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                                                                  Exhibit 10.1.3

                               TELXON CORPORATION
                             1990 STOCK OPTION PLAN
                           FOR NON-EMPLOYEE DIRECTORS
                        (AS AMENDED THROUGH AND EFFECTIVE
                            AS OF SEPTEMBER 15, 1998)



         1. PURPOSE OF THE PLAN. The purpose of this Plan is to promote the best
interests of the Company and its stockholders by enabling the Company to attract
and retain the services of experienced and knowledgeable independent directors
by providing such directors the opportunity, pursuant to Options granted under
the Plan, to acquire a proprietary interest in the Company and thereby encourage
them to put forth their maximum efforts for the continued success and growth of
the Company.

         2. DEFINITIONS. In addition to such other capitalized terms as are
defined elsewhere in this Plan, the following terms shall when used in this Plan
have the respective meanings set forth below:

                  (a) "Act" means the Securities Exchange Act of 1934, as
         amended from time to time.

                  (b) "Authorized Shares" means the maximum aggregate number of
         shares of Common Stock specified in Section 4(a) as being authorized
         for issuance and sale under Options granted pursuant to the Plan,
         subject to adjustment thereof in accordance with Section 12.

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

                  (d) "Code" means the Internal Revenue Code of 1986, as amended
         from time to time.

                  (e) "Commission" means the United States Securities and
         Exchange Commission.

                  (f) "Committee" means the Committee appointed by the Board in
         accordance with Section 5(a), if a Committee is appointed. The members
         of such Committee shall be members of the Board. If no Committee has
         been appointed, any reference to the "Committee" shall be deemed a
         reference to the "Board."
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                  (g) "Common Stock" means the Common Stock, par value $.01 per
         share, of the Company.

                  (h) "Company" means Telxon Corporation, a Delaware
         corporation.

                  (i) "Director" means any person elected or duly appointed in
         accordance with the certificate of incorporation or by-laws of the
         Company, or applicable law, to serve on the Board.

                  (j) "Employee" means any person, including officers and
         Directors who are also officers, employed by the Company or any
         Subsidiary. The payment of director's fees by the Company shall not be
         sufficient to constitute a person as an "Employee" of the Company.

                  (k) "Family Member" means (i) the spouse or any sibling of an
         Optionee or any lineal descendant (including, but not limited to,
         adopted and step children) of any of the foregoing, (ii) a trust for
         the exclusive benefit of the Optionee and/or person(s) described in
         clause (i) of this Section 2(k), or the trustee of such a trust in his,
         her or its capacity as such, (iii) a partnership, corporation, limited
         liability company or similar entity the partners, stockholders or other
         owners of which include only the Optionee and/or person(s) described in
         clause (i) of this Section 2(k).

                  (l) "Non-Profit Organization" means any organization which is
         exempt from United States income taxes under Section 501(c)(3), (4),
         (5), (6), (7), (8) or (10) of the Code.

                  (m) "Option" means a right granted to a non-Employee Director
         pursuant to the Plan to purchase a specified number of shares of Common
         Stock at a specified price during a specified period and on such other
         terms and conditions as may be specified pursuant to the Plan. Options
         may be granted as Tax Qualified Options or as Options which do not
         qualify as Tax Qualified Options.

                  (n) "Option Agreement" means the written agreement evidencing
         an Option by and between the Company and the Optionee as required by
         Section 14.

                  (o) "Optioned Stock" means the Common Stock subject to an
         Option.

                  (p) "Optionee" means a non-Employee Director who receives an
         Option.





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                  (p) "Plan" means this Telxon Corporation 1990 Stock Option
         Plan for Non-Employee Directors.

                  (q) "Rule 16b-3" means Rule 16b-3 promulgated by the
         Commission under the Act or any similar successor regulation exempting
         certain transactions involving stock-based compensation arrangements
         from the liability provisions of Section 16 of the Act, as adopted and
         amended from time to time and as interpreted by formal or informal
         opinions of, and releases published or other interpretive advice
         provided by, the Staff of the Commission.

                  (r) "Securities Law Requirements" means the Securities Act of
         1933, as amended from time to time, and the Act and the rules and
         regulations promulgated by the Commission under such laws, as such
         rules and regulations are adopted and amended from time to time,
         including but not limited to Rule 16b-3, and as all such laws, rules
         and regulations are interpreted by formal or informal opinions of, and
         releases published or other interpretive advice provided by, the Staff
         of the Commission, and the requirements of any stock exchange,
         automated inter-dealer quotation system or other recognized securities
         market on which the Common Stock is listed or traded or in which the
         Common Stock is included, as adopted and amended from time to time and
         as interpreted by formal or informal opinions of, and other
         interpretive advice provided by, the representatives of such stock
         exchange, quotation system or other securities market.

                  (s) "Shares" means the Common Stock as adjusted in accordance
         with Section 12.

                  (t) "Subsidiary" means a corporation of which not less than
         fifty percent (50%) of the voting shares are owned by the Company or a
         Subsidiary, whether or not such corporation now exists or is hereafter
         organized or acquired by the Company or a Subsidiary.

