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<SEC-DOCUMENT>0000927016-96-001092.txt : 19960913
<SEC-HEADER>0000927016-96-001092.hdr.sgml : 19960913
ACCESSION NUMBER:		0000927016-96-001092
CONFORMED SUBMISSION TYPE:	S-8
PUBLIC DOCUMENT COUNT:		6
FILED AS OF DATE:		19960912
EFFECTIVENESS DATE:		19961001
SROS:			NASD

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			HOLOGIC INC
		CENTRAL INDEX KEY:			0000859737
		STANDARD INDUSTRIAL CLASSIFICATION:	X-RAY APPARATUS & TUBES & RELATED IRRADIATION APPARATUS [3844]
		IRS NUMBER:				042902449
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			0930

	FILING VALUES:
		FORM TYPE:		S-8
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-11853
		FILM NUMBER:		96629244

	BUSINESS ADDRESS:	
		STREET 1:		590 LINCOLN ST
		CITY:			WALTHAM
		STATE:			MA
		ZIP:			02154
		BUSINESS PHONE:		6178902300

	MAIL ADDRESS:	
		STREET 1:		590 LINCOLN STREET
		CITY:			WALTHAM
		STATE:			MA
		ZIP:			02154
</SEC-HEADER>
<DOCUMENT>
<TYPE>S-8
<SEQUENCE>1
<DESCRIPTION>FORM S-8
<TEXT>

<PAGE>
 
  As filed with the Securities and Exchange Commission on September 12, 1996.
                                              Registration No. 333-
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549

                             ---------------------

                                    FORM S-8

                             REGISTRATION STATEMENT
                                     Under
                           THE SECURITIES ACT OF 1933

                             ---------------------

                                 HOLOGIC, INC.
             (Exact name of registrant as specified in its charter)

      Delaware                                         04-2902449
- -----------------------                  ------------------------------------
State of Incorporation                   (IRS Employer Identification Number)

                590 Lincoln Street, Waltham, Massachusetts 02154
                ------------------------------------------------
              (Address of principal executive offices) (zip code)

FluoroScan Imaging Systems, Inc. 1994 Amended and Restated Stock Incentive Plan
           FluoroScan Imaging Systems, Inc. 1995 Stock Incentive Plan
       FluoroScan Imaging Systems, Inc. 1994 Directors Stock Option Plan
                             (Full title of Plans)

                         S. David Ellenbogen, Chairman
 Hologic, Inc., 590 Lincoln Street, Waltham, Massachusetts 02154 (617) 890-2300
                    (Name and address of agent for service)

                                   Copies to:
                           Lawrence M. Levy, Esquire
                         Brown, Rudnick, Freed & Gesmer
                              One Financial Center
                          Boston, Massachusetts 02111
<TABLE>
<CAPTION>
 
                                      CALCULATION OF REGISTRATION FEE
=======================================================================================================
                                           Proposed maximum     Proposed maximum       Amount of
   Title of securities    Amount to be    offering price per   aggregate offering   registration fee
    to be registered     registered (1)        share (2)           price (2)        
=======================================================================================================
<S>                      <C>              <C>                  <C>                  <C> 
  Common Stock, $.01 
  par value                 297,517              $22.46           $6,682,231.82         $2,304.22
- ------------------------------------------------------------------------------------------------------- 
  Rights to Purchase 
  Common Stock (3)          297,517                ---                 ---                  ---
=======================================================================================================
</TABLE>

(1)   Represents  150,716 shares, 124,431 shares and 22,370 shares of Common
      Stock that may be issued upon exercise of outstanding options granted
      under the FluoroScan Imaging Systems, Inc. 1994 Amended and Restated Stock
      Incentive Plan, the FluoroScan Imaging Systems, Inc. 1995 Stock Incentive
      Plan and the FluoroScan Imaging Systems, Inc. 1994 Directors Stock Option
      Plan, respectively, that were assumed by Hologic upon consummation of the
      merger of its wholly-owned subsidiary with and into FluoroScan. Also
      registered hereunder are such additional number of shares of common stock,
      presently indeterminable, as may be necessary to satisfy the antidilution
      provisions of the Plans to which this Registration Statement relates.
(2)   Based upon the average exercise price of the options pursuant to which the
      shares covered by this Registration Statement may be purchased.
(3)   Pursuant to a Rights Agreement entered into in 1992, as amended, one right
      (each a "Right") is deemed to be delivered with each share of Common Stock
      issued by the Registrant. The rights currently are not separately
      transferable apart from the Common Stock, and they are not exercisable
      until the occurrence of certain events. Accordingly, no independent value
      has been attributed to the Rights.
================================================================================
<PAGE>
 
                                    PART II

               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3. Incorporation Of Documents by Reference.
- ------  --------------------------------------- 

        The Company hereby incorporates by reference the documents listed in 
(a) through (c) below. In addition, all documents subsequently filed by the
Company pursuant to Section 13(a), 13(c), 14 and 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act") (prior to the filing of a Post-
Effective Amendment which indicates that all securities offered have been sold
or which deregisters all securities then remaining unsold) shall be deemed to be
incorporated by reference in this Registration Statement and to be a part hereof
from the date of filing of such documents.

        (a)   The Company's Prospectus included in its Registration Statement on
Form S-4, File No. 333-08977.

        (b)   All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year covered by the Prospectus referred
to in (a) above.

        (c)   The description of the Company's Common Stock and Rights to
Purchase Common Stock which are contained in Hologic's Registration Statements
filed pursuant to Section 12 of the Exchange Act and all amendments thereto and
reports filed for the purpose of updating such description.

        All documents filed by the Registrant pursuant to Sections 13(a), 13(c),
14 and 15(d) of the Exchange Act, subsequent to the date hereof and prior to the
filing of a post-effective amendment which indicates that all securities offered
have been sold or which deregisters all securities then remaining unsold, shall
be deemed hereby incorporated by reference in this Registration Statement and to
be a part hereof from the date of filing of such documents. Any statement
contained in a document incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
registration statement to the extent that a statement contained herein or in any
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement.

        The Company hereby undertakes to provide without charge to each person
who has received a copy of any of the prospectuses to which this registration
statement relates, upon the written or oral request of any such person, a copy
of any or all the documents that have been or may be incorporated by reference
into this registration statement, other than exhibits to such documents (unless
such exhibits are incorporated therein by reference).

Item 4. Description of Securities.
- ------  ------------------------- 

        Not Applicable.

Item 5. Interests of Named Experts and Counsel.
- ------  -------------------------------------- 

        The validity of the securities offered hereby has been passed upon for
the Registrant by Messrs. Brown, Rudnick, Freed & Gesmer, One Financial Center,
Boston, Massachusetts 02111. Lawrence M. Levy, Secretary of the Registrant, is a
member of Brown, Rudnick, Freed & Gesmer and a stockholder of the Registrant.

Item 6. Indemnification of Directors and Officers.
- ------  ----------------------------------------- 

        Article 10 of the Registrant's Certificate of Incorporation eliminates
the personal liability of directors of the Registrant or its stockholders for
monetary damages for breach of fiduciary duty to the full extent permitted by
Delaware law. Article 11 of the Registrant's By-laws provides that the
Registrant may indemnify its officers and directors to the full extent permitted
by the General Corporation Law of the State of Delaware. Section 145 of the
General Corporation Law of the State of Delaware authorizes a corporation to
indemnify directors, officers, employees or agents of the corporation in non-
derivative suits if such party acted in good faith and in a manner he or she
reasonably believed to be in or not opposed to the best interest of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe this conduct was unlawful, as determined in
accordance with the Delaware General Corporation Law. Section 145 further
provides that indemnification shall be provided if the party in question is
successful on the merits or otherwise in the defense of any claim.

                                     II-2
<PAGE>
 
        The Registrant has entered into indemnification agreements with each of
its present directors. The Company may also enter into similar agreements with
certain of the Company's officers who are not also directors. Generally, the
indemnification agreements attempt to provide the maximum protection permitted
by Delaware law with respect to indemnification of directors. In addition, the
Registrant maintains insurance on behalf of any person who is or was a director
or officer against any loss arising from any claim asserted against him or her
in any such capacity, subject to certain exceptions.

Item 7. Exemption from Registration Claimed.
- ------  ----------------------------------- 

        Not Applicable.

Item 8. Exhibits.
- ------  -------- 

Number        Description
- ------        -----------

 4.1             Certificate of Incorporation of the Registrant -- Filed as
                 Exhibit 3.01 to the Registrant's Registration Statement on 
                 Form S-1 (File No. 33-33128)*

 4.2             By-Laws of the Registrant -- Filed as Exhibit 3.02 to the
                 Registrant's Registration Statement on Form S-1 (File 
                 No. 33-33128)*

 4.3             Specimen Certificate of Common Stock -- Filed as Exhibit 4.01
                 to the Registrant's Registration Statement on Form S-1 (File
                 No. 33-33128)*

 5               Legal Opinion of Brown, Rudnick, Freed & Gesmer

 23.1            Consent of Arthur Andersen LLP

 23.2            Consent of Brown, Rudnick, Freed & Gesmer is included in their
                 legal opinion filed as Exhibit 5 hereof.

 24              Power of Attorney (included on the signature page of this
                 Registration Statement)

 99.1            FluoroScan Imaging Systems, Inc. 1994 Amended and Restated
                 Stock Incentive Plan
 99.2            FluoroScan Imaging Systems, Inc. 1995 Stock Incentive Plan
 99.3            FluoroScan Imaging Systems, Inc. 1994 Directors Stock Option
                 Plan
 99.4            Agreement and Plan of Merger dated as of July 18, 1996 among
                 the Registrant, Fenway Acquisition Corp. and FluoroScan Imaging
                 Systems, Inc. -- Filed as Exhibit 2.01 to the Registrant's
                 Registration Statement on Form S-4 (File No. 333-08977)*

- --------------

* Not filed herewith.  In accordance with Rule 411 promulgated pursuant to the
  Securities Act of 1933, as amended, reference is made to the documents
  previously filed with the Commission, which are incorporated by reference
  herein.

Item 9. Undertakings.
- ------  -------------

      (a) The undersigned Registrant hereby undertakes:

              (1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement.

              (2) That, for the purpose of determining liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.

              (3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.

                                     II-3
<PAGE>
 
      (b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

      (c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

                                     II-4
<PAGE>
 
                                   SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the Town of Waltham, Commonwealth of Massachusetts, on
September 11, 1996.

                                            HOLOGIC, INC.

                                            By: /s/ S. David Ellenbogen
                                                _____________________
                                                S. David Ellenbogen
                                                Chairman and Chief
                                                Executive Officer

                               POWER OF ATTORNEY

        KNOW ALL MEN BY THESE PRESENTS, that the person whose signature appears
below constitutes and appoints S. David Ellenbogen and Glenn P. Muir and each of
them (with full power to each of them to act alone), his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments (including post-effective amendments)
to this Registration Statement, and to file the same, with all exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or any of them, or their
substitutes, may lawfully do or cause to be done by virtue hereof.

        Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the date indicated.
 

         Signature                        Title                      Date
         ---------                        -----                      ----       
 /s/ S. David Ellenbogen
______________________       Principal Executive Officer      September 11, 1996
 S. David Ellenbogen         and Director
 
 /s/ Glenn P. Muir
______________________       Principal Financial and          September 11, 1996
    Glenn P. Muir            Accounting Officer
 
 /s/ Jay A. Stein
______________________       Director                         September 11, 1996
    Jay A. Stein  


_______________________      Director                        
   Larry S. Grossman 

 /s/ Irwin Jacobs
_______________________      Director                         September 11, 1996
     Irwin Jacobs 

 /s/ William A. Peck
_______________________      Director                         September 11, 1996
    William A. Peck    

 /s/ Gerald Segel
_______________________      Director                         September 11, 1996
      Gerald Segel  

 /s/ Elaine Ullian
______________________       Director                         September 3,  1996
     Elaine Ullian 


                                     II-5
<PAGE>
 
                                 Exhibit Index
<TABLE>
<CAPTION>
 
 
Number                                      Description                                          Reference
- ------                                      -----------                                          ---------
<S>        <C>                                                                                   <C>  
4.1        Certificate of Incorporation of the Registrant -- Filed as Exhibit 3.01 to the 
           Registrant's Registration Statement on Form S-1 (File No. 33-33128)                       *
 
4.2        By-Laws of the Registrant -- Filed as Exhibit 3.02 to the Registrant's Registration 
           Statement on Form S-1 (File No. 33-33128)                                                 *
 
4.3        Specimen Certificate of Common Stock -- Filed as Exhibit 4.01 to the Registrant's 
           Registration Statement on Form S-1 (File No. 33-33128)*                                   *
 
5          Legal Opinion of Brown, Rudnick, Freed & Gesmer
                                                                              
23.1       Consent of Arthur Andersen LLP

23.2       Consent of Brown, Rudnick, Freed & Gesmer is included in their legal opinion filed 
           as Exhibit 5 hereof.
 
24         Power of Attorney (included on the signature page of this Registration Statement)
 
99.1       FluoroScan Imaging Systems, Inc. 1994 Amended and Restated Stock Incentive Plan
 
99.2       FluoroScan Imaging Systems, Inc. 1995 Stock Incentive Plan
 
99.3       FluoroScan Imaging Systems, Inc. 1994 Directors Stock Option Plan
 
99.4       Agreement and Plan of Merger dated as of July 18, 1996 among the Registrant, 
           Fenway Acquisition Corp. and FluoroScan Imaging Systems, Inc. -- Filed as Exhibit 
           2.01 to the Registrant's Registration Statement on Form S-4 (File No. 333-08977)*         *
</TABLE> 

- --------------                         
 
*  Not filed herewith. In accordance with Rule 411 promulgated pursuant to the
   Securities Act of 1933, as amended, reference is made to the documents
   previously filed with the Commission, which are incorporated by reference
   herein.

                                     II-6
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-5
<SEQUENCE>2
<DESCRIPTION>LEGAL OPINION OF BROWN, RUDNICK, FREED & GESMER
<TEXT>

<PAGE>
 
                       [Brown, Rudnick, Freed & Gesmer]


                               September 11, 1996


Hologic, Inc.
590 Lincoln Street
Waltham, MA 02154

RE:  Registration Statement on Form S-8
     ----------------------------------

Ladies and Gentlemen:

       We are general counsel to Hologic, Inc., a Delaware corporation (the
"Company"). We have been asked to deliver this opinion in connection with the
preparation and filing with the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Act"), of a Registration Statement on
Form S-8 (the "Registration Statement") relating to 297,517 shares of the
Company's Common Stock, $.01 par value (the "Shares") and 297,517 Rights, as
defined below. The Rights are issuable pursuant to that certain Rights
Agreement, dated as of December 22, 1992, as amended by Amendment No. 1 dated
December 14, 1995 (the "Rights Agreement"), providing, in effect, for the
delivery of a right (a "Right"), along with each share of Common Stock issued by
the Company.

