<PAGE>

                                   GRAPHIX ZONE, INC.

                                1996 STOCK OPTION PLAN


      1.     PURPOSE OF THE PLAN. The purpose of this 1996 Stock Option Plan
("Plan") of Graphix Zone, Inc., a Delaware corporation ("Company"), is to
provide the Company with a means of attracting and retaining the services of
highly motivated and qualified directors and key personnel. The Plan is intended
to advance the interests of the Company by affording to key employees and
directors, upon whose skill, judgment, initiative and efforts the Company is
largely dependent for the successful conduct of its business, an opportunity for
investment in the Company and the incentives inherent in stock ownership in the
Company. In addition, the Plan contemplates the opportunity for investment in
the Company by employees of companies that do business with the Company. For
purposes of this Plan, the term Company shall include subsidiaries, if any, of
the Company.

      2.     LEGAL COMPLIANCE. It is the intent of the Plan that all options
granted under it ("Options") shall be either "Incentive Stock Options" ("ISOs"),
as such term is defined in Section 422 of the Internal Revenue Code of 1986, as
amended ("Code"), or non-qualified stock options ("NQOs"); provided, however,
ISOs shall be granted only to employees of the Company. An Option shall be
identified as an ISO or an NQO in writing in the document or documents
evidencing the grant of the Option. All Options that are not so identified as
ISOs are intended to be NQOs. In addition, the Plan provides for the grant of
NQOs to employees of companies that do business with the Company. It is the
further intent of the Plan that it conform in all respects with the requirements
of Rule 16b-3 of the Securities and Exchange Commission under the Securities
Exchange Act of 1934, as amended ("Rule 16b-3"). To the extent that any aspect
of the Plan or its administration shall at any time be viewed as inconsistent
with the requirements of Rule 16b-3 or, in connection with ISOs, the Code, such
aspect shall be deemed to be modified, deleted or otherwise changed as necessary
to ensure continued compliance with such provisions.

      3.     ADMINISTRATION OF THE PLAN.

             3.1    PLAN COMMITTEE. The Plan shall be administered by a
committee ("Committee"). The members of the Committee shall be appointed from
time to time by the Board of Directors of the Company ("Board") and shall
consist of not less than two (2) nor more than five (5) persons who shall be
directors of the Company.

             3.2    GRANTS OF OPTIONS BY THE COMMITTEE. In accordance with the
provisions of the Plan, the Committee, by resolution, shall select those
eligible persons to whom Options shall be granted ("Optionees"); shall determine
the time or times at which each Option shall be granted, whether an Option is an
ISO or an NQO and the number of shares to be subject to each Option; and shall
fix the time and manner in which the Option may be exercised, the Option
exercise price, and the Option period. The Committee shall determine the form of
option agreement to evidence the foregoing terms and conditions of each Option,
which need not be identical, in the form provided

<PAGE>

for in SECTION 7. Such option agreement may include such other provisions as the
Committee may deem necessary or desirable, so long as such provisions are
consistent with the Plan, the Code and Rule 16b-3.

             3.3    COMMITTEE PROCEDURES. The Committee from time to time may
adopt such rules and regulations for carrying out the purposes of the Plan as it
may deem proper and in the best interests of the Company. The Committee shall
keep minutes of its meetings and records of its actions. A majority of the
members of the Committee shall constitute a quorum for the transaction of any
business by the Committee. The Committee may act at any time by an affirmative
vote of a majority of those members voting. Such vote may be taken at a meeting
(which may be conducted in person or by any telecommunication medium) or by
written consent of Committee members without a meeting.

             3.4    FINALITY OF COMMITTEE ACTION. The Committee shall resolve
all questions arising under the Plan and option agreements entered into pursuant
to the Plan. Each determination, interpretation, or other action made or taken
by the Committee shall be final and conclusive and binding on all persons,
including, without limitation, the Company, its shareholders, the Committee and
each of the members of the Committee, and the directors, officers and employees
of the Company, including Optionees and their respective successors in interest.

             3.5    NON-LIABILITY OF COMMITTEE MEMBERS. No Committee member
shall be liable for any action or determination made by him or her in good faith
with respect to the Plan or any Option granted under it.

