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                                                                   Exhibit 10.60

                             CONNETICS CORPORATION

                          1998 SUPPLEMENTAL STOCK PLAN
                           (ADOPTED NOVEMBER 5, 1998)


        1. Purposes of the Supplemental Plan. The purposes of this 1998
Supplemental Stock Plan ("Supplemental Plan") are to attract and retain the best
available personnel for positions of substantial responsibility, to provide
additional incentive to Employees and Consultants of the Company and its
Subsidiaries and to promote the success of the Company's business. Options
granted under the Plan may be Nonstatutory Stock Options, as determined by the
Administrator at the time of grant and reflected in the terms of the written
option agreement. Stock purchase rights may also be granted under the Plan.

        2. Definitions. As used herein, the following definitions shall apply:

               (a) "Administrator" means the Board or any of its Committees
appointed pursuant to Section 4 of the Supplemental Plan.

               (b) "Board" means the Board of Directors of the Company.

               (c) "Code" means the Internal Revenue Code of 1986, as amended.

               (d) "Committee" means the Committee appointed by the Board of
Directors in accordance with Section 4(a) of the Supplemental Plan below, if one
is appointed.

               (e) "Common Stock" means the Common Stock of the Company.

               (f) "Company" means Connetics Corporation, a Delaware
corporation.

               (g) "Consultant" means any person, including an advisor, who is
engaged by the Company or any Parent or Subsidiary to render services and is
compensated for such services, and any director of the Company, whether
compensated for such services or not.

               (h) "Continuous Status as an Employee or Consultant" means the
absence of any interruption or termination of service as an Employee or
Consultant. Continuous Status as an Employee or Consultant shall not be
considered interrupted in the case of sick leave, military leave, or any other
leave of absence approved by the Administrator, provided that such leave is for
a period of not more than ninety (90) days, unless reemployment upon the
expiration of such leave is guaranteed by contract or statute, or unless
provided otherwise pursuant to Company policy adopted from time to time, or in
the case of transfers between locations of the Company or between the Company,
its Subsidiaries or its successor. For purposes of this Supplemental Plan, a
change in status from an Employee to a Consultant or from a Consultant to an
Employee will not constitute a termination of employment.

               (i) "Director" means a member of the Board.
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               (j) "Employee" means any person, excluding Named Executives,
Officers and Directors, employed by the Company or any Parent or Subsidiary of
the Company.

               (k) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

               (l) "Fair Market Value" means, as of any date, the value of
Common Stock determined as follows:

                      (i) If the Common Stock is listed on any established  
stock exchange or a national market system including without limitation the
National Market of the National Association of Securities Dealers, Inc.
Automated Quotation ("Nasdaq") System, its Fair Market Value shall be the
closing sales price for such stock as quoted on such system on the date of
determination (or the closing bid, if no sales were reported on that day) as
reported in The Wall Street Journal or such other source as the Administrator
deems reliable;

                      (ii) If the Common Stock is quoted on the Nasdaq System
(but not on the National Market thereof) or regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
shall be the mean between the high bid and low asked prices for the Common Stock
or;

                      (iii) In the absence of an established market for the
Common Stock, the Fair Market Value thereof shall be determined in good faith by
the Administrator.

               (m) "Incentive Stock Option" means an Option intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code, as
designated in the applicable written option agreement.

               (n) "Named Executive" means any individual who, on the last day
of the Company's fiscal year, is the chief executive officer of the Company (or
is acting in such capacity) or among the four highest compensated officers of
the Company (other than the chief executive officer). Such officer status shall
be determined pursuant to the executive compensation disclosure rules under the
Exchange Act.

               (o) "Nonstatutory Stock Option" means an Option not intended to
qualify as an Incentive Stock Option, as designated in the applicable written
option agreement.

               (p) "Officer" means a person who is an officer of the Company
within the meaning of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder.

               (q) "Option" means a stock option granted pursuant to the
Supplemental Plan.

               (r) "Optioned Stock" means the Common Stock subject to an Option
or a Stock Purchase Right.

               (s) "Optionee" means an Employee or Consultant who receives an
Option or Stock Purchase Right.


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               (t) "Parent" means a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the Code.

               (u) "Restricted Stock" means shares of Common Stock acquired
pursuant to a grant of a Stock Purchase Right under Section 11 below.

