Document:

Exhibit 10.9

                         ASSET SALE/PURCHASE AGREEMENT

      AGREEMENT  made as of the 14th day of December  1999 by and between  Right
Body Foods Inc., a New York  corporation with its principal place of business at
118 Jackson  Avenue,  Syosset,  Long Island,  New York 11791 ("RBF") and Rebecca
Klafter residing at 102 Bristol Drive, Woodbury, New York 11797 ("Klafter"), the
chief  executive  officer and sole  stockholder of RBF (Klafter and RBF being at
times  collectively  referred  to  as  the  "Sellers")  on  the  one  hand,  and
Bio-Reference  Laboratories,  Inc.,  a New Jersey  corporation  ("BRLI") and its
wholly-owned subsidiary,  BRLI No. 1 Acquisition Corp., a New Jersey corporation
(the  "Purchaser"),  each with its principal  place of business at 481 Edward H.
Ross Drive, Elmwood Park, New Jersey 07407.

                             W I T N E S S E T H :

      WHEREAS RBF is engaged in the  manufacture of certain health food products
at its leased facility at 118 Jackson  Avenue,  Syosset,  Long Island,  New York
11791 and in the distribution of such products under the name "Right Body Foods"
in the greater New York metropolitan area (the "Health Food Business"); and

      WHEREAS  the  Sellers  desire to sell and  Purchaser  desires to  purchase
certain assets used by RBF in its operation of the Health Food Business so as to
enable Purchaser to operate the Health Food Business; and

      WHEREAS  Purchaser is unwilling to effect such purchase  unless it is able
to employ  Klafter to serve as Director of the Health Food  Business  operations
and to obtain  Klafter's  agreement not to compete with Purchaser and/or BRLI in
its operation of the Health Food Business.

      NOW,  THEREFORE,  in  consideration of the mutual covenants and agreements
hereinafter  contained  and other good and valuable  consideration,  the receipt
whereof and sufficiency of which are hereby acknowledged, it is hereby agreed as
follows:

1.    Purchase and Sale

      (a) At the Closing  (hereinafter  defined)  Sellers  will sell,  transfer,
convey,  grant,  relinquish,  release,  assign,  and deliver to  Purchaser,  and
Purchaser  will purchase and acquire from  Sellers,  on the terms and subject to
the conditions set forth in this Agreement, certain assets and rights of Sellers
related to the Health Food  Business  as they exist as of the Closing  including
Sellers'  rights  to the  tradename  "Right  Body  Foods  Inc." and to all other
registered or unregistered  patents,  trademarks  and/or  tradenames,  licenses,
recipes,  labels,  artwork,  food  ingredients,   supplies,  certain  equipment,
leaseholds, customer lists and

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associated  goodwill  used in the  operation  of the Health  Food  Business  and
certain other  assets,  all of which are  specifically  enumerated on Schedule A
hereto and are hereafter referred to as the "Assets."

      (b) At the Closing,  BRLI shall issue an aggregate  180,000  shares of its
authorized but unissued  common stock and deliver same to Purchaser,  registered
in the name of RBF, or if RBF so designates,  in the name of Klafter, which upon
delivery  to the  registered  owner  together  with  BRLI  and  the  Purchaser's
assumption of the liabilities  enumerated in Schedule B hereto, shall constitute
full payment for the Assets.

      (c)  Excluded  from this  sale and  purchase  are any and all  liabilities
(including but not limited to tax  liabilities of the Sellers)  except for those
liabilities  specifically enumerated on Schedule B hereto which shall be assumed
by the Purchaser.

      (d) At the Closing, BRLI shall issue an aggregate 20,000 additional shares
of its  authorized  but unissued  common  stock and deliver  same to  Purchaser,
registered  in Klafter's  name,  for delivery to Klafter in full payment for her
non-competition agreement.

2.    The Closing

      (a) The closing of the sale and purchase (the "Closing")  shall take place
at the principal  offices of the  Purchaser on Tuesday,  December 14, 1999 or at
such date and time  thereafter  as the parties  hereto shall  mutually  agree in
writing (the "Closing Date").

