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                                                                    Exhibit 10.7


                                BIONUTRICS, INC.
                             1996 STOCK OPTION PLAN
                       (AS AMENDED THROUGH MARCH 26, 1998)

                                   ARTICLE 1.
                                    GENERAL

         1.1.     PURPOSE OF PLAN; TERM

                  1.1.1. ADOPTION. On October 31, 1996, the Board of Directors
(the "Board") of Bionutrics, Inc., a Nevada corporation (the "Company"), adopted
a stock option plan to be known as the 1996 Stock Option Plan (the "Plan"). The
Plan was approved by the stockholders on October 31, 1996. The Plan was amended
on December 12, 1997 by the Board, which amendment was approved by the
stockholders on March 26, 1998, to increase the number of shares that may be
issued under the Plan.

                  1.1.2. DEFINED TERMS. All initially capitalized terms used
hereby shall have the meaning set forth in Article V hereto.

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

                  1.1.4. CHARACTER OF OPTIONS. Options granted under this Plan
to employees of the Company (or Parent or Subsidiary Corporations) that are
intended to qualify as an "incentive stock option" as defined in Code section
422 ("Incentive Stock Option") will be specified in the applicable stock option
agreement. All other Options granted under this Plan will be nonqualified
options.

                  1.1.5. RULE 16b-3 PLAN. The Company expects to be subject to
the reporting requirements of the Securities Exchange Act of 1934, and therefore
the Plan is intended to comply with all applicable conditions of Rule 16b-3 (and
all subsequent revisions thereof) promulgated under the 1934 Act. In addition,
the Board may amend the Plan from time to time as it deems necessary in order to
meet the requirements of any amendments to Rule 16b-3 without the consent of the
stockholders of the Company.

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

         1.2.     STOCK AND MAXIMUM NUMBER OF SHARES SUBJECT TO PLAN.

                  1.2.1. DESCRIPTION OF STOCK AND MAXIMUM SHARES ALLOCATED. The
shares of stock subject to the provisions of the Plan and issuable upon the
grant of Stock Awards or upon the exercise of SARs or Options granted under the
Plan are shares of the Company's common stock, $0.001 par value per share (the
"Stock"), which may be either unissued or treasury shares. The Company may not
issue more than 2,850,000 shares of Stock pursuant to the Plan, unless the Plan
is amended as provided in Section 1.3 or the maximum number of shares subject to
the Plan is adjusted as provided in Section 3.1.

                  1.2.2. CALCULATION OF AVAILABLE SHARES. The number of shares
of Stock available under the Plan shall be reduced: (i) by any shares of Stock
issued (including any shares of Stock withheld for tax withholding requirements)
upon exercise of an Option and (ii) by any shares of Stock issued (including any
shares of Stock withheld for tax withholding requirements) upon the grant of a
Stock Award or the exercise of a SAR.

                  1.2.3. RESTORATION OF UNPURCHASED SHARES. If an Option or SAR
expires or terminates for any reason prior to its exercise in full and before
the term of the Plan expires, the shares of Stock subject to, but not issued
under, such Option or SAR shall, without further action or by or on behalf of
the Company, again be available under the Plan.

         1.3.     APPROVAL; AMENDMENTS.

                  1.3.1. APPROVAL BY STOCKHOLDERS. The Plan was submitted to the
stockholders of the Company for their approval at a regular or special meeting
held within 12 months after the adoption of the Plan by the Board. Shareholder
approval is evidenced by the affirmative vote of the holders of a majority of
the shares of the Company's Common Stock present in person or by proxy and
voting at the meeting. The date such shareholder approval was obtained shall be
referred to herein as the "Effective Date."

                  1.3.2. COMMENCEMENT OF PROGRAMS. The Grant Program is
effective immediately, but if the Plan is not approved by the stockholders
within 12 months after its adoption by the Board, the Plan and all Options and
Awards made under the Grant Program will automatically terminate and be
forfeited to the same extent and with the same effect as though the Plan had
never been adopted.

