Document:

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                                                                     EXHIBIT 4.3

                         ASSISTED LIVING CONCEPTS, INC.

                          REGISTRATION RIGHTS AGREEMENT

                           Dated as of January 1, 2002
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                                                                     EXHIBIT 4.3

                                TABLE OF CONTENTS

            This Table of Contents is not part of the Agreement to which it is
attached but is inserted for convenience only.

<TABLE>
<CAPTION>
                                                                        Page No.
                                                                        --------
<S>                                                                     <C>
1.   Shelf Registration...............................................      1

2.   Demand Registrations.............................................      2

3.   Piggyback Registrations..........................................      4

4.   Migration to Short-Form..........................................      4

5.   Registration Procedures..........................................      5

6.   Underwritten Demand Offerings....................................      8

7.   Holdback Agreements..............................................      9

8.   Indemnification by the Company...................................     10

9.   Covenants Relating to Rule 144...................................     13

10.  Registration Expenses............................................     13

11.  Other Registration Rights........................................     13

12.  Transfer or Assignment of Registration Rights....................     14

13.  Termination of Registration Rights...............................     14

14.  Definitions......................................................     14

15.  Miscellaneous....................................................     17
</TABLE>

                                       i
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                                                                     EXHIBIT 4.3

                         ASSISTED LIVING CONCEPTS, INC.

                          REGISTRATION RIGHTS AGREEMENT

            This REGISTRATION RIGHTS AGREEMENT dated as of January 1, 2002 is
made and entered into by and among the investors signatory identified on Annex I
attached hereto (collectively, the "Investors"), and ASSISTED LIVING CONCEPTS,
INC., a Nevada corporation (the "Company").

                                    RECITALS

      A.    WHEREAS, pursuant to Section 3.02 of the Company's Joint
Consolidated Plan of Reorganization under Chapter 11 of the Bankruptcy Code, as
the same may have been amended or supplemented from time to time prior to the
date hereof and has been approved by the United States Bankruptcy Court for the
District of Delaware (the "Plan"), the Company shall issue 6,240,000 shares of
New Common Stock (the "Registrable Equity Securities"), representing, in the
aggregate, 96% of the New Common Stock, 10% senior secured notes due 2009 (the
"Senior Notes") and junior secured notes due 2012 (the "Junior Notes" and,
together with the Senior Notes, collectively known as the "Registrable Debt
Securities") to holders of Allowed Claims in Class 4 ("General Unsecured
Claims") to discharge and release certain outstanding claims against the
Company. All capitalized terms used and not otherwise defined herein shall have
the meanings assigned them in the Plan.

      B.    In order to induce the Investors to accept the Registrable Equity
Securities and the Registrable Debt Securities (collectively known as the
"Registrable Securities") in exchange for the discharge and release of their
General Unsecured Claims, and as a condition precedent to such acceptance, the
Plan requires that the Company enter into this Agreement with the Investors
simultaneously with its issuance of Registrable Securities to the Investors.

                              AGREEMENT PROVISIONS

            In consideration of the mutual covenants and agreements set forth in
this Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which each party acknowledges, the Investors and the Company
agree as follows:

      1.    Shelf Registration.

            (a)   Within 90 Business Days of the Effective Date, but no later
than March 31, 2002, the Company shall file with the Commission a Registration
Statement (the "Shelf Registration") relating to the offer and sale of
Registrable Securities by the Holders to the public, from time to time, on a
delayed or continuous basis (but not involving any underwriting). The Company
shall use its reasonable best efforts to cause the Shelf Registration to be
declared effective by the Commission as soon as practicable thereafter.
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                                                                     EXHIBIT 4.3

            (b)   The Company agrees to use its reasonable best efforts to keep
the Shelf Registration continuously effective in order to permit the prospectus
included therein to be usable by the Holders until the earlier of : (1) the date
all Holders call sell shares free of any volume limitations imposed by Rule 144;
(2) the date all Holders have disposed of all Registrable Securities; or (3)
three years from the date of issuance of the Registrable Securities; provided,
that the Company shall be deemed not to have used its reasonable best efforts to
keep the Registration Statement effective during the requisite period if it
voluntarily takes any action that would result in Holders of the Registrable
Securities covered thereby not being able to offer and sell such Registrable
Securities during that period, unless such action is required by applicable law,
and provided, further, that the foregoing shall not apply to actions if the
Company determines, in its reasonable judgment, upon advice of counsel, as
authorized by a resolution of its Board of Directors, that the filing of such
Registration Statement or the maintenance of effectiveness of such Registration
Statement would (i) require the disclosure of material information, which the
Company has a bona fide business reason for preserving as confidential, or (ii)
interfere with any financing, acquisition, corporate reorganization or other
material transaction involving the Company or any of its Affiliates (as defined
in the rules and regulations adopted under the Exchange Act); provided, however,
that the failure to keep the Registration Statement effective and usable for
offers and sales of Registrable Securities for such reasons shall last no longer
than 75 days in any 12-month period.

      2.    Demand Registrations.

            (a)   If the Company shall receive from Initiating Holders at any
time or times not earlier than six months from the Effective Date a written
request that the Company effect any registration with respect to all or a part
of the Registrable Securities for the purpose of undertaking an underwritten
offering of Registrable Securities (a "Demand Registration"), the Company will
(i) promptly give written notice of the proposed registration to all other
Holders; and (ii) as soon as practicable, use its best efforts to effect such
registration (including, without limitation, filing post-effective amendments,
appropriate qualifications under applicable blue sky or other state securities
laws, and appropriate compliance with the Securities Act) and as would permit or
facilitate the sale and distribution of all or such portion of such Registrable
Securities as are specified in such request, together with all or such portion
of the Registrable Securities of any Holder or Holders joining in such request
as are specified in a written request received by the Company within 20 days
after such written notice from the Company is mailed or delivered. "Initiating
Holders" means Holders which, in the aggregate, propose to sell their
Registrable Securities at an aggregate offering price (calculated based upon the
Market Price of the Registrable Securities on the date of filing of the
Registration Statement with respect to such Registrable Securities) to the
public of at least $15,000,000.

            (b)   The Company shall not be obligated to effect, or to take any
action to effect, any such registration of the same class of Registrable
Securities pursuant to Section 2(a), after the Company has initiated two such
registrations pursuant to this Section 2(a) (counting for these purposes only
registrations which have been declared or ordered effective and pursuant to
which securities have been sold); provided that if Holders shall have been
prevented from selling any Registrable Equity Securities by reason of an
allocation under Section 2(d), the Holders may effect one additional Demand
Registration of the applicable class of Registrable Securities. The

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                                                                     EXHIBIT 4.3

Company shall also not be obligated to initiate any Demand Registration for the
same class of Registrable Securities until six months after the Effective Date
of any prior Registration and shall not be obligated to initiate any Demand
Registration for any Registrable Securities until four months after the
effective date of any prior Registration.

            (c)   Subject to Section 2(b), the Company shall file a Registration
Statement covering the Registrable Securities so requested to be registered
together with any additional Registrable Securities of Holders who were not
Initiating Holders but who, after notice of such Demand Registration, request
the inclusion of additional Registrable Securities, as soon as practicable after
receipt of the request or requests of the Initiating Holders. The Registration
Statement filed pursuant to the request of the Initiating Holders may, subject
to Section 2(d), include other securities of the Company with respect to which
the Company allows registration rights.

            (d)   In the event that the Company includes in any Demand
Registration pursuant to Section 2(a) securities other than securities of
Holders of the same class as the Registrable Securities pursuant to Section
2(c), each Holder shall have the right to participate pro rata in any such
Demand Registration, in accordance with the number of Registrable Securities of
each class sought to be registered by the Holders exercising registration
rights. The Company will include Registrable Securities in such registration to
the extent of the amount of the securities which the Managing Underwriter
advises the Company and the Holders can be sold in such offering. There shall be
no reduction of the number of Registrable Securities requested to be included in
such registration unless and until there is first reduced, to zero, any other
securities of the Company with respect to which the Company allows registration
rights.

            (e)   Notwithstanding any of the foregoing, the Company may postpone
taking action with respect to a Demand Registration for a reasonable period of
time after receipt of the original request (not exceeding 120 days) if, in the
reasonable judgment of the Company's Board of Directors, effecting the
registration would adversely affect a financing, acquisition, disposition of
assets or stock, tender offer, consolidation, merger or other comparable
transaction or would require the Company to make public disclosure of
information the public disclosure of which would have a material adverse effect
upon the Company, provided that the Company shall not delay such action pursuant
to this sentence more than once in any 12-month period.

            (f)   Notwithstanding anything to the contrary contained herein, at
any time within 20 days after receiving a written request for a Demand
Registration of Registrable Equity Securities, the Company may elect to effect
an underwritten primary registration in lieu of the Demand Registration if the
Company's Board of Directors believes that such primary registration would be in
the best interests of the Company or if the Managing Underwriter for the Demand
Registration advises the Company in writing that in its opinion, in order to
sell the Registrable Equity Securities to be sold, the Company should include
its own securities. If the Company so elects to effect a primary registration of
equity securities, the Company shall give prompt written notice to all holders
of Registrable Equity Securities of its intention to effect such a registration
and shall afford the holders of the Registrable Equity Securities rights
contained in Section 3 with respect to Piggyback Registrations. In the event
that the Company so elects to effect a primary registration after receiving a
request for a Demand Registration, the request for a

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                                                                     EXHIBIT 4.3

Demand Registration shall be deemed to have been withdrawn and such primary
registration shall not be deemed to be a Demand Registration.

      3.    Piggyback Registrations

            (a)   Right to Include Registrable Securities. In the event that the
Company at any time proposes after the date hereof to effect a Piggyback
Registration, it will each such time give prompt written notice (a "Notice of
Piggyback Registration"), at least 30 days prior to the anticipated filing date,
to all Holders of its intention to do so and of such Holders' rights under this
Section 3, which Notice of Piggyback Registration shall include a description of
the intended method of disposition of such securities. Upon the written request
of any such Holder (each a "Requesting Holder") made within 20 days after
receipt of a Notice of Piggyback Registration (which request shall specify the
Registrable Securities intended to be disposed of by such Holder) the Company
will, subject to the other provisions of this Agreement, include in the
Registration Statement relating to such Piggyback Registration all Registrable
Equity Securities which the Company has been so requested to register.
Notwithstanding the foregoing, if, at any time after giving a Notice of
Piggyback Registration and prior to the effective date of the Registration
Statement filed in connection with such Registration, the Company shall
determine for any reason not to register or to delay registration of such
securities, the Company may, at its election, give written notice of such
determination to each Holder and, thereupon, (i) in the case of a determination
not to register, shall be relieved of its obligation to register any Registrable
Equity Securities in connection with such registration (but not from its
obligation to pay the Registration Expenses in connection therewith) without
prejudice, however, to the rights of any Requesting Holder entitled to do so to
request that such registration be effected as a Demand Registration under
Section 2, and (ii) in the case of a determination to delay registering, shall
be permitted to delay registering any Registrable Equity Securities for the same
period as the delay in registering such other securities. No registration
effected under this Section 3 shall relieve the Company of its obligations to
effect a Demand Registration under Section 2.

            (b)   Priority in Cutback Registrations. If a Piggyback Registration
becomes a Cutback Registration, the Company will include in such registration to
the extent of the amount of the securities which the Managing Underwriter
advises the Company can be sold in such offering any Registrable Securities
requested to be included in such registration by Requesting Holders, pro-rata on
the basis of the number of Registrable Securities requested to be included by
such Holders. There shall be no reduction of the number of Registrable
Securities requested to be included in such registration unless and until there
is first reduced, to zero, any securities proposed to be included in such
registration by all other holders of the Company's securities.

      4.    Migration to Short-Form. If, during the period in which the Company
is obligated to maintain the Shelf Registration in effect, the Company becomes
qualified for registration on Forms S-2 or S-3 or any comparable or successor
form or forms for offers and sales by Holders, then, the Company may, in its
discretion, terminate the Shelf Registration and concurrently register the
Registrable Securities on such a short-form Registration Statement. The
obligations of the Company with respect to maintenance of the Registration
Statement and the prospectus included therein shall otherwise be as stated in
Section 1(b) above.

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                                                                     EXHIBIT 4.3

      5.    Registration Procedures. If and whenever the Company is required to
effect the registration of any Registrable Securities under the Securities Act
pursuant to Sections 1, 2, 3 and 4, the Company will use its best efforts to
effect the registration and sale of such Registrable Securities in accordance
with the intended method of disposition thereof. Without limiting the foregoing,
the Company in each such case will, as expeditiously as possible:

            (a)   prepare and file with the Commission (not later than 40 days
after the Company's receipt of the request therefor from the Initiating Holders
or as soon thereafter as possible) the requisite Registration Statement to
effect such registration and to cause such Registration Statement to become
effective, provided that as far in advance as practical before filing such
Registration Statement or any amendment thereto, the Company will furnish to the
Requesting Holders copies of reasonably complete drafts of all such documents
proposed to be filed (including exhibits), and any such Holder shall have the
opportunity to object to any information pertaining solely to such Holder that
is contained therein and the Company will make the corrections reasonably
requested by such Holder within three Business Days of the delivery of such
drafts to the Holder with respect to such information prior to filing any such
Registration Statement or amendment;

            (b)   prepare and file with the Commission such amendments and
supplements to such Registration Statement and any prospectus used in connection
therewith as may be necessary to maintain the effectiveness of such Registration
Statement and to comply with the provisions of the Securities Act with respect
to the disposition of all Registrable Securities covered by such Registration
Statement, in accordance with the intended methods of disposition thereof, until
the time set forth in Section 1(b) in the case of a Shelf Registration under
Section 1 or 4; and in the case of a registration under Sections 2 or 3 the
earlier of (i) such time as all of such securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof set forth in such Registration Statement and (ii) 180 days after such
Registration Statement becomes effective;

            (c)   promptly notify each Requesting Holder and the underwriter or
underwriters, if any:

                  (i) when such Registration Statement or any prospectus used in
                  connection therewith, or any amendment or supplement thereto,
                  has been filed and, with respect to such Registration
                  Statement or any post-effective amendment thereto, when the
                  same has become effective;

                  (ii) of any written comments from the Commission with respect
                  to any filing referred to in Section 5(c)(i) and of any
                  written request by the Commission for amendments or
                  supplements to such Registration Statement or prospectus;

                  (iii) of the notification to the Company by the Commission of
                  its initiation of any proceeding with respect to the issuance
                  by the Commission of, or of the issuance by the Commission of,
                  any stop order suspending the effectiveness of such
                  Registration Statement; and

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                                                                     EXHIBIT 4.3

