<DOCUMENT>
<TYPE>DEF 14A
<SEQUENCE>1
<FILENAME>0001.txt
<TEXT>


This Proxy Statement was inadvertently not filed with the SEC at the time it was
delivered  to the  shareholders  of  Cimetrix  Incorporated  on April 20,  1998,
consequently  this filing is being made to bring the Company's file with the SEC
current.






                              CIMETRIX INCORPORATED


                                 April 20, 1998


Dear Shareholder:

         On behalf of the Board of Directors and management,  I cordially invite
you to attend the Annual Meeting of the  Shareholders of Cimetrix  Incorporated,
which will be held on  Saturday,  May 16,  1998,  at 9:00 a.m.  in the  Marriott
Hotel, 75 South West Temple, Salt Lake City, Utah.

         At the meeting,  in addition to electing five directors,  your Board is
asking  shareholders to approve the 1998 Stock Option Plan.  These proposals are
fully set forth in the accompanying  proxy statement which you are urged to read
thoroughly.  I will also  report  on the  progress  of the  Company  and  answer
shareholder questions.

         It is  important  that your  shares  are  represented  and voted at the
meeting  whether or not you plan to attend.  Accordingly,  you are  requested to
sign, date and mail the enclosed proxy in the envelope provided at your earliest
convenience.

         Thank you for your cooperation.

                                                     Very truly yours,

                                                     /s/ Paul A. Bilzerian
                                                     ---------------------
                                                     Paul A. Bilzerian
                                                     President


<PAGE>



                              CIMETRIX INCORPORATED
                           6979 South High Tech Drive
                         Salt Lake City, Utah 84047-3757


                    NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

                           Meeting Date: May 16, 1998

TO OUR SHAREHOLDERS:

         The Annual  Meeting of the  Shareholders  of Cimetrix  Incorporated,  a
Nevada corporation (the "Company"),  will be held on May 16, 1998, commencing at
9:00 a.m., in the Marriott Hotel, 75 South West Temple, Salt Lake City, Utah, to
consider  and vote on the  following  matters  described  in this notice and the
accompanying Proxy Statement:

         1. To elect five directors to the Company's Board of Directors to serve
for one-year terms.

         2. To approve the Cimetrix Incorporated 1998 Stock Option Plan.

         3. To transact  such other  business as may properly  come  before  the
            meeting or any adjournments thereof.

         The Board of  Directors  has fixed the close of  business  on April 20,
1998 as the record date for  determination  of shareholders  entitled to vote at
the Annual  Meeting or any  adjournments  thereof,  and only  record  holders of
Common Stock at the close of business on that day will be entitled to vote.

         TO ASSURE REPRESENTATION AT THE ANNUAL MEETING,  SHAREHOLDERS ARE URGED
TO SIGN AND RETURN  THE  ENCLOSED  PROXY CARD AS  PROMPTLY  AS  POSSIBLE  IN THE
POSTAGE-PREPAID  ENVELOPE ENCLOSED FOR THAT PURPOSE.  ANY SHAREHOLDER  ATTENDING
THE ANNUAL  MEETING MAY VOTE IN PERSON EVEN IF HE OR SHE  PREVIOUSLY  RETURNED A
PROXY. A PROXY MAY BE REVOKED BY WRITTEN REVOCATION  DELIVERED TO THE COMPANY AT
ANY TIME PRIOR TO THE ANNUAL MEETING.


                                By Order of the Board of Directors,

                                /s/ Riley G. Astill
                                -------------------

                                Riley G. Astill
                                Vice President of Finance and Secretary
April 20, 1998
Salt Lake City, Utah


<PAGE>



                              CIMETRIX INCORPORATED
                           6979 South High Tech Drive
                         Salt Lake City, Utah 84047-3757

                                 PROXY STATEMENT

                         ANNUAL MEETING OF SHAREHOLDERS
                           Meeting Date: May 16, 1998

         This  Proxy  Statement  is being  sent on or about  April  20,  1998 in
connection  with the  solicitation  of  proxies  by the  Board of  Directors  of
Cimetrix Incorporated,  a Nevada corporation (the "Company" or "Cimetrix").  The
proxies  are for use at the  1998  Annual  Meeting  of the  Shareholders  of the
Company,  which will be held on May 16, 1998,  commencing  at 9:00 a.m.,  in the
Marriott Hotel, 75 South West Temple,  Salt Lake City, Utah, and at any meetings
held upon adjournment  thereof (the "Annual  Meeting").  The record date for the
Annual  Meeting is the close of business on April 20, 1998 (the "Record  Date").
Only  holders of record of the  Company's  Common  Stock on the Record  Date are
entitled to notice of the Annual Meeting and to vote at the Annual Meeting.

         A proxy card is enclosed.  Whether or not you plan to attend the Annual
Meeting in person,  please  date,  sign and  return the  enclosed  proxy card as
promptly as possible,  in the postage-prepaid  envelope provided, to ensure that
your shares will be voted at the Annual  Meeting.  Any shareholder who returns a
proxy  has the  power to revoke  it at any time  prior to its  effective  use by
filing with the  Secretary  of the Company an  instrument  revoking it or a duly
executed  proxy  bearing a later date,  or by attending  the Annual  Meeting and
voting in person. Unless contrary instructions are given, any such proxy, if not
revoked,  will be voted at the Annual Meeting for the five nominees for election
as directors as set forth in this Proxy Statement; for the proposal to adopt the
Cimetrix Incorporated 1998 Stock Option Plan; and as recommended by the Board of
Directors,  in its  discretion,  with  regard  to all  other  matters  which may
properly come before the Annual Meeting.  The Company does not currently know of
any such other matters.

         At the Record  Date,  there  were  24,143,928  Shares of the  Company's
Common Stock issued and outstanding. The presence, either in person or by proxy,
of persons entitled to vote a majority of the Company's outstanding Common Stock
is  necessary  to  constitute  a quorum for the  transaction  of business at the
Annual  Meeting.  Abstentions  and broker  non-votes are counted for purposes of
determining  a quorum,  but are not  considered  as having voted for purposes of
determining  the outcome of a vote.  No other voting  securities  of the Company
were outstanding at the Record Date.

         Holders of the Common  Stock have one vote for each share on any matter
that may be presented for  consideration  and action by the  shareholders at the
Annual Meeting. In order for action to be taken on any matter, it must receive a
majority  of the votes  present  and  voting in  person or by proxy  except  the
election of directors.  Directors may be elected by a plurality  vote.  The five
nominees  for  director  receiving  the  highest  number of votes at the  Annual
Meeting will be elected. Unless instructed otherwise,  the shares represented by
proxies to management will be voted for the named nominees.

         The cost of  preparing,  assembling,  printing  and mailing  this Proxy
Statement and the accompanying form of proxy, and the cost of soliciting proxies
relating to the Annual  Meeting,  will be borne by the Company.  The Company may
request banks and brokers to solicit their customers who beneficially own Common
Stock listed of record in names of nominees,  and will  reimburse such banks and
brokers for their reasonable out-of-pocket expenses for such solicitations.  The
solicitation of proxies by mail may be  supplemented by telephone,  telegram and
personal  solicitation  by  officers,  directors  and regular  employees  of the
Company, but no additional compensation will be paid to such individuals.


                                       -1-

<PAGE>


                                 PROPOSAL NO. 1

                              ELECTION OF DIRECTORS

         The Board of Directors has  determined  that the five  directors  named
below will be nominated  for election as directors at the Annual  Meeting.  Each
nominee has  consented  to being named in the Proxy  Statement  as a nominee for
election as director and has agreed to serve as director if elected.

         The Board of Directors  have advised the Company that it intends at the
Annual Meeting to vote the shares covered by the proxies for the election of the
nominees named below.  If any one or more of such nominees should for any reason
become  unavailable  for  election,  the  Board  of  Directors  may vote for the
election of such substitute nominees as the Board of Directors may propose.  The
accompanying  form of proxy  contains a  discretionary  grant of authority  with
respect to this matter.

         The nominees  for  election as directors at the Annual  Meeting are set
forth below.

                             Positions with                     Director
         Name                  the Company                       Since

Paul A. Bilzerian       President, Chief Executive            February 9, 1996
                        Officer and Director

Lowell Anderson         Director                              January 23, 1998

Dr. Ron Lumia           Director                              January 1, 1996

Randall Mackey         Director                               January 23, 1998

Bill Van Drunen


Biographical Information

         There  is no  family  relationship  among  the  current  directors  and
executive officers. The following sets forth brief biographical  information for
each director and prospective director of Cimetrix.

Paul A. Bilzerian, age 47, President,  Chief Executive Officer and director, has
been involved in Cimetrix in various  capacities  since 1994. Mr.  Bilzerian has
been the President of Bicoastal Holding Company, a private  investment  company,
since  1993.  During  the period  1988 to 1989,  he was the  Chairman  and Chief
Executive Officer of the Singer Company. Mr. Bilzerian has been involved in more
than $10 billion dollars of corporate transactions and financing.  He has a B.S.
Degree in Political  Science from Stanford  University and a Masters in Business
Administration from Harvard University.

Dr.  Lowell K.  Anderson,  age  55,  has  been  a  director  of  Cimetrix  since
January 23, 1998. Dr. Anderson has practiced Oral and Maxillofacial Surgery from
1975 to the present.  From 1973 to 1975, Dr.  Anderson  served as a Major in the
United States Air Force.  From 1970 to 1973,  Dr.  Anderson did his residency at
Mayo Clinic and Mayo Graduate School of Medicine.  Dr.  Anderson  graduated from
the University of Louisville  Dental School with honors in 1966. Dr. Anderson is
currently a member of the Brigham Young  University  Alumni Board.  Dr. Anderson
also  served as  President  of the  Western  Society  of Oral and  Maxillofacial
Surgeons, representing over 600 surgeons.

                                       -2-

<PAGE>

Dr.  Ron Lumia,  age 47,  has  been  a  director of Cimetrix since January 1996.
He has  been  a  Professor  in  the  Mechanical  Engineering  Department  of the
University of New Mexico since October, 1994. From 1986 through September, 1994,
Dr.  Lumia served as Group  Leader at the  National  Institute of Standards  and
Technology  (NIST),  performing  research in the areas of  advanced  automation,
robotics,  machine vision,  and systems  integration.  Previously,  he taught at
ESIEE (Paris, France),  Virginia Tech, and the National University of Singapore,
where he consulted  for a variety of companies.  Dr. Lumia  received a B.S. from
Cornell University and a M.S. and Ph.D. from the University of Virginia,  all in
electrical engineering. He is the author of over 100 technical papers.

