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Sample Business Contracts

1996 Stock Plan - Intelligroup Inc.

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                              INTELLIGROUP, INC.

                           1996 STOCK PLAN, AS AMENDED


      1.  Purposes of the Plan.  The  purposes of this Stock Plan are to attract
          --------------------
and  retain  the  best   available   personnel  for  positions  of   substantial
responsibility,  to provide  additional  incentive  to  Employees,  non-Employee
members of the Board and Consultants of the Company and its  Subsidiaries and to
promote the success of the Company's  business.  Options  granted under the Plan
may be incentive  stock  options (as defined  under  Section 422 of the Code) or
non-statutory  stock options,  as determined by the Administrator at the time of
grant of an option and subject to the  applicable  provisions  of Section 422 of
the Code, as amended, and the regulations promulgated thereunder. Stock purchase
rights may also be granted under the Plan.

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

            (a)  "Administrator"  means  the  Board  or any  of  its  Committees
appointed pursuant to Section 4 of the Plan.

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

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

            (d)  "Committee"  means  the  Committee  appointed  by the  Board of
Directors in accordance with paragraph (a) of Section 4 of the Plan.

            (e) "Common Stock" means the Common Stock of the Company.

            (f) "Company" means Intelligroup, Inc., a New Jersey corporation.

            (g)  "Consultant"  means any person,  including  an advisor,  who is
engaged by the Company or any Parent or  subsidiary  to render  services  and is
compensated  for  such  services,  and  any  director  of  the  Company  whether
compensated for such services or not.

            (h)  "Continuous  Status as an  Employee"  means the  absence of any
interruption or termination of the employment relationship by the Company or any
Subsidiary. Continuous Status as an Employee shall not be considered interrupted
in the case of: (i) sick leave;  (ii) military  leave;  (iii) any other leave of
absence  approved by the Board,  provided that such leave is for a period of not
more than ninety (90) days,  unless  reemployment  upon the  expiration  of such
leave is  guaranteed  by  contract  or  statute,  or unless  provided  otherwise
pursuant to Company policy adopted from time to time; or (iv) transfers  between
locations  of the  Company or  between  the  Company,  its  Subsidiaries  or its
successor.

            (i) "Employee" means any person,  including  officers and directors,
employed by the Company or any Parent or Subsidiary of the Company.  The payment
of a  director's  fee by the  Company  shall  not be  sufficient  to  constitute
"employment" by the Company.

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


<PAGE>

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

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

                  (ii) If the Common  Stock is quoted on Nasdaq  (but not on the
      National  Market  System  thereof)  or  regularly  quoted by a  recognized
      securities  dealer but selling  prices are not  reported,  its Fair Market
      Value  shall be the mean  between  the high and low asked  prices  for the
      Common Stock or;

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

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

            (m)  "Nonstatutory  Stock  Option"  means an Option not  intended to
qualify as an Incentive Stock Option.

            (n) "Option" means a stock option granted pursuant to the Plan.

            (o) "Optioned Stock" means the Common Stock subject to an Option.

            (p)  "Optionee"  means an Employee  or  Consultant  who  receives an
Option.

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

            (r) "Plan" means this 1996 Stock Plan.

            (s)  "Restricted  Stock"  means  shares  of  Common  Stock  acquired
pursuant to a grant of stock purchase rights under Section 11 below.

            (t)  "Share"  means a share of the  Common  Stock,  as  adjusted  in
accordance with Section 13 of the Plan.

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


                                      - 2 -
<PAGE>

      3.    Stock Subject to the Plan.   Subject to the provisions of Section 13
            -------------------------
of the Plan,  the maximum  aggregate  number of shares which may be optioned and
sold under the Plan is  5,200,000  shares of Common  Stock if an initial  public
offering of Common  Stock  shall have been  consummated,  and 700,000  shares of
Common Stock if an initial  public  offering of Common Stock shall not have been
consummated.  The shares may be authorized,  but unissued,  or reacquired Common
Stock.

