EXHIBIT 4.6

                                HEALTHWATCH, INC.
                             1995 STOCK OPTION PLAN


                      Article I. Establishment and Purpose

       1.1 Establishment. HealthWatch, Inc., a Minnesota Corporation
("Company"), hereby establishes a stock option plan for employees and others
providing services to the Company and its Subsidiary Corporations, as described
herein, which shall be known as the "1995 STOCK OPTION PLAN" (the "Plan"). It is
intended that certain of the options issued pursuant to the Plan to employees
may, subject to the Plan being approved by the stockholders of the Company by
December 8, 1996, constitute incentive stock options within the meaning of
section 422A of the Internal Revenue Code and that other options issued pursuant
to the Plan shall constitute nonstatutory options. The Board shall determine
which options are to be incentive stock options and which are to be nonstatutory
options and shall enter into option agreements with recipients accordingly.

       1.2 Purpose. The purpose of this Plan is to enhance stockholder
investment by attracting, retaining and motivating key employees and consultants
of the Company and its Subsidiary Corporations, and to encourage stock ownership
by such employees and consultants by providing them with a means to acquire a
proprietary interest in the Company's success.


                             Article II. Definitions

         2.1 Definitions. Whenever used herein, the following terms shall have
the respective meanings set forth below, unless the context clearly requires
otherwise, and when said meaning is intended, the term shall be capitalized.

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

        (b)    "Cause" means (i) an act or acts of personal dishonesty taken by
               Employee or Consultant and intended to result in substantial
               personal enrichment to Employee or Consultant at the expense of
               the Company; (ii) repeated violations by Employee or Consultant
               of his obligations which are demonstrably willful and deliberate
               on Employee's or Consultant's part and which are not remedied
               within a reasonable period after Employee's or Consultant's
               receipt of written notice of such violations from the Company;
               (iii) the conviction of Employee or Consultant of a felony that
               is materially and demonstrably injurious to the Company; (iv)
               sexual harassment by Employee or Consultant of any other Employee
               or Consultant of the Company; or (v) illegal use of drugs. No
               act, or failure to act, on Employee's or Consultant's part shall
               be considered "dishonest," "willful," or "deliberate," unless
               done, or admitted to be done, by Employee or Consultant in bad
               faith and without reasonable belief that Employee's or
               Consultant's action or omission was in the best interest of the
               Company.

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

        (d)    "Committee" shall mean the Committee provided for by Article IV
               hereof, which may be created at the discretion of the Board.

        (e)    "Company" means HealthWatch, Inc., a Minnesota Corporation.

        (f)    "Consultant" means any person or entity, including an officer or
               director of the Company or a Subsidiary Corporation, who provides
               services (other than as an Employee) to the Company or a
               Subsidiary Corporation, and shall include a Non-Employee
               Director, as defined below.

        (g)    "Date of Exercise" means the date the Company receives notice, by
               an Optionee, of the exercise of an Option pursuant to section 8.1
               of this Plan. Such notice shall indicate the number of shares of
               Stock the Optionee intends to exercise.

        (h)    "Employee" means any person, including an officer or director of
               the Company or a Subsidiary Corporation, who is employed by the
               Company or a Subsidiary Corporation.

        (i)    "Fair Market Value" means the fair market value of Stock upon
               which an option is granted under this Plan.

        (j)    "Incentive Stock Option" means an Option granted under this Plan
               which is intended to qualify as an "incentive stock option"
               within the meaning of Section 422A of the Code.

        (k)    "Non-Employee Director" means a member of the Board who is not an
               employee of the Company or of any Subsidiary Corporation at the
               time an Option is granted hereunder.

        (l)    "Nonstatutory Option" means an Option granted under this Plan
               which is not intended to qualify as an incentive stock option
               within the meaning of Section 422A of the Code. Nonstatutory
               Options may be granted at such times and subject to such
               restrictions as the Board shall determine without conforming to
               the statutory rules of Section 422A of the Code applicable to
               incentive stock options.

