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                KELLSTROM INDUSTRIES, INC. 1996 STOCK OPTION PLAN

1. PURPOSE OF THE PLAN. The purpose of the Kellstrom Industries, Inc. 1996 Stock
Option Plan (the "Plan") is to promote the  interests  of Kellstrom  Industries,
Inc.,  a  Delaware   corporation  (the  "Company"),   and  its  stockholders  by
strengthening the Company's  ability to attract and retain competent  employees,
to make  service on the Board of Directors  of the Company  (the  "Board")  more
attractive to present and prospective  non-employee directors of the Company and
to provide a means to encourage stock ownership and proprietary  interest in the
Company by  officers,  non-employee  directors  and valued  employees  and other
individuals  upon whose judgment,  initiative and efforts the financial  success
and growth of the Company largely depend.  The Plan became effective on July 10,
1996,  by  resolution  of the Board,  subject to  ratification  of the Plan by a
majority vote of the  stockholders  of the Company at its 1996 Annual Meeting of
Stockholders.

2. STOCK SUBJECT TO THE PLAN.  (a) The total number of shares of the  authorized
but unissued or treasury shares of the Common Stock,  $.001 par value per share,
of the Company ("Common Stock") for which options and stock appreciation  rights
("SARs") may be granted under the Plan shall be 1,100,000, provided that 700,000
of such options and SARs may not be granted  until at least 75% of the 4,600,000
outstanding  Redeemable  Common Stock Purchase Warrants which were issued to the
public in the  Company's  1994  initial  public  offering  are  exercised by the
holders  thereof or redeemed by the Company in accordance with the terms of such
Warrants,  subject to adjustment as provided in Section 14 hereof,  which shares
may be of any class of Common  Stock;  provided,  however,  that such  number of
shares  may from time to time be  reduced  to the  extent  that a  corresponding
number of issued and  outstanding  shares of Common  Stock are  purchased by the
Company and set aside for issue upon the exercise of options.

        (b) If an option granted or assumed  hereunder shall expire or terminate
for any reason without having been  exercised in full,  the  unpurchased  shares
subject thereto shall again be available for subsequent  option grants under the
Plan; provided,  however, that shares as to which an option has been surrendered
in connection with the exercise of a related SAR will not again be available for
subsequent option or SAR grants under the Plan.

        (c) Stock  issuable  upon exercise of an option or SAR granted under the
Plan may be subject to such restrictions on transfer, repurchase rights or other
restrictions as shall be determined by the Board.

3.  ADMINISTRATION  OF THE PLAN. The Plan shall be administered by the Board. No
member of the Board shall act upon any matter exclusively affecting an option or
SAR granted or to be granted to himself or herself under the Plan. A majority of
the members of the Board shall constitute a quorum,  and any action may be taken
by a majority of those  present and voting at any  meeting.  The decision of the
Board as to all questions of interpretation and application of the Plan shall be
final,  binding  and  conclusive  on all  persons.  The Board  may,  in its sole
discretion, grant options to




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purchase  shares of Common  Stock,  grant SARs and issue shares upon exercise of
such options and SARs, as provided in the Plan. The Board shall have  authority,
subject to the express provisions of the Plan, to construe the respective option
and SAR  agreements  and the Plan,  to  prescribe,  amend and rescind  rules and
regulations  relating to the Plan, to determine the terms and  provisions of the
respective option and SAR agreements,  which may but need not be identical,  and
to make all other  determinations  in the  judgment  of the Board  necessary  or
desirable for the  administration  of the Plan. The Board may correct any defect
or supply any  omission or  reconcile  any  inconsistency  in the Plan or in any
option or SAR agreement in the manner and to the extent it shall deem  expedient
to carry the Plan  into  effect  and  shall be the sole and final  judge of such
expediency.  No director shall be liable for any action or determination made in
good faith.  The Board may, in its  discretion,  delegate its power,  duties and
responsibilities to a committee, consisting of two or more members of the Board.
If a committee is so  appointed,  all  references to the Board herein shall mean
and relate to such committee, unless the context otherwise requires.

