APPENDIX A
                                   ----------

                              CERPROBE CORPORATION
                             1995 STOCK OPTION PLAN
                     (as amended through February 18, 1997)

                                    ARTICLE I
                                     General

         1.1      Purpose of Plan; Term

                  (a)  Adoption.  On May 9, 1995,  the Board of  Directors  (the
"Board")  of  Cerprobe  Corporation,  a Delaware  corporation  (the  "Company"),
adopted  this stock  option plan to be known as the 1995 Stock  Option Plan (the
"Original  Plan").  The Original  Plan was approved by the  stockholders  of the
Company on June 27,  1995.  On  February  18,  1997,  the Board  adopted a newly
Amended  and  Restated  1995 Stock  Option  Plan (the  "Revised  Plan")  whereby
additional  shares of Stock  were  authorized  to be  issued  under the Plan and
certain other technical  changes were made. The Revised Plan must be approved by
the  stockholders  of the Company within one year of the date of its adoption by
the Board. If not approved by the stockholders, the Original Plan shall continue
in effect. If the Revised Plan is not timely approved by the  stockholders,  any
Options or Awards  issued  after the date of the  adoption of the  Revised  Plan
shall  remain  valid and  unchanged  to the extent  that such  Options or Awards
contain  terms such that they could have been issued  under the  Original  Plan.
This  Amended and  Restated  Stock  Option  Plan shall be known as the  Cerprobe
Corporation  1995  Stock  Option  Plan  (the  "Plan").  Any  Options  or  Awards
outstanding  prior to the adoption by the Board of the Revised Plan shall remain
valid and unchanged. When applicable, the term "Plan" shall include the Original
Plan and/or the Revised Plan.

                   (b)  Defined  Terms.  All  initially  capitalized  terms used
hereby shall have the meaning set forth in Article V hereto.

                   (c)  General  Purpose.  The Plan  shall be  divided  into two
programs: the Discretionary Grant Program and the Automatic Grant Program.

                           (i) Discretionary  Grant Program.  The purpose of the
Discretionary  Grant  Program is to further the interests of the Company and its
stockholders by encouraging  key persons  associated with the Company (or Parent
or Subsidiary  Corporations) to acquire shares of the Company's  Stock,  thereby
acquiring a  proprietary  interest in its  business  and an  increased  personal
interest  in  its  continued  success  and  progress.   Such  purpose  shall  be
accomplished by providing for the  discretionary  granting of options to acquire
the  Company's  Stock  ("Discretionary  Options"),  the direct  granting  of the
Company's  Stock ("Stock  Awards"),  the granting of stock  appreciation  rights
("SARs"),  or the granting of other cash awards ("Cash  Awards")  (Stock Awards,
SARs, and Cash Awards shall be collectively referred to herein as "Awards").

                           (ii)  Automatic  Grant  Program.  The  purpose of the
Automatic  Grant Program is to promote the interests of the Company by providing
non-employee  members of the  Company's  Board of  Directors  (the  "Board") the
opportunity  to acquire a  proprietary  interest,  or otherwise  increase  their
proprietary  interest,  in the Company and to thereby have an increased personal
interest  in  its  continued  success  and  progress.   Such  purpose  shall  be
accomplished  by  providing  for the  automatic  grant of options to acquire the
Company's Stock ("Automatic Options").
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                  (d) Character of Options.  Discretionary Options granted under
this Plan to  employees  of the Company (or Parent or  Subsidiary  Corporations)
that are intended to qualify as "incentive stock options" as defined in Code ss.
422 ("Incentive Stock Options") will be specified in the applicable stock option
agreement.  All other  Options  granted  under  this  Plan will be  nonqualified
options.

                  (e) Rule  16b-3  Plan.  With  respect  to  persons  subject to
Section 16 of the Securities  Exchange Act of 1934, as amended ("1934 Act"), the
Plan is intended to comply with all applicable conditions of Rule 16b-3 (and all
subsequent  revisions thereof) promulgated under the 1934 Act. In such instance,
to the extent any provision of the Plan or action by a Plan Administrator  fails
to so comply,  it shall be deemed null and void, to the extent  permitted by law
and deemed  advisable by such Plan  Administrator.  In  addition,  the Board may
amend  the Plan  from  time to time as it deems  necessary  in order to meet the
requirements  of any  amendments  to  Rule  16b-3  without  the  consent  of the
stockholders of the Company.

                  (f)  Duration  of Plan.  The term of the  Original  Plan is 10
years  commencing  on the date of adoption of the Plan by the Board as specified
in Section  1.1(a)  hereof.  No Option or Award shall be granted  under the Plan
unless  granted  within 10 years of the  adoption of the Plan by the Board,  but
Options or Awards  outstanding on that date shall not be terminated or otherwise
affected by virtue of the Plan's expiration.

         1.2      Stock and Maximum Number of Shares Subject to Plan.

                  (a)  Description  of Stock and Maximum Shares  Allocated.  The
stock subject to the provisions of the Plan and issuable upon the grant of Stock
Awards or upon the exercise of SARs or Options  granted under the Plan is shares
of the Company's common stock, $.05 par value per share (the "Stock"), which may
be  either  unissued  or  treasury  shares,  as the  Board may from time to time
determine.  Subject to  adjustment  as  provided  in  Section  4.1  hereof,  the
aggregate  number of shares of Stock covered by the Plan and issuable  hereunder
shall be 800,000 shares of Stock.

                  (b)   Calculation  of  Available   Shares.   For  purposes  of
calculating  the maximum number of shares of Stock which may be issued under the
Plan:  (i) the shares issued  (including  the shares,  if any,  withheld for tax
withholding  requirements) upon exercise of an Option shall be counted, and (ii)
the shares issued  (including the shares,  if any,  withheld for tax withholding
requirements)  as a result of a grant of a Stock  Award or an  exercise of a SAR
shall be counted.

                  (c)  Restoration  of Unpurchased  Shares.  If an Option or SAR
expires or  terminates  for any reason  prior to its exercise in full and before
the term of the Plan  expires,  the shares of Stock  subject  to, but not issued
under,  such Option or SAR shall,  without  further action or by or on behalf of
the Company, again be available under the Plan.

         1.3      Approval; Amendments.

                  (a)  Approval  by  Stockholders.  The  Revised  Plan  shall be
submitted to the  stockholders of the Company for their approval at a regular or
special  meeting to be held within 12 months  after the  adoption of the Revised
Plan by the Board.  Stockholder  approval shall be evidenced by the  affirmative
vote of the holders of a majority of the shares of the Company's Common Stock
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present  in  person  or by proxy  and  voting  at the  meeting.  The  date  such
stockholder  approval  has been  obtained  shall be  referred  to  herein as the
"Effective Date."

                  (b) Commencement of Programs.  The Automatic Grant Program, as
revised herein, shall commence immediately.  The Discretionary Grant Program, as
revised herein,  shall commence  immediately,  subject to the terms set forth in
Section 1.1(a).

