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Sample Business Contracts

1995 Stock Option Plan - You Bet! Inc.

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                                 YOU BET!, INC.
                             1995 STOCK OPTION PLAN
                           FOR NON-EMPLOYEE DIRECTORS


SECTION 1.  GENERAL PURPOSE OF PLAN; DEFINITIONS.

                 The name of this plan is the You Bet!, Inc. 1995 Stock Option
Plan for Non-Employee Directors (the "Plan").  The purpose of the Plan is to
enable You Bet!, Inc. (the "Company") to compensate non-employee members of the
Board of Directors of the Company and to provide incentives to such members,
which incentives are linked directly to increases in stockholder value and will
therefore inure to the benefit of all stockholders of the Company.

                 For purposes of the Plan, the following terms shall be defined
as set forth below:

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

                 (b)  "Code" means the Internal Revenue Code of 1986, as
amended from time to time, or any successor thereto.

                 (c)  "Committee" means the Non-Employee Directors Stock Option
Plan Committee of the Board, or any other committee the Board may subsequently
appoint to administer the Plan.  The Committee shall be composed entirely of
directors who meet the qualifications referred to in Section 2 of the Plan.  If
at any time no Committee shall be in office, then the functions of the
committee specified in the Plan shall be exercised by the Board.

                 (d)  "Company" means You Bet!, Inc., a corporation organized
under the laws of the State of Delaware, (or any successor corporation).

                 (e)  "Fair Market Value" with respect to the Common Stock as
of any date shall mean (i) in the event the Common Stock is listed on a
national securities exchange, the closing price as reported for composite
transactions on that date, or, if no sales occurred on that date, then the
closing price on the next preceding date on which such sales of Common Stock
occurred; (ii) in the event the Common Stock is not listed on a national
securities exchange, the mean between the high bid and low asked prices
reported for shares of Common Stock traded over-the-counter on that date, or,
if no bid and asked prices were reported on that date, then the mean between
the high bid and low asked prices on the next preceding date on which such
prices were reported; or (iii) in the event there are no over-the-counter
prices for the Common Stock and it is not listed on a national securities
exchange, the fair market value as determined by the Committee in its
discretion.
<PAGE>   2
                 (f)  "Nonqualified Stock Option" means any Stock Option that
is not an "incentive stock option" within the meaning of Section 422A of the
Code.

                 (g)  "Stock" means the common stock, no par value, of the
Company.

                 (h)  "Stock Option" means any option to purchase shares of
Stock granted pursuant to Section 5.

SECTION 2.  ADMINISTRATION.

                 The Plan shall be administered by a Committee of not less than
two persons, who shall be appointed by the Board and who shall serve at the
pleasure of the Board.

SECTION 3.  STOCK SUBJECT TO PLAN.

                 The total number of shares of Stock reserved and available for
issuance under the Plan shall be 3% of the then outstanding shares of Stock.

                 In the event of any merger, reorganization, consolidation,
recapitalization, Stock dividend, stock split or other change in corporate
structure affecting the Stock, a substitution or adjustment shall be made in
(i) the aggregate number of shares reserved for issuance under the Plan and
(ii) the number and option price of shares subject to outstanding Stock Options
granted under the Plan as may be determined by the Committee; provided that the
number of shares subject to any award shall always be a whole number.

SECTION 4.  ELIGIBILITY.

                 Each non-employee member of the Board shall receive
Non-Qualified Stock Options in accordance with the provisions of Section 5.

SECTION 5.  STOCK OPTIONS.

                 Recipients of Stock Options shall enter into a stock option
agreement with the Company, which agreement shall set forth, among other
things, the exercise price of the option, the term of the option and provisions
regarding exercisability of the option granted thereunder.

                 The Stock Options granted under the Plan are Non-Qualified
Stock Options.

                 Stock Options granted under the Plan shall be subject to the
following terms and conditions:

                 (a)  Subject to shareholder approval of this Plan, and the
effectiveness of a Registration Statement with respect thereto, each of
__________ and __________, the non-

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<PAGE>   3
Employee Directors of the Company at the inception of the Plan, will receive
options in the following amounts and at the exercise price set forth below.