            If an option  should expire or become  unexercisable  for any reason
without having been exercised in full, the unpurchased Shares which were subject
thereto shall, unless the Plan shall have been terminated,  become available for
future grant under the Plan.

      4.    Administration of the Plan.
            --------------------------

            (a)   Procedure.
                  ---------

                  (i)  Administration  With Respect to Directors  and  Officers.
                       --------------------------------------------------------
      With  respect to grants of Options or stock  purchase  rights to Employees
      who are also  officers  or  directors  of the  Company,  the Plan shall be
      administered  by (A) the  Board if the Board  may  administer  the Plan in
      compliance  with Rule  16b-3  promulgated  under the  Exchange  Act or any
      successor  thereto  ("Rule  16b-3")  with  respect to a plan  intended  to
      qualify thereunder as a discretionary plan, or (B) a Committee  designated
      by the Board to administer the Plan,  which Committee shall be constituted
      in such a manner as to  permit  the Plan to comply  with Rule  16b-3  with
      respect to a plan intended to qualify thereunder as a discretionary  plan.
      Once  appointed,  such Committee shall continue to serve in its designated
      capacity  until  otherwise  directed  by the Board.  From time to time the
      Board  may  increase  the size of the  Committee  and  appoint  additional
      members  thereof,  remove  members (with or without cause) and appoint new
      members in  substitution  therefor,  fill vacancies,  however caused,  and
      remove all members of the Committee and thereafter directly administer the
      Plan,  all to the extent  permitted  by Rule 16b-3 with  respect to a plan
      intended to qualify thereunder as a discretionary plan.

                  (ii)  Multiple  Administrative  Bodies.  If  permitted by Rule
                        --------------------------------
      16b-3,  the Plan may be administered  by different  bodies with respect to
      directors,  non-director  officers and Employees who are neither directors
      nor officers.

                  (iii)  Administration  With Respect to  Consultants  and Other
                         -------------------------------------------------------
      Employees.  With respect to grants of Options or stock purchase  rights to
      ---------
      Employees  who are  neither  directors  nor  officers of the Company or to
      Consultants, the Plan shall be administered by (A) the Board, if the Board
      may administer the Plan in compliance  with Rule 16b-3, or (B) a Committee
      designated by the Board,  which  Committee  shall be constituted in such a
      manner as to satisfy the legal requirements relating to the administration
      of incentive stock option plans,  if any, of New Jersey  corporate law and
      applicable  securities laws and of the Code (the "Applicable  Laws"). Once
      appointed,  such  Committee  shall  continue  to serve  in its  designated
      capacity  until  otherwise  directed  by the Board.  From time to time the
      Board  may  increase  the size of the  Committee  and  appoint  additional
      members  thereof,  remove  members (with or without cause) and appoint new
      members in  substitution  therefor,  fill vacancies,  however caused,  and
      remove all members of the


                                      - 3 -
<PAGE>

      Committee and  thereafter directly  administer the Plan, all to the extent
      permitted by the Applicable Laws.

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

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

                  (ii) to select the officers, Consultants and Employees to whom
      Options  and  stock  purchase  rights  may  from  time to time be  granted
      hereunder;

                  (iii) to  determine  whether  and to what  extent  Options and
      stock purchase rights or any combination thereof, are granted hereunder;

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

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

                  (vi) to determine the terms and conditions,  not  inconsistent
      with the terms of the Plan, of any award granted hereunder (including, but
      not limited  to, the share  price and any  restriction  or  limitation  or
      waiver of  forfeiture  restrictions  regarding  any Option or other  award
      and/or the shares of Common Stock relating thereto,  based in each case on
      such  factors  as  the   Administrator   shall  determine,   in  its  sole
      discretion);

                  (vii) to  determine  whether and under what  circumstances  an
      Option  may be settled in cash  under  subsection  9(f)  instead of Common
      Stock;

                  (viii) to determine  whether,  to what  extent  and under what
      circumstances  Common Stock and other  amounts  payable with respect to an
      award under this Plan shall be  deferred  either  automatically  or at the
      election of the participant  (including  providing for and determining the
      amount,  if any, of any deemed  earnings on any deferred amount during any
      deferral period);

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

                  (x) to  determine  the terms and  restrictions  applicable  to
      stock  purchase  rights and the Restricted  Stock  purchased by exercising
      such stock purchase rights.

