EXHIBIT 10.4.2
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                       ACTION PERFORMANCE COMPANIES, INC.

                           SECOND AMENDED AND RESTATED
                             1993 STOCK OPTION PLAN

                      (as amended through January 16, 1997)

                                    ARTICLE I
                                     General

Section 1.1       Purpose of Plan; Term

                  (a) Background. On December 9, 1992, the Board of Directors of
Action Performance  Companies,  Inc., an Arizona  corporation,  adopted the 1993
Stock Option Plan (as adopted and as subsequently  amended,  the "Plan"),  which
was approved by the  shareholders of the Company on December 9, 1992. On January
14, 1993, the Plan was  subsequently  amended and restated (the "First  Restated
Plan").  The First Restated Plan was approved by the shareholders of the Company
on January 14,  1993.  On January 11, 1994,  the Board of Directors  amended and
restated the Plan (the "Second  Restated  Plan").  The Second  Restated Plan was
approved  by the  shareholders  of the Company on July 12,  1994.  On January 4,
1995, the Board of Directors made a technical amendment to the Plan that did not
require  shareholder  approval.  On July 3, 1995, the Board of Directors amended
the Plan (the "Third  Restated  Plan").  The Third Restated Plan was approved by
the shareholders of the Company on February 28, 1996. On September 4, 1996, (the
"Effective  Date") and January 16, 1997, the Board of Directors amended the Plan
as stated herein (the "Fourth Restated Plan"). Any Options outstanding under the
First Restated Plan, the Second  Restated Plan, or the Third Restated Plan shall
remain valid and unchanged. The effective date of the Fourth Restated Plan shall
be September 4, 1996;  provided,  however,  that if this Fourth Restated Plan is
not approved by the shareholders by September 4, 1997, this Fourth Restated Plan
shall not become effective and the Third Restated Plan shall remain in effect.

                  (b) General Purpose. The purpose of the Plan is to further the
interests of Action  Performance  Companies,  Inc., an Arizona  corporation (the
"Company"),  and its shareholders by encouraging key persons associated with the
Company (or parent or subsidiary  corporations of the Company) to acquire shares
of the Company's common stock,  thereby acquiring a proprietary  interest in its
business  and an  increased  personal  interest  in its  continued  success  and
progress.  Such purpose shall be accomplished through the Discretionary  Program
set forth in Article II hereof and the Automatic Program as specified in Article
III hereof by  providing  for the  granting of options to acquire the  Company's
common stock  ("Options"),  the direct  granting of the  Company's  common stock
("Stock Awards"),  the granting of stock  appreciation  rights ("SARs"),  or the
granting of other cash  awards  ("Cash  Awards")  (Stock  Awards,  SARs and Cash
Awards  shall be  collectively  referred  to  herein  as  "Awards").  A  "parent
corporation"  for purposes of this Plan is any corporation in the unbroken chain
of corporations ending with the employer corporation, where, at each link of the
chain,  the  corporation  and the link  above  owns at least 50  percent  of the
combined  total voting power of all classes of the stock in the  corporation  in
the link below.  A  "subsidiary  corporation"  for  purposes of this Plan is any
corporation  in the unbroken  chain of  corporations  starting with the employer
corporation,  where,  at each link of the chain,  the  corporation  and the link
above owns at least 50 percent of the  combined  voting  power of all classes of
stock in the corporation below.

                  (c) Options.  Options  granted under this Plan to employees of
the Company (or parent or  subsidiary  corporations  of the  Company)  which are
intended to qualify as an "incentive  stock option" as defined in section 422 of
the Internal  Revenue Code of 1986, as amended (the "Code") will be specified in
the applicable stock option agreement. All other Options granted under this Plan
will be nonqualified options.
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                  (d) Rule  16b-3  Plan.  With  respect  to  persons  subject to
Section 16 of the Securities Exchange Act of 1934, as amended ("1934 Act"), this
Plan is intended to comply with all applicable conditions of Rule 16b-3 (and all
subsequent  revisions thereof) promulgated under the 1934 Act. To the extent any
provision of the Plan or action by the Plan Administrator fails to so comply, it
shall be  deemed  null and  void,  to the  extent  permitted  by law and  deemed
advisable by the Plan Administrator.  In addition,  the Board may amend the Plan
from time to time as it deems necessary in order to meet the requirements of any
amendments to Rule 16b-3 without the consent of the shareholders of the Company.

                  (e) Duration of Plan. The term of the Plan is until  September
24,  2001.  No Option or Award shall be granted  under the Plan after that date,
but  Options  or Awards  outstanding  on that date  shall not be  terminated  or
otherwise affected by virtue of the Plan's expiration.

Section 1.2       Stock and Maximum Number of Shares Subject to Plan

                  (a)  Description  of Stock and Maximum Shares  Allocated.  The
stock subject to the provisions of the Plan and issuable upon the grant of Stock
Awards or upon the exercise of SARs or Options granted under the Plan are shares
of the Company's  common stock (the  "Stock"),  which may be either  unissued or
treasury  shares,  as the  Board  may from time to time  determine.  Subject  to
adjustment as provided in Article IV hereof,  the aggregate  number of shares of
Stock covered by the Plan and issuable  thereunder  shall be 2,750,000 shares of
Stock.

                  (b)   Calculation  of  Available   Shares.   For  purposes  of
calculating  the maximum number of shares of Stock which may be issued under the
Plan:  (i) the shares issued  (including  the shares,  if any,  withheld for tax
withholding  requirements)  upon exercise of an Option shall be counted and (ii)
the shares issued  (including the shares,  if any,  withheld for tax withholding
requirements)  as a result of a grant of a Stock  Award or an exercise of an SAR
shall be counted.

                  (c)  Restoration  of Unpurchased  Shares.  If an Option or SAR
expires or  terminates  for any reason  prior to its exercise in full and before
the term of the Plan  expires,  the shares of Stock  subject  to, but not issued
under,  such Option or SAR shall,  without further action by or on behalf of the
Company, again be available under the Plan.