Randall A.  Mackey,  age 52, has been a director of Cimetrix  since  January 23,
1998.  Mr.  Mackey  has been a  shareholder  of the Salt  Lake  City law firm of
Mackey,  Price &  Williams  and its  predecessor  firms.  From 1979 to 1989,  he
practiced  law with the Salt Lake City law firm of Fabian & Clendenin,  where he
was a shareholder  and director of the firm from 1982 to 1989. From 1977 to 1979
Mr. Mackey was associated with the Washington, D.C. law firm of Hogan & Hartson.
Mr.  Mackey  received  a  Bachelor  of  Science  degree  in  Economics  from the
University  of Utah in 1968,  a Master in  Business  Administration  degree from
Harvard  University in 1970, a Juris Doctor  degree from Columbia  University in
1975 and a Bachelor  of Civil law degree  from Oxford  University  in 1977.  Mr.
Mackey has served as Secretary  and a director  since  November 1995 of Paradigm
Medical  Industries,  Inc.,  which develops,  manufactures  and sells ophthalmic
surgical systems.

John  W. Van Drunen,  age  43,  is  a Vice President at First Security Bank. Mr.
Van Drunen has been with First  Security  Bank since 1993.  Prior to this he was
with Bank America in various assignments from 1988 to 1993. He has a B.S. degree
in Business Management from Colorado State University.

Board Meetings and Committees

         The Company's  Board of Directors met twelve times during 1997. Each of
the  Company's  directors  attended at least 75% of the meetings of the Board of
Directors.  The  Company's  Board of  Directors  serves in its  entirety  as the
Nominating,  Compensation and Audit Committees. All issues normally addressed by
these  committees  are  addressed  by the full Board of  Directors  during their
meetings.

         All directors of the Company hold office until the next annual  meeting
of shareholders and until their successors have been elected and qualified.

                               EXECUTIVE OFFICERS

         The following table sets forth certain  biographical  information  with
respect to the executive officers of the Company  (biographical  information for
Mr. Bilzerian is set forth above):

   Name                Age                 Title

Paul A. Bilzerian      47     President and Chief Executive Officer

David P. Faulkner      43     Executive Vice President of Marketing

Robert Reback          38     Executive Vice President of Sales

Bradley A. Palser      41     Executive Vice President of Engineering

Riley G. Astill        37     Vice President of Finance, Chief Financial Officer

                                       -3-

<PAGE>

     David P.  Faulkner,  Executive  Vice  President  of  Marketing,  joined the
Company in August 1996. Mr.  Faulkner was previously  employed as the Manager of
PLC Marketing,  Manager of Automotive  Operations and District Sales Manager for
GE Fanuc Automation,  a global supplier of factory automation computer equipment
specializing in programmable  logic  controllers,  factory software and computer
numerical controls from 1986-1996.  Mr. Faulkner has a B.S. Degree in Electrical
Engineering  and a Masters  Degree in Business  Administration  from  Rensselaer
Polytechnic  Institute.

     Robert H. Reback,  Executive  Vice President of Sales,  joined  Cimetrix as
Vice  President  of Sales in January  1996 and was  promoted to  Executive  Vice
President of Sales and Marketing in January,  1997.  Mr. Reback was the District
Manager  of Fanuc  Robotics'  West  Coast  business  unit from  1994-1995.  From
1985-1993  he was  Director of  Sales/Account  Executives  for Thesis,  Inc.,  a
privately-owned  supplier of factory  automation  software and was  previously a
Senior Automation  Engineer for Texas Instruments.  Mr. Reback has a B.S. Degree
in  Mechanical  Engineering  and a M.S.  Degree in Industrial  Engineering  from
Purdue University.

     Bradley A. Palser, Executive Vice President of Software Engineering, joined
the Company in November 1997. Mr. Palser was previously employed as the Director
of Engineering and General Manager of several  Software  Engineering  facilities
for Unisys  Corporation  from 1983-1997.  Prior to that,  Westinghouse  Electric
employed Mr. Palser as a principal software engineer automating power plants and
steel mills.  Mr. Palser has a B.S.  Degree in Mathematics  from Carnegie Mellon
University.

     Riley G.  Astill,  Vice  President  of Finance,  Chief  Financial  Officer,
originally joined Cimetrix as Controller,  in July, 1994. He remained Controller
until October,  1996, when he left the Company prior to its moving to Tampa. Mr.
Astill  rejoined  Cimetrix as Vice  President of Finance in December,  1997. Mr.
Astill  was  Controller  of a  privately  held  Salt Lake  City  publisher  from
1991-1994.  From 1990-1991,  he was a Senior Accountant for Oryx Energy Company.
From 1988-1990 he was an Accountant  for Ernst & Young in Dallas.  He has a B.S.
Degree  in  Accounting  from the  University  of Utah and a  Masters  Degree  in
Accounting from Utah State University.

                COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS

Director Compensation

         Directors  of  the  Company  receive  no  cash  compensation,  but  are
reimbursed  for expenses.  Each  director  (but not including  directors who are
officers or employees)  is granted  stock  options to purchase  24,000 shares of
common stock at an exercise price per share in excess of the market price at the
time of grant,  2,000 of which vest upon the attendance at each monthly  meeting
of the Board. Vested options become exercisable six months after vesting. On May
31, 1997, the date of the 1997 Annual  Shareholders  Meeting,  Dr. Ron Lumia and
Douglas  Davidson  received options to purchase 24,000 shares of common stock at
an exercise price of $6.00 per share.  Randall Mackey and Lowell Anderson became
directors on January 23, 1998 and were granted stock  options to purchase  8,000
shares of common stock at an exercise price of $2.50.

                                       -4-

<PAGE>

Executive Officer Compensation

         The following table discloses compensation,  for the three fiscal years
ended  December 31, 1997,  paid by the Company to the named  executive  officers
whose  annual  salary  equals  or  exceeds  $100,000  (collectively  the  "Named
Executive Officers").
<TABLE>
<CAPTION>

                           SUMMARY COMPENSATION TABLE
                                                                       ------------------Long-Term Compensation---------------------
                                ---------Annual Compensation--------   --------Awards-----------      ------------Payout------------
                                                                       Restricted     Securities      Long-term
                                                                       Stock          Underlying      Incentive    All Other
Name and Principal Position        Year  Salary($)   Bonus   Other     Awards($)      Options         Payout($)    Compensation
---------------------------     ----     ---------   -----   -----     ----------     --------        --------     ------------
<S>                             <C>     <C>        <C>    <C>             <C>          <C>              <C>          <C>
Paul A. Bilzerian, President    1997     90,000(1)      0      0          0                  0           0            0
 and Chief Executive Officer    1996     50,000(1)      0      0          0                  0           0            0
                                1995     36,000(1)      0      0          0                  0           0            0

Robert H. Reback, Executive     1997    121,769         0      0          0                  0           0            0
 Vice President of Sales        1996    115,000    15,000      0          0            120,000           0            0
                                1995          0         0      0          0                  0           0            0

Bradley A. Palser, Executive    1997     12,691         0      0          0             20,000           0            0
 Vice President of Engineering  1996          0         0      0          0                  0           0            0
                                1995          0         0      0          0                  0           0            0

David P. Faulkner, Executive    1997    101,475         0 20,000          0                  0           0            0
   Vice President Marketing     1996     35,483         0      0          0            150,000           0            0
                                1995          0         0      0          0                  0           0            0
</TABLE>

(1) These  amounts  were paid or are owed to Bicoastal  Holding  Company for Mr.
Bilzerian's services. (See "Certain Relationships and Transactions.")


                        OPTION GRANTS IN LAST FISCAL YEAR

         The following table sets forth certain information  regarding the grant
of stock  options to the person named in the Summary  Compensation  Table during
the fiscal year ended December 31, 1997.
<TABLE>
<CAPTION>


                    --------------------Individual Grants-------------------    Potential Realizable
                    Number of        Percent of                                 Value at Assumed
                    Securities       Total Options                              Annual Rates of Stock
                    Underlying       Granted to      Exercise                   Price Appreciation for
                    Options          Employees in    Price Per    Expiration    Option Term ($) (1)
Name                Granted (#)      Fiscal Year     Share ($)    Date             5%         10%
----                ----------       -----------     ---------    ----             --         --
<S>                     <C>                <C>          <C>     <C>           <C>         <C>
Paul A. Bilzerian            0             n/a           n/a        n/a           n/a         n/a
Robert H. Reback             0               0           n/a        n/a           n/a         n/a
Bradley A. Palser       20,000             100          4.00    11/5/02       102,000     128,800
David P. Faulkner            0               0           n/a        n/a           n/a         n/a
------------
</TABLE>

(1)  Potential realizable value is based on the assumption that the common stock
     of the Company  appreciates at the annual rate shown (compounded  annually)
     from the date of grant  until the  expiration  of the 5 year  option  term,
     using the exercise  price of each option as the beginning  value.  The real
     value of the options depends on the actual appreciation of the value of the
     Company's  common  stock.  These  numbers  do  not  reflect  the  Company's
     estimates of future  stock price  growth and no  assurance  exists that the
     price of the Company's common stock will appreciate at the rates assumed in
     the table.
                                       -5-
<PAGE>

                 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                        AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>

                                                           Number of Securities
                             Shares                        Underlying Unexercised           Value of Unexercised
                           Acquired                        Options at                       In-the-Money Options at
                         On Exercise      Value            Fiscal Year-End(#)               Fiscal Year-End ($)
Name                          (#)         Realized ($)   Exercisable   Unexercisable      Exercisable   Unexercisable
----                     -----------      ------------   -----------   -------------      -----------   -------------
<S>                       <C>              <C>              <C>           <C>                    <C>           <C>
Paul A. Bilzerian         3,600,000(1)     18,737,500            0              0                0             0
Robert H. Reback                  0                 0       60,000         60,000                0             0
David P. Faulkner                 0                 0       50,000        100,000                0             0
Bradley A. Palser                 0                 0            0         20,000                0             0
</TABLE>

(1)  Excludes  2.4 million  shares of Cimetrix  common stock held by the Paul A.
     Bilzerian  and Terri L. Steffen 1994  Irrevocable  Trust for the Benefit of
     Adam J.  Bilzerian  and Dan B.  Bilzerian.  Paul A.  Bilzerian and Terri L.
     Steffen  disclaim any  beneficial  ownership of these shares.  The Trust is
     irrevocable and has independent trustees responsible for the affairs of the
     Trust.

