FORM OF STOCK OPTION AGREEMENT

             (Under Provisions of the Malleable Technologies, Inc.
                           1998 Stock Incentive Plan)

                             STOCK OPTION AGREEMENT
                             ----------------------

1. Grant of Option. Malleable Technologies,  Inc., a California corporation (the
"Company"),  hereby  grants to the Optionee  named in the Notice of Stock Option
Grant (the "Optionee"), an option (the "Option") to purchase the total number of
shares of Common  Stock (the  "Shares")  set forth in the Notice of Stock Option
Grant (the  "Notice"),  at the exercise  price per share set forth in the Notice
(the "Exercise  Price") subject to the terms,  definitions and provisions of the
Notice and the Company's 1998 Stock  Incentive Plan (the "Plan")  adopted by the
Company,  which are incorporated  herein by reference.  Unless otherwise defined
herein,  the terms  defined in the Plan shall have the same defined  meanings in
this Option Agreement.

         If designated in the Notice of Stock Option Grant as an Incentive Stock
Option,  the  Option is  intended  to qualify as an  Incentive  Stock  Option as
defined in Section 422 of the Code. Nevertheless,  to the extent that it exceeds
the $100,000 rule of Section  422(d) of the Code, the Option shall be treated as
a Non-Qualified Stock Option.

2.       Exercise of Option.
          (a)   Right to Exercise.  The Option shall be  exercisable  during its
                term in  accordance  with the  Vesting  Schedule  set out in the
                Notice and with the  applicable  provisions of the Plan and this
                Option Agreement.  The Option shall be subject to the provisions
                of Section 11(b) of the Plan relating to the  exercisability  or
                termination   of  the  Option  in  the  event  of  a   Corporate
                Transaction.  No partial  exercise of the Option may be for less
                than the  lesser of five  percent  (5%) of the  total  number of
                Shares  subject to the Option or the remaining  number of Shares
                subject  to the  Option.  In no event  shall the  Company  issue
                fractional Shares.

          (b)   Method of  Exercise.  The Option  shall be  exercisable  only by
                delivery of an  Exercise  Notice  (attached  as Exhibit A) which
                shall  state the  election to  exercise  the  Option,  the whole
                number  of  Shares  in  respect  of which  the  Option  is being
                exercised,  and such other  provisions as may be required by the
                Administrator.  Such  Exercise  Notice  shall be  signed  by the
                Optionee and shall be  delivered in person or by certified  mail
                to the  Secretary of the Company  accompanied  by payment of the
                Exercise Price.  The Option shall be deemed to be exercised upon
                receipt by the Company of such written notice accompanied by the
                Exercise Price.

                No Shares will be issued  pursuant to the exercise of the Option
                unless such  issuance  and such  exercise  shall comply with all
                Applicable  Laws.  Assuming  such  compliance,  for  income  tax
                purposes,  the Shares  shall be  considered  transferred  to the
                Optionee  on the date on which  the  Option  is  exercised  with
                respect to such Shares.
<PAGE>

          (c)   Taxes.  No Shares will be issued to the Optionee or other person
                pursuant  to the  exercise of the Option  until the  Optionee or
                other   person   has  made   arrangements   acceptable   to  the
                Administrator  for the satisfaction of foreign,  federal,  state
                and local income and employment tax withholding obligations.


3.       Optionee's  Representations.   In  the  event  the  Shares  purchasable
pursuant  to the  exercise  of the  Option  have not been  registered  under the
Securities  Act of 1933, as amended,  at the time the Option is  exercised,  the
Optionee  shall, if required by the Company,  concurrently  with the exercise of
all or any  portion the  Option,  deliver to the  Company his or her  Investment
Representation Statement in the form attached hereto as Exhibit B.

4.       Method of Payment. Payment of the Exercise Price shall be by any of the
following, or a combination thereof, at the election of the Optionee;  provided,
however,  that such exercise method does not then violate an Applicable Law:

          (a)   cash;

          (b)   check;

          (c)   if the  exercise  occurs  on or  after  the  Registration  Date,
                surrender of Shares or delivery of a properly  executed  form of
                attestation  of  ownership  of Shares as the  Administrator  may
                require (including  withholding of Shares otherwise  deliverable
                upon  exercise of the Option)  which have a Fair Market Value on
                the date of  surrender  or  attestation  equal to the  aggregate
                Exercise  Price of the  Shares as to which  the  Option is being
                exercised  (but only to the  extent  that such  exercise  of the
                Option  would not result in an  accounting  compensation  charge
                with respect to the Shares used to pay the exercise price);

          (d)   if the  exercise  occurs  on or  after  the  Registration  Date,
                delivery of a properly  executed  Exercise  Notice together with
                such other documentation as the Administrator and the broker, if
                applicable,  shall  require to effect an  exercise of the Option
                and  delivery  to the  Company  of the  sale  or  loan  proceeds
                required to pay the Exercise Price; or

          (e)   provided  that the  aggregate  Exercise  Price for the number of
                Shares  being  purchased  exceeds  _________   thousand  dollars
                ($___,000),  payment  pursuant to a promissory note as described
                below.

