<PAGE>
 
                                                                   EXHIBIT 10(a)

THE SECURITIES REPRESENTED BY THIS AGREEMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED UNDER ANY STATE SECURITIES LAW,
AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS (A) THERE IS
AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR LAWS COVERING SUCH
SECURITIES, OR (B) THE HOLDER RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF
THE SECURITIES SATISFACTORY TO THE CORPORATION, STATING THAT SUCH SALE,
TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND THE QUALIFICATION REQUIREMENTS
UNDER APPLICABLE STATE LAW.

                             STOCK OPTION AGREEMENT

     This Stock Option Agreement ("Option Agreement") by and between Clinicor,
Inc., formerly known as Pegasus Tax and Financial Planning Services, Inc., a
Nevada corporation (hereinafter referred to as the "Company"), and the
"Optionee" identified below.  The terms and conditions of this Option Agreement
are subject to the terms, definitions and provisions of the 1995 Pegasus
Employee and Consultant Stock Option Plan (the "Plan") adopted by the Company.
The Plan is hereby incorporated by reference and attached hereto as Exhibit 1,
as may be amended from time to time in accordance with the provisions of the
Plan.

1.   PRINCIPAL TERMS.  The principal terms and conditions of this Option
     ---------------                                                    
     Agreement are summarized below, subject to the more detailed provisions set
     forth elsewhere in this Option Agreement:

     A.   GRANT DATE.  The "Grant Date" is May 12, 1997.
          ----------                                    

     B.   OPTIONEE.  The "Optionee" is JAMES W. CLARK, JR.
          --------                                        

     C.  OPTION SHARES.  The Company hereby grants to Optionee an Option to
         -------------                                                     
     purchase Three Hundred Thousand (300,000) shares of Common Stock (the
     "Shares"), subject to the terms and conditions of this Option Agreement and
     the Plan.

     D.  EXERCISE PRICE.  The exercise price is $4.675 for each share of Common
         --------------                                                        
     Stock.

     E.  TERM/AMENDMENT.  The term of this Option commences on the Grant Date
         --------------                                                      
     and shall terminate on the seventh (7th) anniversary date of the Grant
     Date.

     F.  VESTING/EXERCISE.
         ---------------- 

          (i) "Vested" shares are the only Shares that Optionee may purchase
     hereunder.  As of the Grant Date, no Shares are Vested Shares.  The Shares
     shall vest
<PAGE>
 
     as follows:  Sixty Thousand (60,000) shares will vest on May 12, 1998;
     Sixty Thousand (60,000) shares will vest on May 12, 1999; Sixty Thousand
     (60,000) shares will vest on May 12, 2000; Sixty Thousand (60,000) shares
     will vest on May 12, 2001; and Sixty Thousand (60,000) shares will vest on
     May 12, 2002.  The Option shall be exercised pursuant to the terms of
     Section 3 below only as to whole shares; no fractional shares may be
     purchased.

          (ii) Notwithstanding subparagraph (i) above, in the event that the
     Company closes a sale of its equity securities and the gross proceeds of
     such sale are $10,000,000 or more ("Qualified Equity Sale"), then 120,000
     Shares immediately vest.  In the event of accelerated vesting under this
     subparagraph (ii), the number of Shares that have vested by virtue of this
     subparagraph (ii) shall be credited against the latest vesting Shares under
     subparagraph (i) above.  In no event shall more than a total of 300,000
     Shares become Vested Shares under this Agreement.

          (iii)  In the event of Optionee's termination, disability or death,
     the exercise rights of Optionee are also subject to Section 7
     (termination), Section 8 (disability) and Section 9 (death).

          (iv) In no event may this Option as an Incentive Stock Option become
     exercisable at a time or times which, when this Option is aggregated with
     all other incentive stock options granted to Optionee by the Company or any
     Parent or Subsidiary, would result in Shares having an aggregate fair
     market value (determined for each Share as of the date of grant of the
     option covering such share) in excess of $100,000 becoming first available
     for purchase upon exercise of one or more incentive stock options during
     any calendar year.  All such shares in excess of the $100,000 limit shall
     automatically become Shares covered by non-statutory stock options.

2.   NATURE OF THE OPTION.  If Optionee is an Employee of the Company, this
     --------------------                                                  
     Option is, to the maximum extent permitted by law, intended to qualify as
     an Incentive Stock Option.  If Optionee is a Consultant of the Company or
     the provisions of this Option Agreement or the Plan fail to qualify for
     Incentive Stock Option treatment under the Code, this Option shall be
     deemed a Nonstatutory Stock Option.  It is the intention of the Company,
     however, that the provisions of this Option Agreement and the Plan qualify
     for Incentive Stock Option treatment under the Code with respect to
     Optionees who are employees of the Company.

3.   METHOD OF EXERCISE.  This Option shall be exercisable by written notice in
     ------------------                                                        
     the form attached as Exhibit 2.  The Notice of Exercise shall state the
     election to exercise the Option, the number of Shares in respect of which
     the Option is being exercised, and such other representations and
     agreements as to the holder's investment intent with respect to

                                       2
<PAGE>
 
     such Shares as may be required by the Company pursuant to the provisions of
     the Plan.  Such written notice shall be signed by Optionee and shall be
     delivered in person or by certified mail to the President or Executive Vice
     President of the Company.  The written notice shall be accompanied by
     payment of the exercise price.  This Option shall be deemed to be exercised
     upon receipt by the Company of such written notice accompanied by the
     exercise price.  Until the issuance (as evidenced by the appropriate entry
     on the books of the Company or a duly authorized transfer agent of the
     Company) of the stock certificate evidencing such Shares, no right to vote
     or receive dividends or any other rights as a shareholder shall exist with
     respect to the Optioned Stock, notwithstanding the exercise of the Option.
     The Company shall issue (or cause to be issued) such stock certificate
     promptly upon exercise of the Option.

     No shares will be issued pursuant to the exercise of an Option unless such
     issuance and such exercise shall comply with all relevant provisions of law
     and the requirements of any stock exchange upon which the Shares may then
     be listed.

