ADVANCED AERODYNAMICS & STRUCTURES, INC.
                         AMENDED 1996 STOCK OPTION PLAN
                          (as amended on March 4, 1997)

     1. PURPOSE.  This Stock Option Plan (the "Plan") is intended to serve as an
incentive to, and to encourage stock ownership by, certain eligible participants
rendering  services to Advanced  Aerodynamics  &  Structures,  Inc.,  a Delaware
corporation,  and certain affiliates as set forth below (the "Corporation"),  so
that they may acquire or increase their proprietary  interest in the Corporation
and to encourage them to remain in the service of the Corporation.

     2. ADMINISTRATION.

          2.1 Committee. The Plan shall be administered by a committee of one or
more outside  directors  appointed by the Board of Directors of the  Corporation
(the "Committee"). The Committee shall select one of its members as Chairman and
shall  appoint  a  Secretary,  who need not be a member  of the  Committee.  The
Committee  shall hold  meetings at such times and places as it may determine and
minutes of such meetings shall be recorded.  Acts by a majority of the Committee
in a meeting  at which a quorum is  present  and acts  approved  in writing by a
majority of the members of the Committee shall be valid acts of the Committee.

          2.2 Formula  Grants to  Non-Employee  Directors.  Notwithstanding  the
other  provisions of this Plan regarding the grant of options,  options shall be
granted to non-employee Directors of the Corporation as follows:

               2.2.1  Options  to  acquire  25,000  shares of Stock (as  defined
below)  shall be granted to each such  Director  of the  Corporation  within six
months  after  taking  office  as a  member  of the  Board of  Directors  of the
Corporation.  Such  options  shall vest and become  exercisable  in 5,000  share
intervals on each  anniversary of the date of grant commencing on the first such
anniversary.

               2.2.2 The  exercise  price for options  granted  pursuant to this
Section 2.2 shall be the fair market value of the Stock,  as  determined  by the
Committee, on the date of grant, unless a higher price is required by applicable
securities or tax laws.

               2.2.3 This Section 2.2 shall not be modified more often than once
every six months,  except as may be  necessary  or advisable to comport with the
requirements of any applicable law or regulation.

          2.3 Term. If the Board of Directors  selects a Committee,  the members
of the Committee  shall serve on the Committee for the period of time determined
by the  Board of  Directors  and shall be  subject  to  removal  by the Board of
Directors at any time.  The Board of Directors may terminate the function of the
Committee at any time and resume all powers and authority  previously  delegated
to the Committee.


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<PAGE>

          2.4 Authority.  The Committee shall have sole discretion and authority
to grant options under the Plan to eligible  participants  rendering services to
the Corporation or any "parent" or "subsidiary" of the  Corporation,  as defined
in Section 424 of the  Internal  Revenue  Code of 1986,  as amended (the "Code")
("Parent or Subsidiary"), at such times, under such terms and in such amounts as
it may decide.  For  purposes of this Plan and any Stock  Option  Agreement  (as
defined below), the term  "Corporation"  shall include any Parent or Subsidiary,
if  applicable.  Subject to the express  provisions  of the Plan,  the Committee
shall have complete  authority to interpret  the Plan,  to prescribe,  amend and
rescind the rules and  regulations  relating to it, to determine the details and
provisions of any Stock Option Agreement,  to accelerate any options and to make
all other  determinations  necessary and advisable for the administration of the
Plan.

          2.5 Type of  Option.  The  Committee  shall  have full  authority  and
discretion to determine, and shall specify, whether the eligible individual will
be granted options intended to qualify as incentive options under Section 422 of
the Code  ("Incentive  Options")  or options  which are not  intended to qualify
under Section 422 of the Code ("Non-Qualified Options"); provided, however, that
Incentive  Options shall only be granted to employees of the  Corporation,  or a
Parent or Subsidiary  thereof,  and shall be subject to the special  limitations
set forth herein attributable to Incentive Options.

          2.6  Interpretation.   The  interpretation  and  construction  by  the
Committee of any  provisions of the Plan or of any option granted under the Plan
shall be final and binding on all parties  having an interest in the Plan or any
option  granted  hereunder.  No member of the Committee  shall be liable for any
action or  determination  made in good  faith  with  respect  to the Plan or any
option granted under the Plan.

