CENTENNIAL BANCORP

                            1995 STOCK INCENTIVE PLAN

                        Adopted by the Board of Directors
                              on November 22, 1995


                                   I. PURPOSE

             The purpose of the Plan is to provide a means by which
selected  Employees,  Directors and  Consultants  may be given an opportunity to
acquire stock of the Company. The Company, by means of the Plan, seeks to retain
the services of persons who are currently  Employees,  Directors or Consultants,
to secure and retain the services of new Employees,  Directors and  Consultants,
and to provide  incentives  for such  persons to exert  maximum  efforts for the
success of the Company.  Accordingly,  the Plan provides for granting  Incentive
Stock Options,  Nonstatutory  Stock Options and Restricted Stock Awards,  or any
combination  of the  foregoing,  as is best suited to the  circumstances  of the
particular person as provided herein.

                                 II. DEFINITIONS

     The following  definitions  shall be applicable  throughout the Plan unless
specifically modified by any paragraph:

          a. "1934 ACT" means the  Securities  Exchange Act of 1934,  as amended
     and in effect from time to time, or any successor statute.

          b.  "AWARD"  means,  individually  or  collectively,   any  Option  or
     Restricted Stock Award.

          c. "BOARD" means the Board of Directors of Centennial Bancorp.

          d. "CODE" means the Internal  Revenue Code of 1986,  as amended and in
     effect from time to time, or any successor  statute.  Reference in the Plan
     to any  section of the Code shall be deemed to include  any  amendments  or
     successor provisions to any such section.

          e.  "COMMITTEE"  means not less than two  members of the Board who are
     selected by the Board as provided in Paragraph A of Article IV.

          f.  "COMMON  STOCK"  means the shares of Common  Stock of the Company,
     with par value of $2.00 per share.



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          g. "COMPANY" means Centennial Bancorp and any Parent and Subsidiary of
     Centennial Bancorp.

          h. "CONSULTANT" means any person, including an adviser, engaged by the
     Company to render  services  and who does not render  such  services  as an
     Employee or Director.

          i.  "DIRECTOR"  means  an  individual  elected  to  the  Board  by the
     shareholders of the Company or by the Board under applicable  corporate law
     who is serving on the Board on the date the Plan is adopted by the Board or
     is elected to the Board after such date.

          j. "DISABILITY"  means the condition of being  permanently  "disabled"
     within the meaning of Section 22(e)(3) of the Code,  namely being unable to
     engage in any  substantial  gainful  activity  by  reason of any  medically
     determinable  physical or mental impairment which can be expected to result
     in death or which has lasted or can be  expected  to last for a  continuous
     period of not less than 12 months.

          k. "EMPLOYEE" means any person (including a Director) in an employment
     relationship with the Company.

          l. "FAIR MARKET VALUE" means, as of any specified date:

                    (i) If the Common Stock is listed on any  established  stock
               exchange,  its fair market  value shall be the closing sale price
               of the Common  Stock (or the average of the closing bid and asked
               prices,  if no sales were  reported),  as quoted on such exchange
               (or the exchange  with the  greatest  volume of trading in Common
               Stock)  on  the   business  day   preceding   the  date  of  such
               determination,  as reported  in The Wall  Street  Journal or such
               other source as the Board deems reliable; or

                    (ii) If the Common  Stock is quoted on the  National  Market
               System of the National  Association of Securities  Dealers,  Inc.
               Automated  Quotation (Nasdaq) System, its fair market value shall
               be the average of the closing bid and asked prices for the Common
               Stock  on  the   business   day   preceding   the  date  of  such
               determination,  as reported  in The Wall  Street  Journal or such
               other source as the Board deems reliable; or

                    (iii) In the absence of an established market for the Common
               Stock,  the fair market value thereof shall be determined in good
               faith by the Committee.