4.   INVESTMENT REPRESENTATIONS; RESTRICTIONS ON TRANSFER.  By receipt of this
     ----------------------------------------------------                     
     Option, by its execution, and by its exercise in whole or in part, Optionee
     represents to the Company the following:

     A.  Optionee understands that this Option and any Shares purchased upon its
     exercise are securities, the issuance of which requires compliance with
     federal and state securities laws.

     B.  Optionee is aware of the Company's business affairs and financial
     condition and has acquired sufficient information about the Company to
     reach an informed and knowledgeable decision to acquire the securities.
     Optionee is acquiring these securities for investment for Optionee's own
     account only and not with a view to, or for resale in connection with, any
     "distribution" thereof within the meaning of the Securities Act of 1933, as
     amended (the "Securities Act").

     C.  Optionee acknowledges and understands that the securities constitute
     "restricted securities" under the Securities Act and must be held
     indefinitely unless they are subsequently registered under the Securities
     Act or an exemption from such registration is available.  Optionee further
     acknowledges and understands that the Company is under no obligation to
     register the securities.  Optionee understands that the certificate
     evidencing the securities will be imprinted with a legend which prohibits
     the transfer of the securities unless they are registered or such
     registration is not required in the opinion of counsel satisfactory to the
     Company, and any other legend required under applicable state securities
     laws.

                                       3
<PAGE>
 
     D. Optionee is familiar with the provisions of Rule 144, promulgated under
     the Securities Act, which, in substance, permit limited public resale of
     "restricted securities" acquired, directly or indirectly, from the issuer
     thereof, in a non-public offering subject to the satisfaction of certain
     conditions.  Rule 144 requires among other things:  (i) the availability of
     certain public information about the Company; (ii) the resale occurring not
     less than one (1) year after the party has purchased, and made full payment
     for, within the meaning of Rule 144, the securities to be sold; and (iii)
     in the case of an affiliate, or of a non-affiliate who has held the
     securities less than two (2) years, the sale being made through a broker in
     an unsolicited "broker's transaction" or in transactions directly with a
     market maker (as said term is defined under the Securities Exchange Act of
     1934) and the amount of securities being sold during any three-month period
     not exceeding the specified limitations stated therein, if applicable.

     E.  In connection with the Company's subsequent underwritten public
     offering of the Company's securities, Optionee agrees:  (i) not to sell,
     make short sale of, loan, grant any options for the purchase of, or
     otherwise dispose of any shares of Common Stock of the Company held by
     Optionee (except traded shares Optionee purchased in the open market and
     those shares included in the registration) without the prior written
     consent of the Company or the underwriters managing such underwritten
     public offering of the Company's securities for one hundred eighty (180)
     days from the effective date of such registration, and (ii) to execute any
     agreement reflecting Section 4(E)(i) above as may be requested by the
     underwriters at the time of the public offering.

5.   METHOD OF PAYMENT.  Payment of the purchase price shall be made by cash.
     -----------------                                                       

6.   RESTRICTIONS ON EXERCISE.  This Option may not be exercised if the issuance
     ------------------------                                                   
     of such Shares upon such exercise or the method of payment of consideration
     for such shares would constitute a violation of any applicable federal or
     state securities or other law or regulation, including any rule under Part
     207 of Title 12 of the Code of Federal Regulations ("Regulation G") as
     promulgated by the Federal Reserve Board.  As a condition to the exercise
     of this Option, the Company may require Optionee to make any representation
     and warranty to the Company as may be required by any applicable law or
     regulation.

7.   TERMINATION OF STATUS AS AN EMPLOYEE.  In the event of termination of
     ------------------------------------                                 
     Optionee's Continuous Status as an employee, Optionee shall have only three
     (3) months after such termination date (but not later than expiration of
     the option term) to exercise this Option and then the exercise can be only
     to the extent that Optionee was entitled to exercise it at the date of such
     termination (i.e. vested Options).  To the extent that Optionee was not
     entitled to exercise this Option at the date of such termination, this
     Option shall terminate as to those "non-vested" Shares and the non-vested
     Shares, if any, shall be forfeited to

                                       4
<PAGE>
 
     the Plan.  To the extent Optionee does not exercise this Option timely,
     then any unexercised option shares, if any, shall be forfeited to the Plan.

8.   DISABILITY OF OPTIONEE.  Notwithstanding the provisions of Section 7 above,
     ----------------------                                                     
     in the event of termination of Optionee's Continuous Status as an Employee
     or Consultant as a result of Optionee's permanent and total disability (as
     defined in Section 22(e) (3) of the Code), Optionee may, but only within
     twelve (12) months from the date of termination of employment or consulting
     relationship (but in no event later than the date of expiration of the Term
     of this Option as set forth in Section 1(E) hereof, exercise this Option to
     the extent Optionee was entitled to exercise it at the date of such
     termination.  To the extent that Optionee was not entitled to exercise this
     Option at the date of termination, or if Optionee does not exercise such
     Option (which Optionee was entitled to exercise) within the time specified
     herein, this Option shall terminate and all unexercised option shares, if
     any, shall be forfeited to the Plan.

9.   DEATH OF OPTIONEE.  In the event of the death of Optionee:
     -----------------                                         

     A.  During the term of this Option while an Employee or Consultant of the
     Company and having been in Continuous Status as an Employee or Consultant
     since the Grant Date of this Option, this Option may be exercised, at any
     time within twelve (12) months following the date of death (but in no event
     later than the date of expiration of the term of this Option as set forth
     in Section 11 below), by Optionee's estate or by a person who acquired the
     right to exercise the Option by bequest or inheritance, but only to the
     extent of the right to exercise that would have accrued had Optionee
     continued living and remained in Continuous Status as an Employee or
     Consultant twelve (12) months after the date of death.

     B.  Within three (3) months after the termination of Optionee's Continuous
     Status as an employee or consultant, this Option may be exercised, at any
     time within twelve (12) months following the date of death (but in no event
     later than the date of expiration of the term of this Option as set forth
     in Section 1(E) hereof), by Optionee's estate or by a person who acquired
     the right to exercise this Option by bequest or inheritance, but only to
     the extent of the right to exercise that had accrued at the date of
     termination.

