EXHIBIT 10.3

                             DIANON SYSTEMS, INC.
                          1999 STOCK INCENTIVE PLAN


SECTION 1.        PURPOSES

            The purposes of the Dianon  Systems, Inc. 1999 Stock Incentive
Plan (the "Plan") are (i) to enable Dianon Systems, Inc. (the "Company") and
its Related Companies (as defined below) to attract, retain and reward
employees and strengthen the existing mutuality of interests between such
employees and the Company's stockholders by offering such employees an equity
interest in the Company, and (ii) to enable the Company to pay part of the
compensation of its Outside Directors (as defined in Section 5.2) in the form
of equity of the Company, thereby increasing such directors' proprietary
interests in the Company. For purposes of the Plan, a "Related Company" means
any corporation, partnership, joint venture or other entity in which the
Company owns, directly or indirectly, at least a 20% beneficial ownership
interest. In addition, for purposes of this Plan, the term "Stock" shall refer
to the common stock of the Company, par value $.01 per share.

SECTION 2.       TYPES OF AWARDS

            2.1 Awards under the Plan may be in the form of (i) Stock Options;
(ii) Stock Appreciation Rights; (iii) Restricted Stock; (iv) Deferred Stock;
(v) Bonus Stock; (vi) Loans; and/or (vii) Tax Offset Payments. One or more
types of awards may be granted, which may be independent or granted in tandem.
If two awards are granted in tandem, the award holder may exercise (or
otherwise receive the benefit of) one award only to the extent he or she
relinquishes the tandem award.

            2.2 Outside Directors shall receive Stock Options, Limited Stock
Appreciation Rights and Stock Grants as provided in Section 15. In addition,
Outside Directors may be granted discretionary awards in one or more of the
forms set forth in Section 2.1.

SECTION 3.          ADMINISTRATION

            3.1 The Plan shall be administered (i) by the Compensation
Committee of the Company's Board of Directors (the "Board") or such other
committee of directors as the Board shall designate (the "Committee"), with
respect to awards to persons other than Outside Directors, and (ii) by the
Board with respect to awards to Outside Directors (except as provided in
Section 4.5). The Committee shall consist of not less than two directors each
of whom is an Outside Director. The members of the Committee shall serve at
the pleasure of the Board.

            3.2 For purposes of this Plan the term "Granting Authority" shall
mean (i) the Board of Directors with respect to awards to Outside Directors
(except as provided in Section 4.5), and (ii) the Committee with respect to
all other awards. The Granting Authority shall have the following authority
with respect to awards under the Plan within its jurisdiction:  to grant such
awards to persons eligible to receive them under the Plan; to adopt, alter and
repeal such administrative rules, guidelines and practices governing the Plan
as it shall deem advisable; to interpret the terms and provisions of the Plan
and any award granted by it under the Plan; and to otherwise supervise the
administration of the Plan. In particular, and without limiting its authority
and powers, the Granting Authority shall have the authority with respect to
the awards within its jurisdiction:

                  (a) to determine whether and to what extent any award or
      combination of awards will be granted hereunder, including whether any
      awards will be granted in tandem with each other;

                  (b) to select the eligible persons to whom awards will be
      granted;

                  (c) to determine the number of shares of the Stock of the
      Company to be covered by each award granted hereunder subject to the
      limitations contained herein;

                  (d) to determine the terms and conditions of any award
      granted hereunder, including, but not limited to, any vesting or other
      restrictions based on such performance objectives (the "Performance
      Objectives") and such other factors as the Granting Authority may
      establish, and to determine whether the Performance Objectives and other
      terms and conditions of the award are satisfied;

                  (e) to determine the treatment of awards upon an award
      holder's retirement, disability, death, termination for cause or other
      termination of employment or service with the Company or Related
      Company;

                  (f) to determine pursuant to a formula or otherwise the fair
      market value of the Stock on a given date; provided, however, that if
      the Granting Authority fails to make such a determination, fair market
      value of the Stock on a given date shall be the closing sale price on a
      given date, or if no such sale of Stock occurs on such date, the
      weighted average of the closing sale prices on the nearest trading dates
      before and after such date;

                  (g) to determine that equal to the amount of any dividends
      declared with respect to the number of shares covered by an award
      (i) will be paid to the award holder currently or (ii) will be deferred
      and deemed to be reinvested or (iii) will  otherwise be credited to the
      award holder, or that the award holder has no rights with respect to
      such dividends;

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

                  (i) to provide that the shares of Stock received as a result
      of an award shall be subject to a right of first refusal, pursuant to
      which the award holder shall be required to offer to the Company any
      shares that the award holder wishes to sell, subject to such terms and
      conditions as the Granting Authority may specify;

                  (j) to amend the terms of any award (including those granted
      under Section 15), prospectively or retroactively; provided, however,
      that no amendment shall impair the rights of the award holder without
      his or her written consent; and

                  (k) to substitute new Stock Options for previously granted
      Stock Options, or for options granted under other plans or agreements,
      in each case including previously granted options having higher option
      prices.