               (v) "Rule 16b-3" means Rule 16b-3 promulgated under the Exchange
Act as the same may be amended from time to time, as any successor provision.

               (w) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 13 below.

               (x) "Stock Purchase Right" means the right to purchase Common
Stock pursuant to Section 11 below.

               (y) "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.

               (z) "Supplemental Plan" means this 1998 Supplemental Plan.



        3. Stock Subject to the Supplemental Plan. Subject to the provisions of
Section 13 of the Supplemental Plan, the maximum aggregate number of shares
which may be optioned and sold under the Supplemental Plan is 500,000 shares of
Common Stock. The shares may be authorized, but unissued, or reacquired Common
Stock.

               If an Option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares which were subject
thereto shall, unless the Supplemental Plan shall have been terminated, become
available for future grant under the Supplemental Plan.

               Notwithstanding any other provision of the Supplemental Plan,
Shares issued under the Supplemental Plan and later repurchased by the Company
shall not become available for future grant or sale under the Supplemental Plan.

        4. Administration of the Supplemental Plan.

               (a) Composition of the Administrator.

                      (i) Administration of the Supplemental Plan. With respect
to grants of Options or Stock Purchase Rights to Employees or Consultants who
are neither Directors nor Officers of the Company, the Supplemental Plan shall
be administered by (A) the Board or (B) a committee designated by the Board,
which committee shall be constituted in such a manner as to satisfy the legal
requirements relating to the administration of stock option plans, if any, of
the applicable securities laws and the Code (collectively the "Applicable
Laws"),.


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                      (ii) General. If a Committee has been appointed pursuant
to subsection (i) of this Section 4(a), such Committee shall continue to serve
in its designated capacity until otherwise directed by the Board. From time to
time the Board may increase the size of the Committee and appoint additional
members thereof, remove members (with or without cause) and appoint new members
in substitution therefor, fill vacancies, however caused, and remove all members
of the Committee and thereafter directly administer the Supplemental Plan, all
to the extent permitted by the Applicable Laws.

               (b) Powers of the Administrator. Subject to the provisions of the
Supplemental Plan and in the case of a Committee, the specific duties delegated
by the Board to such Committee, and subject to the approval of any relevant
authorities, including the approval, if required, of any stock exchange upon
which the Common Stock is listed, the Administrator shall have the authority, in
its discretion:

                      (i) to determine the Fair Market Value of the Common
Stock, in accordance with Section 2(l) of the Supplemental Plan;

                      (ii) to select the Consultants and Employees to whom
Options and Stock Purchase Rights may from time to time be granted hereunder;

                      (iii) to determine whether and to what extent Options and
Stock Purchase Rights or any combination thereof are granted hereunder;

                      (iv) to determine the number of shares of Common Stock to
be covered by each such award granted hereunder;

                      (v) to approve forms of agreement for use under the
Supplemental Plan;

                      (vi) to determine the terms and conditions, not
inconsistent with the terms of the Supplemental Plan, of any award granted
hereunder;

                      (vii) to determine whether and under what circumstances an
Option may be settled in cash under subsection 10(f) instead of Common Stock;

                      (viii) to reduce the exercise price of any Option to the
then current Fair Market Value if the Fair Market Value of the Common Stock
covered by such Option shall have declined since the date the Option was
granted; and

                      (ix) to determine the terms and restrictions applicable to
Stock Purchase Rights and the Restricted Stock purchased by exercising such
Stock Purchase Rights.

               (c) Effect of Administrator's Decision. All decisions,
determinations and interpretations of the Administrator shall be final and
binding on all Optionees and any other holders of any Options or Stock Purchase
Rights.


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        5. Eligibility.

               (a) Nonstatutory Stock Options and Stock Purchase Rights may be
granted to Employees and Consultants. An Employee or Consultant who has been
granted an Option or Stock Purchase Right may, if he is otherwise eligible, be
granted additional Options or Stock Purchase Rights.

               (b) Each Option shall be designated in the written option
agreement as a Nonstatutory Stock Option.

               (c) The Supplemental Plan shall not confer upon any Optionee any
right with respect to continuation of employment or consulting relationship with
the Company, nor shall it interfere in any way with his or her right or the
Company's right to terminate his or her employment or consulting relationship at
any time, with or without cause.

