Document:

EXHIBIT 10.63

                              POSITRON CORPORATION
                             1999 STOCK OPTION PLAN

                                          Date of Board Approval:  June 15, 1999
                                 Date of Shareholder Approval: December 17, 1999

       1. PURPOSE AND SCOPE.  The purposes of this Plan are to induce persons of
outstanding  ability and potential to join and remain with Positron  Corporation
(the  "Company"),  to provide an  incentive  for such  employees  as well as for
non-employee consultants to expand and improve the profits and prosperity of the
Company  by  enabling  such  persons  to acquire  proprietary  interests  in the
Company, and to attract and retain key personnel through the grant of Options to
purchase shares of the Company's common stock. As used herein, the term "Option"
includes both Incentive Stock Options and Non-Qualified Stock Options. This 1999
Stock  Option Plan is intended to amend and restate any other stock  option plan
of the Company currently in effect.

       2.  DEFINITIONS.  Each  term set forth in this  Section 2 shall  have the
meaning  set forth  opposite  such term for  purposes  of this Plan  unless  the
context  otherwise  requires,  and for the  purposes  of such  definitions,  the
singular shall include the plural and the plural shall include the singular:

           (a)  "Affiliate"  shall mean any  parent  corporation  or  subsidiary
corporation of the Company as those terms are defined in Sections 424(e) and (f)
respectively of the Internal Revenue Code of 1986, as amended.

           (b) "Board" shall mean the Board of Directors of the Company.

           (c) "Committee" shall have the meaning set forth in Section 3 hereof.

           (d) "Company" shall mean Positron Corporation, a Texas corporation.

           (e) "Code" shall mean the Internal Revenue Code of 1986, as amended.

           (f) "Fair Market Value" for a share of Stock means the price that the
Board or the Committee acting in good faith  determines,  through any reasonable
valuation  method  (including but not limited to reference to prices existing in
any established market in which the Stock is traded), to be the price at which a
share of Stock might change hands between a willing buyer and a willing  seller,
neither being under any compulsion to buy or to sell and both having  reasonable
knowledge of the relevant facts.

<PAGE>

           (g) "Option" shall mean a right to purchase Stock granted pursuant to
the Plan.

           (h) "Exercise Price" shall mean the purchase price for Stock under an
Option,  as  determined  in  Sections 7 -  "Incentive  Stock  Options" - and 8 -
"Non-Incentive  Stock Options" - below. (i) "Participant" shall mean an employee
or non-employee consultant to the Company to whom an Option is granted under the
Plan.

           (j) "Plan"  shall mean this  Positron  Corporation  1999 Stock Option
Plan.

           (k)  "Stock"  shall  mean the  $0.01 par  value  common  stock of the
Company.

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

       3.  ADMINISTRATION.  The Plan shall be  administered  (i) with respect to
individuals  who receive options under the Plan and who are or become subject to
the reporting requirements and short-swing liability provisions of Section 16 of
the  Securities  Exchange Act of 1934,  as amended (the "1934 Act")  ("Reporting
Persons")  by a  committee  consisting  of at least two  members of the Board of
Directors of the Company (the "Board"),  each of whom is a non-employee director
(as such term is  defined  under  Rule  16b-3 of the 1934  Act) (the  "Reporting
Persons Committee") and (ii) with respect to all individuals who receive Options
under  the Plan and are who are not  Reporting  Persons,  by a  committee  which
consists of at least two members of the Board (the  "Stock  Option  Committee").
For  purposes  of this  Plan,  references  to the  "Committee"  shall  mean  the
Reporting Persons Committee, the Stock Option Committee, or both, as the context
may require.

       The Committee shall have full authority in its discretion, subject to and
not inconsistent with the express  provisions of the Plan, to grant Options,  to
determine the Exercise Price and term of each Option,  and to select the persons
to whom, and the time or times at which, Options shall be granted and the number
of shares of Stock to be covered  by each  Option;  to  interpret  the Plan;  to
prescribe,  amend,  and rescind rules and  regulations  relating to the Plan; to
determine the terms and provisions of the option  agreements  (which need not be
identical)  entered into in connection with the grant of Options under the Plan;
and to make all other  determinations  deemed  necessary  or  advisable  for the
administration  of the  Plan.  The Board  may  delegate  to one or more of their
members,  or to one or more agents,  such  administrative  duties as it may deem
advisable,  and the  Board or any  person  to whom it has  delegated  duties  as
aforesaid  may employ one or more  persons to render  advice with respect to any
responsibility  the Board or such person may have under the Plan.  The Board may
employ  attorneys,  consultants,  accountants,  or other persons,  and the Board
shall be entitled  to rely upon the  advice,  opinions,  or  valuations  of such
persons.  All actions taken and all  interpretations  and determinations made by
the Board in good faith shall be final and binding  upon all  Participants,  the
Company,  and all other  interested  persons.  No  member of the Board  shall be
personally liable for any action, determination,  or interpretation made in good
faith with  respect  to the Plan;  and all  members of the Board  shall be fully
protected  by the  Company  in  respect of any such  action,  determination,  or
interpretation.