             3.6    COMMITTEE NQOS.

                    (a)    Beginning July 1, 1996, and on each July 1
thereafter, each member of the Committee on such date shall be automatically
granted an NQO ("Committee NQO") to purchase 25,000 shares of the Company's
Common Stock (as defined in SECTION 5).

                    (b)    Except as expressly authorized by this SECTION 3.6,
members of the Committee are not otherwise eligible to participate in the Plan.

                    (c)    Upon the grant of a Committee NQO to a Committee
member, the Committee member shall receive a written option agreement
substantially in the form provided for in SECTION 7. Such Committee member shall
not be an "Optionee" as defined in SECTION 3.2 of the Plan.

                    (d)    The exercise price for each Committee NQO granted
under this Section shall be one hundred percent (100%) of the Fair Market Value
(as defined in SECTION 8) of the Company's Common Stock (as defined in SECTION
5) on the date of grant. Each Committee NQO granted under this Section shall be
for a term of five years and shall be subject to earlier termination as
hereinafter provided.

                    (e)    A Committee NQO granted under this Section may be
exercised in whole or consecutive installments, cumulative or otherwise, during
its term; provided, however, that

                                          2

<PAGE>

Committee NQOs shall vest and become exercisable according to the following
schedule: one-half (1/2) of the amount granted shall vest six (6) months
following the grant and one-half (1/2) of the amount granted shall vest twelve
(12) months following the grant. In addition, Committee NQOs granted under this
Section are subject to the rights and obligations of Optionees, as provided in
SECTION 11 of the Plan; provided, however, that the "stock swap feature"
provided for in SECTION 11.3 of the Plan shall be available with respect to all
Committee NQOs granted under this Section.

                    (f)    Committee NQOs granted under this Section shall be
subject to the exercise and non-transferability terms of SECTION 14 of the Plan.
In the event of the termination of service on the Board by the holder of any
Committee NQO granted under this Section, then the outstanding vested Committee
NQOs of such holder shall expire two (2) years after such termination, or their
stated expiration date, whichever occurs first. Any non-vested Committee NQO
shall expire upon termination of service on the Board.

                    (g)    The Committee has the full power, discretion and
authority to interpret and administer the Plan in a manner consistent with the
Plan's provisions. However, the Committee does not have the power to (i)
determine eligibility to receive Committee NQOs or determine the number, price,
vesting period or timing of Committee NQOs to be granted under the Plan or (ii)
take any action that would result in the Committee NQOs not being treated as
"formula awards" within the meaning of Rule 16b-3(c)(ii).

      4.     BOARD POWER TO AMEND, SUSPEND, OR TERMINATE THE PLAN. The Board
may, from time to time, make such changes in or additions to the Plan as it may
deem proper and in the best interests of the Company and its shareholders. The
Board may also suspend or terminate the Plan at any time, without notice, and in
its sole discretion. Notwithstanding the foregoing, no such change, addition,
suspension, or termination by the Board shall (i) materially impair any option
previously granted under the Plan without the express written consent of the
optionee; or (ii) materially increase the number of shares subject to the Plan,
materially increase the benefits accruing to optionees under the Plan,
materially modify the requirements as to eligibility to participate in the Plan
or alter the method of determining the option exercise price described in
SECTION 8, without shareholder approval.

      5.     SHARES SUBJECT TO THE PLAN. For purposes of the Plan, the
Committee is authorized to grant Options and Committee NQOs for up to 2,500,000
shares of the Company's common stock ("Common Stock"), or the number and kind of
shares of stock or other securities which, in accordance with SECTION 13, shall
be substituted for such shares of Common Stock or to which such shares shall be
adjusted. The Committee is authorized to grant Options (including replacement
Options as contemplated in Section 3.2) and Committee NQOs under the Plan with
respect to such shares. Any or all unsold shares subject to an Option which for
any reason expires or otherwise terminates (excluding shares returned to the
Company in payment of the exercise price for additional shares) may again be
made subject to grant under the Plan.