        6. Term of Supplemental Plan. The Supplemental Plan shall become
effective upon the earlier to occur of its adoption by the Board of Directors or
its approval by the stockholders of the Company as described in Section 21 of
the Supplemental Plan. It shall continue in effect for a term of ten (10) years
unless sooner terminated under Section 17 of the Supplemental Plan.

        7. Term of Option. The term of each Option shall be the term stated in
the Option Agreement; provided, however, that in the case of an Option granted
to an Optionee who, at the time the Option is granted, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Parent or Subsidiary, the term of the Option shall be five (5)
years from the date of grant thereof or such shorter term as may be provided in
the Option Agreement.

        8. Limitation on Grants to Employees. Subject to adjustment as provided
in this Supplemental Plan, the maximum number of Shares which may be subject to
Options or Stock Purchase Rights granted to any one Employee under this
Supplemental Plan for any fiscal year of the Company shall be 150,000.

        9. Option Exercise Price and Consideration.

               (a) The per Share exercise price for the Shares to be issued
pursuant to exercise of an Option shall be such price as is determined by the
Administrator, but shall in any event be no less than 100% of the Fair Market
Value per Share on the date of grant.

               (b) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Administrator and may consist entirely of

                      (1) cash,

                      (2) check,

                      (3) promissory note,


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                      (4) other Shares which (x) in the case of Shares acquired
                          upon exercise of an Option either have been owned by
                          the Optionee for more than six months on the date of
                          surrender or were not acquired, directly or
                          indirectly, from the Company, and (y) have a Fair
                          Market Value on the date of surrender equal to the
                          aggregate exercise price of the Shares as to which
                          said Option shall be exercised,

                      (5) authorization from the Company to retain from the
                          total number of Shares as to which the Option is
                          exercised that number of Shares having a Fair Market
                          Value on the date of exercise equal to the exercise
                          price for the total number of Shares as to which the
                          Option is exercised,

                      (6) 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,

                      (7) any combination of the foregoing methods of payment,
                          or

                      (8) such other consideration and method of payment for the
                          issuance of Shares to the extent permitted under
                          Applicable Laws.

In making its determination as to the type of consideration to accept, the Board
shall consider if acceptance of such consideration may be reasonably expected to
benefit the Company.

        10. Exercise of Option.

               (a) Procedure for Exercise; Rights as a Stockholder. Any Option
granted hereunder shall be exercisable at such times and under such conditions
as determined by the Administrator, including performance criteria with respect
to the Company and/or the Optionee, and as shall be permissible under the terms
of the Supplemental Plan.

                      An Option may not be exercised for a fraction of a Share.

                      An Option  shall be deemed to be exercised  when written  
notice of such exercise has been given to the Company in accordance with the
terms of the Option by the person entitled to exercise the Option and full
payment for the Shares with respect to which the Option is exercised has been
received by the Company. Full payment may, as authorized by the Administrator,
consist of any consideration and method of payment allowable under Section 9(b)
of the Supplemental Plan. Until the issuance (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company) of the stock certificate evidencing such Shares, no right to vote or
receive dividends or any other rights as a stockholder shall exist with respect
to the Optioned Stock, notwithstanding the exercise of the Option. The Company
shall issue (or cause to be issued) such stock certificate as promptly as
practicable upon exercise of the Option. No adjustment will be made for a
dividend or other right for which the 

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record date is prior to the date the stock certificate is issued, except as
provided in Section 14 of the Supplemental Plan.

                      Exercise of an Option in any manner shall result in a
decrease in the number of Shares which thereafter may be available, both for
purposes of the Supplemental Plan and for sale under the Option, by the number
of Shares as to which the Option is exercised.

               (b) Termination of Status as an Employee or Consultant. In the
event of termination of an Optionee's Continuous Status as an Employee or
Consultant, such Optionee may, but only within thirty (30) days (or such other
period of time not exceeding six (6) months as is determined by the
Administrator) after the date of such termination (but in no event later than
the date of expiration of the term of such Option as set forth in the Option
Agreement), exercise his or her Option to the extent that he or she was entitled
to exercise it at the date of such termination. To the extent that the Optionee
was not entitled to exercise the Option at the date of such termination, or if
the optionee does not exercise such Option (which he or she was entitled to
exercise) within the time specified herein, the Option shall terminate.