            3.3 The Committee shall have the right to designate awards as
"Performance Awards." Awards so designated shall be granted and administered
in a manner designed to preserve the deductibility of the compensation
resulting from such awards in accordance with Section 162(m) of the Internal
Revenue Code (the "Code"). The grant or vesting of a Performance Award shall
be subject to the achievement of Performance Objectives established by the
Committee based on one or more of the following criteria, in each case applied
to the Company on a consolidated basis and/or to a business unit and which the
Committee may use as an absolute measure, as a measure of improvement relative
to prior performance, or as a measure of comparable performance relative to a
peer group of companies: sales, operating profits, operating profits before
interest expense and taxes, net earnings, earnings per share, return on
equity, return on assets, return on invested capital, total shareholder
return, cash flow, debt to equity ratio, market share, stock price, economic
value added, and market value added.
            The Performance Objectives for a particular Performance Award
relative to a particular fiscal year shall be established by the Committee in
writing no later than 90 days after the beginning of such year. The
Committee's determination as to the achievement of Performance Objectives
relating to a Performance Award shall be made in writing. The Committee shall
have discretion to modify the Performance Objectives or vesting conditions of
a Performance Award only to the extent that the exercise of such discretion
would not cause the Performance Award to fail to qualify as "performance-based
compensation" within the meaning of Section 162(m) of the Code.

            3.4 All determinations made by the Granting Authority pursuant to
the provisions of the Plan shall be final and binding on all persons,
including the Company and Plan participants.

            3.5 The Committee may from time to time delegate to one or more
officers of the Company any or all of its authorities granted hereunder except
with respect to awards granted to persons subject to Section 16 of the
Securities Exchange Act of 1934 or Performance Awards. The Committee shall
specify the maximum number of shares that the officer or officers to whom such
authority is delegated may award.

            3.6 All awards granted under this Plan shall be evidenced by a
grant certificate and the terms and conditions of the award shall be set forth
in a written agreement between the Company and the award recipient.

SECTION 4.       STOCK SUBJECT TO PLAN

            4.1 The total number of shares of Stock which may be awarded or
issued pursuant to the exercise of an award granted under this Plan shall be
300,000, of which 270,000 shall be used for awards to employees and 30,000
shall be used for awards to Outside Directors (all subject to adjustment as
provided below). Such shares may consist of authorized but unissued shares or
treasury shares. The exercise of a Stock Appreciation Right for cash or the
payment of any other award in cash shall not count against this share limit.

            4.2 To the extent a Stock Option terminates without having been
exercised, or an award terminates without the award holder having received
payment of the award, or shares awarded are forfeited, the shares subject to
such award shall again be available for distribution in connection with future
awards under the Plan. Shares of Stock equal in number to the shares
surrendered in payment of the option price, and shares of Stock which are
withheld in order to satisfy federal, state or local tax liabilities, shall
not count against the above limit, and shall again be available for grants
under the Plan.

            4.3  (a) No employee shall be granted Stock Options, Stock
Appreciation Rights, Restricted Stock, Deferred Stock, and/or Bonus Stock, or
any combination of the foregoing with respect to more than 40,000  shares of
Stock in any fiscal year (subject to adjustment as provided in Section 4.5).
No employee shall be granted a Tax Offset Payment in any fiscal year with
respect to more than the number of shares of Stock covered by awards granted
to such employee in such fiscal year.

                 (b) For purposes of Section 162(m) of the Code, no key
employee shall be granted Stock Options or Stock Appreciation Rights with
respect to more than 40,000 shares of Stock in any fiscal year (subject to
adjustment as provided in Section 4.5).

            4.4 The maximum number of shares of Stock that may be issued under
this Plan pursuant to the exercise of Options intended to be Incentive Stock
Options shall be 270,000 shares.

