Document:

Exhibit 4.9

                           WIRE ONE TECHNOLOGIES, INC.

                            2000 STOCK INCENTIVE PLAN

     1. Purposes of the Plan.  The purposes of this Stock  Incentive Plan are to
attract and retain the best available personnel, to provide additional incentive
to  Employees,  Directors  and  Consultants  and to promote  the  success of the
Company's business.

     2. Definitions. As used herein, the following definitions shall apply:

     (a) "Administrator"  means the Board or any of the Committees  appointed to
administer the Plan.

     (b) "Affiliate" and "Associate" shall have the respective meanings ascribed
to such terms in Rule 12b-2 promulgated under the Exchange Act.

     (c)  "Applicable  Laws"  means  the  legal  requirements  relating  to  the
administration of stock incentive plans, if any, under applicable  provisions of
federal  securities  laws,  state  corporate and securities  laws, the Code, the
rules of any applicable stock exchange or national market system,  and the rules
of any foreign jurisdiction applicable to Awards granted to residents therein.

     (d) "Award" means the grant of an Option,  SAR, Dividend  Equivalent Right,
Restricted Stock, Performance Unit, Performance Share, or other right or benefit
under the Plan.

     (e) "Award Agreement" means the written  agreement  evidencing the grant of
an Award  executed by the  Company and the  Grantee,  including  any  amendments
thereto.

     (f) "Board" means the Board of Directors of the Company.

     (g) "Cause"  means,  with  respect to the  termination  by the Company or a
Related Entity of the Grantee's Continuous Service, that such termination is for
"Cause" as such term is expressly defined in a then-effective  written agreement
between the Grantee and the Company or such Related Entity, or in the absence of
such  then-effective  written  agreement  and  definition,  is based  on, in the
determination of the Administrator, the Grantee's: (i) refusal or failure to act
in accordance with any specific,  lawful  direction or order of the Company or a
Related Entity;  (ii) unfitness or unavailability  for service or unsatisfactory
performance (other than as a result of Disability); (iii) performance of any act
or failure to perform any act in bad faith and to the  detriment  of the Company
or a Related Entity; (iv) dishonesty,  intentional misconduct or material breach
of any agreement  with the Company or a Related  Entity;  or (v) commission of a
crime  involving  dishonesty,  breach of trust, or physical or emotional harm to
any  person.  At  least  30  days  prior  to the  termination  of the  Grantee's
Continuous  Service  pursuant  to (i) or (ii)  above,  the  Administrator  shall
provide the Grantee with notice of the Company's or such Related Entity's intent
to terminate,  the reason  therefor,  and an opportunity

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for the Grantee to cure such  defects in his or her service to the  Company's or
such Related Entity's  satisfaction.  During this 30 day (or longer) period,  no
Award issued to the Grantee under the Plan may be exercised or purchased.

     (h)  "Change  in  Control"  means a change in  ownership  or control of the
Company effected through either of the following transactions:

          (i) the direct or indirect  acquisition by any person or related group
     of  persons  (other  than an  acquisition  from or by the  Company  or by a
     Company-sponsored  employee  benefit  plan or by a person that  directly or
     indirectly controls, is controlled by, or is under common control with, the
     Company) of beneficial  ownership  (within the meaning of Rule 13d-3 of the
     Exchange Act) of securities possessing more than fifty percent (50%) of the
     total  combined  voting  power  of  the  Company's  outstanding  securities
     pursuant  to a tender or  exchange  offer made  directly  to the  Company's
     stockholders  which a  majority  of the  Continuing  Directors  who are not
     Affiliates or Associates of the offeror do not recommend such  stockholders
     accept, or

          (ii) a  change  in the  composition  of the  Board  over a  period  of
     thirty-six  (36) months or less such that a majority  of the Board  members
     (rounded  up to the next  whole  number)  ceases,  by reason of one or more
     contested  elections for Board  membership,  to be comprised of individuals
     who are Continuing Directors.

     (i) "Code" means the Internal Revenue Code of 1986, as amended.

     (j)  "Committee"  means any committee  appointed by the Board to administer
the Plan.

     (k) "Common Stock" means the common stock of the Company.

     (l) "Company" means Wire One Technologies, Inc., a Delaware corporation.

     (m)  "Consultant"  means any person  (other than an Employee or a Director,
solely  with  respect to  rendering  services  in such  person's  capacity  as a
Director)  who is  engaged  by the  Company  or any  Related  Entity  to  render
consulting or advisory services to the Company or such Related Entity.

     (n) "Continuing  Directors"  means members of the Board who either (i) have
been Board members  continuously for a period of at least thirty-six (36) months
or (ii) have been Board  members for less than  thirty-six  (36) months and were
elected or nominated for election as Board members by at least a majority of the
Board members  described in clause (i) who were still in office at the time such
election or nomination was approved by the Board.

     (o)  "Continuous  Service"  means that the  provision  of  services  to the
Company or a Related Entity in any capacity of Employee, Director or Consultant,
is not  interrupted  or terminated.  Continuous  Service shall not be considered
interrupted  in the case of (i) any approved  leave of absence,  (ii)  transfers
among the Company,  any Related  Entity,  or any

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successor,  in any capacity of Employee,  Director or  Consultant,  or (iii) any
change in status as long as the individual remains in the service of the Company
or a Related Entity in any capacity of Employee,  Director or Consultant (except
as  otherwise  provided in the Award  Agreement).  An approved  leave of absence
shall  include sick leave,  military  leave,  or any other  authorized  personal
leave.  For purposes of each  Incentive  Stock Option granted under the Plan, if
such leave exceeds ninety (90) days, and  reemployment  upon  expiration of such
leave is not guaranteed by statute or contract,  then the Incentive Stock Option
shall be treated as a Non-Qualified Stock Option on the day three (3) months and
one (1) day following the expiration of such ninety (90) day period.

     (p) "Corporate Transaction" means any of the following transactions:

          (i) a  merger  or  consolidation  in  which  the  Company  is not  the
     surviving  entity,  except for a transaction the principal purpose of which
     is to change the state in which the Company is incorporated;

          (ii) the sale,  transfer or other  disposition of all or substantially
     all of the  assets  of the  Company  (including  the  capital  stock of the
     Company's subsidiary corporations);

          (iii) approval by the Company's  shareholders  of any plan or proposal
     for the complete liquidation or dissolution of the Company;

          (iv) any reverse  merger in which the Company is the surviving  entity
     but in which  securities  possessing  more than fifty  percent (50%) of the
     total  combined  voting power of the Company's  outstanding  securities are
     transferred  to a person  or  persons  different  from  those who held such
     securities immediately prior to such merger; or

          (v)  acquisition by any person or related group of persons (other than
     the Company or by a Company-sponsored  employee benefit plan) of beneficial
     ownership  (within  the  meaning  of Rule  13d-3  of the  Exchange  Act) of
     securities  possessing  more than fifty percent (50%) of the total combined
     voting power of the Company's  outstanding  securities (whether or not in a
     transaction also constituting a Change in Control),  but excluding any such
     transaction  that the  Administrator  determines  shall not be a  Corporate
     Transaction.

     (q) "Director" means a member of the Board or the board of directors of any
Related Entity.

     (r)  "Disability"  means a Grantee would qualify for benefit payments under
the long-term  disability  policy of the Company or the Related  Entity to which
the Grantee  provides  services  regardless of whether the Grantee is covered by
such policy.  If the Company or the Related Entity to which the Grantee provides
service does not have a long-term  disability plan in place,  "Disability" means
that a Grantee  is  permanently  unable to carry  out the  responsibilities  and
functions  of the  position  held by the  Grantee  by  reason  of any  medically
determinable physical or mental impairment.  A Grantee will not be considered to
have incurred

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a Disability  unless he or she furnishes proof of such impairment  sufficient to
satisfy the Administrator in its discretion.

     (s)  "Dividend  Equivalent  Right" means a right  entitling  the Grantee to
compensation measured by dividends paid with respect to Common Stock.

     (t) "Employee" means any person,  including an Officer or Director,  who is
an employee of the Company or any Related  Entity.  The payment of a  director's
fee by the Company or a Related  Entity shall not be  sufficient  to  constitute
"employment" by the Company.