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          m. "HOLDER"  means an Employee,  Consultant or a Director who has been
     granted  an  Award,  and any  assignee  or  transferee  of such  person  as
     permitted under the Plan.

          n. "INCENTIVE STOCK OPTION" means an incentive stock option within the
     meaning of Section 422 of the Code.

          o.  "NONSTATUTORY  STOCK  OPTION"  means a stock  option other than an
     Incentive Stock Option.

          p. "OPTION" means an Award described in Article VII of the Plan.

          q. "OPTION  AGREEMENT" means a written  agreement  between the Company
     and a Holder with respect to an Option.

          r.  "PARENT"  means a "parent  corporation,"  whether now or hereafter
     existing, as defined in Section 424(e) of the Code.

          s. "PLAN" means the 1995 Stock  Incentive Plan of Centennial  Bancorp,
     as set forth herein and as may be hereafter amended from time to time.

          t. "RESTRICTED  STOCK AGREEMENT" means a written agreement between the
     Company and a Holder with respect to a Restricted Stock Award.

          u.  "RESTRICTED  STOCK AWARD" means an Award described in Article VIII
     of the Plan.

          v. "RULE 16B-3" means Rule 16b-3  promulgated  by the  Securities  and
     Exchange Commission under the 1934 Act, as such may be amended from time to
     time, and any successor rule,  regulation or statute fulfilling the same or
     similar function.

          w.  "SUBSIDIARY"  means a  "subsidiary  corporation,"  whether  now or
     hereafter  existing,  as defined in Section 424(f) of the Code; namely, any
     corporation in which the Company directly or indirectly controls 50 percent
     or more of the total  combined  voting power of all classes of stock having
     voting power.

                  III. EFFECTIVE DATE AND DURATION OF THE PLAN

     The Plan  shall be  effective  as of  November  22,  1995,  the date of its
adoption  by  the  Board,  subject  to  its  ratification  and  approval  by the
shareholders  of Centennial  Bancorp on or before  November 21, 1996.  Until the
Plan has been approved by shareholders,  any Awards made under the Plan shall be
conditioned  upon such  approval.  No Awards may be granted under the Plan after
November 21, 2005. The Plan shall remain in


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effect until all Awards granted under the Plan have been satisfied or expired.

                               IV. ADMINISTRATION

     A. COMPOSITION OF COMMITTEE.  The Plan shall be administered by a committee
which shall be (i) appointed by the Board and (ii)  constituted  so as to permit
the Plan to comply with Rule 16b-3.  Except as may be permitted  without causing
the Plan to lose its qualification  under Rule 16b-3, no member of the Committee
shall be  eligible  to  receive  an Award  under the Plan and no person  who has
received  an Award in the  preceding  year  shall  be  eligible  to serve on the
Committee.

     B. AUTHORITY OF THE  COMMITTEE.  Subject to the provisions of the Plan, the
Committee shall have sole authority, in its discretion,  to determine: (i) which
Employees,  Directors and  Consultants  shall receive  Awards;  (ii) the time or
times  when  Awards  shall be  granted;  (iii) the type or types of Awards to be
granted; and (iv) the number of shares of Common Stock which may be issued under
each Award. In making such  determinations,  the Committee may take into account
the nature of the services rendered by the respective individuals, their present
and potential contribution to the success of the Company, and such other factors
as the Committee in its discretion shall deem relevant. The Committee shall also
have such additional  powers as are delegated to it by the Plan.  Subject to the
express provisions of the Plan, the Committee is authorized to construe the Plan
and the respective  agreements executed  hereunder,  to prescribe such rules and
regulations relating to the Plan as it may deem advisable to carry out the Plan,
and to determine the terms, restrictions and provisions of each Award, including
such terms, restrictions and provisions as shall be requisite in the judgment of
the Committee to cause designated Options to qualify as Incentive Stock Options,
and to make all other  determinations  necessary or advisable for  administering
the Plan.  The  Committee  may  correct  any  defect or supply any  omission  or
reconcile any inconsistency in any agreement  relating to an Award in the manner
and to the extent it shall deem  expedient to carry the Award into  effect.  The
determinations  of the  Committee on the matters  referred to in this Article IV
shall be conclusive.

     C.  LIABILITY OF COMMITTEE  MEMBERS.  No member of the  Committee  shall be
liable for any action or  determination  made in good faith with  respect to the
Plan or any Award.

     D. COSTS OF PLAN. The costs and expenses of administering the Plan shall be
borne by the Company.

                                 V. ELIGIBILITY

     Employees,  Directors and  Consultants  are eligible to receive Options and
Restricted  Stock  Awards;  provided,  however,  only  Employees are eligible to
receive Incentive Stock Options.


