PROPOSED AMENDED
                              FRED MEYER, INC.
                         1990 STOCK INCENTIVE PLAN

     1. Purpose. The purpose of this Stock Incentive Plan (the "Plan") is
to enable Fred Meyer, Inc. (the "Company") to attract and retain the
services of selected salaried employees, including employees who may be
officers or directors of the Company or of any subsidiary of the Company,
and selected nonemployee agents, consultants and advisors to the Company or
any subsidiary.

     2. Shares Subject to the Plan. Subject to adjustment as provided below
and in paragraph 12, the shares to be offered under the Plan shall consist
of Common Stock of the Company ("Common Stock"), and the total number of
shares of Common Stock that may be issued under the Plan shall not exceed
4,000,000 shares plus any shares that are available for grant under the
Company's 1983 Stock Option Plan, as amended (the "1983 Plan") or that may
subsequently become available for grant under such plan through the
expiration, termination, forfeiture or cancellation of awards under such
plan. The shares issued under the Plan may be authorized and unissued
shares or reacquired shares. If an option, stock appreciation right or
Performance-based Award granted under the Plan expires, terminates or is
cancelled, the unissued shares subject to such option, stock appreciation
right or Performance-based Award shall again be available under the Plan.
If shares sold or issued under the Plan are forfeited to the Company or
repurchased by the Company, the number of shares forfeited or repurchased
shall again be available under the Plan.

     3. Effective Date and Duration of Plan.

          (a) Effective Date. The Plan shall become effective as of
June19, 1990. No option or stock appreciation right granted under the Plan
to an officer who is subject to Section 16(b) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") or a director shall become
exercisable, however, until the Plan is approved by the affirmative vote of
the holders of a majority of the shares of Common Stock represented at a
shareholders meeting at which a quorum is present and any such awards under
the Plan prior to such approval shall be conditioned on and subject to such
approval. Subject to this limitation, options and stock appreciation rights
may be granted and shares may be awarded as bonuses or Performance-based
Awards or sold under the Plan at any time after the effective date and
before termination of the Plan.

          (b) Duration. The Plan shall continue in effect until all shares
available for issuance under the Plan have been issued and all restrictions
on such shares have lapsed. The Board of Directors may suspend or terminate
the Plan at any time except with respect to options, Performance-based
Awards and shares subject to restrictions then outstanding under the Plan.
Termination shall not affect any outstanding awards, any right of the
Company to repurchase shares or the forfeitability of shares issued under
the Plan.

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     4. Administration.

          (a) Board of Directors. The Plan shall be administered by the
Board of Directors of the Company, which shall determine and designate from
time to time the individuals to whom awards shall be made, the amount of
the awards and the other terms and conditions of the awards. Subject to the
provisions of the Plan, the Board of Directors may from time to time adopt
and amend rules and regulations relating to administration of the Plan,
advance the lapse of any waiting period, accelerate any exercise date,
waive or modify any restriction applicable to share (except those
restrictions imposed by law) and make all other determinations in the
judgment of the Board of Directors necessary or desirable for the
administration of the Plan. The interpretation and construction of the
provisions of the Plan and related agreements by the Board of Directors
shall be final and conclusive. The Board of Directors may correct any
defect or supply any omission or reconcile any inconsistency in the Plan or
in any related agreement in the manner and to the extent it shall deem
expedient to carry the Plan into effect, and it shall be the sole and final
judge of such expediency

          (b) Committee. The Board of Directors may delegate to a committee
of the Board of Directors (the "Committee") any or all authority for
administration of the Plan. If authority is delegated to a Committee, all
references to the Board of Directors in the Plan shall mean and relate to
the Committee except (i)as otherwise provided by the Board of Directors,
(ii)that only the Board of Directors may amend or terminate the Plan as
provided in paragraphs 3 and 15 and (iii)that a Committee including
officers of the Company shall not be permitted to grant options to persons
who are officers of the Company.

