TELESOFT CORP.

	1996 INCENTIVE STOCK OPTION PLAN




1. 	Purposes of the Plan.  The purposes of this 1996 Incentive 
Stock Option Plan are to provide additional incentive to Employees of the 
Company to achieve financial results aimed at increasing stockholder value 
and to attract and retain the best available personnel for positions of 
responsibility within the Company through the grant of options to purchase 
shares of the Company's Common Stock.

		Options granted hereunder may be either Incentive Stock or 
Non-Statutory Stock Options, at the discretion of the Board.  The type of 
options granted shall be reflected in the terms of written Stock Option 
agreements.

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

(a) 	"Board" shall mean the Board of Directors of the 
Company or, when appropriate, the Committee administering the 
Plan, if one has been appointed.

(b) 	"Code" shall mean the Internal Revenue Code of 
1986, as amended, and the rules and regulations promulgated 
thereunder.

(c) 	"Common Stock" shall mean the common stock of 
the Company described in the Company's Articles of Incorporation, as 
amended.

(d) 	"Company" shall mean TELESOFT CORP., an 
Arizona corporation, and shall include any parent or subsidiary 
corporation of the Company as defined in Sections 425(e) and (f), 
respectively, of the Code.

(e) 	"Committee" shall mean the Committee appointed by 
the Board in accordance with paragraph (a) of Section 4 of the Plan, 
if one is appointed.

(f) 	"Employee" shall mean any person, including 
salaried officers and directors, employed by the Company.  The 
payment of a director's fee by the Company shall not be sufficient to 
constitute "employment" by the Company.

(g) 	"Exchange Act" shall mean the Securities Exchange 
Act of 1934, as amended.

(h) 	"Fair Market Value" shall mean, with respect to the 
date a given Option is granted or exercised, the value of the Common 
Stock determined by the Board in such manner as it may deem 
equitable for Plan purposes but, in the case of an Incentive Stock 
Option, no less than is required by applicable laws or regulations; 
provided, however, that where there is a public market for the 
Common Stock, the Fair Market Value per Share shall be the mean of 
the bid and asked prices of the Common Stock on the date of grant, as 
reported in the Wall Street Journal, or, if not so reported, as 
otherwise reported in the National Association of Securities Dealers 
Automated Quotation System ("Nasdaq") or, in the event the Common 
Stock is listed on the New York Stock Exchange, the American Stock 
Exchange, the Nasdaq National Market or the Nasdaq SmallCap 
Market, the Fair Market Value per Share shall be the closing price on 
the relevant Nasdaq market or exchange on the date of grant of the 
Option, as reported in the Wall Street Journal.

(i) 	"Incentive Stock Option" shall mean an Option which 
is intended to qualify as an incentive stock option within the meaning 
of Section 422 of the Code.

(j) 	"Option" shall mean a stock option granted under the 
Plan.

(k) 	"Optioned Stock" shall mean the Common Stock 
subject to an Option.

(l) 	"Optionee" shall mean an Employee of the Company 
who has been granted one or more Options.

(m) 	"Nonstatutory Stock Option" shall mean an Option 
which is not an Incentive Stock Option.

(n) 	"Parent" shall mean a "parent corporation," whether 
now or hereafter existing, as defined in Section 425(e) of the Code.

(o) 	"Plan" shall mean this 1996 Incentive Stock Option 
Plan.

(p) 	"Share" shall mean a share of the Common Stock, as 
adjusted in accordance with Section 11 of the Plan.

(q) 	"Stock Option Agreement" shall mean the written 
agreement between the Company and the Optionee relating to the 
grant of an Option.

(r) 	"Subsidiary" shall mean a "subsidiary corporation," 
whether now or hereafter existing, as defined in Section 425(f) of the 
Code.

(s) 	"Tax Date" shall mean the date an Optionee is 
required to pay the Company an amount with respect to tax 
withholding obligations in connection with the exercise of an option.

3. 	Common Stock Subject to the Plan.  Subject to the 
provisions of Section 11 of the Plan, the maximum aggregate number of 
shares which may be optioned and sold under the Plan is Two Hundred Sixty 
Thousand (260,000) Shares of Common Stock.  The Shares may be 
authorized, but unissued, or previously issued Shares acquired by the 
Company and held in treasury.  

		If an Option should expire or become unexercisable for any 
reason without having been exercised in full, the unpurchased Shares covered 
by such Option shall, unless the Plan shall have been terminated, be available 
for future grants of Options.  