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Members of the Committee  shall be eligible to receive Awards only to the extent
provided in Paragraph A of Article IV. Any Award may be granted on more than one
occasion  to the same  person,  and may include an  Incentive  Stock  Option,  a
Nonstatutory Stock Option, a Restricted Stock Award, or any combination thereof.

                         VI. SHARES SUBJECT TO THE PLAN

     A. AGGREGATE NUMBER OF SHARES.  Subject to Article IX, the aggregate number
of shares of Common  Stock  that may be issued  under the Plan  shall not exceed
200,000  shares.  Shares shall be deemed to have been issued under the Plan only
(i) to the extent actually issued and delivered pursuant to an Award, or (ii) to
the extent an Award is settled in cash.  To the extent  that an Award  lapses or
the rights of its Holder  terminate,  any shares of Common Stock subject to such
Award shall again be available for the grant of an Award under the Plan.

     B.  STOCK  OFFERED.  The stock to be offered  pursuant  to the grant of any
Award may be  authorized  but unissued  Common Stock or Common Stock  previously
issued and outstanding and reacquired by the Company.

                                  VII. OPTIONS

     A. OPTION  PERIOD.  The term of each Option  shall be as  specified  by the
Committee at the date of grant,  except that no Incentive  Stock Option shall be
exercisable  after the  expiration  of ten years  from the date of grant of such
Incentive Stock Option.

     B.  LIMITATIONS  ON EXERCISE OF OPTION.  An Option shall be  exercisable in
whole or in such installments and at such times as determined by the Committee.

     C. SPECIAL  LIMITATIONS ON INCENTIVE STOCK OPTIONS.  To the extent that the
aggregate Fair Market Value  (determined  at the time the  respective  Incentive
Stock Option is granted) of Common Stock with respect to which  Incentive  Stock
Options granted are  exercisable for the first time by an individual  during any
calendar  year under all  incentive  stock option  plans of the Company  exceeds
$100,000,  such Incentive Stock Options shall be treated as options which do not
constitute Incentive Stock Options. The Committee shall determine, in accordance
with  applicable   provisions  of  the  Code,  Treasury  Regulations  and  other
administrative  pronouncements,  which of a Holder's Options will not constitute
Incentive  Stock Options  because of such limitation and shall notify the Holder
of such  determination  as soon as  practicable  after  such  determination.  No
Incentive  Stock  Option shall be granted to an  individual  if, at the time the
Option is granted, such individual owns stock possessing more than 10 percent of
the total combined  voting power of all classes of stock of the Company,  unless
(i) at the time  such  Option  is  granted  the  exercise  price is at least 110
percent of the Fair


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Market Value of the Common  Stock  subject to the Option and (ii) such Option by
its terms is not exercisable after the expiration of five years from the date of
grant.

     D. SEPARATE STOCK CERTIFICATES. Separate stock certificates shall be issued
by the  Company  for  those  shares  acquired  pursuant  to the  exercise  of an
Incentive Stock Option and for those shares acquired pursuant to the exercise of
a Nonstatutory Stock Option.

     E. OPTION AGREEMENT.  Each Option shall be evidenced by an Option Agreement
in such form and containing such provisions not inconsistent with the provisions
of the Plan as the Committee from time to time shall approve, including, without
limitation, provisions to qualify an Incentive Stock Option under Section 422 of
the Code. An Option Agreement may provide for the payment of the exercise price,
in whole or in part, by the delivery of a number of shares of Common Stock (plus
cash if  necessary)  having a Fair Market Value (as of the exercise  date of the
Option) equal to such exercise price.  Moreover, an Option Agreement may provide
for a "cashless  exercise" of the Option by establishing  procedures whereby the
Holder, by a properly executed written notice,  directs: (i) an immediate market
sale or margin loan  respecting  all or a part of the shares of Common  Stock to
which the Holder is entitled upon  exercise of the Option;  (ii) the delivery of
the shares of Common Stock from the Company  directly to a brokerage  firm;  and
(iii) the delivery of the exercise  price from sale or margin loan proceeds from
the  brokerage  firm  directly to the Company.  Such Option  Agreement  may also
include, without limitation, provisions relating to: (a) vesting of Options; (b)
tax  matters  (including   provisions  covering  any  applicable  employee  wage
withholding  requirements);  and (c) any other matters not inconsistent with the
terms  and  provisions  of this  Plan  that  the  Committee  shall  in its  sole
discretion  determine.  The  terms  and  conditions  of  the  respective  Option
Agreements need not be identical.