        (m)    "Option" means the right, granted under this Plan, to purchase
               Stock of the Company at the option price for a specified period
               of time. For purposes of this Plan, an Option may be either an
               Incentive Stock Option or a Nonstatutory Option.

        (n)    "Optionee" means an Employee or Consultant holding an Option
               under the Plan.

        (o)    "Parent Corporation" shall have the meaning set forth in Section
               425(e) of the Code with the Company being treated as the employer
               corporation for purposes of this definition.

        (p)    "Subsidiary Corporation" shall have the meaning set forth in
               Section 425(f) of the Code with the Company being treated as the
               employer corporation for purposes of this definition.

        (q)    "Significant Shareholder" means an individual who, within the
               meaning of Section 422A(b)(6) of the Code, owns stock possessing
               more than ten percent of the total combined voting power of all
               classes of stock of the Company or of any Parent Corporation or
               Subsidiary Corporation of the Company. In determining whether an
               individual is a Significant Shareholder, an individual shall be
               treated as owning stock owned by certain relatives of the
               individual and certain stock owned by corporations in which the
               individual is a stockholder, partnerships in which the individual
               is a partner, and estates or trusts of which the individual is a
               beneficiary, all as provided in Section 425(d) of the Code.

        (r)    "Stock" means the $.07 par value (as adjusted to reflect the
               one-for-seven reverse split effective May 13, 1996) common stock
               of the Company.

         2.2 Gender and Number. Except when otherwise indicated by the context,
any masculine terminology when used in this Plan also shall include the feminine
gender, and the definition of any term herein in the singular also shall include
the plural.


                   Article III. Eligibility and Participation

       3.1 Eligibility and Participation. All Employees are eligible to
participate in this Plan and receive Incentive Stock Options and/or Nonstatutory
Options hereunder. All Consultants are eligible to participate in this Plan and
receive Nonstatutory Options hereunder. Optionees in the Plan shall be selected
by the Board from among those Employees and Consultants who, in the opinion of
the Board, are in a position to contribute materially to the Company's continued
growth and development and to its long-term financial success.


                           Article IV. Administration

         4.1 Administration. The Board shall be responsible for administering
the Plan.

The Board is authorized to interpret the Plan; to prescribe, amend, and rescind
rules and regulations relating to the Plan; to provide for conditions and
assurances deemed necessary or advisable to protect the interests of the
Company; and to make all other determinations necessary or advisable for the
administration of the Plan, but only to the extent not contrary to the express
provisions of the Plan. Determinations, interpretations, or other actions made
or taken by the Board, pursuant to the provisions of this Plan, shall be final
and binding and conclusive for all purposes and upon all persons.

        At the discretion of the Board this Plan may be administered by a
Committee which shall be an executive committee of the Board, consisting of not
less than three (3) members of the Board. The members of such Committee may be
directors who are eligible to receive Options under this Plan, but Options may
be granted to such persons only by action of the full Board and not by action of
the Committee. Such Committee shall have full power and authority, subject to
the limitations of the Plan and any limitations imposed by the Board, to
construe, interpret and administer this Plan and to make determinations which
shall be final, conclusive and binding upon all persons, including, without
limitation, the Company, the stockholders, the directors and any persons having
any interests in any Options which may be granted under this Plan, and, by
resolution or resolution providing for the creation and issuance of any such
Option, to fix the terms upon which, the time or times at or within which, and
the price or prices at which any such shares may be purchased from the Company
upon the exercise of such Option, which terms, time or times and price or prices
shall, in every case, be set forth or incorporated by reference in the
instrument or instruments evidencing such Option, and shall be consistent with
the provisions of this Plan.

        The Board may from time to time remove members from, or add members to,
the Committee. The Board may terminate the Committee at any time. Vacancies on
the Committee, howsoever caused, shall be filled by the Board. The Committee
shall select one of its members as Chairman, and shall hold meetings at such
times and places as the Chairman may determine. A majority of the Committee at
which a quorum is present, or acts reduced to or approved in writing by all of
the members of the Committee, shall be the valid acts of the Committee. A quorum
shall consist of two-thirds (2/3) of the members of the Committee.

