RELIABILITY INCORPORATED












                            1997 STOCK OPTION PLAN









                               February 26, 1997
                    Amended and Restated February 23, 2000


























10QX102K.doc
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                               TABLE OF CONTENTS
                                                                          PAGE

ARTICLE I.  GENERAL                                                       3
      Section 1.1.  Purpose.                                              3
      Section 1.2.  Administration.                                       3
      Section 1.3.  Eligibility for Participation.                        4
      Section 1.4.  Types of Awards Under Plan.                           4
      Section 1.5.  Aggregate Limitation on Awards.                       4
      Section 1.6.  Effective Date and Term of Plan.                      4

ARTICLE II.  STOCK OPTIONS                                                5
      Section 2.1.  Award of Stock Options.                               5
      Section 2.2.  Stock Option Agreements.                              5
      Section 2.3.  Stock Option Price.                                   5
      Section 2.4.  Term and Exercise.                                    5
      Section 2.5.  Manner of Payment.                                    5
      Section 2.6.  Issuance of Certificates.                             5
      Section 2.7.  Death, Retirement and Termination of Employment
                         of Optionee                                      5

ARTICLE III.  INCENTIVE STOCK OPTIONS                                     6
      Section 3.1.  Award of Incentive Stock Options.                     6
      Section 3.2.  Incentive Stock Option Agreements.                    6
      Section 3.3.  Incentive Stock Option Price.                         7
      Section 3.4.  Term and Exercise.                                    7
      Section 3.5.  Maximum Amount of Incentive Stock Option Grant.       7
      Section 3.6.  Death of Optionee.                                    7
      Section 3.7.  Retirement or Disability.                             7
      Section 3.8.  Termination for Other Reasons.                        7
      Section 3.9.  Applicability of Stock Option Sections.               8
      Section 3.10. Code Requirements.                                    8

ARTICLE IV.  MISCELLANEOUS                                                8
      Section 4.1.  General Restriction.                                  8
      Section 4.2.  Non-Assignability.                                    8
      Section 4.3.  Withholding Taxes.                                    8
      Section 4.4.  Right to Terminate Employment.                        8
      Section 4.5.  Non-Uniform Determinations.                           9
      Section 4.6.  Rights as a Stockholder.                              9
      Section 4.7.  Definitions.                                          9
      Section 4.8.  Leaves of Absence.                                    9
      Section 4.9.  Newly Eligible Employees.                            10
      Section 4.10. Adjustments.                                         10
      Section 4.11. Changes in the Company's Capital Structure.          10
      Section 4.12. Amendment of the Plan.                               11







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                           RELIABILITY INCORPORATED
                            1997 STOCK OPTION PLAN
                    Amended and Restated February 23, 2000

                              ARTICLE I.  GENERAL

      Section  1.1.   Purpose.  The  purposes  of  this  Stock Option Plan (the
"Plan") are to: (1) associate the interests of the officers,  directors and key
employees  of  RELIABILITY  INCORPORATED  and  its  subsidiaries  (collectively
referred  to  as  the  "Company")  closely  with the Company's stockholders  to
generate an increased incentive to contribute  to  the Company's future success
and prosperity, thus enhancing the value of the Company  for the benefit of its
stockholders; (2) provide management with a proprietary ownership  interest  in
the  Company  commensurate  with Company performance, as reflected in increased
stockholder  value;  (3)  maintain   competitive  compensation  levels  thereby
attracting and retaining highly competent and talented directors and employees;
and (4) provide an incentive to management  for  continuous employment with the
Company. Certain capitalized terms are defined in Section 4.7.

      Section 1.2.  Administration.

      (a) The Plan shall be administered by (i) the  Board  of Directors of the
Company,  (ii)  any  duly  constituted  committee  of  the  Board of  Directors
consisting of at least two members of the Board of Directors, all of whom shall
be Non-Employee Directors, or (iii) any other duly constituted committee of the
Board of Directors. Such administrating party shall be referred  to  herein  as
the "Plan Administrator".