     F. EXERCISE  PRICE AND PAYMENT.  The price at which a share of Common Stock
may  be  purchased  upon  exercise  of an  Option  shall  be  determined  by the
Committee,  but such  exercise  price (i) shall not be less than the Fair Market
Value of a share of Common  Stock on the date  such  Option  is  granted  if the
Option is an Incentive  Stock Option and (ii) shall be subject to  adjustment as
provided  in  Article  IX. An Option or  portion  thereof  may be  exercised  by
delivery of an irrevocable notice of exercise to the Company. The exercise price
of an Option or portion  thereof shall be paid in full in the manner  prescribed
by the Committee.

     G. TERMINATION OF EMPLOYMENT OR SERVICE.

          1. In the event the  employment or service of a Holder of an Option by
     the Company  terminates  for any reason other than because of Disability or
     death,  such Option may be  exercised  at any time prior to the  expiration
     date of the


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         Option  or the  expiration  of  three  months  after  the  date of such
         termination,  whichever is the shorter  period,  but only if and to the
         extent the Holder was  entitled to  exercise  the Option at the date of
         such termination.

          2. In the event the  employment or service of a Holder of an Option by
     the Company terminates because of Disability,  such Option may be exercised
     at any time prior to the expiration date of the Option or the expiration of
     one year  after  the date of such  termination,  whichever  is the  shorter
     period,  but only if and to the extent the Holder was  entitled to exercise
     the Option at the date of such termination.

          3. In the event of the death of a Holder of an Option  while  employed
     by or providing service to the Company, such Option may be exercised at any
     time prior to the  expiration  date of the Option or the  expiration of one
     year after the date of such death,  whichever  is the shorter  period,  but
     only if and to the extent the Holder was entitled to exercise the Option on
     the date of death.  An Incentive  Stock Option may be exercised only by the
     person or persons to whom such Holder's  rights under the Option shall pass
     by the  Holder's  will or by the laws of descent  and  distribution  of the
     state or country of domicile at the time of death.

          4. The Committee, at the time of grant or at any time thereafter,  may
     extend the three-month and one-year  post-termination  exercise periods any
     length of time not later than the original  expiration  date of the Option,
     and may increase the portion of the Option that is exercisable,  subject to
     such terms and conditions as the Committee may determine.

          5. To the  extent  that the  Option of any  deceased  Holder or of any
     Holder whose  employment or service  terminates is not exercised within the
     applicable  period, all further rights to purchase Common Stock pursuant to
     such Option shall cease and terminate.

     H. RIGHTS AS A  SHAREHOLDER.  The Holder of an Option  under the Plan shall
have no rights as a shareholder with respect to the Common Stock subject to such
Option  until the date of issue to the  Holder of a stock  certificate  for such
shares.  Except as otherwise expressly provided in the Plan, no adjustment shall
be made for  dividends or other rights for which the record date occurs prior to
the date such stock certificate is issued.

     I. OPTIONS IN SUBSTITUTION FOR STOCK OPTIONS GRANTED BY OTHER CORPORATIONS.
Options  may be  granted  under the Plan from time to time in  substitution  for
stock options held by individuals  employed by corporations who become Employees
as a result of a merger or consolidation  of the employing  corporation with the
Company, or the acquisition by the Company of the assets


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of the employing corporation,  or the acquisition by the Company of stock of the
employing  corporation with the result that such employing corporation becomes a
Subsidiary.

     J. RESTRICTION ON SALE. Unless otherwise permitted by the Committee,  if an
officer subject to Section 16 of the 1934 Act or a Director  exercises an Option
within six months of the grant of the Option to such person, the shares acquired
upon  exercise of the Option may not be sold until six months  after the date of
grant of the Option;  provided,  however,  that, with respect to Options granted
subject to shareholder approval of the Plan, the six-month period shall commence
upon such shareholder approval.

