  earnings per share; earnings before interest and
 
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taxes ("EBIT"); earnings before interest, taxes, depreciation,  and amortization
("EBITDA");  debt reduction;  safety;  return on investment;  operating  income;
operating ratio; cash flow;  return on assets;  stockholders'  return;  revenue;
return on equity;  economic value added  (EVA(R));  operating  costs;  sales; or
compliance with Company policies.
 
     (aa)  Performance  Period.  The term  "Performance  Period"  shall mean the
period over which applicable performance is to be measured.
 
     (bb) Performance Stock. The term "Performance Stock" shall have the meaning
ascribed to it in Section 10 of the Plan.
 
     (cc) Performance Units. The term "Performance Units" shall have the meaning
ascribed to it in Section 11 of the Plan.
 
     (dd) Phantom  Stock Award.  The term  "Phantom  Stock Award" shall mean any
Phantom Stock Award granted under the Plan.
 
     (ee) Plan.  The term  "Plan"  shall mean this Arch  Coal,  Inc.  1997 Stock
Incentive Plan as the same may be from time to time amended or revised.
 
     (ff) Qualified Retirement Plan. The term "Qualified  Retirement Plan" means
any plan of an Employer or a Related  Company  that is intended to be  qualified
under Section 401(a) of the Code.
 
     (gg) Related Companies.  The term "Related Companies' means any Significant
Stockholder and their  subsidiaries;  and any other company during any period in
which it is a  Subsidiary  or a division of the  Company,  including  any entity
acquired by, or merged with or into, the Company or a Subsidiary.
 
     (hh) Restricted Period. The term "Restricted  Period" shall mean the period
of time for which  shares of  Restricted  Stock or  Restricted  Stock  Units are
subject to  forfeiture  pursuant to the Plan or during  which  Options and Stock
Appreciation Rights are not exercisable.
 
     (ii) Restricted  Stock. The term "Restricted  Stock" shall have the meaning
ascribed to it in Section 8 of the Plan.
 
     (jj) Restricted Stock Units.  The term "Restricted  Stock Units" shall have
the meaning ascribed to it in Section 9 of the Plan.
 
     (kk) Retirement. "Retirement" of a Participant shall mean the occurrence of
a Participant's  Date of Termination  under  circumstances  that constitute such
Participant's retirement at normal or early retirement age under the terms of
 
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the Qualified Retirement Plan of Participant's  Employer that is extended to the
Participant immediately prior to the Participant's Date of Termination or, if no
such plan is  extended  to the  Participant  on his or her Date of  Termination,
under  the  terms  of any  applicable  retirement  policy  of the  Participant's
Employer.
 
     (ll) SEC. "SEC" means the Securities and Exchange Commission.
 
     (mm) Significant Stockholder. The term "Significant Stockholder" shall mean
any  shareholder of the Company who,  immediately  prior to the Effective  Date,
owned more than 5% of the common stock of the Company.
 
     (nn) Stock.  The term "Stock" shall mean shares of common  stock,  $.01 par
value per share, of the Company.
 
     (oo) Stock Appreciation  Rights. The term "Stock Appreciation Rights" shall
mean any Stock Appreciation Right granted under the Plan.
 
     (pp)  Subsidiary.  The term  "Subsidiary"  shall mean any present or future
subsidiary corporation of the Company within the meaning of Code Section 424(f).
 
     (qq) Tax Date.  The term "Tax Date" shall mean the date a  withholding  tax
obligation arises with respect to an Award.
 
                                    SECTION 3
 
                                   Eligibility
 
3.1.  Subject to the discretion of the Committee and the terms and conditions of
the Plan,  the Committee  shall  determine and designate  from time to time, the
Employees or other persons as contemplated by Section 21 of the Plan who will be
granted one or more Awards under the Plan.
 
                                    SECTION 4
 
                          Operation and Administration
 
4.1.  The Plan has been  adopted by the Board on April 1, 1997,  effective as of
the Effective Date,  subject to the further  approval of the shareholders of the
Company. In addition, if the Plan is approved by the shareholders, to the extent
required pursuant to Section 162(m) of the Code, it or any part thereof shall be
resubmitted to shareholders  for reapproval at the first  shareholders'  meeting
that occurs during the fifth year following the year of the initial approval and
thereafter at five year  intervals,  in each case, as may be required to qualify
any  Award  hereunder  as  Performance-Based  Compensation.  The  Plan  shall be
unlimited  in  duration  and remain in effect  until  termination  by the Board;
provided  however,  that no Incentive Stock Option may be granted under the Plan
after April 1, 2007.
 
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<PAGE>
 
4.2. The Plan shall be  administered by the Committee which shall consist of two
or more members of the Board who are Non-Employee  Directors.  Plenary authority
to manage and  control the  operation  and  administration  of the Plan shall be
vested in the Committee, which authority shall include, but shall not be limited
to:
 
     (a) Subject to the  provisions of the Plan, the authority and discretion to
select  Employees to receive Awards,  to determine the time or times of receipt,
to determine the types of Awards and the number of shares covered by the Awards,
to establish the terms,  conditions,  performance  criteria,  restrictions,  and
other  provisions  of such  Awards.  In making  such Award  determinations,  the
Committee  may  take  into  account  the  nature  of  services  rendered  by the
respective  Employee,  his or her  present  and  potential  contribution  to the
Company's success and such other factors as the Committee deems relevant.
 