                                      -2-
<PAGE>

       4. SHARES SUBJECT TO THE PLAN. Subject to adjustment under the provisions
of Section 14 - "Effect of Change in Stock  Subject to Plan" - of the Plan,  the
maximum number of shares of Stock that may be optioned or sold under the Plan is
Four Million  (4,000,000).  Such shares may be authorized but unissued shares of
Stock of the Company,  or issued shares of Stock  reacquired by the Company,  or
shares purchased in the open market expressly for use under the Plan. If for any
reason any shares of Stock as to which an Option  has been  granted  cease to be
subject  to  purchase  thereunder,   then  (unless  the  Plan  shall  have  been
terminated) such shares shall become available for subsequent  awards under this
Plan in the discretion of the Board.  The Company shall,  at all times while the
Plan is in force,  reserve such number of common shares as will be sufficient to
satisfy the requirements of all outstanding Options granted under the Plan.

       5.  ELIGIBILITY; FACTORS TO BE CONSIDERED IN GRANTING OPTIONS.

           (a) Options may be granted  to: (i) any  regular  full-time  employee
(including officers and directors) of either the Company or any affiliate of the
Company; and (ii) any non-employee consultant of the Company.

           (b) In determining to whom options shall be granted and the number of
shares of Stock to be covered by each Option,  the Board shall take into account
the nature the participants'  duties, their present and potential  contributions
to the success of the Company,  and such other factors as it shall deem relevant
in connection with  accomplishing the purposes of the Plan. The Board shall also
determine  the time(s) of grant,  the type and term of Option  granted,  and the
time(s) of  exercise,  in whole or part. A  Participant  who has been granted an
Option  under the Plan may be granted new  Options,  which may be in addition to
prior Options granted under the Plan or may be in exchange for the surrender and
cancellation  of prior  Options  having a higher  or lower  Exercise  Price  and
containing such other terms as the Board may deem appropriate.

       6.  TERMS AND CONDITIONS OF OPTIONS.

           (a) General. Options granted pursuant to the Plan shall be authorized
by the Board and shall be evidenced by agreements ("Option  Agreements") in such
form as the Board from time to time shall approve.  Such Option Agreements shall
comply with and be subject to the following  general terms and  conditions,  and
shall also comply with and be subject to the provisions of Section 7 relating to
Incentive Stock Options or Section 8 relating to Non-Qualified Stock Options, as
applicable, as well as such other terms and conditions as set forth in this Plan
and as the  Board  may deem  desirable,  not  inconsistent  with the  Plan.

           (b)  Employment  Agreement.  The  Committee  may, in its  discretion,
include in any Option  granted under the Plan a condition  that the  Participant
shall  agree to remain in the  employ  of,  and/or to render  services  to,  the
Company for a period of time (specified in the Option  Agreement)  following the
date the Option is  granted.  No such  Option  Agreement  shall  impose upon the
Company any obligation to employ and/or retain the Participant for any period of
time.

           (c) Manner of  Exercise.  A  Participant  may  exercise  an Option by
giving written  notice of such exercise to the Company at its principal  office,
attention to the Secretary,

                                      -3-
<PAGE>

and  paying  the  Exercise  Price  either  (i) in cash  in  full at the  time of
exercise, or (ii) in the discretion of the Board:

           (d) by delivery of other previously  outstanding  common stock of the
Company,

              (i) by an approved deferred payment schedule or other arrangement,
which  arrangement  shall be  contained in writing in the Option  Agreement,  in
which event an interest rate will be stated which is not less than the rate then
specified which will prevent any imputation of higher interest under Section 483
of the Code,

              (ii) by  retention by the Company of some of the Stock as to which
the  Option is then being  exercised,  in which  case the  Optionee's  notice of
exercise  shall  include a statement (1) directing the Company to retain so many
shares that would  otherwise have been delivered by the Company upon exercise of
this Option as equals the number of shares that would have been  surrendered  to
the  Company if the  purchase  price had been paid with  previously  outstanding
stock of the Company,  and (2) confirming  the aggregate  number of shares as to
which this Option is being thus exercised and therefore surrendered, or

              (iii) in any other form of legal  consideration  acceptable to the
Committee at the time of grant or exercise.

           (e) Time of  Exercise.  Promptly  after the exercise of an Option and
the payment of the  Exercise  Price,  either in full or pursuant to the approved
payment  schedule,  the Participant shall be entitled to the issuance of a stock
certificate evidencing ownership of the appropriate number of shares of Stock. A
Participant  shall have none of the  rights of a  shareholder  until  shares are
issued to him/her,  and no adjustment will be made for dividends or other rights
for which the record date has occurred prior to the date such stock  certificate
is issued.

           (f) Number of Shares.  Each Option  shall  state the total  number of
shares of Stock to which it pertains.

           (g) Option Period and Limitations on Exercise.  The Board may, in its
discretion, provide that an Option may not be exercised in whole or part for any
period(s) of time  specified in the Option  Agreement,  except that the right to
exercise  must be at the rate of at least 20% per year over five  years from the
date the Option is granted,  subject to the further  conditions  of the Plan and
the Option Agreement such as continued  employment.  However,  in the case of an
Option  granted to  officers,  directors,  or  non-employee  consultants  of the
Company or any of its  affiliates,  the Option  may  become  fully  exercisable,
subject to the further  conditions of the Plan and the Option Agreement,  at any
time or during any period  established  by the  Company or its  affiliates.  The
exercise  period  shall be  stated in the  Option  Agreement.  No Option  may be
exercised  after the  expiration of ten years from the Grant Date. No Option may
be  exercised as to less than one hundred  (100) shares at any one time,  or the
remaining shares covered by the Option if less than one hundred (100).