      (b) At the Closing, Sellers shall deliver or cause to be
delivered to the Purchaser;

            (i) a duly  executed  bill  of  sale  substantially  in the  form of
Schedule C hereto ("Bill of Sale") and other good and sufficient  instruments of
transfer and conveyance,  including assignments if appropriate, as shall vest in
Purchaser all of Sellers' rights,  title and interest in and to the Assets, free
from all encumbrances;

            (ii) a duly executed  assignment to Purchaser of the exclusive right
to use of all of Sellers'  registered and unregistered  patents,  trademarks and
tradenames including the right to the name "Right Body Foods";

            (iii) an employment agreement (the "Employment
Agreement") in the form of Schedule D hereto, duly executed by
Klafter;

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            (iv) a non-competition agreement (the "Non-Competition
Agreement") in the form of Schedule E hereto, duly executed by
Klafter;

            (v) a duly  executed  assignment  of the  lease of the  Premises  in
Syosset,  Long Island,  New York  utilized by RBF in the operation of the Health
Food Business to Purchaser  and a duly  executed  consent from the Landlord with
respect to such assignment;

            (vi) an investment  representation  letter substantially in the form
of  Schedule F hereto,  with  respect to the shares of BRLI  common  stock to be
issued at the Closing, duly executed by the recipient(s) of such shares; and

            (vii)  all  such  other  duly  executed  assignments  and  consents,
satisfactory  in  form  and  content  to the  Purchaser,  as the  Purchaser  may
reasonably  require  in  order  to  effectuate  transfer  of the  Assets  to the
Purchaser.

      (c) At the Closing, the Purchaser shall deliver or cause to be
delivered to RBF and/or Klafter, as the case may be;

            (i) a duly  executed  assumption  of certain  liabilities  agreement
substantially  in  the  form  of  Schedule  G  hereto  ("Assumption  of  Certain
Liabilities  Agreement")  as shall be binding  upon both BRLI and the  Purchaser
with respect to those liabilities of RBF specifically enumerated on Schedule B;

            (ii) an aggregate  180,000 shares of BRLI's  authorized but unissued
common stock to RBF, or if RBF so designates in writing, to Klafter,  registered
in the  recipient's  name,  in full payment  (together  with the  Assumption  of
Certain Liabilities Agreement) for the Assets;

            (iii) the Employment Agreement, duly executed by BRLI;

            (iv) the Non-Competition Agreement, duly executed by BRLI
and the Purchaser;

            (v) an aggregate  20,000  shares of BRLI's  authorized  but unissued
common stock to Klafter,  registered in Klafter's  name, in full payment for her
execution and delivery of the Non-Competition Agreement;

            (vi) an  assumption  by  Purchaser  of the lease for the Premises in
Syosset,  Long Island,  New York and a guarantee of the Purchaser's  obligations
thereunder executed by BRLI; and

            (vii) all such other duly executed consents and
assumptions satisfactory in form and content to the Sellers, as the

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Sellers may reasonably require in order to consummate the transactions described
herein.

3.    Representations and Warranties of Sellers

      (a) As an  inducement  to  Purchaser  to enter  into  this  Agreement  and
consummate the transactions  contemplated hereby, the Sellers, and each of them,
jointly and severally, represent and warrant to BRLI and the Purchaser that:

            (i) RBF is a corporation  duly  organized,  validly  existing and in
good  standing  under  the laws of the  State of New York and has all  requisite
power and authority to enter into this Agreement, to consummate the transactions
herein contemplated,  and to own, lease and operate its properties. They have no
actual  knowledge of any impairment of RBF's power and authority to carry on the
Health Food business as it is now being conducted.

            (ii) The execution and delivery of this Agreement,  the consummation
of the transactions  herein  contemplated  and the  performance,  observance and
fulfillment by RBF of all of the terms and  conditions  hereof on its part to be
performed,  observed, and fulfilled, (a) have been duly approved and effectively
authorized by the Board of Directors and by the sole  stockholder  of RBF and no
other  proceedings are necessary to authorize this Agreement or the consummation
of the  transactions  contemplated  hereby,  (b) do not  and  will  not  (either
immediately or with the lapse of time, or with notice,  or both) (1) violate any
provisions of any judicial or administrative  order,  award,  judgment,  decree,
statute,  rule or  regulation  applicable to RBF or any of its  properties,  (2)
conflict with or result in a breach of, constitute a default under,  contravene,
result in a  forfeiture  of a right  under,  or result  in the  acceleration  of
payment or performance under, any note, bond, mortgage,  indenture, deed, trust,
license,  lease,  agreement, or other instrument or obligation to which RBF is a
party or by which  RBF or any of the  Assets  may be bound or  affected,  or (3)
result in the creation or imposition of any lien,  security interest,  charge or
other encumbrance against any of the Assets.