               (i)  The  promissory  note  shall have a term of _____ (__) years
                    with  principal  and interest  payable in _______ (__) equal
                    annual installments;

               (ii) The promissory  note shall bear interest at the minimum rate
                    required by the federal tax laws to avoid the  imputation of
                    interest  income to the Company and  compensation  income to
                    the Optionee;

               (iii)The Optionee  shall be personally  liable for payment of the
                    promissory and the  promissory  note shall be secured by the
                    Shares  purchased upon delivery of the promissory  note in a
                    manner   satisfactory   to  the   Administrator   with  such
                    documentation as the Administrator may request; and
<PAGE>

               (iv) The  promissory  note shall  become due and payable upon the
                    occurrence  of any or all of the following  events:  (A) the
                    sale or transfer of the Shares purchased with the promissory
                    note; (B) termination of the Optionee's Continuous Status as
                    an  Employee,  Director or  Consultant  for any reason other
                    than death or  disability;  or (C) the first  anniversary of
                    the  termination of the Optionee's  Continuous  Status as an
                    Employee, Director or Consultant due to death or disability.

5.    Restrictions on Exercise.  The Option may not be exercised if the issuance
of the Shares  subject to the  Option  upon such  exercise  would  constitute  a
violation of any Applicable Laws.

6.    Termination of Relationship. In the event the Optionee's Continuous Status
as an Employee,  Director or  Consultant  terminates,  the Optionee  may, to the
extent otherwise so entitled at the date of such  termination (the  "Termination
Date"), exercise the Option during the Termination Period set out in the Notice.
Except as provided in Sections 7 and 8, below,  to the extent that the  Optionee
was not  entitled  to exercise  the Option on the  Termination  Date,  or if the
Optionee does not exercise the Option within the Termination  Period, the Option
shall terminate.

7.    Disability of Optionee.  In the event the Optionee's  Continuous Status as
an  Employee,  Director  or  Consultant  terminates  as a  result  of his or her
disability,  the  Optionee  may,  but only  within  twelve  (12) months from the
Termination Date (and in no event later than the Term/Expiration Date), exercise
the Option to the extent  otherwise  entitled to exercise it on the  Termination
Date; provided,  however,  that if such disability is not a "disability" as such
term is defined in Section  22(e)(3) of the Code and the Option is an  Incentive
Stock  Option,  such  Incentive  Stock  Option  shall  cease to be treated as an
Incentive Stock Option and shall be treated as a  Non-Qualified  Stock Option on
the day three (3) months and one day  following  the  Termination  Date.  To the
extent  that the  Optionee  was not  entitled  to  exercise  the  Option  on the
Termination  Date, or if the Optionee does not exercise the Option to the extent
so entitled within the time specified herein, the Option shall terminate.

8.    Death of Optionee. In the event of the Optionee's death, the Option may be
exercised at any time within twelve (12) months following the date of death (and
in no event later than the Expiration  Date),  by the Optionee's  estate or by a
person who acquired the right to exercise the Option by bequest or  inheritance,
but only to the extent the  Optionee  could  exercise  the Option at the date of
death.  To the extent that the  Optionee was not entitled to exercise the Option
on the date of  death,  or if the  Option  is not  exercised  to the  extent  so
entitled within the time specified herein, the Option shall terminate.

9.    Non-Transferability  of Option.  The Option may not be  transferred in any
manner  otherwise than by will or by the laws of descent or distribution and may
be exercised during the lifetime of the Optionee only by the Optionee. The terms
of the Option shall be binding  upon the  executors,  administrators,  heirs and
successors of the Optionee.

