Document:

WORLD CALLNET, INC.
                         AMENDED 1998 STOCK OPTION PLAN

1.  Purposes of the Plan.  The  purposes  of this 1998 Stock  Option Plan are to
attract and retain the best  available  personnel for  positions of  substantial
responsibility,  to provide additional incentive to Employees and Consultants of
the Company  and its  Subsidiaries  and to promote the success of the  Company's
business.  Options  granted  under this Plan may be incentive  stock options (as
defined  under  Section  422 of the  Code) or  nonqualified  stock  options,  as
determined by the Option Committee at the time of grant of an option and subject
to the  applicable  provisions of Section 422 of the Code,  as amended,  and the
regulations promulgated thereunder.

2. Definitions. As used herein, the following definitions shall apply:

         2.1 "Option  Committee"  means the Board or any of its  committees,  as
         applicable, that is administering the Plan pursuant to Section 4 of the
         Plan.

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

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

         2.4 "Company" means WORLD CALLNET, INC., a Delaware corporation.

         2.5 "Consultant"  means any consultant or advisor to the Company or any
         Parent  or  Subsidiary   and  any  director  of  the  Company   whether
         compensated for such services or not, but not including any Employee.

         2.6  "Continuous  Status  as an  Employee"  means  the  absence  of any
         interruption  or  termination  of the  employment  relationship  by the
         Company or any Subsidiary.  Continuous  Status as an Employee shall not
         be  considered  interrupted  in the case of:  (i) any leave of  absence
         approved by the Board,  including sick leave,  military  leave,  or any
         other personal leave; provided, however, that for purposes of Incentive
         Stock  Options,  such  leave is for a period  of not more than 90 days,
         unless  reemployment upon the expiration of such leave is guaranteed by
         contract or statute,  or unless provided  otherwise pursuant to Company
         policy  adopted  from  time to time;  or (ii) in the case of  transfers
         between   locations  of  the  Company  or  between  the  Company,   its
         Subsidiaries or its successors.

         2.7  "Employee"  means any person,  including  officers and  directors,
         employed by the Company or any Parent or Subsidiary of the Company. The
         payment of a director's  fee by the Company  shall not be sufficient to
         constitute "employment" by the Company.

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

         2.9 "Fair  Market  Value"  means,  as of any  date,  the value of Stock
         determined as follows:

                  2.9.1 If the Stock is listed on any established stock exchange
                  or a national market system including  without  limitation the
                  National   Market  System  of  the  National   Association  of
                  Securities  Dealers,   Inc.  Automated  Quotation   ("Nasdaq")
                  System, its Fair Market Value shall be the closing sales price
                  for such stock (or the closing bid, if no sales were reported,

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                  as quoted on such system or exchange or the exchange  with the
                  greatest  volume  of  trading  in Stock  for the  last  market
                  trading day prior to the time of determination) as reported in
                  the Wall  Street  Journal or such  other  source as the Option
                  Committee deems reliable;

                  2.9.2 If the Stock is quoted  on Nasdaq  SmallCap  (but not on
                  the  National   Market  System)  or  regularly   quoted  by  a
                  recognized  securities  dealer  but  selling  prices  are  not
                  reported,  its Fair Market Value shall be the mean between the
                  high and low asked prices for the Stock; or

                  2.9.3 In the absence of an  established  market for the Stock,
                  the Fair Market  Value  thereof  shall be  determined  in good
                  faith by the Option Committee.

         2.10 "Incentive Stock Option" means an Option intended to qualify as an
         incentive stock option within the meaning of Section 422 of the Code.

         2.11  "Nonqualified  Stock  Option"  means an Option  not  intended  to
         qualify as an Incentive Stock Option.

         2.12 "Option" means a stock option granted pursuant to the Plan.

         2.13 "Optioned Stock" means the Stock subject to an Option.

         2.14 "Optionee" means an Employee or Consultant who receives an
         Option.

         2.15 "Parent"  means a "parent  corporation,"  whether now or hereafter
         existing, as defined in Section 424(e) of the Code.

         2.16 "Plan" means this 1998 Stock Option Plan, as amended.

         2.17 "Share" means a share of the Stock, as adjusted in accordance with
         Section 13 of the Plan.

         2.18 "Stock" means the Common Stock,  par value $.001 per share, of the
         Company.

         2.19  "Subsidiary"  means a  "subsidiary  corporation,"  whether now or
         hereafter existing, as defined in Section 424(f) of the Code.

3. Stock  Subject to the Plan.  Subject to the  provisions  of Section 13 of the
Plan, the maximum number of shares of Stock which may be optioned and sold under
the Plan is 3,000,000  shares.  The shares may be authorized,  but unissued,  or
reacquired  Stock.  If an Option should expire or become  unexercisable  for any
reason without having been exercised in full, the unpurchased Shares, which were
subject  thereto,  shall,  unless the Plan shall  have been  terminated,  become
available for future grant under the Plan.

4. Administration of the Plan.

         4.1   Administration   By  Board  or  Committee.   The  Plan  shall  be
         administered  by (a) the  Board or (b) a  committee  designated  by the
         Board to administer the Plan,  which  committee shall be constituted in
         such a  manner  as to  permit  the  Plan  to  comply  with  Rule  16b-3

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         promulgated  under the Exchange  Act or any  successor  thereto  ("Rule
         16b-3")  with  respect to a plan  intended to qualify  thereunder  as a
         discretionary  plan. Once  appointed,  such committee shall continue to
         serve in its designated capacity until otherwise directed by the Board.
         From time to time the Board may increase the size of the  committee and
         appoint  additional  members  thereof,  remove members (with or without
         cause)  and  appoint  new  members  in  substitution  therefore,   fill
         vacancies,  however caused, and remove all members of the committee and
         thereafter directly administer the Plan, all to the extent permitted by
         Rule 16b-3 with respect to a plan  intended to qualify  thereunder as a
         discretionary plan.

         4.2  Limitation  on  Administration  by  Board.   Notwithstanding   the
         foregoing,  the Plan shall not be  administered by the Board if (a) the
         Company  and  its  officers  and  directors  are  then  subject  to the
         requirements  of Section  16 of the  Exchange  Act and (b) the  Board's
         administration  of the Plan would prevent the Plan from  complying with
         Rule 16b-3.

         4.3 Multiple  Administrative  Bodies.  If permitted by Rule 16b-3,  the
         Plan may be administered by different bodies with respect to directors,
         non-director  officers  and  Employees  who are neither  directors  nor
         officers.

         4.4 Powers of the Option  Committee.  Subject to the  provisions of the
         Plan and in, the case of a committee,  the specific duties delegated by
         the  Board to such  committee,  the  Option  Committee  shall  have the
         authority, in its discretion:

                  4.4.1 to determine whether and to what extent Options shall be
                  granted hereunder;

                  4.4.2 to select the  officers,  Consultants  and  Employees to
                  whom Options may from time to time be granted hereunder;

                  4.4.3 to determine the number of shares of Stock to be covered
                  by each such award granted hereunder;

                  4.4.4 to  determine  the Fair  Market  Value of the Stock,  in
                  accordance with Section 2.9 of the Plan;

                  4.4.5 to approve forms of agreement for use under the Plan;

                  4.4.6 to determine the terms and conditions,  not inconsistent
                  with the terms of the Plan,  of any  award  granted  hereunder
                  (including,  but not limited to, the per share  exercise price
                  for the Shares to be issued  pursuant  to the  exercise  of an
                  Option and any  restriction  or  limitation,  or any  vesting,
                  acceleration  or waiver of forfeiture  restrictions  regarding
                  any Option or other award and/or the shares of Stock  relating
                  thereto,  based in each  case on such  factors  as the  Option
                  Committee shall determine, in its sole discretion);

                  4.4.7 to  determine  whether and under what  circumstances  an
                  Option may be bought-out for cash under subsection 10.4;

                  4.4.8 to  determine  whether,  to what  extent  and under what
                  circumstances  Stock and other amounts payable with respect to
                  an  award   under   this  Plan   shall  be   deferred   either
                  automatically or at the election of the participant (including

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                  providing  for and  determining  the  amount,  if any,  of any
                  deemed  earnings on any  deferred  amount  during any deferral
                  period); and

                  4.4.9 to reduce the  exercise  price of any Option to the then
                  current  Fair  Market  Value if the Fair  Market  Value of the
                  Stock  covered by such Option  shall have  declined  since the
                  date the Option was granted.

         4.5   Effect   of   Option   Committee's   Decision.   All   decisions,
         determinations  and  interpretations  of the Option  Committee shall be
         final  and  binding  on all  Optionees  and any  other  holders  of any
         Options. Neither the Board, the Committee, nor any member thereof shall
         be  liable  for any  act,  omission,  interpretation,  construction  or
         determination  made in connection with the Plan in good faith,  and the
         members  of the  Board  and of  the  Committee  shall  be  entitled  to
         indemnification  and  reimbursement  by the  Company  in respect of any
         claim,  loss,  damage  or  expense  (including  counsel  fees)  arising
         therefrom to the full extent permitted by law.

5. Eligibility.

         5.1  Nonqualified  Stock  Options  may  be  granted  to  Employees  and
         Consultants.  Incentive Stock Options may be granted only to Employees.
         An Employee or Consultant  who has been granted an Option may, if he is
         otherwise eligible, be granted an additional Option or Options.