4. 	Administration of the Plan.

(a) 	Procedure.

(i) 	The Plan shall be administered by the Board 
in accordance with Rule 16b-3 under the Exchange Act 
("Rule 16b-3"); provided, however, that the Board may 
appoint a Committee to administer the Plan at any time or 
from time to time, and, provided further, that if the Board is 
not "disinterested" within the meaning of Rule 16b-3, the Plan 
shall be administered by a Committee in accordance with 
Rule 16b-3.

(ii) 	Once appointed, the Committee shall 
continue to serve until otherwise directed by the Board.  From 
time to time the Board may increase the size of the Committee 
and appoint additional members thereof, remove members 
(with or without cause), appoint new members in substitution 
therefor, and fill vacancies however caused: provided, 
however, that at no time may any person serve on the 
Committee if that person's membership would cause the 
Committee not to satisfy the "disinterested administration" 
requirements of Rule 16b-3.

(b) 	Powers of the Board.  Subject to the provisions of 
the Plan, the Board shall have the authority, in its discretion:  (i) to 
grant Incentive Stock Options and Nonstatutory Stock Options; (ii) to 
determine, upon review of relevant information and in accordance 
with Section 2 of the Plan, the Fair Market Value of the Common 
Stock; (iii) to determine the exercise price per Share of Options to be 
granted, which exercise price shall be determined in accordance with 
Section 8(a) of the Plan; (iv) to determine the Employees to whom, 
and the time or times at which, Options shall be granted and the 
number of Shares to be represented by each Option; (v) to interpret 
the Plan; (vi) to prescribe, amend and rescind rules and regulations 
relating to the Plan; (vii) to determine the terms and provisions of 
each Option granted (which need not be identical) and, with the 
consent of the Optionee thereof, modify or amend each Option; (viii) 
to accelerate or defer (with the consent of the Optionee) the exercise 
date of any Option; (ix) to authorize any person to execute on behalf 
of the Company any instrument required to effectuate the grant of an 
Option previously granted by the Board; (x) to accept or reject the 
election made by an Optionee pursuant to Section 17 of the Plan; and 
(xi) to make all other determinations deemed necessary or advisable 
for the administration of the Plan.  

(c) 	Effect of Board's Decision.  All decisions, 
determinations and interpretations of the Board shall be final and 
binding on all Optionees and any other holders of any Options granted 
under the Plan.

5. 	Eligibility.

(a) 	Consistent with the Plan's purposes, Options may be 
granted only to Employees of the Company as determined by the 
Board.  An Employee who has been granted an Option may, if he is 
otherwise eligible, be granted an additional Option or Options.  
Incentive Stock Options may be granted only to those Employees who 
meet the requirements applicable under Section 422 of the Code.

(b) 	All Options granted to Employees of the Company 
under the Plan will be subject to forfeiture until such time as the 
Optionee has been continuously employed by the Company for one 
year after the date of the grant of the Options, and may not be 
exercised prior to such time.  At such time as the Optionee has been 
continuously employed by the Company for one year, the foregoing 
restriction shall lapse and the Optionee may exercise the Options at 
any time otherwise consistent with the Plan.

(c) 	With respect to Incentive Stock Options, the 
aggregate Fair Market Value (determined at the time the Incentive 
Stock Option is granted) of the Common Stock with respect to which 
Incentive Stock Options are exercisable for the first time by the 
employee during any calendar year (under all employee benefit plans 
of the Company) shall not exceed One Hundred Thousand Dollars 
($100,000).

6. 	Stockholder Approval and Effective Dates.  The Plan 
became effective upon approval by the Board.  The grant of any options under 
the Plan is effective only upon approval of the Plan by the Shareholders.  No 
Option may be granted under the Plan after April 14, 2006; provided, however 
that the Plan and all outstanding Options shall remain in effect until such 
Options have expired or until such Options are canceled.

7. 	Term of Option.  Unless otherwise provided in the Stock 
Option Agreement, the term of each Option shall be ten (10) years from the 
date of grant thereof.  In no case shall the term of any Option exceed ten (10) 
years from the date of grant thereof.  Notwithstanding the above, in the case 
of an Incentive Stock Option granted to an Employee who, at the time the 
Incentive Stock Option is granted, owns ten percent (10%) or more of the 
Common Stock as such amount is calculated under Section 422(b)(6) of the 
Code ("Ten Percent Stockholder"), the term of the Incentive Stock Option 
shall be five (5) years from the date of grant thereof or such shorter time as 
may be provided in the Stock Option Agreement.

