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                                    DVI, INC.

                             1996 STOCK OPTION PLAN

         DVI, Inc., a Delaware corporation, wishes to attract key employees,
consultants and directors to the Company and its Subsidiaries, to induce key
employees, consultants and directors to remain with the Company and its
Subsidiaries, and to encourage them to increase their efforts to make the
Company's business more successful whether directly or through its Subsidiaries.
In furtherance thereof, the DVI, Inc. 1996 Stock Option Plan is designed to
provide equity-based incentives to key employees, consultants and directors of
the Company and its Subsidiaries.

         1.       Definitions.

         Whenever used herein, the following terms shall have the meanings set
forth below:

         "Administrator" means the Board, or, if the Board so determines, the
Committee.

         "Award Agreement" means a written agreement in a form approved by the
Administrator to be entered into by the Company and the Optionee of an Option,
as provided in Section 4.

         "Board" means the Board of Directors of the Company.

         "Cause" means, unless otherwise provided in the applicable Award
Agreement, with respect to the termination of an employee's employment or a
consultant's or director's service, termination by reason of commission of a
felony, fraud, willful misconduct, or habitual neglect of the Optionee's duties,
which has resulted, or is likely to result, in substantial and material damage
to the Company or a parent or a Subsidiary, all as the Administrator, in its
sole discretion, may determine.

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

         "Committee" means the Committee appointed by the Board under Section 3,
if any.

         "Common Stock" means the Company's Common Stock, par value $.005,
either currently existing or authorized hereafter.

         "Company" means DVI, Inc., a Delaware corporation.

         "Constituent Corporation" means a corporation which has been merged
into or consolidated with the Company or one or more Subsidiaries, or whose
assets or stock has been acquired by or liquidated into the Company, or by or
into any one or more Subsidiaries, or any parent or any subsidiary of any such
corporation.



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         "Exchange Act" means the Securities Exchange Act of 1934, as amended.

         "Fair Market Value" per Share as of a particular date means (i) if
Shares are then listed on a national stock exchange, the closing sales price per
Share on the exchange for the last preceding date on which there was a sale of
Shares on such exchange, as determined by the Administrator; (ii) if Shares are
not then listed on a national stock exchange but are then traded on an
over-the-counter market, the average of the closing bid and asked prices for the
Shares in such over-the-counter market for the last preceding date on which
there was a sale of such Shares in such market, as determined by the
Administrator; or (iii) if Shares are not then listed on a national stock
exchange or traded on an over-the-counter market, such value as the
Administrator in its discretion may in good faith determine; provided that,
where the Shares are so listed or traded, the Administrator may make
discretionary determinations where the Shares have not been traded for 10
trading days.

         "Incentive Stock Option" means an "incentive stock option" within the
meaning of Section 422(b) of the Code.

         "Non-Qualified Stock Option" means an Option which is not an Incentive
Stock Option.

         "Option" means the right to purchase, at a price and for the term fixed
by the Administrator in accordance with the Plan, and subject to such other
limitations and restrictions in the Plan and the applicable Award Agreement, a
number of Shares determined by the Administrator.

         "Optionee" means an employee, consultant or director of the Company to
whom an Option is granted, or the Successors of the Optionee, as the context so
requires.

         "Option Price" means the exercise price per Share.

         "Plan" means this DVI, Inc. 1996 Stock Option Plan, as set forth herein
and as the same may from time to time be amended.

         "Securities Act" means the Securities Act of 1933, as amended.

         "Shares" means shares of Common Stock of the Company.

         "Subsidiary" means any corporation (other than the Company) that is a
"subsidiary corporation" with respect to the Company under Section 424(f) of the
Code. In the event the Company becomes a subsidiary of another company, the
provisions hereof applicable to subsidiaries shall, unless otherwise determined
by the Administrator, also be applicable to any Company that is a "parent
corporation" with respect to the Company under Section 424(e) of the Code.