                  (c) Amendments to Plan.  The Board may,  without action on the
part of the Company's  stockholders,  make such  amendments  to,  changes in and
additions  to the  Plan  as it  may,  from  time  to  time,  deem  necessary  or
appropriate  and in the best interests of the Company;  provided,  the Board may
not, without the consent of the applicable  Optionholder,  take any action which
disqualifies  any  Discretionary  Option  previously  granted under the Plan for
treatment as an Incentive Stock Option or which adversely affects or impairs the
rights of the Optionholder of any  Discretionary  Option  outstanding  under the
Plan, and further  provided that,  except as provided in Article IV hereof,  the
Board may not, without the approval of the Company's stockholders,  (i) increase
the  aggregate  number of shares of Stock  subject to the Plan,  (ii) reduce the
exercise  price at which  Discretionary  Options may be granted or the  exercise
price at which any  outstanding  Discretionary  Option may be  exercised,  (iii)
extend  the term of the Plan,  (iv)  change  the class of  persons  eligible  to
receive  Discretionary  Options  or Awards  under the  Plan,  or (v)  materially
increase the benefits accruing to participants  under the Plan.  Notwithstanding
the foregoing, Discretionary Options or Awards may be granted under this Plan to
purchase  shares of Stock in excess of the number of shares then  available  for
issuance  under the Plan if (A) an amendment  to increase the maximum  number of
shares  issuable  under the Plan is  adopted by the Board  prior to the  initial
grant of any such Option or Award and within one year  thereafter such amendment
is approved by the Company's stockholders and (B) each such Discretionary Option
or Award granted is not to become exercisable or vested, in whole or in part, at
any time prior to the obtaining of such stockholder approval.

                                   ARTICLE II
                           Discretionary Grant Program

         2.1      Participants; Administration.

                  (a) Eligibility and Participation.  Discretionary  Options and
Awards may be granted only to persons  ("Eligible  Persons")  who at the time of
grant are (i) key personnel (including officers and directors) of the Company or
Parent  or  Subsidiary   Corporations,   or  (ii)   consultants  or  independent
contractors who provide valuable services to the Company or Parent or Subsidiary
Corporations;  provided that (A) Incentive  Stock Options may only be granted to
key personnel of the Company (or its Parent or Subsidiary  Corporations) who are
also  employees of the Company (or its Parent or Subsidiary  Corporations),  and
(B) the maximum number of shares of Stock with respect to which Options, Awards,
or any  combination  thereof,  may be granted to any employee during the term of
the Plan  shall not  exceed 50  percent  of the  shares of Stock  covered by and
issuable  under the Plan.  A Plan  Administrator  shall have full  authority  to
determine  which  Eligible  Persons  in its  administered  group are to  receive
Discretionary  Option grants under the Plan,  the number of shares to be covered
by each such grant, whether or not the granted  Discretionary Option is to be an
Incentive  Stock  Option,  the time or times at which  each  such  Discretionary
Option  is  to  become   exercisable,   and  the  maximum  term  for  which  the
Discretionary Option is to be outstanding.  A Plan Administrator shall also have
full authority to determine which Eligible  Persons in such group are to receive
Awards under the Discretionary Grant Program and the conditions relating to such
Award.
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                  (b)  General   Administration.   Unless  otherwise   expressly
provided in this Plan, the power to administer the  Discretionary  Grant Program
shall be vested  exclusively  with a committee  (the  "Senior  Committee").  The
membership of the Senior  Committee  shall be constituted so as to comply at all
times  with the  applicable  requirements  of Rule  16b-3  and  Code  ss.162(m);
provided,  however,  that if, at any time Rule 16b-3 and Code  ss.162(m) and any
implementing  regulations  (and any  successor  provisions  thereof)  so  permit
without  adversely  affecting  the  ability  of the  Plan  to  comply  with  the
conditions  for exemption  from Section 16 of the Exchange Act (or any successor
provision)  provided by Rule 16b-3 and the  exemption  from the  limitations  on
deductibility of certain executive compensation provided by Code ss.162(m),  the
Board may delegate the  administration of the Plan, in whole or in part, on such
terms and conditions, and to such other person or persons as it may determine in
its  discretion;  provided  further,  however,  that the  Board  may at any time
appoint a committee  (the  "Employee  Committee") of two or more persons who are
members  of the Board  and  delegate  to such  Employee  Committee  the power to
administer the Discretionary Grant Program with respect to Eligible Persons that
are not Affiliates.  For purposes of this Plan, the term "Affiliates" shall mean
all "officers" (as that term is defined in Rule 16a-1(f)  promulgated  under the
1934 Act), all "covered  persons" (as that term is defined in Code ss.  162(m)),
directors  of the  Company,  and all  persons  who own 10 percent or more of the
Company's issued and outstanding equity securities.

                  (c) Plan  Administrators.  The Board,  the  Senior  Committee,
and/or the Employee  Committee,  and/or any other committee  allowed  hereunder,
whichever  is  applicable,   shall  be  each  referred  to  herein  as  a  "Plan
Administrator." Each Plan Administrator shall have the authority and discretion,
with respect to its  administered  group, to select which Eligible Persons shall
participate in the Discretionary Grant Program,  to grant Discretionary  Options
or Awards under the  Discretionary  Grant  Program,  to establish such rules and
regulations   as  they  may  deem   appropriate   with  respect  to  the  proper
administration   of  the   Discretionary   Grant   Program   and  to  make  such
determinations under, and issue such interpretations of, the Discretionary Grant
Program  and any  outstanding  Discretionary  Option  or  Award as they may deem
necessary or  advisable.  Unless  otherwise  required by law or specified by the
Board  with  respect to any  committee,  decisions  among the  members of a Plan
Administrator shall be by majority vote. Decisions of a Plan Administrator shall
be final and binding on all  parties  who have an interest in the  Discretionary
Grant  Program  or any  outstanding  Discretionary  Option or Award.  The Senior
Committee, the Employee Committee, and/or any other committee allowed hereunder,
in their respective sole  discretion,  may make specific grants of Discretionary
Options or Awards conditioned on approval of the Board.

                  The Board may establish an additional  committee or committees
of persons who are members of the Board and delegate to such other  committee or
committees the power to administer all or a portion of the  Discretionary  Grant
program with respect to all or a portion of the Eligible Persons. Members of the
Senior Committee,  Employee Committee,  or any other committee allowed hereunder
shall  serve for such  period of time as the  Board may  determine  and shall be
subject to removal by the Board at any time. The Board may at any time terminate
all or a  portion  of  the  functions  of the  Senior  Committee,  the  Employee
Committee,  or any other  committee  allowed  hereunder  and  reassume  all or a
portion of powers and authority previously delegated to such committee.

                  (d) Guidelines for Participation. In designating and selecting
Eligible Persons for  participation in the Discretionary  Grant Program,  a Plan
Administrator  shall consult with and give consideration to the  recommendations
and criticisms submitted by appropriate managerial and executive officers of the
Company.  A Plan  Administrator  also  shall  take into  account  the duties and
responsibilities   of  the   Eligible   Persons,   their   past,   present   and
potential\contributions to the success of the Company and
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such other  factors as a Plan  Administrator  shall deem  relevant in connection
with accomplishing the purpose of the Plan.

         2.2      Terms and Conditions of Options

                  (a) Allotment of Shares. A Plan Administrator  shall determine
the number of shares of Stock to be optioned from time to time and the number of
shares to be optioned to any Eligible Person (the "Optioned Shares").  The grant
of a Discretionary  Option to a person shall neither entitle such person to, nor
disqualify  such  person  from,  participation  in any other grant of Options or
Stock Awards under this Plan or any other stock option plan of the Company.

