THE 1997 EQUITY PARTICIPATION PLAN

                                       OF

                               RENTRAK CORPORATION



         Rentrak Corporation, an Oregon corporation, has adopted The 1997 Equity
Participation Plan of Rentrak  Corporation (the "Plan"),  effective February 27,
1997, for the benefit of its eligible employees,  consultants and directors. The
Plan  consists of two plans,  one for the benefit of Employees  (as such term is
defined below) and consultants and one for the benefit of Independent  Directors
(as such term is defined below).

         The purposes of this Plan are as follows:

         (1) To provide an  additional  incentive for  directors,  Employees and
consultants  to further the growth,  development  and  financial  success of the
Company by personally  benefiting  through the ownership of Company stock and/or
rights which recognize such growth, development and financial success.

         (2) To enable  the  Company  to  obtain  and  retain  the  services  of
directors,  Employees  and  consultants  considered  essential to the long range
success  of the  Company by  offering  them an  opportunity  to own stock in the
Company and/or rights which will reflect the growth,  development  and financial
success of the Company.

                                    ARTICLE I.
                                   DEFINITIONS

         1.1 GENERAL.  Wherever the  following  terms are used in this Plan they
shall have the meanings  specified below,  unless the context clearly  indicates
otherwise.

         1.2 AWARD LIMIT.  "Award  Limit"  shall mean  400,000  shares of Common
Stock.

         1.3 BOARD.  "Board"  shall mean the Board of  Directors of the Company.

         1.4  CHANGE IN  CONTROL.  "Change  in  Control"  shall mean a change in
ownership or control of the Company  effected  through  either of the  following
transactions:

         (a) Any person or related group of persons (other than the Company or a
     person that directly or indirectly controls,  is controlled by, or is under
     common  control  with,  the  Company)   directly  or  indirectly   acquires
     beneficial  ownership  (within the meaning of Rule 13d-3 under the Exchange
     Act) of securities  possessing  more than 50 percent of the total  combined
     voting power of the Company's  outstanding  securities pursuant to a tender
     or exchange  offer made  directly to the Company's  stockholders  which the
     Board does not recommend such stockholders to accept; or

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         (b) There is a change in the  composition of the Board over a period of
     thirty-six  (36)  consecutive  months (or less) such that a majority of the
     Board members (rounded up to the nearest whole number) ceases, by reason of
     one or more  proxy  contests  for the  election  of  Board  members,  to be
     comprised  of   individuals   who  either  (i)  have  been  Board   members
     continuously  since the  beginning of such period or (ii) have been elected
     or nominated for election as Board members during such period by at least a
     majority  of the Board  members  described  in clause (i) who were still in
     office at the time such election or nomination was approved by the Board.

         1.5 CODE.  "Code"  shall mean the  Internal  Revenue  Code of 1986,  as
amended.

         1.6 COMMITTEE. "Committee" shall mean the Stock Option Committee of the
Board,  or another  committee of the Board,  appointed as provided in
Section 8.1.

         1.7 COMMON  STOCK.  "Common  Stock"  shall mean the common stock of the
Company,  par value  $.001 per share,  and any equity  security  of the  Company
issued or  authorized  to be issued in the future,  but  excluding any preferred
stock and any warrants,  options or other rights to purchase Common Stock.  Debt
securities of the Company  convertible  into Common Stock shall be deemed equity
securities of the Company.

         1.8  COMPANY.  "Company"  shall  mean  Rentrak  Corporation,  an Oregon
corporation.

         1.9 CORPORATE  TRANSACTION.  "Corporate  Transaction" shall mean any of
the following stockholder-approved transactions to which the Company is a party:

         (a) A merger or consolidation in which the Company is not the surviving
     entity,  except  for a  transaction  the  principal  purpose of which is to
     change  the  State in which the  Company  is  incorporated,  form a holding
     company or effect a similar  reorganization  as to form whereupon this Plan
     and all Options are assumed by the successor entity;

         (b)  The  sale,  transfer,  exchange  or  other  disposition  of all or
     substantially all of the assets of the Company, in complete  liquidation or
     dissolution  of the Company in a transaction  not covered by the exceptions
     to clause (a), above; or

         (c) Any reverse merger in which the Company is the surviving entity but
     in which  securities  possessing more than 50 percent of the total combined
     voting power of the Company's  outstanding  securities  are  transferred or
     issued to a person or persons different from those who held such securities
     immediately prior to such merger.

         1.10 DEFERRED STOCK.  "Deferred  Stock" shall mean Common Stock awarded
under Article VII of this Plan.

         1.11 DIRECTOR. "Director" shall mean a member of the Board.

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         1.12 DIVIDEND EQUIVALENT.  "Dividend  Equivalent" shall mean a right to
receive the  equivalent  value (in cash or Common  Stock) of  dividends  paid on
Common Stock, awarded under Article VII of this Plan.

         1.13 EMPLOYEE.  "Employee" shall mean any officer or other employee (as
defined in accordance  with Section  3401(c) of the Code) of the Company,  or of
any corporation which is a Subsidiary.

         1.14 EXCHANGE ACT.  "Exchange Act" shall mean the  Securities  Exchange
Act of 1934, as amended.

         1.15 FAIR MARKET  VALUE.  "Fair Market  Value" as of a given date means
the value of a share of Common  Stock  which is equal to (i) the last sale price
of the Common  Stock as  reported on such date,  or if no sales are  reported on
that date,  then the last  preceding  date on which a sale was reported,  if the
Common Stock is listed on a national securities exchange or quoted on the Nasdaq
Stock Market ("Nasdaq");  (ii) the average of the closing representative bid and
asked  prices of the Common  Stock  reported  on such date,  or if no prices are
reported  on such  date,  then  the last  preceding  date on  which  prices  are
reported,  if the Common Stock is not listed on any national securities exchange
or quoted on Nasdaq but is traded in the  over-the-counter  market; or (iii) the
fair market value of a share of Common Stock as  determined by the Committee (or
the Board,  in the case of Options granted to Independent  Directors)  acting in
good faith, if the Common Stock is not listed on a national securities exchange,
quoted on Nasdaq, or traded in the over-the-counter market.

         1.16 GRANTEE.  "Grantee" shall mean an Employee or consultant granted a
Performance Award,  Dividend Equivalent,  Stock Payment, or an award of Deferred
Stock, under this Plan.

         1.17  INCENTIVE  STOCK OPTION.  "Incentive  Stock Option" shall mean an
option which  conforms to the  applicable  provisions of Section 422 of the Code
and which is designated as an Incentive Stock Option by the Committee.

         1.18 INDEPENDENT DIRECTOR.  "Independent  Director" shall mean a member
of the Board who is not an Employee of the Company.

         1.19  NON-QUALIFIED  STOCK OPTION.  "Non-Qualified  Stock Option" shall
mean an Option  which is not  designated  as an  Incentive  Stock  Option by the
Committee.

         1.20 OPTION.  "Option"  shall mean a stock option granted under Article
III of this Plan. An Option granted under this Plan shall,  as determined by the
Committee,  be either a Non-Qualified Stock Option or an Incentive Stock Option;
PROVIDED, HOWEVER, that Options granted to Independent Directors and consultants
shall be Non-Qualified Stock Options.

         1.21  OPTIONEE.  "Optionee"  shall  mean  an  Employee,  consultant  or
Independent Director granted an Option under this Plan.

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         1.22 PERFORMANCE  AWARD.  "Performance  Award" shall mean a cash bonus,
stock bonus or other performance or incentive award that is paid in cash, Common
Stock or a combination of both, awarded under Article VII of this Plan.

         1.23 PLAN.  "Plan"  shall mean The 1997  Equity  Participation  Plan of
Rentrak Corporation.

         1.24 QDRO.  "QDRO" shall mean a qualified  domestic  relations order as
defined by the Code or Title I of the Employee Retirement Income Security Act of
1974, as amended, or the rules thereunder.

         1.25  RESTRICTED  STOCK.  "Restricted  Stock"  shall mean Common  Stock
awarded under Article VI of this Plan.

         1.26 RESTRICTED  STOCKHOLDER.  "Restricted  Stockholder"  shall mean an
Employee or consultant  granted an award of Restricted Stock under Article VI of
this Plan.

         1.27 RULE 16B-3.  "Rule 16b-3" shall mean that certain Rule 16b-3 under
the Exchange Act, as such Rule may be amended from time to time.

         1.28 SECTION 162(M)  PARTICIPANT.  "Section 162(m)  Participant"  shall
mean any Employee  designated by the Committee as an Employee whose compensation
for the fiscal year in which the Employee is so  designated  or a future  fiscal
year may be subject to the limit on deductible  compensation  imposed by Section
162(m) of the Code.

         1.29 STOCK  PAYMENT.  "Stock  Payment"  shall mean (i) a payment in the
form of shares of Common  Stock,  or (ii) an option or other  right to  purchase
shares of Common Stock, as part of a deferred compensation arrangement,  made in
lieu of all or any portion of the compensation,  including  without  limitation,
salary,  bonuses and  commissions,  that would  otherwise  become  payable to an
Employee or consultant in cash, awarded under Article VII of this Plan.

         1.30 SUBSIDIARY. "Subsidiary" shall mean any corporation in an unbroken
chain of  corporations  beginning  with the Company if each of the  corporations
other than the last corporation in the unbroken chain then owns stock possessing
50 percent or more of the total combined voting power of all classes of stock in
one of the other corporations in such chain.

