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                                                                 Exhibit 10.501

                          CHIRON 1991 STOCK OPTION PLAN

  [AS AMENDED AUGUST 14, 1993,  APRIL 11, 1994,  FEBRUARY 24, 1995,  MARCH 8,
1996, FEBRUARY 28, 1997, AUGUST 7, 1998, AUGUST 20, 1999, FEBRUARY 25, 2000, AND
                              SEPTEMBER 21, 2000]

I.       PURPOSES

         This  Chiron  1991 Stock  Option  Plan  ("Plan")  is intended to enable
Chiron   Corporation   ("Corporation")  to  attract  and  retain  the  following
individuals  by offering them  incentives  and rewards,  in the form of options,
restricted  shares,  share rights,  share units and performance units ("awards")
which will encourage them to acquire a proprietary  interest in the Corporation,
to  continue  in the  service of the  Corporation  or its  subsidiaries,  and to
provide  incentive to build value for  stockholders:  (a)  employees  (including
officers  and  directors)  of  the   Corporation  and  its   subsidiaries,   (b)
non-employee members of the Board of Directors of the Corporation ("Board"), and
(c) consultants and independent  contractors who perform  valuable  services for
the Corporation and its subsidiaries.

         In addition,  the Plan is intended to permit the Corporation to satisfy
its obligations in connection  with options it assumed  pursuant to the terms of
the  Agreement  and Plan of  Merger  dated as of July 21,  1991 by and among the
Corporation,   Chiron  Acquisition  Subsidiary,   Inc.,  and  Cetus  Corporation
("Agreement").  Upon consummation of the transactions described in the Agreement
("Merger"),  the Plan superseded Cetus Corporation's Amended and Restated Common
Stock Option Plan and Cetus Corporation's  Non-Employee  Directors' Stock Option
Plan ("Cetus Prior Plans").  Upon  stockholder  approval in December 1991,  this
Plan superseded the following  Chiron prior plans:  the Protos  Corporation 1988
Stock  Option  Plan  (upon  the  merger  of  Protos  into  Chiron),  the  Chiron
Ophthalmics,  Inc. 1986 Stock Option Plan (upon the merger of Chiron Ophthalmics
into a wholly owned subsidiary of Chiron),  the Corporation's  1982 Stock Option
Plan and the Corporation's 1984 Non-Qualified  Stock Option Plan  (collectively,
"Chiron Prior Plans").

II.      ADMINISTRATION

         The Plan will be administered by a committee or committees appointed by
the Board and  consisting of one or more members of the Board or a  subcommittee
or  subcommittees  thereof.  The  Board  may  delegate  the  responsibility  for
administration  of the Plan with respect to designated  classes of award holders
to  different  committees,  subject  to  such  limitations  as the  Board  deems
appropriate,  and each committee may similarly delegate its  responsibilities to
one or more subcommittees. Members of a committee or subcommittee will serve for
such  term as the Board or  committee  may  determine,  and will be  subject  to
removal  by the  Board  at any  time.  With  respect  to any  matter,  the  term
"Committee," when used in this Plan, will refer to the committee or subcommittee
that has been delegated authority with respect to such matter.

         In determining  the composition of any committee or  subcommittee,  the
Board or  committee,  as the case may be,  shall  consider the  desirability  of
compliance  with  the  compositional  requirements  of  (i)  Rule  16b-3  of the
Securities and Exchange Commission with respect to award holders who are subject
to the trading  restrictions of Section 16(b) of the Securities  Exchange Act of
1934 ("1934 Act") with respect to securities of the Corporation and (ii) Section
162(m) of the

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Internal Revenue Code ("Code") with respect to performance  units, but shall not
be bound by such compliance.

         (a)  AUTHORITY.  Each  Committee will have full authority to administer
the Plan within the scope of its delegated responsibilities, including authority
to interpret  and construe  any  relevant  provision of the Plan,  to adopt such
rules and regulations as it may deem  necessary,  and to determine the terms and
conditions  of  awards  made  under  the Plan  (which  need  not be  identical).
Decisions of a Committee made within the discretion delegated to it by the Board
will be final and binding on all persons who have an interest in the Plan.

III.  ELIGIBILITY FOR AWARDS

         (a) DISCRETIONARY  AWARDS.  From time to time the Committee may, in its
discretion,  select  individuals from among the following  categories to receive
awards under the Plan:

         (1) EMPLOYEES. The Committee may select employees of the Corporation or
         its parent or subsidiaries (including officers, whether or not they are
         also members of the Board).

         (2) CONSULTANTS AND INDEPENDENT  CONTRACTORS.  The Committee may select
         consultants  and  independent   contractors   whose  services  tend  to
         contribute  materially to the success of the Corporation or a parent or
         subsidiary  or whose  services  may  reasonably  be  anticipated  to so
         contribute.

         (3)  DIRECTORS.  The Committee  may select  members of the Board or the
         board of directors of a parent or subsidiary  that are not employees of
         the  Corporation,  parent or  subsidiaries  for awards in  addition  to
         awards made in accordance with the Plan's automatic grant provisions.

         (b) PERFORMANCE UNITS.  Corporate  vice-presidents  and other executive
officers of the Corporation or a parent or subsidiary ("162(m) executives") will
be eligible to receive  performance  units in addition  to, or in lieu of, other
discretionary awards granted under the Plan.

         (c) AUTOMATIC GRANTS. Members of the Board who are not employees of the
Corporation or a subsidiary  will receive  awards in accordance  with the Plan's
automatic grant provisions.

         (d) SUBSTITUTE  OPTIONS.  Upon consummation of the Merger,  outstanding
options  under  the  Cetus  Prior  Plans   (including   related   Limited  Stock
Appreciation  Rights) were  converted,  in the manner and at the exchange  ratio
specified in the Agreement,  into substitute  options under this Plan to acquire
Common Stock (as defined below).  Upon stockholder  approval and, with regard to
the Protos prior plan  options and the Chiron  Ophthalmics  prior plan  options,
consummation of the relevant mergers, outstanding options under the Chiron Prior
Plans were converted into options under this Plan.  These options  preserved the
exercise price of the  outstanding  options as adjusted,  in the case of options
under the Protos Corporation 1988 Stock


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Option Plan and the Chiron  Ophthalmics,  Inc.  1986 Stock Option Plan, to
reflect the substitution of Common Stock. These options also preserved the
other terms and conditions of the outstanding options; provided,  however,
that on the Effective  Date of this Plan,  outstanding  automatic  option
grants  under the Corporation's  1982 Stock Option Plan were  conformed,
other than to extend the term,  to the  Automatic  Option  Grants  under this
Plan.  Collectively,  these options are referred to as "Substitute Options."