         5.2 Each Option shall be designated in the written option  agreement as
         either an  Incentive  Stock  Option  or a  Nonqualified  Stock  Option.
         However,  notwithstanding  such  designations  to the  extent  that the
         aggregate  Fair  Market  Value of the  Shares,  with  respect  to which
         Options  designated as Incentive  Stock Options are exercisable for the
         first time by any Optionee during any calendar year (under all plans of
         the Company or any Parent or Subsidiary), exceeds $100,000, such excess
         Options  shall be  treated  as  Nonqualified  Stock  Options.  For this
         purpose,  Incentive  Stock  Options  shall be taken into account in the
         order in which  they were  granted,  and the Fair  Market  Value of the
         Shares  shall be  determined  as of the time the Option with respect to
         such Shares is granted.

         5.3 The Plan shall not confer upon any  Optionee any right with respect
         to  continuation  of  employment or  consulting  relationship  with the
         Company,  nor  shall it  interfere  in any way  with  his  right or the
         Company's right to terminate his employment or consulting  relationship
         at any time, with or without cause,  unless otherwise agreed in writing
         by the Company and such Optionee.

6. Term of Plan. The Plan shall become  effective upon its adoption by the Board
of  Directors  subject  only to  approval  by the  holders of a majority  of the
outstanding  Shares  within 12 months  after such  date.  Should the Plan not be
approved by a vote of shareholders as specified  above, the Plan shall terminate
12 months after the effective date, all options issued prior to that termination
date shall  continue in effect but without the benefits  that would accrue under
the Code or the Act from such shareholder approval. Otherwise, it shall continue
in effect until ten years from the effective date,  unless extended by the Board
or sooner  terminated under Section 15 of the Plan. No grants of Options will be
made pursuant to the Plan after termination of the Plan.

7.  Term of  Option.  The term of each  Option  shall be the term  stated in the
Option  Agreement;  provided,  however,  that in the case of an Incentive  Stock
Option,  the terms shall be no more than 10 years from the date of grant thereof

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or such shorter term as may be provided in the Option Agreement. However, in the
case of an Option granted to an Optionee who, at the time the Option is granted,
owns  Stock  representing  more than 10% of the voting  power of all  classes of
stock of the Company or any Parent or  Subsidiary,  the term of the Option shall
be five years  from the date of grant  thereof  or such  shorter  term as may be
provided in the Option Agreement.

8. Option Exercise Price and Consideration.

         8.1 The per share exercise  price for the Shares to be issued  pursuant
         to exercise of an Option  shall be such price as is  determined  by the
         Option Committee; provided, however, that as to an Incentive Option:

                  8.1.1  granted to an Employee who, at the time of the grant of
                  such Incentive Stock Option, owns stock representing more than
                  10% of the voting power of all classes of stock of the Company
                  or any  Parent or  Subsidiary,  the per Share  exercise  price
                  shall be no less than 110% of the Fair Market  Value per Share
                  on the date of grant.

                  8.1.2 granted to any other  Employee,  the per Share  exercise
                  price shall be no less than 100% of the Fair Market  Value per
                  Share on the date of grant.

         8.2 The  consideration  to be paid for the  Shares  to be  issued  upon
         exercise of an Option may be paid by certified or cashier's  check.  In
         the  discretion  of the  Option  Committee  as set forth in the  Option
         Agreement or, except for Incentive  Options,  determined at the time of
         exercise, payment may also be made by any or all of the following:

                  8.2.1 check,

                  8.2.2 promissory note,

                  8.2.3 other shares of the Company's  capital stock which a) in
                  the case of shares of the  Company's  capital  stock  acquired
                  upon  exercise  of an Option  either  have  been  owned by the
                  Optionee  for more than six months on the date of surrender or
                  were not acquired,  directly or indirectly,  from the Company,
                  and (b) have a Fair  Market  Value  on the  date of  surrender
                  equal to the aggregate  exercise  price of the Shares to which
                  said Option shall be exercised,

                  8.2.4  authorization  for the Company to retain from the total
                  number  of Shares as to which  the  Option is  exercised  that
                  number of  Shares  having a Fair  Market  Value on the date of
                  exercise  equal to the exercise  price for the total number of
                  Shares as to which the Option is exercised,

                  8.2.5 delivery of a properly executed exercise notice together
                  with irrevocable  instructions to a broker to promptly deliver
                  to the Company the amount of sale or loan proceeds required to
                  pay the exercise price, or

                  8.2.6 such other  consideration  and method of payment for the
                  issuance of Shares to the extent  permitted  under  applicable
                  laws.

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9.  Limitation  on Exercise.  The following  limitations  on exercise of Options
shall apply to all  Incentive  Options and,  except to the extent  waived by the
Option Committee and stated in the Option Agreement, to all other Options.

         9.1.  Termination  of  Employment.  In the event of  termination  of an
         Optionee's relationship as a Consultant (unless such termination is for
         purposes of becoming an Employee of the Company) or on  termination  of
         an Optionee's Continuous Status as an Employee with the Company (as the
         case may be),  such  Optionee  may,  but only within 90 days (or, as to
         Options other than Incentive Options,  such longer period of time as is
         determined by the Option Committee) after the date of such termination,
         but in no  event  later  than the  expiration  date of the term of such
         Option as set forth in the Option Agreement, exercise his Option to the
         extent that  Optionee  was  entitled to exercise it at the date of such
         termination.  To the extent that  Optionee was not entitled to exercise
         the Option at the date of such  termination,  or if  Optionee  does not
         exercise  such  Option  to the  extent  so  entitled  within  the  time
         specified herein, the Option shall terminate.

         9.2 Disability of Optionee.  Notwithstanding  the provisions of Section
         9.1 above, in the event of termination of an Optionee's relationship as
         a  Consultant  or  Continuous  Status as an Employee as a result of his
         total and permanent  disability (as defined in Section  22(e)(3) of the
         Code),  Optionee  may,  but only within 12 months from the date of such
         termination  and in no event later than the expiration date of the term
         of such  Option  as set forth in the  Option  Agreement,  exercise  the
         Option to the extent  otherwise  entitled to exercise it at the date of
         such  termination.  To the extent  that  Optionee  was not  entitled to
         exercise the Option at the date of termination, or if Optionee does not
         exercise  such  Option  to the  extent  so  entitled  within  the  time
         specified herein, the Option shall terminate.

         9.3 Death of Optionee.  In the event of the death of an  Optionee,  the
         Option may be  exercised,  at any time within 12 months  following  the
         date of death (but in no event  later than the  expiration  date of the
         term of such  Option  as set  forth in the  Option  Agreement),  by the
         Optionee's estate or by a person who acquired the right to exercise the
         Option by bequest or  inheritance,  but only to the extent the Optionee
         was entitled to exercise the Option at the date of death. To the extent
         that the  Optionee  was not entitled to exercise the Option at the date
         of termination,  or if the Optionee's  estate (or such other person who
         acquired  the right to exercise  the  Option)  does not  exercise  such
         Option to the extent so entitled within the time specified herein,  the
         Option shall terminate.

10. Exercise of Option.

         10.1 Procedure for Exercise;  Rights as a Stockholder.  An Option shall
         be deemed to be exercised,  and the Optionee deemed to be a stockholder
         of the Shares being  purchased  upon  exercise,  when written notice of
         such  exercise  has been given to the  Company in  accordance  with the
         terms of the Option by the person  entitled to exercise  the Option and
         full  payment  for the  Shares  with  respect  to which  the  Option is
         exercised  has been  received  by the  Company.  Full  payment  may, as
         authorized  by the Board,  consist of any  consideration  and method of
         payment  allowable  under Section 8.2 of the Plan. An Option may not be
         exercised for a fraction of a Share.

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         10.2  Effect on Number of Shares.  Exercise  of an Option in any manner
         shall  result in a decrease in the number of shares,  which  thereafter
         may be available,  both for purposes of the Plan and for sale under the
         Option, by the number of Shares as to which the Option is exercised.

         10.3 Rule 16b-3. Options granted to persons subject to Section 16(b) of
         the Exchange Act must comply with the Rule 16b-3 and shall contain such
         additional  conditions or restrictions as may be required thereunder to
         qualify for the maximum  exemption  from Section 16 of the Exchange Act
         with respect to Plan transactions.

         10.4 Buyout  Provisions.  The Option Committee may at any time offer to
         buy out for a payment in cash or Shares, an Option previously  granted,
         based on such  terms  and  conditions  as the  Option  Committee  shall
         establish and  communicate  to the Optionee at the time that such offer
         is made.

11.  Non-Transferability  of  Options.  The  Options  may not be sold,  pledged,
assigned, hypothecated,  transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised,  during the
lifetime of the Optionee, only by the Optionee.

12. Stock Withholding to Satisfy Withholding Tax Obligations.

         12.1 At the discretion of the Option  Committee,  Optionees may satisfy
         withholding  tax  obligations  as provided in this  paragraph.  When an
         Optionee incurs tax liability in connection  with an Option,  which tax
         liability is subject to tax withholding  under applicable tax laws, and
         the Optionee is  obligated to pay the Company an amount  required to be
         withheld  under  applicable  tax laws,  the  Optionee  may  satisfy the
         withholding  tax  obligation  by electing to have the Company  withhold
         from the Shares to be issued upon  exercise of the Option,  that number
         of Shares having a Fair Market Value equal to the amount required to be
         withheld.  The Fair Market Value of the Shares to be withheld  shall be
         determined  on the date that the amount of tax to be  withheld is to be
         determined (the "Tax Date").