       Of the Shares and Rights, (i) 22,370 are issuable upon exercise of
options granted pursuant to the FluoroScan Imaging Systems, Inc. 1994 Amended
and Restated Stock Incentive Plan, (ii) 124,742 are issuable upon exercise of
options granted pursuant to the FluoroScan Imaging Systems, Inc. 1995 Stock
Incentive Plan and (iii) 150,405 are issuable upon exercise of options granted
pursuant to the FluoroScan Imaging Systems, Inc. 1994 Directors Stock Option
Plan. The aforementioned plans (collectively, the "Plans") were assumed by the
Company upon the merger of FluoroScan Imaging Systems, Inc. ("FluoroScan"), with
and into a wholly-owned subsidiary of the Company on August 29, 1996 pursuant to
an Agreement and Plan of Merger dated July 18, 1996 among the Company,
FluoroScan and the Company's subsidiary (the "Merger Agreement").

       In connection with this opinion, we have examined and are familiar with
originals or copies, certified or otherwise identified to our satisfaction, of
the following documents (collectively, the "Documents"):

       1.  A copy of the Certificate of Incorporation of the Company as in
           effect on the date hereof;
 
       2.  A copy of the Bylaws of the Company as in effect on the date hereof;
<PAGE>
 
Hologic, Inc
September 11, 1996
Page 2 


       3.  The corporate records of the Company relating to the proceedings of
           stockholders and directors of the Company;
 
       4.  Each of the Plans;

       5.  The Rights Agreement;

       6.  The Merger Agreement; and

       7.  The Registration Statement.

       In giving our opinion, we have relied as to matters of fact upon
certificates of officers of the Company. For purposes of this opinion we have
assumed without any investigation (1) the legal capacity of each natural person
and (2) the genuineness of each signature, the completeness of each document
submitted to us as an original and the conformity with the original of each
document submitted to us as a copy.

       Our opinion hereafter expressed is based solely upon (1) our review of
the Documents, (2) discussions with certain officers of the Company with respect
to the Documents, (3) discussions with those of our attorneys who have devoted
substantive attention to the matters contained herein and (4) such review of
published sources of law as we have deemed necessary.

       Based upon and subject to the foregoing, we are of the opinion that the
Shares have been duly authorized and, when issued in accordance with the terms
of the applicable Plan, the Shares will be validly issued, fully paid and
nonassessable. The Rights have been duly authorized and, when issued in
accordance with the terms of the Rights Agreement, will be validly issued, fully
paid and nonassessable.

       We hereby consent to the filing of this opinion as Exhibit 5.1 to the
Registration Statement and to the reference to our firm wherever it appears in
the Registration Statement.

                              Very truly yours,

                              BROWN, RUDNICK, FREED & GESMER, P.C.
                              By:  Brown, Rudnick, Freed & Gesmer, a partner


                              By: /s/ Philip J. Flink
                                  ---------------------------------------------
                                  Philip J. Flink, a Member
                                  hereunto duly authorized

PJF/LML         
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>3
<DESCRIPTION>CONSENT OF ARTHUR ANDERSEN LLP
<TEXT>

<PAGE>
 
                                                                    Exhibit 23.1



                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS


     As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our reports dated November 22,
1995, except with respect to a certain matter as to which the date is December
14, 1995, included in Hologic, Inc.'s Form 10-K for the fiscal year ended
September 30, 1995, and to all references to our Firm included in this
registration statement.



                                        Arthur Anderson LLP



Boston, Massachusetts
September 9, 1996
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>4
<DESCRIPTION>1994 AMENDED AND RESTATED STOCK INCENTIVE PLAN
<TEXT>

<PAGE>
 
                       FLUOROSCAN IMAGING SYSTEMS, INC.

                           1994 AMENDED AND RESTATED

                             STOCK INCENTIVE PLAN
<PAGE>
 
                       FLUOROSCAN IMAGING SYSTEMS, INC.
                1994 AMENDED AND RESTATED STOCK INCENTIVE PLAN
                               TABLE OF CONTENTS
                               -----------------

<TABLE>
<CAPTION>
 
                                                                   Page
                                                                   ----
<C>                <S>                                              <C>
ARTICLE I          ESTABLISHMENT.....................................1

         1.1       Purpose...........................................1

ARTICLE II         DEFINITIONS.......................................1

         2.1       Affiliate.........................................1
         2.2       Agreement or Award Agreement......................1
         2.3       Award.............................................1
         2.4       Board of Directors or Board.......................1
         2.5       Cause.............................................1
         2.6       Change in Control and Change in Control Price.....2
         2.7       Code or Internal Revenue Code.....................2
         2.8       Commission........................................2
         2.9       Committee.........................................2
         2.10      Common Stock......................................2
         2.11      Company...........................................2
         2.12      Deferred Stock....................................2
         2.13      Disability........................................2
         2.14      Disinterested Person..............................2
         2.15      Effective Date....................................2
         2.16      Exchange Act......................................2
         2.17      Fair Market Value.................................3
         2.18      Grant Date........................................3
         2.19      Incentive Stock Option............................3
         2.20      Nonqualified Stock Option.........................3
         2.21      Option Period.....................................3
         2.22      Option Price......................................3
         2.23      Participant.......................................3
         2.24      Plan..............................................4
         2.25      Public Offering...................................4
         2.26      Representative....................................4
         2.27      Restricted Stock..................................4
         2.28      Retirement........................................4
         2.29      Rule 16b-3........................................4
         2.30      Grossman/Issette Entities.........................4
         2.31      Grossman/Issette Interest.........................4
         2.32      Securities Act....................................5
         2.33      Stock Appreciation Right..........................5
         2.34      Stock Option or Option............................5
         2.35      Termination of Employment.........................5
</TABLE>

                                      -i-
<PAGE>
 
<TABLE>
<CAPTION> 
                                                                   Page
                                                                   ----
<C>                <S>                                              <C>
ARTICLE III        ADMINISTRATION....................................5
 
         3.1       Committee Structure and Authority.................5
                                                                      
ARTICLE IV         STOCK SUBJECT TO PLAN.............................7
                                                                      
         4.1       Number of Shares..................................7
         4.2       Release of Shares.................................7
         4.3       Restrictions on Shares............................8
         4.4       Stockholder Rights................................8
         4.5       Best Efforts to Register..........................8
         4.6       Anti-Dilution.....................................8
                                                                      
ARTICLE V          ELIGIBILITY.......................................9
                                                                      
         5.1       Eligibility.......................................9
                                                                      
ARTICLE VI         STOCK OPTIONS.....................................9
                                                                      
         6.1       General...........................................9
         6.2       Grant and Exercise...............................10
         6.3       Terms and Conditions.............................10
         6.4       Termination by Reason of Death...................12
         6.5       Termination by Reason of Disability..............12
         6.6       Other Termination................................12
         6.7       Cashing Out of Option............................12
                                                                      
ARTICLE VII        STOCK APPRECIATION RIGHTS........................13
                                                                      
         7.1       General..........................................13
         7.2       Grant............................................13
         7.3       Terms and Conditions.............................13
                                                                      
ARTICLE VIII       RESTRICTED STOCK.................................15
                                                                      
         8.1       General..........................................15
         8.2       Awards and Certificates..........................15
         8.3       Terms and Conditions.............................15 
</TABLE>

                                     -ii-
<PAGE>
 
<TABLE>
<CAPTION>
                                                                   Page
                                                                   ----
<C>                <S>                                              <C>
 
ARTICLE IX         DEFERRED STOCK...................................16
 
         9.1       General..........................................16
         9.2       Terms and Conditions.............................16
 
ARTICLE X          PROVISIONS APPLICABLE TO STOCK ACQUIRED
                     UNDER THE  PLAN................................17
 
         10.1      Transfer of Shares...............................17
         10.2      Limited Transfer During Offering.................18
         10.3      Committee Discretion.............................18
         10.4      No Company Obligation............................18
         10.5      Sale of Grossman/Issette Interest................18 
 
ARTICLE XI         CHANGE IN CONTROL PROVISIONS.....................19
 
         11.1      Impact of Event..................................19
         11.2      Definition of Change in Control..................19
         11.3      Change in Control Price..........................20 
 
ARTICLE XII        MISCELLANEOUS....................................21
 
         12.1      Amendments and Termination.......................21
         12.2      Unfunded Status of Plan..........................21
         12.3      General Provisions...............................22
         12.4      Mitigation of Excise Tax.........................23
         12.5      Rights with Respect to Continuance of              
                    Employment......................................23 
         12.6      Awards in Substitution for Awards Granted
                    by Other Corporations...........................23
         12.7      Procedure for Adoption...........................24
         12.8      Procedure for Withdrawal.........................24
         12.9      Delay............................................24
         12.10     Headings.........................................24
         12.11     Severability.....................................24
         12.12     Successors and Assigns...........................24
         12.13     Entire Agreement.................................24 
</TABLE>

                                     -iii-
<PAGE>
 
                       FLUOROSCAN IMAGING SYSTEMS, INC.

                1994 AMENDED AND RESTATED STOCK INCENTIVE PLAN


                                   ARTICLE I
                                   ---------

                                 ESTABLISHMENT
                                 -------------

     1.1  Purpose.
          ------- 

     The Fluoroscan Imaging Systems, Inc. 1994 Amended and Restated Stock
Incentive Plan ("Plan") is hereby established by  Fluoroscan Imaging Systems,
Inc. ("Company").  The purpose of the Plan is to promote the overall financial
objectives of the Company and its stockholders by motivating those persons
selected to participate in the Plan to achieve long-term growth in stockholder
equity in the Company and by retaining the association of those individuals who
are instrumental in achieving this growth.  The Plan and the grant of awards
thereunder is expressly conditioned upon the Plan's approval by the security
holders of the Company.  The Plan is adopted effective as of June 15, 1994.

                                  ARTICLE II
                                  ----------

                                  DEFINITIONS
                                  -----------

     For purposes of the Plan, the following terms are defined as set forth
below:

     2.1  "Affiliate" means any individual, corporation, partnership,
           ---------                                                 
association, joint-stock company, trust, unincorporated association or other
entity (other than the Company) that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with, the
Company including, without limitation, any member of an affiliated group of
which the Company is a common parent corporation as provided in Section 1504 of
the Code.

     2.2  "Agreement" or "Award Agreement" means, individually or collectively,
           ---------      ---------------                                      
any agreement entered into pursuant to the Plan pursuant to which an Award is
granted to a Participant.

     2.3  "Award" means a Stock Option, Stock Appreciation Right, Restricted
           -----                                                            
Stock or Deferred Stock.

     2.4  "Board of Directors" or "Board" means the Board of Directors of the
           ------------------      -----                                     
Company.

     2.5  "Cause" shall mean, for purposes of whether and when a Participant has
           -----                                                                
incurred a Termination of Employment for Cause, any act or omission which
permits the Company to terminate the written agreement or arrangement between
the Participant and the Company or an Affiliate for Cause as defined in such
agreement or arrangement, or in the event there is no such agreement or
arrangement or the agreement or arrangement does not define the term "cause,"
then
<PAGE>
 
Cause shall mean (a) any act or failure to act deemed to constitute cause
under the Company's established practices, policies or guidelines applicable to
the Participant or (b) the Participant's act or omission of gross misconduct
with respect to the Company or an Affiliate in any material respect.

     2.6  "Change in Control" and "Change in Control Price" have the meanings
           -----------------       -----------------------                   
set forth in Sections 11.2 and 11.3, respectively.

     2.7  "Code" or "Internal Revenue Code" means the Internal Revenue Code of
           ----      ---------------------                                    
1986, as amended, final Treasury Regulations thereunder and any subsequent
Internal Revenue Code.

     2.8  "Commission" means the Securities and Exchange Commission or any
           ----------                                                     
successor agency.

     2.9  "Committee" means the person or persons appointed by the Board of
           ---------                                                       
Directors to administer the Plan, as further described in the Plan.

     2.10  "Common Stock" means the shares of the regular voting Common Stock,
            ------------                                                      
$.0001 par value, whether presently or hereafter issued, and any other stock or
security resulting from adjustment thereof as described hereinafter or the
common stock of any successor to the Company which is designated for the purpose
of the Plan.

     2.11  "Company" means  Fluoroscan Imaging Systems, Inc., a Delaware
            -------                                                     
corporation, and includes any successor or assignee corporation or corporations
into which the Company may be merged, changed or consolidated; any corporation
for whose securities the securities of the Company shall be exchanged; and any
assignee of or successor to substantially all of the assets of the Company.

     2.12  "Deferred Stock" means an award made pursuant to Article IX.
            --------------                                             

     2.13  "Disability" means a mental or physical illness that entitles the
            ----------                                                      
Participant to receive benefits under the long term disability plan of the
Company or an Affiliate, or if the Participant is not covered by such a plan or
the Participant is not an employee of the Company or an Affiliate, a mental or
physical illness that renders a Participant totally and permanently incapable of
performing the Participant's duties for the Company or an Affiliate.
Notwithstanding the foregoing, a Disability shall not qualify under this Plan if
it is the result of (i) a willfully self- inflicted injury or willfully self-
induced sickness; or (ii) an injury or disease contracted, suffered, or
incurred, while participating in a criminal offense.  The determination of
Disability shall be made by the Committee.  The determination of Disability for
purposes of this Plan shall not be construed to be an admission of disability
for any other purpose.

     2.14  "Disinterested Person" shall have the meaning set forth in Rule 16b-
            --------------------                                              
3(d)(3), or any successor definition adopted by the Commission provided the
person is also an "outside director" under Section 162(m) of the Code.

     2.15  "Effective Date" means June 15, 1994.
            --------------                      

                                      -2-
<PAGE>
 
     2.16  "Exchange Act" means the Securities Exchange Act of 1934, as amended,
            ------------                                                        
and the rules and regulations promulgated thereunder.