      (b) The  Plan  Administrator  shall  have  the  authority,  in  its  sole
discretion and from time to time to:

            (i)   designate  the  directors,  officers and key employees of the
Company eligible to participate in the Plan;

            (ii)  grant Awards provided in the  Plan in such form and amount as
the Plan Administrator shall determine;

            (iii) impose  such limitations, restrictions  and  conditions,  not
inconsistent with this Plan,  upon  any  such  Award  as the Plan Administrator
shall deem appropriate; and

            (iv)  interpret  the Plan and any agreement,  instrument  or  other
document executed in connection  with  the Plan, adopt, amend and rescind rules
and regulations relating to the Plan, and  make  all  other  determinations and
take  all  other  action  necessary  or  advisable  for the implementation  and
administration of the Plan.

      (c) Decisions and determinations of the Plan Administrator on all matters
relating  to  the  Plan shall be in its sole discretion  and  shall  be  final,
conclusive  and  binding   upon   all   persons,  including  the  Company,  any
participant, any stockholder of the Company,  any director and any employee. No
member of any committee acting as Plan Administrator  shall  be  liable for any
action taken or decision made relating to the Plan or any Award thereunder.


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      Section  1.3.   Eligibility for Participation. Participants in  the  Plan
shall be selected by the  Plan  Administrator  from  the  directors,  executive
officers  and other key employees of the Company. In making this selection  and
in determining  the  form  and  amount  of awards, the Plan Administrator shall
consider  any factors deemed relevant, including  the  individual's  functions,
responsibilities,  value  of  services  to  the  Company and past and potential
contributions to the Company's profitability and growth.

      Section 1.4.  Types of Awards Under Plan. Awards under the Plan may be in
the form of either or both of the following:

      (i)   Stock Options, as described in Article II; and/or

      (ii) Incentive Stock Options, as described in Article III.

      Awards under the Plan shall be evidenced by  an  Award  Agreement between
the Company and the recipient of the Award, in form and substance  satisfactory
to  the  Plan  Administrator,  and  not  inconsistent  with  this  Plan.  Award
Agreements  may  provide such vesting schedules for Stock Options and Incentive
Stock Options, and  such  other  terms,  conditions  and  provisions as are not
inconsistent with the terms of this Plan. Subject to the express  provisions of
the  Plan,  and within the limitations of the Plan, the Plan Administrator  may
modify, extend  or  renew outstanding Award Agreements, or accept the surrender
of outstanding Awards  and authorize the granting of new Awards in substitution
therefor. However, except as provided in this Plan, no modification of an Award
shall impair the rights of the holder thereof without his consent.

      Section 1.5.  Aggregate Limitation on Awards.

      (a) Shares  of stock  which  may  be  issued  under  the  Plan  shall  be
authorized and unissued  or  treasury  shares  of  Common  Stock of the Company
("Common  Stock"). The maximum number of shares of Common Stock  which  may  be
issued pursuant to Awards issued under the Plan shall be 1,500,000.

      (b) For  purposes  of  calculating the maximum number of shares of Common
Stock which may be issued under  the  Plan  at  any time, all the shares issued
(including the shares, if any, withheld for tax withholding requirements) under
the Plan as well as all shares subject to Option shall be counted.

      (c) Shares tendered by a participant as payment  for  shares  issued upon
exercise  of  a  Stock Option or Incentive Stock Option shall be available  for
issuance under the  Plan.  Any shares of Common Stock subject to a Stock Option
or Incentive Stock Option which  for  any  reason  is terminated unexercised or
expires shall again be available for issuance under the Plan.

      Section 1.6.  Effective Date and Term of Plan.

      (a) The Plan shall become effective on the date  adopted  by the Board of
Directors,  subject to approval by the holders of a majority of the  shares  of
Common Stock  present  in  person or by proxy at a meeting at which a quorum is
present.

