THE 1997 EQUITY PARTICIPATION PLAN
                                      OF
                                 RESMED INC.
RESMED INC., a Delaware corporation, has adopted The 1997 Equity Participation
Plan of ResMed Inc. (the "Plan"), effective November 10, 1997, for the benefit
of  its  eligible  employees,  consultants  and  directors.
The  purposes  of  this  Plan  are  as  follows:
(1)        To provide an additional incentive for directors, key Employees and
consultants  to  further  the growth, development and financial success of the
Company by personally benefiting through the ownership of Company stock and/or
rights  which  recognize  such  growth,  development  and  financial  success.
(2)      To enable the Company to obtain and retain the services of directors,
key  Employees  and consultants considered essential to the long range success
of  the  Company  by  offering them an opportunity to own stock in the Company
and/or rights which will reflect the growth, development and financial success
of  the  Company.
                                  ARTICLE I.
                                 DEFINITIONS
     1.1.          General.
Wherever  the  following  terms  are  used  in  this  Plan they shall have the
meanings  specified  below,  unless  the  context clearly indicates otherwise.
     1.2.          Award  Limit.
"Award  Limit"  shall  mean  75,000  shares  of  Common  Stock.
     1.3.          Board.
"Board"  shall  mean  the  Board  of  Directors  of  the  Company.
     1.4.          Change  in  Control.
"Change in Control" shall mean a change in ownership or control of the Company
effected  through  either  of  the  following  transactions:
     (a)     any person or related group of persons (other than the Company or
a  person  that directly or indirectly controls, is controlled by, or is under
common  control  with, the Company) directly or indirectly acquires beneficial
ownership  (within  the  meaning  of  Rule  13d-3  under  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 the Board
does  not  recommend  such  stockholders  to  accept;  or
(b)         there is a change in the composition of the Board over a period of
thirty-six (36) consecutive months (or less) such that a majority of the Board
members  (rounded  up to the nearest whole number) ceases, by reason of one or
more  proxy  contests  for  the  election of Board members, to be comprised of
individuals  who  either  (i)  have  been Board members continuously since the
beginning  of  such period or (ii) have been elected or nominated for election
as  Board  members  during  such  period  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.
     1.5.          Code.
"Code"  shall  mean  the  Internal  Revenue  Code  of  1986,  as  amended.
     1.6.          Committee.
"Committee"  shall  mean  the  Compensation Committee of the Board, or another
committee  of  the  Board,  appointed  as  provided  in  Section  8.1.
     1.7.          Common  Stock.
"Common Stock" shall mean the common stock of the Company, par value $0.04 per
share,  and  any  equity  security  of  the Company issued or authorized to be
issued  in  the  future,  but  excluding any preferred stock and any warrants,
options  or  other  rights  to  purchase Common Stock.  Debt securities of the
Company convertible into Common Stock shall be deemed equity securities of the
Company.
     1.8.          Company.
"Company"  shall  mean  ResMed  Inc.,  a  Delaware  corporation.
     1.9.          Corporate  Transaction.
"Corporate  Transaction"  shall mean any of the following stockholder-approved
transactions  to  which  the  Company  is  a  party:
 
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(a)        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, form a holding company or
effect a similar reorganization as to form whereupon this Plan and all Options
are  assumed  by  the  successor  entity;
(b)          the  sale,  transfer,  exchange  or  other  disposition of all or
substantially  all  of  the  assets of the Company, in complete liquidation or
dissolution  of  the Company in a transaction not covered by the exceptions to
clause  (a),  above;  or
(c)     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
or issued to a person or persons different from those who held such securities
immediately  prior  to  such  merger.
     1.10.          Deferred  Stock.
"Deferred  Stock"  shall  mean  Common Stock awarded under Article VII of this
Plan.
     1.11.          Director.
"Director"  shall  mean  a  member  of  the  Board.
     1.12.          Dividend  Equivalent.
"Dividend  Equivalent"  shall mean a right to receive the equivalent value (in
cash or Common Stock) of dividends paid on Common Stock, awarded under Article
VII  of  this  Plan.
     1.13.          Employee.
"Employee"  shall mean any officer or other employee (as defined in accordance
with  Section 3401(c) of the Code) of the Company, or of any corporation which
is  a  Subsidiary.
     1.14.          Exchange  Act.
"Exchange  Act"  shall  mean  the Securities Exchange Act of 1934, as amended.
     1.15.          Fair  Market  Value.
"Fair Market Value" of a share of Common Stock as of a given date shall be (i)
the  closing  price  of  a  share of Common Stock on the principal exchange on
which  shares  of Common Stock are then trading, if any (or as reported on any
composite  index  which  includes such principal exchange), on the trading day
previous  to  such  date,  or  if  shares  were  not traded on the trading day
previous  to  such  date,  then  on  the  next preceding date on which a trade
occurred,  or  (ii) if Common Stock is not traded on an exchange but is quoted
on  The  Nasdaq Stock Market or a successor quotation system, the mean between
the  closing  representative  bid and asked prices for the Common Stock on the
trading  day  previous  to such date as reported by The Nasdaq Stock Market or
such  successor  quotation  system;  or  (iii) if Common Stock is not publicly
traded on an exchange and not quoted on The Nasdaq Stock Market or a successor
quotation  system,  the  Fair  Market  Value  of  a  share  of Common Stock as
established  by the Committee (or the Board, in the case of Options granted to
Independent  Directors)  acting  in  good  faith.
     1.16.          Grantee.
"Grantee"  shall  mean  an Employee or consultant granted a Performance Award,
Dividend  Equivalent  or  Stock  Payment, or an award of Deferred Stock, under
this  Plan.
     1.17.          Incentive  Stock  Option.
"Incentive Stock Option" shall mean an option which conforms to the applicable
provisions  of Section 422 of the Code and which is designated as an Incentive
Stock  Option  by  the  Committee.
     1.18.          Independent  Director.
"Independent Director" shall mean a member of the Board who is not an Employee
of  the  Company.
     1.19.          Non-Qualified  Stock  Option.
"Non-Qualified  Stock  Option" shall mean an Option which is not designated as
an  Incentive  Stock  Option  by  the  Committee.
     1.20.          Option.
"Option" shall mean a stock option granted under Article III of this Plan.  An
Option  granted  under  this  Plan  shall,  as determined by the Committee, be
either  a  Non-Qualified  Stock  Option  or  an  Incentive  Stock  Option.
     1.21.          Optionee.
"Optionee"  shall mean an Employee, consultant or Independent Director granted
an  Option  under  this  Plan.
     1.22.          Performance  Award.
"Performance  Award" shall mean a cash bonus, stock bonus or other performance
or  incentive  award  that  is  paid in cash, Common Stock or a combination of
both,  awarded  under  Article  VII  of  this  Plan.
     1.23.          Plan.
"Plan"  shall  mean  The  1997  Equity  Participation  Plan of ResMed Inc., as
amended  from  time  to  time.
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     1.24.          QDRO.
"QDRO"  shall mean a qualified domestic relations order as defined by the Code
or Title I of the Employee Retirement Income Security Act of 1974, as amended,
or  the  rules  thereunder.
     1.25.          Restricted  Stock.
"Restricted  Stock"  shall  mean Common Stock awarded under Article VI of this
Plan.
     1.26.          Restricted  Stockholder.
"Restricted Stockholder" shall mean an Employee or consultant granted an award
of  Restricted  Stock  under  Article  VI  of  this  Plan.
     1.27.          Rule  16b-3.
"Rule  16b-3"  shall  mean  that certain Rule 16b-3 under the Exchange Act, as
such  Rule  may  be  amended  from  time  to  time.
     1.28.          Stock  Payment.
"Stock  Payment"  shall  mean  (i)  a  payment in the form of shares of Common
Stock, or (ii) an option or other right to purchase shares of Common Stock, as
part  of  a  deferred  compensation  arrangement,  made  in lieu of all or any
portion of the compensation, including without limitation, salary, bonuses and
commissions,  that  would  otherwise  become  payable  to  a  key  Employee or
consultant  in  cash,  awarded  under  Article  VII  of  this  Plan.
     1.29.          Subsidiary.
"Subsidiary"  shall  mean any corporation in an unbroken chain of corporations
beginning  with  the  Company  if each of the corporations other than the last
corporation  in  the  unbroken  chain then owns stock possessing 50 percent or
more  of the total combined voting power of all classes of stock in one of the
other  corporations  in  such  chain.
     1.30.          Termination  of  Consultancy.
"Termination  of  Consultancy"  shall  mean the time when the engagement of an
Optionee,  Grantee or Restricted Stockholder as a consultant to the Company or
a  Subsidiary  is terminated for any reason, with or without cause, including,
but  not by way of limitation, by resignation, discharge, death or retirement;
but  excluding  terminations  where  there  is  a simultaneous commencement of
employment  or  consulting with the Company or any Subsidiary.  The Committee,
in  its  absolute  discretion,  shall  determine the effect of all matters and
questions relating to Termination of Consultancy, including, but not by way of
limitation, the question of whether a Termination of Consultancy resulted from
a  discharge for good cause, and all questions of whether particular leaves of
absence  constitute  Terminations  of  Consultancy.  Notwithstanding any other
provision  of  this  Plan,  the  Company or any Subsidiary has an absolute and
unrestricted  right  to  terminate  a consultant's service at any time for any
reason  whatsoever,  with  or  without  cause,  except to the extent expressly
provided  otherwise  in  writing.
     1.31.          Termination  of  Directorship.
"Termination  of  Directorship" shall mean the time when an Optionee who is an
Independent  Director  ceases  to be a Director for any reason, including, but
not by way of limitation, a termination by resignation, failure to be elected,
death  or  retirement.   The Board, in its sole and absolute discretion, shall
determine  the  effect of all matters and questions relating to Termination of
Directorship  with  respect  to  Independent  Directors.
     1.32.          Termination  of  Employment.
"Termination  of  Employment"  shall  mean the time when the employee-employer
relationship  between  an  Optionee, Grantee or Restricted Stockholder and the
Company or any Subsidiary is terminated for any reason, with or without cause,
including,  but  not  by  way  of  limitation,  a  termination by resignation,
discharge,  death,  disability  or  retirement; but excluding (i) terminations
where  there  is  a  simultaneous  reemployment or continuing employment of an
Optionee,  Grantee or Restricted Stockholder by the Company or any Subsidiary,
(ii)  at  the  discretion  of  the  Committee,  terminations which result in a
temporary  severance  of  the employee-employer relationship, and (iii) at the
discretion  of  the  Committee,  terminations  which  are  followed  by  the
simultaneous  establishment  of  a consulting relationship by the Company or a
Subsidiary  with  the  former  employee.    The  Committee,  in  its  absolute
discretion,  shall  determine the effect of all matters and questions relating
to  Termination  of  Employment,  including, but not by way of limitation, the
question  of whether a Termination of Employment resulted from a discharge for
good  cause,  and  all  questions  of  whether  particular  leaves  of absence
constitute  Terminations  of  Employment;  provided,  however,  that, with
respect  to Incentive Stock Options, a leave of absence, change in status from
an  employee  to  an  independent  contractor  or  other  change  in  the
employee-employer  relationship  shall  constitute a Termination of Employment
if,  and  to the extent that, such leave of absence, change in status or other
change interrupts employment for the purposes of Section 422(a)(2) of the Code
and  the  then applicable regulations and revenue rulings under said Section. 
Notwithstanding  any  other  provision  of  this  Plan,  the  Company  or  any
Subsidiary  has  an absolute and unrestricted right to terminate an Employee's
employment  at  any  time  for  any  reason whatsoever, with or without cause,
except  to  the  extent  expressly  provided  otherwise  in  writing.
 
