PLM INTERNATIONAL, INC.

                     1998 MANAGEMENT STOCK COMPENSATION PLAN

         1.       Purpose

         The  purpose  of this  1998  Management  Stock  Compensation  Plan (the
"Plan") is to attract, retain, and motivate certain management and key employees
of PLM International, Inc. (the "Company"), or any subsidiary of the Company, by
giving such employees (as defined below) an opportunity to acquire stock,  or to
be  granted,  shares of the  Company's  common  stock,  par value $.01 per share
("Common  Shares").  The Company may grant  options under this Plan that (a) are
intended to be "incentive stock options"  ("ISOs") within the meaning of Section
422 of the Internal  Revenue Code of 1986, as amended (the  "Code"),  or (b) are
not intended to be ISOs (such nonqualified options,  "NQSOs"). In addition,  the
Company may grant under this Plan awards of Common  Shares  which may be subject
to such  restrictions  as the Board  may  determine  at the time of grant.  Such
options and any other awards granted under this Plan are hereinafter referred to
collectively as "Awards." For the purposes of this Plan, an individual  shall be
considered  to be an  "employee"  for  such  period  of time as the  Company  is
required  to  withhold  federal  income  tax from the  compensation  paid by the
Company to such  individual  because the  individual  constitutes  an "employee"
under Section 3401(c) of the Code.

         2.       Effective Date

         This Plan was adopted by the Company's board of directors (the "Board")
on May 12, 1998.

         3.       Shares Subject to Plan

         Subject  to the other  provisions  of this  Plan,  the total  number of
Common  Shares  that may be made  subject  to Awards  under  this Plan shall not
exceed in the  aggregate  800,000,  subject to  adjustment  in  accordance  with
Paragraph 13(b). Common Shares delivered to a grantee or optionee by the Company
as the result of the grant,  vesting or exercise  of an Award may be  previously
unissued shares or repurchased  shares,  including shares  repurchased under the
terms of this Plan, or under the terms of any  agreement (an "Award  Agreement")
evidencing  the grant of an Award  under this  Plan.  Common  Shares  covered by
expired,  lapsed,  terminated or surrendered Awards shall again become available
for the grant of Awards.  All Common  Shares  issued  under this Plan,  whatever
their source, shall be counted against the 800,000-share limitation.

         4.       Administration

                  (a)  Board to  Administer.  The Plan and all  Awards  shall be
administered by the Board;  provided,  however,  that  notwithstanding any other
provision of this Plan, (i) Awards granted to executive directors of the Company
shall be made and  administered by a committee of the Board consisting of two or
more directors who are "outside  directors" within the meaning of Section 162(m)
of the Code, and (ii) Awards granted to participants in the Plan who are subject
to Section 16 of the Securities  Exchange Act of 1934, as amended (the "Exchange
Act") with  respect to the  Company  shall,  if the Board  determines  that such
committee  administration is necessary,  be made and administered by a committee
of  the  Board  consisting  of two  or  more  directors  who  are  "non-employee
directors" within the meaning of Rule 16b-3 under the Exchange Act.

                  (b) Voting.  A majority of the Board shall constitute a quorum
for the purposes of this Plan. Provided a quorum is present,  the Board may take
action by consent of a majority  of its members  present at a meeting.  Meetings
may be held  telephonically as long as all parties are able to hear one another,
and a member of the Board  shall be  "present"  for  purposes  of the  preceding
sentence if he or she is in  simultaneous  communication  by telephone  with the
other members, provided, again, that all parties are able to hear one another.

                  (c) Tasks of Administering Plan. The Board shall have full and
final authority,  in its sole discretion,  subject to the express  provisions of
this Plan, to (i) determine the  management  and key employees of the Company to
whom,  and the times or times at which,  Awards shall be granted,  the number of
shares to be subject to any Award,  and the  exercise or  purchase  price of any
Award;  (ii)  determine the terms and  provisions of each Award (which terms and
provisions may differ from those of other Awards) and, but only with the consent
of the  holder  thereof  where such  consent is  required  under  Paragraph  17,
terminate,  cancel,  modify or amend the terms of any Award; (iii) authorize any
person to execute on behalf of the Company an Award  agreement;  (iv)  interpret
the Plan and any Award;  (v) accelerate or extend the permissible  exercise date
of, or the lapse of any  restrictions  with respect to any Award;  and (vi) make
all other determinations deemed necessary or advisable for the administration of
the Plan. The Board may also make whatever rules and regulations it deems useful
to administer the Plan.  Any decision or action of the Board in connection  with
the Plan or any Award granted,  or shares purchased  pursuant to an Award, shall
be final and binding.

