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                                                                   EXHIBIT 10.14
                                                    (APPROVED BY STOCKHOLDERS AT
                                                JANUARY 23, 1998 ANNUAL MEETING)


                           HORIZON HEALTH CORPORATION
                             1998 STOCK OPTION PLAN


         Horizon Health Corporation, a Delaware corporation (the "Corporation"),
hereby establishes this Horizon Health Corporation 1998 Stock Option Plan (the
"Plan").


SECTION 1. PURPOSE; DEFINITIONS

         The purpose of the Plan is to give the Corporation a competitive
advantage in attracting, retaining and motivating directors, officers, key
employees and consultants and to provide the Corporation and its Subsidiaries
with a stock option plan providing incentives directly linked to the
profitability of the Corporation's businesses and increases in shareholder
value.

         For purposes of the Plan, the following terms are defined as set forth
below:

         a. "Board" means the Board of Directors of the Corporation.

         b. "Cause" means (except as otherwise provided by the Committee in the
option agreement relating to any Stock Option) (i) the willful and continued
failure of the optionee to perform substantially the optionee's duties with the
Corporation or one of its Subsidiaries (other than any such failure resulting
from incapacity due to physical or mental illness), after a written demand for
substantial performance is delivered to the optionee by the optionee's immediate
supervisor or the Chief Executive Officer of the Corporation (or, in the case of
the Chief Executive Officer of the Corporation as the optionee, the Board of
Directors) which specifically identifies the manner in which the optionee's
immediate supervisor or the Chief Executive Officer of the Corporation (or, in
the case of the Chief Executive Officer of the Corporation as the optionee, the
Board of Directors) believes the optionee has not substantially performed the
optionee's duties, or (ii) the willful engaging by the optionee in illegal
conduct or gross misconduct which is materially and demonstrably injurious to
the Corporation. Notwithstanding the foregoing, if an optionee is a party to an
employment or consulting agreement with the Corporation or any Subsidiary that
contains a definition of "Cause," such definition shall apply to such optionee
for purposes of the Plan except to the extent otherwise provided by the
Committee in the option agreement relating to any Stock Option. Except as may
otherwise be provided in any such employment or consulting agreement, if
applicable, the existence of Cause shall be determined by the Board of Directors
of the Corporation in its sole discretion and in good faith.

         c. "Change of Control means (a) the acquisition by any individual,
entity or group (within the meaning of Section 13(d)(e) or 14(d)(2) of the
Exchange Act) (an "Acquiring Person") of


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beneficial ownership (within the meaning of Rule 13d-e promulgated under the
Exchange Act) of 50% or more of either (i) the then outstanding shares of Common
Stock of the Corporation (the "Outstanding Corporation common stock") or (ii)
the combined voting power of the then outstanding voting securities of the
Corporation entitled to vote generally in the election of directors (the
"Outstanding Corporation Voting Securities"); provided, however, that for
purposes of this subsection (a), the following acquisitions shall not constitute
a Change of Control: (i) any acquisition directly from the Corporation, (ii) any
acquisition by the Corporation, (iii) any acquisition by any employee benefit
plan (or related trust) sponsored or maintained by the Corporation or any
corporation controlled by the Corporation; (b) individuals who, as of the date
hereof, constitute the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director subsequent to the date hereof whose election, or
nomination for election by the Corporation's shareholders, was approved by a
vote of at least a majority of the directors then comprising the Incumbent Board
shall be considered as though such individual were a member of the Incumbent
Board, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election
contest with respect to the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on behalf of an Acquiring
Person other than the Board; or (c) approval by the shareholders of the
Corporation of a complete liquidation or dissolution of the Corporation.

         d. "Code" means the Internal Revenue Code of 1986, as amended from time
to time, and any successor thereto.

         e. "Commission" means the Securities and Exchange Commission or any
successor agency.

         f. "Committee" means the Committee referred to in Section 2.