     2.17  "Fair Market Value" means:
            -----------------        

           (a)  prior to a Public Offering, the value determined on the basis of
the good faith determination of the Committee and without regard to whether the
Common Stock is restricted, illiquid or represents a minority interest, unless
expressly provided otherwise in an Agreement; and

           (b)  on or after a Public Offering, the value determined on the basis
of the good faith determination of the Committee, without regard to whether the
Common Stock is restricted or represents a minority interest, pursuant to the
applicable method described below:

                (i)    if the Common Stock is listed on a national securities
           exchange or quoted on the Nasdaq National Market System
           ("NASDAQ/NMS"), the closing price of the Common Stock on the relevant
           date, as reported by the principal national exchange on which such
           shares are traded (in the case of an exchange) or by the NASDAQ/NMS,
           as the case may be;

                (ii)   if the Common Stock is not listed on a national
           securities exchange or quoted on the NASDAQ/NMS, but is actively
           traded in the over-the-counter market, the average of the closing bid
           and asked prices for the Common Stock on the relevant date, or the
           most recent preceding date for which such quotations are reported;
           and

                (iii)  if, on the relevant date, the Common Stock is not
          publicly traded or reported as described in (i) or (ii), the value
          determined in good faith by the Committee.

     2.18 "Grant Date" means the date that as of which an Award is granted
           ----------                                                     
pursuant to the Plan.

     2.19 "Incentive Stock Option" means any Stock Option intended to be and
           ----------------------                                           
designated as an "incentive stock option" within the meaning of Section 422 of
the Code.

     2.20 "Nonqualified Stock Option" means an Option to purchase Common Stock
           -------------------------                                          
in the Company granted under the Plan other than an incentive stock option
within the meaning of Section 422 of the Code.

     2.21 "Option Period" means the period during which the Option shall be
           -------------                                                   
exercisable in accordance with the Agreement and Article VI.

     2.22 "Option Price" means the price at which the Common Stock may be
           ------------                                                  
purchased under an Option as provided in Section 6.3.

                                      -3-
<PAGE>
 
     2.23 "Participant" means a person who satisfies the eligibility conditions
           -----------                                                         
of Article V and to whom an Award has been granted by the Committee under the
Plan, and in the event a Representative is appointed for a Participant or a
former spouse becomes a Representative, then the term "Participant" shall mean
such appointed Representative, successor, Representative, or spouse as the case
may be.  The term shall also include a trust for the benefit of the Participant,
the Participant's parents, spouse or descendants, or a custodian under a uniform
gifts to minors act or similar statute for the benefit of the Participant's
descendants, to the extent permitted by the Committee and not inconsistent with
the Rule 16b-3.  Notwithstanding the foregoing, the term "Termination of
Employment" shall mean the Termination of Employment of the Participant.

     2.24 "Plan" means the  Fluoroscan Imaging Systems, Inc. 1994 Amended and
           ----                                                              
Restated Stock Incentive Plan as herein set forth and as may be amended from
time to time.

     2.25 "Public Offering" means the initial public offering of shares of
           ---------------                                                
Common Stock under the Securities Act.

     2.26 "Representative" means (a) the person or entity acting as the executor
           --------------                                                       
or administrator of a Participant's estate pursuant to the last will and
testament of a Participant or pursuant to the laws of the jurisdiction in which
the Participant had the Participant's primary residence at the date of the
Participant's death; (b) the person or entity acting as the guardian or
temporary guardian of a Participant; (c) the person or entity which is the
beneficiary of the Participant upon or following the Participant's death; or (d)
any person to whom an Option has been permissibly transferred; provided that
only one of the foregoing shall be the Representative at any point in time as
determined under applicable law and recognized by the Committee.

     2.27 "Restricted Stock" means an award under Article VIII.
           ----------------                                    

     2.28 "Retirement" means the Participant's Termination of Employment from
           ----------                                                        
active employment with the Company or an Affiliate pursuant to the early
retirement provisions of the applicable pension plan of the Company or an
Affiliate or on or after attaining age 65.

     2.29 "Rule 16b-3" means Rule 16b-3, as promulgated under the Exchange Act,
           ----------                                                          
as amended from time to time, or any successor thereto.

     2.30 "Grossman/Issette Entities" means Larry S. Grossman and Arlen L.
           -------------------------                                      
Issette, their spouses, their heirs, and any group (within the meaning of
Section 13(d)(3) of the Exchange Act) of which any of Larry S. Grossman or Arlen
L. Issette, their spouses or their heirs is a member for purposes of acquiring,
holding or disposing of securities of the Company, any trust established by or
for the benefit of any of the foregoing and any other entity controlled by or
for the benefit of any of the foregoing.

     2.31 "Grossman/Issette Interest" means the beneficial ownership (within the
           -------------------------                                            
meaning of Rule 13d-3 promulgated under the Exchange Act) or the pecuniary
interest (within the meaning of Rule 16a-1 promulgated under the Exchange Act)
of the Grossman/Issette Entities in the outstanding voting securities of the
Company entitled to vote generally in the election of directors or such other
securities as may be specifically referenced.

                                      -4-
<PAGE>
 
     2.32 "Securities Act" means the Securities Act of 1933, as amended, and the
           --------------                                                       
rules and regulations promulgated thereunder.

     2.33 "Stock Appreciation Right" means a right granted under Article VII.
           ------------------------                                          

     2.34 "Stock Option" or "Option" means an option granted under Article VI.
           ------------      ------                                           

     2.35 "Termination of Employment" means the occurrence of any act or event
           -------------------------                                          
whether pursuant to an employment agreement or otherwise that actually or
effectively causes or results in the person's ceasing, for whatever reason, to
be an officer, independent contractor, director or employee of the Company or of
any Affiliate, or to be an officer, independent contractor, director or employee
of any entity that provides services to the Company or an Affiliate, including,
without limitation, death, Disability, dismissal, severance at the election of
the Participant, Retirement, or severance as a result of the discontinuance,
liquidation, sale or transfer by the Company or its Affiliates of all businesses
owned or operated by the Company or its Affiliates.  With respect to any person
who is not an employee with respect to the Company or an Affiliate, the
Agreement shall establish what act or event shall constitute a Termination of
Employment for purposes of the Plan.  A Termination of Employment shall occur to
an employee who is employed by an Affiliate if the Affiliate shall cease to be
an Affiliate and the Participant shall not immediately thereafter become an
employee of the Company or an Affiliate.

     In addition, certain other terms used herein have definitions given to them
in the first place in which they are used.

                                  ARTICLE III
                                  -----------

                                 ADMINISTRATION
                                 --------------

     3.1  Committee Structure and Authority.  The Plan shall be administered by
          ---------------------------------                                    
the Committee which, except as provided herein, may be comprised of one or more
persons.  The Committee shall be the Compensation Committee of the Board of
Directors, unless such committee does not exist or the Board establishes a
committee whose purpose is the administration of this Plan; provided that only
those members of the Compensation Committee of the Board who participate in the
decision relative to Awards under the Plan shall be deemed to be part of the
"Committee" for purposes of the Plan.  In the absence of an appointment, the
Board or the portion thereof that is a Disinterested Person shall be the
Committee.  A majority of the Committee shall constitute a quorum at any meeting
thereof (including telephone conference) and the acts of a majority of the
members present, or acts approved in writing by a majority of the entire
Committee without a meeting, shall be the acts of the Committee for purposes of
this Plan.  The Committee may authorize any one or more of its members or an
officer of the Company to execute and deliver documents on behalf of the
Committee.  On and after a Public Offering, the Committee shall be comprised of
only such number of Disinterested Persons as is required for application of Rule
16b-3 and the deduction of compensation under Section 162(m) of the Code. A
member of the Committee shall not exercise any discretion respecting himself or
herself under the Plan.  The Board shall have the authority to remove, replace
or fill any vacancy of any member of the Committee upon notice to the Committee
and the affected member.  Any member of the Committee may resign upon notice to
the Board.  The Committee may allocate among one

                                      -5-
<PAGE>
 
or more of its members, or may delegate to one or more of its agents, such
duties and responsibilities as it determines.

     Among other things, the Committee shall have the authority, subject to the
terms of the Plan:

          (a) to select those persons to whom Awards may be granted from time to
     time;

          (b) to determine whether and to what extent Stock Options, Stock
     Appreciation Rights, Restricted Stock and Deferred Stock or any combination
     thereof are to be granted hereunder;

          (c) to determine the number of shares of Common Stock to be covered by
     each Award granted hereunder;

          (d) to determine the terms and conditions of any Award granted
     hereunder (including, but not limited to, the Option Price, the Option
     Period, any exercise restriction or limitation and any exercise
     acceleration or forfeiture waiver regarding any Award and the shares of
     Common Stock relating thereto);

          (e) to adjust the terms and conditions, at any time or from time to
     time, of any Award, subject to the limitations of Section 12.1;

          (f) to determine to what extent and under what circumstances Common
     Stock and other amounts payable with respect to an Award shall be deferred;

          (g) to determine under what circumstances an Award may be settled in
     cash or Common Stock.

          (h) to provide for the forms of Agreement to be utilized in connection
     with this Plan;

          (i) to determine whether a Participant has a Disability or a
     Retirement;

          (j) to determine what securities law requirements are applicable to
     the Plan, Awards, and the issuance of shares of Common Stock and to require
     of a Participant that appropriate action be taken with respect to such
     requirements;

          (k) to cancel, with the consent of the Participant or as otherwise
     provided in the Plan or an Agreement, outstanding Awards;

          (l) to require as a condition of the exercise of an Award or the
     issuance or transfer of a certificate of Common Stock, the withholding from
     a Participant of the amount of any federal, state or local taxes as may be
     necessary in order for the Company or any other employer to obtain a
     deduction or as may be otherwise required by law;

                                      -6-
<PAGE>
 
          (m) to determine whether and with what effect a Participant has
     incurred a Termination of Employment;

          (n) to determine whether the Company or any other person has a right
     or obligation to purchase Common Stock from a Participant and, if so, the
     terms and conditions on which such Common Stock is to be purchased;

          (o) to determine the restrictions or limitations on the transfer of
     Common Stock;

          (p) to determine whether an Award is to be adjusted, modified or
     purchased, or is to become fully exercisable, under the Plan or the terms
     of an Agreement;

          (q) to determine the permissible methods of Award exercise and
payment, including cashless exercise arrangements;

          (r) to adopt, amend and rescind such rules and regulations as, in its
     opinion, may be advisable in the administration of the Plan; and

          (s) to appoint and compensate agents, counsel, auditors or other
     specialists to aid it in the discharge of its duties.

     The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of the
Plan and any Award issued under the Plan (and any Agreement) and to otherwise
supervise the administration of the Plan.  The Committee's policies and
procedures may differ with respect to Awards granted at different times.

     Any determination made by the Committee pursuant to the provisions of the
Plan shall be made in its sole discretion, and in the case of any determination
relating to an Award, may be made at the time of the grant of the Award or,
unless in contravention of any express term of the Plan or an Agreement, at any
time thereafter.  All decisions made by the Committee pursuant to the provisions
of the Plan shall be final and binding on all persons, including the Company and
Participants.  Any determination shall not be subject to de novo review if
                                                         -- ----          
challenged in court.

                                   ARTICLE IV
                                   ----------

                             STOCK SUBJECT TO PLAN
                             ---------------------

     4.1  Number of Shares.  Subject to the adjustment under Section 4.6, the
          ----------------                                                   
total number of shares of Common Stock reserved and available for distribution
pursuant to Awards under the Plan shall be Five Hundred Thousand (500,000)
shares of Common Stock authorized for issuance on the Effective Date.  Such
shares may consist, in whole or in part, of authorized and unissued shares or
treasury shares.

     4.2  Release of Shares.   Subject to Section 7.3(f), if any shares of
          -----------------                                               
Common Stock that have been optioned cease to be subject to an Award, if any
shares of Common Stock that are subject to any Award are forfeited or if any
Award otherwise terminates without issuance of 

                                      -7-
<PAGE>

shares of Common Stock being made to the Participant, such shares, in the
discretion of the Committee, may again be available for distribution in
connection with Awards under the Plan.
 
     4.3  Restrictions on Shares.  Shares of Common Stock issued upon exercise
          ----------------------                                              
of an Award shall be subject to the terms and conditions specified herein and to
such other terms, conditions and restrictions as the Committee in its discretion
may determine or provide in the Award Agreement.  The Company shall not be
required to issue or deliver any certificates for shares of Common Stock, cash
or other property prior to (i) the listing of such shares on any stock exchange
(or other public market) on which the Common Stock may then be listed (or
regularly traded), (ii) the completion of any registration or qualification of
such shares under federal or state law, or any ruling or regulation of any
government body which the Committee determines to be necessary or advisable, and
(iii) the satisfaction of any applicable withholding obligation in order for the
Company or an Affiliate to obtain a deduction with respect to the exercise of an
Award. The Company may cause any certificate for any share of Common Stock to be
delivered to be properly marked with a legend or other notation reflecting the
limitations on transfer of such Common Stock as provided in this Plan or as the
Committee may otherwise require.  The Committee may require any person
exercising an Award to make such representations and furnish such information as
it may consider appropriate in connection with the issuance or delivery of the
shares of Common Stock in compliance with applicable law or otherwise.
Fractional shares shall not be delivered, but shall be rounded to the next lower
whole number of shares.

     4.4  Stockholder Rights.  No person shall have any rights of a stockholder
          ------------------                                                   
as to shares of Common Stock subject to an Award until, after proper exercise of
the Award or other action required, such shares shall have been recorded on the
Company's official stockholder records as having been issued or transferred.
Upon exercise of the Award or any portion thereof, the Company will have thirty
(30) days in which to issue the shares, and the Participant will not be treated
as a stockholder for any purpose whatsoever prior to such issuance.  No
adjustment shall be made for cash dividends or other rights for which the record
date is prior to the date such shares are recorded as issued or transferred in
the Company's official stockholder records, except as provided herein or in an
Agreement.

     4.5  Best Efforts To Register.  If there has been a Public Offering, the
          ------------------------                                           
Company will register under the Securities Act the Common Stock delivered or
deliverable pursuant to Awards on Commission Form S-8 if available to the
Company for this purpose (or any successor or alternate form that is
substantially similar to that form to the extent available to effect such
registration), in accordance with the rules and regulations governing such
forms, as soon as such forms are available for registration to the Company for
this purpose.  The Company will use its best efforts to cause the registration
statement to become effective as soon as possible and will file such supplements
and amendments to the registration statement as may be necessary to keep the
registration statement in effect until the earliest of (a) one year following
the expiration of the Option Period of the last Option outstanding, (b) the date
the Company is no longer a reporting company under the Exchange Act and (c) the
date all Participants have disposed of all shares delivered pursuant to any
Award.  The Company may delay the foregoing obligation if the Committee
reasonably determines that any such registration would materially and adversely
affect the Company's interests or if there is no material benefit to
Participants, and in no event will the Company file any such registration
statement for a period of one (1) year following the effective date of the
Public Offering.