10.  NON-TRANSFERABILITY OF OPTION.  This Option may not be transferred in any
     -----------------------------                                            
     manner otherwise than by will or by the laws of descent or distribution and
     may be exercised during the lifetime of Optionee only by Optionee.  The
     terms of this Option shall be binding upon the executors, administrators,
     heirs, successors and assigns of Optionee.

11.  EARLY DISPOSITION OF STOCK.  If Optionee is an employee, Optionee
     --------------------------                                       
     understands that, if Optionee disposes of any Shares received under this
     Option within two (2) years after the

                                       5
<PAGE>
 
     date of this Agreement or within one (1) year after such Shares were
     transferred to Optionee, Optionee will be treated for federal income tax
     purposes as having received ordinary income at the time of such disposition
     in an amount generally measured as the excess of (i) the lower of the fair
     market value of the Shares at the date of disposition or the fair market
     value of the Shares at the Grant Date over (ii) the price paid for the
     Shares.  The amount of such ordinary income may be measured differently if
     Optionee is an officer, director or ten percent (10%) control person
     (defined in Section 2(E) hereof) or if the Shares were subject to a
     substantial risk of forfeiture at the time they were transferred.  Any gain
     recognized on such a premature sale of the Shares in excess of the amount
     treated as ordinary income will be characterized as capital gain.  Optionee
                                                                        --------
     hereby agrees to notify the Company in writing within thirty (30) days
     ----------------------------------------------------------------------
     after the date of any such disposition.  Optionee understands that if
     --------------------------------------                               
     Optionee disposes of such Shares at any time after the expiration of such
     two-year and one-year holding periods, any gain on such sale will generally
     be treated as long-term capital gain.

12.  TAXATION UPON EXERCISE OF OPTION:  Optionee understands that, upon exercise
     --------------------------------                                           
     of this Option or any portion thereof that is a nonstatutory option,
     Optionee will generally recognize income for tax purposes in an amount
     equal to the excess of the then fair market value of the Shares over the
     exercise price.  Optionee understands that, upon exercise of this Option or
     any portion thereof that is an Incentive Stock Option, Optionee will
     generally recognize income for purposes of the alterative minimum tax in
     amount equal to the excess of the then fair market value of the Shares over
     the exercise price.

13.  TAX CONSEQUENCES.  The Optionee understands that any of the foregoing
     ----------------                                                     
     references to taxation are based on federal income tax laws and regulations
     now in effect.  The Optionee has reviewed with the Optionee's own tax
     advisors the federal, state, local and foreign tax consequences of the
     transactions contemplated by this Agreement.  The Optionee is relying
     solely on such advisors and not on any statements or representations of the
     Company or any of its agents.  The Optionee understands that the Optionee
     (and not the Company) shall be responsible for the Optionee's own tax
     liability that may arise as a result of the transactions contemplated by
     this Agreement.  The Optionee hereby authorizes the company to make
     appropriate arrangements for any withholding of tax liability which may be
     required under applicable law in connection with the grant or exercise of
     this Option.

14.  PARTIES' SIGNATURES - DUPLICATE ORIGINALS:  This Option Agreement between
     -----------------------------------------                                
     the parties identified in Section 1 hereof shall be signed in two (2)
     duplicate originals as follows:

     A.  The Company shall sign two (2) duplicate originals of the "Company's
     Signature Page" for this Option Agreement.

                                       6
<PAGE>
 
     B. The Optionee shall sign two (2) duplicate originals of the "Optionee's
     Signature Page" for this Option Agreement together, where applicable, with
     Optionee's spouse.

     C.  One complete duplicate original of this Option Agreement, (complete
     with one company signature page and one Optionee signature page) will be
     given to the Company and the other to Optionee.


Executed on behalf of the Company to be effective on the date first set forth
above.


CLINICOR, INC.


By   /s/ ROBERT SAMMIS
     ---------------------------
     (Signature)

Robert Sammis, Executive Vice President
---------------------------------------
(Print Name & Title)


LIST OF EXHIBITS:

1.   Copy of 1995 Stock Option Plan
2.   Form of Notice of Exercise

                                       7
<PAGE>
 
                          ACKNOWLEDGEMENT BY OPTIONEE

OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO SECTION
1(F) HEREOF IS EARNED ONLY BY CONTINUING SERVICE AS AN EMPLOYEE OR CONSULTANT AT
THE WILL OF THE COMPANY (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS
OPTION OR ACQUIRING SHARES HEREUNDER).  OPTIONEE FURTHER ACKNOWLEDGES AND AGREES
THAT THIS OPTION, THE COMPANY'S PLAN WHICH IS INCORPORATED HEREIN BY REFERENCE,
THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH
HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT
AS AN EMPLOYEE OR CONSULTANT FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL,
AND SHALL NOT INTERFERE WITH OPTIONEE'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE OPTIONEE'S EMPLOYMENT OR CONSULTING RELATIONSHIP AT ANY TIME, WITH OR
WITHOUT CAUSE.

Optionee acknowledges receipt of a copy of the Plan (a copy of which is annexed
hereto as Exhibit 1) represents that Optionee is familiar with the terms and
provisions thereof, and hereby accepts this Option subject to all of the terms
and provisions thereof.  Optionee has reviewed the Plan and this Option
Agreement in their entirety, has had an opportunity to obtain the advice of
counsel prior to executing this Option and fully understands all provisions of
the Option.  Optionee hereby agrees to accept as binding, conclusive and final
all decisions or interpretations of the Board or of the Committee upon any
questions arising under the Plan.  Optionee further agrees to notify the Company
upon any change in the residence address indicated below.

This Acknowledgement is executed by Optionee as of May 12, 1997, to be
considered effective as of the Grant Date of the Option.

OPTIONEE                                 Residence:
/s/ JAMES W. CLARK, JR.                  9108 Canberley Drive
----------------------------------       ---------------------------------------
(Signature)                              (Street)

    James W. Clark, Jr.                  Tampa, FL 33647
----------------------------------       ---------------------------------------
(Print Name)                             (City, State, Zip)


Please also complete the following (if applicable):

The undersigned, being the spouse of the above-named Optionee, does hereby
acknowledge that the undersigned has read and is familiar with the provisions of
the Option Agreement (including

                                       8
<PAGE>
 
this page), and the undersigned hereby agrees thereto and joins therein to the
extent, if any, that the agreement and joiner of the undersigned may be
necessary.