Section 1.3       Administration; Approval; Amendments

                  (a) Administration of the Discretionary  Program. The Eligible
Persons (including all existing  Optionholders) under the Discretionary  Program
are divided into two groups and there shall be a separate administrator for each
group. One group will be comprised of Eligible Persons that are Affiliates.  For
purposes of this Plan, the term "Affiliates"  shall mean all "officers" (as that
term is defined in Rule 16a-1(f)  promulgated  under the 1934 Act) and directors
of the Company  and all  persons  who own ten  percent or more of the  Company's
issued and outstanding Stock. The power to administer the Discretionary  Program
with respect to Eligible Persons that are Affiliates shall be vested exclusively
with the Board or a  committee  ("Senior  Committee")  comprised  of two or more
Non-Employee  Directors which are appointed by the Board. The Senior  Committee,
at its sole discretion, may require approval of the Board for specific grants of
Options or Awards under the Grant Program. The second group shall be composed of
all Eligible Persons that are not Affiliates  ("Non-Affiliates"),  and the power
to administer the Discretionary  Program with respect to Non-Affiliates shall be
vested exclusively with the Board. The Board, however, may at any time appoint a
committee (the  "Employee  Committee") of one or more persons who are members of
the Board and delegate to such Employee  Committee  the power to administer  the
Discretionary Program with respect to the Non-Affiliates.  Members of the Senior
Committee and of the Employee  Committee  shall serve for such period of time as
the Board may  determine  and shall be  subject  to  removal by the Board at any
time.  The Board may at any time  terminate all or a portion of the functions of
either the Senior or Employee  Committee and reassume all of a portion of powers
and authority previously delegated to that Committee.
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                  (b) Plan  Administrator.  The Senior  Committee,  the Employee
Committee,  and/or the Board,  whichever  is  applicable,  shall be  referred to
herein as the "Plan Administrator." The Plan Administrator for each administered
group shall have the authority and discretion to select which  Eligible  Persons
shall participate in the Discretionary Program, to grant Options or Awards under
the Discretionary  Program,  to establish such rules and regulations as they may
deem appropriate with the proper administration of the Discretionary Program and
to make such  determinations  under,  and issue  such  interpretations  of,  the
Discretionary  Program  and any  outstanding  Option  or  Award as they may deem
necessary  or  advisable.  If  an  Optionholder's  status  as  an  Affiliate  or
non-Affiliate  changes,  the  Optionholder's  Plan  Administrator  will likewise
change.  Decisions of the Plan  Administrator  shall be final and binding on all
parties  who have an  interest  in any  outstanding  Option  or Award  issued or
granted pursuant to the Discretionary Program.

                  (c) Automatic Program. Any decisions or interpretations of the
Plan with respect to the Automatic Program shall be made by the Board.

                  (d) Approval by Shareholders.  This Fourth Restated Plan shall
be submitted to the  shareholders of the Company for their approval at a regular
or special meeting to be held within 12 months after the adoption of this Fourth
Restated  Plan by the Board.  Shareholder  approval  shall be  evidenced  by the
affirmative  vote of the  holders of a majority  of the shares of the  Company's
Common  Stock  present in person or by proxy and voting at the  meeting.  If the
shareholders  decline to approve this Fourth Restated Plan at such meeting or if
this Fourth Restated Plan is not approved by the  shareholders  within 12 months
after its adoption by the Board,  this Fourth  Restated Plan (and all Options or
Awards granted hereunder after the Effective Date) shall automatically terminate
to the same extent and with the same effect as though this Fourth  Restated Plan
had never been adopted.  In such instance,  the Third Restated Plan shall remain
in effect. If this Fourth Restated Plan is approved by shareholders, all Options
or Awards granted under the Plan to Eligible Persons who are Affiliates shall be
deemed acquired on the date such approval is obtained.

                  (e) Amendments to Plan.  The Board may,  without action on the
part of the Company's  shareholders,  make such  amendments  to,  changes in and
additions  to the  Plan  as it  may,  from  time  to  time,  deem  necessary  or
appropriate  and in the best  interests of the Company;  provided that the Board
may  not,  without  the  consent  of an  Optionholder,  take  any  action  which
disqualifies  any Option  previously  granted under the Plan for treatment as an
incentive stock option or which  adversely  affects or impairs the rights of the
Optionholder  of any Option  outstanding  under the Plan,  and further  provided
that, except as provided in Section 1.1(d) and Article IV hereof,  the Board may
not,  without the  approval of the  Company's  shareholders,  (i)  increase  the
aggregate  number of shares  of Stock  subject  to the  Plan,  (ii)  reduce  the
exercise  price at which  Options may be granted or the exercise  price at which
any outstanding Option may be exercised, (iii) extend the term of the Plan, (iv)
change the class of persons  eligible  to  receive  Options or Awards  under the
Plan, or (v) materially increase the benefits accruing to participants under the
Plan. Notwithstanding the foregoing, Options or Awards may be granted under this
Plan to  purchase  shares  of Stock in  excess  of the  number  of  shares  then
available  for  issuance  under the Plan if (A) an  amendment  to  increase  the
maximum  number of shares  issuable under the Plan is adopted by the Board prior
to the initial grant of any such Option or Award and within one year  thereafter
such  amendment  is approved  by the  Company's  shareholders  and (B) each such
Option or Award granted is not to become  exercisable or vested,  in whole or in
part, at any time prior to the obtaining of such shareholder approval.

Section 1.4       Participants

                  (a)   Discretionary   Program.   Options  and  Awards  in  the
Discretionary Program may be granted only to persons ("Eligible Persons") who at
the time of grant are (i) key personnel  (including  officers and  directors) of
the Company or parent or  subsidiaries  of the Company,  or (ii)  consultants or
independent  contractors who provide valuable  services to the Company or parent
or subsidiaries  of the Company.  Notwithstanding  the foregoing,  (A) incentive
stock  options  may only be granted to key  personnel  of the  Company  (and its
parent or  subsidiary)  who are also  employees of the Company (or its parent or
subsidiary) and (B) the maximum number of
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shares of stock  with  respect  to which  Options  or SARs may be granted to any
employee  during  the term of the Plan shall not exceed 50 percent of the shares
of Stock covered by the Plan. The Plan  Administrator  shall have full authority
to determine  which Eligible  Persons in its  administered  group are to receive
Option grants in the Discretionary  Program,  the number of shares to be covered
by each such  grant,  whether  the granted  Option is to be an  incentive  stock
option  which  satisfies  the  requirements  of  Section  422 of the  Code  or a
nonqualified option not intended to meet such requirements, the time or times at
which each such Option is to become exercisable,  and the maximum term for which
the Option is to be  outstanding.  The Plan  Administrator  shall also have full
authority  to  determine  which  Eligible  Persons  in such group are to receive
Awards  under the  Discretionary  Program  and the  conditions  relating to such
Award.

                  (b) Automatic Program.  Persons eligible to participate in the
Automatic  Program shall be limited to  non-employee  Board  members  ("Eligible
Directors").  Unless  otherwise  provided in the Plan,  persons who are eligible
under the  Automatic  Program may also be eligible to receive  Options or Awards
under the Discretionary Program.

                                   ARTICLE II
                              Discretionary Program

Section 2.1       Terms and Conditions of Options

                  (a)  Allotment  of  Shares.  The  Plan   Administrator   shall
determine the number of shares of Stock to be optioned from time to time and the
number of shares to be optioned to any Eligible Person (the "Optioned  Shares"),
except  that the Board  must  approve  the grant to any  Eligible  Person of any
Option to purchase more than 50,000 Optioned Shares. The grant of an Option to a
person shall neither  entitle such person to, nor  disqualify  such person from,
participation  in any other grant of Options or Stock  Awards under this Plan or
any other stock option plan of the Company.