                                 ARTICLE II.
                            SHARES SUBJECT TO PLAN
     2.1.          Shares  Subject  to  Plan.
     (a)          The shares of stock subject to Options, awards of Restricted
Stock,  Performance  Awards, Dividend Equivalents, awards of Deferred Stock or
Stock Payments shall be Common Stock, initially shares of the Company's Common
 
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Stock,  par  value  $0.04  per  share.    The  aggregate number of such shares
available  for  grant  of such options or rights or upon any such awards under
the  Plan  shall  initially be equal to 250,000 shares of the Company's Common
Stock  and  commencing  with the first business day of each fiscal year of the
Company  thereafter beginning with July 1, 1998, such maximum number of shares
reserved  for  issuance hereunder shall be increased by a number equal to four
percent (4%) of the number of shares of Common Stock issued and outstanding as
of  June  30 of the immediately preceding fiscal year; provided, however, that
notwithstanding  the  foregoing,  the aggregate number of shares issuable upon
exercise  of  incentive  stock  options  granted  hereunder  shall  not exceed
2,000,000.   Furthermore, the maximum number of shares which may be subject to
options,  rights  or  other awards granted under the Plan to any individual in
any  calendar year shall not exceed the Award Limit and the method of counting
such  shares shall conform to any requirements applicable to performance-based
compensation  under  Section  162(m)  of the Code.  The shares of Common Stock
issuable  upon  exercise of such options or rights or upon any such awards may
be  either  previously  authorized  but  unissued  shares  or treasury shares.
(b)       The maximum number of shares which may be subject to Options granted
under the Plan to any individual in any fiscal year shall not exceed the Award
Limit.    To the extent required by Section 162(m) of the Code, shares subject
to  Options  which are canceled continue to be counted against the Award Limit
and  if,  after grant of an Option, the price of shares subject to such Option
is  reduced,  the transaction is treated as a cancellation of the Option and a
grant of a new Option and both the Option deemed to be canceled and the Option
deemed  to  be  granted  are  counted  against  the  Award  Limit.
     2.2.          Add-back  of  Options  and  Other  Rights.
If  any  Option,  or  other  right to acquire shares of Common Stock under any
other  award under this Plan, expires or is canceled without having been fully
exercised,  or  is exercised in whole or in part for cash as permitted by this
Plan,  the  number  of  shares subject to such Option or other right but as to
which  such  Option  or other right was not exercised prior to its expiration,
cancellation or exercise may again be optioned, granted or awarded hereunder. 
Furthermore,  any shares subject to Options or other awards which are adjusted
pursuant to Section 9.3 and become exercisable with respect to shares of stock
of  another  corporation  shall  be  considered  cancelled  and  may  again be
optioned,  granted  or  awarded  hereunder.   Shares of Common Stock which are
delivered  by  the  Optionee  or  Grantee  or withheld by the Company upon the
exercise  of  any  Option  or  other  award under this Plan, in payment of the
exercise  price  thereof or tax withholding with respect thereto, may again be
optioned,  granted  or awarded hereunder.  If any share of Restricted Stock is
forfeited by the Grantee or repurchased by the Company pursuant to Section 6.6
hereof,  such  share  may  again  be  optioned, granted or awarded hereunder. 
Notwithstanding  the provisions of this Section 2.2, no shares of Common Stock
may  again  be  optioned,  granted  or  awarded  if such action would cause an
Incentive  Stock  Option to fail to qualify as an incentive stock option under
Section  422  of  the  Code.
 
                                 ARTICLE III.
                             GRANTING OF OPTIONS
     3.1.          Eligibility.
Any  Employee  or  consultant  selected  by  the Committee pursuant to Section
3.4(a)(i)  shall  be  eligible  to  be  granted  an  Option.  Each Independent
Director  of  the Company shall be eligible to be granted Options at the times
and  in  the  manner  set  forth  in  Section  3.4(d).
     3.2.          Disqualification  for  Stock  Ownership.
No  person  may  be  granted an Incentive Stock Option under this Plan if such
person,  at  the  time  the  Incentive  Stock  Option  is  granted, owns stock
possessing  more  than ten percent (10%) of the total combined voting power of
all  classes of stock of the Company or any then existing Subsidiary or parent
corporation  (within  the  meaning  of  Section  422  of the Code) unless such
Incentive Stock Option conforms to the applicable provisions of Section 422 of
the  Code.
     3.3.          Qualification  of  Incentive  Stock  Options.
No  Incentive  Stock  Option  shall  be  granted  to  any person who is not an
Employee.
     3.4.          Granting  of  Options
     (a)          The  Committee  shall  from  time  to  time, in its absolute
discretion,  and  subject  to  applicable  limitations  of  this  Plan:
     (i)     Determine which Employees are key Employees and select from among
the  key Employees or consultants (including Employees or consultants who have
previously  received  Options or other awards under this Plan) such of them as
in  its  opinion  should  be  granted  Options;
(ii)          Subject to the Award Limit, determine the number of shares to be
subject  to such Options granted to the selected key Employees or consultants;
 
