As filed with the Securities and Exchange Commission on July 29, 1999

                                  File No. 333-


                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM S-8
                             REGISTRATION STATEMENT
                                      Under
                           THE SECURITIES ACT OF 1933


                             CABLETRON SYSTEMS, INC.
             (Exact name of registrant as specified in its charter)

           Delaware                                              04-2797263
--------------------------------                             -------------------
  (State or Other Jurisdiction                                (I.R.S. Employer
of Incorporation or Organization)                            Identification No.)


                                35 Industrial Way
                         Rochester, New Hampshire 03867
          (Address of Principal Executive Offices, including Zip Code)

                             CABLETRON SYSTEMS, INC.
                           1998 EQUITY INCENTIVE PLAN
                           --------------------------
                            (Full title of the Plan)

                              David J. Kirkpatrick
                             Chief Financial Officer
                             Cabletron Systems, Inc.
                                35 Industrial Way
                         Rochester, New Hampshire 03867
                                 (603) 332-9400

                         ------------------------------
(Name, Address and Telephone Number, including Area Code, of Agent for Service)
<TABLE>
<CAPTION>
<S>                       <C>                 <C>                        <C>                      <C>


                         CALCULATION OF REGISTRATION FEE
------------------------- ------------------- -------------------------- ------------------------- =================

                                                  Proposed Maximum           Proposed Maximum
 Title of Securities To                             Offering Price          Aggregate Offering        Amount of
     Be Registered           Amount To Be            Per Share (1)              Price (1)          Registration Fee
                              Registered
------------------------- ------------------- -------------------------- ------------------------- =================

Common Stock,
  $0.01 par value             14,500,000               $12.6875                  $183,968,750            $51,144
------------------------- ------------------- -------------------------- ------------------------- =================
</TABLE>

(1) Estimated  solely  for the  purpose  of  determining  the  registration  fee
    pursuant  to Rule  457(h)  on the  basis of the  high and low sale  price of
    Cabletron Systems,  Inc. Common Stock, par value $0.01,  reported on the New
    York Stock Exchange Composite Transaction Tape on July 26, 1999.


<PAGE>


                    INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3.  Incorporation of Documents by Reference.

         Cabletron Systems,  Inc. (the "Registrant" or the "Company") hereby
         incorporates the following documents herein by reference:

          (a)  Annual Report on Form 10-K for the fiscal year ended February 28,
               1999 filed with the Commission on June 2, 1999.

          (b)  Current  Report on Form 8-K  filed  with  Commission  on June 16,
               1999 and Quarterly Report on Form 10-Q for the fiscal quarter
               ended May 31, 1999 and filed with the Commission on July 16,1999.

          (c)  Description  of the  Registrant's  Common Stock  contained in its
               registration  statement  on Form 8-A  filed  with the  Commission
               under  Section  12 of the  Exchange  Act on April  19,  1989,  as
               amended by the description  contained in the Registrant's  Form 8
               filed with the Commission on May 22, 1989.

     All documents  subsequently filed by the Registrant or the Plan pursuant to
Section 13(a),  Section 13(c),  Section 14 and Section 15(d) of the Exchange Act
prior to the filing of a post-effective amendment to this Registration Statement
that indicates that all securities  offered have been sold or which  deregisters
all securities then remaining unsold,  shall be deemed to be incorporated herein
by reference from the date of filing of such documents.

Item 4.  Description of Securities.

         Not applicable.

Item 5.  Interests of Named Experts and Counsel.

         Not applicable.

Item 6.  Indemnification of Directors and Officers.

     Section 145 of the Delaware General  Corporation Law, as amended,  provides
that a  corporation  may  indemnify  any  person  who  was or is a  party  or is
threatened to be made a party to any  threatened,  pending or completed  action,
suit or proceeding,  whether  civil,  criminal or  investigative  (other than an
action by or in the right of the  corporation)  by reason of the fact that he is
or was a director,  officer, employee or agent of the corporation,  or is or was
serving at the request of the  corporation as a director,  officer,  employee or
agent  of  another  corporation,  partnership,  joint  venture,  trust  or other
enterprise,  against expenses (including attorneys' fees), judgments,  fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action,  suit or  proceeding if he acted in good faith and in a manner
he  reasonably  believed  to be in or not opposed to the best  interests  of the
corporation,  and,  with respect to any criminal  action or  proceeding,  had no
reasonable  cause to believe  his  conduct  was  unlawful.  Section  145 further
provides that a corporation  similarly may indemnify any such person  serving in
any such  capacity who was or is a party or is  threatened to be made a party to
any  threatened,  pending or completed  action or suit by or in the right of the
corporation to procure a judgment in its favor,  against  expenses  actually and
reasonably  incurred in connection with the defense or settlement of such action
or suit if he acted in good faith and in a manner he  reasonably  believed to be
in or not  opposed to the best  interest of the  corporation  and except that no
indemnification  shall be made in respect  of any  claim,  issue or matter as to
which such  person  shall  have been  adjudged  to be liable to the  corporation
unless and only to the extent that the Delaware  Court of Chancery or such other
court in which such action or suit was brought shall determine upon  application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.

     Section  102(b)(7) of the  Delaware  General  Corporation  Law, as amended,
permits a corporation to include in its certificate of incorporation a provision
eliminating or limiting the personal  liability of a director to the corporation
or its  stockholders  for  monetary  damages for breach of  fiduciary  duty as a
director,  provided  that  such  provision  shall  not  eliminate  or limit  the
liability of a director (i) for any breach of the director's  duty of loyalty to
the  corporation  or its  stockholders,  (ii) for acts or omissions  not in good
faith or which involve  intentional  misconduct  or a knowing  violation of law,
(iii) under  Section 174 of the Delaware  General  Corporation  Law (relating to
unlawful  payment of dividends and unlawful stock purchase and  redemption),  or
(iv) for any transaction  from which the director  derived an improper  personal
benefit.
<PAGE>

     The  Registrant's  Restated  Certificate  of  Incorporation,   as  amended,
provides that the Company's  directors  shall not be liable to the Registrant or
its  stockholders  for  monetary  damages  for  breach  of  fiduciary  duty as a
director,  except  to  the  extent  that  exculpation  from  liabilities  is not
permitted  under the Delaware  General  Corporation Law as in effect at the time
such liability is determined.  The Restated  Certificate  of  Incorporation,  as
amended,  further provides that the Registrant shall indemnify its directors and
officers to the full extent permitted by the law of the State of Delaware.

Item 7.  Exemption From Registration Claimed.

         Not applicable.

Item 8.  Exhibits.

        Exhibit
        -------

          4.1     Cabletron Systems, Inc. 1998 Equity Incentive Plan.

          5.1     Opinion of Ropes & Gray.

         23.1     Consent of KPMG LLP.

         23.3     Consent of Ropes & Gray (See Exhibit 5.1).

         24.1     Power of Attorney (See Signature Page).

Item 9.  Undertakings.

     (a)  The undersigned Registrant hereby undertakes:

          (1)  to file,  during  any  period in which  offers or sales are being
               made, a post-effective  amendment to this registration statement,
               (i) to include any prospectus required by Section 10(a)(3) of the
               Securities  Act of 1933,  (ii) to reflect in the  prospectus  any
               facts  or  events   arising  after  the  effective  date  of  the
               registration   statement  (or  the  most  recent   post-effective
               amendment  thereof),  which,  individually  or in the  aggregate,
               represent a fundamental  change in the  information  set forth in
               the  registration  statement,  and (iii) to include any  material
               information   with  respect  to  the  plan  of  distribution  not
               previously  disclosed  in  the  registration   statement  or  any
               material   change  to  such   information  in  the   registration
               statement;  provided,  however,  that  paragraphs  (a)(1)(i)  and
               (a)(1)(ii)  shall not  apply if the  information  required  to be
               included in a  post-effective  amendment by those  paragraphs  is
               contained in periodic reports filed by the registrant pursuant to
               section 13 or section  15(d) of the  Securities  Exchange  Act of
               1934  that are  incorporated  by  reference  in the  registration
               statement.

          (2)  that,  for the purpose of  determining  any  liability  under the
               Securities Act of 1933, each such post-effective  amendment shall
               be  deemed to be a new  registration  statement  relating  to the
               securities offered herein, and the offering of such securities at
               that time shall be deemed to be the  initial  bona fide  offering
               thereof;

          (3)  to  remove  from   registration  by  means  of  a  post-effective
               amendment any of the  securities  being  registered  which remain
               unsold at the termination of the offering.

     (b) The  undersigned  Registrant  hereby  undertakes  that, for purposes of
determining  any liability  under the Securities Act of 1933, each filing of the
Registrant's  annual  report  pursuant to Section  13(a) or Section 15(d) of the
Securities  Exchange  Act of  1934  that is  incorporated  by  reference  in the
registration  statement  shall  be  deemed  to be a new  registration  statement
relating to the securities offered therein,  and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

     (c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors,  officers and controlling  persons of
the  Registrant  pursuant  to  the  foregoing  provisions,   or  otherwise,  the
Registrant  has been advised that in the opinion of the  Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore,  unenforceable. In the event that a claim for indemnification
against such  liabilities  (other than the payment by the Registrant of expenses
incurred or paid by a director,  officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director,  officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been  settled by  controlling  precedent,  submit to a court of  appropriate
jurisdiction the question whether such  indemnification  by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

<PAGE>


                                   SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement on Form S-8 to be signed on its behalf by the  undersigned,  thereunto
duly authorized,  in the City of Rochester,  The State of New Hampshire, on this
29th day of July, 1999.

                                     CABLETRON SYSTEMS, INC.




                                     By: /s/ Piyush Patel
                                             -------------------
                                     Name:   Piyush Patel
                                     Title:  President, Chief Executive Officer,
                                             and Chairman




                                POWER OF ATTORNEY

     Pursuant  to  the   requirement  of  the  Securities  Act  of  1933,   this
Registration  Statement  has  been  signed  by  the  following  persons  in  the
capacities and on the dates indicated. Each person whose signature appears below
hereby  constitutes and appoints each of Piyush Patel and David J.  Kirkpatrick,
each with full power of substitution,  his true and lawful  attorney-in-fact and
agent with full  power to him to sign for him and in his name in the  capacities
indicated below any and all amendments (including post-effective  amendments) to
this  Registration  Statement and to file the same, with exhibits  thereto,  and
other documents in connection therewith, and he hereby ratifies and confirms his
signature as it may be signed by said attorney to any and all such amendments.


<TABLE>
<CAPTION>
<S>                                   <C>                                                <C>



Signature                             Capacity                                           Date
--------------------------------      ----------------------------------------------     -------------

/s/ Piyush Patel                                                                         July 29, 1999
-------------------------
Piyush Patel                          President, Chief Executive Officer and
                                      Chairman

/S/ David J. Kirkpatrick                                                                 July 29, 1999
-------------------------
David J. Kirkpatrick                  Corporate Executive Vice President of Finance
                                      and Chief Financial Officer (Principal Financial
                                      Officer and Principal Accounting Officer)

/S/ Craig R. Benson                                                                      July 29, 1999
-------------------------
Craig R. Benson                       Director

/S/ Paul R. Duncan                                                                       July 29, 1999
-------------------------
Paul R. Duncan                        Director

/S/ Donald F. McGuinness                                                                 July 29, 1999
-------------------------
Donald F. McGuinness                  Director

/S/ Michael D. Myerow                                                                    July 29, 1999
-------------------------
Michael D. Myerow                     Secretary and Director


</TABLE>





<PAGE>





                                         EXHIBIT INDEX




        Exhibit
        Number                           Title of Exhibit
        -------                          --------------------------------------

          4.1                            Cabletron Systems, Inc. 1998 Equity
                                         Incentive Plan.

          5.1                            Opinion of Ropes & Gray.

         23.1                            Consent of KPMG LLP.

         23.3                            Consent of Ropes & Gray.

         24.1                            Power of Attorney.







<PAGE>


                                                                    EXHIBIT 4.1
                             CABLETRON SYSTEMS, INC.
                           1998 EQUITY INCENTIVE PLAN


1.   PURPOSE

     The purpose of this Equity  Incentive  Plan (the  "Plan") is to advance the
interests of Cabletron  Systems,  Inc. (the  "Company") and its  subsidiaries by
enhancing their ability to attract and retain employees and other individuals or
entities who are in a position to make significant  contributions to the success
of the Company and its subsidiaries through awards based on the Company's common
stock, $.01 par value ("Stock"), and cash incentives.

     The Plan is intended to  accomplish  these goals by enabling the Company to
grant  awards  ("Awards")  in the form of Options,  Stock  Appreciation  Rights,
Restricted   Stock  or  Unrestricted   Stock  Awards,   Deferred  Stock  Awards,
Performance Awards,  Other Stock-Based Awards, or loans or supplemental  grants,
or combinations thereof, all as more fully described below.