                  (b)  Exercise  Price.  Upon the grant of any Option,  the Plan
Administrator  shall  specify  the option  price per share.  In no event may the
option  price per share for an Option that is not an  incentive  stock option be
less than 85 percent of the fair market value per share of the Stock on the date
the Option is granted and in no event may the option  price per share  specified
by a Plan  Administrator  for an incentive stock option be less than 100 percent
of the fair  market  value  per  share of the  Stock on the date the  Option  is
granted (110 percent if Options are intended to be incentive  stock  options and
are granted to a  shareholder  who at the time the Option is granted  owns or is
deemed to own stock possessing more than 10 percent of the total combined voting
power of all classes of stock of the Company or of any parent or any  subsidiary
corporation of the Company).

                  (c) Individual Stock Option Agreements.  Options granted under
the Plan shall be evidenced by option  agreements  in such form and content as a
Plan  Administrator   from  time  to  time  approves,   which  agreements  shall
substantially comply with and be subject to the terms of the Plan, including the
terms and conditions of this Section 2.1. As determined by a Plan Administrator,
each option  agreement  shall  state (i) the total  number of shares to which it
pertains,  (ii) the exercise price for the shares  covered by the Option,  (iii)
the time at which the Options vest and become  exercisable and (iv) the Option's
scheduled  expiration  date.  The  option  agreements  may  contain  such  other
provisions or conditions as a Plan Administrator  deems necessary or appropriate
to  effectuate  the sense and purpose of the Plan,  including  covenants  by the
Optionholder  not-to-compete  and  remedies  to the  Company in the event of the
breach of any such covenant.

                  (d) Option  Period.  Unless  otherwise  provided  in the Stock
Option  Agreement,  the term of each Option  shall be ten years from the date of
grant.  No Option  granted  under the Plan that is intended  to be an  incentive
stock  option shall be  exercisable  for a period in excess of 10 years from the
date of its grant (five years if the Option is granted to a  shareholder  who at
the time the Option is granted  owns or is deemed to own stock  possessing  more
than 10 percent of the total  combined  voting  power of all classes of stock of
the Company or of
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its parent or any subsidiary corporation), subject to earlier termination in the
event of termination of employment,  retirement or death of the Optionholder. An
Option  may be  exercised  in full or in part at any  time or from  time to time
during the term of the Option or provide for its exercise in stated installments
at stated times during the Option's term.

                  (e)  Vesting;  Limitations.  The  time at which  the  Optioned
Shares vest with respect to a  participant  shall be in the  discretion  of that
participant's Plan Administrator.  Notwithstanding the foregoing,  to the extent
an Option is intended to qualify as an  incentive  stock  option under the Code,
the aggregate fair market value  (determined as of the respective  date or dates
of grant) of the Stock for which one or more Options granted to any person under
this Plan (or any other  option plan of the Company or its parent or  subsidiary
corporations)  may for the first time  become  exercisable  as  incentive  stock
options  under the Code during any one calendar year shall not exceed the sum of
$100,000 (referred to herein as the "$100,000  Limitation").  To the extent that
any person holds two or more Options which become exercisable for the first time
in the same calendar year, the foregoing  limitation on the exercisability as an
incentive  stock option shall be applied on the basis of the order in which such
Options are granted.

                  (f) No Fractional  Shares.  Options shall be exercisable  only
for whole  shares;  no  fractional  shares will be issuable upon exercise of any
Option granted under the Plan.

                  (g) Method of Exercising Options; Full Payment.  Options shall
be exercised by written  notice to the Company,  addressed to the Company at its
principal  place of  business.  Such notice shall state the election to exercise
the Option and the number of shares with respect to which it is being exercised,
and shall be signed by the person  exercising  the Option.  Such notice shall be
accompanied  by payment in full of the  exercise  price for the number of shares
being purchased.  Upon the exercise of any Option, the Company shall deliver, or
cause  to be  delivered,  to the  Optionholder  a  certificate  or  certificates
representing  the  shares  of Stock  purchased  upon  such  exercise  as soon as
practicable after payment for those shares has been received by the Company.  If
an Option is  exercised  pursuant to Section  2.1(l)  hereof by any person other
than the Optionholder,  such notice shall be accompanied by appropriate proof of
the right of such person to exercise the Option.  All shares that are  purchased
and paid for in full  upon the  exercise  of an Option  shall be fully  paid and
non-assessable.  Except as  provided in Section  2.1(h)  hereof,  the  aggregate
Option price shall be payable in one of the alternative forms specific below:

                           (i) full payment in cash or check made payable to the
Company's order;

                           (ii) full  payment  in  shares of Stock  held for the
requisite period necessary to avoid a charge to the Company's  reported earnings
and  valued  at fair  market  value  on the  exercise  date  (as  determined  in
accordance with Section 4.2 hereof); or

                           (iii)  if  a  cashless   exercise  program  has  been
implemented by the Board,  full payment through a sale and remittance  procedure
pursuant  to which  the  Optionholder  (A)  shall  provide  irrevocable  written
instructions to a designated  brokerage firm to effect the immediate sale of the
Optioned  Shares  to be  purchased  and  remit to the  Company,  out of the sale
proceeds  available  on the  settlement  date,  sufficient  funds to  cover  the
aggregate exercise price payable for the Optioned Shares to be purchased and (B)
shall  concurrently  provide  written  directives  to the Company to deliver the
certificates for the Optioned Shares to be purchased  directly to such brokerage
firm in order to complete the sale transaction.

                  (h)   Financial   Assistance   to   Optionholders.   The  Plan
Administrator,  with the  approval  of the  Board,  may allow the  paying of the
exercise  price of an Option  granted  under the  Discretionary  Program  in the
following  manner:  (i)  the  extension  of a loan  to the  Optionholder  by the
Company;  (ii)  the  payment  by the  Optionholder  of  the  exercise  price  in
installments;  or (iii) the  guarantee by the Company of a loan  obtained by the
Optionholder from a third party. The terms of any loans, installment payments or
guarantees,  including the interest rate and terms of repayment,  and collateral
requirements, if any, shall be determined by the Board in its sole
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discretion.   Subject  to  the  applicable  margin   requirements,   any  loans,
installment payments or guarantees  authorized by the Board pursuant to the Plan
may be granted  without  security,  but the maximum  credit  available not shall
exceed the  exercise  price or the Option  Shares plus any federal  and/or state
income tax liability incurred in connection with the exercise of the Option.

                  (i) Rights of a  Shareholder.  An  Optionholder  shall have no
rights as a shareholder  with respect to shares  covered by his Option until the
date a stock  certificate  is  issued  to him.  No  adjustment  will be made for
dividends  or other  rights for which the record  date is prior to the date such
stock certificate is issued.

                  (j) Repurchase Right. The Plan  Administrator may, in its sole
discretion,  set forth other terms and conditions upon which the Company (or its
assigns)  shall  have the right to  repurchase  shares of Stock  acquired  by an
Optionholder pursuant to an Option. Any repurchase right of the Company shall be
exercisable by the Company (or its assignees)  upon such terms and conditions as
the Plan Administrator may specify in the Stock Repurchase  Agreement evidencing
such right.  The Plan  Administrator  may also in its discretion  establish as a
term and  condition  of one or more  Options  granted  under  the Plan  that the
Company shall have a right of first refusal with respect to any proposed sale or
other  disposition  by the  Optionholder  of any shares of Stock issued upon the
exercise of such Options.  Any such right of first refusal shall be  exercisable
by the Company (or its assigns) in accordance  with the terms and conditions set
forth in the Stock Repurchase Agreement.