IV.      STOCK SUBJECT TO THE PLAN

         (a)      CLASS.  The  stock  subject  to  awards  under the Plan is
(i) the Corporation's  authorized  but  unissued or  reacquired  Common
Stock  ("Common Stock"),  or (ii) shares of one or more series of the
Corporation's  authorized but unissued or reacquired  Restricted Common
Stock, in the aggregate,  "Company Stock." In connection  with the grant of
awards under the Plan, the  Corporation may repurchase shares in the open
market or otherwise.

         (b)      AGGREGATE AMOUNT

                  (1) SHARES.  Subject to adjustment  under  Sections IV (c) and
         IV(b)(3),  the aggregate maximum number of shares of Company Stock that
         may be subject to awards under the Plan is 50,262,347 (comprised of the
         original  number of shares  authorized  under the Plan,  including  the
         number  of  shares of  Company  Stock  remaining  for  issuance  on the
         Effective Date of this Plan under the  Corporation's  1982 Stock Option
         Plan and the Corporation's 1984  Non-Qualified  Stock Option Plan, plus
         all annual increases  thereto through January 1, 1997, plus an increase
         of  13,000,000  shares  by  amendment  effective  February  28,  1997).
         Notwithstanding the foregoing,  as of the first day of each fiscal year
         beginning  after  January  1,  1997 the  aggregate  number of shares of
         Company  Stock  that may be  subject  to awards  under the Plan will be
         increased  by 1.50% of the number of Chiron  Common  Equivalent  Shares
         outstanding  as of last day of the  preceding  fiscal year.  Subject to
         adjustment under Section IV(c), the maximum number of shares of Company
         Stock  with  respect to which  awards  may be  granted to any  employee
         during the term of the Plan is 4,000,000 shares.  Subject to adjustment
         under Sections IV(c) and IV(b)(3),  not more than 50,262,347  shares of
         Company  Stock,  increased,  as of the  first day of each  fiscal  year
         beginning  after  January  1,  1997,  by 1.50% of the  number of Chiron
         Common  Equivalent  Shares  outstanding as of December 31, 1996, may be
         subject to Incentive  Options (as defined below) granted under the Plan
         after the Effective  Date.  "Chiron Common  Equivalent  Shares" are the
         total  number of  outstanding  shares of  Common  Stock  plus the total
         number of shares of Common Stock  issuable upon  conversion or exercise
         of outstanding  warrants,  options and  convertible  securities.  In no
         event  will more than  2,000,000  shares of  Restricted  Common  Stock,
         whether in a single series or in multiple series,  be subject to awards
         under the Plan.

                  (2) RESTRICTED COMMON STOCK. Shares of Restricted Common Stock
         may be  issued  under  the  Plan in one or more  separate  series.  The
         rights, preferences and privileges,  together with the restrictions and
         limitations  and the number of  shares,  of each  series of  Restricted
         Common  Stock  issuable  under  the  Plan  will  be  set  forth  in the
         Corporation's  Certificate  of  Determination  of Preferences of Common
         Stock ("Certificate")


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as in effect  from  time to time  during  the term of the  Plan.  Shares of each
series of  Restricted  Common Stock will be  convertible  or  exchangeable  into
shares of Common  Stock in  accordance  with the  terms  and  provisions  of the
Certificate applicable to that series.

                  (3)  REUSE OF  SHARES.  If any  outstanding  option  under the
         Chiron Prior Plans,  the Cetus Prior Plans or this Plan  (including the
         Substitute Options) expires or is terminated or canceled for any reason
         (including pursuant to Section X of the Plan but other than pursuant to
         surrender of the option for a cash payment in  accordance  with Section
         XIII of the Plan) before being  exercised for the full number of shares
         to which it  applies,  then the  shares  allocable  to the  unexercised
         portion of such option will not be charged  against the  limitations of
         Section IV(b)(1) and will become available for subsequent  grants under
         the Plan.  To the extent that a share right or share unit expires or is
         terminated,  or is canceled or forfeited  for any reason  without being
         paid in cash or shares of Company Stock, any remaining shares allocable
         to the unpaid  portion  of such share  right or share unit shall not be
         charged  against the  limitations  of Section  IV(b)(1) and will become
         available again for subsequent  grants under the Plan.  Unvested shares
         issued  under  the  Plan  and  subsequently  cancelled,   forfeited  or
         repurchased by the Corporation at the original  exercise or issue price
         paid per share pursuant to the  Corporation's  repurchase  rights under
         the Plan shall be added  back to the  number of shares of Common  Stock
         reserved for issuance  under Section  IV(b)(1).  Shares  subject to any
         option or  portion  of an option  surrendered  in  accordance  with the
         "Surrender  of Options for Cash or Stock"  provisions  of this Plan and
         shares  for  which a cash  payment  is made  in  lieu  thereof  under a
         restricted  share,  share unit or share right will not be available for
         subsequent  awards under the Plan.  If the exercise  price of an option
         under  the Plan is paid with  shares  of  Common  Stock or if shares of
         Common  Stock  otherwise  issuable  under the Plan are  withheld by the
         Corporation  in  satisfaction  of the  withholding  taxes  incurred  in
         connection  with the  exercise  of an option or the  vesting of a stock
         issuance  under the  Plan,  then the  number of shares of Common  Stock
         available for issuance  under Section  IV(b)(1) shall be reduced by the
         gross  number of shares for which the option is exercised or which vest
         under the stock issuance, and not by the net number of shares of Common
         Stock issued to the holder of such option or stock issuance.

         (c)  ADJUSTMENTS.  In the event any change is made to the Company Stock
subject to the Plan (whether by reason of merger, consolidation, reorganization,
recapitalization,  stock dividend,  stock split, combination of shares, exchange
of shares,  or other change in corporate or capital structure of the Corporation
affecting  the  outstanding  Common Stock as a class  without the  Corporation's
receipt of consideration) then, unless such change results in the termination of
all awards,  the Committee will make  appropriate  adjustments to (i) the number
and/or class of  securities  available  under the Plan,  (ii) the number  and/or
class of  securities  for which any one person may be granted  awards  under the
Plan,  (iii) the number and/or class of  securities  to be made under  automatic
grants to non-employee directors, and (iv) the number and/or class of securities
and,  where  applicable,  price per share of securities  subject to  outstanding
awards. Such adjustments are to be effected in a manner which shall preclude the
enlargement  or  dilution  of rights and  benefits of awards and shall be final,
binding and conclusive.