            (iii)  This  Agreement  has  been  duly  and  validly  executed  and
delivered by the Sellers and upon execution and delivery, will constitute valid,
binding  and  enforceable  obligations  of the  Sellers  subject to  bankruptcy,
insolvency and similar laws affecting  creditors rights generally and subject to
general  principles of equity.  No petition in  bankruptcy  has been filed by or
against either of the Sellers. The Sellers have the right, power, legal capacity
and authority to enter into and perform their  obligations  under this Agreement
(and with respect to Klafter, her obligations under the Employment Agreement and
the  Non-Competition  Agreement)  and no consent of any third party is necessary
with respect thereto which has not been obtained.

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            (iv)  There  is no  material  action,  dispute,  claim,  litigation,
arbitration,  investigation,  or other proceeding,  at law or in equity or by or
before any court or  governmental  or  administrative  body (U.S.  or  foreign),
pending or threatened  against RBF, its business or properties,  or with respect
to the  transactions  contemplated by this Agreement,  and RBF is not subject to
any adverse judicial,  governmental or agency judgment,  decree or order, nor do
the Sellers know of any basis for any such action, dispute,  claim,  litigation,
arbitration, investigation or other proceeding.

            (v) RBF has made, and will continue to make,  adequate provision for
payment of its  obligations,  and RBF is not in default of and will not with the
passage of time or  otherwise  become in default  of, any  current or  long-term
liabilities   (including   contingent   liabilities),   debts  or   obligations,
contractual or otherwise.

            (vi)  Immediately  after the Closing,  RBF will cease all operations
relating to the Health Food Business and will engage  solely in  collecting  any
receivables  outstanding  on the Closing  Date and paying all payables and other
obligations which are not expressly assumed hereunder by BRLI and the Purchaser.
RBF  shall  be  permitted  to  maintain  a  bank  account  for  such   purposes.
Furthermore,  RBF will not  engage  in any  facet of the  Health  Food  Business
anywhere in the continental  United States east of the  Mississippi  River for a
period of five (5) years after the Closing.

            (vii)  Annexed   hereto  as  Schedule  H  is  a  copy  of  the  sole
governmental  license which RBF has obtained in connection with its operation of
the Health Food Business.  Sellers have no actual knowledge that said license is
not in full force and effect.

            (viii) Annexed  hereto as Schedule I is a schedule  listing each and
every inspection or other visit to RBF's premises by any federal, state or local
governmental  organization  or  authority  which is or was related to the Health
Food Business  including (a) the date of such inspection or visit;  (b) the name
of the organization or authority;  (c) the substance of the  communication  from
the  organization or authority after such visit;  and (d) the responsive  action
(if any) taken by RBF.

            (ix) Since its inception,  the food products sold and/or distributed
by RBF in its operation of the Health Food Business have been tested for quality
by independent  testing  entities and RBF has not received any negative  reports
concerning such tests.

            (x) From August 31, 1999 through the date hereof,  there has been no
material  adverse  change in RBF's  financial  condition,  operating  results or
business, and no sale or distribution of

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assets and no incurrence of liabilities or indebtedness, except in each case, in
the ordinary course of its business.

            (xi) As soon as possible after the Closing but no later than two (2)
weeks  after  the  Closing,  RBF  will  file a duly  executed  amendment  to its
certificate of incorporation with the New York Department of State, changing its
name from "Right Body Foods, Inc."

      (b) The  foregoing  representations  and  warranties  are  made  with  the
knowledge  and  expectation  that the  Purchaser  is placing  complete  reliance
thereon.

4.    Representations and Warranties of BRLI and Purchaser
      ----------------------------------------------------

      (a) As an  inducement  to the  Sellers  to enter into this  Agreement  and
consummate the transactions contemplated hereby, BRLI and Purchaser, and each of
them, represent and warrant:

            (i) BRLI and Purchaser are each corporations duly organized, validly
existing and in good standing under the laws of the State of New Jersey and each
has all requisite corporate power and authority to enter into this Agreement, to
consummate the transactions herein  contemplated,  to own, lease and operate its
properties and to carry on its business as it is now being  conducted,  and each
is  duly  licensed,  authorized  and  qualified  to do  business  and is in good
standing  in all  jurisdictions  in which the  conduct  of its  business  or the
ownership  or  leasing  of  its  properties  requires  it to  be  so  qualified,
authorized or licensed.