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(iii)         Subject to Section 3.3, determine whether such Options are to be
Incentive  Stock  Options  or  Non-Qualified  Stock  Options  and whether such
Options  are  to  qualify  as  performance-based  compensation as described in
Section  162(m)(4)(C)  of  the  Code;  and
(iv)       Determine the terms and conditions of such Options, consistent with
this  Plan;  provided,  however,  that the terms and conditions of Options
intended  to qualify as performance-based compensation as described in Section
162(m)(4)(C)  of the Code shall include, but not be limited to, such terms and
conditions  as  may  be necessary to meet the applicable provisions of Section
162(m)  of  the  Code.
     (b)      Upon the selection of a key Employee or consultant to be granted
an  Option, the Committee shall instruct the Secretary of the Company to issue
the  Option  and  may  impose such conditions on the grant of the Option as it
deems appropriate.  Without limiting the generality of the preceding sentence,
the  Committee  may,  in  its  discretion  and  on  such  terms  as  it  deems
appropriate,  require  as a condition on the grant of an Option to an Employee
or  consultant that the Employee or consultant surrender for cancellation some
or  all  of  the  unexercised  Options, awards of Restricted Stock or Deferred
Stock,  Performance  Awards,  Dividend  Equivalents or Stock Payments or other
rights which have been previously granted to him under this Plan or otherwise.
 An Option, the grant of which is conditioned upon such surrender, may have an
option  price  lower  (or  higher) than the exercise price of such surrendered
Option  or  other award, may cover the same (or a lesser or greater) number of
shares as such surrendered Option or other award, may contain such other terms
as  the  Committee  deems  appropriate, and shall be exercisable in accordance
with its terms, without regard to the number of shares, price, exercise period
or  any  other  term  or  condition of such surrendered Option or other award.
(c)      Any Incentive Stock Option granted under this Plan may be modified by
the  Committee to disqualify such option from treatment as an "incentive stock
option"  under  Section  422  of  the  Code.
     (d)        During the term of the Plan, each person who is an Independent
Director  shall  be granted an Option to purchase Five Thousand (5,000) shares
of  Common  Stock  (subject  to  adjustment as provided in Section 9.3) on the
first Friday of July each year that such Person continues to be an Independent
Director.  In addition, during the term of the plan, a person who is initially
elected  or  appointed  to  the  board  after November 10, 1997, and who is an
Independent  Director  at the time of such election shall be granted an Option
to  purchase  Seven  Thousand  Five  Hundred  (7,500)  shares  of Common Stock
(subject  to  adjustment as provided in Section 9.3) when initially elected or
appointed to the Board.  Members of the Board who are employees of the Company
who  subsequently  retire  from  the  Company and remain on the Board will not
receive  an initial Option grant pursuant to the above, but to the extent that
they  are  otherwise  eligible, will receive, after retirement from employment
with  the  Company,  the  Annual  Options  Grant  as described above.  All the
foregoing  Option  grants  authorized  by  this  Section 3.4(d) are subject to
stockholder  approval  of  the  Plan.
 
                                 ARTICLE IV.
                               TERMS OF OPTIONS
     4.1.          Option  Agreement.
Each  Option  shall  be  evidenced  by a written Stock Option Agreement, which
shall be executed by the Optionee and an authorized officer of the Company and
which  shall contain such terms and conditions as the Committee (or the Board,
in  the  case  of  Options  granted to Independent Directors) shall determine,
consistent  with  this  Plan.    Stock  Option  Agreements  evidencing Options
intended  to qualify as performance-based compensation as described in Section
162(m)(4)(C)  of  the  Code  shall contain such terms and conditions as may be
necessary  to  meet  the applicable provisions of Section 162(m) of the Code. 
Stock  Option Agreements evidencing Incentive Stock Options shall contain such
terms  and conditions as may be necessary to meet the applicable provisions of
Section  422  of  the  Code.
     4.2.          Option  Price.
The  price  per share of the shares subject to each Option shall be set by the
Committee;  provided,  however,  that such price shall be no less than the
par value of a share of Common Stock, unless otherwise permitted by applicable
state law, and (i) in the case of Incentive Stock Options and Options intended
to  qualify  as  performance-based  compensation  as  described  in  Section
162(m)(4)(C)  of  the Code, such price shall not be less than 100% of the Fair
Market  Value  of  a  share of Common Stock on the date the Option is granted;
(ii)  in  the  case  of  Incentive Stock Options granted to an individual then
owning (within the meaning of Section 424(d) of the Code) more than 10% of the
total  combined  voting  power  of  all classes of stock of the Company or any
Subsidiary or parent corporation thereof (within the meaning of Section 422 of
the Code) such price shall not be less than 110% of the Fair Market Value of a
share of Common Stock on the date the Option is granted; and (iii) in the case
of  Options  granted  to Independent Directors, such price shall equal 100% of
the  Fair  Market  Value  of a share of Common Stock on the date the Option is
granted.
     4.3.          Option  Term.
The  term  of  an  Option  shall  be  set  by the Committee in its discretion;
provided, however, that, (i) in the case of Options granted to Independent
 
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Directors,  the  term  shall  be  ten  (10)  years from the date the Option is
granted,  without  variation or acceleration hereunder, but subject to Section
5.6,  and  (ii)  in the case of Incentive Stock Options, the term shall not be
more  than ten (10) years from the date the Incentive Stock Option is granted,
or  five  (5) years from such date if the Incentive Stock Option is granted to
an  individual  then owning (within the meaning of Section 424(d) of the Code)
more  than  10%  of the total combined voting power of all classes of stock of
the  Company  or  any  Subsidiary  or  parent  corporation thereof (within the
meaning  of  Section  422  of the Code).  Except as limited by requirements of
Section  422  of the Code and regulations and rulings thereunder applicable to
Incentive  Stock Options, the Committee may extend the term of any outstanding
Option  in  connection  with  any  Termination of Employment or Termination of
Consultancy  of  the  Optionee,  or  amend any other term or condition of such
Option  relating  to  such  a  termination.
     4.4.          Option  Vesting
     (a)      The period during which the right to exercise an Option in whole
or  in  part  vests  in  the  Optionee  shall  be set by the Committee and the
Committee  may  determine  that  an Option may not be exercised in whole or in
part  for a specified period after it is granted; provided, however, that,
Options  granted  to  Independent  Directors  shall  become  exercisable  in
cumulative  annual  installments  of thirty-three percent (33%) on each of the
first,  second  and  third  anniversaries of the date of Option grant, without
variation  or acceleration hereunder except as provided in Section 9.3(b).  At
any time after grant of an Option, the Committee may, in its sole and absolute
discretion and subject to whatever terms and conditions it selects, accelerate
the  period during which an Option (except an Option granted to an Independent
Director)  vests.
(b)          No  portion of an Option which is unexercisable at Termination of
Employment,  Termination  of  Directorship  or  Termination of Consultancy, as
applicable,  shall  thereafter  become exercisable, except as may be otherwise
provided  by  the  Committee  in  the  case of Options granted to Employees or
consultants either in the Stock Option Agreement or by action of the Committee
following  the  grant  of  the  Option.
(c)          To  the extent that the aggregate Fair Market Value of stock with
respect  to which "incentive stock options" (within the meaning of Section 422
of the Code, but without regard to Section 422(d) of the Code) are exercisable
for the first time by an Optionee during any calendar year (under the Plan and
all  other  incentive  stock  option  plans of the Company and any Subsidiary)
exceeds  $100,000,  such  Options shall be treated as Non-Qualified Options to
the  extent  required  by  Section 422 of the Code.  The rule set forth in the
preceding  sentence  shall  be  applied  by taking Options into account in the
order  in  which  they were granted.  For purposes of this Section 4.4(c), the
Fair  Market Value of stock shall be determined as of the time the Option with
respect  to  such  stock  is  granted.
 