OPTIONEE'S SPOUSE

/s/ SUSANNE M. CLARK                   Susanne M. Clark
----------------------------------     -----------------------------------------
Signature                              Print Name

                                       9
<PAGE>
 
                                  EXHIBIT 1

                1995 EMPLOYEE AND CONSULTANT STOCK OPTION PLAN 
<PAGE>
 
                                CLINICOR, INC.
                1995 EMPLOYEE AND CONSULTANT STOCK OPTION PLAN

     1.  PURPOSES OF THE PLAN.  The purposes of this Stock Option Plan are:
         --------------------                                              

     .   to attract and retain the best available personnel for positions of
         substantial responsibility;

     .   to provide additional incentive to Employees and Consultants to remain
         with the Company; and

     .   to promote the success of the Company's business.

Options granted under the Plan may be Incentive Stock Options or Nonstatutory
Stock Options, as determined by the Administrator at the time of grant.

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

          A.   "ADMINISTRATOR" means the Board or any of its Committees as shall
                -------------                                                   
be administering the Plan, in accordance with Section 4 of the Plan.

          B.   "APPLICABLE LAWS" means the legal requirements relating to the
                ---------------                                              
administration of stock option plans under state corporate and securities laws
and the Code.

          C.   "BOARD" means the Board of Directors of the Company.
                -----                                              

          D.   "CODE" means the Internal Revenue Code of 1986, as amended.
                ----                                                      

          E.   "COMMITTEE" means a Committee appointed by the Board in
                ---------                                             
accordance with Section 4 of the Plan.

          F.   "COMMON STOCK" means the Common Stock of the Company.
                ------------                                        

          G.   "COMPANY" means CLINICOR, INC., a Nevada corporation, formerly
                -------                                                      
Pegasus Tax and Financial Planning Services, Inc., a Nevada corporation.

          H.   "CONSULTANT" means any person, including an advisor, engaged by
                ----------                                                    
the Company or a Parent or Subsidiary to render services, and who is compensated
for such services, provided that the term "Consultant" shall not include
Directors who are paid only a director's fee by the Company, or who are not
compensated by the Company for their services as Directors.

          I.   "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" means that the
                ----------------------------------------------                
employment or consulting relationship is not interrupted or terminated by the
Company, any Parent or Subsidiary.  Continuous Status as an Employee or
Consultant shall not be considered interrupted in the case of:  (i) any leave of
absence approved by the Company, including sick leave, military leave, or any
other personal leave; provided, however, that for purposes of Incentive Stock
Options, no such leave may exceed ninety (90) days, unless re-employment upon
the expiration of such leave is guaranteed by contract (including certain
Company policies) or statute; provided, further, that on the ninety-first (91st)
day of any such leave (where re-employment is not guaranteed by contract or
statute) the Optionee's Incentive Stock Option shall automatically convert to a
Nonstatutory Stock Option; or (ii) transfers between locations of the Company or
between the Company, its Parent, its Subsidiaries, or its successor.
<PAGE>
 
          J.   "DIRECTOR" means a member of the Board.
                --------                              

          K.   "DISABILITY" means total and permanent disability as defined in
                ----------                                                    
Section 22(e)(3) of the Code.

          L.   "EMPLOYEE" means any person, including Officers and Directors,
                --------                                                     
employed by the Company or any Parent or Subsidiary of the Company.  Neither
service as a Director nor payment of a Director's fee by the Company shall be
sufficient to constitute "employment" by the Company.

          M.   "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
                ------------                                               
amended.

          N.   "FAIR MARKET VALUE" means, as of any date, the value of Common
                -----------------                                            
Stock determined as follows:

               I)        If the Common Stock is listed on any established 
stock exchange or a national market system, including, without limitation, the
National Market System of the National Association of Securities Dealers, Inc.
Automated Quotation ("NASDAQ") System, the Fair Market Value of a Share of
Common Stock shall be the closing sales price for such stock (or the closing
bid, if no shares were reported) as quoted on such system or exchange (or the
exchange with the greatest volume of trading in Common Stock) on the last market
trading day prior to the date of determination, as reported in The Wall Street
                                                               ---------------
Journal, or such other source as the Administrator deems reliable;
-------                                                           

               II)       If the Common Stock is quoted on the NASDAQ System 
(but not on the National Market System thereof), or is regularly quoted by a
recognized securities dealer, but selling prices are not reported, the Fair
Market Value of a Share of Common Stock shall be the mean between the high bid
and low asked prices for the Common Stock on the last market trading day prior
to the day of determination, as reported in The Wall Street Journal, or such
                                            -----------------------
other source as the Administrator deems reliable;

               III)      In the absence of an established market for the Common
Stock, the Fair Market Value shall be determined in good faith by the
Administrator.

          O.   "INCENTIVE STOCK OPTION" means an Option intended to qualify as
                ----------------------                                        
an incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

          P.   "NONSTATUTORY STOCK OPTION" means an Option not intended to
                -------------------------                                 
qualify as an Incentive Stock Option.

          Q.   "NOTICE OF GRANT" means a written notice evidencing certain terms
                ---------------                                                 
and conditions of an individual Option grant.  The Notice of Grant is part of
the Option Agreement.

          R.   "OFFICER" means a person who is an officer of the Company within
                -------                                                        
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated there under.

          S.   "OPTION" means a stock option granted pursuant to the Plan.
                ------                                                    

                                      -2-
<PAGE>
 
          T.   "OPTION AGREEMENT" means a written agreement between the Company
                ----------------                                               
and an Optionee evidencing the terms and conditions of an individual Option
grant.  The Option Agreement is subject to the terms and conditions of the Plan.

          U.   "OPTION EXCHANGE PROGRAM" means a program whereby outstanding
                -----------------------                                     
options are surrendered in exchange for options with a lower exercise price.