      6.     OPTIONEES. Options shall be granted only to members of the Board
and to full-time elected or appointed officers or other full-time key employees
of the Company or employees of companies that do business with the Company
designated by the Committee from time to time as Optionees, including, without
limitation, members of the Board who are also full-time officers or key

                                          3

<PAGE>

employees at the time of grant. Except as provided in Section 3.6, in no event,
however, may a member of the Committee be granted an Option under the Plan. Any
Optionee may hold more than one option to purchase Common Stock, whether such
option is an Option held pursuant to the Plan or otherwise. An Optionee who is
an employee of the Company ("Employee Optionee") and who holds an Option must
remain a continuous full or part-time employee of the Company from the time of
grant of the Option to him until the time of its exercise, except as provided in
SECTION 10.3.

      7.     GRANTS OF OPTIONS. The Committee shall have the sole discretion to
grant Options under the Plan and to determine whether any Option shall be an ISO
or an NQO. The terms and conditions of Options granted under the Plan may differ
from one another as the Committee, in its absolute discretion, shall determine
as long as all Options granted under the Plan satisfy the requirements of the
Plan. Upon determination by the Committee that an Option is to be granted to an
Optionee, a written option agreement evidencing such Option shall be given to
the Optionee, specifying the number of shares subject to the Option, the Option
exercise price, whether the Option is an ISO or an NQO, and the other individual
terms and conditions of such Option. Such option agreement may incorporate
generally applicable provisions from the Plan, a copy of which shall be provided
to all Optionees at the time of their initial grants under the Plan. The Option
shall be deemed granted as of the date specified in the grant resolution of the
Committee, and the option agreement shall be dated as of the date of such
resolution. Notwithstanding the foregoing, any Option granted to an officer,
director or 10% beneficial owner for purposes of Section 16 of the Securities
Exchange Act of 1934, as amended ("Section 16 of the 1934 Act"), shall be
conditioned upon the Optionee's agreement not to sell the shares of Common Stock
underlying the Option for at least six (6) months after the date of grant.

      8.     OPTION EXERCISE PRICE. The price per share to be paid by the
Optionee at the time an ISO is exercised shall not be less than one hundred
percent (100%) of the Fair Market Value (as hereinafter defined) of one share of
the optioned Common Stock on the date on which the Option is granted. No ISO may
be granted under the Plan to any person who, at the time of such grant, owns
(within the meaning of Section 424(d) of the Code) stock possessing more than
ten percent (10%) of the total combined voting power of all classes of stock of
the Company or of any parent thereof, unless the exercise price of such ISO is
at least equal to one hundred and ten percent (110%) of Fair Market Value on the
date of grant. The price per share to be paid by the Optionee at the time an NQO
is exercised shall not be less than eighty-five percent (85%) of the Fair Market
Value on the date on which the NQO is granted, as determined by the Committee.
For purposes of the Plan, the "Fair Market Value" of a share of the Company's
Common Stock as of a given date shall be: (i) the closing price of a share of
the Company's Common Stock on the principal exchange on which shares of the
Company's Common Stock are then trading, if any, on the day immediately
preceding such date, or, if shares were not traded on such date, then on the
next preceding trading day during which a sale occurred; or (ii) if the
Company's Common Stock is not traded on an exchange but is quoted on Nasdaq or a
successor quotation system, (1) the last sales price (if the Common Stock is
then listed as a National Market Issue under the Nasdaq National Market System)
or (2) the closing representative bid price (in all other cases) for the Common
Stock on the day immediately preceding such date as reported by Nasdaq or such
successor quotation system; or (iii) if the Company's Common Stock is not
publicly traded on an exchange and not quoted on Nasdaq or a successor quotation
system, the closing bid price for the Common Stock on such date as determined in
good faith by the Committee; or (iv) if the Company's Common Stock is not
publicly traded, the fair

                                          4

<PAGE>

market value established by the Committee acting in good faith. In addition,
with respect to any ISO, the Fair Market Value on any given date shall be
determined in a manner consistent with any regulations issued by the Secretary
of the Treasury for the purpose of determining fair market value of securities
subject to an ISO plan under the Code.

      9.     CEILING OF ISO GRANTS. The aggregate Fair Market Value (determined
at the time any ISO is granted) of the Common Stock with respect to which an
Optionee's ISOs, together with incentive stock options granted under any other
plan of the Company and any parent, are exercisable for the first time by such
Optionee during any calendar year shall not exceed $100,000. In the event that
an Optionee holds such incentive stock options that become first exercisable
(including as a result of acceleration of exercisability under the Plan) in any
one year for shares having a Fair Market Value at the date of grant in excess of
$100,000, then the most recently granted of such ISOs, to the extent that they
are exercisable for shares having an aggregate Fair Market Value in excess of
such limit, shall be deemed to be NQOs.