                  (k) Termination of Incentive Stock Options.

                           (i)  Termination  of  Service.  Except  as  otherwise
provided  by the  Board,  if any  Optionholder  ceases to be in  Service  to the
Company for a reason other than death or disability  and the Option held by such
Optionholder  is  an  incentive  stock  option,   such   Optionholder  (or  such
Optionholder's  successors in the case of the Optionholder's  death) may, within
90 days after the date of termination of such Service, but in no event after the
Option's stated  expiration  date,  exercise some or all of the Options that the
Optionholder  was  entitled to exercise on the date the  Optionholder's  Service
terminated;  provided,  that (i) if the Optionholder's  Service is terminated by
the Company in its good faith judgment, for cause, including the commission of a
crime by the Optionholder or for reasons  involving moral  turpitude,  an act by
the Optionholder which tends to bring the Company into disrepute,  or negligent,
fraudulent  or  willful  misconduct  by the  Optionholder,  or (ii) if after the
Service  of the  Optionholder  is  terminated,  the  Optionholder  commits  acts
detrimental  to the Company's  interests,  then the Option shall be  immediately
cancelled and shall thereafter be void for all purposes.

                           (ii) Disability.  Except as otherwise provided by the
Board, if any  Optionholder  ceases to be in Service to the Company by reason of
permanent  disability  within the  meaning of Section  22(e)(3)  of the Code (as
determined by the applicable Plan Administrator), the Optionholder shall have 12
months  after the date of  termination  of  Service  (or such  lesser  period as
determined  by  the  Plan  Administrator  and  set  forth  in the  Stock  Option
Agreement),  but in no event after  Optionholder's  Option's  stated  expiration
date, to exercise  Options that the Optionholder was entitled to exercise on the
date the Optionholder's Service terminated as a result of disability.

                           (iii)  Death of  Optionholder.  Except  as  otherwise
provided by the Board, if an Optionholder  dies while in the Company's  Service,
the  Optionholder's  vested Options that are incentive stock options on the date
of death shall be exercisable  within three months of such death (or such lesser
period as determined by the Plan Administrator and set forth in the Stock Option
Agreement) or until the stated  expiration  date of the  Optionholder's  Option,
whichever  occurs  first,  by the person or persons  ("successors")  to whom the
Optionholder's  rights  pass  under  a  will  or by  the  laws  of  descent  and
distribution. An Option may be exercised and payment of the option price made in
full by the successors  only after written notice to the Company  specifying the
number of shares to be purchased.  Such notice shall state that the Option price
is being paid in full in the manner specified in Section 2.1(g) hereof.  As soon
as  practicable  after  receipt by the  Company of such notice and of payment in
full of the Option price, a certificate or certificates representing such shares
shall be registered in the
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name or names  specified by the successors in the written notice of exercise and
shall be delivered to the successors.

                  (l) Termination of Nonqualified Options. Any Options which are
not  incentive   stock  options  and  which  are  exercisable  at  the  time  an
Optionholder ceases to be in Service to the Company shall remain exercisable for
such period of time thereafter as determined by the Plan  Administrator  and set
forth in the documents  evidencing the Options.  In the absence of any provision
in such documents,  the Option shall remain  exercisable (i) for a period of one
year after termination  resulting from death or permanent  disability within the
meaning  of  Section   22(e)(3)  of  the  Code  (as   determined   by  the  Plan
Administrator);  (ii) for no period should the  Optionholder  be discharged  for
cause;  and (iii) for 90 days after  termination for any other reason;  provided
however,  that  no  Option  shall  be  exercisable  after  the  Option's  stated
expiration date.

                  (m) Other Plan Provisions  Still  Applicable.  If an Option is
exercised  upon  the  termination  of  Service,   disability,  or  death  of  an
Optionholder  under this  Section 2.1,  the other  provisions  of the Plan shall
still be applicable to such exercise.

                  (n) Definition of "Service." For purposes of this Plan, unless
it is evidenced  otherwise in the option  agreement with the  Optionholder,  the
Optionholder  shall be deemed to be in  "Service" to the Company so long as such
individual renders services on a periodic basis to the Company (or to any parent
or  subsidiary  corporation)  in the  capacity of an employee or an  independent
consultant or advisor.  The  Optionholder  shall be considered to be an employee
for so long as such  individual  remains in the employ of the  Company or one or
more of its parent or subsidiary corporations.

                  (o) Nonassignability. Except as otherwise allowed by the Board
and set forth in a Stock Option  Agreement,  no Option granted under the Plan or
any of the  rights and  privileges  conferred  thereby  shall be  assignable  or
transferable  by an  Optionholder  other than by will or the laws of descent and
distribution,  and such Option shall be  exercisable  during the  Optionholder's
lifetime only by the Optionholder.  If an Option is assignable or transferrable,
such  assignment or transfer  cannot occur unless (i) the Board has consented in
writing to the proposed transfer and transferee,  and (ii) the transferee enters
into a written stock option agreement with the Company.

                  (p)  Cancellation of Options.  Each Plan  Administrator  shall
have the  authority  to  effect,  at any time  and from  time to time,  with the
consent  of  the  affected  Optionholders,   the  cancellation  of  any  or  all
outstanding  Options  granted  under  the  Discretionary  Program  by that  Plan
Administrator and to grant in substitution  therefore new Options under the Plan
covering  the same or  different  numbers of shares of Stock as long as such new
Options  have an  exercise  price per  share of Stock no less  than the  minimum
exercise price as set forth in Section 2.1(b) hereof on the new grant date.

Section 2.2       Terms and Conditions of Stock Awards

                  (a)  Eligibility.  All Eligible  Persons  shall be eligible to
receive Stock Awards.  The Plan  Administrator of each administered  group shall
determine  the number of shares of Stock to be awarded  from time to time to any
Eligible  Person in such  group.  The grant of a Stock  Award to a Person  shall
neither  entitle such person to, nor disqualify  such person from  participation
in, any other grant of options or awards by the Company, whether under this Plan
or under any other stock option or award plan of the Company.

                  (b) Award for Services Rendered. Stock Awards shall be granted
in recognition of an Eligible Person's past services to the Company. The grantee
of any such Stock Award shall not be  required to pay any  consideration  to the
Company upon  receipt of such Stock Award,  except as may be required to satisfy
applicable employment taxes and income tax withholding requirements.