         g. "Common Stock" means common stock, par value $0.01 per share, of the
Corporation.

         h. "Constructive Termination" means the assignment to the optionee of
any duties inconsistent in any material respect with the optionee's position
(including status, offices, titles and reporting requirements), authority,
duties or responsibilities as exists at the time of a Change of Control, or any
other action by the Corporation which results in material diminution in such
position, authority, duties or responsibilities.

         i. "Corporation" means Horizon Health Corporation, a Delaware
corporation.

         j. "Disability" means permanent and total disability as determined
under procedures established by the Committee for purposes of the Plan.

         k. "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor thereto.

         l. "Fair Market Value" means, as of any given date, the closing price
per share of the Common Stock on that date on the Nasdaq National Market or on
such national securities


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exchange on which the Common Stock is then listed, as applicable, or, if no
shares of Common Stock were traded on that date, on the most recent day on which
shares were traded, as reported by the National Quotation Bureau, Inc. or other
national quotation service.

         m. "Non-Employee Director" means a member of the Board who qualifies as
a Non-Employee Director as defined in Rule 16b-3(b)(3), as promulgated by the
Commission under Section 16(b) of the Exchange Act, or any successor definition
adopted by the Commission.

         n. "Plan" means the Horizon Health Corporation 1998 Stock Option Plan,
as set forth herein and as hereafter amended from time to time.

         o. "Retirement" means retirement from active employment with the
Corporation or a Subsidiary under the retirement policies of the Corporation
applicable to it and its Subsidiaries.

         p. "Rule 16b-3" means Rule 16b-3, as promulgated by the Commission
under Section 16(b) of the Exchange Act, as amended from time to time.

         q. "Section 162(m) Exemption" means the exemption from the limitation
on deductibility imposed by Section 162(m) of the Code that is set forth in
Section 162(m)(4)(c) of the Code.

         r. "Stock Option" means a Stock Option granted under the Plan.

         s. "Subsidiary" means a corporation or other entity controlled by, or
under common control with the Corporation.

         t. "Termination of Employment" means, with respect to any optionee
under the Plan, the termination of such optionee's employment with the
Corporation and its Subsidiaries. An optionee employed by a Subsidiary shall
also be deemed to incur a Termination of Employment if such Subsidiary ceases to
be a Subsidiary and such optionee does not immediately thereafter become an
employee of the Corporation or another Subsidiary. Temporary absences from
employment because of illness, vacation or leave of absence and transfers among
the Corporation and its Subsidiaries shall not be considered Terminations of
Employment.

         In addition, certain other capitalized terms used herein have
definitions specified for them elsewhere herein.


SECTION 2.  ADMINISTRATION

         The Plan shall be administered by the Compensation and Option Committee
or such other committee of the Board as the Board may from time to time
designate (the "Committee"), which shall be composed of two or more Non-Employee
Directors, each of whom shall be an "outside director" for purposes of Section
162(m)(4)(c)(i) of the Code, and who shall be appointed by and serve at the
pleasure of the Board.


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         The Committee shall have plenary authority to grant Stock Options upon
such terms (not inconsistent with the terms of the Plan) as are determined by
the Committee to directors, officers and key employees of the Corporation and
its Subsidiaries.

         Among other things, the Committee shall have the authority, subject to
the terms of the Plan:

         (a) To select the directors, officers, employees and consultants to
whom Stock Optionsmay from time to time be granted;

         (b) To determine the number of shares of Common Stock to be covered by
each Stock Option granted hereunder; and

         (c) To determine the terms and conditions of any Stock Option granted
hereunder and the terms of any agreement relating thereto (including, but not
limited to, the option price (subject to Section 5(a) hereof), any vesting
condition, restriction or limitation (which may be related to the performance of
the optionee, the Corporation or any Subsidiary) and any vesting modification,
acceleration or forfeiture waiver regarding any Stock Option and the shares of
Common Stock relating thereto, based on such factors as the Committee shall
determine.