                                      -4-
<PAGE>

       7. INCENTIVE  STOCK OPTIONS.  The Board may grant Incentive Stock Options
("ISOs") which meet the requirements of Section 422 of the Code, as amended from
time to time.

           (a) ISOs may be  granted  only to  employees  of the  Company  or its
affiliates.

           (b) Each ISO granted  under the Plan must be granted  within 10 years
from the date the Plan is  adopted or is  approved  by the  shareholders  of the
Company, whichever is earlier.

           (c) The  purchase  price shall not be less than the Fair Market Value
of the common shares at the time of grant,  except that the purchase price shall
be 110% of the  Fair  Market  Value  in the case of any  person  who owns  stock
possessing  more than 10% of the total  combined  voting power of all classes of
stock of the Company or its affiliates at the time of grant.

           (d) No ISO granted under the Plan shall be  exercisable  more than 10
years  from the date of grant,  except  that in the case of any  person who owns
stock possessing more than 10% of the total combined voting power of all classes
of stock of the Company or its affiliates at the time of grant,  no ISO shall be
exercisable more than five years from the date of grant.

           (e) To the  extent  that the  aggregate  Fair  Market  Value of stock
(determined at the time of grant) with respect to which ISOs are exercisable for
the first time by any individual during any calendar year under all plans of the
Company and its subsidiaries exceeds $100,000,  such options shall be treated as
Non-Qualified stock options, but only to the extent of such excess. Should it be
determined  that an entire  option or any portion  thereof  does not qualify for
treatment  as an ISO by  reason  of  exceeding  such  maximum,  or for any other
reason, such option or portion shall be considered a Non-Qualified stock option.

       8. NON-QUALIFIED  STOCK OPTIONS.  The Board may grant Non-Qualified Stock
Options  ("NSOs")  under the Plan in addition to or in lieu of  Incentive  Stock
Options.  NSOs are not intended to meet the  requirements  of Section 422 of the
Code, and shall be subject to the following terms and conditions:

           (a) NSOs may be granted to any eligible Participant.

           (b) The purchase price of the shares shall be determined by the Board
in its absolute  discretion,  but in no event shall such purchase  price be less
than 85% of the Fair  Market  Value of the  shares at the time of grant.  In the
case of any person who owns stock possessing more than 10% of the total combined
voting  power of all  classes of stock of the Company or its  affiliates  at the
time of grant, the price shall be 110% of the Fair Market Value.

           (c) NSOs shall not be  exercisable  more than ten years from the date
of grant.

       9.  TRANSFERABILITY.  Options  granted  under  this  Plan  shall  not  be
transferable other than by will or by the laws of descent and distribution,  and
during a  Participant's  life  shall be  exercisable  only by such  Participant.
Options granted under this Plan shall not be subject to execution, attachment or
other process.

                                      -5-
<PAGE>

       10.  TERMINATION  OF  EMPLOYMENT.  Options held by  employees,  including
directors, shall terminate three months after termination of employment with the
Company or affiliate, unless:

           (a) If employment is  terminated  for cause,  as such term is defined
pursuant to the  optionee's  contract of employment  or the Option  Agreement or
otherwise by Texas law, the Option shall immediately terminate.

           (b) If  termination  is due to the  employee's  permanent  and  total
disability within the meaning of Section 22(e)(3) of the Code, the Option may be
exercised at any time within one year following termination.

           (c) The  Option  Agreement  by its terms  specifies  whether it shall
terminate  later than three (3) months after  termination of employment.  If the
Option may be  exercised  later than three  months  following  termination,  any
portion  exercised  beyond three months shall be a  non-qualified  stock option.
This  paragraph  shall not be  construed to extend the term of any Option nor to
permit anyone to exercise the Option after expiration of its term.

           (d)  Options  granted  under this Plan shall not be  affected  by any
change of duties or position of the Participant so long as Participant continues
to be a regular, full-time employee of the Company. Any Option, or any rules and
regulations relating to the Plan, may contain such provisions as the Board shall
approve with reference to the  determination of the date employment  terminates.
Nothing in the Plan or in any Option  granted  pursuant to the Plan shall confer
upon any Participant any right to continue in the employ of the Company or shall
interfere in any way with the right of the Company to terminate such  employment
at its will at any time.

       11. RIGHTS IN THE EVENT OF DEATH.  If an employee dies during the term of
this Option,  his/her legal representative or representatives,  or the person or
persons  entitled to do so under the employee's last will and testament or under
applicable  intestate  laws,  shall have the right to exercise this Option,  but
only for the number of shares as to which the  employee was entitled to exercise
this  Option on the date of his  death,  and such  right  shall  expire and this
Option shall  terminate  six (6) months after the date of Grantee's  death or on
the  expiration  date of this  Option,  whichever  date is sooner.  In all other
respects, this option shall terminate upon such death.