         12.2 All  elections  by an Optionee to have  Shares  withheld  for this
         purpose  shall be made in  writing in a form  acceptable  to the Option
         Committee and shall be subject to the following restrictions:

                  12.2.1 the election must be made on or prior to the applicable
                  Tax Date;

                  12.2.2 once made,  the election shall be irrevocable as to the
                  particular  Shares of the Option as to which the  election  is
                  made;

                  12.2.3  all  elections  shall be  subject  to the  consent  or
                  disapproval of the Option Committee; and

                  12.2.4 if the Optionee is subject to Rule 16b-3,  the election
                  must comply with the  applicable  provisions of Rule 16b-3 and
                  shall be subject to such additional conditions or restrictions
                  as may be  required  thereunder  to  qualify  for the  maximum
                  exemption  from Section 16 of the Exchange Act with respect to
                  Plan transactions.

         12.3 In the event the  election to have  Shares  withheld is made by an
         Optionee,  the Tax Date is deferred under Section 83 of the Code and no
         election is filed under Section 83(b) of the Code,  the Optionee  shall
         receive the full  number of Shares with  respect to which the Option is

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         exercised  but such  Optionee  shall be  unconditionally  obligated  to
         tender back to the Company the proper number of Shares on the Tax Date.

13.  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  any or all  adjustments,  recapitalizations,
reorganizations  or other  changes in the  Company's  capital  structure  or its
business,  or any merger or consolidation of the Company,  or any issue of bond,
debentures,  preferred or prior preference stock ahead of or affecting the Stock
or the rights thereof,  or the dissolution or liquidation of the Company, or any
sale or  transfer  of all or any part of its  assets or  business,  or any other
corporate  act or  proceeding,  whether  of a similar  character  or  otherwise;
subject to the following:

         13.1 If the Company  shall effect a  subdivision  or  consolidation  of
         shares or other capital readjustment,  the payment of a stock dividend,
         or other  increase  or  reduction  of the number of shares of the Stock
         outstanding,   without  receiving   compensation  therefore  in  money,
         services or property,  then (a) the number,  class, and per share price
         of shares of Stock subject to outstanding  Options  hereunder  shall be
         appropriately  adjusted  in such a manner as to entitle an  Optionee to
         receive  upon  exercise  of an  Option,  for the  same  aggregate  cash
         consideration,  the same  total  number and class of shares as he would
         have received had he exercised his Option;  (b) the number and class of
         shares of Stock  then  reserved  for  issuance  under the Plan shall be
         adjusted by  substituting  for the total  number and class of shares of
         Stock then reserved that number and class of shares of stock that would
         have  been  received  by the owner of an equal  number  of  outstanding
         shares of each class of Stock as the result of the event  requiring the
         adjustment.

         13.2 Unless otherwise expressly provided in an Option Agreement, upon a
         Corporate Change (as defined below),  notwithstanding any other term of
         this  Plan,  any and all  outstanding  Options  not  fully  vested  and
         exercisable shall vest in full and be immediately exercisable,  and any
         other  restrictions  on such  Options  including,  without  limitation,
         requirements   concerning  the  achievement  of  specific  goals  shall
         terminate.  The  foregoing  shall apply to  Incentive  Options,  unless
         stated to the contrary in the Option Agreement,  even though the effect
         may be to convert part of the Option to a Nonqualified Option.

         13.3 As used in this Plan, a "Corporate Change" shall be deemed to have
         occurred  upon, and shall mean (a) the  acquisition by any  individual,
         entity or group (within the meaning of Section  13(d)(3) or 14(d)(2) of
         the Exchange Act) (a "Person"),  of  beneficial  ownership  (within the
         meaning of Rule 13d-3  promulgated  under the  Exchange  Act) of 80% or
         more of either (i) the then outstanding  shares of Stock of the Company
         (the  "Outstanding  Company Common Stock") or (ii) the combined  voting
         power of the then outstanding voting securities of the Company entitled
         to vote  generally  in the  election  of  directors  (the  "Outstanding
         Company  Voting  Securities");  provided,  however,  that the following
         transactions   shall  not  constitute  a  Corporate  Change:   (u)  any
         acquisition  by  virtue of the  conversion  of  preferred  stock of the
         Company  outstanding  on  the  effective  date  hereof;  (v)  customary
         transactions  with and between  underwriters  and selling group members
         with  respect to a bona fide  public  offering of  securities,  (w) any
         acquisition  directly  from the Company  (excluding an  acquisition  by

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         virtue of the exercise of a conversion privilege),  (x) any acquisition
         by the Company, (y) any acquisition by any employee benefit plan(s) (or
         related  trust(s))  sponsored  or  maintained  by  the  Company  or any
         corporation  controlled  by the Company or (z) any  acquisition  by any
         entity  pursuant  to a  reorganization,  merger or  consolidation,  if,
         immediately following such reorganization,  merger or consolidation the
         conditions  described in clauses  (i),  (ii) and (iii) of clause (b) of
         this paragraph are satisfied;  or (b) the approval by the  stockholders
         of the Company of a reorganization,  merger or  consolidation,  in each
         case,  unless  immediately  following  such  reorganization,  merger or
         consolidation (i) more than 60% of, respectively,  the then outstanding
         shares of common stock (or other  equivalent  securities) of the entity
         resulting from such  reorganization,  merger or  consolidation  and the
         combined voting power of the then outstanding voting securities of such
         entity  entitled to vote  generally in the  election of  directors  (or
         other similar governing body) is then beneficially  owned,  directly or
         indirectly, by all or substantially all of the individuals and entities
         who were the  beneficial  owners,  respectively,  of the Company Common
         Stock and Outstanding  Company Voting  Securities  immediately prior to
         such reorganization,  merger or consolidation in substantially the same
         proportions   as   their   ownership,   immediately   prior   to   such
         reorganization,  merger or  consolidation  of the  Outstanding  Company
         Common Stock and Outstanding Company Voting Securities, as the case may
         be, (ii) no Person (excluding the Company, any employee benefit plan(s)
         (or related  trust(s)) of the Company and/or its  subsidiaries  or such
         entity resulting from such reorganization,  merger or consolidation and
         any   Person   beneficially   owning,   immediately   prior   to   such
         reorganization, merger or consolidation, directly or indirectly, 80% or
         more of the  Outstanding  Company Common Stock or  Outstanding  Company
         Voting Securities,  as the case may be) beneficially owns,  directly or
         indirectly,  80% or more of, respectively,  the then outstanding shares
         of  common  stock  (or  other  equivalent  securities)  of  the  entity
         resulting  from such  reorganization,  merger or  consolidation  or the
         combined voting power of the then outstanding voting securities of such
         entity  entitled to vote  generally in the  election of  directors  (or
         other  similar  governing  body) and (iii) at least a  majority  of the
         members of the board of directors (or other similar  governing body) of
         the entity resulting from such reorganization,  merger or consolidation
         were members of the Incumbent  Board (as defined  below) at the time of
         the   execution   of  the   initial   agreement   providing   for  such
         reorganization,  merger on  consolidation.  The "Incumbent Board" shall
         mean  individuals  who as of the effective  date hereof  constitute the
         Company's Board of Directors;  provided,  however,  that any individual
         becoming  a  director  subsequent  to  such  date  whose  election,  or
         nomination for election by the Company's stockholders,  was approved by
         a vote of at least a majority  of the  directors  then  comprising  the
         Incumbent  Board shall be considered as though such  individual  were a
         member of the Incumbent  Board,  but excluding,  for this purpose,  any
         such individual  whose initial  assumption of office occurs as a result
         of either (i) an actual or threatened  election  contest (as such terms
         are  used in Rule  14a-11  of  Regulation  14A  promulgated  under  the
         Exchange  Act), or an actual or threatened  solicitation  of proxies or
         consents by or on behalf of a Person other than the Company's  Board of
         Directors  or (ii) a plan or  agreement  to replace a  majority  of the
         members of the Board of Directors then comprising the Incumbent Board.

         13.4 The  Company  intends  that this  Section  shall  comply  with the
         requirements  of  Rule  16b-3  and  any  future  rules  promulgated  in
         substitution  therefore  under the  Exchange Act during the term of the
         Plan.  Should any  provision of this Section not be necessary to comply
         with the requirements of Rule 16b-3 or should any additional provisions

<PAGE>

         be necessary for this Section to comply with the  requirements  of Rule
         16b-3,  the Board of  Directors  may amend the Plan to add to or modify
         the provisions of the Plan accordingly.

         13.5  Except  as  hereinbefore  expressly  provided,  the  issue by the
         Company of shares of stock of any class, or securities convertible into
         shares of stock of any  class,  for cash or  property,  or for labor or
         services  either  upon  direct  sale or upon the  exercise of rights or
         warrants  to  subscribe  therefor,  or upon  conversion  of  shares  or
         obligations  of the  Company  convertible  into  such  shares  or other
         securities, shall not affect, and no adjustment by reason thereof shall
         be made with respect to, the number, class, or price of shares of Stock
         then subject to outstanding Options.