     (u) "Exchange Act" means the Securities Exchange Act of 1934, as amended.

     (v) "Fair Market  Value" means,  as of any date,  the value of Common Stock
determined as follows:

          (i) Where there exists a public market for the Common Stock,  the Fair
     Market Value shall be (A) the closing price for a Share for the last market
     trading day prior to the time of the determination (or, if no closing price
     was  reported  on that date,  on the last  trading  date on which a closing
     price was reported) on the stock exchange  determined by the  Administrator
     to be the  primary  market  for the  Common  Stock or the  Nasdaq  National
     Market, whichever is applicable or (B) if the Common Stock is not traded on
     any such exchange or national market system, the average of the closing bid
     and asked  prices of a Share on the  Nasdaq  Small Cap  Market  for the day
     prior to the time of the determination (or, if no such prices were reported
     on that date, on the last date on which such prices were reported), in each
     case,  as reported in The Wall Street  Journal or such other  source as the
     Administrator deems reliable; or

          (ii) In the absence of an  established  market for the Common Stock of
     the type  described in (i),  above,  the Fair Market Value thereof shall be
     determined by the Administrator in good faith.

     (w) "Good  Reason"  means the  occurrence  after a  Corporate  Transaction,
Change in Control or a Related Entity Disposition of any of the following events
or conditions unless consented to by the Grantee:

          (i)  (A)  a  change  in  the  Grantee's  status,  title,  position  or
     responsibilities  which  represents  an adverse  change from the  Grantee's
     status, title, position or responsibilities as in effect at any time within
     six (6) months  preceding  the date of a Corporate  Transaction,  Change in
     Control or Related Entity  Disposition or at any time thereafter or (B) the
     assignment  to the  Grantee  of any  duties or  responsibilities  which are
     inconsistent   with   the   Optionee's   status,    title,    position   or
     responsibilities  as in effect at any time within six (6) months  preceding
     the date of a Corporate  Transaction,  Change in Control or Related  Entity
     Disposition or at any time thereafter; or

          (ii)  reduction in the Grantee's  base salary to a level below that in
     effect at any time within six (6) months  preceding the date of a Corporate
     Transaction, Change in Control or Related Entity Disposition or at any time
     thereafter.

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     (x) "Grantee"  means an Employee,  Director or  Consultant  who receives an
Award pursuant to an Award Agreement under the Plan.

     (y)  "Immediate  Family" means 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
Grantee's  household  (other than a tenant or employee),  a trust in which these
persons  have  more than  fifty  percent  (50%) of the  beneficial  interest,  a
foundation  in which these  persons (or the Grantee)  control the  management of
assets,  and any other  entity in which these  persons (or the Grantee) own more
than fifty percent (50%) of the voting interests.

     (z)  "Incentive  Stock  Option"  means an Option  intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code.

     (aa)  "Non-Qualified  Stock Option" means an Option not intended to qualify
as an Incentive Stock Option.

     (bb) "Officer" means a person who is an officer of the Company or a Related
Entity  within the meaning of Section 16 of the  Exchange  Act and the rules and
regulations promulgated thereunder.

     (cc)  "Option"  means an option to  purchase  Shares  pursuant  to an Award
Agreement granted under the Plan.

     (dd)  "Parent"  means a  "parent  corporation,"  whether  now or  hereafter
existing, as defined in Section 424(e) of the Code.

     (ee)  "Performance  Shares" means Shares or an Award  denominated in Shares
which may be earned in whole or in part upon attainment of performance  criteria
established by the Administrator.

     (ff) "Performance  Units" means an Award which may be earned in whole or in
part upon attainment of performance  criteria  established by the  Administrator
and which may be settled for cash,  Shares or other  securities or a combination
of cash, Shares or other securities as established by the Administrator.

     (gg) "Plan" means this 2000 Stock Incentive Plan.

     (hh)  "Related  Entity"  means any  Parent,  Subsidiary  and any  business,
corporation, partnership, limited liability company or other entity in which the
Company,  a Parent  or a  Subsidiary  holds a  substantial  ownership  interest,
directly or indirectly.

     (ii) "Related  Entity  Disposition"  means the sale,  distribution or other
disposition by the Company, a Parent or a Subsidiary of all or substantially all
of the interests of the Company,  a Parent or a Subsidiary in any Related Entity
effected by a sale, merger or

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consolidation or other transaction  involving that Related Entity or the sale of
all or  substantially  all of the assets of that Related Entity,  other than any
Related Entity Disposition to the Company, a Parent or a Subsidiary.

     (jj)  "Restricted  Stock" means Shares issued under the Plan to the Grantee
for such  consideration,  if any, and subject to such  restrictions on transfer,
rights of first refusal, repurchase provisions, forfeiture provisions, and other
terms and conditions as established by the Administrator.

     (kk) "Rule  16b-3" means Rule 16b-3  promulgated  under the Exchange Act or
any successor thereto.

     (ll) "SAR" means a stock appreciation right entitling the Grantee to Shares
or  cash  compensation,  as  established  by  the  Administrator,   measured  by
appreciation in the value of Common Stock.

     (mm) "Share" means a share of the Common Stock.

     (nn)  "Subsidiary"  means  a  "subsidiary   corporation,"  whether  now  or
hereafter existing, as defined in Section 424(f) of the Code.

     3. Stock Subject to the Plan.

     (a) Subject to the provisions of Section 10, below,  the maximum  aggregate
number of Shares which may be issued pursuant to all Awards (including Incentive
Stock Options) is 3,000,000  Shares.  The Shares to be issued pursuant to Awards
may be authorized, but unissued, or reacquired Common Stock.

     (b) Any  Shares  covered  by an Award (or  portion  of an  Award)  which is
forfeited  or  canceled,  expires or is settled in cash,  shall be deemed not to
have been issued for purposes of  determining  the maximum  aggregate  number of
Shares which may be issued under the Plan. Shares that actually have been issued
under the Plan  pursuant to an Award shall not be returned to the Plan and shall
not become available for future issuance under the Plan, except that if unvested
Shares are forfeited,  or repurchased by the Company at their original  purchase
price, such Shares shall become available for future grant under the Plan.

     4. Administration of the Plan.

     (a) Plan Administrator.

          (i)  Administration  with  Respect to  Directors  and  Officers.  With
     respect to grants of Awards to Directors or Employees who are also Officers
     or  Directors  of the Company,  the Plan shall be  administered  by (A) the
     Board or (B) a Committee  designated by the Board, which Committee shall be
     constituted  in such a manner  as to  satisfy  the  Applicable  Laws and to
     permit  such grants and  related  transactions  under the Plan to be exempt
     from Section

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     16(b) of the Exchange Act in accordance  with Rule 16b-3.  Once  appointed,
     such Committee  shall  continue to serve in its  designated  capacity until
     otherwise directed by the Board.

          (ii)  Administration  With Respect to Consultants and Other Employees.
     With  respect  to  grants of Awards to  Employees  or  Consultants  who are
     neither  Directors  nor  Officers  of  the  Company,   the  Plan  shall  be
     administered  by (A) the Board or (B) a Committee  designated by the Board,
     which  Committee  shall be  constituted  in such a manner as to satisfy the
     Applicable Laws. Once appointed,  such Committee shall continue to serve in
     its designated  capacity until otherwise  directed by the Board.  The Board
     may  authorize one or more Officers to grant such Awards and may limit such
     authority as the Board determines from time to time.

          (iii)  Administration  Errors.  In the event an Award is  granted in a
     manner  inconsistent with the provisions of this subsection (a), such Award
     shall be  presumptively  valid as of its grant date to the extent permitted
     by the Applicable Laws.