         The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall
from time to time deem advisable, to interpret the terms and provisions of the
Plan and any Stock Option granted under the Plan (and any agreement relating
thereto) and to otherwise supervise the administration of the Plan.

         The Committee may act only by a majority of its members then in office,
except that the members thereof may authorize any one or more of their number or
any officer of the Corporation to execute and deliver documents on behalf of the
Committee.

         Any determination made by the Committee or pursuant to delegated
authority pursuant to the provisions of the Plan with respect to any Stock
Option shall be made in the sole discretion of the Committee or such delegate at
the time of the grant of the Stock Option or, unless in contravention of any
express term of the Plan, at any time thereafter. All decisions made by the
Committee or any appropriately delegated officer pursuant to the provisions of
the Plan shall be final and binding on all persons, including the Corporation
and optionees under the Plan.

         Any authority granted to the Committee may also be exercised by the
full Board, except to the extent that the grant or exercise of such authority
would cause any Stock Option or transaction to become subject to (or lose an
exemption under) the short-swing profit recovery provisions of Section 16 of the
Exchange Act or to lose the Section 162(m) Exemption with respect thereto. To
the extent that any permitted action taken by the Board conflicts with action
taken by the Committee, the Board action shall control.



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SECTION 3.  COMMON STOCK SUBJECT TO PLAN

         Subject to adjustment as provided in the last paragraph of this Section
3, (i) the total number of shares of Common Stock reserved and available for
grant under the Plan shall be five hundred thousand (500,000), and (ii) during
any fiscal year of the Corporation, no person may be granted Stock Options under
the Plan covering in excess of one hundred fifty thousand (150,000) shares of
Common Stock. Shares subject to a Stock Option under the Plan may be authorized
and unissued shares or may be treasury shares.

         If any Stock Option terminates without being exercised, shares of
Common Stock subject to such Stock Option shall again be available for
distribution in connection with Stock Options under the Plan.

         In the event of any change in corporate capitalization of the
Corporation, such as a stock split or a corporate transaction, or any merger,
consolidation, separation, including a spin-off, or other distribution of stock
or property of the Corporation, any reorganization (whether or not such
reorganization comes within the definition of such term in Section 368 of the
Code) or any partial or complete liquidation of the Corporation, the Committee
or Board may make such substitution or adjustments in the aggregate number and
kind of shares reserved for issuance under the Plan, in the number, kind and
option price of shares subject to outstanding Stock Options and/or such other
equitable substitution or adjustments as it may determine to be appropriate in
its sole discretion; provided, however, that the number of shares subject to any
Stock Option shall always be a whole number.


SECTION 4.  ELIGIBILITY

         Directors, officers, employees and consultants of the Corporation and
its Subsidiaries who are responsible for or contribute to the management, growth
or profitability of the business of the Corporation and its Subsidiaries are
eligible to be granted Stock Options under the Plan.


SECTION 5.  STOCK OPTIONS

         Stock Options may only be non-qualified Stock Options that do not
qualify as "incentive stock options" within the meaning of Section 422 of the
Code.

         The Committee shall have the authority to grant Stock Options to any
eligible person at any time. Stock Options shall be evidenced by option
agreements, the terms and provisions of which may differ. An option agreement
shall indicate on its face that it is intended to be an agreement for a
non-qualified Stock Option. The grant of a Stock Option shall occur on the date
the Committee by resolution grants an individual a Stock Option (or on the date
otherwise specified as the effective date of the grant by the Committee) and
specifies the terms and provisions of the Stock Option. The Corporation shall
notify an optionee of any grant of a Stock Option, and a written option
agreement or agreements shall be duly executed and delivered by


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the Corporation to the optionee. Such agreement or agreements shall become
effective upon execution by the Corporation.