                  (u) "Successor" means the estate of an Optionee or a person
         who succeeds by will or the laws of descent and distribution to an
         Optionee's right to exercise an Option.

                  (v) "Tax Qualified Option" means an Option which is intended
         at the time of grant to qualify for special tax treatment under Section
         422A or other particular provisions of the Code and the regulations,
         rulings and procedures promulgated, published or otherwise provided
         thereunder, as adopted and amended from time to time.



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         3. QUALIFICATION OF PLAN. The Plan is intended to qualify for an
exemption from the operation of Section 16(b) of the Act, pursuant to Rule
16b-3. Further, with respect to Options granted hereunder prior to November 1,
1996, the Plan is structured to comply with the requirements of Rule
16b-3(c)(2)(ii) as then in effect regarding disinterested administration and
formula awards to ensure that Directors then receiving grants under the Plan
continue to be "disinterested persons," as that term is defined in Rule
16b-3(c)(2)(i) as in effect prior to November 1, 1996, for the purpose of
administering the Company's employee stock option plans under such Rule. Insofar
as transactions under this Plan are thus intended to comply with all applicable
conditions of Rule 16b-3, to the extent that any provision of the Plan or action
by the Board or the Committee fails to so comply, such provision or action shall
be deemed null and void to the extent permitted by law and deemed advisable by
the Board or, but only with respect to actions taken by it, the Committee.

         4. STOCK SUBJECT TO THE PLAN.

                  (a) NUMBER OF SHARES ISSUABLE. Subject to adjustment in
         accordance with the provisions of Section 12, the maximum aggregate
         number of Authorized Shares which may be issued and sold under Options
         granted pursuant to the Plan is 400,000 shares of Common Stock. The
         Shares issued and sold upon the exercise of Options may be treasury
         Shares, Shares of original issue or a combination thereof.

                  (B) COMPUTATION OF SHARES AVAILABLE FOR GRANT. For purposes of
         computing the number of Authorized Shares available from time to time
         under the Plan for the grant of Options, the number of Shares subject
         to each Option granted pursuant to the Plan shall be provisionally
         counted against the Authorized Shares from and after the grant of such
         Option but only for so long as and to the extent that such Option shall
         remain outstanding and unexercised. Upon the exercise, in whole or in
         part, of an Option, the number of Shares issued upon such exercise
         shall be permanently deducted from the Authorized Shares, provided that
         no such permanent deduction shall be made, and the provisional
         deduction against the Authorized Shares shall be reversed, to the
         extent that the exercise price and/or the withholding taxes with
         respect to such exercise are paid through the delivery to the Company
         by the person exercising the option of Shares already owned by such
         person and/or through the withholding by the Company of Shares from the
         total number of Shares with respect to which the Option is exercised.
         The provisional deduction against the Authorized Shares shall likewise
         be reversed to the extent of the unexercised portion of an Option upon
         the expiration, lapse, cancellation, surrender, forfeiture or other
         termination of such Option. The Shares covered by


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         any such reversal of a provisional deduction against the Authorized
         Shares shall immediately become available for the granting of new
         Options under the Plan with respect thereto.

         5. ADMINISTRATION OF THE PLAN.

                  (a) PROCEDURE. The Plan shall be administered by the Board or
         the Board may, in its discretion, appoint a Committee to administer the
         Plan, subject to such terms and conditions as the Board may prescribe,
         which Committee, once appointed, shall continue to serve until
         otherwise directed by the Board; provided that the granting of Options
         under Section 6(c) and any action under the Plan affecting the number
         of Shares covered thereby, the exercise price payable thereunder or the
         times at which the same may be exercised (including, but not limited
         to, the acceleration of the vesting thereof or any extension of the
         period (subject to the maximum term fixed by Section 7(a)) during which
         such an Option may be exercised) shall not be taken by the Committee
         but shall lie solely within the authority of the full Board, subject to
         the abstention of the Optionee from any decision regarding any Option
         held by him or her. Subject to the provisions of the Plan, the
         Committee has authority to manage and control the operation of the
         Plan, interpret the provisions of the Plan, and prescribe, amend and
         rescind rules and regulations relating to the Plan. From time to time
         the Board may increase the size of the Committee and may appoint
         additional members thereof, remove members (with or without cause),
         fill vacancies however caused and remove all members of the Committee
         and thereafter directly administer the Plan.