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V.       TERMS AND CONDITIONS OF DISCRETIONARY OPTIONS

         Discretionary  stock  options  granted  under  the  Plan  may,  in  the
Committee's discretion,  be either incentive stock options ("Incentive Options")
qualifying  under  Section 422 of the Internal  Revenue Code of 1986, as amended
("Internal  Revenue  Code"),  or nonstatutory  options.  Individuals who are not
employees  of  the  Corporation  or  its   subsidiaries   may  only  be  granted
nonstatutory  options.  Options will be evidenced by instruments in such form as
the Committee may from time to time approve.  These  instruments will conform to
the following terms and conditions and, in the discretion of the Committee,  may
contain such other terms,  conditions and  restrictions as are not  inconsistent
with the following:

         (a)      OPTION PRICE.  The option price per share will be fixed by
the Committee,  but in no event  will  the  option  price  per  share  be
less  than eighty-five  percent  (85%) of the Fair Market Value of the option
shares on the date of the option grant;  provided,  however,  that in no
event will the option price per share of an Incentive  Option be less than
one hundred  percent (100%) of the Fair Market Value of the option  shares on
the date of the option  grant. However,  the  Committee  may grant  options
with an option price per share less than eighty-five  percent (85%) of the
Fair Market Value of the option shares on the date of the option grant in
substitution for the outstanding  options of the acquired  company in a
merger,  if such options are granted with an option price per share  which
preserves  the option  price of the  outstanding  options,  as adjusted for
the merger. Notwithstanding the foregoing,  Substitute Options will have an
option  price per share  determined  pursuant to Section  III(d) of this Plan.

         (b)      NUMBER OF SHARES, TERM AND EXERCISE

                  (1) TERM AND NUMBER.  Each option  granted under the Plan will
                  be exercisable on such date or dates,  during such period, and
                  for such  number of shares of Company  Stock as the  Committee
                  determines  and sets forth in the  instrument  evidencing  the
                  option.  No  option  granted  under  the  Plan  will  have  an
                  expiration  date that is more than 10 years  after the date of
                  the option grant.

                  (2) EXERCISE.  After any option granted under the Plan becomes
                  exercisable,  it may be exercised by delivering notice in such
                  form to such person as the  Corporation  may  designate at any
                  time  prior  to the  termination  of such  option.  Except  as
                  authorized by the  Committee in accordance  with Section VIII,
                  the option price for the number of shares for which the option
                  is exercised will become due and payable upon exercise.

                  (3) PAYMENT.  The option price will be payable in full in cash
                  (including  cash  equivalents);  provided,  however,  that the
                  Committee may,  either at the time the option is granted or at
                  the time it is exercised and subject to such limitations as it
                  may  determine,  authorize  payment of all or a portion of the
                  option  price  in  one  or  a  combination  of  the  following
                  alternative forms

                  (i) a promissory note authorized pursuant to Section VIII;



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                  (ii) full  payment in shares of Common  Stock valued as of the
                  exercise  date and held for the  requisite  period  to avoid a
                  charge to the Corporation's earnings; or

                  (iii) to the extent the option is exercised for vested shares,
                  through a special sale and  remittance  procedure  pursuant to
                  which the optionee shall provide irrevocable instructions,  in
                  such form and pursuant to such  procedures as the  Corporation
                  shall specify, to (a) a Corporation-approved brokerage firm to
                  effect the immediate sale of the purchased shares and remit to
                  the  Corporation,  out of the sale  proceeds  available on the
                  settlement  date,  sufficient  funds  to cover  the  aggregate
                  exercise  price  payable  for the  purchased  shares  plus all
                  applicable  Federal,  state and local  income  and  employment
                  taxes required to be withheld by the  Corporation by reason of
                  such  exercise,   and  (b)  the  Corporation  to  deliver  the
                  certificates   for  the  purchased  shares  directly  to  such
                  brokerage firm in order to complete the sale.

         (c) TERMINATION OF SERVICES.  The Committee will determine and set
forth in each option  whether the option will  continue to be  exercisable,
and the terms and conditions of such exercise, on and after the date that an
optionee ceases to be employed by, or to provide services to, the Corporation
or its subsidiaries. The date of termination  of an optionee's  employment or
services will be determined by the Committee, which determination will be
final.

         (d) INCENTIVE OPTIONS. Options granted under the Plan that are intended
to be Incentive  Options will be subject to the following  additional  terms and
conditions:

                           (1)  DOLLAR  LIMITATION.   To  the  extent  that  the
                  aggregate  Fair Market Value  (determined as of the respective
                  date or  dates of  grant)  of  shares  with  respect  to which
                  options that are granted  after 1986 and that would  otherwise
                  be Incentive Options are exercisable for the first time by any
                  individual  during  any  calendar  year under the Plan (or any
                  other  plan  of  the  Corporation,   a  parent  or  subsidiary
                  corporation  or  predecessor   thereof)  exceeds  the  sum  of
                  $100,000 (or such greater amount as may be permitted under the
                  Internal  Revenue Code),  whether by reason of acceleration or
                  otherwise,  such  options  will not be  treated  as  Incentive
                  Options. In making such a determination, options will be taken
                  into account in the order in which they were granted.

                           (2)  10%  STOCKHOLDER.  If any  employee  to  whom an
                  Incentive  Option is to be granted  pursuant to the provisions
                  of the  Plan  is,  on the date of  grant,  the  owner of stock
                  (determined  with  application  of the  ownership  attribution
                  rules  of  Section  424(d)  of  the  Internal   Revenue  Code)
                  possessing  more than ten percent (10%) of the total  combined
                  voting  power of all  classes of stock of his or her  employer
                  corporation or of its parent or subsidiary  corporation  ("10%
                  Stockholder"),  then the  following  special  provisions  will
                  apply to the option granted to such individual:



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                           (i) The option  price per share of the stock  subject
                           to such  Incentive  Option  will not be less than one
                           hundred ten percent  (110%) of the Fair Market  Value
                           of the option shares on the date of grant; and

                           (ii) The  option  will not have a term in  excess  of
                           five (5) years from the date of grant.

                           (3)  PARENT  AND  SUBSIDIARY.  For  purposes  of this
                  Section   V(d),    "parent    corporation"   and   "subsidiary
                  corporation" will have the meaning  attributed to those terms,
                  as they are used in  Section  422(b) of the  Internal  Revenue
                  Code.