                  (iv) of the receipt by the Company of any notification with
                  respect to the suspension of the qualification of any
                  Registrable Securities for sale under the applicable
                  securities or blue sky laws of any jurisdiction in the United
                  States;

            (d)   furnish to each seller of Registrable Securities covered by
such Registration Statement such number of conformed copies of such Registration
Statement and of each amendment and supplement thereto (in each case including
all exhibits and documents incorporated by reference therein), such number of
copies of the prospectus contained in such Registration Statement (including
each preliminary prospectus and any summary prospectus) and any other prospectus
filed under Rule 424 promulgated under the Securities Act relating to such
holder's Registrable Securities, and such other documents, as such seller may
reasonably request in writing to facilitate the disposition of its Registrable
Securities;

            (e)   use its best efforts to register or qualify all Registrable
Securities covered by such Registration Statement under such other securities or
blue sky laws of such jurisdictions in the United States as each holder thereof
shall reasonably request, to keep such registration or qualification in effect
for so long as such Registration Statement remains in effect, and take any other
action which may be reasonably necessary or advisable to enable such holder to
consummate the disposition in such jurisdictions of the Registrable Securities
owned by such holder, except that the Company shall not for any such purpose be
required (i) to qualify generally to do business as a foreign corporation or as
a dealer in securities in any jurisdiction wherein it would not but for the
requirements of this Section 5(e) be obligated to be so qualified, (ii) to
subject itself to taxation in any such jurisdiction or (iii) to consent to
general service of process in any jurisdiction;

            (f)   use its best efforts to cause all Registrable Securities
covered by such Registration Statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable each
holder thereof to consummate the disposition of such Registrable Securities;

            (g)   furnish to each Requesting Holder a signed counterpart,
addressed to such holder (and the underwriters, if any), of:

                  (i) an opinion of counsel for the Company, dated the effective
                  date of such Registration Statement (or, if such registration
                  includes an underwritten Public Offering, dated the date of
                  any closing under the underwriting agreement), reasonably
                  satisfactory in form and substance to such holder, and

                  (ii) a "comfort" letter, dated the effective date of such
                  Registration Statement (and, if such registration includes an
                  underwritten Public Offering, dated the date of any closing
                  under the underwriting agreement), signed by the independent
                  public accountants who have certified the Company's financial
                  statements included in such Registration Statement,

in each case covering substantially the same matters with respect to such
Registration Statement (and the prospectus included therein) and, in the case of
the accountants' letter, with respect to

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                                                                     EXHIBIT 4.3

events subsequent to the date of such financial statements, as are customarily
covered in opinions of issuer's counsel and in accountants' letters delivered to
the underwriters in underwritten Public Offerings of securities and, in the case
of the accountants' letter, such other financial matters, as such holder (or the
underwriters, if any) may reasonably request;

            (h)   notify each Holder of Registrable Securities covered by such
Registration Statement, at any time when a prospectus relating thereto is
required to be delivered by such Holder under the Securities Act, of the
happening of any event as a result of which any prospectus included in such
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, and at the request of any such
Holder promptly prepare and furnish to such holder a reasonable number of copies
of a supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such securities, such
prospectus shall not include an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;

            (i)   otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its
securityholders, as soon as reasonably practicable, an earnings statement
covering the period of at least 12 months, but not more than 18 months,
beginning with the first full calendar month after the effective date of such
Registration Statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 promulgated thereunder;

            (j)   make available for inspection by any Requesting Holder, any
underwriter participating in any disposition pursuant to such Registration
Statement and any attorney, accountant or other agent retained by any such
seller or underwriter (collectively, the "Inspectors"), all financial and other
records, pertinent corporate documents and properties of the Company
(collectively, the "Records") as shall be reasonably necessary to enable them to
exercise their due diligence responsibility, and cause the Company's officers,
directors and employees to supply all information reasonably requested by any
such Inspector in connection with such Registration Statement, and permit the
Inspectors to participate in the preparation of such Registration Statement and
any prospectus contained therein and any amendment or supplement thereto.
Records which the Company determines, in good faith, to be confidential and
which it notifies the Inspectors are confidential shall not be disclosed by the
Inspectors unless (i) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in the Registration Statement, (ii) the
release of such Records is ordered pursuant to a subpoena or other order from a
court of competent jurisdiction or (iii) the information in such Records has
been made generally available to the public. The seller of Registrable
Securities agrees by acquisition of such Registrable Securities that it will,
upon learning that disclosure of such Records is sought in a court of competent
jurisdiction, give prompt written notice to the Company and allow the Company,
at the Company's expense, to undertake appropriate action to prevent disclosure
of the Records deemed confidential;

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                                                                     EXHIBIT 4.3

            (k)   provide a transfer agent and registrar for all Registrable
Securities covered by such Registration Statement not later than the effective
date of such Registration Statement and assist in making certificates available
for sale and removing legends; and

            (l)   use its best efforts to cause all Registrable Securities
covered by such Registration Statement to be listed, upon official notice of
issuance, on any securities exchange on which any of the securities of the same
class as the Registrable Securities are then listed.

            The Company may require each Holder of Registrable Securities as to
which any registration is being effected to, and each such Holder, as a
condition to including Registrable Securities in such registration, shall,
furnish the Company with such information and affidavits regarding such holder
and the distribution of such securities as the Company may from time to time
reasonably request in writing in connection with such registration.

            Each Holder of Registrable Securities agrees by acquisition of such
Registrable Securities that upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 5(h), such Holder will
forthwith discontinue such holder's disposition of Registrable Securities
pursuant to the Registration Statement relating to such Registrable Securities
until such Holder's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 5(h) and, if so directed by the Company, will
deliver to the Company (at the Company's expense) all copies, other than
permanent file copies, then in such Holder's possession of the prospectus
relating to such Registrable Securities current at the time of receipt of such
notice. In the event the Company shall give any such notice, the period referred
to in Section 5(b) shall be extended by a number of days equal to the number of
days during the period from and including the giving of notice pursuant to
Section 5(h) and to and including the date when each holder of any Registrable
Securities covered by such Registration Statement shall receive the copies of
the supplemented or amended prospectus contemplated by Section 5(h).

      6.    Underwritten Demand Offerings. In the case of any underwritten
Public Offering being effected pursuant to a Demand Registration, the Managing
Underwriter and any other underwriter or underwriters with respect to such
offering shall be selected, after consultation with the Company, by the holders
of a majority of the Registrable Equity Securities to be included in such
underwritten offering with the consent of the Company, which consent shall not
be unreasonably withheld. The Company shall take all appropriate and reasonable
actions to expedite and facilitate an underwritten Public Offering, including
without limitation, entering into an underwriting agreement in customary form
with such underwriter or underwriters, which shall include, among other
provisions, indemnities to the effect and to the extent provided in Section 8,
and making available to such holders and underwriters appropriate officers of
the Company for meetings with prospective purchasers of the Registrable Equity
Securities and preparing and presenting to potential investors customary "road
show" material in a manner consistent with other new issuances of other
securities similar to the Registrable Equity Securities. The holders of
Registrable Equity Securities to be distributed by such underwriters shall be
parties to such underwriting agreement and may, at their option, require that
any or all of the representations and warranties by, and the other agreements on
the part of, the Company to and for the benefit of such underwriters also be
made to and for their benefit and that any or all of the conditions precedent to
the obligations of such underwriters under such underwriting

                                       8
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                                                                     EXHIBIT 4.3

agreement also be conditions precedent to their obligations. No holder of
Registrable Equity Securities shall be required to make any representations or
warranties to or agreements with the Company or the underwriters other than
representations, warranties or agreements regarding such holder and its
ownership of the securities being registered on its behalf and such holder's
intended method of distribution and any other representation required by law. No
Requesting Holder may participate in such underwritten offering unless such
holder agrees to sell its Registrable Equity Securities on the basis provided in
such underwriting agreement and completes and executes all questionnaires,
powers of attorney, indemnities and other documents reasonably required under
the terms of such underwriting agreement. If any Requesting Holder disapproves
of the terms of an underwriting, such holder may elect to withdraw therefrom and
from such registration by notice to the Company and the Managing Underwriter,
and each of the remaining Requesting Holders shall be entitled to increase the
number of Registrable Equity Securities being registered to the extent of the
Registrable Equity Securities so withdrawn in the proportion which the number of
Registrable Equity Securities being registered by such remaining Requesting
Holder bears to the total number of Registrable Equity Securities being
registered by all such remaining Requesting Holders.

      7.    Holdback Agreements

            (a)   By the Holders of Registrable Securities. If and to the extent
requested by the Managing Underwriter (or, in the case of a non-underwritten
Public Offering, the Company), each holder of Registrable Securities, by
acquisition of such Registrable Securities, agrees not to effect any public sale
or distribution (including a sale under any subsection of Rule 144 other than
subsection 144(k)) of the class or classes of securities specified below, or any
securities convertible into or exchangeable or exercisable for such securities:
(i) with respect to an offering of Registrable Equity Securities, any
Registrable Equity Securities, and with respect to an offering of Registrable
Debt Securities, any Registrable Debt Securities of the same class during the 14
days prior to and the 180 days after; and (ii) with respect to an offering of
Registrable Debt Securities, any other Registrable Debt Securities during the 7
days prior to and the 14 days after the effective date, in each case; the
effective date of any Registration Statement filed by the Company in connection
with an offering made pursuant to a Registration (or, in each case, for such
shorter period of time as is sufficient and appropriate, in the opinion of the
Managing Underwriter of an underwritten offering), in order to complete the sale
and distribution of the securities included in such registration), except as
part of such Registration Statement, whether or not such holder participates in
such registration.

            (b)   By the Company and Other Securityholders. Unless the Managing
Underwriter otherwise agrees, the Company agrees (x) not to effect any public
sale or distribution of its equity securities, or any securities convertible
into or exchangeable or exercisable for such securities, during the 14 days
prior to and the 180 days after the effective date of the Registration Statement
filed in connection with an underwritten offering made pursuant to a Demand
Registration (or for such shorter period of time as is sufficient and
appropriate, in the opinion of the Managing Underwriter, in order to complete
the sale and distribution of the securities included in such registration),
except as part of such underwritten registration and except pursuant to
registrations on Form S-4 or Form S-8 promulgated by the Commission or any
successor or similar forms thereto, and (y) to use its reasonable best efforts

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                                                                     EXHIBIT 4.3

to cause each holder (other than a Holder) of its equity securities, or of any
securities convertible into or exchangeable or exercisable for such securities,
in each case purchased from the Company at any time after the date of this
Agreement (other than in a Public Offering), to agree not to effect any such
public sale or distribution of such securities (including a sale under Rule
144), during such period.

      8.    Indemnification by the Company

            (a)   The Company shall, to the full extent permitted by law,
indemnify and hold harmless each seller of Registrable Securities included in
any Registration Statement filed in connection with a Demand Registration, its
directors and officers, and each other Person, if any, who controls any such
seller within the meaning of the Securities Act, against any losses, claims,
damages, expenses or liabilities, joint or several (together, "Losses"), to
which such seller or any such director or officer or controlling Person may
become subject under the Securities Act or otherwise, insofar as such Losses (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any such Registration Statement, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of a prospectus, in the
light of the circumstances under which they were made) not misleading, and the
Company will reimburse such seller and each such director, officer and
controlling Person for any legal or any other expenses reasonably incurred by
them in connection with investigating or defending any such Loss (or action or
proceeding in respect thereof); provided that the Company shall not be liable in
any such case to the extent that any such Loss (or action or proceeding in
respect thereof) arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in any such Registration
Statement, preliminary prospectus, final prospectus, summary prospectus,
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company or its legal counsel by or on behalf of the
Holder expressly for use in the preparation thereof. Such indemnity shall remain
in full force and effect regardless of any investigation made by or on behalf of
such seller or any such director, officer or controlling Person, and shall
survive the transfer of such securities by such seller. The Company shall also
indemnify each other Person who participates (including as an underwriter) in
the offering or sale of Registrable Securities, their officers and directors and
each other Person, if any, who controls any such participating Person within the
meaning of the Securities Act to the same extent as provided above with respect
to sellers of Registrable Securities.

            (b)   Indemnification by the Sellers. Each holder of Registrable
Securities which are included or are to be included in any Registration
Statement filed in connection with a Demand Registration, as a condition to
including Registrable Securities in such Registration Statement, shall, to the
full extent permitted by law, indemnify and hold harmless the Company, its
directors and officers, and each other Person, if any, who controls the Company
within the meaning of the Securities Act, against any Losses to which the
Company or any such director or officer or controlling Person may become subject
under the Securities Act or otherwise, insofar as such Losses (or actions or
proceedings, whether commenced or threatened, in respect thereof)

                                       10
<PAGE>
                                                                     EXHIBIT 4.3

arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any such Registration Statement, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, or any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein (in the case of a prospectus, in the
light of the circumstances under which they were made) not misleading, if such
untrue statement or alleged untrue statement or omission or alleged omission was
made in reliance upon and in conformity with written information furnished to
the Company or its legal counsel by or on behalf of such seller expressly for
use in the preparation of such Registration Statement, preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement; provided,
however, that the obligation to provide indemnification pursuant to this Section
8(b) shall be several, and not joint and several, among such Indemnifying
Parties on the basis of the number of Registrable Securities included in such
Registration Statement and the aggregate amount which may be recovered from any
holder of Registrable Securities pursuant to the indemnification provided for in
this Section 8(b) in connection with any registration and sale of Registrable
Securities shall be limited to the total proceeds received by such holder from
the sale of such Registrable Securities. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of the
Company or any such director, officer or controlling Person and shall survive
the transfer of such securities by such seller. Such holders shall also
indemnify each other Person who participates (including as an underwriter) in
the offering or sale of Registrable Securities, their officers and directors and
each other Person, if any, who controls any such participating Person within the
meaning of the Securities Act to the same extent as provided above with respect
to the Company.

