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                                                                 Exhibit 10.28

                  CAYENTA, INC. NONSTATUTORY STOCK OPTION PLAN

                            ADOPTED DECEMBER 27, 1999
                    APPROVED BY STOCKHOLDERS DECEMBER 27, 1999
                      TERMINATION DATE: SEPTEMBER 16, 2007

1.       PURPOSES.

         (a) ELIGIBLE STOCK OPTIONS. The persons eligible to receive Options are
the Officers and Directors of the Company and its Affiliates.

         (b) AVAILABLE OPTIONS. The purpose of the Plan is to provide a means by
which eligible recipients of Options may be given an opportunity to benefit from
increases in value of the Class A Common Stock through the granting of the
Options.

         (c) GENERAL PURPOSE. The Company, by means of the Plan, seeks to retain
the services of the group of persons eligible to receive Options, to secure and
retain the services of new members of this group and to provide incentives for
such persons to exert maximum efforts for the success of the Company and its
Affiliates.

2.       DEFINITIONS.

         (a) "AFFILIATE" means any parent corporation or subsidiary corporation
of the Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code

         (b) "BOOK VALUE" means the book value of one share of Common Stock as
determined from the consolidated balance sheet of the Company as of the last day
of the last month preceding the date on which Book Value is determined under
this Plan. The consolidated balance sheet shall be prepared in accordance with
U.S. generally accepted accounting principles, consistently applied.

         (c) "BOARD" means the Board of Directors of the Company.

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

         (e) "COMMITTEE" means a committee of one or more members of the Board
appointed by the Board in accordance with subsection 3(c).

         (f) "COMMON STOCK" means the Class A common stock of the Company.

         (g) "COMPANY" means Cayenta, Inc. a Delaware corporation.

         (h) "CONTINUOUS SERVICE" means that the Participant's service with the
Company or an Affiliate, whether as an Officer or Director is not interrupted or
terminated. The Participant's

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Continuous Service shall not be deemed to have terminated merely because of a
change in the capacity in which the Participant renders service to the Company
or an Affiliate as an Officer or Director or a change in the entity for which
the Participant renders such service, provided that there is no interruption or
termination of the Participant's Continuous Service. The Board or the chief
executive officer of the Company, in that party's sole discretion, may determine
whether Continuous Service shall be considered interrupted in the case of any
leave of absence approved by that party, including sick leave, military leave or
any other personal leave.

         (i) "COVERED EMPLOYEE" means the chief executive officer and the four
(4) other highest compensated officers of the Company for whom total
compensation is required to be reported to stockholders under the Exchange Act,
as determined for purposes of Section 162(m) of the Code.

         (j) "DIRECTOR" means a member of the Board of Directors of the Company.

         (k) "DISABILITY" means (i) before the Listing Date, the inability of a
person, in the opinion of a qualified physician acceptable to the Company, to
perform the major duties of that person's position with the Company or an
Affiliate of the Company because of the sickness or injury of the person and
(ii) after the Listing Date, the permanent and total disability of a person
within the meaning of Section 22(e)(3) of the Code.

         (l) "EMPLOYEE" means any person employed by the Company or an
Affiliate. Mere service as a Director or payment of a director's fee by the
Company or an Affiliate shall not be sufficient to constitute "employment" by
the Company or an Affiliate.

         (m) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

         (n) "FAIR MARKET VALUE" means, as of any date, the value of the Common
Stock determined as follows:

             (i) If the Common Stock is listed on any established stock exchange
or traded on the Nasdaq National Market or the Nasdaq SmallCap Market, the Fair
Market Value of a share of Common Stock shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or market (or the exchange or market with the greatest volume of
trading in the Common Stock) on the last market trading day prior to the day of
determination, as reported in THE WALL STREET JOURNAL or such other source as
the Board deems reliable.

             (ii) In the absence of such markets for the Common Stock, the Fair
Market Value shall be determined in good faith by the Board.

         (o) "LISTING DATE" means the first date upon which any security of the
Company is listed (or approved for listing) upon notice of issuance on any
securities exchange or designated (or approved for designation) upon notice of
issuance as a national market security on an interdealer quotation system if
such securities exchange or interdealer quotation system has been

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certified in accordance with the provisions of Section 25100(o) of the
California Corporate Securities Law of 1968.

         (p) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or a subsidiary, does
not receive compensation (directly or indirectly) from the Company or its parent
or a subsidiary for services rendered as a consultant or in any capacity other
than as a Director (except for an amount as to which disclosure would not be
required under Item 404(a) of Regulation S-K promulgated pursuant to the
Securities Act ("Regulation S-K")), does not possess an interest in any other
transaction as to which disclosure would be required under Item 404(a) of
Regulation S-K and is not engaged in a business relationship as to which
disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a "non-employee director" for purposes of Rule 16b-3.

         (q) "OPTION" means an Option not intended to qualify as an Incentive
Stock Option granted under this Plan.

         (r) "OFFICER" means (i) before the Listing Date, any person designated
by the Company as an executive officer of the Company or an executive officer of
an Affiliate and (ii) on and after the Listing Date, a person who is an officer
of the Company within the meaning of Section 16 of the Exchange Act and the
rules and regulations promulgated thereunder and any person who is an officer of
an Affiliate within the meaning of Section 16 of the Exchange Act and the rules
and regulations promulgated thereunder.

         (s) "OPTION AGREEMENT" means a written agreement between the Company
and an Optionholder evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of the
Plan.

         (t) "OPTIONHOLDER" means a person to whom an Option is granted pursuant
to the Plan or, if applicable, such other person who holds an outstanding
Option.

         (u) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current
Employee of the Company or an "affiliated corporation" (within the meaning of
Treasury Regulations promulgated under Section 162(m) of the Code), is not a
former Employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax qualified
pension plan), was not an officer of the Company or an "affiliated corporation"
at any time and is not currently receiving direct or indirect remuneration from
the Company or an "affiliated corporation" for services in any capacity other
than as a Director or (ii) is otherwise considered an "outside director" for
purposes of Section 162(m) of the Code.

         (v) "PARTICIPANT" means a person to whom a Option is granted pursuant
to the Plan or, if applicable, such other person who holds an outstanding
Option.

         (w) "PLAN" means this Cayenta, Inc. Nonstatutory Stock Option Plan.

         (x) "RULE 16b-3" means Rule 16b-3 promulgated under the Exchange Act or
any successor to Rule 16b-3, as in effect from time to time.

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         (y) "SECURITIES ACT" means the Securities Act of 1933, as amended.

3.       ADMINISTRATION.

         (a) ADMINISTRATION BY BOARD. The Board shall administer the Plan unless
and until the Board delegates administration to a Committee, as provided in
subsection 3(c).

         (b) POWERS OF BOARD. The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:

             (i) To determine from time to time which of the persons eligible
under the Plan shall be granted Options; when and how each Option shall be
granted; the provisions of each Option granted (which need not be identical),
including the time or times when a person shall be permitted to receive Common
Stock pursuant to an Option; and the number of shares of Common Stock with
respect to which an Option shall be granted to each such person.

             (ii) To construe and interpret the Plan and Options granted under
it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any Option Agreement, in a
manner and to the extent it shall deem necessary or expedient to make the Plan
fully effective.

             (iii) To amend the Plan or a Option as provided in Section 11.

             (iv) Generally, to exercise such powers and to perform such acts as
the Board deems necessary or expedient to promote the best interests of the
Company which are not in conflict with the provisions of the Plan.

         (c) DELEGATION TO COMMITTEE.