4. TYPE OF OPTIONS.  Options granted pursuant to the Plan shall be authorized by
action  of the  Board  (or a  committee  designated  by the  Board)  and  may be
designated as either incentive stock options meeting the requirements of Section
422  of the  Internal  Revenue  Code  of  1986,  as  amended  (the  "Code"),  or
non-qualified options which are not intended to meet the requirements of Section
422 of the Code,  the  designation  to be in the sole  discretion  of the Board.
Options  designated as incentive stock options that fail to continue to meet the
requirements of Section 422 of the Code shall be  redesignated as  non-qualified
options  automatically  on the  date of such  failure  to  continue  to meet the
requirements of Section 422 of the Code without further action by the Board.

5.  ELIGIBILITY.  Options  designated as incentive  stock options may be granted
only  to  officers  and  key  employees  of the  Company  or of  any  subsidiary
corporation  (herein  called  "subsidiary"  or  "subsidiaries"),  as  defined in
Section 424 of the Code and the Treasury Regulations promulgated thereunder (the
"Regulations"). Directors  who are not  otherwise  employees of the Company or a
subsidiary shall not be eligible to be granted  incentive stock options pursuant
to the Plan. SARs and options designated as non-qualified options may be granted
to (i) officers and key employees of the Company or of any of its  subsidiaries,
or (ii) agents and directors of and  consultants to the Company,  whether or not
otherwise employees of the Company.

        In determining  the eligibility of an individual to be granted an option
or SAR,  as well as in  determining  the number of shares to be  optioned to any
individual,  the  Board  shall  take  into  account  the  recommendation  of the
Company's  Chairman,  the position and  responsibilities of the individual being
considered,  the nature and value to the Company or its  subsidiaries  of his or
her service and accomplishments,  his or her present and potential  contribution
to the success of the Company or its subsidiaries, and such other factors as the
Board may deem relevant.

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6.  RESTRICTIONS  ON INCENTIVE  STOCK OPTIONS.  Incentive stock options (but not
non-qualified options) granted under this Plan shall be subject to the following
restrictions:

        (a)  Limitation on Number of Shares.  The aggregate fair market value of
the shares of Common Stock with  respect to which  incentive  stock  options are
granted,  determined  as of the date the  incentive  stock  options are granted,
exercisable  for the first time by an individual  during any calendar year shall
not exceed  $100,000.  If an incentive stock option is granted pursuant to which
the aggregate fair market value of shares with respect to which it first becomes
exercisable  in  any  calendar  year  by an  individual  exceeds  such  $100,000
limitation,  the  portion  of such  option  which is in excess  of the  $100,000
limitation,  and any such options issued subsequently in the same calendar year,
shall be treated as a non-qualified  option pursuant to Section 422(d)(1) of the
Code. In the event that an individual  is eligible to  participate  in any other
stock  option  plan of the  Company or any parent or  subsidiary  of the Company
which is also intended to comply with the provisions of Section 422 of the Code,
such $100,000 limitation shall apply to the aggregate number of shares for which
incentive stock options may be granted under this Plan and all such other plans.

        (b) Ten Percent (10%) Stockholder.  If any employee to whom an incentive
stock option is granted  pursuant to the  provisions of this Plan is on the date
of grant the owner of stock (as  determined  under  Section  424(d) of the Code)
possessing  more than 10% of the total  combined  voting power of all classes of
stock of the  Company  or any  parent or  subsidiary  of the  Company,  then the
following special  provisions shall be applicable to the incentive stock options
granted to such individual:

               (i) The option price per share  subject to such  incentive  stock
options  shall  be not less  than  110% of the fair  market  value of the  stock
determined at the time such option was granted.  In determining  the fair market
value under this clause (i), the provisions of Section 8 hereof shall apply.

               (ii) The  incentive  stock option shall have a term  expiring not
more than five (5) years from the date of the granting thereof.

7. OPTION AGREEMENT. Each option and SAR shall be evidenced by an agreement (the
"Agreement")  duly  executed on behalf of the Company and by the grantee to whom
such option or SAR is granted,  which Agreement shall comply with and be subject
to the terms and  conditions  of the Plan.  The Agreement may contain such other
terms, provisions and conditions which are not inconsistent with the Plan as may
be determined by the Board,  provided that options designated as incentive stock
options shall meet all of the conditions for incentive  stock options as defined
in Section 422 of the Code. No option or SAR shall be granted within the meaning
of the Plan and no purported grant of any option or SAR shall be effective until
the  Agreement  shall have been duly  executed  on behalf of the Company and the
optionee. More than one option and SAR may be granted to an individual.