                  1.3.3. AMENDMENTS TO PLAN. The Board may, without action on
the part of the Company's stockholders, make such amendments to, changes in and
additions to the Plan as it may, from time to time, deem necessary or
appropriate and in the best interests of the Company; provided, the Board may
not, without the consent of the applicable Optionholder, take any action which
disqualifies any Option previously granted under the Plan for treatment as an
Incentive Stock Option or which adversely affects or impairs the rights of the
Optionholder of any Option outstanding under the Plan, and further provided
that, except as provided in Article III hereof, the 


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Board may not, without the approval of the Company's stockholders, (i) increase
the aggregate number of shares of Stock subject to the Plan, (ii) reduce the
exercise price at which Options may be granted or the exercise price at which
any outstanding Option may be exercised, (iii) extend the term of the Plan, (iv)
change the class of persons eligible to receive Options or Awards under the
Plan, or (v) materially increase the benefits accruing to participants under the
Plan. Notwithstanding the foregoing, Options or Awards may be granted under this
Plan to purchase shares of Stock in excess of the number of shares then
available for issuance under the Plan if (A) an amendment to increase the
maximum number of shares issuable under the Plan is adopted by the Board prior
to the initial grant of any such Option or Award and within one year thereafter
such amendment is approved by the Company's stockholders and (B) each such
Option or Award granted does not become exercisable or vested, in whole or in
part, at any time prior to the obtaining of such shareholder approval.

                                   ARTICLE 2.
                                  GRANT PROGRAM

         2.1.     PARTICIPANTS; ADMINISTRATION.

                  2.1.1. ELIGIBILITY AND PARTICIPATION. Options and Awards may
be granted only to persons ("Eligible Persons") who at the time of grant are (i)
key personnel (including officers and directors) of the Company or Parent or
Subsidiary Corporations, or (ii) consultants or independent contractors who
provide valuable services to the Company or Parent or Subsidiary Corporations;
provided that (1) Incentive Stock Options may only be granted to key personnel
of the Company (and its Parent or Subsidiary Corporation) who are also employees
of the Company (or its Parent or Subsidiary Corporation) and (2) the maximum
number of shares of stock with respect to which Options or Awards may be granted
to any employee during the term of the Plan shall not exceed 50 percent of the
shares of stock covered by the Plan. A Plan Administrator shall have full
authority to determine which Eligible Persons in its administered group are to
receive Option grants under the Plan, the number of shares to be covered by each
such grant, whether or not the granted Option is to be an Incentive Stock
Option, the time or times at which each such Option is to become exercisable,
and the maximum term for which the Option is to be outstanding. A Plan
Administrator shall also have full authority to determine which Eligible Persons
in such group are to receive Awards under the Grant Program and the conditions
relating to such Award.

                  2.1.2. GENERAL ADMINISTRATION. The Eligible Persons under the
Grant Program shall be divided into two groups and there shall be a separate
administrator for each group. One group will be comprised of Eligible Persons
that are Affiliates. For purposes of this Plan, the term "Affiliates" shall mean
all "officers" (as that term is defined in Rule 16a-1(f) promulgated under the
1934 Act) and directors of the Company and all persons who own ten percent or
more of the Company's issued and outstanding equity securities. Initially, the
power to administer the Grant Program with respect to Eligible Persons that are
Affiliates shall be vested with the Board. At any time, however, the Board may
vest the power to administer the Grant Program with respect to Persons that are
Affiliates exclusively with a committee (the "Senior Committee") comprised of
two or more Non-Employee Directors which are appointed by the Board. The Senior
Committee, at its sole discretion, may require approval of the Board for
specific grants of 