8. 	Exercise Price and Payment.

(a) 	Exercise Price.  The per Share exercise price for the 
Shares to be issued pursuant to exercise of an Option shall be 
determined by the Board, but in the case of an Incentive Stock Option 
shall be no less than one hundred percent (100%) of the Fair Market 
Value per share on the date of grant, and in the case of a Nonstatutory 
Stock Option shall be no less than eighty-five percent (85%) of the 
Fair Market Value per share on the date of grant.  Notwithstanding 
the foregoing, in the case of an Incentive Stock Option granted to an 
Employee who, at the time of the grant of such Incentive Stock 
Option, is a Ten Percent Stockholder, the per Share exercise price 
shall be no less than one hundred ten percent (110%) of the Fair 
Market Value per Share on the date of grant.

(b) 	Payment.  The price of an exercised Option and the 
Employee's portion of any taxes attributable to the delivery of 
Common Stock under the Plan, or portion thereof, shall be paid:

(i) 	In United States dollars in cash or by check, 
bank draft or money order payable to the order of the 
Company; or

(ii) 	At the discretion of the Board, through the 
delivery of shares of Common Stock with an aggregate Fair 
Market Value equal to the option price and withholding taxes, 
if any; or

(iii) 	At the election of the Optionee pursuant to 
Section 17 and with the consent of the Board pursuant to 
Section 4(b)(x), by the Company's retention of such number 
of shares of Common Stock subject to the exercised Option 
which have an aggregate Fair Market Value on the exercise 
date equal to the Employee's portion of the Company's 
aggregate federal, state, local and foreign tax withholding and 
FICA and FUTA obligations with respect to income 
generated by the exercise of the Option by Optionee;

(iv) 	By a combination of (i), (ii) and (iii) above; 
or

(v) 	In the manner provided in subsection (c) 
below.

			The Board shall determine acceptable methods for 
tendering Common Stock as payment upon exercise of an Option and 
may impose such limitations and prohibitions on the use of Common 
Stock to exercise an Option as it deems appropriate.

(c) 	Financial Assistance to Optionees.  The Board may 
assist Optionees in paying the exercise price of Options granted under 
this Plan in the following manner:

(i) 	The extension of a loan to the Optionee by 
the Company; or

(ii) 	Payment by the Optionee of the exercise 
price in installments; or

(iii) 	A guaranty by the Company of a loan 
obtained by the Optionee from a third party.

			The terms of any loans, installment payments or 
guarantees, including the interest rate and terms of repayment, and 
collateral requirements, if any, shall be determined by the Board, in its 
sole discretion.  Subject to applicable margin requirements, any loans, 
installment payments or guarantees authorized by the Board pursuant 
to the Plan may be granted without security, but the maximum credit 
available shall not exceed the exercise price for the Shares for which 
the Option is to be exercised, plus any federal and state income tax 
liability incurred in connection with the exercise of the Option.

9. 	Exercise of Option.

(a) 	Procedure for Exercise; Rights as a Stockholder.  
Any Option granted hereunder shall be exercisable at such times and 
under such conditions as determined by the Board, including 
performance criteria with respect to the Company and/or the 
Optionee, and as shall be permissible under the terms of the Plan.  
Unless otherwise determined by the Board at the time of grant, an 
Option may be exercised in whole or in part.  An Option may not be 
exercised for a fraction of a Share.

			An Option shall be deemed to be exercised when 
written notice of such exercise has been given to the Company in 
accordance with the terms of the Option by the person entitled to 
exercise the Option and full payment for the Shares with respect to 
which the Option is exercised has been received by the Company.  
Full payment may, as authorized by the Board, consist of any 
consideration and method of payment allowable under Section 8(b) of 
the Plan.  Until the issuance (as evidenced by the appropriate entry on 
the books of the Company or of a duly authorized transfer agent of 
the Company) of the stock certificate evidencing such Shares, no right 
to vote or receive dividends or any other rights as a stockholder shall 
exist with respect to the Optioned Stock, notwithstanding the exercise 
of the Option.  No adjustment will be made for a dividend or other 
right for which the record date is prior to the date the stock certificate 
is issued, except as provided in Section 11 of the Plan.