            (ii) The execution and delivery of this Agreement,  the consummation
of the  transactions  herein  and  therein  contemplated  and  the  performance,
observance  and  fulfillment  by BRLI and by  Purchaser  of all of the terms and
conditions hereof and thereof, on each of their parts to be performed, observed,
and fulfilled, (A) have all been approved and effectively authorized by BRLI and
by Purchaser's  boards of directors and no other proceedings on the part of BRLI
or of Purchaser are necessary to authorize this Agreement or the consummation of
the  transactions  contemplated  hereby  and  thereby,  (B) do not and  will not
(either  immediately  or with the lapse of time,  or with  notice,  or both) (1)
conflict with any of the provisions of the Articles of  Incorporation or by-laws
of  BRLI  or  of   Purchaser,   violate  any   provisions  of  any  judicial  or
administrative  order,  award,  judgment,  decree,  statute,  rule or regulation
applicable to BRLI or Purchaser or any of their properties, (2) conflict with or
result in a breach  of,  constitute  a default  under,  contravene,  result in a
forfeiture  of a right  under,  or  result in the  acceleration  of  payment  or
performance under, any note, bond, mortgage,  indenture,  deed, trust,  license,
lease,  agreement,  or other instrument or obligation to which BRLI or Purchaser
is a party or by which BRLI or Purchaser or any of

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<PAGE>

their  properties  may be bound or  affected,  or (3) result in the  creation or
imposition of any lien,  security interest,  charge or other encumbrance against
any properties of BRLI or Purchaser.

            (iii)  This  Agreement  has  been  duly  and  validly  executed  and
delivered  by BRLI  and by  Purchaser  and upon  execution  and  delivery,  will
constitute  valid,  binding and  enforceable  obligations of BRLI and Purchaser.
BRLI and the Purchaser each has the right,  power,  legal capacity and authority
to enter into and perform its obligations under this Agreement and no consent of
any third party is necessary with respect thereto,  which has not been obtained.
No petition in bankruptcy has been filed by or against or is  contemplated to be
filed by BRLI or the Purchaser.

            (iv)  There  is no  material  action,  dispute,  claim,  litigation,
arbitration,  investigation,  or other proceeding,  at law or in equity or by or
before any court or  governmental  or  administrative  body (U.S.  or  foreign),
pending or threatened against BRLI or the Purchaser, or against their businesses
or  properties,  or  with  respect  to the  transactions  contemplated  by  this
Agreement,  and  neither  BRLI  nor the  Purchaser  is  subject  to any  adverse
judicial, governmental or agency judgment, decree or order, nor does BRLI or the
Purchaser  know of any basis for any such action,  dispute,  claim,  litigation,
arbitration, investigation or other proceeding.

            (v) At the  Closing  Date,  BRLI will  have not more than  8,000,000
shares of its common stock, $.01 par value,  issued and outstanding,  each share
of which  is  entitled  to one vote on all  matters  on which  stockholders  are
entitled to vote. In addition, at such date, the only other outstanding class of
BRLI  capital  stock  will be Series A Senior  Preferred  Stock,  $.10 par value
("Senior  Preferred Stock") of which 604,078 shares were issued and outstanding.
Each share of Senior  Preferred  Stock is entitled to one vote on all matters on
which  stockholders  are  entitled  to vote.  Furthermore,  each share of Senior
Preferred  Stock is  convertible  into one share of common stock at a conversion
price of $.75.

      (b) The  foregoing  representations  and  warranties  are  made  with  the
knowledge  and  expectation  that the  Sellers  are  placing  complete  reliance
thereon.

5.    Indemnification

      (a)  Provided  that the  representations  made by BRLI and by Purchaser in
this Agreement are accurate and BRLI and Purchaser are in compliance  with their
obligations  under this  Agreement,  the Sellers  and each of them,  jointly and
severally  hereby agree to indemnify and hold harmless BRLI and  Purchaser,  and
each of them, against and in respect of:

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            (i) all  liabilities  and  obligations  of, or claims  against  BRLI
and/or  the  Purchaser  based  on  liabilities  and  obligations  of  RBF or the
individual Seller in connection with the operation up to the Closing Date of the
Health Food Business, including but not limited to liabilities (if any) based on
alleged violations of food processing, licensing and/or labeling laws as well as
liabilities  for  income,  employment,  sales  and all  other  taxes  as well as
penalties and interest thereon (if any);  unless same shall result from the acts
or omissions of BRLI and/or the  Purchaser or are  liabilities  of RBF expressly
assumed hereunder by BRLI and/or the Purchaser;