            (c)   Notices of Claims, etc. Promptly after receipt by an
Indemnified Party of notice of the commencement of any action or proceeding
involving a claim referred to in Section 8 (a) or 8(b), such Indemnified Party
will, if a claim in respect thereof is to be made against an Indemnifying Party
pursuant to such paragraphs, give written notice to the latter of the
commencement of such action, provided that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under the preceding paragraphs of this Section 8, except to the
extent that the Indemnifying Party is actually prejudiced by such failure to
give notice. In case any such action is brought against an Indemnified Party,
the Indemnifying Party shall be entitled to participate in and, unless, in the
reasonable judgment of any Indemnified Party, a conflict of interest between
such Indemnified Party and any Indemnifying Party exists with respect to such
claim, to assume the defense thereof, jointly with any other Indemnifying Party
similarly notified to the extent that it may wish, with counsel reasonably
satisfactory to such Indemnified Party, and after notice from the Indemnifying
Party to such Indemnified Party of its election so to assume the defense
thereof, the Indemnifying Party shall not be liable to such Indemnified Party
for any legal or other expenses subsequently incurred by the latter in
connection with the defense thereof other than reasonable costs of
investigation; provided that the Indemnified Party may participate in such
defense at the Indemnified Party's expense; and provided further that the
Indemnified Party or Indemnified Parties shall have the right to employ one
counsel to represent it or them if, in the reasonable judgment of the
Indemnified Party or Indemnified Parties, it is advisable for it or them to be
represented by separate counsel by reason of having legal defenses which are

                                       11
<PAGE>
                                                                     EXHIBIT 4.3

different from or in addition to those available to the Indemnifying Party, and
in that event the reasonable fees and expenses of such one counsel shall be paid
by the Indemnifying Party. If the Indemnifying Party is not entitled to, or
elects not to, assume the defense of a claim, it will not be obligated to pay
the fees and expenses of more than one counsel for the Indemnified Parties with
respect to such claim, unless in the reasonable judgment of any Indemnified
Party a conflict of interest may exist between such Indemnified Party and any
other Indemnified Parties with respect to such claim, in which event the
Indemnifying Party shall be obligated to pay the fees and expenses of such
additional counsel for the Indemnified Parties or counsels. No Indemnifying
Party shall consent to entry of any judgment or enter into any settlement
without the consent of the Indemnified Party which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. No Indemnifying Party shall be subject to any liability for any
settlement made without its consent, which consent shall not be unreasonably
withheld.

            (d)   Contribution. If the indemnity and reimbursement obligation
provided for in any paragraph of this Section 8 is unavailable or insufficient
to hold harmless an Indemnified Party in respect of any Losses (or actions or
proceedings in respect thereof) referred to therein, then the Indemnifying Party
shall contribute to the amount paid or payable by the Indemnified Party as a
result of such Losses (or actions or proceedings in respect thereof) in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and the Indemnified Party on the other hand in connection
with statements or omissions which resulted in such Losses, as well as any other
relevant equitable considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by or on behalf of the Indemnifying Party or the
Indemnified Party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The parties hereto agree that it would not be just and equitable if
contributions pursuant to this paragraph were to be determined by pro- rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the first sentence of this
paragraph. The amount paid by an Indemnified Party as a result of the Losses
referred to in the first sentence of this paragraph shall be deemed to include
any legal and other expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any Loss which is the subject of this
paragraph.

            No Indemnified Party guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from the Indemnifying Party if the Indemnifying Party was not
guilty of such fraudulent misrepresentation.

            (e)   Other Indemnification. Indemnification similar to that
specified in the preceding paragraphs of this Section 8 (with appropriate
modifications) shall be given by the Company and each seller of Registrable
Securities with respect to any required registration or other qualification of
securities under any federal or state law or regulation of any United States
governmental authority other than the Securities Act. The provisions of this
Section 8 shall be in addition to any other rights to indemnification or
contribution which an Indemnified Party may have pursuant to law, equity,
contract or otherwise.

                                       12
<PAGE>
                                                                     EXHIBIT 4.3

            (f)   Indemnification Payments. The indemnification required by this
Section 8 shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, on the later of the date the claims are
received or Losses are incurred.

      9.    Covenants Relating to Rule 144. The Company will file reports in
compliance with the Exchange Act, will comply with all rules and regulations of
the Commission applicable in connection with the use of Rule 144 and take such
other actions and furnish such Holder with such other information as such Holder
may request in order to avail itself of such rule or any other rule or
regulation of the Commission allowing such Holder to sell any Registrable
Securities without registration, and will, at its expense, promptly upon the
request of any Holder of Registrable Securities, deliver to such Holder a
certificate, signed by the Company's principal financial officer, stating (a)
the Company's name, address and telephone number (including area code), (b) the
Company's Internal Revenue Service identification number, (c) the Company's
Commission file number, (d) the number of shares of each class of Stock
outstanding as shown by the most recent report or statement published by the
Company, and (e) whether the Company has filed the reports required to be filed
under the Exchange Act for a period of at least 90 days prior to the date of
such certificate and in addition has filed the most recent annual report
required to be filed thereunder. If at any time the Company is not required to
file reports in compliance with either Section 13 or Section 15(d) of the
Exchange Act, the Company at its expense will, promptly upon the written request
of the holder of any Registrable Securities, make available adequate current
public information with respect to the Company within the meaning of paragraph
(c)(2) of Rule 144.

      10.   Registration Expenses. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to
Sections 1, 2 and 3 and reasonable fees of one counsel for the selling
securityholders in the case of registrations pursuant to Section 2 shall be
borne by the Company; provided, however, that if the Holders bear the
Registration Expenses for any registration proceeding begun pursuant to Section
2 and subsequently withdrawn prior to the effective date thereof by the Holders
registering shares therein, such registration proceeding shall not be counted as
a Demand Registration pursuant to Section 2(a). Furthermore, in the event that a
withdrawal by the Holders is based upon material adverse information relating to
the Company that is different from the information known or available (upon
request from the Company or otherwise) to the Holders requesting registration at
the time of their request for registration under Section 2(a), such registration
shall not be treated as a counted registration for purposes of Section 2(a),
even though the Holders do not bear the Registration Expenses for such
registration. All selling expenses relating to securities so registered shall be
borne by the Holders of such securities pro rata on the basis of the amount of
securities so registered on their behalf, as shall any other expenses in
connection with the registration required to be borne by the Holders of such
securities.

      11.   Other Registration Rights

            (a)   No Existing Agreements. The Company represents and warrants to
the Investors that there is not in effect on the date hereof any agreement by
the Company (other than this Agreement) pursuant to which any holders of
securities of the Company have a right to

                                       13
<PAGE>
                                                                     EXHIBIT 4.3

cause the Company to register or qualify such securities under the Securities
Act or any securities or blue sky laws of any jurisdiction.

            (b)   Future Agreements. The Company shall not hereafter agree with
the holders of any securities issued or to be issued by the Company to register
or qualify such securities under the Securities Act or any securities or blue
sky laws of any jurisdiction unless such agreement specifically provides that
(i) such holder of such securities may not participate in any Demand
Registration; and (ii) such securities may not be publicly offered or sold for
the period specified in Section 7(a) under the circumstances described in such
Section.

      12.   Transfer or Assignment of Registration Rights. The registration
rights afforded by this Agreement may be transferred or assigned to any
transferee or assignee by a Holder of the lesser of (a) all of the Registrable
Securities held by such holder and (b) with respect to the Registrable Equity
Securities, 1% of the then outstanding shares of New Common Stock of the
Company, and, with respect to the Registrable Debt Securities, 1% of the Senior
Notes or Junior Notes, as applicable, provided that the Company is given written
notice at the time of or within a reasonable time after said transfer or
assignment, stating the name and address of the transferee or assignee and
identifying the securities with respect to which such registration rights are
being transferred or assigned, and, provided further, that the transferee or
assignee of such rights assumes in writing in a form reasonable satisfactory to
and addressed to the Company the obligations of such Holder under this
Agreement.

      13.   Termination of Registration Rights. The rights of any holder: (1) to
be an Initiating Holder pursuant to Section 2 shall terminate on the date such
Holder can sell Registrable Securities free of any volume limitations imposed by
Rule 144; (2) to request inclusion of Registrable Securities in any Demand
Registration otherwise properly noticed pursuant to Section 2 or any Piggyback
Registration pursuant to Section 3 shall terminate on the date all Holders of
Registrable Securities of the class subject to any applicable Registration can
sell such Registrable Securities free of any volume limitations imposed by Rule
144. In any case, all registration rights hereunder shall terminate on the
earlier of the date that Holders have disposed of all Registrable Securities and
the date that is three years from the date of issuance of the Registrable
Securities.

      14.   Definitions

            (a)   Except as otherwise specifically indicated, the following
terms will have the following meanings for all purposes of this Agreement:

            "Agreement" means this Registration Rights Agreement, as the same
shall be amended from time to time.

            "Business Day" means a day other than Saturday, Sunday or any other
day on which banks located in the State of California, New York or Oregon are
authorized or obligated to close.

            "Commission" means the United States Securities and Exchange
Commission, or any successor governmental agency or authority.

                                       14
<PAGE>
                                                                     EXHIBIT 4.3

            "Company" has the meaning ascribed to it in the preamble.

            "Cutback Registration" means any Demand Registration to be effected
as an underwritten Public Offering in which the Managing Underwriter with
respect thereto advises the Company and the Requesting Holders in writing that,
in its opinion, the number of securities requested to be included in such
registration (including securities of the Company which are not Registrable
Securities) exceeds the number which can be sold in such offering without a
reduction in the selling price anticipated to be received for the securities to
be sold in such Public Offering.

            "Demand Registration" means any registration of Registrable
Securities under the Securities Act effected in accordance with Section 2.

            "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.

            "Form S-2" means Form S-2 promulgated by the Commission under the
Securities Act, or any successor or similar short-form Registration Statement.

            "Form S-3" means Form S-3 promulgated by the Commission under the
Securities Act, or any successor or similar short-form Registration Statement.

            "Holder" means a person holding Registrable Securities that is a
party to this Agreement and any person to whom registration rights under this
Agreement have been transferred in accordance with Section 12.

            "Indemnified Party" means a party entitled to indemnity in
accordance with Section 8.

            "Indemnifying Party" means a party obligated to provide indemnity in
accordance with Section 8.

            "Initiating Holders" has the meaning ascribed to it in Section 2(a).

            "Inspectors" has the meaning ascribed to it in Section 5(j).

            "Losses" has the meaning ascribed to it in Section 8(a).

            "Market Price" means, with respect to the Registrable Securities, as
of the date of determination, (a) the average of the closing price per share of
a Registrable Security on the 10 immediately preceding trading dates published
in The Wall Street Journal or, if no such closing price on such dates is
published in The Wall Street Journal, the average of the closing bid and asked
prices on such date, as officially reported on the principal national securities
exchange (including, without limitation, The Nasdaq Stock Market, Inc.) on which
the Registrable Securities are then listed or admitted to trading; or (b) if the
Registrable Securities are not then listed or admitted to trading on any
national securities exchange but are designated as national market system
securities by the NASD, the average of the last trading price per share of a
Registrable Security on the 10 immediately preceding trading dates; or (c) if
there shall have been no trading on such date or if the Registrable Securities
are not so designated, the average of the reported closing bid and asked prices
of the Registrable Securities on each trading date in the immediately preceding
10 trading dates as shown by The Nasdaq Stock Market, Inc. (or its successor)
and reported by any member firm of The New York Stock Exchange, Inc. selected by

                                       15
<PAGE>
                                                                     EXHIBIT 4.3

the Company; or (d) if none of (a), (b) or (c) is applicable, a market price per
share determined in good faith by the Company's Board of Directors. If trading
is conducted on a continuous basis on any exchange, then the closing price shall
be determined as of 4.00 P.M. New York City time.

            "Managing Underwriter" means, with respect to any Public Offering,
the underwriter or underwriters managing such Public Offering.

            "NASD" means the National Association of Securities Dealers.

            "Person" means any natural person, corporation, general partnership,
limited partnership, proprietorship, other business organization, trust, union
or association.

            "Piggyback Registration" means any registration of equity securities
of the Company of the same class as the Registrable Equity Securities under the
Securities Act (other than a registration in respect of a dividend reinvestment
or similar plan for stockholders of the Company or on Form S-4 or Form S-8
promulgated by the Commission, or any successor or similar forms thereto),
whether for sale for the account of the Company or for the account of any holder
of securities of the Company (other than Registrable Securities) , including a
registration by the Company under the circumstances described in Section 2(f).

            "Plan" has the meaning ascribed to it in the preamble.

            "Public Offering" means any offering of New Common Stock to the
public, either on behalf of the Company or any of its securityholders, pursuant
to an effective Registration Statement.

            "Records" has the meaning ascribed to it in Section 5(j).

            "Registrable Debt Securities" has the meaning ascribed to it in the
preamble.

            "Registrable Equity Securities" has the meaning ascribed to it in
the preamble.

            "Registrable Securities" has the meaning ascribed to it in the
preamble.

            "Registration" means any Demand Registration or Piggy-back
Registration.

            "Registration Expenses" means all expenses incident to the Company's
performance of or compliance with its obligations under this Agreement to effect
any registration pursuant to this Agreement, including, without limitation, all
registration, filing, securities exchange listing and NASD fees, all
registration, filing, qualification and other fees and expenses of complying
with securities or blue sky laws, all word processing, duplicating and printing
expenses, messenger and delivery expenses, the fees and disbursements of counsel
for the Company and of its independent public accountants, including the
expenses of any special audits or "cold comfort" letters required by or incident
to such performance and compliance, the reasonable fees and disbursements of a
single counsel and single firm of accountants retained by the holders of a
majority of the Registrable Securities being registered, premiums and other
costs of policies of insurance against liabilities arising out of the Public
Offering of the Registrable Securities being registered and any fees and
disbursements of underwriters customarily paid by issuers or sellers of
securities, but excluding underwriting discounts and commissions and transfer
taxes, if any, in respect of Registrable Securities, and the separate legal fees
and expenses or other expenses incurred by Holders which shall be payable by
each Holder, provided that, such expenses shall not include salaries of Company
personnel or general overhead

                                       16
<PAGE>
                                                                     EXHIBIT 4.3

expenses of the Company, auditing fees, premiums or other expenses relating to
liability insurance required by underwriters of the Company or other expenses
for the preparation of financial statements or other data normally prepared by
the Company in the ordinary course of its business or which the Company would
have incurred in any event, which shall be paid in any event by the Company.

            "Registration Statement" means a Registration Statement filed
pursuant to the Securities Act.

            "Rule 144" means Rule 144 promulgated by the Commission under the
Securities Act, and any successor provision thereto.

            "Shelf Registration" has the meaning ascribed to it in Section 1.

            "Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.

            Unless the context of this Agreement otherwise requires, (i) words
of any gender include each other gender; (ii) words using the singular or plural
number also include the plural or singular number, respectively; (iii) the terms
"hereof," "herein," "hereby" and derivative or similar words refer to this
entire Agreement; and (iv) the term "Section" refers to the specified Section of
this Agreement. Whenever this Agreement refers to a number of days, such number
shall refer to calendar days unless Business Days are specified.