                                       -3-





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8. OPTION  PRICE.  (a) The option  price or prices of shares of Common Stock for
options designated as non-qualified  stock options shall be as determined by the
Board.

        (b) Subject to the  conditions  set forth in Section  6(b)  hereof,  the
option  price or prices of shares of  Common  Stock for  options  designated  as
incentive  stock  options shall be at least the fair market value of such Common
Stock at the time the option is granted as determined by the Board in accordance
with clause (c) below.

        (c) If the  Common  Stock  is then  listed  on any  national  securities
exchange, the fair market value shall be the mean between the high and low sales
prices,  if any,  on the largest  such  exchange on the date of the grant of the
option or, if none,  shall be  determined  by taking a  weighted  average of the
means  between the highest and lowest  sales on the nearest  date before and the
nearest  date after the date of grant in  accordance  with  Regulations  Section
25.2512-2. If the Common Stock is not then listed on any such exchange, the fair
market value shall be the mean between the closing  "Bid" and the closing  "Ask"
prices,  if any, as reported in the National  Association of Securities  Dealers
Automated  Quotation System  ("NASDAQ") for the date of the grant of the option,
or, if none,  shall be  determined  by taking a  weighted  average  of the means
between the highest and lowest  sales on the nearest date before and the nearest
date after the date of grant in accordance with Regulations  Section  25.2512-2.
If the Common Stock is not then either  listed on any such exchange or quoted in
NASDAQ, the fair market value shall be the mean between the average of the "Bid"
prices, if any, as reported in the National Daily Quotation Service for the date
of the  grant of the  option,  or,  if none,  shall be  determined  by  taking a
weighted  average of the means  between  the  highest  and  lowest  sales on the
nearest date before and the nearest  date after the date of grant in  accordance
with Regulations Section 25.2512-2. If the fair market value of the Common Stock
cannot be determined under the preceding three sentences, it shall be determined
in good faith by the Board in accordance with the Regulations  promulgated under
Section 422 of the Code.

9. MANNER OF PAYMENT; MANNER OF EXERCISE. (a) Options granted under the Plan may
provide for the payment of the exercise price by delivery of (i) cash or a check
payable to the order of the Company in an amount equal to the exercise  price of
such  options,  (ii) shares of Common Stock owned by the optionee  having a fair
market value equal in amount to the exercise price of such options, or (iii) any
combination  of (i) and (ii);  provided,  however,  that payment of the exercise
price by delivery of shares of Common  Stock owned by such  optionee may be made
only  upon the  condition  that  such  payment  does not  result  in a charge to
earnings for financial  accounting  purposes as determined by the Board,  unless
such  condition  is waived by the Board.  The fair market value of any shares of
Common  Stock  which  may be  delivered  upon  exercise  of an  option  shall be
determined by the Board in accordance with Section 8 hereof.

        (b) To the extent that the right to purchase  shares under an option has
accrued  and is in effect,  options may be  exercised  in full at one time or in
part  from time to time,  by  giving  written  notice,  signed by the  person or
persons exercising the option, to the Company, stating the number of shares with
respect to which the option

                                       -4-





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is being  exercised,  accompanied by payment in full for such shares as provided
in  subparagraph  (a) above.  Upon such exercise,  delivery of a certificate for
paid-up  non-assessable  shares  shall be made at the  principal  office  of the
Company  to the  person or persons  exercising  the option at such time,  during
ordinary business hours, after three (3) days but not more than ninety (90) days
from the date of receipt of the notice by the Company, as shall be designated in
such  notice,  or at such time,  place and  manner as may be agreed  upon by the
Company and the person or persons exercising the option.

10.  EXERCISE  OF OPTIONS AND SARS.  Each option and SAR granted  under the Plan
shall,  subject to Section 11(b) and Section 13 hereof,  be  exercisable at such
time or times and  during  such  period as shall be set forth in the  Agreement;
provided,  however,  that no option or SAR  granted  under the Plan shall have a
term in excess of ten (10) years from the date of grant.  To the extent  that an
option or SAR is not exercised when it becomes initially  exercisable,  it shall
not  expire  but  shall  be  carried  forward  and  shall be  exercisable,  on a
cumulative  basis,  until the  expiration  of the  exercise  period.  No partial
exercise  may be made for less  than one  hundred  (100)  full  shares of Common
Stock.  The exercise of an option shall result in the cancellation of the SAR to
which it relates with respect to the same number of shares of Common Stock as to
which the option was exercised.