               (c) Disability of Optionee.

                      (i) Notwithstanding the provisions of Section 9(b) above,
in the event of termination of an Optionee's Continuous Status as an Employee or
Consultant as a result of his or her total and permanent disability (within the
meaning of Section 22(e)(3) of the Code), Optionee may, but only within twelve
(12) months from the date of such termination (but in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), exercise the Option to the extent otherwise entitled to exercise it
at the date of such termination. To the extent that Optionee was not entitled to
exercise the Option at the date of termination, or if Optionee does not exercise
such Option to the extent so entitled within the time specified herein, the
Option shall terminate.

                      (ii) In the event of termination of an Optionee's
Continuous Status as an Employee or Consultant as a result of a disability which
does not fall within the meaning of total and permanent disability (as set forth
in Section 22(e)(3) of the Code), Optionee may, but only within six (6) months
from the date of such termination (but in no event later than the expiration
date of the term of such Option as set forth in the Option Agreement), exercise
the Option to the extent otherwise entitled to exercise it at the date of such
termination. To the extent that Optionee was not entitled to exercise the Option
at the date of termination, or if Optionee does not exercise such Option to the
extent so entitled within six months (6) from the date of termination, the
Option shall terminate.

               (d) Death of Optionee. In the event of the death of an Optionee
during the term of the Option who is at the time of death an Employee or
Consultant of the Company, the Option may be exercised, at any time within
twelve (12) months following the date of death (but in no event later than the
expiration date of the term of such Option as set forth in the Option
Agreement), 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 was entitled to exercise the Option at the date of death. To the extent
that Optionee was not entitled to exercise the Option at the 

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date of termination, or if Optionee does not exercise such Option to the extent
so entitled within the time specified herein, the Option shall terminate.

               (e) Rule 16b-3. Options granted to persons subject to Section
16(b) of the Exchange Act must comply with Rule 16b-3 and shall contain such
additional conditions or restrictions as may be required thereunder to qualify
for the maximum exemption from Section 16 of the Exchange Act with respect to
Supplemental Plan transactions.

               (f) Buyout Provisions. The Administrator may at any time offer to
buy out for a payment in cash or Shares, an Option previously granted, based on
such terms and conditions as the Administrator shall establish and communicate
to the Optionee at the time that such offer is made.

        11. Non-Transferability of Options. Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other 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.

        12. Stock Purchase Rights.

               (a) Rights to Purchase. Stock Purchase Rights may be issued
either alone, in addition to, or in tandem with other awards granted under the
Supplemental Plan and/or cash awards made outside of the Supplemental Plan.
After the Administrator determines that it will offer Stock Purchase Rights
under the Supplemental Plan, it shall advise the offeree in writing of the
terms, conditions and restrictions related to the offer, including the number of
Shares that such person shall be entitled to purchase, the price to be paid
(which price shall not be less than 85% of the Fair Market Value of the Shares
as of the date of the offer or, in the case of a stockholder owning ten percent
(10%) or more of the Company's outstanding stock or a person who is a Named
Executive, 100% of the Fair Market Value of the Shares as of the date of the
offer), and the time within which such person must accept such offer, which
shall in no event exceed thirty (30) days from the date upon which the
Administrator made the determination to grant the Stock Purchase Right. The
offer shall be accepted by execution of a Restricted Stock purchase agreement in
the form determined by the Administrator. Shares purchased pursuant to the grant
of a Stock Purchase Right shall be referred to herein as "Restricted Stock."

               (b) Repurchase Option. Unless the Administrator determines
otherwise, the Restricted Stock purchase agreement shall grant the Company a
repurchase option exercisable upon the voluntary or involuntary termination of
the purchaser's employment with the Company for any reason (including death or
Disability). The purchase price for Shares repurchased pursuant to the
Restricted Stock purchase agreement shall be the original price paid by the
purchaser and may be paid by cancellation of any indebtedness of the purchaser
to the Company. The repurchase option shall lapse at such rate as the Board or
Committee may determine.

               (c) Other Provisions. The Restricted Stock purchase agreement
shall contain such other terms, provisions and conditions not inconsistent with
the Supplemental Plan as may be 


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determined by the Administrator in its sole discretion. In addition, the
provisions of Restricted Stock purchase agreements need not be the same with
respect to each purchaser.