          V.   "OPTIONED STOCK" means the Common Stock subject to an Option.
                --------------                                              

          W.   "OPTIONEE" means an Employee or Consultant who holds an
                --------                                              
outstanding Option.

          X.   "PARENT" shall mean a "parent corporation," whether now or
                ------                                                   
hereafter existing, as defined in Section 424(e) of the Code.

          Y.   "PLAN" shall mean this 1995 Employee and Consultant Stock Option
                ----                                                           
Plan.

          Z.   "RULE 16B-3" means Rule 16b-3 of the Exchange Act, or any
                ----------                                              
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.

          AA.  "SHARE" means a share of the Common Stock, as adjusted in
                -----                                                   
accordance with Section 12 of the Plan.

          BB.  "SUBSIDIARY" means a "subsidiary corporation," whether now or
                ----------                                                  
hereafter existing, as defined in Section 424(f) of the Code.

     3.   STOCK SUBJECT TO THE PLAN.  Subject to the provisions of Section 12 of
          -------------------------                                             
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 2,000,000 Shares.  The Shares may be authorized, but unissued,
or reacquired Common Stock.  However, should the Company reacquire Shares which
were issued pursuant to the exercise of an Option, such Shares shall not become
available for future grant under the Plan.

          If an Option expires or becomes unexercisable without having been
exercised in full, or is surrendered pursuant to an Option Exchange Program, the
unpurchased Shares which were subject thereto shall become available for future
grant or sale under the Plan (unless the Plan has been terminated); provided,
                                                                    -------- 
however, that Shares that have actually been issued under the Plan shall not be
returned to the Plan and shall not become available for future distribution
under the Plan.

     4.   ADMINISTRATION OF THE PLAN.
          -------------------------- 

          A.   PROCEDURE.
               --------- 

               I)   MULTIPLE ADMINISTRATIVE BODIES.  If permitted by Rule 16b-3,
                    ------------------------------                              
the Plan may be administered by different bodies with respect to Directors,
Officers who are not Directors, and Employees who are neither Directors nor
Officers.

               II)  ADMINISTRATION WITH RESPECT TO DIRECTORS AND OFFICERS
                    -----------------------------------------------------
SUBJECT TO SECTION 16(b).  With respect to Option grants made to Employees who
------------------------                                                      
are also Officers or Directors subject to Section 16(b) of the Exchange Act, the
Plan shall be administered by (A) the Board, if the Board may administer the
Plan in compliance with the rules governing a plan intended to qualify as a
discretionary plan under Rule 16b-3, or (B) a committee designated by the Board
to administer the Plan, which committee shall be constituted to comply with the
rules

                                      -3-
<PAGE>
 
governing a plan intended to qualify as a discretionary plan under Rule 16b-3.
Once appointed, such Committee shall continue to serve in its designated
capacity until otherwise directed by the Board.  From time to time, the Board
may increase the size of the Committee and appoint additional members, remove
members (with or without cause) and substitute new members, fill vacancies
(however caused), and remove all members of the Committee and thereafter
directly administer the Plan, all to the extent permitted by the rules governing
a plan intended to qualify as a discretionary plan under Rule 16b-3;

               III)  ADMINISTRATION WITH RESPECT TO OTHER PERSONS.  With respect
                     --------------------------------------------               
to Option grants made to Employees or Consultants who are neither Directors nor
Officers of the Company, the Plan shall be administered by (A) the Board; or (B)
a committee designated by the Board, which committee shall be constituted to
satisfy Applicable Laws.  Once appointed, such Committee shall serve in its
designated capacity and otherwise directed by the Board.  The Board may increase
the size of the new Committee and appoint additional members, remove members
(with or without cause), and substitute new members, fill vacancies (however
caused), and remove all members of the Committee and thereafter directly
administer the Plan, all to the extent permitted by Applicable Laws.

          B.   POWERS OF THE ADMINISTRATOR.  Subject to the provisions of the
               ---------------------------                                   
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator shall have the authority, in
its discretion:

               I)    to determine the Fair Market Value of the Common Stock, in
accordance with Section 2(n) of the Plan;

               II)   to select the Consultants and Employees to whom Options may
be granted hereunder;

               III)  to determine whether and to what extent Options are granted
hereunder;

               IV)   to determine the number of shares of Common Stock to be
covered by each Option granted hereunder;

               V)    to approve forms of agreement for use under the Plan;

               VI)   to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder. Such terms and
conditions include, but are not limited to, the exercise price, the time or
times when Options may be exercised (which may be based on performance
criteria), any vesting acceleration or waiver of forfeiture restrictions, and
any restriction or limitation regarding any Option or the shares of Common Stock
relating thereto, based in each case on such factors as the Administrator, in
its sole discretion, shall determine;

               VII)  to reduce the exercise price of any Option to the then-
current Fair Market Value, if the Fair Market Value of the Common Stock covered
by such Option shall have declined since the date the Option was granted;

               VIII) to construe and interpret the terms of the Plan and
awards granted pursuant to the Plan;

               IX)   to prescribe, amend and rescind rules and regulations
relating to the Plan;

                                      -4-
<PAGE>
 
               X)    to modify or amend each Option (subject to Section 16 of
the Plan);

               XI)   to authorize any person to execute on behalf of the Company
any instrument required to effect the grant of an Option previously granted by
the Administrator;

               XII)  to institute an Option Exchange Program;

               XIII) to determine the terms and restrictions applicable to
Options; and

               XIV)  to make all other determinations deemed necessary or
advisable for administering the Plan.

          C.   EFFECT OF ADMINISTRATOR'S DECISION.  The Administrator's
               ----------------------------------                      
decisions, determinations and interpretations shall be final and binding on all
Optionees and any other holders of Options.

     5.   ELIGIBILITY.  Nonstatutory Stock Options may be granted to Employees
          -----------                                                         
and Consultants.  Incentive Stock Options may be granted only to Employees.  If
otherwise eligible, an Employee or Consultant who has been granted an Option may
be granted additional Options.