      10.    DURATION, EXERCISABILITY, AND TERMINATION OF OPTIONS.

             10.1   OPTION PERIOD. The option period shall be determined by the
Committee with respect to each Option granted. In no event, however, may the
option period exceed ten (10) years from the date on which the Option is
granted, or five (5) years in the case of a grant of an ISO to an Optionee who
is a ten percent (10%) shareholder at the date on which the Option is granted as
described in SECTION 8.

             10.2   EXERCISABILITY OF OPTIONS. Each Option shall be exercisable
in whole or in consecutive installments, cumulative or otherwise, during its
term as determined in the discretion of the Committee.

             10.3   TERMINATION OF OPTIONS DUE TO TERMINATION OF EMPLOYMENT,
DISABILITY, OR DEATH OF OPTIONEE; TERMINATION FOR "CAUSE", OR RESIGNATION IN
VIOLATION OF AN EMPLOYMENT AGREEMENT. All Options granted under the Plan to any
Employee Optionee shall terminate and may no longer be exercised if the Employee
Optionee ceases, at any time during the period between the grant of the Option
and its exercise, to be an employee of the Company; provided, however, that the
Committee may alter the termination date of the Option if the Optionee transfers
to an affiliate of the Company. Notwithstanding the foregoing, (i) if the
Employee Optionee's employment with the Company shall have terminated for any
reason (other than involuntary dismissal for "cause" or voluntary resignation in
violation of any agreement to remain in the employ of the Company, including,
without limitation, any such agreement pursuant to SECTION 15), he may, at any
time before the expiration of three (3) months after such termination or before
expiration of the Option, whichever shall first occur, exercise the Option (to
the extent that the Option was exercisable by him on the date of the termination
of his employment); (ii) if the Employee Optionee's employment shall have
terminated due to disability (as defined in Section 22(e)(3) of the Code and
subject to such proof of disability as the Committee may require), such Option
may be exercised by the Employee Optionee (or by his guardian(s), or
conservator(s), or other legal representative(s)) before the expiration of
twelve (12) months after such termination or before expiration of the Option,
whichever shall first occur (to the extent that the Option was exercisable by
him on the date of the termination of his employment); (iii) in the event of the
death of the Employee Optionee, an Option exercisable by him

                                          5

<PAGE>

at the date of his death shall be exercisable by his legal representative(s),
legatee(s), or heir(s), or by his beneficiary or beneficiaries so designated by
him as permitted by SECTION 14, as the case may be, within twelve (12) months
after his death or before the expiration of the Option, whichever shall first
occur (to the extent that the Option was exercisable by him on the date of his
death); and (iv) if the Employee Optionee's employment is terminated for "cause"
or in violation of any agreement to remain in the employ of the Company,
including, without limitation, any such agreement pursuant to SECTION 15, he
may, at any time before the expiration of thirty (30) days after such
termination or before the expiration of the Option, whichever shall first occur,
exercise the Option (to the extent that the Option was exercisable by him on the
date of termination of his employment). For purposes of the Plan, "cause" may
include, without limitation, any illegal or improper conduct (1) which injures
or impairs the reputation, goodwill, or business of the Company; (2) which
involves the misappropriation of funds of the Company, or the misuse of data,
information, or documents acquired in connection with employment by the Company;
or (3) which violates any other directive or policy promulgated by the Company.
A termination for "cause" may also include any resignation in anticipation of
discharge for "cause" or resignation accepted by the Company in lieu of a formal
discharge for "cause."

      11.    MANNER OF OPTION EXERCISE; RIGHTS AND OBLIGATIONS OF OPTIONEES.

             11.1   WRITTEN NOTICE OF EXERCISE. An Optionee may elect to
exercise an Option in whole or in part, from time to time, subject to the terms
and conditions contained in the Plan and in the agreement evidencing such
Option, by giving written notice of exercise to the Company at its principal
executive office.