     5. Types of Awards; Eligibility. The Board of Directors may, from time
to time, take the following action, separately or in combination, under the
Plan: (i)grant Incentive Stock Options, as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"), as provided in
paragraphs 6(a) and 6(b); (ii)grant options other than Incentive Stock
Options ("Non-Statutory Stock Options") as provided in paragraphs 6(a) and
6(c); (iii)award stock bonuses as provided in paragraph 7; (iv)sell
shares subject to restrictions as provided in paragraph 8; (v)grant stock
appreciation rights as provided in paragraph 9; (vi)grant cash bonus
rights as provided in paragraph 10; and (vii)grant Performance-based
Awards as provided in paragraph11. Any such awards may be made to salaried
employees, including employees who are officers or directors, and to other
individuals described in paragraph 1 who the Board of Directors believes
have made or will make an important contribution to the Company or its
subsidiaries; provided, however, that only employees of the Company shall
be eligible to receive Incentive Stock Options under the Plan. The Board of
Directors shall select the individuals to whom awards shall be made and
shall specify the action taken with respect to each individual to whom an
award is made. At the discretion of the Board of Directors, an individual
may be given an election to surrender an award in exchange for the grant of
a new award. No individual may be granted options or stock appreciation
rights under the 

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Plan for more than an aggregate of 500,000 shares of Common Stock in
connection with the hiring of the individual or 200,000 shares in any
fiscal year otherwise.

     6. Option Grants.

          (a) General Rules Relating to Options.

               (i) Terms of Grant. The Board of Directors may grant options
under the Plan. With respect to each option grant, the Board of Directors
shall determine the number of shares subject to the option, the option
price, the period of the option, the time or times at which the option may
be exercised and whether the option is an Incentive Stock Option or a
Non-Statutory Stock Option. At the time of the grant of an option or at any
time thereafter, the Board of Directors may provide that an optionee who
exercised an option with Common Stock of the Company shall automatically
receive a new option to purchase additional shares equal to the number of
shares surrendered and may specify the terms and conditions of such new
options.

               (ii) Exercise of Options. Except as provided in paragraph
6(a)(iv) or as determined by the Board of Directors, no option granted
under the Plan may be exercised unless at the time of such exercise the
optionee is employed by or in the service of the Company or any subsidiary
of the Company and shall have been so employed or provided such service
continuously since the date such option was granted. Absence on leave or on
account of illness or disability under rules established by the Board of
Directors shall not, however, be deemed an interruption of employment or
service for this purpose. Unless otherwise determined by the Board of
Directors, vesting of options shall not continue during an absence on leave
(including an extended illness) or on account of disability. Except as
provided in paragraphs 6(a)(iv), 12 and 13, options granted under the Plan
may be exercised from time to time over the period stated in each option in
such amounts and at such times as shall be prescribed by the Board of
Directors, provided that options shall not be exercised for fractional
shares. Unless otherwise determined by the Board of Directors, if the
optionee does not exercise an option in any one year with respect to the
full number of shares to which the optionee is entitled in that year, the
optionee's rights shall be cumulative and the optionee may purchase those
shares in any subsequent year during the term of the option.

               (iii) Nontransferability. Each Incentive Stock Option and,
unless otherwise determined by the Board of Directors with respect to an
option granted to a person who is neither an officer nor a director of the
Company, each other option granted under the Plan by its terms shall be
nonassignable and nontransferable by the optionee, either voluntarily or by
operation of law, except by will or by the laws of descent and distribution
of the state or country of the optionee's domicile at the time of death,
and each option by its terms shall be exercisable during the optionee's
lifetime only by the optionee.

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               (iv) Termination of Employment or Service.

                    (A) General Rule. Unless otherwise determined by the
Board of Directors, in the event the employment or service of the optionee
with the Company or a subsidiary terminates for any reason other than
because of physical disability or death as provided in subparagraphs
6(a)(iv)(B) and (C) or because of a change in control as provided in
subparagraph 6(a)(iv)(D), the option may be exercised at any time prior to
the expiration date of the option or the expiration of three months after
the date of such termination, whichever is the shorter period, but only if
and to the extent the optionee was entitled to exercise the option at the
date of such termination.

                    (B) Termination Because of Total Disability. Unless
otherwise determined by the Board of Directors, in the event of the
termination of employment or service because of total disability, the
option may be exercised at any time prior to the expiration date of the
option or the expiration of 12 months after the date of such termination,
whichever is the shorter period, but only if and to the extent the optionee
was entitled to exercise the option at the date of such termination. The
term "total disability" means a mental or physical impairment which is
expected to result in death or which has lasted or is expected to last for
a continuous period of 12 months or more and which causes the optionee to
be unable, in the opinion of the Company and two independent physicians, to
perform his or her duties as an employee, director, officer or consultant
of the Company and to be engaged in any substantial gainful activity. Total
disability shall be deemed to have occurred on the first day after the
Company and the two independent physicians have furnished their opinion of
total disability to the Company.