         1.31  TERMINATION OF CONSULTANCY.  "Termination  of Consultancy"  shall
mean  the  time  when the  engagement  of an  Optionee,  Grantee  or  Restricted
Stockholder as a consultant to the Company or a Subsidiary is terminated for any
reason,  with or without  cause,  including,  but not by way of  limitation,  by
resignation,  discharge,  death or retirement;  but excluding terminations where
there is a  simultaneous  commencement  of  employment  with the  Company or any
Subsidiary.  The  Committee,  in its absolute  discretion,  shall  determine the
effect of all matters and  questions  relating to  Termination  of  Consultancy,
including,  but not by way of limitation,  the question of whether a Termination
of  Consultancy  resulted from a discharge for good cause,  and all questions of
whether  particular  leaves of absence  constitute  Terminations of Consultancy.
Notwithstanding  any other provision of this Plan, the Company or any Subsidiary
has an absolute and  unrestricted  right to terminate a consultant's  service at
any time for any

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reason  whatsoever,  with or  without  cause,  except  to the  extent  expressly
provided otherwise in writing.

         1.32 TERMINATION OF DIRECTORSHIP.  "Termination of Directorship"  shall
mean the time when an Optionee  who is an  Independent  Director  ceases to be a
Director for any reason,  including, but not by way of limitation, a termination
by resignation,  failure to be elected,  death or retirement.  The Board, in its
sole and  absolute  discretion,  shall  determine  the effect of all matters and
questions  relating to Termination of  Directorship  with respect to Independent
Directors.

         1.33 TERMINATION OF EMPLOYMENT.  "Termination of Employment" shall mean
the time when the employee-employer relationship between an Optionee, Grantee or
Restricted  Stockholder  and the Company or any Subsidiary is terminated for any
reason,  with or  without  cause,  including,  but not by way of  limitation,  a
termination by  resignation,  discharge,  death,  disability or retirement;  but
excluding  (i)  terminations  where  there  is a  simultaneous  reemployment  or
continuing employment of an Optionee,  Grantee or Restricted  Stockholder by the
Company or any Subsidiary, (ii) at the discretion of the Committee, terminations
which result in a temporary severance of the employee-employer relationship, and
(iii) at the discretion of the Committee, terminations which are followed by the
simultaneous  establishment  of a  consulting  relationship  by the Company or a
Subsidiary with the former employee. The Committee,  in its absolute discretion,
shall determine the effect of all matters and questions  relating to Termination
of Employment,  including, but not by way of limitation, the question of whether
a Termination  of Employment  resulted from a discharge for good cause,  and all
questions of whether  particular  leaves of absence  constitute  Terminations of
Employment;   PROVIDED,  HOWEVER,  that,  unless  otherwise  determined  by  the
Committee  in its  discretion,  a leave of  absence,  change in  status  from an
employee to an independent  contractor or other change in the  employee-employer
relationship  shall constitute a Termination of Employment if, and to the extent
that,  such  leave of  absence,  change  in status  or other  change  interrupts
employment  for the  purposes  of  Section  422(a)(2)  of the  Code and the then
applicable  regulations and revenue rulings under said Section.  Notwithstanding
any other  provision of this Plan, the Company or any Subsidiary has an absolute
and unrestricted right to terminate an Employee's employment at any time for any
reason  whatsoever,  with or  without  cause,  except  to the  extent  expressly
provided otherwise in writing.

                                  ARTICLE II.
                             SHARES SUBJECT TO PLAN

2.1      SHARES SUBJECT TO PLAN.

         (a) The shares of stock subject to Options, awards of Restricted Stock,
     Performance Awards, Dividend Equivalents, awards of Deferred Stock or Stock
     Payments shall be Common Stock,  initially  shares of the Company's  Common
     Stock, par value $.001 per share. The aggregate number of such shares which
     may be issued  upon  exercise  of such  options  or rights or upon any such
     awards  under the Plan shall not exceed two million  seventy-five  thousand
     (2,075,000).  The shares of Common  Stock  issuable  upon  exercise of such
     options  or  rights  or upon  any  such  awards  may be  either  previously
     authorized but unissued shares or treasury shares.

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         (b) The  maximum  number of  shares  which may be  subject  to  Options
     granted  under the Plan to any  individual  in any  fiscal  year  shall not
     exceed the Award  Limit.  To the extent  required by Section  162(m) of the
     Code,  shares subject to Options which are canceled  continue to be counted
     against  the Award  Limit and if,  after  grant of an Option,  the price of
     shares subject to such Option is reduced,  the  transaction is treated as a
     cancellation  of the Option and a grant of a new Option and both the Option
     deemed to be  canceled  and the  Option  deemed to be granted  are  counted
     against the Award Limit.

         2.2 ADD-BACK OF OPTIONS AND OTHER RIGHTS. If any Option, or other right
to acquire shares of Common Stock under any other award under this Plan, expires
or is canceled without having been fully exercised,  or is exercised in whole or
in part for cash as permitted by this Plan, the number of shares subject to such
Option  or other  right  but as to which  such  Option  or other  right  was not
exercised  prior  to its  expiration,  cancellation  or  exercise  may  again be
optioned,  granted or awarded  hereunder,  subject to the limitations of Section
2.1.  Furthermore,  any shares  subject to  Options  or other  awards  which are
adjusted  pursuant to Section 9.3 and become  exercisable with respect to shares
of stock of another  corporation  shall be considered  canceled and may again be
optioned,  granted or awarded  hereunder,  subject to the limitations of Section
2.1.  Shares of Common  Stock which are  delivered by the Optionee or Grantee or
withheld  by the  Company  upon the  exercise of any Option or other award under
this Plan,  in payment of the  exercise  price  thereof,  may again be optioned,
granted or awarded hereunder,  subject to the limitations of Section 2.1. If any
share of  Restricted  Stock is  forfeited by the Grantee or  repurchased  by the
Company  pursuant  to Section  6.6  hereof,  such  share may again be  optioned,
granted  or  awarded  hereunder,  subject to the  limitations  of  Section  2.1.
Notwithstanding  the  provisions  of this Section 2.2, no shares of Common Stock
may  again be  optioned,  granted  or  awarded  if such  action  would  cause an
Incentive  Stock  Option to fail to qualify as an  incentive  stock option under
Section 422 of the Code.

                                  ARTICLE III.
                               GRANTING OF OPTIONS

         3.1 ELIGIBILITY.  Any Employee or consultant  selected by the Committee
pursuant to Section  3.4(a)(i)  shall be eligible to be granted an Option.  Each
Independent  Director of the Company shall be eligible to be granted  Options at
the times and in the manner set forth in Section 3.4(d).

         3.2 DISQUALIFICATION  FOR STOCK OWNERSHIP.  No person may be granted an
Incentive Stock Option under this Plan if such person, at the time the Incentive
Stock Option is granted,  owns stock  possessing  more than ten percent (10%) of
the total  combined  voting  power of all classes of stock of the Company or any
then existing  Subsidiary or parent  corporation  (within the meaning of Section
422 of the Code) unless such Incentive  Stock Option  conforms to the applicable
provisions of Section 422 of the Code.

         3.3 QUALIFICATION OF INCENTIVE STOCK OPTIONS. No Incentive Stock Option
shall be granted to any person who is not an Employee.

         3.4 GRANTING OF OPTIONS


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         (a) The Committee shall from time to time, in its absolute  discretion,
     and subject to applicable limitations of this Plan:

               (i) Select from among the  Employees  or  consultants  (including
         Employees or consultants who have previously  received Options or other
         awards  under  this  Plan)  such of them as in its  opinion  should  be
         granted Options;

               (ii) Subject to the Award Limit,  determine  the number of shares
         to be subject to such  Options  granted to the  selected  Employees  or
         consultants;

               (iii) Subject to Section 3.3,  determine whether such Options are
         to be  Incentive  Stock  Options or  Non-Qualified  Stock  Options  and
         whether such Options are to qualify as  performance-based  compensation
         as described in Section 162(m)(4)(C) of the Code; and

               (iv)   Determine  the  terms  and  conditions  of  such  Options,
         consistent  with  this  Plan;  PROVIDED,  HOWEVER,  that the  terms and
         conditions  of  Options   intended  to  qualify  as   performance-based
         compensation  as  described in Section  162(m)(4)(C)  of the Code shall
         include,  but not be limited  to, such terms and  conditions  as may be
         necessary to meet the  applicable  provisions of Section  162(m) of the
         Code.

         (b) Upon the  selection of an Employee or  consultant  to be granted an
     Option,  the Committee shall instruct the Secretary of the Company to issue
     the Option and may impose such  conditions on the grant of the Option as it
     deems  appropriate.  Without  limiting  the  generality  of  the  preceding
     sentence,  the  Committee  may, in its  discretion  and on such terms as it
     deems  appropriate,  require as a condition on the grant of an Option to an
     Employee or  consultant  that the  Employee  or  consultant  surrender  for
     cancellation some or all of the unexercised  Options,  awards of Restricted
     Stock or Deferred Stock,  Performance Awards, Dividend Equivalents or Stock
     Payments or other  rights which have been  previously  granted to him under
     this Plan or otherwise.  An Option,  the grant of which is conditioned upon
     such  surrender,  may have an  option  price  lower  (or  higher)  than the
     exercise  price of such  surrendered  Option or other award,  may cover the
     same (or a lesser or greater) number of shares as such  surrendered  Option
     or other  award,  may  contain  such  other  terms as the  Committee  deems
     appropriate, and shall be exercisable in accordance with its terms, without
     regard to the number of shares, price, exercise period or any other term or
     condition of such surrendered Option or other award.