                  (b) POWERS OF THE COMMITTEE. Subject to the provisions of this
         Plan, the Committee shall have the authority, in its sole discretion:

                           (i) To determine, upon review of relevant information
                  in accordance with Section 8(b) of the Plan, the "Fair Market
                  Value" (as defined in said Section 8(b)) of the Shares;

                           (ii) To determine the terms and provisions of each
                  Option;

                           (iii) To amend any outstanding Option;

                           (iv) To authorize any person to prepare and execute
                  on behalf of the Company any instrument deemed by the
                  Committee to be necessary or advisable to evidence or
                  effectuate the Plan, any Option granted thereunder or any
                  amendment to the Plan or any Option;



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                           (v) To interpret the Plan;

                           (vi) To prescribe, amend and rescind, if deemed
                  necessary or appropriate, rules and regulations relating to
                  the Plan, to the extent not inconsistent with the Plan;

                           (vii) To make all other determinations the Committee
                  may deem necessary or advisable in connection with the
                  administration of the Plan; and

                           (viii) To accelerate the time as of which any Option
                  shall vest and may be exercised by the Optionee; provided,
                  however, that the Optionee shall not participate in any
                  decision regarding acceleration of vesting of any Option held
                  by him or her.

                  (c) EFFECT OF BOARD AND COMMITTEE DECISIONS. All decisions,
         determinations and actions of the Board and the Committee in connection
         with the construction, interpretation, administration, application,
         operation and implementation of the Plan shall be final, conclusive and
         binding on the Company, its stockholders and Subsidiaries, all
         Directors and Optionees and the respective legal representatives,
         heirs, successors and assigns of all of the foregoing and all other
         persons claiming under or through any of them.

                  (d) EXCULPATION AND INDEMNIFICATION. No member of the Board or
         the Committee, and no Employee or other agent acting on behalf of the
         Board or the Committee, shall be personally liable for any decision,
         determination or action made or taken, or failed to be made or taken,
         with respect to this Plan or any Option granted hereunder, and the
         Company shall fully protect each such person in respect of any such
         decision, determination or action and shall indemnify each such person
         against any and all claims, losses, damages, expenses and liabilities
         arising from or in connection with any such decision, determination or
         action.

         6. ELIGIBILITY; FORMULA GRANTS.

                  (a) ELIGIBILITY. Each Director who is not an Employee shall be
         eligible to receive grants of Options under the Plan.



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                  (b) FORMULA GRANTS.

                           (i) INITIAL GRANTS. Each non-Employee Director who is
                  newly elected or appointed to the Board after May 19, 1992
                  shall automatically be granted an Option (the "Initial Grant")
                  to purchase 25,000 Shares of Common Stock (subject to
                  adjustment as provided in Section 12) on the day he or she
                  joins the Board.

                           (ii) CONTINUING GRANTS. Each non-Employee Director
                  shall automatically be granted an Option (the "Continuing
                  Grant") to purchase 10,000 Shares of Common Stock (subject to
                  adjustment as provided in Section 12) on each anniversary of
                  his or her election or last re-election to the Board so long
                  as such Director is serving on the Board on the date of such
                  anniversary.

                  (c) DISCRETIONARY GRANTS. In its sole discretion, the Board
         may at any time and from time to time while the Plan is in effect grant
         to any one or more of the non-Employee Directors Options to purchase
         Shares on such terms and subject to such provisions as the Board may,
         and the Board is hereby authorized to, determine (which terms and
         provisions need not be identical), including but not limited to, (i)
         the number of Shares subject to the Option, (ii) the exercise price per
         Share (subject to the provisions of Section 8), and (iii) whether the
         Option shall become exercisable over a period of time and when it shall
         be fully exercisable. Any Options granted under this Section 6(c) shall
         be in addition to those automatically granted to eligible Directors
         under Section 6(b) above, and there shall be no limit on the number of
         Options which may be granted to any one eligible Director or on the
         aggregate number of Shares subject to purchase thereunder.

         7. TERM OF OPTIONS; VESTING.

                  (a) TERM OF OPTIONS. The term of each Option shall be seven
         (7) years from the date of grant thereof provided that the Committee,
         if it intends that a particular Option qualify as a Tax-Qualified
         Option, shall observe such restrictions on the term of such Option as  
         may be imposed by applicable tax laws in order for such Option so to
         qualify. In the exercise of its authority under Section 5(b)(iii) and
         other applicable provisions of the Plan, the Committee may extend the
         term of any Option outstanding under the Plan, provided that the term
         of the Option, as so extended, shall expire no later than ten (10)
         years after the date as of which the Option was originally granted.
         Each Option shall continue in effect in accordance with its terms 


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         notwithstanding that the Plan may be terminated prior to the expiration
         of the term of such Option. 



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                  (b) VESTING.

                           (i) INITIAL GRANTS. Each Option constituting an
                  Initial Grant shall be exercisable as to one-third of the
                  Shares subject to the Option after the first anniversary of
                  the grant date, exercisable as to two-thirds of the Shares
                  subject to the Option after the second anniversary of the
                  grant date, and exercisable as to all or any part of the
                  Shares subject to the Option after the third anniversary of
                  the grant date.

                           (ii) CONTINUING GRANTS. Each Option constituting a
                  Continuing Grant shall be exercisable as to all or any part of
                  the Shares subject to the Option after the third anniversary
                  of the grant date.

                           (iii) DISCRETIONARY GRANTS. Each Option granted
                  pursuant to Section 6(c) shall be exercisable at such times
                  and as to all or any part of the Shares subject to the Option
                  as determined by the Board at the time of grant and reflected
                  in the Option Agreement evidencing the same.