                 ______________                 10,000
                 ______________                 10,000


                 (b)  On the first business day after (i) the 1996 annual
stockholders' meeting of the Company, and on the first business day after each
subsequent annual stockholders' meeting of the Company thereafter during the
term of the Plan or (ii) if there shall be no annual meeting during a year, on
January 30 of succeeding year, each non-employee member of the Board shall be
granted a Non-Qualified Stock Option to purchase 5,000 shares of Stock.  The
option price per share of Stock purchasable under such Stock Options shall be
100% of the fair market value on the date of grant.  Such options shall be
exercisable immediately grant by payment in full of the purchase price in cash.

                 (c)  Non-transferability of Options.  No Stock Options shall
be transferable by the optionee otherwise than by will or by the laws of
descent and distribution, and all Stock Options shall be exercisable, during
the optionee's lifetime, only by the optionee.

SECTION 6.  AMENDMENT AND TERMINATION.

                 The Board may not amend, alter, or discontinue the Plan
without the approval of the stockholders.

SECTION 7.  GENERAL PROVISIONS.

                 (a)  Each person purchasing shares pursuant to a Stock Option
must represent to and agree with the Company in writing that such person is
acquiring the shares without a view to distribution thereof.  The certificates
for such shares shall include such legends that are appropriate to reflect any
restrictions on transfer.

                 All certificates for shares of Stock delivered under the Plan
shall be subject to such stop-transfer orders and other restrictions under the
rules, regulations, and other requirements of the Securities and Exchange
Commission, any stock exchange upon which the Stock is then listed, and any
applicable Federal or state securities law, and a legend or legends shall be
put on any such certificates to make appropriate reference to such
restrictions.

                 (b)  Nothing contained in the Plan shall prevent the Board
from adopting other or additional compensation arrangements, subject to
stockholder approval if such approval is required; and such arrangements may be
either generally applicable or applicable only in specific cases.  The adoption
of the Plan shall not confer upon any member of the Board any right to
continued membership on such Board.





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<PAGE>   4
                 (c)  Each Participant shall, no later than the date as of
which the value of an award first becomes includible in the gross income of the
Participant for Federal income tax purposes, pay to the Company, or make
arrangements satisfactory to the Committee regarding payment of, any Federal,
state, or local taxes of any kind required by law to be withheld with respect
to the award.  The obligations of the Company under the Plan shall be
conditional on such payment or arrangements and the Company shall, to the
extent permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to the Participant.

                 (d)  No member of the Board or the Committee, nor any officer
or employee of the Company acting on behalf of the Board or the Committee,
shall be personally liable for any action, determination, or interpretation
taken or made in good faith with respect to the Plan, and all members of the
Board or the Committee and each and any officer or employee of the Company
acting on their behalf shall, to the extent permitted by law, be fully
indemnified and protected by the Company in respect of any such action,
determination or interpretation.

SECTION 8.  EFFECTIVE DATE OF PLAN.

                 The Plan shall be effective on the date it is adopted by the
Board, subject to the approval by the Company's stockholders.

SECTION 9.  TERM OF PLAN.

                 No Stock Option shall be granted pursuant to the Plan on or
after the tenth anniversary of the Effective Date, but awards theretofore
granted may extend beyond that date.





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<PAGE>   5

                                 YOU BET!, INC.

                             1995 STOCK OPTION PLAN

Section 1.       Purpose

                 The purpose of the Plan is to promote the interests of You
Bet!, Inc. (the "Company") and its shareholders by providing a means for
selected Employees and Consultants to acquire a proprietary interest in the
Company, thereby strengthening the Company's ability to attract capable
management personnel and providing an inducement for Key Employees to remain in
the employ of the Company or its Subsidiaries and to perform at their maximum
levels.  It is intended that Options granted pursuant to this Plan may
constitute Incentive Stock Options or Nonqualified Stock Options, as
hereinafter set forth.