            (ii)  any  damage  or   deficiency   resulting   from  any  material
misrepresentation,  breach of warranty or nonfulfillment of any agreement on the
part  of  any  of  the  Sellers  under  this  Agreement  or  from  any  material
misrepresentation  in or  omission  from any  certificate  or  other  instrument
furnished or to be furnished to Purchaser under this Agreement; and

            (iii)  all  actions,  suits,  proceedings,   demands,   assessments,
judgments, costs and expenses incident to any of the foregoing.

      (b)  Provided  that  the  representations  made  by the  Sellers  in  this
Agreement  are  accurate  and  each  Seller  is in  compliance  with its and her
obligations  under  this  Agreement,  BRLI and the  Purchaser,  and each of them
hereby  agrees to  indemnify  and hold  harmless  the  Sellers and each of them,
against and in respect of:

            (i) all  liabilities  and  obligations  of,  or claims  against  the
Sellers or any of them with respect to the Assets, for periods after the Closing
as a result of Purchaser's  purchase of the Assets  hereunder  unless same shall
result from the acts or omissions of Sellers;

            (ii)  any  damage  or   deficiency   resulting   from  any  material
misrepresentation, breach of warranty, or nonfulfillment of any agreement on the
part of Purchaser under this Agreement or from any material misrepresentation in
or  omission  from  any  certificate  or  other  instrument  furnished  or to be
furnished to Sellers under this Agreement; and

            (iii)  all  actions,  suits,  proceedings,   demands,   assessments,
judgments, costs and expenses incident to any of the foregoing.

      (c) In the event that any parties hereunder (the  "Indemnitees")  elect to
assert their rights  pursuant to this Section 5 to  indemnification  against the
other parties hereto (the "Indemnitors"), prior to settling or defending against
any claim as to which they may seek indemnification hereunder, the Indemnitees

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<PAGE>

shall give notice to the Indemnitors of such election and the claim with respect
to which  indemnification is sought. The Indemnitors shall have the right within
seven (7) days after such notice,  time being of the essence,  to give notice to
the  Indemnitees  that they elect to  contest  such  claim and  thereupon,  upon
posting reasonably  adequate security with the Indemnitees,  will be entitled at
their own expense,  to contest  same.  In the event they so elect to contest the
claim,  the  Indemnitors  will also  have the right to settle  same at their own
expense with the  Indemnitees'  consent,  which consent will not be unreasonably
withheld.

6.    Expenses

      Each of the parties shall pay its or her own expenses  (including  without
limitation,  the fees and expenses of the agents,  representatives,  counsel and
accountants) incidental to the preparation and consummation of this Agreement.

7.    Brokerage

      Each party shall  indemnify  and hold the other  parties free and harmless
from all losses,  damages,  costs, and expenses (including attorney's fees) that
may be  suffered as a result of claims  brought by any broker or finder  seeking
compensation on account of this  transaction  arising out of the actions of such
party.

8.    Survival of Representations and Warranties

      The parties agree that the representations,  warranties,  agreements,  and
covenants  contained in this  Agreement or in any other  documents  delivered in
accordance  with or by virtue of this Agreement  shall survive the execution and
delivery of this Agreement and all other  instruments in connection  herewith or
therewith.

9.    Notices

      All notices and other documents required or permitted to be given pursuant
to this Agreement  shall be in writing and shall be deemed to have been given if
delivered  by hand with an  acknowledgement  of  receipt  therefor  or mailed by
registered or certified mail,  return receipt  requested,  to the parties at the
addresses  provided  above  (or  such  other  address  for a party  as  shall be
specified by notice given pursuant to this  paragraph)  with a copy by certified
mail, return receipt  requested,  to the attorneys for the respective parties at
the following  addresses:  for Sellers - Vitale & Levitt,  445 Broadhollow Road,
Suite 124,  Melville,  New York 11747 and for BRLI and the  Purchaser - Tolins &
Lowenfels, A Professional  Corporation,  12 East 49th Street, New York, New York
10017.

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<PAGE>

10.   Binding Effect and Assignability

      This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors, heirs and assigns.