            4.5 In the event of any merger, reorganization, consolidation,
sale of substantially all assets, recapitalization, stock dividend, stock
split, spin-oft split-up, split-off distribution of assets or other change in
corporate structure affecting the Stock, a substitution or adjustment, as may
be determined to be appropriate by the Committee in its sole discretion, shall
be made in the aggregate number of shares reserved for issuance under the
Plan, the number of shares as to which awards may be granted to any individual
in any calendar year, the number and type of shares subject to outstanding
awards and the amounts to be paid by award holders or the Company, as the case
may be, with respect to outstanding awards; provided, however, that no such
adjustment shall increase the aggregate value of any outstanding award. In the
event any change described in this Section 4.5 occurs, the Committee shall
make appropriate adjustment in the awards previously granted and to be granted
to Outside Directors under the Plan; provided that no such adjustment shall
increase the aggregate value of any outstanding award.

SECTION 5.       ELIGIBILITY

            5.1 Key employees of the Company or a Related Company, including
key employees who are officers and/or directors of the Company, are eligible
to be granted awards under the Plan, other than under Section 15. Employees
shall be selected for participation in the Plan from time to time by the
Committee, in its sole discretion, from among those key employees eligible to
participate in this Plan.

            5.2 Awards under Section 15 of the Plan shall be made solely to
Outside Directors, which term shall mean any director of the Company other
than one who is an employee of the Company or a Related Company. The Board, in
its discretion, may also grant other awards under the Plan in one or more of
the forms set forth in Section 2.1 to one or more Outside Directors.

SECTION 6.       STOCK OPTIONS

            The Stock Options awarded under the Plan may be of two types:
(i) Incentive Stock Options within the meaning of Section 422 of the Code or
any successor provision thereto (which may be granted only to employees); and
(ii) Non-Qualified Stock Options. To the extent that any Stock Option  does
not qualify as an Incentive Stock Option, it shall constitute a Non-Qualified
Stock Option.

            Subject to the following provisions, Stock Options awarded under
the Plan shall be in such form and shall have such terms and conditions as the
Granting Authority may determine:

                  (a) OPTION PRICE. The option price per share of Stock
      purchasable under a Stock Option shall be determined by the Granting
      Authority, and may be less than the fair market value of the Stock on
      the date of the award of the Stock Option.

                  (b) OPTION TERM. The term of each Stock Option shall be
      fixed by the Granting Authority.

                  (c) EXERCISABILITY. Stock Options shall be exercisable at
      such time or times and subject to such terms and conditions as shall be
      determined by the Granting Authority. The Granting Authority may waive
      such exercise provisions or accelerate the exercisability of the Stock
      Option at any time in whole or in part.

                  (d) METHOD OF EXERCISE. Stock Options may be exercised in
      whole or in part at any time during the option period by giving written
      notice of exercise to the Company specifying the number of shares to be
      purchased, accompanied by payment of the purchase price. Payment of the
      purchase price shall be made in such manner as the Granting  Authority
      may provide in the award, which may include cash (including cash
      equivalents), delivery of shares of Stock already owned by the optionee
      for at least six months, "cashless exercise" (which may be either (i) a
      broker-assisted cash exercise effected in accordance with rules adopted
      by the Granting Authority or (ii) a direction to the Company to withhold
      shares of Stock, otherwise deliverable to the option holder with respect
      to the Option, having a fair market value on the date of exercise equal
      to the option price), or in any other manner permitted by law determined
      by the Granting Authority, or any combination of the foregoing. If the
      Granting Authority determines that a Stock Option may be exercised using
      shares of Restricted Stock, then unless the Granting Authority provides
      otherwise, the shares received upon the exercise of a Stock Option which
      are paid for using Restricted Stock shall be restricted in accordance
      with the original terms of the Restricted Stock award.

                  (e) NO STOCKHOLDER RIGHTS. An optionee shall have neither
      rights to dividends or other rights of a stockholder with respect to
      shares subject to a Stock Option until the optionee has given written
      notice of exercise and has paid for such shares.

                  (f) SURRENDER RIGHTS. The Granting Authority may provide
      that options may be surrendered for cash upon any terms and conditions
      set by the Granting Authority.

                  (g) NON-TRANSFERABILITY. Unless otherwise provided by the
      Granting Authority, (i) Stock Options shall not be transferable by the
      optionee other than by will or by the laws of descent and distribution,
      and (ii) during the optionee's lifetime, all Stock Options shall be
      exercisable only by the optionee or, in the event of the optionee's
      disability, by his or her guardian or legal representative.