         Where the Committee has been created by the Board, references herein to
actions to be taken by the Board shall be deemed to refer to the Committee as
well, except where limited by this Plan or by the Board.

         The Board shall have all of the enumerated powers of the Committee, but
shall not be limited to such powers. No member of the Board or the Committee
shall be liable for any action or determination made in good faith with respect
to the Plan or any Option granted under it.


                      Article V. Stock Subject to the Plan

       5.1 Number. The total number of shares of Stock hereby made available and
reserved for issuance under the Plan shall be 400,000 shares (as amended
February 26, 1996 and as adjusted to reflect the one-for-seven reverse stock
split effective May 13, 1996). The aggregate number of shares of Stock available
under this Plan shall be subject to adjustment as provided in section 5.3. The
total number of shares of Stock may be authorized but unissued shares of Stock,
or shares acquired by purchase as directed by the Board from time to time in its
discretion, to be used for issuance upon exercise of Options granted hereunder.

       5.2 Unused Stock. If an Option shall expire or terminate for any reason
without having been exercised in full, the unpurchased shares of Stock subject
thereto shall (unless the Plan shall have terminated) become available for other
Options under the Plan.

       5.3 Adjustment in Capitalization. In the event of any change in the
outstanding shares of Stock by reason of a stock dividend or split,
recapitalization, reclassification, or other similar corporate change, the
aggregate number of shares of Stock set forth in section 5.1 shall be
appropriately adjusted by the Board, whose determination shall be conclusive;
provided, however, that fractional shares shall be rounded to the nearest whole
share. In any such case, the number and kind of shares that are subject to any
Option (including any Option outstanding after termination of employment) and
the Option price per share shall be proportionately and appropriately adjusted
without any change in the aggregate Option price to be paid therefor upon
exercise of the Option.


                        Article VI. Duration of the Plan

       6.1 Duration of the Plan. The Plan shall be in effect for ten years from
the date of its adoption by the Board. Any Options outstanding at the end of
said period shall remain in effect in accordance with their terms. The Plan
shall terminate before the end of said period, if all Stock subject to it has
been purchased pursuant to the exercise of Options granted under the Plan.


                       Article VII. Terms of Stock Options

       7.1 Grant of Options. Subject to section 5.1, Options may be granted to
Employees or Consultants at any time and from time to time as determined by the
Board; provided, however, that Consultants may receive only Nonstatutory
Options, and may not receive Incentive Stock Options. The Board shall have
complete discretion in determining the number of Options granted to each
Optionee. In making such determinations, the Board may take into account the
nature of services rendered by such Employees or Consultants, their present and
potential contributions to the Company and its Subsidiary Corporations, and such
other factors as the Board in its discretion shall deem relevant. The Board also
shall determine whether an Option is to be an Incentive Stock Option or a
Nonstatutory Option.

        In the case of Incentive Stock Options the total Fair Market Value
(determined at the date of grant) of shares of Stock with respect to which
incentive stock options granted after December 31, 1986 are exercisable for the
first time by the Optionee during any calendar year under all plans of the
Company under which incentive stock options may be granted (and all such plans
of any Parent Corporations and any Subsidiary Corporations of the Company) shall
not exceed $100,000. (Hereinafter, this requirement is sometimes referred to as
the "$100,000 Limitation".)

        Nothing in this Article VII of the Plan shall be deemed to prevent the
grant of Options permitting exercise in excess of the maximums established by
the preceding paragraph where such excess amount is treated as a Nonstatutory
Option.

        The Board is expressly given the authority to issue amended or
replacement Options with respect to shares of Stock subject to an Option
previously granted hereunder. An amended Option amends the terms of an Option
previously granted and thereby supersedes the previous Option. A replacement
Option is similar to a new Option granted hereunder except that it provides that
it shall be forfeited to the extent that a previously granted Option is
exercised, or except that its issuance is conditioned upon the termination of a
previously granted Option.