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Options or Awards under the Grant Program. The administration of all Eligible
Persons that are not Affiliates ("Non-Affiliates") shall be vested exclusively
with the Board. The Board, however, may at any time appoint a committee (the
"Employee Committee") of two or more persons who are members of the Board and
delegate to such Employee Committee the power to administer the Grant Program
with respect to the Non-Affiliates. In addition, the Board may establish an
additional committee or committees of persons who are members of the Board and
delegate to such other committee or committees the power to administer all or a
portion of the Grant program with respect to all or a portion of the Eligible
Persons. Members of the Senior Committee, Employee Committee or any other
committee allowed hereunder shall serve for such period of time as the Board may
determine and shall be subject to removal by the Board at any time. The Board
may at any time terminate all or a portion of the functions of the Senior
Committee, the Employee Committee, or any other committee allowed hereunder and
reassume all or a portion of powers and authority previously delegated to such
committee. The Board in its discretion may also require the members of the
Senior Committee, the Employee Committee or any other committee allowed
hereunder to be "outside directors" as that term is defined in any applicable
regulations promulgated under Code section 162(m).

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

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

         2.2.     TERMS AND CONDITIONS OF OPTIONS

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


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                  2.2.2. EXERCISE PRICE. Upon the grant of any Option, a Plan
Administrator shall specify the option price per share. If the Option is
intended to qualify as an Incentive Stock Option under the Code, the option
price per share may not be less than 100 percent of the fair market value per
share of the stock on the date the Option is granted (110 percent if the Option
is granted to a shareholder who at the time the Option is granted owns or is
deemed to own stock possessing more than 10 percent of the total combined voting
power of all classes of stock of the Company or of any Parent or Subsidiary
Corporation). The determination of the fair market value of the Stock shall be
made in accordance with the valuation provisions of Section 3.5 hereof.

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

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

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

                  2.2.6. NO FRACTIONAL SHARES. Options shall be exercisable only
for whole shares; no fractional shares will be issuable upon exercise of any
Option granted under the Plan.


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                  2.2.7. METHOD OF EXERCISE. To exercise an Option, an
Optionholder (or in the case of an exercise after an Optionholder's death, such
Optionholder's executor, administrator, heir or legatee, as the case may be)
must take the following action:

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

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

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

As soon as practical after the Exercise Date, the Company will mail or deliver
to or on behalf of the Optionholder (or any other person or persons exercising
this Option under the Plan) a certificate or certificates representing the Stock
acquired upon exercise of the Option.

                  2.2.8.   PAYMENT PRICE.  The aggregate Option Price shall be 
payable in one of the alternative forms specified below:

                           2.2.8.1. Full payment in cash or check made payable
to the Company's order; or

                           2.2.8.2. Full payment in other shares of previously
owned stock of the Company, surrender of which does not trigger tax consequences
to the Company, and valued at fair market value on the Exercise Date (as
determined in accordance with Section 3.5 hereof); or

                           2.2.8.3. Full payment through a sale and remittance
procedure pursuant to which the Optionholder (A) shall provide irrevocable
written instructions to a designated brokerage firm to effect the immediate sale
of the Optioned Shares to be purchased and remit to the Company, out of the sale
proceeds available on the settlement date, sufficient funds to cover the
aggregate exercise price payable for the Optioned Shares to be purchased and (B)
shall concurrently provide written directives to the Company to deliver the
certificates for the Optioned Shares to be purchased directly to such brokerage
firm in order to complete the sale transaction.

                  2.2.9. RELOAD OPTIONS. Concurrently with the award of Options,
the Plan Administrator may authorize the grant of reload Options. Reload Options
shall equal (i) the number of shares of previously owned stock used to exercise
the underlying Options and (ii) the number of shares withheld or the number of
shares of previously owned stock used to satisfy tax withholding requirements
incident to the exercise of the underlying Options. The grant of such reload
Options shall become effective upon the exercise of the underlying Options by
the 


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surrender of shares of stock held for such period of time so as not to trigger
tax consequences to the Company. The exercise price of the reload Options shall
be the fair market value on the date of grant of the reload Options and such
Options shall have a term equal to the remaining term of the underlying Options.
No reload Options shall be granted when the exercise of the underlying Options
occurs following termination of the Optionholder's employment. To the extent not
inconsistent herewith, the other provisions of the Plan set forth herein shall
be applicable to reload Options.