         (c) Any Incentive  Stock Option granted under this Plan may be modified
     by the Committee to disqualify  such option from treatment as an "incentive
     stock option" under Section 422 of the Code.

         (d) (i) During the term of the Plan,  each person who is an Independent
     Director shall  automatically be granted an Option to purchase ten thousand
     (10,000)  shares of Common  Stock  (subject  to  adjustment  as provided in
     Section 9.3) on April 1st of each year; PROVIDED,  HOWEVER,  that each such
     person  who is  Chairman  of the  Board  or of any  Board  committee  shall
     automatically  be granted an Option to purchase an

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     additional  two  thousand  five  hundred  (2,500)  shares of  Common  Stock
     (subject to  adjustment  as  provided in Section  9.3) on April 1st of each
     year. All the foregoing Option grants  authorized by this Section 3.4(d)(i)
     are subject to stockholder approval of the Plan.

               (ii) The Board may from time to time, in its absolute discretion,
         and subject to applicable limitations of this Plan:

               (1) Determine whether, in its opinion, the Independent  Directors
         (or any of them)  should be  granted  Non-Qualified  Stock  Options  in
         addition to the Options granted pursuant to Section 3.4(d)(i);

               (2) Subject to the Award Limit, determine the number of shares to
         be subject to such  Non-Qualified  Stock  Options  granted to  selected
         Independent Directors; and

               (3)  Determine  the terms and  conditions  of such  Non-Qualified
         Stock Options, consistent with this Plan.

                                  ARTICLE IV.
                                TERMS OF OPTIONS

         4.1 OPTION AGREEMENT. Each Option shall be evidenced by a written Stock
Option  Agreement,  which shall be executed by the  Optionee  and an  authorized
officer of the Company and which shall contain such terms and  conditions as the
Committee  (or  the  Board,  in the  case  of  Options  granted  to  Independent
Directors) shall determine,  consistent with this Plan. Stock Option  Agreements
evidencing  Options  intended to qualify as  performance-based  compensation  as
described  in  Section  162(m)(4)(C)  of the Code shall  contain  such terms and
conditions  as may be necessary  to meet the  applicable  provisions  of Section
162(m) of the Code. Stock Option Agreements  evidencing  Incentive Stock Options
shall  contain  such  terms  and  conditions  as may be  necessary  to meet  the
applicable provisions of Section 422 of the Code.

         4.2 OPTION  PRICE.  The price per share of the  shares  subject to each
Option shall be set by the Committee;  PROVIDED,  HOWEVER, that such price shall
be no less  than the par  value of a share of  Common  Stock,  unless  otherwise
permitted  by  applicable  state  law,  and (i) in the case of  Incentive  Stock
Options and Options  intended to qualify as  performance-based  compensation  as
described in Section 162(m)(4)(C) of the Code, such price shall not be less than
100% of the Fair Market  Value of a share of Common Stock on the date the Option
is granted; (ii) in the case of Incentive Stock Options granted to an individual
then owning  (within the meaning of Section 424(d) of the Code) more than 10% of
the total  combined  voting  power of all classes of stock of the Company or any
Subsidiary or parent  corporation  thereof (within the meaning of Section 422 of
the Code) such price shall not be less than 110% of the Fair  Market  Value of a
share of Common  Stock on the date the Option is granted;  and (iii) in the case
of Options granted to Independent Directors pursuant to Section 3.4(d)(i),  such
price shall equal 100% of the Fair  Market  Value of a share of Common  Stock on
the date the Option is granted.

         4.3 OPTION TERM. The term of an Option shall be set by the Committee in
its discretion;  provided,  however, that, (i) in the case of Options granted to
Independent Directors pursuant to Section 3.4(d)(i),  the term shall be ten (10)
years from the date the Option is granted,


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without  variation or  acceleration  hereunder,  but subject to Section 5.6, and
(ii) in the case of Incentive Stock Options, the term shall not be more then ten
(10) years from the date the  Incentive  Stock  Option is  granted,  or five (5)
years from such date if the  Incentive  Stock Option is granted to an individual
then owning  (within the meaning of Section 424(d) of the Code) more than 10% of
the total  combined  voting  power of all classes of stock of the Company or any
Subsidiary or parent  corporation  thereof (within the meaning of Section 422 of
the  Code).  Except as limited by  requirements  of Section  422 of the Code and
regulations and rulings  thereunder  applicable to Incentive Stock Options,  the
Committee may extend the term of any  outstanding  Option in connection with any
Termination of Employment or  Termination  of  Consultancy  of the Optionee,  or
amend any other term or condition of such Option relating to such a termination.

4.4      OPTION VESTING.
         --------------

         (a) The period during which the right to exercise an Option in whole or
     in part vests in the Optionee  shall be set by the Committee (or the Board,
     in the case of Options granted to Independent  Directors) and the Committee
     (or the Board, in the case of Options granted to Independent Directors) may
     determine  that an Option  may not be  exercised  in whole or in part for a
     specified period after it is granted;  PROVIDED,  ---------- HOWEVER, that,
     unless  the  Committee  (or the Board,  in the case of  Options  granted to
     Independent  -------  Directors)  otherwise  provides  in the  terms of the
     Option or otherwise,  no Option shall be exercisable by any Optionee who is
     then subject to Section 16 of the Exchange Act within the period ending six
     months and one day after the date the Option is granted.  At any time after
     grant of an Option,  the  Committee  (or the Board,  in the case of Options
     granted to Independent  Directors) may, in its sole and absolute discretion
     and subject to whatever  terms and  conditions it selects,  accelerate  the
     period during which an Option vests.

         (b) No portion of an Option which is  unexercisable  at  Termination of
     Employment,  Termination of Directorship or Termination of Consultancy,  as
     applicable, shall thereafter become exercisable, except as may be otherwise
     provided by the  Committee  in the case of Options  granted to Employees or
     consultants  either  in the  Stock  Option  Agreement  or by  action of the
     Committee following the grant of the Option.

         (c) To the extent that the  aggregate  Fair Market  Value of stock with
     respect to which  "incentive  stock options" (within the meaning of Section
     422 of the Code,  but  without  regard to  Section  422(d) of the Code) are
     exercisable  for the first time by an  Optionee  during any  calendar  year
     (under the Plan and all other  incentive  stock option plans of the Company
     and any  Subsidiary)  exceeds  $100,000,  such Options  shall be treated as
     Non-Qualified  Stock  Options to the extent  required by Section 422 of the
     Code.  The rule set forth in the  preceding  sentence  shall be  applied by
     taking  Options into account in the order in which they were  granted.  For
     purposes of this  Section  4.4(c),  the Fair Market Value of stock shall be
     determined as of the time the Option with respect to such stock is granted.

         4.5  CONSIDERATION.  In consideration of the granting of an Option, the
Optionee shall agree,  in the written Stock Option  Agreement,  to remain in the
employ  of (or to  consult for

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<PAGE>

or to serve as an  Independent  Director of, as  applicable)  the Company or any
Subsidiary  for a period of at least one year (or such shorter  period as may be
fixed in the Stock  Option  Agreement  or by action of the  Committee  following
grant  of the  Option)  after  the  Option  is  granted  (or,  in the case of an
Independent  Director,  until the next  annual  meeting of  stockholders  of the
Company).  Nothing in this Plan or in any Stock Option Agreement hereunder shall
confer  upon any  Optionee  any  right to  continue  in the  employ  of, or as a
consultant for, the Company or any Subsidiary,  or as a director of the Company,
or shall interfere with or restrict in any way the rights of the Company and any
Subsidiary,  which are hereby expressly  reserved,  to discharge any Optionee at
any time for any reason whatsoever, with or without good cause.

                                   ARTICLE V.
                               EXERCISE OF OPTIONS

         5.1 PARTIAL EXERCISE.  An exercisable  Option may be exercised in whole
or in part.  However,  an  Option  shall  not be  exercisable  with  respect  to
fractional  shares  and the  Committee  (or the  Board,  in the case of  Options
granted to Independent  Directors) may require that, by the terms of the Option,
a partial exercise be with respect to a minimum number of shares.