        7.2 No Tandem Options. Where an Option granted under this Plan is
intended to be an Incentive Stock Option, the Option shall not contain terms
pursuant to which the exercise of the Option would affect the Optionee's right
to exercise another Option, or vice versa, such that the Option intended to be
an Incentive Stock Option would be deemed a tandem stock option within the
meaning of the regulations under Section 422A of the Code.

        7.3 Option Agreement; Terms and Conditions to Apply Unless Otherwise
Specified. As determined by the Board on the date of grant, each Option shall be
evidenced by an Option agreement (the "Option Agreement") that includes the
nontransferability provisions required by Section 10.2 hereof and specifies:
whether the Option is an Incentive Stock Option or a Nonstatutory Option; the
Option price; the duration of the Option; the number of shares of Stock to which
the Option applies; any vesting or exercisability restrictions which the Board
may impose; in the case of an Incentive Stock Option, a provision implementing
the $100,000 Limitation; and any other terms or conditions which the Board may
impose. All such terms and conditions shall be determined by the Board at the
time of grant of the Option.

        If not otherwise specified by the Board, the following terms and
conditions shall apply to Options granted under the Plan:

        (a)    Term. The duration of the Option shall be five (5) years from the
               date of grant.

        (b)    Exercise of Option. Unless an Option is terminated as provided
               hereunder, an Optionee may exercise his Option for up to, but not
               in excess of, the amounts of shares subject to the Option
               specified below, based on the Optionee's number of years of
               continuous service with the Company or a Subsidiary Corporation
               of the Company from the date on which the Option is granted. In
               the case of an Optionee who is an Employee, continuous service
               shall mean continuous employment; in the case of an Optionee who
               is a Consultant, continuous service shall mean the continuous
               provision of consulting services. In applying said limitations,
               the amount of shares, if any, previously purchased by the
               Optionee under the Option shall be counted in determining the
               amount of shares the Optionee can purchase at any time. The
               Optionee may exercise his Option in the following amounts:

               (i)    After one year of such continuous services for up to but 
                      not in excess of thirty-three and one-third percent 
                      (33 1/3%) of the shares originally subject to the Option;

              (ii)    After two years of such continuous services, for up to but
                      not in excess of sixty-six and two-thirds percent 
                      (66 2/3%) of the shares originally subject to the 
                      Option; and

             (iii)    At the expiration of the third year of such continuous
                      services the Option may be exercised at any time and from
                      time to time within its terms in whole or in part, but it
                      shall not be exercisable after the expiration of five (5)
                      years from the date on which it was granted.

The Board shall be free to specify terms and conditions other than those set
forth above, in its discretion.

        All Option Agreements shall incorporate the provisions of this Plan by
reference, with certain provisions to apply depending upon whether the Option
Agreement applies to an Incentive Stock Option or to a Nonstatutory Option.

        7.4 Option Price. No Incentive Stock Option granted pursuant to this
Plan shall have an Option price that is less than the Fair Market Value of Stock
on the date the Option is granted. Incentive Stock Options granted to
Significant Shareholders shall have an Option price of not less than 110 percent
of the Fair Market Value of Stock on the date of grant. The Option price for
Nonstatutory Options shall be established by the Board and shall not be less
than eighty-five percent (85%) of the Fair Market Value of Stock on the date
this Option is granted.

       7.5 Term of Options. Each Option shall expire at such time as the Board
shall determine when it is granted, provided however that no Option shall be
exercisable later than the tenth anniversary date of its grant. By its terms, an
Incentive Stock Option granted to a Significant Shareholder shall not be
exercisable after five years from the date of grant.

       7.6 Exercise of Options. Options granted under the Plan shall be
exercisable at such times and be subject to such restrictions and conditions as
the Board shall in each instance approve, which need not be the same for all
Optionees.