                    REPORT ON EXECUTIVE OFFICER COMPENSATION

     The Board of Directors  reviewed and approved the  compensation  and fringe
benefits for the Company's  officers,  consisting of approximately nine persons.
The Board evaluates the performance of all officers, including the President and
Chief Executive Officer, and administers the Company's  compensation program for
officers.

Compensation Philosophy

     The  Company's  compensation   philosophy  for  officers  conforms  to  its
compensation philosophy for all employees generally.  The Company's compensation
is designed to:

         o    Provide compensation  comparable to that offered by companies with
              similar business, allowing the Company to successfully attract and
              retain the employees necessary to its long-term success.

         o    Provide  compensation  that  rewards  individual  achievement  and
              differentiates among employees based upon individual performance.

         o    Provide  incentive  compensation that varies according to both the
              Company's  success  in  achieving  its  performance  goals and the
              employee's contribution to that success; and

         o    Provide an appropriate  linkage between employee  compensation and
              the creation of shareholder  value through awards that are tied to
              the Company's financial  performance and by facilitating  employee
              stock ownership.

In furtherance of these goals, the Company's  officers'  compensation  comprises
salary,  annual cash bonuses,  long-term  incentive  compensation in the form of
stock options and various  fringe  benefits,  including  medical  benefits and a
401(k) savings plan.


                                       -6-

<PAGE>

Salaries

         The Board of Directors reviewed the salaries of all the officers of the
Company  for fiscal year 1997.  The Board of  Directors  made  salary  decisions
concerning  the officers based upon a variety of  considerations  in conformance
with  the   compensation   philosophy   stated  above.   First,   salaries  were
competitively  set relative to both other companies in the software industry and
other  comparable  companies.  Second,  the Board of Directors  considered  each
officer's  level of  responsibility  and  individual  performance,  including an
assessment of the person's overall value to the Company.  Third, internal equity
among employees was factored into the decision.  Finally, the Board of Directors
considered  the Company's  financial  performance  and its ability to absorb any
increases in salaries.

Bonuses

         Each  officer  is  eligible  to  receive  an annual  cash bonus that is
generally paid pursuant to an incentive  compensation formula established at the
beginning  of a year  in  connection  with  the  preparation  of  the  Company's
operating  budget for the year. In  formulating  decisions  with respect to cash
bonus  awards,  the  Board  of  Directors  evaluates  each  officer's  role  and
responsibility in the Company and other factors that the Board deems relevant to
motivate each officer to achieve strategic performance goals.

Stock Options

         The  Company  has a stock  option  plan that is  designed  to align the
interests of the shareholders  and the Company's  officers in the enhancement of
shareholder value. Stock options are granted under the plan by an administrative
committee  comprising  disinterested  members  of the  Board  of  Directors.  In
general,  stock options are granted at an exercise price not lower than the fair
market value of the Company's  Common Stock on the date of grant. In formulating
its  recommendations to the administrative  committee for the stock option plan,
the Board of Directors evaluates the Company's overall financial performance for
the year, the  desirability of long-term  service from an officer and the number
of stock options held by other  officers in the Company who have the same,  more
or less responsibility.  To encourage long-term  performance,  the stock options
granted in fiscal year 1997 vest ratably over a two-year period and expire up to
five years after the date of grant.

Chief Executive Officer Compensation

         The total compensation of the President and Chief Executive Officer for
fiscal  year 1997 was based on a contract  between  the  Company  and  Bicoastal
Holding Company, which was approved by the shareholders on May 31, 1997.


                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         On August 8, 1995, the Company renegotiated its contract with Bicoastal
Holding  Company,  an  affiliate  of Paul A.  Bilzerian,  the  President,  Chief
Executive  Officer  and a  director  of the  Company,  in  order to  retain  Mr.
Bilzerian's services. Under the terms of the contract, Bicoastal Holding Company
was paid $4,167 per month until March 31, 1997. In addition,  Mr.  Bilzerian had
rent-free use of the Company's  residence in Provo, Utah from August, 1995 until
June, 1996.

         On April 15, 1997,  the Company  entered into  another  agreement  with
Bicoastal  Holding  Company  providing  for the  continued  services  of Paul A.
Bilzerian  and his wife,  Terri L.  Steffen.  The  agreement  provides  that the
Company  is  to  pay  Bicoastal  Holding  Company for their services at the rate

                                       -7-

<PAGE>

of $10,000 per month for Mr.  Bilzerian's  services and $4,000 per month for Ms.
Steffen's  services until March 21, 1999. The Company has the right to terminate
the employment arrangement at the end of any month.

         On January 23,  1998,  the Board of  Directors  approved the lease of a
home in Sandy,  Utah for  $2,700  per  month for the  purpose  of  inducing  Mr.
Bilzerian to temporarily  relocate his family to Utah for a significant  portion
of the year. The term of the lease is from January 10, 1998 through December 31,
1998, with two six-month renewal options.  The Company also agreed to pay all of
Mr. Bilzerian's living expenses related to the temporary relocation.


             SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section  16(a) of the  Securities  Exchange  Act of 1934  requires  the
Company's  executive  officers,  directors and greater than 10%  shareholders to
file reports of  ownership  (on Form 3) and  periodic  changes in ownership  (on
Forms  4  and  5)  of  Company  securities  with  the  Securities  and  Exchange
Commission.  For the fiscal year 1997,  the  Company's  officers and  directors,
through an oversight,  filed late Form 3 reports.  The Company believes that its
officers  and  directors  are  otherwise   current  in  their  16(a)   reporting
requirements.


SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The following table sets forth  information  with respect to beneficial
ownership of the Company's common stock  (exclusive of options or warrants),  as
of April 20, 1998,  for (i) each  executive  officer of the  Company;  (ii) each
director of the Company;  and (iii) each beneficial owner of more than 5% of the
Company's  common  stock;  and (iv) all  executive  officers and  directors as a
group:

Name of Person of Group            Number of Shares                  Percent of
                                                                     Ownership
-----------------------            ----------------                  ----------
Paul Bilzerian                         3,000,000(1)                      12.4%
16229 Villarreal De Avila
Tampa, Florida  33613

Bilzerian Irrevocable Trust            2,400,000(2)                       9.9%
400 North Tampa Street
Tampa, Florida  33602

Lincoln and Linda Dastrup              1,925,950                          8.0%
871 Osmond Lane
Provo, Utah  84604

Douglas A. Davidson                       55,000                          0.2%
4506 Silver Wing Ct.
Castle Rock, CO 80104

Dr. Lowell K. Anderson                    49,450                          0.2%
2842 North Foothill Drive
Provo, UT 84604

                                       -8-

<PAGE>



Dr. Ron Lumia                              1,500                             *
443 Live Oak Loop NE
Albuquerque, NM 87122

Robert H. Reback                           1,000                             *
600 Daybreaker Drive
Park City, UT 84098

Randall A. Mackey                              -                             *
1474 Harvard Ave
Salt Lake City, UT 84105

Bradley A. Palser                              -                             *
1416 West 690 South
Orem, UT 84058

David P. Faulkner                              -                             *
8803 South Willow Green Drive
Sandy, UT 84093


Officers and Directors (8 persons)     3,106,950                          12.9%
---------------------------------
*     Less than 1%.

(1) Overseas Holdings Limited  Partnership,  a Nevada limited partnership (whose
general partner is Bicoastal Holding Company, a Cayman Islands corporation,  and
whose  limited  partner  is the Paul A.  Bilzerian  and  Terri L.  Steffen  1995
Revocable  Family Trust),  owns 3,000,000  shares of Cimetrix common stock.  The
Paul A.  Bilzerian  and Terri L.  Steffen  1995  Revocable  Family  Trust is the
beneficial owner of all the stock of Bicoastal Holding Company. Terri L. Steffen
is the wife of Paul A.  Bilzerian and is a beneficiary  of the Paul A. Bilzerian
and Terri L. Steffen 1995 Revocable Family Trust and, therefore,  is also deemed
to be the beneficial  owner of 3,000,000  shares of Cimetrix  common stock.  The
number of shares indicated for Mr. Bilzerian  excludes proxies to vote 1,978,012
shares  held by W. Keith  Seolas and family  members  pursuant  to an  agreement
between  the Seolas  family and Mr.  Bilzerian  executed  on March 22,  1994 and
amended on August 9, 1995. Mr.  Bilzerian holds the irrevocable  proxies to vote
these  shares  for  directors  and  on  most  ordinary   matters   presented  to
shareholders,  but  not  extraordinary  matters,  such  as  mergers,  sales,  or
dissolution.  Mr. Bilzerian's proxies expire on December 31, 1998.  Ownership of
the shares held by W. Keith  Seolas and his family  members are in dispute  with
the Company.  The number of shares  indicated  for Mr.  Bilzerian  also excludes
shares held by the Paul A. Bilzerian and Terri L. Steffen 1994 Irrevocable Trust
(see footnote 2 below).

(2) The Paul A.  Bilzerian and Terri L. Steffen 1994  Irrevocable  Trust for the
Benefit of Adam J.  Bilzerian and Dan B.  Bilzerian  owns 2.4 million  shares of
Cimetrix  common stock.  Adam J.  Bilzerian and Dan B. Bilzerian are the sons of
Paul A.  Bilzerian and Terri L. Steffen.  Paul A. Bilzerian and Terri L. Steffen
disclaim any beneficial  ownership of this stock.  The Trust is irrevocable  and
has independent trustees responsible for the affairs of the Trust.

                                       -9-

<PAGE>

                                 PROPOSAL NO. 2

                 TO APPROVE THE CIMETRIX 1998 STOCK OPTION PLAN

         On January 23, 1998, the Board of Directors approved the Company's 1998
Stock  Option  Plan (the "98  Plan")  which  became  effective  January 1, 1998,
subject  to  shareholder  approval.  The 98  Plan  provides  for  the  grant  to
directors,  officers,  and  employees of the Company of options to acquire up to
2,000,000  shares of the  Company's  common  stock.  The 98 Plan is an incentive
stock option plan within the meaning of section 422 of the Internal Revenue Code
and is intended to replace the  Company's  1994 Stock Option  Plan.  In order to
participate  in the 98 Plan,  an employee must return all of the options that he
or she  received  under the 1994 Stock  Option  Plan.  At the Annual  Meeting of
Shareholders,  the  shareholders  are being  asked to  consider  and approve the
adoption of the 98 Plan.  The essential  features of the 98 Plan are  summarized
below. A copy of the 98 Plan is attached hereto as Exhibit 1.