      15.   Miscellaneous

            (a)   Notices. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally or by facsimile transmission or courier service or mailed
(first class postage prepaid) to the parties at their respective addresses as
set forth on the signature pages hereto. With respect to any other holder of
Registrable Securities, such notices, requests and other communications shall be
sent to the addresses set forth in the stock transfer records regularly
maintained by the Company. All such notices, requests and other communications
will, if directed to the address or number on the signature page hereof or at
such other address or number as shall be notified in writing by the person to
whom it is addressed, (i) if delivered personally, be deemed given upon
delivery, (ii) if delivered by facsimile transmission, be deemed given upon
receipt, (iii) if delivered by courier service, be deemed given one day after
the date of courier receipt, and (iv) if delivered by mail, be deemed given upon
receipt. Any party from time to time may change its address, facsimile number or
other information for the purpose of notices to that party by giving notice
specifying such change to the other parties hereto.

            (b)   Entire Agreement. This Agreement supersedes all prior
discussions and agreements between the parties with respect to the subject
matter hereof, and contains the sole and entire agreement between the parties
hereto with respect to the subject matter hereof.

            (c)   Amendment. This Agreement may be amended, supplemented or
modified only by a written instrument (which may be executed in any number of
counterparts) duly executed by or on behalf of each of the Company and Holders
owning 60% or more of the then outstanding Registrable Securities.

                                       17
<PAGE>
                                                                     EXHIBIT 4.3

            (d)   Waiver. Subject to Section 15(e), any term or condition of
this Agreement may be waived at any time by the party that is entitled to the
benefit thereof, but no such waiver shall be effective unless set forth in a
written instrument duly executed by or on behalf of the party waiving such term
or condition. No waiver by any party of any term or condition of this Agreement,
in any one or more instances, shall be deemed to be or construed as a waiver of
the same term or condition of this Agreement on any future occasion.

            (e)   Consents and Waivers by Holders. Any consent of the Holders
pursuant to this Agreement, and any waiver by such holders of any provision of
this Agreement, shall be in writing (which may be executed in any number of
counterparts) and may be given or taken by Holders owning 60% or more of the
Registrable Securities, and any such consent or waiver so given or taken will be
binding on all the Holders.

            (f)   No Third Party Beneficiary. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto, their
respective successors or permitted assigns and any other Holder, and it is not
the intention of the parties to confer third-party beneficiary rights upon any
other Person other than any Person entitled to indemnity under Section 8.

            (g)   Successors and Assigns. This Agreement is binding upon, inures
to the benefit of and is enforceable by the parties hereto and their respective
successors and permitted assigns.

            (h)   Headings. The headings used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.

            (i)   Invalid Provisions. If any provision of this Agreement is held
to be illegal, invalid or unenforceable under any present or future law, and if
the rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (i) such provision will be fully
severable, (ii) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof
and (iii) the remaining provisions of this Agreement will remain in full force
and effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom.

            (j)   Remedies. Except as otherwise expressly provided for herein,
no remedy conferred by any of the specific provisions of this Agreement is
intended to be exclusive of any other remedy, and each and every remedy shall be
cumulative and shall be in addition to every other remedy given hereunder or now
or hereafter existing at law or in equity or by statute or otherwise. The
election of any one or more remedies by any party hereto shall not constitute a
waiver by any such party of the right to pursue any other available remedies.
Damages in the event of breach of this Agreement by a party hereto or any other
holder of Registrable Securities may be difficult, if not impossible, to
ascertain, and it is therefore agreed that each such Person, in addition to and
without limiting any other remedy or right it may have, will have the right to
an injunction or other equitable relief in any court of competent jurisdiction,
enjoining any such breach, and enforcing specifically the terms and provisions
hereof and the Company and each Holder of Registrable Securities, by its
acquisition of such Registrable Securities, hereby waives

                                       18
<PAGE>
                                                                     EXHIBIT 4.3

any and all defenses it may have on the ground of lack of jurisdiction or
competence of the court to grant such an injunction or other equitable relief.
The existence of this right will not preclude any such Person from pursuing any
other rights and remedies at law or in equity which such Person may have.

            (k)   Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York applicable to a
contract executed and performed in such State, without giving effect to the
conflicts of laws principles thereof.

            (l)   Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.

                                       19
<PAGE>
                                                                     EXHIBIT 4.3

            This Agreement has been duly executed and delivered by the duly
authorized officer of each party hereto as of the date first above written.

                                       INVESTORS:

                                       LTC HEALTHCARE, INC.

                                       By: /s/ ANDRE DIMITRIADIS
                                           -------------------------------------
                                           Andre Dimitriadis
                                           President and Chief Executive Officer

                                       LTC PROPERTIES, INC.

                                       By: /s/ ANDRE DIMITRIADIS
                                           -------------------------------------
                                           Andre Dimitriadis
                                           President and Chief Executive Officer

                                       NATIONAL HEALTH INVESTORS, INC.

                                       By: /s/ W. ANDREW ADAMS
                                           -------------------------------------
                                           W. Andrew Adams
                                           President and Chief Executive Officer

                                       CERBERUS CAPITAL MANAGEMENT, L.P.
                                       on behalf of funds and/or accounts
                                       managed and/or directed by it

                                       By: /s/ NEWTON GLASSMAN
                                           -------------------------------------
                                           Newton Glassman
                                           Managing Director

                                       ASSISTED LIVING CONCEPTS, INC.

                                       By: /s/ DREW O. MILLER
                                           -------------------------------------
                                           Drew O. Miller
                                           Senior Vice President,
                                           Chief Financial Officer and Treasurer

                                       11835 NE Glenn Widing Drive, Building E,
                                       Portland, OR 97220
                                       Facsimile No.: 503/255.9948
                                       Attn: Chief Financial Officer

Registration Rights Agreement
<PAGE>
                                                                     EXHIBIT 4.3

                                     ANNEX I

1.    LTC HEALTHCARE, INC.

300 Esplanade Dr., Suite 1860
Oxnard, CA 93030
Facsimile No.: 805/981-8663
Attn: Andre Dimitriadis

2.    LTC PROPERTIES, INC.

300 Esplanade Dr., Suite 1860
Oxnard, CA 93030
Facsimile No.: 805/981-8663
Attn: Andre Dimitriadis

3.    NATIONAL HEALTH INVESTORS, INC.

100 Vine Street, Suite 1400
Murfreesboro, TN 37130
Facsimile No.: 615/890-0123
Attn: W. Andrew Adams

4.    CERBERUS CAPITAL MANAGEMENT, L.P.

450 Park Avenue
New York, NY 10022
Facsimile No.: 212/891-1540
Attn: Newton Glassman/Mark Neporent<PAGE>
                          THE 2002 INCENTIVE AWARD PLAN

                                       OF

                         ASSISTED LIVING CONCEPTS, INC.

                  Assisted Living Concepts, Inc., a Nevada corporation, has
adopted the 2002 Incentive Award Plan of Assisted Living Concepts, Inc. (the
"Plan"), effective March 6, 2002, for the benefit of its eligible employees,
consultants and directors. The Plan consists of two plans, one pertaining solely
to the grant of Incentive Stock Options (as defined below), and one pertaining
to the grant of all other Awards (as defined below).

                  The purposes of the Plan are as follows:

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

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

                                   ARTICLE I.

                                   DEFINITIONS

                  Wherever the following terms are used in the Plan they shall
have the meanings specified below, unless the context clearly indicates
otherwise. The singular pronoun shall include the plural where the context so
indicates.

                  1.1.     "Administrator" shall mean the entity that conducts
the general administration of the Plan as provided herein. With reference to the
administration of the Plan with respect to Options granted to Independent
Directors, the term "Administrator" shall refer to the Board. With reference to
the administration of the Plan with respect to any other Award, the term
"Administrator" shall refer to the Committee unless the Board has assumed the
authority for administration of the Plan generally as provided in Section 10.1.

                  1.2.     "Award" shall mean an Option, a Restricted Stock
award, a Performance Award, a Dividend Equivalents award, a Deferred Stock
award, a Stock Payment award or a Stock Appreciation Right which may be awarded
or granted under the Plan (collectively, "Awards").

                  1.3.     "Award Agreement" shall mean a written agreement
executed by an authorized officer of the Company and the Holder which shall
contain such terms and conditions
<PAGE>
with respect to an Award as the Administrator shall determine, consistent with
the Plan.

                  1.4.     "Award Limit" shall mean 100,000 shares of Common
Stock, as adjusted pursuant to Section 11.3; provided, however, that solely with
respect to Performance Awards granted pursuant to Section 8.2(b), Award Limit
shall mean $100,000.

                  1.5.     "Board" shall mean the Board of Directors of the
Company.

                  1.6.     "Change in Control" shall mean the occurrence of any
of the following:

                           (a)      the sale of all or substantially all of the
assets of the Company and its CIC Subsidiaries, taken as a whole, to any Person
or related group of Persons;

                           (b)      the consummation of any consolidation or
merger of the Company:

                                    (i)      in which the Company is not the
                  continuing or surviving corporation, other than a
                  consolidation or merger:

                                             (1)      with a wholly-owned CIC
                           Subsidiary of the Company in which all of the common
                           stock of the Company outstanding immediately prior to
                           the effectiveness thereof is changed into or
                           exchanged for the same consideration, or

                                             (2)      in which the stockholders
                           of the Company immediately prior to the consummation
                           of such consolidation or merger own greater than 50%
                           of the total voting power of all classes of capital
                           shares of the continuing or surviving corporation
                           immediately following the consummation of such
                           consolidation or merger; or

                                    (ii)     pursuant to which the shares of
                  common stock of the Company are converted into cash,
                  securities, or other property, unless the stockholders of the
                  Company immediately prior to the consummation of such
                  consolidation or merger own greater than 50% of the total
                  voting power of all classes of capital shares of the
                  continuing or surviving corporation immediately following the
                  consummation of such consolidation or merger;

                           (c)      the acquisition by any Person individually
or any Persons (in each case other than any Person who is a holder of more than
5% of all classes of capital shares of the Company as of January 1, 2002) acting
together that would constitute a "group" for purposes of Section 13(d) of the
Exchange Act, together with any affiliates thereof, of beneficial ownership (as
defined in Rule 13d-3 under the Exchange Act) of greater than 50% of the total
voting power of all classes of capital shares of the Company entitled to vote
generally in the election of directors of the Company; or

                           (d)      the first day on which a majority of members
of the Board are not Continuing Directors.
<PAGE>
Notwithstanding clause (a) of this definition of "Change in Control," a Change
in Control will not be deemed to have occurred as a result of a transaction in
which either (1) the holders of the shares of common stock of the Company
immediately prior to the sale of all or substantially all of the Company's
assets have, directly or indirectly, at least a majority of the shares of common
stock of the corporation to which such assets were sold immediately after such
asset sale; or (2) the holders of the shares of common stock of the Company
immediately prior to the consolidation or merger have, directly or indirectly,
at least a majority of the shares of common stock of the continuing or surviving
corporation immediately after such consolidation or merger.

Notwithstanding clause (c) of this definition of "Change in Control," a Change
in Control will not be deemed to have occurred solely by virtue of any of the
following Persons filing or becoming obligated to file a report under or in
response to Schedule 13D or Schedule 14D-1 (or any successor schedule, form, or
report) under the Exchange Act disclosing beneficial ownership by it of shares
or securities of the Company, of greater than 50% of the total voting power
referred to in clause (c) of the foregoing definition or otherwise: (1) the
Company; (2) any CIC Subsidiary; (3) any employee share purchase plan, share
option plan, or other share incentive plan or program; (4) any retirement plan
or automatic dividend reinvestment plan; or (5) any substantially similar plan
of the Company or any CIC Subsidiary or any Person holding securities of the
Company for or pursuant to the terms of any such employee benefit plan.

For purposes of this Section 1.6, "CIC Subsidiary" shall mean a "Subsidiary," as
defined in that certain Indenture, dated as of January 1, 2002 between the
Company, Carriage House Assisted Living, Inc., Home and Community Care, Inc.,
and ALC Indiana, as guarantors, and BNY Midwest Trust Company, an Illinois trust
company, as trustee.

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

                  1.8.     "Committee" shall mean the Compensation Committee of
the Board, or another committee or subcommittee of the Board, appointed as
provided in Section 10.1.

                  1.9.     "Common Stock" shall mean the common stock of the
Company, par value $0.01 per share.

                  1.10.    "Company" shall mean Assisted Living Concepts, Inc.,
a Nevada corporation.

                  1.11.    "Consultant" shall mean any consultant or adviser if:

                  (a)      The consultant or adviser renders bona fide services
to the Company;

                  (b)      The services rendered by the consultant or adviser
are not in connection with the offer or sale of securities in a capital-raising
transaction and do not directly or indirectly promote or maintain a market for
the Company's securities; and

                  (c)      The consultant or adviser is a natural person who has
contracted directly with the Company to render such services.

                  1.12.    "Continuing Director" shall mean, as of any date of
determination, any
<PAGE>
member of the Board who:

                  (a)      was a member of such Board on January 1, 2002; or

                  (b)      was nominated for election or elected to such Board
with the approval of a majority of the Continuing Directors who were members of
such Board at the time of such nomination or election.

                  1.13.    "Deferred Stock" shall mean Common Stock awarded
under Article VIII of the Plan.

                  1.14.    "Director" shall mean a member of the Board.

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

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

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

                  1.18.    "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.

                  1.19.    "Fair Market Value" of a share of Common Stock as of
a given date shall be (a) the closing price of a share of Common Stock on the
principal exchange on which shares of Common Stock are then trading, if any (or
as reported on any composite index which includes such principal exchange), on
the trading day previous to such date, or if shares were not traded on the
trading day previous to such date, then on the next preceding date on which a
trade occurred, or (b) if Common Stock is not traded on an exchange but is
quoted on Nasdaq (but not the Nasdaq National Market) or a successor quotation
system or the over-the-counter bulletin board system, or is regularly quoted by
a recognized securities dealer but selling prices are not reported, the mean
between the closing representative bid and asked prices for the Common Stock on
the trading day previous to such date, or (c) if Common Stock is not publicly
traded on an exchange and not quoted in a manner described in subparagraph (b)
above, the Fair Market Value of a share of Common Stock as established by the
Administrator acting in good faith.

                  1.20.    "Holder" shall mean a person who has been granted or
awarded an Award.

                  1.21.    "Incentive Stock Option" shall mean an option which
conforms to the applicable provisions of Section 422 of the Code and which is
designated as an Incentive Stock Option by the Administrator.

                  1.22.    "Independent Director" shall mean a member of the
Board who is not an
<PAGE>
Employee of the Company.

                  1.23.    "Non-Qualified Stock Option" shall mean an Option
which is not designated as an Incentive Stock Option by the Administrator.

                  1.24.    "Option" shall mean a stock option granted under
Article IV of the Plan. An Option granted under the Plan shall, as determined by
the Administrator, be either a Non-Qualified Stock Option or an Incentive Stock
Option; provided, however, that Options granted to Independent Directors and
Consultants shall be Non-Qualified Stock Options.