                  (c) Conditions to Award.  All Stock Awards shall be subject to
such terms, conditions,
                                       A-7
<PAGE>
restrictions,   or  limitations  as  the  applicable  Plan  Administrator  deems
appropriate,  including,  by way of  illustration  but not by way of limitation,
restrictions  on   transferability,   requirements   of  continued   employment,
individual  performance or the financial  performance of the Company, or payment
by the recipient of any applicable  employment or withholding  taxes.  Such Plan
Administrator  may modify or  accelerate  the  termination  of the  restrictions
applicable to any Stock Award under the  circumstances as it deems  appropriate.
Notwithstanding the foregoing,  any Stock received by an affiliate pursuant to a
Stock  Award  must be held for a period  of six  months  after the grant of such
Stock Award.

                  (d) Award  Agreements.  A Plan  Administrator may require as a
condition to a Stock Award that the  recipient of such Stock Award enter into an
award agreement in such form and content as that Plan Administrator from time to
time approves.

Section 2.3       Terms and Conditions of SARs

                  (a)  Eligibility.  All Eligible  persons  shall be eligible to
receive SARs. The Plan  Administrator of each administered group shall determine
the SARs to be awarded from time to time to any  Eligible  Person in such group.
The grant of an SAR to a person  shall  neither  entitle  such  person  to,  nor
disqualify  such  person  from  participation  in, any other grant of options or
awards by the Company,  whether  under this Plan or under any other stock option
or award plan of the Company.

                  (b)  Award of SARs.  Concurrently  with or  subsequent  to the
grant  of  any  Option  to  purchase  one  or  more  shares  of  Stock,  a  Plan
Administrator may award to the Optionholder with respect to each share of Stock,
a related SAR permitting the  Optionholder  to be paid the  appreciation  on the
Stock  underlying  the Option in lieu of exercising the Option.  In addition,  a
Plan  Administrator  may  award to any  Eligible  Person an SAR  permitting  the
Eligible Person to be paid the appreciation on a designated  number of shares of
the Stock, whether or not such Shares are actually issued.

                  (c)  Conditions  to SAR.  All SARs  shall be  subject  to such
terms,   conditions,   restrictions   or  limitations  as  the  applicable  Plan
Administrator  deems appropriate,  including,  by way of illustration but not by
way of limitation,  restrictions of  transferability,  requirements of continued
employment,  individual  performance,  financial  performance of the Company, or
payment by the recipient of any applicable employment or withholding taxes. Such
Plan  Administrator may modify or accelerate the termination of the restrictions
applicable to any SAR under the circumstances as it deems appropriate.

                  (d) SAR  Agreements.  A Plan  Administrator  may  require as a
condition  to the grant of an SAR that the  recipient  of such SAR enter into an
SAR agreement in such form and content as that Plan  Administrator  from time to
time approves.

                  (e)  Exercise.  An Eligible  Person who has been granted a SAR
may exercise such SAR subject to the  conditions  specified in the SAR agreement
by the Plan Administrator.

                  (f)  Amount of  Payment.  The  amount of  payment to which the
grantee of an SAR shall be entitled upon the exercise of each SAR shall be equal
to the amount, if any, by which the fair market value of the specified shares of
Stock on the exercise date exceeds the fair market value of the specified shares
of Stock on the  date  the  Option  related  to the SAR was  granted  or  became
effective,  or, if the SAR is not related to any Option, on the date the SAR was
granted or became effective.

                  (g) Form of  Payment.  The SAR may be paid in  either  cash or
Stock, as determined in the discretion of the applicable Plan  Administrator and
set forth in the SAR agreement. If the payment is in Stock, the number of shares
to be paid to the participant  shall be determined by dividing the amount of the
payment determined pursuant to Section 2.3(f) hereof by the fair market value of
a share of Stock on the exercise date of such SAR.
                                       A-8
<PAGE>
As soon as  practical  after  exercise,  the  Company  shall  deliver to the SAR
grantee a certificate or certificates for such shares of Stock.

                  (h) Termination of Employment; Death. Sections 2.1(j), (k) and
(l), applicable to Options, shall apply equally to SARs.

                  (i)  Nonassignability.  Except as  otherwise  provided  by the
Board and set forth in an SAR Agreement, no SAR granted under the Plan or any of
the rights and privileges  conferred thereby shall be assignable or transferable
by a grantee other than by will or the laws of decent and distribution, and such
SAR shall be exercisable during the grantee's lifetime only by the grantee.

Section 2.4       Tax Withholding

                  (a) General.  The Company's  obligation  to deliver  shares of
Stock upon the  exercise of Options or the vesting of Awards shall be subject to
the  satisfaction  of all  applicable  Federal,  State and local  income tax and
employment tax withholding requirements.

                  (b) Shares to Pay for Withholding.  A Plan  Administrator may,
in its discretion  and in accordance  with the provisions of this Section 2.4(b)
and such  supplemental  rules as the Plan  Administrator  may from  time to time
adopt  (including  the  applicable  safe-harbor  provisions  of SEC Rule 16b-3),
provide any or all holders of  nonqualified  Options or unvested Awards with the
right to use shares of the Company's Stock in satisfaction of all or part of the
federal,  state and local income tax and employment tax liabilities  incurred by
such holders in connection  with the exercise of their Options or the vesting of
their  Awards  (the  "Taxes").  Such right may be provided to any such holder in
either or both of the following formats:

                           (i) Stock Withholding. The holder of the nonqualified
Option or unvested  Award may be provided  with the election to have the Company
withhold,  from the shares of Stock otherwise issuable upon the exercise of such
nonqualified Option or the vesting of such Award, a portion of those shares with
an aggregate fair market value equal to the  percentage of the applicable  Taxes
(not to exceed one hundred percent) designated by the holder.

                           (ii) Stock Delivery.  The Plan  Administrator may, in
its discretion,  provide the holder of the  nonqualified  Option or the unvested
Award with the election to deliver to the Company,  at the time the nonqualified
Option is exercised or the Award vests,  one or more shares of Stock  previously
acquired by such individual  (other than pursuant to the transaction  triggering
the Taxes) with an aggregate  fair market value equal to the  percentage  of the
Taxes incurred in connection  with such Option exercise or Award vesting (not to
exceed 100 percent) designated by the holder.

Section 2.5       Other Cash Awards

                  (a) In General.  The Plan  Administrator of each  administered
group shall have the discretion to make other awards of cash to Eligible Persons
in such group ("Cash  Awards").  Such Cash Awards may relate to existing Options
or to the appreciation in the value of the Stock or other Company securities.

                  (b)  Conditions to Award.  All Cash Awards shall be subject to
such terms,  conditions,  restrictions  or limitations  as the  applicable  Plan
Administrator  deems  appropriate,  and such Plan Administrator may require as a
condition to such Cash Award that the recipient of such Cash Award enter into an
award agreement in such form and content as the Plan  Administrator from time to
time approves.
                                       A-9
<PAGE>
                                   ARTICLE III
                                Automatic Program

Section 3.1       Terms and Conditions of Automatic Option Grants

                  (a) Amount and Date of Grant. Automatic Option Grants shall be
made to each Eligible Director ("Optionholder") as follows:

                           (i) Annual Grants. Each year on the Annual Grant Date
an Option to acquire  8,000  shares of Stock  shall be granted to each  Eligible
Director for so long as there are shares of Stock  available  under  Section 1.2
hereof.  The  "Annual  Grant  Date"  shall be the date of the  Company's  annual
shareholders meeting.  Notwithstanding the foregoing,  (A) any Eligible Director
whose term ended on the Annual  Grant Date shall not be  eligible to receive any
automatic option grants on that Annual Grant Date and (B) any Eligible  Director
who has received an Automatic Option Grant pursuant to Section 3.1(a)(ii) on the
same date as the Annual Grant Date or within 30 days prior thereto, shall not be
eligible to receive an Automatic Option Grant on that Annual Grant Date.