                    (C) Termination Because of Death. Unless otherwise
determined by the Board of Directors, in the event of the death of an
optionee while employed by or providing service to the Company or a
subsidiary, the option may be exercised at any time prior to the expiration
date of the option or the expiration of 12 months after the date of such
death, whichever is the shorter period, but only if and to the extent the
optionee was entitled to exercise the option at the date of such
termination and only by the person or persons to whom such optionee's
rights under the option shall pass by the optionee's will or by the laws of
descent and distribution of the state or country of domicile at the time of
death.

                    (D) Termination Upon a Change of Control. In the event
an optionee's employment by the Company or by any parent or subsidiary of
the Company terminates within one year after a change in control of the
Company for any reason other than retirement, death, or total disability
(as defined in paragraph 6(a)(iv)(B)), any option held by such optionee may
be exercised with respect to all remaining shares subject thereto, free of
any limitation on the number of shares with respect to which the option may
be exercised in any one year, at any time prior to its expiration date or
the expiration of three months after the date of such termination of
employment, whichever is the shorter period; provided that no option may be
exercised by an officer or director of the Company within six months of its
date of 

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grant. With respect to an option granted less than six months prior
to a change in control of the Company to an officer or director of the
Company, the option shall become exercisable in full for a period of
30days following the expiration of six months after the date of such
grant, and this right shall apply even if the option has otherwise
terminated after a change in control. A "change in control of the Company"
shall mean a change in control of a nature that would be required to be
reported in response to Item 5(f) of Schedule 14A of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended
("Exchange Act"), or any successor provision; provided that, without
limitation, such a change in control shall be deemed to have occurred if
(1)any "person" (as such term is used in Sections 13(d) and 14(d)(2) of
the Exchange Act) is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing 20percent or more of
the combined voting power of the Company's then outstanding securities; or
(2)during any period of two consecutive years, individuals who at the
beginning of such period constitute the Board of Directors of the Company
cease for any reason to constitute at least a majority thereof unless the
election, or the nomination for election by the Company's shareholders, of
each new director was approved by a vote of at least two-thirds of the
directors then still in office who were directors at the beginning of the
period. A change in control of the Company shall not include any change in
control (i)pursuant to a written agreement between the Company and another
person, which agreement is approved and adopted by the Board of Directors
of the Company, (ii)pursuant to any tender offer or exchange offer which
the Board of Directors has in any manner recommended acceptance of to the
shareholders of the Company, or (iii)pursuant to a distribution of shares
of Common Stock of the Company by FMI Associates to its partners.

                    (E) Amendment of Exercise Period Applicable to
Termination. The Board of Directors, at the time of grant or at any time
thereafter, may extend the three-month and 12-month exercise periods any
length of time not later than the original expiration date of the option,
and may increase the portion of an option that is exercisable, subject to
such terms and conditions as the Board of Directors may determine.

                    (F) Failure to Exercise Option. To the extent that the
option of any deceased optionee or of any optionee whose employment or
service terminates is not exercised within the applicable period, all
further rights to purchase shares pursuant to such option shall cease and
terminate.

               (v) Purchase of Shares. Unless the Board of Directors
determines otherwise, shares may be acquired pursuant to an option granted
under the Plan only upon receipt by the Company of notice in writing from
the optionee of the optionee's intention to exercise, specifying the number
of shares as to which the optionee desires to exercise the option and the
date on which the optionee desires to complete the transaction, and if
required in order to comply with the Securities Act of 1933, as amended,
containing a representation that it is the optionee's present intention to
acquire the shares for investment and not with a view to distribution.
Unless the Board of Directors determines otherwise, on or before the date
specified for 

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completion of the purchase of shares pursuant to an option, the optionee
must have paid the Company the full purchase price of such shares in cash
(including cash that may be the proceeds of a loan from the Company) or, in
whole or in part, in Common Stock of the Company valued at fair market
value, or, with the consent of the Board of Directors, restricted stock,
Performance-based Awards or other contingent awards denominated in either
stock or cash, deferred compensation credits, promissory notes and other
forms of consideration. The fair market value of Common Stock provided in
payment of the purchase price shall be the closing price for the Common
Stock as reported in the NYSE Composite Transactions and published in The
Wall Street Journal on the trading day preceding the date the option is
exercised, or such other reported value of the Common Stock as shall be
specified by the Board of Directors. No shares shall be issued until full
payment therefor has been made. Subject to such rules as may be adopted by
the Board of Directors, an optionee may request the Company to apply
automatically the shares to be received upon the exercise of a portion of a
stock option (even though stock certificates have not yet been issued) to
satisfy the purchase price for additional portions of the option.