2.   ADMINISTRATION

     Unless  otherwise  determined by the Board of Directors of the Company (the
"Board"),  the Plan will be administered by a committee of the Board  designated
for such purpose (the "Committee").  The Committee shall consist of at least two
directors. A majority of the members of the Committee shall constitute a quorum,
and all  determinations  of the  Committee  shall be made by a  majority  of its
members.  Any  determination of the Committee under the Plan may be made without
notice or  meeting of the  Committee  by a writing  signed by a majority  of the
Committee  members.  During  such  times as the  Stock is  registered  under the
Securities  Exchange Act of 1934 (the "1934  Act"),  at least two members of the
Committee  shall be  "non-employee  directors"  within the meaning of Rule 16b-3
promulgated  under the 1934 Act and  "outside  directors"  within the meaning of
Section  162(m)(4)(C)(i)  of the Internal  Revenue Code of 1986, as amended (the
"Code")  (the  "Outside  Directors").  If any member of the  Committee is not an
Outside Director, a sub-committee (the "Sub-Committee") consisting solely of the
Outside  Directors  shall  administer  the Plan in  connection  with  Awards  to
"officers" of the Company within the meaning of Section 16(b) of the 1934 Act or
with respect to any Award  intended to be exempt under Section  162(m)(3) of the
Code.  Any  references  to the  Committee  in this  Plan  shall  also  mean  the
Sub-Committee.

     The  Committee  will have  authority,  not  inconsistent  with the  express
provisions  of the Plan and in addition  to other  authority  granted  under the
Plan, to (a) grant Awards at such time or times as it may choose;  (b) determine
the size of each Award,  including  the number of shares of Stock subject to the
Award;  (c) determine  the type or types of each Award;  (d) determine the terms
and conditions of each Award;  (e) waive compliance by a holder of an Award with
any  obligations  to be  performed  by such holder  under an Award and waive any
terms or conditions of an Award;  (f) amend or cancel an existing Award in whole
or in part (and if an award is  canceled,  grant  another  Award in its place on
such terms and  conditions  as the  Committee  shall  specify),  except that the
Committee  may not,  without  the  consent of the  holder of an Award,  take any
action under this clause with respect to such Award if such action would
<PAGE>

adversely  affect the rights of such holder;  (g) prescribe the form or forms of
any  instruments  to be used under the Plan,  including any written  notices and
elections  required of Participants  (as defined  below),  and change such forms
from time to time; (h) adopt,  amend and rescind rules and  regulations  for the
administration  of the Plan; and (i) interpret the Plan and decide any questions
and settle all  controversies and disputes that may arise in connection with the
Plan.  Such  determinations  and  actions  of  the  Committee,   and  all  other
determinations  and  actions  of the  Committee  made or taken  under  authority
granted  by any  provision  of the Plan,  will be  conclusive  and will bind all
parties.  Nothing in this paragraph  shall be construed as limiting the power of
the Committee to make adjustments under Section 7.3 or Section 8.6.

3.   EFFECTIVE DATE AND TERM OF PLAN

     The Plan will become  effective  on the date on which it is approved by the
stockholders  of the  Company.  Awards  may be made  prior  to such  stockholder
approval if made subject  thereto.  No Award may be granted under the Plan after
May 14, 2008 (the 10th  anniversary  of day before Board  approval),  but Awards
previously granted may extend beyond that date.

4.   SHARES SUBJECT TO THE PLAN

     (a)  Number of Shares.  Subject to  adjustment  as provided in Section 8.6,
          the  aggregate  number of shares of Stock that may be delivered  under
          the Plan will be 14,500,000.  If any Award  requiring  exercise by the
          Participant  for  delivery  of Stock  terminates  without  having been
          exercised  in  full,  or if any  Award  payable  in  Stock  or cash is
          satisfied in cash rather than Stock,  the number of shares of Stock as
          to  which  such  Award  was  not  exercised  or  for  which  cash  was
          substituted will be available for future grants.

     (b)  Special   Limitations   Applicable  to  Certain  Awards.   Subject  to
          adjustment as provided in Section 8.6(a) to the extent such adjustment
          is consistent with the continued  satisfaction  with respect to Awards
          of the  requirements of Section  162(m)(4)(C) of the Code, the maximum
          number of shares of Stock  for which  Options  and Stock  Appreciation
          Rights may be  awarded  under the Plan to any  participant  during any
          three-calendar-year  period  is in the case of each such form of Award
          2,000,000 shares. For purposes of the preceding sentence,  the regrant
          of a canceled Option or Stock Appreciation  Right, or the repricing of
          an Option or Stock Appreciation  Right, shall be treated as a separate
          Award to the extent  required under Section  162(m)(4)(C) of the Code.
          For maximum  limits  relating to Performance  Awards,  see Section 6.5
          below.

     (c)  Shares to be Delivered.  Stock  delivered under the Plan may be either
          authorized but unissued  Stock or previously  issued Stock acquired by
          the Company and held in treasury.  No fractional  shares of Stock will
          be delivered under the Plan.

<PAGE>


5.   ELIGIBILITY AND PARTICIPATION

     Each key employee of the Company or any of its subsidiaries (an "Employee")
and each other  individual or entity (other than employees of the Company or any
of its subsidiaries,  but including without limitation  directors of the Company
or a subsidiary  of the Company) who, in the opinion of the  Committee,  is in a
position to make a significant contribution to the success of the Company or its
subsidiaries  will be  eligible  to  receive  Awards  under the Plan  (each such
Employee,  other  individual  or entity  receiving an Award,  "a  Participant").
Participants  shall  also  include  individuals  who have  accepted  an offer of
employment from the Company and who the Company reasonably  believes will be key
employees upon commencing employment with the Company (a "New Hire").

6.   TYPES OF AWARDS

     6.1  Options

          (a)  Nature of Options.  An option  ("Option")  is an Award giving the
               recipient the right on exercise thereof to purchase Stock.

               Both  "incentive  stock options," as defined in Section 422(b) of
               the Code (any Option  intended to qualify as an  incentive  stock
               option being  hereinafter  referred to as an "ISO"),  and Options
               that are not ISOs,  may be granted under the Plan.  ISOs shall be
               awarded only to Employees. An Option awarded under the Plan shall
               be a non-ISO unless it is expressly  designated as an ISO at time
               of grant.

          (b)  Exercise  Price.   The  exercise  price  of  an  Option  will  be
               determined by the Committee subject to the following:

               (1)  The  exercise  price  of an ISO  or an  Option  intended  to
                    qualify as  performance  based  compensation  under  Section
                    162(m)  of the Code  shall not be less than 100% of the fair
                    market value of the Stock subject to the Option,  determined
                    as of the time the Option is granted.

               (2)  In no case may the  exercise  price paid for Stock  which is
                    part of an original  issue of authorized  Stock be less than
                    the par value per share of the Stock.

          (c)  Duration  of  Options.  The latest date on which an Option may be
               exercised will be the tenth  anniversary  of the day  immediately
               preceding  the date the Option was granted,  or such earlier date
               as may  have  been  specified  by the  Committee  at the time the
               Option was granted.


<PAGE>



          (d)  Exercise of Options.  An Option will become  exercisable  at such
               time or  times,  and on such  conditions,  as the  Committee  may
               specify.  The  Committee  may at any time  and from  time to time
               accelerate the time at which all or any part of the Option may be
               exercised.  Except as otherwise determined by the Committee,  any
               period  during  which a  Participant  who is an Employee is on an
               unpaid  leave of  absence  (or  other  unpaid  absence)  from the
               Company  shall  toll the  period  of time  over  which an  option
               becomes  exercisable.  Any  exercise  of  an  Option  must  be in
               writing,  signed by the proper  person and delivered or mailed to
               the Company,  accompanied  by (1) any  documents  required by the
               Committee  and (2) payment in full in accordance  with  paragraph
               (e) below  for the  number  of  shares  for  which the  Option is
               exercised.

          (e)  Payment for Stock.  Stock purchased on exercise of an Option must
               be paid for as follows:  (1) in cash or by check  (acceptable  to
               the Company in accordance  with  guidelines  established for this
               purpose),  bank draft or money order  payable to the order of the
               Company or (2) if so permitted  by the  Committee at or after the
               grant of the Option,  (i) through the delivery of shares of Stock
               which  have  been  held  for at  least  six  months  (unless  the
               Committee approves a shorter period) and which have a fair market
               value  equal  to  the  exercise  price,  (ii)  by  delivery  of a
               promissory note of the Participant to the Company containing such
               terms as are specified by the Committee,  (iii) by delivery of an
               unconditional and irrevocable  undertaking by a broker to deliver
               promptly  to the  Company  sufficient  funds to pay the  exercise
               price,  or (iv) by any  combination of the foregoing  permissible
               forms of payment.

          (f)  Discretionary  Payments.  If (i) the  market  price of  shares of
               Stock  subject  to an Option  (other  than an Option  which is in
               tandem with a Stock  Appreciation  Right as  described in Section
               6.2) exceeds the exercise  price of the Option at the time of its
               exercise,  and (ii) the person  exercising the Option so requests
               in writing,  the Committee may in its sole discretion  cancel the
               Option  and  cause  the  Company  to pay in cash or in  shares of
               Common  Stock  (valued  at  fair  market  value)  to  the  person
               exercising the Option an amount equal to the  difference  between
               the  fair  market  value  of the  Stock  which  would  have  been
               purchased  pursuant to the exercise  (determined  on the date the
               Option is canceled) and the aggregate  exercise price which would
               have been paid.

     6.2. Stock Appreciation Rights.

          (a)  Nature of Stock  Appreciation  Rights. A Stock Appreciation Right
               ("Stock  Appreciation  Right" or "SAR") is an Award entitling the
               holder on  exercise  to  receive  an amount in cash or Stock or a
               combination thereof (such form to be determined by the Committee)
               determined in whole or in part by reference to appreciation, from
               and after the date of grant,  in the fair market value of a share
               of Stock.  SARs may be based solely on  appreciation  in the fair
               market  value of Stock or on a  comparison  of such  appreciation
               with  some  other  measure  of  market  growth  such as (but  not
               limited) to appreciation in a recognized  market index.  The date
               as of which such  appreciation  or other  measure  is  determined
               shall be the  exercise  date unless  another date is specified by
               the Committee.
<PAGE>

          (b)  Grant of Stock Appreciation Rights. Stock Appreciation Rights may
               be granted in tandem with, or  independently  of, Options granted
               under the Plan.

               (1)  Rules Applicable to Tandem Awards.  When Stock  Appreciation
                    Rights are  granted in tandem  with  Options,  (A) the Stock
                    Appreciation  Right will be exercisable only at such time or
                    times,  and  to the  extent,  that  the  related  Option  is
                    exercisable  and will be exercisable in accordance  with the
                    procedure  required for exercise of the related Option;  (B)
                    the Stock Appreciation Right will terminate and no longer be
                    exercisable  upon the termination or exercise of the related
                    Option,  except that a Stock Appreciation Right granted with
                    respect to fewer than the full  number of shares  covered by
                    an Option will not be reduced  until the number of shares as
                    to  which  the  related  Option  has been  exercised  or has
                    terminated  exceeds  the number of shares not covered by the
                    Stock Appreciation  Right; (C) the Option will terminate and
                    no longer be  exercisable  upon the  exercise of the related
                    Stock  Appreciation  Right;  and (D) the Stock  Appreciation
                    Right will be transferable only with the related Option.

               (2)  Exercise of Independent Stock  Appreciation  Rights. A Stock
                    Appreciation Right not granted in tandem with an Option will
                    become  exercisable  at  such  time  or  times,  and on such
                    conditions,   as  the  Committee  may  specify.   Except  as
                    otherwise  determined  by the  Committee,  any period during
                    which a Participant who is an Employee is on an unpaid leave
                    of absence (or other unpaid  absence) from the Company shall
                    toll the  period  of time  over  which a Stock  Appreciation
                    Right  becomes  exercisable.  The  Committee may at any time
                    accelerate  the time at which  all or any part of the  Right
                    may be exercised.

         Any  exercise of an  independent  Stock  Appreciation  Right must be in
         writing,  signed by the proper  person and  delivered  or mailed to the
         Company, accompanied by any other documents required by the Committee.

     6.3. Restricted and Unrestricted Stock.

          (a)  Grant of Restricted Stock. Subject to the terms and provisions of
               the Plan, the Committee may grant shares of Stock in such amounts
               and  upon  such  terms  and  conditions  as the  Committee  shall
               determine   subject   to   the   restrictions   described   below
               ("Restricted Stock").

          (b)  Restricted  Stock  Agreement.  The  Committee  may require,  as a
               condition to an Award,  that a recipient  of a  Restricted  Stock
               Award  enter into a  Restricted  Stock Award  Agreement,  setting
               forth  the  terms  and  conditions  of the  Award.  In  lieu of a
               Restricted Stock Award  Agreement,  the Committee may provide the
               terms and  conditions of an Award in a notice to the  Participant
               of the Award,  in the resolution  approving the Award, or in such
               other  manner  as it deems  appropriate.  The  stock  certificate
               representing the Restricted Stock shall be appropriately legended
               to reflect the applicable restrictions.