         5.2 MANNER OF EXERCISE. All or a portion of an exercisable Option shall
be deemed exercised upon delivery of all of the following to
the Secretary of the Company or his office:

         (a) A written notice complying with the applicable rules established by
     the Committee (or the Board,  in the case of Options granted to Independent
     Directors) stating that the Option, or a portion thereof, is exercised. The
     notice  shall be signed by the  Optionee or other  person then  entitled to
     exercise the Option or such portion;

         (b) Such  representations and documents as the Committee (or the Board,
     in the case of Options granted to Independent  Directors),  in its absolute
     discretion,  deems  necessary or advisable  to effect  compliance  with all
     applicable  provisions of the Securities  Act of 1933, as amended,  and any
     other federal or state  securities  laws or  regulations.  The Committee or
     Board  may,  in its  absolute  discretion,  also take  whatever  additional
     actions it deems appropriate to effect such compliance  including,  without
     limitation, placing legends on share certificates and issuing stop-transfer
     notices to agents and registrars;

         (c) In the event that the Option shall be exercised pursuant to Section
     9.1 by any person or persons other than the Optionee,  appropriate proof of
     the right of such person or persons to exercise the Option; and

         (d) Full cash  payment to the  Secretary  of the Company for the shares
     with  respect  to which the  Option,  or  portion  thereof,  is  exercised.
     However,  the  Committee (or the Board,  in the case of Options  granted to
     Independent Directors),  may in its discretion (i) allow a delay in payment
     up to 30 days from the date the Option,  or portion thereof,  is exercised;
     (ii) allow payment,  in whole or in part, through the delivery of shares of
     Common  Stock owned by the  Optionee,  duly  endorsed  for  transfer to the


                                       10
<PAGE>

     Company  with a Fair  Market  Value  on the date of  delivery  equal to the
     aggregate exercise price of the Option or exercised portion thereof;  (iii)
     allow  payment,  in whole or in part,  through the  surrender  of shares of
     Common Stock then issuable upon exercise of the Option having a Fair Market
     Value on the date of Option exercise equal to the aggregate  exercise price
     of the Option or exercised portion thereof; (iv) allow payment, in whole or
     in part,  through the  delivery  of property of any kind which  constitutes
     good and valuable  consideration;  (v) allow payment,  in whole or in part,
     through the delivery of a promissory note (which may be without recourse or
     of limited  recourse as determined  by the Committee or the Board)  bearing
     interest (at no less than such rate as shall then  preclude the  imputation
     of  interest  under  the  Code)  and  payable  upon  such  terms  as may be
     prescribed by the Committee or the Board;  (vi) allow payment,  in whole or
     in part,  through the  delivery of a notice that the  Optionee has placed a
     market sell order with a broker with respect to shares of Common Stock then
     issuable upon exercise of the Option, and that the broker has been directed
     to pay a sufficient  portion of the net proceeds of the sale to the Company
     in  satisfaction  of the Option  exercise  price;  or (vii)  allow  payment
     through any  combination  of the  consideration  provided in the  foregoing
     subparagraphs (ii), (iii), (iv), (v), and (vi). In the case of a promissory
     note,  the  Committee  (or the  Board,  in the case of  Options  granted to
     Independent  Directors)  may also  prescribe  the form of such note and the
     security  to be given  for such  note.  The  Option  may not be  exercised,
     however,  by  delivery of a  promissory  note or by a loan from the Company
     when or where such loan or other extension of credit is prohibited by law.

         5.3 CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES. The Company shall not
be required to issue or deliver any  certificate or  certificates  for shares of
stock  purchased  upon the  exercise of any Option or portion  thereof  prior to
fulfillment of all of the following conditions:

         (a) The  admission of such shares to listing on all stock  exchanges on
     which such class of stock is then listed;

         (b) The completion of any  registration or other  qualification of such
     shares under any state or federal law, or under the rulings or  regulations
     of  the  Securities  and  Exchange  Commission  or any  other  governmental
     regulatory  body  which  the  Committee  or Board  shall,  in its  absolute
     discretion, deem necessary or advisable;

         (c) The obtaining of any approval or other  clearance from any state or
     federal  governmental  agency which the Committee (or Board, in the case of
     Options   granted  to  Independent   Directors)   shall,  in  its  absolute
     discretion, determine to be necessary or advisable;

         (d) The lapse of such reasonable  period of time following the exercise
     of the Option as the Committee (or Board, in the case of Options granted to
     Independent  Directors)  may  establish  from time to time for  reasons  of
     administrative convenience; and

         (e) The  receipt  by the  Company  of full  payment  for  such  shares,
     including payment of any applicable withholding tax.


                                       11
<PAGE>

         5.4 RIGHTS AS  STOCKHOLDERS.  The holders of Options  shall not be, nor
have any of the rights or privileges of,  stockholders of the Company in respect
of any shares  purchasable upon the exercise of any part of an Option unless and
until  certificates  representing such shares have been issued by the Company to
such holders.

         5.5 OWNERSHIP AND TRANSFER  RESTRICTIONS.  The Committee (or Board,  in
the  case  of  Options  granted  to  Independent  Directors),  in  its  absolute
discretion, may impose such restrictions on the ownership and transferability of
the shares  purchasable upon the exercise of an Option as it deems  appropriate.
Any such restriction shall be set forth in the respective Stock Option Agreement
and may be referred to on the certificates evidencing such shares. The Committee
may require the Employee to give the Company prompt notice of any disposition of
shares of Common Stock acquired by exercise of an Incentive  Stock Option within
(i) two years from the date of granting such Option to such Employee or (ii) one
year after the  transfer  of such shares to such  Employee.  The  Committee  may
direct that the certificates evidencing shares acquired by exercise of an Option
refer to such requirement to give prompt notice of disposition.

         5.6   LIMITATIONS  ON  EXERCISE  OF  OPTIONS   GRANTED  TO  INDEPENDENT
DIRECTORS.   Unless  earlier  terminated   pursuant  to  Section  9.3(c)(ii)  or
9.3(c)(viii),  no Option granted to an Independent  Director pursuant to Section
3.4(d)(i)  may be  exercised to any extent by anyone after the first to occur of
the following events:

         (a)  The  expiration  of  twelve  (12)  months  from  the  date  of the
     Optionee's death;

         (b)  The  expiration  of  twelve  (12)  months  from  the  date  of the
     Optionee's Termination of Directorship by reason of his permanent and total
     disability (within the meaning of Section 22(e)(3) of the Code);

         (c) The  expiration of three (3) months from the date of the Optionee's
     Termination of Directorship for any reason other than such Optionee's death
     or his permanent and total disability, unless the Optionee dies within said
     three-month period; or

         (d) The expiration of ten years from the date the Option was granted.

                                  ARTICLE VI.
                            AWARD OF RESTRICTED STOCK

         6.1 AWARD OF RESTRICTED STOCK

         (a) The Committee may from time to time, in its absolute discretion:

               (i) Select from among the  Employees  or  consultants  (including
         Employees or  consultants  who have  previously  received  other awards
         under  this  Plan)  such of them as in its  opinion  should be  awarded
         Restricted Stock; and

               (ii)  Determine the purchase  price,  if any, and other terms and
         conditions  applicable to such Restricted  Stock,  consistent with this
         Plan.


                                       12
<PAGE>

         (b) The Committee  shall establish the purchase price, if any, and form
     of payment for  Restricted  Stock;  PROVIDED,  HOWEVER,  that such purchase
     price  shall  be no less  than  the par  value  of the  Common  Stock to be
     purchased,  unless  otherwise  permitted  by  applicable  state law. In all
     cases,  legal   consideration  shall  be  required  for  each  issuance  of
     Restricted Stock.

         (c) Upon the  selection  of an  Employee  or  consultant  to be awarded
     Restricted Stock, the Committee shall instruct the Secretary of the Company
     to issue  such  Restricted  Stock and may  impose  such  conditions  on the
     issuance of such Restricted Stock as it deems appropriate.

         6.2 RESTRICTED STOCK  AGREEMENT.  Restricted Stock shall be issued only
pursuant to a written Restricted Stock Agreement, which shall be executed by the
selected  Employee or consultant  and an  authorized  officer of the Company and
which shall contain such terms and conditions as the Committee shall  determine,
consistent with this Plan.

         6.3  CONSIDERATION.  As  consideration  for the issuance of  Restricted
Stock, in addition to payment of any purchase price, the Restricted  Stockholder
shall agree, in the written Restricted Stock Agreement,  to remain in the employ
of, or to consult  for, the Company or any  Subsidiary  for a period of at least
one year after the Restricted  Stock is issued (or such shorter period as may be
fixed in the Restricted Stock Agreement or by action of the Committee  following
grant of the Restricted Stock).  Nothing in this Plan or in any Restricted Stock
Agreement  hereunder  shall confer on any  Restricted  Stockholder  any right to
continue in the employ of, or as a consultant for, the Company or any Subsidiary
or shall interfere with or restrict in any way the rights of the Company and any
Subsidiary,  which are hereby  expressly  reserved,  to discharge any Restricted
Stockholder at any time for any reason whatsoever, with or without good cause.

         6.4 RIGHTS AS  STOCKHOLDERS.  Upon delivery of the shares of Restricted
Stock to the escrow holder  pursuant to Section 6.7, the Restricted  Stockholder
shall have,  unless  otherwise  provided by the  Committee,  all the rights of a
stockholder  with respect to said  shares,  subject to the  restrictions  in his
Restricted  Stock  Agreement,  including  the right to receive all dividends and
other distributions paid or made with respect to the shares; PROVIDED,  HOWEVER,
that in the discretion of the Committee,  any extraordinary  distributions  with
respect to the Common  Stock shall be subject to the  restrictions  set forth in
Section 6.5.

