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HATHAWAY CORPORATION AMENDMENT NO. 1 TO THE 1989 INCENTIVE AND NON-QUALIFIED 
                               STOCK OPTION PLAN
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                                AMENDMENT NO. 1

                                    TO THE

                             HATHAWAY CORPORATION

              1989 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
                                        

          THIS AMENDMENT is made this 13th day of August, 1998, by Hathaway
Corporation, a Colorado corporation (the "Corporation").

          WHEREAS, the Corporation entered into and executed the 1989 Incentive
and Non-Qualified Stock Option Plan of Hathaway Corporation (the "Plan"); and

          WHEREAS, Article 16 of the Plan provides that the Board of Directors
of the Corporation "may amend or discontinue this Plan at any time..."; and

          WHEREAS, the Corporation desires to amend the Plan.

          NOW THEREFORE, the Corporation hereby amends the Plan as follows:

          1.  A new Section 13.4 hereby is added to the Plan to read in its
entirety as follows:

               13.4  ACCELERATION OF VESTING IN APPROVED TRANSACTIONS:  In 
          the event of any Approved Transaction, notwithstanding any contrary
          waiting period or vesting schedule in any stock option agreement, any
          outstanding option granted under the Plan and held, as of the date of
          such Approved Transaction, by an Optionee whose employment with the
          Corporation or a Subsidiary is affected in such Approved Transaction,
          shall become exercisable in full (100% vested) in respect of the
          aggregate number of shares covered thereby as of the date of the
          Approved Transaction. An Approved Transaction will include (a) the
          acquisition directly or indirectly by any Person (other than the
          Corporation, any Subsidiary, or any employee stock ownership plan or
          other employee benefit plan of the Corporation) during any period of
          12 consecutive months of beneficial ownership (within the meaning of
          Rule 13d-3 under the Securities Exchange Act of 1934, as amended, as
          in effect on the date of this Agreement) of voting stock of any
          Subsidiary representing in the aggregate more than 50% of the total
          voting power of all voting stock of the Subsidiary; (b) the sale,
          exchange or other disposition (other than by reason of the pledge or
          assignment of such assets as security for a loan) of all or
          substantially all of the assets of any Subsidiary or any division of
          the Corporation or a Subsidiary, if immediately after such transaction
          substantially all of such assets are not owned by the Corporation, any
          Subsidiary, or any employee stock ownership plan or other employee
          benefit plan of the Corporation. A "division" means any operating or
          business unit designated by the Corporation, in its discretion, as
          constituting a division of the Corporation or of a Subsidiary. An
          Optionee's employment with the Corporation or a Subsidiary is affected
          in an Approved Transaction if such employment is terminated by the
          Corporation or Subsidiary solely as a result of the Approved


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HATHAWAY CORPORATION AMENDMENT NO. 1 TO THE 1989 INCENTIVE AND NON-QUALIFIED 
                               STOCK OPTION PLAN
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          Transaction, if such employment is transferred to any employer other
          than the Corporation or a Subsidiary, or if the Optionee remains
          employed with a Subsidiary which is no longer a Subsidiary of the
          Corporation as a result of the Approved Transaction.  The Corporation
          will determine whether any Optionee's employment is affected by any
          Approved Transaction.

          2.  Except as provided above, the Corporation hereby reaffirms and
readopts each and every other provision of the Plan, to the extent not
inconsistent with this amendment.

          3.  The effective date of this amendment shall be August 1, 1998, and
shall apply to all currently outstanding stock option agreements and all future
stock options granted under the Plan.

          IN WITNESS WHEREOF, the officers of the Corporation, having been duly
authorized by the Board of Directors of the Corporation, have signed this
amendment as of the date first written above.

                                    HATHAWAY CORPORATION


                                    By:/s/Richard D. Smith
                                       --------------------
                                             President
ATTEST:


/s/Susan M. Chiarmonte
-----------------------
Secretary


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