         8. EXERCISE PRICE.

                  (a) MINIMUM PRICE REQUIRED. The per Share exercise price for
         the Shares subject to an Option shall be (i) with respect to Options
         granted under Section 6(b), the Fair Market Value per Share as of the
         day prior to the date of grant of such Option, and (ii) with respect to
         Options granted under Section 6(c), such price per Share as the Board
         may determine at the time of grant and reflected in the Option
         Agreement evidencing the same, but in no event less than the Fair
         Market Value per Share as of the day prior to the date of grant.

                  (b) DEFINITION OF "FAIR MARKET VALUE". For all purposes under
         the Plan, "Fair Market Value" per Share shall be determined by the
         Committee in its sole discretion; provided that if the Shares are
         included in the NASDAQ National Market or listed on a stock exchange on
         the date as of which the same is to be determined, the Fair Market
         Value per Share shall be the closing price on such quotation system or
         exchange which is the principal trading market for the Shares on the
         date of determination or, if no sale price was reported for the Shares
         on the date of determination, the closing price on such principal
         trading market for the last trading day prior to the date of
         determination for which a sale price was reported; provided further,
         however, that if the foregoing method of determining Fair Market Value
         is inconsistent with the then existing tax law requirements with
         respect to any Option which the Committee intends to qualify as a Tax
         Qualified Option, then the Fair Market Value per Share shall be
         determined by the 


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         Committee in such manner as is required for such Tax Qualified Option
         to qualify as such.

         9. FORM OF PAYMENT.

                  (a) ACCEPTABLE FORMS OF CONSIDERATION. Except as may otherwise
         be specified by the Committee in its sole discretion at the time of
         grant thereof and reflected in the Option Agreement evidencing such
         Option, the following forms of consideration will be accepted in
         payment of the exercise price for the Shares to be issued upon exercise
         of an Option: (i) cash, (ii) personal check, (iii) bank cashier's
         check, (iv) already owned Shares (duly endorsed for transfer with
         signature guaranteed), (v) Shares withheld from the Shares to be issued
         upon such exercise, (vi) subject to compliance with applicable law, a
         commitment for the delivery to the Company of proceeds from the sale,
         pursuant to a brokerage or similar arrangement, of Shares to be issued
         upon exercise of the Option, or (vii) any combination of the foregoing.
         The person or persons entitled to exercise the Option shall be entitled
         to elect from the foregoing forms of consideration the form(s) to be
         used in effecting payment with respect to a particular exercise;
         provided that any election by an Optionee to use already owned Shares
         or have Shares withheld from those issuable upon such exercise shall be
         effective only if made in accordance with the applicable requirements
         of Rule 16b-3; and provided further that a commitment for the delivery
         to the Company of proceeds from the sale, pursuant to a brokerage or
         similar arrangement, of Shares to be issued upon exercise of an Option
         will not be accepted from an Optionee if under Securities Law
         Requirements such a sale would be matched with such exercise to result
         in "short-swing" profit liability under Section 16(b) of the Act on the
         part of such Optionee with respect to such transaction.

                  (b) VALUATION OF SHARES DELIVERED OR WITHHELD. Where already
         owned Shares, or Shares withheld from those issuable upon such
         exercise, are used in payment of the exercise price, such Shares shall
         be valued at Fair Market Value as of the day immediately preceding the
         date of exercise.

                  (c) DELIVERY OF ALREADY OWNED SHARES. The Company shall not be
         obligated to accept from an Optionee Shares he or she already owns as
         full or partial payment of the exercise price of an Option unless such
         tender is accompanied by a written statement of the Optionee certifying
         that either (i) the Shares tendered in payment were acquired other than
         through the exercise of a stock option granted by the Company, or (ii)
         the Shares tendered in payment were acquired through the exercise, on
         such date(s) as shall be recited in such statement (any such Shares
         acquired through such an exercise occurring less than six (6)


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         months prior to the date of exercise of the Option in respect of which
         such already owned Shares are tendered are ineligible for use as
         payment toward such Option exercise), of stock option(s) granted by the
         Company. The Committee may, in its sole discretion, accept, in lieu of
         physical delivery of the stock certificates evidencing such Shares,
         such constructive delivery of such Shares as may be satisfactory to the
         Committee.

         10. METHOD OF EXERCISE.

                  (a) PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any
         Option granted hereunder shall be exercisable at such times and under
         such conditions as determined by the Committee and as permitted under
         the Plan. An Option may not be exercised for a fraction of a Share. In
         order to exercise an Option, the person or persons entitled to exercise
         it shall deliver to the Company written notice of the number of Shares
         with respect to which the Option is being exercised, accompanied by
         payment in full of the aggregate price for the Shares so to be
         acquired. To constitute an effective exercise of an Option, such notice
         and payment shall be addressed to the attention of the Treasurer of the
         Company and must be received at the principal executive office of the
         Company by 5:00 p.m., local time, on the date of expiration or
         termination of the Option. Until the issuance (as evidenced by the
         appropriate entry on the books of the Company or of a duly authorized
         transfer agent of the Company) of the stock certificate evidencing such
         Shares, no right to vote or receive dividends nor any other rights as a
         stockholder shall exist with respect to the Optioned Stock
         notwithstanding the exercise of the Option. No adjustment will be made
         for a dividend or other right for which the record date is prior to the
         date the stock certificate is issued, except as provided in Section 12.