                                      -8-
<PAGE>
 
     4.6  Anti-Dilution.  In the event of any Company stock dividend, stock
          -------------                                                    
split, combination or exchange of shares, recapitalization or other change in
the capital structure of the Company, corporate separation or division of the
Company (including, but not limited to, a split- up, spin-off, split-off or
distribution to Company stockholders other than a normal cash dividend), sale by
the Company of all or a substantial portion of its assets (measured on either a
stand-alone or consolidated basis), reorganization, rights offering, a partial
or complete liquidation, or any other corporate transaction, Company share
offering or event involving the Company and having an effect similar to any of
the foregoing, then the Committee shall adjust or substitute, as the case may
be, the number of shares of Common Stock available for Awards under the Plan,
the number of shares of Common Stock covered by outstanding Awards, the exercise
price per share of outstanding Awards, and any other characteristics or terms of
the Awards as the Committee shall deem necessary or appropriate to reflect
equitably the effects of such changes to the Participants; provided, however,
that any fractional shares resulting from such adjustment shall be eliminated by
rounding to the next lower whole number of shares with appropriate payment for
such fractional share as shall reasonably be determined by the Committee.

                                   ARTICLE V
                                   ---------

                                  ELIGIBILITY
                                  -----------

     5.1  Eligibility.  Except as herein provided, the persons who shall be
          -----------                                                      
eligible to participate in the Plan and be granted Awards shall be those persons
who are officers, directors, employees, independent contractors or other service
providers of the Company or any Affiliate including, without limitation, the
officers, directors and employees of any other entity which provides services to
the Company or any Affiliate, who shall be in a position, in the opinion of the
Committee, to make contributions to the growth, management, protection and
success of the Company and its Affiliates.  Of those persons described in the
preceding sentence, the Committee may, from time to time, select persons to be
granted Awards and shall determine the terms and conditions with respect
thereto.  In making any such selection and in determining the form of the Award,
the Committee may give consideration to the functions and responsibilities of
the person's contributions to the Company and its Affiliates, the value of the
individual's service to the Company and its Affiliates and such other factors
deemed relevant by the Committee.  The Committee may designate in writing any
person who is not eligible to participate in the Plan if such person would
otherwise be eligible to participate in the Plan.

                                   ARTICLE VI
                                   ----------

                                 STOCK OPTIONS
                                 -------------

     6.1  General.  The Committee shall have authority to grant Options under
          -------                                                            
the Plan at any time or from time to time.  Stock Options may be granted alone
or in addition to other Awards and may be either Incentive Stock Options or Non-
Qualified Stock Options, provided, however, that Non-Qualified Stock Options may
be granted for no more than 250,000 shares of Common Stock, subject to
adjustment under Section 4.6.  An Option shall entitle the Participant to
receive shares of Common Stock upon exercise of such Option, subject to the
Participant's satisfaction in full of any conditions, restrictions or
limitations imposed in accordance with the Plan or an Agreement (the terms and
provisions of which may differ from other Agreements)

                                      -9-
<PAGE>
 
including without limitation, payment of the Option Price. During any calendar
year, Options for no more than 100,000 shares of Common Stock shall be granted
to any Participant.

     6.2  Grant and Exercise.  The grant of a Stock Option shall occur as of the
          ------------------                                                
date the Committee determines. Each Option granted under this Plan shall be
evidenced by an Agreement, in a form approved by the Committee, which shall
embody the terms and conditions of such Option and which shall be subject to the
express terms and conditions set forth in the Plan. Such Agreement shall become
effective upon execution by the Participant. Only a person who is a common-law
employee of the Company, any parent corporation of the Company or a subsidiary
(as such terms are defined in Section 424 of the Code) on the date of grant
shall be eligible to be granted an Option which is intended to be and is an
Incentive Stock Option. To the extent that any Stock Option is not designated as
an Incentive Stock Option or even if so designated does not qualify as an
Incentive Stock Option, it shall constitute a Non-Qualified Stock Option.
Anything in the Plan to the contrary notwithstanding, no term of the Plan
relating to Incentive Stock Options shall be interpreted, amended or altered,
nor shall any discretion or authority granted under the Plan be exercised, so as
to disqualify the Plan under Section 422 of the Code or, without the consent of
the Participant affected, to disqualify any Incentive Stock Option under such
Section 422.

     6.3  Terms and Conditions.  Stock Options shall be subject to such terms
          --------------------                                               
and conditions as shall be determined by the Committee, including the following:

     (a)  Option Period.  The Option Period of each Stock Option shall be fixed
          -------------                                                        
by the Committee; provided that no Non-Qualified Stock Option shall be
exercisable more than fifteen (15) years after the date the Stock Option is
granted.  In the case of an Incentive Stock Option, the Option Period shall not
exceed ten (10) years from the date of grant or five (5) years in the case of an
individual who owns more than ten percent (10%) of the combined voting power of
all classes of stock of the Company, a corporation which is a parent corporation
of the Company or any subsidiary of the Company (each as defined in Section 424
of the Code).  No Option which is intended to be an Incentive Stock Option shall
be granted more than ten (10) years from the date the Plan is adopted by the
Company or the date the Plan is approved by the stockholders of the Company,
whichever is earlier.

     (b)  Option Price.  The Option Price per share of the Common Stock
          ------------                                                 
purchasable under an Option shall be determined by the Committee.  If such
Option is intended to qualify as an Incentive Stock Option, the Option Price per
share shall be not less than the Fair Market Value per share on the date the
Option is granted, or where granted to an individual who owns or who is deemed
to own stock possessing more than ten percent (10%) of the combined voting power
of all classes of stock of the Company, a corporation which is a parent
corporation of the Company or any subsidiary of the Company (each as defined in
Section 424 of the Code), not less than one hundred ten percent (110%) of such
Fair Market Value per share.

     (c)  Exercisability.  Subject to Section 11.1, Stock Options shall be
          --------------                                                  
exercisable at such time or times and subject to such terms and conditions as
shall be determined by the Committee. If the Committee provides that any Stock
Option is exercisable only in installments, the Committee may at any time waive
such installment exercise provisions, in whole or in part.  In addition, the
Committee may at any time accelerate the exercisability of any Stock Option.

                                     -10-
<PAGE>
 
     (d)  Method of Exercise.  Subject to the provisions of this Article VI, a
          ------------------                                                  
Participant may exercise Stock Options, in whole or in part, at any time during
the Option Period by the Participant's giving written notice of exercise on a
form provided by the Committee (if available) to the Company specifying the
number of shares of Common Stock subject to the Stock Option to be purchased.
Such notice shall be accompanied by payment in full of the purchase price by
cash or check or such other form of payment as the Company may accept.  If
approved by the Committee, payment in full or in part may also be made (i) by
delivering Common Stock already owned by the Participant having a total Fair
Market Value on the date of such delivery equal to the Option Price; (ii) by the
execution and delivery of a note or other evidence of indebtedness (and any
security agreement thereunder) satisfactory to the Committee and permitted in
accordance with Section 6.3(e); (iii) by authorizing the Company to retain
shares of Common Stock which would otherwise be issuable upon exercise of the
Option having a total Fair Market Value on the date of delivery equal to the
Option Price; (iv) by the delivery of cash by a broker-dealer to whom the
Participant has submitted a notice of exercise (in accordance with Part 220,
Chapter II, Title 12 of the Code of Federal Regulations, so-called "cashless"
exercise); or (v) by any combination of the foregoing.  If payment of the Option
Price of a Non-Qualified Stock Option is made in whole or in part in the form of
Restricted Stock or Deferred Stock, the number of shares of Common Stock to be
received upon such exercise equal to the number of shares of Restricted Stock or
Deferred Stock used for payment of the Option Price shall be subject to the same
forfeiture restrictions or deferral limitations to which such Restricted Stock
or Deferred Stock was subject, unless otherwise determined by the Committee.  In
the case of an Incentive Stock Option, the right to make a payment in the form
of already owned shares of Common Stock of the same class as the Common Stock
subject to the Stock Option may be authorized only at the time the Stock Option
is granted.  No shares of Common Stock shall be issued until full payment
therefor has been made.  Subject to any forfeiture restrictions or deferral
limitations that may apply if a Stock Option is exercised using Restricted Stock
or Deferred Stock, a Participant shall have all of the rights of a stockholder
of the Company holding the class of Common Stock that is subject to such Stock
Option (including, if applicable, the right to vote the shares and the right to
receive dividends), when the Participant has given written notice of exercise,
has paid in full for such shares and such shares have been recorded on the
Company's official stockholder records as having been issued or transferred.

     (e)  Company Loan or Guarantee.  Upon the exercise of any Option and
          -------------------------
subject to the pertinent Agreement and the discretion of the Committee, the
Company may at the request of the Participant:

     (i)  lend to the Participant, with recourse, an amount equal to such
          portion of the Option Price as the Committee may determine; or
 
     (ii) guarantee a loan obtained by the Participant from a third-party for
          the purpose of tendering the Option Price.

The terms and conditions of any loan or guarantee, including the term, interest
rate, and any security interest thereunder, shall be determined by the
Committee, except that no extension of credit or guarantee shall obligate the
Company for an amount to exceed the lesser of the aggregate Fair Market Value
per share of the Common Stock on the date of exercise, less the par value of the
shares of Common Stock to be purchased upon the exercise of the Award, or the
amount

                                     -11-
<PAGE>
 
permitted under applicable laws or the regulations and rules of the
Federal Reserve Board and any other governmental agency having jurisdiction.

     (f)  Non-transferability of Options.  Except as provided herein or in an
          ------------------------------                                     
Agreement, no Stock Option or interest therein shall be transferable by the
Participant other than by will or by the laws of descent and distribution, and
all Stock Options shall be exercisable during the Participant's lifetime only by
the Participant.  If the Committee adopts Securities Exchange Act Release 
34-28869 of the Securities Exchange Commission the Committee may permit an Award
to be transferred pursuant to a domestic relations order which would be a
"qualified domestic relations order" as defined in Section 414 of the Code if
such section applied to the Award, but only to the extent consistent with an
Award's intended status as an Incentive Stock Option.

     6.4  Termination by Reason of Death.  Unless otherwise provided in an
          ------------------------------                                  
Agreement or determined by the Committee, if a Participant incurs a Termination
of Employment due to death, any unexpired and unexercised Stock Option held by
such Participant shall thereafter be fully exercisable for a period of one (1)
year (or such other period or no period as the Committee may specify)
immediately following the date of such death or until the expiration of the
Option Period, whichever period is the shorter.

     6.5  Termination by Reason of Disability.  Unless otherwise provided in an
          -----------------------------------                                  
Agreement or determined by the Committee, if a Participant incurs a Termination
of Employment due to a Disability, any unexpired and unexercised Stock Option
held by such Participant shall thereafter be fully exercisable by the
Participant for the period of one (1) year (or such other period or no period as
the Committee may specify) immediately following the date of such Termination of
Employment or until the expiration of the Option Period, whichever period is
shorter, and the Participant's death at any time following such Termination of
Employment due to Disability shall not affect the foregoing.  In the event of
Termination of Employment by reason of Disability, if an Incentive Stock Option
is exercised after the expiration of the exercise periods that apply for
purposes of Section 422 of the Code, such Stock Option will thereafter be
treated as a Non-Qualified Stock Option.

     6.6  Other Termination.  Unless otherwise provided in an Agreement or
          -----------------                                               
determined by the Committee, if a Participant incurs a Termination of Employment
due to Retirement, or the Termination of Employment is involuntary on the part
of the Participant (but is not due to death, Disability or with Cause), any
Stock Option held by such Participant shall thereupon terminate, except that
such Stock Option, to the extent then exercisable, may be exercised for the
lesser of the three-month period commencing with the date of such Termination of
Employment or until the expiration of the Option Period.  If the Participant
incurs a Termination of Employment which is either (a) voluntary on the part of
the Participant (and is not due to Retirement) or (b) with Cause, the Option
shall terminate immediately.  The death or Disability of a Participant after a
Termination of Employment otherwise provided herein shall not extend the
exercisability of the time permitted to exercise an Option.

     6.7  Cashing Out of Option.  On receipt of written notice of exercise, the
          ---------------------                                                
Committee may elect to cash out all or part of the portion of any Stock Option
to be exercised by paying the Participant an amount, in cash or Common Stock,
equal to the excess of the Fair Market Value of the Common Stock that is subject
to the Option over the Option Price times the number of

                                     -12-
<PAGE>
 
shares of Common Stock subject to the Option on the effective date of such cash
out. Cash outs relating to Options held by Participants who are actually or
potentially subject to Section 16(b) of the Exchange Act shall comply with the
"window period" provisions of Rule 16b-3, to the extent applicable, and, in the
case of cash outs of Non-Qualified Stock Options held by such Participants, the
Committee may determine Fair Market Value under the pricing rule set forth in
Section 7.3(b).

                                  ARTICLE VII
                                  -----------

                           STOCK APPRECIATION RIGHTS
                           -------------------------

     7.1  General.  The Committee shall have authority to grant Stock
          -------                                                    
Appreciation Rights under the Plan at any time or from time to time.  Subject to
the Participant's satisfaction in full of any conditions, restrictions or
limitations imposed in accordance with the Plan or an Agreement, a Stock
Appreciation Right shall entitle the Participant to surrender to the Company the
Stock Appreciation Right and to be paid therefor in shares of the Common Stock,
cash or a combination thereof as herein provided, the amount described in
Section 7.3(b).

     7.2  Grant.  Stock Appreciation Rights may be granted in conjunction with
          -----                                                               
all or part of any Stock Option granted under the Plan in which case the
exercise of the Stock Appreciation Right shall require the cancellation of a
corresponding portion of the Stock Option, and the exercise of the Stock Option
shall require the cancellation of a corresponding portion of the Stock
Appreciation Right.  In the case of a Non-Qualified Stock Option, such rights
may be granted either at or after the time of grant of such Stock Option.  In
the case of an Incentive Stock Option, such rights may be granted only at the
time of grant of such Stock Option.  A Stock Appreciation Right may also be
granted on a stand alone basis.  The grant of a Stock Appreciation Right shall
occur as of the date the Committee determines.  Each Stock Appreciation Right
granted under this Plan shall be evidenced by an Agreement, which shall embody
the terms and conditions of such Stock Appreciation Right and which shall be
subject to the terms and conditions set forth in the Plan.  During any calendar
year, no more than 100,000 Stock Appreciation Rights shall be granted to a
Participant.