11.     TERM OF OPTIONS AND SARS; EXERCISABILITY.

        (a) Term. (i) Each option shall expire not more than ten (10) years from
the date of the granting thereof,  except as (a) otherwise  provided pursuant to
the  provisions of Section 6(b) hereof,  and (b) earlier  termination  as herein
provided.

               (ii) Except as  otherwise  provided in this Section 11, an option
or SAR granted to any grantee who ceases to perform  services for the Company or
one of its subsidiaries shall terminate three months after the date such grantee
ceases to perform services for the Company or one of its subsidiaries, or on the
date on which the option or SAR expires by its terms, whichever occurs first.

               (iii) If the grantee  ceases to perform  services for the Company
because  of  dismissal  for cause or  because  the  grantee  is in breach of any
employment agreement,  such option or SAR will terminate on the date the grantee
ceases to perform services for the Company or one of its subsidiaries.

               (iv) If the grantee  ceases to perform  services  for the Company
because  the  grantee  has become  permanently  disabled  (within the meaning of
Section 22(e)(3) of the Code),  such option or SAR shall terminate twelve months
after the date such grantee  ceases to perform  services for the Company,  or on
the date on which the  option or SAR  expires  by its  terms,  whichever  occurs
first.

                                       -5-





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               (v) In the event of the death of any  grantee,  any option or SAR
granted to such grantee shall  terminate  twelve months after the date of death,
or on the date on which the option or SAR expires by its terms, whichever occurs
first.

        (b)  Exercisability.  (i)  Except as  provided  below,  an option or SAR
granted to a grantee  who ceases to perform  services  for the Company or one of
its subsidiaries shall be exercisable only to the extent that such option or SAR
has accrued and is in effect on the date such grantee ceases to perform services
for the Company or one of its subsidiaries.

               (ii) An option or SAR  granted to a grantee who ceases to perform
services for the Company or one of its subsidiaries because he or she has become
permanently disabled (as defined above) shall be exercisable with respect to the
full number of shares  covered  thereby,  whether or not under the provisions of
Section 10 hereof the grantee was entitled to do so at the date he or she became
permanently  disabled,  and may be exercised by a legal representative on behalf
of the grantee.

               (iii) In the event of the death of any grantee, the option or SAR
granted to such  grantee  may be  exercised  with  respect to the full number of
shares covered thereby, whether or not under the provisions of Section 10 hereof
the grantee was entitled to do so at the date of his or her death, by the estate
of such grantee,  or by any person or persons who acquired the right to exercise
such option or SAR by bequest or  inheritance  or by reason of the death of such
grantee.

12. OPTIONS NOT TRANSFERABLE. The right of any grantee to exercise any option or
SAR  granted  to him or her  shall not be  assignable  or  transferable  by such
grantee  other than by will or the laws of  descent,  and any such option or SAR
shall be exercisable during the lifetime of such grantee only by him. Any option
or SAR granted under the Plan shall be null and void and without effect upon the
bankruptcy  of the grantee to whom the option is granted,  or upon any attempted
assignment or transfer except as herein provided,  including without limitation,
any  purported  assignment,  whether  voluntary or by operation of law,  pledge,
hypothecation  or other  disposition,  attachment,  trustee  process  or similar
process, whether legal or equitable, upon such option or SAR.

13. TERMS AND  CONDITIONS  OF SARS.  (a) An SAR may be granted  separately or in
connection with an option (either at the time of grant or at any time during the
term of the option).

        (b) The  exercise of an SAR granted in  connection  with an option shall
result in the cancellation of the option to which it relates with respect to the
same number of shares of Common Stock as to which the SAR was exercised.

        (c) An SAR granted in connection  with an option shall be exercisable or
transferable  only to the extent  that such  related  option is  exercisable  or
transferable.

                                       -6-





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        (d) Upon the exercise of an SAR related to an option, the holder will be
entitled to receive payment of an amount determined by multiplying:

               (i) the difference  obtained by subtracting the purchase price of
a share of Common  Stock  specified  in the related  option from the fair market
value  of a share  of  Common  Stock  on the  date of  exercise  of such SAR (as
determined by the Board in accordance with Section 8 hereof), by

               (ii)   the number of shares as to which such SAR is exercised.