            (c)   Effect of Committee's Decision.  All decisions, determinations
                  ------------------------------
and  interpretations  of the  Administrator  shall be final and  binding  on all
Optionees and any other holders of any Options.


                                     - 4 -
<PAGE>

      5.    Eligibility.
            -----------

            (a)  Nonstatutory  Stock  Options  may be granted to  Employees  and
Consultants.  Incentive  Stock  Options  may be granted  only to  Employees.  An
Employee or  Consultant  who has been  granted an Option may, if he is otherwise
eligible, be granted an additional Option or Options.

            (b) Each Option shall be designated in the written option  agreement
as either an Incentive  Stock Option or a  Nonstatutory  Stock Option.  However,
notwithstanding such designations,  to the extent that the aggregate Fair Market
Value of the Shares with respect to which Options  designated as Incentive Stock
Options are  exercisable  for the first time by any optionee during any calendar
year  (under  all plans of the  Company  or any  Parent or  Subsidiary)  exceeds
$100,000, such excess Options shall be treated as Nonstatutory Stock Options.

            (c) For purposes of Section 5(b),  Incentive  Stock Options shall be
taken into account in the order in which they were granted,  and the Fair Market
Value of the Shares shall be  determined  as of the time the Option with respect
to such Shares is granted.

            (d) The Plan  shall not  confer  upon any  Optionee  any right  with
respect to  continuation  of  employment  or  consulting  relationship  with the
Company, nor shall it interfere in any way with his right or the Company's right
to terminate  his  employment or consulting  relationship  at any time,  with or
without cause.

      6.    Term of Plan.    The Plan shall become effective upon the earlier to
            ------------
occur  of its  adoption  by the  Board  of  Directors  or  its  approval  by the
shareholders  of the Company as  described  in Section 19 of the Plan.  It shall
continue in effect for a term of ten (10) years unless sooner  terminated  under
Section 15 of the Plan.

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

      8.    Option Exercise Price and Consideration.
            ---------------------------------------

            (a)   The per share  exercise  price  for the  Shares  to be  issued
pursuant to exercise of an Option  shall be such price as is  determined  by the
Board, but shall be subject to the following:

                  (i)   In the case of an Incentive Stock Option

                        (A) granted to an Employee who, at the time of the grant
      of such  Incentive  Stock Option,  owns stock  representing  more than ten
      percent  (10%) of the voting  power of all classes of stock of the Company
      or any Parent or Subsidiary, the per


                                     - 5 -
<PAGE>

      Share exercise price shall be no less than  110% of the Fair Market  Value
      per Share on the date of grant.

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

                  (ii)  In the case of a Nonstatutory Stock Option

                        (A) granted to a person who, at the time of the grant of
      such Option,  owns stock  representing  more than ten percent (10%) of the
      voting  power of all  classes  of stock of the  Company  or any  Parent or
      Subsidiary, the per Share exercise price shall be no less than 110% of the
      Fair Market Value per Share on the date of the grant.

                        (B) granted to any person,  the per Share exercise price
      shall be no less than 85% of the Fair  Market  Value per Share on the date
      of grant.