                  (h) TERMINATION OF SERVICE. Following the termination of an
      optionee's service with the Company or a Related Company, the Stock
      Option shall be exercisable to the extent determined by the Granting
      Authority. The Granting Authority may provide different post-termination
      exercise provisions with respect to termination of service for different
      reasons. The Granting Authority may provide that, notwithstanding the
      option term fixed pursuant to Section  6.2(b), a Stock Option which is
      outstanding on the date of an optionee's death shall remain outstanding
      for an additional period after the date of such death.

            6.3  Notwithstanding the provisions of Section  6.2, no Incentive
Stock Option shall (i) have an option price which is less than 100% of the
fair market value of the Stock on the date of the award of the Incentive Stock
Option, (ii) be exercisable more than ten years after the date such Incentive
Stock Option is awarded, or (iii) be awarded more than ten years after the
effective date of the Plan specified in Section 19. No Incentive  Stock Option
granted to an employee who owns more than 10% of the total combined voting
power of all classes of stock of the Company or any of its parent or
subsidiary corporations, as defined in Section 424 of the Code, shall (A) have
an option price which is less than 110% of the fair market value of the Stock
on the date of award of the Incentive Stock Option or (B) be exercisable more
than five years after the date such Incentive Stock Option is awarded.

            6.4 A Stock Option granted to a key employee under this Plan will
not be considered an Incentive Stock Option to the extent that such Stock
Option, together with any earlier Stock Option granted to such employee under
this or any other plan of the Company that is intended to be an Incentive
Stock Option, permits the exercise for the first time in any calendar year of
shares of Stock having a fair market value in excess of $100,000 (determined
at the time of grant).

SECTION 7.       STOCK APPRECIATION RIGHTS

            7.1 A Stock Appreciation Right shall entitle the holder thereof to
receive payment of an amount, in cash, shares of Stock or a combination
thereof, as determined by the Granting Authority, equal in value to the excess
of the fair market value of the number of shares of Stock as to which the
award is granted on the date of exercise over an amount specified by the
Granting Authority. Any such award shall be in such form and shall have such
terms and conditions as the Granting Authority may determine. The grant shall
specify the number of shares of Stock as to which the Stock Appreciation Right
is granted.

            7.2 The Granting Authority may provide that a Stock Appreciation
Right may be exercised only within the 60-day period following occurrence of a
Change of Control (as defined in Section 17.2) (such Stock Appreciation Right
being referred to herein as a Limited Stock  Appreciation Right). The Granting
Authority may also provide that in the event of a Change of Control the amount
to be paid upon exercise of a Stock Appreciation Right shall be based on the
Change of Control Price (as defined in Section 17.3).

SECTION 8.       RESTRICTED STOCK

            Subject to the following provisions, all awards of Restricted Stock
shall be in such form and shall have such terms and conditions as the Granting
Authority may determine:

                  (a) The Restricted Stock award shall specify the number of
      shares of Restricted Stock to be awarded, the price, if any, to be paid
      by the recipient of the Restricted  Stock and the date or dates on
      which, or the conditions upon the satisfaction of which, the
      restrictions shall lapse and the Restricted Stock will vest. The grant
      and/or the vesting of Restricted Stock may be conditioned upon the
      completion of a specified period of service with the Company or a
      Related Company, upon the attainment of specified Performance Objectives
      or upon such other criteria as the Granting Authority may determine.

                  (b) Stock certificates representing the Restricted Stock
      awarded under the Plan shall be registered in the award holder's name,
      but the Granting Authority may direct that such certificates be held by
      the Company on behalf of the award holder. Except as may be permitted by
      the Granting Authority, no share of Restricted Stock may be sold,
      transferred, assigned, pledged or otherwise encumbered by the award
      holder until such share has vested in accordance with the terms of the
      Restricted Stock award. At the time Restricted Stock vests, a
      certificate for such vested shares shall be delivered to the award
      holder (or his or her designated beneficiary in the event of death),
      free of all restrictions.

                  (c) The Granting Authority may provide that the award holder
      shall have the right to vote or receive dividends on Restricted Stock.
      Unless the Granting Authority provides otherwise, Stock received as a
      dividend on, or in connection with a stock split of, Restricted Stock
      shall be subject to the same restrictions as the Restricted Stock.