                  Exercise of an Option shall result in a decrease in the number
         of Shares which thereafter shall be available for sale under such
         Option by the number of Shares as to which the Option is exercised,
         including any Shares withheld from the Shares to be issued pursuant to
         such exercise to cover the exercise price.

                  (b) TERMINATION OF SERVICE. Except as may otherwise be
         specified by the Committee in its sole discretion at the time of grant
         thereof and reflected in the Option Agreement evidencing such Option,
         in the event that an Optionee shall cease to be a Director (other than
         by reason of the Optionee's death or disability), he may exercise his
         Option (to the extent that he was entitled to exercise it at the time
         he ceased to be a Director) until the earlier of (i) the date three (3)
         months after the date Optionee ceased to be a Director or (ii) the
         expiration date of such Option, and the Option shall terminate on the
         earlier of such dates.



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                  (c) DEATH OF OPTIONEE. Except as may otherwise be specified by
         the Committee in its sole discretion at the time of grant thereof and
         reflected in the Option Agreement evidencing such Option, upon the
         death of an Optionee:

                           (i) who is at the time of his death a Director of the
                  Company, the Option may be exercised (to the extent the
                  Optionee would have been entitled to do so had he continued
                  living and terminated directorship six (6) months after the
                  date of death) by his Successor until the earlier of (A) the
                  date six (6) months (or, if the Committee intends that a
                  particular Option qualify as a Tax Qualified Option, such
                  lesser period of time within which the applicable tax laws may
                  require that the Option be exercised in order for such Option
                  so to qualify) following the date of the Optionee's death or
                  (B) the expiration date of such Option, and the Option shall
                  terminate on the earlier of such dates; or

                           (ii) within thirty (30) days after the termination of
                  Optionee's directorship (other than termination due to
                  disability), the Option may be exercised (to the extent the
                  Optionee was entitled to do so at the date of termination of
                  his directorship) by his Successor until the earlier of (A)
                  the date six (6) months following the date of the Optionee's
                  death (or, if the Committee intends that a particular Option
                  qualify as a Tax Qualified Option, such lesser period of time
                  within which the applicable tax laws may require that the
                  Option be exercised in order for such Option so to qualify) or
                  (B) the expiration date of such Option, and the Option shall
                  terminate on the earlier of such dates.

                  (d) DISABILITY OF OPTIONEE. Except as may otherwise be
         specified by the Committee in its sole discretion at the time of grant
         thereof and reflected in the Option Agreement evidencing such Option,
         if an Optionee's directorship terminates due to Optionee having become
         permanently and totally disabled within the meaning of Section 23(e)(3)
         of the Code ("disability"), the Option may be exercised (to the extent
         the Optionee was entitled to do so as of the effective date of the
         termination of Optionee's directorship by reason of such disability)
         until the earlier of (i) the date one (1) year after the effective date
         of such termination or (ii) the expiration date of such Option, and the
         Option shall terminate on the earlier of such dates.


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         11. LIMITED TRANSFERABILITY OF OPTIONS.

                  (a) Options granted under the Plan and any rights and
         privileges appertaining thereto (i) may not be sold, pledged, assigned,
         hypothecated, transferred or disposed of in any manner by the Optionee
         other than (1) by will or the laws of descent and distribution, (2)
         pursuant to a "qualified domestic relations order" as defined in Code
         Section 414(p)(1)(B) and satisfying the requirements of Code Section
         414(p)(1)(A), or (3) without the payment of any cash or other economic
         consideration by the transferee to the transferor, to (A) a Family
         Member, (B) a Non-Profit Organization, or (C) a charitable trust, and
         (ii) shall not be subject to execution, attachment or similar process.
         A transfer of an Option pursuant to one of the foregoing clauses
         (i)(1)-(3) may relate to all or any part of the Shares (but must be for
         whole Shares) which then continue to be subject to such Option. Written
         evidence of any such transfer, accompanied by the transferring
         Optionee's original copy of the Grant Agreement evidencing the
         transferred Option, shall be promptly provided to the Company, in the
         case of clauses (i)(1)-(2), upon the entry of the court order
         effecting, or other judicial authorization or direction of, such
         transfer or, in the case of clause (i)(3), upon the transferor's making
         of such transfer, which transfer must in all cases comply with the
         requirements of Section 15 and otherwise be in form and substance
         reasonably acceptable to the Company before the Company shall be
         obligated to recognize such transfer. Upon its receipt of the
         foregoing, the Company shall cancel the original Option Agreement and
         re-issue a replacement Option Agreement to the transferee for the
         Option or portion thereof so transferred and to the transferring
         Optionee for any balance of the Option he or she retains without
         transfer.