                  (b)  Exercise  Price.  Upon  the  grant  of any  Discretionary
Option, a Plan Administrator shall specify the option price per share, which may
not be less than 100 percent of the fair market  value per share of the Stock on
the date the  Discretionary  Option is granted (110 percent if the Discretionary
Option is intended to qualify as an  Incentive  Stock Option and is granted to a
stockholder  who at the time the  Discretionary  Option  is  granted  owns or is
deemed to own stock possessing more than 10 percent of the total combined voting
power of all  classes of stock of the  Company  or of any  Parent or  Subsidiary
Corporation).  The  determination of the fair market value of the Stock shall be
made in accordance with the valuation provisions of Section 4.5 hereof.

                  (c) Individual Stock Option Agreements.  Discretionary Options
granted under the Plan shall be evidenced by option  agreements in such form and
content as a Plan  Administrator  from time to time approves,  which  agreements
shall  substantially  comply  with and be  subject  to the  terms  of the  Plan,
including the terms and  conditions of this Section 2.2. As determined by a Plan
Administrator,  each option agreement shall state (i) the total number of shares
to which it  pertains,  (ii) the  exercise  price for the shares  covered by the
Option,  (iii) the time at which the Options  vest and become  exercisable,  and
(iv) the Option's  scheduled  expiration date. The option agreements may contain
such other provisions or conditions as a Plan  Administrator  deems necessary or
appropriate to effectuate the sense and purpose of the Plan, including covenants
by the  Optionholder not to compete and remedies for the Company in the event of
the breach of any such covenant.

                  (d) Option Period.  No Discretionary  Option granted under the
Plan that is intended to be an Incentive Stock Option shall be exercisable for a
period  in  excess of 10 years  from the date of its  grant  (five  years if the
Discretionary   Option  is  granted  to  a  stockholder  who  at  the  time  the
Discretionary  Option is granted owns or is deemed to own stock  possessing more
than 10 percent of the total  combined  voting  power of all classes of stock of
the  Company or of any  Parent or  Subsidiary  Corporation),  subject to earlier
termination in the event of  termination  of employment,  retirement or death of
the Optionholder.  A Discretionary Option may be exercised in full or in part at
any time or from time to time  during  the term of the  Discretionary  Option or
provide  for its  exercise in stated  installments  at stated  times  during the
Option's term.

                  (e)  Vesting;  Limitations.  The  time at which  the  Optioned
Shares vest with respect to an  Optionholder  shall be in the discretion of that
Optionholder's Plan Administrator.  Notwithstanding the foregoing, to the extent
a Discretionary  Option is intended to qualify as an Incentive Stock Option, the
aggregate fair market value  (determined  as of the respective  date or dates of
grant) of the Stock for which one or more  Options  granted to any person  under
this Plan (or any other  option plan of the Company or any Parent or  Subsidiary
Corporation)  may for the first  time  become  exercisable  as  Incentive  Stock
Options  during any one  calendar  year  shall not  exceed  the sum of  $100,000
(referred to herein as
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the  "$100,000  Limitation").  To the extent  that any person  holds two or more
Options which become  exercisable  for the first time in the same calendar year,
the foregoing  limitation  on the  exercisability  as an Incentive  Stock Option
shall be applied on the basis of the order in which such Options are granted.

                   (f) No Fractional  Shares.  Options shall be exercisable only
for whole  shares;  no  fractional  shares will be issuable upon exercise of any
Discretionary Option granted under the Plan.

                   (g) Method of Exercise. In order to exercise a  Discretionary
Option with respect to any vested Optioned  Shares,  an Optionholder  (or in the
case of an exercise after an Optionholder's death, such Optionholder's executor,
administrator,  heir or  legatee,  as the case may be) must  take the  following
action:

                           (i)  execute  and  deliver  to the  Company a written
notice of exercise signed in writing by the person  exercising the Discretionary
Option  specifying  the  number  of shares of Stock  with  respect  to which the
Discretionary Option is being exercised;

                           (ii)  pay the  aggregate  Option  Price in one of the
alternate forms as set forth in Section 2.2(h) below; and

                           (iii)  furnish  appropriate  documentation  that  the
person or  persons  exercising  the  Discretionary  Option  (if  other  than the
Optionholder) has the right to exercise such Option.

As soon as  practicable  after the  Exercise  Date,  the  Company  shall mail or
deliver  to or on behalf of the  Optionholder  (or any other  person or  persons
exercising this  Discretionary  Option in accordance  herewith) a certificate or
certificates  representing the Stock for which the Discretionary Option has been
exercised in  accordance  with the  provisions of this Plan. In no event may any
Discretionary Option be exercised for any fractional shares.

                   (h) Payment of Option Price. The aggregate Option Price shall
be payable in one of the alternative forms specified below:

                           (i) Full payment in cash or check made payable to the
Company's order; or

                           (ii) Full  payment  in  shares of Stock  held for the
requisite period necessary to avoid a charge to the Company's  reported earnings
and  valued  at fair  market  value  on the  Exercise  Date  (as  determined  in
accordance with Section 4.5 hereof); or

                           (iii)  If  a  cashless   exercise  program  has  been
implemented by the Board,  full payment through a sale and remittance  procedure
pursuant  to which  the  Optionholder  (A)  shall  provide  irrevocable  written
instructions to a designated  brokerage firm to effect the immediate sale of the
Optioned  Shares to be purchased  and  remitted to the Company,  out of the sale
proceeds  available  on the  settlement  date,  sufficient  funds to  cover  the
aggregate  exercise price payable for the Optioned  Shares to be purchased,  and
(B) shall concurrently  provide written directives to the Company to deliver the
certificates for the Optioned Shares to be purchased  directly to such brokerage
firm in order to complete the sale transaction.
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                  (i) Repurchase Right. The Plan  Administrator may, in its sole
discretion,  set forth other terms and conditions upon which the Company (or its
assigns)  shall  have the right to  repurchase  shares of Stock  acquired  by an
Optionholder  pursuant to a Discretionary  Option.  Any repurchase  right of the
Company shall be exercisable  by the Company (or its assignees)  upon such terms
and  conditions as the Plan  Administrator  may specify in the Stock  Repurchase
Agreement  evidencing  such  right.  The Plan  Administrator  may  also,  in its
discretion,  establish  as a term  and  condition  of one or more  Discretionary
Options  granted  under the Plan that the  Company  shall  have a right of first
refusal  with  respect  to  any  proposed  sale  or  other  disposition  by  the
Optionholder   of  any  shares  of  Stock  issued  upon  the  exercise  of  such
Discretionary  Options.  Any such right of first refusal shall be exercisable by
the Company (or its assigns) in  accordance  with the terms and  conditions  set
forth in the Stock Repurchase Agreement.