     (b) Subject to the  provisions of the Plan, the authority and discretion to
determine  the  extent to which  Awards  under the Plan  will be  structured  to
conform to the  requirements  applicable to  Performance-Based  Compensation  as
described  in Code  Section  162(m),  and to take such  action,  establish  such
procedures,  and impose such restrictions at the time such awards are granted as
the  Committee  determines  to be  necessary or  appropriate  to conform to such
requirements.
 
     (c) The  authority  and  discretion  to  interpret  the Plan and the Awards
granted  under  the  Plan,  to  establish,  amend  and  rescind  any  rules  and
regulations  relating to the Plan, to determine the terms and  provisions of any
agreements made pursuant to the Plan, to make all other  determinations  that it
deems necessary or advisable for the  administration  of the Plan and to correct
any defect or supply any omission or reconcile any  inconsistency in the Plan or
in any Award,  in each case, in the manner and to the extent the Committee deems
necessary or advisable to carry it into effect.
 
4.3. Any interpretation of the Plan by the Committee and any decision made by it
under the Plan shall be final and binding on all persons.  The express  grant in
the Plan of any  specific  power to the  Committee  shall  not be  construed  as
limiting any power or authority of the Committee. Provided, however, that except
as otherwise  permitted under Treasury  Regulation  1.162-27(e)(2)(iii)(C),  the
Committee  may not increase  any Award once made if payment  under such Award is
intended to constitute Performance-Based Compensation.
 
4.4. The Committee  may only act at a meeting by unanimous  consent if comprised
of two members, and otherwise by a majority of its members. Any determination of
the Committee may be made without a meeting by the unanimous  written consent of
its members. In addition, the Committee may authorize one or more of its members
or any officer of an Employer to execute and deliver documents and perform other
administrative acts pursuant to the Plan.
 
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4.5. No member or authorized  delegate of the  Committee  shall be liable to any
person for any action taken or omitted in connection with the  administration of
the Plan unless  attributable to his or her own fraud or gross  misconduct.  The
Committee,  the individual members thereof, and persons acting as the authorized
delegates of the Committee under the Plan, shall be indemnified by the Employers
against any and all  liabilities,  losses,  costs and expenses  (including legal
fees and  expenses)  of  whatsoever  kind and nature  which may be  imposed  on,
incurred by, or asserted  against,  the  Committee or its members or  authorized
delegates by reason of the performance of any action pursuant to the Plan if the
Committee  or its  members  or  authorized  delegates  did  not  act in  willful
violation of the law or regulation  under which such  liability,  loss,  cost or
expense arises. This indemnification  shall not duplicate but may supplement any
coverage  available  under any applicable  insurance  policy,  contract with the
indemnitee or the Company's By-laws.
 
 
4.6.  Notwithstanding  any  other  provision  of the Plan to the  contrary,  but
without  giving effect to Awards made pursuant to Section 21, the maximum number
of shares of Stock with respect to which any  Participant  may receive any Award
of an Option or a Stock  Appreciation  Right under the Plan during any  calendar
year is  300,000;  the  maximum  number  of  shares  with  respect  to which any
Participant  may receive Awards of Restricted  Stock during any calendar year is
100,000;  the maximum number of shares with respect to which any Participant may
receive Merit Awards during any calendar year is 100,000; and the maximum number
of shares with respect to which any  Participant may receive other Awards during
any calendar year is 100,000.
 
4.7.  To the  extent  that the  Committee  determines  that it is  necessary  or
desirable to conform any Awards under the Plan with the requirements  applicable
to  "Performance-Based  Compensation",  as that  term  is  used in Code  Section
162(m)(4)(C),  it may,  at or prior to the time an Award is  granted,  establish
Performance  Goals  for  a  particular  Performance  Period.  If  the  Committee
establishes Performance Goals for a Performance Period, it may approve a payment
from that particular Performance Period upon attainment of the Performance Goal.
 
                                    SECTION 5
 
                         Shares Available Under the Plan
 
5.1. The shares of Stock with respect to which Awards may be made under the Plan
shall be shares of currently authorized but unissued or treasury shares acquired
by the  Company,  including  shares  purchased  in the open market or in private
transactions.  Subject  to the  provisions  of Section  16, the total  number of
shares of Stock  available  for grant of Awards  shall not exceed  nine  million
(9,000,000)  shares of Stock.  Except as otherwise provided herein, if any Award
shall expire or terminate for any reason  without having been exercised in full,
the  unissued  shares of Stock  subject  thereto  (whether  or not cash or other
consideration is paid in respect of such Award) shall again be available for the
purposes  of the Plan.  Any  shares of Stock  which are used as full or  partial
payment to the Company upon exercise of an Award shall be available for purposes
of the Plan.
 