      (b) The Plan and all Awards  made  under  the Plan shall remain in effect
until such Awards have been satisfied or terminated in accordance with the Plan
and the terms of such Awards.
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                          ARTICLE II.  STOCK OPTIONS

      Section  2.1.  Award of Stock Options. The Plan  Administrator  may  from
time to time, and  subject  to  the provisions of the Plan and such other terms
and  conditions  as  the  Plan  Administrator   may  prescribe,  grant  to  any
participant in the Plan one or more options to purchase  for cash or shares the
number  of  shares  of  Common  Stock ("Stock Options") allotted  by  the  Plan
Administrator. The date a Stock Option  is granted shall mean the date selected
by the Plan Administrator as of which the  Plan Administrator allots a specific
number of shares to a participant pursuant to the Plan.

      Section 2.2.  Stock Option Agreements.  The grant of a Stock Option shall
be evidenced by a written Award Agreement, executed  by  the  Company  and  the
holder  of  a  Stock  Option  (the "Optionee"), stating the number of shares of
Common Stock subject to the Stock Option evidenced thereby, and in such form as
the Plan Administrator may from time to time determine.

      Section 2.3.  Stock Option  Price.  The  Option Price per share of Common
Stock deliverable upon the exercise of a Stock Option shall be 100% of the Fair
Market  Value  of  a  share of Common Stock on the date  the  Stock  Option  is
granted.

      Section 2.4.  Term  and Exercise. A Stock Option shall not be exercisable
prior to six months from the  date  of  its  grant,  unless a shorter period is
provided by the Plan Administrator or by another Section  of this Plan, and may
be  subject  to such vesting scheduling and term ("Option Term")  as  the  Plan
Administrator  may  provide  in  an  Award  Agreement. No Stock Option shall be
exercisable after the expiration of its Option Term.

      Section 2.5.  Manner of Payment. Each Award Agreement providing for Stock
Options  shall set forth the procedure governing  the  exercise  of  the  Stock
Option granted  thereunder,  and  shall  provide  that,  upon  such exercise in
respect of any shares of Common Stock subject thereto, the Optionee  shall  pay
to the Company, in full, the Option Price for such shares with cash or, if duly
authorized by the Plan Administrator, Common Stock.

      Section  2.6.   Issuance  of  Certificates.  As soon as practicable after
receipt of payment, the Company shall deliver to the  Optionee a certificate or
certificates for such shares of Common Stock. Upon issuance  of  a certificate,
the Optionee shall become a stockholder of the Company with respect  to  Common
Stock  represented  by  such  share  certificates  and  as  such shall be fully
entitled to receive dividends, to vote and to exercise all other  rights  of  a
stockholder.

      Section   2.7.   Death,  Retirement  and  Termination  of  Employment  of
Optionee. Unless  otherwise  provided in an Award Agreement or otherwise agreed
to by the Plan Administrator:

      (a) Upon the death of the  Optionee, any rights to the extent exercisable
on the date of death may be exercised  by the Optionee's estate, or by a person
who acquires the right to exercise such  Stock Option by bequest or inheritance
or by reason of the death of the Optionee,  provided  that such exercise occurs
within  the sooner of (i) the remaining Option Term of the  Stock  Option,  and

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(ii) the  expiration of one year from the date of death. The provisions of this
Section shall apply notwithstanding the fact that the Optionee's employment may
have terminated  prior  to  death,  but  only  to  the  extent  of  any  rights
exercisable on the date of death.

      (b) Upon termination of the Optionee's employment by reason of retirement
or permanent disability (as each is determined by the Plan Administrator),  the
Optionee  may exercise any Stock Options exercisable on the date of termination
of employment,  provided  such  option exercise occurs within the sooner of (i)
the remaining Option Term of the  Stock  Option, and (ii) the expiration of six
months (in the case of permanent disability)  or  three  months (in the case of
retirement) of the date of termination.

      (c) Upon termination of the Optionee's employment for  any  reason  other
than  death,  disability  or  retirement,  the  Optionee may exercise any Stock
Options  exercisable on the date of termination of  employment,  provided  such
option exercise  occurs  within  the sooner of (i) the remaining Option Term of
the  Stock Option, and (ii) the expiration  of  thirty  days  of  the  date  of
termination.