                                  ARTICLE V.
                             EXERCISE OF OPTIONS
     5.1.          Partial  Exercise.
An  exercisable  Option  may  be  exercised  in whole or in part.  However, an
Option  shall  not  be  exercisable  with respect to fractional shares and the
Committee  (or  the  Board,  in  the  case  of  Options granted to Independent
Directors) may require that, by the terms of the Option, a partial exercise be
with  respect  to  a  minimum  number  of  shares.
     5.2.          Manner  of  Exercise.
All  or  a  portion  of  an  exercisable Option shall be deemed exercised upon
delivery  of  all  of  the  following  to  the Secretary of the Company or his
office:
     (a)      A written notice complying with the applicable rules established
by  the Committee (or the Board, in the case of Options granted to Independent
Directors)  stating  that the Option, or a portion thereof, is exercised.  The
notice  shall  be  signed  by  the  Optionee  or other person then entitled to
exercise  the  Option  or  such  portion;
(b)      Such representations and documents as the Committee (or the Board, in
the  case  of  Options  granted  to  Independent  Directors),  in its absolute
discretion,  deems  necessary  or  advisable  to  effect  compliance  with all
applicable provisions of the Securities Act of 1933, as amended, and any other
federal  or state securities laws or regulations.  The Committee or Board may,
in  its  absolute  discretion,  also take whatever additional actions it deems
appropriate  to  effect such compliance including, without limitation, placing
legends  on share certificates and issuing stop-transfer notices to agents and
registrars;
(c)        In the event that the Option shall be exercised pursuant to Section
10.1  by  any  person or persons other than the Optionee, appropriate proof of
the  right  of  such  person  or  persons  to  exercise  the  Option;  and
 
- -6-
<PAGE>
(d)      Full cash payment to the Secretary of the Company for the shares with
respect  to  which the Option, or portion thereof, is exercised.  However, the
Committee  (or  the  Board,  in  the  case  of  Options granted to Independent
Directors),  may  in  its discretion (i) allow a delay in payment up to thirty
(30)  days  from  the  date the Option, or portion thereof, is exercised; (ii)
allow  payment,  in whole or in part, through the delivery of shares of Common
Stock  owned by the Optionee, duly endorsed for transfer to the Company with a
Fair  Market  Value  on  the  date of delivery equal to the aggregate exercise
price  of  the  Option  or  exercised portion thereof; (iii) allow payment, in
whole  or  in  part,  through  the  surrender  of  shares of Common Stock then
issuable upon exercise of the Option having a Fair Market Value on the date of
Option  exercise  equal  to  the  aggregate  exercise  price  of the Option or
exercised  portion  thereof;  (iv) allow payment, in whole or in part, through
the  delivery  of  property  of  any  kind which constitutes good and valuable
consideration; (v) allow payment, in whole or in part, through the delivery of
a full recourse promissory note bearing interest (at no less than such rate as
shall  then  preclude  the  imputation of interest under the Code) and payable
upon such terms as may be prescribed by the Committee or the Board; (vi) allow
payment,  in  whole  or  in  part,  through  the delivery of a notice that the
Optionee  has  placed a market sell order with a broker with respect to shares
of Common Stock then issuable upon exercise of the Option, and that the broker
has  been directed to pay a sufficient portion of the net proceeds of the sale
to  the  Company  in satisfaction of the Option exercise price; or (vii) allow
payment through any combination of the consideration provided in the foregoing
subparagraphs  (ii),  (iii),  (iv), (v) and (vi).  In the case of a promissory
note,  the  Committee  (or  the  Board,  in  the  case  of  Options granted to
Independent  Directors)  may  also  prescribe  the  form  of such note and the
security to be given for such note.  The Option may not be exercised, however,
by  delivery  of a promissory note or by a loan from the Company when or where
such  loan  or  other  extension  of  credit  is  prohibited  by  law.
     5.3.          Conditions  to  Issuance  of  Stock  Certificates.
The  Company  shall  not  be  required  to issue or deliver any certificate or
certificates  for shares of stock purchased upon the exercise of any Option or
portion  thereof  prior  to  fulfillment  of  all of the following conditions:
     (a)     The admission of such shares to listing on all stock exchanges on
which  such  class  of  stock  is  then  listed;
(b)          The completion of any registration or other qualification of such
shares  under any state or federal law, or under the rulings or regulations of
the  Securities  and  Exchange Commission or any other governmental regulatory
body  which  the  Committee  or  Board shall, in its absolute discretion, deem
necessary  or  advisable;
(c)         The obtaining of any approval or other clearance from any state or
federal  governmental  agency  which  the  Committee (or Board, in the case of
Options  granted  to Independent Directors) shall, in its absolute discretion,
determine  to  be  necessary  or  advisable;
(d)      The lapse of such reasonable period of time following the exercise of
the  Option  as  the  Committee  (or  Board, in the case of Options granted to
Independent  Directors)  may  establish  from  time  to  time  for  reasons of
administrative  convenience;  and
(e)      The receipt by the Company of full payment for such shares, including
payment  of  any  applicable  withholding  tax  as  referenced in Section 9.5.
     5.4.          Rights  as  Stockholders.
The  holders of Options shall not be, nor have any of the rights or privileges
of,  stockholders of the Company in respect of any shares purchasable upon the
exercise  of  any part of an Option unless and until certificates representing
such  shares  have  been  issued  by  the  Company  to  such  holders.
     5.5.          Ownership  and  Transfer  Restrictions.
The  Committee  (or  Board,  in  the  case  of  Options granted to Independent
Directors),  in  its  absolute discretion, may impose such restrictions on the
ownership  and  transferability of the shares purchasable upon the exercise of
an Option as it deems appropriate.  Any such restriction shall be set forth in
the  respective  Stock  Option  Agreement  and  may  be  referred  to  on  the
certificates  evidencing  such shares.  The Committee may require the Employee
to give the Company prompt notice of any disposition of shares of Common Stock
acquired  by  exercise  of an Incentive Stock Option within (i) two years from
the  date  of granting such Option to such Employee or (ii) one year after the
transfer  of  such shares to such Employee.  The Committee may direct that the
certificates evidencing shares acquired by exercise of an Option refer to such
requirement  to  give  prompt  notice  of  disposition.
     5.6.          Limitations  on Exercise of Options Granted to Independent
Directors.
No Option granted to an Independent Director may be exercised to any extent by
anyone  after  the  first  to  occur  of  the  following  events:
     (a)          The  expiration  of  twelve (12) months from the date of the
Optionee's  death;
 
- -7-
<PAGE>
(b)       the expiration of twelve (12) months from the date of the Optionee's
Termination  of  Directorship  by reason of his permanent and total disability
(within  the  meaning  of  Section  22(e)(3)  of  the  Code);
(c)         the expiration of three (3) months from the date of the Optionee's
Termination of Directorship for any reason other than such Optionee's death or
his  permanent  and  total  disability,  unless  the Optionee dies within said
three-month  period;  or
(d)          The expiration of ten years from the date the Option was granted.
 
                                 ARTICLE VI.
                          AWARD OF RESTRICTED STOCK
     6.1.          Award  of  Restricted  Stock
     (a)      The Committee may from time to time, in its absolute discretion:
     (i)         Select from among the key Employees or consultants (including
Employees  or consultants who have previously received other awards under this
Plan)  such  of them as in its opinion should be awarded Restricted Stock; and
     (ii)        Determine the purchase price, if any, and other terms and 
conditions applicable to such Restricted  Stock, consistent  with  this  Plan.
     (b)         The Committee shall establish the purchase price, if any, and
form  of  payment  for  Restricted  Stock;  provided,  however,  that such
purchase  price  shall be no less than the par value of the Common Stock to be
purchased,  unless otherwise permitted by applicable state law.  In all cases,
legal  consideration  shall be required for each issuance of Restricted Stock.
(c)          Upon  the selection of a key Employee or consultant to be awarded
Restricted Stock, the Committee shall instruct the Secretary of the Company to
issue  such Restricted Stock and may impose such conditions on the issuance of
such  Restricted  Stock  as  it  deems  appropriate.
     6.2.          Restricted  Stock  Agreement.
Restricted  Stock  shall be issued only pursuant to a written Restricted Stock
Agreement,  which shall be executed by the selected key Employee or consultant
and  an  authorized  officer of the Company and which shall contain such terms
and  conditions  as  the Committee shall determine, consistent with this Plan.
     6.3.          Consideration.
As  consideration for the issuance of Restricted Stock, in addition to payment
of  any purchase price, the Restricted Stockholder shall agree, in the written
Restricted Stock Agreement, to remain in the employ of, or to consult for, the
Company  or  any  Subsidiary  for  a  period  of  at  least one year after the
Restricted  Stock  is  issued  (or  such shorter period as may be fixed in the
Restricted  Stock  Agreement  or by action of the Committee following grant of
the  Restricted  Stock).    Nothing  in  this  Plan or in any Restricted Stock
Agreement  hereunder  shall  confer on any Restricted Stockholder any right to
continue  in  the  employ  of,  or  as  a  consultant  for, the Company or any
Subsidiary  or  shall  interfere with or restrict in any way the rights of the
Company  and any Subsidiary, which are hereby expressly reserved, to discharge
any  Restricted  Stockholder  at  any  time for any reason whatsoever, with or
without  good  cause.
     6.4.          Rights  as  Stockholders.
Upon  delivery of the shares of Restricted Stock to the escrow holder pursuant
to  Section  6.7,  the  Restricted  Stockholder  shall  have, unless otherwise
provided  by  the  Committee,  all the rights of a stockholder with respect to
said  shares,  subject  to the restrictions in his Restricted Stock Agreement,
including  the  right to receive all dividends and other distributions paid or
made with respect to the shares; provided, however, that in the discretion
of  the  Committee, any extraordinary distributions with respect to the Common
Stock  shall  be  subject  to  the  restrictions  set  forth  in  Section 6.5.
     6.5.          Restriction.
All  shares  of  Restricted Stock issued under this Plan (including any shares
received  by  holders  thereof with respect to shares of Restricted Stock as a
result of stock dividends, stock splits or any other form of recapitalization)
shall,  in the terms of each individual Restricted Stock Agreement, be subject
to  such  restrictions  as the Committee shall provide, which restrictions may
include,  without  limitation,  restrictions  concerning  voting  rights  and
 