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                                    SECTION 6
 
                                     Options
 
6.1. The grant of an "Option"  under this Section 6 entitles the  Participant to
purchase shares of Stock at a price fixed at the time the Option is granted,  or
at a price  determined  under a method  established  at the time the  Option  is
granted,  subject to the terms of this  Section 6.  Options  granted  under this
Section 6 may be either Incentive Stock Options or Non-Qualified  Stock Options,
and subject to Subsection  6.6 and Sections 15 and 20, shall not be  exercisable
for at least six months from the date of grant,  as determined in the discretion
of the Committee.  An "Incentive  Stock Option" is an Option that is intended to
satisfy the requirements  applicable to an "incentive stock option" described in
Section  422(b) of the Code. A  "Non-Qualified  Option" is an Option that is not
intended to be an "incentive  stock option" as that term is described in Section
422(b) of the Code.
 
6.2.  The  Committee  shall  designate  the  Employees to whom Options are to be
granted  under this Section 6 and shall  determine the number of shares of Stock
to be subject to each such Option.  To the extent that the aggregate Fair Market
Value of Stock with respect to which Incentive Stock Options are exercisable for
the first time by any  individual  during any calendar  year (under all plans of
the Company and all Related Companies)  exceeds $100,000,  such Options shall be
treated as  Non-Qualified  Stock  Options,  but only to the extent  required  by
Section 422 of the Code.
 
6.3. The  determination  and payment of the  purchase  price of a share of Stock
under each Option  granted  under this Section shall be subject to the following
terms of this Subsection 6.3:
 
     (a) The purchase  price shall be  established  by the Committee or shall be
determined  by a method  established  by the Committee at the time the Option is
granted;  provided,  however, that in no event shall the price per share be less
than  the Fair  Market  Value  per  share on the  date of the  grant  except  as
otherwise permitted by Section 21 of the Plan;
 
     (b) The full  purchase  price of each  share  of Stock  purchased  upon the
exercise of any Option shall be paid at the time of such  exercise  and, as soon
as practicable  thereafter,  a certificate  representing the shares so purchased
shall be delivered to the person entitled thereto; and
 
     (c) The  purchase  price shall be paid  either in cash,  in shares of Stock
(valued at Fair Market Value as of the day of  exercise),  through a combination
of cash and Stock (so valued) or through such cashless  exercise  arrangement as
 
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may be approved by the Committee and  established by the Company,  provided that
any shares of Stock used for payment shall have been owned by the Participant
for at least six (6) months.
 
6.4. Except as otherwise expressly provided in the Plan, an Option granted under
this Section 6 shall be  exercisable in accordance  with the following  terms of
this Subsection 6.4.
 
     (a) The terms and  conditions  relating to  exercise of an Option  shall be
established by the Committee,  and may include,  without limitation,  conditions
relating  to  completion  of a  specified  period  of  service,  achievement  of
performance  standards prior to exercise of the Option,  or achievement of Stock
ownership  objectives  by the  Participant.  No  Option  may be  exercised  by a
Participant after the expiration date applicable to that Option.
 
     (b)  The  exercise  of an  Option  will  result  in  the  surrender  of the
corresponding rights under a tandem Stock Appreciation Right, if any.
 
6.5. The exercise  period of any Option shall be determined by the Committee but
the term of any Option  shall not extend  more than ten years  after the date of
grant.
 
                                    SECTION 7
 
                            Stock Appreciation Rights
 
7.1. Subject to the terms of this Section 7, a Stock  Appreciation Right granted
under  the Plan  entitles  the  Participant  to  receive,  in cash or Stock  (as
determined in accordance with Subsection  7.4),  value equal to all or a portion
of the excess of: (a) the Fair Market  Value of a specified  number of shares of
Stock at the time of  exercise;  over (b) a  specified  price which shall not be
less  than  100% of the Fair  Market  Value of the  Stock at the time the  Stock
Appreciation  Right is  granted,  or, if granted in tandem  with an Option,  the
exercise price with respect to shares under the tandem Option.
 
7.2.  Subject to the provisions of the Plan, the Committee  shall  designate the
Employees to whom Stock  Appreciation  Rights are to be granted  under the Plan,
shall  determine  the  exercise  price or a method by which  the price  shall be
established  with  respect  to each such  Stock  Appreciation  Right,  and shall
determine the number of shares of Stock on which each Stock  Appreciation  Right
is based. A Stock  Appreciation  Right may be granted in connection  with all or
any  portion  of a  previously  or  contemporaneously  granted  Option or not in
connection  with  an  Option.  If a  Stock  Appreciation  Right  is  granted  in
connection  with an Option then, in the discretion of the  Committee,  the Stock
Appreciation Right may, but need not, be granted in tandem with the Option.
 
7.3.  The  exercise  of  Stock  Appreciation  Rights  shall  be  subject  to the
following:
 
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     (a) If a Stock Appreciation Right is not in tandem with an Option, then the
Stock  Appreciation  Right shall be  exercisable  in  accordance  with the terms
established  by the  Committee in  connection  with such rights but,  subject to
Sections  15 and 20,  shall not be  exercisable  for six months from the date of
grant and the term of any Stock  Appreciation  Right  shall not extend more than
ten  years  from  the  date of  grant;  and  may  include,  without  limitation,
conditions relating to completion of a specified period of service,  achievement
of performance  standards prior to exercise of the Stock Appreciation Rights, or
achievement of objectives relating to Stock ownership by the Participant; and
 
     (b) If a Stock  Appreciation  Right is in tandem  with an Option,  then the
Stock Appreciation Right shall be exercisable only at the time the tandem Option
is exercisable and the exercise of the Stock  Appreciation  Right will result in
the surrender of the corresponding rights under the tandem Option.
 