11.   Governing Law and Jurisdiction

      This Agreement shall be construed and enforced in accordance with the laws
of the State of New Jersey  without  regard to the  principle of the conflict of
laws. The parties hereto consent to the in personam  jurisdiction  of the courts
of the State of New Jersey and  further  agree that any action  with  respect to
this  Agreement  shall be commenced  and  prosecuted  only in such  courts.  The
parties  hereby waive trial by jury in any action or  proceeding  arising  under
this Agreement.

12.   Remedies

      No remedy herein  conferred  upon or reserved to a party is intended to be
exclusive of any other available remedy, but each and every such remedy shall be
cumulative  and in addition to every other remedy given under this  Agreement or
in connection  with this  Agreement  and now or hereafter  existing at law or in
equity.

13.   Entire Agreement

      This  Agreement,   the  Employment  Agreement  and  the  Non-  Competition
Agreement  constitute the entire agreement among the parties with respect to the
subject matter  contained herein and therein and supersedes all prior agreements
and  understandings,  oral or written.  This Agreement and such other Agreements
may not be amended or modified except in writing executed by each of the parties
hereto and thereto.

14.   Confidentiality of Agreement and Disclosure

      The parties agree that the terms of this  Agreement  and the  transactions
contemplated  hereby will be kept confidential and not publicly  disclosed until
such time and in such manner as shall be determined by the  Purchaser,  although
Klafter shall be permitted to disclose the terms of the  transaction  to members
of her immediate family and her professional advisors.

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<PAGE>

     IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first above written.

                              /s/Rebecca Klafter
                              ------------------
                              Rebecca Klafter (individually)

                              Right Body Foods Inc.

                                    By /s/Rebecca Klafter
                                  Rebecca Klafter, President

                        Bio-Reference Laboratories, Inc.

                              By /s/Howard Dubinett
                            Howard Dubinett, Executive Vice President

                        BRLI No. 1 Acquisition Corp.

                              By /s/Howard Dubinett
                            Howard Dubinett, Executive Vice President

                                      11<PAGE>

                                                                     Exhibit 4.1

                                BI INCORPORATED

                             1999 STOCK OPTION PLAN

          1.   Purpose.  The purpose of this 1999 Stock Option Plan (the "Plan")
               -------
is to grant to employees, consultants and directors, options to purchase common
stock (the "Common Stock") of BI Incorporated, a Colorado corporation (the
"Corporation"), so that they may have the opportunity to participate in the
growth of the Corporation and to provide them with an increased incentive to
promote the interests of the Corporation. The options granted under the Plan are
intended to qualify as incentive stock options under Section 422 of the Internal
Revenue Code of 1986, as amended (the "Code"), unless specifically designated as
non-qualified stock options.

          2.   Effectiveness of the Plan; Termination.  This Plan shall become
               --------------------------------------
effective at such time as it has received the required approval of shareholders
of the Corporation as contemplated by Section 422 of the Code (the "Effective
Date"). No options shall be granted under the Plan prior to the Effective Date.
The Plan shall terminate at the earlier of ten years from the Effective Date or
at such earlier time as the Board of Directors determines to terminate it.

          3.   Eligible Persons.  Employees, directors and consultants of the
               ----------------
Corporation or of any parent or subsidiary of the Corporation shall be eligible
to be granted options under this Plan, except that incentive stock options may
be granted only to employees. "Parent" and "subsidiary" shall have the meanings
set forth in Section 424 of the Code.

          4.   Stock Subject to Plan.
               ---------------------

               (a)  The stock issuable under the Plan shall be shares of
authorized but unissued or reacquired Common Stock, including shares repurchased
by the Corporation on the open market. The maximum number of shares of Common
Stock initially reserved for issuance over the term of the Plan shall not exceed
300,000 shares. Upon the Effective Date of the Plan, all shares of Common Stock
reserved but not subject to outstanding options under the BI Incorporated 1996
Stock Option Plan shall become part of the shares of Common Stock reserved for
options to be granted under this Plan (in addition to the 300,000 shares
reserved above) and no further options shall be granted under the BI
Incorporated 1996 Stock Option Plan. In addition, the share reserve will
automatically be increased on the first day of each fiscal year, beginning with
the fiscal year ending June 30, 2000, by an amount equal to two percent (2%) of
the total number of shares of Common Stock outstanding on the last day of the
immediately preceding fiscal year, or such lesser number of shares as is later
ratified by the Board at their first meeting or action in the beginning of such
new fiscal year; provided, that in no event shall any such annual increase
exceed 200,000 shares.