                     ARTICLE III.  INCENTIVE STOCK OPTIONS

      Section  3.1.   Award  of Incentive Stock Options. The Plan Administrator
may, from time to time and subject to the provisions of the Plan and such other
terms and conditions as the Plan  Administrator  may  prescribe,  grant  to any
officer or key employee who is a participant in the Plan one or more "incentive
stock options" (intended to qualify as such under the provisions of Section 422
of  the  Internal  Revenue  Code of 1986 ("Code"), as amended ("Incentive Stock
Options")) to purchase for cash  or shares the number of shares of Common Stock
allotted by the Plan Administrator. No Incentive Stock Options shall be granted
under the Plan after the tenth anniversary  of  the effective date of the Plan.
The date an Incentive Stock Option is granted shall  mean  the date selected by
the  Plan  Administrator as of which the Plan Administrator allots  a  specific
number of shares  to  a  participant  pursuant to the Plan. Notwithstanding the
foregoing, Incentive Stock Options shall  not  be  granted  to  any  officer or
employee  who  owns  10%  or  more  of the Company's voting stock (directly  or
beneficially) unless the requirements of the code are met.

      Section  3.2.   Incentive  Stock  Option  Agreements.  The  grant  of  an
Incentive  Stock  Option  shall be evidenced  by  a  written  Award  Agreement,
executed by the Company and  the  holder  of  an  Incentive  Stock  Option (the
"Optionee"),  stating  the  number  of  shares  of Common Stock subject to  the
Incentive  Stock  Option  evidenced  thereby, and in  such  form  as  the  Plan
Administrator may from time to time determine.

      Section 3.3.  Incentive Stock Option Price. The Option Price per share of
Common Stock deliverable upon the exercise  of  an Incentive Stock Option shall
be 100% of the Fair Market Value of a share of Common  Stock  on  the  date the
Incentive Stock Option is granted, except as otherwise required by Section  422
of the Code, as amended.




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      Section 3.4.  Term and Exercise. Each Incentive Stock Option shall not be
exercisable  prior  to  six months from the date of its grant, unless a shorter
period is provided by the  Plan  Administrator or another Section of this Plan,
may be exercised during a period,  established by the Plan Administrator, of up
to ten years from the date of grant  thereof  (the  "Option  Term")  and may be
subject to such vesting scheduling as the Plan Administrator may provide  in an
Award  Agreement.  No  Incentive  Stock  Option  shall be exercisable after the
expiration of its Option Term.

      Section  3.5.   Maximum  Amount  of  Incentive Stock  Option  Grant.  The
aggregate Fair Market Value (determined on the  date the Incentive Stock Option
is granted) of Common Stock with respect to which Incentive Stock Options first
become exercisable by an Optionee during any calendar  year (under all plans of
the   Optionee's   employer  corporations  and  their  parent  and   subsidiary
corporations) shall not exceed $100,000.

      Section 3.6.  Death of Optionee.

      (a) Upon  the  death   of   the  Optionee,  any  Incentive  Stock  Option
exercisable on the date of death may  be  exercised by the Optionee's estate or
by a person who acquires the right to exercise  such  Incentive Stock Option by
bequest or inheritance or by reason of the death of the Optionee, provided that
such  exercise occurs within the sooner of the remaining  Option  Term  of  the
Incentive Stock Option and one year after the Optionee's death.

      (b) The  provisions  of this Section shall apply notwithstanding the fact
that the Optionee's employment  may have terminated prior to death, but only to
the extent of any Incentive Stock Options exercisable on the date of death.

      Section 3.7.  Retirement or  Disability.  Unless otherwise provided in an
Award  Agreement  or otherwise agreed to by the Plan  Administrator,  upon  the
termination of the  Optionee's  employment by reason of permanent disability or
retirement (as each is determined  by the Plan Administrator), the Optionee may
exercise any Incentive Stock Options  exercisable  on  the date of termination,
provided  such option exercise occurs within the sooner of  (i)  the  remaining
Option Term  of the Incentive Stock Option, and (ii) six months (in the case of
permanent  disability)   or  three  months  (in  the  case  of  retirement)  of
termination. Notwithstanding the terms of an Award Agreement, the tax treatment
available pursuant to Section 422 of the Code, as amended, upon the exercise of
an Incentive Stock Option  shall  not be available to an Optionee who exercises
any  Incentive  Stock  Options  more than  (i)  one  year  after  the  date  of
termination of employment due to  permanent  disability  or  (ii)  three months
after the date of termination of employment due to retirement.