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         "Successor of the Optionee" means the legal representative of the
estate of a deceased Optionee or the person or persons who shall acquire the
right to exercise an Option by bequest or inheritance or by reason of the death
of the Optionee.

         2.       Effective Date and Termination of Plan.

         The effective date of the Plan is August 29, 1996. The Plan shall
terminate on, and no Option shall be granted hereunder on or after, August 29,
2006.

         3.       Administration of Plan.

         The Plan shall be administered by the Administrator. If the
Administrator is the Committee, then the Committee shall consist of at least two
individuals each of whom shall be a "nonemployee director" as defined in Rule
16b-3 as promulgated by the Securities and Exchange Commission ("Rule 16b-3")
under the Exchange Act and shall, at such times as the Company is subject to
Section 162(m) of the Code (to the extent relief from the limitation of Section
162(m) of the Code is sought with respect to Options), qualify as "outside
directors" for purposes of Section 162(m) of the Code. The acts of a majority of
the members present at any meeting of the Committee at which a quorum is
present, or acts approved in writing by a majority of the entire Committee,
shall be the acts of the Committee for purposes of the Plan. If and to the
extent applicable, no member of the Committee may act as to matters under the
Plan specifically relating to such member.

         4.       Eligibility and Grant of Options; Administrator Authority.

         Subject to the provisions of the Plan, the Administrator shall, in its
discretion as reflected by the terms of the Award Agreements: (i) authorize the
granting of Options to key employees, consultants and directors of the Company
and its Subsidiaries; (ii) determine and designate from time to time those key
employees, consultants and directors of the Company and its Subsidiaries to whom
Options are to be granted and the number of Shares to be optioned to each
employee, consultant or director; (iii) determine whether to grant Incentive
Stock Options, or Non-Qualified Stock Options, or both (to the extent that any
Option does not qualify as an Incentive Stock Option, it shall constitute a
separate Non-Qualified Stock Option); (iv) determine the number of Shares
subject to each Option; (v) determine the time or times when and the manner and
condition in which each Option shall be exercisable and the duration of the
exercise period; and (vi) determine or impose other conditions to the grant or
exercise of Options under the Plan as it may deem appropriate. In determining
the eligibility of an employee, consultant or director to receive an Option, as
well as in determining the number of Shares to be optioned to any employee,
consultant or director, the Administrator may consider the position and
responsibilities of such employee, consultant or director, the nature and value
to the Company of the employee's, consultant's or director's services and
accomplishments whether directly or through its Subsidiaries, the employee's,
consultant's or director's present and potential contribution to the success of
the Company whether directly or through its Subsidiaries and


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such other factors as the Administrator may deem relevant. The Award Agreement
shall contain such other terms, provisions and conditions not inconsistent
herewith as shall be determined by the Administrator. The Optionee shall take
whatever additional actions and execute whatever additional documents the
Administrator may in its reasonable judgment deem necessary or advisable in
order to carry out or effect one or more of the obligations or restrictions
imposed on the Optionee pursuant to the express provisions of the Plan and the
Award Agreement. The Administrator shall cause each Option to be designated as
an Incentive Stock Option or a Non-Qualified Stock Option.

         5.       Number of Shares Subject to Options.

         Subject to adjustments pursuant to Section 17, Options with respect to
an aggregate of no more than 1,500,000 Shares may be granted under the Plan. In
no event may any Optionee receive Options for more than 1,000,000 Shares of
Common Stock over the life of the Plan. Notwithstanding the foregoing provisions
of this Section 5, Shares as to which an Option is granted under the Plan that
remains unexercised at the expiration, forfeiture or other termination of such
Option may be the subject of the grant of further Options. Shares of Common
Stock issued hereunder may consist, in whole or in part, of authorized and
unissued shares or treasury shares or any Shares purchased in the open market or
otherwise. The certificates for Shares issued hereunder may include any legend
which the Administrator deems appropriate to reflect any repurchase rights of
the Company, restrictions on transfer hereunder or under the Award Agreement, or
as the Administrator may otherwise deem appropriate.