                  (d) Reports.  Unless otherwise decided by the Board, the Board
shall cause written summaries of Awards to be maintained, including descriptions
of all  restrictions  thereon,  as  follows:  (i) from time to time,  all recent
Awards  that  have not  previously  been  included  in such a  summary  shall be
summarized;  (ii)  annually  within 60 days after the end of the  calendar  year
Awards made during  such  preceding  calendar  year shall be  summarized;  (iii)
annually  within 60 days of the end of the  calendar  year,  and at other  times
within the Board's discretion,  all outstanding Awards shall be summarized;  and
(iv) at any additional time, within the Board's discretion, all Awards ever made
under the Plan shall be reported.

                  (e)  Delegation.  The  Board  may  delegate  non-discretionary
administrative duties to such employees of the Company as it deems proper.

         5.       Eligibility.

                  (a) Only Employees May Receive  Awards.  Awards may be granted
under  this Plan only to  persons  who are  management  employees  and other key
employees of the Company or any subsidiary of the Company  selected by the Board
to  participate in this Plan (such  individuals  and,  where  appropriate,  such
individual's  legal  representative or beneficiary,  "Participants");  provided,
however,  that an ISO may be granted only to a Participant who is at the time of
grant an employee of the Company or a "subsidiary  corporation"  of the Company,
within the meaning of Section 424 (f) of the Code.

                  (b) Selection of Participants.  In selecting the Participants,
and in determining the size,  terms and conditions of an Award,  the Board shall
take into  consideration  such factors as it deems relevant in accomplishing the
Plan's purposes. A Participant who has been granted an Award may later, if he or
she is otherwise eligible, be granted additional Awards.
                           
         6.       Grant of Awards; Limitations

                  (a)  General  Rules.  Subject  to the rules  and  restrictions
contained  elsewhere in this Plan, the Company may grant Awards at any time, and
from time to time,  until the Plan  expires or otherwise  terminates.  The Board
shall  specify  the date of grant or, if it fails to, the date of grant shall be
the date of the action taken by the Board to grant the Award; provided, however,
that in the case of any Award that is approved in  anticipation  of  employment,
the date of grant  with  respect to such  Award  shall be the date the  intended
Participant  first  becomes an employee of the Company or a parent or subsidiary
of the  Company.  Notice of the  determination  shall be given to each person to
whom an Award is granted.  Within a  reasonable  time after the date of grant of
any Award that is subject to restrictions, the Participant and the Company shall
enter into a written  agreement (the "Award  Agreement")  that shall specify the
date of grant,  the number of shares  covered by the Award,  and the other terms
and conditions of the Award.

                  (b) Special ISO Limit.  To the extent that the aggregate  fair
market  value  (within the meaning of Section  422(b)(4)  of the Code) of Common
Shares  with  respect  to which  ISOs are  exercisable  for the first  time by a
Participant  during any calendar  year under the Plan and any other stock option
plan of the Company (or any "parent corporation" or "subsidiary  corporation" of
the Company,  as such terms are defined in Section  424(f) of the Code)  exceeds
$100,000, such options shall be treated as NQSOs.

                  (c) Identification of Option as ISO or NQSO. The determination
of whether  any option  granted  under this Plan is  intended to be an ISO or an
NQSO shall be made by the Board at the time the Board acts to grant the  option,
and shall be clearly reflected in the Award Agreement.

                  (d) Special  Limitation on Amounts Paid for Common Shares.  In
the case of any Award of Common Shares,  whether or not subject to  restrictions
at the time of grant or thereafter,  the Company shall receive no  consideration
for such  grant in  excess of any  minimum  price  required  to be paid for such
shares  under  the  General  Corporation  Law  of the  State  of  Delaware,  the
California  Corporate  Securities  Rules,  or any  other  state  corporation  or
securities  law,  if  applicable,  including,  but not by way of  limitation,  a
requirement that shares not be sold for less than their par value.