                  (b) Upon the transfer of an Option in accordance with Section
         11(a), the transferee shall succeed to, and be entitled to exercise,
         all of the rights and privileges of the transferring Optionee, provided
         that the Option in the hands of the transferee shall continue to be
         subject to all of the terms, conditions and restrictions under the Plan
         and the Option Agreement with respect to such Option which would be
         applicable to the Option were it still held by the Optionee to whom it
         was originally granted, including, without limitation, any requirement
         for the continued exercisability or other effectiveness of the Option
         based upon the life, employment or other status of the original
         Optionee.

                  (c) The restrictions on transferability set forth in Section
         11(a) shall not be construed to limit the ability of an Optionee to
         elect to pay all or any portion of the exercise price using the form of
         consideration described in clause (vi) of Section 9(a).



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         12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER.

                  (e) ADJUSTMENTS, IN GENERAL. Subject to the provisions of
         Paragraph (b) of this Section 12 and to any required action by the
         stockholders of the Company, the number of Shares covered by each
         outstanding Option, and the number of Shares which have been authorized
         for issuance under the Plan but as to which no Options have yet been
         granted or which due to the expiration, lapse, cancellation, surrender,
         forfeiture or other termination of an Option under this Plan are again
         available for grant, as well as the price per Share covered by each
         such outstanding Option, shall be proportionately adjusted for any
         increase or decrease in the number of issued and outstanding Shares
         resulting from a stock split, reverse stock split, stock dividend,
         combination or reclassification of Shares or any other increase or
         decrease in the aggregate number of issued and outstanding Shares
         effected without receipt of consideration by the Company; provided,
         however, that the issuance of Shares pursuant to the conversion or
         exchange of any securities of the Company convertible into or
         exchangeable for Shares shall not be deemed to have been "effected
         without receipt of consideration." Any fractional Shares which would
         otherwise result from any such adjustments shall be eliminated either
         by deleting all fractional Shares or by appropriate rounding to the
         next higher (fractions of one-half or more) or lower (fractions of less
         than one-half) whole Share. All such adjustments shall be made by the
         Board in its sole discretion. Except as expressly provided herein, no
         issuance by the Company of shares of stock of any class, or securities
         convertible into or exchangeable for shares of stock of any class,
         shall affect, and no adjustment by reason thereof shall be made to, the
         number of or exercise price for Shares subject to an Option.

                  In the event of the proposed dissolution or liquidation of the
         Company, all outstanding Options will terminate immediately prior to
         the consummation of such proposed action, unless otherwise provided by
         the Board. The Board may, in the exercise of its sole discretion in
         such instances, declare that any Option shall terminate as of a date
         fixed by the Board and give each Optionee the right to exercise his
         Option as to all or any part of the Optioned Stock, including Shares as
         to which the Option would not otherwise then be exercisable.

                  Subject to the provisions of Paragraph (b) of this Section 12,
         in the event of a sale of all or substantially all of the assets of the
         Company, or the merger or consolidation of the Company with or into
         another corporation, each outstanding Option shall be assumed or an
         equivalent option shall be substituted by such successor corporation or
         a parent or subsidiary of such successor corporation, unless the Board,
         in the exercise of its sole discretion, determines that, in lieu of


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<PAGE>   15

         such assumption or substitution, the Optionee shall have the right to
         exercise the Option as to all or any part of the Optioned Stock,
         including Shares as to which the Option would not otherwise then be
         exercisable. If in the event of a merger, consolidation or sale of
         assets the Board makes an Option fully exercisable in lieu of
         assumption or substitution, the Company shall notify the Optionee that
         the Option shall be fully exercisable for a period of thirty (30) days
         from the date of such notice, and the Option will terminate upon the
         expiration of such period.

                  (f) SPECIAL ADJUSTMENTS UPON CHANGE IN CONTROL. In the event
         of a "Change in Control" of the Company (as defined in Paragraph (c) of
         this Section 12), unless otherwise determined by the Board in its sole
         discretion prior to the occurrence of such Change in Control, the
         following acceleration and valuation provisions shall apply:

                           (i) Any Options outstanding as of the date of such
                  Change in Control that are not yet fully vested on such date
                  shall become fully vested; and

                           (ii) The value of all outstanding Options, measured
                  by the excess of the "Change in Control Price" (as defined in
                  Paragraph (d) of this Section 12) over the exercise price,
                  shall be cashed out. The cash out proceeds shall be paid to
                  the Optionee or, in the event of death of an Optionee prior to
                  payment, to his Successor.