          (c)  Transferability  and  Other  Restrictions.  Except  as  otherwise
               provided in this  Section  6.3,  the shares of  Restricted  Stock
               granted herein may not be sold, transferred,  pledged,  assigned,
               or  otherwise  alienated  or  hypothecated  until  the end of the
               applicable period or periods established by the Committee and the
               satisfaction of any other conditions or restrictions  established
               by the Committee  (such period during which a share of Restricted
               Stock is subject to such  restrictions and conditions is referred
               to as the  "Restricted  Period").  Except  as the  Committee  may
               otherwise  determine  under  Section  7.1 or  Section  7.2,  if a
               Participant  dies or  suffers  a Status  Change  (as  defined  at
               Section 7.2(a)) for any reason during the Restricted  Period, the
               Company may purchase the shares of  Restricted  Stock  subject to
               such  restrictions  and conditions for the amount of cash paid by
               the  Participant for such shares;  provided,  that if no cash was
               paid by the Participant  such shares of Restricted Stock shall be
               automatically forfeited to the Company.
<PAGE>

               During  the  Restricted  Period  with  respect  to any  shares of
               Restricted  Stock,  the Company shall have the right to retain in
               the  Company's   possession  the   certificate  or   certificates
               representing such shares.

          (d)  Removal of  Restrictions.  Except as  otherwise  provided in this
               Section 6.3, a share of Restricted  Stock covered by a Restricted
               Stock grant shall  become free from  restrictions  under the Plan
               upon completion of the Restricted  Period,  including the passage
               of  any  applicable  period  of  time  and  satisfaction  of  any
               conditions  to vesting.  Except as  otherwise  determined  by the
               Committee,  any  period  during  which  a  Participant  who is an
               Employee is on leave of absence (or other  unpaid  absence)  from
               the Company shall, to the extent the Restricted Period relates to
               the passage of time,  toll such time period.  The Committee shall
               have the right at any time, in its sole  discretion,  immediately
               to waive all or any part of the  restrictions and conditions with
               regard to all or any part of the shares held by any Participant.

          (e)  Voting  Rights,  Dividends  and Other  Distributions.  During the
               Restricted  Period,  Participants  holding  shares of  Restricted
               Stock granted hereunder may exercise full voting rights and shall
               receive  all regular  cash  dividends  paid with  respect to such
               shares.  Except as the Committee shall otherwise  determine,  any
               other cash dividends and other distributions paid to Participants
               with  respect  to  shares  of  Restricted  Stock,  including  any
               dividends and distributions  paid in shares,  shall be subject to
               the same  restrictions and conditions as the shares of Restricted
               Stock with respect to which they were paid.

          (f)  Other Awards Settled with Restricted Stock. The Committee may, at
               the  time any  Award  described  in this  Section  6 is  granted,
               provide  that any or all of the Stock  delivered  pursuant to the
               Award will be Restricted Stock.

          (g)  Unrestricted  Stock.  Subject to the terms and  provisions of the
               Plan,   the   Committee   may  grant  shares  of  Stock  free  of
               restrictions  under the Plan in such  amounts and upon such terms
               and conditions as the Committee shall determine.

     6.4. Deferred Stock.

          A Deferred Stock Award ("Deferred  Stock  Award") is an  unfunded  and
               unsecured  promise by the  Company to deliver  shares of Stock in
               the future  ("Deferred  Stock").  Delivery of the Stock will take
               place  at such  time or  times,  and on such  conditions,  as the
               Committee may specify.  The Committee may at any time  accelerate
               the time at which  delivery  of all or any part of the Stock will
               take place.  At the time any Award described in this Section 6 is
               granted,  the  Committee may provide that any or all of the Stock
               delivered pursuant to the Award will be Deferred Stock.
<PAGE>

     6.5. Performance Awards.

          The  Committee  may, at the time an Award  described in Sections  6.1,
     6.2,  6.3,  6.4 or 6.7 is granted,  impose the  additional  condition  that
     performance goals must be met prior to the Participant's realization of any
     vesting, payment or benefit under the Award. In addition, the Committee may
     make awards  entitling  the  Participant  to receive an amount in cash upon
     attainment of specified  performance goals (a "Cash Incentive").  Any Award
     or Cash  Incentive  made subject to  performance  goals as described in the
     preceding  two  sentences  shall be a  "Performance  Award"  subject to the
     provisions  of  this  Section  6.5  in  addition  to any  other  applicable
     provisions of the Plan or the Award. Performance Awards may consist of Cash
     Incentives or Awards that are intended to qualify for the performance-based
     compensation exception under Section 162(m) of the Code, other than Options
     or Stock  Appreciation  Rights  intended to qualify for such  exception  by
     reason of the special rules under Section 162(m) of the Code  applicable to
     stock options and stock  appreciation  rights  granted at an exercise price
     not  less  than  fair  market  value  on  the  date  of  grant  ("Qualified
     Performance  Awards")  or Cash  Incentives  or Awards  that  either are not
     intended so to qualify or are Options or Stock Appreciation Rights intended
     to qualify for such  exception by reason of the special rules under Section
     162(m) of the Code  applicable  to stock  options  and  stock  appreciation
     rights  granted at an exercise price not less than fair market value on the
     date of grant ("Other  Performance  Awards").  The Committee will determine
     the performance measures, the period or periods during which performance is
     to be  measured,  and all other  terms  and  conditions  applicable  to the
     Performance Award. The performance measures to which a Performance Award is
     subject  may be related to  personal  performance,  corporate  performance,
     departmental performance,  or any other category of performance established
     by the Committee.  In the case of a Qualified  Performance  Award,  payment
     under  the  Award  or of the  Cash  Incentive  must be  conditioned  on the
     satisfaction of one or more "qualified performance measures" preestablished
     by the Committee in accordance  with the rules under Section  162(m) of the
     Code and on  certification  (within the meaning of the rules under  Section
     162(m) of the Code) by the  Committee  that such  measure or measures  have
     been met or exceeded.  For purposes of the preceding sentence,  a qualified
     performance measure is an objectively  determinable  measure of performance
     based on any one or more of the following (on a  consolidated,  divisional,
     subsidiary,  line of  business  or  geographical  basis or in  combinations
     thereof): (i) sales; revenues;  assets; expenses;  earnings before or after
     deduction  for all or any  portion  of  interest,  taxes,  depreciation  or
     amortization,  whether or not on a continuing operations or an aggregate or
     per share basis; return on equity, investment, capital or assets; inventory
     level or turns; one or more operating ratios;  borrowing  levels,  leverage
     ratios or credit rating;  market share;  capital  expenditures;  cash flow;
     stock price;  stockholder  return; or any combination of the foregoing;  or
     (ii)  acquisitions and  divestitures (in whole or in part);  joint ventures
     and   strategic   alliances;    spin-offs,    split-ups   and   the   like;
     reorganizations; recapitalizations, restructurings, financings (issuance of
     debt or equity) and  refinancings;  transactions  that would  constitute  a
     change  of  control;  or any  combination  of the  foregoing.  A  qualified
     performance  measure and targets with  respect  thereto  determined  by the
     Committee need not be based upon an increase, a positive or improved result
     or  avoidance  of loss.  The maximum  number of shares of Stock  subject to
     Performance Awards (other than Cash Incentives)  awarded to any Participant
     in any  three-calendar-year  period shall be 2,000,000 shares.  The maximum
     amount payable under Cash  Incentives to any Participant for any year shall
     be $1,000,000.

     6.6. Loans and Supplemental Grants.

          (a)  Loans.  The Company may make a loan to a  Participant,  either at
               the time of or after the grant to him or her of any Award. Such a
               loan may be made in connection  with either the purchase of Stock
               under the  Award or the  payment  of any  federal  income  tax in
               respect  of  income  recognized  as a result  of the  Award.  The
               Committee will have full authority to decide whether to make such
               a loan and to determine the amount,  terms and  conditions of the
               loan,  including the interest  rate (which may be zero),  whether
               the  loan is to be  secured  or  unsecured  or  with  or  without
               recourse against the borrower,  the terms on which the loan is to
               be  repaid  and the  conditions,  if any,  under  which it may be
               forgiven. However, no loan may have a term (including extensions)
               exceeding ten years in duration.

          (b)  Cash Grants.  In connection with any Award,  the Committee may at
               the time such  Award is made or at a later date  provide  for and
               make a cash  payment to the  Participant  not to exceed an amount
               equal to (a) the amount of any  federal,  state and local  income
               tax on ordinary income for which the Participant will be liable

<PAGE>

               with  respect to the Award,  plus (b) an  additional  amount on a
               grossed-up  basis  necessary  to make him or her whole after tax,
               discharging all the Participant's  income tax liabilities arising
               from  all  payments  under  this  Section  6,  all  based on such
               reasonable estimates of applicable tax rates as the Committee may
               determine.

     6.7. Other Stock-Based Awards.

          (a)  Nature of Awards.  The  Committee  may grant other  Awards  under
               which  Stock  is  or  may  in  the  future  be  acquired  ("Other
               Stock-Based   Awards").   Such   awards  may   include,   without
               limitation,  debt securities convertible into or exchangeable for
               shares of Stock upon such  conditions,  including  attainment  of
               performance  goals,  as  the  Committee  shall  determine.   Such
               convertible  or  exchangeable  securities may have such terms and
               conditions  as the  Committee may determine at the time of grant.
               However,  no  convertible  or  exchangeable  debt shall be issued
               unless the  Committee  shall have  provided (by Company  right of
               repurchase,  right to require  conversion  or exchange,  or other
               means deemed  appropriate  by the  Committee) a means of avoiding
               any  right of the  holders  of such  debt to  prevent  a  Company
               transaction by reason of covenants in such debt.

          (b)  Purchase Price; Form of Payment.  The Committee may determine the
               consideration,  if any,  payable upon the issuance or exercise of
               an Other  Stock-Based  Award. The Committee may permit payment by
               certified check or bank check or other  instrument  acceptable to
               the Committee or by surrender of other shares of Stock (excluding
               shares then subject to restrictions under the Plan).

          (c)  Forfeiture of Awards; Repurchase of Stock; Acceleration or Waiver
               of Restrictions. The Committee may determine the conditions under
               which an Other  Stock-Based  Award shall be forfeited  or, in the
               case of an  Award  involving  a  payment  by the  recipient,  the
               conditions  under which the Company may or must  repurchase  such
               Award or related Stock. At any time the Committee may in its sole
               discretion  accelerate,  waive,  or,  amend  any  or  all  of the
               limitations  or conditions  imposed  under any Other  Stock-Based
               Award.

7.   EVENTS AFFECTING OUTSTANDING AWARDS

     7.1. Death.

          Except as the Committee may otherwise determine, if a Participant dies
     the following will apply:

          (a)  All Options and Stock Appreciation Rights held by the Participant
               immediately prior to death, to the extent then  exercisable,  may
               be exercised by the  Participant's  executor or  administrator or
               the person or persons to whom the Option or Right is  transferred
               by will or the applicable  laws of descent and  distribution,  at
               any  time  within  the one year  period  ending  with  the  first
               anniversary of the Participant's death (or such shorter or longer
               period as the  Committee  may  determine),  and  shall  thereupon
               terminate.  In no  event,  however,  shall  an  Option  or  Stock
               Appreciation  Right remain  exercisable beyond the latest date on
               which it could have been exercised without regard to this Section
               7.  All  Options  and  Stock   Appreciation   Rights  held  by  a
               Participant   immediately  prior  to  death  that  are  not  then
               exercisable shall terminate at death.
<PAGE>

          (b)  All Restricted  Stock held by the Participant must be transferred
               to the Company (and, in the event the  certificates  representing
               such  Restricted  Stock are held by the Company,  such Restricted
               Stock will be so  transferred  without any further  action by the
               Participant in accordance with Section 6.3(c)).

          (c)  Any payment or benefit under a Deferred Stock Award,  Performance
               Award or Other Stock-Based Award to which the Participant was not
               irrevocably  entitled  prior to death will be  forfeited  and the
               Award canceled as of the time of death.

     7.2. Termination of Service (Other Than By Death).

          If (i) a Participant  who is an Employee  ceases to be an Employee for
     any reason  other than death,  (ii) there is a  termination  (other than by
     reason of death or  satisfactory  completion  of the  project or service as
     determined  by  the  Committee)  of  the  consulting,  service  or  similar
     relationship in respect of which a non-Employee  Participant was granted an
     Award  hereunder or (iii) a New Hire's offer of  employment  is  terminated
     prior to the New Hire  commencing  employment  with the  Company or the New
     Hire does not commence his or her  employment  with the Company  within two
     months  after  receipt  of an  Award  hereunder  (such  termination  of the
     employment or other relationship being hereinafter referred to as a "Status
     Change"),  then,  except as the  Committee  may  otherwise  determine,  the
     following will apply:

          (a)  All Options and Stock Appreciation Rights held by the Participant
               that were not exercisable  immediately prior to the Status Change
               shall terminate at the time of the Status Change.  Any Options or
               Rights  that were  exercisable  immediately  prior to the  Status
               Change  will  continue  to be  exercisable  for a period of three
               months, and shall thereupon terminate,  unless the Award provides
               by its terms for immediate  termination  in the event of a Status
               Change or unless the Status  Change  results from a discharge for
               cause which in the opinion of the Committee  casts such discredit
               on the  Participant  as to justify  immediate  termination of the
               Award.   In  no  event,   however,   shall  an  Option  or  Stock
               Appreciation  Right remain  exercisable beyond the latest date on
               which it could have been exercised without regard to this Section
               7. For purposes of this  paragraph,  in the case of a Participant
               who is an Employee,  a Status  Change shall not be deemed to have
               resulted  by reason of (i) a sick  leave or other bona fide leave
               of absence approved for purposes of the Plan by the Committee, so
               long as the Employee's right to reemployment is guaranteed either
               by  statute or by  contract,  or (ii) a  transfer  of  employment
               between the Company and a subsidiary or between subsidiaries,  or
               to the  employment  of a  corporation  (or a parent or subsidiary
               corporation of such corporation) issuing or assuming an option in
               a transaction to which Section 424(a) of the Code applies.