            (b) The  consideration  to be paid for the Shares to be issued  upon
exercise of an Option,  including the method of payment,  shall be determined by
the  Administrator  (and,  in the case of an Incentive  Stock  Option,  shall be
determined  at the time of grant)  and may  consist  entirely  of (1) cash,  (2)
check,  (3)  promissory  note,  (4) other Shares which (x) in the case of Shares
acquired  upon  exercise of an Option either have been owned by the Optionee for
more than six months on the date of surrender or were not acquired,  directly or
indirectly,  from the  Company,  and (y) have a Fair Market Value on the date of
surrender  equal to the aggregate  exercise price of the Shares as to which said
Option shall be exercised, (5) authorization from the Company to retain from the
total number of Shares as to which the Option is exercised that number of Shares
having a Fair Market Value on the date of exercise  equal to the exercise  price
for the total number of Shares as to which the option is exercised, (6) delivery
of a properly executed exercise notice together with irrevocable instructions to
a broker to promptly  deliver to the Company the amount of sale or loan proceeds
required  to  pay  the  exercise   price,   (7)  by  delivering  an  irrevocable
subscription  agreement  for the Shares which  irrevocably  obligates the option
holder to take and pay for the Shares not more than twelve months after the date
of delivery of the subscription agreement,  (8) any combination of the foregoing
methods of payment,  or (9) such other  consideration  and method of payment for
the issuance of Shares to the extent  permitted under Applicable Laws. In making
its  determination as to the type of consideration to accept,  the Administrator
shall consider if acceptance of such consideration may be reasonably expected to
benefit the Company.

      9.    Exercise of Option.
            ------------------

            (a)   Procedure for Exercise;  Rights as a  Shareholder.  Any Option
                  -------------------------------------------------
granted  hereunder  shall be exercisable at such times and under such conditions
as determined by the Administrator,  including performance criteria with respect
to the Company and/or the Optionee,  and as shall be permissible under the terms
of the Plan.

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


                                      - 6 -
<PAGE>

                  An Option shall be deemed to be exercised  when written notice
of such exercise has been given to the Company in  accordance  with the terms of
the Option by the person  entitled to exercise  the Option and full  payment for
the Shares with  respect to which the Option is exercised  has been  received by
the Company.  Full payment may, as authorized by the  Administrator,  consist of
any  consideration  and method of payment  allowable  under  Section 8(b) of the
Plan. Until the issuance (as evidenced by the appropriate  entry on the books of
the Company or of a duly authorized  transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a  shareholder  shall exist with respect to the Optioned  Stock,
notwithstanding the exercise of the Option. The Company shall issue (or cause to
be issued)  such stock  certificate  promptly  upon  exercise of the Option.  No
adjustment  will be made for a dividend or other right for which the record date
is prior to the date the stock  certificate  is issued,  except as  provided  in
Section 11 of the Plan.

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

            (b)   Termination of  Employment.  In the event of termination of an
                  --------------------------
Optionee's consulting  relationship or Continuous Status as an Employee with the
Company (as the case may be),  such  Optionee  may, but only within  ninety (90)
days (or such other  period of time as is  determined  by the  Board,  with such
determination in the case of an Incentive Stock Option being made at the time of
grant of the Option and not  exceeding  ninety (90) days) after the date of such
termination  (but in no event later than the expiration date of the term of such
Option as set forth in the Option Agreement),  exercise his Option to the extent
that  Optionee was entitled to exercise it at the date of such  termination.  To
the extent that  Optionee was not entitled to exercise the Option at the date of
such termination,  or if Optionee does not exercise such Option to the extent so
entitled within the time specified herein, the Option shall terminate.

            (c)   Disability  of Optionee.  Notwithstanding  the  provisions  of
                  -----------------------
Section 9(b) above,  in the event of  termination  of an  Optionee's  consulting
relationship  or  Continuous  Status as an Employee as a result of his total and
permanent disability (as defined in Section 22(e)(3) of the Code), Optionee may,
but only within twelve (12) months from the date of such  termination (but in no
event later than the expiration  date of the term of such Option as set forth in
the Option  Agreement),  exercise the Option to the extent otherwise entitled to
exercise it at the date of such termination. To the extent that Optionee was not
entitled to exercise the Option at the date of termination,  or if Optionee does
not  exercise  such Option to the extent so entitled  within the time  specified
herein, the Option shall terminate.