       12. LEAVES OF ABSENCE.  For purposes of the Plan, an employee on approved
leave of absence from the Company shall be considered as currently  employed for
90 days  following  beginning  the  leave  or for so long as  his/her  right  to
reemployment is guaranteed by statute or contract, whichever is longer.

       13. EFFECT OF CHANGE IN STOCK SUBJECT TO PLAN.

           (a) In the event that outstanding common shares are hereafter changed
by   reason  of   reorganization,   merger,   consolidation,   recapitalization,
reclassification,  stock split,  combination of shares,  stock dividends and the
like, the Board shall make adjustments as it deems  appropriate in the aggregate
number of shares  advisable  under the Plan and the number and price  subject to
outstanding  option. Any adjustment shall apply  proportionately and only to the
unexercised  portion of options granted.

                                      -6-
<PAGE>

           (b) In the event the  Company  dissolves  or  liquidates  or  another
entity succeeds to its assets,  or in the event of a merger or  consolidation in
which the  Company  is not the  surviving  entity,  or in the event of a reverse
merger in which the Company survives but its common stock immediately  preceding
the merger is converted  into other  property by virtue of the merger,  then the
surviving  entity shall assume the  outstanding  Options or  substitute  similar
Options for those outstanding.

       14. AGREEMENT AND REPRESENTATION OF EMPLOYEES.

           (a) Acquiring  stock for investment  purposes.  As a condition to the
exercise of any Option,  the  Company  may  require the person  exercising  such
Option to represent  and warrant at the time of such exercise that any shares of
Stock  acquired at exercise are being  acquired only for  investment and without
any present  intention to sell or  distribute  such shares if, in the opinion of
Company's  counsel,  such  representation  is  required or  desirable  under the
Securities Act of 1933 or any other applicable law,  regulation,  or rule of any
governmental agency.

           (b)  Withholding.  With respect to the exercise of any Option granted
under this Plan, each Participant shall fully and completely consent to whatever
the Board directs to satisfy the federal and state tax withholding requirements,
if any, which the Board in its discretion deems applicable to such exercise.

           (c)  Delivery.  The  Company is not  obligated  to deliver any common
shares until there has been qualification  under or compliance with all state or
federal laws,  rules and  regulations  deemed  appropriate  by the Company.  The
Company  will use all  reasonable  efforts  to  obtain  such  qualification  and
compliance.

       15.  AMENDMENT AND  TERMINATION  OF PLAN. The Board,  by resolution,  may
terminate,  amend,  or revise  the Plan with  respect  to any shares as to which
Options have not been granted;  provided however, that any amendment that would:
(a) increase the  aggregate  number of shares of common stock that may be issued
under the Plan, (b) materially  increase the benefits  accruing to Participants,
or (c) materially modify the requirements as to eligibility for participation in
the Plan,  shall be subject to shareholder  approval  within 12 months before or
after adoption.  It is expressly  contemplated that the Board may amend the Plan
in any  respect  necessary  to  provide  employees  with  the  maximum  benefits
available  under and/or to satisfy the  requirements of or amendments to Section
422 of the Code.

           No  termination,  modification  or amendment of the Plan may however,
alter or impair the rights conferred by an Option previously granted without the
consent of the individual to whom the Option was previously granted.

           Unless  sooner  terminated,  the Plan  shall  remain in effect  for a
period  of ten  years  from  the  date  of the  Plan's  adoption  by the  Board.
Termination of the Plan shall not affect any Option previously granted.

           16. USE OF PROCEEDS. The proceeds from the sale of shares pursuant to
Options granted under the Plan shall constitute general funds of the Company.

                                      -7-
<PAGE>

           17.  EFFECTIVE  DATE OF PLAN. The Effective Date of this Plan is June
15,  1999,  the  effective  date  it was  adopted  by the  Board,  provided  the
shareholders  of the Company  approve this Plan within  twelve (12) months after
such effective  date.  Any Options  granted under this Plan prior to the date of
shareholder  approval  shall be deemed to be granted  subject to such  approval.
Should  shareholder  approval not be obtained  within  twelve (12)  months,  any
Options granted pursuant to the Plan shall be null and void.

           18. INDEMNIFICATION OF COMMITTEE. In addition to such other rights of
indemnification  as they may have and subject to limitations of applicable  law,
the members of the Committee  shall be  indemnified  by the Company  against all
costs and expenses  reasonably  incurred by them in connection  with any action,
suit or  proceeding to which they or any of them may be a party by reason of any
action  taken or  failure  to act  under or in  connection  with the Plan or any
rights  granted  thereunder  and against all amounts paid by them in  settlement
thereof or paid by them in satisfaction  of a judgment of any such action,  suit
or proceeding, the Board or Committee member or members shall notify the Company
in writing, giving the Company an opportunity at its own cost to defend the same
before such  Committee  member or members  undertake to defend the same on their
own behalf.

           19.  INFORMATION   REQUIREMENTS.   The  Company  shall  provide  each
participant with annual financial statements.

           20.  GOVERNING  LAW. The Plan shall be governed by, and all questions
arising  hereunder,  shall be determined in accordance with the laws of State of
Texas as such laws are applied to  agreements  between Texas  residents  entered
into and to be performed entirely within Texas.