     (b)  Powers  of the  Administrator.  Subject  to  Applicable  Laws  and the
provisions of the Plan  (including  any other powers given to the  Administrator
hereunder),  and except as otherwise  provided by the Board,  the  Administrator
shall have the authority, in its discretion:

          (i) to select the Employees,  Directors and Consultants to whom Awards
     may be granted from time to time hereunder;

          (ii) to  determine  whether  and to what  extent  Awards  are  granted
     hereunder;

          (iii) to  determine  the  number  of  Shares  or the  amount  of other
     consideration to be covered by each Award granted hereunder;

          (iv) to approve forms of Award Agreements for use under the Plan;

          (v) to  determine  the  terms  and  conditions  of any  Award  granted
     hereunder;

          (vi) to amend the terms of any  outstanding  Award  granted  under the
     Plan, provided that any amendment that would adversely affect the Grantee's
     rights under an  outstanding  Award shall not be made without the Grantee's
     written consent;

          (vii) to  construe  and  interpret  the  terms of the Plan and  Awards
     granted pursuant to the Plan,  including without limitation,  any notice of
     Award or Award Agreement, granted pursuant to the Plan;

          (viii) to establish additional terms, conditions,  rules or procedures
     to accommodate the rules or laws of applicable foreign jurisdictions and to
     afford Grantees  favorable  treatment under such laws;  provided,  however,
     that no Award shall be granted under

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     any such additional  terms,  conditions,  rules or procedures with terms or
     conditions which are inconsistent with the provisions of the Plan; and

          (ix) to take such other action, not inconsistent with the terms of the
     Plan, as the Administrator deems appropriate.

     5. Eligibility. Awards other than Incentive Stock Options may be granted to
Employees,  Directors and  Consultants.  Incentive  Stock Options may be granted
only to  Employees  of the  Company,  a Parent  or a  Subsidiary.  An  Employee,
Director or Consultant who has been granted an Award may, if otherwise eligible,
be granted additional Awards. Awards may be granted to such Employees, Directors
or Consultants who are residing in foreign  jurisdictions  as the  Administrator
may determine from time to time.

     6. Terms and Conditions of Awards.

     (a) Type of Awards. The Administrator is authorized under the Plan to award
any type of  arrangement  to an  Employee,  Director or  Consultant  that is not
inconsistent  with the  provisions of the Plan and that by its terms involves or
might involve the issuance of (i) Shares, (ii) an Option, a SAR or similar right
with a fixed or variable  price  related to the Fair Market  Value of the Shares
and with an exercise or conversion privilege related to the passage of time, the
occurrence of one or more events, or the satisfaction of performance criteria or
other  conditions,  or (iii) any other  security with the value derived from the
value of the Shares.  Such awards include,  without limitation,  Options,  SARs,
sales or bonuses of Restricted Stock,  Dividend  Equivalent Rights,  Performance
Units or  Performance  Shares,  and an Award may consist of one such security or
benefit, or two (2) or more of them in any combination or alternative.

     (b)  Designation  of Award.  Each Award  shall be  designated  in the Award
Agreement. In the case of an Option, the Option shall be designated as either an
Incentive Stock Option or a Non-Qualified Stock Option. However, notwithstanding
such  designation,  to the extent that the aggregate Fair Market Value of Shares
subject  to  Options   designated  as  Incentive   Stock  Options  which  become
exercisable  for the first time by a Grantee during any calendar year (under all
plans of the Company or any Parent or Subsidiary) exceeds $100,000,  such excess
Options,  to the extent of the Shares covered thereby in excess of the foregoing
limitation,  shall be treated as Non-Qualified Stock Options.  For this purpose,
Incentive  Stock  Options shall be taken into account in the order in which they
were granted,  and the Fair Market Value of the Shares shall be determined as of
the date the Option with respect to such Shares is granted.

     (c)   Conditions  of  Award.   Subject  to  the  terms  of  the  Plan,  the
Administrator  shall  determine the  provisions,  terms,  and conditions of each
Award  including,  but not limited to, the Award  vesting  schedule,  repurchase
provisions,  rights of first  refusal,  forfeiture  provisions,  form of payment
(cash,  Shares, or other  consideration)  upon settlement of the Award,  payment
contingencies,  and  satisfaction of any performance  criteria.  The performance
criteria  established  by the  Administrator  may be  based  on any one  of,  or
combination of, increase in share price,  earnings per share,  total stockholder
return, return on equity, return on assets, return on investment,  net operating
income,   cash  flow,  revenue,   economic  value  added,   personal

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management  objectives,   or  other  measure  of  performance  selected  by  the
Administrator.  Partial  achievement  of the specified  criteria may result in a
payment or vesting  corresponding  to the degree of  achievement as specified in
the Award Agreement.

     (d) Acquisitions and Other Transactions. The Administrator may issue Awards
under the Plan in settlement, assumption or substitution for, outstanding awards
or  obligations  to grant  future  awards in  connection  with the  Company or a
Related Entity  acquiring  another  entity,  an interest in another entity or an
additional interest in a Related Entity whether by merger, stock purchase, asset
purchase or other form of transaction.

     (e) Deferral of Award Payment.  The Administrator may establish one or more
programs under the Plan to permit selected  Grantees the opportunity to elect to
defer  receipt of  consideration  upon  exercise  of an Award,  satisfaction  of
performance  criteria, or other event that absent the election would entitle the
Grantee to payment or receipt of Shares or other  consideration  under an Award.
The  Administrator  may  establish the election  procedures,  the timing of such
elections,  the  mechanisms  for  payments  of, and accrual of interest or other
earnings,  if any, on amounts,  Shares or other  consideration so deferred,  and
such other terms, conditions,  rules and procedures that the Administrator deems
advisable for the administration of any such deferral program.

     (f) Award Exchange  Programs.  The  Administrator may establish one or more
programs under the Plan to permit  selected  Grantees to exchange an Award under
the Plan for one or more other types of Awards  under the Plan on such terms and
conditions as determined by the Administrator from time to time.

     (g) Separate Programs. The Administrator may establish one or more separate
programs under the Plan for the purpose of issuing particular forms of Awards to
one or more classes of Grantees on such terms and  conditions  as  determined by
the Administrator from time to time.

     (h)  Early  Exercise.  The Award  Agreement  may,  but need not,  include a
provision whereby the Grantee may elect at any time while an Employee,  Director
or  Consultant to exercise any part or all of the Award prior to full vesting of
the Award. Any unvested Shares received pursuant to such exercise may be subject
to a  repurchase  right in favor of the  Company  or a Related  Entity or to any
other restriction the Administrator determines to be appropriate.

     (i) Term of Award.  The term of each Award  shall be the term stated in the
Award Agreement,  provided,  however, that the term of an Incentive Stock Option
shall be no more than ten (10) years from the date of grant thereof. However, in
the case of an Incentive  Stock Option granted to a Grantee who, at the time the
Option is granted,  owns stock  representing  more than ten percent (10%) of the
voting power of all classes of stock of the Company or any Parent or Subsidiary,
the term of the Incentive  Stock Option shall be five (5) years from the date of
grant thereof or such shorter term as may be provided in the Award Agreement.

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     (j)  Transferability  of Awards.  Incentive  Stock Options may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner other
than by will or by the laws of descent  or  distribution  and may be  exercised,
during the lifetime of the Grantee, only by the Grantee; provided, however, that
the Grantee may designate a beneficiary of the Grantee's  Incentive Stock Option
in the event of the Grantee's death on a beneficiary  designation  form provided
by the  Administrator.  Other  Awards  may be  transferred  by gift or through a
domestic  relations  order to members of the Grantee's  Immediate  Family to the
extent  provided  in the Award  Agreement  or in the  manner  and to the  extent
determined by the Administrator.

     (k) Time of  Granting  Awards.  The date of grant of an Award shall for all
purposes be the date on which the Administrator makes the determination to grant
such Award, or such other date as is determined by the Administrator.  Notice of
the grant determination shall be given to each Employee,  Director or Consultant
to whom an Award is so granted  within a reasonable  time after the date of such
grant.

     7. Award Exercise or Purchase Price, Consideration and Taxes.

     (a) Exercise or Purchase Price. The exercise or purchase price, if any, for
an Award shall be as follows:

          (i) In the case of an Incentive Stock Option:

               (A) granted to an Employee  who, at the time of the grant of such
          Incentive Stock Option owns stock  representing  more than ten percent
          (10%) of the voting  power of all  classes of stock of the  Company or
          any Parent or  Subsidiary,  the per Share  exercise price shall be not
          less than one hundred ten percent  (110%) of the Fair Market Value per
          Share on the date of grant; or

               (B) granted to any Employee  other than an Employee  described in
          the preceding  paragraph,  the per Share  exercise  price shall be not
          less than one  hundred  percent  (100%) of the Fair  Market  Value per
          Share on the date of grant.