         (e)      WITHHOLDING

                           (1)  OBLIGATION.   The  Corporation's  obligation  to
                  deliver stock certificates upon the exercise of an option will
                  be  subject  to  the  option  holder's   satisfaction  of  all
                  applicable federal,  state and local income and employment tax
                  withholding requirements.

                           (2)  PAYMENT.  In the event that an option  holder is
                  required to pay to the  Corporation  an amount with respect to
                  income  and   employment   tax   withholding   obligations  in
                  connection  with exercise of an option,  the Committee may, in
                  its discretion and subject to such limitations and rules as it
                  may adopt, permit the option holder to satisfy the obligation,
                  in whole or in part,  by  delivering  shares of  Common  Stock
                  already held by the option holder or by making an  irrevocable
                  election  that a  portion  of the  total  value of the  shares
                  subject  to the  option be paid in the form of cash in lieu of
                  the issuance of Company  Stock,  and that such cash payment be
                  applied to the satisfaction of the withholding obligations.

VI.  DISCRETIONARY  RESTRICTED SHARES, SHARE RIGHTS, SHARE UNITS AND PERFORMANCE
UNITS

         (a)      NATURE OF AWARDS

                           (1)  RESTRICTED  SHARES.  A restricted  share granted
                  under the Plan shall consist of shares of Company  Stock,  the
                  retention  and  transfer  of which is subject  to such  terms,
                  conditions  and  restrictions  (whether  based on  performance
                  standards  or periods of service or  otherwise  and  including
                  repurchase   and/or   forfeiture   rights   in  favor  of  the
                  Corporation)  as the  Committee  shall  determine.  The terms,
                  conditions and  restrictions  to which  restricted  shares are
                  subject shall be evidenced by  instruments in such form as the
                  Committee  may from  time to time  approve  and may vary  from
                  grant  to  grant.   The  Committee  shall  have  the  absolute
                  discretion to determine whether any consideration  (other than
                  the services of the potential  award holder) is to be received
                  by  the  Corporation  or  its   subsidiaries  as  a  condition
                  precedent to the issuance of restricted shares.

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                           (2) SHARE  RIGHTS.  A share right  granted  under the
                  Plan  shall  consist  of the  right,  subject  to such  terms,
                  conditions  and  restrictions  (whether  based on  performance
                  standards  or periods of service or  otherwise),  to receive a
                  share  of  Company   Stock   (together   with  cash   dividend
                  equivalents   if  so  determined  by  the  Committee)  as  the
                  Committee   shall   determine   and  shall  be   evidenced  by
                  instruments  in such  form as the  Committee  may from time to
                  time approve. The Committee shall have the absolute discretion
                  to  determine  whether  any  consideration   (other  than  the
                  services of the  potential  award holder) is to be received by
                  the Corporation or its  subsidiaries as a condition  precedent
                  to the issuance of shares pursuant to share rights. The terms,
                  conditions and  restrictions to which share rights are subject
                  may vary from grant to grant.

                           (3) SHARE UNITS.  A share unit granted under the Plan
                  shall  consist of the right to receive an amount in cash equal
                  to the Fair Market Value of one share of Company  Stock on the
                  date of valuation  of the unit  (together  with cash  dividend
                  equivalents  if so  determined  by the  Committee)  less  such
                  amount,  if any, as the Committee  shall specify.  The date of
                  valuation  and  payment  of cash  under a share  unit  and the
                  conditions,  if any,  to which  such  payment  will be subject
                  (whether based on performance  standards or periods of service
                  or otherwise) shall be determined by the Committee. The terms,
                  conditions and  restrictions  to which share units are subject
                  may vary from grant to grant.

         (b) WITHHOLDING.  The Committee may require,  or permit an award holder
to  elect,  that a  portion  of the total  value of the  shares of Common  Stock
subject to  restricted  shares or share rights held by one or more award holders
be paid in the form of cash in lieu of the  issuance  of Company  Stock and that
such cash payment be applied to the satisfaction of the federal, state and local
income and employment  tax  withholding  obligations  that arise at the time the
restricted  shares and share rights  become free of all  restrictions  under the
Plan.

         (c) CASH  PAYMENTS.  The  Committee  may provide  award holders with an
election to receive a percentage of the total value of the Company Stock subject
to restricted  shares or share rights in the form of a cash payment,  subject to
such terms, conditions and restrictions as the Committee shall specify.

         (d) ELECTIVE AND TANDEM  AWARDS.  The  Committee  may award  restricted
shares,  share rights, and share units independently of other compensation or in
lieu of  compensation  that would  otherwise  be paid in cash or stock  options,
whether at the election of the potential  award holder or otherwise.  The number
of restricted  shares,  share rights or share units to be awarded in lieu of any
cash  compensation  amount or number of stock options shall be determined by the
Committee  in its  sole  discretion  and  need  not be  equal  to such  foregone
compensation in Fair Market Value. In addition, restricted shares, share rights,
and share units may be awarded in tandem with stock  options,  so that a portion
of such award becomes payable or becomes free of restrictions only if and to the
extent that the tandem  options are not exercised or are  forfeited,  subject to
such terms and conditions as the Committee may specify.

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         (e) MODIFICATION OF AWARDS. Except to the extent an award is granted as
a performance  unit, the Committee may, in its sole discretion,  modify or waive
any  or  all  of  the  terms,  conditions  or  restrictions  applicable  to  any
outstanding restricted share, share right or share unit; provided, however, that
no such  modification  or waiver shall,  without the consent of the holder of an
outstanding award, adversely affect the holder's rights thereunder.

         (f) PERFORMANCE UNITS. Effective March 8, 1996, the Committee may grant
restricted shares, share rights and share units to 162(m) executives that comply
with the requirements of Code Section 162(m).

Performance  units will  become  payable or vest upon  attainment  of  specified
performance goals over a specified performance period.

                           (1) PERFORMANCE  GOALS.  The Committee will determine
                  the Corporation  performance goal or goals that must be met to
                  achieve the maximum  payout within the shorter of the first 90
                  days  of the  specified  performance  period  over  which  the
                  performance  goal or goals  will be  measured,  or 25% of such
                  performance  period.  The Committee may establish a goal based
                  on  more  than  one  performance  criteria,  or may  establish
                  multiple   goals,   but  any  payout  must  be  based  on  the
                  satisfaction  of at least one goal.  The Committee may provide
                  for different levels of payouts based on relative  performance
                  toward a performance goal.