     6.   LIMITATIONS.
          ----------- 

          A.   Each Option shall be designated in the Notice of Grant as either
an Incentive Stock Option or a Nonstatutory Stock Option.  However,
notwithstanding such designations, to the extent that the aggregate Fair Market
Value of Shares subject to an Optionee's incentive stock options granted by the
Company, any Parent or Subsidiary, which become exercisable for the first time
during any calendar year (under all plans of the Company, or any Parent or
Subsidiary), exceeds $100,000, such excess Options shall be treated as Non
statutory Stock Options.  For purposes of this Section 6.a., Incentive Stock
Options shall be taken into account in the order in which they were granted, and
the Fair Market Value of the Shares shall be determined as of the time of grant.

          B.   Neither the Plan nor any Option shall confer upon an Optionee any
right with respect to continuing the Optionee's employment or consulting
relationship with the Company, nor shall they interfere in any way with the
Optionee's right or the Company's right to terminate such employment or
consulting relationship at any time, with or without cause.

     7.   TERM OF PLAN.  Subject to Section 16 of the Plan, the Plan shall
          ------------                                                    
become effective upon the earlier to occur of its adoption by the Board, or its
approval by the stockholders of the Company as described in Section 18 of the
Plan.  It shall continue in effect for a term of ten (10) years, (unless
terminated earlier) under Section 14 of the Plan.

     8.   TERM OF OPTION.  The term of each Option shall be stated in the Notice
          --------------                                                        
of Grant; provided, however, that in the case of an Incentive Stock Option, the
term shall be ten (10) years from the date of grant or such shorter term as may
be provided in the Notice of Grant.  Moreover, in the case of an Incentive Stock
Option granted to an Optionee who, at the time the Incentive Stock Option is
granted, owns stock representing more than ten percent (10%) of the voting power
of all classes of stock of the Company, or any Parent or Subsidiary, the term of
the Incentive Stock Option shall be five (5) years from the date of grant or
such shorter term as may be provided in the Notice of Grant.

                                      -5-
<PAGE>
 
     9.   OPTION EXERCISE PRICE AND CONSIDERATION.
          --------------------------------------- 

          A.   EXERCISE PRICE.  The per Share exercise price for the Shares to
               --------------                                                 
be issued pursuant to exercise of an Option shall be determined by the
Administrator, subject to the following:

               I)   In the case of an Incentive Stock Option:

                    A)   granted to an Employee who, at the time the Incentive
Stock Option is granted, owns stock representing more than ten percent (10%) of
the voting power of all classes of stock of the Company, or any Parent or
Subsidiary, the per Share exercise price shall be no less than one hundred ten
percent (110%) of the Fair Market Value per Share on the date of grant.

                    B)   granted to any Employee, the per Share exercise price
shall be no less than one hundred percent (100%) of the Fair Market Value per
Share on the date of grant.

               II)  In the case of a Nonstatutory Stock Option, the per Share
exercise price shall be determined by the Administrator.

          B.   WAITING PERIOD AND EXERCISE DATES.  At the time an Option is
               ---------------------------------                           
granted, the Administrator shall fix the period within which the Option may be
exercised and shall determine any conditions which must be satisfied before the
Option may be exercised.  In so doing, the Administrator may specify that an
Option may not be exercised until the completion of a service period.

          C.   FORM OF CONSIDERATION.  The Administrator shall determine the
               ---------------------                                        
acceptable form of consideration for exercising an Option, including the method
of payment.  In the case of an Incentive Stock Option, the Administrator shall
determine the acceptable form of consideration at the time of grant.  Such
consideration may consist of:

               I)   cash;

               II)  check;

               III) promissory note;

               IV)  other Shares which (a) in the case of Shares acquired upon
exercise of an Option, have been owned by the Optionee for more than six (6)
months on the date of surrender; and (b) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised;

               V)   a reduction in the amount of any Company liability to the
Optionee, including any liability attributable to the Optionee's participation
in any Company-sponsored deferred compensation program or arrangement;

               VI)  any combination of the foregoing methods of payment; or

               VII) such other consideration and method of payment for the
issuance of Shares to the extent permitted by Applicable Laws.

                                      -6-
<PAGE>
 
     10.  EXERCISE OF OPTION.
          ------------------ 

          A.   PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER.  Any Option
               -----------------------------------------------             
granted hereunder shall be exercisable according to the terms of the Plan, and
at such times and under such conditions as determined by the Administrator and
set forth in the Option Agreement.

          An Option may not be exercised for a fraction of a Share.

          An Option shall be deemed to be exercised when the Company receives:
(I) written notice of exercise, together with such other documentation as the
Administrator and the broker, if applicable, shall require to effect an exercise
of the Option (all in accordance with the Option Agreement) from the person
entitled to exercise the Option, and (II) full payment for the Shares with
respect to which the Option is exercised.  Full payment may consist of any
consideration and method of payment authorized by the Administrator and
permitted by the Option Agreement and the Plan.  Shares issued upon exercise of
an Option shall be issued in the name of the Optionee or, if requested by the
Optionee, in the name of the Optionee and his or her spouse.  Until the stock
certificate evidencing such Shares is issued (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company), no right to vote or receive dividends or any other rights as a
Stockholder shall exist with respect to the Optioned Stock, notwithstanding the
exercise of the Option.  The Company shall issue (or cause to be issued) such
stock certificate promptly after the Option is exercised.  No adjustment will be
made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 12 of the
Plan.

          Exercising an Option in any manner shall decrease the number of Shares
thereafter available, both for purposes of the Plan and for sale under the
Option, by the number of Shares as to which the Option is exercised.

          B.   TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP.  Upon
               ----------------------------------------------------       
termination of an Optionee's Continuous Status as an Employee or Consultant,
other than upon the Optionee's death or Disability, the Optionee may exercise
his or her Option, but only within such period of time as is determined by the
Administrator, and only to the extent that the Optionee was entitled to exercise
it at the date of such termination (but in no event later than the expiration of
the term of such Option as set forth in the Notice of Grant).  In the case of an
Incentive Stock Option, the Administrator shall determine such period of time
(in no event to exceed ninety (90) days from the date of termination) when the
Option is granted.  If, at the date of termination, the Optionee is not entitled
to exercise his or her entire Option, the Shares covered by the unexercisable
portion of the Option shall revert to the Plan.  If, after termination, the
Optionee does not exercise his or her Option within the time specified by the
Administrator, the Option shall terminate, and the Shares covered by such Option
shall revert to the Plan.