         The aggregate Fair Market Value, determined as of the date an Option is
granted, of the Common Stock for which any Optionee may be awarded Incentive
Stock Options which are first exercisable by the Optionee during any calendar
year under the Plan (or any other stock option plan required to be taken into
account under Section 422(d) of the Code) shall not exceed $100,000.

         6.       Option Price.

         The Option Price shall not be less than 100% (or 110%, in the case of
an Incentive Stock Option granted to an individual described in Section
422(b)(6) of the Code (relating to certain 10% owners)) of the Fair Market Value
of a Share on the day the Option is granted.

         7.       Period of Option and Vesting.

         (a) Unless earlier expired, forfeited or otherwise terminated, each
Option shall expire in its entirety upon the 10th anniversary of the date of
grant or shall have such other term as is set forth in the applicable Award
Agreement (except that, in the case of an individual described in Section
422(b)(6) of the Code (relating to certain 10% owners) who is granted an
Incentive Stock Option, the term of such Option shall be no more than five years
from the date of grant). The Option shall also expire, be forfeited and
terminate at


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such times and in such circumstances as otherwise provided hereunder or under
the Award Agreement.

         (b) Each Option, to the extent that there has been no termination of
the Optionee's employment (or, in the case of consultants and directors, other
service) and the Option has not otherwise lapsed, expired, terminated or been
forfeited, shall first become exercisable according to the terms and conditions
set forth in the Award Agreement, as determined by the Administrator at the time
of grant; provided that no Option shall be exercisable at the rate of less than
20% per year over a five-year period. Unless otherwise provided in the Award
Agreement or herein, no Option (or portion thereof) shall ever be exercisable if
the Optionee's employment (or other service, if applicable) with the Company and
its Subsidiaries has terminated before the time at which such Option would
otherwise have become exercisable, and any Option that would otherwise become
exercisable after such termination shall not become exercisable and shall be
forfeited upon such termination. Notwithstanding the foregoing provisions of
this Section 7(b), Options exercisable pursuant to the schedule set forth by the
Administrator at the time of grant may be fully or more rapidly exercisable or
otherwise vested at any time in the discretion of the Administrator. Upon and
after the death of an Optionee, such Optionee's Options, if and to the extent
otherwise exercisable hereunder or under the applicable Award Agreement after
the Optionee's death, may be exercised by the Successors of the Optionee.

         8.       Exercisability Upon and After Termination of Optionee.

         (a) Unless otherwise provided in the Award Agreement, if the Optionee's
employment (or other service, as applicable) with the Company and its
Subsidiaries is terminated within twelve months after the date of grant, the
Optionee's Options, to the extent then unexercised, shall thereupon cease to be
exercisable and shall be forfeited forthwith.

         (b) Unless otherwise provided in the Award Agreement, other than by
reason of voluntary separation, Cause, death, retirement or disability, no
exercise of an Option may occur after the expiration of the three-month period
to follow the termination, or if earlier, the expiration of the term of the
Option as provided under Section 7; provided that, if the Optionee should die
after termination of employment (or other service, if applicable) such
termination being for a reason other than disability or retirement, but while
the Option is still in effect, the Option (if and to the extent otherwise
exercisable by the Optionee at the time of death) may be exercised until the
earlier of (i) one year from the date of termination of employment (or other
service, if applicable) of the Optionee, or (ii) the date on which the term of
the Option expires in accordance with Section 7.

         (c) Unless otherwise provided in the Award Agreement, if the Optionee's
employment (or other service) with the Company and its Subsidiaries terminates
due to the death or disability of the Optionee, no exercise of an Option may
occur after the expiration of the one-year period to follow such termination or,
if earlier, the expiration of the term of the Option in accordance with Section
7.



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         (d) Unless otherwise provided in the Award Agreement, if the Optionee's
employment (or other service, as applicable) with the Company and its
Subsidiaries terminates due to the retirement of the Optionee, no exercise of an
Option may occur after the expiration of the three-month period to follow such
termination or, if earlier, the expiration of the term of the Option in
accordance with Section 7.

