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                                                                     Exhibit 4.2

                  AMENDED AND RESTATED 1999 STOCK OPTION PLAN
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                        MERCURY INTERACTIVE CORPORATION

                             AMENDED AND RESTATED
                            1999 STOCK OPTION PLAN

                         (Effective December 16, 1999)


     1.   Purposes of the Plan.  The purposes of this Stock Option Plan are to
          --------------------
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to such individuals of the
Company and to promote the success of the Company's business.  Options granted
hereunder may be either Incentive Stock Options or Nonstatutory Stock Options,
at the discretion of the Administrator and as reflected in the terms of the
written option agreement.

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

          (a) "Administrator"  means the Committee, if one has been appointed,
               -------------
or the Board of Directors of the Company, if no Committee is appointed.

          (b) "Board" means the Board of Directors of the Company.  A member of
               -----
the Board shall be referred to hereinafter as a "Director."

          (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, if one is
appointed.

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

          (f) "Company" means Mercury Interactive Corporation, a Delaware
               -------
corporation.

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

                                      -1-
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          (h) "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.

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

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

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

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

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

          (n) "Optionee" means an Employee  who receives an Option.
               --------

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

          (p) "Plan" means this 1999 Stock Option Plan.
               ----

          (q) "Share" means a share of the Common Stock, as adjusted in
               -----
accordance with Section 11 of the Plan.

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

     3.   Stock Subject to the Plan.  Subject to the provisions to Section 11 of
          -------------------------
the Plan, the total number of Shares reserved and available for issuance is the
number equal to the sum of (i) 2,300,000 and (ii) on the first day of any fiscal
year,  the number equal to 4% of the sum of the number of Shares outstanding as
of the last business day preceding the first day of such new fiscal year plus
the number of shares subject to outstanding and unexercised options (the
"Percentage Increase"). The Percentage Increase shall be determined annually on
the first day of each new fiscal year of the Company beginning with fiscal year
2000 and ending with (and including) fiscal year 2003.  Notwithstanding the
preceding sentence, the maximum annual Percentage Increase which may be
allocated to Incentive Stock Options in any single fiscal year shall be
1,900,000 Shares, for a maximum aggregate number of 9,900,000 Shares allocable
to Incentive Stock Options under the Plan.

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     Subject to Section 11 of the Plan, if any Shares that have been optioned
under an Option cease to be subject to such Option (other than through exercise
of the Option), or if any Option granted hereunder is forfeited, or any such
award otherwise terminates prior to the issuance of Common Stock to the
participant, the Shares that were subject to such Option shall again be
available for distribution in connection with future Option grants under the
Plan.  Shares that have actually been issued under the Plan, upon exercise of an
Option, shall not in any event be returned to the Plan and shall not become
available for future distribution under the Plan.

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

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

               (i)   Multiple Administrative Bodies. The Plan may be
                     ------------------------------
administered by different bodies with respect to Directors, Officers who are not
Directors, and Employees who are neither Directors nor Officers.

               (ii)  Administration With Respect to Directors and Officers
                     -----------------------------------------------------
Subject to Section 16(b). With respect to Option grants made to Employees who
------------------------
are also Officers or Directors subject to Section 16(b) of the Exchange Act, the
Plan shall be administered by (A) the Board, if the Board may administer the
Plan in compliance with the rules governing a plan transaction intended to
qualify as an exempt transaction under Rule 16b-3 and/or in accordance with
Section 162(m) of the Code, or (B) a Committee (or Committees) designated by the
Board to administer the Plan, which Committee shall be constituted to comply
with the rules governing a plan transaction intended to qualify as an exempt
transaction under Rule 16b-3 and/or in accordance with Section 162(m) of the
Code. Once appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board. From time to time, as the Board
deems appropriate (and for the purposes of satisfying Rule 16b-3 and/or Section
162(m)), it may increase the size of the Committee and appoint additional
members, remove members (with or without cause) and substitute new members, fill
vacancies (however caused), and remove all members of the Committee and
thereafter directly administer the Plan .

               (iii) Administration With Respect to Other Persons.  With respect
                     --------------------------------------------
to Option grants made to Employees who are neither Directors nor Officers of the
Company, the Plan shall be administered by (A) the Board or (B) a committee
designated by the Board, which committee shall be constituted in such a manner
as to satisfy the legal requirements relating to the administration of stock
option plans, if any, of state corporate law, the relevant stock exchange and
the Code  (the "Applicable Rules").  Once appointed, such Committee shall serve
in its designated capacity until otherwise directed by the Board.  The Board may
increase the size of the Committee and appoint additional members, remove
members (with or without cause) and substitute new members, fill vacancies
(however caused), and remove all members of the Committee and thereafter
directly administer the Plan, all to the extent permitted by the Applicable
Rules.

