INTERCARDIA, INC.

                       1994 STOCK OPTION PLAN, AS AMENDED

1.   Purpose.

     The purpose of this plan (the "Plan") is to secure for INTERCARDIA, INC.
(the "Company") and its shareholders the benefits arising from capital stock
ownership by employees, officers and directors of, and consultants or advisors
to, the Company, the Company's parent, Interneuron Pharmaceuticals, Inc.
("Interneuron") and the Company's subsidiary corporations who are expected to
contribute to the Company's future growth and success. Those provisions of the
Plan which make express reference to Section 422 shall apply only to Incentive
Stock Options (as that term is defined in the Plan).

2.   Type of Options and Administration.

     (a) Types of Options. Options granted pursuant to the Plan shall be
authorized by action of the Board of Directors of the Company (or a Committee
designated by the Board of Directors) and may be either incentive stock options
("Incentive Stock Options") meeting the requirements of Section 422 of the
Internal Revenue Code of 1986, as amended or replaced from time to time (the
"Code") or non-statutory options which are not intended to meet the requirements
of Section 422 of the Code.

     (b) Administration. The Plan will be administered by the Board of Directors
or a committee (the "Committee") appointed by the Board of Directors of the
Company, whose construction and interpretation of the terms and provisions of
the Plan shall be final and conclusive. The delegation of powers to the
Committee shall be consistent with applicable laws or regulations (including,
without limitation, applicable state law and Rule 16b-3 promulgated under the
Securities Exchange Act of 1934 (the "Exchange Act"), or any successor rule
("Rule 16b-3")). The Committee may in its sole discretion grant options to
purchase shares of the Company's Common Stock, $.001 par value per share
("Common Stock"), and issue shares upon exercise of such options as provided in
the Plan. The Committee shall have authority, subject to the express provisions
of the Plan, to construe the respective option agreements and the Plan, to
prescribe, amend and rescind rules and regulations relating to the Plan, to
determine the terms and provisions of the respective option agreements, which
need not be identical, and to make all other determinations in the judgment of
the Committee necessary or desirable for the administration of the Plan. The
Committee may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any option agreement in the manner and to the
extent it shall deem expedient to carry the Plan into effect and it shall be the
sole and final judge of such expediency. No director or person acting pursuant
to authority delegated by the Board of Directors shall be liable for any action
or determination under the Plan made in good faith. Subject to adjustment as
provided in Section 15 below, the aggregate number of shares of Common Stock
that may be subject to options granted to any person in a calendar year shall
not exceed 300,000 shares.



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     (c) Applicability of Rule 16b-3. Those provisions of the Plan which make
express reference to Rule 16b-3 shall apply to the Company only at such time as
the Company's Common Stock is registered under the Exchange Act, subject to the
last sentence of Section 3(b), and then only to such persons as are required to
file reports under Section 16(a) of the Exchange Act (a "Reporting Person").

3.   Eligibility.

     (a) General. Options may be granted to persons who are, at the time of
grant, employees, officers or directors of, or consultants or advisors to, the
Company, Interneuron, or any subsidiaries of the Company as defined in Sections
424(e) and 424(f) of the Code ("Participants") provided, that Incentive Stock
Options may only be granted to individuals who are employees of the Company
(within the meaning of Section 3401(c) of the Code). A person who has been
granted an option may, if he or she is otherwise eligible, be granted additional
options if the Committee shall so determine.

     (b) Grant of Options to Reporting Persons. The selection of a director or
an officer who is a Reporting Person (as the terms "director" and "officer" are
defined for purposes of Rule 16b-3) as a recipient of an option, the timing of
the option grant, the exercise price of the option and the number of shares
subject to the option shall be determined either (i) by the Board of Directors,
(ii) by a committee of the Board of Directors that is composed solely of two or
more Non-Employee Directors having full authority to act in the matter or (iii)
pursuant to provisions for automatic grants set forth in Section 3(c) below. For
the purposes of the Plan, a director shall be deemed to be a "Non-Employee
Director" only if such person is described in Rule 16b-3(b)(3) as interpreted
from time to time.