         Stock Options granted under the Plan shall be subject to the following
terms and conditions and shall contain such additional terms and conditions as
the Committee shall deem desirable:

         (a) Option Price. The option price per share of Common Stock
purchasable under a Stock Option shall be determined by the Committee and set
forth in the option agreement, and shall not be less than the Fair Market Value
of the Common Stock subject to the Stock Option on the date of grant.

         (b) Option Term. The term of each Stock Option shall be fixed by the
Committee, but no Stock Option shall be exercisable more than ten (10) years
after the date the Stock Option is granted.

         (c) Exercisability. Except as otherwise provided herein, Stock Options
shall be exercisable at such time or times and subject to such terms and
conditions as shall be determined by the Committee. If the Committee provides
that any Stock Option vests or is exercisable only in installments, the
Committee may at any time waive or modify such installment vesting or exercise
provisions, in whole or in part, based on such factors as the Committee may
determine. In addition, the Committee may at any time accelerate the vesting
and/or exercisability of any Stock Option.

         (d) Method of Exercise. Subject to the vesting provisions applicable to
a Stock Option and to the provisions of this Section 5, Stock Options may be
exercised, in whole or in part, at any time during the option term by giving
written notice of exercise to the Corporation specifying the number of shares of
Common Stock subject to the Stock Option to be purchased.

         Such notice shall be accompanied by payment in full of the purchase
price by certified or bank check or such other instrument as the Committee may
accept. If approved by the Committee, payment, in full or in part, may also be
made in the form of Common Stock already owned by the optionee of the same class
as the Common Stock subject to the Stock Option (based on the Fair Market Value
of the Common Stock on the date the Stock Option is exercised).

         In the discretion of the Committee, payment for any shares subject to a
Stock Option may also be made by delivering a properly executed exercise notice
to the Corporation, together with a copy of irrevocable instructions to a broker
to deliver promptly to the Corporation the amount of sale or loan proceeds
necessary to pay the purchase price, and, if requested by the Corporation, the
amount of any federal, state, local or foreign withholding taxes. To facilitate
the foregoing, the Corporation may enter into agreements for coordinated
procedures with one or more brokerage firms.


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         In addition, at the discretion of the Committee, payment for any shares
subject to a Stock Option may also be made by instructing the Committee to
withhold a number of such shares being issued on the exercise of such Stock
Option having a Fair Market Value on the date of exercise equal to the aggregate
exercise price of the exercised Stock Option.

         No shares of Common Stock shall be issued until full payment therefor
has been made. An optionee shall only have the rights of a stockholder of the
Corporation holding the class or series of Common Stock that is subject to such
Stock Option (including, if applicable, the right to vote the shares and the
right to receive dividends), after the optionee has given written notice of
exercise, paid in full for such shares and, if requested, given the
representation described in Section 8(a).

         (e) Transferability of Stock Options. Stock Options shall be
transferable by the optionee only pursuant to the following methods: (i) by will
or the laws of descent and distribution; or (ii) as a gift to family members of
the optionee or trusts for the benefit of family members of the optionee. Except
to the extent provided in this Section 5(e) or in Section 5(f), (g) and (h)
below, Stock Options may not be assigned, transferred, pledged, hypothecated or
disposed of in any way (whether by operation of law or otherwise), shall not be
subject to execution, attachment or similar process, and may be exercised during
the lifetime of the holder thereof only by such holder.

         (f) Termination Upon Disability or Death.

                  (1) Unless otherwise determined by the Committee and expressly
         provided otherwise in the option agreement, if a Termination of
         Employment of an optionee occurs by reason of Disability of such
         optionee, any Stock Option held by such optionee may thereafter be
         exercised to the extent it was exercisable at the date of such
         Termination of Employment, for a period of ninety (90) days (or such
         other period as the Committee may specify in the option agreement) from
         such date or until the expiration of the stated term of such Stock
         Option, whichever period is shorter (but no further installments of
         such Stock Option shall vest during such ninety (90) day period and all
         portions of such Stock Option not exercisable on the date of such
         Termination of Employment shall terminate immediately on such date),
         and thereafter such Stock Option shall terminate in its entirety.