       7.7 Payment. Payment for all shares of Stock shall be made at the time
that an Option, or any part thereof, is exercised, and no shares shall be issued
until full payment therefor has been made. Payment shall be made (i) in cash, or
(ii) if acceptable to the Board, in Stock or in some other form; provided,
however, in the case of an Incentive Stock Option, that said other form of
payment does not prevent the Option from qualifying for treatment as an
"incentive stock option" within the meaning of the Code. Payment may also be
made, in the discretion of the Board, by delivery (including by FAX) to the
Company or its designated agent of an executed irrevocable option exercise form
together with irrevocable instructions to a broker-dealer to sell or margin a
sufficient portion of the shares and deliver the sale or margin loan proceeds
directly to the Company to pay for the exercise price.


          Article VIII. Amendment, Modification and Termination of Plan

       8.1 Amendment, Modification, and Termination of the Plan. The Board may
at any time terminate, and from time to time may amend or modify the Plan,
provided, however, that no amendment, modification, or termination of the Plan
shall in any manner adversely affect any outstanding grant under the Plan
without the consent of the recipient thereof.

       8.2 Issuance of Stock Certificates. As soon as practicable after the
receipt of written notice and payment, the Company shall deliver to the Optionee
or to a nominee of the Optionee a certificate or certificates for the requisite
number of shares of Stock.

       8.3 Privileges of a Stockholder. An Optionee or any other person entitled
to exercise an Option under this Plan shall not have stockholder privileges with
respect to any Stock covered by the Option until the date of issuance of a stock
certificate for such stock.


               Article IX. Termination of Employment or Services

       9.1 Death. Unless provided otherwise for a Nonstatutory Option, if an
Optionee's employment in the case of an Employee, or provision of services as a
Consultant, in the case of a Consultant, terminates by reason of death, the
Option may thereafter be exercised at any time prior to the expiration date of
the Option or within 12 months after the date of such death, whichever period is
the shorter, by the person or persons entitled to do so under the Optionee's
will or, if the Optionee shall fail to make a testamentary disposition of an
Option or shall die intestate, the Optionee's legal representative or
representatives. The Option shall be exercisable only to the extent that such
Option was exercisable as of the date of death.

       9.2 Termination Other Than For Cause Or Due to Death. Unless provided
otherwise for a Nonstatutory Option, in the event of an Optionee's termination
of employment, in the case of an Employee, or termination of the provision of
services as a Consultant, in the case of a Consultant, other than by reason of
death, the Optionee may exercise such portion of his Option as was exercisable
by him at the date of such termination (the "Termination Date") at any time
within three (3) months of the Termination Date; provided, however, that where
the Optionee is an Employee or Consultant, and is terminated due to disability
within the meaning of Code ss. 422A, he may exercise such portion of his Option
as was exercisable by him on his Termination Date within one year of his
Termination Date. In any event, the Option cannot be exercised after the
expiration of the term of the Option. Options not exercised within the
applicable period specified above shall terminate.

In the case of an Employee, a change of duties or position within the Company or
an assignment of employment in a Subsidiary Corporation or Parent Corporation of
the Company, if any, or from such a Corporation to the Company, shall not be
considered a termination of employment for purposes of this Plan. The Option
Agreements may contain such provisions as the Board shall approve with reference
to the effect of approved leaves of absence upon termination of employment.

       9.3 Termination for Cause. Unless provided otherwise for a Nonstatutory
Option, in the event of an Optionee's termination of employment, in the case of
an Employee, or termination of the provision of services as a Consultant, in the
case of a Consultant, which termination is by the Company or a Subsidiary
Corporation for cause, any Option or Options held by him under the Plan, to the
extent not exercised before such termination, shall forthwith terminate.


                         Article X. Rights of Optionees

      10.1 Service. Nothing in this Plan shall interfere with or limit in any
way the right of the Company or a Subsidiary Corporation to terminate any
Employee's employment, or any Consultant's services, at any time, nor confer
upon any Employee any right to continue in the employ of the Company or a
Subsidiary Corporation, or upon any Consultant any right to continue to provide
services to the Company or a Subsidiary Corporation.