10.   Term of Option.  The Option may be exercised no later than the  Expiration
Date set forth in the Notice.

11.   Company's  Right  of First  Refusal.

          (a)   Transfer Notice.  Neither the Optionee nor a transferee  (either
                being sometimes  referred to herein as the "Holder") shall sell,
                hypothecate,  encumber or  otherwise  transfer any Shares or any
                right or interest  therein  without  first  obtaining  the prior
                written consent of the Company.  In the event the Holder desires
                to  accept a bona fide  third-party  offer for any or all of the
                Shares, the Holder shall provide the Company with written notice
                (the "Transfer Notice") of:
<PAGE>

               (i)    The Holder's intention to transfer;

               (ii)   The name of the proposed transferee;

               (iii)  The number of Shares to be transferred; and

               (iv)   The proposed transfer price or value and terms thereof.

          (b)   First Refusal Exercise  Notice.  Within 45 days after receipt of
                the Transfer Notice (the "Option Period") the Company and/or its
                assigns  shall have the right to  purchase  (the "Right of First
                Refusal")  all but not less than all,  of the  Shares  which are
                described in the Transfer  Notice (the "Offered  Shares") at the
                per share price or value and in accordance with the terms stated
                in the Transfer  Notice,  which Right of First  Refusal shall be
                exercised  by  written  notice  (the  "First  Refusal   Exercise
                Notice")  to the  Holder  setting  forth the  number of  Offered
                Shares  the  Company  and/or  its  assigns  elects to  purchase,
                provided that the number equals all of the Offered Shares.

          (c)   Payment Terms.  The Company shall consummate the purchase of the
                Offered  Shares on the terms  set forth in the  Transfer  Notice
                within 15 days  after  delivery  of the First  Refusal  Exercise
                Notice; provided, however, that in the event the Transfer Notice
                provides  for the payment for the Offered  Shares  other than in
                cash, the Company and/or its assigns shall have the right to pay
                for the Offered Shares by the discounted  cash equivalent of the
                consideration  described  in the Transfer  Notice as  reasonably
                determined  by the  Administrator.  Upon payment for the Offered
                Shares  to the  Holder or into  escrow  for the  benefit  of the
                Holder,  the Company or its assigns  shall  become the legal and
                beneficial  owner  of the  Offered  Shares  and all  rights  and
                interest therein or related thereto,  and the Company shall have
                the right to transfer the Offered  Shares to its own name or its
                assigns without the further action by the Holder.

          (d)   Assignment.  Whenever  the  Company  shall  have  the  right  to
                purchase  Shares under this Right of First Refusal,  the Company
                may  designate  and  assign  one or  more  employees,  officers,
                directors  or  shareholders  of the Company or other  persons or
                organizations,  to exercise all or a part of the Company's Right
                of First Refusal.

          (e)   Non-Exercise.   If  the  Company   and/or  its  assigns  do  not
                collectively elect to exercise the Right of First Refusal within
                the specified  45-day period or such earlier time if the Company
                and/or its assigns notifies the Holder that it will not exercise
                the Right of First  Refusal,  then the Holder may  transfer  the
                Shares  upon the terms  and  conditions  stated in the  Transfer
                Notice, provided that:

               (i)  The  transfer  is made  within  120  days of the date of the
                    Transfer Notice; and

               (ii) The  transferee  agrees in writing that such Shares shall be
                    held  subject  to the  provisions  of this  Right  of  First
                    Refusal.

          (f)   Expiration of Transfer Period. Following such 120-day period, no
                transfer of the Offered Shares and no change in the terms of the
                transfer as stated in the Transfer Notice (including the name of
                the  proposed  transferee)  shall  be  permitted  without  a new
                written  Transfer  Notice  prepared and  submitted in accordance
                with the requirements of this Right of First Refusal.
<PAGE>

          (g)   Exception for Certain Family Transfers. Anything to the contrary
                contained in this section  notwithstanding,  the transfer of any
                or all of the Shares  during the  Optionee's  lifetime or on the
                Optionee's   death  by  will  or  intestacy  to  the  Optionee's
                Immediate  Family or a trust for the benefit of the  Optionee or
                the  Optionee's  Immediate  Family  shall  be  exempt  from  the
                provisions of this Right of First Refusal. "Immediate Family" as
                used herein shall mean spouse,  domestic  partner (as determined
                by the  Administrator),  child, lineal descendant or antecedent,
                father,  mother, brother or sister and the lineal descendants of
                such  individuals.   In  such  case,  the  transferee  or  other
                recipient  shall  receive  and hold the  Shares  so  transferred
                subject to the  provisions of this Right of First  Refusal,  and
                there  shall be no further  transfer  of such  Shares  except in
                accordance with the terms of this Right of First Refusal.