          (ii) In the  case  of a  Non-Qualified  Stock  Option,  the per  Share
     exercise price shall be not less than eighty-five percent (85%) of the Fair
     Market Value per Share on the date of grant unless otherwise  determined by
     the Administrator.

          (iii) In the case of other Awards,  such price as is determined by the
     Administrator.

          (iv) Notwithstanding the foregoing provisions of this Section 7(a), in
     the case of an Award issued pursuant to Section 6(d),  above,  the exercise
     or purchase price for the Award shall be determined in accordance  with the
     principles of Section 424(a) of the Code.

     (b) Consideration. Subject to Applicable Laws, the consideration to be paid
for the Shares to be issued upon exercise or purchase of an Award  including the
method of payment, shall be determined by the Administrator (and, in the case of
an  Incentive  Stock

                                       10
<PAGE>

Option,  shall be  determined  at the time of grant).  In  addition to any other
types of consideration  the  Administrator  may determine,  the Administrator is
authorized  to accept as  consideration  for  Shares  issued  under the Plan the
following, provided that the portion of the consideration equal to the par value
of the Shares must be paid in cash or other legal consideration permitted by the
Delaware General Corporation Law:

          (i) cash;

          (ii) check;

          (iii)  delivery  of  Grantee's  promissory  note with  such  recourse,
     interest,   security,   and  redemption  provisions  as  the  Administrator
     determines as appropriate;

          (iv)  surrender of Shares or delivery of a properly  executed  form of
     attestation  of  ownership  of  Shares  as the  Administrator  may  require
     (including withholding of Shares otherwise deliverable upon exercise of the
     Award)  which  have  a Fair  Market  Value  on the  date  of  surrender  or
     attestation equal to the aggregate exercise price of the Shares as to which
     said Award shall be exercised (but only to the extent that such exercise of
     the  Award  would not  result in an  accounting  compensation  charge  with
     respect to the  Shares  used to pay the  exercise  price  unless  otherwise
     determined by the Administrator);

          (v) with respect to Options,  payment through a broker-dealer sale and
     remittance  procedure  pursuant  to which the  Grantee  (A)  shall  provide
     written  instructions to a Company designated  brokerage firm to effect the
     immediate  sale of some or all of the  purchased  Shares  and  remit to the
     Company,  out of the  sale  proceeds  available  on  the  settlement  date,
     sufficient  funds to cover the  aggregate  exercise  price  payable for the
     purchased Shares and (B) shall provide written directives to the Company to
     deliver  the  certificates  for  the  purchased  Shares  directly  to  such
     brokerage firm in order to complete the sale transaction; or

          (vi) any combination of the foregoing methods of payment.

     (c) Taxes.  No Shares shall be  delivered  under the Plan to any Grantee or
other person until such Grantee or other person has made arrangements acceptable
to the  Administrator  for the satisfaction of any foreign,  federal,  state, or
local income and  employment tax  withholding  obligations,  including,  without
limitation,  obligations  incident to the receipt of Shares or the disqualifying
disposition of Shares  received on exercise of an Incentive  Stock Option.  Upon
exercise of an Award,  the Company  shall  withhold or collect  from  Grantee an
amount sufficient to satisfy such tax obligations.

     8. Exercise of Award.

     (a) Procedure for Exercise; Rights as a Stockholder.

          (i) Any Award granted hereunder shall be exercisable at such times and
     under such conditions as determined by the Administrator under the terms of
     the Plan and specified in the Award Agreement.

                                       11
<PAGE>

          (ii) An Award shall be deemed to be exercised  when written  notice of
     such exercise has been given to the Company in accordance with the terms of
     the Award by the person entitled to exercise the Award and full payment for
     the Shares with respect to which the Award is exercised,  including, to the
     extent selected,  use of the broker-dealer sale and remittance procedure to
     pay the purchase price as provided in Section  7(b)(v).  Until the issuance
     (as evidenced by the appropriate  entry on the books of the Company or of a
     duly  authorized  transfer  agent of the Company) of the stock  certificate
     evidencing such Shares,  no right to vote or receive dividends or any other
     rights as a  stockholder  shall exist with respect to Shares  subject to an
     Award,  notwithstanding  the  exercise  of an  Option or other  Award.  The
     Company shall issue (or cause to be issued) such stock certificate promptly
     upon exercise of the Award.  No  adjustment  will be made for a dividend or
     other  right  for  which  the  record  date is prior to the date the  stock
     certificate is issued, except as provided in the Award Agreement or Section
     10, below.

     (b) Exercise of Award Following Termination of Continuous Service.

          (i) An Award may not be exercised after the  termination  date of such
     Award set forth in the Award  Agreement and may be exercised  following the
     termination of a Grantee's  Continuous  Service only to the extent provided
     in the Award Agreement.

          (ii) Where the Award Agreement  permits a Grantee to exercise an Award
     following  the  termination  of  the  Grantee's  Continuous  Service  for a
     specified period,  the Award shall terminate to the extent not exercised on
     the last day of the  specified  period or the last day of the original term
     of the Award, whichever occurs first.

          (iii) Any Award  designated as an Incentive Stock Option to the extent
     not  exercised  within  the  time  permitted  by law  for the  exercise  of
     Incentive Stock Options following the termination of a Grantee's Continuous
     Service shall convert  automatically  to a  Non-Qualified  Stock Option and
     thereafter  shall be exercisable  as such to the extent  exercisable by its
     terms for the period specified in the Award Agreement.

     9. Conditions Upon Issuance of Shares.

     (a) Shares shall not be issued  pursuant to the exercise of an Award unless
the exercise of such Award and the issuance and delivery of such Shares pursuant
thereto shall comply with all Applicable  Laws, and shall be further  subject to
the approval of counsel for the Company with respect to such compliance.

     (b) As a condition to the exercise of an Award, the Company may require the
person  exercising  such Award to represent  and warrant at the time of any such
exercise that the Shares are being purchased only for investment and without any
present  intention  to sell or  distribute  such  Shares  if, in the  opinion of
counsel for the Company,  such a  representation  is required by any  Applicable
Laws.

     10.  Adjustments  Upon Changes in  Capitalization.  Subject to any required
action by the stockholders of the Company,  the number of Shares covered by each
outstanding  Award,  and the  number of Shares  which have been  authorized  for
issuance under the Plan but as to which no

                                       12
<PAGE>

Awards  have yet been  granted  or which  have been  returned  to the Plan,  the
exercise or purchase price of each such outstanding  Award, as well as any other
terms  that  the   Administrator   determines   require   adjustment   shall  be
proportionately  adjusted  for (i) any  increase  or  decrease  in the number of
issued Shares resulting from a stock split, reverse stock split, stock dividend,
combination or  reclassification  of the Shares,  or similar event affecting the
Shares,  (ii) any other  increase  or  decrease  in the number of issued  Shares
effected  without  receipt  of  consideration  by the  Company,  or (iii) as the
Administrator  may  determine  in its  discretion,  any other  transaction  with
respect  to Common  Stock to which  Section  424(a) of the Code  applies  or any
similar  transaction;  provided,  however  that  conversion  of any  convertible
securities  of the Company  shall not be deemed to have been  "effected  without
receipt of  consideration."  Such adjustment shall be made by the  Administrator
and its  determination  shall be final,  binding and  conclusive.  Except as the
Administrator  determines,  no issuance by the Company of shares of stock of any
class,  or  securities  convertible  into  shares of stock of any  class,  shall
affect,  and no  adjustment  by reason hereof shall be made with respect to, the
number or price of Shares subject to an Award.