       10.2 Nontransferability. All Options granted under this Plan shall be
nontransferable by the Optionee, other than by will or the laws of descent and
distribution, and shall be exercisable during the Optionee's lifetime only by
the Optionee.


                         Article XI. Optionee-Employee's
                          Transfer or Leave of Absence

       11.1 Optionee-Employee's Transfer or Leave of Absence. For Plan
purposes--

       (a)    A transfer of an Optionee who is an Employee from the Company to a
              Subsidiary Corporation or Parent Corporation, or from one such
              Corporation to another, or

       (b)    a leave of absence for such an Optionee (i) which is duly
              authorized in writing by the Company or a Subsidiary Corporation,
              and (ii) if the Optionee holds an Incentive Stock Option, which
              qualifies under the applicable regulations under the Code which
              apply in the case of incentive stock options, 
shall not be deemed a termination of employment. However, under no circumstances
may an Optionee exercise an Option during any leave of absence, unless
authorized by the Board.

                             Article XII. Amendment,
                    Modification, and Termination of the Plan

      12.1 Amendment, Modification, and Termination of the Plan. The Board may
at any time terminate, and from time to time may amend or modify the Plan,
provided, however, that no amendment, modification, or termination of the Plan
shall in any manner adversely affect any outstanding Option under the Plan
without the consent of the Optionee holding the Option.


                Article XIII. Acquisition, Merger, or Liquidation

      13.1 Acquisition. In the event that an Acquisition occurs with respect to
the Company, the Company shall have the option, but not the obligation, to
cancel Options outstanding as of the effective date of Acquisition, whether or
not such Options are then exercisable, in return for payment to the Optionees of
an amount equal to a reasonable estimate of an amount (hereinafter the "Spread")
equal to the difference between the net amount per share payable in the
Acquisition, or as a result of the Acquisition, less the exercise price of the
Option. In estimating the Spread, appropriate adjustments to give effect to the
existence of the Options shall be made, such as deeming the Options to have been
exercised, with the Company receiving the exercise price payable thereunder, and
treating the shares receivable upon exercise of the Options as being outstanding
in determining the net amount per share. For purposes of this section, an
"Acquisition" shall mean any transaction in which substantially all of the
Company's assets are acquired or in which a controlling amount of the Company's
outstanding shares are acquired, in each case by a single person or entity or an
affiliated group of persons and/or entities. For purposes of this Section a
controlling amount shall mean more than 50% of the issued and outstanding shares
of stock of the Company. The Company shall have such an option regardless of how
the Acquisition is effectuated, whether by direct purchase, through a merger or
similar corporate transaction, or otherwise. In cases where the acquisition
consists of the acquisition of assets of the Company, the net amount per share
shall be calculated on the basis of the net amount receivable with respect to
shares upon a distribution and liquidation by the Company after giving effect to
expenses and charges, including but not limited to taxes, payable by the Company
before the liquidation can be completed.

Where the Company does not exercise its option under this Section 13.1 the
remaining provisions of this Article XIII shall apply, to the extent applicable.

      13.2 Merger or Consolidation. Subject to any required action by the
stockholders, if the Company shall be the surviving corporation in any merger or
consolidation, any Option granted hereunder shall pertain to and apply to the
securities to which a holder of the number of shares of Stock subject to the
Option would have been entitled in such merger or consolidation.