                   (j) Termination of Incentive Stock Options

                           (i)  Termination  of  Service.  If  any  Optionholder
ceases to be in Service  to the  Company  for a reason  other  than  death,  the
Optionholder's vested Incentive Stock Options on the date of termination of such
Service shall remain  exercisable only for 30 days after the date of termination
of such  Service  or until  the  stated  expiration  date of the  Optionholder's
Option, whichever occurs first; provided, that (i) if Optionholder is discharged
for Cause, or (ii) if after the Service of the  Optionholder is terminated,  the
Optionholder  commits acts  detrimental  to the  Company's  interests,  then the
Incentive Stock Option shall thereafter be void for all purposes.  "Cause" shall
be limited to a  termination  of Service  for (A)  commission  of a crime by the
Optionholder  or  for  reasons  involving  moral  turpitude;  (B)  an act by the
Optionholder which tends to bring the Company into disrepute;  or (C) negligent,
fraudulent  or  willful  misconduct  by the  Optionholder.  Notwithstanding  the
foregoing,  if any Optionholder ceases to be in Service to the Company by reason
of permanent  disability  within the meaning of section 22(e)(3) of the Code (as
determined by the applicable Plan  Administrator),  the Optionholder  shall have
180 days after the date of  termination  of  Service,  but in no event after the
stated  expiration  date  of the  Optionholder's  Incentive  Stock  Options,  to
exercise  Incentive Stock Options that the Optionholder was entitled to exercise
on  the  date  the  Optionholder's  Service  terminated  as  a  result  of  such
disability.

                           (ii) Death of Optionholder.  If an Optionholder  dies
while in the  Company's  Service,  the  Optionholder's  vested  Incentive  Stock
Options on the date of death shall remain exercisable only for 90 days after the
date of death or until the stated expiration date of the Optionholder's  Option,
whichever  occurs  first,  and may be  exercised  only by the  person or persons
("successors")  to whom the  Optionholder's  rights  pass under a will or by the
laws of descent and  distribution.  A Discretionary  Option may be exercised and
payment of the Option Price made in full by the  successors  only after  written
notice to the  Company  specifying  the number of shares to be  purchased.  Such
notice  shall  state that the  Option  Price is being paid in full in the manner
specified in Section 2.2 hereof.  As soon as  practicable  after  receipt by the
Company of such notice and of payment in full of the Option Price, a certificate
or certificates representing the Optioned Shares shall be registered in the name
or names specified by the successors in the written notice of exercise and shall
be delivered to the successors.

                  (k) Termination of Nonqualified Options. Any Options which are
not  Incentive   Stock  Options  and  which  are  outstanding  at  the  time  an
Optionholder  dies while in Service to the Company or otherwise  ceases to be in
Service  to the  Company  shall  remain  exercisable  for  such  period  of time
thereafter as determined by the Plan  Administrator at the time of grant and set
forth in the documents evidencing such Options;  provided,  that no Option shall
be exercisable  after the Option's stated expiration date, and provided further,
that if the Optionholder is discharged for Cause or, if after
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the  Optionholder's  Service to the  Company  is  terminated,  the  Optionholder
commits  acts  detrimental  to the  Company's  interests,  then the Option  will
thereafter be void for all purposes.

                  (l) Other Plan Provisions Still Applicable. If a Discretionary
Option is exercised upon the  termination of Service or death of an Optionholder
under  this  Section  2.2,  the  other  provisions  of the Plan  shall  still be
applicable to such exercise,  including the requirement that the Optionholder or
its successor may be required to enter into a Stock Repurchase Agreement.

                  (m) Definition of "Service." For purposes of this Plan, unless
it is evidenced  otherwise in the option  agreement with the  Optionholder,  the
Optionholder  shall be deemed to be in  "Service" to the Company so long as such
individual renders continuous services on a periodic basis to the Company (or to
any Parent or Subsidiary Corporation) in the capacity of an employee,  director,
or  an  independent   consultant  or  advisor.  In  the  discretion  of  a  Plan
Administrator,  an Optionholder  shall be considered to be rendering  continuous
services to the Company even if the type of services change, e.g., from employee
to  independent  consultant.  The  Optionholder  shall  be  considered  to be an
employee for so long as such individual  remains in the employ of the Company or
one or more of its Parent or Subsidiary Corporations.

         2.3      Terms and Conditions of Stock Awards

                  (a)  Eligibility.  All Eligible  Persons  shall be eligible to
receive Stock Awards.  The Plan  Administrator of each administered  group shall
determine  the number of shares of Stock to be awarded  from time to time to any
Eligible  Person in such  group.  The grant of a Stock  Award to a person  shall
neither  entitle such person to, nor disqualify  such person from  participation
in, any other grant of options or awards by the Company, whether under this Plan
or under any other stock option or award plan of the Company.

                  (b) Award for Services Rendered. Stock Awards shall be granted
in recognition of an Eligible Person's past services to the Company. The grantee
of any such Stock Award shall not be  required to pay any  consideration  to the
Company upon  receipt of such Stock Award,  except as may be required to satisfy
any  applicable  Delaware  corporate  law,  employment  tax,  and/or  income tax
withholding or other legal requirements.

                  (c) Conditions to Award.  All Stock Awards shall be subject to
such terms,  conditions,  restrictions,  or limitations  as the applicable  Plan
Administrator  deems appropriate,  including,  by way of illustration but not by
way of limitation,  restrictions on  transferability,  requirements of continued
employment,  individual performance or the financial performance of the Company,
or payment by the recipient of any applicable  employment or withholding  taxes.
Such  Plan  Administrator  may  modify  or  accelerate  the  termination  of the
restrictions  applicable  to any Stock Award under  circumstances  that it deems
appropriate.

                  (d) Award  Agreements.  A Plan  Administrator may require as a
condition to a Stock Award that the  recipient of such Stock Award enter into an
award agreement in such form and content as that Plan Administrator from time to
time approves.
                                       A-8
<PAGE>
         2.4      Terms and Conditions of SARs

                  (a)  Eligibility.  All Eligible  Persons  shall be eligible to
receive SARs. The Plan  Administrator of each administered group shall determine
the SARs to be awarded from time to time to any  Eligible  Person in such group.
The  grant of a SAR to a person  shall  neither  entitle  such  person  to,  nor
disqualify  such  person  from  participation  in, any other grant of options or
awards by the Company,  whether  under this Plan or under any other stock option
or award plan of the Company.

                  (b)  Award of SARs.  Concurrently  with or  subsequent  to the
grant of any  Discretionary  Option to purchase  one or more shares of Stock,  a
Plan  Administrator  may award to the Optionholder with respect to each share of
Stock  underlying the Option,  a related SAR permitting the  Optionholder  to be
paid the appreciation on the Stock underlying the  Discretionary  Option in lieu
of exercising the Option.  In addition,  a Plan  Administrator  may award to any
Eligible Person a SAR permitting the Eligible Person to be paid the appreciation
on a  designated  number of shares of the Stock,  whether or not such Shares are
actually issued.

                  (c)  Conditions  to SAR.  All SARs  shall be  subject  to such
terms,   conditions,   restrictions   or  limitations  as  the  applicable  Plan
Administrator  deems appropriate,  including,  by way of illustration but not by
way of limitation,  restrictions on  transferability,  requirements of continued
employment,  individual  performance,  financial  performance of the Company, or
payment by the recipient of any applicable employment or withholding taxes. Such
Plan  Administrator may modify or accelerate the termination of the restrictions
applicable to any SAR under circumstances that it deems appropriate.

                  (d) SAR  Agreements.  A Plan  Administrator  may  require as a
condition to the grant of a SAR that the  recipient of such SAR enter into a SAR
agreement in such form and content as that Plan  Administrator from time to time
approves.