          C.   DISABILITY OF OPTIONEE.  In the event that an Optionee's
               ----------------------                                  
Continuous Status as an Employee or Consultant terminates as a result of
Optionee's Disability, the Optionee may exercise his or her Option at any time
within twelve (12) months from the date of such termination, but only to the
extent that the Optionee was entitled to exercise it at the date of such
termination (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant).  If, at the date of termination,
the Optionee is not entitled to exercise his or her entire Option, the Shares
covered by the unexercisable portion of the Option shall revert to the Plan.
If, after termination, the Optionee does not exercise his or her Option within
the time specified herein, the Option shall terminate, and the Shares covered by
such Option shall revert to the Plan.

                                      -7-
<PAGE>
 
          D.  DEATH OF OPTIONEE.  In the event of the death of an Optionee, the
              -----------------                                                
Option may be exercised at any time within twelve (12) months following the date
of death (but in no event later than the expiration of the term of such Option
as set forth in the Notice of Grant), by the Optionee's estate or by a person
who acquired the right to exercise the Option by bequest or inheritance, but
only to the extent that the Optionee was entitled to exercise the Option at the
date of death.  If, at the time of death, the Optionee was not entitled to
exercise his or her entire Option, the Shares covered by the unexercisable
portion of the Option shall immediately revert to the Plan.  If, after death,
the Optionee's estate or a person who acquired the right to exercise the Option
by bequest or inheritance does not exercise the Option within the time specified
herein, the Option shall terminate and the Shares covered by such Option shall
revert to the Plan.

          E.   RULE 16b-3.  Options granted to individuals subject to Section 16
               ----------                                                       
of the Exchange Act ("Insiders"), must comply with the applicable provisions of
Rule 16b-3 and shall contain such additional conditions or restrictions as may
be required thereunder to qualify for the maximum exemption from Section 16 of
the Exchange Act with respect to Plan transactions.

     11.  NONTRANSFERABILITY OF OPTIONS.  An Option may not be sold, pledged,
          -----------------------------                                      
assigned, hypothecated, transferred, or disposed of in any manner, other than by
Will or by the laws of descent or distribution, and may be exercised, during the
lifetime of the Optionee, only by the Optionee.

     12.  ADJUSTMENTS UPON CHANGES IN CAPITALIZATION, DISSOLUTION, MERGER, ASSET
          ----------------------------------------------------------------------
          SALE OR CHANGE OF CONTROL.
          ------------------------- 

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

          B.   DISSOLUTION OR LIQUIDATION.  In the event of the proposed
               --------------------------                               
dissolution or liquidation of the Company, to the extent that an Option has not
been previously exercised, it will terminate immediately prior to the
consummation of such proposed action.  The Board may, in the exercise of its
sole discretion in such instances, declare that any Option shall terminate as of
a date fixed by the Board and give each Optionee the right to exercise his or
her Option as to all or any part of the Optioned Stock, including Shares as to
which the Option would not otherwise be exercisable.

                                      -8-
<PAGE>
 
          C.   MERGER OR ASSET SALE.  Subject to the provisions of paragraph (d)
               --------------------                                             
hereof, in the event of a merger of the Company with or into another
corporation, or the sale of substantially all of the assets of the Company, each
outstanding Option shall be assumed or an equivalent option or right shall be
substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation.  In the event that the successor corporation does not
agree to assume the Option or to substitute an equivalent option, the
Administrator shall, in lieu of such assumption or substitution, provide for the
Optionee to have the right to exercise the Option as to all or a portion of the
Optioned Stock, including Shares as to which it would not otherwise be
exercisable.  If the Administrator makes an Option exercisable in lieu of
assumption or substitution in the event of a merger or sale of assets, the
Administrator shall notify the Optionee that the Option shall be fully
exercisable for a period of fifteen (15) days from the date of such notice, and
the Option will terminate upon the expiration of such period.  For the purposes
of this paragraph, the Option shall be considered assumed if, following the
merger or sale of assets, the option confers the right to purchase, for each
Share of Optioned Stock subject to the Option immediately prior to the merger or
sale of assets, the consideration (whether stock, cash, or other securities or
property) received in the merger or sale of assets by holders of Common Stock
for each Share held on the effective date of the transaction (and if holders
were offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding Shares); provided, however, that if
such consideration received in the merger or sale of assets not solely common
stock of the successor corporation or its Parent, the Administrator may, with
the consent of the successor corporation, provide for the consideration to be
received upon the exercise of the Option, for each Share of Optioned Stock
subject to the Option, to be solely common stock of the successor corporation or
its Parent equal in fair market value to the per-share consideration received by
holders of Common Stock in the merger or sale of assets.

          D.   CHANGE IN CONTROL.  In the event of a "Change of Control" of the
               -----------------                                               
Company, as defined in paragraph (e) below, then the following acceleration and
valuation provisions shall apply:

               I)    Except as otherwise determined by the Board, in its
discretion, in the event of an anticipated Change in Control, any Options
outstanding on the date such Change in Control is determined to have occurred
that are not yet exercisable and vested on such date shall become fully
exercisable and vested;

               II)   Except as otherwise determined by the Board, in its
discretion, in the event of an anticipated Change in Control, all outstanding
Options, to the extent they are exercisable and vested (including Options that
shall become exercisable and vested pursuant to subparagraph i) above), shall be
terminated in exchange for a cash payment equal to the Change in Control Price
(reduced by the exercise price applicable to such Options).  These cash proceeds
shall be paid to the Optionee or, in the event of death of an Optionee, prior to
payment, to the estate of the Optionee or a person who acquired the right to
exercise the Option by bequest or inheritance.

               III)  Any payment made pursuant to this paragraph (d) shall not
exceed the maximum amount which could be paid to an Optionee without having the
payment treated as an "excess parachute payment" within the meaning of (S)280G
of the Code.