- -8-
<PAGE>
transferability  and  restrictions  based  on  duration of employment with the
Company,  Company  performance  and  individual  performance;  provided,
however,  that  by  action  taken  after the Restricted Stock is issued, the
Committee  may,  on  such  terms  and  conditions  as  it  may determine to be
appropriate, remove any or all of the restrictions imposed by the terms of the
Restricted  Stock  Agreement.   Restricted Stock may not be sold or encumbered
until all restrictions are terminated or expire.  Unless provided otherwise by
the Committee, if no consideration was paid by the Restricted Stockholder upon
issuance, a Restricted Stockholder's rights in unvested Restricted Stock shall
lapse  upon  Termination  of Employment or, if applicable, upon Termination of
Consultancy  with  the  Company.
     6.6.          Repurchase  of  Restricted  Stock.
The  Committee  shall provide in the terms of each individual Restricted Stock
Agreement  that  the  Company  shall  have  the  right  to repurchase from the
Restricted Stockholder the Restricted Stock then subject to restrictions under
the  Restricted  Stock  Agreement immediately upon a Termination of Employment
or,  if  applicable,  upon a Termination of Consultancy between the Restricted
Stockholder and the Company, at a cash price per share equal to the price paid
by  the  Restricted  Stockholder  for  such  Restricted  Stock;  provided,
however,  that  provision may be made that no such right of repurchase shall
exist  in  the  event  of  a  Termination  of  Employment  or  Termination  of
Consultancy  without cause, or following a change in control of the Company or
because  of  the  Restricted Stockholder's retirement, death or disability, or
otherwise.
     6.7.          Escrow.
The  Secretary of the Company or such other escrow holder as the Committee may
appoint  shall  retain  physical  custody  of  each  certificate  representing
Restricted  Stock  until  all of the restrictions imposed under the Restricted
Stock  Agreement  with  respect  to  the  shares evidenced by such certificate
expire  or  shall  have  been  removed.
     6.8.          Legend.
In  order  to enforce the restrictions imposed upon shares of Restricted Stock
hereunder,  the  Committee  shall  cause  a  legend or legends to be placed on
certificates  representing  all  shares  of  Restricted  Stock  that are still
subject  to  restrictions  under  Restricted Stock Agreements, which legend or
legends  shall  make  appropriate reference to the conditions imposed thereby.
 
                                 ARTICLE VII.
 
                  PERFORMANCE AWARDS, DIVIDEND EQUIVALENTS,
                        DEFERRED STOCK, STOCK PAYMENTS
     7.1.          Performance  Awards.
Any key Employee or consultant selected by the Committee may be granted one or
more  Performance  Awards.  The value of such Performance Awards may be linked
to  the market value, book value, net profits or other measure of the value of
Common  Stock or other specific performance criteria determined appropriate by
the Committee, in each case on a specified date or dates or over any period or
periods  determined by the Committee, or may be based upon the appreciation in
the  market  value, book value, net profits or other measure of the value of a
specified  number  of  shares  of  Common Stock over a fixed period or periods
determined  by  the  Committee.   In making such determinations, the Committee
shall  consider (among such other factors as it deems relevant in light of the
specific  type  of  award)  the  contributions,  responsibilities  and  other
compensation  of  the  particular  key  Employee  or  consultant.
     7.2.          Dividend  Equivalents.
Any  key  Employee  or  consultant  selected  by  the Committee may be granted
Dividend  Equivalents  based  on the dividends declared on Common Stock, to be
credited  as  of dividend payment dates, during the period between the date an
Option,  Deferred  Stock  or  Performance  Award is granted, and the date such
Option, Deferred Stock or Performance Award is exercised, vests or expires, as
determined  by the Committee.  Such Dividend Equivalents shall be converted to
cash or additional shares of Common Stock by such formula and at such time and
subject  to  such  limitations  as  may  be determined by the Committee.  With
respect to Dividend Equivalents granted with respect to Options intended to be
qualified performance-based compensation for purposes of Section 162(m) of the
Code,  such  Dividend  Equivalents shall be payable regardless of whether such
Option  is  exercised.
     7.3.          Stock  Payments.
Any  key  Employee  or  consultant selected by the Committee may receive Stock
Payments  in  the  manner  determined from time to time by the Committee.  The
number  of  shares  shall be determined by the Committee and may be based upon
the  Fair  Market Value, book value, net profits or other measure of the value
of  Common Stock or other specific performance criteria determined appropriate
by  the Committee, determined on the date such Stock Payment is made or on any
date  thereafter.
     7.4.          Deferred  Stock.
Any  key  Employee  or  consultant selected by the Committee may be granted an
award  of  Deferred  Stock  in  the manner determined from time to time by the
Committee.   The number of shares of Deferred Stock shall be determined by the
Committee  and  may  be linked to the market value, book value, net profits or
other  measure  of  the  value  of  Common Stock or other specific performance
 
- -9-
<PAGE>
criteria  determined  to  be  appropriate  by the Committee, in each case on a
specified  date  or  dates  or  over  any  period or periods determined by the
Committee.   Common Stock underlying a Deferred Stock award will not be issued
until  the  Deferred Stock award has vested, pursuant to a vesting schedule or
performance  criteria  set by the Committee.  Unless otherwise provided by the
Committee,  a  Grantee  of  Deferred  Stock  shall have no rights as a Company
stockholder  with  respect to such Deferred Stock until such time as the award
has  vested  and  the  Common  Stock  underlying  the  award  has been issued.
     7.5.         Performance Award Agreement, Dividend Equivalent Agreement,
Deferred  Stock  Agreement,  Stock  Payment  Agreement.
Each  Performance  Award,  Dividend Equivalent, award of Deferred Stock and/or
Stock  Payment  shall  be  evidenced  by  a  written agreement, which shall be
executed  by  the  Grantee  and an authorized Officer of the Company and which
shall  contain  such  terms  and  conditions as the Committee shall determine,
consistent  with  this  Plan.
     7.6.          Term.
The  term of a Performance Award, Dividend Equivalent, award of Deferred Stock
and/or  Stock  Payment  shall  be  set  by  the  Committee  in its discretion.
     7.7.          Exercise  Upon  Termination  of  Employment.
A Performance Award, Dividend Equivalent, award of Deferred Stock and/or Stock
Payment  is  exercisable  or  payable only while the Grantee is an Employee or
consultant;  provided  that  the  Committee may determine that the Performance
Award,  Dividend  Equivalent, award of Deferred Stock and/or Stock Payment may
be exercised or paid subsequent to Termination of Employment or Termination of
Consultancy without cause, or following a change in control of the Company, or
because  of  the  Grantee's  retirement,  death  or  disability, or otherwise.
     7.8.          Payment  on  Exercise.
Payment  of  the  amount determined under Section 7.1 or 7.2 above shall be in
cash,  in  Common  Stock  or  a  combination  of  both,  as  determined by the
Committee.    To  the extent any payment under this Article VII is effected in
Common  Stock,  it  shall be made subject to satisfaction of all provisions of
Section  5.3.
     7.9.          Consideration.
In  consideration of the granting of a Performance Award, Dividend Equivalent,
award  of  Deferred  Stock and/or Stock Payment, the Grantee shall agree, in a
written  agreement, to remain in the employ of, or to consult for, the Company
or  any  Subsidiary  for  a period of at least one year after such Performance
Award,  Dividend  Equivalent,  award of Deferred Stock and/or Stock Payment is
granted (or such shorter period as may be fixed in such agreement or by action
of  the  Committee  following  such  grant).    Nothing in this Plan or in any
agreement  hereunder  shall confer on any Grantee any right to continue in the
employ  of,  or  as  a  consultant for, the Company or any Subsidiary or shall
interfere  with  or  restrict  in  any  way  the rights of the Company and any
Subsidiary,  which  are hereby expressly reserved, to discharge any Grantee at
any  time  for  any  reason  whatsoever,  with  or  without  good  cause.
 