     7.4.  Upon the  exercise  of a Stock  Appreciation  Right,  the value to be
distributed to the  Participant,  in accordance  with  Subsection  7.1, shall be
distributed in shares of Stock (valued at their Fair Market Value at the time of
exercise),  in cash, or in a combination  of Stock or cash, in the discretion of
the Committee.
 
                                    SECTION 8
 
                                Restricted Stock
 
8.1.  Subject to the terms of this Section 8, Restricted  Stock Awards under the
Plan are  grants of Stock to  Participants,  the  vesting of which is subject to
certain  conditions  established  by the  Committee,  with  some or all of those
conditions  relating to events (such as continued  employment or satisfaction of
performance  criteria)  occurring  after  the date of the  grant  of the  Award,
provided,  however,  that to the extent that vesting of a Restricted Stock Award
is  contingent on continued  employment,  the required  employment  period shall
generally  (unless  otherwise  determined by the Committee) not be less than one
year following the grant of the Award unless such grant is in  substitution  for
an Award  under  this Plan or a  predecessor  plan of the  Company  or a Related
Company.  To the extent, if any, required by the General  Corporation Law of the
State of Delaware, a Participant's receipt of an Award of newly issued shares of
Restricted  Stock  shall be made  subject to payment  by the  Participant  of an
amount equal to the aggregate par value of such newly issued shares of Stock.
 
8.2. The Committee shall designate the Employees to whom Restricted  Stock is to
be  granted,  and the  number of shares of Stock  that are  subject to each such
Award.  The Award of shares  under this  Section 8 may, but need not, be made in
conjunction with a cash-based  incentive  compensation program maintained by the
Company,  and may, but need not, be in lieu of cash  otherwise  awardable  under
such program.
 
                                        11
<PAGE>
 
 
8.3. Shares of Restricted Stock granted to Participants  under the Plan shall be
subject to the following terms and conditions:
 
     (a) Restricted  Stock granted to  Participants  may not be sold,  assigned,
transferred, pledged or otherwise encumbered during the Restricted Period;
 
     (b) The  Participant as owner of such shares shall have all the rights of a
stockholder,  including  but not  limited to the right to vote such  shares and,
except as otherwise  provided by the  Committee or as otherwise  provided by the
Plan,  the right to receive all dividends and other  distributions  paid on such
shares;
 
     (c) Each  certificate  issued in  respect  of shares  of  Restricted  Stock
granted under the Plan shall be registered in the name of the  Participant  but,
at the discretion of the Committee,  each such certificate may be deposited with
the Company with a stock power endorsed in blank or in a bank  designated by the
Committee;
 
     (d)  The  Committee  may  award  Restricted   Stock  as   Performance-Based
Compensation,  which shall be Restricted Stock that will be earned (or for which
earning is accelerated) upon the achievement of Performance Goals established by
the  Committee  and the  Committee may specify the number of shares that will be
earned upon achievement of different levels of performance;  except as otherwise
provided by the Committee, achievement of maximum targets during the Performance
Period  shall  result  in the  Participant's  earning  of  the  full  amount  of
Restricted  Stock  comprising such  Performance-Based  Compensation  and, in the
discretion of the Committee, achievement of the minimum target but less than the
maximum  target,  the  Committee  may result in the  Participant's  earning of a
portion of the Award; and
 
     (e) Except as otherwise  provided by the Committee,  any  Restricted  Stock
which is not earned by the end of a Restricted Period or Performance  Period, as
the case may be, shall be  forfeited.  If a  Participant's  Date of  Termination
occurs prior to the end of a Restricted  Period or  Performance  Period,  as the
case may be, the  Committee  may  determine,  in its sole  discretion,  that the
Participant  will  be  entitled  to  settlement  of all or  any  portion  of the
Restricted  Stock as to which he or she would  otherwise  be  eligible,  and may
accelerate  the  determination  of the value and  settlement of such  Restricted
Stock or make such other  adjustments as the Committee,  in its sole discretion,
deems  desirable.  Subject  to the  limitations  of the  Plan  and the  Award of
Restricted  Stock,  upon the vesting of Restricted  Stock, such Restricted Stock
will be transferred  free of all  restrictions to the Participant (or his or her
legal representative, beneficiary or heir).
 