                          VIII. RESTRICTED STOCK AWARDS

     A. RESTRICTION PERIOD. At the time a Restricted Stock Award is granted, the
Committee shall establish a period of time (the "Restriction Period") applicable
to such Award.  Each  Restricted  Stock  Award may have a different  Restriction
Period, in the discretion of the Committee. The Restriction Period applicable to
a particular  Restricted Stock Award shall not be changed except as permitted by
Paragraph B of this Article VIII or by Article IX.

     B.  OTHER  TERMS  AND  CONDITIONS.  Common  Stock  awarded  pursuant  to  a
Restricted Stock Award shall be represented by a stock certificate registered in
the name of the Holder of such Restricted Stock Award. The Holder shall have the
right to receive  dividends during the Restriction  Period, to vote Common Stock
subject thereto and to enjoy all other shareholder rights,  except that: (i) the
Holder  shall not be entitled to  delivery  of the stock  certificate  until the
Restriction Period shall have expired;  (ii) the Company shall retain custody of
the stock certificate  during the Restriction  Period;  (iii) the Holder may not
sell, transfer, pledge, exchange,  hypothecate or otherwise dispose of the stock
during the  Restriction  Period;  and (iv) a breach of the terms and  conditions
established by the Committee  pursuant to the Restricted  Stock  Agreement shall
cause a forfeiture of the Restricted  Stock Award.  Stock dividends  issued with
respect to Common Stock  awarded  pursuant to a Restricted  Stock Award shall be
treated as additional Common Stock covered by the Restricted Stock Award. At the
time of such  Award,  the  Committee  may,  in its  sole  discretion,  prescribe
additional  terms,  conditions  or  restrictions  relating to  Restricted  Stock
Awards,  including,  but not limited to, rules  pertaining to the termination of
employment  or service (by  retirement,  Disability,  death or  otherwise)  of a
Holder prior to expiration of the Restriction  Period.  Such  additional  terms,
conditions or  restrictions  shall be set forth in a Restricted  Stock Agreement
entered into in conjunction with the Award.  Such Restricted Stock Agreement may
also include, without limitation, provisions relating to: (i) vesting of Awards;
(ii) tax matters (including provisions (x) covering any applicable employee wage
withholding


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requirements  and (y)  prohibiting an election by the Holder under Section 83(b)
of the Code);  and (iii) any other matters not  inconsistent  with the terms and
provisions  of this  Plan  that  the  Committee  shall  in its  sole  discretion
determine. Unless otherwise permitted by the Committee, if an officer subject to
Section 16 of the 1934 Act or a  Director  receives a  Restricted  Stock  Award,
shares issued  pursuant to such Award may not be sold until six months after the
date of the Award.

     C. PURCHASE PRICE AND PAYMENT. The Committee shall determine the amount and
form of any payment for Common Stock  received  pursuant to a  Restricted  Stock
Award, provided that, in the absence of such a determination, a Holder shall not
be  required  to make any  payment  for  Common  Stock  received  pursuant  to a
Restricted Stock Award, except to the extent otherwise required by law.

     D. RESTRICTED STOCK AGREEMENT.  At the time any Award is granted under this
Article  VIII,  the Company and the Holder shall enter into a  Restricted  Stock
Agreement setting forth each of the matters  contemplated  hereby and such other
matters  as the  Committee  may  determine  to be  appropriate.  The  terms  and
provisions of the respective Restricted Stock Agreements need not be identical.