                  2.2.10. RIGHTS OF A SHAREHOLDER. An Optionholder shall not
have any of the rights of a shareholder with respect to Optioned Shares until
such individual shall have exercised the Option and paid the Option Price for
the Optioned Shares. No adjustment will be made for dividends or other rights
for which the record date is prior to the date such stock certificate is issued.

                  2.2.11. REPURCHASE RIGHT. The Plan Administrator may, in its
sole discretion, set forth other terms and conditions upon which the Company (or
its assigns) shall have the right to repurchase shares of Stock acquired by an
Optionholder pursuant to an Option. Any repurchase right of the Company shall be
exercisable by the Company (or its assignees) upon such terms and conditions as
the Plan Administrator may specify in the Stock Repurchase Agreement evidencing
such right. The Plan Administrator may also in its discretion establish as a
term and condition of one or more Options granted under the Plan that the
Company shall have a right of first refusal with respect to any proposed sale or
other disposition by the Optionholder of any shares of Stock issued upon the
exercise of such Options. Any such right of first refusal shall be exercisable
by the Company (or its assigns) in accordance with the terms and conditions set
forth in the Stock Repurchase Agreement. The terms of the Stock Repurchase
Agreement shall provide for a reasonable Notice period not to exceed two
business days for the exercise of such repurchase or right of first refusal by
the Company.

                  2.2.12.  TERMINATION OF INCENTIVE STOCK OPTIONS.

                           (i)      TERMINATION OF SERVICE.  If any Optionholder
ceases to be in Service to the Company for a reason other than permanent
disability or death and the Option held by such Optionholder is an Incentive
Stock Option, then such Optionholder must, within 90 days after the date of
termination of such Service, but in no event after the Option's stated
expiration date, exercise some or all of the Options that the Optionholder was
entitled to exercise on the date the Optionholder's Service terminated;
provided, that if the Optionholder is discharged for Cause or commits acts
detrimental to the Company's interests after the Service of the Optionholder has
been terminated, then the Option will thereafter be void for all purposes.
"Cause" shall mean a termination of Service based upon a finding by the
applicable Plan Administrator that the Optionholder: (i) has committed a felony
involving dishonesty, fraud, theft or embezzlement; (ii) after written notice
from the Company has repeatedly failed or refused, in a material respect, to
follow reasonable policies or directives established by the Company; (iii) after
written notice from the Company, has willfully and persistently failed to attend
to material duties or obligations; (iv) has performed an act or failed to act,
which, if he were prosecuted and convicted, would constitute a theft of money or
property of the Company; or (v) has misrepresented or concealed a material fact
for purposes of securing employment with 


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the Company. If any Optionholder ceases to be in Service to the Company by
reason of permanent disability within the meaning of section 22(e)(3) of the
Code (as determined by the applicable Plan Administrator), the Optionholder will
have 12 months after the date of termination of Service, but in no event after
the stated expiration date of the Optionholder's Options, to exercise Options
that the Optionholder was entitled to exercise on the date the Optionholder's
Service terminated as a result of the disability.

                           (ii)     DEATH OF OPTIONHOLDER.  If an Optionholder 
dies while in the Company's Service, any Options that are Incentive Stock
Options that the Optionholder was entitled to exercise on the date of death will
be exercisable within three months after such date or until the stated
expiration date of the Optionholder's Option, whichever occurs first, by the
person or persons ("successors") to whom the Optionholder's rights pass under a
will or by the laws of descent and distribution. As soon as practicable after
receipt by the Company of such notice and of payment in full of the Option
Price, a certificate or certificates representing the Optioned Shares shall be
registered in the name or names specified by the successors in the written
notice of exercise and shall be delivered to the successors.