            (d)   Death of Optionee.   In the event of the death of an Optionee,
                  -----------------
th Option may be exercised,  at any time within twelve (12) months following the
date of death  (but in no event  later than the  expiration  date of the term of
such Option as set forth in the Option  Agreement),  by the Optionee's estate or
by a person  who  acquired  the  right to  exercise  the  Option by  bequest  or
inheritance,  but only to the extent the  Optionee  was entitled to exercise the
Option at the date of death.  To the extent that  Optionee  was not  entitled to
exercise the Option at the date of termination, or if Optionee does not exercise
such  Option to the extent so entitled  within the time  specified  herein,  the
Option shall terminate.

                                      - 7 -
<PAGE>

            (e)   Rule 16b-3.   Options granted to  persons  subject to  Section
                  ----------
16(b) of the  Exchange  Act must comply with Rule 16b-3 and shall  contain  such
additional  conditions or restrictions as may be required  thereunder to qualify
for the maximum  exemption  from  Section 16 of the Exchange Act with respect to
Plan transactions.

            (f)   Buyout Provisions.  The Administrator may at any time offer to
                  -----------------
buy out for a payment in cash or Shares, an Option previously granted,  based on
such terms and conditions as the  Administrator  shall establish and communicate
to the Optionee at the time that such offer is made.

      10.   Non-Transferability of Options. The Option may not be sold, pledged,
            ------------------------------
assigned, hypothecated,  transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised,  during the
lifetime of the Optionee, only by the Optionee. The terms of the Option shall be
binding upon the executors, administrators, heirs, successors and assigns of the
Optionee.

      11.   Stock Purchase Rights.
            ---------------------

            (a)   Rights to Purchase. Stock purchase rights may be issued either
                  ------------------
alone,  in addition  to, or in tandem with other awards  granted  under the Plan
and/or cash awards made outside of the Plan. After the Administrator  determines
that it will offer stock  purchase  rights  under the Plan,  it shall advise the
offeree  in writing of the terms,  conditions  and  restrictions  related to the
offer,  including  the number of Shares  that such  person  shall be entitled to
purchase,  the price to be paid  (which  price shall not be less than 50% of the
Fair  Market  Value of the  Shares  as of the date of the  offer),  and the time
within which such person must accept such offer,  which shall in no event exceed
thirty  (30)  days  from  the  date  upon  which  the  Administrator   made  the
determination  to grant the stock purchase right. The offer shall be accepted by
execution of a Restricted Stock purchase agreement in the form determined by the
Administrator.

            (b)   Repurchase  Option.   Unless  the   Administrator   determines
                  ------------------
otherwise,  the Restricted  Stock purchase  agreement  shall grant the Company a
repurchase option  exercisable upon the voluntary or involuntary  termination of
the purchaser's  employment with the Company for any reason  (including death or
Disability).   The  purchase  price  for  Shares  repurchased  pursuant  to  the
Restricted  Stock  purchase  agreement  shall be the original  price paid by the
purchaser and may be paid by cancellation  of any  indebtedness of the purchaser
to the Company.  The repurchase option shall lapse at such rate as the Committee
may determine.

            (c)   Other Provisions.   The  Restricted  Stock  purchase agreement
                  ----------------
shall contain such other terms,  provisions and conditions not inconsistent with
the Plan as may be determined by the  Administrator in its sole  discretion.  In
addition, the provisions of Restricted Stock purchase agreements need not be the
same with respect to each purchaser.

            (d)   Rights as a  Shareholder.  Once the  stock  purchase  right is
                  ------------------------
exercised,  the  purchaser  shall  have  the  rights  equivalent  to  those of a
shareholder, and shall be a shareholder when his or her purchase is entered upon
the records of the duly authorized  transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the stock purchase right is exercised, except as provided in Section 13
of the Plan.