                                        12
 
<PAGE>
                                    SECTION 9
 
                             Restricted Stock Units
 
9.1.  Subject to the terms of this Section 9, a Restricted Stock Unit entitles a
Participant to receive shares for the units at the end of a Restricted Period to
the extent provided by the Award with the vesting of such units to be contingent
upon such  conditions as may be established by the Committee  (such as continued
employment or satisfaction of performance  criteria) occurring after the date of
grant of the Award, provided,  however, that to the extent that the vesting of a
Restricted  Stock Unit is  contingent  on  continued  employment,  the  required
employment  period shall  generally not be less than one year following the date
of grant of the Award  unless such grant is in  substitution  for an Award under
this Plan or a predecessor plan of the Company or a Related  Company.  The Award
of  Restricted  Stock Units under this  Section 9 may,  but need not, be made in
conjunction with a cash-based  incentive  compensation program maintained by the
Company,  and may, but need not, be in lieu of cash  otherwise  awardable  under
such program.
 
9.2. The Committee shall designate the Employees to whom Restricted  Stock Units
shall be granted  and the number of units that are  subject to each such  Award.
During any period in which  Restricted  Stock Units are outstanding and have not
been  settled  in  Stock,  the  Participant  shall  not  have  the  rights  of a
stockholder,  but, in the discretion of the Committee,  may be granted the right
to receive a payment  from the Company in lieu of a dividend in an amount  equal
to any cash dividends that might be paid during the Restricted Period.
 
9.3 Except as otherwise  provided by the Committee,  any  Restricted  Stock Unit
which is not earned by the end of a Restricted  Period shall be forfeited.  If a
Participant's  Date of  Termination  occurs  prior  to the  end of a  Restricted
Period,  the  Committee,  in  its  sole  discretion,   may  determine  that  the
Participant  will be entitled to settlement of all, any portion,  or none of the
Restricted  Stock Units as to which he or she would  otherwise be eligible,  and
may accelerate the  determination of the value and settlement of such Restricted
Stock  Units  or make  such  other  adjustments  as the  Committee,  in its sole
discretion, deems desirable.
 
                                   SECTION 10
 
                                Performance Stock
 
10.1.  Subject to the terms of this  Section 10, an Award of  Performance  Stock
provides for the  distribution of Stock to a Participant upon the achievement of
performance objectives,  which may include Performance Goals, established by the
Committee.
 
10.2. The Committee  shall designate the Employees to whom Awards of Performance
Stock are to be  granted,  and the number of shares of Stock that are subject to
 
                                      13
<PAGE>
 
each such Award. The Award of shares of Performance  Stock under this Section 10
may,  but  need  not,  be  made  in  conjunction  with  a  cash-based  incentive
compensation  program  maintained  by the Company,  and may, but need not, be in
lieu of cash otherwise awardable under such program.
 
10.3.  Except as otherwise  provided by the Committee,  any Award of Performance
Stock  which  is not  earned  by the  end of the  Performance  Period  shall  be
forfeited.  If a Participant's  Date of Termination occurs prior to the end of a
Performance  Period, the Committee,  in its sole discretion,  may determine that
the Participant  will be entitled to settlement of all, any portion,  or none of
the Performance Stock as to which he or she would otherwise be eligible, and may
accelerate the  determination  of the value and  settlement of such  Performance
Stock or make such other  adjustments as the Committee,  in its sole discretion,
deems desirable.
 
                                   SECTION 11
 
                                Performance Units
 
11.1.  Subject to the terms of this Section 11, the Award of  Performance  Units
under the Plan  entitles the  Participant  to receive value for the units at the
end of a Performance  Period to the extent provided under the Award.  The number
of Performance Units earned, and value received from them, will be contingent on
the degree to which the performance measures established at the time of grant of
the Award are met.
 
11.2. The Committee shall designate the Employees to whom Performance  Units are
to be granted,  and the number of  Performance  Units to be subject to each such
Award.
 
11.3.  For  each  Participant,   the  Committee  will  determine  the  value  of
Performance  Units,  which may be stated either in cash or in units representing
shares of Stock;  the  performance  measures  used for  determining  whether the
Performance  Units  are  earned;   the  Performance   Period  during  which  the
performance   measures  will  apply;  the  relationship  between  the  level  of
achievement  of the  performance  measures  and the degree to which  Performance
Units are earned;  whether, during or after the Performance Period, any revision
to the  performance  measures or  Performance  Period  should be made to reflect
significant events or changes that occur during the Performance  Period; and the
number of earned Performance Units that will be settled in cash and/or shares of
Stock.
 
11.4. Settlement of Performance Units shall be subject to the following:
 
     (a) The Committee will compare the actual  performance  to the  performance
measures  established  for the  Performance  Period and  determine the number of
Performance Units as to which settlement is to be made;
 
     (b) Settlement of Performance  Units earned shall be wholly in cash, wholly
in Stock or in a  combination  of the two,  to be  distributed  in a lump sum or
installments, as determined by the Committee; and
 
                                         14
<PAGE>
 
     (c) Shares of Stock distributed in settlement of Performance Units shall be
subject  to such  vesting  requirements  and other  conditions,  if any,  as the
Committee shall determine,  including,  without limitation,  restrictions of the
type that may be imposed with respect to Restricted Stock under Section 8.
 