                  (e)  Exercise.  An Eligible  Person who has been granted a SAR
may  exercise  such  SAR  subject  to  the  conditions  specified  by  the  Plan
Administrator in the SAR agreement.

                  (f)  Amount of  Payment.  The  amount of  payment to which the
grantee of a SAR shall be entitled  upon the exercise of each SAR shall be equal
to the amount, if any, by which the fair market value of the specified shares of
Stock on the exercise date exceeds the fair market value of the specified shares
of Stock on the date the Discretionary  Option related to the SAR was granted or
became  effective,  or, if the SAR is not related to any Option, on the date the
SAR was granted or became effective.

                  (g) Form of  Payment.  The SAR may be paid in  either  cash or
Stock, as determined in the discretion of the applicable Plan  Administrator and
set forth in the SAR agreement. If the payment is in Stock, the number of shares
to be delivered to the participant shall be determined by dividing the amount of
the payment determined  pursuant to Section 2.4(f) by the fair market value of a
share of Stock on the exercise  date of such SAR. As soon as  practicable  after
exercise,  the  Company  shall  deliver  to the SAR  grantee  a  certificate  or
certificates for such shares of Stock.

                   (h)  Termination  of  Employment;   Death.   Section  2.2(j),
applicable  to  Incentive  Stock  Options,  and Section  2.2(k),  applicable  to
nonqualified  options,  shall  apply  equally to SARs issued in tandem with such
Options.
                                       A-9
<PAGE>
         2.5      Terms and Conditions of Cash Awards

                  (a) In General.  The Plan  Administrator of each  administered
group shall have the discretion to make other awards of cash to Eligible Persons
in such group ("Cash  Awards").  Such Cash Awards may relate to existing Options
or to the appreciation in the value of the Stock or other Company securities.

                  (b)  Conditions to Award.  All Cash Awards shall be subject to
such terms,  conditions,  restrictions,  and  limitations as the applicable Plan
Administrator  deems  appropriate,  and such Plan Administrator may require as a
condition to such Cash Award that the recipient of such Cash Award enter into an
award agreement in such form and content as the Plan  Administrator from time to
time approves.

                                   ARTICLE III
                             Automatic Grant Program

         3.1      Eligible  Persons  under  the  Automatic  Grant  Program.  The
persons  eligible to participate in the Automatic Grant Program shall be limited
to Board  members  who are not  employed  by the  Company,  whether  or not such
persons  qualify  as  Non-Employee   directors  as  defined  herein   ("Eligible
Directors"). Persons who are eligible under the Automatic Grant Program may also
be eligible to receive  Discretionary  Options or Awards under the Discretionary
Grant  Program or option grants or direct stock  issuances  under other plans of
the Company.

         3.2      Terms and Conditions of Automatic Option Grants

                   (a) Amount  and Date of Grant.  During the term of this Plan,
Automatic  Grants shall be made to each Eligible  Director  ("Optionholder")  as
follows:

                           (i) Annual Grants. Each year on the Annual Grant Date
an  Automatic  Option to acquire  2,000 shares of Stock shall be granted to each
Eligible  Director  for so long as there  are  shares of Stock  available  under
Section 1.2 hereof.  The "Annual  Grant Date" shall be the date of the Company's
annual  stockholders  meeting commencing as of the next annual meeting occurring
after the annual meeting held on the Effective Date. Any Person that was granted
an Automatic Option under Section  3.2(a)(ii) hereof within 30 days of an Annual
Grant Date shall be ineligible to receive an Automatic  Option grant pursuant to
this Section 3.2(a)(i) on such Annual Grant Date.

                           (ii)  Initial  New  Director  Grants.  On the Initial
Grant Date,  every new member of the Board who is an Eligible  Director  and has
not previously  received an Automatic Option grant under this Section 3.2(a)(ii)
shall be granted an Automatic  Option to acquire  20,000  shares of Stock for so
long as there are  shares of Stock  available  under  Section  1.2  hereof.  The
"Initial  Grant  Date"  shall be the date  that an  Eligible  Director  is first
appointed  or elected to the Board.  Any  Eligible  Person  that was  granted an
Automatic Option pursuant to Section  3.2(a)(iii) shall be ineligible to receive
an Automatic Option grant pursuant to this Section 3.2(a)(ii).

                           (iii) Initial Existing  Director Grants.  On the date
the Original  Plan was approved by the  Company's  stockholders,  each  Eligible
Director was granted an Automatic Option to acquire 2,000 shares of Stock.
                                      A-10
<PAGE>
                  (b)  Exercise  Price.  The  exercise  price per share of Stock
subject to each Automatic Option Grant shall be equal to 100 percent of the fair
market value per share of the Stock on the date the Automatic Option was granted
as determined in accordance with the valuation  provisions of Section 4.5 hereof
(the "Option Price").

                  (c)  Vesting.   Each  Automatic   Option  Grant  shall  become
exercisable  and  vest  in  a  series  of  three  equal  and  successive  yearly
installments,  with each annual  installment  to become  exercisable  on the day
before the Company's annual  stockholders'  meeting  occurring in the applicable
year.  Each  installment  of an  Automatic  Option  shall  only vest and  become
exercisable if the  Optionholder  has not ceased serving as a Board member as of
such vesting date.

                  (d) Method of  Exercise.  In order to  exercise  an  Automatic
Option with respect to any vested Optioned  Shares,  an Optionholder  (or in the
case of an exercise after an Optionholder's death, such Optionholder's executor,
administrator,  heir or  legatee,  as the case may be) must  take the  following
action:

                           (i)  execute  and  deliver  to the  Company a written
notice of  exercise  signed in writing by the person  exercising  the  Automatic
Option  specifying  the  number  of shares of Stock  with  respect  to which the
Automatic Option is being exercised;

                           (ii)  pay the  aggregate  Option  Price in one of the
alternate forms as set forth in Section 3.2(e) below; and

                           (iii)  furnish  appropriate  documentation  that  the
person  or  persons   exercising  the  Automatic   Option  (if  other  than  the
Optionholder) has the right to exercise such Option.

As soon as  practicable  after the  Exercise  Date,  the  Company  shall mail or
deliver  to or on behalf of the  Optionholder  (or any other  person or  persons
exercising  the  Automatic  Option in  accordance  herewith)  a  certificate  or
certificates  representing  the Stock for which the  Automatic  Option  has been
exercised in  accordance  with the  provisions of this Plan. In no event may any
Automatic Option be exercised for any fractional shares.

                   (e) Payment of Option Price. The aggregate Option Price shall
be payable in one of the alternative forms specified below:

                           (i) full payment in cash or check made payable to the
Company's order; or

                           (ii) full  payment  in  shares of Stock  held for the
requisite period necessary to avoid a charge to the Company's  reported earnings
and  valued  at fair  market  value  on the  Exercise  Date  (as  determined  in
accordance with Section 4.5 hereof); or

                           (iii)  if  a  cashless   exercise  program  has  been
implemented by the Board,  full payment through a sale and remittance  procedure
pursuant  to which  the  Optionholder  (A)  shall  provide  irrevocable  written
instructions to a designated  brokerage firm to effect the immediate sale of the
Optioned  Shares  to be  purchased  and  remit to the  Company,  out of the sale
proceeds  available  on the  settlement  date,  sufficient  funds to  cover  the
aggregate exercise price payable for the Optioned Shares to be purchased and (B)
shall concurrently provide written directives to the Company to deliver the
                                      A-11
<PAGE>
certificates for the Optioned Shares to be purchased  directly to such brokerage
firm in order to complete the sale transaction.