               (d) Rights as a Stockholder. Once the Stock Purchase Right is
exercised, the purchaser shall have the rights equivalent to those of a
stockholder, and shall be a stockholder when his or her purchase is entered upon
the records of the duly authorized transfer agent of the Company. No adjustment
will be made for a dividend or other right for which the record date is prior to
the date the Stock Purchase Right is exercised, except as provided in Section 14
of the Supplemental Plan.

        13. Withholding Taxes. As a condition to the exercise of Options or the
purchase of Restricted Stock pursuant to awards granted hereunder, the Optionee
or purchaser shall make such arrangements as the Administrator may require for
the satisfaction of any federal, state, local or foreign withholding tax
obligations that may arise in connection with the exercise, receipt or vesting
of such award. The Company shall not be required to issue any Shares under the
Supplemental Plan until such obligations are satisfied.

        14. Stock Withholding to Satisfy Withholding Tax Obligations. At the
discretion of the Administrator, Optionees may satisfy withholding obligations
as provided in this paragraph. When an Optionee incurs tax liability in
connection with an Option or Stock Purchase Right, which tax liability is
subject to tax withholding under applicable tax laws, and the Optionee is
obligated to pay the Company an amount required to be withheld under applicable
tax laws, the Optionee may satisfy the withholding tax obligation by electing to
have the Company withhold from the Shares to be issued upon exercise of the
Option, or the Shares to be issued in connection with the Stock Purchase Right,
if any, that number of Shares having a Fair Market Value equal to the amount
required to be withheld. The Fair Market Value of the Shares to be withheld
shall be determined on the date that the amount of tax to be withheld is to be
determined (the "Tax Date").

               All elections by an Optionee to have Shares withheld for this
purpose shall be made in writing in a form acceptable to the Administrator and
shall be subject to the following restrictions:

               (a) the election must be made on or prior to the applicable Tax
Date;

               (b) once made, the election shall be irrevocable as to the
particular Shares of the Option or Stock Purchase Right as to which the election
is made; and

               (c) all elections shall be subject to the consent or disapproval
of the Administrator.

               In the event the election to have Shares withheld is made by an
Optionee and the Tax Date is deferred under Section 83 of the Code because no
election is filed under Section 83(b) of the Code, the Optionee shall receive
the full number of Shares with respect to which the Option or Stock Purchase
Right is exercised but such Optionee shall be unconditionally obligated to
tender back to the Company the proper number of Shares on the Tax Date.


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        15. Adjustments Upon Changes in Capitalization; Corporate Transaction.

               (a) Changes in Capitalization. Subject to any required action by
the stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Option or Stock Purchase Right, and the number of shares of
Common Stock which have been authorized for issuance under the Supplemental Plan
but as to which no Options or Stock Purchase Rights have yet been granted or
which have been returned to the Supplemental Plan upon cancellation or
expiration of an Option or Stock Purchase Right, as well as the price per share
of Common Stock covered by each such outstanding Option or Stock Purchase Right,
shall be proportionately adjusted for any increase or decrease in the number of
issued shares of Common Stock resulting from a stock split, reverse stock split,
stock dividend, combination or reclassification of the Common Stock, or any
other increase or decrease in the number of issued shares of Common Stock
effected without receipt of consideration by the Company; provided, however,
that conversion of any convertible securities of the Company shall not be deemed
to have been "effected without receipt of consideration." Such adjustment shall
be made by the Board, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock subject
to an Option or Stock Purchase Right.

               (b) Corporate Transactions. In the event of a dissolution or
liquidation of the Company, the Option will terminate immediately prior to the
consummation of such action, unless otherwise provided by the Administrator. The
Administrator may, in the exercise of its sole discretion in such instances,
declare that any Option shall terminate as of a date fixed by the Administrator
and give each Optionee the right to exercise his or her Option as to all of the
Optioned Stock, including Shares as to which the Option would not otherwise be
exercisable. In the event of a proposed sale of all or substantially all of the
assets of the Company, the merger of the Company with or into another
corporation or any other capital reorganization in which more than fifty percent
(50%) of the shares of the Company entitled to vote are exchanged, the Option
shall be assumed or an equivalent option shall be substituted by such successor
corporation or a parent or subsidiary of such successor corporation, unless the
Administrator determines, in the exercise of its sole discretion and in lieu of
such assumption or substitution, that the Optionee shall have the right to
exercise the Option as to all of the Optioned Stock, including Shares as to
which the Option would not otherwise be exercisable. If the Administrator makes
an Option exercisable in lieu of assumption or substitution in the event of a
merger or sale of assets, the Administrator shall notify the Optionee that the
Option shall be exercisable for a period of thirty (30) days from the date of
such notice, and the Option will terminate upon the expiration of such period.