Section 2.       Definitions

                 Unless the context clearly indicates otherwise, the following
terms, when used in this Plan, shall have the meanings set forth below:

                 (a)  "Board" shall mean the Board of Directors of the Company.

                 (b)  "Code" shall mean the Internal Revenue Code of 1986, as
         it may be amended from time to time.

                 (c)  "Committee" shall mean the Stock Option Committee of the
         Board, appointed by the Board to administer the Plan and perform the
         functions set forth in Section 3 of this Plan.

                 (d)  "Common Stock" shall mean the Company's Common Stock, no
         par value and any other stock or securities resulting from the
         adjustment thereof or substitution therefor as described in Section 14
         of this Plan.

                 (e)  "Company" shall mean You Bet!, Inc. a Delaware
         corporation.

                 (f)  "Fair Market Value" with respect to the Common Stock as
         of any date shall mean (i) in the event the Common Stock is listed on
         a national securities exchange, the closing price as reported for
         composite transactions on that date, or, if no sales occurred on that
         date, then the closing price on the
<PAGE>   6
         next preceding date on which such sales of Common Stock occurred; (ii)
         in the event the Common Stock is not listed on a national securities
         exchange, the mean between the high bid and low asked prices reported
         for shares of Common Stock traded over-the-counter on that date, or,
         if no bid and asked prices were reported on that date, then the mean
         between the high bid and low asked prices on the next preceding date
         on which such prices were reported; or (iii) in the event there are no
         over-the-counter prices for the Common Stock and it is not listed on a
         national securities exchange, the fair market value as determined by
         the Committee in its discretion.

                 (g)  "Incentive Stock Option" shall mean an Option granted
         under the Plan and designated as such by the Committee which meets the
         requirements of Section 422 of the Code.

                 (h)  "Key Employee" shall mean (i) a regular employee, whether
         or not a director, of the Company or a Subsidiary who is an officer or
         holds a managerial or other key position and/or (ii) a consultant,
         including a business or financial advisor, all as determined by the
         Committee, and who, in the judgment of the Committee, has demonstrated
         a capacity for making a substantial contribution to the success of the
         business of the Company or a Subsidiary.  All employee members of the
         Board of Directors shall automatically be deemed Key Employees, other
         than Marshall and Fine.

                 (i)  "Marshall" shall mean David Marshall, the President and
         Chief Executive Officer of the Company.

                 (j)  "Fine" shall mean Russell Fine, the Executive Vice
         President of the Company.

                 (k)  "Nonqualified Stock Option" shall mean an Option granted
         under the Plan other than an Incentive Stock Option.

                 (l)  "Option" shall mean, unless otherwise specifically
         limited under any provision of this Plan, both an Incentive Stock
         Option and a Nonqualified Stock Option granted pursuant to this Plan.

                 (m)  "Option Price" shall mean the price at which Common Stock
         may be purchased under an Option, as provided in Section 7(d) of this
         Plan.





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<PAGE>   7
                 (n) "Optionee" shall mean a Key Employee granted an Option
         under the Plan.

                 (o)  "Parent" shall mean any corporation which qualifies as a
         parent corporation of the Company within the meaning of Section 425(e)
         of the Code.

                 (p)  "Plan" shall mean the You Bet!, Inc. 1995 Stock Option
         Plan.

                 (q)  "Stock Option Agreement"  shall mean the written
         agreement between an Optionee and the Company evidencing the grant of
         an Option and setting forth the terms and conditions of the grant.

                 (r)  "Subsidiary" shall mean any corporation which qualifies
         as a subsidiary corporation of the Company within the meaning of
         Section 425(f) of the Code.

                 (s)  "Surrender Right" shall mean a right to surrender to the
         Company for cancellation all or a portion of an Option granted under
         the Plan and to receive in exchange therefor shares of the Company's
         Common Stock, as hereinafter provided in Section 9 of this Plan.