Purpose

         The purpose of the 98 Plan is to promote the  interests  of the Company
and its  shareholders  by  enabling  the  Company to attract  and  retain,  on a
long-term basis, directors,  key executives and employees by providing them with
significant proprietary incentives based on the Company's long-term success. The
Company's  1994 Stock  Option  Plan  authorized  up to  2,500,000  options to be
issued,  all of which expire by December 31, 1999. In addition,  the Company has
issued warrants to purchase 450,000 shares to its former advisory panel members,
warrants  to  purchase  330,000  shares to David L.  Redmond,  its former  Chief
Financial Officer,  and warrants to purchase 829,000 shares to purchasers of the
Company's  Senior  Notes.  Over the period from  January 1, 1998 to December 31,
1999,  the Company  expects to reduce the total  amount of options and  warrants
authorized and outstanding by  approximately  1,300,000.  In January,  1998, Mr.
Redmond  returned all of his 330,000 warrants to the Company.  In addition,  the
Company does not intend to grant  450,000 of the  2,000,000  options  authorized
under the 98 Plan unless the  450,000  warrants  granted to the former  advisory
panel members expire without being exercised on September 30, 1999.

Eligibility

         The 98 Plan provides that options may be granted to any employee of the
Company.  The committee  selects the  participants  and determines the number of
shares  to be  subject  to each  option.  In  making  such  determinations,  the
participant's duties and responsibilities,  present and potential  contributions
to the Company's success, and other relevant factors are considered.

Option Terms

         The terms of options  granted are  determined  by the  committee.  Each
option is  evidenced  by a stock  option  agreement  between the Company and the
participant. Each option is also subject to the following terms and conditions:

     (a)  Vesting  Schedule.  25% of the  option  vests one year after the grant
          date, and the remainder vests over the following three years,  subject
          to the  acceleration  upon certain  changes in control of the Company.
          The committee can alter this vesting  schedule in a particular  option
          agreement.  An option is  exercised  by giving  written  notice to the
          Company, specifying the number of shares to be purchased and tendering
          to the  Company  the full  purchase  price  plus  any tax  withholding
          liability the Company may incur upon exercise. The exercise price will
          be  payable  in cash  or  such  other  form  of  consideration  as the
          committee approves.
                                      -10-

<PAGE>


         (b)      Exercise  Price.  The exercise price of options  granted under
                  the 98 Plan is  determined  by the  committee  and must be not
                  less than 100% of the  closing  trade  price of the  Company's
                  stock on the date the option is granted.  Exercise  prices are
                  normally  higher than the market price of the Company's  stock
                  at the grant date.  The  Company's  stock price was $1.8125 on
                  March 31,  1998.  The  Company  has no  present  intention  of
                  granting options below $2.50.

         (c)      Termination  of  Employment.   If  an  optionee's   employment
                  relationship  with the Company is terminated for reasons other
                  than death or disability, options held by such person cease to
                  be exercisable  ninety days after the employee ceases to be an
                  employee of the Company.

         (d)      Termination  of  Options.  Unless  otherwise  provided  in the
                  option  agreement,  all options granted will expire five years
                  after their grant dates.

         (e)      Nontransferability  of Options.  Except in the event of death,
                  an  option  is  not   transferable  by  an  optionee.   It  is
                  exercisable   only  by  the  optionee  during  the  optionee's
                  lifetime,  and only by his heirs or  executors  following  his
                  death.

Changes in Control

         If the Company sells all or substantially all its assets or is acquired
in a merger,  tender offer transaction,  or another type of reorganization,  the
options  will  fully  vest  and  become  exercisable  immediately  prior to such
transaction.

         The Board of Directors has adopted the Company's 1998 Stock Option Plan
and recommends a vote FOR approval of the 1998 Plan.






                                      -11-

<PAGE>



                                PERFORMANCE GRAPH

         The  following  graph shows a comparison  of the three year  cumulative
total return for the  Company's  Common  Stock,  the Nasdaq Stock Market  (U.S.)
Index,  and the Nasdaq  Computer and Data Processing  Stocks Index,  assuming an
investment of $100 on December 1, 1994. The cumulative return of the Company was
computed by dividing the  difference  between the price of the Company's  Common
Stock at the end and the beginning of the measurement  period  (December 1, 1994
to  December  31,  1997)  by the  price  of the  Company's  Common  Stock at the
beginning of the measurement period.


                               [GRAPHIC OMITTED]








                                      -12-

<PAGE>



                                  ANNUAL REPORT

         A copy of the Company's Annual Report,  including financial  statements
for the years ended December 31, 1997,  1996 and 1995, is being mailed with this
Proxy Statement to shareholders of record on the Record Date.

                              INDEPENDENT AUDITORS

         Tanner & Company served as the Company's independent auditors for 1997.
One or more  representatives  of Tanner & Company are  expected to be present at
the Annual Meeting and will be available to respond to appropriate questions.

                              SHAREHOLDER PROPOSALS

         Shareholders who wish to include  proposals for action at the Company's
1999 Annual  Meeting of  Shareholders  in next year's proxy  statement  must, in
addition to other applicable requirements,  cause their proposals to be received
in writing by the  Company  at its  address  set forth on the first page of this
Proxy  Statement  no later  than  January  1,  1999.  Such  proposals  should be
addressed to the  Company's  Secretary  and may be included in next year's proxy
statement if they comply with certain rules and  regulations  promulgated by the
Securities and Exchange Commission.

                                  OTHER MATTERS

         Management  knows of no matters other than those listed in the attached
Notice of the Annual  Meeting  which are likely to be brought  before the Annual
Meeting.  However,  if any other matters should  properly come before the Annual
Meeting or any adjournment thereof, the persons named in the enclosed proxy will
vote all proxies  given to them in  accordance  with their best judgment of such
matters.

                                        By Order of the Board of Directors,

                                        /s/ Riley G. Astill
                                        ---------------

                                        Riley G. Astill
                                        Vice President of Finance and Secretary

Salt Lake City, Utah
April 20, 1998

                                      -13-

<PAGE>

                                    EXHIBIT 1

                              CIMETRIX INCORPORATED
                        1998 INCENTIVE STOCK OPTION PLAN
                               (Corrected Version)

         Cimetrix  Incorporated  establishes  the following 1998 Incentive Stock
Option Plan for the exclusive benefit of its eligible employees:

                                    ARTICLE I
                           PURPOSE AND INTERPRETATION

         1.1  Purpose.  The purpose of this Plan is to further the  interests of
the Company and its  shareholders  by providing  incentives in the form of Stock
Options  to  key  employees  who  contribute   materially  to  the  success  and
profitability  of the  Company.  The Plan will enable the Company to attract and
retain key employees,  to reward outstanding  individual  contributions,  and to
give selected key  employees an interest in the Company  parallel to that of its
shareholders,  thus  enhancing  their  proprietary  interest  in  the  Company's
continued success and progress.

         1.2 Definitions.  As used in this Plan, the following capitalized terms
have the respective definitions attributed to them:

                "Administrative  Committee"  means the Board of Directors or any
         Board  Committee  to whom the  Board of  Directors  has  delegated  the
         administration of this Plan pursuant to section 2.1.

                "Affiliate"  means a  Subsidiary,  a parent  corporation  of the
         Company,  or a corporation  of which 50% or more of the total  combined
         voting  power  of all  classes  of  its  stock  is  owned  directly  or
         indirectly by a parent corporation of the Company.

                "Board  Committee"  means any  committee  of  Company  directors
         appointed  by  the  Board  of  Directors  pursuant  to  section  2.1 to
         administer this Plan.

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

                "Change  in  Control"  means  any  of  the  following:  (a)  the
         shareholders  of the Company  approve a plan of dissolution or complete
         liquidation  of the Company  (unless the  transaction  is  subsequently
         abandoned or otherwise  fails to occur);  (b) the  shareholders  of the
         Company  approve a sale,  lease,  exchange,  or other  transfer  to any
         person other than the Company, a Subsidiary, or an affiliate of Paul A.
         Bilzerian (in a single  transaction or related series of  transactions)
         of all or substantially  all of consolidated  assets of the Company and
         its Subsidiaries, excluding the creation (but not the foreclosure) of a
         lien,  mortgage,  or  security  interest  (unless  the  transaction  is
         subsequently  abandoned  or  otherwise  fails  to  occur);  or (c)  the
         shareholders   of  the   Company   approve  a  merger,   consolidation,
         reorganization,  tender offer,  exchange  offer,  or share  exchange in
         which more than 50% of the outstanding  Shares are or will be exchanged
         for, or converted into, cash or securities of another corporation other
         than a  Subsidiary  or an affiliate  of Paul A.  Bilzerian,  unless the
         transaction is subsequently  abandoned or otherwise fails to occur, and
         unless immediately after the transaction the former shareholders of the
         Company  beneficially own more than 50% of the combined voting power of
         all the outstanding  securities of a publicly traded  corporation  that
         directly or indirectly  through one or more  subsidiaries  beneficially
         owns all or substantially  all the  consolidated  assets of the Company
         and its  subsidiaries  or more than 50% of the combined voting power of
         all the outstanding securities of the Company that are entitled to vote
         generally in the election of its directors.


                                       E-1

<PAGE>

                  "Company" means Cimetrix Incorporated,  a  Nevada  corporation
         and the sponsor of this Plan.

                  "Date of Grant" means,  with respect to any  particular  Stock
         Option,  the date when the  Board of  Directors  or the  Administrative
         Committee authorizes the grant of the Stock Option to the Participant.

                  "Employee"  means a person who is  employed  by the Company or
         any  Subsidiary  on a full-time,  salaried  basis for at least 40 hours
         each week, and, in addition, any officer or director of the Company.

                  "Exchange Act" means the United States Securities Exchange Act
         of 1934,  as amended,  and  includes all rules and  regulations  of the
         United States Securities and Exchange Commission promulgated under that
         act.

                  "Internal  Revenue  Code"  means the  United  States  Internal
         Revenue  Code of 1986,  as  amended  from time to time,  or any  United
         States income tax law  subsequently  enacted in  substitution  for that
         code.