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

(b) 	Termination of Status as an Employee.  If an 
Employee's employment by the Company is terminated for cause, then 
any Option held by the Employee shall be immediately canceled upon 
termination of employment and the Employee shall have no further 
rights with respect to such Option.  Unless otherwise provided in the 
Stock Option Agreement (which may reduce but not increase the time 
period described below), if an Employee's employment by the 
Company is terminated for reasons other than cause, and does not 
occur due to death or disability, then the Employee may, with the 
consent of the Board, but only within ten (10) days after the date he 
ceases to be an Employee of the Company, exercise his Option to the 
extent that he was entitled to exercise it at the date of such 
termination.  To the extent that he was not entitled to exercise the 
Option at the date of such termination, or if he does not exercise such 
Option (which he was entitled to exercise) within the time specified 
herein, the Option shall terminate.  

(c) 	Disability.  Unless otherwise provided in the Stock 
Option Agreement (which may reduce but not increase the time period 
described below), notwithstanding the provisions of Section 9(b) 
above, in the event an Employee is unable to continue his employment 
with the Company as a result of his permanent and total disability (as 
defined in Section 22(e)(3) of the Code), he may, but only within 
twelve (12) months from the date of termination, exercise his Option 
to the extent he was entitled to exercise it at the date of such 
termination.  To the extent that he was not entitled to exercise the 
Option at the date of termination, or if he does not exercise such 
Option (which he was entitled to exercise) within the time specified 
herein, the Option shall terminate.

(d) 	Death.  Unless otherwise provided in the Stock 
Option Agreement (which may reduce but not increase the time period 
described below), if an Employee dies during the term of the Option 
and is at the time of his death an Employee of the Company who shall 
have been in continuous status as an Employee since the date of grant 
of the Option, the Option may be exercised at any time within twelve 
(12) months following the date of death (or such other period of time 
as is determined by the Board) by the Employee's estate or by a 
person who acquired the right to exercise the Option by bequest or 
inheritance, but only to the extent that an Employee was entitled to 
exercise the Option on the date of death.  To the extent the Employee 
was not entitled to exercise the Option on the date of death, or if the 
Employee's estate, or person who acquired the right to exercise the 
Option by bequest or inheritance, does not exercise such Option 
(which he was entitled to exercise) within the time specified herein, 
the Option shall terminate.  
10. 	Non-Transferability of Options.  An Option may not be 
sold, pledged, assigned, hypothecated, transferred or disposed of in any 
manner other than by will or by the laws of descent or distribution, or 
pursuant to a "qualified domestic relations order" under the Code and ERISA, 
and may be exercised, during the lifetime of the Optionee, only by the 
Optionee.  

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

		In the event of the proposed dissolution or liquidation of the 
Company, the Option will terminate immediately prior to the consummation of 
such proposed action, unless otherwise provided by the Board.  The Board 
may, in the exercise of its sole discretion in such instances, declare that any 
Option shall terminate as of a date fixed by the Board and give each Optionee 
the right to exercise his Option as to all or any part of the Optioned Stock, 
including Shares as to which the Option would not otherwise be exercisable.  
In the event of a proposed sale of all or substantially all of the assets of 
the Company, or the merger of the Company with or into another corporation, the 
Option shall be assumed or an equivalent option shall be substituted by such 
successor corporation or a parent or subsidiary of such successor corporation, 
unless the Board determines, in the exercise of its sole discretion and in 
lieu of such assumption or substitution, that the Optionee shall have the 
right to exercise the option as to all of the Optioned Stock, including 
Shares as to which the Option would not otherwise be exercisable.  If the 
Board makes an Option fully exercisable in lieu of assumption or substitution 
in the event of a merger of sale of assets, the Board shall notify the 
Optionee that the Option shall be fully exercisable for a period of sixty (60)
days from the date of such notice (but not later than the expiration of the term
of the Option under the Option Agreement), and the Option will terminate upon
the expiration of such period.

12. 	Time of Granting Options.  The date of grant of an Option 
shall, for all purposes, be the date on which the Board makes the 
determination granting such Option.  Notice of the determination shall be 
given to each Employee to whom an Option is so granted within a reasonable 
time after the date of such grant.

13. 	Amendment and Termination of the Plan.

(a) 	Amendment and Termination.  The Board may 
amend or terminate the Plan from time to time in such respects as the 
Board may deem advisable; provided, however, that the following 
revisions or amendments shall require approval of the Stockholders of 
the Company, to the extent required by law, rule or regulation:

(i) 	Any material increase in the number of 
Shares subject to the Plan, other than in connection with an 
adjustment under Section 11 of the Plan;

(ii) 	Any material change in the designation of the 
Employees eligible to be granted Options; or 

(iii) 	Any material increase in the benefits 
accruing to participants under the Plan.