      13.3 Other Transactions. A dissolution or a liquidation of the Company or
a merger and consolidation in which the Company is not the surviving corporation
shall cause every Option outstanding hereunder to terminate as of the effective
date of such dissolution, liquidation, merger or consolidation. However, the
Optionee either (i) shall be offered a firm commitment whereby the resulting or
surviving corporation in a merger or consolidation will tender to the Optionee
an option (the "Substitute Option") to purchase its shares on terms and
conditions both as to number of shares and otherwise, which will substantially
preserve to the Optionee the rights and benefits of the Option outstanding
hereunder granted by the Company, or (ii) shall have the right immediately prior
to such dissolution, liquidation, merger, or consolidation to exercise any
unexercised Options whether or not then exercisable, subject to the provisions
of this Plan. The Board shall have absolute and uncontrolled discretion to
determine whether the Optionee has been offered a firm commitment and whether
the tendered Substitute Option will substantially preserve to the Optionee the
rights and benefits of the Option outstanding hereunder. In any event, any
Substitute Option for an Incentive Stock Option shall comply with the
requirements of Code Section 425(a).


                      Article XIV. Securities Registration

      14.1 Securities Registration. In the event that the Company shall deem it
necessary or desirable to register under the Securities Act of 1933, as amended,
or any other applicable statute, any Options or any Stock with respect to which
an Option may be or shall have been granted or exercised, or to qualify any such
Options or Stock under the Securities Act of 1933, as amended, or any other
statute, then the Optionee shall cooperate with the Company and take such action
as is necessary to permit registration or qualification of such Options or
Stock.

Unless the Company has determined that the following representation is
unnecessary, each person exercising an Option under the Plan may be required by
the Company, as a condition to the issuance of the shares pursuant to exercise
of the Option, to make a representation in writing (a) that he is acquiring such
shares for his own account for investment and not with a view to, or for sale in
connection with, the distribution of any part thereof, (b) that before any
transfer in connection with the resale of such shares, he will obtain the
written opinion of counsel for the Company, or other counsel acceptable to the
Company, that such shares may be transferred. The Company may also require that
the certificates representing such shares contain legends reflecting the
foregoing.


                           Article XV. Tax Withholding

      15.1 Tax Withholding. Whenever shares of Stock are to be issued in
satisfaction of Options exercised under this Plan, the Company shall have the
power to require the recipient of the Stock to remit to the Company an amount
sufficient to satisfy federal, state, and local withholding tax requirements.


                          Article XVI. Indemnification

      16.1 Indemnification. To the extent permitted by law, each person who is
or shall have been a member of the Board shall be indemnified and held harmless
by the Company against and from any loss, cost, liability, or expense that may
be imposed upon or reasonably incurred by him in connection with or resulting
from any claim, action, suit, or proceeding to which he may be a party or in
which he may be involved by reason of any action taken or failure to act under
the Plan and against and from any and all amounts paid by him in settlement
thereof, with the Company's approval, or paid by him in satisfaction of judgment
in any such action, suit, or proceeding against him, provided he shall give the
Company an opportunity, at its own expense, to handle and defend the same before
he undertakes to handle and defend it on his own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to
which such persons may be entitled under the Company's articles of incorporation
or bylaws, as a matter of law, or otherwise, or any power that the Company or
any Subsidiary Corporation may have to indemnify them or hold them harmless.


                        Article XVII. Requirements of Law

      17.1 Requirements of Law. The granting of Options and the issuance of
shares of Stock upon the exercise of an Option shall be subject to all
applicable laws, rules, and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.

      17.2 Governing Law. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of
California.


                      Article XVIII. Effective Date of Plan

       18.1 Effective Date. The Plan shall be effective on December 8, 1995, the
effective date of its adoption by the Board.


                       Article XIX. Compliance with Code.

      19.1 Compliance with Code. Incentive Stock Options granted hereunder are
intended to qualify as "incentive stock options" under Code ss. 422A. If any
provision of this Plan is susceptible to more than one interpretation, such
interpretation shall be given thereto as is consistent with Incentive Stock
Options granted under this Plan being treated as incentive stock options under
the Code. In the event that the stockholders of the Company do not approve the
Plan by December 8, 1996, all options granted pursuant to the Plan shall be
deemed to be Nonstatutory Options.


                  Article XX. No Obligation to Exercise Option.

       20.1 No Obligation to Exercise. The granting of an Option shall impose no
obligation upon the holder thereof to exercise such Option.