     3. ELIGIBILITY.

          3.1 General. All directors, officers, employees of and certain persons
rendering services to the Corporation relative to the Corporation's  management,
operation or  development  shall be eligible to receive  options under the Plan.
The  selection of  recipients  of options  shall be within the sole and absolute
discretion  of the  Committee.  No person shall be granted an  Incentive  Option
under this Plan unless such person is an employee of the Corporation on the date
of grant.  No person  shall be granted an option  under  this Plan  unless  such
person has executed the grant representation letter set forth on Exhibit "A," as
such Exhibit may be amended by the Committee from time to time.



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<PAGE>

          3.2 Termination of Eligibility.

               3.2.1 If an optionee ceases to be employed by the Corporation, is
no longer an officer or member of the Board of Directors of the Corporation,  or
no longer  performs  services for the Corporation for any reason (other than for
"cause," as hereinafter  defined,  or such optionee's  death), any vested option
granted  hereunder  to such  optionee  shall  expire  on the 90th day  after the
occurrence  giving rise to such  termination  of  eligibility  (or 1 year in the
event an optionee is "disabled," as defined in Section  22(e)(3) of the Code) or
upon the date it expires by its terms, whichever is earlier. Any option that has
not vested in the optionee as of the date of such termination  shall immediately
expire and shall be null and void. The Committee shall, in its sole and absolute
discretion,  decide  whether an  authorized  leave of  absence  or  absence  for
military  or  governmental  service,  or  absence  for any other  reason,  shall
constitute termination of eligibility for purposes of this Section.

               3.2.2 If an optionee ceases to be employed by the Corporation, is
no longer an officer or member of the Board of Directors of the Corporation,  or
no longer performs  services for the  Corporation  and such  termination is as a
result of "cause," as hereinafter defined, then all options granted hereunder to
such  optionee  shall expire on the date of the  occurrence  giving rise to such
termination of  eligibility or upon the date it expires by its terms,  whichever
is  earlier,  and  such  optionee  shall  have no  rights  with  respect  to any
unexercised options. For purposes of this Plan, "cause" shall mean an optionee's
personal  dishonesty,   misconduct,  breach  of  fiduciary  duty,  incompetence,
intentional failure to perform stated obligations, willful violation of any law,
rule,  regulation or final cease and desist order, or any material breach of any
provision of this Plan, any Stock Option Agreement or any employment agreement.

          3.3 Death of Optionee and Transfer of Option. In the event an optionee
shall die, an option may be exercised  (subject to the condition  that no option
shall be  exercisable  after  its  expiration  and only to the  extent  that the
optionee's  right  to  exercise  such  option  had  accrued  at the  time of the
optionee's  death) at any time within six months after the  optionee's  death by
the executors or  administrators of the optionee or by any person or persons who
shall  have  acquired  the  option  directly  from the  optionee  by  bequest or
inheritance.  Any option  that has not vested in the  optionee as of the date of
death or  termination  of employment,  whichever is earlier,  shall  immediately
expire  and  shall be null and  void.  No option  shall be  transferable  by the
optionee other than by will or the laws of intestate succession.

          3.4  Limitation on Incentive  Options.  No person shall be granted any
Incentive Option to the extent that the aggregate fair market value of the Stock
(as defined below) to which such options are  exercisable  for the first time by
the optionee  during any calendar  year (under all plans of the  Corporation  as
determined under Section 422(d) of the Code) exceeds $100,000.


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<PAGE>

     4.  IDENTIFICATION  OF STOCK. The Stock, as defined herein,  subject to the
options shall be shares of the Corporation's authorized but unissued or acquired
or reacquired Class A Common Stock (the "Stock"). The aggregate number of shares
subject to outstanding options shall not exceed 500,000 shares of Stock (subject
to adjustment as provided in Section 6). If any option granted  hereunder  shall
expire or terminate for any reason  without  having been  exercised in full, the
unpurchased shares subject thereto shall again be available for purposes of this
Plan.