                 (t)  "Ten Percent Shareholder" shall mean an Optionee who, at
         the time an Incentive Stock Option is to be granted to him, owns stock
         possessing more than ten percent (l0%) of the total combined voting
         power of all classes of stock of the Company or of its Parent (if any)
         or Subsidiaries (as such ownership is defined in Section 425(d) of the
         Code).

Section 3.       Administration of the Plan

                 (a)  Committee.  The Plan shall be administered by the
         Committee, which shall consist of at least two directors(1) of the
         Company appointed by the Board.  The members of the Committee shall
         not be eligible to receive Options and shall be "disinterested
         persons" as defined in Rule 16b-3(d)(3) promulgated under the
         Securities Exchange Act of 1934, as amended (the "l934 Act").  The
         members of the Committee shall serve at the pleasure of the Board,
         which shall have the power, at any time and from time to time, to





         ____________________

         (1)   This will be David Marshall and Russell Fine.

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<PAGE>   8
         remove members from the Committee or to add members thereto. Vacancies
         on the Committee shall be filled by action of the Board.

                 (b)  Duties and Powers of the Committee.  The Committee shall
         have the full power and authority, in it sole and absolute discretion,
         but subject to and not inconsistent with the express provisions of the
         Plan, to administer the Plan and to exercise all the powers and
         authorities either specifically granted to it under the Plan or
         necessary or advisable in the administration of the Plan, including,
         without limitation, the authority (i) to grant Options which have
         received any requisite approval of the Board and to determine which
         Options shall constitute Incentive Stock Options and which Options
         shall constitute Nonqualified Stock Options; (ii) to determine the
         employees to whom, and the time or times at which, Options shall be
         granted; (iii) to determine the number of shares of Common Stock to be
         covered by each Option; (iv) to determine which Options (if any) shall
         be accompanied by Surrender Rights; (v) determine the Option Price of
         Common Stock subject to an Option; (vi) to determine the duration of
         the exercise period of Options and the time or times at which Options
         may be exercised and the extent of exercisability of Options; (vii) to
         determine the terms and provisions of Stock Option Agreements (which
         need not be identical) entered into in connection with Options granted
         under the Plan, including such terms and provisions as shall in the
         judgment of the Committee be necessary or advisable in order to
         conform to any applicable laws or regulations, as the same may be
         amended from time to time; and (viii) to make all other determinations
         necessary or advisable for the administration of the Plan.  Subject to
         the express provisions of the Plan, the committee may correct any
         defect or supply any omission or reconcile any inconsistency in the
         Plan or in any Stock Option Agreement in such manner and to the extent
         it shall determine in order to carry out the purposes of the Plan.

                 The committee shall have full power and authority to construe
         and interpret the Plan and the respective Stock Option Agreements and
         to establish, amend or rescind such rules, regulations and procedures
         as the Committee deems necessary or appropriate for the proper
         administration of the Plan.

                 The determinations of the Committee on the foregoing matters
         and any other matters arising in connection with the construction,
         administration, interpretation and effect of the Plan and of the
         Committee's rules and





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<PAGE>   9
         regulations thereunder shall (except as otherwise specifically
         provided in the Plan) be final, binding and conclusive.

                 (c)  Committee Meetings and Actions.  The Committee may select
         one of its members as Chairman.  The Committee shall hold its meetings
         at such times and places as it shall determine.  All decisions and
         determinations of the Committee shall be made by not less than the
         affirmative vote of a majority of its members.  Actions may be taken
         by the Committee at a duly convened meeting (including a meeting by
         telephone conference call) or by unanimous written consent.

Section 4.       Eligibility

                 Options under the Plan may be granted only to Key Employees of
the Company and its Subsidiaries other than Messrs. David Marshall and
Russell Fine.  More than one Option may be granted to the same Optionee and
be outstanding concurrently hereunder.