                                ARTICLE VIII.
                                ADMINISTRATION
     8.1.          Compensation  Committee.
The  Compensation  Committee  (or  another  committee or a subcommittee of the
Board  assuming  the functions of the Committee under this Plan) shall consist
solely of two or more Independent Directors appointed by and holding office at
the  pleasure  of the Board, each of whom is both a "non-employee director" as
defined by Rule 16b-3 and an "outside director" for purposes of Section 162(m)
of  the  Code.    Appointment  of  Committee  members  shall be effective upon
acceptance  of  appointment.    Committee  members  may  resign at any time by
delivering  written  notice  to  the Board.  Vacancies in the Committee may be
filled  by  the  Board.
     8.2.          Duties  and  Powers  of  Committee.
It shall be the duty of the Committee to conduct the general administration of
this  Plan  in  accordance  with its provisions.  The Committee shall have the
power  to  interpret  this  Plan and the agreements pursuant to which Options,
awards  of  Restricted  Stock  or Deferred Stock, Performance Awards, Dividend
Equivalents  or Stock Payments are granted or awarded, and to adopt such rules
for  the  administration,  interpretation, and application of this Plan as are
consistent  therewith  and  to  interpret,  amend  or  revoke any such rules. 
Notwithstanding  the  foregoing,  the  full Board, acting by a majority of its
members  in  office, shall conduct the general administration of the Plan with
respect  to Options granted to Independent Directors.  Any such grant or award
under this Plan need not be the same with respect to each Optionee, Grantee or
Restricted  Stockholder.    Any such interpretations and rules with respect to
Incentive Stock Options shall be consistent with the provisions of Section 422
of  the  Code.  In its absolute discretion, the Board may at any time and from
time  to  time  exercise  any and all rights and duties of the Committee under
this  Plan  except  with  respect to matters which under Rule 16b-3 or Section
162(m)  of  the  Code,  or  any  regulations  or  rules issued thereunder, are
required  to  be  determined  in  the  sole  discretion  of  the  Committee.
     8.3.          Majority  Rule;  Unanimous  Written  Consent.
The  Committee  shall  act  by  a  majority  of its members in attendance at a
meeting  at  which  a  quorum  is  present or by a memorandum or other written
instrument  signed  by  all  members  of  the  Committee.
 
- -10-
<PAGE>
     8.4.         Compensation; Professional Assistance; Good Faith Actions.
Members of the Committee shall receive such compensation for their services as
members as may be determined by the Board.  All expenses and liabilities which
members  of  the Committee incur in connection with the administration of this
Plan  shall  be borne by the Company.  The Committee may, with the approval of
the Board, employ attorneys, consultants, accountants, appraisers, brokers, or
other  persons.    The  Committee,  the Company and the Company's officers and
Directors shall be entitled to rely upon the advice, opinions or valuations of
any  such  persons.    All  actions  taken  and  all  interpretations  and
determinations made by the Committee or the Board in good faith shall be final
and binding upon all Optionees, Grantees, Restricted Stockholders, the Company
and  all other interested persons.  No members of the Committee or Board shall
be  personally  liable for any action, determination or interpretation made in
good  faith  with respect to this Plan, Options, awards of Restricted Stock or
Deferred  Stock,  Performance  Awards, Dividend Equivalents or Stock Payments,
and all members of the Committee and the Board shall be fully protected by the
Company  in  respect  of  any  such  action,  determination or interpretation.
 
                                 ARTICLE IX.
                           MISCELLANEOUS PROVISIONS
     9.1.          Not  Transferable.
Options,  Restricted  Stock awards, Deferred Stock awards, Performance Awards,
Dividend  Equivalents  or  Stock  Payments  under  this  Plan may not be sold,
pledged, assigned, or transferred in any manner other than by will or the laws
of  descent  and  distribution  or  pursuant  to a QDRO, unless and until such
rights  or awards have been exercised, or the shares underlying such rights or
awards  have  been issued, and all restrictions applicable to such shares have
lapsed.   No Option, Restricted Stock award, Deferred Stock award, Performance
Award, Dividend Equivalent or Stock Payment or interest or right therein shall
be  liable for the debts, contracts or engagements of the Optionee, Grantee or
Restricted  Stockholder  or  his successors in interest or shall be subject to
disposition  by  transfer,  alienation,  anticipation,  pledge,  encumbrance,
assignment  or  any  other  means  whether  such  disposition  be voluntary or
involuntary  or by operation of law by judgment, levy, attachment, garnishment
or  any  other  legal or equitable proceedings (including bankruptcy), and any
attempted  disposition thereof shall be null and void and of no effect, except
to  the  extent  that such disposition is permitted by the preceding sentence.
During the lifetime of the Optionee or Grantee, only he may exercise an Option
or  other  right  or  award  (or any portion thereof) granted to him under the
Plan,  unless  it has been disposed of pursuant to a QDRO.  After the death of
the  Optionee  or Grantee, any exercisable portion of an Option or other right
or  award may, prior to the time when such portion becomes unexercisable under
the  Plan  or  the  applicable  Stock  Option Agreement or other agreement, be
exercised  by  his personal representative or by any person empowered to do so
under  the  deceased Optionee's or Grantee's will or under the then applicable
laws  of  descent  and  distribution.
     9.2.          Amendment,  Suspension  or  Termination  of  this  Plan.
Except  as  otherwise provided in this Section 9.2, this Plan may be wholly or
partially  amended  or otherwise modified, suspended or terminated at any time
or from time to time by the Board or the Committee.  However, without approval
of  the  Company's stockholders given within twelve months before or after the
action  by the Board or the Committee, no action of the Board or the Committee
may, except as provided in Section 9.3, increase the limits imposed in Section
2.1  on  the  maximum  number of shares which may be issued under this Plan or
modify  the  Award  Limit,  and no action of the Board or the Committee may be
taken  that  would  otherwise  require  stockholder  approval  as  a matter of
applicable  law,  regulation or rule.  No amendment, suspension or termination
of  this  Plan shall, without the consent of the holder of Options, Restricted
Stock  awards, Deferred Stock awards, Performance Awards, Dividend Equivalents
or  Stock  Payments,  alter  or  impair  any  rights  or obligations under any
Options,  Restricted  Stock awards, Deferred Stock awards, Performance Awards,
Dividend  Equivalents or Stock Payments theretofore granted or awarded, unless
the  award  itself  otherwise  expressly  so provides.  No Options, Restricted
Stock,  Deferred  Stock,  Performance  Awards,  Dividend  Equivalents or Stock
Payments  may  be  granted or awarded during any period of suspension or after
termination  of  this  Plan, and in no event may any Incentive Stock Option be
granted  under  this  Plan  after  the first to occur of the following events:
     (a)      The expiration of ten years from the date the Plan is adopted by
the  Board;  or
(b)      The expiration of ten years from the date the Plan is approved by the
Company's  stockholders  under  Section  9.4.
     9.3.       Changes in Common Stock or Assets of the Company, Acquisition
or  Liquidation  of  the  Company  and  Other  Corporate  Events.
     (a)        Subject to Section 9.3(d), in the event that the Committee (or
the Board, in the case of Options granted to Independent Directors) determines
 