                  (d) Except as may be provided by the Granting Authority, in
      the event of an award holder's termination of service before all of his
      or her Restricted Stock has vested, or in the event any conditions to
      the vesting of Restricted Stock have not been satisfied prior to any
      deadline for the satisfaction of such conditions set forth in the award,
      the shares of Restricted Stock which have not vested shall be forfeited,
      and the Granting Authority may provide that (i) any purchase price paid
      by the award holder shall be returned to the award holder or (ii) a cash
      payment equal to the Restricted Stock's fair market value on the date of
      forfeiture, if lower, shall be paid to the award holder.

                  (f) The Granting Authority may waive, in whole or in part,
      any or all of the conditions to receipt of, or restrictions with respect
      to, any or all of the award holder's Restricted Stock, other than
      Performance Awards whose vesting was made subject to satisfaction of one
      or more Performance Objectives (except that the Committee may waive
      conditions or restrictions with respect to Performance Awards if such
      waiver would not cause the Performance Award to fail to qualify as
      "performance-based compensation" within the meaning of Section 162(m) of
      the Code).

SECTION 9.       DEFERRED STOCK AWARDS

            Subject to the following provisions, all awards of Deferred Stock
shall be in such form and shall have such terms and conditions as the Granting
Authority may determine:

                  (a) The Deferred Stock award shall specify the number of
      shares of Deferred Stock to be awarded and the duration of the period
      (the "Deferral Period") during which, and the conditions under which,
      receipt of the Stock will be deferred. The Granting Authority may
      condition the grant or vesting of Deferred Stock, or receipt of Stock or
      cash at the end of the Deferral Period, upon the attainment of specified
      Performance Objectives or such other criteria as the Granting Authority
      may determine.

                  (b) Except as may be provided by the Granting Authority,
      Deferred Stock awards may not be sold, assigned, transferred, pledged or
      otherwise encumbered during the Deferral Period.

                  (c) At the expiration of the Deferral Period, the award
      holder (or his or her designated beneficiary in the event of death)
      shall receive (i) certificates for the number of shares of Stock equal
      to the number of shares covered by the Deferred  Stock award, (ii) cash
      equal to the fair market value of such Stock, or (iii) a combination of
      shares and cash, as the Granting Authority may determine.

                  (d) Except as may be provided by the Granting Authority, in
      the event of an award holder's termination of service before the
      Deferred Stock has vested, his or her Deferred Stock award shall be
      forfeited.

                  (e) The Granting Authority may waive, in whole or in part,
      any or all of the conditions to receipt of, or restrictions with respect
      to, Stock or cash under a Deferred Stock award, other than with respect
      to Performance Awards (except that the Committee may waive conditions
      or restrictions with respect to Performance Awards if such waiver would
      not cause the Performance Award to fail to qualify as "performance based
      compensation" within the meaning of Section 162(m) of the Code).

SECTION 10.      BONUS STOCK

            The Granting Authority may award Bonus Stock subject to such terms
and conditions as the Granting Authority shall determine. The grant of Bonus
Stock may be conditioned upon the attainment of specified Performance
Objectives or upon such other criteria as the Granting Authority may
determine. The Granting Authority may waive such conditions in whole or in
part other than with respect to Performance Awards (except that the Committee
may waive conditions or restrictions with respect to Performance Awards if
such waiver would not cause the Performance Award to fail to qualify as
"performance-based compensation" within the meaning of Section 162(m) of the
Code). In making a determination with respect to the terms and conditions of a
Bonus Stock award, the Granting Authority shall also have the right to
eliminate or reduce the amount of Bonus Stock  otherwise payable under an
award. Unless otherwise specified by the Granting Authority, no money shall be
paid by the recipient for the Bonus Stock. Alternatively, the Granting
Authority may offer the award holder the opportunity to purchase Bonus Stock
at a discount from its fair market value. The Bonus Stock award shall be
satisfied by the delivery of the designated number of shares of Stock which
are not subject to restriction.

SECTION 11.      LOANS

            The Granting Authority may provide that the Company shall make, or
arrange for, a loan or loans with respect to the exercise of any Stock Option
awarded under the Plan, with respect to the payment of the purchase price, if
any, of any Restricted Stock awarded hereunder or with respect to any taxes
arising from an award hereunder; provided, however, that the Company shall not
loan more than the sum of (i) the excess of the purchase or exercise price of
an award over the par value of any shares of Stock awarded plus (ii) the
amount of any taxes arising from such award. The Granting Authority shall have
full authority to decide  whether a loan will be made hereunder and to
determine the amount, term and provisions of any such loan, including the
interest rate to be charged, whether the loan will be with or without recourse
against the borrower, any security for the loan, the terms on which the loan
is to be repaid and the conditions, if any, under which the loan may be
forgiven.