                  1.25.    "Performance Award" shall mean a cash bonus, stock
bonus or other performance or incentive award that is paid in cash, Common Stock
or a combination of both, awarded under Article VIII of the Plan.

                  1.26.    "Performance Criteria" shall mean the following
business criteria with respect to the Company, any Subsidiary or any division or
operating unit: (a) net income, (b) pre-tax income, (c) operating income, (d)
cash flow, (e) earnings per share, (f) return on equity, (g) return on invested
capital or assets, (h) cost reductions or savings, (i) funds from operations,
(j) appreciation in the fair market value of Common Stock, and (k) earnings
before any one or more of the following items: interest, taxes, depreciation or
amortization.

                  1.27.    "Person" shall mean any individual, corporation,
limited liability company, partnership, joint venture, association, joint-stock
company, trust, unincorporated organization or government (or any agency,
instrumentality or political subdivision thereof).

                  1.28.    "Plan" shall mean the 2002 Incentive Award Plan of
Assisted Living Concepts, Inc.

                  1.29.    "Restricted Stock" shall mean Common Stock awarded
under Article VII of the Plan.

                  1.30.    "Rule 16b-3" shall mean Rule 16b-3 promulgated under
the Exchange Act, as such Rule may be amended from time to time.

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

                  1.32.    "Securities Act" shall mean the Securities Act of
1933, as amended.

                  1.33.    "Stock Appreciation Right" shall mean a stock
appreciation right granted under Article IX of the Plan.

                  1.34.    "Stock Payment" shall mean (a) a payment in the form
of shares of Common Stock, or (b) an option or other right to purchase shares of
Common Stock, as part of a deferred compensation arrangement, made in lieu of
all or any portion of the compensation, including without limitation, salary,
bonuses and commissions, that would otherwise become
<PAGE>
payable to a key Employee or Consultant in cash, awarded under Article VIII of
the Plan.

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

                  1.36.    "Substitute Award" shall mean an Option granted under
this Plan upon the assumption of, or in substitution for, outstanding equity
awards previously granted by a company or other entity in connection with a
corporate transaction, such as a merger, combination, consolidation or
acquisition of property or stock; provided, however, that in no event shall the
term "Substitute Award" be construed to refer to an award made in connection
with the cancellation and repricing of an Option.

                  1.37.    "Termination of Consultancy" shall mean the time when
the engagement of a Holder as a Consultant to the Company or a Subsidiary is
terminated for any reason, with or without cause, including, but not by way of
limitation, by resignation, discharge, death or retirement, but excluding
terminations where there is a simultaneous commencement of employment with the
Company or any Subsidiary. The Administrator, in its absolute discretion, shall
determine the effect of all matters and questions relating to Termination of
Consultancy, including, but not by way of limitation, the question of whether a
Termination of Consultancy resulted from a discharge for good cause, and all
questions of whether a particular leave of absence constitutes a Termination of
Consultancy. Notwithstanding any other provision of the Plan, the Company or any
Subsidiary has an absolute and unrestricted right to terminate a Consultant's
service at any time for any reason whatsoever, with or without cause, except to
the extent expressly provided otherwise in writing.

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

                  1.39.    "Termination of Employment" shall mean the time when
the employee-employer relationship between a Holder and the Company or any
Subsidiary is terminated for any reason, with or without cause, including, but
not by way of limitation, a termination by resignation, discharge, death,
disability or retirement; but excluding (a) terminations where there is a
simultaneous reemployment or continuing employment of a Holder by the Company or
any Subsidiary, (b) at the discretion of the Administrator, terminations which
result in a temporary severance of the employee-employer relationship, and (c)
at the discretion of the Administrator, terminations which are followed by the
simultaneous establishment of a consulting relationship by the Company or a
Subsidiary with the former employee. The Administrator, in its absolute
discretion, shall determine the effect of all matters and questions relating to
Termination of Employment, including, but not by way of limitation, the question
of whether a Termination of Employment resulted from a discharge for good cause,
and all questions of whether a particular leave of absence constitutes a
Termination of Employment; provided, however, that, with respect to Incentive
Stock Options, unless otherwise determined by the Administrator in its
discretion, a
<PAGE>
leave of absence, change in status from an employee to an independent contractor
or other change in the employee-employer relationship shall constitute a
Termination of Employment if, and to the extent that, such leave of absence,
change in status or other change interrupts employment for the purposes of
Section 422(a)(2) of the Code and the then applicable regulations and revenue
rulings under said Section.

                                   ARTICLE II.

                             SHARES SUBJECT TO PLAN

                  2.1.     Shares Subject to Plan.

                           (a)      The shares of stock subject to Awards shall
         be Common Stock, initially shares of the Company's Common Stock.
         Subject to adjustment as provided in Section 11.3, the aggregate number
         of such shares which may be issued upon exercise of such Options or
         rights or upon any such Awards under the Plan shall not exceed 325,000.
         The shares of Common Stock issuable upon exercise of such Options or
         rights or upon any such awards may be either previously authorized but
         unissued shares or treasury shares.

                           (b)      The maximum number of shares which may be
         subject to Awards granted under the Plan to any individual in any
         calendar year shall not exceed the Award Limit. To the extent required
         by Section 162(m) of the Code, shares subject to Options which are
         canceled continue to be counted against the Award Limit.

                  2.2.     Add-back of Options and Other Rights. If any Option,
or other right to acquire shares of Common Stock under any other Award under the
Plan, expires or is canceled without having been fully exercised, or is
exercised in whole or in part for cash as permitted by the Plan, the number of
shares subject to such Option or other right but as to which such Option or
other right was not exercised prior to its expiration, cancellation or exercise
may again be optioned, granted or awarded hereunder, subject to the limitations
of Section 2.1. Furthermore, any shares subject to Awards which are adjusted
pursuant to Section 11.3 and become exercisable with respect to shares of stock
of another corporation shall be considered cancelled and may again be optioned,
granted or awarded hereunder, subject to the limitations of Section 2.1. Shares
of Common Stock which are delivered by the Holder or withheld by the Company
upon the exercise of any Award under the Plan, in payment of the exercise price
thereof or tax withholding thereon, may again be optioned, granted or awarded
hereunder, subject to the limitations of Section 2.1. If any shares of
Restricted Stock are surrendered by the Holder or repurchased by the Company
pursuant to Section 7.4 or 7.5 hereof, such shares may again be optioned,
granted or awarded hereunder, subject to the limitations of Section 2.1.
Notwithstanding the provisions of this Section 2.2, no shares of Common Stock
may again be optioned, granted or awarded if such action would cause an
Incentive Stock Option to fail to qualify as an incentive stock option under
Section 422 of the Code.

                                  ARTICLE III.

                               GRANTING OF AWARDS

                  3.1.     Award Agreement. Each Award shall be evidenced by an
Award
<PAGE>
Agreement. Award Agreements evidencing Awards intended to qualify as
performance-based compensation as described in Section 162(m)(4)(C) of the Code
shall contain such terms and conditions as may be necessary to meet the
applicable provisions of Section 162(m) of the Code. Award Agreements evidencing
Incentive Stock Options shall contain such terms and conditions as may be
necessary to meet the applicable provisions of Section 422 of the Code.

                  3.2.     Provisions Applicable to Section 162(m) Participants.

                           (a)      The Committee, in its discretion, may
         determine whether an Award is to qualify as performance-based
         compensation as described in Section 162(m)(4)(C) of the Code.

                           (b)      Notwithstanding anything in the Plan to the
         contrary, the Committee may grant any Award to a Section 162(m)
         Participant, including Restricted Stock the restrictions with respect
         to which lapse upon the attainment of performance goals which are
         related to one or more of the Performance Criteria and any performance
         or incentive award described in Article VIII that vests or becomes
         exercisable or payable upon the attainment of performance goals which
         are related to one or more of the Performance Criteria.

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

                           (d)      Furthermore, notwithstanding any other
         provision of the Plan, any Award which is granted to a Section 162(m)
         Participant and is intended to qualify as performance-based
         compensation as described in Section 162(m)(4)(C) of the Code shall be
         subject to any additional limitations set forth in Section 162(m) of
         the Code (including
<PAGE>
         any amendment to Section 162(m) of the Code) or any regulations or
         rulings issued thereunder that are requirements for qualification as
         performance-based compensation as described in Section 162(m)(4)(C) of
         the Code, and the Plan shall be deemed amended to the extent necessary
         to conform to such requirements.

                  3.3.     Limitations Applicable to Section 16 Persons.
Notwithstanding any other provision of the Plan, the Plan, and any Award granted
or awarded to any individual who is then subject to Section 16 of the Exchange
Act, shall be subject to any additional limitations set forth in any applicable
exemptive rule under Section 16 of the Exchange Act (including any amendment to
Rule 16b-3 of the Exchange Act) that are requirements for the application of
such exemptive rule. To the extent permitted by applicable law, the Plan and
Awards granted or awarded hereunder shall be deemed amended to the extent
necessary to conform to such applicable exemptive rule.

                  3.4.     Consideration. The Award Agreement may provide that
in consideration of the granting of an Award under the Plan, the Holder shall
agree to remain in the employ of (or to consult for or to serve as an
Independent Director of, as applicable) the Company or any Subsidiary for a
period of at least one year (or such shorter period as may be fixed in the Award
Agreement or by action of the Administrator following grant of the Award) after
the Award is granted (or, in the case of an Independent Director, until the next
annual meeting of stockholders of the Company).

                  3.5.     At-Will Employment. Nothing in the Plan or in any
Award Agreement hereunder shall confer upon any Holder any right to continue in
the employ of, or as a Consultant for, the Company or any Subsidiary, or as a
director of the Company, or shall interfere with or restrict in any way the
rights of the Company and any Subsidiary, which are hereby expressly reserved,
to discharge any Holder at any time for any reason whatsoever, with or without
cause, except to the extent expressly provided otherwise in a written employment
agreement between the Holder and the Company and any Subsidiary.

                                   ARTICLE IV.

                        GRANTING OF OPTIONS TO EMPLOYEES,

                      CONSULTANTS AND INDEPENDENT DIRECTORS

                  4.1.     Eligibility. Any Employee or Consultant selected by
the Committee pursuant to Section 4.4(a)(i) shall be eligible to be granted an
Option. Each Independent Director of the Company shall be eligible to be granted
Options at the times and in the manner set forth in Section 4.5.

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

                  4.3.     Qualification of Incentive Stock Options. No
Incentive Stock Option shall
<PAGE>
be granted to any person who is not an Employee.

                  4.4.     Granting of Options to Employees and Consultants.

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

                                    (i)      Determine which Employees are key
                  Employees and select from among the key Employees or
                  Consultants (including Employees or Consultants who have
                  previously received Awards under the Plan) such of them as in
                  its opinion should be granted Options;

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

                                    (iii)    Subject to Section 4.3, determine
                  whether such Options are to be Incentive Stock Options or
                  Non-Qualified Stock Options and whether such Options are to
                  qualify as performance-based compensation as described in
                  Section 162(m)(4)(C) of the Code; and

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

                           (b)      Upon the selection of a key Employee or
         Consultant to be granted an Option, the Committee shall instruct the
         Secretary of the Company to issue the Option and may impose such
         conditions on the grant of the Option as it deems appropriate.

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

                  4.5.     Granting of Options to Independent Directors. During
the term of the Plan, each person who is an Independent Director as of the date
on which the Board approves the Plan (the "Board Approval Date") automatically
shall be granted (a) an Option to purchase 2,000 shares of Common Stock (subject
to adjustment as provided in Section 11.3) on the Board Approval Date, and (b)
an Option to purchase 500 shares of Common Stock (subject to adjustment as
provided in Section 11.3) on the date of each annual meeting of stockholders
after the Board Approval Date at which the Independent Director is re-elected to
the Board. During the term of the Plan, a person who is initially elected to the
Board after the Board Approval Date and who is an Independent Director at the
time of such initial election automatically shall be granted (x) an Option to
purchase 2,000 shares of Common Stock (subject to adjustment as provided in
Section 11.3) on the date of such initial election, and (y) an Option to
purchase 500
<PAGE>
shares of Common Stock (subject to adjustment as provided in Section 11.3) on
the date of each annual meeting of stockholders after such initial election at
which the Independent Director is re-elected to the Board. Members of the Board
who are employees of the Company who subsequently retire from the Company and
remain on the Board will not receive an initial Option grant pursuant to clause
(x) of the preceding sentence, but to the extent that they are otherwise
eligible, will receive, after retirement from employment with the Company,
Options as described in clause (y) of the preceding sentence. Options granted
pursuant to clauses (a) and (x) of this Section 4.5 are hereinafter referred to
as "Initial Options," and Options granted pursuant to clauses (b) and (y) of
this Section 4.5 are hereinafter referred to as "Subsequent Options".

                  4.6.     Options in Lieu of Cash Compensation. To the extent
permitted by applicable law, Options may be granted under the Plan to Employees
and Consultants in lieu of cash bonuses which would otherwise be payable to such
Employees and Consultants and to Independent Directors in lieu of directors'
fees which would otherwise be payable to such Independent Directors, pursuant to
such policies which may be adopted by the Administrator from time to time.

                                   ARTICLE V.

                                TERMS OF OPTIONS

                  5.1.     Option Price. The price per share of the shares
subject to each Option granted to Employees and Consultants shall be set by the
Committee; provided, however, that such price shall be no less than 100% of the
Fair Market Value of a share of Common Stock on the date the Option is granted,
and:

                           (a)      In the case of Options intended to qualify
         as performance-based compensation as described in Section 162(m)(4)(C)
         of the Code, such price shall not be less than 100% of the Fair Market
         Value of a share of Common Stock on the date the Option is granted;

                           (b)      In the case of Incentive Stock Options such
         price shall not be less than 100% of the Fair Market Value of a share
         of Common Stock on the date the Option is granted (or the date the
         Option is modified, extended or renewed for purposes of Section 424(h)
         of the Code);

                           (c)      In the case of Incentive Stock Options
         granted to an individual then owning (within the meaning of Section
         424(d) of the Code) more than 10% of the total combined voting power of
         all classes of stock of the Company or any Subsidiary or parent
         corporation thereof (within the meaning of Section 422 of the Code),
         such price shall not be less than 110% of the Fair Market Value of a
         share of Common Stock on the date the Option is granted (or the date
         the Option is modified, extended or renewed for purposes of Section
         424(h) of the Code).