                           (ii)  Initial  New  Director  Grants.  On the Initial
Grant Date,  every new member of the Board who is an Eligible  Director  and has
not previously  been a member of the Board shall be granted an Option to acquire
10,000  shares of Stock as long as there are  shares  of Stock  available  under
Section 1.2 hereof.  The "Initial Grant Date" shall be the date that an Eligible
Director is first appointed or elected to the Board.

                  (b)  Exercise  Price.  The  exercise  price per share of Stock
subject to each Automatic Option Grant shall be equal to 100% of the fair market
value per share of the Stock on the date the Option was granted as determined in
accordance  with the  valuation  provisions  of Section 4.2 hereof (the  "Option
Price").

                  (c) Vesting.  Each  Automatic  Option  Grant made  pursuant to
Section 3.1(a) shall become exercisable and vest immediately upon grant.

                  (d) Method of  Exercise.  In order to  exercise an Option with
respect to any vested Optioned  Shares,  an  Optionholder  (or in the case of an
exercise  after  an   Optionholder's   death,  such   Optionholder's   executor,
administrator,  heir or  legatee,  as the case may be) must  take the  following
action:

                           (i)  execute  and  deliver  to the  Secretary  of the
Company a written notice of exercise signed in writing by the person  exercising
the Option  specifying  the number of shares of Stock with  respect to which the
Option is being exercised;

                           (ii)  pay the  aggregate  Option  Price in one of the
alternate forms as set forth in Section 3.1(e) below; and

                           (iii)  furnish  appropriate  documentation  that  the
person or persons exercising the Option (if other than the Optionholder) has the
right to exercise such Option.

As soon after the exercise date as practical,  the Company shall mail or deliver
to or on behalf of the Optionholder  (or any other person or persons  exercising
this Option in accordance  herewith) a certificate or certificates  representing
the Stock for  which  the  Option  has been  exercised  in  accordance  with the
provisions  of this  Plan.  In no event  may any  Option  be  exercised  for any
fractional shares.

                  (e) Payment Price. The aggregate Option price shall be payable
in one of the alternative forms specific below:

                           (i) full payment in cash or check made payable to the
Company's order; or
                                      A-10
<PAGE>
                           (ii) full  payment  in  shares of Stock  held for the
requisite period necessary to avoid a charge to the Company's  reported earnings
and  valued  at fair  market  value  on the  exercise  date  (as  determined  in
accordance with Section 4.2 hereof); or

                           (iii)  if  a  cashless   exercise  program  has  been
implemented by the Board,  full payment through a sale and remittance  procedure
pursuant  to which  the  Optionholder  (A)  shall  provide  irrevocable  written
instructions to a designated  brokerage firm to effect the immediate sale of the
Optioned  Shares  to be  purchased  and  remit to the  Company,  out of the sale
proceeds  available  on the  settlement  date,  sufficient  funds to  cover  the
aggregate exercise price payable for the Optioned Shares to be purchased and (B)
shall  concurrently  provide  written  directives  to the Company to deliver the
certificates for the Optioned Shares to be purchased  directly to such brokerage
firm in order to complete the sale transaction.

                  (f) Term of  Option.  Each  Option  shall  expire on the fifth
anniversary of the date on which an Automatic Option Grant was made ("Expiration
Date").  Should an  Optionholder's  Service as a Board member cease prior to the
Expiration  Date  for  any  reason  while  an  Option  remains  outstanding  and
unexercised,  then the Option term shall  immediately  terminate  and the Option
shall cease to be outstanding in accordance with the following provisions:

                           (i) The Option shall immediately  terminate and cease
to be  outstanding  for any shares of Stock which were not vested at the time of
Optionholder's cessation of Board service.

                           (ii)  Should an  Optionholder  cease,  for any reason
other than death, to serve as a member of the Board, then the Optionholder shall
have a 90 day period  measured from the date of such  cessation of Board service
in  which  to  exercise  the  Options  which  vested  prior  to the time of such
cessation of Board service.  In no event,  however,  may any Option be exercised
after the Expiration Date of such Option.

                           (iii) Should an  Optionholder  die while serving as a
Board  member or within  90 days  after  cessation  of Board  service,  then the
personal  representative of the Optionholder's  estate (or the person or persons
to whom the Option is  transferred  pursuant  to the  Optionholder's  will or in
accordance  with the laws of  descent  and  distribution)  shall have a one year
period measured from the date of the  Optionholder's  cessation of Board service
in  which  to  exercise  the  Options  which  vested  prior  to the time of such
cessation of Board service.  In no event,  however,  may any Option be exercised
after the Expiration Date of such Option.

                  (g) Limited Transferability.  Each Option shall be exercisable
only by  Optionholder  during  Optionholder's  lifetime  and  shall  be  neither
transferable  nor  assignable,  other than by will or by the laws of descent and
distribution following Optionholder's death.

Section 3.2       Tax Withholding

                  (a) General.  The  Company's  obligation to deliver Stock upon
the  exercise of Options  under the  Automatic  Program  shall be subject to the
satisfaction of all applicable  federal,  state and local income tax withholding
requirements.

                  (b)  Shares  to Pay for  Withholding.  The Board  may,  in its
discretion and in accordance with the provisions of this Section 3.2(b) and such
supplemental  rules as it may from time to time adopt  (including the applicable
safe-harbor provisions of SEC Rule 16b-3), provide any or all Optionholders with
the right to use shares of Stock in  satisfaction of all or part of the federal,
state and  local  income  tax  liabilities  incurred  by such  Optionholders  in
connection  with the  exercise  of their  Options  ("Taxes").  Such right may be
provided to any such Optionholder in either or both of the following formats:

                           (i)  Stock  Withholding.   The  Optionholder  may  be
provided with the election to have
                                      A-11
<PAGE>
the Company  withhold,  from the Stock  otherwise  issuable upon the exercise of
such Option,  a portion of those  shares of Stock with an aggregate  fair market
value  equal to the  percentage  of the  applicable  Taxes  (not to  exceed  100
percent) designated by the Optionholder.

                           (ii)  Stock   Delivery.   The  Board   may,   in  its
discretion,  provide  the  Optionholder  with the  election  to  deliver  to the
Company,  at the time the  Option  is  exercised,  one or more  shares  of Stock
previously  acquired by such individual  (other than pursuant to the transaction
triggering  the  Taxes)  with  an  aggregate  fair  market  value  equal  to the
percentage of the taxes incurred in connection with such Option exercise (not to
exceed 100 percent) designated by the Optionholder.