         6.5 RESTRICTION.  All shares of Restricted Stock issued under this Plan
(including  any shares  received by holders  thereof  with  respect to shares of
Restricted Stock as a result of stock dividends,  stock splits or any other form
of  recapitalization)  shall, in the terms of each individual  Restricted  Stock
Agreement, be subject to such restrictions as the Committee shall provide, which
restrictions may include,  without  limitation,  restrictions  concerning voting
rights and transferability and restrictions based on duration of employment with
the Company, Company performance and individual performance; provided, however,
that,  unless the Committee  otherwise  provides in the terms of the  Restricted
Stock Agreement or otherwise,  no share of Restricted  Stock granted to a person
subject to Section 16 of the Exchange  Act shall be sold,  assigned or otherwise
transferred  until at least six months and one day have elapsed from the date on
which the Restricted  Stock was issued,  and provided, further, that by action
taken

                                       13
<PAGE>

after the  Restricted  Stock is issued,  the  Committee  may,  on such terms and
conditions  as it may  determine  to be  appropriate,  remove  any or all of the
restrictions imposed by the terms of the Restricted Stock Agreement.  Restricted
Stock may not be sold or encumbered  until all  restrictions  are  terminated or
expire. Unless provided otherwise by the Committee, if no consideration was paid
by the Restricted  Stockholder upon issuance, a Restricted  Stockholder's rights
in unvested  Restricted  Stock shall lapse upon Termination of Employment or, if
applicable, upon Termination of Consultancy with the Company.

         6.6 REPURCHASE OF RESTRICTED  STOCK. The Committee shall provide in the
terms of each individual  Restricted Stock Agreement that the Company shall have
the right to repurchase  from the Restricted  Stockholder  the Restricted  Stock
then subject to restrictions  under the Restricted  Stock Agreement  immediately
upon a  Termination  of Employment  or, if  applicable,  upon a  Termination  of
Consultancy between the Restricted  Stockholder and the Company, at a cash price
per  share  equal  to the  price  paid by the  Restricted  Stockholder  for such
Restricted  Stock;  PROVIDED,  HOWEVER,  that provision may be made that no such
right of repurchase  shall exist in the event of a Termination  of Employment or
Termination  of Consultancy  without cause,  or following a change in control of
the  Company or because of the  Restricted  Stockholder's  retirement,  death or
disability, or otherwise.

         6.7 ESCROW. The Secretary of the Company or such other escrow holder as
the  Committee  may appoint shall retain  physical  custody of each  certificate
representing  Restricted Stock until all of the  restrictions  imposed under the
Restricted  Stock  Agreement  with  respect  to the  shares  evidenced  by  such
certificate expire or shall have been removed.

         6.8 LEGEND. In order to enforce the restrictions imposed upon shares of
Restricted Stock hereunder,  the Committee shall cause a legend or legends to be
placed on  certificates  representing  all shares of  Restricted  Stock that are
still subject to restrictions under Restricted Stock Agreements, which legend or
legends shall make appropriate reference to the conditions imposed thereby.

         6.9 PROVISIONS APPLICABLE TO SECTION 162(M) PARTICIPANTS.

         (a) Notwithstanding anything in the Plan to the contrary, the Committee
     may grant Restricted Stock awards to a Section 162(m) Participant that vest
     upon the  attainment  of  performance  targets  for the  Company  which are
     related to one or more of the  following  performance  goals:  (i)  pre-tax
     income,  (ii) operating  income,  (iii) cash flow, (iv) earnings per share,
     (v) return on equity,  (vi) return on invested capital or assets, and (vii)
     cost reductions or savings.

         (b) To the  extent  necessary  to  comply  with  the  performance-based
     compensation requirements of Section 162(m)(4)(c) of the Code, with respect
     to  Restricted  Stock  which may be granted to one or more  Section  162(m)
     Participants,  no later  than 90 days  following  the  commencement  of any
     fiscal  year in  question or any other  designated  fiscal  period (or such
     other time as may be required or permitted by Section  162(m) of the Code),
     the Committee  shall, in writing,  (i) designate one or more Section 162(m)
     Participants,  (ii) select the performance  goal or goals applicable to the
     fiscal year or other designated fiscal period,  (iii) establish the various
     targets and bonus

                                       14
<PAGE>

     amounts which may be earned for such fiscal year or other designated fiscal
     period and (iv)  specify the  relationship  between  performance  goals and
     targets and the amounts to be earned by each Section 162(m) Participant for
     such  fiscal  year  or  other  designated  fiscal  period.   Following  the
     completion  of each  fiscal year or other  designated  fiscal  period,  the
     Committee  shall  certify in writing  whether  the  applicable  performance
     targets have been achieved for such fiscal year or other designated  fiscal
     period.  In determining the amount earned by a Section 162(m)  Participant,
     the  Committee  shall have the right to reduce  (but not to  increase)  the
     amount  payable  at a given  level  of  performance  to take  into  account
     additional  factors that the Committee may deem relevant to the  assessment
     of  individual  or  corporate  performance  for the  fiscal  year or  other
     designated fiscal period.

         6.10  MAXIMUM  AWARD PER FISCAL YEAR.  The maximum  number of shares of
Restricted Stock that may be awarded under the Plan to any individual during any
fiscal year shall not exceed the Award Limit.(i)

                                  ARTICLE VII.
                    PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS,
                         DEFERRED STOCK, STOCK PAYMENTS

         7.1  PERFORMANCE  AWARDS.  Any Employee or  consultant  selected by the
Committee  may be  granted  one or more  Performance  Awards.  The value of such
Performance Awards may be linked to the market value, book value, net profits or
other  measure  of the  value of  Common  Stock or  other  specific  performance
criteria  determined  appropriate by the Committee,  in each case on a specified
date or dates or over any period or periods determined by the Committee,  or may
be based upon the  appreciation in the market value,  book value, net profits or
other measure of the value of a specified  number of shares of Common Stock over
a  fixed  period  or  periods  determined  by  the  Committee.  In  making  such
determinations,  the Committee  shall  consider  (among such other factors as it
deems  relevant  in light of the  specific  type of  award)  the  contributions,
responsibilities   and  other   compensation  of  the  particular   Employee  or
consultant.

         7.2 DIVIDEND  EQUIVALENTS.  Any Employee or consultant  selected by the
Committee may be granted Dividend Equivalents based on the dividends declared on
Common Stock,  to be credited as of dividend  payment  dates,  during the period
between the date an Option,  Deferred Stock or Performance Award is granted, and
the date such Option, Deferred Stock or Performance Award is exercised, vests or
expires,  as determined by the  Committee.  Such Dividend  Equivalents  shall be
converted  to cash or  additional  shares of Common Stock by such formula and at
such time and subject to such limitations as may be determined by the Committee.
With respect to Dividend Equivalents granted with respect to Options intended to
be qualified  performance-based  compensation  for purposes of Section 162(m) of
the Code, such Dividend  Equivalents shall be payable regardless of whether such
Option is exercised.

         7.3  STOCK  PAYMENTS.  Any  Employee  or  consultant  selected  by  the
Committee may receive Stock Payments in the manner  determined from time to time
by the Committee.  The number of shares shall be determined by the Committee and
may be based  upon the Fair  Market  Value,  book  value,  net  profits or other
measure  of the value of Common  Stock or other


                                       15
<PAGE>


specific   performance   criteria  determined   appropriate  by  the  Committee,
determined on the date such Stock Payment is made or on any date thereafter.

         7.4  DEFERRED  STOCK.  Any  Employee  or  consultant  selected  by  the
Committee  may be granted an award of  Deferred  Stock in the manner  determined
from time to time by the Committee. The number of shares of Deferred Stock shall
be  determined  by the  Committee  and may be linked to the market  value,  book
value,  net  profits  or other  measure  of the value of  Common  Stock or other
specific performance criteria determined to be appropriate by the Committee,  in
each case on a specified date or dates or over any period or periods  determined
by the  Committee.  Common Stock  underlying a Deferred  Stock award will not be
issued until the Deferred Stock award has vested, pursuant to a vesting schedule
or performance  criteria set by the Committee.  Unless otherwise provided by the
Committee,  a  Grantee  of  Deferred  Stock  shall  have no  rights as a Company
stockholder with respect to such Deferred Stock until such time as the award has
vested and the Common Stock underlying the award has been issued.

         7.5  PERFORMANCE  AWARD  AGREEMENT,   DIVIDEND  EQUIVALENT   AGREEMENT,
DEFERRED STOCK  AGREEMENT,  STOCK PAYMENT  AGREEMENT.  Each  Performance  Award,
Dividend  Equivalent,  award of Deferred  Stock  and/or Stock  Payment  shall be
evidenced by a written agreement,  which shall be executed by the Grantee and an
authorized  Officer  of the  Company  and which  shall  contain  such  terms and
conditions as the Committee shall determine, consistent with this Plan.

         7.6 TERM. The term of a Performance Award,  Dividend Equivalent,  award
of Deferred  Stock and/or  Stock  Payment  shall be set by the  Committee in its
discretion.

         7.7 EXERCISE UPON  TERMINATION  OF  EMPLOYMENT.  A  Performance  Award,
Dividend Equivalent, award of Deferred Stock and/or Stock Payment is exercisable
or payable only while the Grantee is an Employee or  consultant;  provided  that
the Committee may determine that the  Performance  Award,  Dividend  Equivalent,
award of Deferred Stock and/or Stock Payment may be exercised or paid subsequent
to Termination of Employment or  Termination  of Consultancy  without cause,  or
following  a change in control  of the  Company,  or  because  of the  Grantee's
retirement, death or disability, or otherwise.

         7.8 PAYMENT ON EXERCISE. Payment of the amount determined under Section
7.1 or 7.2 above shall be in cash, in Common Stock or a combination  of both, as
determined by the Committee. To the extent any payment under this Article VII is
effected  in Common  Stock,  it shall be made  subject  to  satisfaction  of all
provisions of Section 5.3.