Section 5.       Shares Subject to the Plan

                 (a)  Aggregate Number of Shares Available.  Subject to the
         adjustments provided for in Section 14 of this Plan, the aggregate
         number of shares of Common Stock for which Options may be granted
         under the Plan shall be 12% of the shares of the Company's Common
         Stock then outstanding. Shares delivered by the Company pursuant to
         exercises of Options or Surrender Rights may be authorized but
         unissued shares of Common Stock, issued shares of Common Stock which
         have been reacquired by the Company, or a combination thereof, as the
         Board or the Committee shall from time to time determine.

                 (b)  Effect of Expiration of Options.  In the event that any
         outstanding Option under the Plan for any reason expires or is
         terminated without having been exercised in full or surrendered in
         full in connection with the exercise of a related Surrender Right, the
         shares of Common stock subject to but not issued under such Option
         shall again be available for the granting of Options under the Plan.

                 (c)  Effect of Exercises.  If all or any portion of an Option
         is exercised or is surrendered pursuant to the exercise of a Surrender
         Right, the shares





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<PAGE>   10
         with respect to which such Option or such Surrender Right is exercised
         shall not thereafter be available for the granting of other Options
         under the Plan. Shares of Common Stock delivered by the Company upon
         the exercise of a Surrender Right shall not be charged against the
         number of shares of Common Stock available for the grant of Options.

Section 6.       Stock Option Agreements

                 Each Option shall be evidenced by a written Stock Option
Agreement which shall be executed by the Company and the Optionee, containing
such terms and conditions, not inconsistent with the Plan, as shall be
determined by the Committee. Stock Option Agreements evidencing Incentive Stock
Options shall contain such terms and conditions, among others, as may be
necessary in the opinion of the Committee to qualify them as incentive stock
options under the Code.

Section 7.       Terms and Conditions of Options


                 Each Option granted under the Plan shall comply with and be
subject to the following terms and conditions, as well as such other terms and
conditions as may be determined by the Committee and specified in the related
Stock Option Agreement:

                 (a)  Number of Shares.  The number of shares of Common Stock
         to which an Option relates shall be determined by the Committee and
         specified in the related Stock Option Agreement.

                 (b)  Type of Option.  Each Stock Option Agreement shall
         specify the type of Option granted and evidenced thereby, i.e.,
         whether the Option is an Incentive Stock Option or a Nonqualified
         Stock Option.

                 (c)  Date of Grant; Exercise Period.  The date of grant of any
         Option shall be the date on which the Committee shall award the Option
         (or the earlier date, if applicable, that the Board specifically
         approves such grant) if an immediate grant of such Option is
         contemplated, or the date contemplated as the date of grant if the
         Committee imposes a condition on the granting of such Option.  Options
         granted under the Plan shall be for such periods as may be determined
         by the Committee and set forth in the related Stock Option Agreements,
         subject to the provisions of Section 10 hereof regarding early





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<PAGE>   11
         termination upon the occurrence of certain events and subject to the
         further provisions of this paragraph (c). The exercise period of an
         Incentive Stock Option shall not exceed ten (10) years from the date
         of grant of such Option; provided, however, that in the case of an
         Incentive Stock Option granted to a Ten Percent Shareholder, such
         period shall not exceed five (5) years from the date of grant.

                 Subject to the further provisions of this paragraph (c)
         regarding Incentive Stock Options, the Committee shall have authority
         to prescribe any Stock Option Agreement that the Option evidenced
         thereby may be exercised in full or in part as to any number of shares
         subject thereto at any time or from time to time during the term of
         the Option, or in such installments at such times during said term as
         the  Committee may prescribe.  The aggregate Fair Market Value
         (determined at the time an Incentive Stock Option is granted) of the
         Common Stock with respect to which Incentive Stock Options are
         exercisable for the first time by an Optionee during any calendar year
         (under the Plan and all other plans of the Company and its Parent (if
         any) and Subsidiaries) shall not exceed $100,000.

                 Except as otherwise provided in Section 10 of this Plan, an
         Option may not be exercised in whole or in part unless the Optionee
         is, at the time or such exercise, an employee of the Company or a
         Subsidiary.