                  2.2.13. TERMINATION OF NONQUALIFIED OPTIONS. Options that are
not Incentive Stock Options and that are outstanding at the time an Optionholder
ceases to be in Service to the Company shall remain exercisable (i) for a period
of one year after termination resulting from death or permanent disability
within the meaning of Section 22(e)(3) of the Code (as determined by the Plan
Administrator); (ii) for no period should the Optionholder be discharged for
Cause; (iii) for 90 days after termination for any other reason; or (iv) for a
longer period if determined by the Plan Administrator; provided however, that no
Option shall be exercisable after the Option's stated expiration date.

                  2.2.14. OTHER PLAN PROVISIONS STILL APPLICABLE. If an Option
is exercised upon the termination of Service or death of an Optionholder under
this Section 2.2, the other provisions of the Plan will continue to apply to
such exercise, including the requirement that the Optionholder or its successor
may be required to enter into a Stock Repurchase Agreement.

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

         2.3.     TERMS AND CONDITIONS OF STOCK AWARDS

                  2.3.1. ELIGIBILITY. All Eligible Persons shall be eligible to
receive Stock Awards. The Plan Administrator of each administered group shall
determine the number of shares of Stock to be awarded from time to time to any
Eligible Person in such group. Except as provided 


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otherwise in this Plan, the grant of a Stock Award to a person (a "Grantee")
shall neither entitle such person to, nor disqualify such person from
participation in, any other grant of options or awards by the Company, whether
under this Plan or under any other stock option or award plan of the Company.

                  2.3.2. AWARD FOR SERVICES RENDERED. Stock Awards shall be
granted in recognition of an Eligible Person's services to the Company. The
grantee of any such Stock Award shall not be required to pay any consideration
to the Company upon receipt of such Stock Award, except as may be required to
satisfy any applicable Arizona corporate law, employment tax and/or income tax
withholding requirements.

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

                  2.3.4. AWARD AGREEMENTS. A Plan Administrator may require as a
condition to a Stock Award that the recipient of such Stock Award enter into an
award agreement in such form and content as that Plan Administrator from time to
time approves.

         2.4.     TERMS AND CONDITIONS OF SARS

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

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

                  2.4.3. CONDITIONS TO SAR. All SARs shall be subject to such
terms, conditions, restrictions or limitations as the applicable Plan
Administrator deems appropriate, including, by way of illustration but not by
way of limitation, restrictions on transferability, requirements of continued
employment, individual performance, financial performance of the Company, or
payment by the recipient of any applicable employment or withholding taxes. Such
Plan 


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Administrator may modify or accelerate the termination of the restrictions
applicable to any SAR under the circumstances as it deems appropriate.

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

                  2.4.5. EXERCISE. An Eligible Person who has been granted a SAR
may exercise such SAR subject to the conditions specified in the SAR agreement
by the Plan Administrator.

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

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

                  2.4.8.   TERMINATION OF EMPLOYMENT; DEATH.  Sections 2.2(k)
and (l), applicable to Options, shall apply equally to SARs.

         2.5.     OTHER CASH AWARDS

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

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

                                   ARTICLE 3.
                                  MISCELLANEOUS

         3.1. CAPITAL ADJUSTMENTS. The aggregate number of shares of Stock
subject to the Plan, the number of shares of Stock covered by outstanding
Options and Awards, and the price 


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per share stated in all outstanding Options and Awards shall be proportionately
adjusted for any increase or decrease in the number of outstanding shares of
Stock of the Company resulting from a subdivision or consolidation of shares or
any other capital adjustment or the payment of a stock dividend or any other
increase or decrease in the number of such shares effected without the Company's
receipt of consideration therefor in money, services or property.

         3.2. MERGERS, ETC. If the Company is the surviving corporation in any
merger or consolidation (not including a Corporate Transaction), any Option or
Award granted under the Plan shall pertain to and apply to the securities to
which a holder of the number of shares of Stock subject to the Option or Award
would have been entitled prior to the merger or consolidation. Except as
provided in Section 3.3 hereof, a dissolution or liquidation of the Company
shall cause every Option or Award outstanding hereunder to terminate.