SECTION 12.      TAX OFFSET PAYMENTS

            The Granting Authority may provide for a Tax Offset Payment by
the Company with respect to one or more awards granted under the Plan. The Tax
Offset Payment shall be in an amount specified by the Granting Authority,
which shall not exceed the amount necessary to pay the federal, state, local
and other taxes payable with respect to the applicable award and the receipt
of the Tax Offset Payment, assuming that the award holder is taxed at the
maximum tax rate applicable to such income. The Tax Offset Payment shall be
paid solely in cash.

SECTION 13.      ELECTION TO DEFER AWARDS

            The Granting Authority may permit an employee or Outside Director
to elect to defer receipt of an award (other than an award pursuant to Section
15) for a specified period or until a specified event, upon such terms as are
determined by the Granting Authority.

SECTION 14.      TAX WITHHOLDING

            14.1 Each employee shall, no later than the date as of which the
value of an award first becomes includible in such person's gross income for
applicable tax purposes, pay to the Company, or make arrangements
satisfactory to the Committee regarding payment of, any federal, state,
local or other 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 (and, where
applicable, any Related 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 employee.

            14.2 To the extent permitted by the Committee, and subject to such
terms and conditions as the Committee may provide, an employee may elect to
have the withholding tax obligation, or any additional tax obligation with
respect to any awards hereunder, satisfied by (i) having the Company withhold
shares of Stock otherwise deliverable to such person with respect to the award
or (ii) delivering to the Company shares of unrestricted Stock previously
owned by the person for at least six months.

SECTION 15.      AUTOMATIC STOCK OPTIONS, LIMITED STOCK APPRECIATION RIGHTS AND
                 STOCK GRANTS FOR OUTSIDE DIRECTORS

            15.1 Outside Directors shall be granted Stock Options as follows:

                  (a) INITIAL GRANT.  Each person who is an Outside  Director
      on the date of adoption of the Plan by the Board shall be granted on
      such date a Stock Option to purchase the number of whole shares of Stock
      obtained by dividing $5,000 by the closing sales price of the Stock on
      the date of grant. Each person who becomes an Outside Director after
      such date shall be granted, on the first trading day coincident with or
      immediately following the effective date of his or her election as an
      Outside Director, a Stock Option to purchase the number of whole shares
      of Stock obtained by dividing $5,000 by the closing sales price of the
      Stock on the date of grant.

                  (b) QUARTERLY GRANTS. On the first trading day of each
      calendar quarter beginning with October 1, 1999, each Outside Director
      then serving on the Board and who has served for all or a portion of the
      previous calendar quarter shall be granted a Stock Option to purchase
      the number of whole shares of Stock obtained by dividing $5,000 by the
      closing sales price of the Stock on the date of grant.

                  (c) For purposes of this Section 15.1, the term trading day
      shall mean a day on which the Stock is traded on a national securities
      exchange, on the Nasdaq National Market, or in the over-the-counter
      market.

                  (d) Notwithstanding the foregoing, if on any date on which
      Stock Options are to be granted under this Section 15.1 the remaining
      shares available for issuance to Outside Directors under the Plan are
      insufficient to enable each Outside Director to receive a Stock Option
      to purchase the applicable number of shares of Stock set forth above,
      each Outside Director who is entitled to be granted a Stock Option
      pursuant to this Section 15.1 on such date shall be granted a Stock
      Option to purchase his or her pro-rata portion of such remaining shares.

            Stock Options granted under this Section 15 shall be Non-Qualified
Stock Options, and shall have the following terms and conditions:

                  (a) OPTION PRICE. The option price per share of Stock
      purchasable under the Stock Option shall be equal to the closing sales
      price of the Stock on the date the Stock Option is granted.

                  (b) TERM OF OPTION. The term of the Stock Option shall be
      ten years from the date of grant, subject to earlier termination in the
      event of termination of service as a director, as set forth in
      paragraphs (e) and (f) below.