                 (d)  Option Price.  The Option Price per share of the Common
         Stock subject to an Option granted under the Plan shall be determined
         by the Committee at the time the Option is granted, and shall be
         subject to the following conditions:

                          (i)  Nonqualified Stock Option Price - The Option
                 Price per share of Common Stock subject to a Nonqualified
                 Stock Option may be less than the Fair Market Value per share
                 of the Common Stock on the date of grant, but shall not be
                 less than the par value per share of Common Stock.

                          (ii)  Incentive Stock Options - The Option Price per
                 share of Common Stock subject to an Incentive Stock Option
                 shall not be less than the greater of (a) 100% of the Fair
                 Market Value per share of the Common Stock on the date of
                 grant, or (b) the par value per share of the Common Stock;
                 provided, however, that in the case of an





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<PAGE>   12
                 Incentive Stock Option granted to a Ten Percent Shareholder,
                 the Option Price per share shall not be less than the greater
                 of (x) 110% of the Fair Market Value per share of Common Stock
                 on the date of grant, or (y) the par value per share of the
                 Common Stock.


                 (e)  Vesting Provisions.  Unless otherwise specified
        by the Committee, all Nonqualified Options shall:

                          (i)  vest ratably over a four year period, and

                          (ii)  require that shares of Common Stock received
                 upon the exercise of options, which vest after the first year,
                 regardless of whether such Options are registered with the
                 Securities and Exchange Commission, be held by such holder for
                 a period equal to the vesting date with respect to the second
                 set of options; provided however, such shares may be pledged
                 to a bank or held in a margin account by the Holder.

Section 8.       Method of Exercise: Payment of Option Price

                 (a)  Method of Exercise.  An Option may be exercised as to any
         or all full shares of Common Stock as to which the Option has become
         exercisable in accordance with the terms of the related Stock Option
         Agreement and the provisions of this Plan by delivering to the Company
         written notice of such exercise in the manner hereinafter specified in
         Section 19; provided, however, that an Option may not be exercised at
         any one time as to less than 1,000 shares (or such number of shares as
         to which the Option is then exercisable if such number of shares is
         less than 1,000 shares).  Such written notice shall specify the number
         of shares of Common Stock with respect to which the Option is being
         exercised and shall be accompanied by payment in full of the Option
         Price for such shares.  The date of exercise of an Option or portion
         thereof shall be the date of receipt by the Company of such written
         notice as determined in accordance with the provisions of Section 19
         of the Plan.

                 (b)  Payment of Option Price.  Payment for shares purchased
         upon exercise of an Option may be made





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<PAGE>   13
                          (i)  in cash (including a certified check, bank draft
                 or money order), or

                          (ii)  with the approval of the Committee, by
                 delivering to the Company shares of Common Stock already owned
                 by the Optionee ("Previously Held Shares") having a Fair
                 Market Value (determined as of the day preceding the date on
                 which the option is exercised) equal to the cash Option Price
                 of the shares of Common Stock as to which the Option is being
                 exercised, or

                          (iii)  with the approval of the Committee, by a
                 combination of the methods described in (i) and (ii) above, or

                          (iv)  with the approval of the Committee, by any
                 other method or in any other form authorized by the Committee
                 and reflected in the related Stock Option Agreement or in any
                 written notice relative thereto as may be from time to time
                 delivered by the Committee to the Optionee.



Section 9.       Surrender Rights

                 (a)  Grant of Surrender Rights.  The Committee shall have the
         authority to grant Surrender Rights to Optionees with respect to all
         or any portion of an Option (hereinafter a "Related Option").  If the
         Related Option is a Nonqualified Stock Option, a Surrender Right may
         be granted either at the time the Related Option is granted or at any
         time thereafter prior to the exercise, termination or cancellation of
         such Related Option.  If the Related Option is an Incentive Stock
         Option, a Surrender Right may be granted only at the time the Related
         Option is granted.  Surrender Rights shall be evidenced either by the
         Stock Option Agreement entered into in connection with the grant of
         the Related Option or by a separate agreement between the Company and
         an Optionee.