         3.3. CORPORATE TRANSACTION. In the event of shareholder approval of a
Corporate Transaction, the Plan Administrator shall have the discretion and
authority, exercisable at any time, to provide for the automatic acceleration of
one or more of the outstanding Options or Awards granted by it under the Plan.
Upon the consummation of the Corporate Transaction, all Options shall, to the
extent not previously exercised, terminate and cease to be outstanding.

         3.4.     CHANGE IN CONTROL.

                  3.4.1. GRANT PROGRAM. In the event of a Change in Control, a
Plan Administrator shall have the discretion and authority, exercisable at any
time, whether before or after the Change in Control, to provide for the
automatic acceleration of one or more outstanding Options or Awards granted by
it under the Plan. Any Options or Awards accelerated upon a Change in Control
will remain fully exercisable until the expiration or sooner termination of the
Option term.

                  3.4.2. INCENTIVE STOCK OPTION LIMITS. The exercisability of
any Options which are intended to qualify as Incentive Stock Options and which
are accelerated by the Plan Administrator in connection with a pending
Corporation Transaction or Change in Control shall, except as otherwise provided
in the discretion of the Plan Administrator and the Optionholder, remain subject
to the $100,000 Limitation and vest as quickly as possible without violating the
$100,000 Limitation.

         3.5. CALCULATION OF FAIR MARKET VALUE OF STOCK. The fair market value
of a share of Stock on any relevant date shall be determined in accordance with
the following provisions:

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


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<PAGE>   12
asked price (or the closing selling price) on the last preceding date for which
such quotations exist shall be determinative of fair market value.

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

                  3.5.3. If the Stock at the time is neither listed nor admitted
to trading on any stock exchange nor traded in the over-the-counter market, then
the fair market value shall be determined by the Board after taking into account
such factors as the Board shall deem appropriate, including one or more
independent professional appraisals.

         3.6. USE OF PROCEEDS. The proceeds received by the Company from the
sale of Stock pursuant to the exercise of Options or Awards hereunder, if any,
shall be used for general corporate purposes.

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

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

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

         3.10. PLAN NOT EXCLUSIVE. This Plan is not intended to be the exclusive
means by which the Company may issue options or warrants to acquire its Stock,
stock awards or any other type of award. To the extent permitted by applicable
law, any such other option, warrants or 


                                       12
<PAGE>   13
awards may be issued by the Company other than pursuant to this Plan without
shareholder approval.

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

         3.12.    ASSIGNMENT. The right to acquire Stock or other assets under
the Plan may not be assigned, encumbered or otherwise transferred by any
Optionholder except as specifically provided herein. No Option or Award granted
under the Plan or any of the rights and privileges conferred thereby shall be
assignable or transferable by an Optionholder or grantee other than by will or
the laws of descent and distribution, and such Option or Award shall be
exercisable during the Optionholder's or grantee's lifetime only by the
Optionholder or grantee. Notwithstanding the foregoing, any Options or Awards
granted pursuant to the Grant Program may be assigned, encumbered or otherwise
transferred by the Optionholder or grantee if specifically allowed by the Plan
Administrator upon the grant of such Option or Award and subject to compliance
with policies and guidelines established by the Board. The provisions of the
Plan shall inure to the benefit of, and be binding upon, the Company and its
successors or assigns, and the Optionholders, the legal representatives of their
respective estates, their respective heirs or legatees and their permitted
assignees.

         3.13.    SECURITIES RESTRICTIONS

                  3.13.1. LEGEND ON CERTIFICATES. All certificates representing
shares of Stock issued under the Plan shall be endorsed with a legend reading as
follows:

                           The shares of Common Stock evidenced by this
                           certificate have been issued to the registered owner
                           in reliance upon written representations that these
                           shares have been purchased solely for investment.
                           These shares may not be sold, transferred or assigned
                           unless in the opinion of the Company and its legal
                           counsel such sale, transfer or assignment will not be
                           in violation of the Securities Act of 1933, as
                           amended, and the rules and regulations thereunder.