        (e)  An  SAR  granted  without   relationship  to  an  option  shall  be
exercisable as determined by the Board, but in no event after ten years from the
date of grant.

        (f) An SAR granted  without  relationship  to an option will entitle the
holder,  upon exercise of the SAR, to receive payment of an amount determined by
multiplying:

               (i) the difference  obtained by subtracting the fair market value
of a share of Common  Stock on the date the SAR was granted from the fair market
value  of a share  of  Common  Stock  on the  date of  exercise  of such SAR (as
determined by the Board in accordance with Section 8 hereof), by

               (ii)   the number of shares as to which such SAR is exercised.

        (g)  Notwithstanding  subsections (d) and (f) above, the Board may limit
the  amount  payable  upon  exercise  of an SAR.  Any such  limitation  shall be
determined as of the date of grant and noted on the  instrument  evidencing  the
SAR granted.

        (h) At the  discretion  of the Board,  payment of the amount  determined
under subsections (d) and (f) above may be made either in whole shares of Common
Stock  valued at their fair market  value on the date of exercise of the SAR (as
determined by the Board in accordance with Section 8 hereof), or solely in cash,
or in a  combination  of cash and  shares.  If the  Board  decides  to make full
payment in shares of Common Stock and the amount payable results in a fractional
share, payment for the fractional share shall be made in cash.

        (i)  Neither  an SAR nor an option  granted  in  connection  with an SAR
granted  to a  person  subject  to  Section  16(b)  of the  Exchange  Act may be
exercised before six months after the date of grant.

14.  RECAPITALIZATION,  REORGANIZATION  AND THE  LIKE.  In the  event  that  the
outstanding shares of Common Stock are changed into or exchanged for a different
number  or kind of shares  or other  securities  of the  Company  or of  another
corporation   by   reason   of  any   reorganization,   merger,   consolidation,
recapitalization,  reclassification,  stock split-up,  combination of shares, or
dividends  payable in capital  stock,  appropriate  adjustment  shall be made in
accordance  with Section  424(a) of the Code in the number and kind of shares as
to which options and SARs may be granted under the Plan and as to which

                                       -7-





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outstanding  options  and SARs or portions  thereof  then  unexercised  shall be
exercisable,  to the end that the proportionate interest of the grantee shall be
maintained  as  before  the  occurrence  of  such  event;   such  adjustment  in
outstanding  options  and SARs shall be made  without  change in the total price
applicable  to the  unexercised  portion  of such  options  and  SARs and with a
corresponding adjustment in the exercise price per share.

        In  addition,  unless  otherwise  determined  by the  Board  in its sole
discretion,  in the case of any (i) sale or conveyance to another  entity of all
or substantially all of the property and assets of the Company or (ii) Change in
Control  (as  hereinafter  defined)  of the  Company,  the  purchaser(s)  of the
Company's  assets or stock may, in his,  her or its  discretion,  deliver to the
optionee the same kind of consideration that is delivered to the stockholders of
the Company as a result of such sale,  conveyance  or Change in Control,  or the
Board may cancel all outstanding  options and SARs in exchange for consideration
in cash or in kind which  consideration in both cases shall be equal in value to
the value of those shares of stock or other  securities  the optionee would have
received had the option been exercised (to the extent then  exercisable)  and no
disposition  of the shares  acquired  upon such exercise been made prior to such
sale,  conveyance or Change in Control,  less the exercise price therefor.  Upon
receipt of such consideration,  the options and SARs shall immediately terminate
and be of no  further  force  and  effect.  The  value  of the  stock  or  other
securities  the grantee  would have  received  if the option had been  exercised
shall be  determined  in good faith by the  Board,  and in the case of shares of
Common Stock, in accordance with the provisions of Section 8 hereof.

        The  Board  shall  also  have the  power  and  right to  accelerate  the
exercisability of any options or SARs,  notwithstanding  any limitations in this
Plan or in the Agreement upon such a sale, conveyance or Change in Control. Upon
such  acceleration,  any options or portion  thereof  originally  designated  as
incentive  stock options that no longer qualify as incentive stock options under
Section 422 of the Code as a result of such  acceleration  shall be redesignated
as non qualified stock options.