          (h)   Termination  of Right of First  Refusal.  The provisions of this
                Right of First Refusal shall terminate as to all Shares upon the
                Registration Date.

          (i)   Additional Shares or Substituted Securities. In the event of any
                stock split,  stock dividend,  recapitalization,  combination of
                shares,  exchange  of  shares  or  other  change  affecting  the
                outstanding  Common  Stock  as  a  class  effected  without  the
                Company's  receipt of  consideration,  any new,  substituted  or
                additional  securities or other  property  which is by reason of
                any such  transaction  distributed  with  respect  to the Shares
                shall be immediately subject to the Right of First Refusal,  but
                only to the extent  the  Shares are at the time  covered by such
                right.

          (j)   Corporate Transaction.  Immediately prior to the consummation of
                a  Corporate  Transaction,  the  Right  of First  Refusal  shall
                automatically  lapse in its  entirety,  except to the extent the
                Right  of  First  Refusal  is to be  assigned  to the  successor
                corporation  (or its parent  company)  in  connection  with such
                Corporate Transaction,  the right shall apply to the new capital
                stock or other  property  received in exchange for the Shares in
                consummation  of the  Corporate  Transaction,  but  only  to the
                extent the Shares are at the time covered by such right.

12.   [Intentionally   Omitted.]

13.   Stop-Transfer Notices. In order to ensure compliance with the restrictions
on  transfer  referred to in the legends  placed  upon  certificates  evidencing
ownership  of the  Shares,  the Company may issue  appropriate  "stop  transfer"
instructions to its transfer  agent,  if any, and, if the Company  transfers its
own securities,  it may make appropriate notations to the same effect in its own
records.

14.   Refusal to Transfer.  The Company shall not be required (i) to transfer on
its books any Shares that have been sold or otherwise  transferred  in violation
of any of the  provisions of this Option  Agreement or (ii) to treat as owner of
such Shares or to accord the right to vote or pay  dividends to any purchaser or
other transferee to whom such Shares shall have been so transferred.

15.   Tax  Consequences.  Set forth  below is a brief  summary as of the date of
this Option Agreement of some of the federal tax consequences of exercise of the
Option and  disposition of the Shares.  THIS SUMMARY IS NECESSARILY  INCOMPLETE,
AND THE TAX LAWS AND  REGULATIONS  ARE SUBJECT TO CHANGE.  THE  OPTIONEE  SHOULD
CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.

          (a)   Exercise of Incentive Stock Option.  If the Option  qualifies as
                an  Incentive  Stock  Option,  there will be no regular  federal
                income tax liability  upon the exercise of the Option,  although
                the excess,  if any,  of the Fair Market  Value of the Shares on
                the date of exercise over the Exercise  Price will be treated as
                an  adjustment  to the  alternative  minimum tax for federal tax
                purposes and may subject the Optionee to the alternative minimum
                tax in the year of exercise.
<PAGE>

          (b)   Exercise of Incentive Stock Option Following Disability.  If the
                Optionee's  Continuous  Status  as  an  Employee,   Director  or
                Consultant  terminates  as a result  of  disability  that is not
                total and permanent disability as defined in Section 22(e)(3) of
                the Code,  to the extent  permitted on the date of  termination,
                the  Optionee  must  exercise an Incentive  Stock Option  within
                three (3) months of such  termination  for the  Incentive  Stock
                Option to be qualified as an Incentive Stock Option.

          (c)   Exercise of Non-Qualified  Stock Option.  There may be a regular
                federal   income  tax   liability   upon  the   exercise   of  a
                Non-Qualified  Stock  Option.  The  Optionee  will be treated as
                having received  compensation income (taxable at ordinary income
                tax rates) equal to the excess, if any, of the Fair Market Value
                of the Shares on the date of exercise  over the Exercise  Price.
                If the Optionee is an Employee or a former Employee, the Company
                will be required to withhold from the Optionee's compensation or
                collect  from  the  Optionee  and pay to the  applicable  taxing
                authorities  an amount  in cash  equal to a  percentage  of this
                compensation  income at the time of exercise,  and may refuse to
                honor  the  exercise  and  refuse  to  deliver  Shares  if  such
                withholding amounts are not delivered at the time of exercise.