                  (e) Notwithstanding anything to the contrary contained herein,
the  maximum  number of  shares  that may be made  subject  to Awards to any one
individual shall not exceed, in the aggregate,  33.33% of the shares that may be
made subject to Awards under this Plan.

         7.       Terms and Conditions of Options

         Options granted under this Plan shall be subject to the following terms
and conditions,  and to any other terms and conditions,  not  inconsistent  with
this Plan, that the Board imposes when the option is granted;

                  (a) Time of  Exercise.  Unless  earlier  terminated  under the
terms of this Plan and the applicable  Award  Agreement,  options  granted under
this Plan shall become  exercisable as to one-third of the Common Shares covered
thereby on each of the  first,  second  and third  anniversaries  of the date of
grant.
                           
                  (b)  Exercise  Price of Options  Generally.  Unless  otherwise
decided by the Board,  with respect to any option  granted under this Plan,  the
price to be paid by the option holder for Common Shares issued  pursuant to such
option shall be equal to 110% of the average  daily closing price of such shares
on the AMEX or such other national stock exchange on which the Common Shares are
traded for the ten trading days immediately  preceding the date as of which such
option is granted,  which  price  shall be  specified  in the  applicable  Award
Agreement.

                  (c) Option Term. The term of any option granted under the Plan
shall  commence  and  expire  on the  date  specified  in the  applicable  Award
Agreement (such date, the "Expiration  Date");  provided,  however,  that in the
case of any ISO the Expiration  Date shall not be later than the date that is 10
years  after the date the option is  granted,  or, in the case of an ISO that is
granted to a  Participant  who, as of the date such ISO is  granted,  owns stock
possessing  more than 10% of the total  combined  voting power of all classes of
stock of the Company or of any "subsidiary corporation" (as such term is defined
in Section  424(f) of the Code) of the Company (a "10% Owner"),  the  Expiration
Date of such ISO may not be later than 5 years  after such date.  Options may be
terminated  earlier  than  their  original   Expiration  Date,  in  the  Board's
discretion, and the Board also may extend the term of any option, except that in
no event may an ISO's term be  extended  beyond that date that is 10 years after
the date it was granted,  or in the case of 10% Owner, 5 years after the date of
grant.

                  (d) Method of Exercise.  Unless  otherwise  determined  by the
Board,  options may be  exercised,  in whole or in part,  from time to time,  by
written notice from the  Participant to the Company stating the number of shares
being purchased and accompanied by payment in full of the exercise price for the
shares.  Unless the Award Agreement provides otherwise,  or in the discretion of
the Board exercised at the time the option is exercised,  payment may be made in
cash,  by check,  by delivery to the Company of whole Common Shares owned by the
Participant  (duly  endorsed  in favor of the Company or  accompanied  by a duly
endorsed  stock  power),  by the  Participant's  interest-bearing  full recourse
promissory  note  (subject  to  any  applicable  restrictions,  limitations,  or
conditions  imposed by General  Corporation  Law of the State of  Delaware,  the
California  Corporations  Code,  or any other  state  law,  if  applicable),  by
non-cash  exercise  methods  permitted by law,  including,  without  limitation,
methods  whereby a broker  sells  shares of  Common  Stock to which an  exercise
relates or holds such  shares as  collateral  for a margin  loan,  delivers  the
aggregate exercise price to the Company,  and delivers the remaining proceeds to
the  Participant  (and in  conjunction  therewith  the Company  may  establish a
non-cash  exercise program including a program where the commissions on the sale
of  shares  of  Common  Stock  to which  the  exercise  relates  are paid by the
Company),  or by a combination  of the above having a combined fair market value
equal to the aggregate exercise of the option,  determined in the same manner as
the option price under Paragraph 7(b).

                  (e)  Nontransferability  of Options.  An option  granted under
this Plan  shall not be  transferable  other  than (i) by will or by the laws of
descent  and  distribution  or  (ii)  by  gratuitous  transfer  to  any  of  the
Participant's immediate family members or a trust established for the benefit of
such family member,  and an option may be exercised,  during the lifetime of the
holder  of the  option,  only by such  holder.  An option  may not be  assigned,
transferred  (except  as  provided  in  the  preceding  sentence),   pledged  or
hypothecated in any way (whether by operation of law or otherwise), and will not
be  subject  to  execution,   attachment  or  similar  process.   Any  attempted
assignment,  transfer, pledge, hypothecation, or other disposition of any option
contrary  to the  provisions  of this Plan,  and any levy of any  attachment  or
similar  process upon an option,  will be null and void,  and otherwise  without
effect,  and the Board may, in its sole  discretion,  upon the  happening of any
such event, terminate such option forthwith.