                        IX. CHANGES IN CAPITAL STRUCTURE

     A. If the outstanding  Common Stock is hereafter  increased or decreased or
changed  into or  exchanged  for a  different  number or kind of shares or other
securities  of  the  Company  or  of  another   corporation  by  reason  of  any
reorganization,  merger,  consolidation,  plan  of  exchange,  recapitalization,
reclassification,  stock split-up,  combination of shares or dividend payable in
shares,  appropriate adjustment shall be made by the Committee in the number and
kind of shares  available  for Awards.  In addition,  the  Committee  shall make
appropriate  adjustment in the number and kind of shares as to which outstanding
Options, or portions thereof then unexercised, shall be exercisable, so that the
Holder's  proportionate interest before and after the occurrence of the event is
maintained.   Notwithstanding  the  foregoing,   the  Committee  shall  have  no
obligation to effect any  adjustment  that would or might result in the issuance
of fractional  shares,  and any fractional  shares resulting from any adjustment
may be  disregarded  or provided for in any manner  determined by the Committee.
Any such adjustments  made by the Committee shall be conclusive.  Any adjustment
provided for in this  Paragraph A of Article IX shall be subject to any required
shareholder  action.  In the event of  dissolution  of the  Company or a merger,
consolidation, plan of exchange or similar transaction affecting the Company, in
lieu of providing for Options as provided  above in this  Paragraph A of Article
IX or in lieu of having the Options  continue  unchanged,  the Committee may, in
its sole  discretion,  provide a 30-day  period prior to such event during which
Holders shall have the right to


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exercise  Options in whole or in part without any  limitation on  exercisability
and upon the  expiration  of such 30-day  period all  unexercised  Options shall
immediately terminate. Notwithstanding the foregoing, if the Holder of an Option
is subject to Section  16(b) of the 1934 Act and if such event  occurs less than
six months  after the date the Option is  granted,  the  exercise  of the Option
shall not be  accelerated,  unless  such  acceleration  is  approved by both the
Committee  and the  Holder,  if such  acceleration  would cause the grant or the
exercise of the Option to be deemed a purchase  subject to Section  16(b) of the
1934 Act and the regulations promulgated thereunder.

     B. The  existence of the Plan and the Awards  granted  hereunder  shall not
affect  in any way the right or power of the  Board or the  shareholders  of the
Company to make or authorize any adjustment, recapitalization, reorganization or
other change in the Company's capital  structure or its business,  any merger or
consolidation of the Company,  any issue of debt or equity  securities senior to
or affecting Common Stock or the rights thereof,  the dissolution or liquidation
of the Company, or any sale, lease,  exchange or other disposition of all or any
part of its assets or business or any other corporate act or proceeding.

     C. Except as hereinbefore  expressly provided,  the issuance by the Company
of shares of stock of any class or securities  convertible  into shares of stock
of any class, for cash, property,  labor or services, upon direct sale, upon the
exercise of rights or warrants to  subscribe  therefor,  or upon  conversion  of
shares or  obligations  of the  Company  convertible  into such  shares or other
securities, and in any case whether or not for fair value, shall not affect, and
no  adjustment  by reason  thereof  shall be made with respect to, the number of
shares of Common  Stock  subject to Awards  previously  granted or the  exercise
price per share, if applicable.

                    X. AMENDMENT AND TERMINATION OF THE PLAN

     The Board in its discretion may terminate the Plan at any time with respect
to any shares for which Awards have not previously been granted. The Board shall
have the right to alter or amend the Plan or any part thereof from time to time;
provided, that no change in any Award previously granted may be made which would
impair the rights of the Holder  without  the  consent of the  Holder;  provided
further, that the Board may not, without approval of the shareholders, amend the
Plan:

          (a) to increase  the maximum  number of shares  which may be issued on
     grant or exercise of an Award, except as provided in Article IX;

          (b) to change the price at which an Award may be granted or exercised;



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          (c) to change the class of individuals eligible to receive Awards;

          (d) to extend the maximum  period  during  which Awards may be granted
     under the Plan; or

          (e) to decrease any authority  granted to the  Committee  hereunder if
     such  change  would  cause the Plan to lose its  qualification  under  Rule
     16b-3.

                                XI. MISCELLANEOUS

     A. NO RIGHT TO AN AWARD.  Neither  the  adoption of the Plan by the Company
nor any  action  of the  Board  or the  Committee  shall  be  deemed  to give an
Employee,  a Consultant or a Director any right to be granted an Award or any of
the  rights  hereunder  except as may be  evidenced  by an Award or by an Option
Agreement or Restricted  Stock Agreement duly executed on behalf of the Company,
and then only to the extent and on the terms and conditions  expressly set forth
therein.