     5. TERMS AND CONDITIONS OF OPTIONS. Any option granted pursuant to the Plan
shall be evidenced by an agreement  ("Stock  Option  Agreement") in such form as
the Committee  shall from time to time  determine,  which agreement shall comply
with and be subject to the following terms and conditions:

          5.1 Number of Shares.  Each option shall state the number of shares of
Stock to which it pertains.

          5.2 Option Exercise Price. Each option shall state the option exercise
price, which shall be determined by the Committee;  provided,  however, that (i)
the  exercise  price of any  Incentive  Option  shall  not be less than the fair
market value of the Stock, as determined by the Committee,  on the date of grant
of such option,  (ii) the exercise  price of any Incentive  Option granted to an
employee  who owns  more  than 10% of the  total  combined  voting  power of all
classes of the Corporation's stock, as determined for purposes of Section 422 of
the Code,  shall not be less than 110% of the fair market value of the Stock, as
determined by the Committee,  on the date of grant of such option, and (iii) the
exercise  price of any  Non-Qualified  Option  shall  not be less  than the fair
market value of the Stock, as determined by the Committee,  on the date of grant
of such option.

          5.3 Term of Option.  The term of an option granted  hereunder shall be
determined by the Committee at the time of grant, but shall not exceed ten years
from the date of the  grant.  The term of any  Incentive  Option  granted  to an
employee  who owns  more  than 10% of the  total  combined  voting  power of all
classes of the Corporation's stock, as determined for purposes of Section 422 of
the Code,  shall in no event  exceed  five  years  from the date of  grant.  All
options shall be subject to early  termination  as set forth in this Plan. In no
event shall any option be exercisable after the expiration of its term.

          5.4 Method of Exercise. An option shall be exercised by written notice
to the  Corporation  by the  optionee  (or  successor in the event of death) and
execution by the optionee of an exercise  representation  letter in the form set
forth on Exhibit "B," as such Exhibit may be amended by the Committee  from time
to time.  Such  written  notice shall state the number of shares with respect to
which the option is being exercised and designate a time, during normal business
hours of the Corporation, for the delivery thereof ("Exercise Date"), which time
shall be at least 30 days after the giving of such notice unless an earlier date
shall have been  mutually  agreed  upon.  At the time  specified  in the written
notice, the Corporation shall deliver to the

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<PAGE>

optionee at the principal office of the Corporation,  or such other  appropriate
place as may be determined by the Committee,  a certificate or certificates  for
such  shares.  Notwithstanding  the  foregoing,  the  Corporation  may  postpone
delivery of any  certificate or  certificates  after notice of exercise for such
reasonable  period as may be  required  to comply  with any  applicable  listing
requirements  of any  securities  exchange.  In the  event  an  option  shall be
exercisable  by any person other than the  optionee,  the required  notice under
this Section  shall be  accompanied  by  appropriate  proof of the right of such
person to exercise the option.

          5.5 Medium and Time of  Payment.  The option  exercise  price shall be
payable  in  full  on or  before  the  option  Exercise  Date  in any one of the
following alternative forms:

               5.5.1 Full payment in cash or certified bank or cashier's check;

               5.5.2 A Promissory Note (as defined below);

               5.5.3 Full payment in shares of Stock or other  securities of the
Corporation  having a fair market value on the Exercise Date in the amount equal
to the option exercise price;

               5.5.4 A combination  of the  consideration  set forth in Sections
5.4.1, 5.4.2 and 5.4.3 equal to the option exercise price; or

               5.5.5 Any other method of payment  complying  with the provisions
of Section 422 of the Code with respect to Incentive Options, provided the terms
of payment are  established  by the Committee at the time of grant and any other
method of payment  established  by the Committee  with respect to  Non-Qualified
Options.

          5.6 Fair Market  Value.  The fair market  value of a share of Stock on
any  relevant  date  shall  be  determined  in  accordance  with  the  following
provisions:

               5.6.1 If the Stock or other  security of the  Corporation  at the
time is neither  listed nor admitted to trading on any stock exchange nor traded
in the  over-the-counter  market, then the fair market value shall be determined
by the Committee  after taking into account such factors as the Committee  shall
deem appropriate.