      Section  3.8.   Termination  for Other Reasons. Upon termination  of  the
Optionee's  employment  for  any  reason   other   than  death,  disability  or
retirement, the Optionee may exercise any Incentive  Stock  Options exercisable
on the date of termination of employment, provided such option  exercise occurs
within  the  sooner  of  (i)  the remaining Option Term of the Incentive  Stock
Option, and (ii) the expiration of thirty days of the date of termination.




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      Section 3.9.  Applicability  of  Stock  Option  Sections.  Sections  2.5,
Manner  of  Payment,  and  2.6,  Issuance  of Certificates, applicable to Stock
Options,  shall apply equally to Incentive Stock  Options.  Said  Sections  are
incorporated by reference in this Article III as though fully set forth herein

      Section 3.10.  Code Requirements. The terms of any Incentive Stock Option
granted under the Plan shall comply in all respects with the provisions of Code
Section 422.  Anything  in the Plan to the contrary notwithstanding, no term of
the Plan relating to Incentive  Stock  Options shall be interpreted, amended or
altered,  nor  shall any discretion or authority  granted  under  the  Plan  be
exercised, so as  to  disqualify  either the Plan or any Incentive Stock Option
under Code Section 422, unless the  participant  has first requested the change
that will result in such disqualification.

                          ARTICLE IV.  MISCELLANEOUS

      Section 4.1.  General Restriction. Each Award  under  the  Plan  shall be
subject  to  the  requirement that, if at any time the Plan Administrator shall
determine that (i)  the listing, registration or qualification of the shares of
Common 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 grantee  of an Award with respect
to the disposition of shares of Common Stock, is necessary  or  desirable  as a
condition of, or in connection with, the granting of such Award or the issue or
purchase  of  shares  of  Common  Stock  thereunder,  such  Award  may  not  be
consummated   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 Plan Administrator.

      Section  4.2.   Non-Assignability.  No  Award  under  the  Plan shall  be
assignable or transferable by the recipient thereof, except by will  or  by the
laws  of descent and distribution. During the life of the recipient, such Award
shall be  exercisable only by such person or by such person's guardian or legal
representative.

      Section  4.3.   Withholding  Taxes.  Whenever  the Company proposes or is
required  to  issue  or  transfer shares of Common Stock under  the  Plan,  the
Company shall have the right  to require the grantee to remit to the Company an
amount sufficient to satisfy any  Federal,  state  and/or local withholding tax
requirements prior to the delivery of any certificate  or certificates for such
shares. Alternatively, the Company may issue, transfer or vest only such number
of shares of the Company net of the number of shares sufficient  to satisfy the
withholding  tax  requirements.  For  withholding  tax purposes, the shares  of
Common  Stock  shall  be  valued  on  the  date the withholding  obligation  is
incurred.

      Section 4.4.  Right to Terminate Employment.  Nothing  in  the Plan or in
any  agreement  entered  into  pursuant  to  the  Plan  shall  confer upon  any
participant  the right to continue in the employment of the Company  or  affect
any right which  the  Company  may  have  to  terminate  the employment of such
participant.




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<PAGE>

      Section   4.5.   Non-Uniform  Determinations.  The  Plan  Administrator's
determinations under  the  Plan (including without limitation determinations of
the persons to receive Awards,  the form, amount and timing of such Awards, the
terms and provisions of such Awards  and  the  agreements evidencing same) need
not be uniform and may be made by it selectively  among persons who receive, or
are eligible to receive, Awards under the Plan, whether or not such persons are
similarly situated.

      Section 4.6.  Rights as a Stockholder. The recipient  of  any Award under
the Plan shall have no rights as a stockholder with respect thereto  unless and
until certificates for shares of Common Stock are issued to him.