          Each optionee who has exercised an option shall immediately upon
notification of the amount due, if any, pay to the Company in cash amounts
necessary to satisfy any applicable federal, state and local tax
withholding requirements. If additional withholding is or becomes required
beyond any amount deposited before delivery of the certificates, the
optionee shall pay such amount to the Company on demand. If the optionee
fails to pay the amount demanded, the Company may withhold that amount from
other amounts payable by the Company to the optionee, including salary,
subject to applicable law. Subject to such rules as may be adopted by the
Board of Directors, an optionee may satisfy this obligation, in whole or in
part, by having the Company withhold from the shares to be issued upon the
exercise that number of shares that would satisfy the withholding amount
due or by delivering to the Company Common Stock to satisfy the withholding
amount. Upon the exercise of an option, the number of shares reserved for
issuance under the Plan shall be reduced by the number of shares issued
upon exercise of the option, less the number of shares surrendered in
payment of the option exercise or surrendered or withheld to satisfy
withholding obligations.

          (b) Incentive Stock Options. Incentive Stock Options shall be
subject to the following additional terms and conditions:

               (i) Limitation on Amount of Grants. No employee may be
granted Incentive Stock Options under the Plan if the aggregate fair market
value, on the date of grant, of the Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by that employee
during any calendar year under the Plan and under any other incentive stock
option plan (within the meaning of Section 422 of the Code) of the Company
or any parent or subsidiary of the Company exceeds $100,000.

               (ii) Limitations on Grants to 10 Percent Shareholders. An
Incentive Stock Option may be granted under the Plan to an employee
possessing 

7
more than 10percent of the total combined voting power of all classes of
stock of the Company or of any parent or subsidiary of the Company only if
the option price is at least 110percent of the fair market value of the
Common Stock subject to the option on the date it is granted, as described
in paragraph 6(b)(iv), and the option by its terms is not exercisable after
the expiration of five years from the date it is granted.

               (iii) Duration of Options. Subject to paragraphs 6(a)(ii)
and 6(b)(ii), Incentive Stock Options granted under the Plan shall continue
in effect for the period fixed by the Board of Directors, except that no
Incentive Stock Option shall be exercisable after the expiration of
10years from the date it is granted.

               (iv) Option Price. The option price per share shall be
determined by the Board of Directors at the time of grant. Except as
provided in paragraph 6(b)(ii), the option price shall not be less than
100percent of the fair market value of the Common Stock covered by the
Incentive Stock Option at the date the option is granted. The fair market
value shall be deemed to be the closing price for the Common Stock as
reported in the NYSE Composite Transactions and published in The Wall
Street Journal on the day preceding the date the option is granted, or if
there has been no sale on that date, on the last preceding date on which a
sale occurred, or such other value of the Common Stock as shall be
specified by the Board of Directors.

               (v) Limitation on Time of Grant. No Incentive Stock Option
shall be granted on or after the tenth anniversary of the effective date of
the Plan.

               (vi) Conversion of Incentive Stock Options. The Board of
Directors may at any time without the consent of the optionee convert an
Incentive Stock Option to a Non-Statutory Stock Option.

               (vii) Limitation on Number of Shares Issuable Under
Incentive Stock Options. Subject to adjustment as provided in paragraph 12,
the total number of shares of Common Stock that may be issued under the
Plan upon exercise of Incentive Stock Options shall not exceed 4,000,000
shares.

          (c) Non-Statutory Stock Options. Non-Statutory Stock options
shall be subject to the following additional terms and conditions:

               (i) Option Price. The option price for Non-Statutory Stock
Options shall be determined by the Board of Directors at the time of grant.
The option price may not be less than 50percent of the fair market value
of the shares on the date of grant. The fair market value of shares covered
by a Non-Statutory Stock Option shall be determined pursuant to paragraph
6(b)(iv).