               5.6.2 If the Stock or other security of the Corporation is not at
the time listed or admitted  to trading on any stock  exchange  but is traded in
the over-the-counter market, the fair market value shall be the mean between the
highest bid and lowest asked prices (or, if such  information is available,  the
closing  selling  price)  of  one  share  of  Stock  or  other  security  of the
Corporation  on the date in question  in the  over-the-counter  market,  as such
prices are reported by the National  Association of Securities  Dealers  through
its NASDAQ  system or any  successor  system.  If there are no reported  bid and
asked prices (or closing selling price) for

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<PAGE>

the Stock or other security of the Corporation on the date in question, then the
mean  between  the  highest  bid price and lowest  asked  price (or the  closing
selling price) on the last preceding date for which such quotations  exist shall
be determinative of fair market value.

               5.6.3 If the Stock or other security of the Corporation is at the
time listed or admitted to trading on any stock  exchange,  then the fair market
value shall be the closing selling price of one share of Stock or other security
of the  Corporation on the date in question on the stock exchange  determined by
the  Committee to be the primary  market for the Stock or other  security of the
Corporation,  as such  price  is  officially  quoted  in the  composite  tape of
transactions  on such  exchange.  If there is no reported sale of Stock or other
security of the  Corporation on such exchange on the date in question,  then the
fair market value shall be the closing selling price on the exchange on the last
preceding date for which such quotation exists.

          5.7 Promissory  Note.  Subject to the requirements of applicable state
or Federal  law or margin  requirements,  and if  provided  in the Stock  Option
Agreement, payment of all or part of the purchase price of the Stock may be made
by  delivery  of a  full  recourse  promissory  note  ("Promissory  Note").  The
Promissory  Note  shall  be  executed  by  the  optionee,  made  payable  to the
Corporation and bear interest at such rate as the Committee shall determine, but
in no case less than the  minimum  rate which will not cause  under the Code (i)
interest to be imputed,  (ii)  original  issue  discount to exist,  or (iii) any
other similar results to occur.  Unless  otherwise  determined by the Committee,
interest on the Note shall be payable in  quarterly  installments  on  March 31,
June 30,  September 30  and  December 31  of each year. A Promissory  Note shall
contain such other terms and  conditions as may be determined by the  Committee;
provided, however, that the full principal amount of the Promissory Note and all
unpaid interest  accrued thereon shall be due not later than five years from the
date of  exercise.  The  Corporation  may  obtain  from the  optionee a security
interest in all shares of Stock  issued to the  optionee  under the Plan for the
purpose of securing payment under the Promissory Note and may retain  possession
of the stock  certificates  representing  such  shares in order to  perfect  its
security interest.

          5.8 Rights as a  Shareholder.  An optionee or successor  shall have no
rights as a shareholder  with respect to any Stock  underlying  any option until
the date of the issuance to such  optionee of a certificate  for such Stock.  No
adjustment shall be made for dividends  (ordinary or  extraordinary,  whether in
cash,  securities or other property) or  distributions or other rights for which
the record date is prior to the date such Stock certificate is issued, except as
provided in Section 6.

          5.9  Modification,  Extension  and Renewal of Options.  Subject to the
terms and  conditions of the Plan,  the  Committee  may modify,  extend or renew
outstanding  options  granted  under  the  Plan,  or  accept  the  surrender  of
outstanding  options (to the extent not exercised) and authorize the granting of
new options in substitution therefor.


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<PAGE>

          5.10  Vesting and  Restrictions.  The  Committee  shall have  complete
authority and  discretion to set the terms,  conditions,  restrictions,  vesting
schedules  and other  provisions  of any option in the  applicable  Stock Option
Agreement.  In addition,  the Committee shall have complete authority to require
conditions and restrictions on any Stock issued pursuant to this Plan.

          5.11 Other Provisions.  The Stock Option Agreements shall contain such
other provisions as the Committee shall deem advisable.

     6. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION.

          6.1  Subdivision or  Consolidation.  Subject to any required action by
shareholders of the  Corporation,  the number of shares of Stock covered by each
outstanding  option,  and the exercise price thereof,  shall be  proportionately
adjusted for any increase or decrease in the number of issued shares of Stock of
the Corporation  resulting from a subdivision or  consolidation of shares or the
payment of a stock  dividend  (but only on the Stock) or any other  increase  or
decrease in the number of such shares effected  without receipt of consideration
by the  Corporation.  Any  fraction  of a share  subject  to option  that  would
otherwise  result from an  adjustment  pursuant to this Section shall be rounded
downward  to the next full  number  of  shares  without  other  compensation  or
consideration to the holder of such option.