        A "Change in Control" shall be deemed to have occurred if any person, or
any two or more persons acting as a group,  and all affiliates of such person or
persons,  who prior to such time owned less than fifty percent (50%) of the then
outstanding  Common Stock,  shall acquire such additional shares of Common Stock
in one or more transactions, or series of transactions, such that following such
transaction or  transactions,  such person or group and affiliates  beneficially
own fifty percent (50%) or more of the Common Stock outstanding.

        If by  reason  of a  corporate  merger,  consolidation,  acquisition  of
property or stock, separation,  reorganization,  or liquidation, the Board shall
authorize  the issuance or  assumption  of a stock option or stock  options in a
transaction to which Section 424(a) of the Code applies,  then,  notwithstanding
any other  provision of the Plan,  the Board may grant an option or options upon
such  terms  and  conditions  as it may  deem  appropriate  for the  purpose  of
assumption  of the old  option,  or  substitution  of a new  option  for the old
option, in conformity with the provisions of such Section 424(a) of

                                       -8-





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the Code and the  Regulations  thereunder,  and any such option shall not reduce
the number of shares otherwise available for issuance under the Plan.

        No fraction  of a share shall be  purchasable  or  deliverable  upon the
exercise of any option or SAR, but in the event any adjustment  hereunder in the
number of shares covered by the option or SAR shall cause such number to include
a fraction of a share,  such fraction  shall be adjusted to the nearest  smaller
whole number of shares.

15. NO SPECIAL EMPLOYMENT RIGHTS. Nothing contained in the Plan or in any option
or SAR  granted  under the Plan shall  confer  upon any  grantee  any right with
respect to the  continuation  of his or her  employment  by the  Company (or any
subsidiary)  or  interfere  in any way with the  right  of the  Company  (or any
subsidiary),  subject to the terms of any separate  employment  agreement to the
contrary,  at any time to terminate  such  employment or to increase or decrease
the  compensation  of the grantee  from the rate in existence at the time of the
grant of an option or SAR. Whether an authorized leave of absence, or absence in
military or government service, shall constitute termination of employment shall
be determined in accordance with Regulations Section 1.421-7(h)(2).

16. WITHHOLDING. The Company's obligation to deliver shares upon the exercise of
any  non-qualified  option or SAR granted under the Plan shall be subject to the
option holder's  satisfaction of all applicable Federal,  state and local income
and employment tax withholding requirements.  The Company and optionee may agree
to withhold  shares of Common Stock  purchased upon exercise of an option or SAR
to satisfy the above-mentioned withholding requirements; provided, however, that
no such  agreement  may be made by a grantee who is an "officer"  or  "director"
within the  meaning of Section 16 of the  Exchange  Act,  except  pursuant  to a
standing  election to so withhold shares of Common Stock purchased upon exercise
of an option,  such  election to be made not less than six months  prior to such
exercise and which  election  may be revoked only upon six months prior  written
notice.

17.  RESTRICTIONS ON ISSUANCE OF SHARES. (a)  Notwithstanding  the provisions of
Section 9 hereof,  the Company may delay the  issuance of shares  covered by the
exercise of an option or SAR and the delivery of a  certificate  for such shares
until one of the following conditions shall be satisfied:

               (i) The shares with  respect to which such option or SAR has been
exercised are at the time of the issue of such shares effectively  registered or
qualified under applicable  Federal and state securities acts now in force or as
hereafter amended; or

               (ii) Counsel for the Company  shall have given an opinion,  which
opinion shall not be unreasonably  conditioned or withheld, that such shares are
exempt from  registration and qualification  under applicable  Federal and state
securities acts now in force or as hereafter amended.

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        (b) It is  intended  that all  exercises  of  options  and SARs shall be
effective,  and the Company shall use its best efforts to bring about compliance
with the above  conditions,  within a reasonable  time,  except that the Company
shall  be under no  obligation  to  qualify  shares  or to cause a  registration
statement  or a  post-effective  amendment to any  registration  statement to be
prepared for the purpose of covering the issue of shares in respect of which any
option  may be  exercised,  except  as  otherwise  agreed to by the  Company  in
writing.