                                      -8-Exhibit 10.64

                              POSITRON CORPORATION
                 1999 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN

                                        Date of Board Approval:  October 6, 1999
                                 Date of Shareholder Approval: December 17, 1999

       1. PURPOSE AND SCOPE. This 1999 Non-Employee Directors' Stock Option Plan
(the  "Plan")  is  adopted  for  the  benefit  of  the   directors  of  Positron
Corporation,  a Texas  corporation  (the  "Company")  who,  at the time of their
service,  are not  employees  of the  Company  or any of its  subsidiaries  (the
"Non-Employee  Directors").  It is  intended  to advance  the  interests  of the
Company by providing the  Non-Employee  Directors with  additional  incentive to
serve the Company by increasing their proprietary interest in the success of the
Company.

       2. ADMINISTRATION.

           (a) The Plan shall be  administered  by the Board of Directors of the
Company (the "Board").  The Board may delegate  administration  of the Plan to a
committee ("Committee") comprised of not less than two (2) members of the Board.
If  administration  is delegated to a Committee,  the  Committee  shall have, in
connection  with the  administration  of the Plan,  the powers  possessed by the
Board, subject to such resolutions,  not inconsistent with the provisions of the
Plan,  as may be adopted  from time to time by the Board.  The Board may abolish
the  committee  at any time and  revest in the Board the  administration  of the
Plan.

           (b) The Board  shall have the  authority  to adopt,  alter and repeal
such  administrative  rules,  guidelines and practices  governing the Plan as it
shall, from time to time, deem advisable;  to interpret the terms and provisions
of the Plan and any Option granted under the Plan (and any  agreements  relating
thereto);  and to otherwise  supervise the  administration  of the plan,  and to
exercise  such powers and  perform  such acts as the Board  deems  necessary  or
expedient to promote the best  interests  of the Company.  The Board may correct
any defect, supply any omission or reconcile any inconsistency in the Plan or in
any Option in the manner and to the extent it shall deem  necessary to carry the
Plan into effect.

           (c) All actions taken and all interpretations and determinations made
by the Board in good  faith  shall be final and  binding  upon all  Non-Employee
Directors, the Company, and all other interested persons.

           (d) No member of the Board shall be personally liable for any action,
determination,  or  interpretation  made in good faith with respect to the Plan;
and all members of the Board shall be fully  protected by the Company in respect
of any such action, determination, or interpretation.

<PAGE>

       3. STOCK SUBJECT TO AND RESERVED FOR THE PLAN.

           (a) The total number of shares of the Company's  Common Stock, no par
value (the "Common  Stock"),  with respect to which Options may be granted under
the Plan, shall not exceed the aggregate of 500,000 shares;  provided,  however,
that the  class and  aggregate  number of  shares  which may be  subject  to the
Options granted  hereunder shall be subject to adjustment in accordance with the
provisions  of Section  14 of this Plan.  Such  shares may be  treasury  shares,
reacquired shares or authorized but unissued shares.

           (b) The Company shall reserve for issuance pursuant to this Plan such
number of shares of Common  Stock as may from time to time be subject to Options
granted hereunder. If any Option expires or is canceled prior to its exercise in
full, the shares theretofore subject to such Option may again be made subject to
an Option under the Plan.

           (c) All Options granted under the Plan will constitute  non-qualified
options (the "Option").

       4. ELIGIBILITY.  Options shall be granted only to Non-Employee  Directors
of the Company.

       5. NON-DISCRETIONARY GRANT OF OPTIONS.

           (a)  NON-EMPLOYEE  DIRECTORS  ELECTED AFTER THE EFFECTIVE DATE OF THE
PLAN.  Initial  Grant.  For so long as this Plan is in  effect  and  shares  are
available  for the grant of Options  hereunder,  each person who is elected as a
Non-Employee Director of the Company for the first time after the effective date
of the Plan,  and who is not and has not been an  employee of the Company or any
of the  Company's  subsidiaries  (as defined in Section  424(f) of the  Internal
Revenue  Code of 1986,  as  amended  (the  "Code") (a "New  Director")  shall be
granted a one-time Option ("Initial Option") to purchase 25,000 shares of Common
Stock at a per  share  exercise  price  equal to 85% of the  Fair  Market  Value
(defined  below)  of a share  of  Common  Stock  on such  date  (subject  to the
adjustments  provided in Section 14 hereof).  This Section 5(a) shall only apply
to New  Director  the first time he or she is elected a director  of the Company
after the effective date of this Plan.

           (b) ANNUAL OPTIONS GRANT TO NON-EMPLOYEE DIRECTORS. ANNUAL OPTION. In
addition,  for so long as (i) this Plan is in effect,  and (ii) there are shares
available for the grant of Options hereunder,  each person serving as an elected
Non-Employee  Director  as of the  effective  date of this  Plan  and  each  New
Director  (together  "Eligible  Director")  shall be granted  automatically,  on
January 1st of each year (or the next day on which the Company's common stock is
traded should the Company's  common stock not trade on such date,  commencing as
of  January  1, 2000 and  subject  to the  adjustments  provided  in  Section 14
hereof),  an Option to  purchase  25,000  shares of Common  Stock at a per share
exercise price equal to 85% of the Fair Market Value (defined  below) of a share
of Common Stock. The foregoing notwithstanding, such Eligible Director must have
served as a  Non-Employee  Director  continuously  for at least thirty (30) days
immediately preceding the first day of January of any given year, in order to be
eligible  for grant of an Annual  Option as of January  1st of that  year.  Both
Initial Options and Annual Options shall be Non-Statutory Options.