                  (f) Term of Option.  Each Automatic Option shall expire on the
tenth  anniversary  of the date on  which an  Automatic  Option  Grant  was made
("Expiration  Date").  Except as  provided  in  Section  4.4  hereof,  should an
Optionholder's  service as a Board member cease prior to the Expiration Date for
any reason while an Automatic Option remains  outstanding and unexercised,  then
the Automatic Option term shall  immediately  terminate and the Automatic Option
shall cease to be outstanding in accordance with the following provisions:

                           (i) The Automatic Option shall immediately  terminate
and cease to be outstanding for any shares of Stock which were not vested at the
time of Optionholder's cessation of Board service.

                           (ii)  Should an  Optionholder  cease,  for any reason
other than death, to serve as a member of the Board, then the Optionholder shall
have 30 days measured from the date of such  cessation of Board service in which
to  exercise  the  Automatic  Options  which  vested  prior  to the time of such
cessation of Board service.  In no event,  however,  may any Automatic Option be
exercised after the Expiration Date of such Automatic Option.

                           (iii) Should an  Optionholder  die while serving as a
Board  member or within  30 days  after  cessation  of Board  service,  then the
personal  representative of the Optionholder's  estate (or the person or persons
to whom the Automatic Option is transferred  pursuant to the Optionholder's will
or in accordance with the laws of descent and distribution)  shall have a 90 day
period measured from the date of the  Optionholder's  cessation of Board service
in which to exercise  the  Automatic  Options  which vested prior to the time of
such cessation of Board service. In no event,  however, may any Automatic Option
be exercised after the Expiration Date of such Automatic Option.

                                   ARTICLE IV
                                  Miscellaneous

         4.1      Capital Adjustments. The aggregate  number of  shares of Stock
subject to the Plan,  the number of shares  covered by  outstanding  Options and
Awards,  and the price per share  stated in such  Options  and  Awards  shall be
proportionately  adjusted  for  any  increase  or  decrease  in  the  number  of
outstanding  shares of Stock of the  Company  resulting  from a  subdivision  or
consolidation  of shares or any other  capital  adjustment  or the  payment of a
stock  dividend  or any other  increase or decrease in the number of such shares
effected  without  the  Company's  receipt of  consideration  therefor in money,
services or property.

         4.2      Mergers, Etc. If the Company is the  surviving  corporation in
any merger or consolidation (not including a Corporate Transaction),  any Option
or Award granted under the Plan shall pertain to and apply to the  securities to
which a holder of the  number of shares of Stock  subject to the Option or Award
would  have  been  entitled  prior to the  merger  or  consolidation.  Except as
provided in Section 4.3 hereof,  a  dissolution  or  liquidation  of the Company
shall cause every Option or Award outstanding hereunder to terminate.

         4.3      Corporate Transaction. In the event of stockholder approval of
a Corporate Transaction,  (a) all unvested Automatic Options shall automatically
accelerate and immediately vest so 
                                      A-12
<PAGE>
that each  outstanding  Automatic  Option shall, one week prior to the specified
effective date for the Corporate  Transaction,  become fully exercisable for all
of the Optioned Shares, and (b) the Plan Administrator shall have the discretion
and   authority,   exercisable  at  any  time,  to  provide  for  the  automatic
acceleration of one or more of the outstanding  Discretionary  Options or Awards
granted  by  it  under  the  Plan.  Upon  the   consummation  of  the  Corporate
Transaction,  all  Options  shall,  to  the  extent  not  previously  exercised,
terminate and cease to be outstanding.

         4.4      Change in Control

                  (a)  Automatic  Grant  Program.  In the  event of a Change  in
Control,  all unvested  Automatic  Options shall  automatically  accelerate  and
immediately  vest so that each outstanding  Automatic Option shall,  immediately
prior to the effective date of such Change in Control,  become fully exercisable
for all of the Optioned Shares.  Thereafter,  each Automatic Option shall remain
exercisable until the Expiration Date of such Automatic Option.

                  (b) Discretionary  Grant Program.  In the event of a Change in
Control,  a  Plan  Administrator   shall  have  the  discretion  and  authority,
exercisable  at any time,  whether  before or after the  Change in  Control,  to
provide for the automatic acceleration of one or more outstanding  Discretionary
Options  or Awards  granted  by it under the Plan  upon the  occurrence  of such
Change in Control.  A Plan  Administrator  may also impose  limitations upon the
automatic  acceleration  of such  Options  or  Awards  to the  extent  it  deems
appropriate.  Any Options or Awards  accelerated  upon a Change in Control  will
remain fully  exercisable  until the  expiration  or sooner  termination  of the
Option term.

         4.5      Calculation of Fair Market  Value  of Stock. The  fair  market
value of a share of Stock on any relevant date shall be determined in accordance
with the following provisions:

                           (i)  If the  Stock  is not  at  the  time  listed  or
admitted to trading on any stock exchange but is traded in the  over-the-counter
market,  the fair  market  value  shall be the mean  between the highest bid and
lowest asked prices (or, if such  information is available,  the closing selling
price)  per  share  of Stock on the  date in  question  in the  over-the-counter
market,  as such prices are reported by the National  Association  of Securities
Dealers  through  its Nasdaq  system or any  successor  system.  If there are no
reported  bid and asked prices (or closing  selling  price) for the Stock on the
date in  question,  then the mean between the highest bid price and lowest asked
price (or the closing  selling  price) on the last preceding date for which such
quotations exist shall be determinative of fair market value.

                           (ii) If the Stock is at the time  listed or  admitted
to  trading  on any stock  exchange,  then the fair  market  value  shall be the
closing  selling  price per share of Stock on the date in  question on the stock
exchange determined by the Board to be the primary market for the Stock, as such
price  is  officially  quoted  in the  composite  tape of  transactions  on such
exchange.  If there is no reported sale of Stock on such exchange on the date in
question,  then the fair market value shall be the closing  selling price on the
exchange on the last preceding date for which such quotation exists.

                           (iii) If the Stock at the time is neither  listed nor
admitted  to trading on any stock  exchange  nor traded in the  over-the-counter
market, then the fair market value shall be determined by the Board after taking
into account such factors as the Board shall deem appropriate,  including one or
more independent professional appraisals.
                                      A-13
<PAGE>
         4.6      Use of Proceeds. The proceeds received by the Company from the
sale of Stock pursuant to the exercise of Options or Awards  hereunder,  if any,
shall be used for general corporate purposes.

         4.7      Cancellation of Options.  Each Plan Administrator  shall  have
the authority to effect,  at any time and from time to time, with the consent of
the  affected  Optionholders,   the  cancellation  of  any  or  all  outstanding
Discretionary  Options granted under the Plan by that Plan  Administrator and to
grant  in  substitution  therefore  new  Discretionary  Options  under  the Plan
covering  the same or  different  numbers of shares of Stock as long as such new
Discretionary Options have an exercise price per share of Stock no less than the
minimum  exercise  price as set forth in Section  2.2(b) hereof on the new grant
date.