18. PURCHASE FOR INVESTMENT; RIGHTS OF HOLDER ON SUBSEQUENT REGISTRATION. Unless
the shares to be issued upon exercise of an option or SAR granted under the Plan
have been  effectively  registered  under the Securities Act of 1933, as amended
(the "1933 Act"),  the Company  shall be under no obligation to issue any shares
covered by any option or SAR unless the person who  exercises  such  option,  in
whole or in part,  shall give a written  representation  and  undertaking to the
Company which is  satisfactory  in form and scope to counsel for the Company and
upon which,  in the opinion of such counsel,  the Company may  reasonably  rely,
that he or she is acquiring the shares  issued  pursuant to such exercise of the
option or SAR for his or her own  account as an  investment  and not with a view
to, or for sale in connection  with, the  distribution  of any such shares,  and
that he or she will make no transfer of the same except in  compliance  with any
rules and  regulations in force at the time of such transfer under the 1933 Act,
or any  other  applicable  law,  and that if  shares  are  issued  without  such
registration,  a legend to this effect may be endorsed  upon the  securities  so
issued.

        In the event that the Company shall, nevertheless,  deem it necessary or
desirable to register under the 1933 Act or other applicable statutes any shares
with respect to which an option or SAR shall have been exercised,  or to qualify
any such shares for exception  from the 1933 Act or other  applicable  statutes,
then the Company may take such action and may  require  from each  grantee  such
information  in writing  for use in any  registration  statement,  supplementary
registration statement, prospectus,  preliminary prospectus or offering circular
as is reasonably necessary for such purpose and may require reasonable indemnity
to the Company  and its  officers  and  directors  from such holder  against all
losses, claims, damages and liabilities arising from such use of the information
so furnished and caused by any untrue  statement of any material fact therein or
caused by the omission to state a material fact required to be stated therein or
necessary  to make the  statements  therein not  misleading  in the light of the
circumstances under which they were made.

19. LOANS. At the discretion of the Board,  the Company may loan to the optionee
some or all of the purchase  price of the shares  acquired  upon  exercise of an
option granted under the Plan.

20.  MODIFICATION  OF  OUTSTANDING  OPTIONS  AND SARS.  Subject  to  limitations
contained  herein,  the Board may  authorize  the  amendment of any  outstanding
option  or SAR  with  the  consent  of the  grantee  when  and  subject  to such
conditions  as are  deemed to be in the best  interests  of the  Company  and in
accordance with the purposes of the Plan.

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21.  APPROVAL  OF  STOCKHOLDERS.  The Plan  shall be subject  to  approval  by a
majority vote of the stockholders of the Company voting in person or by proxy at
the Company's 1996 Annual Meeting of Stockholders.  The Plan became effective on
July 10, 1996 by resolution  of the Board.  The Board may grant options and SARs
under the Plan prior to such  stockholder  approval,  but any such option  shall
become  effective  as of  the  date  of  grant  only  upon  such  approval  and,
accordingly, no such option may be exercisable prior to such approval.

22.  TERMINATION  AND  AMENDMENT OF PLAN.  Unless  sooner  terminated  as herein
provided,  the Plan shall  terminate on July 9, 2006.  The Board may at any time
terminate the Plan or make such  modification  or amendment  thereof as it deems
advisable;  provided, however, that (i) the Board may not, without approval by a
majority vote of the stockholders of the Company, increase the maximum number of
shares for which  options and SARs may be granted or change the  designation  of
the class of persons  eligible to receive  options and SARs under the Plan,  and
(ii) any such  modification  or  amendment  of the Plan shall be  approved  by a
majority  vote of the  stockholders  of the  Company  to the  extent  that  such
stockholder  approval is necessary to comply with  applicable  provisions of the
Code, rules promulgated  pursuant to Section 16 of the Exchange Act,  applicable
state law, or applicable  National  Association of Securities  Dealers,  Inc. or
exchange listing  requirements.  Termination or any modification or amendment of
the Plan shall not, without the consent of an optionee, affect his or her rights
under an option or SAR theretofore granted to him or her.

23. LIMITATION OF RIGHTS IN THE UNDERLYING  SHARES. A holder of an option or SAR
shall not be deemed for any  purpose to be a  stockholder  of the  Company  with
respect to such option or SAR except to the extent that such option or SAR shall
have been exercised with respect thereto and, in addition,  a stock  certificate
shall have been issued theretofore and delivered to the holder.

24. NOTICES. Any communication or notice required or permitted to be given under
the Plan shall be in writing,  and mailed by  registered  or  certified  mail or
delivered  by hand,  if to the  Company,  to its  principal  place of  business,
attention:  Chairman,  and, if to the holder of an option or SAR, to the address
as appearing on the records of the Company.

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