         (e) Notwithstanding any other provision hereof, unless otherwise
provided in the Award Agreement, if (i) the Optionee's employment (or other
service, as applicable) is terminated by the Company and its Subsidiaries for
Cause or (ii) the Optionee voluntarily terminates employment (or other service,
as applicable) with the Company and its Subsidiaries (other than on account of
death, retirement or disability) the Optionee's Options, to the extent then
unexercised, shall thereupon cease to be exercisable and shall be forfeited
forthwith.

         (f) If the Optionee commences or continues service as a consultant or
director of the Company upon termination of employment, such continued service
shall, if the Administrator in its discretion so consents, be treated as
continued employment hereunder.

         (g) Except as may otherwise be expressly set forth in this Section 8,
and except as may otherwise be expressly provided under the Award Agreement, no
provision of this Section 8 is intended to or shall permit the exercise of the
Option to the extent the Option was not exercisable upon cessation of employment
(or other service, as applicable).

         (h) Notwithstanding any other provision hereof, whether a termination
of employment (or other service, if applicable) is considered to be a retirement
or disability and whether an authorized leave of absence on military or
government service shall constitute a termination of employment (or other
service, if applicable) for the purposes of the Plan shall be determined by the
Administrator, which determination, unless overruled by the Board, shall be
final and conclusive. An Optionee's employment (or other service, as applicable)
with a Constituent Corporation shall be deemed to be employment (or other
service, as applicable) with the Company. An Optionee's employment (or other
service, as applicable) by the Company shall be deemed to continue during such
periods as he or she is employed (or otherwise serves) by the a corporation
which is a Subsidiary both (i) at the time the Optionee's Option is granted and
(ii) throughout the period of the Optionee's employment (or other service, as
applicable) by such Subsidiary. If the Optionee shall be transferred from the
Company to a Subsidiary or from a Subsidiary to the Company or from a Subsidiary
to another Subsidiary, his or her employment (or other service, as applicable)
shall not be deemed to be terminated by reason of such transfer. An Option shall
terminate immediately if while the Optionee is employed (or otherwise services)
by a Subsidiary, such Subsidiary shall cease to be a Subsidiary and the Optionee
is not thereupon transferred to and employed by the Company or another
Subsidiary.




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         9.       Exercise of Options.

         (a) Subject to vesting and other restrictions provided for hereunder or
otherwise imposed in accordance herewith, an Option may be exercised, and
payment in full of the aggregate Option Price made, by an Optionee only by
written notice (in the form prescribed by the Administrator) to the Company
specifying the number of Shares to be purchased.

         (b) Without limiting the scope of the Administrator's discretion
hereunder, the Administrator may impose such other restrictions on the exercise
of Incentive Stock Options (whether or not in the nature of the foregoing
restrictions) as it may deem necessary or appropriate.

         (c) If Shares acquired upon exercise of an Incentive Stock Option are
disposed of in a disqualifying disposition within the meaning of Section 422 of
the Code by an Optionee prior to the expiration of either two years from the
date of grant of such Option or one year from the transfer of Shares to the
Optionee pursuant to the exercise of such Option, or in any other disqualifying
disposition within the meaning of Section 422 of the Code, such Optionee shall
notify the Company in writing as soon as practicable thereafter of the date and
terms of such disposition and, if the Company thereupon has a tax-withholding
obligation, shall pay to the Company an amount equal to any withholding tax the
Company is required to pay as a result of the disqualifying disposition.

         10.      Payment.

         (a) The aggregate Option Price shall be paid in full upon the exercise
of the Option. Except to the extent otherwise provided by the Administrator,
payment must be made by check or bank draft.

         (b) Except in the case of Options exercised by check or bank draft, the
Administrator may impose limitations and prohibitions on the exercise of Options
as it deems appropriate, including, without limitation, any limitation or
prohibition designed to avoid accounting consequences which may result from the
use of Common Stock as payment upon exercise of an Option. Any fractional Shares
resulting from an Optionee's election that are accepted by the Company shall in
the discretion of the Administrator be paid in cash.