             11.2   CASH PAYMENT FOR OPTIONED SHARES. If an Option is exercised
for cash, such notice shall be accompanied by a cashier's or personal check, or
money order, made payable to the Company for the full exercise price of the
shares purchased.

             11.3   STOCK SWAP FEATURE. At the time of the Option exercise, and
subject to the discretion of the Committee to accept payment in cash only, the
Optionee may determine whether the total purchase price of the shares to be
purchased shall be paid solely in cash or by transfer from the Optionee to the
Company of previously acquired shares of Common Stock, or by a combination
thereof. In the event that the Optionee elects to pay the total purchase price
in whole or in part with previously acquired shares of Common Stock, the value
of such shares shall be equal to their Fair Market Value on the date of
exercise, determined by the Committee in the same manner used for determining
Fair Market Value at the time of grant for purposes of SECTION 8.

             11.4   INVESTMENT REPRESENTATION FOR NON-REGISTERED SHARES AND
LEGALITY OF ISSUANCE. The receipt of shares of Common Stock upon the exercise of
an Option shall be conditioned upon the Optionee (or any other person who
exercises the Option on his or her behalf as permitted by SECTION 10.3)
providing to the Committee a written representation that, at the time of such
exercise, it is the intent of such person(s) to acquire the shares for
investment only and not with a view toward distribution. The certificate for
unregistered shares issued for investment shall be restricted by the Company as
to transfer unless the Company receives an opinion of counsel satisfactory to
the Company to the effect that such restriction is not necessary under then
pertaining law. The providing of such representation and such restrictions on
transfer shall not, however, be

                                          6

<PAGE>

required upon any person's receipt of shares of Common Stock under the Plan in
the event that, at the time of grant of the Option relating to such receipt or
upon such receipt, whichever is the appropriate measure under applicable federal
or state securities laws, the shares subject to the Option shall be (i) covered
by an effective and current registration statement under the Securities Act of
1933, as amended, and (ii) either qualified or exempt from qualification under
applicable state securities laws. The Company shall, however, under no
circumstances be required to sell or issue any shares under the Plan if, in the
opinion of the Committee, (i) the issuance of such shares would constitute a
violation by the Optionee or the Company of any applicable law or regulation of
any governmental authority, or (ii) the consent or approval of any governmental
body is necessary or desirable as a condition of, or in connection with, the
issuance of such shares.

             11.5   SHAREHOLDER RIGHTS OF OPTIONEE. Upon exercise, the Optionee
(or any other person who exercises the Option on his behalf as permitted by
SECTION 10.3) shall be recorded on the books of the Company as the owner of the
shares, and the Company shall deliver to such record owner one or more duly
issued stock certificates evidencing such ownership. No person shall have any
rights as a shareholder with respect to any shares of Common Stock covered by an
Option granted pursuant to the Plan until such person shall have become the
holder of record of such shares. Except as provided in SECTION 13, no
adjustments shall be made for cash dividends or other distributions or other
rights as to which there is a record date preceding the date such person becomes
the holder of record of such shares.

             11.6   HOLDING PERIODS FOR TAX PURPOSES. The Plan does not provide
that an Optionee must hold shares of Common Stock acquired under the Plan for
any minimum period of time. Optionees are urged to consult with their own tax
advisors with respect to the tax consequences to them of their individual
participation in the Plan.

      12.    SUCCESSIVE GRANTS. Successive grants of Options may be made to any
Optionee under the Plan.

      13.    ADJUSTMENTS.

             (a)    If the outstanding Common Stock shall be hereafter
increased or decreased, or 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 a recapitalization, reclassification, reorganization, merger,
consolidation, share exchange, or other business combination in which the
Company is the surviving parent corporation, stock split-up, combination of
shares, or dividend or other distribution payable in capital stock or rights to
acquire capital stock, appropriate adjustment shall be made by the Committee in
the number and kind of shares for which Options may be granted under the Plan.
In addition, the Committee shall make appropriate adjustment in the number and
kind of shares as to which outstanding and unexercised Options shall be
exercisable, to the end that the proportionate interest of the holder of the
Option shall, to the extent practicable, be maintained as before the occurrence
of such event. Such adjustment in outstanding Options shall be made without
change in the total price applicable to the unexercised portion of the Option
but with a corresponding adjustment in the exercise price per share.