          (d)   Disposition  of  Shares.  In the case of a  Non-Qualified  Stock
                Option,  if  Shares  are held for at least  one  year,  any gain
                realized  on  disposition  of the  Shares  will  be  treated  as
                long-term  capital  gain for  federal  income tax  purposes  and
                subject to tax at a maximum  rate of 28%.  For Shares  held more
                than 18 months, the maximum rate falls to 20%. In the case of an
                Incentive Stock Option,  if Shares  transferred  pursuant to the
                Option  are held for at least  one  year  after  receipt  of the
                Shares and are  disposed of at least two years after the Date of
                Grant,  any gain realized on disposition of the Shares also will
                be treated as  long-term  capital  gain for  federal  income tax
                purposes  and subject to the same tax rates and holding  periods
                that apply to Shares  acquired upon exercise of a  Non-Qualified
                Stock  Option.  If Shares  purchased  under an  Incentive  Stock
                Option are disposed of within such one-year or two-year periods,
                any  gain  realized  on  such  disposition  will be  treated  as
                compensation  income  (taxable at ordinary  income rates) to the
                extent of the  difference  between  the  Exercise  Price and the
                lesser of (i) the Fair Market Value of the Shares on the date of
                exercise,  or (ii) the sale  price of the  Shares.

16.   Lock-Up Agreement.

          (a)   Agreement.  The  Optionee,  if  requested by the Company and the
                lead  underwriter of any public  offering of the Common Stock or
                other securities of the Company (the "Lead Underwriter"), hereby
                irrevocably  agrees  not to sell,  contract  to sell,  grant any
                option to purchase,  transfer the economic risk of ownership in,
                make any short sale of, pledge or otherwise  transfer or dispose
                of  any  interest  in  any  Common   Stock  or  any   securities
                convertible into or exchangeable or exercisable for or any other
                rights to purchase or acquire  Common Stock (except Common Stock
                included  in such  public  offering  or  acquired  on the public
                market after such offering)  during the 180-day period following
                the effective  date of a  registration  statement of the Company
                filed under the  Securities  Act of 1933,  as  amended,  or such
                shorter  period of time as the Lead  Underwriter  shall specify.
                The  Optionee  further  agrees to sign such  documents as may be
                requested by the Lead  Underwriter  to effect the  foregoing and
                agrees that the Company  may impose  stop-transfer  instructions
                with respect to such Common Stock  subject until the end of such
                period. The Company and the Optionee  acknowledge that each Lead
                Underwriter of a public offering of the Company's stock,  during
                the  period  of  such  offering  and  for  the  180-day   period
                thereafter, is an intended beneficiary of this Section 16.

          (b)   Permitted  Transfers.  Notwithstanding  the  foregoing,  Section
                16(a) shall not  prohibit  the Optionee  from  transferring  any
                shares  of  Common  Stock  or  securities  convertible  into  or
                exchangeable  or exercisable  for the Company's  Common Stock to
                the extent such  transfer is not  otherwise  prohibited  by this
                Option  Agreement,  either during the Optionee's  lifetime or on
                death by will or intestacy to the Optionee's immediate family or
                to a trust  the  beneficiaries  of  which  are  exclusively  the
                Optionee and/or a member or members of the Optionee's  immediate
                family; provided, however, that prior to any such transfer, each
                transferee  shall  execute an  agreement  pursuant to which each
                transferee  shall  agree to  receive  and hold  such  securities
                subject to the provisions of Section 16 hereof. For the purposes
                of this  subsection,  the term  "immediate  family"  shall  mean
                spouse,  domestic partner (as determined by the  Administrator),
                child, lineal descendant or antecedent,  father, mother, brother
                or sister and the lineal descendants of such individuals.

          (c)   No Amendment  Without Consent of Underwriter.  During the period
                from identification as a Lead Underwriter in connection with any
                public offering of the Company's  Common Stock until the earlier
                of (i) the expiration of the lock-up period specified in Section
                16(a) in connection  with such offering or (ii) the  abandonment
                of such  offering by the Company and the Lead  Underwriter,  the
                provisions  of this  Section  16 may not be  amended  or  waived
                except with the consent of the Lead Underwriter.

17.   Entire  Agreement:  Governing  Law. The Notice of Stock Option Grant,  the
Plan and this Option  Agreement  constitute the entire  agreement of the parties
with respect to the subject  matter hereof and  supersede in their  entirety all
prior  undertakings  and agreements of the Company and the Optionee with respect
to the  subject  matter  hereof,  and  may  not  be  modified  adversely  to the
Optionee's  interest  except by means of a writing  signed  by the  Company  and
Optionee.  These  agreements are governed by California law except for that body
of law pertaining to conflict of laws.

18    Headings.  The captions  used in the Notice of Stock Option Grant and this
Option  Agreement are inserted for convenience and shall not be deemed a part of
the Option for construction or interpretation.


