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 250,000  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 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" of a share of Common
Stock as of a given  date  shall be (i) the  closing  price of a share of Common
Stock on the  principal  exchange  on which  shares  of  Common  Stock  are then
trading,  if any (or as reported on any  composite  index  which  includes  such
principal exchange), on the trading day previous to such date, or if shares were
not traded on the trading day previous to such date,  then on the next preceding
date on which a trade  occurred,  or (ii) if  Common  Stock is not  traded on an
exchange  but is  quoted on NASDAQ or a  successor  quotation  system,  the mean
between the closing  representative bid and asked prices for the Common Stock on
the  trading day  previous to such date as reported by NASDAQ or such  successor
quotation system; or (iii) if Common Stock is not publicly traded on an exchange
and not quoted on NASDAQ or a successor  quotation system, the Fair Market Value
of a share of Common Stock as established by the Committee (or the Board, in the
case of Options granted to Independent Directors) acting in good faith.

            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 one million six hundred thousand  (1,600,000).  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
      additional two thousand five hundred (2,500)


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      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

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pursuant to Section 3.4(d)(i), the term shall be ten (10)years from the date the
Option is granted,  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.

                 (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.

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            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 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


                                      -10-
<PAGE>

      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 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.

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


                                      -15-
<PAGE>

            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 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.

                                      -16-
<PAGE>

                 (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.

                                  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 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


                                      -17-
<PAGE>

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  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.

                                      -18-
<PAGE>

            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.

            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


                                      -19-
<PAGE>

      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  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


                                      -20-
<PAGE>

           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;

                      (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

                                      -21-
<PAGE>

           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.

                 (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.

                                      -22-
<PAGE>

            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 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,


                                      -23-
<PAGE>

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)  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.

                                      -24-
<PAGE>

            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-