         4.8      Regulatory Approvals.  The implementation  of  the  Plan,  the
granting of any Option or Award  hereunder,  and the  issuance of Stock upon the
exercise of any such Option or Award shall be subject to the  procurement by the
Company of all approvals and permits required by regulatory  authorities  having
jurisdiction over the Plan, the Options or Awards granted under it and the Stock
issued pursuant thereto.

         4.9      Indemnification.  Each   and   every   member   of   a    Plan
Administrator,  in addition to such other available rights of indemnification as
they may have, the members of a Plan Administrator shall be indemnified and held
harmless by the Company, to the extent permitted under applicable law, for, from
and against all costs and  expenses  reasonably  incurred by them in  connection
with any action,  suit,  legal  proceeding to which any member  thereof may be a
party by reason of any action taken,  failure to act under or in connection with
the Plan or any rights  granted  thereunder and against all amounts paid by them
in settlement  thereof or paid by them in satisfaction of a judgment of any such
action, suit or proceeding, except a judgment based upon a finding of bad faith.

         4.10     Plan Not Exclusive.  This  Plan is  not  intended  to  be  the
exclusive  means by which the Company  may issue  options or warrants to acquire
its Stock,  stock awards or any other type of award. To the extent  permitted by
applicable  law, any such other option,  warrants or awards may be issued by the
Company other than pursuant to this Plan without stockholder approval.

         4.11     Company  Rights. The grants of Options  shall in no way affect
the right of the Company to adjust,  reclassify,  reorganize or otherwise change
its capital or business structure or to merge, consolidate,  dissolve, liquidate
or sell or transfer all or any part of its business or assets.

         4.12     Privilege of Stock Ownership.  An Optionholder  shall not have
any of the rights of a  stockholder  with respect to Optioned  Shares until such
individual  shall have  exercised  the Option and paid the Option  Price for the
Optioned  Shares.  No adjustment  will be made for dividends or other rights for
which the record date is prior to the date of such exercise and full payment for
such Optioned Shares.

         4.13     Assignment.  The right to acquire Stock or  other assets under
the  Plan may not be  assigned,  encumbered,  or  otherwise  transferred  by any
Optionholder  except  as  specifically   provided  herein.   Except  as  may  be
specifically  allowed  by the Plan  Administrator  at the time of grant  and set
forth in the documents  evidencing a Discretionary Option or Award, no Option or
Award  granted  under the Plan or any of the  rights  and  privileges  conferred
thereby shall be assignable or  transferable by an Optionholder or grantee other
than by will or the laws of descent and  distribution,  and such Option or Award
shall be exercisable during the Optionholder's or grantee's lifetime only by the
Optionholder  or grantee.  Notwithstanding  the  foregoing,  no Incentive  Stock
Option  granted  under the Plan or any of the  rights and  privileges  conferred
thereby shall be assignable or transferable by an Optionholder or grantee 
                                      A-14
<PAGE>
other than by will or the laws of descent and  distribution,  and such Incentive
Stock  Option  shall be  exercisable  during  the  Optionholder's  or  grantee's
lifetime only by the  Optionholder or grantee.  The provisions of the Plan shall
inure to the benefit of, and be binding upon,  the Company and its successors or
assigns,  and the Optionholders,  the legal  representatives of their respective
estates, their respective heirs or legatees and their permitted assignees.

         4.14     Securities Restrictions

                  (a)  Legend on  Certificates.  All  certificates  representing
shares of Stock issued upon exercise of Options or Awards granted under the Plan
shall be endorsed with a legend reading as follows:

                  THE  SHARES  OF  COMMON   STOCK   EVIDENCED  BY  THIS
                  CERTIFICATE  HAVE BEEN ISSUED TO THE REGISTERED OWNER
                  IN RELIANCE UPON WRITTEN  REPRESENTATIONS  THAT THESE
                  SHARES  HAVE BEEN  PURCHASED  SOLELY FOR  INVESTMENT.
                  THESE SHARES MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED
                  UNLESS IN THE  OPINION OF THE  COMPANY  AND ITS LEGAL
                  COUNSEL SUCH SALE, TRANSFER OR ASSIGNMENT WILL NOT BE
                  IN  VIOLATION  OF  THE  SECURITIES  ACT OF  1933,  AS
                  AMENDED, AND THE RULES AND REGULATIONS THEREUNDER.

                  (b) Private  Offering  for  Investment  Only.  The Options and
Awards are and shall be made  available  only to a limited number of present and
future key personnel who have  knowledge of the Company's  financial  condition,
management  and its  affairs.  The Plan is not  intended  to provide  additional
capital for the Company, but to encourage ownership of Stock among the Company's
key personnel.  By the act of accepting an Option or Award,  each grantee agrees
(i) that, any shares of Stock  acquired  pursuant to any Option or Award will be
solely for investment and not with any intention to resell or redistribute those
shares and, (ii) such intention will be confirmed by an appropriate  certificate
at the time the Stock is acquired if requested  by the  Company.  The neglect or
failure to execute such a  certificate,  however,  shall not limit or negate the
foregoing agreement.

                  (c)  Registration   Statement.  If  a  Registration  Statement
covering the shares of Stock issuable upon exercise of Options granted under the
Plan is filed under the  Securities  Act of 1933,  as  amended,  and is declared
effective by the  Securities  Exchange  Commission,  the  provisions of Sections
4.14(a) and (b) shall terminate during the period of time that such Registration
Statement, as periodically amended, remains effective.

         4.15     Tax Withholding

                  (a) General.  The  Company's  obligation to deliver Stock upon
the exercise of Options under the Plan shall be subject to the  satisfaction  of
all applicable federal, state and local income tax withholding requirements.

                  (b)  Shares  to Pay for  Withholding.  The Board  may,  in its
discretion  and in accordance  with the  provisions of this Section  4.15(b) and
such  supplemental  rules as it may from time to time adopt,  provide any or all
Optionholders  with the right to use shares of Stock in  satisfaction  of all or
part of the federal,  state and local income tax liabilities  ("Taxes") incurred
by such Optionholders in
                                      A-15
<PAGE>
connection with the exercise of their Options. Such right may be provided to any
such Optionholder in either or both of the following formats:

                           (i) Stock Withholding. The Plan Administrator may, in
its discretion,  provide the Optionholder  with the election to have the Company
withhold,  from the Stock otherwise  issuable upon the exercise of an Option,  a
portion of those  shares of Stock with an  aggregate  fair market value equal to
the percentage (not to exceed 100 percent) of the applicable Taxes designated by
the Optionholder.

                           (ii) Stock Delivery.  The Plan  Administrator may, in
its  discretion,  provide the  Optionholder  with the election to deliver to the
Company,  at the time the  Option  is  exercised,  one or more  shares  of Stock
previously  acquired by such individual  (other than pursuant to the transaction
triggering  the  Taxes)  with  an  aggregate  fair  market  value  equal  to the
percentage  (not to exceed 100 percent) of the Taxes incurred in connection with
such Option exercise as designated by the Optionholder.

         4.16     Governing Law. The Plan shall be governed by and all questions
hereunder  shall be  determined  in  accordance  with  the laws of the  State of
Arizona, without regard to conflicts of laws principles.