     11. Corporate  Transactions/Changes in Control/Related Entity Dispositions.
Except as may be provided in an Award Agreement:

     (a) In the event of any Corporate  Transaction,  each Award which is at the
time  outstanding  under the Plan  automatically  shall  become fully vested and
exercisable  and be  released  from any  restrictions  on  transfer  (other than
transfer  restrictions  applicable  to Options)  and  repurchase  or  forfeiture
rights,  immediately  prior to the specified  effective  date of such  Corporate
Transaction,  for all of the  Shares  at the  time  represented  by such  Award.
Effective upon the  consummation of the Corporate  Transaction,  all outstanding
Awards  under the Plan  shall  terminate.  However,  all such  Awards  shall not
terminate  if the Awards  are, in  connection  with the  Corporate  Transaction,
assumed  by the  successor  corporation  or  Parent  thereof.  In  addition,  an
outstanding  Award under the Plan shall not so fully vest and be exercisable and
released  from such  limitations  if and to the  extent:  (i) such  Award is, in
connection  with the  Corporate  Transaction,  either  assumed by the  successor
corporation or Parent  thereof or replaced with a comparable  Award with respect
to shares of the capital stock of the successor corporation or Parent thereof or
(ii) such Award is to be replaced with a cash incentive program of the successor
corporation  which preserves the compensation  element of such Award existing at
the time of the  Corporate  Transaction  and provides for  subsequent  payout in
accordance with the same vesting  schedule  applicable to such Award;  provided,
however, that such Award (if assumed),  the replacement Award (if replaced),  or
the cash incentive program automatically shall become fully vested,  exercisable
and payable  and be  released  from any  restrictions  on  transfer  (other than
transfer restrictions applicable to Options) and repurchase or forfeiture rights
immediately upon termination of the Grantee's  Continuous Service  (substituting
the  successor  employer  corporation  for  "Company or Related  Entity" for the
definition of "Continuous  Service") if such Continuous Service is terminated by
the  successor  company  without Cause or  voluntarily  by the Grantee with Good
Reason within twelve (12) months of the Corporate Transaction. The determination
of Award comparability above shall be made by the Administrator.

                                       13
<PAGE>

     (b)  Following a Change in Control  (other  than a Change in Control  which
also is a Corporate  Transaction)  and upon the  termination  of the  Continuous
Service of a Grantee if such Continuous  Service is terminated by the Company or
Related  Entity  without  Cause or  voluntarily  by the Grantee with Good Reason
within  twelve (12) months of a Change in  Control,  each Award of such  Grantee
which is at the time outstanding under the Plan automatically shall become fully
vested and exercisable and be released from any  restrictions on transfer (other
than transfer  restrictions  applicable to Options) and repurchase or forfeiture
rights, immediately upon the termination of such Continuous Service.

     (c) Effective upon the  consummation of a Related Entity  Disposition,  for
purposes of the Plan and all Awards,  the Continuous Service of each Grantee who
is at the time engaged  primarily in service to the Related  Entity  involved in
such Related Entity  Disposition  shall be deemed to terminate and each Award of
such Grantee which is at the time outstanding under the Plan automatically shall
become fully vested and  exercisable  and be released from any  restrictions  on
transfer (other than transfer restrictions applicable to Options) and repurchase
or forfeiture rights for all of the Shares at the time represented by such Award
and  be  exercisable  in  accordance  with  the  terms  of the  Award  Agreement
evidencing such Award.  However,  such Continuous Service shall be not be deemed
to  terminate  if  such  Award  is,  in  connection   with  the  Related  Entity
Disposition,  assumed by the successor entity or its Parent.  In addition,  such
Continuous  Service  shall not be deemed to terminate and an  outstanding  Award
under the Plan shall not so fully vest and be exercisable and released from such
limitations  if and to the  extent:  (i) such Award is, in  connection  with the
Related Entity Disposition,  either to be assumed by the successor entity or its
parent or to be replaced  with a  comparable  Award with respect to interests in
the  successor  entity or its parent or (ii) such Award is to be replaced with a
cash incentive  program of the successor entity which preserves the compensation
element of such Award existing at the time of the Related Entity Disposition and
provides for  subsequent  payout in  accordance  with the same vesting  schedule
applicable to such Award;  provided,  however, that such Award (if assumed), the
replacement  Award (if replaced),  or the cash incentive  program  automatically
shall  become fully  vested,  exercisable  and payable and be released  from any
restrictions  on  transfer  (other  than  transfer  restrictions  applicable  to
Options) and repurchase or forfeiture rights immediately upon termination of the
Grantee's  Continuous  Service  (substituting the successor  employer entity for
"Company or Related Entity" for the definition of "Continuous  Service") if such
Continuous  Service is  terminated  by the  successor  entity  without  Cause or
voluntarily  by the Grantee  with Good Reason  within  twelve (12) months of the
Related Entity Disposition. The determination of Award comparability above shall
be made by the Administrator.

     12.  Effective Date and Term of Plan. The Plan shall become  effective upon
the  earlier  to occur of its  adoption  by the  Board  or its  approval  by the
stockholders of the Company.  It shall continue in effect for a term of ten (10)
years unless sooner  terminated.  Subject to Section 17, below,  and  Applicable
Laws, Awards may be granted under the Plan upon its becoming effective.

     13. Amendment, Suspension or Termination of the Plan.

                                       14
<PAGE>

     (a) The Board may at any time amend,  suspend or terminate the Plan. To the
extent  necessary  to comply with  Applicable  Laws,  the Company  shall  obtain
stockholder approval of any Plan amendment in such a manner and to such a degree
as required.

     (b) No Award may be  granted  during  any  suspension  of the Plan or after
termination of the Plan.

     (c)  Any  amendment,  suspension  or  termination  of the  Plan  (including
termination of the Plan under Section 12, above) shall not affect Awards already
granted,  and such Awards  shall  remain in full force and effect as if the Plan
had not been amended, suspended or terminated,  unless mutually agreed otherwise
between the Grantee and the  Administrator,  which  agreement must be in writing
and signed by the Grantee and the Company.

     14. Reservation of Shares.

     (a) The Company, during the term of the Plan, will at all times reserve and
keep  available  such  number of Shares as shall be  sufficient  to satisfy  the
requirements of the Plan.

     (b) The inability of the Company to obtain  authority  from any  regulatory
body having jurisdiction,  which authority is deemed by the Company's counsel to
be necessary  to the lawful  issuance  and sale of any Shares  hereunder,  shall
relieve the Company of any  liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.

     15.  No  Effect on Terms of  Employment/Consulting  Relationship.  The Plan
shall not  confer  upon any  Grantee  any right with  respect  to the  Grantee's
Continuous  Service,  nor shall it interfere in any way with his or her right or
the Company's right to terminate the Grantee's  Continuous  Service at any time,
with or without cause.

     16. No Effect on Retirement and Other Benefit Plans. Except as specifically
provided  in a  retirement  or other  benefit  plan of the  Company or a Related
Entity,  Awards  shall not be deemed  compensation  for  purposes  of  computing
benefits or contributions  under any retirement plan of the Company or a Related
Entity,  and shall not affect any benefits  under any other  benefit plan of any
kind or any benefit plan subsequently instituted under which the availability or
amount  of  benefits  is  related  to level of  compensation.  The Plan is not a
"Retirement  Plan" or  "Welfare  Plan"  under  the  Employee  Retirement  Income
Security Act of 1974, as amended.

     17.  Stockholder  Approval.  The grant of Incentive Stock Options under the
Plan shall be subject to approval  by the  stockholders  of the  Company  within
twelve  (12)  months  before  or after  the date the Plan is  adopted  excluding
Incentive Stock Options issued in substitution  for outstanding  Incentive Stock
Options pursuant to Section 424(a) of the Code. Such stockholder  approval shall
be  obtained  in the degree and  manner  required  under  Applicable  Laws.  The
Administrator may grant Incentive Stock Options under the Plan prior to approval
by the  stockholders,  but until such  approval is obtained,  no such  Incentive
Stock Option shall be exercisable. In the event that stockholder approval is not
obtained within the twelve (12) month

                                       15
<PAGE>

period provided above, all Incentive Stock Options  previously granted under the
Plan shall be exercisable as Non-Qualified Stock Options.