          6.2  Capital  Transactions.   Upon  a  sale  or  exchange  of  all  or
substantially all of the assets of the Corporation, a merger or consolidation in
which the Corporation is not the surviving corporation, a merger, reorganization
or  consolidation  in which the  Corporation  is the surviving  corporation  and
shareholders of the Corporation exchange their stock for securities or property,
a   liquidation   of  the   Corporation,   or  similar   transaction   ("Capital
Transaction"),  this Plan and each option issued under this Plan, whether vested
or  unvested,  shall  terminate,  unless such options are assumed by a successor
corporation  in a  merger  or  consolidation  or  otherwise  determined  by  the
Committee,  15 days prior to such Capital Transaction;  provided,  however, that
unless the  outstanding  options  are assumed by a  successor  corporation  in a
merger  or  consolidation,  subject  to terms  approved  by the  Committee,  all
optionees will have the right, until 15 days prior to such Capital  Transaction,
to exercise all vested  options.  Notwithstanding  the  foregoing,  in the event
there is a merger or  consolidation  where the  Corporation is not the surviving
corporation,  all  options  granted  under this Plan shall vest 30 days prior to
such merger or  consolidation  unless such options are assumed by the  successor
corporation in such merger or consolidation. The Committee may (but shall not be
obligated  to) (i)  accelerate  the  vesting  of any  option  or (ii)  apply the
foregoing provisions,  including but not limited to termination of this Plan and
options  granted  pursuant  to the Plan,  in the event there is a sale of 51% or
more of the stock of the  Corporation  in any two year  period or a  transaction
similar to a Capital Transaction.

          6.3 Adjustments.  To the extent that the foregoing  adjustments relate
to stock or securities of the Corporation, such adjustments shall be made by the
Committee,  whose  determination  in that  respect  shall be final,  binding and
conclusive.

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<PAGE>

          6.4  Ability to Adjust.  The grant of an option  pursuant  to the Plan
shall  not  affect  in any way the  right or power  of the  Corporation  to make
adjustments,  reclassifications,  reorganizations  or changes of its  capital or
business  structure  or to  merge,  consolidate,  dissolve,  liquidate,  sell or
transfer all or any part of its business or assets.

          6.5 Notice of  Adjustment.  Whenever  the  Corporation  shall take any
action resulting in any adjustment provided for in this Section, the Corporation
shall  forthwith  deliver notice of such action to each  optionee,  which notice
shall set forth the number of shares  subject  to the  option  and the  exercise
price thereof resulting from such adjustment.

          6.6  Limitation  on  Adjustments.   Any   adjustment,   assumption  or
substitution  of an Incentive  Option shall comply with Section 425 of the Code,
if applicable.

     7.  NONASSIGNABILITY.  Options  granted  under  this  Plan may not be sold,
pledged, assigned or transferred in any manner other than by will or by the laws
of  intestate  succession,  and may be  exercised  during  the  lifetime  of the
optionee  only by such  optionee.  Any transfer in  violation of this  provision
shall void such  option,  and any Stock  Option  Agreement  entered  into by the
optionee  and the  Corporation  regarding  such option shall be void and have no
further force or effect.  No option shall be pledged or hypothecated in any way,
nor shall any option be subject to execution, attachment or similar process.

     8. NO RIGHT OF EMPLOYMENT. Neither the grant nor exercise of any option nor
anything in this Plan shall impose upon the Corporation or any other corporation
any  obligation to employ or continue to employ any  optionee.  The right of the
Corporation  and any other  corporation  to terminate any employee  shall not be
diminished or affected because an option has been granted to such employee.

     9. TERM OF PLAN.  This Plan is effective on the date the Plan is adopted by
the Board of Directors and options may be granted pursuant to the Plan from time
to time  within a period of ten (10) years  from such  date,  or the date of any
required shareholder  approval required under the Plan, if earlier.  Termination
of the Plan shall not affect any option theretofore granted.