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

               (i)    to determine the Fair Market Value of the Common Stock, in
accordance with Section 8(b) of the Plan;

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

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

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

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

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

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

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

               (ix)   to modify or amend each Option (subject to Section 14(b)
of the Plan);

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

               (xi)   to determine and recommend the terms of any Option
exchange program or repricing program for Options granted under the Plan, and
subject to prior stockholder approval, to institute and implement any such
program;

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

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

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

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

          (a)  Nonstatutory Stock Options and Incentive Stock Options  may be
granted to only to Employees.

          (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) exceeds $100,000, such Options shall be
treated as Nonstatutory Stock Options.

          (c)  For purposes of Section 5(b), 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)  Nothing in the Plan or any Option granted hereunder shall 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
the Optionee's right or the Company's right to terminate his employment or
consulting relationship at any time, with or without cause.

          (e)  The following limitations shall apply to grants of Options to
Employees:

               (i)    No Employee shall be granted, in any fiscal year of the
Company, Options to purchase more than 400,000 Shares.

               (ii)   The foregoing limitation shall be adjusted proportionately
in connection with any change in the Company's capitalization as described in
Section 11.

               (iii)  If an Option is canceled (other than in connection with a
transaction described in Section 11), the canceled Option will be counted
against the limit set forth in Section 5(e)(i).  For this purpose, if the
exercise price of an Option is reduced, the transaction will be treated as a
cancellation of the Option and the grant of a new Option.

                                      -5-
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     6.   Term of Plan.  The term of the Plan shall be ten (10) years,
          ------------
commencing on August 31, 1999 and terminating on August 31, 2009 unless sooner
terminated under Section 13 of the Plan.

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

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

          (a)  The per Share exercise price under each Option shall be such
price as is determined by the Board, 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 Share exercise price shall be no less than 110% of
the Fair Market Value per Share on the date of grant.

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

                    (ii) In the case of a Nonstatutory Stock Option the per
Share exercise price shall be no less than 100% of the Fair Market Value per
Share on the date of grant.

For purposes of this Section 8(a), in the event that an Option is amended to
reduce the exercise price, the date of grant of such Option shall thereafter be
considered to be the date of such amendment.

          (b)  The Fair Market Value shall be determined by the Board in good
faith; provided, however, that where there is a public market for the Common
Stock, the Fair Market Value per Share shall be the mean of the bid and asked
prices (or the closing price per share if the Common Stock is listed on the
National Association of Securities Dealers Automated Quotation ("NASDAQ")
National Market System) of the Common Stock for the date of grant, as reported
in the Wall Street Journal (or, if not so reported, as otherwise reported by the
NASDAQ System) or, in the event the Common Stock is listed on a stock exchange,
the Fair Market Value per Share shall be the closing price on such exchange on
the date of grant of the Option, as reported in the Wall Street Journal.

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

               (i)   cash;

               (ii)  check;

               (iii) promissory note;

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

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

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

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

          (d)  Prior to issuance of the Shares upon exercise of an Option, the
Optionee shall pay or make adequate provision for any federal or state
withholding obligations of the Company, if applicable.

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

          (a)  Procedure for Exercise; Rights as a Stockholder. Any Option
               -----------------------------------------------
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Board at the time of grant, 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.

          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

                                      -7-
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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 Board, consist of any consideration and method of payment
allowable under Section 8(c) 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 stockholder shall
exist with respect to the Optioned Stock, notwithstanding the exercise of the
Option. The Company shall issue (or cause to be issued) such stock certificate
as promptly as practicable upon exercise of the Option. In the event that the
exercise of an Option is treated in part as the exercise of an Incentive Stock
Option and in part as the exercise of a Nonstatutory Stock Option pursuant to
Section 5(b), the Company shall issue a separate stock certificate evidencing
the Shares treated as acquired upon exercise of an Incentive Stock Option and a
separate stock certificate evidencing the Shares treated as acquired upon
exercise of a Nonstatutory Stock Option, and shall identify each such
certificate accordingly in its stock transfer records. 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 Status as an Employee.  In the event of
               ------------------------------------
termination of an Optionee's Continuous Status as an Employee  with the Company,
such Optionee may, but only within thirty (30) days after the date of such
termination (or such other period as is set out by the Administrator in the
Option Agreement, 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 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 Continuous Status as an
Employee  as a result of his total and permanent disability (as defined in
Section 22(e)(3) of the Code), he may exercise his Option to the extent he was
entitled to exercise it at the date of such termination within six (6) months
from the date of such termination (or such other period as is specified in the
grant, but in no event later than the date of expiration of the term of such
Option as set forth in the Option Agreement).  To the extent that the Optionee
was not entitled to exercise the Option at the date of termination, or does not
exercise such Option (to the extent exercisable) within the time specified
herein, the Option shall terminate.