                  (f) Optionee Not a Stockholder  Until Exercise.  A Participant
shall not have any of the  rights of a  stockholder  with  respect to the Common
Shares  covered by his or her option until such option (or any portion  thereof)
shall have been  exercised  and such shares shall have been issued to him or her
(as evidenced by an appropriate entry on the books of a duly authorized transfer
agent of the Company) pursuant to the exercise of the option.
                           
                  (g) Exercise After Termination of Employment. If a Participant
ceases to be employed by the Company,  or a subsidiary  of the Company,  for any
reason other than death,  options held by such Participant at the effective date
of termination of employment may, to the extent  exercisable  immediately before
the termination of employment, be exercised, in whole or in part, within, in the
case of an ISO, three months (12 months if the termination of employment results
from such Participant's  permanent and total disability) following the effective
date of such  termination  and, in the case of an NQSO, six months (12 months if
the  termination of employment  results from the Optionee's  permanent and total
disability)  after the effective  date of such  termination  of  employment,  or
within such lesser period as may be specified in the Award Agreement;  provided,
however,  that in no case may an option be exercised after its Expiration  Date,
if that occurs first. A Participant shall be considered  permanently and totally
disabled if he or she is unable to engage in any substantial gainful activity by
reason of any medically  determinable  physical or mental impairment that can be
expected to result in death, or that has lasted or can be expected to last for a
continuous  period  of not less  than 12  months,  but in  either  case  only as
evidenced by the such Participant's  receipt of disability benefits under Social
Security.

                  (h) Exercise  Following  Death.  If a  Participant  dies while
employed by the Company or a  subsidiary  of the  Company,  or within the period
that the option remains  exercisable  after  termination  of  employment,  those
options held by such  Participant at the date of his or her death, to the extent
then  exercisable  by him or her,  may be  exercised  in whole or in part by the
holder  of such  option  (whether  such  option  was  transferred  prior  to the
Participant's death or by will or the laws of descent distribution), at any time
prior to the  earliest of their  Expiration  Date or within 12 months  after the
death of such  Participant,  or within any lesser period  specified in the Award
Agreement.

                  (i)  Sick  Leaves  and  Leaves  of  Absence.  A  Participant's
employment  shall  not be  deemed to be  terminated  by  reason  of sick  leave,
military leave, or other leave of absence approved by the Company, if the period
of any such leave  does not  exceed a period  approved  by the  Company,  or, if
longer,  if such  Participant's  right to  reemployment  by the  Company (or any
parent or subsidiary) of the Company is guaranteed  either  contractually  or by
statute.  Individual  Award  Agreements  may contain such other  (additional  or
different)  provisions  with  respect  to  leaves  of  absence  as the Board may
approve, either at the time of grant or later.

                  (j) Discretionary  Transfers.  Notwithstanding anything herein
to the contrary, the Board may, in its sole discretion, permit lifetime or death
transfers to the extent permitted by Rule 16b-3 under the Exchange Act.
                           
         8.       Compliance with Securities Laws

         The  Company  shall not be  obligated  to offer or sell any shares upon
exercise of an option unless the shares are at that time effectively  registered
or exempt from registration  under the federal securities laws and the offer and
sale of the shares are otherwise in compliance  with all  applicable  securities
laws, including, without limitation, the Securities Act of 1933, as amended, the
Securities  and  Exchange  Act of 1934,  as amended,  and the General  Rules and
Regulations promulgated thereunder.  The grant of any shares under this Plan, or
the offer or sale of any shares  upon  exercise of an option,  shall  further be
subject to approval by the  Company's  counsel with respect to such  compliance.
The Company shall have no obligation  to register  under the federal  securities
laws any shares granted under this Plan, or to take any other steps necessary to
enable  shares to be offered and sold under  federal or other  securities  laws.
Prior to the transfer by the Company of any shares to a Participant, or upon the
exercise of all or any portion of an option, such Participant may be required to
furnish  representations  or  undertakings  deemed  appropriate  by the Board to
enable the offer and sale of the option shares,  or subsequent  transfers of any
interest  in the  shares,  to comply  with  applicable  securities  laws.  Stock
certificates  evidencing  Common Shares acquired pursuant to an Award shall bear
any legend  required by, or useful for compliance  with,  applicable  securities
laws, this Plan, or any Award Agreement.

