ACTION PERFORMANCE COMPANIES, INC.
                      1998 NON-QUALIFIED STOCK OPTION PLAN

              Adopted by the Board of Directors as of March 2, 1998

         1. Purpose.  The purpose of this 1998  Non-Qualified  Stock Option Plan
(the "Plan") is to attract,  retain,  and  motivate  employees  and  independent
contractors  by providing  them with the  opportunity  to acquire a  proprietary
interest in ACTION  PERFORMANCE  COMPANIES,  INC., an Arizona  corporation  (the
"Company") and to link their interests and efforts to the long-term interests of
the Company's shareholders.

         2. Plan Administration

                  2.1  In  General.  The  Plan  shall  be  administered  by  the
Company's  Board of Directors (the  "Board").  Except for the power to amend the
Plan as provided in Section 11, the Board, in its sole discretion,  may delegate
its authority  and duties under the Plan to a committee  appointed by the Board,
under  such  conditions  and  limitations  as the  Board  may from  time to time
establish.  The Board and/or any committee that has been delegated the authority
to administer the Plan shall be referred to as the "Plan Administrator."  Except
as otherwise explicitly set forth in the Plan, the Plan Administrator shall have
the authority,  in its discretion,  to determine all matters relating to options
granted under the Plan,  including  selection of the  individuals  to be granted
options,  the type of  options,  the  number of shares of the  Company's  common
stock,  par value  $.01 per share  (the  "Common  Stock")  subject to an option,
vesting conditions, and any and all other terms, conditions,  restrictions,  and
limitations,  if any, of an option. All decisions made by the Plan Administrator
pursuant  to the Plan and  related  orders  and  resolutions  shall be final and
conclusive.

                  2.2  Other  Plans.  The Plan  Administrator  shall  also  have
authority to grant  options as an  alternative  to or as the form of payment for
grants or rights earned or due under other compensation plans or arrangements of
the Company, including the plan of any entity acquired by the Company.

         3.  Eligibility.  Employees of the Company and independent  contractors
and consultants  shall be eligible to receive  options under the Plan,  provided
that no person who is a director or  executive  officer of the Company  shall be
eligible to receive  options under the Plan. For purposes of this Section 3, the
"Company"  includes any entity that is directly or indirectly  controlled by the
Company or any entity in which the Company has a significant equity interest, as
determined by the Plan Administrator.

         4. Shares Subject to the Plan

                  4.1 Number and Source. The shares offered under the Plan shall
be shares of the Company's Common Stock and may be unissued shares or shares now
held or  subsequently  acquired by the Company as treasury  shares,  as the Plan
Administrator  may from time to time determine.  Any shares subject to an option
granted under the Plan that is forfeited,
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terminated or canceled, or any shares that do not vest, shall again be available
for the granting of options under the Plan. Subject to adjustment as provided in
Section  4.2, the  aggregate  number of shares that may be issued under the Plan
shall not exceed 500,000 shares.

                  4.2 Adjustment of Shares  Available.  The aggregate number and
type of shares  available for issuance  under the Plan,  the maximum  number and
type of shares that may be subject to an option granted to any individual  under
the Plan, the number and type of shares covered by each outstanding  option, and
the exercise price per share (but not the total price) for an option outstanding
under  the Plan  shall  all be  proportionately  adjusted  for any  increase  or
decrease  in the  number of issued  shares of Common  Stock  resulting  from any
split-up,  combination  or  exchange  of  shares,  consolidation,   spin-off  or
recapitalization  of shares or any like capital adjustment or the payment of any
stock dividend.

                  4.3  Transfer  of  Control.  In the  event  of a  Transfer  of
Control,  as defined below, the surviving,  continuing,  successor or purchasing
corporation or parent  corporation  thereof,  as the case may be (the "Acquiring
Corporation")  shall either assume the Company's  rights and  obligations  under
outstanding  options  or  substitute  for  outstanding   options   substantially
equivalent  options  for the  Acquiring  Corporation's  stock.  In the event the
Acquiring  Corporation  elects not to assume or substitute for such  outstanding
options in  connection  with the  Transfer  of  Control,  the Board may,  in its
discretion,  provide  that any  unexercisable  and/or  unvested  portion  of the
outstanding  options shall be immediately  exercisable  and vested in full on or
before the date of the Transfer of Control.  The exercise  and/or vesting of any
option  that was  permissible  solely  by reason  of this  Section  4.3 shall be
conditioned upon the  consummation of the Transfer of Control.  Any options that
are  neither  assumed  or  substituted  for  by  the  Acquiring  Corporation  in
connection  with the Transfer of Control nor  exercised on or before the date of
the Transfer of Control shall terminate and cease to be outstanding effective as
of the date of the  Transfer  of Control.  Unless  otherwise  determined  by the
Board,  a "Transfer of Control" shall be deemed to have occurred in the event of
any of the  following:  (a) the  direct  or  indirect  sale or  exchange  by the
shareholders  of the  Company  of all or  substantially  all of the stock of the
Company if the  shareholders  of the Company before such sale or exchange do not
retain,  directly or indirectly,  at least a majority of the beneficial interest
in the voting stock of the Company after such sale or exchange;  (b) a merger or
consolidation  in which the  Company  is not the  surviving  corporation;  (c) a
merger or consolidation in which the Company is the surviving corporation if the
shareholders of the Company before such merger or  consolidation  do not retain,
directly or indirectly,  at least a majority of the  beneficial  interest in the
voting stock of the Company  after such merger or  consolidation;  (d) the sale,
exchange or transfer of all or  substantially  all of the assets of the Company;
or (e) a liquidation or dissolution of the Company.