             (i) GENERAL. The Board may delegate administration of the Plan to a
Committee or Committees of one (1) or more members of the Board, and the term
"Committee" shall apply to any person or persons to whom such authority has been
delegated. If administration is delegated to a Committee, the Committee shall
have, in connection with the administration of the Plan, the powers theretofore
possessed by the Board, including the power to delegate to a subcommittee any of
the administrative powers the Committee is authorized to exercise (and
references in this Plan to the Board shall thereafter be to the Committee or
subcommittee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.

             (ii) COMMITTEE COMPOSITION WHEN COMMON STOCK IS PUBLICLY TRADED. At
such time as the Common Stock is publicly traded, in the discretion of the
Board, a Committee may consist solely of two or more Outside Directors, in
accordance with Section 162(m) of the Code, and/or solely of two or more
Non-Employee Directors, in accordance with Rule 16b-3. Within the scope of such
authority, the Board or the Committee may (1) delegate to a committee

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of one or more members of the Board who are not Outside Directors the authority
to grant Options to eligible persons who are either (a) not then Covered
Employees and are not expected to be Covered Employees at the time of
recognition of income resulting from such Option or (b) not persons with respect
to whom the Company wishes to comply with Section 162(m) of the Code and/or (2)
delegate to a committee of one or more members of the Board who are not
Non-Employee Directors the authority to grant Options to eligible persons who
are not then subject to Section 16 of the Exchange Act.

         (d) EFFECT OF BOARD'S DECISION. All determinations, interpretations and
constructions made by the Board in good faith shall not be subject to review by
any person and shall be final, binding and conclusive on all persons.

4.       SHARES SUBJECT TO THE PLAN.

         (a) SHARE RESERVE. Subject to the provisions of Section 10 relating to
adjustments upon changes in Common Stock, the Common Stock that may be issued
pursuant to Options shall not exceed in the aggregate Six Hundred Twenty-Eight
Thousand (628,000) shares of Common Stock.

         (b) REVERSION OF SHARES TO THE SHARE RESERVE. If any Option shall for
any reason expire or otherwise terminate, in whole or in part, without having
been exercised in full, the shares of Common Stock not acquired under such
Option shall revert to and again become available for issuance under the Plan.

         (c) SOURCE OF SHARES. The shares of Common Stock subject to the Plan
may be unissued shares or reacquired shares, bought on the market or otherwise.

5. ELIGIBILITY. Subject to the provisions of Section 10 relating to
adjustments upon changes in the shares of Common Stock, no Employee shall be
eligible to be granted Options covering more than five hundred thousand
(500,000) shares of Common Stock during any calendar year. This Section 5
shall not apply prior to the Listing Date and, following the Listing Date,
this Section 5 shall not apply until (i) the earliest of: (1) the first
material modification of the Plan (including any increase in the number of
shares of Common Stock reserved for issuance under the Plan in accordance
with Section 4); (2) the issuance of all of the shares of Common Stock
reserved for issuance under the Plan; (3) the expiration of the Plan; or (4)
the first meeting of stockholders at which Directors are to be elected that
occurs after the close of the third calendar year following the calendar year
in which occurred the first registration of an equity security under Section
12 of the Exchange Act; or (ii) such other date required by Section 162(m) of
the Code and the rules and regulations promulgated thereunder.

6.       OPTION PROVISIONS.

         Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. All Options shall be designated
Nonstatutory Stock Options at the time of grant, and, if certificates are
issued, a separate certificate or certificates will be issued for shares of
Common Stock purchased on exercise of each type of Option. The provisions of

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separate Options need not be identical, but each Option shall include (through
incorporation of provisions hereof by reference in the Option or otherwise) the
substance of each of the following provisions:

         (a) TERM. No Option granted prior to the Listing Date shall be
exercisable after the expiration of ten (10) years from September 16, 1997.

         (b) EXERCISE PRICE OF A NONSTATUTORY STOCK OPTION. The exercise price
of each Nonstatutory Stock Option granted prior to the Listing Date shall be not
less than the Book Value per share on the date the Option is granted. The
exercise price of each Nonstatutory Stock Option granted on or after the Listing
Date shall be not less than eighty-five percent (85%) of the Fair Market Value
of the Common Stock subject to the Option on the date the Option is granted.
Notwithstanding the foregoing, a Nonstatutory Stock Option may be granted with
an exercise price lower than that set forth in the preceding sentence if such
Option is granted pursuant to an assumption or substitution for another option
in a manner satisfying the provisions of Section 424(a) of the Code.

         (c) CONSIDERATION. The purchase price of Common Stock acquired pursuant
to an Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised or (ii) at
the discretion of the Board at the time of the grant of the Option (or
subsequently in the case of a Nonstatutory Stock Option) (1) by delivery to the
Company of other Common Stock, (2) according to a deferred payment or other
similar arrangement with the Optionholder or (3) in any other form of legal
consideration that may be acceptable to the Board. Unless otherwise specifically
provided in the Option, the purchase price of Common Stock acquired pursuant to
an Option that is paid by delivery to the Company of other Common Stock
acquired, directly or indirectly from the Company, shall be paid only by shares
of the Common Stock of the Company that have been held for more than six (6)
months (or such longer or shorter period of time required to avoid a charge to
earnings for financial accounting purposes). At any time that the Company is
incorporated in Delaware, payment of the Common Stock's "par value," as defined
in the Delaware General Corporation Law, shall not be made by deferred payment.

         (d) In the case of any deferred payment arrangement, interest shall be
compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be interest
under the deferred payment arrangement.

         (e) TRANSFERABILITY OF A NONSTATUTORY STOCK OPTION. A Nonstatutory
Stock Option granted prior to the Listing Date shall not be transferable except
by will or by the laws of descent and distribution and shall be exercisable
during the lifetime of the Optionholder only by the Optionholder. A Nonstatutory
Stock Option granted on or after the Listing Date shall be transferable to the
extent provided in the Option Agreement. If the Nonstatutory Stock Option does
not provide for transferability, then the Nonstatutory Stock Option shall not be
transferable except by will or by the laws of descent and distribution and shall
be exercisable during the lifetime of the Optionholder only by the Optionholder.
Notwithstanding the foregoing, the Optionholder may, by delivering written
notice to the Company, in a form satisfactory to the

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Company, designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the Option.

         (f) VESTING GENERALLY. The total number of shares of Common Stock
subject to an Option may, but need not, vest and therefore become exercisable in
periodic installments that may, but need not, be equal. The Option may be
subject to such other terms and conditions on the time or times when it may be
exercised (which may be based on performance or other criteria) as the Board may
deem appropriate. The vesting provisions of individual Options may vary. The
provisions of this subsection 6(f) are subject to any Option provisions
governing the minimum number of shares of Common Stock as to which an Option may
be exercised. Options granted prior to the Listing Date to Officers or Directors
may be made fully exercisable, subject to reasonable conditions such as
continued employment, at any time or during any period established by the
Company.

         (g) TERMINATION OF CONTINUOUS SERVICE. In the event an Optionholder's
Continuous Service terminates (other than upon the Optionholder's death or
Disability), the Optionholder may exercise his or her Option (to the extent that
the Optionholder was entitled to exercise such Option as of the date of
termination) but only within such period of time ending on the earlier of (i)
the date three (3) months following the termination of the Optionholder's
Continuous Service (or such longer or shorter period specified in the Option
Agreement, which period shall not be less than thirty (30) days for Options
granted prior to the Listing Date unless such termination is for cause), or (ii)
the expiration of the term of the Option as set forth in the Option Agreement.
If, after termination, the Optionholder does not exercise his or her Option
within the time specified in the Option Agreement, the Option shall terminate.