         9.       Restrictions on Shares

                  (a) Repurchase  Rights.  At the time an Award is granted,  the
Board may determine  that the Company shall retain,  for itself or others,  such
rights to repurchase,  rights of first refusal, and other transfer  restrictions
applicable to Common Shares acquired  pursuant to such Award, or may impose such
other restrictions as the Board, in is complete discretion, may determine, which
Company rights or other  restrictions shall be set forth in the applicable Award
Agreement.
                           
                  (b)  Financial  Covenants.  The Company may be precluded  from
paying dividends on Common Shares which may be acquired  pursuant to an Award by
the terms of financial  covenants  with any person that has purchased  preferred
equity or debt  securities  of, or loaned money to, the Company or any parent or
subsidiary of the Company.
                           
                  (c) Escrow Agreement.  In order to enforce  restrictions which
may be imposed  upon Common  Shares  which may be acquired  pursuant to an Award
hereunder,  the  Board  may  require  any  Participant  to enter  into an escrow
agreement  providing that the certificates  representing  shares shall remain in
the physical  custody of an escrow  holder until any or all of the  restrictions
imposed  pursuant to the Plan or applicable Award Agreement shall have lapsed or
otherwise been terminated.
                           

                  (d)  Legending  Share   Certificates.   In  order  to  enforce
restrictions  which may be imposed  upon  Common  Shares  which may be  acquired
pursuant  to an Award  hereunder,  the Board may cause a legend or legends to be
placed on any  certificates  representing  such shares,  which legend or legends
shall  make  appropriate   reference  to  the  restrictions  imposed  hereunder,
including, but not limited to (i) the Company's repurchase rights, if any, under
Paragraph 9(a) and (ii) a restriction against sale of such shares for any period
of  time  as  may be  required  by an  appropriate  law  or  regulation.  If any
restriction with respect to which a legend was placed on any certificate  ceases
to apply to Common  Shares  represented  by such  certificate,  the owner of the
Common Shares  represented by such  certificate may require the Company to cause
the issuance of a new certificate not bearing the legend.

                  (e) Additional Restrictions.  Additionally,  and not by way of
limitation,  the Board may impose such  restrictions on any Common Shares issued
pursuant to this Plan as it may deem advisable,  including,  without limitation,
restrictions   under  the  Securities  Act  of  1933,  as  amended,   under  the
requirements  of any stock  exchange upon which the shares of the same class are
then listed,  and under any blue sky or other securities laws applicable to such
shares.
                           

         10. Taxes. The issuance of Common Shares pursuant to the grant, vesting
or exercise of an Award shall be conditioned  upon payment by the Participant to
the Company of amounts  sufficient  to enable the Company to pay all  applicable
federal,  state and local withholding  taxes. Such payment to the Company by the
Participant  may be effected  through  (i) the  Company's  withholding  from the
number of Common  Shares  that would  otherwise  be  delivered a number of whole
shares  having  a  fair  market  value  equal  to or  less  than  the  aggregate
withholding  taxes;  (ii)  payment  by the  Participant  to the  Company  of the
aggregate withholding taxes in cash; (iii) withholding by the Company from other
amounts  contemporaneously  owed by the Company to the Participant;  or (iv) any
combination of the three preceding methods.

         11.      Use of Proceeds

         Proceeds realized from the sale of Common Shares pursuant to the grant,
vesting or exercise of an Award shall constitute general funds of the Company.