     (c) Directors' Options. Directors of the Company who are not employees
("Eligible Directors") will receive an option ("Initial Director Option") to
purchase 5,000 shares of Common Stock on the date that such person first becomes
an Eligible Director. As long as an Eligible Director is a member of the Board
of Directors, such Eligible Director will automatically be granted a stock
option ("Automatic Grant") to purchase 3,000 shares of Common Stock on the day
of each annual meeting of stockholders, except for Eligible Directors who
received an Initial Director Option since the most recent Automatic Grant. The
exercise price for each share subject to a Director Option shall be equal to the
fair market value of the Common Stock on the date of grant. Director Options
shall become exercisable in 36 equal monthly installments commencing one month
from the date the option is granted and will expire the earlier of 10 years
after the date of grant or 90 days after the termination of the director's
service on the Board.

4.   Stock Subject to Plan.

     The stock subject to options granted under the Plan shall be shares of
authorized but unissued or reacquired Common Stock. Subject to adjustment as
provided in Section 15 below, the maximum number of shares of Common Stock of
the Company which may be issued



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and sold under the Plan is 2,500,000. If an option granted under the Plan shall
expire, terminate or is cancelled for any reason without having been exercised
in full, the unpurchased shares subject to such option shall again be available
for subsequent option grants under the Plan.

5.   Forms of Option Agreements.

     As a condition to the grant of an option under the Plan, each recipient of
an option shall execute an option agreement in such form not inconsistent with
the Plan as may be approved by the Board of Directors. Such option agreements
may differ among recipients.

6.   Purchase Price.

     (a) General. The purchase price per share of stock deliverable upon the
exercise of an option shall be determined by the Board of Directors or the
Committee at the time of grant of such option; provided, however, that in the
case of an Incentive Stock Option, the exercise price shall not be less than
100% of the Fair Market Value (as hereinafter defined) of such stock, at the
time of grant of such option, or less than 110% of such Fair Market Value in the
case of options described in Section 11(b). "Fair Market Value" of a share of
Common Stock of the Company as of a specified date for the purposes of the Plan
shall mean the closing price of a share of the Common Stock on the principal
securities exchange (including the Nasdaq National Market) on which such shares
are traded on the day as of which Fair Market Value is being determined, or on
the next preceding date on which such shares are traded if no shares were traded
on such day, or if the shares are not traded on a securities exchange, Fair
Market Value shall be deemed to be the average of the high bid and low asked
prices of the shares in the over-the-counter market on the day immediately
preceding the date as of which Fair Market Value is being determined or on the
next preceding date on which such high bid and low asked prices were recorded.
If the shares are not publicly traded, Fair Market Value of a share of Common
Stock (including, in the case of any repurchase of shares, any distributions
with respect thereto which would be repurchased with the shares) shall be
determined in good faith by the Board of Directors. In no case shall Fair Market
Value be determined with regard to restrictions other than restrictions which,
by their terms, will never lapse.

     (b) Payment of Purchase Price. Options granted under the Plan may provide
for the payment of the exercise price by delivery of cash or a check to the
order of the Company in an amount equal to the exercise price of such options,
or by any other means which the Board of Directors determines are consistent
with the purpose of the Plan and with applicable laws and regulations
(including, without limitation, the provisions of Rule 16b-3 and Regulation T
promulgated by the Federal Reserve Board).

7.   Option Period.

     Subject to earlier termination as provided in the Plan, each option and all
rights thereunder shall expire on such date as determined by the Board of
Directors or the Committee and set forth in the applicable option agreement,
provided, that such date shall not be later than



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(10) ten years after the date on which the option is granted.

8.   Exercise of Options.

     Each option granted under the Plan shall be exercisable either in full or
in installments at such time or times and during such period as shall be set
forth in the option agreement evidencing such option, subject to the provisions
of the Plan. No option granted to a Reporting Person for purposes of the
Exchange Act, however, shall be exercisable during the first six months after
the date of grant. Subject to the requirements in the immediately preceding
sentence, if an option is not at the time of grant immediately exercisable, the
Board of Directors may (i) in the agreement evidencing such option, provide for
the acceleration of the exercise date or dates of the subject option upon the
occurrence of specified events, and/or (ii) at any time prior to the complete
termination of an option, accelerate the exercise date or dates of such option.