19.   Interpretation.  Any dispute regarding the interpretation of the Notice of
Stock Option Grant,  the Plan, and this Option  Agreement  shall be submitted by
the Optionee or by the Company forthwith to the Board or the Administrator  that
administers  the Plan,  which  shall  review  such  dispute at its next  regular
meeting.  The resolution of such dispute by the Board or the Administrator shall
be final and binding on all persons.



<PAGE>



                                    EXHIBIT A


             MALLEABLE TECHNOLOGIES, INC. 1998 STOCK INCENTIVE PLAN

                                 EXERCISE NOTICE


     [COMPANY ADDRESS]


     Attention: Secretary

1.    Exercise   of   Option.    Effective   as   of   today,    ______________,
________________  ________________,  the  undersigned  (the  "Optionee")  hereby
elects to exercise the Optionee's option to purchase  ___________  shares of the
Common Stock (the  "Shares") of Malleable  Technologies,  Inc.  (the  "Company")
under and pursuant to the Company's  1998 Stock  Incentive Plan (the "Plan") and
the [ ] Incentive [ ] Non-Qualified  Stock Option  Agreement and Notice of Stock
Option Grant dated ______________, ________ (the "Option Agreement").

2.    Representations  of the  Optionee.  The  Optionee  acknowledges  that  the
Optionee has received, read and understood the Notice of Stock Option Grant, the
Plan and the Option Agreement and agrees to abide by and be bound by their terms
and conditions.

3.    Rights as Shareholder.  Until the stock certificate evidencing such Shares
is issued (as evidenced by the appropriate  entry on the books of the Company or
of a duly authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a  shareholder  shall exist with respect to the
Shares,  notwithstanding the exercise of the Option. The Company shall issue (or
cause to be  issued)  such  stock  certificate  promptly  after  the  Option  is
exercised.  No  adjustment  will be made for a dividend or other right for which
the record date is prior to the date the stock certificate is issued,  except as
provided in Section 11(a) of the Plan.

      The Optionee  shall enjoy rights as a  shareholder  until such time as the
Optionee disposes of the Shares or the Company and/or its assignee(s)  exercises
the Right of First Refusal or the  Repurchase  Right.  Upon such  exercise,  the
Optionee  shall  have no further  rights as a holder of the Shares so  purchased
except the right to receive  payment for the Shares so purchased  in  accordance
with the provisions of the Option  Agreement,  and the Optionee shall  forthwith
cause the certificate(s) evidencing the Shares so purchased to be surrendered to
the Company for transfer or cancellation.

4.    Delivery of Payment.  The  Optionee  herewith  delivers to the Company the
full Exercise Price for the Shares.
<PAGE>

5.    Tax  Consultation.  The Optionee  understands that the Optionee may suffer
adverse tax  consequences as a result of the Optionee's  purchase or disposition
of the Shares. The Optionee  represents that the Optionee has consulted with any
tax  consultants the Optionee deems advisable in connection with the purchase or
disposition  of the Shares and that the  Optionee  is not relying on the Company
for any tax advice.

6.    Taxes.  The Optionee agrees to satisfy all applicable  federal,  state and
local income and employment tax withholding obligations and herewith delivers to
the  Company  the full  amount  of such  obligations  or has  made  arrangements
acceptable  to the  Company  to  satisfy  such  obligations.  In the  case of an
Incentive Stock Option,  the Optionee also agrees, as partial  consideration for
the  designation  of the  Option as an  Incentive  Stock  Option,  to notify the
Company in writing  within  thirty  (30) days of any  disposition  of any shares
acquired  by exercise of the Option if such  disposition  occurs  within two (2)
years from the Grant  Date or within one (1) year from the date the Shares  were
transferred to the Optionee.  If the Company is required to satisfy any federal,
state or local income or employment tax  withholding  obligations as a result of
such an early  disposition,  the  Optionee  agrees to satisfy the amount of such
withholding in a manner that the Administrator prescribes.

7.    Restrictive  Legends. The Optionee understands and agrees that the Company
shall  cause the legends  set forth  below or legends  substantially  equivalent
thereto, to be placed upon any certificate(s) evidencing ownership of the Shares
together  with any other legends that may be required by the Company or by state
or federal securities laws:

                     THE SECURITIES  REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
                     UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE
                     OFFERED,   SOLD  OR  OTHERWISE   TRANSFERRED,   PLEDGED  OR
                     HYPOTHECATED  UNLESS AND UNTIL REGISTERED UNDER THE ACT OR,
                     IN THE  OPINION  OF COUNSEL  SATISFACTORY  TO THE ISSUER OF
                     THESE SECURITIES,  SUCH OFFER, SALE OR TRANSFER,  PLEDGE OR
                     HYPOTHECATION IS IN COMPLIANCE THEREWITH.