                  (c) EXERCISABILITY. Subject to paragraph (f) below, each
      Stock Option shall become exercisable with respect to 10% of the
      underlying shares on the date which is three months after the date of
      grant, and an additional 10% at the end of each three-month period
      thereafter, less any shares that have been exercised prior to each such
      date, provided that the optionee is a director of the Company on such
      date. The minimum number of shares with respect to which a Stock Option
      may be exercised is the lesser of 100 shares or the number of shares then
      subject to the Stock Option.

                  (d) METHOD OF EXERCISE. The Stock Options may be exercised
      in whole or in part at any time during the option period by giving
      written notice of exercise to the Company specifying the number of
      shares to be purchased, accompanied by payment of the purchase price.
      Payment of the purchase price shall be made in cash (including cash
      equivalents) or by delivery of shares of Stock already owned by the
      optionee for at least six months, or by any combination of the
      foregoing. Shares delivered upon payment of the exercise price shall be
      valued at the average of the high and low sale prices of the Stock on
      the date of exercise (or, if the Stock is not traded on such date, at
      the weighted average of the high and low prices on the nearest trading
      dates before and after such date).

                  (e) TERMINATION OF SERVICE AS DIRECTOR. If an optionee's
      service as a director is terminated for any reason, such director's
      Stock Options may be exercised for five years following such termination
      of service (but not beyond the Option term), but only to the extent such
      Options were vested on the date of termination of service.

                  (f) Change of Control. Notwithstanding any other provision
      of the Plan, upon the occurrence of a Change of Control (as defined in
      Section 17.2), all Stock Options outstanding at the time of such Change
      of Control shall become immediately vested and exercisable and shall
      remain exercisable for five years after the director's termination of
      service (but not beyond the option term).

                  (g) Non-transferability. No Stock Option shall be
      transferable by the optionee other than by will or by the laws of
      descent and distribution. During an optionee's lifetime, all Stock
      Options shall be exercisable only by the optionee or, in the event of
      the optionee's disability, by his or her guardian or legal
      representative.

                  (h) Shareholder Rights. The holder of a Stock Option shall,
      as such, have none of the rights of a shareholder.

            15.3 Limited Stock Appreciation Rights in Tandem with Options.
Each Stock Option granted to an Outside Director under this Section 15 shall
be granted in tandem with a Limited Stock Appreciation Right which may be
exercised only within the 60-day period following a Change of Control. Upon
exercise of the Limited Stock Appreciation Right, the holder shall receive,
for each share with respect to which the Limited Stock Appreciation Right is
exercised, an amount equal in value to the excess of the Change of Control
Price (as defined in Section 17.3) over the exercise price of the related
Stock Option. The Limited Stock Appreciation Right shall be payable solely in
cash, and shall be paid within 30 days of the exercise of the Limited  Stock
Appreciation Right. Upon the exercise of the Limited Stock Appreciation
Right, the Stock Option granted in tandem with such Right shall expire.

            15.4 Quarterly Stock Grants. On the first trading day of each
calendar quarter beginning with the first calendar quarter after the date of
shareholder approval of the Plan, each Outside Director then serving on the
Board and who has served for all or a portion of the previous calendar quarter
shall be granted the number of whole shares of Stock obtained by dividing
$2,000 by the closing sales price of the Stock on the date of grant.
Notwithstanding the foregoing, if on any date on which shares are to be
granted pursuant to this Section 15.4 the remaining shares reserved for
issuance to Outside Directors under the Plan are insufficient to enable each
Outside Director to receive the applicable number of shares of Stock set forth
above, each Outside Director who is entitled to be granted shares pursuant to
this Section 15.4 shall be granted his or her pro rata portion of such
remaining shares. All shares granted under this Section 15.4 shall be fully
vested and non-forfeitable at the time of grant.

SECTION 16.      AMENDMENTS AND TERMINATION

            The Board may discontinue the Plan at any time and may amend it
from time to time. No amendment or discontinuation of the Plan shall adversely
affect any award previously granted without the award holder's written
consent. Amendments may be made without stockholder approval except as
required to satisfy Section 422 of the Code, Section 162(m) of the Code, or
other NASDAQ, stock exchange, or regulatory requirements.