                 (b)  Exercises of Surrender Rights.  A Surrender Right shall
         entitle the Optionee to surrender to the Company for cancellation all
         or a portion of the Related Option and to receive in payment therefor
         that number of shares of Common Stock (rounded to the nearest whole
         number) having an aggregate





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<PAGE>   14
         Fair Market Value equal to the excess, if any, of that Fair Market
         Value of the shares of Common Stock subject to the Related Option or
         portion thereof surrendered over the aggregate Option Price of the
         shares of Common Stock subject to the Related Option or portion
         thereof surrendered.  The Fair Market Value of the shares covered by
         the surrendered portion of a Related Option shall be determined as of
         the day preceding the date of the exercise of the Surrender Right, and
         any shares of Common Stock delivered by the Company in payment
         pursuant to this Section 9 shall be valued at their Fair Market Value
         on the day preceding the date of such exercise.

                 A Surrender Right shall be exercisable only at the same time
         or times and to the same extent and subject to the  same conditions as
         the Related Option, except that the Committee may prescribe additional
         conditions and limitations on the exercise of a Surrender Right.  In
         addition, in the case of a Surrender Right granted in respect of an
         Incentive Stock Option, such Surrender Right shall be exercisable only
         when the Fair Market Value per share of Common Stock exceeds the
         Option Price per share.  A Surrender Right shall be exercisable only
         by delivering written notice to the Company of such exercise in the
         manner hereinafter specified in Section 19.  The date of exercise of a
         Surrender Right or portion thereof shall be the date of receipt by the
         Company of such notice as determined in accordance with the provisions
         of Section 19 of the Plan.

                 (c)  Effect of Exercise of Surrender Right or Related Option.
         Upon the exercise of a Surrender Right, the Related Option shall cease
         to be exercisable to the extent of the shares of Common Stock with
         respect to which such Surrender Right is exercised, but shall be
         considered to have been exercised to that extent for purposes of
         determining the number of shares of Common Stock available for the
         grant of further Options pursuant to the Plan.  Upon the exercise or
         termination of a Related Option, the Surrender Right with respect to
         such Related Option shall terminate to the extent of the shares of
         Common Stock with respect to which the Related Option was exercised or
         terminated.

Section 10.      Death, Disability or Other Termination of Employment


                 (a)  Death.  In the event an Optionee dies (i) while in the
         employ of the Company or a Subsidiary or (ii) within three (3) months
         of the





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<PAGE>   15
         termination of such employment (other than termination for cause or
         voluntary termination without the consent of the Company or the
         Subsidiary, as the case may be), his Option may be exercised, solely
         to the extent that the Optionee was entitled to exercise the Option at
         the date of his death or, if earlier, the date of his termination, by
         the person or persons to whom Optionee's rights under the Option shall
         pass by will or the laws of descent and distribution, at any time or
         from time to time within one (l) year after the date of Optionee's
         death or prior to the expiration of the period for which the Option
         was granted, whichever is the shorter period.

                 (b)  Disability.  In the event an Optionee's employment by the
         Company or a Subsidiary is terminated because of the Optionee's
         permanent disability, the Optionee may exercise his Option, solely to
         the extent that he was entitled to do so at the date of termination of
         his employment, at any time or from time to time within one (l) year
         after the date of such termination of employment or prior to the
         expiration of the period for which the Option was granted, whichever
         is the shorter period.

                 (c)  Other Termination of Employment.  In the event the
         Optionee's employment by the Company or a Subsidiary is terminated
         other than by death or permanent disability as provided by paragraphs
         (a) and (b), respectively, of this Section 10 and other than for cause
         or by the voluntary action of the Optionee without the consent of the
         Company or Subsidiary employing the Optionee, the Optionee may
         exercise his Option, solely to the extent that he was entitled to do
         so at the date of termination of his employment, at any time or from
         time to time within ninety (90) days after the date of such
         termination of employment or prior to the expiration of the period for
         which the Option was granted, whichever is the shorter period.  In the
         event the Optionee's employment by the Company or a Subsidiary is
         terminated for cause or by the voluntary action of the Optionee
         without the consent of the Company or Subsidiary employing the
         Optionee, his Option shall terminate at the date of termination of his
         employment.  Notwithstanding the foregoing, the Committee may, in its
         sole discretion, provide for a later exercise after the employment
         relationship is concluded.