      Section  4.7.  Definitions. In this Plan the following definitions  shall
apply:

      (a) "Award"  shall  mean  a  grant  of  Stock  Options or Incentive Stock
Options under the Plan.

      (b) "Fair Market Value" as of any date and in respect  of  any  share  of
Common  Stock  means the closing price on such date or on the previous business
day, if such date  is  not a business day, of a share of Common Stock reflected
in the consolidated trading  tables  of  The  Wall  Street Journal or any other
publication  selected by the Plan Administrator provided  that,  if  shares  of
Common Stock shall  not  have  been  traded  on  the  National  Association  of
Securities  Dealers,  Inc. Automated Quotation System/National Market System or
other public securities market for more than 10 days immediately preceding such
date or if deemed appropriate  by  the Plan Administrator for any other reason,
the fair market value of shares of Common  Stock  shall be as determined by the
Plan Administrator in such other manner as it may deem appropriate. In no event
shall the Fair Market Value of any share of Common  Stock  be less than its par
value.

      (c) "Non-Employee  Director"  shall mean a director who  (i)  is  not  an
officer of the Company or a parent or  subsidiary  of the Company, or otherwise
employed by the Company or parent or subsidiary of the  Company;  (ii) does not
receive  compensation,  either  directly or indirectly, from the Company  or  a
parent or subsidiary of the Company,  for  services rendered as a consultant or
in any capacity other than as a director, except  for  an  amount not exceeding
$60,000;  (iii)  does  not  possess  an interest in any transaction  for  which
disclosure  would  be required under Item  404(a)  of  Regulation  S-K  of  the
Securities Act of 1933,  as amended ("Securities Act"); and (iv) is not engaged
in a business relationship  for  which disclosure would be required pursuant to
Item 404(b) of Regulation S-K of the Securities Act.

      (d) "Option" means a Stock Option or Incentive Stock Option.

      (e) "Option Price" means the  purchase  price  per  share of Common Stock
deliverable upon the exercise of a Stock Option or Incentive Stock Option.

      Section 4.8.  Leaves of Absence. The Plan Administrator shall be entitled
to  make  such  rules,  regulations and determinations as it deems  appropriate
under the Plan in respect of any leave of absence taken by the recipient of any
Award. Without limiting the generality of the foregoing, the Plan Administrator


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<PAGE>

shall be entitled to determine  (i)  whether  or  not any such leave of absence
shall constitute a termination of employment within  the  meaning  of the Plan,
and (ii) the impact, if any, of any such leave of absence on Awards  under  the
Plan theretofore made to any recipient who takes such leave of absence.

      Section  4.9.   Newly Eligible Employees. The Plan Administrator shall be
entitled to make such rules, regulations, determinations and Awards as it deems
appropriate in respect  of  any  director,  officer  or  employee  who  becomes
eligible  to  participate  in  the  Plan  or  any  portion  thereof  after  the
commencement of an Award or incentive period.

      Section 4.10.  Adjustments. In the event of any change in the outstanding
Common  Stock  by reason of a stock dividend or distribution, recapitalization,
merger, consolidation,  split-up,  combination, exchange of shares or the like,
the Plan Administrator may appropriately  adjust the number of shares of Common
Stock which may be issued under the Plan, the  number of shares of Common Stock
subject to Options or Performance Shares theretofore  granted  under  the Plan,
and any and all other matters deemed appropriate by the Plan Administrator.

      Section 4.11.  Changes in the Company's Capital Structure.

      (a) The existence of outstanding Options or Performance Shares shall  not
affect in any way the right or power of the Company or its stockholders to make
or  authorize  any  or  all  adjustments, recapitalizations, reorganizations or
other changes in the Company's capital structure or its business, or any merger
or consolidation of the Company,  or  any issue of bonds, debentures, preferred
or prior preference stock ahead of or affecting  the Common Stock or the rights
thereof,  or the dissolution or liquidation of the  Company,  or  any  sale  or
transfer of  all  or any part of its assets or business, or any other corporate
act or proceeding, whether of a similar character or otherwise.