     10.  AMENDMENT OF THE PLAN. The Board of Directors of the Corporation  may,
subject to any required shareholder approval, suspend,  discontinue or terminate
the Plan,  or revise or amend it in any respect  whatsoever  with respect to any
shares of stock at that time not subject to options.

     11. APPLICATION OF FUNDS. The proceeds received by the Corporation from the
sale of Stock pursuant to options may be used for general corporate purposes.

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

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<PAGE>

     13. NO OBLIGATION TO EXERCISE  OPTION.  The granting of an option shall not
impose any obligation upon the optionee to exercise such option.

     14.  APPROVAL OF BOARD OF DIRECTORS  AND  SHAREHOLDERS.  The Plan shall not
take effect until  approved by the Board of Directors of the  Corporation.  This
Plan shall be approved by a vote of the  shareholders  within 12 months from the
date of approval by the Board of Directors.  In the event such  shareholder vote
is not obtained,  all options  granted  hereunder,  whether  vested or unvested,
shall be null and void.

     15.  WITHHOLDING  TAXES.  Notwithstanding  anything else to the contrary in
this Plan or any Stock  Option  Agreement,  the  exercise of any option shall be
conditioned  upon  payment  by  such  optionee  in  cash,  or  other  provisions
satisfactory to the Committee, of all local, state, federal or other withholding
taxes  applicable,  in the  Committee's  judgment,  to the  exercise or to later
disposition  of  shares  acquired  upon  exercise  of an option  (including  any
repurchase of an option or Stock).

     16. PARACHUTE  PAYMENTS.  Any outstanding  option under the Plan may not be
accelerated to the extent any such acceleration of such option would, when added
to the  present  value of other  payments  in the nature of  compensation  which
becomes  due and  payable to the  optionee  would  result in the payment to such
optionee of an excess  parachute  payment  under  Section 280G of the Code.  The
existence of any such excess  parachute  payment shall be determined in the sole
and absolute discretion of the Committee.

     17. SECURITIES LAWS COMPLIANCE.  Notwithstanding anything contained herein,
the Corporation shall not be obligated to grant any option under this Plan or to
sell,  issue or effect  any  transfer  of any Stock  unless  such  grant,  sale,
issuance or transfer is at such time  effectively  (i) registered or exempt from
registration  under the Securities Act of 1933, as amended (the "Act"), and (ii)
qualified or exempt from qualification under the California Corporate Securities
Law of 1968 and any other  applicable  state  securities laws. As a condition to
exercise of any option, each optionee shall make such  representations as may be
deemed  appropriate by counsel to the Corporation for the Corporation to use any
available  exemption from registration under the Act or qualification  under any
applicable state securities law.

     18.  RESTRICTIVE  LEGENDS.  The certificates  representing the Stock issued
upon exercise of options  granted  pursuant to this Plan will bear the following
legends giving notice of  restrictions  on transfer under the Act and this Plan,
as follows:

               (a)  THE SHARES  REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED
                    OR  TRANSFERRED  IN A TRANSACTION  WHICH WAS NOT  REGISTERED
                    UNDER THE  SECURITIES  ACT OF 1933, AS AMENDED,  IN RELIANCE
                    UPON AN EXEMPTION  AFFORDED BY SUCH ACT. NO SALE OR TRANSFER
                    OF THESE SHARES SHALL

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<PAGE>

                    BE MADE, NO ATTEMPTED SALE OR TRANSFER  SHALL BE VALID,  AND
                    THE ISSUER  SHALL NOT BE  REQUIRED TO GIVE ANY EFFECT TO ANY
                    SUCH TRANSACTION UNLESS (A) SUCH TRANSACTION SHALL HAVE BEEN
                    DULY  REGISTERED  UNDER THE ACT OR (B) THE ISSUER SHALL HAVE
                    FIRST RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO IT THAT
                    SUCH REGISTRATION IS NOT REQUIRED.

               (b)  Any other legends  required by applicable  state  securities
                    laws as determined by the Committee.

     19.  NOTICES.  Any notice to be given  under the terms of the Plan shall be
addressed to the  Corporation in care of its Secretary at its principal  office,
and any notice to be given to an optionee shall be addressed to such optionee at
the  address  maintained  by the  Corporation  for such  person or at such other
address as the optionee may specify in writing to the Corporation.