          (b)  All Restricted  Stock held by the  Participant at the time of the
               Status  Change must be  transferred  to the Company  (and, in the
               event the  certificates  representing  such Restricted  Stock are
               held by the Company, such Restricted Stock will be so transferred
               without any further action by the Participant) in accordance with
               Section 6.3(c) above.
<PAGE>

          (c)  Any payment or benefit under a Deferred Stock Award,  Performance
               Award or Other Stock-Based Award to which the Participant was not
               irrevocably entitled prior to the Status Change will be forfeited
               and the Award canceled as of the date of such Status Change.

     7.3. Certain Corporate Transactions.

          Except  as  otherwise  provided  by the  Committee,  in the event of a
     consolidation  or  merger  in  which  the  Company  is  not  the  surviving
     corporation  or  which  results  (or that is part of a  series  of  related
     transactions  that results) in the  acquisition  of  substantially  all the
     Company's  outstanding  Stock by a single person or entity or by a group of
     persons  or  entities  acting  in  concert,  or in the event of the sale or
     transfer of  substantially  all the Company's  assets or a  dissolution  or
     liquidation of the Company (a "covered  transaction"),  the following rules
     shall apply:

          (a)  Subject to paragraph (b) below, all outstanding  Awards requiring
               exercise  will cease to be  exercisable,  and all other Awards to
               the  extent  not  fully  vested   (including  Awards  subject  to
               conditions not yet satisfied or determined) will be forfeited, as
               of the effective time of the covered  transaction,  provided that
               the  Committee  may in its  sole  discretion,  on or prior to the
               effective  date  of  the  covered   transaction,   (1)  make  any
               outstanding  Option and Stock  Appreciation  Right exercisable in
               full, (2) remove the restrictions  from any Restricted Stock, (3)
               cause the  Company to make any  payment  and  provide any benefit
               under any Deferred Stock Award or Performance Award or (4) remove
               any performance or other conditions or restrictions on any Award;
               or

          (b)  With respect to an outstanding  Award held by a participant  who,
               following  the  covered  transaction,  will  be  employed  by  or
               otherwise providing services to an entity which is a surviving or
               acquiring  entity in the covered  transaction  or an affiliate of
               such an entity,  the  Committee  may at or prior to the effective
               time  of the  covered  transaction  and  in  lieu  of the  action
               described in paragraph (a) above,  arrange to have such surviving
               or acquiring  entity or  affiliate  assume any Award held by such
               participant  outstanding  hereunder or grant a replacement  award
               which,  in  the  judgment  of  the  Committee,  is  substantially
               equivalent to any Award being replaced.

8.   GENERAL PROVISIONS

     8.1. Documentation of Awards.

          Awards will be evidenced by such written  instruments,  if any, as may
     be prescribed by the Committee from time to time.  Such  instruments may be
     in the form of  agreements to be executed by both the  Participant  and the
     Company, or certificates, letters or similar instruments, which need not be
     executed by the Participant but acceptance of which will evidence agreement
     to the terms thereof.

     8.2. Rights as a Stockholder, Dividend Equivalents.

          Except as  specifically  provided by the Plan, the receipt of an Award
     will not give a Participant  rights as a stockholder;  the Participant will
     obtain such rights,  subject to any limitations  imposed by the Plan or the
     instrument  evidencing the Award, only upon the issuance of Stock. However,
     the Committee may, on such conditions as it deems appropriate, provide that
     a Participant  will receive a benefit in lieu of cash  dividends that would
     have been payable on any or all Stock  subject to the  Participant's  Award
     had such Stock been  outstanding.  Without  limitation,  the  Committee may
     provide  for  payment  to the  Participant  of  amounts  representing  such
     dividends, either currently or in the future, or for the investment of such
     amounts on behalf of the Participant.
<PAGE>

     8.3. Conditions on Delivery of Stock.

          The  Company  will not be  obligated  to  deliver  any shares of Stock
     pursuant  to the  Plan or to  remove  restriction  from  shares  previously
     delivered  under the Plan (a) until all  conditions  of the Award have been
     satisfied or removed,  (b) until, in the opinion of the Company's  counsel,
     all  applicable  federal and state laws and  regulation  have been complied
     with,  (c) if the  outstanding  Stock is at the time  listed  on any  stock
     exchange or The Nasdaq  National  Market,  until the shares to be delivered
     have been listed or authorized to be listed on such exchange or market upon
     official  notice of  issuance,  and (d) until all other  legal  matters  in
     connection with the issuance and delivery of such shares have been approved
     by the  Company's  counsel.  If the sale of Stock  has not been  registered
     under the Securities Act of 1933, as amended, the Company may require, as a
     condition to exercise of the Award, such  representations  or agreements as
     counsel for the Company may consider appropriate to avoid violation of such
     Act and may require  that the  certificates  evidencing  such Stock bear an
     appropriate legend restricting transfer.

          If an Award is exercised by the  Participant's  legal  representative,
     the Company will be under no obligation  to deliver Stock  pursuant to such
     exercise  until  the  Company  is  satisfied  as to the  authority  of such
     representative.

     8.4. Tax Withholding.

          The Company will  withhold  from any cash payment made  pursuant to an
     Award an  amount  sufficient  to  satisfy  all  federal,  state  and  local
     withholding tax requirements (the "withholding requirements").

          In the case of an Award pursuant to which Stock may be delivered,  the
     Committee  will have the right to  require  that the  Participant  or other
     appropriate person remit to the Company an amount sufficient to satisfy the
     withholding  requirements,  or make other arrangements  satisfactory to the
     Committee  with regard to such  requirements,  prior to the delivery of any
     Stock or removal of  restrictions  thereon.  If and to the extent that such
     withholding is required,  the Committee may permit the  Participant or such
     other  person  to elect at such time and in such  manner  as the  Committee
     provides to have the Company hold back from the shares to be delivered,  or
     to deliver to the Company,  Stock having a value  calculated to satisfy the
     withholding  requirement.  The  Committee  may make such share  withholding
     mandatory  with  respect  to any Award at the time such  Award is made to a
     Participant.

          If at the time an ISO is exercised the Committee  determines  that the
     Company could be liable for  withholding  requirements  with respect to the
     exercise  or with  respect  to a  disposition  of the Stock  received  upon
     exercise,  the  Committee  may require as a condition of exercise  that the
     person  exercising the ISO agree (a) to provide for  withholding  under the
     preceding paragraph of this Section 8.4, if the Committee determines that a
     withholding  responsibility may arise in connection with the exercise,  (b)
     to inform the Company  promptly of any  disposition  (within the meaning of
     section  424(c) of the Code) of Stock  received upon  exercise,  and (c) to
     give such  security as the Committee  deems  adequate to meet the potential
     liability of the Company for other withholding  requirements and to augment
     such security from time to time in any amount  reasonably  deemed necessary
     by the Committee to preserve the adequacy of such security.


     8.5. Transferability of Awards.

          Unless otherwise  permitted by the Committee,  no Award (other than an
     Award in the form of an outright  transfer of cash or  Unrestricted  Stock)
     may be  transferred  other  than  by will or by the  laws  of  descent  and
     distribution.

     8.6. Adjustments in the Event of Certain Transactions.

          (a)  In the event of a stock  dividend,  stock split or combination of
               shares,   recapitalization  or  other  change  in  the  Company's
               capitalization,  or other  distribution to holders of Stock other
               than normal cash dividends, after the effective date of the Plan,
               the  Committee  will  make  any  appropriate  adjustments  to the
               maximum  number of shares  that may be  delivered  under the Plan
               under the first  paragraph  of  Section 4 above and to the limits
               described  in the  second  paragraph  of Section 4 and in Section
               6.5(c).
<PAGE>

          (b)  In any event  referred to in paragraph  (a), the  Committee  will
               also make any  appropriate  adjustments to the number and kind of
               shares of Stock or securities  subject to Awards then outstanding
               or subsequently  granted,  any exercise prices relating to Awards
               and any other  provision of Awards  affected by such change.  The
               Committee  may also make such  adjustments  to take into  account
               material changes in law or in accounting practices or principles,
               mergers,  consolidations,  acquisitions,  dispositions or similar
               corporate  transactions,  or any other event, if it is determined
               by the  Committee  that  adjustments  are  appropriate  to  avoid
               distortion in the operation of the Plan.

          (c)  In the  case  of ISOs  or  Awards  intended  to  qualify  for the
               "performance-based    compensation"   exception   under   Section
               162(m)(4)(C)  of the Code, the  adjustments  described in (a) and
               (b) will be made only to the  extent  consistent  with  continued
               qualification  of the Option or other Award under  Section 422 of
               the Code or Section 162(m) of the Code, as the case may be.

     8.7. Employment Rights, Etc.

          Neither  the  adoption of the Plan nor the grant of Awards will confer
     upon any  person any right to  continued  retention  by the  Company or any
     subsidiary as an Employee or  otherwise,  or affect in any way the right of
     the Company or  subsidiary to terminate an  employment,  service or similar
     relationship at any time. Except as specifically  provided by the Committee
     in any particular  case, the loss of existing or potential profit in Awards
     granted  under the Plan will not  constitute  an  element of damages in the
     event of termination of an employment, service or similar relationship even
     if the  termination  is in violation of an obligation of the Company or any
     of its subsidiaries to the Participant.

     8.8. Deferral of Payments.

          The Committee may agree at any time, upon request of the  Participant,
     to defer the date on which any payment under an Award will be made.

     8.9. Past Services as Consideration.

          Where a Participant  purchases  Stock under an Award for a price equal
     to the par value of the Stock the Committee  may determine  that such price
     has been satisfied by past services rendered by the Participant.

9.   EFFECT, AMENDMENT AND TERMINATION

     Neither  adoption of the Plan nor the grant of Awards to a Participant will
affect the  Company's  right to grant to such  Participant  awards  that are not
subject to the Plan, to issue to such Participant Stock as a bonus or otherwise,
or to adopt  other  plans or  arrangements  under  which  Stock may be issued to
Employees.

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


<PAGE>



                                                                     EXHIBIT 5.1


                                                                   July 29, 1999

Cabletron Systems, Inc.
35 Industrial Way
Rochester, NH 03867

Ladies and Gentlemen:

         This  opinion is  furnished to you in  connection  with a  registration
statement  on Form  S-8 (the  "Registration  Statement")  to be  filed  with the
Securities and Exchange  Commission (the "Commission")  under the Securities Act
of 1933, as amended,  for the registration of 14,500,000 shares of common stock,
par value $0.01 per share (the "Shares"), of Cabletron Systems, Inc., a Delaware
corporation (the "Company"),  issuable upon exercise of options issued under the
Cabletron  Systems,  Inc. 1998 Equity  Incentive Plan (the  "Options"  under the
"Plan").

         We have  acted  as  counsel  for the  Company  in  connection  with the
establishment  of the Plan and the issuance of the Options and are familiar with
the actions taken by the Company in connection  therewith.  For purposes of this
opinion,  we have examined the Registration  Statement,  the Plan and such other
documents as we have deemed appropriate.

         Based upon the  foregoing,  we are of the  opinion  that the Shares (i)
have been duly  authorized and (ii) when issued and sold in accordance  with the
terms of the Options  and the Plan,  will have been  validly  issued and will be
fully paid and non-assessable.

         We hereby  consent  to your  filing  this  opinion as an exhibit to the
Registration Statement.

                                                              Very truly yours,

                                                              /s/ Ropes & Gray
                                                              ----------------
                                                              Ropes & Gray





<PAGE>



                                                                    EXHIBIT 23.1

The Board of Directors
Cabletron Systems, Inc.:

We consent to the use of our reports incorporated herein by reference.