                           (2) PERFORMANCE  CRITERIA.  Performance  units may be
                  based on one or more of the  following  performance  criteria:
                  total  shareholder  return;  the  achievement  of a  specified
                  closing or average closing price of Common Stock; the absolute
                  or percentage increase in the closing or average closing price
                  of Common Stock and/or one or more of the  following  measures
                  of the Corporation's net income for the specified  performance
                  period  determined  in  accordance  with  generally   accepted
                  accounting   principles   as   consistently   applied  by  the
                  Corporation:  absolute net income or a percentage  or absolute
                  dollar  increase  in  net  income,  earnings  per  share  or a
                  percentage or absolute  dollar increase in earnings per share,
                  or return  on assets  employed  or equity or a  percentage  or
                  absolute  dollar  increase  in return on  assets  employed  or
                  equity;  or the  Corporation's  absolute  gross  revenues or a
                  percentage or absolute  dollar  increase in gross revenues for
                  the specified performance period determined in accordance with
                  generally  accepted  accounting   principles  as  consistently
                  applied  by the  Corporation.  The  awards  may  based  on the
                  Corporation's   performance   alone,   or  the   Corporation's
                  performance  may  be  measured  against   variously   weighted
                  published benchmark indices that the Committee  determines are
                  representative of the Corporation's  peer group, which indices
                  may include the Standard & Poor's Health Care Composite Index,
                  the Standard & Poor's Health Care  Diversified  Index, and the
                  AMEX Biotechnology Index, among others.

For purposes of this Plan, net income and gross revenues shall be net income and
gross revenues of the Corporation and its consolidated  subsidiaries as reported
by the Corporation and certified by its independent public accountants,  but the
Committee  in fixing any goal may  exclude any or all of the


                                       9
<PAGE>


following if they have a material effect on annual net income or gross revenues:
events or  transactions  that are  either  unusual  in nature or  infrequent  in
occurrence (such as  restructuring/reorganization  charges, the purchase or sale
of in process technology,  the sale or discontinuance of a business segment, the
sale of investment securities,  losses from litigation, the cumulative effect of
changes in accounting principles and natural disasters),  depreciation, interest
or taxes.

                  (3) REDUCTION OR  CANCELLATION  OF  PERFORMANCE  UNITS.  Final
         payouts are subject to the approval of the Committee, which may reserve
         the absolute discretion to reduce or cancel any payout thereunder.

VII.     AUTOMATIC AWARDS TO DIRECTORS

         (a) OPTIONS. Effective March 8, 1996, non-employee members of the Board
("Eligible  Directors")  will  automatically  be  granted  nonstatutory  options
("Automatic  Options")  to  purchase  the  number  of  shares  of  Common  Stock
determined as set forth below (subject to adjustment under Section IV(c) hereof)
on the dates and terms set forth below:

         (1) OPTION  GRANTS.  On the last business day of the second  quarter of
         each fiscal year of the  Corporation  ("Automatic  Grant  Date"),  each
         continuing  Eligible Director  (including each Eligible Director who is
         newly elected or appointed on the Automatic Grant Date) will receive an
         Automatic  Option to  purchase  that  number of whole  shares of Common
         Stock determined by dividing $100,000 by the Average Stock Price on the
         Automatic Grant Date.

         (2)  PRO-RATA  OPTION  GRANTS.  Each  person  who is newly  elected  or
         appointed  as an Eligible  Director  on a date other than an  Automatic
         Grant Date, will receive,  on the date of such election or appointment,
         an  Automatic  Option to purchase a pro-rata  number of whole shares of
         Common Stock determined by multiplying $8,333.33 by the number of whole
         calendar months between the date of the Eligible Director's election or
         appointment and the next Automatic Grant Date, and dividing that number
         by the  Average  Stock  Price of a share of  Common  Stock on the grant
         date.

         (3)  ADVISORY  COUNSELLORS.  Advisory  Counsellors  of  Cetus  will not
         qualify for Automatic Option Grants.

         (4) TERMS AND CONDITIONS.  The terms and conditions  applicable to each
         Automatic Option Grant will be as follows:

                  (i)  PRICE.  The  option  price per share will be equal to one
         hundred  percent (100%) of the Fair Market Value of one share of Common
         Stock on the date of grant;

                  (ii) TERM. Each Automatic  Option will have a term of ten (10)
         years,  measured from the date of grant, and will be exercisable at any
         time  during  the  term  for  all or any  part of the  covered  shares;
         provided,  however, that no Automatic Options may be exercised prior to
         approval of the Plan by the Corporation's stockholders.

                                       10
<PAGE>

                  (iii)  REPURCHASE.  The shares  purchased  under the Automatic
         Options  will  be  subject  to  repurchase  by the  Corporation  at the
         original  exercise  price in the event an  optionee  ceases to  provide
         services to the  Corporation  or its  subsidiaries  as a  director,  an
         employee, a consultant or an independent contractor.  The Corporation's
         repurchase  rights  will  lapse,  and the  optionee's  interest  in the
         purchased  shares will vest,  in a series of equal annual  installments
         over the five-year  period  measured from the grant date,  provided the
         optionee  continues  to  provide  such  services.   In  addition,   the
         Corporation's  repurchase  right  will lapse in its  entirety,  and the
         Automatic  Options will become fully vested,  should one or more of the
         following  events occur while the optionee is providing  such services:
         (A) the optionee's death, or (B) the optionee's permanent disability.

                  (iv)  PAYMENT.  Upon  exercise of the  Automatic  Option,  the
         option price for the purchased  shares will become payable  immediately
         in cash or in shares of Common  Stock that the optionee has held for at
         least  six (6)  months.  Payment  may  also be  made by  delivery  of a
         properly   executed   exercise   notice   together   with   irrevocable
         instructions  to a broker to promptly  deliver to the  Corporation  the
         amount of sale or loan proceeds to pay the option price.

                  (v)  CESSATION.  In the event the  optionee  ceases to provide
         services to the  Corporation  or its  subsidiaries  as a  director,  an
         employee,  a consultant  or an  independent  contractor,  the Automatic
         Option may be exercised, within the term of the Automatic Option, for a
         period of three (3)  months  after the date of such  cessation  (twelve
         (12) months in the case of cessation by reason of disability or death).
         In the case of death, the Automatic Option may be exercised within such
         period by the estate or heirs of the optionee.