         (h) EXTENSION OF TERMINATION DATE. An Optionholder's Option Agreement
may also provide that if the exercise of the Option following the termination of
the Optionholder's Continuous Service (other than upon the Optionholder's death
or Disability) would be prohibited at any time solely because the issuance of
shares of Common Stock would violate the registration requirements under the
Securities Act, then the Option shall terminate on the earlier of (i) the
expiration of the term of the Option set forth in subsection 6(a) or (ii) the
expiration of a period of three (3) months after the termination of the
Optionholder's Continuous Service during which the exercise of the Option would
not be in violation of such registration requirements.

         (i) DISABILITY OF OPTIONHOLDER. In the event that an Optionholder's
Continuous Service terminates as a result of the Optionholder's Disability, the
Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise such Option as of the date of termination), but only
within such period of time ending on the earlier of (i) the date twelve (12)
months following such termination (or such longer or shorter period specified in
the Option Agreement, which period shall not be less than six (6) months for
Options granted prior to the Listing Date) or (ii) the expiration of the term of
the Option as set forth in the Option Agreement. If, after termination, the
Optionholder does not exercise his or her Option within the time specified
herein, the Option shall terminate.

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         (j) DEATH OF OPTIONHOLDER. In the event (i) an Optionholder's
Continuous Service terminates as a result of the Optionholder's death or (ii)
the Optionholder dies within the period (if any) specified in the Option
Agreement after the termination of the Optionholder's Continuous Service for a
reason other than death, then the Option may be exercised (to the extent the
Optionholder was entitled to exercise such Option as of the date of death) by
the Optionholder's estate, by a person who acquired the right to exercise the
Option by bequest or inheritance or by a person designated to exercise the
option upon the Optionholder's death pursuant to subsection 6(e), but only
within the period ending on the earlier of (1) the date eighteen (18) months
following the date of death (or such longer or shorter period specified in the
Option Agreement, which period shall not be less than six (6) months for Options
granted prior to the Listing Date) or (2) the expiration of the term of such
Option as set forth in the Option Agreement. If, after death, the Option is not
exercised within the time specified herein, the Option shall terminate.

         (k) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionholder may elect at any time before the Optionholder's
Continuous Service terminates to exercise the Option as to any part or all of
the shares of Common Stock subject to the Option prior to the full vesting of
the Option. Any unvested shares of Common Stock so purchased may be subject to a
repurchase option in favor of the Company or to any other restriction the Board
determines to be appropriate. The Company will not exercise its repurchase
option until at least six (6) months (or such longer or shorter period of time
required to avoid a charge to earnings for financial accounting purposes) have
elapsed following exercise of the Option unless the Board otherwise specifically
provides in the Option.

         (l) RIGHT OF REPURCHASE. The Option may, but need not, include a
provision whereby the Company may elect, prior to the Listing Date, to
repurchase all or any part of the vested shares of Common Stock acquired by the
Optionholder pursuant to the exercise of the Option at a price per share equal
to the Book Value per share on the date of repurchase.

         (m) RIGHT OF FIRST REFUSAL. The Option may, but need not, include a
provision whereby the Company may elect, prior to the Listing Date, to exercise
a right of first refusal following receipt of notice from the Optionholder of
the intent to transfer all or any part of the shares of Common Stock received
upon the exercise of the Option. Except as expressly provided in this subsection
6(m), such right of first refusal shall otherwise comply with any applicable
provisions of the Bylaws of the Company.

7.       COVENANTS OF THE COMPANY.

         (a) AVAILABILITY OF SHARES. During the terms of the Options, the
Company shall keep available at all times the number of shares of Common Stock
required to satisfy such Options.

         (b) SECURITIES LAW COMPLIANCE. The Company shall seek to obtain from
each regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to grant Options and to issue and sell shares of
Common Stock upon exercise of the Options; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
the Plan, any Option or any Common Stock issued or issuable pursuant

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to any such Option. If, after reasonable efforts, the Company is unable to
obtain from any such regulatory commission or agency the authority which counsel
for the Company deems necessary for the lawful issuance and sale of Common Stock
under the Plan, the Company shall be relieved from any liability for failure to
issue and sell Common Stock upon exercise of such Options unless and until such
authority is obtained.

8.       USE OF PROCEEDS FROM STOCK.

         Proceeds from the sale of Common Stock pursuant to Options shall
constitute general funds of the Company.

9.       MISCELLANEOUS.

         (a) ACCELERATION OF EXERCISABILITY AND VESTING. The Board shall have
the power to accelerate the time at which a Option may first be exercised or the
time during which a Option or any part thereof will vest in accordance with the
Plan, notwithstanding the provisions in the Option stating the time at which it
may first be exercised or the time during which it will vest.

         (b) STOCKHOLDER RIGHTS. No Participant shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares of
Common Stock subject to such Option unless and until such Participant has
satisfied all requirements for exercise of the Option pursuant to its terms.

         (c) NO EMPLOYMENT OR OTHER SERVICE RIGHTS. Nothing in the Plan or any
instrument executed or Option granted pursuant thereto shall confer upon any
Participant any right to continue to serve the Company or an Affiliate in the
capacity in effect at the time the Option was granted or shall affect the right
of the Company or an Affiliate to terminate (i) the employment of an Employee
with or without notice and with or without cause, or (ii) the service of a
Director pursuant to the Bylaws of the Company or an Affiliate, and any
applicable provisions of the corporate law of the state in which the Company or
the Affiliate is incorporated, as the case may be.

         (d) INVESTMENT ASSURANCES. The Company may require a Participant, as a
condition of exercising or acquiring Common Stock under any Option, (i) to give
written assurances satisfactory to the Company as to the Participant's knowledge
and experience in financial and business matters and/or to employ a purchaser
representative reasonably satisfactory to the Company who is knowledgeable and
experienced in financial and business matters and that he or she is capable of
evaluating, alone or together with the purchaser representative, the merits and
risks of exercising the Option; and (ii) to give written assurances satisfactory
to the Company stating that the Participant is acquiring Common Stock subject to
the Option for the Participant's own account and not with any present intention
of selling or otherwise distributing the Common Stock. The foregoing
requirements, and any assurances given pursuant to such requirements, shall be
inoperative if (1) the issuance of the shares of Common Stock upon the exercise
or acquisition of Common Stock under the Option has been registered under a then
currently effective registration statement under the Securities Act or (2) as to
any particular requirement, a determination is made by counsel for the Company
that such requirement need not be met in the

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circumstances under the then applicable securities laws. The Company may, upon
advice of counsel to the Company, place legends on stock certificates issued
under the Plan as such counsel deems necessary or appropriate in order to comply
with applicable securities laws, including, but not limited to, legends
restricting the transfer of the Common Stock.

         (e) WITHHOLDING OBLIGATIONS. To the extent provided by the terms of a
Option Agreement, the Participant may satisfy any federal, state or local tax
withholding obligation relating to the exercise or acquisition of Common Stock
under a Option by any of the following means (in addition to the Company's right
to withhold from any compensation paid to the Participant by the Company) or by
a combination of such means: (i) tendering a cash payment; (ii) authorizing the
Company to withhold shares of Common Stock from the shares of Common Stock
otherwise issuable to the Participant as a result of the exercise or acquisition
of Common Stock under the Option, provided, however, that no shares of Common
Stock are withheld with a value exceeding the minimum amount of tax required to
be withheld by law; or (iii) delivering to the Company owned and unencumbered
shares of Common Stock.