                              KPMG LLP



Boston, Massachusetts
July 29, 1999
[{"type": "S-8", "sequence": "1", "description": "1998 EQUITY INCENTIVE PLAN", "secsgml_size_bytes": 68385}]
{"company-data": {"conformed-name": "CABLETRON SYSTEMS INC", "cik": "0000846909", "assigned-sic": "3576", "irs-number": "042797263", "state-of-incorporation": "DE", "fiscal-year-end": "0228"}, "filing-values": {"form-type": "S-8", "act": "33", "file-number": "333-83991", "film-number": "99673028"}, "business-address": {"street1": "35 INDUSTRIAL WAY", "city": "ROCHESTER", "state": "NH", "zip": "03886", "phone": "6033329400"}, "mail-address": {"street1": "35 INDUSTRIAL WAY", "city": "ROCHESTER", "state": "NH", "zip": "03886"}}
As filed with the Securities and Exchange Commission on July 29, 1999

                                  File No. 333-

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM S-8
                             REGISTRATION STATEMENT
                                      Under
                           THE SECURITIES ACT OF 1933

                             CABLETRON SYSTEMS, INC.
             (Exact name of registrant as specified in its charter)

           Delaware                                              04-2797263
--------------------------------                             -------------------
  (State or Other Jurisdiction                                (I.R.S. Employer
of Incorporation or Organization)                            Identification No.)

                                35 Industrial Way
                         Rochester, New Hampshire 03867
          (Address of Principal Executive Offices, including Zip Code)

                             CABLETRON SYSTEMS, INC.
                           1998 EQUITY INCENTIVE PLAN
                           --------------------------
                            (Full title of the Plan)

                              David J. Kirkpatrick
                             Chief Financial Officer
                             Cabletron Systems, Inc.
                                35 Industrial Way
                         Rochester, New Hampshire 03867
                                 (603) 332-9400

                         ------------------------------
(Name, Address and Telephone Number, including Area Code, of Agent for Service)
CALCULATION OF REGISTRATION FEE
------------------------- ------------------- -------------------------- ------------------------- =================

                                                  Proposed Maximum           Proposed Maximum
 Title of Securities To                             Offering Price          Aggregate Offering        Amount of
     Be Registered           Amount To Be            Per Share (1)              Price (1)          Registration Fee
                              Registered
------------------------- ------------------- -------------------------- ------------------------- =================

Common Stock,
  $0.01 par value             14,500,000               $12.6875                  $183,968,750            $51,144
------------------------- ------------------- -------------------------- ------------------------- =================
(1) Estimated  solely  for the  purpose  of  determining  the  registration  fee
    pursuant  to Rule  457(h)  on the  basis of the  high and low sale  price of
    Cabletron Systems,  Inc. Common Stock, par value $0.01,  reported on the New
    York Stock Exchange Composite Transaction Tape on July 26, 1999.
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3.  Incorporation of Documents by Reference.

         Cabletron Systems,  Inc. (the "Registrant" or the "Company") hereby
         incorporates the following documents herein by reference:

          (a)  Annual Report on Form 10-K for the fiscal year ended February 28,
               1999 filed with the Commission on June 2, 1999.

          (b)  Current  Report on Form 8-K  filed  with  Commission  on June 16,
               1999 and Quarterly Report on Form 10-Q for the fiscal quarter
               ended May 31, 1999 and filed with the Commission on July 16,1999.

          (c)  Description  of the  Registrant's  Common Stock  contained in its
               registration  statement  on Form 8-A  filed  with the  Commission
               under  Section  12 of the  Exchange  Act on April  19,  1989,  as
               amended by the description  contained in the Registrant's  Form 8
               filed with the Commission on May 22, 1989.

     All documents  subsequently filed by the Registrant or the Plan pursuant to
Section 13(a),  Section 13(c),  Section 14 and Section 15(d) of the Exchange Act
prior to the filing of a post-effective amendment to this Registration Statement
that indicates that all securities  offered have been sold or which  deregisters
all securities then remaining unsold,  shall be deemed to be incorporated herein
by reference from the date of filing of such documents.

Item 4.  Description of Securities.

         Not applicable.

Item 5.  Interests of Named Experts and Counsel.

         Not applicable.

Item 6.  Indemnification of Directors and Officers.

     Section 145 of the Delaware General  Corporation Law, as amended,  provides
that a  corporation  may  indemnify  any  person  who  was or is a  party  or is
threatened to be made a party to any  threatened,  pending or completed  action,
suit or proceeding,  whether  civil,  criminal or  investigative  (other than an
action by or in the right of the  corporation)  by reason of the fact that he is
or was a director,  officer, employee or agent of the corporation,  or is or was
serving at the request of the  corporation as a director,  officer,  employee or
agent  of  another  corporation,  partnership,  joint  venture,  trust  or other
enterprise,  against expenses (including attorneys' fees), judgments,  fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action,  suit or  proceeding if he acted in good faith and in a manner
he  reasonably  believed  to be in or not opposed to the best  interests  of the
corporation,  and,  with respect to any criminal  action or  proceeding,  had no
reasonable  cause to believe  his  conduct  was  unlawful.  Section  145 further
provides that a corporation  similarly may indemnify any such person  serving in
any such  capacity who was or is a party or is  threatened to be made a party to
any  threatened,  pending or completed  action or suit by or in the right of the
corporation to procure a judgment in its favor,  against  expenses  actually and
reasonably  incurred in connection with the defense or settlement of such action
or suit if he acted in good faith and in a manner he  reasonably  believed to be
in or not  opposed to the best  interest of the  corporation  and except that no
indemnification  shall be made in respect  of any  claim,  issue or matter as to
which such  person  shall  have been  adjudged  to be liable to the  corporation
unless and only to the extent that the Delaware  Court of Chancery or such other
court in which such action or suit was brought shall determine upon  application
that, despite the adjudication of liability but in view of all the circumstances
of the case, such person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall deem proper.

     Section  102(b)(7) of the  Delaware  General  Corporation  Law, as amended,
permits a corporation to include in its certificate of incorporation a provision
eliminating or limiting the personal  liability of a director to the corporation
or its  stockholders  for  monetary  damages for breach of  fiduciary  duty as a
director,  provided  that  such  provision  shall  not  eliminate  or limit  the
liability of a director (i) for any breach of the director's  duty of loyalty to
the  corporation  or its  stockholders,  (ii) for acts or omissions  not in good
faith or which involve  intentional  misconduct  or a knowing  violation of law,
(iii) under  Section 174 of the Delaware  General  Corporation  Law (relating to
unlawful  payment of dividends and unlawful stock purchase and  redemption),  or
(iv) for any transaction  from which the director  derived an improper  personal
benefit.
The  Registrant's  Restated  Certificate  of  Incorporation,   as  amended,
provides that the Company's  directors  shall not be liable to the Registrant or
its  stockholders  for  monetary  damages  for  breach  of  fiduciary  duty as a
director,  except  to  the  extent  that  exculpation  from  liabilities  is not
permitted  under the Delaware  General  Corporation Law as in effect at the time
such liability is determined.  The Restated  Certificate  of  Incorporation,  as
amended,  further provides that the Registrant shall indemnify its directors and
officers to the full extent permitted by the law of the State of Delaware.

Item 7.  Exemption From Registration Claimed.

         Not applicable.

Item 8.  Exhibits.

        Exhibit
        -------

          4.1     Cabletron Systems, Inc. 1998 Equity Incentive Plan.

          5.1     Opinion of Ropes & Gray.

         23.1     Consent of KPMG LLP.

         23.3     Consent of Ropes & Gray (See Exhibit 5.1).

         24.1     Power of Attorney (See Signature Page).

Item 9.  Undertakings.

     (a)  The undersigned Registrant hereby undertakes:

          (1)  to file,  during  any  period in which  offers or sales are being
               made, a post-effective  amendment to this registration statement,
               (i) to include any prospectus required by Section 10(a)(3) of the
               Securities  Act of 1933,  (ii) to reflect in the  prospectus  any
               facts  or  events   arising  after  the  effective  date  of  the
               registration   statement  (or  the  most  recent   post-effective
               amendment  thereof),  which,  individually  or in the  aggregate,
               represent a fundamental  change in the  information  set forth in
               the  registration  statement,  and (iii) to include any  material
               information   with  respect  to  the  plan  of  distribution  not
               previously  disclosed  in  the  registration   statement  or  any
               material   change  to  such   information  in  the   registration
               statement;  provided,  however,  that  paragraphs  (a)(1)(i)  and
               (a)(1)(ii)  shall not  apply if the  information  required  to be
               included in a  post-effective  amendment by those  paragraphs  is
               contained in periodic reports filed by the registrant pursuant to
               section 13 or section  15(d) of the  Securities  Exchange  Act of
               1934  that are  incorporated  by  reference  in the  registration
               statement.

          (2)  that,  for the purpose of  determining  any  liability  under the
               Securities Act of 1933, each such post-effective  amendment shall
               be  deemed to be a new  registration  statement  relating  to the
               securities offered herein, and the offering of such securities at
               that time shall be deemed to be the  initial  bona fide  offering
               thereof;

          (3)  to  remove  from   registration  by  means  of  a  post-effective
               amendment any of the  securities  being  registered  which remain
               unsold at the termination of the offering.

     (b) The  undersigned  Registrant  hereby  undertakes  that, for purposes of
determining  any liability  under the Securities Act of 1933, each filing of the
Registrant's  annual  report  pursuant to Section  13(a) or Section 15(d) of the
Securities  Exchange  Act of  1934  that is  incorporated  by  reference  in the
registration  statement  shall  be  deemed  to be a new  registration  statement
relating to the securities offered therein,  and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

     (c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors,  officers and controlling  persons of
the  Registrant  pursuant  to  the  foregoing  provisions,   or  otherwise,  the
Registrant  has been advised that in the opinion of the  Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore,  unenforceable. In the event that a claim for indemnification
against such  liabilities  (other than the payment by the Registrant of expenses
incurred or paid by a director,  officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director,  officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been  settled by  controlling  precedent,  submit to a court of  appropriate
jurisdiction the question whether such  indemnification  by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement on Form S-8 to be signed on its behalf by the  undersigned,  thereunto
duly authorized,  in the City of Rochester,  The State of New Hampshire, on this
29th day of July, 1999.

                                     CABLETRON SYSTEMS, INC.

                                     By: /s/ Piyush Patel
                                             -------------------
                                     Name:   Piyush Patel
                                     Title:  President, Chief Executive Officer,
                                             and Chairman

                                POWER OF ATTORNEY

     Pursuant  to  the   requirement  of  the  Securities  Act  of  1933,   this
Registration  Statement  has  been  signed  by  the  following  persons  in  the
capacities and on the dates indicated. Each person whose signature appears below
hereby  constitutes and appoints each of Piyush Patel and David J.  Kirkpatrick,
each with full power of substitution,  his true and lawful  attorney-in-fact and
agent with full  power to him to sign for him and in his name in the  capacities
indicated below any and all amendments (including post-effective  amendments) to
this  Registration  Statement and to file the same, with exhibits  thereto,  and
other documents in connection therewith, and he hereby ratifies and confirms his
signature as it may be signed by said attorney to any and all such amendments.
Signature                             Capacity                                           Date
--------------------------------      ----------------------------------------------     -------------

/s/ Piyush Patel                                                                         July 29, 1999
-------------------------
Piyush Patel                          President, Chief Executive Officer and
                                      Chairman

/S/ David J. Kirkpatrick                                                                 July 29, 1999
-------------------------
David J. Kirkpatrick                  Corporate Executive Vice President of Finance
                                      and Chief Financial Officer (Principal Financial
                                      Officer and Principal Accounting Officer)

/S/ Craig R. Benson                                                                      July 29, 1999
-------------------------
Craig R. Benson                       Director

/S/ Paul R. Duncan                                                                       July 29, 1999
-------------------------
Paul R. Duncan                        Director

/S/ Donald F. McGuinness                                                                 July 29, 1999
-------------------------
Donald F. McGuinness                  Director

/S/ Michael D. Myerow                                                                    July 29, 1999
-------------------------
Michael D. Myerow                     Secretary and Director
EXHIBIT INDEX

        Exhibit
        Number                           Title of Exhibit
        -------                          --------------------------------------

          4.1                            Cabletron Systems, Inc. 1998 Equity
                                         Incentive Plan.

          5.1                            Opinion of Ropes & Gray.

         23.1                            Consent of KPMG LLP.

         23.3                            Consent of Ropes & Gray.

         24.1                            Power of Attorney.
EXHIBIT 4.1
                             CABLETRON SYSTEMS, INC.
                           1998 EQUITY INCENTIVE PLAN

1.   PURPOSE

     The purpose of this Equity  Incentive  Plan (the  "Plan") is to advance the
interests of Cabletron  Systems,  Inc. (the  "Company") and its  subsidiaries by
enhancing their ability to attract and retain employees and other individuals or
entities who are in a position to make significant  contributions to the success
of the Company and its subsidiaries through awards based on the Company's common
stock, $.01 par value ("Stock"), and cash incentives.

     The Plan is intended to  accomplish  these goals by enabling the Company to
grant  awards  ("Awards")  in the form of Options,  Stock  Appreciation  Rights,
Restricted   Stock  or  Unrestricted   Stock  Awards,   Deferred  Stock  Awards,
Performance Awards,  Other Stock-Based Awards, or loans or supplemental  grants,
or combinations thereof, all as more fully described below.