               (ii) Duration of Options. Non-Statutory Stock Options
granted under the Plan shall continue in effect for the period fixed by the
Board of Directors.

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     7. Stock Bonuses. The Board of Directors may award shares under the
Plan as stock bonuses. Shares awarded as a bonus shall be subject to the
terms, conditions, and restrictions determined by the Board of Directors.
The restrictions may include restrictions concerning transferability and
forfeiture of the shares awarded, together with such other restrictions as
may be determined by the Board of Directors. The Board of Directors may
require the recipient to sign an agreement as a condition of the award, but
may not require the recipient to pay any monetary consideration other than
amounts necessary to satisfy tax withholding requirements. The agreement
may contain any terms, conditions, restrictions, representations and
warranties required by the Board of Directors. The certificates
representing the shares awarded shall bear any legends required by the
Board of Directors. The Company may require any recipient of a stock bonus
to pay to the Company in cash upon demand amounts necessary to satisfy any
applicable federal, state or local tax withholding requirements. If the
recipient fails to pay the amount demanded, the Company may withhold that
amount from other amounts payable by the Company to the recipient,
including salary or fees for services, subject to applicable law. With the
consent of the Board of Directors, a recipient may deliver Common Stock to
the Company to satisfy this withholding obligation. Upon the issuance of a
stock bonus, the number of shares reserved for issuance under the Plan
shall be reduced by the number of shares issued, less the number of shares
surrendered or withheld to satisfy withholding obligations.

     8. Restricted Stock. The Board of Directors may issue shares under the
Plan for such consideration (including promissory notes and services) as
determined by the Board of Directors provided that in no event shall the
consideration be less than 50percent of fair market value of the Common
Stock at the time of issuance. Shares issued under the Plan shall be
subject to the terms, conditions and restrictions determined by the Board
of Directors. The restrictions may include restrictions concerning
transferability, repurchase by the Company and forfeiture of the shares
issued, together with such other restrictions as may be determined by the
Board of Directors. All Common Stock issued pursuant to this paragraph 8
shall be subject to a purchase agreement, which shall be executed by the
Company and the prospective recipient of the shares prior to the delivery
of certificates representing such shares to the recipient. The purchase
agreement may contain any terms, conditions, restrictions, representations
and warranties required by the Board of Directors. The certificates
representing the shares shall bear any legends required by the Board of
Directors. The Company may require any purchaser of restricted stock to pay
to the Company in cash upon demand amounts necessary to satisfy any
applicable federal, state or local tax withholding requirements. If the
purchaser fails to pay the amount demanded, the Company may withhold that
amount from other amounts payable by the Company to the purchaser,
including salary; subject to applicable law. With the consent of the Board
of Directors, a purchaser may deliver Common Stock to the Company to
satisfy this withholding obligation. Upon the issuance of restricted stock,
the number of shares reserved for issuance under the Plan shall be reduced
by the number of shares issued, less the number of shares surrendered in
payment of the restricted stock or surrendered or withheld to satisfy
withholding obligations.

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     9. Stock Appreciation Rights.

          (a) Grant. Stock appreciation rights may be granted under the
Plan by the Board of Directors, subject to such rules, terms, and
conditions as the Board of Directors prescribes.

          (b) Exercise.

               (i) Each stock appreciation right shall entitle the holder,
upon exercise, to receive from the Company in exchange therefor an amount
equal in value to the excess of the fair market value on the date of
exercise of one share of Common Stock of the Company over its fair market
value on the date of grant (or, in the case of a stock appreciation right
granted in connection with an option, the excess of the fair market value
of one share of Common Stock of the Company over the option price per share
under the option to which the stock appreciation right relates), multiplied
by the number of shares covered by the stock appreciation right or the
option, or portion thereof, that is surrendered. No stock appreciation
right shall be exercisable at a time that the amount determined under this
subparagraph is negative. Payment by the Company upon exercise of a stock
appreciation right may be made in Common Stock valued at fair market value,
in cash, or partly in Common Stock and partly in cash, all as determined by
the Board of Directors.