10.      ADJUSTMENTS UPON CHANGES IN STOCK.

         (a) CAPITALIZATION ADJUSTMENTS. If any change is made in the Common
Stock subject to the Plan, or subject to any Option, without the receipt of
consideration by the Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan will be appropriately
adjusted in the class(es) and maximum number of securities subject to the Plan
pursuant to subsection 4(a) and the maximum number of securities subject to
award to any person pursuant to Section 5, and the outstanding Options will be
appropriately adjusted in the class(es) and number of securities and price per
share of Common Stock subject to such outstanding Options. The Board shall make
such adjustments, and its determination shall be final, binding and conclusive.
(The conversion of any convertible securities of the Company shall not be
treated as a transaction "without receipt of consideration" by the Company.)

         (b) CHANGE IN CONTROL--DISSOLUTION OR LIQUIDATION. In the event of a
dissolution or liquidation of the Company, then all outstanding Options shall
terminate immediately prior to such event.

         (c) CHANGE IN CONTROL--ASSET SALE, MERGER, CONSOLIDATION OR REVERSE
MERGER. In the event of (i) a sale, lease or other disposition of all or
substantially all of the assets of the Company, (ii) a merger or consolidation
in which the Company is not the surviving corporation or (iii) a reverse merger
in which the Company is the surviving corporation but the shares of Common Stock
outstanding immediately preceding the merger are converted by virtue of the
merger into other property, whether in the form of securities, cash or
otherwise, then any surviving corporation or acquiring corporation shall assume
any Options outstanding under the Plan or shall substitute similar Options
(including an award to acquire the same consideration paid to the stockholders
in the transaction described in this subsection 10(c) for those outstanding
under the Plan). In the event any surviving corporation or acquiring corporation
refuses to

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assume such Options or to substitute similar Options for those outstanding under
the Plan, then with respect to Options held by Participants whose Continuous
Service has not terminated, the vesting of such Options (and, if applicable, the
time during which such Options may be exercised) shall be accelerated in full,
and the Options shall terminate if not exercised (if applicable) at or prior to
such event. With respect to any other Options outstanding under the Plan, such
Options shall terminate if not exercised (if applicable) prior to such event.

         (d) CHANGE IN CONTROL--SECURITIES ACQUISITION. After the Listing Date,
in the event of an acquisition by any person, entity or group within the meaning
of Section 13(d) or 14(d) of the Exchange Act, or any comparable successor
provisions (excluding any employee benefit plan, or related trust, sponsored or
maintained by the Company or an Affiliate) of the beneficial ownership (within
the meaning of Rule 13d-3 promulgated under the Exchange Act, or comparable
successor rule) of securities of the Company representing at least fifty percent
(50%) of the combined voting power entitled to vote in the election of
Directors, then with respect to Options held by Participants whose Continuous
Service has not terminated, the vesting of such Options (and, if applicable, the
time during which such Options may be exercised) shall be accelerated in full.

11.      AMENDMENT OF THE PLAN AND OPTIONS.

         (a) AMENDMENT OF PLAN. The Board at any time, and from time to time,
may amend the Plan. However, except as provided in Section 10 relating to
adjustments upon changes in Common Stock, no amendment shall be effective unless
approved by the stockholders of the Company to the extent stockholder approval
is necessary to satisfy the requirements of Section 422 of the Code, Rule 16b-3
or any Nasdaq or securities exchange listing requirements.

         (b) STOCKHOLDER APPROVAL. The Board may, in its sole discretion, submit
any other amendment to the Plan for stockholder approval, including, but not
limited to, amendments to the Plan intended to satisfy the requirements of
Section 162(m) of the Code and the regulations thereunder regarding the
exclusion of performance-based compensation from the limit on corporate
deductibility of compensation paid to certain executive officers.

         (c) CONTEMPLATED AMENDMENTS. It is expressly contemplated that the
Board may amend the Plan in any respect the Board deems necessary or advisable
to provide eligible Employees with the maximum benefits provided or to be
provided under the provisions of the Code and the regulations promulgated
thereunder relating to Incentive Stock Options and/or to bring the Plan and/or
Incentive Stock Options granted under it into compliance therewith.

         (d) NO IMPAIRMENT OF RIGHTS. Rights under any Option granted before
amendment of the Plan shall not be impaired by any amendment of the Plan unless
(i) the Company requests the consent of the Participant and (ii) the Participant
consents in writing.

         (e) AMENDMENT OF OPTIONS. The Board at any time, and from time to time,
may amend the terms of any one or more Options; provided, however, that the
rights under any Option shall not be impaired by any such amendment unless (i)
the Company requests the consent of the Participant and (ii) the Participant
consents in writing.

                                       11
<PAGE>

12.      TERMINATION OR SUSPENSION OF THE PLAN.

         (a) PLAN TERM. The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate on the day before the tenth
(10th) anniversary of the date the Plan is adopted by the Board or approved by
the stockholders of the Company, whichever is earlier. No Options may be granted
under the Plan while the Plan is suspended or after it is terminated.

         (b) NO IMPAIRMENT OF RIGHTS. Suspension or termination of the Plan
shall not impair rights and obligations under any Option granted while the Plan
is in effect except with the written consent of the Participant.

13.      EFFECTIVE DATE OF PLAN.

         The Plan shall become effective as determined by the Board, but no
Option shall be exercised (or, in the case of a stock bonus, shall be granted)
unless and until the Plan has been approved by the stockholders of the Company,
which approval shall be within twelve (12) months before or after the date the
Plan is adopted by the Board.

14.      CHOICE OF LAW.

         The law of the State of California shall govern all questions
concerning the construction, validity and interpretation of this Plan, without
regard to such state's conflict of laws rules.

                                       12<PAGE>

                            MONACO COACH CORPORATION

                        1993 INCENTIVE STOCK OPTION PLAN

               AS AMENDED AND RESTATED EFFECTIVE FEBRUARY 16, 1999

         1.       PURPOSES OF THE PLAN. The purposes of this Stock Option Plan
are:

         -        to attract and retain the best available personnel for
                  positions of substantial responsibility,

         -        to provide additional incentive to Employees and
                  Consultants, and

         -        to promote the success of the Company's business.

Options granted under the Plan may be Incentive Stock Options or Nonstatutory
Stock Options, as determined by the Administrator at the time of grant.

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

                  (a) "ADMINISTRATOR" means the Board or any of its Committees
as shall be administering the Plan, in accordance with Section 4 of the Plan.

                  (b) "APPLICABLE LAWS" means the legal requirements relating to
the administration of stock option plans under state corporate and securities
laws and the Code.

                  (c) "BOARD" means the Board of Directors of the Company.

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

                  (e) "COMMITTEE" means a Committee appointed by the Board in
accordance with Section 4 of the Plan.

                  (f) "COMMON STOCK" means the Class B Common Stock of the
Company.

                  (g)      "COMPANY" means Monaco Coach Corporation, a
Delaware corporation.

                  (h) "CONSULTANT" means any person, including an advisor,
engaged by the Company or a Parent or Subsidiary to render services and who is
compensated for such services, provided that the term "Consultant" shall not
include Directors who are paid only a director's fee by the Company or who are
not compensated by the Company for their services as Directors.

                  (i) "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" means
that the employment or consulting relationship is not interrupted or terminated
by the Company, any Parent

                                     -1-
<PAGE>

or Subsidiary. Continuous Status as an Employee or Consultant shall not be
considered interrupted in the case of: (i) any leave of absence approved by
the Board, including sick leave, military leave, or any other personal leave;
provided, however, that for purposes of Incentive Stock Options, any such
leave may not exceed ninety (90) days, unless reemployment upon the
expiration of such leave is guaranteed by contract (including certain Company
policies) or statute; or (ii) transfers between locations of the Company or
between the Company, its Parent, its Subsidiaries or its successor.