14.  Time of  Granting  Options.  The date of grant of an Option  shall,  or all
purposes,  be the date on which the  Option  Committee  makes the  determination
granting  such  Option,  or such  other  date  as is  determined  by the  Option
Committee.  Notice  of the  determination  shall be given  to each  Employee  or
Consultant  to whom an Option is so granted  within a reasonable  time after the
date of such grant.

15. Amendment and Termination of the Plan.

         15.1 Amendment and Termination. The Board may at any time amend, alter,
         suspend  or  discontinue  the  Plan,  but  no  amendment,   alteration,
         suspension  or  discontinuation  shall be made which  would  impair the
         rights of any Optionee under any grant theretofore made, without his or
         her consent.  In addition,  to the extent  necessary  and  desirable to
         comply with Rule 16b-3 under the  Exchange  Act or with  Section 422 of
         the Code (or any other  applicable  law or  regulation,  including  the
         applicable  requirements of the NASD or an established stock exchange),
         the Company shall obtain stockholder  approval of any Plan amendment in
         such a manner and to such a degree as required.

         15.2  Effect  of  Amendment  or  Termination.  Any  such  amendment  or
         termination  of the Plan shall not affect Options  already  granted and
         such Options  shall remain in full force and effect as if this Plan had
         not been  amended  or  terminated,  unless  mutually  agreed  otherwise
         between the Optionee and the Board,  which agreement must be in writing
         and signed by the Optionee and the Company.

16. Conditions Upon Issuance of Shares.

         16.1 Shares  shall not be issued  pursuant to the exercise of an Option
         unless the  exercise of such Option and the  issuance  and  delivery of
         such Shares pursuant thereto shall comply with all relevant  provisions
         of law,  including without  limitation,  the Securities Act of 1933, as
         amended,  the  Exchange  Act,  the  rules and  regulations  promulgated
         thereunder,  and the  requirements of any stock exchange upon which the
         Shares may then be listed, and shall be further subject to the approval
         of counsel for the Company with respect to such compliance.

         16.2 As a  condition  to the  exercise  of an Option,  the  Company may
         require the person  exercising  such Option to represent and warrant at
         the time of any such exercise that the Shares are being  purchased only
         for investment and without any present  intention to sell or distribute

<PAGE>

         such  Shares  if, in the  opinion of counsel  for the  Company,  such a
         representation  is  required  by  any of  the  aforementioned  relevant
         provisions of law.

17.  Reservation of Shares.  The Company,  during the term of this Plan, will at
all  times  reserve  and  keep  available  such  number  of  Shares  as shall be
sufficient to satisfy the requirements of the Plan.

18. Information to Optionees. The Company shall provide to each Optionee, during
the period for which such Optionee has one or more Options  outstanding,  copies
of all annual reports and other information, which are generally provided to all
stockholders  of the Company.  The Company shall not be required to provide such
information to persons whose duties in connection with the Company assures their
access to equivalent information.

19. Governing Law; Construction. All rights and obligations under the Plan shall
be governed by, and the Plan shall be construed in accordance  with, the laws of
the State of Oklahoma  without  regard to the  principals  of conflicts of laws.
Titles and headings to Sections  herein are for purposes of reference  only, and
shall in no way limit,  define or otherwise affect the meaning or interpretation
of any provisions of the Plan.

         ADOPTED by the Directors on November 16, 1998.

         APPROVED by the Shareholders on January 5, 1999.

         AMENDED by the Shareholders on February 24, 2000.<PAGE>

                                 EXHIBIT 4C
                                 ----------

                             ACUSON CORPORATION
                          1995 STOCK INCENTIVE PLAN

             Adopted by the Board of Directors on March 1, 1995
                  Approved by stockholders on May 31, 1995
           Amended by the Board of Directors on February 29, 1996
             Amendment approved by stockholders on July 23, 1996
           Amended by the Board of Directors on February 19, 1999
             Amended by the Board of Directors on March 9, 2000

1.   Establishment, Purpose, and Definitions.
     ----------------------------------------

          (a)  Acuson Corporation (the "Company") hereby adopts the Acuson
     Corporation 1995 Stock Incentive Plan (the "Plan").

          (b)  The purpose of the Plan is to allow the Company to provide
     incentives to Eligible Individuals (as defined in Section 4, below) for
     employment, increased efforts and successful achievements on behalf of or
     in the interests of the Company and its Affiliates and to maximize the
     rewards due them for those efforts and achievements. In the case of
     Employees (including officers and directors who are Employees) of the
     Company and of its Affiliates such incentives include (i) an opportunity to
     purchase shares of common stock, par value $.0001 per share, of the Company
     ("Stock") pursuant to options which may qualify as incentive stock options
     (referred to as "incentive stock options") under Section 422 of the
     Internal Revenue Code of 1986, as amended (the "Code"), (ii) an opportunity
     to purchase shares of Stock pursuant to options which are not described in
     Sections 422 or 423 of the Code (referred to as "nonqualified stock
     options"), (iii) the sale or bonus of restricted Stock ("Restricted
     Stock"), and (iv) the grant of stock appreciation rights ("SARs"), either
     separately or in relation ("tandem") with stock options, entitling holders
     to compensation measured by appreciation in the value of Stock. The Plan
     also provides for the grant of similar incentives (other than incentive
     stock options) to independent contractors and consultants to the Company
     and its Affiliates. Finally, the Plan provides for the automatic,
     nondiscretionary grant of nonqualified stock options to directors of the
     Company who are not Employees of the Company or any Affiliate ("Non-
     Employee Directors").

          (c)  Except for purposes of Section 12, the term "Affiliate" means
     parent or subsidiary corporations of the Company, as defined in Sections
     424(e) and (f) of the Code (but substituting "the Company" for "employer
     corporation"), including parents or subsidiaries of the Company that become
     such after adoption of the Plan.

                                       1
<PAGE>

          (d)  The term "Employee" means any person, including officers and
     directors, who is an employee of the Company or an Affiliate for purposes
     of income tax withholding under the Code. Neither service as a director nor
     payment of a director's fee by the Company shall be sufficient to
     constitute a person an Employee.

2.   Administration of the Plan.
     --------------------------

          (a)  The Plan may be administered by different committees with respect
     to: (i) Non-Employee Directors; (ii) Eligible Individuals who are (A)
     officers or directors subject to Section 16(b) of the Securities Exchange
     Act of 1934, as amended (the "Exchange Act"), or (B) "covered employees"
     within the meaning of Section 162(m)(3) of the Code ("Covered Employees");
     and (iii) Eligible Individuals who are neither officers or directors
     subject to Section 16(b) of the Exchange Act nor Covered Employees. Each
     committee, in addition to satisfying any specific requirements imposed by
     this Section 2, shall also satisfy any legal requirements relating to the
     administration of stock-based compensation plans under applicable state
     corporate and securities laws and the Code ("Applicable Laws"). References
     herein to the "Plan Administrator" shall refer to the applicable
     committee(s) or, if the Board of Directors of the Company (the "Board")
     does not delegate administration of some aspects of the Plan to a
     committee, shall be construed to refer to the Board.

          (b)  With respect to awards made to Eligible Individuals who are
     officers or directors subject to Section 16(b) of the Exchange Act or
     Covered Employees, the Plan shall be administered by a committee of the
     Board, which committee shall be constituted (i) in such manner as to permit
     such grants and related transactions under the Plan to be exempt from
     Section 16(b) of the Exchange Act in accordance with Rule 16b-3 (or any
     successor thereto) promulgated under the Exchange Act ("Rule 16b-3") and as
     a (ii) "committee comprised solely of two or more outside directors" for
     purposes of Section 162(m) of the Code. Once appointed, such committee
     shall continue to serve in its designated capacity until otherwise directed
     by the Board. From time to time, the Board may increase the size of the
     committee and appoint additional members, remove members (with or without
     cause) and substitute new members, fill vacancies (however caused), all to
     the extent permitted by Rule 16b-3, Section 162(m) of the Code, the rules
     and regulations with respect to each, and Applicable Laws. The committee
     shall select one of its members as chair of the committee and shall hold
     meetings at such times and places as it may determine. To the extent
     permitted by Rule 16b-3, Section 162(m) of the Code, the rules and
     regulations with respect to each, and Applicable Laws, a majority of the
     committee shall constitute a quorum, and acts of the committee at which a
     quorum is present, or acts

                                       2
<PAGE>

     reduced to or approved in writing by all the members of the committee,
     shall be the valid acts of the committee.

          (c)  With respect to awards made to Eligible Individuals who are
     neither officers nor directors subject to Section 16(b) of the Exchange Act
     nor Covered Employees, the Plan shall be administered by (i) the Board; or
     (ii) a committee of one or more persons (which may be the committee
     established pursuant to Section 2(b), above) designated by the Board. Once
     appointed, such committee shall continue to serve in its designated
     capacity until otherwise directed by the Board. From time to time, the
     Board may increase the size of the committee and appoint additional
     members, remove members (with or without cause) and substitute new members,
     fill vacancies (however caused), and remove all members of the committee
     and thereafter directly administer the Plan, all to the extent permitted by
     Applicable Laws. The committee shall select one of its members as chair of
     the committee and shall hold meetings at such times and places as it may
     determine. To the extent permitted by Applicable Laws, a majority of the
     committee shall constitute a quorum, and acts of the committee at which a
     quorum is present, or acts reduced to or approved in writing by all the
     members of the committee, shall be the valid acts of the committee.