         11.      Tax Withholding.

         The Administrator may, in its discretion, require the Optionee to pay
to the Company at the time of exercise of any Option the amount that the
Administrator deems necessary to satisfy the Company's obligation to withhold
federal, state or local income or other taxes incurred by reason of the
exercise. Upon exercise of the Option, the Optionee may, if approved by the
Administrator in its discretion, make a written election to have Shares then
issued withheld by the Company from the Shares otherwise to be received, or


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to deliver previously owned Shares, in order to satisfy the liability for such
withholding taxes. In the event that the Optionee makes, and the Administrator
permits, such an election, the number of Shares so withheld or delivered shall
have an aggregate Fair Market Value on the date of exercise sufficient to
satisfy the applicable withholding taxes. Where the exercise of an Option does
not give rise to an obligation by the Company to withhold federal, state or
local income or other taxes on the date of exercise, but may give rise to such
an obligation in the future, the Administrator may, in its discretion, make such
arrangements and impose such requirements as it deems necessary or appropriate.
Notwithstanding anything contained in the Plan to the contrary, the Optionee's
satisfaction of any tax-withholding requirements imposed by the Administrator
shall be a condition precedent to the Company's obligation as may otherwise be
provided hereunder to provide Shares to the Optionee, and the failure of the
Optionee to satisfy such requirements with respect to the exercise of an Option
shall cause such Option to be forfeited.

         12.      Exercise by Successors and Payment in Full.

         An Option may be exercised, and payment in full of the aggregate Option
Price made, by the Successors of the Optionee only by written notice (in the
form prescribed by the Administrator) to the Company specifying the number of
Shares to be purchased. Such notice shall state that the aggregate Option Price
will be paid in full, or that the Option will be exercised as otherwise provided
hereunder, in the discretion of the Company or the Administrator, if and as
applicable.

         13.      Nontransferability of Option.

         Each Option granted under the Plan shall by its terms be
nontransferable by the Optionee except by will or the laws of descent and
distribution of the state wherein the Optionee is domiciled at the time of his
death; provided, however, that the Administrator may (but need not) permit other
transfers, where the Administrator concludes that such transferability (i) does
not result in accelerated taxation, (ii) does not cause any Option intended to
be an Incentive Stock Option to fail to be described in Section 422(b) of the
Code and (iii) is otherwise appropriate and desirable.

         14.      Right of Repurchase.

         At the time of grant, the Administrator may provide in connection with
any grant made under the Plan that Shares received in connection with Options
shall be subject to a right of repurchase, pursuant to which the Company shall
be entitled to purchase such Shares at no less than the greater of the Option
Price paid by the Optionee for such Shares or the Fair Market Value of such
Shares on the date of such repurchase.

         15.      Regulations and Approvals.

         (a) The obligation of the Company to sell Shares with respect to
Options granted under the Plan shall be subject to all applicable laws, rules
and regulations,


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including all applicable federal and state securities laws, and the obtaining of
all such approvals by governmental agencies as may be deemed necessary or
appropriate by the Administrator.

         (b) The Administrator may make such changes to the Plan as may be
necessary or appropriate to comply with the rules and regulations of any
government authority or to obtain tax benefits applicable to stock options.

         (c) Each Option is subject to the requirement that, if at any time the
Administrator determines, in its discretion, that the listing, registration or
qualification of Shares issuable pursuant to the Plan is required by any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body is necessary or desirable as a
condition of, or in connection with, the grant of an Option or the issuance of
Shares, no Options shall be granted or payment made or Shares issued, in whole
or in part, unless listing, registration, qualification, consent or approval has
been effected or obtained free of any conditions in a manner acceptable to the
Administrator.