     7.3  Terms and Conditions.  Stock Appreciation Rights shall be subject to
          --------------------                                                
such terms and conditions as shall be determined by the Committee, including the
following:

          (a) Period and Exercise.  The term of a Stock Appreciation Right shall
              -------------------                                               
     be established by the Committee.  If granted in conjunction with a Stock
     Option, the Stock Appreciation Right shall have a term which is the same as
     the Option Period and shall be exercisable only at such time or times and
     to the extent the related Stock Options would be exercisable in accordance
     with the provisions of Article VI.  A Stock Appreciation Right which is
     granted on a stand alone basis shall be for such period and shall be
     exercisable at such times and to the extent provided in an Agreement.
     Stock Appreciation Rights shall be exercised by the Participant's giving
     written notice of exercise on a form provided by the Committee (if
     available) to the Company specifying the portion of the Stock Appreciation
     Right to be exercised.

                                     -13-
<PAGE>
 
          (b) Amount.  Upon the exercise of a Stock Appreciation Right, a
              ------                                                     
     Participant shall be entitled to receive an amount in cash, shares of
     Common Stock or both as determined by the Committee or as otherwise
     permitted in an Agreement equal in value to the excess of the Fair Market
     Value per share of Common Stock over the Option Price per share of Common
     Stock specified in the related Agreement multiplied by the number of shares
     in respect of which the Stock Appreciation Right is exercised.  In the case
     of a Stock Appreciation Right granted on a stand alone basis, the Agreement
     shall specify the value to be used in lieu of the Option Price per share of
     Common Stock.  The aggregate Fair Market Value per share of the Common
     Stock shall be determined as of the date of exercise of such Stock
     Appreciation Right.

          (c) Special Rules.  In the case of Stock Appreciation Rights relating
              -------------                                                    
     to Stock Options held by Participants who are actually or potentially
     subject to Section 16(b) of the Exchange Act:

              (i)    The Committee may require that such Stock Appreciation
          Rights be exercised only in accordance with the applicable "window
          period" provisions of Rule 16b-3;

              (ii)   The Committee may provide that the amount to be paid upon
          exercise of such Stock Appreciation Rights (other than those relating
          to Incentive Stock Options) during a Rule 16b-3 "window period" shall
          be based on the highest mean sales price of the Common Stock on the
          principal exchange on which the Common Stock is traded, NASDAQ/NMS or
          other relevant market for determining value on any day during such
          "window period"; and

              (iii)  no Stock Appreciation Right shall be exercisable during
          the first six months of its term, except that this limitation shall
          not apply in the event of death or Disability of the Participant prior
          to the expiration of the six-month period.

          (d) Non-transferability of Stock Appreciation Rights.  Stock
              ------------------------------------------------        
     Appreciation Rights shall be transferable only when and to the extent that
     a Stock Option would be transferable under the Plan unless otherwise
     provided in an Agreement.

          (e) Termination.  A Stock Appreciation Right shall terminate at such
              -----------                                                     
     time as a Stock Option would terminate under the Plan, unless otherwise
     provided in an Agreement.

          (f) Effect on Shares Under the Plan.  Upon the exercise of a Stock
              -------------------------------                               
     Appreciation Right, the Stock Option or part thereof to which such Stock
     Appreciation Right is related shall be deemed to have been exercised for
     the purpose of the limitation set forth in Section 4.2 on the number of
     shares of Common Stock to be issued under the Plan, but only to the extent
     of the number of shares of Common Stock covered by the Stock Appreciation
     Right at the time of exercise based on the value of the Stock Appreciation
     Right at such time.

                                     -14-
<PAGE>
 
          (g) Incentive Stock Option.  A Stock Appreciation Right granted in
              ----------------------                                        
     tandem with an Incentive Stock Option shall not be exercisable unless the
     Fair Market Value of the Common Stock on the date of exercise exceeds the
     Option Price.  In no event shall any amount paid pursuant to the Stock
     Appreciation Right exceed the difference between the Fair Market Value on
     the date of exercise and the Option Price.

                                  ARTICLE VIII
                                  ------------

                                RESTRICTED STOCK
                                ----------------

     8.1  General.  The Committee shall have authority to grant Restricted Stock
          -------                                                               
under the Plan at any time or from time to time.  Shares of Restricted Stock may
be awarded either alone or in addition to other Awards granted under the Plan.
The Committee shall determine the persons to whom and the time or times at which
grants of Restricted Stock will be awarded, the number of shares of Restricted
Shares to be awarded to any Participant, the time or times within which such
Awards may be subject to forfeiture and any other terms and conditions of the
Awards.  Each Award shall be confirmed by, and be subject to the terms of, an
Agreement.  The Committee may condition the grant of Restricted Stock upon the
attainment of specified performance goals by the Participant or by the Company
or an Affiliate (including a division or department of the Company or an
Affiliate) for or within which the Participant is primarily employed or upon
such other factors or criteria as the Committee shall determine.  The provisions
of Restricted Stock Awards need not be the same with respect to any Participant.

     8.2  Awards and Certificates.  Notwithstanding the limitations on issuance
          -----------------------                                              
of shares of Common Stock otherwise provided in the Plan, each Participant
receiving an Award of Restricted Stock shall be issued a certificate in respect
of such shares of Restricted Stock.  Such certificate shall be registered in the
name of such Participant and shall bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such Award as determined by
the Committee.  The Committee may require that the certificates evidencing such
shares be held in custody by the Company until the restrictions thereon shall
have lapsed and that, as a condition of any Award of Restricted Stock, the
Participant shall have delivered a stock power, endorsed in blank, relating to
the Common Stock covered by such Award.

     8.3  Terms and Conditions.  Shares of Restricted Stock shall be subject to
          --------------------                                                 
the following terms and conditions:

          (a) Limitations on Transferability.  Subject to the provisions of the
              ------------------------------                                   
     Plan and the Agreement, during a period set by the Committee, commencing
     with the date of such Award (the "Restriction Period"), the Participant
     shall not be permitted to sell, assign, transfer, pledge or otherwise
     encumber any interest in shares of Restricted Stock.

          (b) Rights.  Except as provided in Section 8.3(a), the Participant
              ------                                                        
     shall have, with respect to the shares of Restricted Stock, all of the
     rights of a stockholder of the Company holding the class of Common Stock
     that is the subject of the Restricted Stock, including, if applicable, the
     right to vote the shares and the right to receive any cash dividends.
     Unless otherwise determined by the Committee and subject to the Plan, cash
     dividends on the class of Common Stock that is the subject of the
     Restricted Stock shall

                                     -15-
<PAGE>
 
     be automatically deferred and reinvested in additional Restricted Stock,
     and dividends on the class of Common Stock that is the subject of the
     Restricted Stock payable in Common Stock shall be paid in the form of
     Restricted Stock of the same class as the Common Stock on which such
     dividend was paid.

          (c) Criteria.  Based on service, performance by the Participant or by
              --------                                                         
     the Company or the Affiliate, including any division or department for
     which the Participant is employed or such other factors or criteria as the
     Committee may determine, the Committee may provide for the lapse of
     restrictions in installments and may accelerate the vesting of all or any
     part of any Award and waive the restrictions for all or any part of such
     Award.

          (d) Forfeiture.  Unless otherwise provided in an Agreement or
              ----------                                               
     determined by the Committee, if the Participant incurs a Termination of
     Employment during the Restriction Period due to death or Disability, the
     restrictions shall lapse and the Participant shall be fully vested in the
     Restricted Stock.  Except to the extent otherwise provided in the
     applicable Agreement and the Plan, upon a Participant's Termination of
     Employment for any reason during the Restriction Period other than death or
     Disability, all shares of Restricted Stock still subject to restriction
     shall be forfeited by the Participant, except the Committee shall have the
     discretion to waive in whole or in part any or all remaining restrictions
     with respect to any or all of such Participant's shares of Restricted
     Stock.

          (e) Delivery.  If and when the Restriction Period expires without a
              --------                                                       
     prior forfeiture of the Restricted Stock subject to such Restriction
     Period, unlegended certificates for such shares shall be delivered to the
     Participant.

          (f) Election.  A Participant may elect to further defer receipt of the
              --------                                                          
     Restricted Stock for a specified period or until a specified event, subject
     in each case to the Committee's approval and to such terms as are
     determined by the Committee.  Subject to any exceptions adopted by the
     Committee, such election must be made one (1) year prior to completion of
     the Restriction Period.

                                   ARTICLE IX
                                   ----------

                                 DEFERRED STOCK
                                 --------------

     9.1  General.  The Committee shall have authority to grant Deferred Stock
          -------                                                             
under the Plan at any time or from time to time.  Shares of Deferred Stock may
be awarded either alone or in addition to other Awards granted under the Plan.
The Committee shall determine the persons to whom and the time or times at which
Deferred Stock will be awarded, the number of shares of Deferred Stock to be
awarded to any Participant, the duration of the period (the "Deferral Period")
prior to which the Common Stock will be delivered, and the conditions under
which receipt of the Common Stock will be deferred and any other terms and
conditions of the Awards.  Each Award shall be confirmed by, and be subject to
the terms of, an Agreement.  The Committee may condition the grant of Deferred
Stock upon the attainment of specified performance goals by the Participant or
by the Company or an Affiliate, including a division or department of the
Company or an Affiliate for or within which the Participant is primarily

                                     -16-
<PAGE>
 
employed or upon such other factors or criteria as the Committee shall
determine. The provisions of Deferred Stock Awards need not be the same with
respect to any Participant.

     9.2  Terms and Conditions.  Deferred Stock Awards shall be subject to the
          --------------------                                                
following terms and conditions:

          (a) Limitations on Transferability.  Subject to the provisions of the
              ------------------------------                                   
     Plan and the Agreement, neither Deferred Stock Awards not any interest
     therein may be sold, assigned, transferred, pledged or otherwise encumbered
     during the Deferral Period.  At the expiration of the Deferral Period (or
     Elective Deferral Period as defined in Section 9.2(e), where applicable),
     the Committee may elect to deliver Common Stock, cash equal to the Fair
     Market Value of such Common Stock or a combination of cash and Common
     Stock, to the Participant for the shares covered by the Deferred Stock
     Award.

          (b) Rights.  Unless otherwise determined by the Committee and subject
              ------                                                           
     to the Plan, cash dividends on the Common Stock that is the subject of the
     Deferred Stock Award shall be automatically deferred and reinvested in
     additional Deferred Stock, and dividends on the Common Stock that is the
     subject of the Deferred Stock Award payable in Common Stock shall be paid
     in the form of Deferred Stock of the same class as the Common Stock on
     which such dividend was paid.

          (c) Criteria.  Based on service, performance by the Participant or by
              --------                                                         
     the Company or the Affiliate, including any division or department for
     which the Participant is employed or such other factors or criteria as the
     Committee may determine, the Committee may provide for the lapse of
     deferral limitations in installments and may accelerate the vesting of all
     or any part of any Award and waive the deferral limitations for all or any
     part of such Award.

          (d) Forfeiture.  Unless otherwise provided in an Agreement or
              ----------                                               
     determined by the Committee, if the Participant incurs a Termination of
     Employment during the Deferral Period due to death or Disability, the
     restrictions shall lapse and the Participant shall be fully vested in the
     Deferred Stock.  Unless otherwise provided in an Agreement or determined by
     the Committee, upon a Participant's Termination of Employment for any
     reason during the Deferral Period other than death or Disability, the
     rights to the shares still covered by the Award shall be forfeited by the
     Participant, except the Committee shall have the discretion to waive in
     whole or in part any or all remaining deferral limitations with respect to
     any or all of such Participant's Deferred Stock.

          (e) Election.  A Participant may elect to further defer receipt of the
              --------                                                          
     Deferred Stock payable under an Award (or an installment of an Award) for a
     specified period or until a specified event, subject in each case to the
     Committee's approval and to such terms as are determined by the Committee.
     Subject to any exceptions adopted by the Committee, such election must be
     made at one (1) year prior to completion of the Deferral Period for the
     Award.

                                     -17-
<PAGE>
 
                                   ARTICLE X
                                   ---------

             PROVISIONS APPLICABLE TO STOCK ACQUIRED UNDER THE PLAN
             ------------------------------------------------------

     10.1 Transfer of Shares.  A Participant may at any time make a  transfer of
          ------------------                                                    
shares of Common Stock received pursuant to the exercise of an Award to his
parents, spouse or descendants or to any trust for the benefit of the foregoing
or to a custodian under a uniform gifts to minors act or similar statute for the
benefit of any of the Participant's descendants.  Any transfer of shares
received pursuant to the exercise of an Award shall not be permitted or valid
unless and until the transferee agrees to be bound by the provisions of the
Plan, and any provision respecting Common Stock under the Agreement, provided
that "Termination of Employment" shall continue to refer to the Termination of
Employment of the Participant.

     10.2 Limited Transfer During Offering.  In the event there is an effective
          --------------------------------                                     
registration statement under the Securities Act pursuant to which shares of
Common Stock shall be offered for sale in an underwritten offering, a
Participant shall not, during the  period requested by the underwriters managing
the registered public offering, effect any public sale or distribution of shares
received directly or indirectly pursuant to an exercise of an Award.

     10.3 Committee Discretion.  The Committee may in its sole discretion
          --------------------                                           
include in any Agreement an obligation that the Company purchase a Participant's
shares of Common Stock received upon the exercise of an Award (including the
purchase of any unexercised Awards which have not expired), or may obligate a
Participant to sell shares of Common Stock to the Company upon such terms and
conditions as the Committee may determine and set forth in an Agreement.  The
provisions of this Article X shall be construed by the Committee in its sole
discretion, and shall be subject to such other terms and conditions as the
Committee may from time to time determine.  Notwithstanding any provision herein
to the contrary, the Company may upon determination by the Committee assign its
right to purchase shares of Common Stock under this Article X, whereupon the
assignee of such right shall have all the rights, duties and obligations of the
Company with respect to purchase of the shares of Common Stock.