                                      -2-
<PAGE>

           (c)  OPTION  PRICE.  For the  purposes  of this  Section 5, the "Fair
Market Value" as of any  particular  date shall mean (i) the closing sales price
on the immediately preceding business day of a share of Common Stock as reported
on the  principal  securities  exchange on which shares of Common Stock are then
listed or  admitted  to trading or (ii) if not so  reported,  the average of the
closing  bid and asked  prices  for a share of Common  Stock on the  immediately
preceding  business  day as quoted on the  National  Association  of  Securities
Dealers Automated  Quotation System ("NASDAQ") or (iii) if not quoted on NASDAQ,
the average of the closing bid and asked  prices for a share of Common  Stock as
quoted  by the  National  Quotation  Bureau's  "Pink  Sheets"  or  the  National
Association of Securities  Dealers' OTC Bulletin Board System. If the price of a
share of Common Stock shall not be so reported, the Fair Market Value of a share
of Common Stock shall be determined by the Board in its absolute discretion.

       6.  OPTION  AGREEMENT.  Each  Option  granted  under  the  Plan  shall be
evidenced  by an  agreement,  in a form  approved  by the Board,  which shall be
subject to the terms and  conditions of the Plan. Any agreement may contain such
other terms,  provisions  and  conditions  as may be determined by the Board and
that are not inconsistent with the Plan.

       7.  VESTING AND TERM OF OPTIONS.

           (a) Each Option  granted  under this Plan shall be subject to vesting
pursuant to one of two schedules:  (i) vesting in full on the date of grant;  or
(ii) vesting in four (4) equal installments  commencing on the first anniversary
of the date of grant;  provided,  however, that each such Option,  regardless of
the manner of vesting,  shall be subject to termination as provided in Section 9
hereof.  The schedule of vesting,  whether  vesting in full or in  installments,
shall  be  determined  by the  Board  as part of and at the  time of the  grant;
provided however, that any Option granted under this Plan which vests in full on
the date of grant as set forth in subsection (i) above,  shall be subject,  as a
condition of such Option grant, to the Company's right to repurchase as provided
in Section 16 hereof.

           (b) Each Option  agreement  shall also  provide that the Option shall
expire ten years from the date of grant,  unless sooner  terminated  pursuant to
Section 9 hereof.

       8. EXERCISE OF OPTIONS.  Options shall be  exercisable  at any time after
their appropriate  vesting date, subject to termination as provided in Section 9
hereof  and to the  Company's  right to  repurchase  as  provided  in Section 16
hereof.  Options  shall be  exercised by written  notice to the Company  setting
forth the number of shares with  respect to which the Option is being  exercised
and specifying the address to which the  certificates  representing  such shares
are to be mailed.  Such notice shall be accompanied by cash or certified  check,
bank  draft,  or postal  or  express  money  order  payable  to the order of the
Company, for an amount equal to the product obtained by multiplying the exercise
price of the  Option by the  number of shares of Common  Stock  with  respect to
which the Option is then being  exercised.  As  promptly  as  practicable  after
receipt of such written  notification and payment,  the Company shall deliver to
the Eligible  Director a certificate or certificates  representing the number of
shares of Common Stock with respect to which such Option has been so  exercised,
issued in the Eligible Director's name,  provided,  however,  that such delivery
shall be deemed  effected for all purposes  when the  Company's  transfer  agent
shall have deposited such  certificates in the United States mail,  addressed to
the Eligible Director, at the address specified pursuant to this Section 8.

                                      -3-
<PAGE>

       9. TERMINATION OF OPTIONS.  Except as may be otherwise expressly provided
in this Plan or otherwise determined by the Board, each Option, to the extent it
shall not have been exercised previously, shall terminate on the earliest of the
following:  (i) on the last day of the three-month period commencing on the date
on which the Eligible Director ceases to be a member of the Board for any reason
other than the death or total disability (within the meaning of Section 22(e)(3)
of the Internal Revenue Code) of the Eligible Director, in which case the option
may be exercised at any time within eighteen (18) months  following  termination
of such directorship or service, during which period the Eligible Director shall
be entitled to exercise all Options held by the Eligible Director on the date on
which the Eligible  Director  ceased to be a member of the Board that could have
been  exercised on such date;  or (ii) ten years after the date of grant of such
Option.

       10. TRANSFERABILITY OF OPTIONS.  During the term of an Option, the Option
shall not be assignable or otherwise  transferable except by will or by the laws
of descent and distribution.  Each Option shall be exercised during the Eligible
Director's lifetime only by the Eligible Director.