                     THE SHARES  REPRESENTED BY THIS  CERTIFICATE ARE SUBJECT TO
                     CERTAIN  RESTRICTIONS  ON  TRANSFER  AND A RIGHT  OF  FIRST
                     REFUSAL HELD BY THE ISSUER OR ITS  ASSIGNEE(S) AS SET FORTH
                     IN THE OPTION AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL
                     HOLDER OF THESE SHARES,  A COPY OF WHICH MAY BE OBTAINED AT
                     THE   PRINCIPAL   OFFICE  OF  THE  ISSUER   SUCH   TRANSFER
                     RESTRICTIONS  AND RIGHT OF FIRST  REFUSAL  ARE  BINDING  ON
                     TRANSFEREES OF THESE SHARES.

8.    Successors  and  Assigns.  The Company may assign any of its rights  under
this Exercise Notice to single or multiple  assignees,  and this agreement shall
inure to the benefit of the  successors  and assigns of the Company.  Subject to
the  restrictions  on transfer  herein set forth,  this Exercise Notice shall be
binding  upon the  Optionee  and his or her  heirs,  executors,  administrators,
successors and assigns.

9.    Headings.  The  captions  used in this  Exercise  Notice are  inserted for
convenience and shall not be deemed a part of this agreement for construction or
interpretation.
<PAGE>

10.   Interpretation.  Any dispute regarding the interpretation of this Exercise
Notice shall be  submitted  by the  Optionee or by the Company  forthwith to the
Company's  Board of Directors or the  Administrator  that  administers the Plan,
which shall review such dispute at its next regular  meeting.  The resolution of
such a dispute by the Board or  Administrator  shall be final and binding on all
persons.

11.   Governing Law; Severability. This Exercise Notice shall be governed by and
construed in accordance with the laws of the State of California  excluding that
body of law  pertaining  to  conflicts  of law.  Should  any  provision  of this
Exercise Notice be determined by a court of law to be illegal or  unenforceable,
the other  provisions  shall  nevertheless  remain  effective  and shall  remain
enforceable.

12.   Notices.  Any notice  required or  permitted  hereunder  shall be given in
writing and shall be deemed  effectively  given upon  personal  delivery or upon
deposit in the United  States  mail by  certified  mail,  with  postage and fees
prepaid,  addressed to the other party at its address as shown below beneath its
signature,  or to such other address as such party may designate in writing from
time to time to the other party.

13.   Further Instruments. The parties agree to execute such further instruments
and to take such further action as may be reasonably  necessary to carry out the
purposes and intent of this agreement.

14.   Entire  Agreement.  The  Notice of Stock  Option  Grant,  the Plan and the
Option  Agreement  are  incorporated  herein by reference and together with this
Exercise Notice  constitute the entire  agreement of the parties with respect to
the subject matter hereof and supersede in their entirety all prior undertakings
and  agreements  of the Company  and the  Optionee  with  respect to the subject
matter  hereof,  and may not be modified  adversely to the  Optionee's  interest
except by means of a writing signed by the Company and the Optionee.

    Submitted by:                               Accepted by:

    OPTIONEE:                                   MALLEABLE TECHNOLOGIES, INC.

                                                By: ___________________________

                                                Its: __________________________
    ______________________
    (Signature)

    Address:                                    Address:

                                               [COMPANY ADDRESS]



<PAGE>

                                    EXHIBIT B


             MALLEABLE TECHNOLOGIES, INC. 1998 STOCK INCENTIVE PLAN

                       INVESTMENT REPRESENTATION STATEMENT


         OPTIONEE:


         COMPANY:      MALLEABLE TECHNOLOGIES, INC.


         SECURITY:     COMMON STOCK


         AMOUNT:


         DATE:


                  In   connection   with  the   purchase  of  the   above-listed
         Securities,  the  undersigned  Optionee  represents  to the Company the
         following:

(a)       Optionee is aware of the  Company's  business  affairs  and  financial
          condition and has acquired sufficient information about the Company to
          reach  an  informed   and   knowledgeable   decision  to  acquire  the
          Securities.  Optionee is acquiring these Securities for investment for
          Optionee's  own account  only and not with a view to, or for resale in
          connection with, any "distribution"  thereof within the meaning of the
          Securities Act of 1933, as amended (the "Securities Act").