                  3.13.2. PRIVATE OFFERING FOR INVESTMENT ONLY. The Options and
Awards are and shall be made available only to a limited number of present and
future key executives, directors and employees who have knowledge of the
Company's financial condition, management and its affairs. The Plan is not
intended to provide additional capital for the Company, but to encourage
ownership of Stock among the Company's key personnel. By the act of accepting an
Option or Award, each grantee agrees (i) that, any shares of Stock acquired will
be solely for investment not with any intention to resell or redistribute those
shares (except as delivery of such Stock is permitted as payment upon option
exercise or for tax withholding requirements) and (ii) such intention will be
confirmed by an appropriate certificate at the time the Stock is acquired if


                                       13
<PAGE>   14
requested by the Company. The neglect or failure to execute such a certificate,
however, shall not limit or negate the foregoing agreement.

                  3.13.3. REGISTRATION STATEMENT. If a Registration Statement
covering the shares of Stock issuable under the Plan as filed under the
Securities Exchange Act of 1933, as amended, and is declared effective by the
Securities Exchange Commission, the provisions of Sections 3.13(a) and (b) shall
terminate during the period of time that such Registration Statement, as
periodically amended, remains effective.

         3.14.    TAX WITHHOLDING.

                  3.14.1. GENERAL. The Company's obligation to deliver Stock
under the Plan shall be subject to the satisfaction of all applicable federal,
state and local income tax withholding requirements.

                  3.14.2. SHARES TO PAY FOR WITHHOLDING. The Board may, in its
discretion and in accordance with the provisions of this Section 3.14(b) and
such supplemental rules as it may from time to time adopt (including the
applicable safe-harbor provisions of SEC Rule 16b-3), provide any or all
Optionholders or Grantees with the right to use shares of Stock in satisfaction
of all or part of the federal, state and local income tax liabilities incurred
by such Optionholders or Grantees in connection with the receipt of Stock
("Taxes"). Such right may be provided to any such Optionholder or Grantee in
either or both of the following formats:

                           3.14.2.1.   STOCK WITHHOLDING.  An Optionholder or 
Grantee may be provided with the election, which may be subject to approval by
the Plan Administrator, to have the Company withhold, from the Stock otherwise
issuable, a portion of those shares of Stock with an aggregate fair market value
equal to the percentage of the applicable Taxes (not to exceed 100 percent)
designated by the Optionholder or Grantee.

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

         3.15. GOVERNING LAW. The Plan shall be governed by and all questions
hereunder shall be determined in accordance with the laws of the State of
Arizona.

                                   ARTICLE 4.
                                   DEFINITIONS

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


                                       14
<PAGE>   15
         "AFFILIATES" shall mean all "officers" (as that term is defined in Rule
16a-1(f) promulgated under the 1934 Act) and directors of the Company and all
persons who own ten percent or more of the Company's issued and outstanding
Stock.

         "AWARD" shall mean a Stock Award, SAR or Cash Award under the Grant
Program.

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

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

         "CHANGE IN CONTROL" shall mean and include the following transactions
or situations:

                  (i) A sale, transfer, or other disposition by the Company
through a single transaction or a series of transactions of securities of the
Company representing 30 percent or more of the combined voting power of the
Company's then outstanding securities to any "Unrelated Person" or "Unrelated
Persons" acting in concert with one another. For purposes of this Section, the
term "Person" shall mean and include any individual, partnership, joint venture,
association, trust corporation, or other entity (including a "group" as referred
to in Section 13(d)(3) of the 1934 Act). For purposes of this Section, the term
"Unrelated Person" shall mean and include any Person other than the Company, a
wholly-owned subsidiary of the Company, or an employee benefit plan of the
Company.