          (d)  The Plan Administrator shall determine which Eligible Individuals
     shall be granted options under the Plan, the timing of such grants, the
     terms thereof (including any restrictions on the Stock), and the number of
     shares subject to such options.

          (e)  The Plan Administrator shall also determine which Eligible
     Individuals shall be granted or issued SARs or Restricted Stock (other than
     pursuant to the exercise of options) under the Plan, the timing of such
     grants or issuances, the terms thereof (including any restrictions and the
     consideration, if any, to be paid therefor) and the number of shares or
     SARs to be granted.

          (f)  Subject to Section 2(h) of this Plan, the Plan Administrator may
     amend the terms of any outstanding option or SAR granted under this Plan,
     but any amendment that would adversely affect the holder's rights under an
     outstanding option or SAR shall not be made without the holder's written
     consent. The Plan Administrator may, with the holder's written consent,
     cancel any outstanding option or SAR or accept any outstanding option or
     SAR in exchange for a new option or SAR. The Plan Administrator also may
     amend any Restricted Stock purchase agreement or Restricted Stock bonus
     agreement relating to sales or bonuses of Restricted Stock under the Plan,
     but any amendment that would adversely affect the individual's rights to
     the Restricted Stock shall not be made without his or her written consent.

                                       3
<PAGE>

          (g)  The Plan Administrator shall have the sole authority, in its
     absolute discretion, to adopt, amend, and rescind such rules and
     regulations as, in its opinion, may be advisable for the administration of
     the Plan, to construe and interpret the Plan, the rules and the
     regulations, and the instruments evidencing options, SARs or Restricted
     Stock granted or issued under the Plan and to make all other determinations
     deemed necessary or advisable for the administration of the Plan. All
     decisions, determinations, and interpretations of the Plan Administrator
     shall be binding on all participants.

          (h)  Notwithstanding any other provision of this Plan, options granted
     under this Plan may not be repriced unless such repricing is approved by
     the vote of the holders of a majority of the shares of the Common Stock of
     the Company present in person or represented by proxy and entitled to vote
     at a meeting of stockholders.

3.   Stock Subject to the Plan.
     -------------------------

          (a)  The maximum aggregate number of shares of Stock available for
     issuance under the Plan and during the life of the Plan shall equal
     6,500,000 shares, subject to adjustment from time to time in accordance
     with this Section 3. The Stock subject to the Plan may be unissued shares,
     treasury shares or shares purchased by the Company on the open market or
     otherwise.

          (b)  For purposes of the limitation specified in Section 3(a), the
     following principles shall apply:

               (1)  the following transactions, if granted pursuant to this
     Plan, shall count against and decrease the number of shares of Stock that
     may be issued for purposes of Section 3(a): (i) shares of Stock subject to
     outstanding options, outstanding shares of Restricted Stock, and shares
     subject to SARs granted independently of options (based upon a good faith
     estimate by the Company or the Plan Administrator of the maximum number of
     shares for which the SAR may be settled (assuming payment in full in shares
     of Stock), and (ii) in the case of options granted in tandem with SARs, the
     greater of the number of shares of Stock that would be counted if one or
     the other alone was outstanding (determined as described in clause (i)
     above);

               (2)  the following shall be added back to the number of shares of
     Stock that may be issued for purposes of Section 3(a): (i) shares of Stock
     with respect to which options, SARs granted independent of options, or
     Restricted Stock awards expire, are cancelled, or otherwise terminate
     without being exercised, converted,

                                       4
<PAGE>

     or vested, as applicable, and (ii) in the case of options granted in tandem
     with SARs, shares of Stock as to which an option has been surrendered in
     connection with the exercise of a tandem SAR, to the extent the number
     surrendered exceeds the number issued upon exercise of the SAR; provided
                                                                     --------
     that, in any case, the holder of such awards did not receive any dividends
     ----
     or other benefits of ownership with respect to the underlying shares being
     added back, other than voting rights and the accumulation (but not payment)
     of dividends of Stock;

               (3)  shares of Stock subject to SARs granted independently of
     options (calculated as provided in clause (1) above) that are exercised and
     paid in cash shall be added back to the number of shares of Stock that may
     be issued for purposes of Section 3(a), provided that the holder of such
     SAR did not receive any dividends or other benefits of ownership, other
     than voting rights and the accumulation (but not payment) of dividends,
     relative to the shares of Stock subject to the SARs;

               (4)  shares of Stock that are transferred by a holder of an award
     (or withheld by the Company) as full or partial payment to the Company of
     the purchase price of shares of Stock subject to an option or the Company's
     or any Affiliate's tax withholding obligations shall not be added back to
     the number of shares of Stock that may be issued for purposes of Section
     3(a) and shall not again be subject to awards; and

               (5)  if the number of shares of Stock counted against the number
     of shares that may be issued for purposes of Section 3(a) is based upon an
     estimate made by the Company or the Plan Administrator as provided in
     clause (1) above and the actual number of shares of Stock issued pursuant
     to the applicable award is greater or less than the estimated number, then
     upon such issuance, the number of shares of Stock that may be issued
     pursuant to Section 3(a) shall be further reduced by the excess issuance or
     increased by the shortfall, as applicable.

          (c)  If there is any change in the Stock through merger,
     consolidation, reorganization, recapitalization, reincorporation, stock
     split, stock dividend (in excess of 2%), or other change in the capital
     structure of the Company, appropriate adjustments shall be made by the Plan
     Administrator, in order to preserve but not to increase the benefits to the
     outstanding options, SARs and Restricted Stock purchase or Restricted Stock
     bonus awards under the Plan, including adjustments to the aggregate number
     and kind of shares subject to the Plan, or to outstanding Restricted Stock
     purchase or Restricted Stock bonus agreements, or SAR agreements, and the
     number and kind of shares and the price per share subject to outstanding
     options.

                                       5
<PAGE>

          (d)  The Plan Administrator shall have the discretion, to the extent
     permitted by Applicable Law, to include provisions in any agreements
     evidencing awards granted under the Plan providing that, in the event of a
     dissolution, liquidation, merger or consolidation of the Company, or any
     other event that the Plan Administrator deems to have effected a change in
     control of the Company, any such awards shall accelerate and become fully
     vested, and all forfeiture and/or transfer restrictions with respect
     thereto shall lapse, regardless of whether such awards are otherwise to be
     assumed or replaced in connection with such event.

4.   Eligible Individuals.  Individuals who shall be eligible to have the Plan
     --------------------
Administrator grant to them options, SARs or Restricted Stock under the Plan
("Eligible Individuals") shall be such employees, officers (including officers
who are directors of the Company), independent contractors, and consultants of
the Company or an Affiliate as the Plan Administrator, in its discretion, shall
designate from time to time.  Notwithstanding the foregoing, only Employees
shall be eligible to receive incentive stock options.  Eligible Individuals
shall not include Non-Employee Directors.  Non-Employee Directors shall receive
automatic and nondiscretionary option grants pursuant to Section 5 and will not
be otherwise eligible to receive any other option grants or awards of SARs or
Restricted Stock under the Plan or any other stock plan of the Company or any
Affiliate.

5.   Automatic Option Grants to Non-Employee Directors.
     -------------------------------------------------

          (a)  All grants of options pursuant to this Section 5 shall be
     automatic and nondiscretionary and shall be made strictly in accordance
     with the provisions of this Section 5. No person shall have any discretion
     to determine which Non-Employee Directors shall be granted options, the
     number of shares of Stock to be covered by options granted to Non-Employee
     Directors, the timing of such option grants or the exercise price thereof.

          (b)  An option to purchase 7,500 shares of Stock shall be granted to
     each Non-Employee Director continuing in office immediately following each
     annual meeting of the Company's stockholders which occurs on or after the
     date of approval of the Plan by the stockholders of the Company and prior
     to the termination of the Plan.

          (c)  The term of each option granted pursuant to this Section 5 shall
     be ten years from the date of grant, unless a shorter period is required to
     comply with any Applicable Law, and except for the early termination
     provisions contained in the written stock option agreement in the form of
     Exhibit A hereto, in either of which cases such shorter period shall apply.

                                       6
<PAGE>

          (d)  Each option granted pursuant to this Section 5 shall vest and
     become fully exercisable as to fifty percent (50%) of the shares subject to
     the option on the date which is six (6) months from the date the option is
     granted, then daily thereafter as to 1/365th of the total shares subject to
     the option so that the option is fully exercisable no later than one year
     following the date the option is granted.

          (e)  Each option grant to an Non-Employee Director pursuant to this
     Section 5 shall be evidenced by a written stock option agreement, in the
     form of Exhibit A hereto, executed by the Company and the Non-Employee
     Director to whom such option is automatically granted.

6.   Terms and Conditions of Options.
     -------------------------------

          (a)  Each option granted pursuant to the Plan will be evidenced by a
     written stock option agreement executed by the Company and the person to
     whom such option is granted.