                                          7

<PAGE>

             (b)    In the event of the dissolution or liquidation of the
Company, any outstanding and unexercised Options shall terminate as of a future
date to be fixed by the Committee.

             (c)    In the event of a Reorganization (as hereinafter defined),
then,

                    (i) If there is no plan or agreement with respect to the
Reorganization ("Reorganization Agreement"), or if the Reorganization Agreement
does not specifically provide for the adjustment, change, conversion, or
exchange of the outstanding and unexercised Options for cash or other property
or securities of another corporation, then any outstanding and unexercised
Options shall terminate as of a future date to be fixed by the Committee; or

                    (ii) If there is a Reorganization Agreement, and the
Reorganization Agreement specifically provides for the adjustment, change,
conversion, or exchange of the outstanding and unexercised Options for cash or
other property or securities of another corporation, then the Committee shall
adjust the shares under such outstanding and unexercised Options, and shall
adjust the shares remaining under the Plan which are then available for the
issuance of Options under the Plan if the Reorganization Agreement makes
specific provisions therefor, in a manner not inconsistent with the provisions
of the Reorganization Agreement for the adjustment, change, conversion, or
exchange of such Options and shares.

             (d)    The term "Reorganization" as used in this SECTION 13 shall
mean any reorganization, merger, consolidation, share exchange, or other
business combination pursuant to which the Company is not the surviving parent
corporation after the effective date of the Reorganization, or any sale or lease
of all or substantially all of the assets of the Company. Nothing herein shall
require the Company to adopt a Reorganization Agreement, or to make provision
for the adjustment, change, conversion, or exchange of any Options, or the
shares subject thereto, in any Reorganization Agreement which it does adopt.

             (e)    The Committee shall provide to each Optionee then holding
an outstanding and unexercised Option not less than thirty (30) calendar days'
advanced written notice of any date fixed by the Committee pursuant to this
SECTION 13 and of the terms of any Reorganization Agreement providing for the
adjustment, change, conversion, or exchange of outstanding and unexercised
Options. Except as the Committee may otherwise provide, each Optionee shall have
the right during such period to exercise his Option only to the extent that the
Option was exercisable on the date such notice was provided to the Optionee.

                    Any adjustment to any outstanding ISO pursuant to this
SECTION 13, if made by reason of a transaction described in Section 424(a) of
the Code, shall be made so as to conform to the requirements of that Section and
the regulations thereunder. If any other transaction described in Section 424(a)
of the Code affects the Common Stock subject to any unexercised ISO theretofore
granted under the Plan (hereinafter for purposes of this SECTION 13 referred to
as the "old option"), the Board of Directors of the Company or of any surviving
or acquiring corporation may take such action as it deems appropriate, in
conformity with the requirements of that Code Section and the regulations
thereunder, to substitute a new option for the old option, in order to make the
new option, as nearly as may be practicable, equivalent to the old option, or to
assume the old option.

                                          8

<PAGE>

             (f)    No modification, extension, renewal, or other change in any
Option granted under the Plan may be made, after the grant of such Option,
without the Optionee's consent, unless the same is permitted by the provisions
of the Plan and the Option agreement. In the case of an ISO, Optionees are
hereby advised that certain changes may disqualify the ISO from being considered
as such under Section 422 of the Code, or constitute a modification, extension,
or renewal of the ISO under Section 424(h) of the Code.

             (g)    All adjustments and determinations under this SECTION 13
shall be made by the Committee in good faith in its sole discretion.

      14.    NON-TRANSFERABILITY OF OPTIONS. An Option shall be exercisable
only by the Optionee, or in the event of his disability, by his guardian(s),
conservator(s), or other legal representative(s), during the Optionee's
lifetime. In the event of the death of the Optionee, an Option shall be
exercisable by his legal representative(s), legatee(s), or heir(s), as the case
may be, or by such person(s) as he may designate as his beneficiary or
beneficiaries in a signed statement included as a part of the option agreement.
No Option shall be transferable by the Optionee, either voluntarily or
involuntarily, except by will or the laws of descent and distribution except in
the case of an ISO, pursuant to a court order that would otherwise satisfy the
requirements to be a domestic relations order as defined in Section 414(p)(1)(B)
of the Code if the order satisfied Section 414(p)(1)(A) of the Code
notwithstanding that such an order relates to the transfer of a stock option
rather than an interest in an employee benefit plan. Any attempt to exercise,
transfer or otherwise dispose of an interest in an Option in contravention of
the terms and conditions of the Plan, or of the Option agreement for the Option,
shall immediately void the Option.