         12.      Acquisitions and Other Transactions

         Upon the  occurrence  of a Change in Control  (as defined  below),  the
Board may in its absolute  discretion do any one or more of the  following:  (i)
shorten the period during which options are  exercisable  (provided  they remain
exercisable, to the extent otherwise exercisable, for at least 10 days after the
date  the  notice  of such  modification  is given  to the  Participants);  (ii)
accelerate any vesting schedule to which an Award is subject,  or cause to lapse
any  repurchase  or other  rights the  Company  may have with  respect to Common
Shares acquired by a Participant  pursuant to the grant,  vesting or exercise of
an Award;  (iii) arrange for the grant of  replacement  Awards with  appropriate
adjustments  in the number and kind of  securities  and option  prices;  or (iv)
cancel  outstanding  Awards or Common Shares acquired by a Participant which are
subject to restrictions,  for which each such  Participant  shall be entitled to
receive in  consideration  of such  cancellation  an amount in cash that, in the
absolute  discretion  of the Board,  is  determined to be equivalent to the fair
market value (at the  effective  time of the Change in Control) of such Award or
Shares.  In considering the  advisability,  or the terms and conditions,  of any
action it may take in connection with a Change in Control,  the Board shall take
into account the  penalties  that may result  directly or  indirectly  from such
action to either the Company or the Participant,  or both, under Section 280G of
the Code,  and may decide to limit such action to the extent  necessary to avoid
or mitigate such penalties or their effects.

         A "Change in Control" shall be deemed to have occurred if the event set
forth in any one of the following paragraphs shall have occurred:

                  (a) any Person becomes the  Beneficial  Owner of securities of
         the Company  representing  17% or more of the combined  voting power of
         the Company's then outstanding securities;

                  (b)  there is  consummated  a merger or  consolidation  of the
         Company or any direct or indirect  subsidiary  of the Company  with any
         other corporation, other than (i) a merger or consolidation which would
         result in the voting securities of the Company outstanding  immediately
         prior to such merger or consolidation  continuing to represent  (either
         by remaining  outstanding or by being converted into voting  securities
         of the surviving entity or any parent thereof), in combination with the
         ownership of any trustee or other fiduciary holding securities under an
         employee  benefit plan of the Company or any subsidiary of the Company,
         at least 40% of the  combined  voting  power of the  securities  of the
         Company  or such  surviving  entity or any parent  thereof  outstanding
         immediately  after such  merger or  consolidation,  or (ii) a merger or
         consolidation  effected to implement a recapitalization  of the Company
         (or similar  transaction)  in which no Person  increases its Beneficial
         Ownership, directly or indirectly, of securities of the Company by more
         than 17% of the combined voting power of the Company's then outstanding
         securities;

                  (c) the stockholders of the Company approve a plan of complete
         liquidation  or  dissolution  of the Company or there is consummated an
         agreement  for  the  sale  or  disposition  by  the  Company  of all or
         substantially  all of  the  Company's  assets,  other  than  a sale  or
         disposition by the Company of all or substantially all of the Company's
         assets to an entity,  at least 40% of the combined  voting power of the
         voting  securities of which are owned by stockholders of the Company in
         substantially  the same  proportions as their  ownership of the Company
         immediately prior to such sale; or

                  (d) a change in the  Board,  which  change is the  result of a
         proxy   solicitation   or  other  action  to  influence   voting  at  a
         stockholders'  meeting of the Company  (other than by voting  one's own
         stock) by a Person or group of  Persons  which  causes  the  Continuing
         Directors to cease to be a majority of the Board;

         provided,  however,  that none of the  foregoing  events  described  in
paragraphs  (a)  through  (d) above shall be deemed to be a Change in Control if
the event or election causing such change shall have been approved  specifically
for purposes of this Agreement by the affirmative vote of at least a majority of
the members of the Continuing Directors.

         13.      Changes in Capital Structure

                  (a) No  Impediment  to Corporate  Transactions.  The fact that
Common  Shares are  subject to Awards  shall not affect the  Company's  right to
effect adjustments, recapitalizations,  reorganizations, or other changes in its
or  any  other  corporations'  capital  structure  or  business,  or  merger  or
consolidation,  any issuance of bonds, debentures, preferred or prior preference
stock ahead of or affecting Common Shares, the dissolution or liquidation of the
Company's or any other corporation's assets or business,  or any other corporate
act, whether similar to the events described above or otherwise.