          (b)  Except for options granted under Section 5 above, the Plan
     Administrator shall determine the term of each option granted under the
     Plan; provided, however, that the term of an incentive stock option shall
     not be for more than ten years and that, in the case of an incentive stock
     option granted to a person possessing more than 10% of the combined voting
     power of the Company or an Affiliate on the date the option is granted, the
     term of each incentive stock option shall be no more than five years.

          (c)  In the case of incentive stock options, the aggregate fair market
     value (determined as of the time such option is granted) of the Stock with
     respect to which incentive stock options are exercisable for the first time
     by an Eligible Individual in any calendar year (under this Plan and any
     other plans of the Company or its Affiliates) shall not exceed $100,000. If
     the aggregate fair market value of the Stock with respect to which
     incentive stock options are exercisable by an optionee for the first time
     in any calendar year exceeds $100,000, such options shall be treated, to
     the minimum extent required to preserve incentive stock option treatment
     for as many options as possible, as nonqualified stock options. The rule
     set forth in the preceding sentence shall be applied by taking options into
     account in the order in which they were granted.

          (d)  The exercise price of each incentive stock option shall be not
     less than the per share fair market value of the Stock subject to such
     option on the date the option is granted. The exercise price of each
     nonqualified stock option shall be as determined by the Plan Administrator.
     Notwithstanding the foregoing, (i) in the case of an incentive stock option
     granted to a person possessing more than 10% of the combined voting power
     of the Company or an Affiliate on the date the

                                       7
<PAGE>

     option is granted, the exercise price shall be not less than 110% of the
     fair market value of the Stock on the date the option is granted, and (ii)
     in the case of an option granted pursuant to Section 5 above, the exercise
     price shall be not less than the per share fair market value of the Stock
     subject to such option on the date the option is granted. The exercise
     price of an option shall be subject to adjustment to the extent provided in
     Section 3(c), above.

          (e)  The stock option agreement may contain such other terms,
     provisions, and conditions consistent with this Plan as may be determined
     by the Plan Administrator. If an option, or any part thereof, is intended
     to qualify as an incentive stock option, the stock option agreement shall
     contain those terms and conditions which are necessary to so qualify it.

          (f)  The maximum number of shares of Stock with respect to which SARs
     or options to acquire Stock may be granted to any individual during any
     calendar year shall not exceed 1,000,000 shares (which number may be
     increased without stockholder approval to reflect adjustments under Section
     3(c), above, to the extent such increase does not cause the grant to fail
     to qualify as remuneration payable solely on account of one or more
     performance goals within the meaning of Section 162(m) of the Code). To the
     extent required by Section 162(m) of the Code or the regulations
     thereunder, in applying the foregoing limitation with respect to any
     employee, if any option is cancelled, the cancelled option shall continue
     to count against the maximum number of shares for which options may be
     granted to the employee under this Section 6(f). For this purpose, the
     repricing of an option shall be treated as a cancellation of the existing
     option and the grant of a new option to the extent required by Section
     162(m) of the Code or the regulations thereunder.

7.   Payment Upon Exercise of Options.
     --------------------------------

          (a)  Payment of the purchase price upon exercise of any option granted
     under this Plan shall be made in cash, by optionee's personal check, a
     certified check, bank draft, or postal or express money order payable to
     the order of the Company in lawful money of the United States
     (collectively, "Cash Consideration"); provided, however, that, except for
     options granted under Section 5 above, the Plan Administrator, in its sole
     discretion, may permit an optionee to pay the option price in whole or in
     part (i) with shares of Stock owned by the optionee or with shares of Stock
     withheld from the shares otherwise deliverable to the optionee upon
     exercise of an option; (ii) by delivery on a form prescribed by the Company
     of an irrevocable direction to a securities broker approved by the Company
     to sell shares of Stock and deliver all or a portion of the proceeds to the
     Company in payment for the Stock; (iii) by delivery of the optionee's
     promissory note with such recourse, interest, security, and

                                       8
<PAGE>

     redemption provisions as the Plan Administrator in its discretion
     determines appropriate; or (iv) in any combination of the foregoing. The
     exercise price of any options granted under Section 5 above, shall be paid
     in Cash Consideration, the consideration specified in clauses (i) or (ii)
     of the preceding sentence or in any combination thereof. Any Stock used to
     exercise options shall be valued at its fair market value on the date of
     the exercise of the option. In addition, the Plan Administrator, in its
     sole discretion, may authorize the surrender by an optionee of all or part
     of an unexercised option (excluding options granted under Section 5 above)
     and authorize a payment in consideration thereof of an amount equal to the
     difference between the aggregate fair market value of the Stock subject to
     such option and the aggregate option price of such Stock. In the Plan
     Administrator's discretion, such payment may be made in cash, shares of
     Stock with a fair market value on the date of surrender equal to the
     payment amount, or some combination thereof.

          (b)  In the event that the exercise price is satisfied by shares
     withheld from the shares of Stock otherwise deliverable to the optionee,
     the Plan Administrator may issue the optionee an additional option, with
     terms identical to the option agreement under which the option was
     exercised, entitling the optionee to purchase additional shares of Stock
     equal to the number of shares so withheld but at an exercise price equal to
     the fair market value of the Stock on the grant date of the new option;
     provided, however, that no Such additional options may be granted with
     respect to options granted pursuant to Section 5, above.

8.   Terms and Conditions of Restricted Stock Purchases and Bonuses.
     --------------------------------------------------------------

          (a)  Each sale (other than upon exercise of options) or bonus grant of
     Restricted Stock pursuant to the Plan will be evidenced by a written
     Restricted Stock purchase or Restricted Stock bonus agreement, as
     applicable, executed by the Company and the person to whom such Restricted
     Stock is sold or granted.

          (b)  The Restricted Stock purchase agreement or Restricted Stock bonus
     agreement may contain such terms, provisions, and conditions consistent
     with this Plan as may be determined by the Plan Administrator, including
     not by way of limitation, payment terms, restrictions on transfer,
     forfeiture provisions, repurchase provisions, and vesting provisions.

          (c)  The Plan Administrator may condition the award or the exercise of
     any right under an award under this Section 8 upon the attainment of one or
     more preestablished objective performance goals meeting the requirements of
     Section 162(m) of the Code and the regulations thereunder.

                                       9
<PAGE>

9.   Terms and Conditions of SARs.  The Plan Administrator may, under such terms
     ----------------------------
and conditions as it deems appropriate, authorize the issuance of SARs evidenced
by a written SAR agreement (which, in the case of tandem options, may be part of
the option agreement to which the SAR relates) executed by the Company and the
person to whom the SARs are granted.  The SAR agreement shall specify the term
for the SARs covered thereby and contain such other terms, provisions and
conditions consistent with this Plan as may be determined by the Plan
Administrator.

10.  Withholding Taxes.
     -----------------

          (a)  No Stock shall be granted or sold under the Plan to any Eligible
     Individual, and no SAR may be exercised, until the individual has made
     arrangements acceptable to the Plan Administrator for the satisfaction of
     federal, state, and local income and employment tax withholding
     obligations, including without limitation obligations incident to the
     receipt of Stock under the Plan, the lapsing of restrictions applicable to
     such Stock, the failure to satisfy the conditions for treatment as
     incentive stock options under applicable tax law, or the receipt of cash
     payments. Upon the exercise of an option or the lapsing of a restriction on
     Stock issued under the Plan, the Company (or the optionee's or
     stockholder's employer) may withhold from the shares otherwise deliverable
     to the optionee upon such exercise, or require the stockholder to surrender
     shares of Stock as to which the restriction has lapsed, such number of
     shares having a fair market value sufficient to satisfy federal, state and
     local income and employment tax withholding obligations.

          (b)  In the event that such tax withholding is satisfied by the
     Company or the optionee's employer withholding shares of Stock otherwise
     deliverable to the optionee, the Plan Administrator may issue the optionee
     an additional option, with terms identical to the option agreement under
     which the option was exercised, entitling the optionee to purchase
     additional shares of Stock equal to the number of shares so withheld but at
     an exercise price equal to the fair market value of the Stock on the grant
     date of the new option; provided, however, that no such additional options
     may be granted with respect to options granted pursuant to Section 5,
     above.

                                       10
<PAGE>

11.  Assignability.  Incentive stock options may not be sold, pledged, assigned,
     -------------
hypothecated, transferred, or disposed of in any manner other than by will or by
the laws of descent or distribution and may be exercised, during the lifetime of
the optionee, only by the optionee.  Nonqualified stock options and SARs shall
be transferable to the extent provided in the stock option or SAR agreement or
as determined by the Plan Administrator.  Stock subject to a Restricted Stock
purchase agreement or a Restricted Stock bonus agreement shall be transferable
only as provided in such agreement.

12.  Change in Control.
     -----------------

          (a)  Notwithstanding anything to the contrary contained in the Plan,
     each stock option, SAR, Restricted Stock bonus or Restricted Stock purchase
     agreement (or an amendment thereto) evidencing an option, SAR, Restricted
     Stock bonus or Restricted Stock purchase hereunder shall automatically and
     without further action be fully vested, nonforfeitable and become
     exercisable, and any Restricted Stock covered by such an agreement shall be
     released from restrictions on transfer and repurchase or forfeiture rights,
     on the twenty-second day after any Share Acquisition Date, unless prior to
     such twenty-second day a majority of the Continuing Directors then in
     office has determined that the transaction pursuant to which a Person has
     become an Acquiring Person is an Approved Transaction.