                                   ARTICLE IV
                                  Miscellaneous

Section 4.1       Certain Adjustments

                  (a) Capital  Adjustments.  The  aggregate  number of shares of
Stock subject to the Plan, the number of shares  covered by outstanding  Options
and Awards, the number of shares of Stock covered by unissued Automatic Options,
and the price per share  stated in all  outstanding  Options and Awards shall be
proportionately  adjusted  for  any  increase  or  decrease  in  the  number  of
outstanding  shares of Stock of the  Company  resulting  from a  subdivision  or
consolidation  of shares or any other  capital  adjustment  or the  payment of a
stock  dividend  or any other  increase or decrease in the number of such shares
effected  without  the  Company's  receipt of  consideration  therefor in money,
services or property.

                  (b) Mergers,  Etc. If the Company is the surviving corporation
in any merger or consolidation, any Option or Award granted under the Plan shall
pertain to and apply to the securities to which a holder of the number of shares
of Stock  subject to the Option or Award would have been  entitled  prior to the
merger or consolidation. A dissolution or liquidation of the Company shall cause
every  Option  or  Award  outstanding  hereunder  to  terminate.   A  merger  or
consolidation in which the Company is not the surviving  corporation  shall also
cause  every  Option  or Award  outstanding  hereunder  to  terminate,  but each
Optionholder or grantee of an Award shall have the right,  immediately  prior to
such  merger  or   consolidation  in  which  the  Company  is  not  a  surviving
corporation,  to  exercise  his  vested  Options  or Awards in whole or in part,
subject to the other provisions of this Plan.

                  (c) Change in Control.  With respect to any Change in Control,
a Plan Administrator shall have the discretion and authority, exercisable at any
time,  whether  before  or after the  Change  in  Control,  to  provide  for the
automatic  acceleration of one or more outstanding  Options or Awards granted by
it under  the  Discretionary  Program  upon the  occurrence  of such  Change  in
Control.  A Plan  Administrator  may also impose  limitations upon the automatic
acceleration of such Options or Awards to the extent it deems  appropriate.  Any
Options  or  Awards  accelerated  upon a Change in  Control  will  remain  fully
exercisable until the expiration or sooner termination of the Option term.

                  (d) Incentive Stock Option Limits.  The  exercisability of any
Options  which are intended to qualify as incentive  stock options and which are
accelerated  under the Plan in connection  with a Change in Control shall remain
subject to the $100,000 Limitation and shall vest as quickly as possible without
violating the $100,000 Limitation.

Section 4.2       Calculation of Fair Market Value of Stock

                  The fair market value of a share of Stock on any relevant date
shall be determined in accordance with the following provisions:
                                      A-12
<PAGE>
                  (a) If the  Stock is not at the time  listed  or  admitted  to
trading on any stock exchange but is traded in the over-the-counter  market, the
fair  market  value shall be the mean  between the highest bid and lowest  asked
prices (or, if such  information  is available,  the closing  selling price) per
share of Stock on the date in question in the  over-the-counter  market, as such
prices are reported by the National  Association of Securities  Dealers  through
its Nasdaq  system or any  successor  system.  If there are no reported  bid and
asked prices (or closing  selling  price) for the Stock on the date in question,
then the mean  between  the  highest  bid price and lowest  asked  price (or the
closing  selling  price) on the last  preceding  date for which such  quotations
exist shall be determinative of fair market value.

                  (b) If the Stock is at the time  listed or admitted to trading
on any stock  exchange,  then the fair market value shall be the closing selling
price  per  share  of  Stock  on the  date in  question  on the  stock  exchange
determined by the Board to be the primary market for the Stock, as such price is
officially  quoted in the composite tape of  transactions  on such exchange.  If
there is no reported  sale of Stock on such  exchange  on the date in  question,
then the fair market value shall be the closing selling price on the exchange on
the last preceding date for which such quotation exists.

                  (c) If the Stock at the time is neither listed nor admitted to
trading on any stock exchange nor traded in the  over-the-counter  market,  then
the fair market value shall be determined by the Board after taking into account
such  factors  as the  Board  shall  deem  appropriate,  including  one or  more
independent professional appraisals.

Section 4.3       Use of Proceeds

                  The  proceeds  received by the Company  from the sale of Stock
pursuant to the exercise of Options or Awards  hereunder,  if any, shall be used
for general corporate purposes.

Section 4.4       Regulatory Approvals

                  The  implementation of the Plan, the granting of any Option or
Award hereunder,  and the issuance of Stock upon the exercise of any such Option
or Award shall be subject to the procurement by the Company of all approvals and
permits required by regulatory  authorities  having  jurisdiction over the Plan,
the Options or Awards granted under it and the Stock issued pursuant to it.

Section 4.5       Indemnification

                  In addition to such other  rights of  indemnification  as they
may have, the members of the Plan  Administrator  shall be indemnified  and held
harmless by the Company, to the extent permitted under applicable law, for, from
and against all costs and  expenses  reasonably  incurred by them in  connection
with any action,  legal proceeding to which any member thereof may be a party by
reason of any action taken,  failure to act under or in connection with the Plan
or any  rights  granted  thereunder  and  against  all  amounts  paid by them in
settlement  thereof or paid by them in  satisfaction  of a judgment  of any such
action, suit or proceeding, except a judgment based upon a finding of bad faith;
provided  that upon the  institution  of any such action,  suit or  proceeding a
Board member shall in writing give the Company notice thereof an opportunity, at
its own  expense,  to handle  and  defend  the same  before  such  Board  member
undertakes to handle and defend it on his or her own behalf.

Section 4.6       Plan Not Exclusive

                  This Plan is not intended to be the  exclusive  means by which
the Company may issue options or warrants to acquire its Stock,  stock awards or
any other type of award.  To the extent  permitted by  applicable  law, any such
other  option,  warrants  or  awards  may be issued by the  Company  other  than
pursuant to this Plan without shareholder approval.
                                      A-13
<PAGE>
Section 4.7       Governing Law

                  The Plan  shall be  governed  by,  and all  questions  arising
hereunder  shall be  determined  in  accordance  with,  the laws of the State of
Arizona.

Section 4.8       Securities Restrictions

                  (a)  Legend on  Certificates.  Except as  provided  in Section
4.8(c)  hereof,  all  certificates  representing  shares  of Stock  issued  upon
exercise of Options or Awards  granted  under the Plan shall be endorsed  with a
legend reading as follows:

                  The shares of Common Stock evidenced by this  certificate have
                  been issued to the  registered  owner in reliance upon written
                  representations  that these shares have been purchased  solely
                  for investment.  These shares may not be sold,  transferred or
                  assigned  unless in the  opinion of the  Company and its legal
                  counsel  such  sale,  transfer  or  assignment  will not be in
                  violation of the Securities  Act of 1933, as amended,  and the
                  rules and regulations thereunder.