                  "Market Value" means, as of any particular determination date,
         the fair market  value of a Share  determined  as  follows:  (a) if the
         Shares are not traded in the Nasdaq Stock Market or on a United  States
         national securities  exchange,  the mean arithmetic average (rounded to
         the nearest whole cent) of the daily high bid and low asked  quotations
         per Share in the  over-the-counter  market for the three  trading  days
         immediately  preceding the  determination  date, as reported on the OTC
         Bulletin  Board  or in  the  pink  sheets  published  by  the  National
         Quotations Bureau, Incorporated, or (b) if the Shares are traded in the
         Nasdaq  Stock  Market,  the mean  arithmetic  average  (rounded  to the
         nearest  whole  cent) of the high bid and low  asked  prices  per Share
         quoted in the National  Association  of  Securities  Dealers  Automated
         Quotation  System for the last  trading  day  before the  determination
         date, as reported in The Wall Street Journal or another source that the
         Administrative  Committee considers reliable,  or (c) if the Shares are
         traded on a United States  national  securities  exchange,  the closing
         sales price  reported on the  exchange  for the last trading day before
         the  determination  date,  as reported  in The Wall  Street  Journal or
         another source that the Administrative Committee considers reliable.

                  "Option Agreement" means the agreement between the Company and
         a Participant that sets forth the terms, conditions,  limitations,  and
         restrictions applicable to the Participant's Stock Option.

                  "Option  Year" means,  with respect to a Stock Option  granted
         under this Plan,  a period of 12  consecutive  months  beginning on its
         Date of Grant or an anniversary of its Date of Grant.

                  "Participant"  means  an  Employee  who  is  selected  by  the
         Administrative  Committee  to receive a Stock  Option  pursuant to this
         Plan, in the person's capacity as a participant under the Plan.

                  "Plan" means this 1998 Incentive Stock Option Plan of Cimetrix
         Incorporated,  as  originally  adopted  and  as  subsequently  amended,
         modified, or supplemented in accordance with its terms.


                                       E-2

<PAGE>

                  "Proprietary   Property"  means  all  ideas,  plans,  methods,
         discoveries,  inventions,  developments,  improvements,  trade secrets,
         intellectual  property,  and other  proprietary  data,  knowledge,  and
         information  that a  Participant  solely  or  jointly  knows,  creates,
         conceives,  develops,  or reduces to  practice  while  employed  by the
         Company or any  Subsidiary  and that directly or  indirectly  benefits,
         relates  to,  or is  connected  in  any  way  with,  the  Participant's
         employment with the Company or a Subsidiary,  or any process,  product,
         formula, business, facility, research, equipment, machinery, technique,
         experiment,  computer program, software, source code, or user interface
         screen or other development of the Company or any Subsidiary.

                  "Securities  Act" means the United  States  Securities  Act of
         1933, as amended,  and includes all rules and regulations of the United
         States Securities and Exchange Commission promulgated under that Act.

                  "Shares"  means shares of the Company's  common stock,  $.0001
         par  value  per  share,  or  any  securities   issued  in  exchange  or
         substitution  for those shares  pursuant to a transaction  described in
         section 5.1.

                  "Stock  Option"  means an option to  purchase  Shares from the
         Company that is granted to a  Participant  pursuant to this Plan and is
         intended to qualify as an incentive stock option, as defined in section
         422 of the Internal  Revenue Code, as in effect on the Date of Grant of
         the option.

                  "Subsidiary"  means a corporation  of which 50% or more of the
         total  combined  voting  power  of all  classes  of its  stock is owned
         directly or indirectly by the Company and includes any corporation that
         qualifies as a Subsidiary  corporation  as defined in section 424(f) of
         the Internal Revenue Code.

         1.3 Other  Recurring  Words. As used in this Plan, (a) the word "or" is
not exclusive,  (b) the words "consent" and "approval" are  synonymous,  (c) the
word "including" is always without limitation,  (d) words in the singular number
include  words in the  plural  number  and  vice  versa,  and (e) the  following
uncapitalized words and terms have the respective meanings ascribed to them:

                  "affiliate" has the meaning attributed  to  it  in  Rule 12b-2
         under the Exchange Act.

                  "beneficial owner" has the meaning attributed to it under Rule
         13d-3 under the Exchange  Act, and the terms  "beneficially  owned" and
         "beneficial ownership" have the same meaning as "beneficial owner".

                  "business day" has the meaning attributed to it in Rule  14d-1
         (c)(6) under the Exchange Act.

                  "disability" means a total and permanent disability as defined
         in section 22(e)(3) of the Internal Revenue Code.

                  "group"  has  the  meaning  attributed  to  that  term in Rule
         13d-5(b)(1) under the Exchange Act and includes two or more persons who
         agree to act in  concert  for the  purpose  of  voting,  acquiring,  or
         holding any securities of the Company or any Subsidiary.

                  "parent  corporation" has the meaning  attributed to that term
         in section 424(e) of the Internal Revenue Code.


                                      E-3

<PAGE>

         1.4 Headings and  References.  The headings  preceding  the text of the
articles  and  sections  of this Plan are solely for  convenient  reference  and
neither  constitute a part of this Plan nor affect its meaning,  interpretation,
or effect.  Unless  otherwise  expressly  stated,  a reference in this Plan to a
section refers to a section of this Plan.

         1.5  Limitation  of Rights.  Nothing in this Plan,  whether  express or
implied,  is intended or should be construed to confer upon, or to grant to, any
person (other than the Participants and their respective heirs,  guardians,  and
personal  representatives)  any claim,  right,  remedy,  or  privilege  under or
because of this Plan or any  provision  of it,  except that every  member of the
Administrative  Committee is a  third-party  beneficiary  of the  provisions  of
sections 2.2 and 2.4. An employee of the Company or any Subsidiary does not have
any claim or right to  participate in this Plan, and the grant of a Stock Option
to a  Participant  does not  create or extend  any right of the  Participant  to
continue  to  serve  as an  employee  of  the  Company  or  any  Subsidiary,  to
participate in any other stock option or employee benefit plan of the Company or
any Subsidiary,  or to receive the same employee  benefits as any other employee
of the Company or any  Subsidiary.  Furthermore,  an  employee's  selection as a
Participant  does  not  restrict  in any  way  the  right  of the  Company  or a
Subsidiary to terminate at any time the Participant's  employment with it either
at will or as provided in any written  employment  agreement  between it and the
Participant.

         1.6  Governing  Law.  The  validity,  construction,   enforcement,  and
interpretation  of this Plan are  governed  by the laws of the State of Utah and
the federal laws of the United  States of America,  excluding  the laws of those
jurisdictions  pertaining  to the  resolution  of  conflicts  with laws of other
jurisdictions.

                                   ARTICLE II
                               PLAN ADMINISTRATION

         2.1  Administrative  Committee.  This Plan will be  administered by the
Board of  Directors,  or, at its  election,  the Board of Directors may delegate
administration  of  this  Plan to a Board  Committee  consisting  of two or more
directors  who are  appointed by the Board of Directors and satisfy the criteria
described  below.  The members of the Board Committee will serve for unspecified
terms at the  discretion of the Board of  Directors.  The Board of Directors has
the  exclusive  power to increase or decrease  the size of the Board  Committee,
appoint additional members of the Board Committee,  remove a member of the Board
Committee (as such) at any time, with or without cause,  and appoint a successor
to fill any vacancy on the Board Committee.

         The  Board of  Directors  shall  not  appoint  as a member of the Board
Committee  any director  who (a) is an officer or employee of the  Company,  any
Subsidiary,  or any parent corporation of the Company or who does not qualify as
an "outside  director"  for purposes of section  162(m) of the Internal  Revenue
Code, (b) receives directly or indirectly from the Company,  and Subsidiary,  or
any  parent  corporation  of the  Company a dollar  amount of  compensation  for
services  rendered as a consultant  or in any capacity  other than as a director
for which disclosure would be required pursuant to Item 404(a) of Regulation S-K
under the  Exchange Act and the  Securities  Act, (c) possess an interest in any
other  transaction to which the Company or any Subsidiary was or will be a party
and for which disclosure would be required pursuant to Item 404(a) of Regulation
S-K  under  the  Exchange  Act and the  Securities  Act,  or (d) has a  business
relationship for which  disclosure would be required  pursuant to Item 404(b) of
Regulation  S-K under the Exchange Act and the  Securities  Act. If the Board of
Directors  is  unable  to  appoint  a  Board  Committee  comprising  two or more
directors who satisfy the foregoing criteria, or if the Administrative Committee
ceases at any time to comprise  directors who satisfy those criteria,  the Board
of Directors shall serve as the Administrative  Committee for this Plan, and all
grants  of Stock  Options  under  this  Plan  must be  approved  by the Board of
Directors.

         2.2 Power and  Authority.  Subject to  compliance  with all  applicable
rules and regulations of any relevant authorities, including stock exchanges and
the Securities and Exchange  Commission,  the  Administrative  Committee has the
exclusive power and authority, and the sole and absolute discretion, to do


                                      E-4
<PAGE>


the  following:  (a) construe and interpret  this Plan; (b) select the Employees
who will be  Participants  in this Plan;  (c) adopt,  amend,  and rescind forms,
rules,  procedures,  and regulations relating to this Plan (all of which must be
approved  by  the  Board  of  Directors  if a  Board  Committee  serves  as  the
Administrative  Committee);  (d) grant  Stock  Options  under  the Plan,  either
conditionally  or  unconditionally;  (e)  determine  when Stock  Options will be
granted under the Plan; (f) determine the number of Shares subject to each Stock
Option;  (g)  determine  the  Market  Value  of a Share in  accordance  with the
provisions of this Plan;  (h)  determine the terms and  conditions of each Stock
Option,  including the exercise  price (which must comply with section 3.4), the
methods of exercising the Stock Option,  the methods for payment of the exercise
price,  the time or times when the Stock Option will become  exercisable and the
duration of the exercise period (which must not exceed the limitations specified
in section  3.4),  the  conditions  under  which the Stock  Option will vest and
become exercisable, and any limitations,  restrictions, performance criteria, or
forfeiture  conditions  applicable  to the Stock Option or any Shares  purchased
pursuant  to it; (i)  determine  the  consideration  for the grant of each Stock
Option and the consideration to be paid for Shares purchased pursuant to a Stock
Option,  which may consist of cash,  other  Shares,  or any  combination  of the
foregoing;  (j) to approve and recommend  amendments to the Plan for adoption by
the Board of Directors and (if necessary or desirable) the  shareholders  of the
Company;  (k) to authorize  any officer or director of the Company to execute in
the name and on behalf of the Company any agreement, certificate, instrument, or
other  document  required to carry out the purposes of this Plan;  (l) to engage
the services of any agent, expert, or professional advisor in furtherance of the
Plan's  purposes;  (m) to amend any  outstanding  Option  Agreement,  subject to
complying with applicable  legal  restrictions and obtaining the approval of the
Participant  who is a party to the Option  Agreement;  and (n) to take all other
actions, and make all other determinations,  that are advisable or necessary for
the Plan's  administration.  In the  absence of fraud or mis take,  any  action,
decision,  interpretation, or determination by the Administrative Committee will
be final and binding on all persons.