9.   Transferability of Options.

     (a) No Incentive Stock Option granted under this Plan shall be assignable
or otherwise transferable by the optionee except by will or by the laws of
descent and distribution or pursuant to a qualified domestic relations order as
defined in the Code or Title I of the Employee Retirement Income Security Act,
or the rules thereunder. An Incentive Stock Option may be exercised during the
lifetime of the optionee only by the optionee.

     (b) Any option granted under the Plan other than an Incentive Stock Option
shall be transferable by the optionee to members of his or her family or
otherwise by will or by the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined in the Code or Title I of the
Employee Retirement Income Security Act, or the rules thereunder. For purposes
of the Plan, an optionee's "family members" shall be deemed to consist of his or
her spouse, parents, children, grandparents, grandchildren and any trusts
created for the benefit of such individuals. A family member to whom an option
has been transferred pursuant to this Section 9(b) shall be hereinafter referred
to as a "Permitted Transferee". An option shall be transferred to a Permitted
Transferee in accordance with the foregoing provisions by the optionee's
execution of an assignment in writing in such form approved by the Board of
Directors or the Committee. The Company shall not be required to recognize the
rights of a Permitted Transferee until such time as it receives a copy of the
assignment from the optionee.

     (c) In the event an optionee dies during his employment by the Company or
any of its subsidiaries, or during the three-month period following the date of
termination of such employment, his options shall thereafter be exercisable,
during the period specified in the option agreement, by his executors,
administrators or Permitted Transferees to the full extent to which such options
were exercisable by the optionee at the time of his death during the periods set
forth in Section 10 or 11(d).



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10.  Effect of Termination of Employment or Other Relationship.

     Except as provided in Section 11(d) with respect to Incentive Stock Options
and except as otherwise determined by the Committee at the date of grant of an
option, and subject to the provisions of the Plan, an optionee or his Permitted
Transferee may exercise an option at any time within three (3) months following
the termination of the optionee's employment or other relationship with the
Company or within one (1) year if such termination was due to the death or
disability of the optionee but, except in the case of the optionee's death, in
no event later than the expiration date of the option. If the termination of the
optionee's employment or other relationship with the Company is for cause or is
otherwise attributable to a breach by the optionee of an employment, consulting,
confidentiality or non-disclosure agreement, the option shall expire immediately
upon such termination. The Board or Directors shall have the power to determine
what constitutes a termination for cause or a breach of an employment,
consulting, confidentiality or non-disclosure agreement, whether an optionee has
been terminated for cause or has breached such an agreement, and the date upon
such termination for cause or breach occurs. Any such determinations shall be
final and conclusive and binding upon the optionee.

11.  Incentive Stock Options

     Options granted under the Plan which are intended to be Incentive Stock
Options shall be subject to the following additional terms and conditions:

     (a) Express Designation. All Incentive Stock Options granted under the Plan
shall, at the time of grant, be specifically designated as such in the option
agreement covering such Incentive Stock Options.

     (b) 10% Stockholder. If any employee to whom an Incentive Stock Option is
to be granted under the Plan is, at the time of the grant of such option, the
owner of stock possessing more than 10% of the total combined voting power of
all classes of stock of the Company (after taking into account the attribution
of stock ownership rules of Section 424(d) of the Code), then the following
special provisions shall be applicable to the Incentive Stock Option granted to
such individual:

          (i) The purchase price per share of the Common Stock subject to such
     Incentive Stock Option shall not be less than 110% of the Fair Market Value
     of one share of Common Stock at the time of grant; and

          (ii) the option exercise period shall not exceed five years from the
     date of grant.

     (c) Dollar Limitation. For so long as the Code shall so provide, options
granted to any employee under the Plan (and any other incentive stock option
plans of the Company) which are intended to constitute Incentive Stock Options
shall not constitute Incentive Stock Options to the extent that such options, in
the aggregate, become exercisable for the first



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time in any one calendar year for shares of Common Stock with an aggregate Fair
Market Value, as of the respective date or dates of grant, of more than
$100,000.