SECTION 17.      CHANGE OF CONTROL

            17.1 In the event of a Change of Control, unless otherwise
determined by the Granting Authority at the time of grant or by amendment
(with the award holder's consent) of such grant:

                  (a) all outstanding Stock Options and all outstanding Stock
      Appreciation Rights (including Limited Stock Appreciation Rights)
      awarded under the Plan shall become fully exercisable and vested;

                  (b) the restrictions and deferral limitations applicable to
      any outstanding Restricted Stock and Deferred Stock awards under the
      Plan shall lapse and such shares and awards shall be deemed fully
      vested; and

                  (c) to the extent the cash payment of any award is based on
      the fair market value of Stock, such fair market value shall be the
      Change of Control Price.

            17.2 A "Change of Control" shall be deemed to occur on:

                  (a) the date that any person or group deemed a person under
      Sections 3(a)(9) and 13(d)(3) of the Securities Exchange Act of 1934
      (other than the Company and its subsidiaries as determined immediately
      prior to that date) has become the beneficial owner, directly or
      indirectly (with beneficial ownership determined as provided in rule
      13d-3, or any successor rule, under the Securities Exchange Act of 1934)
      of securities of the Company representing 25% or more of the total
      combined voting power of all classes of stock of the Company having the
      right under ordinary circumstances to vote at an election of the Board,
      unless such person has acquired 80% or more of such securities directly
      from the Company;

                  (b) the date on which one-third or more of the members of
      the Board shall consist of persons other than Current Directors (for
      these purposes a "Current Director" shall mean any member of the Board on
      August 31, 1999 and any member of the Board whose nomination or election
      has been approved by a majority of the Current Directors then on the
      Board);

                  (c) the date of approval by the stockholders of the Company
      of an agreement providing for the merger or consolidation of the Company
      with another corporation where (i) the stockholders of the Company,
      immediately prior to the merger or consolidation, would not beneficially
      own, immediately after the merger or consolidation, shares entitling such
      stockholders to 50% or more of all votes (without consideration of the
      rights of any class of stock to elect directors by a separate class
      vote) to which all stockholders of the corporation issuing cash or
      securities in the merger or consolidation would be entitled in the
      election of directors, or (ii) where the members of the Board,
      immediately prior to the merger or consolidation, would not, immediately
      after the merger or consolidation, constitute a majority of the board of
      directors of the corporation issuing cash or securities in the merger;
      or

                  (d) the date of approval by the stockholders of the Company
      of an agreement providing for the sale or other disposition of all or
      substantially all of the assets of the Company.

             17.3 "Change of Control  Price" means the highest price per share
paid in any transaction reported in the Nasdaq National Market or on any
national securities exchange where the Stock is traded, or paid or offered in
any transaction related to a Change of Control at any time during the 90-day
period ending with the Change of Control. Notwithstanding the foregoing
sentence, in the case of Stock Appreciation Rights granted in tandem with
Incentive Stock Options, the Change of Control Price shall be the highest
price paid on the date on which the Stock Appreciation Right is exercised.

SECTION 18.      GENERAL PROVISIONS

            18.1 Each award under the Plan shall be subject to the requirement
that, if at any time the Granting Authority shall determine that (i) the
listing, registration or qualification of the Stock subject or related thereto
upon any securities exchange or under any state or federal  law,  or (ii) the
consent or approval of any government regulatory body or (iii) an agreement by
the recipient of an award with respect to the disposition of Stock is
necessary or desirable (in connection with any requirement or interpretation
of any federal or state securities law, rule or regulation) as a condition of,
or in connection with, the granting of such award or the issuance, purchase or
delivery of Stock thereunder, such award shall not be granted or exercised, in
whole or in part, unless such listing, registration, qualification, consent,
approval or agreement shall have been effected or obtained free of any
conditions not acceptable to the Granting Authority.

            18.2 Nothing set forth in this Plan shall prevent the Board from
adopting other or additional compensation arrangements. Neither the adoption
of the Plan nor any award hereunder shall confer upon any employee of the
Company, or of a Related Company, any right to continued employment, and no
award shall confer upon any Outside Director any right to continued service as
a director.

            18.3 Determinations by the Granting Authority under the Plan
relating to the form, amount, and terms and conditions of awards need not be
uniform, and may be made selectively among persons who receive or are eligible
to receive awards under the Plan, whether or not such persons are similarly
situated.

            18.4 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 with respect to the Plan, and all members of the Board or the Committee
and all officers or employees 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 19.      EFFECTIVE DATE OF PLAN

            The Plan was adopted by the Company's Board of Directors on August
31, 1999, and shall be effective as of such date, subject to the approval of
the Plan by the Company's stockholders at the 1999 Annual Meeting of
Stockholders.