                  (2) Unless otherwise determined by the Committee and expressly
         provided otherwise in the option agreement, upon the death of an
         optionee, any Stock Option held by such optionee may thereafter be
         exercised to the extent it was exercisable at the date of death, for a
         period of ninety (90) days (or such other period as the Committee may
         specify in the option agreement) following the date of death or until
         the expiration of the stated term of such Stock Option, whichever
         period is shorter, by the optionee's legal representatives or
         distributees having the valid authority to exercise such right (but no
         further installments of such Stock Option shall vest during such ninety
         (90) day period and all portions of such Stock Option not exercisable
         on the date of death shall terminate


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         immediately on such date), and thereafter such Stock Option shall
         terminate in its entirety.

         (g) Termination Upon Retirement. Unless otherwise determined by the
Committee, if a Termination of Employment of an optionee occurs by reason of
Retirement of such optionee, any Stock Option held by such optionee may
thereafter be exercised by the optionee, to the extent it was exercisable at the
date of such Retirement, for a period of ninety (90) days (or such other period
as the Committee may specify in the option agreement) from the date of such
Retirement or until the expiration of the stated term of such Stock Option,
whichever period is shorter (but no further installments of such Stock Option
shall vest during such ninety (90) day period and all portions of such Stock
Option not exercisable on the date of such Retirement shall terminate
immediately on such date), and thereafter such Stock Option shall terminate in
its entirety; provided, however, that if the optionee dies within such ninety
(90) day period any unexercised Stock Option held by such optionee shall,
notwithstanding the expiration of such period, continue to be exercisable to the
extent to which it was exercisable at the date of death for a period of ninety
(90) days from the date of death or until the expiration of the stated term of
such Stock Option, whichever period is shorter.

         (h) Other Terminations. Unless otherwise determined by the Committee
and expressly provided otherwise in the option agreement, (1) if an optionee
voluntarily effects his or her Termination of Employment, then each Stock Option
held by such optionee to the extent unexercised shall terminate in its entirety
on the date of such Termination of Employment, (2) if the Termination of
Employment of an optionee is effected by the Corporation or a Subsidiary for
Cause, then each Stock Option held by such optionee to the extent unexercised
shall terminate in its entirety on the date of such Termination of Employment,
and (3) if the Termination of Employment of an optionee is effected by the
Corporation or a Subsidiary without Cause, then each Stock Option held by such
optionee to the extent exercisable on the date of such Termination of Employment
shall terminate thirty (30) days after such date (but no further installments of
such Stock Option shall vest during such thirty (30) day period and all portions
of such Stock Option not exercisable on the date of such Termination of
Employment shall terminate immediately on such date) and thereafter such Stock
Option shall terminate in its entirety.

         (i) Consultant or Director Status. Notwithstanding the foregoing
provisions of Sections 5(f), 5(g) and 5(h), a Stock Option held by an optionee
shall not terminate upon the Termination of Employment of such optionee if such
optionee continues to serve as a consultant or director to the Corporation or
any of its Subsidiaries, in which case such Stock Option shall continue in
effect, including future vesting of installments, until the status of such
optionee as a consultant or director terminates at which time the Stock Option
shall terminate on the date of such termination of consultant or director status
on the same basis as provided above in this Section 5 with respect to
Termination of Employment status.

         (j) Acceleration Upon Change of Control. Unless otherwise determined by
the Committee and expressly provided otherwise in the option agreement, Stock
Options granted under the Plan with a vesting date no more than three years from
the date of the optionee's


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Termination of Employment or termination of consultant or director status with
the Corporation will accelerate as to vesting upon the termination by the
Corporation of such employment or consulting or director status (including
Constructive Termination), except when such termination is for Cause, and only
when such termination follows a Change of Control.