         7.9  CONSIDERATION.  In  consideration of the granting of a Performance
Award,  Dividend  Equivalent,  award of Deferred Stock and/or Stock Payment, the
Grantee shall agree, in a written  agreement,  to remain in the employ of, or to
consult  for,  the Company or any  Subsidiary  for a period of at least one year
after such  Performance  Award,  Dividend  Equivalent,  award of Deferred  Stock
and/or Stock Payment is granted (or such shorter  period as may be fixed in such
agreement or by action of the Committee  following such grant).  Nothing in this
Plan or in any  agreement  hereunder  shall  confer on any  Grantee any right to
continue in the employ of, or as a consultant for, the Company or any Subsidiary
or shall interfere with or restrict in any


                                       16
<PAGE>


way the rights of the Company  and any  Subsidiary,  which are hereby  expressly
reserved,  to discharge any Grantee at any time for any reason whatsoever,  with
or without good cause.

         7.10   PROVISIONS    APPLICABLE   TO   SECTION   162(M)   PARTICIPANTS.

         (a) Notwithstanding anything in the Plan to the contrary, the Committee
     may grant any performance or incentive awards described in Article VII to a
     Section  162(m)  Participant  that  vest or  become  exercisable  upon  the
     attainment of performance  targets for the Company which are related to one
     or more of the  following  performance  goals:  (i)  pre-tax  income,  (ii)
     operating  income,  (iii) cash flow, (iv) earnings per share, (v) return on
     equity,  (vi)  return  on  invested  capital  or  assets,  and  (vii)  cost
     reductions or savings.

         (b) To the  extent  necessary  to  comply  with  the  performance-based
     compensation requirements of Section 162(m)(4)(C) of the Code, with respect
     to  performance or incentive  awards  described in Article VII which may be
     granted to one or more Section  162(m)  Participants,  no later than ninety
     (90) days following the  commencement of any fiscal year in question or any
     other  designated  fiscal  period (or such other time as may be required or
     permitted by Section 162(m) of the Code),  the Committee shall, in writing,
     (i)  designate  one or more Section  162(m)  Participants,  (ii) select the
     performance goal or goals applicable to the fiscal year or other designated
     fiscal period,  (iii) establish the various targets and bonus amounts which
     may be earned for such fiscal year or other  designated  fiscal  period and
     (iv) specify the relationship between performance goals and targets and the
     amounts to be earned by each  Section  162(m)  Participant  for such fiscal
     year or other  designated  fiscal period.  Following the completion of each
     fiscal year or other designated fiscal period,  the Committee shall certify
     in writing  whether the applicable  performance  targets have been achieved
     for such fiscal year or other designated  fiscal period. In determining the
     amount earned by a Section 162(m) Participant, the Committee shall have the
     right to reduce (but not to increase)  the amount  payable at a given level
     of performance to take into account  additional  factors that the Committee
     may deem relevant to the assessment of individual or corporate  performance
     for the fiscal year or other designated fiscal period.

         7.11 MAXIMUM  AWARD PER FISCAL YEAR.  The value of  Performance  Awards
that may be awarded  under the Plan to any  individual  during  any fiscal  year
shall not exceed the Award  Limit to the extent that the awards are based on the
value of a specified  number of shares of Common  Stock.  The maximum  number of
shares of Deferred Stock that may be awarded to any individual during any fiscal
year shall not exceed the Award Limit.

                                  ARTICLE VIII.
                                 ADMINISTRATION

         8.1 STOCK  OPTION  COMMITTEE.  The Stock Option  Committee  (or another
committee or a subcommittee of the Board assuming the functions of the Committee
under this  Plan)  shall  consist  solely of two or more  Independent  Directors
appointed by and holding  office at the  pleasure of the Board,  each of whom is
both a  "non-employee  director"  as  defined  by  Rule  16b-3  and an  "outside
director" for purposes of Section  162(m) of the Code.  Appointment


                                       17
<PAGE>

of  Committee  members  shall  be  effective  upon  acceptance  of  appointment.
Committee  members may resign at any time by  delivering  written  notice to the
Board. Vacancies in the Committee may be filled by the Board.

         8.2  DUTIES  AND  POWERS  OF  COMMITTEE.  It  shall  be the duty of the
Committee to conduct the general  administration of this Plan in accordance with
its  provisions.  The Committee  shall have the power to interpret this Plan and
the agreements pursuant to which Options, awards of Restricted Stock or Deferred
Stock, Performance Awards, Dividend Equivalents or Stock Payments are granted or
awarded,  and to adopt such rules for the  administration,  interpretation,  and
application of this Plan as are consistent therewith and to interpret, amend, or
revoke any such rules.  Notwithstanding the foregoing, the full Board, acting by
a majority of its members in office, shall conduct the general administration of
the Plan with  respect to Options  granted to  Independent  Directors.  Any such
grant or award  under  this  Plan  need not be the  same  with  respect  to each
Optionee, Grantee or Restricted Stockholder.  Any such interpretations and rules
with respect to Incentive  Stock Options shall be consistent with the provisions
of Section 422 of the Code.  In its  absolute  discretion,  the Board may at any
time and  from  time to time  exercise  any and all  rights  and  duties  of the
Committee  under this Plan except with respect to matters which under Rule 16b-3
or Section 162(m) of the Code, or any  regulations  or rules issued  thereunder,
are required to be determined in the sole discretion of the Committee.

         8.3 MAJORITY RULE;  UNANIMOUS  WRITTEN CONSENT.  In  administering  the
Plan,  the  Committee  shall act by a majority of its members in attendance at a
meeting  at  which a quorum  is  present  or by a  memorandum  or other  written
instrument signed by all members of the Committee.

         8.4 COMPENSATION;  PROFESSIONAL ASSISTANCE; GOOD FAITH ACTIONS. Members
of the Committee shall receive such  compensation  for their services as members
as may be determined by the Board. All expenses and liabilities which members of
the Committee incur in connection with the  administration of this Plan shall be
borne by the Company.  The Committee may, with the approval of the Board, employ
attorneys, consultants,  accountants, appraisers, brokers, or other persons. The
Committee,  the  Company  and the  Company's  officers  and  Directors  shall be
entitled to rely upon the advice,  opinions or  valuations  of any such persons.
All  actions  taken  and  all  interpretations  and  determinations  made by the
Committee  or the  Board  in good  faith  shall be final  and  binding  upon all
Optionees,   Grantees,  Restricted  Stockholders,  the  Company  and  all  other
interested  persons.  No members of the  Committee or Board shall be  personally
liable for any action,  determination or interpretation  made in good faith with
respect to this Plan,  Options,  awards of Restricted  Stock or Deferred  Stock,
Performance Awards,  Dividend Equivalents or Stock Payments,  and all members of
the Committee  and the Board shall be fully  protected by the Company in respect
of any such action, determination or interpretation.

                                  ARTICLE IX.
                            MISCELLANEOUS PROVISIONS

         9.1 NOT TRANSFERABLE.  Options, Restricted Stock awards, Deferred Stock
awards,  Performance Awards,  Dividend  Equivalents or Stock Payments under this
Plan may not be sold, pledged, assigned, or transferred in any manner other than
by will or the laws of descent

                                       18
<PAGE>

and  distribution or pursuant to a QDRO,  unless and until such rights or awards
have been  exercised,  or the shares  underlying such rights or awards have been
issued,  and all restrictions  applicable to such shares have lapsed. No Option,
Restricted  Stock award,  Deferred  Stock  award,  Performance  Award,  Dividend
Equivalent or Stock Payment or interest or right therein shall be liable for the
debts,  contracts  or  engagements  of  the  Optionee,   Grantee  or  Restricted
Stockholder  or his successors in interest or shall be subject to disposition by
transfer, alienation, anticipation, pledge, encumbrance, assignment or any other
means whether such  disposition  be voluntary or  involuntary or by operation of
law by judgment,  levy, attachment,  garnishment or any other legal or equitable
proceedings (including bankruptcy),  and any attempted disposition thereof shall
be null and void and of no effect, except to the extent that such disposition is
permitted by the preceding sentence.

         During the lifetime of the Optionee or Grantee, only he may exercise an
Option or other right or award (or any portion thereof) granted to him under the
Plan,  unless it has been disposed of pursuant to a QDRO. After the death of the
Optionee  or  Grantee,  any  exercisable  portion of an Option or other right or
award may, prior to the time when such portion becomes  unexercisable  under the
Plan or the applicable Stock Option  Agreement or other agreement,  be exercised
by his  personal  representative  or by any person  empowered to do so under the
deceased  Optionee's  or  Grantee's  will or under the then  applicable  laws of
descent and distribution.