                  5.2.     Option Term. The term of an Option granted to an
Employee or consultant shall be set by the Committee in its discretion;
provided, however, that, in the case of Incentive Stock Options, the term shall
not be more than 10 years from the date the Incentive Stock Option is granted,
or five years from the date the Incentive Stock Option is granted if the
<PAGE>
Incentive Stock Option is granted to an individual then owning (within the
meaning of Section 424(d) of the Code) more than 10% of the total combined
voting power of all classes of stock of the Company or any Subsidiary or parent
corporation thereof (within the meaning of Section 422 of the Code). Except as
limited by requirements of Section 422 of the Code and regulations and rulings
thereunder applicable to Incentive Stock Options, the Committee may extend the
term of any outstanding Option in connection with any Termination of Employment
or Termination of Consultancy of the Holder, or amend any other term or
condition of such Option relating to such a termination.

                  5.3.     Option Vesting.

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

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

                           (c)      To the extent that the aggregate Fair Market
         Value of stock with respect to which "incentive stock options" (within
         the meaning of Section 422 of the Code, but without regard to Section
         422(d) of the Code) are exercisable for the first time by a Holder
         during any calendar year (under the Plan and all other incentive stock
         option plans of the Company and any parent or subsidiary corporation,
         within the meaning of Section 422 of the Code) of the Company, exceeds
         $100,000, such Options shall be treated as Non-Qualified Stock Options
         to the extent required by Section 422 of the Code. The rule set forth
         in the preceding sentence shall be applied by taking Options into
         account in the order in which they were granted. For purposes of this
         Section 5.3(c), the Fair Market Value of stock shall be determined as
         of the time the Option with respect to such stock is granted.

                  5.4.     Terms of Options Granted to Independent Directors.
The price per share of the shares subject to each Option granted to an
Independent Director shall equal 100% of the Fair Market Value of a share of
Common Stock on the date the Option is granted. Initial Options granted to
Independent Directors shall become vested and exercisable in cumulative
installments of one third (1/3) of the shares subject thereto on the date of
each of the first, second and third annual meetings of stockholders after the
date on which the Initial Option is granted. Subsequent Options granted to
Independent Directors shall become vested and exercisable with respect to
<PAGE>
100% of the shares subject thereto on the date of the first annual meeting of
stockholders after the date on which the Subsequent Option is granted. Subject
to Section 6.6, the term of each Option granted to an Independent Director shall
be 10 years from the date the Option is granted, except that any Option granted
to an Independent Director may by its terms become immediately exercisable in
full upon the retirement of the Independent Director in accordance with the
Company's retirement policy applicable to directors. Notwithstanding the
foregoing, no portion of an Option which is unexercisable at Termination of
Directorship shall thereafter become exercisable.

                  5.5.     Substitute Awards. Notwithstanding the foregoing
provisions of this Article V to the contrary, in the case of an Option that is a
Substitute Award, the price per share of the shares subject to such Option may
be less than the Fair Market Value per share on the date of grant, provided,
that the excess of:

                           (a)      The aggregate Fair Market Value (as of the
         date such Substitute Award is granted) of the shares subject to the
         Substitute Award; over

                           (b)      The aggregate exercise price thereof;
         does not exceed the excess of:

                           (c)      The aggregate fair market value (as of the
         time immediately preceding the transaction giving rise to the
         Substitute Award, such fair market value to be determined by the
         Committee) of the shares of the predecessor entity that were subject to
         the grant assumed or substituted for by the Company; over

                           (d)      The aggregate exercise price of such shares.

                                   ARTICLE VI.

                               EXERCISE OF OPTIONS

                  6.1.     Partial Exercise. An exercisable Option may be
exercised in whole or in part. However, an Option shall not be exercisable with
respect to fractional shares and the Administrator may require that, by the
terms of the Option, a partial exercise be with respect to a minimum number of
shares.

                  6.2.     Manner of Exercise. All or a portion of an
exercisable Option shall be deemed exercised upon delivery of all of the
following to the Secretary of the Company or his or her office:

                           (a)      A written notice complying with the
         applicable rules established by the Administrator stating that the
         Option, or a portion thereof, is exercised. The notice shall be signed
         by the Holder or other person then entitled to exercise the Option or
         such portion of the Option;

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

                           (c)      In the event that the Option shall be
         exercised pursuant to Section 11.1 by any person or persons other than
         the Holder, appropriate proof of the right of such person or persons to
         exercise the Option; and

                           (d)      Full cash payment to the Secretary of the
         Company for the shares with respect to which the Option, or portion
         thereof, is exercised. However, the Administrator may, in its
         discretion, (i) allow a delay in payment up to 30 days from the date
         the Option, or portion thereof, is exercised; (ii) allow payment, in
         whole or in part, through the delivery of shares of Common Stock which
         have been owned by the Holder for at least six months, duly endorsed
         for transfer to the Company with a Fair Market Value on the date of
         delivery equal to the aggregate exercise price of the Option or
         exercised portion thereof; (iii) allow payment, in whole or in part,
         through the surrender of shares of Common Stock then issuable upon
         exercise of the Option having a Fair Market Value on the date of Option
         exercise equal to the aggregate exercise price of the Option or
         exercised portion thereof; (iv) allow payment, in whole or in part,
         through the delivery of property of any kind which constitutes good and
         valuable consideration; (v) allow payment, in whole or in part, through
         the delivery of a full recourse promissory note bearing interest (at no
         less than such rate as shall then preclude the imputation of interest
         under the Code) and payable upon such terms as may be prescribed by the
         Administrator; (vi) allow payment, in whole or in part, through the
         delivery of a notice that the Holder has placed a market sell order
         with a broker with respect to shares of Common Stock then issuable upon
         exercise of the Option, and that the broker has been directed to pay a
         sufficient portion of the net proceeds of the sale to the Company in
         satisfaction of the Option exercise price, provided that payment of
         such proceeds is then made to the Company upon settlement of such sale;
         or (vii) allow payment through any combination of the consideration
         provided in the foregoing subparagraphs (ii), (iii), (iv), (v) and
         (vi). In the case of a promissory note, the Administrator may also
         prescribe the form of such note and the security to be given for such
         note. The Option may not be exercised, however, by delivery of a
         promissory note or by a loan from the Company when or where such loan
         or other extension of credit is prohibited by law.

                  6.3.     Conditions to Issuance of Stock Certificates. The
Company shall not be required to issue or deliver any certificate or
certificates for shares of stock purchased upon the exercise of any Option or
portion thereof prior to fulfillment of all of the following conditions:

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

                           (b)      The completion of any registration or other
         qualification of such shares under any state or federal law, or under
         the rulings or regulations of the Securities and Exchange Commission or
         any other governmental regulatory body which the Administrator shall,
         in its absolute discretion, deem necessary or advisable;
<PAGE>
                           (c)      The obtaining of any approval or other
         clearance from any state or federal governmental agency which the
         Administrator shall, in its absolute discretion, determine to be
         necessary or advisable;

                           (d)      The lapse of such reasonable period of time
         following the exercise of the Option as the Administrator may establish
         from time to time for reasons of administrative convenience; and

                           (e)      The receipt by the Company of full payment
         for such shares, including payment of any applicable withholding tax,
         which in the discretion of the Administrator may be in the form of
         consideration used by the Holder to pay for such shares under Section
         6.2(d).

                  6.4.     Rights as Stockholders. Holders shall not be, nor
have any of the rights or privileges of, stockholders of the Company in respect
of any shares purchasable upon the exercise of any part of an Option unless and
until certificates representing such shares have been issued by the Company to
such Holders.

                  6.5.     Ownership and Transfer Restrictions. The
Administrator, in its absolute discretion, may impose such restrictions on the
ownership and transferability of the shares purchasable upon the exercise of an
Option as it deems appropriate. Any such restriction shall be set forth in the
respective Award Agreement and may be referred to on the certificates evidencing
such shares. The Holder shall give the Company prompt notice of any disposition
of shares of Common Stock acquired by exercise of an Incentive Stock Option
within (a) two years from the date of granting (including the date the Option is
modified, extended or renewed for purposes of Section 424(h) of the Code) such
Option to such Holder, or (b) one year after the transfer of such shares to such
Holder.

                  6.6.     Limitations on Exercise of Options Granted to
Independent Directors. No Option granted to an Independent Director may be
exercised to any extent by anyone after the first to occur of the following
events:

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

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

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

                           (d)      The expiration of 10 years from the date the
         Option was granted.

                  6.7.     Additional Limitations on Exercise of Options.
Holders may be required to comply with any timing or other restrictions with
respect to the settlement or exercise of an Option, including a window-period
limitation, as may be imposed in the discretion of the Administrator.
<PAGE>
                                  ARTICLE VII.

                            AWARD OF RESTRICTED STOCK

                  7.1.     Eligibility. Subject to the Award Limit, Restricted
Stock may be awarded to any Employee who the Committee determines is a key
Employee or any Consultant who the Committee determines should receive such an
Award.

                  7.2.     Award of Restricted Stock.

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

                                    (i)      Determine which Employees are key
                  Employees and select from among the key Employees or
                  Consultants (including Employees or Consultants who have
                  previously received other awards under the Plan) such of them
                  as in its opinion should be awarded Restricted Stock; and

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

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

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

                  7.3.     Rights as Stockholders. Subject to Section 7.4, upon
delivery of the shares of Restricted Stock to the escrow holder pursuant to
Section 7.6, the Holder shall have, unless otherwise provided by the Committee,
all the rights of a stockholder with respect to said shares, subject to the
restrictions in his or her Award Agreement, including the right to receive all
dividends and other distributions paid or made with respect to the shares;
provided, however, that in the discretion of the Committee, any extraordinary
distributions with respect to the Common Stock shall be subject to the
restrictions set forth in Section 7.4.

                  7.4.     Restriction. All shares of Restricted Stock issued
under the Plan (including any shares received by holders thereof with respect to
shares of Restricted Stock as a result of stock dividends, stock splits or any
other form of recapitalization) shall, in the terms of each individual Award
Agreement, be subject to such restrictions as the Committee shall provide, which
restrictions may include, without limitation, restrictions concerning voting
rights and transferability and restrictions based on duration of employment with
the Company, Company performance and individual performance; provided, however,
that, unless the Committee otherwise provides in the terms of the Award
Agreement or otherwise, no share of
<PAGE>
Restricted Stock granted to a person subject to Section 16 of the Exchange Act
shall be sold, assigned or otherwise transferred until at least six months and
one day have elapsed from the date on which the Restricted Stock was issued, and
provided, further, that, except with respect to shares of Restricted Stock
granted to Section 162(m) Participants, by action taken after the Restricted
Stock is issued, the Committee may, on such terms and conditions as it may
determine to be appropriate, remove any or all of the restrictions imposed by
the terms of the Award Agreement. Restricted Stock may not be sold or encumbered
until all restrictions are terminated or expire. If no consideration was paid by
the Holder upon issuance, a Holder's rights in unvested Restricted Stock shall
lapse, and such Restricted Stock shall be surrendered to the Company without
consideration, upon Termination of Employment or, if applicable, upon
Termination of Consultancy with the Company; provided, however, that the
Committee in its sole and absolute discretion may provide that such rights shall
not lapse in the event of a Termination of Employment following a "change of
ownership or control" (within the meaning of Treasury Regulation Section
1.162-27(e)(2)(v) or any successor regulation thereto) of the Company or because
of the Holder's death or disability; provided, further, except with respect to
shares of Restricted Stock granted to Section 162(m) Participants, the Committee
in its sole and absolute discretion may provide that no such lapse or surrender
shall occur in the event of a Termination of Employment, or a Termination of
Consultancy, without cause or following any Change in Control of the Company or
because of the Holder's retirement, or otherwise.

                  7.5.     Repurchase of Restricted Stock. The Committee shall
provide in the terms of each individual Award Agreement that the Company shall
have the right to repurchase from the Holder the Restricted Stock then subject
to restrictions under the Award Agreement immediately upon a Termination of
Employment or, if applicable, upon a Termination of Consultancy between the
Holder and the Company, at a cash price per share equal to the price paid by the
Holder for such Restricted Stock; provided, however, that the Committee in its
sole and absolute discretion may provide that no such right of repurchase shall
exist in the event of a Termination of Employment following a "change of
ownership or control" (within the meaning of Treasury Regulation Section
1.162-27(e)(2)(v) or any successor regulation thereto) of the Company or because
of the Holder's death or disability; provided, further, that, except with
respect to shares of Restricted Stock granted to Section 162(m) Participants,
the Committee in its sole and absolute discretion may provide that no such right
of repurchase shall exist in the event of a Termination of Employment or a
Termination of Consultancy without cause or following any Change in Control of
the Company or because of the Holder's retirement, or otherwise.

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

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

                  7.8.     Section 83(b) Election. If a Holder makes an election
under Section 83(b)
<PAGE>
of the Code, or any successor section thereto, to be taxed with respect to the
Restricted Stock as of the date of transfer of the Restricted Stock rather than
as of the date or dates upon which the Holder would otherwise be taxable under
Section 83(a) of the Code, the Holder shall deliver a copy of such election to
the Company immediately after filing such election with the Internal Revenue
Service.

                                  ARTICLE VIII.

            PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS, DEFERRED STOCK,
                                 STOCK PAYMENTS

                  8.1.     Eligibility. Subject to the Award Limit, one or more
Performance Awards, Dividend Equivalents, awards of Deferred Stock and/or Stock
Payments may be granted to any Employee whom the Committee determines is a key
Employee or any Consultant whom the Committee determines should receive such an
Award.

                  8.2.     Performance Awards.

                           (a)      Any key Employee or Consultant selected by
         the Committee may be granted one or more Performance Awards. The value
         of such Performance Awards may be linked to any one or more of the
         Performance Criteria or other specific performance criteria determined
         appropriate by the Committee, in each case on a specified date or dates
         or over any period or periods determined by the Committee. In making
         such determinations, the Committee shall consider (among such other
         factors as it deems relevant in light of the specific type of award)
         the contributions, responsibilities and other compensation of the
         particular key Employee or Consultant.

                           (b)      Without limiting Section 8.2(a), the
         Committee may grant Performance Awards to any Section 162(m)
         Participant in the form of a cash bonus payable upon the attainment of
         objective performance goals which are established by the Committee and
         relate to one or more of the Performance Criteria, in each case on a
         specified date or dates or over any period or periods determined by the
         Committee. Any such bonuses paid to Section 162(m) Participants shall
         be based upon objectively determinable bonus formulas established in
         accordance with the provisions of Section 3.2. The maximum amount of
         any Performance Award payable to a Section 162(m) Participant under
         this Section 8.2(b) shall not exceed the Award Limit with respect to
         any calendar year.