         The Board of  Directors  may  reserve  to  itself  any of the power and
authority conferred on the Administrative Committee, and it may exercise all the
power and authority of the Administrative Committee at any time to the exclusion
of any  Board  Committee.  All  references  in this  Plan to the  Administrative
Committee include the Board of Directors whenever it is exercising the power and
authority of the Administrative Committee.

         2.3  Approval  Procedures.   All  actions  and  determinations  of  the
Administrative  Committee  must be  unanimous,  unless the Board of Directors is
exercising the power and authority of the Administrative  Committee. All actions
and  determinations  of the Board of Directors with respect to this Plan must be
approved in the manner provided by the Company's Bylaws and applicable corporate
law.  Every action or  determination  of the  Administrative  Committee  that is
expressly required or permitted under this Plan will be valid only if undertaken
pursuant to a vote,  consent,  or  approval  that is  evidenced  by either (a) a
resolution adopted by the affirmative vote of the requisite number of members of
the  Administrative  Committee at a meeting,  or (b) a written consent signed by
the requisite number of members of the Administrative Committee.

         The  members  of the  Administrative  Committee  may  execute a written
consent in counterparts.  Each executed  counterpart will constitute an original
document,  and all of them,  together,  will  constitute  the same  document.  A
properly  executed written consent will be effective as of the date specified in
it or, if an effective  date is not so specified,  on the date when it is signed
by the last director  whose  signature is neces sary to validate it, and will be
valid if it is  executed  before,  after,  or  concurrently  with the  action or
determina tion to which it applies.

         2.4  Indemnification.  A member of the Administrative  Committee is not
liable for, and the Company releases each member of the Administrative Committee
from all liability for, any punitive, incidental,  compensatory,  consequential,
or other damages or obligation to the Company or any Employee,  Participant,  or
other  person  for any  act or  omission  by the  member  of the  Administrative
Committee, or by any agent, employee, professional advisor, or other expert used
or engaged by the Administrative Committee,

                                      E-5

<PAGE>



if  the  act or  omission  does  not  constitute  gross  negligence  or  willful
misconduct and is done or omitted in good faith,  on behalf of the Company,  and
in a manner reasonably believed by the member of the Administrative Committee to
be both in the  best  interests  of the  Company  and  within  the  scope of the
authority  granted to the  Administrative  Committee  by this Plan.  The Company
shall indemnify each member of the Administrative Committee, and shall reimburse
the member from the Company's assets,  for any cost, loss, damage,  expense,  or
liability  incurred by the member by reason of any act or omission for which the
member is released from liability pursuant to this section.

                                   ARTICLE III
                         STOCK OPTIONS AND PARTICIPANTS

         3.1 Stock Option Awards. The  Administrative  Committee may grant Stock
Options to eligible Employees,  Officers or Directors from time to time pursuant
to the  provisions of this Plan.  Every Stock Option  granted under this Plan is
intended to qualify as an incentive  stock option  within the meaning of section
422 of the Internal Revenue Code. In addition,  every Stock Option granted to an
Employee,  Officer or Director must be evidenced by an Option Agreement  between
the Company and the  Employee,  Officer or Director  that will be subject to all
the  applicable  terms and  conditions  of this Plan and may contain  additional
terms and conditions that are not inconsistent  with the provisions of this Plan
and  are  determined  by  the  Administrative   Committee  to  be  desirable  or
appropriate. The provisions of each Option Agreement need not be identical.

         3.2 Participants.  Every Employee,  Officer and Director is eligible to
be selected by the  Administrative  Committee to  participate  in this Plan. The
Administrative Committee's designation of an Employee, Officer and Director as a
Participant at any particular time does not require the Administrative Committee
to designate that Employee, Officer and Director to receive any Stock Options at
any other time or to receive the same Stock Options as any other  Participant at
any time. The  Administrative  Committee may consider  factors that it considers
pertinent in selecting  Participants and in determining the terms and conditions
of Stock Options awarded to them, including the following:  (a) the consolidated
financial  condition of the Company;  (b) the expected net income of the Company
for the current or future  years;  (c) the  contributions  of an Employee to the
success and profitability of the Company; and (d) the adequacy of the Employee's
other compensation.  The Administrative  Committee may award Stock Options to an
Employee even if Stock  Options  previously  were granted to the Employee  under
this or another  plan of the  Company or an  Affiliate,  and  whether or not the
previously  granted  benefits  have  been  fully  exercised.   An  Employee  who
participates  in another  benefit plan of the Company or an  Affiliate  also may
participate in this Plan.

         3.3  Limitations on Option Shares.  The total number of Shares that are
authorized to be issued  pursuant to the exercise of Stock Options granted under
this Plan is limited to 2,000,000. This amount will be adjusted automatically in
accordance with section 5.1. If a Stock Option lapses,  expires, or is canceled,
or terminated as a whole or in part for any reason other than its exercise,  the
Shares subject to the  unexercised  portion of that Stock Option (or the part of
it so canceled or  terminated)  will be available  for the future grant of Stock
Options under this Plan.

         If a Participant pays the exercise price for Shares purchased  pursuant
to the  exercise  of a Stock  Option by  delivering  to the  Company  previously
acquired  Shares or by  instructing  the Company to withhold  from the number of
Shares issuable on exercise of the Stock Option a number of Shares sufficient to
pay all or any  portion  of the  total  exercise  price,  the  number  of Shares
available  for future  grants of Stock  Options  under this Plan will be reduced
only by the net amount of Shares issued in  connection  with the exercise of the
Stock Option (that is the number of Shares issuable  pursuant to the exercise of
the Stock  Option,  less the number of Shares  retained by, or delivered to, the
Company in payment of the exercise price).


                                      E-6


<PAGE>

         3.4  Exercise  Price and  Dates.  The  purchase  price  for each  Share
issuable  pursuant to the  exercise of a Stock  Option must be not less than the
Market  Value of a Share on the Date of Grant of the Stock  Option.  Every Stock
Option must expire not later than ten years after its Date of Grant, and, except
as  otherwise  provided in sections 4.4 and 5.2 or in the Option  Agreement,  it
will expire on the 90th day following the date when the Participant ceases to be
an  Employee.  However,  if a  Participant  owns  (within the meaning of section
422(b)(6)  of the  Internal  Revenue  Code) at the time  when a Stock  Option is
granted  to the  Participant  stock  representing  more  than  10% of the  total
combined  voting power of all classes of outstanding  stock of the Company,  any
Subsidiary, or any parent corporation of the Company, then: (a) the Stock Option
must  expire  not later  than five  years  after its Date of Grant;  and (b) the
exercise  price of the Stock  Option  must be not less  than 110% of the  Market
Value of a Share on the Date of Grant of the Stock Option.

         Stock Options are not exercisable  until they have been accepted by the
Participant.  An award  of a Stock  Option  to a  Participant  will be  canceled
automatically  if the  Participant  does not accept the award within 30 calendar
days  following the date when the  Participant  is given  written  notice of the
award.  Unless a Participant's  Option Agreement  expressly provides  otherwise,
every Stock Option will be  exercisable in serial  increments  after each Option
Year as follows:

    Percentage Exercisable
      After Option Year                  Per Option Year            Cumulatively

              1                                25%                       25%
              2                                25%                       50%
              3                                25%                       75%
              4                                25%                      100%

         In no event,  however,  is any Stock Option permitted to be exercisable
during the first six months  after its Date of Grant or during the first  Option
Year for more than 20% of the Shares subject to the Stock Option. Subject to the
foregoing limitations,  the Administrative Committee may impose on an award of a
Stock  Option  any terms and  conditions  that it  determines  to be  desirable,
including  performance  criteria,   forfeiture  provisions,  and  additional  or
different vesting conditions. Extension of the expiration date of a Stock Option
is not permitted.  In calculating the stock ownership of any person for purposes
of the  foregoing,  the  attribution  rules of  section  424(d) of the  Internal
Revenue Code will apply.

         3.5 Incentive Stock Option Conditions. Notwithstanding anything in this
Plan or any Option  Agreement to the  contrary,  every Stock Option must satisfy
the following requirements:

                  (a)      The  Stock  Option must be designated as an incentive
         stock option by the Administrative Committee when it is granted;

                  (b) This  Plan must be  approved  by the  shareholders  of the
         Company within 12 months before or after its effective date;

                  (c) The maximum  number of Shares subject to any Stock Options
         granted to a Participant must not result in the Participant  having the
         right to  exercise  for the first time  during any one  calendar  year,
         under all incentive stock options granted to the Participant  under all
         benefit  plans  of  the  Company,  its  Subsidiaries,  and  any  parent
         corporation of the Company,  options to purchase Shares having a Market
         Value in excess of $100,000 (determined as of the date of grant of each
         incentive stock option); and


                                      E-7

<PAGE>
                  (d) The  Incentive  Option  must  satisfy all  conditions  and
         requirements  imposed by the Internal  Revenue Code for incentive stock
         options and any policies adopted by the  Administrative  Committee with
         respect to incentive stock options.

         If a Stock Option is granted for a number of Shares having an aggregate
Market Value on the Date of Grant in excess of $100,000,  then,  notwithstanding
anything in this or the relevant  Option  Agreement to the  contrary,  the Stock
Option  will be  exercisable  in each  calendar  year as to only that  number of
Shares  having a Market  Value on the Date of Grant of not more  than  $100,000.
However,  the number of Shares as to which a Stock Option is  exercisable in any
one calendar year is cumulative, so, if the Stock Option is not exercised to the
fullest extent allowed in any one calendar  year, the  unexercised  portion will
accumulate and carry forward to ensuing years.

         For example,  if in 1998, the Company were to grant an Employee a Stock
Option to purchase 100,000 Shares at an exercise price of $5.00 per share (which
was the then current Market Value),  the Stock Option would be exercisable  with
respect to only 20,000  Shares  during  1998,  and the Stock Option would become
exercisable  with respect to 20,000  additional  Shares in each  successive year
(1999 through 2002). If the  Participant  elected to purchase only 10,000 Shares
pursuant to the Stock Option during 1998, the  Participant  could purchase up to
30,000 Shares in 1999,  and, if no additional  purchases  were made in 1999, the
Participant  could purchase up to 50,000 Shares in 2000 (carry forward of 10,000
Shares from 1998 and 20,000 Shares from 1999; plus 20,000 Shares in 2000).