                                       16WILLAMETTE INDUSTRIES
                            1995 LONG-TERM INCENTIVE
                                COMPENSATION PLAN

         1.  GENERAL.  Pursuant to the terms and  conditions  of the  WILLAMETTE
INDUSTRIES 1995 LONG-TERM INCENTIVE COMPENSATION PLAN (the "Plan"),  hereinafter
set forth,  the Committee  specified in Article 2 may from time to time grant or
award to eligible employees of Willamette Industries,  Inc. ("Company"),  and of
those corporations ("Subsidiaries") in which Company owns at least 50 percent of
the total  combined  voting  power of all classes of stock,  options to purchase
shares  of  the  $.50  par  value  common  stock  ("Stock")  of  Company,  stock
appreciation  rights,  and restricted Stock. In addition,  the Plan provides for
the automatic grant of options to  Non-Employee  Directors as defined in Article
8. Such options,  stock appreciation  rights, and restricted Stock are sometimes
referred to  collectively  as "grants and awards." The purpose of the Plan is to
motivate special  achievement by officers and other key employees of Company and
its Subsidiaries by assisting them in acquiring or increasing an equity interest
in Company, and, in the case of Non-Employee  Directors, to align their interest
more closely to that of Company. The options shall be nonqualified stock options
subject to Section 83 of the Internal  Revenue  Code,  and not  incentive  stock
options subject to Section 422A of the Internal Revenue Code.

         2. ADMINISTRATION.   The Board of  Directors of Company  ("the  Board")
shall  designate  a  Committee  of not less than two  members of the Board ("the
Committee")  who  shall  administer  the Plan and serve at the  pleasure  of the
Board.  The number and  identity  of the  members  of, and any name given to the
Committee,  may be changed  by the Board at any time and from time to time.  The
Committee may also have other  duties,  as would be the case if the Board should
designate the Company's  Compensation  and Nomination  Committee (or a successor
thereto) to act as the Committee  under the Plan. No person shall be eligible or
continue  to  serve  as a  member  of the  Committee  unless  such  person  is a
"disinterested  person"  within the meaning of Rule 16b-3 ("Rule  16b-3") of the
General  Rules and  Regulations  under the  Securities  Exchange Act of 1934, as
amended (the "Exchange Act"), or any law, rule,  regulation,  or other provision
that may  hereafter  replace  such  rule.  Also,  unless  the  Board  determines
otherwise,  members of the  Committee  must be  "outside  directors"  within the
meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended,  and
the rules  thereunder.  Subject  to the  express  provisions  of the  Plan,  the
Committee shall have full and final authority, acting in its sole discretion, to
interpret the Plan, to establish rules and regulations relating to the Plan, and
to take such  action  and make such  determinations  as the  Committee  may deem
necessary or advisable in the  administration  of the Plan.  However,  Committee
shall have no discretion as to any aspect of grants to  Non-Employee  Directors;
these grants shall be governed by Article 8. No member of the Committee shall be
liable for any action or  determination  made in good faith with  respect to the
Plan or any grant or award  made  thereunder,  nor be liable  for any good faith
reliance  upon any report or other  information  furnished  to the  Committee by
Company's officers,  its independent public accountants,  or by any other person
or entity.

         3. ELIGIBILITY.   Except as otherwise  provided in Article 8, employees
eligible to receive grants and awards under the Plan shall be such key employees
(including  officers,  regardless whether they are directors) of Company and its
Subsidiaries  as may be selected from time to time by the Committee.  Except for
the provisions in Articles 5, 6, and 7 setting a  per-

                                     - 1 -
<PAGE>
employee  maximum  limit on the  number  of stock  options,  stock  appreciation
rights,  or shares of  restricted  Stock whose vesting is based on attainment of
one or more  performance  goals,  no provision of the Plan shall be construed to
prohibit the Committee from making additional grants or awards under the Plan to
employees who have  previously  received  grants or awards.  No provision of the
Plan shall be  construed  as  automatically  entitling an employee to a grant or
award,  regardless whether the employee has received a grant or award in a prior
year or has attained a particular executive position or salary level.

         4. SHARES SUBJECT TO THE PLAN.  Subject to Article 16 hereof, the total
number of shares of Stock  issuable  under the Plan shall not exceed  2,750,000.
For  purposes of this  limitation,  (a) any option or stock  appreciation  right
which  terminates or expires without  exercise shall thereafter be deemed not to
have been granted,  and (b) shares of restricted Stock which are forfeited shall
thereafter  be deemed not to have been  issued.  Shares of Stock  available  for
issue under the Plan shall be authorized and unissued  shares or shares acquired
by Company and held in treasury.

         5. STOCK OPTIONS.  The Committee may from time to time grant options to
eligible employees. Subject to appropriate adjustment pursuant to Article 16, no
employee may receive, under the Plan, stock options or stock appreciation rights
which in the aggregate would exceed 350,000 shares of Stock.  The price at which
a share of Stock may be purchased on exercise of an option shall be fixed by the
Committee  at the date of grant of such  option  and  shall not be less than the
fair market value of a share of Stock at that date.  Fair market value,  as used
in this Article 5 and elsewhere in the Plan,  shall,  unless the Committee shall
determine  otherwise,  be the  closing  price of Stock on the date the option is
granted as reported on the NASDAQ  national  market  system for such date or, if
such  closing  price  is not  available  for a date  (because  the date is not a
trading day or  otherwise),  for the next  preceding date for which such closing
price is available.

         At the time an option is  granted,  the  Committee  shall  specify  the
period  during  which it is not  exercisable,  and  whether  the option is to be
thereafter  exercisable  in full or in  installments.  The  Committee  may  also
specify that all the shares become exercisable no later than upon termination of
employment for certain reasons, such as death,  disability,  or retirement.  The
Committee may at any time after the grant accelerate the  exercisability  of the
option.  Options granted under the Plan shall expire not more than ten years and
two days from the date of the grant of the option as specified by the  Committee
(the "stated period of the option") at date of grant.

         No  employee  to whom an option is granted  shall be entitled to any of
the rights of a shareholder of Company with respect to any shares covered by the
option  until  certificates  representing  such  shares  have been issued to the
employee.

         No option may be transferred  except by will or the laws of descent and
distribution  and,  during  the  lifetime  of an  employee  to whom an option is
granted,  such option may be  exercised  only by the  employee,  the  employee's
guardian or legal representative.  Notwithstanding the foregoing, the Committee,
in its sole discretion,  may include in the agreement  referred to in Article 12
evidencing  the grant of an option to an  employee a  provision  permitting  the
employee to transfer such option upon the terms and conditions specified in such
agreement,  provided that the foregoing  provisions of this sentence shall apply
to any  person

                                     - 2 -
<PAGE>

subject to the reporting provisions of Section 16(a) of the Exchange Act only to
the extent that the exemption given by Rule 16b-3 shall continue to be available
to the grant of such option.

         Upon  termination  of  employment  for any  reason  other  than  death,
disability,  or retirement ("disability" and "retirement" are defined in Article
10) of an employee to whom an option has been granted,  the employee may, at any
time prior to the earlier of (a) 30 days after  termination of employment or (b)
the  expiration of the stated  period of the option,  exercise the option to the
same extent, if any, that the option was exercisable by the employee on the date
of termination of employment under the terms of the option.  Notwithstanding the
foregoing,  the Committee may in its discretion,  after giving  consideration to
the  circumstances  of the  termination  of employment of an employee to whom an
option has been  granted,  extend said 30-day  period to a period of three years
after  termination  of  employment.  The  option  shall  expire  on the  date of
termination  of  employment  to the  extent  it was  not  then  exercisable  and
otherwise  shall  expire  upon  the  earlier  of 30 days  (three  years,  if the
Committee  has extended  the period)  after  termination  of  employment  or the
expiration of the stated period of the option.

         Upon the termination of employment by reason of death,  disability,  or
retirement of an employee to whom an option has been granted,  the employee (or,
in case of death, any person or persons,  including the legal  representative of
the  employee's  estate,  to whom the  option  passes  by will or by the laws of
descent and distribution) may, at any time prior to the expiration of the stated
period of the option,  exercise the option to the same extent,  if any, that the
option was  exercisable by the employee on the date of termination of employment
under  the  terms  of the  option.  The  option  shall  expire  on the  date  of
termination  of  employment  to the  extent  it was  not  then  exercisable  and
otherwise shall expire upon the expiration of the stated period of the option.