                  (b) SHARE RIGHTS.  Effective March 8, 1996, Eligible Directors
         will  automatically be granted share rights  ("Automatic Share Rights")
         to receive the number of shares of Common Stock determined as set forth
         below  (subject to adjustment  under Section IV(c) hereof) on the dates
         and terms set forth below:

                  (1) NEW  DIRECTORS.  Each newly elected or appointed  Eligible
         Director will be granted,  on the date of such election or appointment,
         an  Automatic  Share  Right to  purchase  that  number of whole  shares
         determined by dividing  $40,000 by the Average Stock Price on the grant
         date.

                  (2)      CONTINUING DIRECTORS.

                           (i) FULL GRANTS. Subject to Subsection  VII(b)(2)(ii)
                  below,   on  each  Automatic   Grant  Date,   each  incumbent,
                  continuing  Eligible  Director  will be granted  an  Automatic
                  Share Right to receive  that number of whole  shares of Common
                  Stock  determined  by dividing  $25,000 by the  Average  Stock
                  Price  on  the  Automatic  Grant  Date.   Notwithstanding  the
                  foregoing, on the Automatic Grant Date occurring in June 1996,
                  each continuing  Eligible Director elected or appointed before
                  March 8, 1996,  will be granted an  Automatic  Share  Right to
                  receive  that number of whole shares  determined  by using the
                  $40,000 in lieu of the $25,000 figure.

                                       11
<PAGE>

                           (ii)  PRO-RATA  GRANTS.  If an  Eligible  Director is
                  newly  elected or  appointed on a date other than an Automatic
                  Grant Date,  on the  immediately  succeeding  Automatic  Grant
                  Date,  such  Eligible  Director  will be  granted  a  pro-rata
                  Automatic Share Right to receive the number of whole shares of
                  Common Stock  determined  by  multiplying  the number of whole
                  calendar  months  since the  Eligible  Director's  election or
                  appointment  by  $2,083.33  and  dividing  the  product by the
                  Average Stock Price on the Automatic Grant Date.

                  (3) ADVISORY  COUNSELLORS.  Advisory Counsellors of Cetus will
         not qualify for Automatic Share Rights.

                  (4) TERMS AND CONDITIONS.  The terms and conditions applicable
         to each Automatic Share Right will be as follows:

                           (i) TERM. Each Automatic Share Right will have a term
                  of five (5) years, measured from the grant date.

                           (ii) VESTING.  The Automatic Share Right will vest in
                  a  series  of equal  annual  installments  over the  five-year
                  period  measured  from the grant date,  provided  the Eligible
                  Director  continues to provide  services to the Corporation or
                  its subsidiaries as a director,  an employee,  a consultant or
                  an  independent  contractor.  Shares of Common  Stock  will be
                  issued in  satisfaction  of the  Automatic  Share Right as the
                  Automatic  Share Right vests.  In addition,  full vesting will
                  occur should one or more of the  following  events occur while
                  the Eligible  Director is  providing  such  services:  (A) the
                  Eligible  Director's  death,  or (B) the  Eligible  Director's
                  permanent disability.

                           (iii) CESSATION.  In the event the Eligible  Director
                  ceases  to  provide   services  to  the   Corporation  or  its
                  subsidiaries  as a director,  an employee,  a consultant or an
                  independent  contractor,   the  Automatic  Share  Right  shall
                  terminate with respect to the unvested portion of the Award.

         (c)  COST-OF-LIVING  INCREASES.  Each dollar value used in this Article
VII will be subject to annual  cost-of-living  increases.  The increases will be
based on the Consumer Price Index, and will occur  automatically  beginning with
the 1997 Automatic Grant Date.

         (d) AVERAGE STOCK PRICE.  Average Stock Price means the average closing
price of one share of Common  Stock as  reported on the Nasdaq  National  Market
System for the previous  twelve month period ending on the last day of the month
before the grant date of the award.

VIII.    LOANS AND INSTALLMENT PAYMENTS

         In order to assist an award  holder  (including  an employee  who is an
officer or director of the  Corporation) in the acquisition of shares of Company
Stock  pursuant to an award  granted  under the Plan (other than pursuant to the
Automatic Option Grant provisions of this Plan), the


                                       12
<PAGE>

Committee may authorize, at either the time of the grant of an award or the time
of the acquisition of Company Stock pursuant to the award (i) the extension of a
loan to the  award  holder by the  Corporation,  (ii) the  payment  by the award
holder of the purchase price, if any, of the Company Stock in  installments,  or
(iii) the  guarantee by the  Corporation  of a loan obtained by the award holder
from a third party. The terms of any loans,  guarantees or installment payments,
including  the  interest  rate and terms of  repayment,  will be  subject to the
discretion of the Committee.  Loans,  installment payments and guarantees may be
granted without security, the maximum credit available being the purchase price,
if any, of the Company Stock acquired plus the maximum  federal and state income
and  employment  tax  liability  that may be  incurred  in  connection  with the
acquisition.

IX.      ASSIGNABILITY

         No award granted under the Plan is  assignable or  transferable  by the
award holder other than by Will or by the laws of descent and distribution,  and
during the  lifetime of the award  holder,  only the award  holder may  exercise
options or exercise the rights  provided  under awards  granted  under the Plan.
However,  if and to the extent that the  Committee so  authorizes at the time an
award is granted or amended,  an option  (other than an option  designated as an
Incentive  Option) or other award may be assigned in whole or in part during the
grantee's  lifetime to one or more of the grantee's  family members or an entity
substantially  owned,  benefiting or controlled by the grantee or one or more of
grantee's  family  members if and to the extent that the Securities and Exchange
Commission  Form S-8  Registration  Statement would continue to be available for
the exercise of the award and resale of the underlying securities following such
assignment.  The terms  applicable to the assigned  portion shall be the same as
those in effect for the award  immediately prior to such assignment and shall be
set forth in such  documents  issued to the assignee as the  Committee  may deem
appropriate.

X.       CANCELLATION AND NEW GRANT OF OPTIONS

         The Committee  will have the authority to effect,  at any time and from
time to time, with the consent of the affected option holders,  the cancellation
of any or all outstanding options under the Plan, a Cetus Prior Plan or a Chiron
Prior Plan (other than options granted under automatic  option grant  provisions
of these plans) and to grant in substitution therefor new options under the Plan
covering the same or different numbers of shares, but having an option price per
share not less than  eighty-five  percent  (85%) of the Fair Market Value on the
new grant  date or, in the case of an  Incentive  Option,  one  hundred  percent
(100%) of the Fair  Market  Value on the new grant  date (or,  in the case of an
Incentive Option granted to a 10% Stockholder, one hundred ten percent (110%) of
such Fair Market Value).