     As adopted by the Board of Directors on March 4, 1997.

                                        ADVANCED AERODYNAMICS &
                                        STRUCTURES, INC.,
                                        a Delaware corporation


                                        By: /s/ Dr. Carl L. Chen
                                            Dr. Carl. L. Chen,  Chairman


                                       10


<PAGE>

                                    EXHIBIT A



                                                ____________, 199__




_____________________________
_____________________________
_____________________________

         Re:  1996 Stock Option Plan

To Whom It May Concern:

     This letter is delivered to Advanced  Aerodynamics  &  Structures,  Inc., a
Delaware corporation (the  "Corporation"),  in connection with the grant to (the
"Optionee") of an option (the "Option") to purchase  _________  shares of common
stock of the Corporation (the "Stock")  pursuant to the Advanced  Aerodynamics &
Structures,  Inc. 1996 Stock Option Plan dated July 16, 1996 (the  "Plan").  The
Optionee  understands that the Corporation's  receipt of this letter executed by
the Optionee is a condition to the Corporation's willingness to grant the Option
to the Optionee.

     The Optionee  acknowledges  that the grant of the Option by the Corporation
is in lieu of any and all other  promises of the  Corporation  to the  Optionee,
whether written or oral,  express or implied,  regarding the grant of options or
other rights to acquire Stock. Accordingly,  in anticipation of the grant of the
Option,  the Optionee hereby  relinquishes  all rights to such other rights,  if
any, to acquire stock of the Corporation.

     In  addition,   the  Optionee  makes  the  following   representations  and
warranties with the  understanding  that the Corporation  will rely upon them in
the  Corporation's  determination  of whether the grant of the Option  meets the
requirements of the "private offering" exemption provided in Section 25102(f) of
the  California  Corporations  Code and certain  exemptions  provided  under the
Securities Act of 1933, as amended.

     1. The Optionee  acknowledges  receipt of a copy of the Plan and Agreement.
The Optionee has carefully reviewed the Plan and Agreement.



                               Exhibit A - Page 1

<PAGE>

     2. The Option and the Stock will be acquired by the Optionee for investment
only,  for the  Optionee's  own  account,  and not with a view to or for sale in
connection with any  distribution of the Option or the Stock.  The Optionee will
not take, or cause to be taken,  any action which would cause the  Optionee,  or
any entity or person  affiliated with the Optionee,  to be deemed an underwriter
with respect to the Option or the Stock.

     3. The Optionee either:

          a.  has a  preexisting  personal  or  business  relationship  with the
Corporation or any of its officers, directors or controlling persons of a nature
and duration as would allow the Optionee to be aware of the character,  business
acumen,  general  business and financial  circumstances of the Corporation or of
the person with whom such relationship exists; or

          b. by reason of the Optionee's  business or financial  experience,  or
the business or financial experience of the Optionee's  professional advisor who
is unaffiliated  with and is not compensated by the Corporation or any affiliate
or selling agent of the  Corporation,  directly or indirectly,  the Optionee has
the capacity to protect the Optionee's interests in connection with the grant of
the Option and the purchase of the Stock.

     4.  The  Optionee  acknowledges  that  an  investment  in  the  Corporation
represents  a  speculative  investment  and a high degree of risk.  The Optionee
acknowledges  that the Optionee has had the opportunity to obtain and review all
information  from  the  Corporation  necessary  to  make a  reasonably  informed
investment  decision and that the Optionee  has had all  questions  asked of the
Corporation  answered  to  the  reasonable  satisfaction  of the  Optionee.  The
Optionee is able to bear the economic  risk of an  investment  in the Option and
the Stock.

     5. The grant of the Option has not been  accompanied by the  publication of
any advertisement.

     6. The Optionee  understands and acknowledges  that the Stock has not been,
and will not be,  registered  under the Securities  Act of 1933, as amended,  or
qualified  under the California  Corporate  Securities Law of 1968. The Optionee
understands and acknowledges  that the Stock may not be sold without  compliance
with the  registration  requirements of federal and applicable  state securities
laws unless an exemption from such laws is available.  The Optionee  understands
that the Certificate  representing the Stock shall bear the legends set forth in
the Plan.