SECTION 6.  TAX OFFSET BONUSES

         At the time a Stock Option is granted hereunder or at any time
thereafter, the Committee in its sole discretion may grant to the optionee
receiving such Stock Option the right to receive a cash payment in an amount
specified by the Committee, to be paid at such time or times (if ever) as the
Stock Option results in compensation income to the optionee, for the purpose of
assisting the optionee to pay the resulting taxes, all as determined by the
Committee and on such other terms and conditions as the Committee shall
determine.


SECTION 7.  TERM, AMENDMENT AND TERMINATION

         The Plan will terminate ten (10) years after the effective date of the
Plan. Under the Plan, Stock Options outstanding as of such date shall not be
affected or impaired by the termination of the Plan.

         The Board may amend, alter, or discontinue the Plan in any respect
whatsoever, but no amendment, alteration or discontinuation shall be made which
would impair the rights of an optionee under a Stock Option theretofore granted
without the optionee's consent, except such an amendment made to cause the Plan
to qualify for any exemption provided by Rule 16b-3. In addition, no such
amendment shall be made without the approval of the Corporation's stockholders
to the extent, if at all, such approval is required by applicable law, stock
market or exchange rule, or agreement.

         The Committee may amend in any respect whatsoever the terms of any
Stock Option theretofore granted, but no amendment may impair the rights of any
holder of such Stock Option without such holder's consent except an amendment
made to cause the Plan or Stock Option to qualify for any exemption provided by
Rule 16b-3.

         Subject to the above provisions, the Board shall have the authority to
amend the Plan to take into account changes in law and tax and accounting rules
as well as other developments, and to grant Stock Options which qualify for
beneficial treatment under such rules without stockholder approval.


SECTION 8.  GENERAL PROVISIONS

         (a) The Committee may require each person purchasing or receiving
shares pursuant to a Stock Option to represent to and agree with the Corporation
in writing that such person is


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acquiring the shares without a view to the distribution thereof. The
certificates for such shares may include any legend which the Committee deems
appropriate to reflect any restrictions on transfer. Notwithstanding any other
provisions of the Plan or agreements made pursuant thereto, the Corporation
shall not be required to issue or deliver any certificate or certificates for
shares of Common Stock under the Plan prior to fulfillment of all of the
following conditions:

                  (1) Listing or approval for listing upon notice of issuance,
         of such shares on the Nasdaq National Market or such other securities
         exchange as may at the time be the principal market for the Common
         Stock;

                  (2) Any registration or other qualification of such shares of
         the Corporation under any state or federal law or regulation, or the
         maintaining in effect of any such registration or other qualification
         which the Committee shall, in its absolute discretion upon the advice
         of counsel, deem necessary or advisable; and

                  (3) Obtaining any other consent, approval, or permit from any
         state or federal governmental agency which the Committee shall, in its
         absolute discretion after receiving the advice of counsel, determine to
         be necessary or advisable.

         (b) Nothing contained in the Plan shall prevent the Corporation or any
Subsidiary from adopting other or additional compensation arrangements for its
employees.

         (c) Adoption of the Plan shall not confer upon any employee any right
to continue employment, nor shall it interfere in any way with the right of the
Corporation or any Subsidiary to terminate the employment of any employee at any
time.

         (d) No later than the date as of which an amount first become
includible in the gross income of the optionee for federal income tax purposes
with respect to any Stock Option under the Plan, the optionee shall pay to the
Corporation, or make arrangements satisfactory to the Corporation regarding the
payment of, any federal, state, local or foreign taxes of any kind required by
law to be withheld with respect to such amount. Unless otherwise determined by
the Corporation, withholding obligations may be settled with Common Stock,
including Common Stock that is part of the Stock Option that gives rise to the
withholding requirement. The obligations of the Corporation under the Plan and
the Stock Option shall be conditional on such payment or arrangements, and the
Corporation and its Subsidiaries shall, to the extent permitted by law, have the
right to deduct any such taxes from any payment otherwise due to the optionee.
The Committee may establish such procedures as it deems appropriate, including
making irrevocable elections, for the settlement of withholding obligations with
Common Stock.