         9.2  AMENDMENT,  SUSPENSION  OR  TERMINATION  OF THIS  PLAN.  Except as
otherwise  provided in this  Section  9.2,  this Plan may be wholly or partially
amended or otherwise modified,  suspended or terminated at any time or from time
to  time  by the  Board  or the  Committee.  However,  without  approval  of the
Company's  stockholders given within 12 months before or after the action by the
Board or the Committee,  no action of the Board or the Committee may,  except as
provided  in Section  9.3,  increase  the limits  imposed in Section  2.1 on the
maximum number of shares which may be issued under this Plan or modify the Award
Limit,  and no action  of the Board or the  Committee  may be taken  that  would
otherwise require stockholder approval as a matter of applicable law, regulation
or rule. No amendment, suspension or termination of this Plan shall, without the
consent  of the holder of  Options,  Restricted  Stock  awards,  Deferred  Stock
awards,  Performance Awards,  Dividend  Equivalents or Stock Payments,  alter or
impair any rights or  obligations  under any Options,  Restricted  Stock awards,
Deferred  Stock  awards,  Performance  Awards,  Dividend  Equivalents  or  Stock
Payments  theretofore  granted or  awarded,  unless the award  itself  otherwise
expressly so provides. No Options, Restricted Stock, Deferred Stock, Performance
Awards,  Dividend Equivalents or Stock Payments may be granted or awarded during
any period of suspension or after  termination of this Plan, and in no event may
any  Incentive  Stock Option be granted under this Plan after the first to occur
of the following events:

         (a) The  expiration  of ten years  from the date the Plan is adopted by
     the Board; or

         (b) The  expiration  of ten years from the date the Plan is approved by
     the Company's stockholders under Section 9.4.


                                       19
<PAGE>


         9.3 CHANGES IN COMMON  STOCK OR ASSETS OF THE COMPANY,  ACQUISITION  OR
LIQUIDATION OF THE COMPANY AND OTHER CORPORATE EVENTS.

         (a) Subject to Section 9.3(d),  in the event that the Committee (or the
     Board, in the case of Options granted to Independent  Directors) determines
     that any  dividend  or  other  distribution  (whether  in the form of cash,
     Common  Stock,  other  securities,  or other  property),  recapitalization,
     reclassification, stock split, reverse stock split, reorganization, merger,
     consolidation,  split-up, spin-off, combination,  repurchase,  liquidation,
     dissolution  or sale,  transfer,  exchange or other  disposition  of all or
     substantially all of the assets of the Company (including,  but not limited
     to,  a  Corporate  Transaction),  or  exchange  of  Common  Stock  or other
     securities of the Company, issuance of warrants or other rights to purchase
     Common Stock or other securities of the Company, or other similar corporate
     transaction or event, in the Committee's sole discretion (or in the case of
     Options  granted to Independent  Directors,  the Board's sole  discretion),
     affects  the Common  Stock such that an  adjustment  is  determined  by the
     Committee to be appropriate in order to prevent  dilution or enlargement of
     the benefits or potential  benefits intended to be made available under the
     Plan or with  respect to an Option,  Restricted  Stock  award,  Performance
     Award, Dividend Equivalent, Deferred Stock award or Stock Payment, then the
     Committee  (or the  Board,  in the case of Options  granted to  Independent
     Directors)  shall, in such manner as it may deem  equitable,  adjust any or
     all of

               (i) The  number  and kind of  shares  of  Common  Stock (or other
         securities  or  property)  with respect to which  Options,  Performance
         Awards, Dividend Equivalents or Stock Payments may be granted under the
         Plan,  or which may be granted as  Restricted  Stock or Deferred  Stock
         (including,  but not  limited to,  adjustments  of the  limitations  in
         Section  2.1 on the  maximum  number  and kind of  shares  which may be
         issued and adjustments of the Award Limit),

               (ii) The  number  and kind of shares  of  Common  Stock (or other
         securities or property)  subject to  outstanding  Options,  Performance
         Awards, Dividend Equivalents,  or Stock Payments, and in the number and
         kind of shares of outstanding Restricted Stock or Deferred Stock, and

               (iii) The grant or  exercise  price with  respect to any  Option,
         Performance Award, Dividend Equivalent or Stock Payment.

         (b) Subject to  Sections  9.3(b)(vii)  and 9.3(d),  in the event of any
     Corporate  Transaction or other  transaction or event  described in Section
     9.3(a) or any unusual or nonrecurring  transactions or events affecting the
     Company,  any affiliate of the Company, or the financial  statements of the
     Company or any affiliate, or of changes in applicable laws, regulations, or
     accounting principles,  the Committee (or the Board, in the case of Options
     granted to Independent Directors) in its discretion is hereby authorized to
     take any one or more of the  following  actions  whenever the Committee (or
     the  Board,  in the  case of  Options  granted  to  Independent  Directors)
     determines that such action is appropriate in order to prevent  dilution or
     enlargement  of the  benefits  or  potential  benefits  intended to be made
     available  under the Plan or with  respect  to any  option,  right

                                       20
<PAGE>

or other award under this Plan, to facilitate such  transactions or events or to
give effect to such changes in laws, regulations or principles:

               (i) In its sole and  absolute  discretion,  and on such terms and
         conditions as it deems appropriate, the Committee (or the Board, in the
         case of Options granted to Independent  Directors) may provide,  either
         by  the  terms  of  the  agreement  or by  action  taken  prior  to the
         occurrence of such  transaction  or event and either  automatically  or
         upon the  optionee's  request,  for  either  the  purchase  of any such
         Option,  Performance Award,  Dividend Equivalent,  or Stock Payment, or
         any  Restricted  Stock or Deferred Stock for an amount of cash equal to
         the amount  that could have been  attained  upon the  exercise  of such
         option, right or award or realization of the optionee's rights had such
         option,  right or award been currently  exercisable or payable or fully
         vested or the  replacement  of such  option,  right or award with other
         rights or property selected by the Committee (or the Board, in the case
         of Options granted to Independent Directors) in its sole discretion;

               (ii) In its sole and absolute  discretion,  the Committee (or the
         Board,  in the case of Options  granted to  Independent  Directors) may
         provide,  either  by the  terms  of  such  Option,  Performance  Award,
         Dividend Equivalent,  or Stock Payment, or Restricted Stock or Deferred
         Stock or by action taken prior to the occurrence of such transaction or
         event that it cannot be exercised after such event;

               (iii) In its sole and absolute discretion,  and on such terms and
         conditions as it deems appropriate, the Committee (or the Board, in the
         case of Options granted to Independent  Directors) may provide,  either
         by the terms of such Option, Performance Award, Dividend Equivalent, or
         Stock Payment, or Restricted Stock or Deferred Stock or by action taken
         prior  to the  occurrence  of such  transaction  or  event,  that for a
         specified  period of time  prior to such  transaction  or  event,  such
         option,  right or award shall be  exercisable  as to all shares covered
         thereby, notwithstanding anything to the contrary in (i) Section 4.4 or
         (ii)  the  provisions  of  such  Option,  Performance  Award,  Dividend
         Equivalent, or Stock Payment, or Restricted Stock or Deferred Stock;

               (iv) In its sole and absolute  discretion,  and on such terms and
         conditions as it deems appropriate, the Committee (or the Board, in the
         case of Options granted to Independent  Directors) may provide,  either
         by the terms of such Option, Performance Award, Dividend Equivalent, or
         Stock Payment, or Restricted Stock or Deferred Stock or by action taken
         prior to the occurrence of such  transaction  or event,  that upon such
         event,  such  option,  right or award be  assumed by the  successor  or
         survivor  corporation,  or a parent or subsidiary  thereof, or shall be
         substituted for by similar options, rights or awards covering the stock
         of the  successor or survivor  corporation,  or a parent or  subsidiary
         thereof,  with  appropriate  adjustments  as to the  number and kind of
         shares and prices;


                                       21
<PAGE>

               (v) In its sole and  absolute  discretion,  and on such terms and
         conditions as it deems appropriate, the Committee (or the Board, in the
         case of Options granted to Independent  Directors) may make adjustments
         in the number and type of shares of Common  Stock (or other  securities
         or  property)  subject  to  outstanding  Options,  Performance  Awards,
         Dividend Equivalents,  or Stock Payments, and in the number and kind of
         outstanding  Restricted Stock or Deferred Stock and/or in the terms and
         conditions of (including the grant or exercise price), and the criteria
         included in, outstanding options, rights and awards and options, rights
         and awards which may be granted in the future;

               (vi) In its sole and absolute  discretion,  and on such terms and
         conditions as it deems appropriate, the Committee may provide either by
         the terms of a  Restricted  Stock award or  Deferred  Stock award or by
         action  taken  prior  to the  occurrence  of  such  event  that,  for a
         specified period of time prior to such event, the restrictions  imposed
         under a Restricted  Stock  Agreement or a Deferred Stock Agreement upon
         some or all  shares  of  Restricted  Stock  or  Deferred  Stock  may be
         terminated, and, in the case of Restricted Stock, some or all shares of
         such  Restricted  Stock may cease to be  subject  to  repurchase  under
         Section 6.6 or forfeiture under Section 6.5 after such event; and

               (vii) None of the  foregoing  discretionary  actions  taken under
         this Section 9.3(b) shall be permitted with respect to Options  granted
         under Section 3.4(d) to  Independent  Directors to the extent that such
         discretion  would  be  inconsistent   with  the  applicable   exemptive
         conditions  of Rule  16b-3.  In the event of a Change in  Control  or a
         Corporate  Transaction,  to the extent that the Board does not have the
         ability  under  Rule  16b-3  to  take or to  refrain  from  taking  the
         discretionary  actions  set forth in Section  9.3(b)(iii)  above,  each
         Option  granted to an  Independent  Director shall be exercisable as to
         all shares  covered  thereby  upon such Change in Control or during the
         five days  immediately  preceding the  consummation  of such  Corporate
         Transaction and subject to such consummation,  notwithstanding anything
         to the contrary in Section 4.4 or the vesting schedule of such Options.
         In the event of a Corporate  Transaction,  to the extent that the Board
         does not have the ability  under Rule 16b-3 to take or to refrain  from
         taking the discretionary actions set forth in Section 9.3(b)(ii) above,
         no Option granted to an Independent Director may be exercised following
         such Corporate  Transaction  unless such Option is, in connection  with
         such Corporate Transaction, either assumed by the successor or survivor
         corporation  (or  parent or  subsidiary  thereof)  or  replaced  with a
         comparable  right with  respect to shares of the  capital  stock of the
         successor or survivor corporation (or parent or subsidiary thereof).