          (d)  Death of Optionee. Notwithstanding the provisions of Section 9(b)
               -----------------
above, in the event of the death of an Optionee:

                                      -8-
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          (i)  during the term of the Option, who is at the time of his death an
Employee  of the Company and who shall have been in Continuous Status as an
Employee  since the date of grant of the Option, the Option may be exercised, at
any time within six (6) months following the date of death ((or such other
period as is specified in the grant, but in no event later than the date of
expiration 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, by the Optionee's estate or by a person who
acquired the right to exercise the Option by bequest or inheritance, as to all
of the Optioned Stock, including Shares as to which it would not otherwise be
exercisable, and such Shares shall be fully vested and not subject to any
repurchase option; or

          (ii) during the post-termination exercise period specified in the
grant with respect to terminations under Section 9(b) above,  at any time within
six (6) months following the date of death (or such other period as is
determined by the Administrator, but in no event later than the date of
expiration 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 of the right to
exercise that had accrued at the date of termination.

     10.  Non-Transferability of Options. Except as otherwise designated by the
          ------------------------------
Administrator, an Option may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Optionee, only by the Optionee.

     11.  Adjustments Upon Changes in Capitalization, Dissolution, Merger, Asset
          ----------------------------------------------------------------------
          Sale or Change of Control.
          -------------------------

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

                                      -9-
<PAGE>

shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.

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

          (c)  Merger or Asset Sale.  In the event of a merger of the Company
               --------------------
with or into another corporation or the sale of substantially all of the assets
of the Company:

               (i)  Each outstanding Option shall be assumed or an equivalent
option substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. Any Shares subject to a repurchase option of the Company
shall be exchanged for the consideration (whether stock, cash, or other
securities or property) received in the merger or asset sale by the holders of
the Common Stock for the successor corporation or a parent or subsidiary of such
successor corporation for each Share held on the effective date of the
transaction and such consideration shall, in the case of securities of the
successor corporation, be subject to a repurchase option with terms consistent
to the Company's repurchase option and in the case of any other property shall
be subject to vesting according to the schedule for the lapse of the repurchase
option.

               (ii) In the event that the successor corporation refuses to
assume or substitute for the Option, the Optionee shall have the right to
exercise the Option as to all of the Optioned Stock, including Shares as to
which it would not otherwise be exercisable, and such Shares shall be fully
vested and not subject to any repurchase option. In the event that the successor
corporation fails to assume the restricted stock purchase agreement pursuant to
which the Optionee purchased unvested Shares, the Company's repurchase option
shall lapse and the shares shall be fully vested. If an Option is exercisable in
lieu of assumption or substitution in the event of a merger or sale of assets,
the Administrator 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 shall terminate upon the expiration of such period. For the purposes
of this paragraph, the Option shall be considered assumed if, following the
merger or sale of assets, the option confers the right to purchase or receive,
for each Share of Optioned Stock subject to the Option immediately prior to the
merger or sale of assets, the consideration (whether stock, cash, or other
securities or property) received in the merger or sale of assets by holders of
Common Stock for each Share held on the effective date of the transaction (and
if holders were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding Shares); provided,
however, that if such consideration received in the merger or sale of assets was
not solely

                                      -10-
<PAGE>

Common Stock of the successor corporation or its Parent, the Administrator may,
with the consent of the successor corporation, provide for the consideration to
be received upon the exercise of the Option, for each Share of Optioned Stock
subject to the Option, to be solely common stock of the successor corporation or
its Parent equal in Fair Market Value to the per share consideration received by
holders of Common Stock in the merger or sale of assets.

     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 the exercise of an Option, 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 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 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 as to which the election is made;

     (c)  all elections shall be subject to the consent 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 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.  Time of Granting Options.  The date of grant of an Option shall, for
          ------------------------
all purposes, be the date on which the Board makes the determination granting
such Option.  Notice of the determination shall be given to each Employee  to
whom an Option is so granted within a reasonable time after the date of such
grant.

                                      -11-
<PAGE>

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

          (a)  Amendment and Termination.  The Board may amend or terminate the
               -------------------------
Plan from time to time in such respects as the Board may deem advisable;
provided that the following changes shall require approval of the stockholders
of the Company in the manner described in Section 18 of the Plan (i) revisions
or amendments to increase the number of Shares in the Share Pool (other than in
connection with an adjustment under Section 11 of the Plan); (ii) changes in the
designation of the class of persons eligible to be granted Options and/or (iii)
the reduction of 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.

          (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.

     15.  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.

     16.  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.

     17.  Option Agreement.  Options shall be evidenced by written option
          ----------------
agreements in such form as the Board shall approve.

                                      -12-
<PAGE>

     18.  Stockholder Approval. Any required stockholder approval obtained at a
          --------------------
duly held stockholders' meeting, may be obtained by the affirmative vote of the
holders of a majority of the outstanding Shares of the Company present or
represented and entitled to vote thereon.

                                      -13-