      15.    CONTINUED EMPLOYMENT. As determined in the sole discretion of the
Committee at the time of grant and if so stated in a writing signed by the
Company, each Option may have as a condition the requirement of an Employee
Optionee to remain in the employ of the Company, or of its affiliates, and to
render to it his or her exclusive service, at such compensation as may be
determined from time to time by it, for a period not to exceed the term of the
Option, except for earlier termination of employment by or with the express
written consent of the Company or on account of disability or death. The failure
of any Employee Optionee to abide by such agreement as to any Option under the
Plan may result in the termination of all of his or her then outstanding Options
granted pursuant to the Plan. Neither the creation of the Plan nor the granting
of Option(s) under it shall be deemed to create a right in an Employee Optionee
to continued employment with the Company, and each such Employee Optionee shall
be and shall remain subject to discharge by the Company as though the Plan had
never come into existence. Except as specifically provided by the Committee in
any particular case, the loss of existing or potential profit in options granted
under this Plan shall not constitute an element of damages in the event of
termination of the employment of an employee even if the termination is in
violation of an obligation of the Company to the employee by contract or
otherwise.

      16.    TAX WITHHOLDING. The exercise of any Option granted under the Plan
is subject to the condition that if at any time the Company shall determine, in
its discretion, that the satisfaction of withholding tax or other withholding
liabilities under any federal, state or local law is necessary or desirable as a
condition of, or in connection with, such exercise or a later lapsing of time or
restrictions on or disposition of the shares of Common Stock received upon such
exercise, then in

                                          9

<PAGE>

such event, the exercise of the Option shall not be effective unless such
withholding shall have been effected or obtained in a manner acceptable to the
Company. When an Optionee is required to pay to the Company an amount required
to be withheld under applicable income tax laws in connection with the exercise
of any Option, the Optionee may, subject to the approval of the Committee
(provided such approval has not been disapproved at any time after the election
is made) satisfy the obligation, in whole or in part, by electing to have the
Company withhold shares of Common Stock having a value equal to the amount
required to be withheld. The value of the Common Stock withheld pursuant to the
election shall be determined by the Committee, in accordance with the criteria
set forth in SECTION 8, with reference to the date the amount of tax to be
withheld is determined. The Optionee shall pay to the Company in cash any amount
required to be withheld that would otherwise result in the withholding of a
fractional share. The election by an Optionee who is a director, officer or 10%
beneficial owner of the Company within the meaning of Section 16 of the 1934
Act, to be effective, must meet all of the requirements of Section 16 of the
1934 Act and the rules and regulations thereunder.

      17.    TERM OF PLAN.

             17.1   EFFECTIVE DATE. The Plan shall become effective as of
January 17, 1996.

             17.2   TERMINATION DATE. Except as to options previously granted
and outstanding under the Plan, the Plan shall terminate at midnight on January
17, 2006 and no Option shall be granted after that time. Options then
outstanding may continue to be exercised in accordance with their terms. The
Plan may be suspended or terminated at any earlier time by the Board within the
limitations set forth in SECTION 4.

      18.    NON-EXCLUSIVITY OF THE PLAN. Nothing contained in the Plan is
intended to amend, modify, or rescind any previously approved compensation
plans, programs or options entered into by the Company. This Plan shall be
construed to be in addition to and independent of any and all such other
arrangements. Neither the adoption of the Plan by the Board nor the submission
of the Plan to the shareholders of the Company for approval shall be construed
as creating any limitations on the power or authority of the Board to adopt,
with or without shareholder approval, such additional or other compensation
arrangements as the Board may from time to time deem desirable.

      19.    GOVERNING LAW. The Plan and all rights and obligations under it
shall be construed and enforced in accordance with the laws of the State of
California.

      20.    INFORMATION TO OPTIONEES. Optionees under the Plan who do not
otherwise have access to financial statements of the Company will receive the
Company's financial statements at least annually.

                                          10