11.5.  Except as otherwise  provided by the Committee,  any Award of Performance
Units  which  is not  earned  by the  end of the  Performance  Period  shall  be
forfeited.  If a Participant's  Date of Termination occurs prior to the end of a
Performance  Period, the Committee,  in its sole discretion,  may determine that
the Participant  will be entitled to settlement of all, any portion,  or none of
the Performance Units as to which he or she would otherwise be eligible, and may
accelerate the  determination  of the value and  settlement of such  Performance
Units or make such other  adjustments as the Committee,  in its sole discretion,
deems desirable.
 
                                   SECTION 12
 
                             Stock Purchase Program
 
12.1. The Committee may, from time to time, establish one or more programs under
which  Employees  will be permitted to purchase  shares of Stock under the Plan,
and shall  designate  the  Employees  eligible to  participate  under such Stock
purchase  programs.  The purchase price for shares of Stock available under such
programs, and other terms and conditions of such programs,  shall be established
by the Committee. The purchase price may not be less than 75% of the Fair Market
Value of the Stock at the time of purchase (or, in the  Committee's  discretion,
the average Stock value over a period determined by the Committee),  and further
provided that if newly issued shares of Stock are sold,  the purchase  price may
not be less than the aggregate par value of such newly issued shares of Stock.
 
12.2.  The  Committee  may  impose  such  restrictions  with  respect  to shares
purchased  under this  Section  12, as the  Committee,  in its sole  discretion,
determines to be appropriate. Such restrictions may include, without limitation,
restrictions  of the type that may be imposed with respect to  Restricted  Stock
under Section 8.
 
                                   SECTION 13
 
                                  Merit Awards
 
13.1.  The Committee may from time to time make an Award of Stock under the Plan
to selected Employees for such reasons and in such amounts as the Committee,  in
its sole discretion,  may determine. The consideration to be paid by an Employee
for any such Merit Award,  if any,  shall be fixed by the Committee from time to
time, but, if required by the General  Corporation Law of the State of Delaware,
it shall not be less than the aggregate par value of the shares of Stock awarded
to him or her.
 
                                      15
<PAGE>
 
                                   SECTION 14
 
                              Phantom Stock Awards
 
14.1.  The Committee may make Phantom Stock Awards to selected  Employees  which
may be based solely on the value of the  underlying  shares of Stock,  solely on
any earnings or appreciation  thereon, or both. Subject to the provisions of the
Plan, the Committee shall have the sole and complete  authority to determine the
number of  hypothetical  or target  shares as to which each such  Phantom  Stock
Award is subject and to determine the terms and  conditions of each such Phantom
Stock Award.  There may be more than one Phantom Stock Award in existence at any
one time with respect to a selected  Employee,  and the terms and  conditions of
each such Phantom Stock Award may differ from each other.
 
14.2. The Committee  shall  establish  vesting or performance  measures for each
Phantom  Stock  Award  on the  basis of such  criteria  and to  accomplish  such
objectives  as the  Committee  may from  time to time,  in its sole  discretion,
determine.  Such  measures  may be  based  on years of  service  or  periods  of
employment,   or  the   achievement  of  individual  or  corporate   performance
objectives,  but  shall,  in each  instance,  be  based  upon one or more of the
business  criteria  as  determined  pursuant  to Section  4.7.  The  vesting and
performance  measures  determined by the Committee  shall be  established at the
time a  Phantom  Stock  Award is made.  Phantom  Stock  Awards  may not be sold,
assigned,  transferred,  pledged, or otherwise encumbered, except as provided in
Section 17, during the Performance Period.
 
14.3.  The Committee  shall  determine,  in its sole  discretion,  the manner of
payment,  which may include cash or shares of Stock in such  proportions  as the
Committee shall determine.
 
14.4. Except as otherwise provided by the Committee,  any Award of Phantom Stock
which is not earned by the end of the Performance Period shall be forfeited.  If
a  Participant's  Date of  Termination  occurs prior to the end of a Performance
Period,  the  Committee,  in  its  sole  discretion,   may  determine  that  the
Participant  will be entitled to  settlement  of all or a portion of the Phantom
Stock for which he or she would  otherwise be eligible,  and may  accelerate the
determination  of the value and  settlement  of Phantom Stock or make such other
adjustment as the Committee, in its sole discretion, deems desirable.
 
                                       16
<PAGE>
 
 
 
                                   SECTION 15
 
                            Termination of Employment
 
15.1. If a Participant's  employment is terminated by the Participant's Employer
for Cause or if the  Participant's  employment is terminated by the  Participant
without the written consent and approval of the Participant's  Employer,  all of
the Participant's  unvested Awards,  including any unexercised Options, shall be
forfeited.
 
15.2.  If a  Participant's  Date of  Termination  occurs  by  reason  of  death,
Disability or Retirement,  all Options and Stock Appreciation Rights outstanding
immediately  prior to the  Participant's  Date of Termination  shall immediately
become   exercisable   and  shall  be  exercisable   until  one  year  from  the
Participant's  Date of  Termination  and  thereafter  shall be  forfeited if not
exercised,  and all restrictions on any Awards outstanding  immediately prior to
the Participant's Date of Termination shall immediately lapse. Options and Stock
Appreciation   Rights  which  are  or  become  exercisable  at  the  time  of  a
Participant's death may be exercised by the Participant's designated beneficiary
or, in the absence of such designation,  by the person to whom the Participant's
rights will pass by will or the laws of descent and distribution.
 