                  (b) Private Offering for Investment  Only.  Except as provided
in Section 4.8(c) hereof, the Options and Awards are and shall be made available
only to a limited  number of present and future key executives and key employees
who have  knowledge of the Company's  financial  condition,  management  and its
affairs. The Plan is not intended to provide additional capital for the Company,
but to encourage  ownership of Stock among the Company's key  personnel.  By the
act of accepting an Option or Award, each grantee agrees (i) that, any shares of
Stock acquired will be solely for investment not with any intention to resell or
redistribute  those  shares  and (ii) such  intention  will be  confirmed  by an
appropriate  certificate  at the time the  Stock is  acquired.  The  neglect  or
failure to execute such a  certificate,  however,  shall not limit or negate the
foregoing agreement.

                  (c)  Registration   Statement.  If  a  Registration  Statement
covering the shares of Stock issuable upon exercise of options granted under the
Plan as filed under the  Securities  Exchange  Act of 1933,  as amended,  and as
declared  effective by the  Securities  Exchange  Commission,  the provisions of
Sections  4.8(a)  and (b) shall  terminate  during  the period of time that such
Registration Statement, as periodically amended, remains effective.

Section 4.9       Definitions

                  The following  capitalized  terms used in this Plan shall have
the meaning described below:

                  "Affiliates"  shall  mean  all  "officers"  (as  that  term is
defined in Rule  16a-1(f)  promulgated  under the 1934 Act) and directors of the
Company and all persons who own 10 percent or more of the  Company's  issued and
outstanding Stock.

                  "Annual  Grant  Date"  shall  mean the  date of the  Company's
annual shareholder meeting.

                  "Automatic  Option  Grant" shall mean those  automatic  option
grants made pursuant to the  Automatic  Program on the Annual Grant Date, on the
Initial Grant Date,  and on the date that the Second  Restated Plan was approved
by the shareholders of the Company.

                  "Automatic  Program"  shall  mean  that  portion  of the  Plan
relating to the Options issued automatically under Article III hereof.

                  "Award" shall mean a Stock Award, SAR or Cash Award.
                                      A-14
<PAGE>
                  "Board" shall mean the Board of Directors of the Company.

                  "Cash  Award"  shall  mean an  award  to be  paid in cash  and
granted under Section 2.5 hereunder.

                  "Change in Control"  shall mean (i) a person or related  group
of  persons,  other than the Company or a person  that  directly  or  indirectly
controls,  is controlled by, or under common control with the Company,  acquires
ownership  of 40  percent  or more of the  Company's  outstanding  common  stock
pursuant to a tender or exchange  offer which the Board of Directors  recommends
that  the  Company's  shareholders  not  accept,  or  (ii)  the  change  in  the
composition of the Board occurs such that those  individuals who were elected to
the Board at the last  shareholders'  meeting at which there was not a contested
election for Board membership  subsequently ceased to comprise a majority of the
Board by reason of a contested election.

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

                  "Company" shall mean Action  Performance  Companies,  Inc., an
Arizona corporation.

                  "Discretionary  Program"  shall mean that  portion of the Plan
relating  to the  Options  and  Awards  issued  in the  discretion  of the  Plan
Administrator pursuant to Article II hereof.

                  "Effective Date" shall mean September 4, 1996.

                  "Eligible Directors"  shall mean non-employee Board members.

                  "Eligible  Persons"  shall mean those persons who, at the time
that the Option or Award is granted,  are (i) key personnel (including officers)
of the Company or parent or subsidiaries of the Company,  or (ii) consultants or
independent  contractors who provide valuable  services to the Company or parent
or subsidiaries of the Company.

                  "Employee  Committee"  shall mean that committee  appointed by
the  Board to  administer  the  Plan  with  respect  to the  Non-Affiliates  and
comprised of two or more persons who are members of the Board and/or officers of
the Company.

                  "First  Restated  Plan"  shall mean the Plan  amended  through
January 14, 1993 as approved by the Board and the shareholders of the Company on
January 14, 1993.

                  "Fourth  Restated  Plan"  shall mean the Plan  approved by the
Board on the Effective Date, as amended through January 16, 1997.

                  "Initial  Grant  Date"  shall  mean the date that an  Eligible
Director is first appointed or elected to the Board.

                  "Non-Affiliates"  shall mean all Eligible  Persons who are not
Affiliates.

                  "Non-Employee   Directors"  shall  mean  those  Directors  who
satisfy the  definition of  "Non-Employee  Director"  under Rule  16b-3(b)(3)(i)
promulgated under the 1934 Act.

                  "$100,000  Limitation"  shall mean the limitation in which the
aggregate fair market value  (determined  as of the respective  date or dates of
grant) of the Stock for which one or more  Options  granted to any person  under
this Plan (or any other  option plan of the Company or its parent or  subsidiary
corporations)  may for the first time be exercisable as incentive  stock options
under  the Code  during  any one  calendar  year  shall  not  exceed  the sum of
$100,000.
                                      A-15
<PAGE>
                  "Optionholder"  shall  mean an  Eligible  Person  or  Eligible
Director to whom Options have been granted.

                  "Optioned  Shares"  shall  be  those  shares  of  Stock  to be
optioned from time to time to any Eligible Person or Eligible Director.

                  "Options" shall mean options granted under the Plan to acquire
Stock.

                  "Plan"   shall  mean  this  stock   option   plan  for  Action
Performance Companies, Inc.

                  "Plan  Administrator"  shall  mean (a) either the Board or the
Senior Committee,  with respect to the  administration of the Plan as it relates
to Affiliates and (b) either the Board or the Employee  Committee,  with respect
to the administration of the Plan as it relates to Non-Affiliates.

                  "SAR" shall mean stock appreciation rights granted pursuant to
Section 2.3 hereunder.

                  "Second Effective Date" shall mean January 11, 1994.

                  "Second  Restated  Plan"  shall mean the Plan  approved by the
Board on January 11, 1994 and approved by the Company's shareholders on July 12,
1994.

                  "Senior Committee" shall mean that committee  appointed by the
Board to administer the Plan with respect to the Affiliates and comprised of two
or more Non-Employee Directors.

                  "Service"  shall have the meaning set forth in Section  2.1(n)
hereof.

                  "Stock" shall mean shares of the Company's  common stock which
may be unissued or treasury shares as the Board may from time to time determine.

                  "Stock  Awards"  shall mean Stock  directly  granted under the
Plan.

                  "Third  Restated  Plan"  shall mean the Plan  approved  by the
Board on July 3, 1995 and approved by the Company's shareholders on February 28,
1996.

                  EXECUTED this 16th day of January, 1997.

                                           ACTION PERFORMANCE COMPANIES,
                                           INC., an Arizona corporation


                                           By:     /s/ Fred W. Wagenhals
                                              ---------------------------------
                                           Its:    President
                                              ---------------------------------
ATTESTED BY:


/s/ Tod Wagenhals
-------------------------
Secretary
                                      A-16