          (b)  Certain Definitions.  For purposes of this Section 12, the
               -------------------
     following definitions shall apply:

     "Acquiring Person" means any Person who or which, together with all
      ----------------
Affiliates and Associates of such Person, shall be the Beneficial Owner of 20%
or more of the Common Shares then outstanding, but shall not include the
Company, any Subsidiary of the Company or any employee benefit plan of the
Company or any Subsidiary of the Company, or any entity holding Common Shares
for or pursuant to the terms of any such plan.  Notwithstanding the foregoing,
no Person shall become an "Acquiring Person" as the result of an acquisition of
Common Shares by the Company which, by reducing the number of shares
outstanding, increases the proportionate number of shares beneficially owned by
such Person to 20% or more of the Common Shares of the Company then outstanding;
provided, however, that if a Person becomes the Beneficial Owner of 20% or more
--------  -------
of the Common Shares of the Company then outstanding by reason of share
purchases by the Company and shall, after such share purchases by the Company,
becomes the Beneficial Owner of any additional Common Shares of the Company,
then such Person shall be deemed to be an "Acquiring Person".

     "Affiliate" and "Associate" have the respective meanings ascribed to such
      ---------       ---------
terms in Rule 12b-2 of the General Rules and Regulations under the Exchange Act.

                                       11
<PAGE>

     "Approved Transaction" means any transaction that occurs at a time when
      --------------------
Continuing Directors are in office and a majority of the Continuing Directors
then in office has determined that the transaction is in the best interest of
the Company and its stockholders.

     A Person shall be deemed the "Beneficial Owner" of and shall be deemed to
                                   ----------------
"beneficially own" any securities: (i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or indirectly; (ii) which
such Person or any of such Person's Affiliates or Associates has (A) the right
to acquire (whether such right is exercisable immediately or only after the
passage of time) pursuant to any agreement, arrangement or understanding, or
upon the exercise of conversion rights, exchange rights, rights (other than the
Rights), warrants or options, or otherwise; provided, however, that a Person
                                            --------  -------
shall not be deemed the Beneficial Owner of, or to beneficially own, securities
tendered pursuant to a tender or exchange offer made by or on behalf of such
Person or any of such Person's Affiliates or Associates until such tendered
securities are accepted for purchase or exchange; or (B) the right to vote
pursuant to any agreement, arrangement or understanding; provided, however, that
                                                         --------  -------
a Person shall not be deemed the Beneficial Owner of, or to beneficially own,
any security if the agreement, arrangement or understanding to vote such
security (1) arises solely from a revocable proxy or consent given to such
person in response to a public proxy or consent solicitation made pursuant to,
and in accordance with, the applicable rules and regulations of the Exchange Act
and (2) is not also then reportable on Schedule 13D under the Exchange Act (or
any comparable or successor report); or (iii) which are beneficially owned,
directly or indirectly, by any other Person with which such Person or any of
such Person's Affiliates or Associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting (except to the
extent contemplated by the proviso to clause (ii)(B) of this definition) or
disposing of any securities of the Company; provided further, however, that
nothing in this Section 12 shall cause a Person to be the Beneficial Owner of,
or to beneficially own, any securities (x) acquired through such Person's
participation in the business of underwriting securities in good faith in a firm
commitment underwriting until the expiration of forty days after the date of
such acquisition or (y) which such Person has reported on Schedule 13G under the
Exchange Act and has not ceased to be eligible to report on Schedule 13G
pursuant to Rule 13d-1 under the Exchange Act.

     "Common Shares" means the shares of common stock, par value $.0001 per
      -------------
share, of the Company.

     "Continuing Director" means (i) any member of the Board of Directors of the
      -------------------
Company, while such Person is a member of the Board, who is not an Acquiring
Person, or an Affiliate or Associate of an Acquiring Person, or a representative
of an Acquiring Person or of any such Affiliate or Associate, and who was, if
applicable, a member of the Board prior to the time that any Person becomes an
Acquiring Person, or (ii) any Person who subsequently becomes a member of the
Board, while such Person is a member of the Board, who is not

                                       12
<PAGE>

an Acquiring Person, or an Affiliate or Associate of an Acquiring Person, or a
representative of an Acquiring Person or of any such Affiliate or Associate, if
such Person's nomination for election or election to the Board is recommended or
approved by a majority of Continuing Directors.

     "Exchange Act" means the Securities Exchange Act of 1934, as amended, and
      ------------
the rules and regulations promulgated thereunder.

     "Person" means any individual, firm, partnership, corporation or other
      ------
entity, and shall include any successor (by merger or otherwise) of such entity.

     "Rights" means the rights granted to the Company's shareholders to purchase
      ------
additional Common Shares under certain circumstances, as described in that
certain Rights Agreement, dated as of May 5, 1988, by and between the Company
and The First National Bank of Boston, as rights agent.

     "Share Acquisition Date" means the first date of public announcement by the
      ----------------------
Company or an Acquiring Person that a Person has become an Acquiring Person.

     "Subsidiary" of any Person means any corporation or other entity of which a
      ----------
majority of the voting power of the voting equity securities or equity interest
is owned, directly or indirectly, by such Person, or which is otherwise
controlled by such Person.

13.  Amendment, Suspension, or Termination of the Plan.
     -------------------------------------------------

          (a)  The Board may at any time amend, suspend or terminate the Plan as
     it deems advisable; provided that such amendment, suspension or termination
     complies with all applicable requirements of state and federal law,
     including any applicable requirement that the Plan or an amendment to the
     Plan be approved by the stockholders, and provided further that, except as
     provided in Section 3(c) above, the Board shall in no event amend the Plan
     in the following respects without the consent of stockholders then
     sufficient to approve the Plan in the first instance:

               (1)  To materially increase the benefits accruing to participants
     under the Plan;

               (2)  To materially increase the number of shares of Stock
     available under the Plan or to increase the number of shares of Stock
     available for grant of incentive stock options under the Plan; or

               (3)  To materially modify the eligibility requirements for
     participation in the Plan or the class of employees eligible to receive
     options under the Plan or to change the designation or class of persons
     eligible to receive incentive stock options under the Plan.

                                       13
<PAGE>

          (b)  No option or SAR may be granted nor may any Stock be issued
     (other than upon exercise of outstanding options) under the Plan during any
     suspension or after the termination of the Plan, and no amendment,
     suspension, or termination of the Plan shall, without the affected
     individual's consent, alter or impair any rights or obligations under any
     option or SAR previously granted under the Plan.

14.  Term of Plan.  The Plan shall terminate with respect to the grant of
     ------------
additional awards on the tenth anniversary of the date the Plan is approved by
the stockholders, unless previously terminated by the Board pursuant to Section
13.

15.  Use of Proceeds.  Cash proceeds realized from the exercise of options
     ---------------
granted under the Plan or from other sales of Stock under the Plan shall
constitute general funds of the Company.

16.  Stockholder Approval.  The Plan was adopted by the Board on March 1, 1995
     --------------------
and became effective when approved by the Company's stockholders on May 31,
1995. On February 29, 1996, the Board adopted and approved an amendment to
increase the automatic option grants to Non-Employee Directors from 5,000 to
7,500 shares of Stock which became effective when approved by the Company's
stockholders on July 23, 1996. On February 19, 1999, the Board adopted and
approved an amendment and restatement of the Plan to reflect amendments
promulgated by the Securities and Exchange Commission to Rule 16b-3 applicable
to the Plan, which amendment and restatement was not subject to stockholder
approval. On March 9, 2000, the Board adopted and approved an amendment to the
Plan to eliminate the ability of the Plan Administrator to reprice outstanding
options, which amendment was not subject to stockholder approval, and also
adopted and approved an amendment to the Plan to increase the maximum aggregate
number of shares of stock available for issuance under the Plan from 3,500,000
to 6,500,000, which will become effective if approved by the Company's
stockholders.

17.  No Employment Right.  Nothing in this Plan or any instrument executed or
     -------------------
any award granted pursuant thereto shall confer upon any employee, independent
contractor, consultant or director any right to continue in the employ of the
Company or any Affiliate (or to continue acting as an independent contractor,
consultant or director) or shall affect the right of the Company or any
Affiliate to terminate the employment, contractual or consulting relationship or
directorship of any person, with or without cause.

                                       14
<PAGE>

                              ACUSON CORPORATION
         NON-EMPLOYEE DIRECTORS' NON-QUALIFIED STOCK OPTION AGREEMENT

     This agreement (the "Agreement") is made as of __________ 199_ (the "Grant
Date") between Acuson Corporation (the "Company") and ("Optionee").

     WITNESSETH:

     WHEREAS, the Company has adopted the Acuson Corporation 1995 Stock
Incentive Plan (the "Plan"), which Plan is incorporated in this Agreement by
reference and made a part of it (capitalized terms shall have the meaning
ascribed to them in the Plan); and

     WHEREAS, the Plan provides for automatic option grants to Non-Employee
Directors of the Company;

     NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties to this Agreement hereby agree as follows:

     1.   Option Grant.  The Company hereby grants to Optionee the right and
          ------------
option to purchase from the Company on the terms and conditions hereinafter set
forth, all or any part of an aggregate of Seven Thousand Five Hundred (7,500)
shares of the Common Stock, $.0001 par value, of the Company (the "Stock"). The
exercise price of the Stock subject to this option shall be $___ per share,
which is not less than the fair market value per share of the Stock on the Grant
Date. This grant is an automatic option grant under Section 5 of the Plan.