               (ii) A stock appreciation right shall be exercisable only at
the time or times established by the Board of Directors; provided, that the
provisions of paragraph 6(a)(iv)(D) shall apply to the exercise of a stock
appreciation right upon termination of employment of the grantee following
a change in control as provided therein. If a stock appreciation right is
granted in connection with an option, the following rules shall apply:
(1)the stock appreciation right shall be exercisable only to the extent
and on the same conditions that the related option could be exercised;
(2)upon exercise of the stock appreciation right, the option or portion
thereof to which the stock appreciation right relates terminates; and
(3)upon exercise of the option, the related stock appreciation right or
portion thereof terminates. No stock appreciation right granted to an
officer or director may be exercised during the first six months following
the date it is granted.

               (iii) The Board of Directors may withdraw any stock
appreciation right granted under the Plan at any time and may impose any
conditions upon the exercise of a stock appreciation right or adopt rules
and regulations from time to time affecting the rights of holders of stock
appreciation rights. Such rules and regulations may govern the right to
exercise stock appreciation rights granted prior to adoption or amendment
of such rules and regulations as well as stock appreciation rights granted
thereafter.

               (iv) For purposes of this paragraph 9, the fair market value
of the Common Stock shall be the closing price for the Common Stock as
reported in the NYSE Composite Transactions and published in The Wall
Street Journal, or such other reported value of the Common Stock as shall
be specified by the Board of 

10
Directors, on the trading day preceding the date the stock appreciation
right is exercised.

               (v) No fractional shares shall be issued upon exercise of a
stock appreciation right. In lieu thereof, cash may be paid in an amount
equal to the value of the fraction or, if the Board of Directors shall
determine, the number of shares may be rounded downward to the next whole
share.

               (vi) Each participant who has exercised a stock appreciation
right shall, upon notification of the amount due, pay to the Company in
cash amounts necessary to satisfy any applicable federal, state and local
tax withholding requirements. If the participant fails to pay the amount
demanded, the Company may withhold that amount from other amounts payable
by the Company to the participant including salary, subject to applicable
law. With the consent of the Board of Directors a participant may satisfy
this obligation, in whole or in part, by having the Company withhold from
any shares to be issued upon the exercise that number of shares that would
satisfy the withholding amount due or by delivering Common Stock to the
Company to satisfy the withholding amount.

               (vii) Upon the exercise of a stock appreciation right for
shares, the number of shares reserved for issuance under the Plan shall be
reduced by the number of shares issued, less the number of shares
surrendered or withheld to satisfy withholding obligations. Cash payments
of stock appreciation rights shall not reduce the number of shares of
Common Stock reserved for issuance under the Plan.

     10. Cash Bonus Rights.

          (a) Grant. The Board of Directors may grant cash bonus rights
under the Plan in connection with (i)options granted or previously
granted, (ii)stock appreciation rights granted or previously granted,
(iii)stock bonuses awarded or previously awarded and (iv)shares sold or
previously sold under the Plan. Cash bonus rights will be subject to rules,
terms and conditions as the Board of Directors may prescribe. The payment
of a cash bonus shall not reduce the number of shares of Common Stock
reserved for issuance under the Plan.

          (b) Cash Bonus Rights in Connection with Options. A cash bonus
right granted in connection with an option will entitle an optionee to a
cash bonus when the related option is exercised (or terminates in
connection with the exercise of a stock appreciation right related to the
option) in whole or in part. No cash bonus right granted to an officer or
director in connection with an option may be exercised during the first six
months following the date the bonus right is granted. If an optionee
purchases shares upon exercise of an option and does not exercise a related
stock appreciation right, the amount of the bonus shall be determined by

11
multiplying the excess of the total fair market value of the shares to be
acquired upon the exercise over the total option price for the shares by
the applicable bonus percentage. If the optionee exercises a related stock
appreciation right in connection with the termination of an option, the
amount of the bonus shall be determined by multiplying the total fair
market value of the shares and cash received pursuant to the exercise of
the stock appreciation right by the applicable bonus percentage. The bonus
percentage applicable to a bonus right shall be determined from time to
time by the Board of Directors but shall in no event exceed 75percent.

          (c) Cash Bonus Rights in Connection with Stock Bonus. A cash
bonus right granted in connection with a stock bonus will entitle the
recipient to a cash bonus payable when the stock bonus is awarded or
restrictions, if any, to which the stock is subject lapse. If bonus stock
awarded is subject to restrictions and is repurchased by the Company or
forfeited by the holder, the cash bonus right granted in connection with
the stock bonus shall terminate and may not be exercised. The amount and
timing of payment of a cash bonus shall be determined by the Board of
Directors.