      (b) If, while  there  are outstanding Options, the Company shall effect a
subdivision or consolidation  of  shares  or other increase or reduction in the
number of shares of the Common Stock outstanding without receiving compensation
therefor in money, services or property, then,  subject  to  the provisions, if
any, in the Award Agreement (a) in the event of an increase in  the  number  of
such  shares  outstanding, the number of shares of Common Stock then subject to
Options hereunder shall be proportionately increased; and (b) in the event of a
decrease in the  number  of  such  shares  outstanding, the number of shares of
Common  Stock  then  subject  to  Option  hereunder  shall  be  proportionately
decreased.

      (c) After a merger of one or more corporations into the Company, or after
a  consolidation  of  the Company and one or more  corporations  in  which  the
Company shall be the surviving  corporation,  (i) each holder of an outstanding
Option shall, at no additional cost, be entitled  upon  exercise of such Option
to  receive (subject to any required action by stockholders)  in  lieu  of  the
number  of  shares  as  to  which such Option shall then be so exercisable, the
number and class of shares of stock, other securities or consideration to which
such holder would have been entitled  to  receive  pursuant to the terms of the
agreement of merger or consolidation if, immediately  prior  to  such merger or
consolidation, such holder had been the holder of record of a number  of shares
of the Company equal to the number of shares as to which such Option had been

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<PAGE>

exercisable, and  (ii) unless  otherwise  provided  by the Plan Administrator,
the number of shares of Common Stock, other securities  or consideration to be
received with respect to unvested  Performance  Shares  shall  continue  to  be
subject  to  the  Award Agreement, including any vesting provisions thereof.

      (d) If the Company is about  to  be  merged  into  or  consolidated  with
another  corporation  or  other entity under circumstances where the Company is
not the surviving corporation,  or if the Company is about to sell or otherwise
dispose of substantially all of its  assets  to  another  corporation  or other
entity   while  unvested  Performance  Shares  or  unexercised  Options  remain
outstanding,  then  the Plan Administrator may direct that any of the following
shall occur:

          (i) If the  successor  entity  is willing to assume the obligation to
 deliver shares of stock or other securities  after  the  effective date of the
 merger, consolidation or sale of assets, as the case may be, each holder of an
 outstanding  Option shall be entitled to receive, upon the  exercise  of  such
 Option and payment  of  the  Option  Price, in lieu of shares of Common Stock,
 such shares of stock or other securities  as  the  holder of such Option would
 have been entitled to receive had such Option been exercised immediately prior
 to the consummation of such merger, consolidation or  sale,  and  the terms of
 such  Option  shall  apply as nearly as practicable to the shares of stock  or
 other securities purchasable  upon  exercise  of  the  Option  following  such
 merger, consolidation or sale of assets;

          (ii) The Plan Administrator may waive any limitations set forth in or
 imposed  pursuant  to  this  Plan  or any Award Agreement with respect to such
 Option or Performance Share such that (A) such Option shall become exercisable
 prior to the record or effective date of such merger, consolidation or sale of
 assets or (B) the vesting of such Performance  Share  shall  occur  upon  such
 merger, consolidation or sale of assets; and/or

          (iii) The Plan Administrator may cancel all outstanding Options as of
 the  effective  date  of  any  such  merger,  consolidation or sale of assets,
 provided that prior notice of such cancellation  shall be given to each holder
 of  an Option at least 30 days prior to the effective  date  of  such  merger,
 consolidation  or  sale of assets, and each holder of an Option shall have the
 right to exercise such Option in full during a period of not less than 30 days
 prior to the effective date of such merger, consolidation or sale of assets.

      (e) Except as herein  provided,  the  issuance  by  the Company of Common
Stock  or  any  other  shares  of capital stock or securities convertible  into
shares of capital stock, for cash, property, labor done or other consideration,
shall not affect, and no adjustment  by  reason  thereof  shall  be  made  with
respect  to,  the  number  or  price  of shares of Common Stock then subject to
outstanding Options.

      Section 4.12.  Amendment of the Plan. The Board of Directors may, without
further   approval   by  the  stockholders  and   without   receiving   further
consideration from the  participants,  amend  this  Plan or condition or modify
Awards under this Plan.




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