         (e) The Committee shall establish such procedures as it deems
appropriate for an optionee to designate a beneficiary by whom any rights of the
optionee, after the optionee's death, may be exercised.


<PAGE>   11


         (f) In the case of a grant of a Stock Option to any employee of a
Subsidiary of the Corporation, the Corporation may, if the Committee so directs,
issue or transfer the shares of Common Stock, if any, covered by the Stock
Option to the Subsidiary, for such lawful consideration as the Committee may
specify, upon the condition or understanding that the Subsidiary will transfer
the shares of Common Stock to the employee in accordance with the terms of the
Stock Option specified by the Committee pursuant to the provisions of the Plan.

         (g) The Plan and all Stock Options made and actions taken hereunder
shall be governed by and construed in accordance with the laws of the State of
Delaware, without reference to principles of conflict of laws.

         (h) Anything in this Plan to the contrary notwithstanding, the Board
may, without further approval by the stockholders, substitute new options for,
or assume, prior options of any corporation which engages with the Corporation
or any of its Subsidiaries in a transaction to which Section 424(a) of the Code
applies (or would apply if the option assumed or substituted were an incentive
stock option), or any parent or any subsidiary of such corporation.

         (i) With respect to optionees subject to Section 16 of the Exchange
Act, transactions under the Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the Exchange Act. To the extent
any provision of the Plan or action by the Committee fails to so comply, the
Stock Option or action shall be deemed null and void, to the extent permitted by
law and deemed advisable by the Committee.


SECTION 9.  EFFECTIVE DATE OF PLAN

         The Plan shall be effective as of the date it is approved by at least a
majority of the shares of Common Stock of the Corporation represented by proxy
or in person and entitled to vote at a meeting of the stockholders of the
Corporation having as one of its purposes voting on approval of the adoption of
the Plan by the Corporation.


SECTION 10.  INDEMNIFICATION OF COMMITTEE

         In addition to such other rights of indemnification as they may have as
directors of the Corporation or as members of the Committee, the members of the
Committee shall be indemnified by the Corporation against the reasonable
expenses, including attorneys' fees actually and reasonably incurred in
connection with the defense of any action, suit or proceeding, or in connection
with any appeal therein, to which they or any of them may be a party by reason
of any action taken or failure to act under or in connection with the Plan or
any Stock Option granted hereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by a majority of the
disinterested directors of the Corporation or by independent legal counsel
selected by the Corporation)


<PAGE>   12

or paid by them in satisfaction of a judgment in any such action, suit or
proceeding, except in relation to matters as to which it shall be adjudged in
such action, suit or proceeding that a member of the Committee is liable for
gross negligence or intentional and willful misconduct in the performance of his
duties; provided that within sixty (60) days after institution of any such
action, suit or proceeding, such member of the Committee shall in writing offer
the Corporation the opportunity, at its own expense, to handle and defend the
same.


<PAGE>   13


                    AMENDMENT NO. 1 TO 1998 STOCK OPTION PLAN


         Resolved, that pursuant to authority granted to the Board of Directors
in Section 7 of the 1998 Stock Option Plan of the Company (the "1998 Plan"),
stock options outstanding under the 1998 Plan are authorized to be amended (with
the written consent of the holders thereof) and the 1998 Plan shall be amended
to provide that such stock options shall be transferable by the optionee only
pursuant to the following methods: (i) by will or the laws of descent and
distribution; or (ii) as a gift to family members of the optionee or to trusts
for the benefit of family members of the optionee or to charities or other
not-for-profit organizations; or (iii) to an entity (other than a public
company) controlled or owned by, or for the benefit of, family members of the
optionee.