15.3. If a Participant's  Date of Termination  occurs by reason of Participant's
employment being terminated by the  Participant's  Employer for any reason other
than Cause, or by the  Participant  with the written consent and approval of the
Participant's Employer, the Restricted Period shall lapse on a proportion of any
Awards  outstanding  immediately prior to the Participant's  Date of Termination
(except that, to the extent that an Award of Restricted Stock,  Restricted Stock
Units,  Performance  Units,  Performance Stock and Phantom Stock is subject to a
Performance  Period),  such  proportion of the Award shall remain subject to the
same terms and  conditions  for  vesting as were in effect  prior to the Date of
Termination  and shall be determined at the end of the Performance  Period.  The
proportion of an Award upon which the  Restricted  Period shall lapse shall be a
fraction,  the  denominator  of which  is the  total  number  of  months  of any
Restricted  Period  applicable  to an Award  and the  numerator  of which is the
number of months of such  Restricted  Period which  elapsed prior to the Date of
Termination.
 
15.4. Options and Stock  Appreciation  Rights which are or become exercisable by
reason of the  Participant's  employment being  terminated by the  Participant's
Employer for reasons other than Cause or by the Participant with the consent and
approval of the Participant's Employer,  shall be exercisable until 60 days from
the  Participant's  Termination  Date and shall  thereafter  be forfeited if not
exercised.
 
15.5.  Except to the extent the  Company  shall  otherwise  determine,  if, as a
result  of a sale or other  transaction  (other  than a Change  in  Control),  a
Participant's  Employer  ceases to be a Related  Company (and the  Participant's
Employer  is or  becomes  an entity  that is  separate  from the  Company),  the
occurrence of such  transaction  shall be treated as the  Participant's  Date of
Termination  caused by the  Participant's  employment  being  terminated  by the
Participant's Employer for a reason other than Cause.
 
                                      17
<PAGE>
 
15.6. Notwithstanding the foregoing provisions of this Section 15, the Committee
may, with respect to any Awards of a Participant  (or portion  thereof) that are
outstanding   immediately  prior  to  the  Participant's  Date  of  Termination,
determine that a Participant's Date of Termination will not result in forfeiture
or other  termination  of the Award,  or may extend the period  during which any
Options or Stock Appreciation Rights may be exercised, but shall not extend such
period beyond the expiration date set forth in the Award.
 
 
                                   SECTION 16
 
                              Adjustments to Shares
 
16.1. If the Company shall effect a reorganization, merger, or consolidation, or
similar event or effect any subdivision or  consolidation  of shares of Stock or
other capital readjustment,  payment of stock dividend,  stock split,  spin-off,
combination of shares or  recapitalization or other increase or reduction of the
number of shares of Stock outstanding without receiving compensation therefor in
money,  services or property,  then the Committee shall appropriately adjust (i)
the  number of  shares of Stock  available  under the Plan,  (ii) the  number of
shares of Stock  available under any individual or other  limitations  under the
Plan, (iii) the number of shares of Stock subject to outstanding Awards and (iv)
the  per-share  price  under  any  outstanding  Award  to the  extent  that  the
Participant  is required to pay a purchase  price per share with  respect to the
Award.
 
16.2. If the  Committee  determines  that an  adjustment in accordance  with the
provisions of Subsection 16.1 would not be fully consistent with the purposes of
the Plan or the purposes of the outstanding Awards under the Plan, the Committee
may  make  such  other  adjustments,  if  any,  that  the  Committee  reasonably
determines  are  consistent  with the  purposes of the Plan and/or the  affected
Awards.
 
16.3. To the extent that any reorganization,  merger, consolidation,  or similar
event or any  subdivision or  consolidation  of shares of Stock or other capital
readjustment,  payment of stock dividend, stock split, spin-off,  combination of
shares or  recapitalization  or other  increase  or  reduction  of the number of
shares of Stock  hereunder  is also  accompanied  by or  related  to a Change in
Control,  the  adjustment  hereunder  shall be made  prior  to the  acceleration
contemplated by Section 20.
 
                                        18
<PAGE>
 
                                   SECTION 17
 
                     Transferability and Deferral of Awards
 
17.1.  Awards under the Plan are not transferable  except by will or by the laws
of descent and  distribution.  To the extent that a Participant  who receives an
Award  under the Plan has the right to  exercise  such  Award,  the Award may be
exercised  during  the  lifetime  of the  Participant  only by the  Participant.
Notwithstanding the foregoing  provisions of this Section 17, the Committee may,
subject to any  restrictions  under applicable  securities  laws,  permit Awards
under the Plan (other than an Incentive  Stock  Option) to be  transferred  by a
Participant  for no  consideration  to or for the  benefit of the  Participant's
Immediate Family (including, without limitation, to a trust for the benefit of a
Participant's  Immediate Family or to a Partnership  comprised solely of members
of the Participant's Immediate Family),  subject to such limits as the Committee
may establish,  provided the transferee shall remain subject to all of the terms
and conditions applicable to such Award prior to such transfer.
 