2.   ADMINISTRATION

     Unless  otherwise  determined by the Board of Directors of the Company (the
"Board"),  the Plan will be administered by a committee of the Board  designated
for such purpose (the "Committee").  The Committee shall consist of at least two
directors. A majority of the members of the Committee shall constitute a quorum,
and all  determinations  of the  Committee  shall be made by a  majority  of its
members.  Any  determination of the Committee under the Plan may be made without
notice or  meeting of the  Committee  by a writing  signed by a majority  of the
Committee  members.  During  such  times as the  Stock is  registered  under the
Securities  Exchange Act of 1934 (the "1934  Act"),  at least two members of the
Committee  shall be  "non-employee  directors"  within the meaning of Rule 16b-3
promulgated  under the 1934 Act and  "outside  directors"  within the meaning of
Section  162(m)(4)(C)(i)  of the Internal  Revenue Code of 1986, as amended (the
"Code")  (the  "Outside  Directors").  If any member of the  Committee is not an
Outside Director, a sub-committee (the "Sub-Committee") consisting solely of the
Outside  Directors  shall  administer  the Plan in  connection  with  Awards  to
"officers" of the Company within the meaning of Section 16(b) of the 1934 Act or
with respect to any Award  intended to be exempt under Section  162(m)(3) of the
Code.  Any  references  to the  Committee  in this  Plan  shall  also  mean  the
Sub-Committee.

     The  Committee  will have  authority,  not  inconsistent  with the  express
provisions  of the Plan and in addition  to other  authority  granted  under the
Plan, to (a) grant Awards at such time or times as it may choose;  (b) determine
the size of each Award,  including  the number of shares of Stock subject to the
Award;  (c) determine  the type or types of each Award;  (d) determine the terms
and conditions of each Award;  (e) waive compliance by a holder of an Award with
any  obligations  to be  performed  by such holder  under an Award and waive any
terms or conditions of an Award;  (f) amend or cancel an existing Award in whole
or in part (and if an award is  canceled,  grant  another  Award in its place on
such terms and  conditions  as the  Committee  shall  specify),  except that the
Committee  may not,  without  the  consent of the  holder of an Award,  take any
action under this clause with respect to such Award if such action would
adversely  affect the rights of such holder;  (g) prescribe the form or forms of
any  instruments  to be used under the Plan,  including any written  notices and
elections  required of Participants  (as defined  below),  and change such forms
from time to time; (h) adopt,  amend and rescind rules and  regulations  for the
administration  of the Plan; and (i) interpret the Plan and decide any questions
and settle all  controversies and disputes that may arise in connection with the
Plan.  Such  determinations  and  actions  of  the  Committee,   and  all  other
determinations  and  actions  of the  Committee  made or taken  under  authority
granted  by any  provision  of the Plan,  will be  conclusive  and will bind all
parties.  Nothing in this paragraph  shall be construed as limiting the power of
the Committee to make adjustments under Section 7.3 or Section 8.6.

3.   EFFECTIVE DATE AND TERM OF PLAN

     The Plan will become  effective  on the date on which it is approved by the
stockholders  of the  Company.  Awards  may be made  prior  to such  stockholder
approval if made subject  thereto.  No Award may be granted under the Plan after
May 14, 2008 (the 10th  anniversary  of day before Board  approval),  but Awards
previously granted may extend beyond that date.

4.   SHARES SUBJECT TO THE PLAN

     (a)  Number of Shares.  Subject to  adjustment  as provided in Section 8.6,
          the  aggregate  number of shares of Stock that may be delivered  under
          the Plan will be 14,500,000.  If any Award  requiring  exercise by the
          Participant  for  delivery  of Stock  terminates  without  having been
          exercised  in  full,  or if any  Award  payable  in  Stock  or cash is
          satisfied in cash rather than Stock,  the number of shares of Stock as
          to  which  such  Award  was  not  exercised  or  for  which  cash  was
          substituted will be available for future grants.

     (b)  Special   Limitations   Applicable  to  Certain  Awards.   Subject  to
          adjustment as provided in Section 8.6(a) to the extent such adjustment
          is consistent with the continued  satisfaction  with respect to Awards
          of the  requirements of Section  162(m)(4)(C) of the Code, the maximum
          number of shares of Stock  for which  Options  and Stock  Appreciation
          Rights may be  awarded  under the Plan to any  participant  during any
          three-calendar-year  period  is in the case of each such form of Award
          2,000,000 shares. For purposes of the preceding sentence,  the regrant
          of a canceled Option or Stock Appreciation  Right, or the repricing of
          an Option or Stock Appreciation  Right, shall be treated as a separate
          Award to the extent  required under Section  162(m)(4)(C) of the Code.
          For maximum  limits  relating to Performance  Awards,  see Section 6.5
          below.

     (c)  Shares to be Delivered.  Stock  delivered under the Plan may be either
          authorized but unissued  Stock or previously  issued Stock acquired by
          the Company and held in treasury.  No fractional  shares of Stock will
          be delivered under the Plan.
5.   ELIGIBILITY AND PARTICIPATION

     Each key employee of the Company or any of its subsidiaries (an "Employee")
and each other  individual or entity (other than employees of the Company or any
of its subsidiaries,  but including without limitation  directors of the Company
or a subsidiary  of the Company) who, in the opinion of the  Committee,  is in a
position to make a significant contribution to the success of the Company or its
subsidiaries  will be  eligible  to  receive  Awards  under the Plan  (each such
Employee,  other  individual  or entity  receiving an Award,  "a  Participant").
Participants  shall  also  include  individuals  who have  accepted  an offer of
employment from the Company and who the Company reasonably  believes will be key
employees upon commencing employment with the Company (a "New Hire").

6.   TYPES OF AWARDS

     6.1  Options

          (a)  Nature of Options.  An option  ("Option")  is an Award giving the
               recipient the right on exercise thereof to purchase Stock.

               Both  "incentive  stock options," as defined in Section 422(b) of
               the Code (any Option  intended to qualify as an  incentive  stock
               option being  hereinafter  referred to as an "ISO"),  and Options
               that are not ISOs,  may be granted under the Plan.  ISOs shall be
               awarded only to Employees. An Option awarded under the Plan shall
               be a non-ISO unless it is expressly  designated as an ISO at time
               of grant.

          (b)  Exercise  Price.   The  exercise  price  of  an  Option  will  be
               determined by the Committee subject to the following:

               (1)  The  exercise  price  of an ISO  or an  Option  intended  to
                    qualify as  performance  based  compensation  under  Section
                    162(m)  of the Code  shall not be less than 100% of the fair
                    market value of the Stock subject to the Option,  determined
                    as of the time the Option is granted.

               (2)  In no case may the  exercise  price paid for Stock  which is
                    part of an original  issue of authorized  Stock be less than
                    the par value per share of the Stock.

          (c)  Duration  of  Options.  The latest date on which an Option may be
               exercised will be the tenth  anniversary  of the day  immediately
               preceding  the date the Option was granted,  or such earlier date
               as may  have  been  specified  by the  Committee  at the time the
               Option was granted.
(d)  Exercise of Options.  An Option will become  exercisable  at such
               time or  times,  and on such  conditions,  as the  Committee  may
               specify.  The  Committee  may at any time  and from  time to time
               accelerate the time at which all or any part of the Option may be
               exercised.  Except as otherwise determined by the Committee,  any
               period  during  which a  Participant  who is an Employee is on an
               unpaid  leave of  absence  (or  other  unpaid  absence)  from the
               Company  shall  toll the  period  of time  over  which an  option
               becomes  exercisable.  Any  exercise  of  an  Option  must  be in
               writing,  signed by the proper  person and delivered or mailed to
               the Company,  accompanied  by (1) any  documents  required by the
               Committee  and (2) payment in full in accordance  with  paragraph
               (e) below  for the  number  of  shares  for  which the  Option is
               exercised.

          (e)  Payment for Stock.  Stock purchased on exercise of an Option must
               be paid for as follows:  (1) in cash or by check  (acceptable  to
               the Company in accordance  with  guidelines  established for this
               purpose),  bank draft or money order  payable to the order of the
               Company or (2) if so permitted  by the  Committee at or after the
               grant of the Option,  (i) through the delivery of shares of Stock
               which  have  been  held  for at  least  six  months  (unless  the
               Committee approves a shorter period) and which have a fair market
               value  equal  to  the  exercise  price,  (ii)  by  delivery  of a
               promissory note of the Participant to the Company containing such
               terms as are specified by the Committee,  (iii) by delivery of an
               unconditional and irrevocable  undertaking by a broker to deliver
               promptly  to the  Company  sufficient  funds to pay the  exercise
               price,  or (iv) by any  combination of the foregoing  permissible
               forms of payment.

          (f)  Discretionary  Payments.  If (i) the  market  price of  shares of
               Stock  subject  to an Option  (other  than an Option  which is in
               tandem with a Stock  Appreciation  Right as  described in Section
               6.2) exceeds the exercise  price of the Option at the time of its
               exercise,  and (ii) the person  exercising the Option so requests
               in writing,  the Committee may in its sole discretion  cancel the
               Option  and  cause  the  Company  to pay in cash or in  shares of
               Common  Stock  (valued  at  fair  market  value)  to  the  person
               exercising the Option an amount equal to the  difference  between
               the  fair  market  value  of the  Stock  which  would  have  been
               purchased  pursuant to the exercise  (determined  on the date the
               Option is canceled) and the aggregate  exercise price which would
               have been paid.

     6.2. Stock Appreciation Rights.

          (a)  Nature of Stock  Appreciation  Rights. A Stock Appreciation Right
               ("Stock  Appreciation  Right" or "SAR") is an Award entitling the
               holder on  exercise  to  receive  an amount in cash or Stock or a
               combination thereof (such form to be determined by the Committee)
               determined in whole or in part by reference to appreciation, from
               and after the date of grant,  in the fair market value of a share
               of Stock.  SARs may be based solely on  appreciation  in the fair
               market  value of Stock or on a  comparison  of such  appreciation
               with  some  other  measure  of  market  growth  such as (but  not
               limited) to appreciation in a recognized  market index.  The date
               as of which such  appreciation  or other  measure  is  determined
               shall be the  exercise  date unless  another date is specified by
               the Committee.
(b)  Grant of Stock Appreciation Rights. Stock Appreciation Rights may
               be granted in tandem with, or  independently  of, Options granted
               under the Plan.

               (1)  Rules Applicable to Tandem Awards.  When Stock  Appreciation
                    Rights are  granted in tandem  with  Options,  (A) the Stock
                    Appreciation  Right will be exercisable only at such time or
                    times,  and  to the  extent,  that  the  related  Option  is
                    exercisable  and will be exercisable in accordance  with the
                    procedure  required for exercise of the related Option;  (B)
                    the Stock Appreciation Right will terminate and no longer be
                    exercisable  upon the termination or exercise of the related
                    Option,  except that a Stock Appreciation Right granted with
                    respect to fewer than the full  number of shares  covered by
                    an Option will not be reduced  until the number of shares as
                    to  which  the  related  Option  has been  exercised  or has
                    terminated  exceeds  the number of shares not covered by the
                    Stock Appreciation  Right; (C) the Option will terminate and
                    no longer be  exercisable  upon the  exercise of the related
                    Stock  Appreciation  Right;  and (D) the Stock  Appreciation
                    Right will be transferable only with the related Option.

               (2)  Exercise of Independent Stock  Appreciation  Rights. A Stock
                    Appreciation Right not granted in tandem with an Option will
                    become  exercisable  at  such  time  or  times,  and on such
                    conditions,   as  the  Committee  may  specify.   Except  as
                    otherwise  determined  by the  Committee,  any period during
                    which a Participant who is an Employee is on an unpaid leave
                    of absence (or other unpaid  absence) from the Company shall
                    toll the  period  of time  over  which a Stock  Appreciation
                    Right  becomes  exercisable.  The  Committee may at any time
                    accelerate  the time at which  all or any part of the  Right
                    may be exercised.

         Any  exercise of an  independent  Stock  Appreciation  Right must be in
         writing,  signed by the proper  person and  delivered  or mailed to the
         Company, accompanied by any other documents required by the Committee.

     6.3. Restricted and Unrestricted Stock.

          (a)  Grant of Restricted Stock. Subject to the terms and provisions of
               the Plan, the Committee may grant shares of Stock in such amounts
               and  upon  such  terms  and  conditions  as the  Committee  shall
               determine   subject   to   the   restrictions   described   below
               ("Restricted Stock").

          (b)  Restricted  Stock  Agreement.  The  Committee  may require,  as a
               condition to an Award,  that a recipient  of a  Restricted  Stock
               Award  enter into a  Restricted  Stock Award  Agreement,  setting
               forth  the  terms  and  conditions  of the  Award.  In  lieu of a
               Restricted Stock Award  Agreement,  the Committee may provide the
               terms and  conditions of an Award in a notice to the  Participant
               of the Award,  in the resolution  approving the Award, or in such
               other  manner  as it deems  appropriate.  The  stock  certificate
               representing the Restricted Stock shall be appropriately legended
               to reflect the applicable restrictions.