XI.      ACCELERATION AND TERMINATION OF AWARDS

         (a)  ACCELERATION.  In the event of an  agreement  to dispose of all or
substantially all of the assets or outstanding  capital stock of the Corporation
by means of a sale, merger,  reorganization,  or liquidation, each award will be
automatically  accelerated  so that (1) options  become fully  exercisable  with
respect  to the total  number  of shares  purchasable  under  the  options;  (2)
restrictions  on  restricted  shares  will be  eliminated,  and the shares  will
immediately vest; and (3)


                                       13
<PAGE>


share  rights and share  units will  immediately  vest and become  payable.  The
Committee may also provide for the automatic  termination  of repurchase  rights
upon the occurrence of such an event.

         (b) NO ACCELERATION.  No acceleration of awards will occur if the terms
of the agreement require as a prerequisite to the consummation of any such sale,
merger,  reorganization  or  liquidation  that  each such  award  will be either
assumed by the  successor  corporation  or parent  thereof or be replaced with a
comparable  award  subject  to shares  of the  successor  corporation  or parent
thereof.  The determination of such comparability will be made by the Committee,
and its determination will be final,  binding and conclusive.  Upon consummation
of  the  sale,  merger,   reorganization  or  liquidation  contemplated  by  the
agreement, all awards, whether or not accelerated, will terminate unless assumed
pursuant to a written agreement by the successor corporation or parent thereof.

         (c) CORPORATE STRUCTURE. The grant of awards under this Plan will in no
way affect the right of the Corporation 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.

XII.  VALUATION

         With  regard to all  Substitute  Options,  Fair  Market  Value  will be
determined in  accordance  with the relevant  option plan  documents on the date
that the outstanding  options were granted.  With regard to awards granted under
this Plan, for all valuation purposes under the Plan, the Fair Market Value of a
share of Common  Stock or  Restricted  Common  Stock (as the case may be) on any
relevant date will be determined in accordance with the following provisions:

         (a) If the Common Stock or  Restricted  Common 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 will be the average between the
reported  high price and the  reported low price of one share of Common Stock or
Restricted  Common  Stock  (as the case may be) 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.

         (b) If the  Common  Stock  or  Restricted  Common  Stock is at the time
listed or admitted to trading on any stock exchange,  then the Fair Market Value
will be the average  between the reported  high price and the reported low price
of one share of Common Stock or Restricted  Common Stock (as the case may be) on
the date in question on the stock  exchange  that is the primary  market for the
stock, as such prices are officially quoted on such exchange.

         (c) If the Common Stock or Restricted Common Stock (as the case may be)
is at the time neither  listed nor admitted to trading on any stock exchange nor
traded in the  over-the-counter  market,  or if the  Committee  determines  that
neither  subparagraph  (a) nor subparagraph (b) above reflects Fair Market Value
of the stock and the award was not  granted  pursuant  to the  Plan's  Automatic
Award provisions, then the Fair Market Value will be determined by the Committee
after taking into account such factors as the Committee deems appropriate, or in
the case of Automatic Awards, by an independent third party valuation.

                                       14
<PAGE>

XIII.    SURRENDER OF OPTIONS FOR CASH OR STOCK

         (a) STOCK APPRECIATION  RIGHTS.  If, and only if the Committee,  in its
discretion,  elects to implement an option surrender program under the Plan, one
or more option  holders may, upon such terms and conditions as the Committee may
establish at the time of the option grant or at any time thereafter,  be granted
the right to surrender  all or part of an  unexercised  option in exchange for a
distribution equal in amount to the difference between (i) the Fair Market Value
(at date of surrender) of the shares for which the surrendered option or portion
thereof is at the time  exercisable and (ii) the aggregate  option price payable
for such shares.  The  distribution  to which an option holder becomes  entitled
under this  Section may be made in shares of Common Stock or  Restricted  Common
Stock, valued at Fair Market Value at the date of surrender,  in cash, or partly
in shares and partly in cash, as the Committee,  in its sole  discretion,  deems
appropriate.  The option surrender  provisions of this Section will not apply to
options granted pursuant to the Automatic Option Grant provisions of this Plan.

         (b) LIMITED STOCK APPRECIATION  RIGHTS. If outstanding options of Cetus
for which Substitute  Options are issued pursuant to Section III(d) have Limited
Stock Appreciation Rights ("LSARs") attached thereto,  then each such LSAR shall
be  honored  by  the  Corporation  in  accordance  with  its  terms  and  remain
exercisable  for a period of 60 days  following  the date that  stockholders  of
Cetus approve the Merger;  provided,  however,  that if the LSAR was  originally
granted within 6 months of the date that Cetus stockholders  approve the Merger,
then the LSAR will be exercisable  for a period of 60 days following  expiration
of such six-month period.  Upon expiration of the applicable 60-day period, each
such LSAR not previously  exercised shall expire.  Upon exercise of an LSAR, the
related  option  will be  cancelled,  and Chiron  will pay to the LSAR holder an
amount  in cash for each  share  with  respect  to which  the LSAR is  exercised
determined in accordance with the terms of the Cetus Prior Plans.

XIV.  REPURCHASE RIGHTS

         The  Committee  may, in its  discretion,  establish as a term of one or
more awards  granted under the Plan that the  Corporation  (or its assigns) will
have the right,  exercisable  upon the award holder's  termination of employment
with, or cessation of services for, the  Corporation  and its  subsidiaries,  to
repurchase  at the original  price paid,  if any, for such shares of (1) Company
Stock acquired by the award holder  pursuant to the granted award, or (2) Common
Stock into which acquired Restricted Common Stock may have been converted or for
which Restricted Common Stock may have been exchanged. Any such repurchase right
will be  exercisable  by the  Corporation  (or its assigns)  upon such terms and
conditions (including provisions for the expiration of such right in one or more
installments)  as the Committee may specify in the  instrument  evidencing  such
right.  The Committee will also have full power and authority to provide for the
automatic  termination of the  Corporation's  repurchase  rights, in whole or in
part,  thereby  accelerating  the vesting of any or all of the purchased  shares
(other than purchased shares obtained pursuant to the Automatic Award provisions
of this Plan) upon the occurrence of any change in control  specified in Article
XI.