17.2.  The Committee may permit a Participant to elect to defer payment under an
Award under such terms and conditions as the Committee,  in its sole discretion,
may  determine;  provided that any such deferral  election must be made prior to
the time the Participant has become entitled to payment under the Award.
 
                                   SECTION 18
 
                                 Award Agreement
 
18.1. Each Participant granted an Award pursuant to the Plan shall sign an Award
Agreement  which  signifies  the  offer  of the  Award  by the  Company  and the
acceptance of the Award by the  Participant in accordance  with the terms of the
Award and the  provisions of the Plan.  Each Award  Agreement  shall reflect the
terms and  conditions  of the Award.  Participation  in the Plan shall confer no
rights to continued  employment with an Employer nor shall it restrict the right
of an  Employer  to  terminate a  Participant's  employment  at any time for any
reason, not withstanding the fact that the Participant's  rights under this Plan
may be negatively affected by such action.
 
                                   SECTION 19
 
                                 Tax Withholding
 
19.1 All Awards and other  payments under the Plan are subject to withholding of
all applicable taxes, which withholding  obligations shall be satisfied (without
regard to whether the  Participant has transferred an Award under the Plan) by a
 
                                        19
<PAGE>
 
cash remittance, or with the consent of the Committee,  through the surrender of
shares  of Stock  which the  Participant  owns or to which  the  Participant  is
otherwise entitled under the Plan pursuant to an irrevocable  election submitted
by the Participant to the Company at the office designated for such purpose. The
number of shares of Stock  needed to be  submitted in payment of the taxes shall
be determined using the Fair Market Value as of the applicable tax date rounding
down to the nearest whole share.
 
                                   SECTION 20
 
                                Change in Control
 
20.1.  After  giving  effect to the  provisions  of Section 16  (relating to the
adjustment of shares of Stock),  and except as otherwise provided in the Plan or
the Agreement  reflecting the applicable  Award, upon the occurrence of a Change
in Control:
 
     (a) All  outstanding  Options  (regardless  of whether in tandem with Stock
Appreciation  Rights) shall become fully exercisable and may be exercised at any
time during the original term of the Option;
 
     (b) All outstanding  Stock  Appreciation  Rights  (regardless of whether in
tandem with Options) shall become fully  exercisable and may be exercised at any
time during the original term of the Option;
 
     (c) All shares of Stock  subject to Awards shall become fully vested and be
distributed to the Participant; and
 
     (d) Performance  Units may be paid out in such manner and amounts as may be
reasonably determined by the Committee.
 
                                   SECTION 21
 
                             MERGERS / ACQUISITIONS
 
21.1 In the event of any merger or  acquisition  involving the Company  and/or a
Subsidiary of the Company and another  entity which results in the Company being
the  survivor or the  surviving  direct or indirect  parent  corporation  of the
merged or acquired  entity,  the Committee may grant Awards under the provisions
of the Plan in substitution  for awards held by employees or former employees of
such other entity under any plan of such entity immediately prior to such merger
or  acquisition  upon  such  terms  and  conditions  as  the  Committee,  in its
discretion,  shall  determine  and as  otherwise  may be required by the Code to
ensure such  substitution  is not treated as the grant of a new Award for tax or
accounting purposes.
 
                                       20
<PAGE>
 
21.2 In the event of a merger or acquisition  involving the Company in which the
Company is not the surviving corporation, the Acquiring Corporation shall either
assume  the  Company's  rights  and  obligations  under  outstanding  Awards  or
substitute  awards  under  the  Acquiring   Corporation's  plans,  or  if  none,
securities for such outstanding  Awards. In the event the Acquiring  Corporation
elects not to assume or  substitute  for such  outstanding  Awards,  and without
limiting  Section  20, the Board shall  provide  that any  unexercisable  and/or
unvested portion of the outstanding Awards shall be immediately  exercisable and
vested  as of a date  prior to such  merger  or  consolidation,  as the Board so
determines. The exercise and/or vesting of any Award that was permissible solely
by reason of this Section 21.2 shall be conditioned upon the consummation of the
merger or consolidation. Unless otherwise provided in the Plan or the Award, any
Awards which are neither  assumed by the Acquiring  Corporation nor exercised on
or prior to the date of the  transaction  shall  terminate  effective  as of the
effective date of the transaction.
 
                                   SECTION 22
 
                            Termination and Amendment
 
22.1 The Board may suspend,  terminate,  modify or amend the Plan, provided that
any amendment  that would (a) increase the  aggregate  number of shares of Stock
which may be issued under the Plan,  (b) would change the method of  determining
the exercise  price of Options,  other than to change the method of  determining
Fair Market  Value of Stock as set forth in Section  2.1(o) of the Plan,  or (c)
materially  modify the  requirements as to eligibility for  participation in the
Plan,  shall be subject to the approval of the  Company's  stockholders,  except
that  any  such  increase  or  modification  that may  result  from  adjustments
authorized  by  Section  16 does  not  require  such  approval.  No  suspension,
termination, modification or amendment of the Plan may terminate a Participant's
existing Award or materially and adversely  affect a Participant's  rights under
such Award without the Participant's consent.
</DOCUMENT>