                  8.3.     Dividend Equivalents.

                           (a)      Any key Employee or Consultant selected by
         the Committee may be granted Dividend Equivalents based on the
         dividends declared on Common Stock, to be credited as of dividend
         payment dates, during the period between the date a Stock Appreciation
         Right, Deferred Stock or Performance Award is granted, and the date
         such Stock Appreciation Right, Deferred Stock or Performance Award is
         exercised, vests or expires, as determined by the Committee. Such
         Dividend Equivalents shall be converted to cash or additional shares of
         Common Stock by such formula and at such time and subject to such
         limitations as may be determined by the Committee.
<PAGE>
                           (b)      Any Holder of an Option who is an Employee
         or Consultant selected by the Committee may be granted Dividend
         Equivalents based on the dividends declared on Common Stock, to be
         credited as of dividend payment dates, during the period between the
         date an Option is granted, and the date such Option is exercised, vests
         or expires, as determined by the Committee. Such Dividend Equivalents
         shall be converted to cash or additional shares of Common Stock by such
         formula and at such time and subject to such limitations as may be
         determined by the Committee.

                           (c)      Any Holder of an Option who is an
         Independent Director selected by the Board may be granted Dividend
         Equivalents based on the dividends declared on Common Stock, to be
         credited as of dividend payment dates, during the period between the
         date an Option is granted and the date such Option is exercised, vests
         or expires, as determined by the Board. Such Dividend Equivalents shall
         be converted to cash or additional shares of Common Stock by such
         formula and at such time and subject to such limitations as may be
         determined by the Board.

                           (d)      Dividend Equivalents granted with respect to
         Options intended to be qualified performance-based compensation for
         purposes of Section 162(m) of the Code shall be payable, with respect
         to pre-exercise periods, regardless of whether such Option is
         subsequently exercised.

                  8.4.     Stock Payments. Any key Employee or Consultant
selected by the Committee may receive Stock Payments in the manner determined
from time to time by the Committee. The number of shares shall be determined by
the Committee and may be based upon the Performance Criteria or other specific
performance criteria determined appropriate by the Committee, determined on the
date such Stock Payment is made or on any date thereafter.

                  8.5.     Deferred Stock. Any key Employee or Consultant
selected by the Committee may be granted an award of Deferred Stock in the
manner determined from time to time by the Committee. The number of shares of
Deferred Stock shall be determined by the Committee and may be linked to the
Performance Criteria or other specific performance criteria determined to be
appropriate by the Committee, in each case on a specified date or dates or over
any period or periods determined by the Committee. Common Stock underlying a
Deferred Stock award will not be issued until the Deferred Stock award has
vested, pursuant to a vesting schedule or performance criteria set by the
Committee. Unless otherwise provided by the Committee, a Holder of Deferred
Stock shall have no rights as a Company stockholder with respect to such
Deferred Stock until such time as the Award has vested and the Common Stock
underlying the Award has been issued.

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

                  8.7.     Exercise or Purchase Price. The Committee may
establish the exercise or purchase price of a Performance Award, shares of
Deferred Stock or shares received as a Stock Payment; provided, however, that
such price shall not be less than the par value of a share of Common Stock,
unless otherwise permitted by applicable state law.
<PAGE>
                  8.8.     Exercise Upon Termination of Employment, Termination
of Consultancy or Termination of Directorship. A Performance Award, Dividend
Equivalent, award of Deferred Stock and/or Stock Payment is exercisable or
payable only while the Holder is an Employee, Consultant or Independent
Director, as applicable; provided, however, that the Administrator in its sole
and absolute discretion may provide that the Performance Award, Dividend
Equivalent, award of Deferred Stock and/or Stock Payment may be exercised or
paid subsequent to a Termination of Employment following a "change of control or
ownership" (within the meaning of Section 1.162-27(e)(2)(v) or any successor
regulation thereto) of the Company; provided, further, that except with respect
to Performance Awards granted to Section 162(m) Participants, the Administrator
in its sole and absolute discretion may provide that Performance Awards may be
exercised or paid following a Termination of Employment or a Termination of
Consultancy without cause, or following a Change in Control of the Company, or
because of the Holder's retirement, death or disability, or otherwise.

                  8.9.     Form of Payment. Payment of the amount determined
under Section 8.2 or 8.3 above shall be in cash, in Common Stock or a
combination of both, as determined by the Committee. To the extent any payment
under this Article VIII is effected in Common Stock, it shall be made subject to
satisfaction of all provisions of Section 6.3.

                                   ARTICLE IX.

                            STOCK APPRECIATION RIGHTS

                  9.1.     Grant of Stock Appreciation Rights. A Stock
Appreciation Right may be granted to any key Employee or Consultant selected by
the Committee. A Stock Appreciation Right may be granted (a) in connection and
simultaneously with the grant of an Option, (b) with respect to a previously
granted Option, or (c) independent of an Option. A Stock Appreciation Right
shall be subject to such terms and conditions not inconsistent with the Plan as
the Committee shall impose and shall be evidenced by an Award Agreement.

                  9.2.     Coupled Stock Appreciation Rights.

                           (a)      A Coupled Stock Appreciation Right ("CSAR")
         shall be related to a particular Option and shall be exercisable only
         when and to the extent the related Option is exercisable.

                           (b)      A CSAR may be granted to the Holder for no
         more than the number of shares subject to the simultaneously or
         previously granted Option to which it is coupled.

                           (c)      A CSAR shall entitle the Holder (or other
         person entitled to exercise the Option pursuant to the Plan) to
         surrender to the Company unexercised a portion of the Option to which
         the CSAR relates (to the extent then exercisable pursuant to its terms)
         and to receive from the Company in exchange therefor an amount
         determined by multiplying the difference obtained by subtracting the
         Option exercise price from the Fair Market Value of a share of Common
         Stock on the date of exercise of the CSAR by the number of shares of
         Common Stock with respect to which the CSAR shall have been exercised,
         subject to any limitations the Committee may impose.
<PAGE>
                  9.3.     Independent Stock Appreciation Rights.

                           (a)      An Independent Stock Appreciation Right
         ("ISAR") shall be unrelated to any Option and shall have a term set by
         the Committee. An ISAR shall be exercisable in such installments as the
         Committee may determine. An ISAR shall cover such number of shares of
         Common Stock as the Committee may determine; provided, however, that
         unless the Committee otherwise provides in the terms of the ISAR or
         otherwise, no ISAR granted to a person subject to Section 16 of the
         Exchange Act shall be exercisable until at least six months have
         elapsed from (but excluding) the date on which the Option was granted.
         The exercise price per share of Common Stock subject to each ISAR shall
         be set by the Committee. An ISAR is exercisable only while the Holder
         is an Employee or Consultant; provided, that the Committee may
         determine that the ISAR may be exercised subsequent to Termination of
         Employment or Termination of Consultancy without cause, or following a
         Change in Control of the Company, or because of the Holder's
         retirement, death or disability, or otherwise.

                           (b)      An ISAR shall entitle the Holder (or other
         person entitled to exercise the ISAR pursuant to the Plan) to exercise
         all or a specified portion of the ISAR (to the extent then exercisable
         pursuant to its terms) and to receive from the Company an amount
         determined by multiplying the difference obtained by subtracting the
         exercise price per share of the ISAR from the Fair Market Value of a
         share of Common Stock on the date of exercise of the ISAR by the number
         of shares of Common Stock with respect to which the ISAR shall have
         been exercised, subject to any limitations the Committee may impose.

                  9.4.     Payment and Limitations on Exercise.

                           (a)      Payment of the amounts determined under
         Section 9.2(c) and 9.3(b) above shall be in cash, in Common Stock
         (based on its Fair Market Value as of the date the Stock Appreciation
         Right is exercised) or a combination of both, as determined by the
         Committee. To the extent such payment is effected in Common Stock it
         shall be made subject to satisfaction of all provisions of Section 6.3
         above pertaining to Options.

                           (b)      Holders of Stock Appreciation Rights may be
         required to comply with any timing or other restrictions with respect
         to the settlement or exercise of a Stock Appreciation Right, including
         a window-period limitation, as may be imposed in the discretion of the
         Committee.

                                   ARTICLE X.

                                 ADMINISTRATION

                  10.1.    Compensation Committee. The Compensation Committee
(or another committee or a subcommittee of the Board assuming the functions of
the Committee under the Plan) shall consist solely of two or more Independent
Directors appointed by and holding office at the pleasure of the Board, each of
whom is both a "non-employee director" as defined by Rule 16b-3 and an "outside
director" for purposes of Section 162(m) of the Code. Appointment of Committee
members shall be effective upon acceptance of appointment. Committee members
<PAGE>
may resign at any time by delivering written notice to the Board. Vacancies in
the Committee may be filled by the Board.

                  10.2.    Duties and Powers of Committee. It shall be the duty
of the Committee to conduct the general administration of the Plan in accordance
with its provisions. The Committee shall have the power to interpret the Plan
and the Award Agreements, and to adopt such rules for the administration,
interpretation and application of the Plan as are consistent therewith, to
interpret, amend or revoke any such rules and to amend any Award Agreement
provided that the rights or obligations of the Holder of the Award that is the
subject of any such Award Agreement are not affected adversely. Any such grant
or award under the Plan need not be the same with respect to each Holder. Any
such interpretations and rules with respect to Incentive Stock Options shall be
consistent with the provisions of Section 422 of the Code. In its absolute
discretion, the Board may at any time and from time to time exercise any and all
rights and duties of the Committee under the Plan except with respect to matters
which under Rule 16b-3 or Section 162(m) of the Code, or any regulations or
rules issued thereunder, are required to be determined in the sole discretion of
the Committee. Notwithstanding the foregoing, the full Board, acting by a
majority of its members in office, shall conduct the general administration of
the Plan with respect to Options and Dividend Equivalents granted to Independent
Directors.

                  10.3.    Majority Rule; Unanimous Written Consent. The
Committee shall act by a majority of its members in attendance at a meeting at
which a quorum is present or by a memorandum or other written instrument signed
by all members of the Committee.

                  10.4.    Compensation; Professional Assistance; Good Faith
Actions. Members of the Committee shall receive such compensation, if any, for
their services as members as may be determined by the Board. All expenses and
liabilities which members of the Committee incur in connection with the
administration of the Plan shall be borne by the Company. The Committee may,
with the approval of the Board, employ attorneys, consultants, accountants,
appraisers, brokers or other persons. The Committee, the Company and the
Company's officers and Directors shall be entitled to rely upon the advice,
opinions or valuations of any such persons. All actions taken and all
interpretations and determinations made by the Committee or the Board in good
faith shall be final and binding upon all Holders, the Company and all other
interested persons. No members of the Committee or Board shall be personally
liable for any action, determination or interpretation made in good faith with
respect to the Plan or Awards, and all members of the Committee and the Board
shall be fully protected by the Company in respect of any such action,
determination or interpretation.

                  10.5.    Delegation of Authority to Grant Awards. To the
extent permitted by applicable law, the Committee may, but need not, delegate
from time to time some or all of its authority to grant Awards under the Plan to
a committee consisting of one or more members of the Committee or of one or more
officers of the Company; provided, however, that the Committee may not delegate
its authority to grant Awards to individuals (a) who are subject on the date of
the grant to the reporting rules under Section 16(a) of the Exchange Act, (b)
who are Section 162(m) Participants, or (c) who are officers of the Company who
are delegated authority by the Committee hereunder. Any delegation hereunder
shall be subject to the restrictions and limits that the Committee specifies at
the time of such delegation of authority and may be rescinded at any time by the
Committee. At all times, any committee appointed under this
<PAGE>
Section 10.5 shall serve in such capacity at the pleasure of the Committee.

                                   ARTICLE XI.

                            MISCELLANEOUS PROVISIONS

                  11.1.    Not Transferable.

                           (a)      Except as otherwise provided in Section
         11.1(b):

                                    (i)      No Award under the Plan may be
                  sold, pledged, assigned or transferred in any manner other
                  than by will or the laws of descent and distribution or,
                  subject to the consent of the Administrator, pursuant to a
                  DRO, unless and until such Award has been exercised, or the
                  shares underlying such Award have been issued, and all
                  restrictions applicable to such shares have lapsed;

                                    (ii)     No Award or interest or right
                  therein shall be liable for the debts, contracts or
                  engagements of the Holder or his or her successors in interest
                  or shall be subject to disposition by transfer, alienation,
                  anticipation, pledge, encumbrance, assignment or any other
                  means whether such disposition be voluntary or involuntary or
                  by operation of law by judgment, levy, attachment, garnishment
                  or any other legal or equitable proceedings (including
                  bankruptcy), and any attempted disposition thereof shall be
                  null and void and of no effect, except to the extent that such
                  disposition is permitted by clause (i) above; and

                                    (iii)    During the lifetime of the Holder,
                  only he or she may exercise an Option or other Award (or any
                  portion thereof) granted to him or her under the Plan, unless
                  it has been disposed of with the consent of the Administrator
                  pursuant to a DRO. After the death of the Holder, any
                  exercisable portion of an Option or other Award may, prior to
                  the time when such portion becomes unexercisable under the
                  Plan or the applicable Award Agreement, be exercised by his or
                  her personal representative or by any person empowered to do
                  so under the deceased Holder's will or under the then
                  applicable laws of descent and distribution.

                           (b)      Notwithstanding Section 11.1(a), the
         Administrator, in its sole discretion, may determine to permit a Holder
         to transfer a Non-Qualified Stock Option to any one or more Permitted
         Transferees (as defined below), subject to the following terms and
         conditions: (i) a Non-Qualified Stock Option transferred to a Permitted
         Transferee shall not be assignable or transferable by the Permitted
         Transferee other than by will or the laws of descent and distribution;
         (ii) any Non-Qualified Stock Option which is transferred to a Permitted
         Transferee shall continue to be subject to all the terms and conditions
         of the Non-Qualified Stock Option as applicable to the original Holder
         (other than the ability to further transfer the Non-Qualified Stock
         Option); and (iii) the Holder and the Permitted Transferee shall
         execute any and all documents requested by the Administrator,
         including, without limitation documents to (A) confirm the status of
         the
<PAGE>
         transferee as a Permitted Transferee, (B) satisfy any requirements for
         an exemption for the transfer under applicable federal and state
         securities laws and (C) evidence the transfer. For purposes of this
         Section 11.1(b), "Permitted Transferee" shall mean, with respect to a
         Holder, any child, stepchild, grandchild, parent, stepparent,
         grandparent, spouse, former spouse, sibling, niece, nephew,
         mother-in-law, father-in-law, son-in-law, daughter-in-law,
         brother-in-law, or sister-in-law, including adoptive relationships, any
         person sharing the Holder's household (other than a tenant or
         employee), a trust in which these persons (or the Holder) control the
         management of assets, and any other entity in which these persons (or
         the Holder) own more than fifty percent of the voting interests, or any
         other transferee specifically approved by the Administrator after
         taking into account any state or federal tax or securities laws
         applicable to transferable Non-Qualified Stock Options.