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

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

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

		Inability of the Company to obtain authority from any 
regulatory body having jurisdiction, which authority is deemed by the 
Company's counsel to be necessary to the lawful issuance and sale of any 
Shares hereunder, shall relieve the Company of any liability in respect of the 
failure to issue or sell such Shares as to which such requisite authority shall 
not have been obtained.

		In the case of an Incentive Stock Option, any Optionee who 
disposes of Shares of Common Stock acquired upon the exercise of an Option 
by sale or exchange (a) either within two (2) years after the date of the grant 
of the Option under which the Common Stock was acquired or (b) within one 
(1) year after the acquisition of such Shares of Common Stock shall notify the 
Company of such disposition and of the amount realized upon such 
disposition.

15. 	Reservation of Shares.  The Company will at all times 
reserve and keep available such number of Shares as shall be sufficient to 
satisfy the requirements of the Plan.  

16. 	Option Agreement.  Options shall be evidenced by Stock 
Option Agreements in such form as the Board shall approve.

17. 	Withholding Taxes.  Subject to Section 4(b)(x) of the Plan 
and prior to the Tax Date, the Optionee may make an irrevocable election to 
have the Company withhold from those Shares that would otherwise be 
received upon the exercise of any Option, a number of Shares having a Fair 
Market Value equal to the minimum amount necessary to satisfy the 
Company's federal, state, local and foreign tax withholding obligations and 
FICA and FUTA obligations with respect to the exercise of such Option by 
the Optionee.

		An Optionee who is also an officer of the Company must 
make the above described election:

(a) 	at least six months after the date of grant of the 
Option (except in the event of death or disability); and 

(b) 	either:

(i) 	six months prior to the Tax Date, or

(ii) 	prior to the Tax Date and during the period 
beginning on the third business day following the date the 
Company releases its quarterly or annual statement of sales 
and earnings and ending on the twelfth business day following 
such date.

18. 	Miscellaneous Provisions.

(a) 	Plan Expense.  Any expense of administering this 
Plan shall be borne by the Company.

(b) 	Use of Exercise Proceeds.  The payment received 
from Optionees from the exercise of Options shall be used for the 
general corporate purposes of the Company.

(c) 	Construction of Plan.  The place of administration of 
the Plan shall be in the State of Arizona, and the validity, 
construction, interpretation, administration and effect of the Plan and 
of its rules and regulations, and rights relating to the Plan, shall be 
determined in accordance with the laws of the State of Arizona 
without regard to conflict of law principles and, where applicable, in 
accordance with the Code.

(d) 	Taxes.  The Company shall be entitled if necessary or 
desirable to pay or withhold the amount of any tax attributable to the 
delivery of Common Stock under the Plan from other amounts 
payable to the Employee after giving the person entitled to receive 
such Common Stock notice as far in advance as practical, and the 
Company may defer making delivery of such Common Stock if any 
such tax may be pending unless and until indemnified to its 
satisfaction.

(e) 	Indemnification.  In addition to such other rights of 
indemnification as they may have as members of the Board, the 
members of the Board shall be indemnified by the Company against 
all costs and expenses reasonably incurred by them in connection with 
any action, suit or proceeding to which they or any of them may be 
party by reason of any action taken or failure to act under or in 
connection with the Plan or any Option, and against all amounts paid 
by them in settlement thereof (provided such settlement is approved 
by independent legal counsel selected by the Company) or paid by 
them in satisfaction of a judgment in any such action, suit or 
proceeding, except a judgment based upon a finding of bad faith; 
provided that upon the institution of any such action, suit or 
proceeding a Board member shall, in writing, give the Company 
notice thereof and an opportunity, at its own expense, to handle and 
defend the same before such Board member undertakes to handle and 
defend it on her or his own behalf.

(f) 	Gender.  For purposes of this Plan, words used in the 
masculine gender shall include the feminine and neuter, and the 
singular shall include the plural and vice versa, as appropriate.

(g) 	No Employment Agreement.  The Plan shall not 
confer upon any Optionee any right with respect to continuation of 
employment with the Company, nor shall it interfere in any way with 
his right or the Company's right to terminate his employment at any 
time.
 



 

 


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