                  (b)  Adjustments.  Subject to Paragraph 12, which shall,  when
applicable, take precedence over this Paragraph 13(b), if the outstanding Common
Shares are increased or decreased in number,  or changed into, or exchanged for,
a different number or kind of securities of the Company or any other corporation
by reason of a recapitalization,  reclassification,  stock split, combination of
shares,  stock  dividend or other event,  or if any other dilutive event occurs,
the  number and kind of  securities  that may be issued  pursuant  to the grant,
vesting or exercise of any  outstanding or future Award,  and the purchase price
with respect to any outstanding or future Awards, shall be adjusted by the Board
if and to the extent the Board  determines in its sole  discretion  that such an
adjustment is necessary or desirable.

         14.      Disqualifying Dispositions of ISOs

         If any Common Share acquired upon exercise of any ISO is disposed of in
a disposition that, under Section 422 of the Code,  disqualifies such portion of
such ISO from the  application of Section 421(a) of the Code, the holder of such
Common  Shares at the time of such  disposition  shall  notify  the  Company  in
writing of the date and terms of the disposition and shall comply with any other
requirements imposed by the Company in order to enable the Company to secure the
related income tax deduction to which it is entitled.

         15.      No Representations.

         Neither the  Company  nor the Board  shall at any time make,  and at no
time shall be deemed to have made,  any  representations  to any  Participant or
beneficiary  thereof  concerning the specific legal,  vesting or exercise of any
Award or tax effect  surrounding  such Award, it being a condition of each Award
that the recipient thereof shall be subject to all applicable  federal and state
laws and regulations.

         16.      Limitation on Right of Action.

         Any and all  rights of  action by the  Company  or any  stockholder  or
stockholders of the Company against any past,  present, or future members of the
Board,  or against any past or present  employee of the Company or any parent or
subsidiary of the Company,  arising out of or in connection  with the Plan,  any
Award  Agreement or any act or omissions  related  thereto,  shall be limited to
acts or  omissions  only that are the  result  of gross  negligence  or  willful
misconduct.  Any such  right of action  shall  terminate  and  forever be barred
unless  action is brought  within one year of the time of the  occurrence of the
act or omission upon which liability is claimed.

         17.      Amendment/Termination of Plan

         The  Board  may,  without  stockholder  approval,   alter,  suspend  or
terminate this Plan at any time or from time to time;  provided,  however,  that
stockholder approval shall be required if and to the extent the Board determines
that such approval is  appropriate  for purposes of satisfying  applicable  law,
including  but not limited to the Exchange Act or Sections  162(m) or 422 of the
Code.  The Board may amend or modify the terms of any  outstanding  Award at any
time and from time to time;  provided,  however,  that no such amendment  shall,
without  the prior  written  consent of the  Participant,  adversely  affect the
rights of such Participant under a then outstanding Award.

         This Plan shall  automatically  expire on the tenth  anniversary of the
date of its adoption,  and no options may be granted  under this Plan  following
such date. The expiration or other  termination of this Plan shall not,  without
the prior written consent of the Participant, adversely affect the rights of any
Participant under a then outstanding Award.

         18.      Interpretation; Severability.

         This Plan is designed and intended to comply with all  applicable  law,
including but not limited to Sections 162(m) and 422 of the Code and federal and
state securities laws, and all provisions  hereof shall be construed in a manner
so to comply.

         If any  provision  of  this  Plan is or  becomes  illegal,  invalid  or
unenforceable  in any  jurisdiction  or as to any  Participant  or  Award,  such
provision  shall be construed or deemed amended to conform to applicable law, or
if it cannot be construed or deemed amended without, in the determination of the
Board, materially altering the intent of the Plan or Award, such provision shall
be  stricken  as to such  jurisdiction,  Participant  or  Award  and  the  other
provisions of this Plan shall remain in full force and effect.

         19.      No Effect on Terms of Employment.

         Neither  the  establishment  of this  Plan and the  granting  of Awards
hereunder,  nor  the  inclusion  in any  Award  of a  right  of the  Company  to
repurchase  Common Shares  issued to a Participant  shall have any effect on the
terms and conditions of employment of any  Participant.  Subject to the terms of
any  employment  contract  to  the  contrary,  the  Company,  or any  parent  or
subsidiary of the Company, shall have the right to terminate or change the terms
of employment of any Participant at any time, for any reason whatsoever, without
regard to the  impact,  if any,  that such  termination  or change may have with
respect  to such  Participant's  rights  under  this  Plan,  or under  any Award
Agreement,  immediately before such change or termination, and without regard to
any resulting tax consequences to such Participant.





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