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

                           (i) When any "person," as such term is used in
                  Sections 13(d) and 14(d) of the Act (other than the Company, a
                  Subsidiary or a Company or Subsidiary employee benefit plan,
                  including any trustee of such a plan acting as trustee)
                  becomes the "beneficial owner" (as defined in Rule 13d-3
                  promulgated by the Commission under the Act, as adopted and
                  amended from time to time and as interpreted by formal or
                  informal opinions of, and releases published or other
                  interpretive advice provided by, the Staff of the Commission),
                  directly or indirectly, of securities of the Company
                  representing fifty percent (50%) or more of the combined
                  voting power of the Company's then outstanding securities; or

                           (i) The consummation of a transaction requiring
                  stockholder approval and involving the sale of all or
                  substantially all of the assets of the 


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<PAGE>   16

                  Company or the merger or consolidation of the Company with or
                  into another corporation.

                  (h) DEFINITION OF "CHANGE IN CONTROL PRICE". For purposes of
         this Section 12, "Change in Control Price" shall be, as determined by
         the Board, (i) the highest closing sale price of a Share, as reported
         by the NASDAQ National Market, any stock exchange on which the Shares
         are listed or any other recognized securities market on which the
         Shares are traded, at any time within the sixty (60) day period
         immediately preceding the date of the Change in Control (the "Sixty-Day
         Period"), or (ii) the highest price paid or offered, as determined by
         members of the Board other than the Optionees, in any bona fide
         transaction or bona fide offer related to the Change in Control, at any
         time within the Sixty-Day Period.

         13. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for
all purposes, be (i) with respect to Options granted under Section 6(b), the
dates for the automatic granting thereof as specified in said Section 6(b), and
(ii) with respect to Options granted under Section 6(c), the date on which the
Board makes the determination to grant such Options.

         11. OPTION AGREEMENTS. As a condition to the effectiveness of each
grant of an Option under this Plan, the Optionee shall enter into a written
Option Agreement in such form as may be authorized by the Committee from time to
time. Subject to the provisions of Section 19(a), each such Option Agreement
shall contain such provisions as are required by the terms of this Plan and may
contain such additional provisions not inconsistent with the terms of this Plan
as the Committee in its sole discretion may from time to time authorize. Each
Option Agreement shall also provide for such minimum waiting period from the
date of grant before the Option may be exercised, and such minimum holding
period from the date of the acquisition of Shares upon exercise of an Option for
which such Shares must be held before making any disposition of such Shares, as
may be required by Rule 16b-3.

         12. CONDITIONS UPON ISSUANCE OF SHARES AND TRANSFERS OF OPTIONS.
Notwithstanding anything express or implied to the contrary in the Plan or any
Option Agreement made hereunder:.

                  (a) No Shares shall be issued with respect to an Option unless
         the exercise of such Option and the issuance and delivery of such
         Shares pursuant thereto, nor shall the transfer of an Option be
         effective under Section 11 unless the same, shall comply with all
         applicable Securities Law Requirements and all other applicable
         provisions of law, including without limitation, any applicable state
         "blue sky" laws and foreign (national and provincial) securities laws
         and the rules 


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<PAGE>   17

         and regulations promulgated under any of such laws, and shall be
         further subject to the approval of counsel for the Company with respect
         to such compliance As a condition to the exercise of an Option or the
         issuance of Shares upon exercise of an Option, or to the transfer of an
         Option under Section 11, the Company may require the person exercising
         such Option to make such representations and warranties to the Company
         as may be required, in the opinion of counsel for the Company, by any
         of the aforementioned Securities Law Requirements and other laws, which
         may include, without limitation, representations and warranties that
         the Shares which are being or may be purchased thereunder are being or
         will be acquired only for investment and without any present intention
         to sell or distribute such Shares.

                  (b) The Company shall not have any liability to any Optionee
         in respect of any delay in the sale or issuance of Shares, or the
         transfer of an Option, hereunder until the Company is able to obtain
         authority from any governmental authority (domestic or foreign) or
         self-regulatory organization having jurisdiction thereover, which
         authority is deemed by the Company's counsel to be necessary to the
         lawful sale, issuance or transfer of such Shares or Option, as the case
         may be, or any failure to sell or issue such Shares, or to effect any
         such Option transfer, as to which the Company is unable to obtain such
         requisite authority.

                  (c) The Company may, but shall be under no obligation to,
         effect or obtain any registration or other qualification or approval of
         any Option granted or transferred hereunder, or of any Shares issuable
         upon the exercise thereof, under any applicable Securities Law
         Requirements or any other applicable provisions of law, including
         without limitation, any applicable state "blue sky" laws and foreign
         (national and provincial) securities laws and the rules and regulations
         promulgated under any of such laws, and in the event any such
         registration, qualification or approval is not effected or obtained,
         such Option or Shares, as the case may be, shall be subject to such
         transfer and/or other restrictions (including, if so provided by such
         laws, rules and regulations, the prohibition of a particular
         transaction) as may be imposed by such laws, rules and regulations
         under such circumstances. By way of illustrating, but without limiting
         the generality of, the foregoing provisions of this Section 14(c), as
         of the time of the September 10, 1997 amendments to the Plan, the
         Shares issuable upon the exercise of an Option by a Director were
         covered by an effective registration statement which the Company had
         prior to that date elected to file (consistent with the discretion
         recognized in this Section 14(c)) with the Commission on Form S-8 and
         would be freely tradable (subject to the filing of a Form 144 and the
         other applicable requirement of Rule 144 as then promulgated by the
         Commission) by the Director, but unless the Company were to file (but
         in its discretion, the Company has not elected to file) with the