         (d) In the event that the disposition of stock acquired pursuant to the
Plan is not covered by a then current registration statement under the
Securities Act, and is not otherwise exempt from such registration, such Shares
shall be restricted against transfer to the extent required under the Securities
Act, and the Administrator may require any individual receiving Shares pursuant
to the Plan, as a condition precedent to receipt of such Shares, to represent to
the Company in writing that the Shares acquired by such individual are acquired
for investment only and not with a view to distribution and that such Shares
will be disposed of only if registered for sale under the Securities Act or if
there is an available exemption for such disposition.

         16.      Interpretation and Amendments; Other Rules.

         The Administrator may make such rules and regulations and establish
such procedures for the administration of the Plan as it deems appropriate.
Without limiting the generality of the foregoing, the Administrator may (i)
determine (A) the conditions under which an Optionee will be considered to have
retired or become disabled and (B) whether any Optionee has done so; (ii)
establish or assist in the establishment of a program (which need not be
administered in a nondiscriminatory or uniform manner) under which the Company
or a third party may make bona-fide loans on arm's-length terms to any or all
Optionees to assist such Optionees with the satisfaction of any or all of the
obligations that such Optionees may have hereunder or under which third-party
sales may be made for such purpose (including, without limitation, a loan
program under which the Company or a third party would advance the aggregate
Option Price to the Optionee and be repaid with Option stock or the proceeds
thereof and a sale program under which funds to pay for Option stock are
delivered by a third party upon the third party's receipt from the Company of
stock certificates); (iii) determine the extent, if any, to which Options or
Shares shall be forfeited (whether or not such forfeiture is expressly
contemplated hereunder); (iv) interpret the Plan and the Award Agreements
hereunder, with such interpretations to be conclusive and


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binding on all persons and otherwise accorded the maximum deference permitted by
law; and (v) take any other actions and make any other determinations or
decisions that it deems necessary or appropriate in connection with the Plan or
the administration or interpretation thereof. The Administrator may in the Award
Agreement provide that the Optionee shall notify the Company of the failure to
meet any holding period requirement under the Code applicable to Shares received
upon the exercise of an Incentive Stock Option. Unless otherwise expressly
provided hereunder, the Administrator, with respect to any Option, may exercise
its discretion hereunder at the time of the award or thereafter. In the event of
any dispute or disagreement as to the interpretation of the Plan or of any rule,
regulation or procedure, or as to any question, right or obligation arising from
or related to the Plan, the decision of the Administrator shall be final and
binding upon all persons. The Board may amend the Plan as it shall deem
advisable, except that no amendment may adversely affect an Optionee with
respect to Options previously granted unless such amendments are in connection
with compliance with applicable laws; provided that the Board may not make any
amendment in the Plan that would, if such amendment were not approved by the
holders of the Common Stock, cause the Plan to fail to comply with any
requirement of applicable law or regulation, unless and until the approval of
the holders of such Common Stock is obtained. Without limiting the generality of
the foregoing, the Administrator may (subject to such considerations as may
arise under Section 16 of the Exchange Act, or under other corporate, securities
or tax laws) take any steps it deems appropriate, that are not inconsistent with
the purposes and intent of the Plan, to take into account the provisions of
Section 162(m) of the Code.

         17.      Changes in Capital Structure.

         If (i) the Company or its Subsidiaries shall at any time be involved in
a merger, consolidation, dissolution, liquidation, reorganization, exchange of
shares, sale of all or substantially all of the assets or stock of the Company
or its Subsidiaries or a transaction similar thereto, (ii) any stock dividend,
stock split, reverse stock split, stock combination, reclassification,
recapitalization or other similar change in the capital structure of the Company
or its Subsidiaries, or any distribution to holders of Common Stock other than
cash dividends, shall occur or (iii) any other event shall occur which in the
judgment of the Administrator necessitates action by way of adjusting the terms
of the outstanding Options, then the Administrator shall forthwith take any such
action as in its judgment shall be necessary to preserve to the Optionees rights
substantially proportionate to the rights existing prior to such event, and to
maintain the continuing availability of Shares under Section 5 (if Shares are
otherwise then available) in a manner consistent with the intent hereof,
including, without limitation, adjustments in (x) the number and kind of shares
subject to Options, (y) the Option Price, and (z) the number and kind of shares
available under Section 5; provided that no such action taken by the
Administrator shall cause Options intended to qualify as Incentive Stock Options
to fail to qualify as Incentive Stock Options. To the extent that such action
shall include an increase or decrease in the number of Shares (or units of other
property then available) subject to outstanding Options, the number of Shares
(or units) available under Section 5 above shall be increased or decreased, as
the case may be, proportionately, as may be provided by Administrator in its


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discretion.