                  (j) "DIRECTOR" means a member of the Board.

                  (k) "DISABILITY" means total and permanent disability as
defined in Section 22(e)(3) of the Code.

                  (l) "EMPLOYEE" means any person, including Officers and
Directors, employed by the Company or any Parent or Subsidiary of the Company.
Neither service as a Director nor payment of a director's fee by the Company
shall be sufficient to constitute "employment" by the Company.

                  (m) "EXCHANGE ACT" means the Securities Exchange Act of 1934,
as amended.

                  (n) "FAIR MARKET VALUE" means, as of any date, the value of
Common Stock determined as follows:

                           (i)      If the Common Stock is listed on any
established stock exchange or a national market system, including without
limitation the National Market System of the National Association of
Securities Dealers, Inc. Automated Quotation ("NASDAQ") System, the Fair
Market Value of a Share of Common Stock shall be the closing sales price for
such stock (or the closing bid, if no sales were reported) as quoted on such
system or exchange (or the exchange with the greatest volume of trading in
Common Stock) on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;

                           (ii)     If the Common Stock is quoted on the
NASDAQ System (but not on the National Market System thereof) or is regularly
quoted by a recognized securities dealer but selling prices are not reported,
the Fair Market Value of a Share of Common Stock shall be the mean between
the high bid and low asked prices for the Common Stock on the last market
trading day prior to the day of determination, as reported in The Wall Street
Journal or such other source as the Administrator deems reliable;

                           (iii)    In the absence of an established market
for the Common Stock, the Fair Market Value shall be determined in good faith
by the Administrator.

                                      -2-

<PAGE>

                  (o) "INCENTIVE STOCK OPTION" means an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code and the regulations promulgated thereunder.

                  (p) "NONSTATUTORY STOCK OPTION" means an Option not intended
to qualify as an Incentive Stock Option.

                  (q) "NOTICE OF GRANT" means a written notice evidencing
certain terms and conditions of an individual Option. The Notice of Grant is
part of the Option Agreement.

                  (r) "OFFICER" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.

                  (s) "OPTION" means a stock option granted pursuant to the
Plan.

                  (t) "OPTION AGREEMENT" means a written agreement between the
Company and an Optionee evidencing the terms and conditions of an individual
Option grant. The Option Agreement is subject to the terms and conditions of the
Plan.

                  (u) "OPTION EXCHANGE PROGRAM" means a program whereby
outstanding options are surrendered in exchange for options with a lower
exercise price.

                  (v) "OPTIONED STOCK" means the Common Stock subject to an
Option.

                  (w) "OPTIONEE" means an Employee or Consultant who holds an
outstanding Option.

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

                  (y) "PLAN" means this 1993 Incentive Stock Option Plan.

                  (z) "RULE 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.

                  (aa)"SHARE" means a share of the Common Stock, as adjusted
in accordance with Section 12 of the Plan.

                  (bb)"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. Subject to the provisions of
Section 12 of the Plan, the maximum aggregate number of Shares which may be
optioned and sold under the Plan is five

                                      -3-

<PAGE>

hundred twenty-five thousand (525,000) Shares. The Shares may be authorized,
but unissued, or reacquired Common Stock. If an Option expires or becomes
unexercisable without having been exercised in full, or is surrendered
pursuant to an Option Exchange Program, the unpurchased Shares which were
subject thereto shall become available for future grant or sale under the
Plan (unless the Plan has terminated); PROVIDED, however, that Shares that
have actually been issued under the Plan shall not be returned to the Plan
and shall not become available for future distribution under the Plan.

         4.       ADMINISTRATION OF THE PLAN.

                  (a)      PROCEDURE.

                           (i)      MULTIPLE ADMINISTRATIVE BODIES.  If
permitted by Rule 16b-3, the Plan may be administered by different bodies
with respect to Directors, Officers who are not Directors, and Employees who
are neither Directors nor Officers.

                           (ii)     ADMINISTRATION WITH RESPECT TO DIRECTORS
AND OFFICERS SUBJECT TO SECTION 16(b). With respect to Option grants made to
Employees who are also Officers or Directors subject to Section 16(b) of the
Exchange Act, the Plan shall be administered by (A) the Board, if the Board
may administer the Plan in compliance with the rules governing a plan
intended to qualify as a discretionary plan under Rule 16b-3, or (B) a
committee designated by the Board to administer the Plan, which committee
shall be constituted to comply with the rules governing a plan intended to
qualify as a discretionary plan under Rule 16b-3. Once appointed, such
Committee shall continue to serve in its designated capacity until otherwise
directed by the Board. From time to time the Board may increase the size of
the Committee and appoint additional members, remove members (with or without
cause) and substitute new members, fill vacancies (however caused), and
remove all members of the Committee and thereafter directly administer the
Plan, all to the extent permitted by the rules governing a plan intended to
qualify as a discretionary plan under Rule 16b-3.

                           (iii)    ADMINISTRATION WITH RESPECT TO OTHER
PERSONS. With respect to Option grants made 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 to satisfy Applicable Laws. Once
appointed, such Committee shall serve in its designated capacity until
otherwise directed by the Board. The Board may increase the size of the
Committee and appoint additional members, remove members (with or without
cause) and substitute new members, fill vacancies (however caused), and
remove all members of the Committee and thereafter directly administer the
Plan, all to the extent permitted by Applicable Laws.

                  (b) POWERS OF THE ADMINISTRATOR. Subject to the provisions of
the Plan, and in the case of a Committee, subject to the specific duties
delegated by the Board to such Committee, the Administrator shall have the
authority, in its discretion:

                                     -4-

<PAGE>

                           (i)      to determine the Fair Market Value of the
Common Stock, in accordance with Section 2(n) of the Plan;

                           (ii)     to select the Consultants and Employees to
whom Options may be granted hereunder;

                           (iii)    to determine whether and to what extent
Options are granted hereunder;

                           (iv)     to determine the number of shares of Common
Stock to be covered by each Option granted hereunder;

                           (v)      to approve forms of agreement for use under
the Plan;

                           (vi)     to determine the terms and conditions,
not inconsistent with the terms of the Plan, of any award granted hereunder.
Such terms and conditions include, but are not limited to, the exercise
price, the time or times when Options may be exercised (which may be based on
performance criteria), any vesting acceleration or waiver of forfeiture
restrictions, and any restriction or limitation regarding any Option or the
shares of Common Stock relating thereto, based in each case on such factors
as the Administrator, in its sole discretion, shall determine;

                           (vii)    to reduce the exercise price of any
Option to the then current Fair Market Value if the Fair Market Value of the
Common Stock covered by such Option shall have declined since the date the
Option was granted;

                           (viii)   to construe and interpret the terms of
the Plan and awards granted pursuant to the Plan;

                           (ix)     to prescribe, amend and rescind rules and
regulations relating to the Plan;

                           (x)      to modify or amend each Option (subject
to Section 14(c) of the Plan);

                           (xi)     to authorize any person to execute on
behalf of the Company any instrument required to effect the grant of an
Option previously granted by the Administrator;

                           (xii)    to institute an Option Exchange Program;

                           (xiii)   to determine the terms and restrictions
applicable to Options; and

                           (xiv)    to make all other determinations deemed
necessary or advisable for administering the Plan.

                                      -5-

<PAGE>

                  (c) EFFECT OF ADMINISTRATOR'S DECISION. The Administrator's
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options.

         5.       ELIGIBILITY. Nonstatutory Stock Options may be granted to
Employees and Consultants. Incentive Stock Options may be granted only to
Employees. If otherwise eligible, an Employee or Consultant who has been
granted an Option may be granted additional Options.

