BMC INDUSTRIES, INC. 1997 MANAGEMENT INCENTIVE PLAN OBJECTIVES - To focus management's attention on annual profit performance and balance sheet management. - To recognize the extraordinary contributions of individual managers, in years when earnings exceed "Par" performance. GLOSSARY OF TERMS "Maximum" Performance - That level of consolidated net earnings justifying a "maximum" incentive award. "Par" Performance - The level of consolidated net earnings, as approved by the Board, justifying a "target/par" incentive award. "Cut-in" Performance - The minimum level of consolidated net earnings justifying a "minimum" incentive award. "Target/Par" Incentive - The percent (%) of base pay when a "target/par"incentive award is earned. "Minimum" Incentive - The percent (%) of base pay when a "minimum" incentive award is earned. "Maximum" Incentive - The percent (%) of base pay when a "maximum" incentive award is earned. Page 10 1997 MANAGEMENT INCENTIVE PLAN SUMMARY PARTICIPANTS: Elected officers and key managers. PERFORMANCE STANDARDS: "Maximum" performance is 108.3% of the "Par" consolidated net earnings. "Par" performance is the consolidated net earnings number, as approved by the Board. "Cut-in" performance is 95% of the "Par" consolidated net earnings. AWARD LEVELS: "Target" incentive award levels vary as a percentage of base salary, depending on level of responsibility. ORGANIZATION WEIGHTING: There is no organization weighting, i.e., Corporate participants earn awards based on Corporate performance. INCENTIVE OPPORTUNITY: Individual incentive awards will be prorated and calculated based on the following, once the applicable "Thresholds" have been exceeded. - The "Maximum" Incentive is earned when reported earnings, as defined above, equal or exceed "Maximum" Performance. - The "Target/Par" Incentive is earned when reported earnings, as defined above, equal "Par" Performance. - The "Minimum" Incentive is earned when reported earnings, as defined above, equal "Cut-in" Performance. Page 11 INCENTIVE OPPORTUNITY: - No incentive will be paid when reported (continued) earnings, as defined above, fall below "Cut-in" Performance. - "Discretionary Incentive Pools" will be generated when earnings performance exceeds "Par". Any MIP participant is eligible to participate. The "Pool" will be 10% of the accrued incentive dollars at "Par". Discretionary awards will be in addition to the incentive awards by formula. Such awards must be determined by the CEO. PAYMENT FORM: Cash. Page 12