               (b)  Shares of Common Stock reserved for issuance pursuant to
outstanding options shall be available for subsequent issuance under the Plan to
the extent those options expire or terminate for any reason prior to exercise in
full. In the event the exercise price of an option under the Plan be paid with
shares of Common Stock, or should shares of Common Stock otherwise issuable
under the Plan be withheld by the Corporation in satisfaction of the withholding
taxes incurred in connection with the exercise of an option, then the number of
shares of Common Stock available for issuance under the Plan shall be reduced by
the gross number of shares for which the option is exercised or which vest under
the stock issuance, and not by the net number of shares of Common Stock issued
to the holder exercising such option.

               (c)  Appropriate adjustments shall be made to the number and type
of shares reserved under the Plan, including the number and type of shares to be
added annually to the Plan as provided for in Paragraph 4(a) above, upon the
occurrence of any of the events describe in Section 10 below. Any such
adjustments as determined by the Committee shall be final, binding and
conclusive.
<PAGE>

          4.   Administration.
               --------------

               (a)  The Plan shall be administered by a committee of at least
two non-employee members of the Board of Directors of the Corporation (the
"Board") appointed by the Board and serving at the Board's pleasure (the
"Committee"). The Board may increase the size of the Committee, appoint
additional members, remove members (with or without cause), appoint new members,
fill vacancies however caused, or remove all members of the Committee and
thereafter directly administer the Plan. As used herein, the term Board shall
also mean the Committee.

               (b)  The Board may from time to time adopt such rules and
regulations as it may deem advisable for the administration of the Plan, and may
alter, amend, or rescind any such rules and regulations in its discretion. The
Board shall have the power to interpret or amend or discontinue the Plan, except
that any amendment which, under state or federal law or the applicable rules of
any exchange or trading system on which the Common Stock is traded, would
require shareholder approval shall take effect only upon such approval; and
further provided that without the written consent of an optionee, no amendment
or discontinuance of the Plan shall alter or impair any option previously
granted to him under the Plan, subject to any provisions otherwise in the Plan.
All decisions made by the Board in the administration and interpretation of the
Plan shall be binding and conclusive for all purposes. No member of the Board
shall be liable for any action taken or decisions made by him or her in good
faith with respect to the Plan or any options granted under it.

          5.   Price, Terms and Conditions of Options.
               --------------------------------------

               (a)  Options shall be evidenced by a written Incentive Stock
Option Agreement or Non-Qualified Stock Option Agreement, as appropriate, in the
form approved from time to time by the Board. The type of option, the number of
shares which may be purchased under such option, the exercisability of such
option, the option's expiration date and the purchase price per share, shall be
designated by the Board at the time the option is granted.

               (b)  The purchase price per share of any option granted hereunder
shall in no event be less than 100% of the fair market value of each share at
the time the option is granted; provided, however, that incentive stock options
may not be granted to any holder of the voting rights of 10% or more of the
total combined voting power of all classes of stock of the Corporation at time
of grant, unless the purchase price is at least 110% of the fair market value of
the shares at the time of grant. "Fair market value" shall be determined as set
forth in Section 9 below. No incentive stock options shall be granted under the
Plan to any employee where the aggregate fair market value (determined at the
time the option is granted) of the stock with respect to which incentive stock
options are exercisable for the first time by such employee during any calendar
year (under all such plans of the Corporation and its parent and subsidiary
corporations) shall exceed $100,000; provided that non-qualified stock options
granted under the Plan may exceed these limits. All options shall be exercisable
even though there may be outstanding any other option(s) which was or were
granted before the granting of such option. The Board may impose on any option
any additional terms and conditions which it deems advisable and which are not
inconsistent with the Plan.

          6.   Transferability.  Unless otherwise determined by the Board, an
               ---------------
option granted under the Plan shall not be transferable by the individual to
whom it is granted otherwise than by will or the laws of descent and
distribution, and shall be exercisable, during the lifetime of such individual,
only by him; provided, however, that if such individual becomes legally
disabled, his legal representative may exercise the option on his behalf.