          E.   DEFINITION OF "CHANGE IN CONTROL".  For purposes of this Section
               ---------------------------------                               
12, a "Change in Control" means the happening of any of the following:

                                      -9-
<PAGE>
 
               I)    When any "person," as such term is used in Sections 13(d)
and 14(d) of the Exchange Act (other than the Company, a Subsidiary or a Company
employee benefit plan, including any trustee of such plan acting as trustee), is
or becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act), directly or indirectly, of securities of the Company representing more
than twenty-five percent (25%) of the combined voting power of the Company's
then-outstanding securities entitled to vote generally in the election of
directors; or

               II)   A merger or consolidation of the Company with any other
corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least seventy-five percent
(75%) of the total voting power represented by the voting securities of the
Company or such surviving entity outstanding immediately after such merger or
consolidation, or the stockholders of the Company approve an agreement for the
sale or disposition by the Company of all or substantially all the Company's
assets; or

               III) A change in the composition of the Board of Directors of the
Company occurring within a two (2) year period, as a result of which fewer than
a majority of the directors are Incumbent Directors. "Incumbent Directors" shall
mean directors who either (A) are directors of the Company as of the date the
Plan is approved by the stockholders; or (B) are elected, or nominated for
election, to the Board of Directors of the Company with the affirmative votes of
at least a majority of the Incumbent Directors at the time of such election or
nomination (but shall not include an individual whose election or nomination is
in connection with an actual or threatened proxy contest relating to the
election of directors to the Company).

          F.   CHANGE IN CONTROL PRICE.  For purposes of this Section 12,
               -----------------------                                   
"Change in Control Price" shall be, as determined by the Board:  (i) the highest
Fair Market Value of a Share within the 60-day period immediately preceding the
date of determination of the Change of Control Price by the Board (the "60-Day
Period"); or (ii) the highest price paid or offered per Share, as determined by
the Board, in any bona fide transaction or bona fide offer related to the Change
in Control of the Company, at any time within the 60-Day Period; or (iii) some
lower price as the Board, in its discretion, determines to be a reasonable
estimate of the fair market value of a Share.

     13.  DATE OF GRANT.  The date of grant of an Option shall be, for all
          -------------                                                   
purposes, the date on which the Administrator makes the determination granting
such Option, or such other later date as is determined by the Administrator.
Notice of the determination shall be provided to each Optionee within a
reasonable time after the date of such grant.

     14.  AMENDMENT AND TERMINATION OF THE PLAN.
          ------------------------------------- 

          A.   AMENDMENT AND TERMINATION.  The Board may at any time amend,
               -------------------------                                   
alter, suspend or terminate the Plan.

          B.   STOCKHOLDER APPROVAL.  The Company shall obtain Stockholder
               --------------------                                       
approval of any Plan amendment to the extent necessary and desirable to comply
with Rule 16b-3 or with Section 422 of the Code (or any successor rule or
statute or other applicable law, rule or regulation, including the requirements
of any exchange or quotation system on which the Common Stock is listed or
quoted).  Such Stockholder approval, if required, shall be obtained in such a
manner and to such a degree as is required by the applicable law, rule or
regulation.

                                     -10-
<PAGE>
 
          C.   EFFECT OF AMENDMENT OR TERMINATION.  No amendment, alteration,
               ----------------------------------                            
suspension or termination of the Plan shall impair the rights of any Optionee,
unless mutually agreed otherwise between the Optionee and the Administrator,
which agreement must be in writing and signed by the Optionee and the Company.

     15.  CONDITIONS UPON ISSUANCE OF SHARES.
          ---------------------------------- 

          A.   LEGAL COMPLIANCE.  Shares shall not be issued pursuant to the
               ----------------                                             
exercise of an Option unless the exercise of such Option and the issuance and
delivery of such Shares shall comply with all relevant provisions of law,
including, without limitation, the Securities Act of 1933, as amended, the
Exchange Act, the rules and regulations promulgated thereunder, Applicable Laws,
and the requirements of any stock exchange or quotation system upon which the
Shares may then be listed or quoted, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.

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

     16.  LIABILITY OF COMPANY.
          -------------------- 

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

          B.   GRANTS EXCEEDING ALLOTTED SHARES.  If the Option Stock covered by
               --------------------------------                                 
an Option exceeds, as of the date of grant, the number of Shares which may be
issued under the Plan without additional Stockholder approval, such Option shall
be void with respect to such excess Optioned Stock, unless Stockholder approval
of an amendment sufficiently increasing the number of Shares subject to the Plan
is timely obtained in accordance with Section 14.b. of the Plan.

     17.  RESERVATION OF SHARES.  The Company, during the term of this Plan,
          ---------------------                                             
will at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

     18.  STOCKHOLDER APPROVAL.  Continuance of the Plan shall be subject to
          --------------------                                              
approval by the Stockholders of the Company within twelve (12) months before or
after the date the Plan is adopted.  Such Stockholder approval shall be obtained
in the manner and to the degree required under applicable federal and state law.

                                     -11-
<PAGE>
 
                                   EXHIBIT 2
                         FORM OF NOTICE OF EXERCISE OF
                                  STOCK OPTION

DATE:     
      --------------------------------

TO:   
      --------------------------------

FROM: 
      --------------------------------   
("Optionee")

RE:   Exercise of Stock Option By Optionee Named Above

In accordance with the terms of my Stock Option Agreement dated _______________,
19___, I hereby exercise my option to purchase _______ Shares at $ ___________
per share (total exercise price of $ _____________), effective today.  The
option price and vested amount is in accordance with the provisions of my
aforementioned Stock Option Agreement.

Unless a different form of payment is agreed to by the parties, attached is a
check payable to __________________________ for the total exercise price of the
Shares being purchased.  The undersigned confirms the representations made in
Section 4 of the Stock Option Agreement.

Please prepare the stock certificate in the following name(s). (Note, if the
stock is to be registered in a name other than Optionee's name, the Company's
approval for said other person's ownership is required.)

                   

                               ----------------------------------------

                               ----------------------------------------

                               ----------------------------------------

Sincerely,


----------------------------------
(Signature)


----------------------------------
(Print or Type Name)

Letter and consideration received by Company on _______________, 19____.

By:
    ------------------------------