        16. Time of Granting Options and Stock Purchase Rights. The date of
grant of an Option or Stock Purchase Right shall, for all purposes, be the date
on which the Administrator makes the determination granting such Option or Stock
Purchase Right, or such other date as is determined by the Administrator;
provided however that in the case of any Incentive Stock Option, the grant date
shall be the later of the date on which the Administrator makes the
determination granting such Incentive Stock Option or the date of commencement
of the 

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Optionee's employment relationship with the Company. Notice of the
determination shall be given to each Employee or Consultant to whom an Option or
Stock Purchase Right is so granted within a reasonable time after the date of
such grant.

        17. Amendment and Termination of the Supplemental Plan.

               (a) Amendment and Termination. The Board may amend or terminate
the Supplemental Plan from time to time in such respects as the Board may deem
advisable; provided, however, that the following revisions or amendments shall
require approval of the stockholders of the Company in the manner described in
Section 20 of the Supplemental Plan:

                        (i) any change in the designation of the class of
persons eligible to be granted Options;

                        (ii) any change in the limitation on grants to employees
as described in Section 8 of the Supplemental Plan or other changes which would
require stockholder approval to qualify options granted hereunder as
performance-based compensation under Section 162(m) of the Code; or

                        (iii) any revision or amendment requiring stockholder
approval in order to preserve the qualification of the Supplemental Plan under
Rule 16b-3.

               (b) Effect of Amendment or Termination. Any such amendment or
termination of the Supplemental Plan shall not affect Options already granted
and such Options shall remain in full force and effect as if this Supplemental
Plan had not been amended or terminated, unless mutually agreed otherwise
between the Optionee and the Board, which agreement must be in writing and
signed by the Optionee and the Company.

        18. Conditions Upon Issuance of Shares. Shares shall not be issued
pursuant to the exercise of an Option or Stock Purchase Right unless the
exercise of such Option and the issuance and delivery of such Shares pursuant
thereto shall comply with all relevant provisions of law, including, without
limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules
and regulations promulgated thereunder, and the requirements of any stock
exchange upon which the Shares may then be listed, and shall be further subject
to the approval of counsel for the Company with respect to such compliance.

               As a condition to the exercise of an Option or Stock Purchase
Right, the Company may require the person exercising such Option or Stock
Purchase Right to represent and warrant at the time of any such exercise that
the Shares are being purchased only for investment and without any present
intention to sell or distribute such Shares if, in the opinion of counsel for
the Company, such a representation is required by any of the aforementioned
relevant provisions of law.

        19. Reservation of Shares. The Company, during the term of this
Supplemental Plan, will at all times reserve and keep available such number of
Shares as shall be sufficient to satisfy the requirements of the Supplemental
Plan. The inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to 


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<PAGE>   12

be necessary to the lawful issuance and sale of any Shares hereunder, shall
relieve the Company of any liability in respect of the failure to issue or sell
such Shares as to which such requisite authority shall not have been obtained.

        20. Agreements. Options and Stock Purchase Rights shall be evidenced by
written agreements in such form as the Board shall approve from time to time.


        21. Information to Optionees and Purchasers. The Company shall provide
financial statements at least annually to each Optionee and to each individual
who acquired Shares Pursuant to the Supplemental Plan, during the period such
Optionee or purchaser has one or more Options or Stock Purchase Rights
outstanding, and in the case of an individual who acquired Shares pursuant to
the Supplemental Plan, during the period such individual owns such Shares. The
Company shall not be required to provide such information if the issuance of
Options or Stock Purchase Rights under the Supplemental Plan is limited to key
employees whose duties in connection with the Company assure their access to
equivalent information.



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