     (d) Termination of Employment, Death or Disability. No Incentive Stock
Option may be exercised unless, at the time of such exercise, the optionee is,
and has been continuously since the date of grant of his or her option, employed
by the Company, except that:

          (i) an Incentive Stock Option may be exercised within the period of
     three months after the date the optionee ceases to be an employee of the
     Company (or within such lesser period as may be specified in the applicable
     option agreement), provided, that the agreement with respect to such option
     may designate a longer exercise period and that the exercise after such
     three-month period shall be treated as the exercise of a non-statutory
     option under the Plan;

          (ii) if the optionee dies while in the employ of the Company, or
     within three months after the optionee ceases to be such an employee, the
     Incentive Stock Option may be exercised by the person to whom it is
     transferred by will or the laws of descent and distribution within the
     period of one year after the date of death (or within such lesser period as
     may be specified in the applicable option agreement); and

          (iii) if the optionee becomes disabled (within the meaning of Section
     22(e)(3) of the Code or any successor provisions thereto) while in the
     employ of the Company, the Incentive Stock Option may be exercised within
     the period of one year after the date the optionee ceases to be such an
     employee because of such disability (or within such lesser period as may be
     specified in the applicable option agreement).

For all purposes of the Plan and any option granted hereunder, "employment"
shall be defined in accordance with the provisions of Section 1.421-7(h) of the
Income Tax Regulations (or any successor regulations). Notwithstanding the
foregoing provisions, no Incentive Stock Option may be exercised after its
expiration date.

12.  Additional Provisions.

     (a) Additional Option Provisions. The Board of Directors or the Committee
may, in its sole discretion, include additional provisions in option agreements
covering options granted under the Plan, including without limitation
restrictions on transfer, repurchase rights, rights of first refusal,
commitments to pay cash bonuses, to make, arrange for or guaranty loans or to
transfer other property to optionees upon exercise of options, or such other
provisions as shall be determined by the Board of Directors; provided, that such
additional provisions shall not be inconsistent with any other term or condition
of the Plan and such additional provisions shall not cause any Incentive Stock
Option granted under the Plan to fail to qualify as an Incentive Stock Option
within the meaning of Section 422 of the Code.

     (b) Acceleration, Extension, Etc. The Board of Directors may, in its sole



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discretion, (i) accelerate the date or dates on which all or any particular
option or options granted under the Plan may be exercised or (ii) extend the
dates during which all, or any particular, option or options granted under the
Plan may be exercised; provided, however, that no such extension shall be
permitted if it would cause the Plan to fail to comply with Section 422 of the
Code or with Rule 16b-3 (if applicable).

13.  General Restrictions.

     (a) Investment Representations. The Company may require any person to whom
an option is granted, as a condition of exercising such option or award, to give
written assurances in substance and form satisfactory to the Company to the
effect that such person is acquiring the Common Stock subject to the option or
award, for his or her own account for investment and not with any present
intention of selling or otherwise distributing the same, and to such other
effects as the Company deems necessary or appropriate in order to comply with
federal and applicable state securities laws, or with covenants or
representations made by the Company in connection with any public offering of
its Common Stock, including any "lock-up" or other restriction on
transferability.

     (b) Compliance With Securities Law. Each option shall be subject to the
requirement that if, at any time, counsel to the Company shall determine that
the listing, registration or qualification of the shares subject to such option
or award upon any securities exchange or automated quotation system or under any
state or federal law, or the consent or approval of any governmental or
regulatory body, or that the disclosure of non-public information or the
satisfaction of any other condition is necessary as a condition of, or in
connection with the issuance or purchase of shares thereunder, such option or
award may not be exercised, in whole or in part, unless such listing,
registration, qualification, consent or approval, or satisfaction of such
condition shall have been effected or obtained on conditions acceptable to the
Board of Directors or the Committee. Nothing herein shall be deemed to require
the Company to apply for or to obtain such listing, registration or
qualification, or to satisfy such condition.