XV.      RIGHT OF FIRST REFUSAL

                                       15
<PAGE>


         The  Committee  may, in its  discretion,  establish as a term of one or
more awards  granted  under the Plan that the  Corporation  has a right of first
refusal  with respect to the  proposed  disposition  by the award holder (or any
successor in interest by reason of purchase,  gift or other mode of transfer) of
any shares of (1) Company  Stock  acquired by the award  holder  pursuant to the
granted award, or (2) Common Stock into which purchased  Restricted Common Stock
may have been converted or for which acquired  Restricted  Common Stock may have
been  exchanged.  Any such right of first  refusal  will be  exercisable  by the
Corporation or its assigns in accordance with the terms and conditions specified
in the instrument evidencing such right.

XVI.     EFFECTIVE DATE AND TERM OF PLAN

         (a) EFFECTIVE DATE. The Plan became effective on December 10, 1991, the
date  that it was  approved  by the  Corporation's  stockholders.  The  Plan was
subsequently amended on several occasions and, as amended through March 8, 1996,
was approved by the  Corporation's  stockholders  on May 16, 1996.  The Plan was
further amended on February 28, 1997, and as amended  through  February 28, 1997
was approved by the  Corporation's  stockholders  on May 15, 1997.  The Plan was
further amended on September 21, 2000, to allow the Corporation to grant options
in connection with a merger with an option price per share less than eighty-five
percent  (85%) of the Fair Market Value of the option  shares on the grant date,
in substitution  for the outstanding  options of the acquired  company,  if such
price is intended to preserve the option price of the  outstanding  options,  as
adjusted for the merger.

         (b) TERM. Incentive Options may be granted under the Plan until May 14,
2007,  and may not be issued  under the Plan after  that  date.  Subject to this
limitation,  the Committee may grant awards under the Plan at any time after the
Effective Date of the Plan and before the Plan is terminated by the Board.

XVII.    AMENDMENT OR DISCONTINUANCE

         (a) BOARD.  The Board may amend,  suspend  or  discontinue  the Plan in
whole or in part at any time; provided,  however,  that (a) except to the extent
necessary to qualify as Incentive  Options any or all options  granted under the
Plan that are intended to so qualify,  such action may not,  without the consent
of the award holder,  adversely  affect rights and  obligations  with respect to
awards  outstanding under the Plan; (b) certain amendments may, as determined by
the Board in its sole  discretion,  require  stockholder  approval  pursuant  to
applicable laws or regulations.

         (b)  COMMITTEE.  The  Committee  will have full power and  authority to
modify or waive any or all of the terms,  conditions or restrictions  applicable
to any outstanding award (other than Automatic Option Grants), to the extent not
inconsistent with the Plan.

         (c) SUBSTITUTE OPTIONS. Substitute Options will be subject to amendment
in accordance with the terms of this Plan.

XVIII.     NO OBLIGATION

                                       16
<PAGE>


         Nothing contained in the Plan (or in any award granted under this Plan,
a Chiron  Prior Plan or a Cetus  Prior Plan)  shall  confer  upon any  employee,
consultant, or independent contractor any right to continue in the employ of, or
to provide  services  to, the  Corporation  or any  affiliate  or  constitute  a
contract or  agreement  of  employment  or for the  provision  of  services,  or
interfere in any way with the right of the Corporation or an affiliate to reduce
such employee's,  consultant's or independent contractor's compensation from the
rate in existence  at the time of the granting of an award or to terminate  such
employee's,  consultant's or independent  contractor's employment or services at
any time,  with or without  cause;  but nothing  contained in the Plan or in any
award granted under this Plan shall affect any contractual rights of an employee
pursuant to a written employment agreement.

XIX.     USE OF PROCEEDS

         The cash  proceeds  received  by the  Corporation  pursuant  to  awards
granted under the Plan will be used for general corporate purposes.

XX.      COMPLIANCE

         (a)  FEDERAL  AND STATE  LAWS.  No  option  may be  exercised,  and the
Corporation will not be obligated to issue stock under any award unless,  in the
opinion of  counsel  for the  Corporation,  such  exercise  and  issuance  is in
compliance with all applicable federal and state securities laws. As a condition
to the grant of any award,  or to the  issuance  of stock  under any award,  the
Committee may require that the award holder agree to comply with such provisions
of federal and state  securities  laws as may be applicable to such grant, or to
the sale of stock  acquired  pursuant  to the Plan,  and that the  award  holder
deliver  to  the  Corporation  a  written  agreement,   in  form  and  substance
satisfactory to the Corporation and its counsel, implementing such agreement.

         (b)  INFORMATION.  The  Corporation  will  furnish to each award holder
participating  in the Plan (other  than a key  employee or a director) a copy of
the Corporation's Annual Report to Stockholders for the most recent fiscal year,
and additional  copies will be furnished,  without charge, to such award holders
upon request to the Secretary of the Corporation.




                                       17
<PAGE>





                                   APPENDIX A

            SPECIAL PROVISIONS RELATED TO 1995 CIBA-GEIGY TRANSACTION

         Those persons  holding  options to acquire shares of Common Stock under
the  Corporation's  1991 Stock  Option Plan on November 20, 1994 are granted the
following rights ("Rights") with respect to each such option:

                  (i) the right to receive  upon the closing of the tender offer
         contemplated  under the Investment  Agreement entered into on such date
         among the Corporation and Ciba-Geigy  Limited,  Ciba-Geigy  Corporation
         and Ciba Biotech Partnership, Inc. (the "Closing") a cash payment equal
         to (A) 37.33% of the number of shares of Common  Stock with  respect to
         which each such option would first become  exercisable in calendar year
         1995  multiplied by (B) the  difference  between $117 per share and the
         exercise price per share of such option with respect to such shares and

                  (ii) with  respect  to the  remaining  shares of Common  Stock
         subject to each such option,  the right,  exercisable at any time after
         the later of the Closing or the date that such an option first  becomes
         exercisable  with respect to such shares,  to surrender that portion of
         such  option  relating  to 37.33% of such  shares in return  for a cash
         payment  equal  (A) to the  difference  between  $117 per share and the
         exercise price per share of such option multiplied by (B) the number of
         shares with  respect to which such option is so  surrendered.  However,
         the grant and exercise of any such right with respect to any officer or
         director  subject to Section 16 of the Securities  Exchange Act of 1934
         shall be subject to stockholder approval of the grant of such rights at
         the Corporation's 1995 stockholder  meeting.  The grant of such rights,
         which are made with  respect to 1,858,776  optioned  shares shall be in
         addition  to, and shall not count  against,  the  aggregate  and annual
         limits on the number of shares with respect to which other awards under
         the Plan may be made to all individuals and/or a single individual.