     10.4 No Company Obligation.  None of the Company, an Affiliate or the
          ---------------------                                           
Committee shall have any duty or obligation to affirmatively disclose to a
record or beneficial holder of Common Stock or an Award, and such holder shall
have no right to be advised of any material information regarding the Company or
any Affiliate at any time prior to, upon or in connection with receipt or the
exercise of an Award or the Company's purchase of Common Stock or an Award from
such holder in accordance with the terms hereof.

     10.5 Sale of Grossman/Issette Interest.  Unless otherwise provided in an
          ---------------------------------                                  
Agreement, the Company shall give notice to each Participant with respect to a
sale or series of sales of any Grossman/Issette Interest other than a sale to a
Grossman/Issette Entity.  Upon receipt of such notice, each Participant shall,
if such notice so directs, sell to such proposed purchaser a percentage of the
Participant's shares of Common Stock owned and acquired pursuant to the Plan
(including any shares of Common Stock which could yet be acquired pursuant to an
Award) equal to that percentage of all shares of Common Stock owned by the
Grossman/Issette Entities which are to be sold by the Grossman/Issette Entities
to such purchaser on the same terms and

                                     -18-
<PAGE>
 
conditions, including at the price per share of Common Stock to be paid, as in
the sale by the Grossman/Issette Entities.


                                   ARTICLE XI
                                   ----------

                          CHANGE IN CONTROL PROVISIONS
                          ----------------------------

     11.1  Impact of Event.  Notwithstanding any other provision of the Plan to
           ---------------                                                     
the contrary, in the event of a Change in Control (as defined in Section 11.2),
other than a Change in Control consisting of a transaction approved by the Board
of Directors of the Company (which approval included the affirmative vote of
Larry S. Grossman, provided he is then a director, and of Arlen L. Issette,
provided he is then a director):

     (a)   Any Stock Appreciation Rights and Stock Options outstanding as of the
date such Change in Control and not then exercisable shall become fully
exercisable to the full extent of the original grant;

     (b)   The restrictions and deferral limitations applicable to any
Restricted Stock and Deferred Stock shall lapse, and such Restricted Stock and
Deferred Stock shall become free of all restrictions and become fully vested and
transferable to the full extent of the original grant.

     (c)   Notwithstanding any other provision of the Plan, unless the Committee
shall provide otherwise in an Agreement, a Participant shall have the right,
whether or not the Award is fully exercisable or may be otherwise realized by
the Participant, by giving notice during the 60-day period from and after a
Change in Control to the Company, to elect to surrender all or part of the Award
to the Company and to receive cash, within 30 days of such notice, in an amount
equal to the amount by which the "Change in Control Price" (as defined in
Section 11.3) per share of Common Stock on the date of such election shall
exceed the amount which the Participant must pay to exercise the Award per share
of Common Stock under the Award (the "Spread") multiplied by the number of
shares of Common Stock granted under the Award as to which the right granted
hereunder shall have been exercised; provided, however, that if the end of such
60-day period from and after a Change in Control is within six months of the
date of grant of the Award held by a Participant (except a Participant who has
died during such six month period) who is an officer or director of the Company
(within the meaning of Section 16(b) of the Exchange Act), such Award shall be
cancelled in exchange for a payment to the Participant at the time of the
Participant's Termination of Employment equal to the Spread multiplied by the
number of shares of Common Stock granted under the Award and increased from the
date of the change in control to the date of the Termination of Employment by
the prime rate as reported from time to time in The Wall Street Journal or other
general publication.  With respect to any Participant who is an officer or
director of the Company (within the meaning of Section 16(b) of the Exchange
Act), the 60-day period shall be extended, if necessary, to include the "window
period" of Rule 16(b)-3 which first commences on or after the date of the Change
in Control, and the Committee shall have sole discretion, if necessary, to
approve the Participant's exercise hereunder and the date in which the Spread is
calculated may be adjusted, if necessary, to a later date if necessary to avoid
liability to such Participant under Section 16(b).

                                     -19-
<PAGE>
 
     11.2 Definition of Change in Control.  For purposes of the Plan, a "Change
          -------------------------------                                      
in Control" shall mean the happening of any of the following events:

          (a)  (i)  An acquisition by any individual, entity or group (within
     the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a
     "Person") of the beneficial ownership (within the meaning of Rule 13d-3
     promulgated under the Exchange Act) of 20% or more of the then outstanding
     shares of common stock of the Company (the "Outstanding Company Common
     Stock") or the combined voting power of the then outstanding voting
     securities of the Company entitled to vote generally in the election of
     directors (the "Outstanding Company Voting Securities") or (ii) the
     approval by the stockholders of the Company of a reorganization, merger,
     consolidation, complete liquidation or dissolution of the Company, the sale
     or disposition of all or substantially all of the assets of the Company or
     similar corporate transaction (in each case referred to in this Section
     11.2 as a "Corporate Transaction") or, if consummation of such Corporate
     Transaction is subject, at the time of such approval by stockholders, to
     the consent of any government or governmental agency, the obtaining of such
     consent (either explicitly or implicitly); provided, in the case of the
     acquisition of beneficial ownership, that such acquisition would result in
     the Grossman/Issette Entities beneficially owning (within the meaning of
     Rule 13d-3 promulgated under the Exchange Act) following the acquisition or
     Corporate Transaction less than 40.1% of the Outstanding Company Common
     Stock or less than 40.1% of the Outstanding Company Voting Securities;
     excluding, however, the following: (i) any acquisition by or consummation
     of a or Corporate Transaction with any subsidiary of the Company or by an
     employee benefit plan (or related trust) sponsored or maintained by the
     Company or an Affiliate, (ii) any acquisition by or consummation of a
     Corporate Transaction with a Grossman/Issette Entity, (iii) the acquisition
     by or consummation of a Corporate Transaction with any Person who
     beneficially owned, immediately prior to such acquisition or Corporate
     Transaction, directly or indirectly, 20% or more of the Outstanding Company
     Common Stock or Outstanding Company Voting Securities, or (iv) any
     Corporate Transaction, if more than a majority of the beneficial ownership
     of the Outstanding Company Voting Securities after the Corporate
     Transaction is held directly or indirectly by Persons who held directly or
     indirectly the beneficial ownership of the Outstanding Company Voting
     Securities before the Corporate Transaction; or

          (b) A change in the composition of the Board such that the individuals
     who, as of the date of the Public Offering, constitute the Board (such
     Board shall be hereinafter referred to as the "Incumbent Board") cease for
     any reason to constitute at least a majority of the Board; provided,
     however, for purposes of this Section 11.2(b), that any individual who
     becomes a member of the Board subsequent to the date of the Company's
     Public Offering whose election, or nomination for election by the Company's
     stockholders, was approved by a vote of at least a majority of those
     individuals who are members of the Board and who were also members of the
     Incumbent Board (or deemed to be such pursuant to this proviso) shall be
     considered as though such individual were a member of the Incumbent Board;
     but, provided, further, that any such individual whose initial assumption
     of office occurs as a result of either an actual or threatened election
     contest (as such terms are used in Rule 14a-11 of Regulation 14A
     promulgated under the Exchange Act) or other actual or threatened
     solicitation of proxies or consents by or on behalf of a

                                     -20-
<PAGE>
 
     Person other than the Board shall not be so considered as a member of the
     Incumbent Board.

     11.3 Change in Control Price.  For purposes of the Plan, "Change in Control
          -----------------------                                               
Price" means the higher of (a) the highest reported sales price of a share of
Common Stock in any transaction reported on the principal exchange on which such
shares are listed or on NASDAQ/NMS during the 60-day period prior to and
including the date of a Change in Control or (b) if the Change in Control is the
result of a tender or exchange offer or a Corporate Transaction, the highest
price per share of Common Stock paid in such tender or exchange offer or a
Corporate Transaction, except that, in the case of Incentive Stock Options and
Stock Appreciation Rights relating to Incentive Stock Options, such price shall
be based only on the Fair Market Value of the Common Stock on the date such
Incentive Stock Option or Stock Appreciation Right is exercised.  To the extent
that the consideration paid in any such transaction described above consists all
or in part of securities or other non-cash consideration, the value of such
securities or other non-cash consideration shall be determined in the sole
discretion of the Committee.

                                  ARTICLE XII
                                  -----------

                                 MISCELLANEOUS
                                 -------------

     12.1 Amendments and Termination.  The Board may amend, alter, or
          --------------------------                                 
discontinue the Plan at any time, but no amendment, alteration or
discontinuation shall be made which would (a) impair the rights of a Participant
under a Stock Option, Stock Appreciation Right, Restricted Stock Award or
Deferred Stock Award theretofore granted without the Participant's consent,
except such an amendment made to cause the Plan to qualify for the exemption
provided by Rule 16b-3 or (b) disqualify the Plan from the exemption provided by
Rule 16b-3.  In addition, no such amendment shall be made without the approval
of the Company's stockholders to the extent such approval is required by law or
agreement.

     The Committee may amend the Plan at any time provided that (a) no amendment
shall impair the rights of any Participant under any Award theretofore granted
without the Participant's consent, (b) no amendment shall disqualify the Plan
from the exemption provided by Rule 16b-3, and (c) any amendment shall be
subject to the approval or rejection of the Board.

     The Committee may amend the terms of any Award or other Award theretofore
granted, prospectively or retroactively, but no such amendment shall impair the
rights of any Participant without the Participant's consent, except such an
amendment made to cause the Plan or Award to qualify for the exemption provided
by Rule 16b-3.  The Committee may also substitute new Stock Options or Stock
Appreciation Rights for previously granted Stock Options, including previously
granted Stock Options or Stock Appreciation Rights having higher Option Prices
but no such substitution shall be made which would impair the rights of
Participants under such Stock Option or Stock Appreciation Right theretofore
granted without the Participant's consent.

     Subject to the above provisions, the Board shall have authority to amend
the Plan to take into account changes in law and tax and accounting rules, as
well as other developments and to

                                     -21-
<PAGE>
 
grant Awards which qualify for beneficial treatment under such rules without
stockholder approval.

     12.2 Unfunded Status of Plan.  It is intended that the Plan be an
          -----------------------                                     
"unfunded" plan for incentive and deferred compensation.  The Committee may
authorize the creation of trusts or other arrangements to meet the obligations
created under the Plan to deliver Common Stock or make payments; provided,
however, that, unless the Committee otherwise determines, the existence of such
trusts or other arrangements is consistent with the "unfunded" status of the
Plan.

     12.3 General Provisions.
          ------------------ 

          (a) Representation.  The Committee may require each person purchasing
              --------------                                                   
     or receiving shares pursuant to an Award to represent to and agree with the
     Company in writing that such person is acquiring the shares without a view
     to the distribution thereof. The certificates for such shares may include
     any legend which the Committee deems appropriate to reflect any
     restrictions on transfer.

          (b) No Additional Obligation.  Nothing contained in the Plan shall
              ------------------------                                      
     prevent the Company or an Affiliate from adopting other or additional
     compensation arrangements for its employees.

          (c) Withholding.  No later than the date as of which an amount first
              -----------                                                     
     becomes includible in the gross income of the Participant for Federal
     income tax purposes with respect to any Award, the Participant shall pay to
     the Company (or other entity identified by the Committee), or make
     arrangements satisfactory to the Company or other entity identified by the
     Committee regarding the payment of, any Federal, state, local or foreign
     taxes of any kind required by law to be withheld with respect to such
     amount required in order for the Company or an Affiliate to obtain a
     current deduction.  If the Participant disposes of shares of Common Stock
     acquired pursuant to an Incentive Stock Option in any transaction
     considered to be a disqualifying transaction under the Code, the
     Participant must give written notice of such transfer and the Company shall
     have the right to deduct any taxes required by law to be withheld from any
     amounts otherwise payable to the Participant.  Unless otherwise determined
     by the Committee, withholding obligations may be settled with Common Stock,
     including Common Stock that is part of the Award that gives rise to the
     withholding requirement provided that any applicable requirements under
     Section 16 of the Exchange Act are satisfied.  The obligations of the
     Company under the Plan shall be conditional on such payment or
     arrangements, and the Company and its Affiliates shall, to the extent
     permitted by law, have the right to deduct any such taxes from any payment
     otherwise due to the Participant.

          (d) Reinvestment.  The reinvestment of dividends in additional
              ------------                                              
     Deferred or Restricted Stock at the time of any dividend payment shall only
     be permissible if sufficient shares of Common Stock are available for such
     reinvestment (taking into account then outstanding Options and other
     Awards).

                                     -22-
<PAGE>
 
          (e) Representation.  The Committee shall establish such procedures as
              --------------                                                   
     it deems appropriate for a Participant to designate a Representative to
     whom any amounts payable in the event of the Participant's death are to be
     paid.

          (f) Controlling Law.  The Plan and all Awards made and actions taken
              ---------------                                                 
     thereunder shall be governed by and construed in accordance with the laws
     of the State of Delaware (other than its law respecting choice of law).
     The Plan shall be construed to comply with all applicable law, and to avoid
     liability to the Company, an Affiliate or a Participant, including, without
     limitation, liability under Section 16(b) of the Exchange Act.

          (g) Offset.  Any amounts owed to the Company or an Affiliate by the
              ------                                                         
     Participant of whatever nature may be offset by the Company from the value
     of any shares of Common Stock,  cash or other thing of value under this
     Plan or an Agreement to be transferred to the Participant, and no shares of
     Common Stock, cash or other thing of value under this Plan or an Agreement
     shall be transferred unless and until all disputes between the Company and
     the Participant have been fully and finally resolved and the Participant
     has waived all claims to such against the Company or an Affiliate.

     12.4 Mitigation of Excise Tax.  If any payment or right accruing to a
          ------------------------                                        
Participant under this Plan (without the application of this Section 12.4),
either alone or together with other payments or rights accruing to the
Participant from the Company or an Affiliate ("Total Payments") would constitute
a "parachute payment" (as defined in Section 280G of the Code and regulations
thereunder), such payment or right shall be reduced to the largest amount or
greatest right that will result in no portion of the amount payable or right
accruing under the Plan being subject to an excise tax under Section 4999 of the
Code or being disallowed as a deduction under Section 280G of the Code.  The
determination of whether any reduction in the rights or payments under this Plan
is to apply shall be made by the Committee in good faith after consultation with
the Participant, and such determination shall be conclusive and binding on the
Participant.  The Participant shall cooperate in good faith with the Committee
in making such determination and providing the necessary information for this
purpose.  The foregoing provisions of this Section 12.4 shall apply with respect
to any person only if after reduction for any applicable federal excise tax
imposed by Section 4999 of the Code and federal income tax imposed by the Code,
the Total Payments accruing to such person would be less than the amount of the
Total Payments as reduced, if applicable, under the foregoing provisions of the
Plan and after reduction for only federal income taxes.