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<PAGE>
that  any  dividend or other distribution (whether in the form of cash, Common
Stock,  other  securities,  or  other  property),  recapitalization,
reclassification,  stock  split,  reverse stock split, reorganization, merger,
consolidation,  split-up,  spin-off,  combination,  repurchase,  liquidation,
dissolution,  or  sale,  transfer,  exchange  or  other  disposition of all or
substantially all of the assets of the Company (including, but not limited to,
a  Corporate  Transaction), or exchange of Common Stock or other securities of
the  Company, issuance of warrants or other rights to purchase Common Stock or
other  securities  of  the  Company, or other similar corporate transaction or
event,  in  the Committee's sole discretion (or in the case of Options granted
to  Independent  Directors,  the  Board's sole discretion), affects the Common
Stock such that an adjustment is determined by the Committee to be appropriate
in  order  to  prevent  dilution  or  enlargement of the benefits or potential
benefits  intended  to  be made available under the Plan or with respect to an
Option,  Restricted  Stock  award,  Performance  Award,  Dividend  Equivalent,
Deferred  Stock  award  or Stock Payment, then the Committee (or the Board, in
the case of Options granted to Independent Directors) shall, in such manner as
it  may  deem  equitable,  adjust  any  or  all  of
     (i)          the  number  and  kind  of  shares of Common Stock (or other
securities  or  property)  with  respect to which Options, Performance Awards,
Dividend Equivalents or Stock Payments may be granted under the Plan, or which
may  be  granted  as  Restricted  Stock  or Deferred Stock (including, but not
limited  to,  adjustments  of  the  limitations  in Section 2.1 on the maximum
number  and  kind  of  shares which may be issued and adjustments of the Award
Limit),
(ii)     the number and kind of shares of Common Stock (or other securities or
property)  subject  to  outstanding  Options,  Performance  Awards,  Dividend
Equivalents,  or  Stock  Payments,  and  in  the  number and kind of shares of
outstanding  Restricted  Stock  or  Deferred  Stock,  and
(iii)      the grant or exercise price with respect to any Option, Performance
Award,  Dividend  Equivalent  or  Stock  Payment.
     (b)       Subject to Sections 9.3(b)(vii) and 9.3(d), in the event of any
Corporate  Transaction  or  other  transaction  or  event described in Section
9.3(a)  or  any  unusual  or nonrecurring transactions or events affecting the
Company,  any  affiliate  of  the  Company, or the financial statements of the
Company  or  any  affiliate, or of changes in applicable laws, regulations, or
accounting  principles,  the  Committee  (or the Board, in the case of Options
granted  to  Independent  Directors) in its discretion is hereby authorized to
take  any  one or more of the following actions whenever the Committee (or the
Board,  in  the  case  of Options granted to Independent Directors) determines
that such action is appropriate in order to prevent dilution or enlargement of
the  benefits  or  potential  benefits intended to be made available under the
Plan  or  with respect to any option, right or other award under this Plan, to
facilitate  such  transactions  or events or to give effect to such changes in
laws,  regulations  or  principles:
     (i)          In  its  sole and absolute discretion, and on such terms and
conditions  as  it deems appropriate, the Committee (or the Board, in the case
of  Options granted to Independent Directors) may provide, either by the terms
of  the  agreement  or  by  action  taken  prior  to  the  occurrence  of such
transaction  or event and either automatically or upon the optionee's request,
for  either  the  purchase  of  any  such  Option, Performance Award, Dividend
Equivalent, or Stock Payment, or any Restricted Stock or Deferred Stock for an
amount  of  cash  equal  to  the amount that could have been attained upon the
exercise  of  such  option,  right  or  award or realization of the optionee's
rights  had  such option, right or award been currently exercisable or payable
or  fully  vested or the replacement of such option, right or award with other
rights  or  property  selected  by the Committee (or the Board, in the case of
Options  granted  to  Independent  Directors)  in  its  sole  discretion;
(ii)      In its sole and absolute discretion, the Committee (or the Board, in
the  case  of Options granted to Independent Directors) may provide, either by
the  terms  of  such  Option, Performance Award, Dividend Equivalent, or Stock
Payment, or Restricted Stock or Deferred Stock or by action taken prior to the
occurrence of such transaction or event that it cannot be exercised after such
event;
(iii)          In  its  sole  and  absolute  discretion, and on such terms and
conditions  as  it deems appropriate, the Committee (or the Board, in the case
of  Options granted to Independent Directors) may provide, either by the terms
of  such  Option, Performance Award, Dividend Equivalent, or Stock Payment, or
Restricted  Stock or Deferred Stock or by action taken prior to the occurrence
of  such  transaction  or  event, that for a specified period of time prior to
such transaction or event, such option, right or award shall be exercisable as
to all shares covered thereby, notwithstanding anything to the contrary in (i)
Section 4.4 or (ii) the provisions of such Option, Performance Award, Dividend
Equivalent,  or  Stock  Payment,  or  Restricted  Stock  or  Deferred  Stock;
 
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<PAGE>
(iv)     In its sole and absolute discretion, and on such terms and conditions
as  it  deems appropriate, the Committee (or the Board, in the case of Options
granted  to  Independent  Directors)  may provide, either by the terms of such
Option,  Performance  Award,  Dividend  Equivalent,  or  Stock  Payment,  or
Restricted  Stock or Deferred Stock or by action taken prior to the occurrence
of  such  transaction  or  event,  that upon such event, such option, right or
award  be  assumed  by  the  successor or survivor corporation, or a parent or
subsidiary  thereof, or shall be substituted for by similar options, rights or
awards  covering  the  stock  of  the  successor or survivor corporation, or a
parent  or  subsidiary  thereof, with appropriate adjustments as to the number
and  kind  of  shares  and  prices;
(v)      In its sole and absolute discretion, and on such terms and conditions
as  it  deems appropriate, the Committee (or the Board, in the case of Options
granted  to Independent Directors) may make adjustments in the number and type
of  shares  of  Common  Stock  (or  other  securities  or property) subject to
outstanding  Options,  Performance  Awards,  Dividend  Equivalents,  or  Stock
Payments,  and  in  the  number  and  kind  of outstanding Restricted Stock or
Deferred  Stock  and/or in the terms and conditions of (including the grant or
exercise price), and the criteria included in, outstanding options, rights and
awards  and options, rights and awards which may be granted in the future; and
(vi)     In its sole and absolute discretion, and on such terms and conditions
as  it  deems  appropriate, the Committee may provide either by the terms of a
Restricted Stock award or Deferred Stock award or by action taken prior to the
occurrence  of  such  event that, for a specified period of time prior to such
event,  the  restrictions  imposed  under  a  Restricted  Stock Agreement or a
Deferred  Stock  Agreement  upon  some  or  all  shares of Restricted Stock or
Deferred  Stock  may be terminated, and, in the case of Restricted Stock, some
or  all  shares of such Restricted Stock may cease to be subject to repurchase
under  Section  6.6  or  forfeiture  under  Section  6.5  after  such  event.
(vii)     None of the foregoing discretionary actions taken under this Section
9.3(b) shall be permitted with respect to Options granted under Section 3.4(d)
to  Independent  Directors  to  the  extent  that  such  discretion  would  be
inconsistent  with  the applicable exemptive conditions of Rule 16b-3.  In the
event  of  a  Change in Control or a Corporate Transaction, to the extent that
the  Board  does  not  have the ability under Rule 16b-3 to take or to refrain
from  taking the discretionary actions set forth in Section 9.3(b)(iii) above,
each  Option granted to an Independent Director shall be exercisable as to all
shares  covered  thereby  upon  such Change in Control or during the five days
immediately  preceding  the  consummation  of  such  Corporate Transaction and
subject  to  such  consummation,  notwithstanding  anything to the contrary in
Section  4.4  or  the  vesting  schedule  of  such Options.  In the event of a
Corporate  Transaction, to the extent that the Board does not have the ability
under  Rule  16b-3 to take or to refrain from taking the discretionary actions
set  forth  in  Section  9.3(b)(ii) above, no Option granted to an Independent
Director  may  be  exercised  following such Corporate Transaction unless such
Option  is,  in  connection with such Corporate Transaction, either assumed by
the  successor  or  survivor  corporation (or parent or subsidiary thereof) or
replaced  with  a comparable right with respect to shares of the capital stock
of  the  successor  or survivor corporation (or parent or subsidiary thereof).
     (a)       Subject to Section 9.3(d) and 9.8, the Committee (or the Board,
in  the  case  of  Options  granted  to  Independent  Directors)  may,  in its
discretion,  include  such  further  provisions and limitations in any Option,
Performance  Award, Dividend Equivalent, or Stock Payment, or Restricted Stock
or  Deferred  Stock  agreement or certificate, as it may deem equitable and in
the  best  interests  of  the  Company.
(b)          With  respect to Options intended to qualify as performance-based
compensation  under  Section 162(m), no adjustment or action described in this
Section  9.3  or in any other provision of the Plan shall be authorized to the
extent  that such adjustment or action would cause the Plan to violate Section
422(b)(1)  of  the Code or would cause such Option to fail to so qualify under
Section  162(m),  as  the  case  may be, or any successor provisions thereto. 
Furthermore,  no  such  adjustment or action shall be authorized to the extent
such  adjustment or action would result in short-swing profits liability under
Section  16  or  violate  the  exemptive  conditions  of Rule 16b-3 unless the
Committee  (or  the  Board,  in  the  case  of  Options granted to Independent
Directors)  determines  that  the  Option is not to comply with such exemptive
conditions.  The number of shares of Common Stock subject to any option, right
or  award  shall  always  be  rounded  to  the  next  whole  number.
     9.4.          Approval  of  Plan  by  Stockholders.
This  Plan  will  be  submitted for the approval of the Company's stockholders
within  twelve  months  after the date of the Board's initial adoption of this
Plan.  Options, Performance Awards, Dividend Equivalents or Stock Payments may
be granted and Restricted Stock or Deferred Stock may be awarded prior to such
 