     2.   Option Period.  This option shall be exercisable only during the
          -------------
period (the "Option Period") commencing on the Grant Date and, except as
provided in paragraph 3, ending on the date (the "Terminal Date") which shall be
ten years from the Grant Date. During the Option Period, the exercisability of
this option shall be subject to the limitations of paragraph 3 and the vesting
provisions of paragraph 4.

     3.   Limits on Option Period.  The Option Period may end before the
          -----------------------
Terminal Date, as follows:

               (a)  If Optionee ceases to be a director on the Company's Board
     of Directors (the "Board") for any reason other than death, disability
     (within the meaning of subparagraph (c) below) or cause during the Option
     Period, the Option Period shall terminate on the earlier of (i) the last
     day of the period, beginning on the day next following the day on which the
     Optionee ceases to be a director, which equals in length the most recent
     period of the Optionee's continuous service as a director (including all
     portions of such period prior to the Grant Date), (ii) three years after
     the date Optionee ceases to be a director, or (iii) the Terminal Date. In
     each case this option shall be exercisable only to the

                                       2
<PAGE>

     extent exercisable under paragraph 4 on the date Optionee ceases to be a
     director.

               (b)  If Optionee should die while serving on the Board, the
     Option Period shall terminate three years after the date of death or on the
     Terminal Date, whichever shall first occur, and this option shall be
     exercisable only to the extent exercisable under paragraph 4 on the date of
     Optionee's death. In the event of Optionee's death, Optionee's executor or
     administrator or the person or persons to whom Optionee's rights under this
     option shall pass by will or by the applicable laws of descent and
     distribution may exercise the entire unexercised portion of this option to
     the extent exercisable on the date of Optionee's death.

               (c)  If Optionee ceases to be a director by reason of disability,
     as defined below, the Option Period shall terminate three years after the
     date Optionee ceases to be a director or on the Terminal Date, whichever
     shall first occur, and this option shall be exercisable only to the extent
     exercisable under paragraph 4 on the date Optionee ceases to be a director.
     For purposes of this subparagraph (c), an individual is disabled if he or
     she is unable to engage in any substantial gainful activity by reason of
     any medically determinable physical or mental impairment which can be
     expected to result in death or which has lasted or can be expected to last
     for a continuous period of not less than 12 months. An individual shall not
     be considered to be disabled unless he or she furnishes proof of the
     existence thereof in such form and manner, and at such times, as the Board
     may require.

               (d)  If Optionee is removed from the Board for cause during the
     Option Period, the Option Period shall terminate on the date of such
     Optionee's removal as a director and shall not thereafter be exercisable to
     any extent.

4.   Vesting of Right to Exercise Options.
     ------------------------------------

               (a)  This option shall vest as to fifty percent (50%) of the
     number of shares originally covered by this option on the date which is six
     months from the Grant Date, then daily thereafter in installments of
     1/365th of the total shares subject to this option so that this option will
     become fully vested and exercisable no later than one (1) year following
     the Grant Date.

               (b)  Vesting of this option will cease prior to this option
     becoming fully vested at such time that Optionee ceases to be a director of
     the Company, including by reason of death or disability.

               (c)  Fractional shares shall not vest until such time as
     additional fractional shares included in other installments allocated to
     this option can be combined with the existing fractional shares to
     constitute one or more whole shares.

                                       3
<PAGE>

               (d)  Notwithstanding the foregoing, this option shall be fully
     vested and nonforfeitable and shall become fully exercisable under the
     circumstances specified in Section 12 of the Plan.

5.   Method of Exercise.
     ------------------

               (a)  Optionee may exercise this option with respect to all or any
     part of the shares of Stock then subject to such exercise by giving the
     Company written notice of such exercise, specifying the number of such
     shares as to which this option is exercised. Such notice shall be
     accompanied by an amount equal to the exercise price of such shares, in any
     of the forms permitted under Section 7 of the Plan.

               (b)  If required by the Company, Optionee shall give the Company
     satisfactory assurance in writing, signed by Optionee or Optionee's legal
     representative, as the case may be, that such shares are being purchased
     for investment and not with a view to the distribution thereof, provided
     that such assurance shall be deemed inapplicable to (i) any sale of such
     shares by such Optionee made in accordance with the terms of a registration
     statement covering such sale, which has heretofore been (or may hereafter
     be) filed and become effective under the Securities Act of 1933, as
     amended, and with respect to which no stop order suspending the
     effectiveness thereof has been issued, and (ii) any other sale of such
     shares with respect to which, in the opinion of counsel for the Company,
     such assurance is not required to be given in order to comply with the
     provisions of the Securities Act of 1933, as amended.

               (c)  As soon as practicable after receipt of the notice required
     in paragraph 5(a) and satisfaction of the conditions set forth in paragraph
     5(b), the Company shall, without transfer or issue tax and without other
     incidental expense to Optionee, deliver to Optionee at the office of the
     Company at 1220 Charleston Road, Mountain View, CA 94043, attention of the
     Corporate Secretary, or such other place as may be mutually acceptable to
     the Company and Optionee, a certificate or certificates for such shares of
     Stock; provided, however, that the time of such delivery may be postponed
     by the Company for such period as may be required for it with reasonable
     diligence to comply with applicable registration requirements under the
     Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
     amended, any applicable listing requirements of any national securities
     exchange, and requirements under any other law or regulation applicable to
     the issuance or transfer of such shares. If Optionee fails to accept
     delivery of and pay for all or any part of the number of shares specified
     in such notice upon tender or delivery thereof, Optionee's right to
     purchase such shares may be terminated by the Company at its election. In
     no event shall the Company be required to issue fractional shares upon the
     exercise of this option.

                                       4
<PAGE>

6.   Withholding.  Optionee agrees to make appropriate arrangements with the
     -----------
Company for satisfaction of any applicable federal, state or local income tax
withholding requirements or social security requirements.

7.   Changes in Capitalization.  If there should be any change in a class of
     -------------------------
Stock subject to this option, through merger, consolidation, reorganization,
recapitalization, reincorporation, stock split, stock dividend (in excess of two
percent) or other change in the capital structure of the Company, appropriate
adjustments shall be made in order to preserve, but not to increase, the
benefits to Optionee, including adjustments of the number and kind of shares of
such Stock subject to this option and of the price per share.  Any adjustment
made pursuant to this paragraph 7 as a consequence of a change in the capital
structure of the Company shall not entitle Optionee to acquire a number of
shares of such Stock of the Company or shares of stock of any successor company
greater than the number of shares Optionee would receive if, prior to such
change, Optionee had actually held a number of shares of such Stock equal to the
number of shares subject to this option.

8.   Transferability. This Option may be transferred by the Optionee in a manner
     ---------------
and to the extent acceptable to the Plan Administrator as evidenced by a writing
signed by the Company and the Optionee.

9.   No Stockholder Rights. Neither Optionee nor any person entitled to exercise
     ---------------------
Optionee's rights in the event of Optionee's death shall have any of the rights
of a stockholder with respect to the shares of Stock subject to this option
except to the extent the certificates for such shares shall have been issued
upon the exercise of this option.

10.  No Employment Right.  Nothing in the Plan or this Agreement shall confer
     -------------------
upon the Optionee any right to continue service as a director of the Company or
any Affiliate or shall affect the right of the Company or any Affiliate or the
shareholders of the Company or any Affiliate, as the case may be, to terminate
the directorship of Optionee, with or without cause.

11.  Notice.  Any notice required to be given to the Company under the terms of
     ------
this Agreement shall be given in writing and addressed to the Company in care of
its Corporate Secretary at the office of the Company at 1220 Charleston Road,
Mountain View, CA 94043, and any notice to be given to Optionee shall be given
in writing and addressed to Optionee at the address given by Optionee beneath
Optionee's signature to this Agreement, or such other address as either party to
this Agreement may hereafter designate in writing to the other.  Any such notice
shall be deemed to have been duly given when enclosed in a properly sealed
envelope addressed as aforesaid, registered or certified and deposited (postage
and registration or certification fee prepaid) in a post office or branch post
office regularly maintained by the United States.

12.  Successors.  This Agreement shall be binding upon and inure to the benefit
     ----------
of any successor or successors of the Company.  Where the context permits,
"Optionee" as used in this Agreement shall include Optionee's executor,
administrator or other legal

                                       5
<PAGE>

representative or the person or persons to whom Optionee's rights pass by will
or the applicable laws of descent and distribution.

13.  Applicable Law.  The interpretation, performance, and enforcement of this
     --------------
Agreement shall be governed by the laws of the State of California.
     IN WITNESS WHEREOF, this Agreement has been executed as of the day and year
first written above.

                              Acuson Corporation
                              a Delaware corporation

                              By:_______________________________

                              Title:____________________________

                              Optionee
                              Signature:________________________

                              Address:__________________________

                                      __________________________

                                      __________________________

                                       6

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