          (d) Cash Bonus Rights in Connection with Stock Purchases. A cash
bonus right granted in connection with the purchase of stock pursuant to
paragraph 8 will entitle the recipient to a cash bonus when the shares are
purchased or restrictions, if any, to which the stock is subject lapse. Any
cash bonus right granted in connection with shares purchased pursuant to
paragraph 8 shall terminate and may not be exercised in the event the
shares are repurchased by the Company or forfeited by the holder pursuant
to applicable restrictions. The amount of any cash bonus to be awarded and
timing of payment of a cash bonus shall be determined by the Board of
Directors.

          (e) Taxes. The Company shall withhold from any cash bonus paid
pursuant to paragraph 10 the amount necessary to satisfy any applicable
federal, state and local withholding requirements.

     11. Performance-based Awards. The Board of Directors may grant awards
intended to qualify as performance-based compensation under Section 162(m)
of the Code and the regulations thereunder ("Performance-based Awards").
Performance- based Awards shall be denominated at the time of grant either
in Common Stock ("Stock Performance Awards") or in dollar amounts ("Dollar
Performance Awards"). Payment under a Stock Performance Award or a Dollar
Performance Award shall be made, at the discretion of the Board of
Directors, in Common Stock ("Performance Shares"), or in cash or in any
combination thereof. Performance-based Awards shall be subject to the
following terms and conditions:

          (a) Award Period. The Board of Directors shall determine the
period of time for which a Performance-based Award is made (the "Award
Period").

          (b) Performance Goals and Payment. The Board of Directors shall
establish in writing an objective ("Performance Goals") that must be met by
the Company or any subsidiary, division or other unit (including one or
more regions or stores) of the Company ("Business Unit") during the Award
Period as a condition to payment being made under the Performance-based
Award. The Performance Goals for each award shall be one or more targeted
levels of performance with respect to 

12
one or more of the following objective measures with respect to the Company
or any Business Unit: departmental expense performance, earnings per share,
total shareholder return (stock price increase plus dividends), return on
equity, return on assets, revenues, operating income, income before taxes,
net income, inventories, inventory turns, cash flows, expenses, capital
expenditures, increase in shareholder value as a percentage of assets
employed, other financial return ratios, market performance, customer
satisfaction or any of the foregoing before the effect of acquisitions,
divestitures, accounting changes, and restructuring and special charges
(determined according to criteria established by the Board of Directors).
The Board of Directors shall also establish the number of Performance
Shares or the amount of cash payment to be made under a Performance-based
Award if the Performance Goals are met or exceeded, including the fixing of
a maximum payment (subject to Section11(d)). The Board of Directors may
establish other restrictions to payment under a Performance-based Award,
such as a continued employment requirement, in addition to satisfaction of
the Performance Goals. Some or all of the Performance Shares may be issued
at the time of the award as restricted shares subject to forfeiture in
whole or in part if Performance Goals or, if applicable, other restrictions
are not satisfied.

          (c) Computation of Payment. After an Award Period, the financial
performance of the Company or Business Unit, as applicable, during the
period shall be measured against the Performance Goals. If the Performance
Goals are not met, no payment shall be made under a Performance-based
Award. If the Performance Goals are met or exceeded, the Board of Directors
shall certify that fact in writing and certify the number of Performance
Shares earned or the amount of cash payment to be made under the terms of
the Performance-based Award.

          (d) Maximum Awards. No participant may receive Stock Performance
Awards in any fiscal year under which the maximum number of shares of
Common Stock issuable under the award exceeds 100,000 shares. No
participant may receive Dollar Performance Awards in any fiscal year under
which the maximum amount of cash payable under the award exceeds
$1,500,000.

          (e) Tax Withholding. Each participant who has received
Performance Shares shall, upon notification of the amount due, pay to the
Company in cash amounts necessary to satisfy any applicable federal, state
and local tax withholding requirements. If the participant fails to pay the
amount demanded, the Company may withhold that amount from other amounts
payable by the Company to the participant, including salary, subject to
applicable law. With the consent of the Board of Directors, a participant
may satisfy this obligation, in whole or in part, by having the Company
withhold from any shares to be issued that number of shares that would
satisfy the withholding amount due or by delivering Common Stock to the
Company to satisfy the withholding amount.