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<PAGE>
stockholder approval, provided that such Options, Performance Awards, Dividend
Equivalents  or  Stock  Payments  shall not be exercisable and such Restricted
Stock  or  Deferred  Stock  shall not vest prior to the time when this Plan is
approved  by  the stockholders, and provided further that if such approval has
not  been  obtained  at  the  end  of  said  twelve-month period, all Options,
Performance  Awards, Dividend Equivalents or Stock Payments previously granted
and  all Restricted Stock or Deferred Stock previously awarded under this Plan
shall  thereupon  be  canceled  and  become  null  and  void.
     9.5.          Tax  Withholding.
The  Company  shall  be  entitled to require payment in cash or deduction from
other compensation payable to each Optionee, Grantee or Restricted Stockholder
of  any  sums  required by federal, state or local tax law to be withheld with
respect  to the issuance, vesting or exercise of any Option, Restricted Stock,
Deferred  Stock, Performance Award, Dividend Equivalent or Stock Payment.  The
Committee  (or  the  Board,  in  the  case  of  Options granted to Independent
Directors)  may  in  its  discretion  and  in  satisfaction  of  the foregoing
requirement allow such Optionee, Grantee or Restricted Stockholder to elect to
have the Company withhold shares of Common Stock otherwise issuable under such
Option or other award (or allow the return of shares of Common Stock) having a
Fair  Market  Value  equal  to  the  sums  required  to  be  withheld.
     9.6.          Loans.
The  Committee  may,  in  its  discretion,  extend  one  or  more loans to key
Employees in connection with the exercise or receipt of an Option, Performance
Award,  Dividend  Equivalent  or Stock Payment granted under this Plan, or the
issuance  of  Restricted Stock or Deferred Stock awarded under this Plan.  The
terms  and  conditions  of  any  such  loan  shall  be  set  by the Committee.
     9.7.          Forfeiture  Provisions.
Pursuant  to  its  general  authority  to  determine  the terms and conditions
applicable  to awards under the Plan, the Committee (or the Board, in the case
of  Options  granted  to  Independent  Directors) shall have the right (to the
extent  consistent  with the applicable exemptive conditions of Rule 16b-3) to
provide,  in  the  terms of Options or other awards made under the Plan, or to
require  the  recipient  to agree by separate written instrument, that (i) any
proceeds,  gains or other economic benefit actually or constructively received
by  the  recipient  upon  any  receipt  or  exercise of the award, or upon the
receipt  or  resale of any Common Stock underlying such award, must be paid to
the Company, and (ii) the award shall terminate and any unexercised portion of
such award (whether or not vested) shall be forfeited, if (a) a Termination of
Employment,  Termination  of Consultancy or Termination of Directorship occurs
prior to a specified date, or within a specified time period following receipt
or  exercise  of  the  award,  or  (b)  the recipient at any time, or during a
specified  time  period,  engages  in  any  activity  in  competition with the
Company,  or  which  is  inimical, contrary or harmful to the interests of the
Company,  as  further  defined by the Committee (or the Board, as applicable).
     9.8.          Limitations  Applicable  to  Section  16  Persons  and
Performance-Based  Compensation.
Notwithstanding  any  other provision of this Plan, this Plan, and any Option,
Performance Award, Dividend Equivalent or Stock Payment granted, or Restricted
Stock  or  Deferred  Stock  awarded,  to any individual who is then subject to
Section 16 of the Exchange Act, shall be subject to any additional limitations
set  forth  in  any applicable exemptive rule under Section 16 of the Exchange
Act  (including  any  amendment  to  Rule  16b-3 of the Exchange Act) that are
requirements  for  the  application  of  such  exemptive  rule.  To the extent
permitted  by  applicable law, the Plan, Options, Performance Awards, Dividend
Equivalents,  Stock  Payments,  Restricted Stock and Deferred Stock granted or
awarded  hereunder  shall be deemed amended to the extent necessary to conform
to  such  applicable  exemptive  rule.  Furthermore, notwithstanding any other
provision  of  this  Plan, any Option intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall be subject
to  any  additional  limitations  set  forth  in  Section  162(m)  of the Code
(including  any amendment to Section 162(m) of the Code) or any regulations or
rulings  issued  thereunder  that  are  requirements  for  qualification  as
performance-based  compensation  as  described  in Section 162(m)(4)(C) of the
Code, and this Plan shall be deemed amended to the extent necessary to conform
to  such  requirements.
     9.9.          Effect  of  Plan  Upon  Options  and  Compensation Plans.
The adoption of this Plan shall not affect any other compensation or incentive
plans in effect for the Company or any Subsidiary.  Nothing in this Plan shall
be  construed  to  limit  the  right of the Company (i) to establish any other
forms of incentives or compensation for Employees, Directors or Consultants of
the  Company  or  any  Subsidiary  or (ii) to grant or assume options or other
rights  otherwise than under this Plan in connection with any proper corporate
purpose  including  but  not  by way of limitation, the grant or assumption of
options  in  connection  with  the  acquisition  by  purchase,  lease, merger,
consolidation  or  otherwise,  of  the  business,  stock  or  assets  of  any
corporation,  partnership,  limited  liability  company,  firm or association.
     9.10.          Compliance  with  Laws.
This  Plan,  the  granting  and  vesting  of Options, Restricted Stock awards,
Deferred  Stock  awards,  Performance  Awards,  Dividend  Equivalents or Stock
Payments  under  this  Plan  and the issuance and delivery of shares of Common
Stock  and  the payment of money under this Plan or under Options, Performance
Awards,  Dividend Equivalents or Stock Payments granted or Restricted Stock or
Deferred Stock awarded hereunder are subject to compliance with all applicable
federal  and  state  laws, rules and regulations (including but not limited to
state  and federal securities law and federal margin requirements) and to such
 
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<PAGE>
approvals  by any listing, regulatory or governmental authority as may, in the
opinion  of  counsel  for the Company, be necessary or advisable in connection
therewith.   Any securities delivered under this Plan shall be subject to such
restrictions,  and the person acquiring such securities shall, if requested by
the Company, provide such assurances and representations to the Company as the
Company  may  deem  necessary  or  desirable  to  assure  compliance  with all
applicable legal requirements.  To the extent permitted by applicable law, the
Plan,  Options,  Restricted  Stock  awards, Deferred Stock awards, Performance
Awards,  Dividend  Equivalents  or Stock Payments granted or awarded hereunder
shall be deemed amended to the extent necessary to conform to such laws, rules
and  regulations.
     9.11.          Titles.
Titles  are  provided  herein  for  convenience only and are not to serve as a
basis  for  interpretation  or  construction  of  this  Plan.
     9.12.          Governing  Law.
This  Plan and any agreements hereunder shall be administered, interpreted and
enforced  under the internal laws of the State of California without regard to
conflicts  of  laws  thereof.
                                   *  *  *
I  hereby  certify  that  the  foregoing Plan was duly adopted by the Board of
Directors  of ResMed Inc. on August 11, 1997 and by the stockholders of ResMed
Inc.  on  November  10,  1997.
Executed  on  this  10th  day  of  November  1997.
 
/S/ WALTER FLICKER
_____________________________
Walter  Flicker,
Secretary