          (c)  Transferability  and  Other  Restrictions.  Except  as  otherwise
               provided in this  Section  6.3,  the shares of  Restricted  Stock
               granted herein may not be sold, transferred,  pledged,  assigned,
               or  otherwise  alienated  or  hypothecated  until  the end of the
               applicable period or periods established by the Committee and the
               satisfaction of any other conditions or restrictions  established
               by the Committee  (such period during which a share of Restricted
               Stock is subject to such  restrictions and conditions is referred
               to as the  "Restricted  Period").  Except  as the  Committee  may
               otherwise  determine  under  Section  7.1 or  Section  7.2,  if a
               Participant  dies or  suffers  a Status  Change  (as  defined  at
               Section 7.2(a)) for any reason during the Restricted  Period, the
               Company may purchase the shares of  Restricted  Stock  subject to
               such  restrictions  and conditions for the amount of cash paid by
               the  Participant for such shares;  provided,  that if no cash was
               paid by the Participant  such shares of Restricted Stock shall be
               automatically forfeited to the Company.
During  the  Restricted  Period  with  respect  to any  shares of
               Restricted  Stock,  the Company shall have the right to retain in
               the  Company's   possession  the   certificate  or   certificates
               representing such shares.

          (d)  Removal of  Restrictions.  Except as  otherwise  provided in this
               Section 6.3, a share of Restricted  Stock covered by a Restricted
               Stock grant shall  become free from  restrictions  under the Plan
               upon completion of the Restricted  Period,  including the passage
               of  any  applicable  period  of  time  and  satisfaction  of  any
               conditions  to vesting.  Except as  otherwise  determined  by the
               Committee,  any  period  during  which  a  Participant  who is an
               Employee is on leave of absence (or other  unpaid  absence)  from
               the Company shall, to the extent the Restricted Period relates to
               the passage of time,  toll such time period.  The Committee shall
               have the right at any time, in its sole  discretion,  immediately
               to waive all or any part of the  restrictions and conditions with
               regard to all or any part of the shares held by any Participant.

          (e)  Voting  Rights,  Dividends  and Other  Distributions.  During the
               Restricted  Period,  Participants  holding  shares of  Restricted
               Stock granted hereunder may exercise full voting rights and shall
               receive  all regular  cash  dividends  paid with  respect to such
               shares.  Except as the Committee shall otherwise  determine,  any
               other cash dividends and other distributions paid to Participants
               with  respect  to  shares  of  Restricted  Stock,  including  any
               dividends and distributions  paid in shares,  shall be subject to
               the same  restrictions and conditions as the shares of Restricted
               Stock with respect to which they were paid.

          (f)  Other Awards Settled with Restricted Stock. The Committee may, at
               the  time any  Award  described  in this  Section  6 is  granted,
               provide  that any or all of the Stock  delivered  pursuant to the
               Award will be Restricted Stock.

          (g)  Unrestricted  Stock.  Subject to the terms and  provisions of the
               Plan,   the   Committee   may  grant  shares  of  Stock  free  of
               restrictions  under the Plan in such  amounts and upon such terms
               and conditions as the Committee shall determine.

     6.4. Deferred Stock.

          A Deferred Stock Award ("Deferred  Stock  Award") is an  unfunded  and
               unsecured  promise by the  Company to deliver  shares of Stock in
               the future  ("Deferred  Stock").  Delivery of the Stock will take
               place  at such  time or  times,  and on such  conditions,  as the
               Committee may specify.  The Committee may at any time  accelerate
               the time at which  delivery  of all or any part of the Stock will
               take place.  At the time any Award described in this Section 6 is
               granted,  the  Committee may provide that any or all of the Stock
               delivered pursuant to the Award will be Deferred Stock.
6.5. Performance Awards.

          The  Committee  may, at the time an Award  described in Sections  6.1,
     6.2,  6.3,  6.4 or 6.7 is granted,  impose the  additional  condition  that
     performance goals must be met prior to the Participant's realization of any
     vesting, payment or benefit under the Award. In addition, the Committee may
     make awards  entitling  the  Participant  to receive an amount in cash upon
     attainment of specified  performance goals (a "Cash Incentive").  Any Award
     or Cash  Incentive  made subject to  performance  goals as described in the
     preceding  two  sentences  shall be a  "Performance  Award"  subject to the
     provisions  of  this  Section  6.5  in  addition  to any  other  applicable
     provisions of the Plan or the Award. Performance Awards may consist of Cash
     Incentives or Awards that are intended to qualify for the performance-based
     compensation exception under Section 162(m) of the Code, other than Options
     or Stock  Appreciation  Rights  intended to qualify for such  exception  by
     reason of the special rules under Section 162(m) of the Code  applicable to
     stock options and stock  appreciation  rights  granted at an exercise price
     not  less  than  fair  market  value  on  the  date  of  grant  ("Qualified
     Performance  Awards")  or Cash  Incentives  or Awards  that  either are not
     intended so to qualify or are Options or Stock Appreciation Rights intended
     to qualify for such  exception by reason of the special rules under Section
     162(m) of the Code  applicable  to stock  options  and  stock  appreciation
     rights  granted at an exercise price not less than fair market value on the
     date of grant ("Other  Performance  Awards").  The Committee will determine
     the performance measures, the period or periods during which performance is
     to be  measured,  and all other  terms  and  conditions  applicable  to the
     Performance Award. The performance measures to which a Performance Award is
     subject  may be related to  personal  performance,  corporate  performance,
     departmental performance,  or any other category of performance established
     by the Committee.  In the case of a Qualified  Performance  Award,  payment
     under  the  Award  or of the  Cash  Incentive  must be  conditioned  on the
     satisfaction of one or more "qualified performance measures" preestablished
     by the Committee in accordance  with the rules under Section  162(m) of the
     Code and on  certification  (within the meaning of the rules under  Section
     162(m) of the Code) by the  Committee  that such  measure or measures  have
     been met or exceeded.  For purposes of the preceding sentence,  a qualified
     performance measure is an objectively  determinable  measure of performance
     based on any one or more of the following (on a  consolidated,  divisional,
     subsidiary,  line of  business  or  geographical  basis or in  combinations
     thereof): (i) sales; revenues;  assets; expenses;  earnings before or after
     deduction  for all or any  portion  of  interest,  taxes,  depreciation  or
     amortization,  whether or not on a continuing operations or an aggregate or
     per share basis; return on equity, investment, capital or assets; inventory
     level or turns; one or more operating ratios;  borrowing  levels,  leverage
     ratios or credit rating;  market share;  capital  expenditures;  cash flow;
     stock price;  stockholder  return; or any combination of the foregoing;  or
     (ii)  acquisitions and  divestitures (in whole or in part);  joint ventures
     and   strategic   alliances;    spin-offs,    split-ups   and   the   like;
     reorganizations; recapitalizations, restructurings, financings (issuance of
     debt or equity) and  refinancings;  transactions  that would  constitute  a
     change  of  control;  or any  combination  of the  foregoing.  A  qualified
     performance  measure and targets with  respect  thereto  determined  by the
     Committee need not be based upon an increase, a positive or improved result
     or  avoidance  of loss.  The maximum  number of shares of Stock  subject to
     Performance Awards (other than Cash Incentives)  awarded to any Participant
     in any  three-calendar-year  period shall be 2,000,000 shares.  The maximum
     amount payable under Cash  Incentives to any Participant for any year shall
     be $1,000,000.

     6.6. Loans and Supplemental Grants.

          (a)  Loans.  The Company may make a loan to a  Participant,  either at
               the time of or after the grant to him or her of any Award. Such a
               loan may be made in connection  with either the purchase of Stock
               under the  Award or the  payment  of any  federal  income  tax in
               respect  of  income  recognized  as a result  of the  Award.  The
               Committee will have full authority to decide whether to make such
               a loan and to determine the amount,  terms and  conditions of the
               loan,  including the interest  rate (which may be zero),  whether
               the  loan is to be  secured  or  unsecured  or  with  or  without
               recourse against the borrower,  the terms on which the loan is to
               be  repaid  and the  conditions,  if any,  under  which it may be
               forgiven. However, no loan may have a term (including extensions)
               exceeding ten years in duration.

          (b)  Cash Grants.  In connection with any Award,  the Committee may at
               the time such  Award is made or at a later date  provide  for and
               make a cash  payment to the  Participant  not to exceed an amount
               equal to (a) the amount of any  federal,  state and local  income
               tax on ordinary income for which the Participant will be liable
with  respect to the Award,  plus (b) an  additional  amount on a
               grossed-up  basis  necessary  to make him or her whole after tax,
               discharging all the Participant's  income tax liabilities arising
               from  all  payments  under  this  Section  6,  all  based on such
               reasonable estimates of applicable tax rates as the Committee may
               determine.

     6.7. Other Stock-Based Awards.

          (a)  Nature of Awards.  The  Committee  may grant other  Awards  under
               which  Stock  is  or  may  in  the  future  be  acquired  ("Other
               Stock-Based   Awards").   Such   awards  may   include,   without
               limitation,  debt securities convertible into or exchangeable for
               shares of Stock upon such  conditions,  including  attainment  of
               performance  goals,  as  the  Committee  shall  determine.   Such
               convertible  or  exchangeable  securities may have such terms and
               conditions  as the  Committee may determine at the time of grant.
               However,  no  convertible  or  exchangeable  debt shall be issued
               unless the  Committee  shall have  provided (by Company  right of
               repurchase,  right to require  conversion  or exchange,  or other
               means deemed  appropriate  by the  Committee) a means of avoiding
               any  right of the  holders  of such  debt to  prevent  a  Company
               transaction by reason of covenants in such debt.

          (b)  Purchase Price; Form of Payment.  The Committee may determine the
               consideration,  if any,  payable upon the issuance or exercise of
               an Other  Stock-Based  Award. The Committee may permit payment by
               certified check or bank check or other  instrument  acceptable to
               the Committee or by surrender of other shares of Stock (excluding
               shares then subject to restrictions under the Plan).

          (c)  Forfeiture of Awards; Repurchase of Stock; Acceleration or Waiver
               of Restrictions. The Committee may determine the conditions under
               which an Other  Stock-Based  Award shall be forfeited  or, in the
               case of an  Award  involving  a  payment  by the  recipient,  the
               conditions  under which the Company may or must  repurchase  such
               Award or related Stock. At any time the Committee may in its sole
               discretion  accelerate,  waive,  or,  amend  any  or  all  of the
               limitations  or conditions  imposed  under any Other  Stock-Based
               Award.

7.   EVENTS AFFECTING OUTSTANDING AWARDS

     7.1. Death.

          Except as the Committee may otherwise determine, if a Participant dies
     the following will apply:

          (a)  All Options and Stock Appreciation Rights held by the Participant
               immediately prior to death, to the extent then  exercisable,  may
               be exercised by the  Participant's  executor or  administrator or
               the person or persons to whom the Option or Right is  transferred
               by will or the applicable  laws of descent and  distribution,  at
               any  time  within  the one year  period  ending  with  the  first
               anniversary of the Participant's death (or such shorter or longer
               period as the  Committee  may  determine),  and  shall  thereupon
               terminate.  In no  event,  however,  shall  an  Option  or  Stock
               Appreciation  Right remain  exercisable beyond the latest date on
               which it could have been exercised without regard to this Section
               7.  All  Options  and  Stock   Appreciation   Rights  held  by  a
               Participant   immediately  prior  to  death  that  are  not  then
               exercisable shall terminate at death.
(b)  All Restricted  Stock held by the Participant must be transferred
               to the Company (and, in the event the  certificates  representing
               such  Restricted  Stock are held by the Company,  such Restricted
               Stock will be so  transferred  without any further  action by the
               Participant in accordance with Section 6.3(c)).

          (c)  Any payment or benefit under a Deferred Stock Award,  Performance
               Award or Other Stock-Based Award to which the Participant was not
               irrevocably  entitled  prior to death will be  forfeited  and the
               Award canceled as of the time of death.

     7.2. Termination of Service (Other Than By Death).

          If (i) a Participant  who is an Employee  ceases to be an Employee for
     any reason  other than death,  (ii) there is a  termination  (other than by
     reason of death or  satisfactory  completion  of the  project or service as
     determined  by  the  Committee)  of  the  consulting,  service  or  similar
     relationship in respect of which a non-Employee  Participant was granted an
     Award  hereunder or (iii) a New Hire's offer of  employment  is  terminated
     prior to the New Hire  commencing  employment  with the  Company or the New
     Hire does not commence his or her  employment  with the Company  within two
     months  after  receipt  of an  Award  hereunder  (such  termination  of the
     employment or other relationship being hereinafter referred to as a "Status
     Change"),  then,  except as the  Committee  may  otherwise  determine,  the
     following will apply:

          (a)  All Options and Stock Appreciation Rights held by the Participant
               that were not exercisable  immediately prior to the Status Change
               shall terminate at the time of the Status Change.  Any Options or
               Rights  that were  exercisable  immediately  prior to the  Status
               Change  will  continue  to be  exercisable  for a period of three
               months, and shall thereupon terminate,  unless the Award provides
               by its terms for immediate  termination  in the event of a Status
               Change or unless the Status  Change  results from a discharge for
               cause which in the opinion of the Committee  casts such discredit
               on the  Participant  as to justify  immediate  termination of the
               Award.   In  no  event,   however,   shall  an  Option  or  Stock
               Appreciation  Right remain  exercisable beyond the latest date on
               which it could have been exercised without regard to this Section
               7. For purposes of this  paragraph,  in the case of a Participant
               who is an Employee,  a Status  Change shall not be deemed to have
               resulted  by reason of (i) a sick  leave or other bona fide leave
               of absence approved for purposes of the Plan by the Committee, so
               long as the Employee's right to reemployment is guaranteed either
               by  statute or by  contract,  or (ii) a  transfer  of  employment
               between the Company and a subsidiary or between subsidiaries,  or
               to the  employment  of a  corporation  (or a parent or subsidiary
               corporation of such corporation) issuing or assuming an option in
               a transaction to which Section 424(a) of the Code applies.