                                     - 8 -
<PAGE>

      12.   Stock Withholding to Satisfy  Withholding  Tax  Obligations.  At the
            -----------------------------------------------------------
discretion of the Administrator,  Optionees may satisfy withholding  obligations
as  provided  in this  paragraph.  When an  Optionee  incurs  tax  liability  in
connection  with an Option or stock  purchase  right,  which  tax  liability  is
subject to tax  withholding  under  applicable  tax laws,  and the  Optionee  is
obligated to pay the Company an amount required to be withheld under  applicable
tax laws, the Optionee may satisfy the withholding tax obligation by electing to
have the  Company  withhold  from the Shares to be issued  upon  exercise of the
Option,  or the Shares to be issued in connection with the stock purchase right,
if any,  that number of Shares  having a Fair  Market  Value equal to the amount
required  to be  withheld.  The Fair  Market  Value of the Shares to be withheld
shall be  determined  on the date that the amount of tax to be withheld is to be
determined (the "Tax Date").

            All  elections  by an  Optionee  to have  Shares  withheld  for this
purpose shall be made in writing in a form acceptable to the  Administrator  and
shall be subject to the following restrictions:

            (a)  the election  must be made on or  prior to the  applicable  Tax
Date;

            (b)  once  made,  the  election  shall  be  irrevocable  as  to  the
particular Shares of the Option or Right as to which the election is made;

            (c)  all elections shall be subject to the consent or disapproval of
the Administrator;

            (d)  if the Optionee is subject to Rule  16b-3,  the  election  must
comply with the applicable provisions of Rule 16b-3 and shall be subject to such
additional  conditions or restrictions as may be required  thereunder to qualify
for the maximum  exemption  from  Section 16 of the Exchange Act with respect to
Plan transactions.

            In the event the  election  to have  Shares  withheld  is made by an
Optionee  and the Tax Date is deferred  under  Section 83 of the Code because no
election is filed under  Section 83(b) of the Code,  the Optionee  shall receive
the full  number of Shares  with  respect to which the Option or stock  purchase
right is  exercised  but such  Optionee  shall be  unconditionally  obligated to
tender back to the Company the proper number of Shares on the Tax Date.

            13.   Adjustments Upon Changes in Capitalization or Merger.  Subject
                  ----------------------------------------------------
to any required action by the shareholders of the Company,  the number of shares
of Common Stock covered by each outstanding  Option, and the number of shares of
Common Stock which have been  authorized  for issuance  under the Plan but as to
which no Options have yet been  granted or which have been  returned to the Plan
upon  cancellation or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding  Option,  shall be proportionately
adjusted for any  increase or decrease in the number of issued  shares of Common
Stock  resulting  from a stock  split,  reverse  stock  split,  stock  dividend,
combination or  reclassification  of the Common Stock,  or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of  consideration  by the Company;  provided,  however,  that  conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of  consideration."  Such adjustment shall be made by the Board,
whose  determination  in that respect  shall be final,  binding and  conclusive.
Except as

                                      - 9 -
<PAGE>

expressly  provided herein, no issuance by the Company of shares of stock of any
class,  or  securities  convertible  into  shares of stock of any  class,  shall
affect,  and no adjustment by reason  thereof shall be made with respect to, the
number or price of shares of Common Stock subject to an Option.