14.  Rights as a Stockholder.

     The holder of an option shall have no rights as a stockholder with respect
to any shares covered by the option (including, without limitation, any rights
to receive dividends or non-cash distributions with respect to such shares)
until the date of issue of a stock certificate to him or her for such shares. No
adjustment shall be made for dividends or other rights for which the record date
is prior to the date such stock certificate is issued.

15.  Adjustment Provisions for Recapitalizations, Reorganizations and Related
     Transactions.

     (a) Recapitalizations and Related Transactions. If, through or as a result
of any recapitalization, reclassification, stock dividend, stock split, reverse
stock split or other



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similar transaction, (i) the outstanding shares of Common Stock are increased,
decreased or exchanged for a different number or kind of shares or other
securities of the Company, or (ii) additional shares or new or different shares
or other non-cash assets are distributed with respect to such shares of Common
Stock or other securities, an appropriate and proportionate adjustment shall be
made in (x) the maximum number and kind of shares reserved for issuance under or
otherwise referred to in the Plan, (y) the number and kind of shares or other
securities subject to any then outstanding options under the Plan, and (z) the
price for each share subject to any then outstanding options under the Plan,
without changing the aggregate purchase price as to which such options remain
exercisable. Notwithstanding the foregoing, no adjustment shall be made pursuant
to this Section 15 if such adjustment (i) would cause the Plan to fail to comply
with Section 422 of the Code or with Rule 16b-3 or (ii) would be considered as
the adoption of a new plan requiring stockholder approval.

     (b) Reorganization, Merger and Related Transactions. All outstanding
options under the Plan shall become fully exercisable for a period of sixty (60)
days following the occurrence of any Trigger Event, whether or not such options
are then exercisable under the provisions of the applicable agreements relating
thereto. For purposes of the Plan, a "Trigger Event" is any one of the following
events:

          (i) the date on which shares of Common Stock are first purchased
     pursuant to a tender offer or exchange offer (other than such an offer by
     the Company, any Subsidiary, any employee benefit plan of the Company or of
     any Subsidiary or any entity holding shares or other securities of the
     Company for or pursuant to the terms of such plan), whether or not such
     offer is approved or opposed by the Company and regardless of the number of
     shares purchased pursuant to such offer;

          (ii) the date the Company acquires knowledge that any person or group
     deemed a person under Section 13(d)-3 of the Exchange Act (other than the
     Company, Interneuron, any Subsidiary, any employee benefit plan of the
     Company or of any Subsidiary or any entity holding shares of Common Stock
     or other securities of the Company for or pursuant to the terms of any such
     plan or any individual or entity or group or affiliate thereof which
     acquired its beneficial ownership interest prior to the date the Plan was
     adopted by the Board), in a transaction or series of transactions, has
     become the beneficial owner, directly or indirectly (with beneficial
     ownership determined as provided in Rule 13d-3, or any successor rule,
     under the Exchange Act), of securities of the Company entitling the person
     or group to 30% or more of all votes (without consideration of the rights
     of any class or stock to elect directors by a separate class vote) to which
     all stockholders of the Company would be entitled in the election of the
     Board of Directors were an election held on such date;

          (iii) the date, during any period of two consecutive years, when
     individuals who at the beginning of such period constitute the Board of
     Directors of the Company cease for any reason to constitute at least a
     majority thereof, unless the election, or the nomination for election by
     the stockholders of the Company, of each new director



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     was approved by a vote of at least two-thirds of the directors then still
     in office who were directors at the beginning of such period; and

          (iv) the date of approval by the stockholders of the Company of an
     agreement (a "reorganization agreement") providing for:

               (A) The merger or consolidation of the Company with another
          corporation where the stockholders of the Company, immediately prior
          to the merger or consolidation, do not beneficially own, immediately
          after the merger or consolidation, shares of the corporation issuing
          cash or securities in the merger or consolidation entitling such
          stockholders to 80% or more of all votes (without consideration of the
          rights of any class of stock to elect directors by a separate class
          vote) to which all stockholders of such corporation would be entitled
          in the election of directors or where the members of the Board of
          Directors of the Company, immediately prior to the merger or
          consolidation, do not, immediately after the merger or consolidation,
          constitute a majority of the Board of Directors of the corporation
          issuing cash or securities in the merger or consolidation; or

               (B) The sale or other disposition of all or substantially all the
          assets of the Company.