                 (d)  Committee Discretion.  Notwithstanding the provisions of
         paragraphs (a), (b) or (c) of  this Section 10, the Committee, in its
         sole and absolute discretion, may establish different terms and
         conditions pertaining to





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         the effect of death, disability or other termination of employment to
         the extent permitted by applicable federal and state law.

                 (e)  Failure to Exercise.  To the extent an Option or any
         portion thereof is not exercised within the limited period provided in
         paragraphs (a), (b) Optionee who is an officer of the Company or is
         otherwise subject to Section 16 of the 1934 Act, the Committee may, in
         its absolute discretion at the time of the granting of an Option or
         Surrender Right or the exercise thereof, make such provisions as may
         be necessary to assure compliance with Rule 16b-3 under the 1934 Act.


Section 11.      Notices

         Whenever any notice is required or permitted to be given under the
Plan or any Stock Option Agreement, such notice must be in writing and
personally delivered or sent by courier or by mail.  Any such notice shall be
deemed effectively given or delivered upon personal delivery or twenty-four
hours after delivery to a courier service which guarantees overnight delivery
or five (5) days after deposit with the U.S. Post Office, by registered or
certified mail, return receipt requested, postage prepaid, addressed to the
person who is to receive such notice at the address which such person has
theretofore specified by written notice delivered in accordance here with.  The
Company or an Optionee may change, at any time and from time to time, by
written notice to the other, the address which it or he had theretofore
specified for receiving notices.  Until changed in accordance herewith, the
Company and each Optionee shall specify as its or his address for receiving
notices the address set forth in the Stock Option Agreement pertaining to the
shares of Common Stock to which such notice relates.

Section 12.      Amendment, Suspension of Termination of the Plan


                 The 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; provided, however, that the Board or the Committee shall not,
without the approval of the holders of a majority of the outstanding shares of
the Company's stock entitled to vote thereon, effect any change to the Plan
(other than through adjustment for changes in capitalization as herein before
provided by Section 14) which would





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                          (i)  materially increase the aggregate number of
                 shares as to which Options may be granted under the Plan;

                          (ii)  materially increase the benefits accruing to
                 Optionee under the Plan;

                          (iii)  materially modify the requirements as to
                 eligibility for participation in the Plan.

Further, no such amendment, suspension or termination, other than adjustments
for changes in capitalization as provided in Section 14 hereof, shall adversely
affect or impair any outstanding Option without the written consent of the
Optionee affected thereby.

Section 13.      Effective Date: Duration

                 (a)  Effective Date.  The Plan shall become effective upon the
         date of its adoption by the Board provided that, within twelve months
         after the date the Plan is adopted by the Board, the Plan is approved
         and adopted by the holders of a majority of the outstanding shares of
         stock of the Company entitled to vote thereon.  If the Plan shall not
         be subsequently approved and adopted by the shareholders of the
         Company as specified herein, the Plan and all Options granted
         hereunder shall be null and void and any obligation pursuant to the
         subsequent exercise (or surrender pursuant to Section 9 hereof) of any
         Option previously granted shall not be binding upon the Company. To
         the extent an Optionee has ready purchased and paid for any shares
         received under the Plan, the Optionee may retain the ownership of said
         shares; however, the prior exercise of said Option shall not
         constitute the exercise of an Incentive Stock Option.

                 (b)  Duration.  Unless earlier terminated by the Board or the
         Committee pursuant to the provisions of the Plan, the Plan shall
         terminate on the tenth anniversary of its effective date as
         hereinbefore specified.  No Options shall be granted under the Plan
         after such termination date.

Section 14.      Governing Law





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                 This Plan and all rights hereunder shall be construed and
interpreted in accordance with the laws of the State of California, to the
extent not superseded by the laws of the United States.





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