         6.       LIMITATIONS.

                  (a) Each Option shall be designated in the Notice of Grant as
either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designations, to the extent that the aggregate Fair Market
Value:

         (i) of Shares subject to an Optionee's incentive stock options granted
         by the Company, any Parent or Subsidiary, which (ii) become exercisable
         for the first time during any calendar year (under all plans of the
         Company or any Parent or Subsidiary)

exceeds $100,000, such excess Options shall be treated as Nonstatutory Stock
Options.  For purposes of this Section 6(a), 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 time of grant.

                  (b) Neither the Plan nor any Option shall confer upon an
Optionee any right with respect to continuing the Optionee's employment or
consulting relationship with the Company, nor shall they interfere in any way
with the Optionee's right or the Company's right to terminate such employment or
consulting relationship at any time, with or without cause.

                  (c) The following limitation shall apply to grants of Options
under the Plan:

                           (i)      No Employee shall be granted, in any
fiscal year of the Company, Options under the Plan to purchase more than
100,000 shares.

                           (ii)     The foregoing limitation shall be adjusted
proportionately in connection with any change in the Company's capitalization as
described in Section 12(a).

                           (iii)    If an Option is canceled (other than in
connection with a transaction described in Section 12), the canceled Option
shall be counted against the limits set forth in Section 6(c)(i). For this
purpose, if the exercise price of an Option is reduced, the transaction will
be treated as a cancellation of the Option and the grant of a new Option.

         7.       TERM OF PLAN. Subject to Section 18 of the 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 as described in Section 18
of the Plan. It shall continue in effect for a term of ten (10) years unless
terminated earlier under Section 14 of the Plan.

                                      -6-

<PAGE>

         8.       TERM OF OPTION. The term of each Option shall be stated in
the Notice of Grant; provided, however, that in the case of an Incentive
Stock Option, the term shall be ten (10) years from the date of grant or such
shorter term as may be provided in the Notice of Grant. Moreover, in the case
of an Incentive Stock Option granted to an Optionee who, at the time the
Incentive Stock 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 or such shorter term as may be provided
in the Notice of Grant.

         9.       OPTION EXERCISE PRICE AND CONSIDERATION.

                  (a) EXERCISE PRICE. The per share exercise price for the
Shares to be issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:

                      (i)      In the case of an Incentive Stock Option

                               (A)     granted to an Employee who, at the
time the Incentive Stock 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 per Share exercise price shall be no less
than 110% of the Fair Market Value per Share on the date of grant.

                               (B)     granted to any Employee, the per Share
exercise price shall be no less than 100% of the Fair Market Value per Share
on the date of grant.

                      (ii)     In the case of a Nonstatutory Stock Option,
the per Share exercise price shall be determined by the Administrator.

                  (b) WAITING PERIOD AND EXERCISE DATES. At the time an Option
is granted, the Administrator shall fix the period within which the Option may
be exercised and shall determine any conditions which must be satisfied before
the Option may be exercised. In so doing, the Administrator may specify that an
Option may not be exercised until the completion of a service period.

                  (c) FORM OF CONSIDERATION. The Administrator shall determine
the acceptable form of consideration for exercising an Option, including the
method of payment. In the case of an Incentive Stock Option, the Administrator
shall determine the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of:

                           (i)      cash;

                           (ii)     check;

                                     -7-

<PAGE>

                           (iii)    promissory note;

                           (iv)     other Shares which (A) in the case of
Shares acquired upon exercise of an option, have been owned by the Optionee
for more than six months on the date of surrender, and (B) have a Fair Market
Value on the date of surrender equal to the aggregate exercise price of the
Shares as to which said Option shall be exercised;

                           (v)      delivery of a properly executed exercise
notice together with such other documentation as the Administrator and the
broker, if applicable, shall require to effect an exercise of the Option and
delivery to the Company of the sale or loan proceeds required to pay the
exercise price;

                           (vi)     any combination of the foregoing methods of
payment; or

                           (vii) such other consideration and method of payment
for the issuance of Shares to the extent permitted by Applicable Laws.

         10. EXERCISE OF OPTION.

                  (a)      PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER.
Any Option granted hereunder shall be exercisable according to the terms of
the Plan and at such times and under such conditions as determined by the
Administrator and set forth in the Option Agreement.

                           An Option may not be exercised for a fraction of a
Share.

                           An Option shall be deemed exercised when the
Company receives: (i) written notice of exercise (in accordance with the
Option Agreement) from the person entitled to exercise the Option, and (ii)
full payment for the Shares with respect to which the Option is exercised.
Full payment may consist of any consideration and method of payment
authorized by the Administrator and permitted by the Option Agreement and the
Plan. Shares issued upon exercise of an Option shall be issued in the name of
the Optionee or, if requested by the Optionee, in the name of the Optionee
and his or her spouse. Until the stock certificate evidencing such Shares is
issued (as evidenced by the appropriate entry on the books of the Company or
of a duly authorized transfer agent of the Company), no right to vote or
receive dividends or any other rights as a stockholder shall exist with
respect to the Optioned Stock, notwithstanding the exercise of the Option.
The Company shall issue (or cause to be issued) such stock certificate
promptly after the Option is exercised. 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 Section 12 of the Plan.

                           Exercising an Option in any manner shall decrease
the number of Shares thereafter available, both for purposes of the Plan and
for sale under the Option, by the number of Shares as to which the Option is
exercised.

                                     -8-

<PAGE>

                  (b) TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP.
In the event that an Optionee's Continuous Status as an Employee or
Consultant terminates (other than upon the Optionee's death or Disability),
the Optionee may exercise his or her Option, but only within such period of
time (if any) as is determined by the Administrator, and only to the extent
that the Optionee was entitled to exercise it (if at all) at the date of
termination (but in no event later than the expiration of the term of such
Option as set forth in the option agreement). In the case of an Incentive
Stock Option, the Administrator shall determine such period of time when the
Option is granted. If, at the date of termination, the Optionee is not
entitled to exercise his or her Option, in whole or in part, the Shares
covered by the unexercisable portion of the Option shall revert to the Plan.
If the Optionee does not exercise his or her Option within the time specified
by the Administrator, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.

                  (c) DISABILITY OF OPTIONEE. In the event that an Optionee's
Continuous Status as an Employee or Consultant terminates as a result of the
Optionee's Disability, the Option granted hereunder to such Optionee shall
become vested and exercisable for the full number of Shares covered by the
Option. The Optionee may exercise his or her Option at any time within twelve
(12) months from the date of such termination (but in no event later than the
expiration of the term of such Option as set forth in the Notice of Grant). If,
after termination, the Optionee does not exercise his or her Option within the
time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.

                  (d) DEATH OF OPTIONEE. In the event of the death of an
Optionee, the Option shall become vested and exercisable for the full number of
Shares covered by the Option. The Option held by the Optionee at the time of
death may be exercised at any time within twelve (12) months following the date
of death by the Optionee's estate or by a person who acquired the right to
exercise the Option by bequest or inheritance. In no event shall an Option be
exercised later than the expiration of the term of the Option, as set forth in
the Option agreement. If, after death, the Optionee's estate or a person who
acquired the right to exercise the Option by bequest or inheritance does not
exercise the Option within the time specified herein, the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.

         11.      NON-TRANSFERABILITY OF OPTIONS. An Option 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 Optionee, only by the Optionee.

         12.      ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION,
MERGER, ASSET SALE OR CHANGE OF CONTROL.