     7. The Optionee  understands and acknowledges that the Option and the Stock
are subject to the terms and conditions of the Plan.



                               Exhibit A - Page 2

<PAGE>

     8. The Optionee understands and agrees that, at the time of exercise of any
part of the  Option for Stock,  the  Optionee  may be  required  to provide  the
Corporation with additional representations, warranties and/or covenants similar
to those contained in this letter.

     9. The Optionee is a resident of the State of __________.

     10. The Optionee will notify the  Corporation  immediately of any change in
the above information which occurs before the Option is exercised in full by the
Optionee.

     The foregoing  representations  and warranties are given on ______________,
199__ at ____________________.


                                            OPTIONEE:






                               Exhibit A - Page 3

<PAGE>

                                    EXHIBIT B


                                                ____________, 199__


_________________________
_________________________
_________________________

         Re:  1996 Stock Option Plan

To Whom It May Concern:

     I (the  "Optionee")  hereby  exercise my right to purchase  _____ shares of
common  stock (the  "Stock") of Advanced  Aerodynamics  &  Structures,  Inc.,  a
Delaware corporation (the  "Corporation"),  pursuant to, and in accordance with,
the Advanced  Aerodynamics  & Structures,  Inc. Stock Option Plan dated July 16,
1996 (the "Plan") and Stock Option Agreement (the "Agreement")  dated , 1996. As
provided in such Plan,  I deliver  herewith  payment as set forth in the Plan in
the amount of the aggregate  option exercise  price.  Please deliver to me at my
address as set forth above stock  certificates  representing  the subject shares
registered in my name (and (spouse) , as (style of vesting)).

     The Optionee hereby represents as follows:

     1. The Optionee  acknowledges  receipt of a copy of the Plan and Agreement.
The Optionee has carefully reviewed the Plan and Agreement.

     2. The Optionee either:

          (a) has a  preexisting  personal  or  business  relationship  with the
Corporation or any of its officers, directors or controlling persons of a nature
and  duration  as would  allow  the  undersigned  to be aware of the  character,
business acumen, general business and financial circumstances of the Corporation
or of the person with whom such relationship exists; or

          (b) by reason of the  Optionee's  business or financial  experience or
the business or financial experience of the Optionee's  professional  advisor(s)
who is (are)  unaffiliated  with and is (are) not compensated by the Corporation
or any affiliate or selling agent of the  Corporation,  directly or  indirectly,
has the  capacity to protect the  Optionee's  interests in  connection  with the
purchase of  nonqualified  stock options of the  Corporation  and Stock issuable
upon the exercise thereof.


                               Exhibit B - Page 1


<PAGE>

          3. The Optionee is able to bear the economic risk of his investment in
the stock options of the  Corporation  and an  investment in the Stock  issuable
upon exercise thereof.

          4. The Optionee  acknowledges  that an investment  in the  Corporation
represents  a  speculative  investment  and a high degree of risk.  The Optionee
acknowledges  that the Optionee has had the opportunity to obtain and review all
information  from  the  Corporation  necessary  to  make a  reasonably  informed
investment  decision and that the Optionee  has had all  questions  asked of the
Corporation answered to the reasonable satisfaction of the Optionee.

          5. The grant of Options for Stock and the  exercise of the Options has
not been accompanied by the publication of any advertisement.

          6. The Optionee  understands and acknowledges  that the Stock has not,
and will not, be registered  under the  Securities  Act of 1933, as amended,  or
qualified under the California  Securities Law of 1968. The Optionee understands
and  acknowledges  that the Stock may not be sold  without  compliance  with the
registration  and  qualification  requirements  of federal and applicable  state
securities  laws unless  exemptions  from such laws are available.  The Optionee
understands that the certificates  representing the Stock shall bear the legends
set forth in the Plan.

          7. The Optionee is a resident of the State of __________.

          8. The Optionee  hereby is purchasing  for the  Optionee's own account
and not with a view to or for sale in connection  with any  distribution  of the
nonqualified  stock  options  of the  Corporation  or any  Stock  issuable  upon
exercise thereof.

          The   foregoing   representations   and   warranties   are   given  on
______________, 199___ at ______________________.


                                           OPTIONEE:







                               Exhibit B - Page 2