     (c) Board Authority to Make Adjustments. Any adjustments under this Section
15 will be made by the Board of Directors or the Committee, whose determination
as to what adjustments, if any, will be made and the extent thereof will be
final, binding and conclusive. No fractional shares will be issued under the
Plan on account of any such adjustments.

16.  Merger, Consolidation, Asset Sale, Liquidation, Etc.

     (a) General. In the event of any sale, merger, transfer or acquisition of
the Company or substantially all of the assets of the Company in which the
Company is not the surviving corporation, and provided that after the Company
shall have requested the acquiring or succeeding corporation (or an affiliate
thereof), that equivalent options shall be substituted and such successor
corporation shall have refused or failed to assume all options outstanding under
the Plan or issue substantially equivalent options, then any or all outstanding
options under the Plan shall accelerate and become exercisable in full
immediately prior to such event. The Committee will notify holders of options
under the Plan that any such options shall be fully exercisable for a period of
fifteen (15) days from the date of such notice, and the options will terminate
upon expiration of such notice.

     (b) Substitute Options. The Company may grant options under the Plan in
substitution for options held by employees of another corporation who become
employees of the Company, Interneuron, or a subsidiary of the Company,
Interneuron, as the result of a merger or consolidation of the employing
corporation with the Company or a subsidiary of the Company,



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Interneuron, or as a result of the acquisition by the Company, Interneuron, or
one of its subsidiaries, of property or stock of the employing corporation. The
Company may direct that substitute options be granted on such terms and
conditions as the Board of Directors considers appropriate in the circumstances.

17.  No Special Employment Rights.

     Nothing contained in the Plan or in any option shall confer upon any
optionee any right with respect to the continuation of his or her employment by
the Company or interfere in any way with the right of the Company at any time to
terminate such employment or to increase or decrease the compensation of the
optionee.

18.  Other Employee Benefits.

     Except as to plans which by their terms include such amounts as
compensation, the amount of any compensation deemed to be received by an
employee as a result of the exercise of an option or the sale of shares received
upon such exercise will not constitute compensation with respect to which any
other employee benefits of such employee are determined, including, without
limitation, benefits under any bonus, pension, profit-sharing, life insurance or
salary continuation plan, except as otherwise specifically determined by the
Board of Directors.

19.  Amendment of the Plan.

     (a) The Board of Directors may at any time, and from time to time, modify
or amend the Plan in any respect; provided, however, that if at any time the
approval of the stockholders of the Company is required under Section 422 of the
Code or any successor provision with respect to Incentive Stock Options, or
under Rule 16b-3, the Board of Directors may not effect such modification or
amendment without such approval; and provided, further, that the provisions of
Section 3(c) hereof shall not be amended more than once every six months, other
than to comport with changes in the Code, the Employer Retirement Income
Security Act of 1974, as amended, or the rules thereunder.

     (b) The modification or amendment of the Plan shall not, without the
consent of an optionee, affect his or her rights under an option previously
granted to him or her. With the consent of the optionee affected, the Board of
Directors or the Committee may amend outstanding option agreements in a manner
not inconsistent with the Plan. The Board of Directors shall have the right to
amend or modify (i) the terms and provisions of the Plan and of any outstanding
Incentive Stock Options granted under the Plan to the extent necessary to
qualify any or all such options for such favorable federal income tax treatment
(including deferral of taxation upon exercise) as may be afforded incentive
stock options under Section 422 of the Code and (ii) the terms and provisions of
the Plan and of any outstanding option to the extent necessary to ensure the
qualification of the Plan under Rule 16b-3.