         5. Stock Options

                  5.1   Grants.   The  Plan   Administrator   may   grant   only
"Nonqualified  Stock  Options"  under the Plan.  Nonqualified  Stock Options are
stock options that do not qualify as "Incentive Stock Options" under Section 422
of the Internal Revenue Code of 1986, as amended. The price for which shares may
be purchased upon exercise of a particular option shall be
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determined  by the Plan  Administrator.  For purposes of the Plan,  "Fair Market
Value" as to a particular  day shall be the closing sales price of the Company's
Common  Stock on the Nasdaq  National  Market  (or,  if the Common  Stock is not
traded on the Nasdaq National  Market,  on the principal  trading market for the
Common  Stock) as reported  for such day (or, if such day is not a trading  day,
then the last date on which the  Company's  Common Stock was traded prior to the
date of grant) in The Wall  Street  Journal or in such other  source as the Plan
Administrator deems reliable.  The Plan Administrator shall set the term of each
stock option.

                  5.2  Individual  Option  Agreements.   Each  option  shall  be
evidenced by an agreement between the Company and the recipient in such form and
content as the Plan  Administrator  from time to time approves,  which agreement
shall  substantially  comply with and be subject to the terms of the Plan.  Each
individual  agreement  may contain such  provisions  or  conditions  as the Plan
Administrator deems necessary or appropriate to effectuate the sense and purpose
of the Plan and may be amended  from time to time in  accordance  with the terms
thereof.

         6. Option Exercise

                  6.1  Precondition  to  Stock  Issuance.  No  shares  shall  be
delivered  pursuant to the  exercise of any option,  in whole or in part,  until
qualified for delivery  under such  securities  laws and  regulations  as may be
deemed by the Plan Administrator to be applicable thereto and until, in the case
of the exercise of an option,  payment in full of the option  price  thereof (in
cash or stock as provided in Section 6.3) is received by the Company.  No holder
of an option, or any legal representative, legatee or distributee shall be or be
deemed to be a holder of any shares subject to such option unless and until such
holder  has  tendered  all  documentation  necessary  to  properly  effect  such
exercise,  together  with full payment of the  exercise  price for the number of
shares to be issued.

                  6.2 No Fractional  Shares.  No stock option may at any time be
exercised with respect to a fractional share.

                  6.3 Form of Payment.  An optionee  may exercise a stock option
using as the form of payment (a) cash or cash  equivalent,  (b)  stock-for-stock
payment (as described  below),  (c) any  combination  of the above,  or (d) such
other means as the Plan Administrator may approve.  Any optionee who owns shares
of the  Company's  Common  Stock  may use such  shares as a form of  payment  to
exercise stock options  granted under the Plan. The Plan  Administrator,  in its
discretion,  may restrict or rescind this right by notice to optionees.  A stock
option  may be  exercised  in such  manner  only by  tendering  (actually  or by
attestation)  to the Company  whole  shares of Common Stock having a Fair Market
Value  equal to or less than the  aggregate  exercise  price  for the  number of
options to be exercised. If an option is exercised by surrender of shares having
a Fair Market  Value less than the  aggregate  exercise  price for the number of
options to be exercised, the optionholder must pay the difference in cash.

         7.  Transferability.   Except  as  specifically  allowed  by  the  Plan
Administrator,  options and any of the rights and privileges  conferred  thereby
shall not be assignable or
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transferable  by the  recipient  other than by will or the laws of  descent  and
distribution  and shall be exercisable  during the recipient's  lifetime only by
the recipient.

         8.  Withholding  Taxes;  Other  Deductions.  The Company shall have the
right to  deduct  from any  settlement  of an  option  granted  under  the Plan,
including the delivery or vesting of shares,  (a) an amount  sufficient to cover
withholding  as required by law for any federal,  state or local taxes,  and (b)
any  amounts  due from the  recipient  of such  option to the  Company or to any
parent or  subsidiary  of the  Company  or to take such  other  action as may be
necessary  to  satisfy  any such  withholding  or other  obligations,  including
withholding from any other cash amounts due or to become due from the Company to
such recipient an amount equal to such taxes or obligations.

         9.  Termination of Services.  The terms and  conditions  under which an
option may be  exercised  following  termination  of a  recipient's  employment,
directorship or independent  contractor  relationship  with the Company shall be
determined by the Plan Administrator.

         10. Term of the Plan.  The Plan shall  become  effective as of March 2,
1998,  and shall remain in full force and effect  through March 2, 2008,  unless
sooner terminated by the Board. After the Plan is terminated,  no future options
may be granted,  but options  previously  granted  shall remain  outstanding  in
accordance with their  applicable  terms and conditions and the Plan's terms and
conditions.

         11. Plan Amendment.  The Board may amend, suspend or terminate the Plan
at any time.

         12. Plan Not  Exclusive.  This Plan is not intended to be the exclusive
means by which the Company may issue options to acquire its Common Stock.


                                             ACTION PERFORMANCE COMPANIES, INC.,
                                             an Arizona corporation



                                             By:________________________________
                                                  Tod J. Wagenhals
                                                  Secretary
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