          (f) Effect on Shares Available. The payment of a
Performance-based Award in cash shall not reduce the number of shares of
Common Stock reserved for issuance under the Plan. The number of shares of
Common Stock reserved for 

13
issuance under the Plan shall be reduced by the number of shares issued
upon payment of an award, less the number of shares surrendered or withheld
to satisfy withholding obligations.

     12. Changes in Capital Structure. If the outstanding Common Stock of
the Company is hereafter increased or decreased or changed into or
exchanged for a different number or kind of shares or other securities of
the Company or of another corporation by reason of any reorganization,
merger, consolidation, plan of exchange, recapitalization,
reclassification, stock split-up, combination of shares or dividend payable
in shares, appropriate adjustment shall be made by the Board of Directors
in the number and kind of shares available for awards under the Plan. In
addition, the Board of Directors shall make appropriate adjustment in the
number and kind of shares as to which outstanding options and stock
appreciation rights, or portions thereof then unexercised, shall be
exercisable, so that the optionee's proportionate interest before and after
the occurrence of the event is maintained. The Board of Directors may also
require that any securities issued in respect of or exchanged for shares
issued hereunder that are subject to restrictions be subject to similar
restrictions. Notwithstanding the foregoing, the Board of Directors shall
have no obligation to effect any adjustment that would or might result in
the issuance of fractional shares, and any fractional shares resulting from
any adjustment may be disregarded or provided for in any manner determined
by the Board of Directors. Any such adjustments made by the Board of
Directors shall be conclusive. In the event of dissolution of the Company
or a merger, consolidation or plan of exchange affecting the Company, in
lieu of providing for options and stock appreciation rights as provided
above in this paragraph 12, the Board of Directors may, in its sole
discretion, provide a 30-day period prior to such event during which
optionees shall have the right to exercise options and stock appreciation
rights in whole or in part without any limitation on exercisability and
upon the expiration of which 30-day period all unexercised options and
stock appreciation rights shall immediately terminate.

     13. Corporate Mergers, Acquisitions, etc. The Board of Directors may
also grant options, stock appreciation rights, Performance-based Awards,
stock bonuses and cash bonuses and issue restricted stock under the Plan
having terms, conditions and provisions that vary from those specified in
this Plan provided that any such awards are granted in substitution for, or
in connection with, the assumption of existing options, stock appreciation
rights, stock bonuses, cash bonuses, restricted stock and Performance-based
Awards granted, awarded or issued by another corporation and assumed or
otherwise agreed to be provided for by the Company pursuant to or by reason
of a transaction involving a corporate merger, consolidation, acquisition
of property or stock, separation, reorganization or liquidation to which
the Company or a subsidiary is a party.

     14. Amendment of Plan. The Board of Directors may at any time, and
from time to time, modify or amend the Plan in such respects as it shall
deem advisable because of changes in the law while the Plan is in effect or
for any other reason. Except as provided in paragraphs 6(a)(iv), 9 and 12,
however, no change in an award 

14
already granted shall be made without the written consent of the holder of
such award.

     15. Approvals. The obligations of the Company under the Plan are
subject to the approval of state and federal authorities or agencies with
jurisdiction in the matter. The Company will use its best efforts to take
steps required by state or federal law or applicable regulations, including
rules and regulations of the Securities and Exchange Commission and any
stock exchange on which the Company's shares may then be listed, in
connection with the grants under the Plan. The foregoing notwithstanding,
the Company shall not be obligated to issue or deliver Common Stock under
the Plan if such issuance or delivery would violate applicable state or
federal securities laws.

     16. Employment and Service Rights. Nothing in the Plan or any award
pursuant to the Plan shall (i)confer upon any employee any right to be
continued in the employment of the Company or any subsidiary or interfere
in any way with the right of the Company or any subsidiary by whom such
employee is employed to terminate such employee's employment at any time,
for any reason, with or without cause, or to decrease such employee's
compensation or benefits, or (ii)confer upon any person engaged by the
Company any right to be retained or employed by the Company or to the
continuation, extension, renewal, or modification of any compensation,
contract, or arrangement with or by the Company.

     17. Rights as a Shareholder. The recipient of any award under the Plan
shall have no rights as a shareholder with respect to any Common Stock
until the date of issue to the recipient of a stock certificate for such
shares. Except as otherwise expressly provided in the Plan, no adjustment
shall be made for dividends or other rights for which the record date
occurs prior to the date such stock certificate is issued.