         3.6.  Nontransferability  of Stock Options. A Participant is prohibited
from  transferring  a Stock  Option,  any  interest in it, or any right under an
Option  Agreement  by any means  other  than by will or the law of  descent  and
distribution.   Any  prohibited   transfer  (whether  by  gift,  sale,   pledge,
assignment,  hypothecation,  or otherwise) will be invalid and ineffective as to
the Company. In addition,  a Stock Option and the Participant's  rights under it
and the related Option Agreement are not subject to any lien, levy,  attachment,
execution,  or similar  process by  creditors.  The Company may cancel any Stock
Option by notice to the  Participant to whom it was granted,  if the Participant
attempts to make a prohibited transfer,  or if the Stock Option, any interest in
it, or any right under the related Option  Agreement  becomes subject to a lien,
levy, attachment, execution, or similar process by any creditor.

                                   ARTICLE IV
                            EXERCISE OF STOCK OPTIONS

         4.1 Exercise  Method.  Subject to limitations  imposed by this Plan and
the Option Agreement, a Participant may exercise a Stock Option as a whole or in
part in  increments  of at least  100  shares  at any time and from time to time
before it  expires.  A partial  exercise  of a Stock  Option  will not  affect a
Participant's  subsequent right to exercise the Stock Option as to the remaining
Shares  subject to the Stock  Option.  A Stock  Option must be  exercised  for a
number of whole Shares and is not exercisable for a fraction of a Share.

         To exercise a Stock Option,  a Participant  must do the following:  (a)
deliver to the Company a written  notice of exercise in such form as  prescribed
by the Administrative  Committee; (b) tender to the Company full payment for the
Shares to be purchased  pursuant to the exercise of the Stock Option; (c) pay to
the Company, or make an arrangement satisfactory to the Administrative Committee
for the payment of, any tax withholding required in connection with the exercise
of the Stock Option  (including  FICA,  Medicare,  and local,  state, or federal
income  taxes);  and (d) comply with any and all other  reasonable  requirements
established by the  Administrative  Committee for the exercise of Stock Options.
The  exercise  date of a Stock  Option will be the date when (i) the Company has
received the written notice of exercise and full payment of the exercise  price,
(ii) the Participant has paid to the Company or made a satisfactory  arrangement
for the payment of any  requisite tax  withholding,  and (iii) any and all other
requirements of exercise  established by the Administrative  Committee have been
satisfied.


                                      E-8
<PAGE>

         4.2 Payment of Exercise Price. A Participant may pay all or any part of
the  exercise  price and any  applicable  tax  withholding  for any Shares to be
purchased  pursuant  to  exercise of a Stock  Option by any  combination  of the
following methods:

                  (a)      By bank draft, money order, or personal check payable
         to the order of the Company; or

                  (b) To the extent  approved  in advance by the  Administrative
         Committee,   by  delivering  to  the  Company  a  copy  of  irrevocable
         instructions  that have been provided by the Participant to a financial
         institution  or a  securities  broker-dealer  to  pay  promptly  to the
         Company  all or a portion  of the  proceeds  from  either a sale of the
         Shares to be purchased  pursuant to the exercise of the Stock Option or
         a loan to be secured by a pledge of all or a portion of those Shares.

         Shares that are  transferred to, or withheld by, the Company in payment
of the  exercise  price or any tax  withholding  will be valued for  purposes of
payment at their  Market  Value on the  exercise  date of the Stock  Option,  as
determined  pursuant to section 4.1. The foregoing  provision  does not preclude
the exercise of a Stock  Option by any other  proper  legal method  specifically
approved  in  advance  by  the  Administrative   Committee.  The  Administrative
Committee  shall  determine the acceptable  methods for tendering or withholding
Shares  as  payment  of the  exercise  price of a Stock  Option  and may  impose
limitations and prohibitions on the use of Shares to pay the exercise price of a
Stock Option as it considers appropriate for tax, legal, business, or accounting
reasons.  No one has the rights of a shareholder with respect to Shares sub ject
to a Stock  Option  until a  certificate  representing  those  Shares  has  been
delivered to the person exercising the Stock Option.

         4.3  Tax  Withholding.   The  Administrative  Committee,  in  its  sole
discretion, may require a Participant to pay to the Company when the Participant
exercises  a Stock  Option  the  amount  (if  any)  that the  Company  considers
necessary  to satisfy its legal  obligation  to withhold  any local,  state,  or
federal  taxes  (including  FICA,  income,  and Medicare  taxes)  imposed by any
governmental  authority as a result of the exercise of the Stock Option, and the
Company may defer delivery of any Shares purchased  pursuant to the Stock Option
until it has been paid or  indemnified  to its  satisfaction  for those taxes. A
Participant  may pay to the Company any requisite tax  withholding by any of the
methods of payment  authorized  for  payment  of the  exercise  price for Shares
purchased pursuant to the Stock Option.

         If an  exercise  of a  Stock  Option  does  not  give  rise  to any tax
withholding  obligation on the date of exercise but is reasonably expected to do
so at a future time, the  Administrative  Committee (in its sole discretion) may
require  the  Participant  to place the Shares  purchased  pursuant to the Stock
Option in escrow  for the  benefit  of the  Company  until  tax  withholding  is
required for the amounts included in the Participant's  gross income as a result
of  the  Participant's   exercise  of  the  Stock  Option.  At  that  time,  the
Administrative  Committee (in its discretion) may require the Participant to pay
to it an amount that it  considers  sufficient  to satisfy  the tax  withholding
obligation incurred by it as a result of the Participant's exercise of the Stock
Option,  in which case the Company shall promptly release to the Participant the
escrowed Shares.

         4.4 Exercise Conditions. A Participant may exercise a Stock Option only
if the  Participant  has been in the  continuous  employment of the Company or a
Subsidiary  during the period beginning on the Date of Grant of the Stock Option
and  ending  on the  90th day  before  the  exercise  date.  The  Administrative
Committee  may decide to what extent  bona fide  leaves of absence for  illness,
temporary  disability,  govern ment or military  service,  or other reasons will
constitute  an  interruption  of  continuous  employment.  Each Stock  Option is
exercisable  during the life of the  Participant  only by the Participant or the
Participant's guardian.



                                      E-9

<PAGE>

         A Stock  Option  expires and ceases to be  exercisable  on the 90th day
after the Participant to whom it was granted ceases to be an Employee, except as
otherwise provided in this Plan and in the Option Agreement.  If a Participant's
employment  with the  Company or a  Subsidiary  is  terminated  (voluntarily  or
involuntarily),  the  Participant may exercise her or his Stock Option within 90
calendar days following the date of termination of employment.  If a Participant
dies or ceases to be an  Employee  because  of a  disability  at a time when the
Participant  is  entitled  to  exercise a Stock  Option,  the Stock  Option will
continue to be exercisable for one year (365 days) after the Participant's death
or disability by the Participant or the  Participant's  guardian (in the case of
disability) or the Participant's heir or personal representative (in the case of
death).

         Notwithstanding  the  foregoing,  a Stock  Option is never  exercisable
later  than  its  stated  expiration  date.  After  the  death,  disability,  or
termination  of employment of a Participant,  a Stock Option of the  Participant
will be  exercisable  only with  respect  to the  number of Shares (if any) that
could have been  exercised as of the date when the  Participant  ceased to be an
Employee  (subject to any  adjustment  required by section  5.1). A Stock Option
will  terminate  to the extent that it ceases to be  exercisable  for any of the
Shares subject to it.

         4.5  Inventions.  While  employed by the Company or any  Subsidiary and
within 30 days after the termination date of a Participant's employment with the
Company or any Subsidiary,  every  Participant fully and promptly shall disclose
in writing to the  Company,  and hold in trust for the sole right and benefit of
the Company,  all  Proprietary  Property,  whether or not any of the Proprietary
Property is  patentable,  capable of copyright or trademark  registration  or is
created,  conceived,  developed,  or reduced to practice  during normal  working
hours, at the request of the Company or any  Subsidiary,  or before or after the
execution date of this Agreement.

         In  furtherance  of the  foregoing,  a Participant  shall assign to the
Company  all of the  Participant's  right,  title,  and  interest  in and to all
Proprietary Property. While employed by the Company or any Subsidiary and at all
times  thereafter,  each  Participant  shall  do all  things,  and  execute  all
documents,  including applications for patents,  copyrights,  and trademarks and
for renewals,  extensions,  and divisions thereof, as the Company reasonably may
request to carry out the intent and purposes of this section.  If the Company is
unable  for any  reason  whatsoever  to  obtain  a  Participant's  signature  or
assistance,  the  Participant  irrevocably  appoints the Company and each of its
duly authorized officers as the Participant's agent and  attorney-in-fact,  with
full power of substitution, to sign, execute, and file in the name and behalf of
the Participant  any document  required to prosecute or apply for any foreign or
United States patent,  copyright,  trademark,  or other proprietary  protection,
including renewals,  extensions,  and divisions, and to do all other lawful acts
and  things to further  the  issuance  or  prosecution  of a patent,  copyright,
trademark,  or other proprietary  protection,  all with the same legal force and
effect as if done or executed by the Participant.

         4.6  Reservation,  Listing,  and Delivery of Shares.  The Company shall
reserve from its  authorized but unissued  Shares and keep  available  until the
termination  of this  Plan,  solely  for  issuance  upon the  exercise  of Stock
Options,  the number of Shares  issuable at any time pursuant to the exercise of
Stock Options  granted or available for grant under this Plan. In addition,  the
Company  shall take all  requisite  action to assure that it validly and legally
may issue  fully-paid,  nonassessable  Shares  upon the  exercise  of each Stock
Option.  Also,  if the Shares are  traded in the Nasdaq  Stock  Market or on any
United States national  securities  exchange,  the Company, at its sole expense,
shall reserve for quotation or listing on that market or exchange, upon official
notice of issuance  pursuant to the  exercise  of Stock  Options,  the number of
Shares  issuable  at any time upon the  exercise  of Stock  Options  granted  or
available for grant under this Plan, and the Company shall maintain that listing
until this Plan terminates.