                                    ARTICLE V
                                   Definitions

         The  following  capitalized  terms  used in this  Plan  shall  have the
meaning described below:

         "Affiliates"  shall  mean all  "executive  officers"  (as that  term is
defined in Rule  16a-1(f)  promulgated  under the 1934 Act) and directors of the
Company and all persons who own ten percent or more of the Company's  issued and
outstanding Stock.

         "Annual  Grant  Date"  shall  mean  the  date of the  Company's  annual
stockholder meeting.

         "Automatic  Grant Program" shall mean that program set forth in Article
III of this Agreement pursuant to which Eligible  Directors,  as defined herein,
are automatically granted Options upon certain events.

         "Automatic  Option Grant" shall mean those automatic option grants made
on the Annual Grant Date and on the Initial Grant Date.

         "Automatic  Options" shall mean those Options  granted  pursuant to the
Automatic Grant Program.

         "Award" shall mean a Stock Award, SAR or Cash Award.

         "Board" shall mean the Board of Directors of the Company.

         "Cash Award"  shall mean an award to be paid in cash and granted  under
Section 2.5 hereunder.

         "Change in Control"  shall mean and include the following  transactions
or situations  (i) a person or related group of persons,  other than the Company
or a person that directly or indirectly controls, is
                                      A-16
<PAGE>
controlled by, or under common control with the Company,  acquires  ownership of
40 percent or more of the  Company's  outstanding  common  stock  pursuant  to a
tender  or  exchange  offer  which the Board of  Directors  recommends  that the
Company's  stockholders not accept, or (ii) the change in the composition of the
Board  occurs such that those  individuals  who were elected to the Board at the
last stockholders' meeting at which there was not a contested election for Board
membership  subsequently ceased to comprise a majority of the Board by reason of
a contested election.

         "Code" shall mean the Internal Revenue Code of 1986, as amended.

         "Company" shall mean Cerprobe Corporation, a Delaware corporation.

         "Corporate  Transaction"  shall mean (a) a merger or  consolidation  in
which the Company is not the  surviving  entity,  except for a  transaction  the
principal  purposes  of which is to change  the state in which  the  Company  is
incorporated;  (b)  the  sale,  transfer  of or  other  disposition  of  all  or
substantially  all of the assets of the  Company  and  complete  liquidation  or
dissolution  of the Company,  or (c) any reverse  merger in which the Company is
the surviving entity but in which the securities possessing more than 50 percent
of the total combined voting power of the Company's  outstanding  securities are
transferred to a person or persons different from those who held such securities
immediately prior to such merger.

         "Discretionary  Grant  Program"  shall mean the  program  described  in
Article II of this Plan pursuant to which certain Eligible Directors are granted
Options or Awards in the discretion of the Plan Administrator.

         "Discretionary   Options"   shall  mean  Options   granted   under  the
Discretionary Grant Program.

         "Effective Date" shall mean the date that the Plan has been approved by
the stockholders as set forth in Section 1.3(a) hereof.

         "Eligible  Director"  shall mean,  with respect to the Automatic  Grant
Program, those Board members who are not employed by the Company, whether or not
such members are Non-Employee Directors as defined herein.

         "Eligible  Persons"  shall mean (a) with  respect to the  Discretionary
Grant Program,  those persons who, at the time that the Discretionary  Option or
Award is granted,  are (i) key personnel  (including  officers and directors) of
the  Company  or Parent  or  Subsidiary  Corporations,  or (ii)  consultants  or
independent  contractors who provide valuable  services to the Company or Parent
or Subsidiary Corporations; and (b) with respect to the Automatic Grant Program,
the Eligible Directors.

         "Employee  Committee" shall mean that committee  appointed by the Board
to administer the Plan with respect to the  Non-Affiliates  and comprised of two
or more persons who are members of the Board.

         "Exercise  Date"  shall  be the  date on which  written  notice  of the
exercise  of an  Option is  delivered  to the  Company  in  accordance  with the
requirements of the Plan.

         "Expiration Date" shall be the 10-year anniversary of the date on which
an Automatic Option Grant was made.
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         "Incentive  Stock  Option"  shall mean a  Discretionary  Option that is
intended to qualify as an "incentive stock option" under Code ss. 422.

         "Initial  Grant Date" shall mean the date that an Eligible  Director is
first appointed or elected to the Board.

         "Non-Affiliates" shall mean all persons who are not Affiliates.

         "Non-Employee  Directors"  shall mean those  Directors  who satisfy the
definition of "Non- Employee  Director"  under Rule  16b-3(b)(3)(i)  promulgated
under the 1934 Act.

         "$100,000  Limitation" shall mean the limitation  pursuant to which the
aggregate fair market value  (determined  as of the respective  date or dates of
grant) of the Stock for which one or more  Options  granted to any person  under
this Plan (or any other  option plan of the Company or any Parent or  Subsidiary
Corporation)  may for the first time be exercisable  as Incentive  Stock Options
during any one calendar year shall not exceed the sum of $100,000.

         "Optionholder"  shall mean an Eligible  Person or Eligible  Director to
whom Options have been granted.

         "Optioned  Shares"  shall be those shares of Stock to be optioned  from
time to time to any Eligible Director.

         "Option  Price" shall mean (i) with respect to  Discretionary  Options,
the exercise price per share as specified by the Plan Administrator  pursuant to
Section 2.2(b) hereof, and (ii) with respect to Automatic Options,  the exercise
price per share as specified by Section 3.2(b) hereof.

         "Options" shall mean options to acquire Stock granted under the Plan.

         "Parent  Corporation"  shall mean any corporation in the unbroken chain
of corporations ending with the employer corporation, where, at each link of the
chain,  the  corporation  and the link  above  owns at least 50  percent  of the
combined  total voting power of all classes of the stock in the  corporation  in
the link below.

         "Plan" shall mean this stock option plan for Cerprobe Corporation.

         "Plan  Administrator"  shall  mean (a)  either  the  Board,  the Senior
Committee, or any other committee,  whichever is applicable, with respect to the
administration of the  Discretionary  Grant Program as it relates to Affiliates,
and (b)  either the  Board,  the  Employee  Committee,  or any other  committee,
whichever is applicable, with respect to the administration of the Discretionary
Grant Program as it relates to Non-Affiliates  and with respect to the Automatic
Grant Program.

         "SAR" shall mean stock appreciation  rights granted pursuant to Section
2.4 hereunder.

         "Senior Committee" shall mean that committee  appointed by the Board to
administer  the  Discretionary  Grant Program with respect to the Affiliates and
comprised of two or more Disinterested Directors.
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<PAGE>
         "Service" shall have the meaning set forth in Section 2.2(m) hereof.

         "Stock" shall mean shares of the Company's common stock, $.05 par value
per share,  which may be unissued or treasury shares, as the Board may from time
to time determine.

         "Stock   Awards"   shall  mean  Stock   directly   granted   under  the
Discretionary Grant Program.

         "Subsidiary  Corporation"  shall mean any  corporation  in the unbroken
chain of  corporations  starting with the employer  corporation,  where, at each
link of the chain,  the  corporation and the link above owns at least 50 percent
of the combined voting power of all classes of stock in the corporation below.

         EXECUTED as of the __th day of _________, 1997.

                                        CERPROBE CORPORATION

                                        By:_____________________________________

                                        Name:___________________________________

ATTESTED BY:                            Its:____________________________________


__________________________________
Secretary
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