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<PAGE>   18

         Commission a registration statement with respect thereto on Form S-3 or
         other available Form, the Shares issuable to a non-Director transferee
         of such Option under Section 11 would not upon his or her exercise
         thereof be able to dispose of such Shares on the public securities
         markets for a one year period as is further required by Rule 144 in the
         absence of an applicable Form S-8 or other registration statement. In
         the event that any such transfer and/or other restrictions shall apply,
         the Option Agreement evidencing such Option or the Shares so issued, as
         the case may be, shall bear such legends referencing such restrictions
         as the Company may reasonably require.

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

         14. EFFECTIVENESS OF PLAN. This Plan was adopted by the Board on, and
effective as of, October 18, 1990; subject to the approval hereof by the vote of
the Company's stockholders required therefor by the Delaware General Corporation
Law and applicable Securities Law Requirements within one (1) year of such
adoption by the Board, which approval was obtained at the Annual Meeting of such
stockholders held September 5, 1991. Amendments to this Plan changing the
frequency and amount of automatic grants and as to certain other matters were
adopted by the Board subject to the, and which received such, required approval
of the Company's stockholders at the Annual Meeting thereof held August 19,
1992. The Board also approved an increase in the number of Authorized Shares and
certain other amendments to this Plan subject to and which received such
required approval of the Company's stockholders at the Annual Meeting thereof
held August 31, 1995. On September 10, 1997, the Plan was further amended by the
Board, without the necessity of any stockholder action with respect to such
amendments, principally to permit discretionary grants of options in addition to
those automatically granted under the Plan and the limited transferability of
Options. The Plan shall continue in full force and effect until (i) terminated
by resolution of the Board or (ii) both (A) all Options granted under the Plan
have been exercised in full and (B) no Authorized Shares remain available for
the granting of additional Options. The termination of the Plan shall not affect
Options already granted, which Options shall remain in full force and effect in
accordance with their respective terms as if this Plan had not been terminated.

                                       18
<PAGE>   19

         15. AMENDMENT OF PLAN AND OUTSTANDING OPTIONS. The Board may, in its
sole discretion, amend the Plan from time to time, provided that any amendment
which Rule 16b-3 or any other Securities Law Requirement requires be approved by
the stockholders of the Company shall be made only with the approval of such
stockholders. Amendments to the Plan shall apply prospectively to all Options
then outstanding under the Plan, except in the case of any amendment which is
adverse to an Optionee, in which case the amendment shall apply with respect to
the outstanding Options held by the adversely affected Optionee only upon the
consent of such Optionee to such amendment. In exercising its authority under
Section 5(b)(vii) to amend outstanding Options, the Committee likewise may make
an amendment which adversely affects the Optionee only upon the consent of such
Optionee to such amendment. Notwithstanding the provisions of this Section 18,
the consent of the Optionee shall not be required with respect to an amendment
to the Plan or to any outstanding Option which is made in order to comply with
Securities Law Requirements or which causes a Tax Qualified Option no longer to
qualify as such.

         16. GENERAL PROVISIONS.

                  (a) GRANTS TO FOREIGN DIRECTORS. Notwithstanding any other
         provision of this Plan to the contrary but subject to applicable
         Securities Law Requirements and tax laws, to the extent deemed
         necessary or appropriate by the Committee in its sole discretion in
         order to further the purposes of the Plan with respect to Directors who
         are foreign nationals and/or employed outside the United States of
         America, an Option granted to any such Director may be on terms and
         conditions different from those specified in this Plan in recognition
         of the differences in the laws, tax policies and customs applicable to
         such a Director, without the necessity of the Plan being amended to
         provide for such different terms and conditions.

                  (b) DETERMINATION OF DEADLINES. If any day on or before which
         action under this Plan or any Option granted hereunder must be taken
         falls on a Saturday, Sunday or Company-recognized holiday, such action
         may be taken on the next succeeding day which is not a Saturday, Sunday
         or Company-recognized holiday.

                  (c) GOVERNING LAW. To the extent that federal laws (such as
         the Act or the Code) or the Delaware General Corporation Law do not
         otherwise control, this Plan and all determinations made and actions
         taken pursuant hereto shall be governed by the laws of the State of
         Ohio and construed accordingly.

                  (d) GENDER AND NUMBER. Whenever the context may require, any
         pronouns used herein shall include the corresponding masculine,
         feminine or 


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<PAGE>   20

         neuter forms, and the singular form of nouns and pronouns shall include
         the plural and vice versa.

                  (e) CAPTIONS. The captions contained in this Plan are for
         convenience of reference only and do not affect the meaning of any term
         or provision hereof.




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