         Promptly after a Stock Option is validly  exercised,  the Company shall
issue and deliver to the order of the person who  exercised  the Stock  Option a
stock  certificate  representing  that number of  fully-paid  and  nonassessable
Shares that were purchased  pursuant to the exercise of the Stock Option,  plus,
instead of any


                                      E-10
<PAGE>



fractional  Share to which that person  otherwise would be entitled,  a cash sum
equal to the product of (a) that fraction, multiplied by (b) the Market Value of
one full Share as of the exercise  date of the Stock  Option.  The Company shall
pay all costs and excise taxes  associated  with the original  issuance of stock
certificates  representing  Shares  purchased  pursuant to the exercise of Stock
Options.

         4.7 Legal  Compliance.  Stock Options are  exercisable,  and Shares are
issuable  under this Plan,  only in  compliance  with all  applicable  state and
federal laws and regulations  (including  securities  laws) and the rules of all
stock markets or exchanges on which the Shares are quoted or listed for trading.
Any certificate representing Shares issued under the Plan will bear such legends
and statements as the Administra  tive Committee  considers  advisable to assure
compliance  with  those  laws,   rules,  and  regulations.   In  addition,   the
Administrative Committee may require a Participant,  as a condition to the grant
or  exercise  of a Stock  Option,  to provide  to the  Company  any  agreements,
representations, and warranties that, in the opinion of counsel for the Company,
are  desirable  or necessary  to comply with  applicable  laws and all rules and
regulations  of any stock  market or  exchange on which the Shares are traded or
quoted, including a representation that the Shares issuable pursuant to exercise
of the Stock Option are or will be acquired for  investment  purposes  without a
view to distribute them to others.

         A Stock Option is not exercisable,  and the Company shall not issue any
Shares  under this Plan,  until the Company has obtained any consent or approval
required from any state or federal regulatory body having jurisdiction. Upon the
exercise of a Stock Option by an heir, guardian, or personal representative of a
Partici pant, the Administrative  Committee may require  reasonable  evidence of
the person's  legal  ownership of the Stock Option and any consents and releases
of governmental authorities as it determines are advisable.

                                    ARTICLE V
                              ADDITIONAL PROVISIONS

         5.1 Antidilution. If the Company does any of the following (a "Dilutive
Event") at any time before the exercise or  expiration  of a Stock  Option:  (a)
splits or  subdivides  its  then-outstanding  Shares into a greater or different
number of Shares; (b) reduces the then-outstanding number of Shares by a reverse
stock-split  or by otherwise  combining  those  Shares into a smaller  number of
Shares or as a result of the  cancellation or return to the Company of Shares in
settlement  of any claim by the Company that the Shares were not validly  issued
or  authorized  or fully paid for;  (c)  effects any other  capital  adjustment,
recapitalization,  reorganization,  or  reclassification  that has the effect of
increasing or decreasing propor tionately the number of outstanding  Shares then
held by each shareholder;  (d) distributes any of its assets to its shareholders
pro rata as a partial liquidation or return of capital; or (e) declares, issues,
or  distributes  to the holders of its Common Stock,  without  separate  payment
therefor,  (i) a noncash  dividend  payable in any property or securities of the
Company,  including additional Shares, (ii) any cash, property, or securities in
connection  with  a  spin-off,  split-up,  reclassification,   recapitalization,
combination of shares, or similar  rearrangement of the Company's capital stock;
or (iii) any securities in exchange,  conversion, or substitution for any of the
Shares then outstanding, whether pursuant to a merger, split-up, spin-off, share
exchange, consolidation, reorganization, recapitalization,  reclassification, or
otherwise; then, upon the subsequent exercise of a Stock Option after the record
date for, or the occurrence of, each Dilutive  Event,  the  Participant  will be
entitled to receive in exchange  for the exercise  price  specified in the Stock
Option,  and in  addition  to (or in  substitution  for)  the  Shares  otherwise
issuable upon exercise of the Stock Option, the additional (or different) amount
of Shares and other securities and property  (including cash) resulting from the
Dilutive Event that the  Participant  would have been entitled to receive if (A)
the Participant had exercised the Stock Option on the Date of Grant (even if the
Stock  Option was not  exercisable  then) and had been the  record  owner of the
number  of Shares  issuable  pursuant  to the Stock  Option  during  the  period
beginning  on that date and  ending  on the  actual  exercise  date of the Stock
Option, and (B) the Participant had retained all Shares and other securities and
property  (including  cash)  receivable by the  Participant  during that period,
after giving effect to all the Dilutive Events that occurred during that period.


                                      E-11

<PAGE>


         The number of Shares  issuable  pursuant  to Stock  Options  granted or
available  for grant under this Plan and the  exercise  price per Share of those
Stock Options will be proportionately  adjusted automatically to account for any
increase or decrease in the number of issued  Shares that occurs during the term
of this Plan and results from a stock split,  stock dividend,  recapitalization,
or other reduction, subdivision, or consolidation of Shares that proportionately
increases or decreases the number or percentage of outstanding  Shares then held
by each  shareholder  of the Company,  except for a repurchase  of Shares by the
Company in exchange for cash,  Shares,  or other  property,  but  including  the
cancellation  or return to the Company of Shares in  settlement  of any claim by
the Company that the Shares were not validly  issued or authorized or fully paid
for.

         For example,  if the Company were to effect a two-for-one  stock split,
the maximum number of Shares  issuable  pursuant to this Plan would be increased
from  2,000,000  to  4,000,000,  and the  exercise  price  and  number of Shares
issuable under an  outstanding  Stock Option for 100 Shares at an exercise price
of $5.00 per Share would be changed to 200 Shares at an exercise  price of $2.50
per Share.  Similarly, if the Company were to effect a one-for-ten reverse stock
split,  the  maximum  number of Shares  issuable  pursuant to this Plan would be
decreased from 2,000,000 to 200,000, and the exercise price and number of Shares
issuable under an  outstanding  Stock Option for 100 Shares at an exercise price
of $5.00 per Share would be changed to 10 Shares at an exercise  price of $50.00
per Share. No adjustment of the number of shares issuable  pursuant to this Plan
or upon  exercise of a Stock  Option will be made to account for the issuance by
the  Company  of any  shares of any class of stock  other  than as  specifically
provided above or of any securities that are convertible into Shares.

         5.2  Changes in  Control.  If a Change in Control  occurs,  every Stock
Option that has been outstanding for at least six months since its Date of Grant
will automatically  become fully vested and exercisable in full, and any and all
conditions and restrictions applicable to the Stock Option and the Shares issued
pursuant  to  it  will  automatically  lapse.  The  Company  shall  notify  each
Participant of the occurrence of any event that constitutes a Change in Control.

         If  a  Change  in  Control   constitutes  a  dissolution   or  complete
liquidation of the Company,  then,  notwithstanding  anything to the contrary in
this Plan or an Option  Agreement,  this Plan and every outstanding Stock Option
will terminate  immediately  before the effective time of the dissolution of the
Company and at 5:00 P.M., New York time, on the 15th business day after the date
when  the  Company  mails  to all  the  Participants  written  notice  that  its
shareholders have approved a plan of complete liquidation of the Company.


         If  the  Change  in  Control   constitutes  a  merger,   consolidation,
reorganization,  share exchange, or a negotiated tender offer or exchange offer,
each Stock Option will be subject to the  agreement  between the Company and the
acquiring  corporation that governs the transaction.  That agreement may provide
for any of the following: (a) the assumption of outstanding Stock Options by the
surviving  corporation  or its  parent  corporation;  (b)  the  continuation  of
outstanding Stock Options, if the Company is the surviving corporation;  (c) the
payment by the Company of a cash sum for the  cancellation  of each  outstanding
Stock Option, in full settlement of all the  Participant's  rights and interests
in the Stock Option,  and instead of the Shares that the  Participant  otherwise
would have been titled to receive upon the exercise of the Stock  Option,  in an
amount  equal to the  product  of (i) the  total  number of  unexercised  Shares
issuable  under the  Stock  Option  multiplied  by (ii) the  difference  between
highest  net cash price paid or offered to  shareholders  of the Company for one
Share under the agreement and the exercise  price per share of the Stock Option;
or (d) for the  cancellation  and  termination  of  Stock  Options  that are not
exercised before the effective date of the transaction;  in all cases other than
clause (c)  without  the  Participants'  consent.  The  written  consent of each
Participant  whose Stock  Option is canceled is required  for a cash  settlement
pursuant to clause (c).




                                      E-12

<PAGE>


         5.3 Amendment and Termination. The Board of Directors may alter, amend,
suspend,  or terminate  this Plan at any time without  approval of the Company's
shareholders,  unless the approval of the Company's  shareholders is required to
comply  with  applicable  law or any rule or  regulation  of a stock  market  or
exchange on which the Shares are traded or quoted.  An amendment or  termination
of  this  Plan,   whether  with  or  without  the  approval  of  the   Company's
shareholders,  that  would  adversely  affect  any  right  or  obligation  of  a
Participant  under an outstanding Stock Option will not be valid or effective as
to that Stock Option without that Participant's written consent.

         5.4 Expenses and  Proceeds.  The Company  shall pay all expenses of the
Plan. The Company may use the cash proceeds  received from Participants upon the
exercise of Stock Options for general corporate purposes.

         5.5 Market Value  Determinations.  If trading in the Shares, or a price
quotation  for the  Shares,  does not occur on a date when the  Market  Value is
required to be  determined  under either this Plan or an Option  Agreement,  the
next  preceding  date when Shares were traded or a price was quoted will control
the determination of the Market Value.

         5.6 Section 16(b) Exemptions.  With respect to Participants  subject to
section 16 of the  Exchange  Act,  transactions  under this Plan are intended to
comply with all applicable  conditions of SEC Rules 16b-3 and 16b-6 and any rule
promulgated by the United States  Securities and Exchange  Commission  under the
Exchange  Act in  substitution  for  either of those  rules.  To the  extent any
provision  of this Plan or action by the  Administrative  Committee  fails to so
comply,  it shall be null and void to the extent permitted by law and determined
by the Administrative  Committee. In furtherance of the foregoing objective, the
Administrative  Committee may include in an Option  Agreement with a Participant
who is subject to section 16 of the Exchange Act any  additional  conditions  or
restrictions  that are  required to qualify the grant and  exercise of the Stock
Option for exemption under Rules 16b-3 and 16b-6 or any future rule providing an
exemption for the award, grant, and exercise of stock options.

         5.7 Duration and Effective Date. This Plan will become  effective as of
the date when it is adopted by the Board of  Directors,  subject to  approval by
the Company's  shareholders within 12 months after that date, and will terminate
on the tenth anniversary of its effective date. The Company is not authorized to
award any Stock Options after the termination date of this Plan.




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<PAGE>



</TEXT>
</DOCUMENT>