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<PAGE>



20.  Withholding.

     (a) The Company shall have the right to deduct from payments of any kind
otherwise due to the optionee any federal, state or local taxes of any kind
required by law to be withheld with respect to any shares issued upon exercise
of options under the Plan. Subject to the prior approval of the Company, which
may be withheld by the Company in its sole discretion, the optionee may elect to
satisfy such obligations, in whole or in part, (i) by causing the Company to
withhold shares of Common Stock otherwise issuable pursuant to the exercise of
an option or (ii) by delivering to the Company shares of Common Stock already
owned by the optionee. The shares so delivered or withheld shall have a Fair
Market Value equal to such withholding obligation as of the date that the amount
of tax to be withheld is to be determined. An optionee who has made an election
pursuant to this Section 20(a) may only satisfy his or her withholding
obligation with shares of Common Stock which are not subject to any repurchase,
forfeiture, unfulfilled vesting or other similar requirements.

     (b) The acceptance of shares of Common Stock upon exercise of an Incentive
Stock Option shall constitute an agreement by the optionee (i) to notify the
Company if any or all of such shares are disposed of by the optionee within two
years from the date the option was granted or within one year from the date the
shares were issued to the optionee pursuant to the exercise of the option, and
(ii) if required by law, to remit to the Company, at the time of and in the case
of any such disposition, an amount sufficient to satisfy the Company's federal,
state and local withholding tax obligations with respect to such disposition,
whether or not, as to both (i) and (ii), the optionee is in the employ of the
Company at the time of such disposition.

     (c) Notwithstanding the foregoing, in the case of a Reporting Person whose
options have been granted in accordance with the provisions of Section 3(b)
herein, no election to use shares for the payment of withholding taxes shall be
effective unless made in compliance with any applicable requirements of Rule
16b-3.

21.  Cancellation and New Grant of Options, Etc.

     The Board of Directors or the Committee shall have the authority to effect,
at any time and from time to time, with the consent of the affected optionees,
(i) the cancellation of any or all outstanding options under the Plan and the
grant in substitution therefor of new options under the Plan covering the same
or different numbers of shares of Common Stock and having an option exercise
price per share which may be lower or higher than the exercise price per share
of the cancelled options or (ii) the amendment of the terms of any and all
outstanding options under the Plan to provide an option exercise price per share
which is higher or lower than the then-current exercise price per share of such
outstanding options.

22.  Effective Date and Duration of the Plan.

     (a) Effective Date. The Plan shall become effective when adopted by the
Board of Directors, but no Incentive Stock Option granted under the Plan shall
become



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<PAGE>



exercisable unless and until the Plan shall have been approved by the Company's
stockholders. If such stockholder approval is not obtained within twelve months
after the date of the Board's adoption of the Plan, no options previously
granted under the Plan shall be deemed to be Incentive Stock Options and no
Incentive Stock Options shall be granted thereafter. Amendments to the Plan not
requiring stockholder approval shall become effective when adopted by the Board
of Directors; amendments requiring stockholder approval (as provided in Section
19) shall become effective when adopted by the Board of Directors, but no
Incentive Stock Option granted after the date of such amendment shall become
exercisable (to the extent that such amendment to the Plan was required to
enable the Company to grant such Incentive Stock Option to a particular
optionee) unless and until such amendment shall have been approved by the
Company's stockholders. If such stockholder approval is not obtained within
twelve months of the Board's adoption of such amendment, any Incentive Stock
Options granted on or after the date of such amendment shall terminate to the
extent that such amendment to the Plan was required to enable the Company to
grant such option to a particular optionee. Subject to this limitation, options
may be granted under the Plan at any time after the effective date and before
the date fixed for termination of the Plan.

     (b) Termination. Unless sooner terminated in accordance with Section 16,
the Plan shall terminate upon the earlier of (i) the close of business on the
day next preceding the tenth anniversary of the date of its adoption by the
Board of Directors, or (ii) the date on which all shares available for issuance
under the Plan shall have been issued pursuant to the exercise or cancellation
of options granted under the Plan. If the date of termination is determined
under (i) above, then options outstanding on such date shall continue to have
force and effect in accordance with the provisions of the instruments evidencing
such options.

23.  Governing Law.

     The provisions of this Plan shall be governed and construed in accordance
with the laws of the State of Delaware without regard to the principles of
conflicts of laws.

     Adopted by the Board of Directors on October 31, 1994.

     As amended by the Board of Directors through December 12, 1997.




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