     B. NO  EMPLOYMENT  RIGHTS  CONFERRED.  Nothing in the Plan shall (i) confer
upon any Employee any right with respect to  continuation of employment with the
Company or (ii)  interfere in any way with the right of the Company to terminate
the  Employee's  employment  (or  service  as a  Director,  in  accordance  with
applicable  corporate  law,  or  service  as a  Consultant)  at any time for any
reason, with or without cause.

     C. OTHER LAWS; WITHHOLDING. The Company shall not be obligated to issue any
Common Stock  pursuant to any Award  granted under the Plan at any time when the
shares covered by such Award have not been  registered  under the Securities Act
of 1933, as amended, and such other state and federal laws, rules or regulations
as the Company or the Committee  deems  applicable  and, in the opinion of legal
counsel  for  the  Company,   there  is  no  exemption  from  the   registration
requirements of such laws,  rules or regulations  available for the issuance and
sale of such shares.  No  fractional  shares of Common Stock shall be delivered,
nor shall any cash in lieu of fractional  shares be paid. The Company shall have
the right to deduct in connection  with all Awards any taxes  required by law to
be  withheld  and to require any  payments  required to enable it to satisfy its
withholding obligations.

     D. NO RESTRICTION ON CORPORATE ACTION.  Nothing contained in the Plan shall
be construed to prevent the Company  from taking any  corporate  action which is
deemed by the Company to be appropriate or in its best interest,  whether or not
such action would have an adverse  effect on the Plan or any Award granted under
the Plan. No Employee,  Consultant,  Director, beneficiary or other person shall
have any claim against the Company as a result of any such action.



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     E. RESTRICTIONS ON TRANSFER.  An Award shall not be transferable  otherwise
than by will or the laws of descent and distribution;  provided,  however, that,
with the consent of the Committee, Nonstatutory Stock Options may be assigned or
transferred,  if such assignment or transfer does not cause the Plan to lose its
qualification under Rule 16b-3. (At the date the Plan was approved by the Board,
the following  additional  transfers of Nonstatutory Stock Options could be made
without  causing  the Plan to lose  its  qualification  under  Rule  16b-3:  (i)
transfers  pursuant to qualified  domestic  relations orders;  (ii) transfers to
members of the Optionee's  immediate family (i.e.,  children,  grandchildren and
spouses);  (iii) transfers to trusts for the benefit of such family members; and
(iv) transfers to partnerships  whose only partners are such family members.) No
consideration  may be paid for the transfer of any  Nonstatutory  Stock  Option,
and, after any permitted transfer,  the Nonstatutory Stock Option shall continue
to be  subject  to the  same  terms  and  conditions  as were  applicable  to it
immediately prior to its transfer. Before permitting any transfer, the Committee
may require the transferee to agree in writing to be so bound.  Unless otherwise
permitted by the Committee,  an officer subject to Section 16 of the 1934 Act or
a Director may not transfer a Nonstatutory Stock Option within six months of the
date of grant;  provided,  however,  that,  with respect to  Nonstatutory  Stock
Options made subject to shareholder  approval of the Plan, the six-month  period
shall commence upon such  shareholder  approval.  Incentive Stock Options may be
exercisable during the lifetime of the optionee only by the optionee,  or by the
optionee's guardian or legal representative.

     F.  RULE  16B-3.  It is  intended  that the Plan and,  except as  otherwise
determined by the  Committee,  any grant of an Award made to a person subject to
Section  16 of the  1934  Act meet all of the  requirements  of Rule  16b-3,  as
modified or amended from time to time.  If any provision of the Plan or any such
Award would  disqualify  the Plan or such Award under,  or would  otherwise  not
comply with,  Rule 16b-3,  such  provision or Award shall be construed or deemed
amended  to conform  to Rule  16b-3,  except as the  Committee  shall  otherwise
determine with respect to any particular Award.

     G. GOVERNING LAW. To the extent that federal laws (such as the Code and the
federal securities laws) do not otherwise  control,  the Plan shall be construed
in accordance with the laws of the state of Oregon.

     H. HEADINGS.  Headings contained in the Plan are for reference purposes and
shall not affect the meaning or interpretation of the Plan.



                               /s/Cordy H. Jensen
                              ---------------------------------
                              Cordy H. Jensen, Secretary