(b)       Optionee  acknowledges and understands that the Securities  constitute
          "restricted  securities"  under the  Securities  Act and have not been
          registered  under  the  Securities  Act in  reliance  upon a  specific
          exemption therefrom,  which exemption depends upon among other things,
          the bona fide  nature of  Optionee's  investment  intent as  expressed
          herein. In this connection,  Optionee understands that, in the view of
          the Securities and Exchange  Commission,  the statutory basis for such
          exemption  may  be  unavailable  if  Optionee's   representation   was
          predicated  solely upon a present  intention to hold these  Securities
          for the minimum capital gains period specified under tax statutes, for
          a deferred  sale,  for or until an  increase or decrease in the market
          price  of the  Securities,  or for a period  of one year or any  other
          fixed  period in the future.  Optionee  further  understands  that the
          Securities  must be held  indefinitely  unless  they are  subsequently
          registered  under  the  Securities  Act  or  an  exemption  from  such
          registration  is  available.   Optionee   further   acknowledges   and
          understands  that the Company is under no  obligation  to register the
          Securities.  Optionee understands that the certificate  evidencing the
          Securities  will  be  imprinted  with a  legend  which  prohibits  the
          transfer  of  the  Securities  unless  they  are  registered  or  such
          registration is not required in the opinion of counsel satisfactory to
          the Company.
<PAGE>

(c)       Optionee is  familiar  with the  provisions  of Rule 701 and Rule 144,
          each promulgated under the Securities Act, which, in substance, permit
          limited public resale of "restricted securities" acquired, directly or
          indirectly from the issuer thereof,  in a non-public  offering subject
          to the satisfaction of certain  conditions.  Rule 701 provides that if
          the  issuer  qualifies  under Rule 701 at the time of the grant of the
          Option to the Optionee,  the exercise will be exempt from registration
          under the Securities  Act. In the event the Company becomes subject to
          the reporting  requirements  of Section 13 or 15(d) of the  Securities
          Exchange  Act of 1934,  ninety  (90) days  thereafter  (or such longer
          period as any market  stand-off  agreement may require) the Securities
          exempt under Rule 701 may be resold,  subject to the  satisfaction  of
          certain of the conditions  specified by Rule 144,  including:  (1) the
          resale  being  made  through  a  broker  in an  unsolicited  "broker's
          transaction" or in transactions  directly with a market maker (as said
          term is defined under the  Securities  Exchange Act of 1934);  and, in
          the case of an  affiliate,  (2) the  availability  of  certain  public
          information about the Company, (3) the amount of Securities being sold
          during any three month period not exceeding the limitations  specified
          in  Rule  144(e),  and  (4)  the  timely  filing  of a  Form  144,  if
          applicable.

                  In the event that the Company does not qualify  under Rule 701
         at the time of grant of the Option,  then the  Securities may be resold
         in certain limited circumstances subject to the provisions of Rule 144,
         which  requires  the  resale to occur not less than one year  after the
         later of the date the  Securities  were sold by the Company or the date
         the  Securities  were sold by an affiliate  of the Company,  within the
         meaning of Rule 144; and, in the case of  acquisition of the Securities
         by an  affiliate,  or by a  non-affiliate  who  subsequently  holds the
         Securities less than two years,  the satisfaction of the conditions set
         forth in sections (1),  (2), (3) and (4) of the  paragraph  immediately
         above.


(d)       Optionee  further  understands that in the event all of the applicable
          requirements of Rule 701 or 144 are not satisfied,  registration under
          the  Securities  Act,  compliance  with  Regulation  A, or some  other
          registration exemption will be required; and that, notwithstanding the
          fact  that  Rules  144 and 701 are not  exclusive,  the  Staff  of the
          Securities  and Exchange  Commission  has  expressed  its opinion that
          persons proposing to sell private placement securities other than in a
          registered  offering and  otherwise  than pursuant to Rules 144 or 701
          will  have a  substantial  burden  of  proof in  establishing  that an
          exemption from registration is available for such offers or sales, and
          that such persons and their respective brokers who participate in such
          transactions  do so at their own risk.  Optionee  understands  that no
          assurances  can be given  that any such other  registration  exemption
          will be available in such event.

(e)       Optionee   represents   that  he  is  a  resident   of  the  state  of
          ____________________.




                                       Signature of Optionee:




                                       _______________________
                                       Date:                 ,