                  (a) CHANGES IN CAPITALIZATION. Subject to any required action
by the stockholders of the Company, the number of shares of Common Stock covered
by each outstanding Option, and the number of shares of Common Stock which have
been authorized for issuance under the Plan but as to which no Options have yet
been granted or which have been returned to the Plan upon cancellation or
expiration of an Option, as well as the price per share of Common Stock covered
by

                                      -9-

<PAGE>

each such outstanding Option, shall be proportionately adjusted for any
increase or decrease in the number of issued shares of Common Stock resulting
from a stock split, reverse stock split, stock dividend, combination or
reclassification of the Common Stock, or any other increase or decrease in
the number of issued shares of Common Stock effected without receipt of
consideration by the Company; 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 Board, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, 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 thereof shall
be made with respect to, the number or price of shares of Common Stock
subject to an Option.

                  (b) DISSOLUTION OR LIQUIDATION. In the event of the proposed
dissolution or liquidation of the Company, to the extent that an Option has not
been previously exercised, it will terminate immediately prior to the
consummation of such proposed action. The Board may, in the exercise of its sole
discretion in such instances, declare that any Option shall terminate as of a
date fixed by the Board and give each Optionee the right to exercise his or her
Option as to all or any part of the Optioned Stock, including Shares as to which
the Option would not otherwise be exercisable.

                  (c) MERGER OR ASSET SALE. 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 or right shall be substituted by the successor corporation or
a Parent or Subsidiary of the successor corporation. In the event that the
successor corporation does not agree to assume the Option or to substitute an
equivalent 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, unless the Administrator, in its sole discretion,
determines otherwise. If an Option is not assumed or substituted in the event of
a merger or sale of assets, the Administrator shall notify the Optionee as to
what portion of the Option is exercisable, and such portion of the Option shall
remain exercisable for a period of fifteen (15) days from the date of such
notice, and the Option will terminate in full upon the expiration of such
period. For the purposes of this paragraph, the Option shall be considered
assumed if, following the merger or sale of assets, the option confers the right
to purchase, 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.

                                     -10-

<PAGE>

         13.      DATE OF GRANT. The date of grant of an Option shall be, for
all purposes, the date on which the Administrator makes the determination
granting such Option, or such other later date as is determined by the
Administrator. Notice of the determination shall be provided to each Optionee
within a reasonable time after the date of such grant.

         14.      AMENDMENT AND TERMINATION OF THE PLAN.

                  (a) AMENDMENT AND TERMINATION. The Board may at any time
amend, alter, suspend or terminate the Plan.

                  (b) STOCKHOLDER APPROVAL. The Company shall obtain stockholder
approval of any Plan amendment to the extent necessary and desirable to comply
with Rule 16b-3 or with Section 422 of the Code (or any successor rule or
statute or other applicable law, rule or regulation, including the requirements
of any exchange or quotation system on which the Common Stock is listed or
quoted). Such stockholder approval, if required, shall be obtained in such a
manner and to such a degree as is required by the applicable law, rule or
regulation.

                  (c) EFFECT OF AMENDMENT OR TERMINATION. No amendment,
alteration, suspension or termination of the Plan shall impair the rights of any
Optionee, unless mutually agreed otherwise between the Optionee and the
Administrator, which agreement must be in writing and signed by the Optionee and
the Company.

         15.      CONDITIONS UPON ISSUANCE OF SHARES.

                  (a) LEGAL COMPLIANCE. Shares shall not be issued pursuant to
the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, Applicable Laws,
and the requirements of any stock exchange or quotation system upon which the
Shares may then be listed or quoted, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.

                  (b) INVESTMENT REPRESENTATIONS. As a condition to the exercise
of an Option, the Company may require the person exercising such Option 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.

         16.      LIABILITY OF COMPANY.

                  (a) INABILITY TO OBTAIN AUTHORITY. 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

                                     -11-

<PAGE>

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.

                  (b) GRANTS EXCEEDING ALLOTTED SHARES. If the Optioned Stock
covered by an Option exceeds, as of the date of grant, the number of Shares
which may be issued under the Plan without additional stockholder approval, such
Option shall be void with respect to such excess Optioned Stock, unless
stockholder approval of an amendment sufficiently increasing the number of
Shares subject to the Plan is timely obtained in accordance with Section 14(b)
of the Plan.

         17.      RESERVATION OF SHARES. The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.

         18.      STOCKHOLDER APPROVAL. Continuance of 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. Such stockholder
approval shall be obtained in the manner and to the degree required under
applicable federal and state law.

                                      -12-

<PAGE>

                                                                   EXHIBIT 99.1

                             MONACO COACH CORPORATION

                         1993 INCENTIVE STOCK OPTION PLAN

                              STOCK OPTION AGREEMENT

        Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Option Agreement.

I.      NOTICE OF STOCK OPTION GRANT

[Optionee's Name and Address]

        You have been granted an option to purchase Common Stock of the
Company, subject to the terms and conditions of the Plan and this Option
Agreement, as follows:

        Grant Number                            ___________________________

        Date of Grant                           ___________________________

        Exercise Price per Share                $__________________________

        Total Number of Shares Granted          ___________________________

        Total Exercise Price                    $__________________________

        Type of Option:                     ___ Incentive Stock Option

                                            ___ Nonstatutory Stock Option

        Term/Expiration Date:               _______________________________

        VESTING SCHEDULE:

        This Option may be exercised, in whole or in part, in accordance with
the following schedule:

        20% of the Shares subject to the Option shall vest one year after the
Date of Grant, and 20% of the Shares subject to the Option shall vest each
year thereafter.

        TERMINATION PERIOD:

        This Option may be exercised for ___ days [not to exceed three months
for ISOs] after termination of your employment or consulting relationship,
or such longer period as may be applicable upon death or Disability of
Optionee as provided in the Plan, but in no event later than the
Term/Expiration Date as provided above.

<PAGE>

II.     AGREEMENT

        1.      GRANT OF OPTION. The Plan Administrator of the Company hereby
grants to the Optionee named in the Notice of Grant attached as Part I of
this Agreement (the "Optionee"), an option (the "Option") to purchase a
number of Shares, as set forth in the Notice of Grant, at the exercise price
per share set forth in the Notice of Grant (the "Exercise Price"), subject to
the terms and conditions of the Plan, which is incorporated herein by
reference. Subject to Section 14(c) of the Plan, in the event of a conflict
between the terms and conditions of the Plan and the terms and conditions of
this Option Agreement, the terms and conditions of the Plan shall prevail.

                If designated in the Notice of Grant as an Incentive Stock
Option, this Option is intended to qualify as an Incentive Stock Option under
Section 422 of the Code. However, if this Option is intended to be an
Incentive Stock Option, to the extent that it exceeds the $100,000 rule of
Code Section 422(d) it shall be treated as a Nonstatutory Stock Option.

        2.      EXERCISE OF OPTION.

                (a) RIGHT TO EXERCISE. This Option is exercisable during its
term in accordance with the Vesting Schedule set out in the Notice of Grant
and the applicable provisions of the Plan and this Option Agreement. In the
event of Optionee's death, Disability or other termination of Optionee's
employment or consulting relationship, the exercisability of the Option is
governed by the applicable provisions of the Plan and this Option Agreement.

                (b) METHOD OF EXERCISE. This Option is exercisable by
delivery of an exercise notice, in the form attached as Exhibit A (the
"Exercise Notice"), which shall state the election to exercise the Option,
the number of Shares in respect of which the Option is being exercised (the
"Exercised Shares"), and such other representations and agreements as may be
required by the Company pursuant to the provisions of the Plan. The Exercise
Notice shall be signed by the Optionee and shall be delivered in person or by
certified mail to the Secretary of the Company. The Exercise Notice shall be
accompanied by payment of the aggregate Exercise Price as to all Exercised
Shares. This Option shall be deemed to be exercised upon receipt by the
Company of such fully executed Exercise Notice accompanied by such aggregate
Exercise Price.