          (b)  All Restricted  Stock held by the  Participant at the time of the
               Status  Change must be  transferred  to the Company  (and, in the
               event the  certificates  representing  such Restricted  Stock are
               held by the Company, such Restricted Stock will be so transferred
               without any further action by the Participant) in accordance with
               Section 6.3(c) above.
(c)  Any payment or benefit under a Deferred Stock Award,  Performance
               Award or Other Stock-Based Award to which the Participant was not
               irrevocably entitled prior to the Status Change will be forfeited
               and the Award canceled as of the date of such Status Change.

     7.3. Certain Corporate Transactions.

          Except  as  otherwise  provided  by the  Committee,  in the event of a
     consolidation  or  merger  in  which  the  Company  is  not  the  surviving
     corporation  or  which  results  (or that is part of a  series  of  related
     transactions  that results) in the  acquisition  of  substantially  all the
     Company's  outstanding  Stock by a single person or entity or by a group of
     persons  or  entities  acting  in  concert,  or in the event of the sale or
     transfer of  substantially  all the Company's  assets or a  dissolution  or
     liquidation of the Company (a "covered  transaction"),  the following rules
     shall apply:

          (a)  Subject to paragraph (b) below, all outstanding  Awards requiring
               exercise  will cease to be  exercisable,  and all other Awards to
               the  extent  not  fully  vested   (including  Awards  subject  to
               conditions not yet satisfied or determined) will be forfeited, as
               of the effective time of the covered  transaction,  provided that
               the  Committee  may in its  sole  discretion,  on or prior to the
               effective  date  of  the  covered   transaction,   (1)  make  any
               outstanding  Option and Stock  Appreciation  Right exercisable in
               full, (2) remove the restrictions  from any Restricted Stock, (3)
               cause the  Company to make any  payment  and  provide any benefit
               under any Deferred Stock Award or Performance Award or (4) remove
               any performance or other conditions or restrictions on any Award;
               or

          (b)  With respect to an outstanding  Award held by a participant  who,
               following  the  covered  transaction,  will  be  employed  by  or
               otherwise providing services to an entity which is a surviving or
               acquiring  entity in the covered  transaction  or an affiliate of
               such an entity,  the  Committee  may at or prior to the effective
               time  of the  covered  transaction  and  in  lieu  of the  action
               described in paragraph (a) above,  arrange to have such surviving
               or acquiring  entity or  affiliate  assume any Award held by such
               participant  outstanding  hereunder or grant a replacement  award
               which,  in  the  judgment  of  the  Committee,  is  substantially
               equivalent to any Award being replaced.

8.   GENERAL PROVISIONS

     8.1. Documentation of Awards.

          Awards will be evidenced by such written  instruments,  if any, as may
     be prescribed by the Committee from time to time.  Such  instruments may be
     in the form of  agreements to be executed by both the  Participant  and the
     Company, or certificates, letters or similar instruments, which need not be
     executed by the Participant but acceptance of which will evidence agreement
     to the terms thereof.

     8.2. Rights as a Stockholder, Dividend Equivalents.

          Except as  specifically  provided by the Plan, the receipt of an Award
     will not give a Participant  rights as a stockholder;  the Participant will
     obtain such rights,  subject to any limitations  imposed by the Plan or the
     instrument  evidencing the Award, only upon the issuance of Stock. However,
     the Committee may, on such conditions as it deems appropriate, provide that
     a Participant  will receive a benefit in lieu of cash  dividends that would
     have been payable on any or all Stock  subject to the  Participant's  Award
     had such Stock been  outstanding.  Without  limitation,  the  Committee may
     provide  for  payment  to the  Participant  of  amounts  representing  such
     dividends, either currently or in the future, or for the investment of such
     amounts on behalf of the Participant.
8.3. Conditions on Delivery of Stock.

          The  Company  will not be  obligated  to  deliver  any shares of Stock
     pursuant  to the  Plan or to  remove  restriction  from  shares  previously
     delivered  under the Plan (a) until all  conditions  of the Award have been
     satisfied or removed,  (b) until, in the opinion of the Company's  counsel,
     all  applicable  federal and state laws and  regulation  have been complied
     with,  (c) if the  outstanding  Stock is at the time  listed  on any  stock
     exchange or The Nasdaq  National  Market,  until the shares to be delivered
     have been listed or authorized to be listed on such exchange or market upon
     official  notice of  issuance,  and (d) until all other  legal  matters  in
     connection with the issuance and delivery of such shares have been approved
     by the  Company's  counsel.  If the sale of Stock  has not been  registered
     under the Securities Act of 1933, as amended, the Company may require, as a
     condition to exercise of the Award, such  representations  or agreements as
     counsel for the Company may consider appropriate to avoid violation of such
     Act and may require  that the  certificates  evidencing  such Stock bear an
     appropriate legend restricting transfer.

          If an Award is exercised by the  Participant's  legal  representative,
     the Company will be under no obligation  to deliver Stock  pursuant to such
     exercise  until  the  Company  is  satisfied  as to the  authority  of such
     representative.

     8.4. Tax Withholding.

          The Company will  withhold  from any cash payment made  pursuant to an
     Award an  amount  sufficient  to  satisfy  all  federal,  state  and  local
     withholding tax requirements (the "withholding requirements").

          In the case of an Award pursuant to which Stock may be delivered,  the
     Committee  will have the right to  require  that the  Participant  or other
     appropriate person remit to the Company an amount sufficient to satisfy the
     withholding  requirements,  or make other arrangements  satisfactory to the
     Committee  with regard to such  requirements,  prior to the delivery of any
     Stock or removal of  restrictions  thereon.  If and to the extent that such
     withholding is required,  the Committee may permit the  Participant or such
     other  person  to elect at such time and in such  manner  as the  Committee
     provides to have the Company hold back from the shares to be delivered,  or
     to deliver to the Company,  Stock having a value  calculated to satisfy the
     withholding  requirement.  The  Committee  may make such share  withholding
     mandatory  with  respect  to any Award at the time such  Award is made to a
     Participant.

          If at the time an ISO is exercised the Committee  determines  that the
     Company could be liable for  withholding  requirements  with respect to the
     exercise  or with  respect  to a  disposition  of the Stock  received  upon
     exercise,  the  Committee  may require as a condition of exercise  that the
     person  exercising the ISO agree (a) to provide for  withholding  under the
     preceding paragraph of this Section 8.4, if the Committee determines that a
     withholding  responsibility may arise in connection with the exercise,  (b)
     to inform the Company  promptly of any  disposition  (within the meaning of
     section  424(c) of the Code) of Stock  received upon  exercise,  and (c) to
     give such  security as the Committee  deems  adequate to meet the potential
     liability of the Company for other withholding  requirements and to augment
     such security from time to time in any amount  reasonably  deemed necessary
     by the Committee to preserve the adequacy of such security.

     8.5. Transferability of Awards.

          Unless otherwise  permitted by the Committee,  no Award (other than an
     Award in the form of an outright  transfer of cash or  Unrestricted  Stock)
     may be  transferred  other  than  by will or by the  laws  of  descent  and
     distribution.

     8.6. Adjustments in the Event of Certain Transactions.

          (a)  In the event of a stock  dividend,  stock split or combination of
               shares,   recapitalization  or  other  change  in  the  Company's
               capitalization,  or other  distribution to holders of Stock other
               than normal cash dividends, after the effective date of the Plan,
               the  Committee  will  make  any  appropriate  adjustments  to the
               maximum  number of shares  that may be  delivered  under the Plan
               under the first  paragraph  of  Section 4 above and to the limits
               described  in the  second  paragraph  of Section 4 and in Section
               6.5(c).
(b)  In any event  referred to in paragraph  (a), the  Committee  will
               also make any  appropriate  adjustments to the number and kind of
               shares of Stock or securities  subject to Awards then outstanding
               or subsequently  granted,  any exercise prices relating to Awards
               and any other  provision of Awards  affected by such change.  The
               Committee  may also make such  adjustments  to take into  account
               material changes in law or in accounting practices or principles,
               mergers,  consolidations,  acquisitions,  dispositions or similar
               corporate  transactions,  or any other event, if it is determined
               by the  Committee  that  adjustments  are  appropriate  to  avoid
               distortion in the operation of the Plan.

          (c)  In the  case  of ISOs  or  Awards  intended  to  qualify  for the
               "performance-based    compensation"   exception   under   Section
               162(m)(4)(C)  of the Code, the  adjustments  described in (a) and
               (b) will be made only to the  extent  consistent  with  continued
               qualification  of the Option or other Award under  Section 422 of
               the Code or Section 162(m) of the Code, as the case may be.

     8.7. Employment Rights, Etc.

          Neither  the  adoption of the Plan nor the grant of Awards will confer
     upon any  person any right to  continued  retention  by the  Company or any
     subsidiary as an Employee or  otherwise,  or affect in any way the right of
     the Company or  subsidiary to terminate an  employment,  service or similar
     relationship at any time. Except as specifically  provided by the Committee
     in any particular  case, the loss of existing or potential profit in Awards
     granted  under the Plan will not  constitute  an  element of damages in the
     event of termination of an employment, service or similar relationship even
     if the  termination  is in violation of an obligation of the Company or any
     of its subsidiaries to the Participant.

     8.8. Deferral of Payments.

          The Committee may agree at any time, upon request of the  Participant,
     to defer the date on which any payment under an Award will be made.

     8.9. Past Services as Consideration.

          Where a Participant  purchases  Stock under an Award for a price equal
     to the par value of the Stock the Committee  may determine  that such price
     has been satisfied by past services rendered by the Participant.

9.   EFFECT, AMENDMENT AND TERMINATION

     Neither  adoption of the Plan nor the grant of Awards to a Participant will
affect the  Company's  right to grant to such  Participant  awards  that are not
subject to the Plan, to issue to such Participant Stock as a bonus or otherwise,
or to adopt  other  plans or  arrangements  under  which  Stock may be issued to
Employees.

     The  Committee  may at any time or times amend the Plan or any  outstanding
Award for any purpose  which may at the time be  permitted by law, or may at any
time  terminate  the Plan as to any  further  grants of  Awards,  provided  that
(except to the  extent  expressly  required  or  permitted  by the Plan) no such
amendment  will,  without  the  approval  of the  stockholders  of the  Company,
effectuate a change for which stockholder  approval is required in order for the
Plan to continue to qualify for the award of ISOs under  Section 422 of the Code
or for the award of  performance-based  compensation under Section 162(m) of the
Code.
EXHIBIT 5.1

                                                                   July 29, 1999

Cabletron Systems, Inc.
35 Industrial Way
Rochester, NH 03867

Ladies and Gentlemen:

         This  opinion is  furnished to you in  connection  with a  registration
statement  on Form  S-8 (the  "Registration  Statement")  to be  filed  with the
Securities and Exchange  Commission (the "Commission")  under the Securities Act
of 1933, as amended,  for the registration of 14,500,000 shares of common stock,
par value $0.01 per share (the "Shares"), of Cabletron Systems, Inc., a Delaware
corporation (the "Company"),  issuable upon exercise of options issued under the
Cabletron  Systems,  Inc. 1998 Equity  Incentive Plan (the  "Options"  under the
"Plan").

         We have  acted  as  counsel  for the  Company  in  connection  with the
establishment  of the Plan and the issuance of the Options and are familiar with
the actions taken by the Company in connection  therewith.  For purposes of this
opinion,  we have examined the Registration  Statement,  the Plan and such other
documents as we have deemed appropriate.

         Based upon the  foregoing,  we are of the  opinion  that the Shares (i)
have been duly  authorized and (ii) when issued and sold in accordance  with the
terms of the Options  and the Plan,  will have been  validly  issued and will be
fully paid and non-assessable.

         We hereby  consent  to your  filing  this  opinion as an exhibit to the
Registration Statement.

                                                              Very truly yours,

                                                              /s/ Ropes & Gray
                                                              ----------------
                                                              Ropes & Gray
EXHIBIT 23.1

The Board of Directors
Cabletron Systems, Inc.:

We consent to the use of our reports incorporated herein by reference.

                              KPMG LLP

Boston, Massachusetts
July 29, 1999