       11. NO RIGHTS AS STOCKHOLDER.  No Eligible Director shall have any rights
as a stockholder  with respect to shares  covered by an Option until the date of
issuance of a stock certificate or certificates representing such shares. Except
as provided in Section 14 hereof, no adjustment for dividends or otherwise shall
be made if the  record  date  therefore  is  prior to the  date of  issuance  of
certificates  representing shares of Common Stock purchased pursuant to exercise
of this Option.

       12.  INVESTMENT  REPRESENTATIONS.  Whether or not the  Options and shares
covered by the Plan have been  registered  under the  Securities Act of 1933, as
amended,  each person exercising an option under the Plan may be required by the
Company to give a  representation  in writing that such person is acquiring such
shares for  investment  and not with a view to, or for sale in connection  with,
the  distribution  of any part  thereof.  The Company will endorse any necessary
legend   referring  to  the  foregoing   restriction  upon  the  certificate  or
certificates  representing  any shares  issued or  transferred  to the  Eligible
Director upon the exercise of any Option granted under the Plan.

       13.  AMENDMENT OR  TERMINATION.  The Board may amend,  modify,  revise or
terminate this Plan at any time and from time to time. All Options granted under
this Plan  shall be  subject  to the terms and  provisions  of this Plan and any
amendment,  modification  or  revision  of this  Plan  shall be deemed to amend,
modify or revise  all  Options  outstanding  under this Plan at the time of such
amendment, modification or revision. If this Plan is terminated by action of the
Board, all outstanding Options may be terminated.

       14.  CHANGES  IN  THE  COMPANY'S  CAPITAL  STRUCTURE.  The  existence  of
outstanding  Options  shall  not  affect  in any way the  right  or power of the
Company or its  stockholders to make or authorize the dissolution or liquidation
of the Company,  any sale or transfer of all or any part of the Company's assets
or business, any reorganization or other corporate act or proceeding, whether of
a similar  character or otherwise,  any or all  adjustments,  recapitalizations,
reorganizations  or other  changes in the  Company's  capital  structure  or its
business,  any merger or consolidation of the Company, or any issuance of bonds,
debentures, preferred or prior

                                      -4-
<PAGE>

preference  stock senior to or affecting the Common Stock or the rights thereof;
provided,  however,  that if (i) the  outstanding  shares of Common Stock of the
Company  shall  be  subdivided  into a  greater  number  of  shares  or (ii) the
outstanding  shares of Common Stock shall be combined  into a smaller  number of
shares thereof,  then (a) the number of shares of Common Stock available for the
grant of Options  under the Plan shall be  proportionally  adjusted to equal the
product  obtained by multiplying  such number of available shares remaining by a
fraction,  the numerator of which is the number of outstanding  shares of Common
Stock after giving effect to such combination or subdivision and the denominator
of which is that  number of  outstanding  shares of Common  Stock  prior to such
combination  or  subdivision,   (b)  the  exercise  price  of  any  Option  then
outstanding  under  the Plan  shall be  proportionately  adjusted  to equal  the
product obtained by multiplying such exercise price by a fraction, the numerator
of which is the  number of  outstanding  shares of  Common  Stock  prior to such
combination  or  subdivision  and the  denominator  of which is that  number  of
outstanding  shares of Common Stock after giving effect to such  combination  or
subdivision,  and (c) the  number  of shares of  Common  Stock  issuable  on the
exercise of any Option then  outstanding  under the Plan or  thereafter  granted
under the Plan shall be  proportionately  adjusted to equal the product obtained
by  multiplying  such  number  of  shares of  Common  Stock by a  fraction,  the
numerator  of which is the number of  outstanding  shares of Common  Stock after
giving effect to such combination or subdivision and the denominator of which is
that number of outstanding  shares of Common Stock prior to such  combination or
subdivision.

       15. COMPLIANCE WITH OTHER LAWS AND REGULATIONS.

           (a) The Plan, the grant and exercise of Options  thereunder,  and the
obligation of the Company to sell and deliver  shares  acquirable on exercise of
such Options,  shall be subject to all applicable  federal and state laws, rules
and regulations and to such approvals by any  governmental or regulatory  agency
or national  securities  exchange as may be required.  The Company  shall not be
required to sell or issue any shares on  exercise of any Option if the  issuance
of such shares shall constitute a violation by the Non-Employee  Director or the
Company  of  any  provisions  of  any  law or  regulation  of  any  governmental
authority.

           (b) Each  Option  granted  under  this Plan  shall be  subject to the
requirement that, if at any time the Board shall determine that (i) the listing,
registration  or  qualification  of the shares subject thereto on any securities
exchange or under any state or federal law of the United  States or of any other
country or governmental subdivision thereof, (ii) the consent or approval of any
governmental  regulatory  body,  or (iii)  the  making  of  investment  or other
representations,  are  necessary or desirable  in  connection  with the issue or
purchase of shares subject thereto,  no such Option may be exercised in whole or
in part unless such listing, registration,  qualification,  consent, approval or
representation shall have been effected or obtained,  free of any conditions not
acceptable to the Board.

           (c) These  provisions do not obligate the Company to register  either
the Plan,  any option  granted  under the Plan,  or any stock issued or issuable
pursuant to any such Option, under any state or federal law of the United States
or of any other country or governmental subdivision thereof.