                No Shares shall be issued pursuant to the exercise of this
Option unless such issuance and exercise complies with all relevant
provisions of law and the requirements of any stock exchange or quotation
service upon which the Shares are then listed. Assuming such compliance, for
income tax purposes the

                                        -2-

<PAGE>

Exercised Shares shall be considered transferred to the Optionee on the date
the Option is exercised with respect to such Exercised Shares.

        3.      METHOD OF PAYMENT. Payment of the aggregate Exercise Price
shall be by any of the following, or a combination thereof, at the election
of the Optionee:

                (a) cash; or

                (b) check; or

                (c) delivery of a properly executed exercise notice together
with such other documentation as the Administrator and the broker, if
applicable, shall require to effect an exercise of the Option and delivery to
the Company of the sale or loan proceeds required to pay the exercise price;
or

                (d) surrender of other Shares which (i) in the case of Shares
acquired upon exercise of an option, have been owned by the Optionee for more
than six (6) months on the date of surrender, and (ii) have a Fair Market
Value on the date of surrender equal to the aggregate Exercise Price of the
Exercised Shares.

        4.      NON-TRANSFERABILITY OF OPTION. This Option may not be
transferred in any manner otherwise than by will or by the laws of descent or
distribution and may be exercised during the lifetime of Optionee only by the
Optionee. The terms of the Plan and this Option Agreement shall be binding
upon the executors, administrators, heirs, successors and assigns of the
Optionee.

        5.      TERM OF OPTION. This Option may be exercised only within the
term set out in the Notice of Grant, and may be exercised during such term
only in accordance with the Plan and the terms of this Option Agreement.

        6.      TAX CONSEQUENCES. Some of the federal tax consequences
relating to this Option, as of the date of this Option, are set forth below.
THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE
SUBJECT TO CHANGE. THE OPTIONEE SHOULD CONSULT A TAX ADVISOR BEFORE
EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

                (a) EXERCISING THE OPTION.

                        (i) NONQUALIFIED STOCK OPTION ("NSO"). If this Option
does not qualify as an ISO, the Optionee may incur regular federal income tax
liability upon exercise. The Optionee will be treated as having received
compensation income (taxable at ordinary income tax rates) equal to the
excess, if any, of the fair market value of the Exercised Shares on the date
of exercise over their

                                        -3-

<PAGE>

aggregate Exercise Price. If the Optionee is an employee, the Company will be
required to withhold from his or her compensation or collect from Optionee
and pay to the applicable taxing authorities an amount equal to a percentage
of this compensation income at the time of exercise.

                        (ii) INCENTIVE STOCK OPTION ("ISO"). If this Option
qualifies as an ISO, the Optionee will have no regular federal income tax
liability upon its exercise, although the excess, if any, of the fair market
value of the Exercised Shares on the date of exercise over their aggregate
Exercise Price will be treated as an adjustment to the alternative minimum
tax for federal tax purposes and may subject the Optionee to alternative
minimum tax in the year of exercise.

                (b) DISPOSITION OF SHARES.

                        (i) NSO. If the Optionee holds NSO Shares for at
least one year, any gain realized on disposition of the Shares will be
treated as long-term capital gain for federal income tax purposes.

                        (ii) ISO. If the Optionee holds ISO Shares for at
least one year after exercise and two years after the grant date, any gain
realized on disposition of the Shares will be treated as long-term capital
gain for federal income tax purposes. If the Optionee disposes of ISO Shares
within one year after exercise or two years after the grant date, any gain
realized on such disposition will be treated as compensation income (taxable
at ordinary income rates) to the extent of the excess, if any, of the lesser
of (A) the difference between the fair market value of the Shares acquired on
the date of exercise and the aggregate Exercise Price, or (B) the difference
between the sale price of such Shares and the aggregate Exercise Price.

                (c) NOTICE OF DISQUALIFYING DISPOSITION OF ISO SHARES. If the
Optionee sells or otherwise disposes of any of the Shares acquired pursuant
to an ISO on or before the later of (i) two years after the grant date, or
(ii) one year after the exercise date, the Optionee shall immediately notify
the Company in writing of such disposition. The Optionee agrees that he or
she may be subject to income tax withholding by the Company on the
compensation income recognized from such early disposition of ISO Shares by
payment in cash or out of the current earnings paid to the Optionee.

                By your signature and the signature of the Company's
representative below, you and the Company agree that this Option is granted
under and governed by the terms and conditions of the Plan and this Option
Agreement. Optionee has reviewed the Plan and this Option Agreement in their
entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Option

                                      -4-

<PAGE>

Agreement and fully understands all provisions of the Plan and Option
Agreement. Optionee hereby agrees to accept as binding, conclusive and final
all decisions or interpretations of the Administrator upon any questions
relating to the Plan and Option Agreement.

OPTIONEE:                                MONACO COACH CORPORATION

                                         By:
--------------------------------            ---------------------------------
Signature

                                         Title:
--------------------------------               ------------------------------
Print Name

                                      -5-

<PAGE>

                                    EXHIBIT A

                            MONACO COACH CORPORATION

                        1993 INCENTIVE STOCK OPTION PLAN

                                 EXERCISE NOTICE

Monaco Coach Corporation
Attention:  Chief Financial Officer

        1.      EXERCISE OF OPTION. Effective as of today,                ,
199   , the undersigned ("Purchaser") hereby elects to purchase
 shares (the "Shares") of the Common Stock of Monaco Coach Corporation (the
"Company") under and pursuant to the Monaco Coach Corporation 1993 Incentive
Stock Option Plan (the "Plan") and the Stock Option Agreement dated
(the "Option Agreement"). The purchase price for the Shares shall be $        ,
as required by the Option Agreement.

        2.      DELIVERY OF PAYMENT. Purchaser herewith delivers to the
Company the full purchase price for the Shares.

        3.      REPRESENTATIONS OF PURCHASER. Purchaser acknowledges that
Purchaser has received, read and understood the Plan and the Option Agreement
and agrees to abide by and be bound by their terms and conditions.

        4.      RIGHTS AS STOCKHOLDER. 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 the Optioned Stock, notwithstanding
the exercise of the Option. A share certificate for the number of Shares so
acquired shall be issued to the Optionee as soon as practicable after
exercise of the Option. 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 Section 12 of the Plan.

        5.      TAX CONSULTATION. Purchaser understands that Purchaser may
suffer adverse tax consequences as a result of Purchaser's purchase or
disposition of the Shares. Purchaser represents that Purchaser has consulted
with any tax consultants Purchaser deems advisable in connection with the
purchase or disposition of the Shares and that Purchaser is not relying on
the Company for any tax advice.

        6.      ENTIRE AGREEMENT; GOVERNING LAW. The Plan and Option
Agreement are incorporated herein by reference. This Agreement, the Plan and
the Option Agreement constitute the entire agreement of the parties and
supersede in their entirety all prior undertakings and agreements of the
Company and Purchaser with respect to

<PAGE>

the subject matter hereof, and such agreement is governed by Delaware law
except for that body of law pertaining to conflict of laws.

Submitted by:                           Accepted by:

PURCHASER:                              MONACO COACH CORPORATION

                                        By:
--------------------------------        ----------------------------------
Signature

                                        Its:
--------------------------------            ------------------------------
Print Name

ADDRESS:

-------------------------------

-------------------------------

                                      -2-

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