            In the  event of the  proposed  dissolution  or  liquidation  of the
Company, the Board shall notify the Optionee at least fifteen (15) days prior to
such proposed action.  To the extent it has not been previously  exercised,  the
Option will terminate  immediately  prior to the  consummation  of such proposed
action.  In the event of a merger or  consolidation  of the Company with or into
another  corporation  or the sale of all or  substantially  all of the Company's
assets (hereinafter,  a "merger"),  the Option shall be assumed or an equivalent
option  shall be  substituted  by such  successor  corporation  or a  parent  or
subsidiary  of such  successor  corporation.  In the event  that such  successor
corporation  does not agree to assume the Option or to  substitute an equivalent
option, the Board shall, in lieu of such assumption or substitution, provide for
the  Optionee to have the right to exercise the Option as to all of the Optioned
Stock,  including  Shares  as  to  which  the  Option  would  not  otherwise  be
exercisable.  If the  Board  makes  an  Option  fully  exercisable  in  lieu  of
assumption or substitution in the event of a merger,  the Board shall notify the
Optionee that the Option shall be fully exercisable for a period of fifteen (15)
days  from the date of such  notice,  and the  Option  will  terminate  upon the
expiration of such period. For the purposes of this paragraph,  the Option shall
be considered  assumed if, following the merger, the Option or right confers the
right to  purchase,  for each Share of stock  subject to the Option  immediately
prior to the merger, the consideration (whether stock, cash, or other securities
or  property)  received in the merger by holders of Common  Stock for each Share
held on the  effective  date of the  transaction  (and if holders were offered a
choice of  consideration,  the type of consideration  chosen by the holders of a
majority  of  the  outstanding  Shares);   provided,   however,   that  if  such
consideration  received  in the  merger  was  not  solely  common  stock  of the
successor  corporation  or its  Parent,  the Board may,  with the consent of the
successor  corporation and the participant,  provide for the consideration to be
received upon the exercise of the Option, for each Share of stock subject to the
Option,  to be solely  common stock of the successor  corporation  or its Parent
equal in Fair Market Value to the per share consideration received by holders of
Common Stock in the merger or sale of assets.

            14.  Time of Granting Options. The date of grant of an Option shall,
                 ------------------------
for all purposes, be the date on which the Administrator makes the determination
granting such Option,  or such other date as is determined by the Board.  Notice
of the  determination  shall be given to each  Employee or Consultant to whom an
Option is so granted within a reasonable time after the date of such grant.

            15.  Amendment and Termination of the Plan.
                 -------------------------------------

            (a)  Amendment  and  Termination.  The Board may at any time  amend,
                 ---------------------------
alter, suspend or discontinue the Plan, but no amendment, alteration, suspension
or  discontinuation  shall be made which would impair the rights of any Optionee
under any grant theretofore made,  without his or her consent.  In addition,  to
the extent  necessary and desirable to comply with Rule 16b-3 under the Exchange
Act or with Section 422 of the Code (or any other  applicable law or regulation,
including the requirements of the NASD or an established stock exchange), the


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<PAGE>

Company shall obtain shareholder approval of any Plan amendment in such a manner
and to such a degree as required.

            (b)   Effect of Amendment  or  Termination.  Any such  amendment  or
                  ------------------------------------
termination  of the Plan  shall not  affect  Options  already  granted  and such
Options  shall  remain  in full  force  and  effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Board, which agreement must be in writing and signed by the Optionee and the
Company.

      16.   Conditions Upon  Issuance  of  Shares.  Shares  shall  not be issued
            -------------------------------------
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance  and  delivery of such Shares  pursuant  thereto  shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933,  as amended,  the  Exchange  Act,  the rules and  regulations  promulgated
thereunder, and the requirements of any stock exchange upon which the Shares may
then be listed,  and shall be further subject to the approval of counsel for the
Company with respect to such compliance.

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

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

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

      18.   Agreements.  Options and stock purchase rights shall be evidenced by
            ----------
written agreements in such form as the Board shall approve from time to time.

      19.   Shareholder Approval.  Continuance  of the Plan  shall be subject to
            ---------------------
approval by the  shareholders of the Company within twelve (12) months before or
after the date the Plan is adopted.  Such shareholder approval shall be obtained
in the degree and manner required under applicable state and federal law.

      20.  Information to Optionees. The Company shall provide to each Optionee,
           ------------------------
during the period for which such  Optionee has one or more Options  outstanding,
copies of all annual  reports and other  information  which are  provided to all
shareholders  of the Company.  The Company shall not be required to provide such
information  if the  issuance  of  Options  under  the  Plan is  limited  to key
employees  whose duties in  connection  with the Company  assure their access to
equivalent information.

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