         Payment upon  exercise of an option shall be made in cash, by certified
check or bank  draft  payable  to the order of  Company  or, at the  Committee's
discretion,  in whole or in part in any other form,  including by personal check
or by the  delivery  to Company of shares of Stock  previously  acquired  by the
employee or by any combination of the foregoing.

         6. STOCK APPRECIATION RIGHTS. The Committee may from time to time award
stock appreciation rights to eligible employees and determine the base price for
each stock  appreciation right (which may be higher than, equal to, or less than
the fair  market  value of a share  of  Stock  on the date of  award).  A "stock
appreciation  right" is a right to receive  cash as provided in this  Article 6.
Subject to  appropriate  adjustment  pursuant  to Article  16, no  employee  may
receive, under the Plan, stock options or stock appreciation rights which in the
aggregate would exceed 350,000 shares of Stock.

         Upon the exercise of a stock appreciation  right, the optionee shall be
entitled  to the  excess of the fair  market  value of one share of Stock on the
date of such exercise over the base price  specified in the award  agreement for
the stock appreciation right.

         Except  as  otherwise  provided  in  this  Article  6,  the  terms  and
conditions  relating to exercise and  expiration  of stock  appreciation  rights
shall be as  determined  by the  Committee  under the same rules as  provided in
Article 5 for stock  options  and shall be  subject  to the same  restraints  on
transferability,  except that the exercise of stock appreciation rights shall be
subject

                                     - 3 -
<PAGE>

to such  conditions  as are  required to prevent  the  employee  from  incurring
liability under Section 16(b) of the Exchange Act.

         7. AWARDS OF RESTRICTED STOCK. The Committee may from time to time make
awards of restricted Stock under the Plan to eligible employees. An award may be
either of two types:

         (a)   Stock  whose vesting is based on years of continuous  employment
after the date of award.

         (b)   Stock whose vesting  is based  on  attainment  of one  or  more
performance goals.

         YEARS OF CONTINUOUS EMPLOYMENT. At the time of an award of shares whose
vesting is based on years of continuous employment,  the Committee shall specify
the number of continuous years of employment  required for vesting,  except that
full vesting shall occur no later than upon  termination of employment by reason
of death,  disability,  or retirement ("disability" and "retirement" are defined
in Article 10). The  Committee  may at any time after the award  accelerate  the
vesting as to part or all the shares awarded.  There is no per-employee  maximum
limit on the  number of shares of  restricted  Stock  whose  vesting is based on
years of continuous employment.

         ATTAINMENT OF GOALS. At the time of an award of shares whose vesting is
based on  attainment  of  performance  goals,  the  Committee  shall specify the
performance  goal or goals  which must be  attained,  and the date by which they
must be attained,  in order to cause the shares to vest. The performance goal or
goals shall be one or more of earnings  per share,  return on equity,  return on
assets, growth in earnings, growth in sales revenue, corporate profitability, or
shareholder returns. These can be measured in comparison to the performance of a
group of peer companies selected by the Committee or based on Company's results.
Notwithstanding   the  foregoing,   full  vesting  shall  occur  upon  death  or
disability.  Also, the Committee may, in its discretion, at the time an award is
made,  specify that the shares shall become fully vested upon  retirement in the
event retirement  occurs before the attainment of the performance goal or goals.
If the  specified  performance  goal  or  goals  are  not met  within  the  time
specified,  the  nonvested  shares  subject  to such  goal  or  goals  shall  be
forfeited. Furthermore, upon termination of employment for any reason other than
death,  disability,  or (in those cases where the Committee  has specified  full
vesting on retirement) retirement of an employee to whom an award has been made,
any  nonvested  shares shall be  forfeited.  Subject to  appropriate  adjustment
pursuant to Article  16, no  employee  may  receive,  under the Plan,  more than
50,000  shares of  restricted  Stock  whose  vesting is based on  attainment  of
performance goals.

         GENERAL PROVISIONS. While the shares are not vested, the employee shall
have all the rights of a  shareholder  of Company  as to the  nonvested  shares,
except  that the  shares may not be sold,  assigned,  transferred,  pledged,  or
otherwise  encumbered.   Certificates   representing  awarded  shares  shall  be
registered in the name of the employee but held (with a stock power  endorsed in
blank) by Company  until the  shares  have  vested,  at which time they shall be
delivered to the employee or legal representative free of restrictions.

                                     - 4 -
<PAGE>

         The  Committee  may, in its  discretion,  provide that a portion of the
award of  restricted  Stock shall be made in cash rather than  shares.  Any such
cash  shall be payable at the same time or times as the shares to which the cash
relates  become vested.  If shares are  forfeited,  the related amount of unpaid
cash shall also be forfeited.

         8. NON-EMPLOYEE DIRECTORS. Grants shall be made to members of the Board
who are not employees of Company or any  Subsidiary  ("Non-Employee  Directors")
only under this Article 8. No person,  including the members of the Board or the
Committee,  shall have any discretion as to the selection of eligible recipients
or the  determination of the type,  amount,  or terms of grants pursuant to this
Article 8. The persons eligible to receive grants pursuant to this Article 8 are
all Non-Employee Directors.

         INITIAL  OPTIONS.  Upon the date of approval  of the Plan by  Company's
shareholders  (the  "Approval  Date"),  each  person who is then a  Non-Employee
Director  shall be  automatically  granted an option (a  "Director  Option")  to
purchase 1,000 shares of Stock. Each person who becomes a Non-Employee  Director
after the Approval Date shall be automatically  granted, on the date such person
becomes a Non-Employee  Director,  an initial  Director Option to purchase 2,000
Shares; provided, however, that a director who was at any time an officer of the
Company  or any  Subsidiary  shall  not be  entitled  to a grant of the  initial
Director Option.

         ANNUAL  OPTIONS.  Upon the date of each  annual  meeting  of  Company's
shareholders  beginning  with the  meeting  in 2001,  each  person who is then a
Non-Employee  Director and who is to continue as a member of the Board following
the  annual  meeting,  and  without  regard  to how long the  person  has been a
Non-Employee  Director or whether the person had ever been an officer of Company
or any Subsidiary,  shall be automatically  granted an annual Director Option to
purchase 2,000 shares of Stock.

         OPTION  PRICE.  The option price for all Director  Options shall be the
fair market value of a share of Stock at the date of grant.

         OPTION AGREEMENTS. Each grant of Director Options made pursuant to this
Article 8 shall be governed by and shall be subject to the terms and  conditions
set forth in an Option  Agreement in the form attached to the Plan as Exhibit A.
Except to the extent  otherwise  provided  in this  Article 8 or in such  Option
Agreement,  each such grant shall be governed by the Plan's provisions  relating
to the grant of options to, and the exercise of options by, employees.

         9. CHANGE IN  CONTROL.  For  purposes of the Plan,  "change in control"
means the  occurrence of any of the  following  events  without  approval by the
affirmative  vote of at least two  thirds of those  members of the Board who (i)
are  members  of the  Board  immediately  prior to the  event,  and (ii) are not
employees of Company or a Subsidiary:

         (a)   The merger or  consolidation of Company with, or the sale of all
or substantially  all the assets of Company to, any person or entity or group of
associated persons or entities.

         (b)   The  attainment  of direct or indirect  beneficial  ownership of
securities of Company which in the aggregate represent 20 percent or more of the
total combined voting power of Company's then issued and outstanding  securities
by any person or entity or group of  associated  persons or  entities  acting in
concert who is not affiliated (within the meaning of the

                                     - 5 -
<PAGE>

Securities Act of 1933) with Company as of November 10, 1994; provided, however,
the Board may at any time in its discretion  increase the 20 percent requirement
but not beyond 40 percent.

         (c)   The  approval  by the  shareholders  of  Company  of any plan or
proposal for the liquidation or dissolution of Company.