     12.5 Rights with Respect to Continuance of Employment.  Nothing contained
          ------------------------------------------------                    
herein shall be deemed to alter the relationship between the Company or an
Affiliate and a Participant, or the contractual relationship between a
Participant and the Company or an Affiliate if there is a written contract
regarding such relationship.  Nothing contained herein shall be construed to
constitute a contract of employment between the Company or an Affiliate and a
Participant.  The Company or an Affiliate and each of the Participants continue
to have the right to terminate the employment or service relationship at any
time for any reason, except as provided in a written contract.  The Company or
an Affiliate shall have no obligation to retain the Participant in its employ or
service as a result of this Plan.  There shall be no inference as to the length
of employment or service

                                     -23-
<PAGE>
 
hereby, and the Company or an Affiliate reserves the same rights to terminate
the Participant's employment or service as existed prior to the individual
becoming a Participant in this Plan.

     12.6  Awards in Substitution for Awards Granted by Other Corporations.
           ---------------------------------------------------------------  
Awards may be granted under the Plan from time to time in substitution for
awards held by employees, directors or service providers of other corporations
who are about to become officers, directors or employees of the Company or an
Affiliate as the result of a merger or consolidation of the employing
corporation with the Company or an Affiliate, or the acquisition by the Company
or an Affiliate of the assets of the employing corporation, or the acquisition
by the Company or Affiliate of the stock of the employing corporation, as the
result of which it becomes a designated employer under the Plan.  The terms and
conditions of the Awards so granted may vary from the terms and conditions set
forth in this Plan at the time of such grant as the majority of the members of
the Committee may deem appropriate to conform, in whole or in part, to the
provisions of the awards in substitution for which they are granted.

     12.7  Procedure for Adoption.  Any Affiliate of the Company may by
           ----------------------                                      
resolution of such Affiliate's board of directors, with the consent of the Board
of Directors and subject to such conditions as may be imposed by the Board of
Directors, adopt the Plan for the benefit of its employees as of the date
specified in the board resolution.

     12.8  Procedure for Withdrawal.  Any Affiliate which has adopted the Plan
           ------------------------                                           
may, by resolution of the board of directors of such direct or indirect
subsidiary, with the consent of the Board of Directors and subject to such
conditions as may be imposed by the Board of Directors, terminate its adoption
of the Plan.  If the Participant disposes of shares of Common Stock acquired
pursuant to an Incentive Stock Option in any transaction considered to be a
disqualifying transaction under the Code, the Participant must give written
notice of such transfer and the Company shall have the right to deduct any taxes
required by law to be withheld from any amounts otherwise payable to the
Participant.

     12.9  Delay.  If at the time a Participant incurs a Termination of
           -----                                                       
Employment (other than due to Cause) or if at the time of a Change in Control,
the Participant is subject to "short-swing" liability under Section 16 of the
Exchange Act, any time period provided for under the Plan or an Agreement to the
extent necessary to avoid the imposition of liability shall be suspended and
delayed during the period the Participant would be subject to such liability,
but not more than six (6) months and one (1) day and not to exceed the Option
Period, or the period for exercise of a Stock Appreciation Right as provided in
the Agreement, whichever is shorter.  The Company shall have the right to
suspend or delay any time period described in the Plan or an Agreement if the
Committee shall determine that the action may constitute a violation of any law
or result in liability under any law to the Company, an Affiliate or a
stockholder of the Company until such time as the action required or permitted
shall not constitute a violation of law or result in liability to the Company,
an Affiliate or a stockholder of the Company.  The Committee shall have the
discretion to suspend the application of the provisions of the Plan required
solely to comply with Rule 16b-3 if the Committee shall determine that Rule 16b-
3 does not apply to the Plan.

     12.10 Headings.  The headings contained in this Plan are for reference
           --------                                                        
purposes only and shall not affect the meaning or interpretation of this Plan.

                                     -24-
<PAGE>
 
     12.11     Severability.  If any provision of this Plan shall for any reason
               ------------                                                     
be held to be invalid or unenforceable, such invalidity or unenforceability
shall not effect any other provision hereby, and this Plan shall be construed as
if such invalid or unenforceable provision were omitted.

     12.12     Successors and Assigns.  This Plan shall inure to the benefit of
               ----------------------                                          
and be binding upon each successor and assign of the Company.  All obligations
imposed upon a Participant, and all rights granted to the Company hereunder,
shall be binding upon the Participant's heirs, legal representatives and
successors.

     12.13     Entire Agreement.  This Plan and the Agreement constitute the
               ----------------                                             
entire agreement with respect to the subject matter hereof and thereof, provided
that in the event of any inconsistency between the Plan and the Agreement, the
terms and conditions of the Agreement shall control.


     Executed on this 24th day of June, 1994.



                              FLUOROSCAN IMAGING SYSTEMS, INC.


                              By:___________________________________

                              Its:__________________________________



                                     -25-
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>5
<DESCRIPTION>1995 STOCK INCENTIVE PLAN
<TEXT>

<PAGE>
 
                                                                    Exhibit 99.2

                        FLUOROSCAN IMAGING SYSTEMS, INC.

                           1995 STOCK INCENTIVE PLAN
<PAGE>
 
                       FLUOROSCAN IMAGING SYSTEMS, INC.
                           1995 STOCK INCENTIVE PLAN

                               TABLE OF CONTENTS
                               -----------------
<TABLE>
<CAPTION>
                                                                           Page
                                                                           ----
<C>         <S>                                                            <C>
ARTICLE I   ESTABLISHMENT ..............................................     1
 
       1.1  Purpose ....................................................     1
 
ARTICLE II  DEFINITIONS ................................................     1
 
       2.1  Affiliate ..................................................     1
       2.2  Agreement or Award Agreement ...............................     1
       2.3  Award ......................................................     1
       2.4  Board of Directors or Board ................................     1
       2.5  Cause ......................................................     1
       2.6  Change in Control and Change in Control Price ..............     2
       2.7  Code or Internal Revenue Code ..............................     2
       2.8  Commission .................................................     2
       2.9  Committee ..................................................     2
      2.10  Common Stock ...............................................     2
      2.11  Company ....................................................     2
      2.12  Deferred Stock .............................................     2
      2.13  Disability .................................................     2
      2.14  Disinterested Person .......................................     2
      2.15  Effective Date .............................................     3
      2.16  Exchange Act ...............................................     3
      2.17  Fair Market Value ..........................................     3
      2.18  Grant Date .................................................     3
      2.19  Grossman/Issette Entities ..................................     3
      2.20  Grossman/Issette Interest ..................................     3
      2.21  Incentive Stock Option .....................................     3
      2.22  Non-Qualified Stock Option .................................     4
      2.23  Option Period ..............................................     4
      2.24  Option Price ...............................................     4
      2.25  Participant ................................................     4
      2.26  Plan .......................................................     4
      2.27  Representative .............................................     4
      2.28  Restricted Stock ...........................................     4
      2.29  Retirement .................................................     4
      2.30  Rule 16b-3 .................................................     4
      2.31  Securities Act .............................................     4
      2.32  Stock Appreciation Right ...................................     4
      2.33  Stock Option or Option .....................................     4
      2.34  Termination of Employment ..................................     5
</TABLE> 
                                      -i-
<PAGE>
 
<TABLE>
<CAPTION>

                                                                            Page
                                                                            ----
<S>             <C>                                                         <C>
ARTICLE III     ADMINISTRATION ..........................................    5
 
     3.1        Committee Structure and Authority .......................    5
 
ARTICLE IV      STOCK SUBJECT TO PLAN ...................................    7
 
     4.1        Number of Shares ........................................    7
     4.2        Release of Shares .......................................    7
     4.3        Restrictions on Shares ..................................    8
     4.4        Stockholder Rights ......................................    8
     4.5        Best Efforts to Register ................................    8
     4.6        Anti-Dilution ...........................................    9
 
ARTICLE V       ELIGIBILITY .............................................    9
 
     5.1        Eligibility .............................................    9
 
ARTICLE VI      STOCK OPTIONS ...........................................    9
 
     6.1        General .................................................    9
     6.2        Grant and Exercise ......................................   10
     6.3        Terms and Conditions ....................................   10
     6.4        Termination by Reason of Death ..........................   12
     6.5        Termination by Reason of Disability .....................   12
     6.6        Other Termination .......................................   12
     6.7        Cashing Out of Option ...................................   13
 
ARTICLE VII     STOCK APPRECIATION RIGHTS ...............................   13
 
     7.1        General .................................................   13
     7.2        Grant ...................................................   13
     7.3        Terms and Conditions ....................................   13
 
ARTICLE VIII    RESTRICTED STOCK ........................................   15
 
     8.1        General .................................................   15
     8.2        Awards and Certificates .................................   15
     8.3        Terms and Conditions ....................................   16
</TABLE>

                                     -ii-
<PAGE>
 
<TABLE>
<CAPTION>

                                                                            Page
                                                                            ----
<S>            <C>                                                           <C>
ARTICLE IX     DEFERRED STOCK ..........................................     17
 
     9.1       General .................................................     17
     9.2       Terms and Conditions ....................................     17
 
ARTICLE X      PROVISIONS APPLICABLE TO STOCK ACQUIRED
                UNDER THE PLAN .........................................     18
 
     10.1      Transfer of Shares ......................................     18
     10.2      Limited Transfer During Offering ........................     18
     10.3      Committee Discretion ....................................     18
     10.4      No Company Obligation ...................................     19
     10.5      Sale of Grossman/Issette Interest .......................     19
 
ARTICLE XI     CHANGE IN CONTROL PROVISIONS ............................     19
 
     11.1      Impact of Event .........................................     19
     11.2      Definition of Change in Control .........................     20
     11.3      Change in Control Price .................................     21
 
ARTICLE XII    MISCELLANEOUS ...........................................     21
 
     12.1      Amendments and Termination ..............................     21
     12.2      Unfunded Status of Plan .................................     22
     12.3      General Provisions ......................................     22
     12.4      Mitigation of Excise Tax ................................     23
     12.5      Rights with Respect to Continuance of
               Employment ..............................................     24
     12.6      Awards in Substitution for Awards Granted
               by Other Corporations ...................................     24
     12.7      Procedure for Adoption ..................................     24
     12.8      Procedure for Withdrawal ................................     24
     12.9      Delay ...................................................     25
     12.10     Headings ................................................     25
     12.11     Severability ............................................     25
     12.12     Successors and Assigns ..................................     25
     12.13     Entire Agreement ........................................     25
</TABLE>

                                     -iii-
<PAGE>
 
                        FLUOROSCAN IMAGING SYSTEMS, INC.

                           1995 STOCK INCENTIVE PLAN


                                   ARTICLE I
                                   ---------

                                 ESTABLISHMENT
                                 -------------

     1.1  Purpose.
          ------- 

     The FluoroScan Imaging Systems, Inc. 1995 Stock Incentive Plan ("Plan") is
hereby established by FluoroScan Imaging Systems, Inc. ("Company").  The purpose
of the Plan is to promote the overall financial objectives of the Company and
its stockholders by motivating those persons selected to participate in the Plan
to achieve long-term growth in stockholder equity in the Company and by
retaining the association of those individuals who are instrumental in achieving
this growth.  The Plan and the grant of awards thereunder is expressly
conditioned upon the Plan's approval by the security holders of the Company.  If
such approval is not obtained, then this Plan and all Awards thereunder shall be
null and void ab initio.  The Plan is adopted effective as of March 19, 1995.
              -- ------                                                      


                                   ARTICLE II
                                   ----------

                                  DEFINITIONS
                                  -----------

     For purposes of the Plan, the following terms are defined as set forth
below:

     2.1  "Affiliate" means any individual, corporation, partnership,
           ---------                                                 
association, joint-stock company, trust, unincorporated association or other
entity (other than the Company) that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with, the
Company including, without limitation, any member of an affiliated group of
which the Company is a common parent corporation as provided in Section 1504 of
the Code.

     2.2  "Agreement" or "Award Agreement" means, individually or collectively,
           ---------      ---------------                                      
any agreement entered into pursuant to the Plan pursuant to which an Award is
granted to a Participant.

     2.3  "Award" means a Stock Option, Stock Appreciation Right, Restricted
           -----                                                            
Stock or Deferred Stock.

     2.4  "Board of Directors" or "Board" means the Board of Directors of the
           ------------------      -----                                     
Company.

     2.5  "Cause" shall mean, for purposes of whether and when a Participant has
           -----                                                                
incurred a Termination of Employment for Cause, any act or omission which
permits the Company to 
<PAGE>
 
terminate the arrangement or written agreement between the Participant and the
Company or an Affiliate for Cause as defined in such arrangement or agreement,
or in the event there is no such arrangement or agreement or the arrangement or
agreement does not define the term "cause," then Cause shall mean (a) any act or
failure to act deemed to constitute cause under the Company's established
practices, policies or guidelines applicable to the Participant or (b) the
Participant's act or omission constituting gross misconduct with respect to the
Company or an Affiliate in any material respect.

     2.6  "Change in Control" and "Change in Control Price" have the meanings
           -----------------       -----------------------                   
set forth in Sections 11.2 and 11.3, respectively.

     2.7  "Code" or "Internal Revenue Code" means the Internal Revenue Code of
           ----      ---------------------                                    
1986, as amended, final Treasury Regulations thereunder and any subsequent
Internal Revenue Code.

     2.8  "Commission" means the Securities and Exchange Commission or any
           ----------                                                     
successor agency.

     2.9   "Committee" means the person or persons appointed by the Board of
            ---------                                                       
Directors to administer the Plan, as further described herein.

     2.10  "Common Stock" means the shares of the regular voting common stock
            ------------                                                     
of the Company, $.0001 par value, whether presently or hereafter issued, and any
other stock or security resulting from adjustment thereof as described
hereinafter or the common stock of any successor to the Company which is
designated for the purpose of the Plan.

     2.11  "Company" means  FluoroScan Imaging Systems, Inc., a Delaware
            -------                                                     
corporation, and includes any successor or assignee corporation or corporations
into which the Company may be merged, changed or consolidated; any corporation
for whose securities the securities of the Company shall be exchanged; and any
assignee of or successor to substantially all of the assets of the Company.