           (d) Any  determination  by the  Board in  connection  with any of the
above determinations shall be final, binding and conclusive.

                                      -5-
<PAGE>

       16. REPURCHASE RIGHT OF THE COMPANY.

           (a) GENERAL.  Shares of stock issued or issuable  upon exercise of an
option  grant  with  immediate  vesting,  as set forth in Section  7(a)(i),  are
subject  to  a  right  of  repurchase  by  the  Company.  If  the  service  of a
Non-Employee  Director  to  the  Company  or a  subsidiary  of  the  Company  is
terminated  for any reason  other than by death or total  disability,  except as
otherwise described in Section 16(d), the Company (or any subsidiary  designated
by it) shall have the option for 90 days after the termination of service by the
Non-Employee  Director  to  repurchase  all or any part of his  stock  issued or
issuable upon exercise of the option, as provided in this Section 16.

           (b) NOTICE.  Within 30 days of receiving  notice from a  Non-Employee
Director or his  representative of the termination of the director's  service to
the Company or a subsidiary of the Company,  the Company must give notice to the
director of the  Company's  decision  whether or not to exercise its  repurchase
right.

           (c) REPURCHASE  PRICE. The repurchase price per share  repurchased in
accordance  with this Section 16 shall be the original per share  purchase price
set  forth in the  accompanying  Notice of Stock  Option  Grant.  The  Company's
repurchase right at this price lapses at the rate of 25% per year, starting with
the first  anniversary of the Option Grant, and continues over 4 years,  without
reference to the date the Option was exercised or became exercisable.

           (d) SHARES ACQUIRED THROUGH  EXERCISE OF OPTION AFTER  TERMINATION OF
SERVICES.  If the Non-Employee Director exercises in whole or in part his option
after termination of his services to the Company for any reason other than death
or total disability, the Company shall have, for 90 days after the exercise, the
right  to  repurchase  the  shares  so  acquired  upon  written  notice  to  the
Non-Employee  Director. The purchase price and terms of payment will be governed
by Sections 16(c) and (e) of this Plan.

           (e) PAYMENT OF THE PURCHASE PRICE.  The Company's right to repurchase
must be exercised for cash or  cancellation of purchase money  indebtedness  for
the shares within 90 days of termination of service by the Non-Employee Director
(or in the case of securities  issued upon exercise of Options after the date of
termination, within 90 days after the date of exercise).

           (f) DEATH OR TOTAL DISABILITY.  There shall be no right of repurchase
by the Company upon the Non-Employee's death or total disability.  The foregoing
notwithstanding, the provisions of this Section 16(g) do not extend or otherwise
affect the  termination  of any Option which shall not have been  exercised,  as
otherwise set forth in Section 9 herein.

           (g) REPURCHASE RIGHT AS TO OTHER Shares.  The repurchase right of the
Company  shall  apply  as well to all  shares  or  other  securities  issued  in
connection  with  any  stock  split,   reverse  stock  split,   stock  dividend,
recapitalization,  reclassification,  spin-off, split-off, merger, consolidation
or reorganization ("Other Shares") but such right shall expire on the occurrence
of any event or transaction upon which the Option terminates.

       17.  INDEMNIFICATION  OF BOARD OF DIRECTORS.  The Company  shall,  to the
fullest extent permitted by law, indemnify,  defend and hold harmless any person
who at any time is a party or

                                      -6-
<PAGE>

is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding (whether civil, criminal, administrative or investigative) in
any way relating to or arising out of this Plan or any Options granted hereunder
by reason of the fact that such  person is or was at any time a director  of the
Company against judgments, fines, penalties, settlements and reasonable expenses
(including  attorneys' fees) actually incurred by such person in connection with
such action,  suit or proceeding.  This right of indemnification  shall inure to
the benefit of the heirs,  executors and  administrators of each such person and
is in  addition  to all other  rights to which such  person may be  entitled  by
virtue  of the  bylaws  of the  Company  or as a  matter  of  law,  contract  or
otherwise.

       18. ADDITIONAL PROVISIONS.  (a) Nothing in the Plan, or in any instrument
executed  pursuant thereto,  shall confer upon any Non-Employee  Director either
the  right  or  the  obligation  to  continue  acting  as a  director  of (or to
employment by) the Company,  nor shall any Plan provision or instrument executed
pursuant  thereto  affect  any  right  of the  Company,  its  Board  and/or  its
shareholders to terminate the  directorship  (or employment) of any Non-Employee
Director  with or without  cause.  (b) In  connection  with each option  granted
pursuant  to the  Plan,  each  Non-Employee  Director  shall  make  arrangements
satisfactory  to the  Company to insure  that the amount of any federal or other
withholding tax required to be withheld with respect to such sale or transfer is
made available to the Company for timely payment of such tax.

       19. EFFECTIVE DATE OF THE PLAN. This Plan shall become effective, subject
to stockholder approval, on October 6, 1999. No Option shall be granted pursuant
to this Plan on or after December 31, 2009.

       20.  GOVERNING  LAW.  The Plan shall be  governed  by, and all  questions
arising hereunder,  shall be determined in accordance with the laws of the State
of Texas as such laws are applied to agreements  between Texas residents entered
into and to be performed entirely within Texas.

                                      -7-

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