                  (ii) A sale, transfer, or other disposition through a single
transaction or a series of transactions of all or substantially all of the
assets of the Company to an Unrelated Person or Unrelated Persons acting in
concert with one another.

                  (iii) A change in the ownership of the Company through a
single transaction or a series of transactions such that any Unrelated Person or
Unrelated Persons acting in concert with one another become the "Beneficial
Owner," directly or indirectly, of securities of the Company representing at
least 30 percent of the combined voting power of the Company's then outstanding
securities. For purposes of this Section, the term "Beneficial Owner" shall have
the same meaning as given to that term in Rule 13d-3 promulgated under the Act,
provided that any pledgee of voting securities is not deemed to be the
Beneficial Owner thereof prior to its acquisition of voting rights with respect
to such securities.

                  (iv) Any consolidation or merger of the Company with or into
an Unrelated Person, unless immediately after the consolidation or merger the
holders of the common stock of the Company immediately prior to the
consolidation or merger are the Beneficial Owners of securities of the surviving
corporation representing at least 50 percent of the combined voting power of the
surviving corporation's then outstanding securities.

                  (v) During any period of two years, individuals who, at the
beginning of such period, constituted the Board of Directors of the Company
cease, for any reason, to constitute at least a majority thereof, unless the
election or nomination for election of each new director was


                                       15
<PAGE>   16
approved by the vote of at least two-thirds of the directors then still in
office who were directors at the beginning of such period.

                  (vi) A change in control of the Company of a nature that would
be required to be reported in response to item 6(e) of Schedule 14A of
Regulation 14A promulgated under the 1934 Act, or any successor regulation of
similar import, regardless of whether the Company is subject to such reporting
requirement.

         Notwithstanding any provision hereof to the contrary, the filing of a
proceeding for the reorganization of the Company under Chapter 11 of the General
Bankruptcy Code or any successor or other statute of similar import shall not be
deemed to be a Change of Control for purposes of this Plan.

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

         "COMPANY" shall mean Bionutrics, Inc., a Nevada corporation.

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

         "EFFECTIVE DATE" shall mean the date that the Plan was approved by the
stockholders as required by Section 1.3(a) hereof.

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

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

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

         "GRANTEE" shall mean an Eligible Person or Eligible Director that has
received an Award.


                                       16
<PAGE>   17
         "GRANT PROGRAM" shall mean the program described in Article II of this
Agreement pursuant to which certain Eligible Persons are granted Options or
Awards in the discretion of the Plan Administrator.

         "INCENTIVE STOCK OPTION" shall mean an Option that is intended to
qualify as an "incentive stock option" under Code section 422.

         "NON-AFFILIATES" shall mean all persons who are not Affiliates.

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

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

         "OPTIONHOLDER" shall mean an Eligible Person to whom Options have been
granted.

         "OPTIONED SHARES" shall be those shares of Stock to be optioned from
time to time to any Eligible Person.

         "OPTION PRICE" shall mean the option price per share as specified by
the Plan Administrator or by the terms of the Plan.

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

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

         "PLAN" shall mean this stock option plan for Bionutrics, Inc.

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

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

         "SENIOR COMMITTEE" shall mean that committee appointed by the Board to
administer the Grant Program with respect to the Affiliates and comprised of two
or more Non-Employee Directors.


                                       17
<PAGE>   18
         "SERVICE" shall have the meaning set forth in Section 2.2(n) hereof.

         "STOCK" shall mean shares of the Company's common stock, $.01 par value
per share, which may be unissued or treasury shares, as the Board may from time
to time determine.

         "STOCK AWARDS" shall mean Stock directly granted under the Grant
Program.

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

         EXECUTED as of the 26th day of March, 1998.

                                       BIONUTRICS, INC.




                                       By:/s/Ronald H. Lane  
                                          --------------------------------
                                       Name:Ronald H. Lane   
                                            ------------------------------
                                       Its:President         
                                           -------------------------------


ATTESTED BY:



/s/George E. Duck, Jr.
-----------------------------
Secretary


                                       18