          7.   Exercise of Option.
               ------------------

               (a)  Exercise of an option shall be accomplished by delivery to
the Corporation before the option's expiration of written notice, signed by the
holder of the option, specifying the number of shares with respect to which the
option is exercised, the type of option being exercised, and by full payment of
the purchase price for the shares. The purchase price may, at the Corporation's
discretion, be paid by assignment to the Corporation of outstanding shares of
Common Stock of the Corporation owned by the optionee for at least six (6)
months prior to the date of exercise and having a fair market value (as
determined pursuant to Section 9 below) equal to the purchase price or that
portion thereof being paid in outstanding stock. The Corporation may issue a
certificate which reflects the net number of shares issuable after payment of
the exercise price in already owned Common
<PAGE>

Stock, so that the previously owned certificate need not actually be tendered.
An option may not be exercised for a fraction of a share of Common Stock. At the
Corporation's request, the notice of exercise delivered to it shall contain a
representation that the shares are being purchased for investment only and not
for resale or distribution. Within a reasonable time after receipt of the
properly executed notice of exercise, the Corporation shall cause to be issued
and delivered to the holder of the option a certificate for the number of shares
of Common Stock being purchased; provided, however, that the Corporation may in
its discretion allow the optionee to elect to pay any withholding taxes payable
upon exercise of a non-qualified stock option, in whole or in part, by
transferring to the Corporation shares of Common Stock of the Corporation owned
by him or by being credited by the Corporation for shares he has a right to
acquire in the option being exercised.

               (b)  No person shall have any rights as a stockholder with
respect to any shares covered by an option until the date of the issuance of a
stock certificate(s) for the shares for which the option has been exercised. No
adjustments shall be made for dividends or distributions or other rights for
which the record date is prior to the date such stock certificate(s) are issued,
except as provided in Section 10. Nothing in this Plan or in any option
agreement shall confer upon any optionee any rights to continue in the employ of
the Corporation or shall affect the Corporation's ability to terminate the
optionee's employment at any time.

          8.   Expiration of Option.
               --------------------

               (a)  Each option granted under the Plan shall expire on the
earlier of (i) the date set forth in the Option Agreement for such optionee;
(ii) no later than ten (10) years from the date the option is granted, provided
that no incentive stock option granted to a 10% shareholder (as described in
Section 5, above) shall be exercisable after the expiration of five (5) years
from the date of grant; or (iii) in the case of an incentive stock option, three
(3) months following the termination, for any reason other than death or
disability, of the employment by the Corporation, or by its parent or
subsidiary, of the employee to whom the option is granted.

               (b)  Unless earlier terminated pursuant to this Section 8, each
incentive stock option granted under the Plan, shall expire one (1) year
following the termination on account of death or disability of the employment by
or services for the Corporation, or by or for its parent or subsidiary, of the
employee to whom the option is granted. In the event of the termination of
employment by the Corporation of an optionee on account of his or her death or
disability, the optionee shall for purposes of the foregoing requirement be
considered to have completed the next full vesting period of employment with
respect to the vesting period in which his or her death or disability occurs.

          9.   Definition of Fair Market Value.  For the purposes of this Plan,
               -------------------------------
"fair market value" shall mean either the exercise price per share established
in the discretion of the Board of Directors or, so long as the Corporation's
stock is publicly traded, the closing price per share of Common Stock of the
Corporation on the last trading day preceding the date of grant.

          10.  Stock Splits, Dissolutions, Mergers, Etc.
               -----------------------------------------

               (a)  In case of any stock split, stock dividend or similar
transaction which increases or decreases the number of outstanding shares of the
Corporation's Common Stock, appropriate adjustment will be made to both the
number of shares which may be purchased under the Plan and the number and
exercise price per share of Common Stock which may be purchased under any
outstanding options.

               (b)  In the event of the proposed dissolution or liquidation of
the Company, all options will be deemed terminated immediately prior to the
consummation of such proposed action, unless otherwise provided by the Board.
The Board may, in the exercise of its sole discretion in such instances, give
each Optionee the right to exercise his option prior to the consummation of such
action as to all or any part of the Common Stock subject to such option,
including shares as to which the option would not otherwise be exercisable.

               (c)  In the case of any merger, sale of all or substantially all
of the assets of the Corporation of other transaction which results in the
replacement of the Corporation's Common Stock with the stock of another
corporation, any option granted under the Plan shall accelerate and become
immediately exercisable in full as of the
<PAGE>

day immediately preceding the closing day of such event, unless there shall have
been a binding agreement entered into for the assumption or replacement of any
options with comparable options to purchase the stock of such other corporation.

ADOPTED BY THE BOARD OF DIRECTORS: August 4, 1999

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