         A change in control  shall also be deemed to occur upon a change in the
membership of the Board at any time during any consecutive  24-month period such
that the  "continuity"  directors cease for any reason to constitute at least 70
percent of the Board.  The  continuity  directors are those members of the Board
who were either (i) members of the Board at the  beginning  of such  consecutive
24-month period, or (ii) elected by, or on the nomination or recommendation  of,
at least two thirds of the members of the Board.

         If a change in  control  occurs,  all  options  and stock  appreciation
rights  previously  granted or  awarded  which are not fully  exercisable  shall
become  exercisable in full upon the date of such occurrence and shall remain so
exercisable  until  the  earlier  of (a)  three  years  after  the  date of such
occurrence,  or (b) the expiration of the stated period of the option. After the
end of the  three-year  period,  the  options and rights  shall  revert to being
exercisable in accordance  with their terms,  although no option or rights which
have previously been exercised or otherwise terminated shall become exercisable.
Notwithstanding  the foregoing,  no stock  appreciation  rights may be exercised
within six months of the date of award of the rights.

         Notwithstanding  the  provisions  of  Articles 5 or 6  relating  to the
expiration  of  options  and  stock  appreciation   rights  in  connection  with
termination of employment,  upon termination of employment for any reason (other
than by reason of conduct  which  constitutes  a felony under federal law or the
law of the state in which the  employee  resides)  within  the  two-year  period
following the  occurrence  of a change in control,  the option and rights may be
exercised at any time prior to the earlier of (a) three years after  termination
of employment or (b) the expiration of the stated period of the option.

         If  a  change  in  control  occurs,  all  shares  of  restricted  Stock
previously  awarded  which are not vested shall  become  vested upon the date of
such occurrence.

         10. RIGHT TO RECEIVE CASH ON CHANGE IN CONTROL. If a change in control,
as defined in Article 9,  occurs,  each  employee  (including  those who are not
officers) holding an unexercised  option,  and regardless  whether the option is
then otherwise fully exercisable, may make a cash exercise of all or any portion
of the option in lieu of the purchase of Stock under the option. A cash exercise
may be made,  without any payment to Company,  by  surrendering  unexercised the
option or any portion  thereof.  Upon such exercise and surrender,  the optionee
shall be  entitled to receive  cash (less  applicable  withholding  taxes) in an
amount equal to the excess of the  aggregate  fair market value of the shares of
Stock covered by the option,  or the relevant  portion  thereof,  on the date of
such exercise and  surrender  over the  aggregate  exercise  price of such Stock
under the option. The cash exercise may be made only during the period beginning
on the first day following the date on which Company has actual knowledge of the
actual  occurrence of the change in control and ending on the 45th day following
such date.  Notwithstanding  the  foregoing,  no cash exercise may be made by an
officer (as defined under Section 16 of the Exchange Act) of Company  within six
months of the date of grant of the  option

                                     - 6 -
<PAGE>

and no cash  exercise may be made by any optionee  after the  expiration  of the
stated period of the option.

         11. DISABILITY;  RETIREMENT.  Except as otherwise provided in Exhibit A
for  Non-Employee  Directors,  "disability" for purposes of this Plan shall have
the same  meaning  as "total  and  permanent  disability"  under the  Willamette
Industries,  Inc., and Associated Companies Salaried Employees'  Retirement Plan
(regardless  whether  the  employee  is covered by such  Retirement  Plan),  and
"retirement" shall mean:

         (a) Termination of  employment  at or  after  attainment  of age  62,
provided the employee has (or would have, if covered by such Retirement Plan) at
least ten vesting credits as defined under such Retirement Plan, or

         (b) Termination of  employment  at or  after  attainment  of age  65,
regardless of the number of such vesting credits, if any.

         12. AGREEMENT. Each employee to whom a grant or award is made under the
Plan shall execute an appropriate  agreement with respect to such grant or award
referring  to the  terms and  conditions  thereof  and of the Plan.  The form of
agreements  may be  changed  from time to time and need not be  identical  among
those receiving the grants or awards.

         13. WITHHOLDING TAXES.  Company shall have the right to deduct from all
cash payments made under the Plan any federal, state, or local taxes required by
law to be withheld  with respect to such cash  payments,  and, in the event such
cash payments are insufficient to cover the required  withholding,  the employee
or other  person  receiving  such  payment may be required to pay to Company the
additional  amount necessary for this purpose.  In the case of an exercise of an
option or an award of restricted  Stock, the employee or other person exercising
such option or taxable in  connection  with such award may be required to pay to
Company the amount of any such taxes that  Company is required to withhold  with
respect to such  exercise or award.  Company shall also have the right to deduct
any such taxes from the shares that would  otherwise be issued to or vest in the
employee or other person.

         The  Committee  may,  in its  discretion,  allow the  employee or other
person  to make the  required  payment  to  Company  by  delivery  of  shares of
previously acquired Stock.

         14. EMPLOYMENT.  Nothing contained in the Plan or in any grant or award
under the Plan shall  confer  upon any  employee  any right with  respect to the
continuation of employment with Company or its  Subsidiaries or interfere in any
way with the right of Company or its  Subsidiaries  to terminate the  employee's
employment  at any time.  Nothing  contained  in the Plan shall  confer upon any
employee  or other  person  any claim or right to any  grant or award  under the
Plan.

         15. GOVERNMENTAL COMPLIANCE.  Each grant and award under the Plan shall
be subject to the requirement that, if at any time the Committee shall determine
that  the  listing,  registration,  or  qualification  of  any  shares  issuable
thereunder  upon any  securities  exchange or under any federal or state law, or
the consent or approval of any governmental or self-regulatory body is necessary
or desirable as a condition thereof, or in connection  therewith,  no such grant
or award may be exercised or shares issued  unless such  listing,  registration,
qualification, consent,

                                     - 7 -
<PAGE>

or approval  shall have been  effected or obtained  free of any  conditions  not
acceptable to the Committee.

         16.  ADJUSTMENTS.  The  right  and  power of  Company  to  provide  for
reclassifications,   reorganizations,  recapitalizations,  stock  splits,  stock
dividends,  combination of shares, merger, consolidation, or any other change in
the capital structure or shares of Company shall not be affected by the Plan. In
the  event of any  such  action,  the  Committee  or the  Board  may  make  such
adjustments,  if  any,  as it may  deem  appropriate  in the  number  of  shares
available  for grants and awards under the Plan,  that may be granted or awarded
to an individual  employee or  Non-Employee  Director,  and to grants and awards
made under the Plan.

         17. EXPENSES.  The expenses of administering the Plan shall be borne by
Company.

         18. TERMINATION. No grants or awards under the Plan shall be made after
April 27, 2005, or such earlier date as the Board may determine.

         19. SUCCESSORS   AND  ASSIGNS.   The  provisions  of  the  Plan  (and
interpretations and determinations made by the Committee pursuant thereto) shall
be conclusive and binding upon Company and its  Subsidiaries,  their  successors
and assigns,  and upon each employee  receiving  grants or awards under the Plan
and the employee's heirs, successors, and assigns.

         20. AMENDMENT.  The  Plan  may be  amended  by the  Board  as it deems
advisable, provided that no such amendments shall adversely affect the rights of
participants  to whom  grants  and  awards  under the Plan  shall have been made
without the consent of the participants  affected thereby,  nor shall the Board,
without approval of Company's shareholders:

         (a) Except as provided in Article 16,  increase the number of shares of
Stock that are  subject to the Plan or the number of shares that may be received
by any one employee;

         (b) Extend the period during which grants and awards under the Plan may
be made;

         (c) Otherwise materially increase the benefits accruing to participants
under the Plan;

         (d) Amend the  requirements  of the Plan in respect of  eligibility  to
receive grants and awards under the Plan; or

         (e)  Establish  the  price  at which  shares  may be  purchased  on the
exercise  of an option at less  than the fair  market  value of the Stock at the
time the option is granted.

         The  provisions of Article 8 of the Plan shall not be amended more than
once  every six  months,  other  than to comport  with  changes in the  Internal
Revenue Code or in Rule 16b-3 under the Exchange Act.

                                     - 8 -

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