                  11.2.    Amendment, Suspension or Termination of the Plan.
Except as otherwise provided in this Section 11.2, the Plan may be wholly or
partially amended or otherwise modified, suspended or terminated at any time or
from time to time by the Administrator. However, without approval of the
Company's stockholders given within 12 months before or after the action by the
Administrator, no action of the Administrator may, except as provided in Section
11.3, increase the limits imposed in Section 2.1 on the maximum number of shares
which may be issued under the Plan. No amendment, suspension or termination of
the Plan shall, without the consent of the Holder, alter or impair any rights or
obligations under any Award theretofore granted or awarded, unless the Award
itself otherwise expressly so provides. No Awards may be granted or awarded
during any period of suspension or after termination of the Plan, and in no
event may any Incentive Stock Option be granted under the Plan after the first
to occur of the following events:

                           (a)      The expiration of 10 years from the date the
         Plan is adopted by the Board; or

                           (b)      The expiration of 10 years from the date the
         Plan is approved by the Company's stockholders under Section 11.4.

                  11.3.    Changes in Common Stock or Assets of the Company,
Acquisition or Liquidation of the Company and Other Corporate Events.

                           (a)      Subject to Section 11.3(e), in the event
         that the Administrator determines that any dividend or other
         distribution (whether in the form of cash, Common Stock, other
         securities or other property), recapitalization, reclassification,
         stock split, reverse stock split, reorganization, merger,
         consolidation, split-up, spin-off, combination, repurchase,
         liquidation, dissolution, or sale, transfer, exchange or other
         disposition of all or substantially all of the assets of the Company,
         or exchange of Common Stock or other securities of the Company,
         issuance of warrants or other rights to purchase Common Stock or other
         securities of the Company, or other similar corporate transaction or
         event, in the Administrator's sole discretion, affects the Common Stock
         such that an adjustment is determined by the Administrator to be
         appropriate in order to prevent dilution or enlargement of the benefits
         or potential benefits intended to be made available under the Plan or
         with respect to an Award, then the Administrator shall, in such manner
         as it may
<PAGE>
         deem equitable, adjust any or all of:

                                    (i)      The number and kind of shares of
                  Common Stock (or other securities or property) with respect to
                  which Awards may be granted or awarded (including, but not
                  limited to, adjustments of the limitations in Section 2.1 on
                  the maximum number and kind of shares which may be issued and
                  adjustments of the Award Limit);

                                    (ii)     The number and kind of shares of
                  Common Stock (or other securities or property) subject to
                  outstanding Awards; and

                                    (iii)    The grant or exercise price with
                  respect to any Award.

                           (b)      Subject to Sections 11.3(b)(vii), 11.3(c)
         and 11.3(e), in the event of any transaction or event described in
         Section 11.3(a) or any unusual or nonrecurring transactions or events
         affecting the Company, any affiliate of the Company, or the financial
         statements of the Company or any affiliate, or of changes in applicable
         laws, regulations or accounting principles, the Administrator, in its
         sole and absolute discretion, and on such terms and conditions as it
         deems appropriate, either by the terms of the Award or by action taken
         prior to the occurrence of such transaction or event and either
         automatically or upon the Holder's request, is hereby authorized to
         take any one or more of the following actions whenever the
         Administrator determines that such action is appropriate in order to
         prevent dilution or enlargement of the benefits or potential benefits
         intended to be made available under the Plan or with respect to any
         Award under the Plan, to facilitate such transactions or events or to
         give effect to such changes in laws, regulations or principles:

                                    (i)      To provide for either the purchase
                  of any such Award for an amount of cash equal to the amount
                  that could have been attained upon the exercise of such Award
                  or realization of the Holder's rights had such Award been
                  currently exercisable or payable or fully vested or the
                  replacement of such Award with other rights or property
                  selected by the Administrator in its sole discretion;

                                    (ii)     To provide that the Award cannot
                  vest, be exercised or become payable after such event;

                                    (iii)    To provide that such Award shall be
                  exercisable as to all shares covered thereby, notwithstanding
                  anything to the contrary in Section 5.3 or 5.4 or the
                  provisions of such Award;

                                    (iv)     To provide that such Award be
                  assumed by the successor or survivor corporation, or a parent
                  or subsidiary thereof, or shall be substituted for by similar
                  options, rights or awards covering the stock of the successor
                  or survivor corporation, or a parent or subsidiary thereof,
                  with appropriate adjustments as to the number and kind of
                  shares and prices; and
<PAGE>
                                    (v)      To make adjustments in the number
                  and type of shares of Common Stock (or other securities or
                  property) subject to outstanding Awards, and in the number and
                  kind of outstanding Restricted Stock or Deferred Stock and/or
                  in the terms and conditions of (including the grant or
                  exercise price), and the criteria included in, outstanding
                  options, rights and awards and options, rights and awards
                  which may be granted in the future.

                                    (vi)     To provide that, for a specified
                  period of time prior to such event, the restrictions imposed
                  under an Award Agreement upon some or all shares of Restricted
                  Stock or Deferred Stock may be terminated, and, in the case of
                  Restricted Stock, some or all shares of such Restricted Stock
                  may cease to be subject to repurchase under Section 7.5 or
                  forfeiture under Section 7.4 after such event.

                                    (vii)    Notwithstanding any other provision
                  of the Plan, in the event of a Change in Control, each
                  outstanding Award shall, immediately prior to the effective
                  date of the Change in Control, automatically become fully
                  exercisable for all of the shares of Common Stock at the time
                  subject to such rights and may be exercised for any or all of
                  those shares as fully-vested shares of Common Stock.

                           (c)      Notwithstanding any other provision of the
         Plan, in the event of a merger of the Company with or into another
         corporation, or the sale of substantially all of the assets of the
         Company, each outstanding Option shall be assumed or an equivalent
         option substituted by the successor corporation or a parent or
         subsidiary of the successor corporation. In the event that the
         successor corporation refuses to assume or substitute for the Option,
         the optionee shall have the right to exercise the Option as to all of
         the optioned stock, including shares as to which it would not otherwise
         be exercisable. If an Option is exercisable in lieu of assumption or
         substitution in the event of a merger or sale of assets, the
         Administrator shall notify the optionee that the Option shall be fully
         exercisable for a period of 15 days from the date of such notice, and
         the Option shall terminate upon the expiration of such period. For the
         purposes of this Section 11.3(c), the Option shall be considered
         assumed if, following the merger or sale of assets, the option confers
         the right to purchase or receive, for each share of optioned stock
         subject to the Option immediately prior to the merger or sale of
         assets, the consideration (whether stock, cash, or other securities or
         property) received in the merger or sale of assets by holders of Common
         Stock for each share held on the effective date of the transaction (and
         if holders were offered a choice of consideration, the type of
         consideration chosen by the holders of a majority of the outstanding
         shares); provided, however, that if such consideration received in the
         merger or sale of assets was not solely common stock of the successor
         corporation or its parent, the Administrator may, with the consent of
         the successor corporation, provide for the consideration to be received
         upon the exercise of the Option, for each share of optioned stock
         subject to the Option, to be solely common stock of the successor
         corporation or its parent equal in fair market value to the per share
         consideration received by holders of Common Stock in the merger or sale
         of assets.
<PAGE>
                           (d)      Subject to Sections 11.3(e), 3.2 and 3.3,
         the Administrator may, in its discretion, include such further
         provisions and limitations in any Award, agreement or certificate, as
         it may deem equitable and in the best interests of the Company.

                           (e)      With respect to Awards which are granted to
         Section 162(m) Participants and are intended to qualify as
         performance-based compensation under Section 162(m)(4)(C), no
         adjustment or action described in this Section 11.3 or in any other
         provision of the Plan shall be authorized to the extent that such
         adjustment or action would cause such Award to fail to so qualify under
         Section 162(m)(4)(C), or any successor provisions thereto. No
         adjustment or action described in this Section 11.3 or in any other
         provision of the Plan shall be authorized to the extent that such
         adjustment or action would cause the Plan to violate Section 422(b)(1)
         of the Code. Furthermore, no such adjustment or action shall be
         authorized to the extent such adjustment or action would result in
         short-swing profits liability under Section 16 or violate the exemptive
         conditions of Rule 16b-3 unless the Administrator determines that the
         Award is not to comply with such exemptive conditions. The number of
         shares of Common Stock subject to any Award shall always be rounded to
         the next whole number.

                           (f)      The existence of the Plan, the Award
         Agreement and the Awards granted hereunder shall not affect or restrict
         in any way the right or power of the Company or the shareholders of the
         Company to make or authorize any adjustment, recapitalization,
         reorganization or other change in the Company's capital structure or
         its business, any merger or consolidation of the Company, any issue of
         stock or of options, warrants or rights to purchase stock or of bonds,
         debentures, preferred or prior preference stocks whose rights are
         superior to or affect the Common Stock or the rights thereof or which
         are convertible into or exchangeable for Common Stock, or the
         dissolution or liquidation of the company, or any sale or transfer of
         all or any part of its assets or business, or any other corporate act
         or proceeding, whether of a similar character or otherwise.

                  11.4.    Approval of Plan by Stockholders. The Plan will be
submitted for the approval of the Company's stockholders within 12 months after
the date of the Board's initial adoption of the Plan. Awards may be granted or
awarded prior to such stockholder approval, provided that no Incentive Stock
Option granted prior to stockholder approval shall be exercisable or vest prior
to the time when the Plan is approved by the stockholders, and provided further
that if such approval has not been obtained at the end of said twelve-month
period, all Incentive Stock Options previously granted or awarded under the Plan
shall thereupon be canceled and become null and void. In addition, if the Board
determines that Awards other than Options or Stock Appreciation Rights which may
be granted to Section 162(m) Participants should continue to be eligible to
qualify as performance-based compensation under Section 162(m)(4)(C) of the
Code, the Performance Criteria must be disclosed to and approved by the
Company's stockholders no later than the first stockholder meeting that occurs
in the fifth year following the year in which the Company's stockholders
previously approved the Performance Criteria.

                  11.5.    Tax Withholding. The Company shall be entitled to
require payment in cash or deduction from other compensation payable to each
Holder of any sums required by
<PAGE>
federal, state or local tax law to be withheld with respect to the issuance,
vesting, exercise or payment of any Award. The Administrator may in its
discretion and in satisfaction of the foregoing requirement allow such Holder to
elect to have the Company withhold shares of Common Stock otherwise issuable
under such Award (or allow the return of shares of Common Stock) having a Fair
Market Value equal to the sums required to be withheld. Notwithstanding any
other provision of the Plan, the number of shares of Common Stock which may be
withheld with respect to the issuance, vesting, exercise or payment of any Award
(or which may be repurchased from the Holder of such Award within six months
after such shares of Common Stock were acquired by the Holder from the Company)
in order to satisfy the Holder's federal and state income and payroll tax
liabilities with respect to the issuance, vesting, exercise or payment of the
Award shall be limited to the number of shares which have a Fair Market Value on
the date of withholding or repurchase equal to the aggregate amount of such
liabilities based on the minimum statutory withholding rates for federal and
state tax income and payroll tax purposes that are applicable to such
supplemental taxable income.

                  11.6.    Loans. The Committee may, in its discretion, extend
one or more loans to key Employees in connection with the exercise or receipt of
an Award granted or awarded under the Plan, or the issuance of Restricted Stock
or Deferred Stock awarded under the Plan. The terms and conditions of any such
loan shall be set by the Committee.

                  11.7.    Forfeiture Provisions. Pursuant to its general
authority to determine the terms and conditions applicable to Awards under the
Plan, the Administrator shall have the right to provide, in the terms of Awards
made under the Plan, or to require a Holder to agree by separate written
instrument, that (a)(i) any proceeds, gains or other economic benefit actually
or constructively received by the Holder upon any receipt or exercise of the
Award, or upon the receipt or resale of any Common Stock underlying the Award,
must be paid to the Company, and (ii) the Award shall terminate and any
unexercised portion of the Award (whether or not vested) shall be forfeited, if
(b)(i) a Termination of Employment, Termination of Consultancy or Termination of
Directorship occurs prior to a specified date, or within a specified time period
following receipt or exercise of the Award, or (ii) the Holder at any time, or
during a specified time period, engages in any activity in competition with the
Company, or which is inimical, contrary or harmful to the interests of the
Company, as further defined by the Administrator or (iii) the Holder incurs a
Termination of Employment, Termination of Consultancy or Termination of
Directorship for cause.

                  11.8.    Effect of Plan Upon Options and Compensation Plans.
The adoption of the Plan shall not affect any other compensation or incentive
plans in effect for the Company or any Subsidiary. Nothing in the Plan shall be
construed to limit the right of the Company (a) to establish any other forms of
incentives or compensation for Employees, Directors or Consultants of the
Company or any Subsidiary, or (b) to grant or assume options or other rights or
awards otherwise than under the Plan in connection with any proper corporate
purpose including but not by way of limitation, the grant or assumption of
options in connection with the acquisition by purchase, lease, merger,
consolidation or otherwise, of the business, stock or assets of any corporation,
partnership, limited liability company, firm or association.

                  11.9.    Compliance with Laws. The Plan, the granting and
vesting of Awards under the Plan and the issuance and delivery of shares of
Common Stock and the payment of
<PAGE>
money under the Plan or under Awards granted or awarded hereunder are subject to
compliance with all applicable federal and state laws, rules and regulations
(including but not limited to state and federal securities law and federal
margin requirements) and to such approvals by any listing, regulatory or
governmental authority as may, in the opinion of counsel for the Company, be
necessary or advisable in connection therewith. Any securities delivered under
the Plan shall be subject to such restrictions, and the person acquiring such
securities shall, if requested by the Company, provide such assurances and
representations to the Company as the Company may deem necessary or desirable to
assure compliance with all applicable legal requirements. To the extent
permitted by applicable law, the Plan and Awards granted or awarded hereunder
shall be deemed amended to the extent necessary to conform to such laws, rules
and regulations.

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

                  11.11.   Governing Law. The Plan and any agreements hereunder
shall be administered, interpreted and enforced under the internal laws of the
State of Oregon without regard to conflicts of laws thereof.

                                      * * *

                  I hereby certify that the foregoing Plan was duly adopted by
the Board of Directors of Assisted Living Concepts, Inc. on March 6, 2002.

                  Executed on this 6th day of March, 2002.

                                             /s/ Sandra Campbell
                                          ____________________________________
                                                      Secretary

                                      * * *

                  I hereby certify that the foregoing Plan was approved by the
stockholders of Assisted Living Concepts, Inc. on ____________ __, 200__.

                  Executed on this ____ day of _______________, 200___.

                                          ____________________________________
                                                      Secretary

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