         (c) Subject to Section 9.3(d) and 9.8, the Committee (or the Board,  in
     the  case  of  Options  granted  to  Independent  Directors)  may,  in  its
     discretion,  include such further provisions and limitations in any Option,
     Performance Award,  Dividend  Equivalent,  or Stock Payment,  or Restricted
     Stock or Deferred Stock agreement or certificate,  as it may deem equitable
     and in the best interests of the Company.


                                       22
<PAGE>

         (d) With respect to  Incentive  Stock  Options and Options  intended to
     qualify  as   performance-based   compensation  under  Section  162(m),  no
     adjustment  or  action  described  in  this  Section  9.3 or in  any  other
     provision  of the  Plan  shall  be  authorized  to  the  extent  that  such
     adjustment or action would cause the Plan to violate  Section  422(b)(1) of
     the Code or would cause such option or stock  appreciation right to fail to
     so  qualify  under  Section  162(m),  as the case may be, or any  successor
     provisions  thereto.  Furthermore,  no such  adjustment  or action shall be
     authorized  to the  extent  such  adjustment  or  action  would  result  in
     short-swing  profits  liability  under  Section 16 of the  Exchange  Act or
     violate the exemptive conditions of Rule 16b-3 unless the Committee (or the
     Board, in the case of Options granted to Independent  Directors) determines
     that  the  option  or other  award is not to  comply  with  such  exemptive
     conditions.  The number of shares of Common  Stock  subject to any  option,
     right or award shall always be rounded to the next whole number.

         9.4 APPROVAL OF PLAN BY  STOCKHOLDERS.  This Plan will be submitted for
the approval of the  Company's  stockholders  within 12 months after the date of
the Board's initial adoption of this Plan. Options, Performance Awards, Dividend
Equivalents or Stock  Payments may be granted and  Restricted  Stock or Deferred
Stock may be awarded  prior to such  stockholder  approval,  provided  that such
Options, Performance Awards, Dividend Equivalents or Stock Payments shall not be
exercisable and such Restricted  Stock or Deferred Stock shall not vest prior to
the time when this Plan is approved by the  stockholders,  and provided  further
that if such approval has not been obtained at the end of said 12-month  period,
all  Options,   Performance  Awards,  Dividend  Equivalents  or  Stock  Payments
previously granted and all Restricted Stock or Deferred Stock previously awarded
under this Plan shall thereupon be canceled and become null and void.

         9.5 TAX  WITHHOLDING.  The Company shall be entitled to require payment
in cash or deduction from other compensation  payable to each Optionee,  Grantee
or Restricted  Stockholder  of any sums required by federal,  state or local tax
law to be  withheld  with  respect to the  issuance,  vesting or exercise of any
Option, Restricted Stock, Deferred Stock, Performance Award, Dividend Equivalent
or Stock Payment. The Committee (or the Board, in the case of Options granted to
Independent  Directors)  may  in  its  discretion  and  in  satisfaction  of the
foregoing requirement allow such Optionee,  Grantee or Restricted Stockholder to
elect to have the Company  withhold  shares of Common Stock  otherwise  issuable
under such Option or other award (or allow the return of shares of Common Stock)
having a Fair Market Value equal to the sums required to be withheld.

         9.6 LOANS.  The Committee  may, in its  discretion,  extend one or more
loans to  Employees  in  connection  with the  exercise or receipt of an Option,
Performance Award, Dividend Equivalent or Stock Payment granted under this Plan,
or the issuance of Restricted  Stock or Deferred  Stock awarded under this Plan.
The terms and conditions of any such loan shall be set by the Committee.

         9.7  FORFEITURE  PROVISIONS.  Pursuant  to  its  general  authority  to
determine  the terms and  conditions  applicable  to awards under the Plan,  the
Committee  (or  the  Board,  in the  case  of  Options  granted  to  Independent
Directors)  shall have the right (to the extent  consistent  with the applicable
exemptive conditions of Rule 16b-3) to provide, in the terms of Options or


                                       23
<PAGE>

other  awards  made under the Plan,  or to  require  the  recipient  to agree by
separate  written  instrument,  that (i) any proceeds,  gains or other  economic
benefit actually or constructively received by the recipient upon any receipt or
exercise  of the  award,  or upon the  receipt  or  resale of any  Common  Stock
underlying  such award,  must be paid to the  Company,  and (ii) the award shall
terminate  and any  unexercised  portion of such award  (whether  or not vested)
shall  be  forfeited,  if  (a)  a  Termination  of  Employment,  Termination  of
Consultancy or Termination of Directorship  occurs prior to a specified date, or
within a specified time period  following  receipt or exercise of the award,  or
(b) the recipient at any time, or during a specified time period, engages in any
activity in  competition  with the Company,  or which is  inimical,  contrary or
harmful to the interests of the Company, as further defined by the Committee (or
the Board, as applicable).

         9.8 LIMITATIONS  APPLICABLE TO SECTION 16 PERSONS AND PERFORMANCE-BASED
COMPENSATION.  Notwithstanding  any other provision of this Plan, this Plan, and
any Option,  Performance Award, Dividend Equivalent or Stock Payment granted, or
Restricted  Stock or  Deferred  Stock  awarded,  to any  individual  who is then
subject to Section 16 of the Exchange  Act,  shall be subject to any  additional
limitations  set forth in any applicable  exemptive rule under Section 16 of the
Exchange Act (including any amendment to Rule 16b-3) that are  requirements  for
the  application of such exemptive  rule. To the extent  permitted by applicable
law,  the  Plan,  Options,  Performance  Awards,  Dividend  Equivalents,   Stock
Payments, Restricted Stock and Deferred Stock granted or awarded hereunder shall
be  deemed  amended  to the  extent  necessary  to  conform  to such  applicable
exemptive rule.  Furthermore,  notwithstanding any other provision of this Plan,
any Option,  Restricted  Stock or  performance or incentive  award  described in
Article VII intended to qualify as  performance-based  compensation as described
in  Section  162(m)(4)(C)  of the  Code  shall  be  subject  to  any  additional
limitations  set forth in Section 162(m) of the Code (including any amendment to
Section 162(m) of the Code) or any regulations or rulings issued thereunder that
are  requirements  for  qualification  as   performance-based   compensation  as
described  in Section  162(m)(4)(C)  of the Code,  and this Plan shall be deemed
amended to the extent necessary to conform to such requirements.

         9.9 EFFECT OF PLAN UPON OPTIONS AND COMPENSATION PLANS. The adoption of
this Plan shall not affect any other  compensation  or incentive plans in effect
for the Company or any  Subsidiary.  Nothing in this Plan shall be  construed to
limit the right of the Company (i) to establish any other forms of incentives or
compensation  for  Employees,  Directors  or  Consultants  of the Company or any
Subsidiary  or (ii) to grant or assume  options or other rights  otherwise  than
under this Plan in connection with any proper  corporate  purpose  including but
not by way of limitation,  the grant or assumption of options in connection with
the acquisition by purchase,  lease, merger,  consolidation or otherwise, of the
business,  stock or assets of any corporation,  partnership,  limited  liability
company, firm or association.

         9.10  COMPLIANCE  WITH LAWS.  This Plan,  the  granting  and vesting of
Options,  Restricted Stock awards,  Deferred Stock awards,  Performance  Awards,
Dividend  Equivalents  or Stock  Payments  under this Plan and the  issuance and
delivery  of shares of Common  Stock and the payment of money under this Plan or
under  Options,  Performance  Awards,  Dividend  Equivalents  or Stock  Payments
granted or Restricted  Stock or Deferred Stock awarded  hereunder are subject to
compliance  with all applicable  federal and state laws,  rules and  regulations
(including  but not  limited to state and  federal  securities  law and  federal
margin  requirements)

                                       24
<PAGE>


and to such approvals by any listing,  regulatory or  governmental  authority as
may, in the opinion of counsel for the  Company,  be  necessary  or advisable in
connection therewith.  Any securities delivered under this Plan shall be subject
to such  restrictions,  and the  person  acquiring  such  securities  shall,  if
requested by the Company,  provide such  assurances and  representations  to the
Company as the Company may deem necessary or desirable to assure compliance with
all applicable  legal  requirements.  To the extent permitted by applicable law,
the Plan, Options,  Restricted Stock awards, Deferred Stock awards,  Performance
Awards,  Dividend  Equivalents  or Stock Payments  granted or awarded  hereunder
shall be deemed amended to the extent  necessary to conform to such laws,  rules
and regulations.

         9.11 TITLES.  Titles are provided herein for  convenience  only and are
not to serve as a basis for interpretation or construction of this Plan.

         9.12  GOVERNING LAW. This Plan and any  agreements  hereunder  shall be
administered,  interpreted  and enforced under the internal laws of the State of
Oregon without regard to conflicts of laws thereof.



                                       25
<PAGE>