         If the Company sells all, or substantially all, of its assets, or the
Company merges or consolidates with another corporation and the stockholders of
the Company immediately prior to such transaction do not own, immediately after
such transaction, stock of the purchasing or surviving corporation in such
transaction (or of the parent corporation of the purchasing or surviving
corporation) possessing more than 50% of the voting power of the outstanding
stock of that corporation, which ownership shall be measured without regard to
any stock of the purchasing, surviving or parent corporation owned by the
stockholders of the Company before the transaction, then any outstanding Options
shall become fully vested and exercisable thirty (30) days prior to such merger,
consolidation or sale of assets (but shall terminate thereafter), unless
provisions are made in connection with such transaction for the continuance of
the Plan or the assumption or the substitution for outstanding Options of new
options covering the stock of the successor employer corporation, or a parent or
subsidiary thereof, with such equitable and appropriate adjustments as to price,
number and kind of shares as is just and reasonable under the circumstances.
Upon the dissolution or liquidation of the Company, all outstanding Options
shall terminate; provided, however, that the persons then entitled to exercise
an unexercised portion of an Option shall have the right, at such time
immediately prior to such dissolution or liquidation as the Company shall
designate, to exercise the Option to the full extent not theretofore exercised.

         Anything in the Plan to the contrary notwithstanding, the Board may,
without further approval of the stockholders of the Company, substitute new
options for prior options of a Constituent Corporation or assume the prior
options of a Constituent Corporation.

         The judgment of the Administrator with respect to any matter referred
to in this Section 17 shall be conclusive and binding upon each Optionee without
the need for any amendment to the Plan.

         18.      Notices.

         All notices under the Plan shall be in writing, and if to the Company,
shall be delivered to the Board or mailed to its principal office, addressed to
the attention of the Board; and if to the Optionee, shall be delivered
personally or mailed to the Optionee at the address appearing in the records of
the Company. Such addresses may be changed at any time by written notice to the
other party given in accordance with this Section 18.

         19.      Rights as Stockholder.

         Neither the Optionee nor any person entitled to exercise the Optionee's
rights in the event of death shall have any rights of a stockholder with respect
to the Shares subject to an Option, except to the extent that a certificate for
such Shares shall have been issued upon the exercise of the Option as provided
for herein.



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         20.      Rights to Employment.

         Nothing in the Plan or in any Option granted pursuant to the Plan shall
confer on any individual any right to continue in the employ (or other service,
as applicable) of the Company or its Subsidiaries or interfere in any way with
the right of the Company or its Subsidiaries to terminate the individual's
employment (or other service, as applicable) at any time.

         21.      Exculpation and Indemnification.

         To the maximum extent permitted by law, the Company shall indemnify and
hold harmless the members of the Board and the members of the Administrator from
and against any and all liabilities, costs and expenses incurred by such persons
as a result of any act or omission to act in connection with the performance of
such person's duties, responsibilities and obligations under the Plan, other
than such liabilities, costs and expenses as may result from the gross
negligence, bad faith, willful misconduct or criminal acts of such persons.

         22.      Captions.

         The use of captions in this Plan is for convenience. The captions are
not intended to and do not provide substantive rights.

         23.      Governing Law.

         THE PLAN SHALL BE GOVERNED BY THE LAWS OF DELAWARE, WITHOUT REFERENCE
TO PRINCIPLES OF CONFLICT OF LAWS.




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