     2.12  "Deferred Stock" means an award made pursuant to Article IX.
            --------------                                             

     2.13  "Disability" means a mental or physical illness that entitles the
            ----------                                                      
Participant to receive benefits under the long term disability plan of the
Company or an Affiliate, or if the Participant is not covered by such a plan or
the Participant is not an employee of the Company or an Affiliate, a mental or
physical illness that renders a Participant totally and permanently incapable of
performing the Participant's duties for the Company or an Affiliate.
Notwithstanding the foregoing, a Disability shall not qualify under this Plan if
it is the result of (i) a willfully self- inflicted injury or willfully self-
induced sickness; or (ii) an injury or disease contracted, suffered, or
incurred, while participating in a criminal offense.  The determination of
Disability shall be made by the Committee.  The determination of Disability for
purposes of this Plan shall not be construed to be an admission of disability
for any other purpose.

     2.14  "Disinterested Person" shall have the meaning set forth in Rule 16b-
            --------------------                                              
3, or any successor definition adopted by the Commission, and shall mean a
person who is also an "outside director" under Section 162(m) of the Code.

                                      -2-
<PAGE>
 
     2.15  "Effective Date" means March 19, 1995.
            --------------                       

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

     2.17  "Fair Market Value" means the value determined on the basis of the
            -----------------                                                
good faith determination of the Committee, without regard to whether the Common
Stock is restricted or represents a minority interest, pursuant to the
applicable method described below:

               (a) if the Common Stock is listed on a national securities
           exchange or quoted on the Nasdaq National Market System
           ("NASDAQ/NMS"), the closing price of the Common Stock on the relevant
           date (or, if such date is not a business day or a day on which
           quotations are reported, then on the immediately preceding date on
           which quotations were reported), as reported by the principal
           national exchange on which such shares are traded (in the case of an
           exchange) or by the NASDAQ/NMS, as the case may be;

               (b) if the Common Stock is not listed on a national securities
           exchange or quoted on the NASDAQ/NMS, but is actively traded in the
           over-the-counter market, the average of the closing bid and asked
           prices for the Common Stock on the relevant date (or, if such date is
           not a business day or a day on which quotations are reported, then on
           the immediately preceding date on which quotations were reported), or
           the most recent preceding date for which such quotations are
           reported; and

               (c) if, on the relevant date, the Common Stock is not publicly
           traded or reported as described in (i) or (ii), the value determined
           in good faith by the Committee.

     2.18 "Grant Date" means the date as of which an Award is granted pursuant
           ----------                                                         
to the Plan.

     2.19 "Grossman/Issette Entities" means Larry S. Grossman and Arlen L.
           -------------------------                                      
Issette, their spouses, their heirs, and any group (within the meaning of
Section 13(d)(3) of the Exchange Act) of which any of Larry S. Grossman or Arlen
L. Issette, their spouses or their heirs is a member for purposes of acquiring,
holding or disposing of securities of the Company, any trust established by or
for the benefit of any of the foregoing and any other entity controlled by or
for the benefit of any of the foregoing.

     2.20 "Grossman/Issette Interest" means the beneficial ownership (within the
           -------------------------                                            
meaning of Rule 13d-3 promulgated under the Exchange Act) or the pecuniary
interest (within the meaning of Rule 16a-1 promulgated under the Exchange Act)
of the Grossman/Issette Entities in the outstanding voting securities of the
Company entitled to vote generally in the election of directors or such other
securities as may be specifically referenced.

     2.21 "Incentive Stock Option" means any Stock Option intended to be and
           ----------------------                                           
designated as an "incentive stock option" within the meaning of Section 422 of
the Code.

                                      -3-
<PAGE>
 
     2.22 "Non-Qualified Stock Option" means an Option to purchase Common Stock
           --------------------------                                          
in the Company granted under the Plan which is taxed pursuant to Section 83 of
the Code.

     2.23 "Option Period" means the period during which the Option shall be
           -------------                                                   
exercisable in accordance with the Agreement and Article VI.

     2.24 "Option Price" means the price at which the Common Stock may be
           ------------                                                  
purchased under an Option as provided in Section 6.3.

     2.25 "Participant" means a person who satisfies the eligibility conditions
           -----------                                                         
of Article V and to whom an Award has been granted by the Committee under the
Plan, and in the event a Representative is appointed for a Participant or
another person becomes a Representative, then the term "Participant" shall mean
such Representative.  The term shall also include a trust for the benefit of the
Participant, the Participant's parents, spouse or descendants, or a custodian
under a uniform gifts to minors act or similar statute for the benefit of the
Participant's descendants, to the extent permitted by the Committee and not
inconsistent with Rule 16b-3.  Notwithstanding the foregoing, the term
"Termination of Employment" shall mean the Termination of Employment of the
Participant.

     2.26 "Plan" means this FluoroScan Imaging Systems, Inc. 1995 Stock
           ----                                                        
Incentive Plan, as the same may be amended from time to time.

     2.27 "Representative" means (a) the person or entity acting as the executor
           --------------                                                       
or administrator of a Participant's estate pursuant to the last will and
testament of such Participant or pursuant to the laws of the jurisdiction in
which the Participant had the Participant's primary residence at the date of the
Participant's death; (b) the person or entity acting as the guardian or
temporary guardian of a Participant; (c) the person or entity which is the
beneficiary of the Participant upon or following the Participant's death; or (d)
any person to whom an Option has been permissibly transferred; provided that
only one of the foregoing shall be the Representative at any point in time as
determined under applicable law and recognized by the Committee.

     2.28 "Restricted Stock" means an award under Article VIII.
           ----------------                                    

     2.29 "Retirement" means the Participant's Termination of Employment from
           ----------                                                        
active employment with the Company or an Affiliate pursuant to the early
retirement provisions of the applicable pension plan of the Company or an
Affiliate or, if the Participant is not covered by such a plan, on or after
attaining age 65.

     2.30 "Rule 16b-3" means Rule 16b-3, as promulgated under the Exchange Act,
           ----------                                                          
as amended from time to time, or any successor thereto.

     2.31 "Securities Act" means the Securities Act of 1933, as amended, and the
           --------------                                                       
rules and regulations promulgated thereunder.

     2.32 "Stock Appreciation Right" means a right granted under Article VII.
           ------------------------                                          

     2.33 "Stock Option" or "Option" means an option granted under Article VI.
           ------------      ------                                           

                                      -4-
<PAGE>
 
     2.34 "Termination of Employment" means the occurrence of any act or event
           -------------------------                                          
whether pursuant to an employment agreement or otherwise that actually or
effectively causes or results in the person's ceasing, for whatever reason, to
be an officer, independent contractor, consultant, advisor, director or employee
of the Company or of any Affiliate, or to be an officer, independent contractor,
director or employee of any entity that provides services to the Company or an
Affiliate, including, without limitation, death, Disability, dismissal,
severance at the election of the Participant, Retirement, or severance as a
result of the discontinuance, liquidation, sale or transfer by the Company or
its Affiliates of all businesses owned or operated by the Company or its
Affiliates.  With respect to any person who is not an employee with respect to
the Company or an Affiliate, the Agreement shall establish what act or event
shall constitute a Termination of Employment for purposes of the Plan.  A
transfer of employment from the Company to an Affiliate, or from an Affiliate to
the Company, shall not be deemed a Termination of Employment unless expressly
determined by the Committee.  A Termination of Employment shall occur to an
employee who is employed by an Affiliate if the Affiliate shall cease to be an
Affiliate and the Participant shall not immediately thereafter become an
employee of the Company or an Affiliate.

     In addition, certain other terms used herein have definitions given to them
in the first place in which they are used.


                                  ARTICLE III
                                  -----------

                                 ADMINISTRATION
                                 --------------

     3.1  Committee Structure and Authority.  The Plan shall be administered by
          ---------------------------------                                    
the Committee which shall be comprised of at least two Disinterested Persons.
The Committee shall be the Compensation Committee of the Board of Directors,
unless such committee does not exist or the Board establishes a committee whose
sole purpose is the administration of this Plan; provided that only those
members of the Compensation Committee of the Board who participate in the
decision relative to Awards under the Plan shall be deemed to be part of the
"Committee" for purposes of the Plan.  In the absence of an appointment, the
Board or the portion thereof that is a Disinterested Person shall be the
Committee.  A majority of the Committee shall constitute a quorum at any meeting
thereof (including telephone conference) and the acts of a majority of the
members present, or acts approved in writing by a majority of the entire
Committee without a meeting, shall be the acts of the Committee for purposes of
this Plan.  The Committee may authorize any one or more of its members or an
officer of the Company to execute and deliver documents on behalf of the
Committee.  The Committee shall be comprised of only such number of
Disinterested Persons as is required for application of Rule 16b-3 and the
deduction of compensation under Section 162(m) of the Code.  A member of the
Committee shall not exercise any discretion respecting himself or herself under
the Plan.  The Board shall have the authority to remove, replace or fill any
vacancy of any member of the Committee upon notice to the Committee and the
affected member.  Any member of the Committee may resign upon notice to the
Board.  The Committee may allocate among one or more of its members, or may
delegate to one or more of its agents, such duties and responsibilities as it
determines.

     Among other things, the Committee shall have the authority, subject to the
terms of the Plan:

                                      -5-
<PAGE>
 
     (a) to select those persons to whom Awards may be granted from time to 
time;

     (b) to determine whether and to what extent Stock Options, Stock
Appreciation Rights, Restricted Stock and Deferred Stock or any combination
thereof are to be granted hereunder;

     (c) to determine the number of shares of Common Stock to be covered by each
Award granted hereunder;

     (d) to determine the terms and conditions of any Award granted hereunder
(including, but not limited to, the Option Price, the Option Period, any
exercise restriction or limitation and any exercise acceleration or forfeiture
waiver regarding any Award and the shares of Common Stock relating thereto);

     (e) to adjust the terms and conditions, at any time or from time to time,
of any Award, subject to the limitations of Section 12.1;

     (f) to determine to what extent and under what circumstances Common Stock
and other amounts payable with respect to an Award shall be deferred;

     (g) to determine under what circumstances an Award may be settled in cash
or Common Stock.

     (h) to provide for the forms of Agreement to be utilized in connection with
this Plan;

     (i) to determine whether a Participant has a Disability or a Retirement;

     (j) to determine what securities law requirements are applicable to the
Plan, Awards, and the issuance of shares of Common Stock and to require of a
Participant that appropriate action be taken with respect to such requirements;

     (k) to cancel, with the consent of the Participant or as otherwise provided
in the Plan or an Agreement, outstanding Awards;

     (l) to interpret and make a final determination with respect to the number
of shares of Common Stock available under this Plan;

     (m) to require as a condition of the exercise of an Award or the issuance
or transfer of a certificate of Common Stock, the withholding from a Participant
of the amount of any federal, state or local taxes as may be necessary in order
for the Company or any other employer to obtain a deduction or as may be
otherwise required by law;

     (n) to determine whether and with what effect a Participant has incurred a
Termination of Employment;

                                      -6-
<PAGE>
 
        (o) to determine whether the Company or any other person has a right or
     obligation to purchase Common Stock from a Participant and, if so, the
     terms and conditions on which such Common Stock is to be purchased;

        (p) to determine the restrictions or limitations on the transfer of
     Common Stock;

        (q) to determine whether an Award is to be adjusted, modified or
     purchased, or is to become fully exercisable, under the Plan or the terms
     of an Agreement;

        (r) to determine the permissible methods of Award exercise and payment,
     including cashless exercise arrangements;

        (s) to adopt, amend and rescind such rules and regulations as, in its
     opinion, may be advisable in the administration of the Plan; and

        (t) to appoint and compensate agents, counsel, auditors or other
     specialists to aid it in the discharge of its duties.

     The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of the
Plan and any Award issued under the Plan (and any Agreement) and to otherwise
supervise the administration of the Plan.  The Committee's policies and
procedures may differ with respect to Awards granted at different times or to
different Participants or with respect to different Awards granted at the same
time to a single Participant.

     Any determination made by the Committee pursuant to the provisions of the
Plan shall be made in its sole discretion, and in the case of any determination
relating to an Award, may be made at the time of the grant of the Award or,
unless in contravention of any express term of the Plan or an Agreement, at any
time thereafter.  All decisions made by the Committee pursuant to the provisions
of the Plan shall be final and binding on all persons, including the Company and
Participants.  Any determination shall not be subject to de novo review if
                                                         -- ----          
challenged in court.


                                   ARTICLE IV
                                   ----------

                             STOCK SUBJECT TO PLAN
                             ---------------------

     4.1  Number of Shares.  Subject to the adjustment under Section 4.6, the
          ----------------                                                   
total number of shares of Common Stock reserved and available for distribution
pursuant to Awards under the Plan shall be Five Hundred Thousand (500,000)
shares of Common Stock authorized for issuance on the Effective Date.  Such
shares may consist, in whole or in part, of authorized and unissued shares or
treasury shares.

     4.2  Release of Shares.   Subject to Section 7.3(f), if any shares of
          -----------------                                               
Common Stock that have been optioned cease to be subject to an Award, if any
shares of Common Stock that are subject to any Award are forfeited, if any Award
otherwise terminates without issuance of shares of Common Stock being made to
the Participant, or if any shares (whether or not restricted) of 

                                      -7-
<PAGE>
 
Common Stock are received by the Company in connection with the exercise of an
Award, such shares, in the discretion of the Committee, may again be available
for distribution in connection with Awards under the Plan.

     4.3  Restrictions on Shares.  Shares of Common Stock issued upon exercise
          ----------------------                                              
of an Award shall be subject to the terms and conditions specified herein and to
such other terms, conditions and restrictions as the Committee in its discretion
may determine or provide in the Award Agreement.  The Company shall not be
required to issue or deliver any certificates for shares of Common Stock, cash
or other property prior to (i) the listing of such shares on any stock exchange
(or other public market) on which the Common Stock may then be listed (or
regularly traded), (ii) the completion of any registration or qualification of
such shares under federal or state law, or any ruling or regulation of any
government body which the Committee determines to be necessary or advisable, and
(iii) the satisfaction of any applicable withholding obligation in order for the
Company or an Affiliate to obtain a deduction with respect to the exercise of an
Award. The Company may cause any certificate for any share of Common Stock to be
delivered to be properly marked with a legend or other notation reflecting the
limitations on transfer of such Common Stock as provided in this Plan or as the
Committee may otherwise require.  The Committee may require any person
exercising an Award to make such representations and furnish such information as
it may consider appropriate in connection with the issuance or delivery of the
shares of Common Stock in compliance with applicable law or otherwise.
Fractional shares shall not be delivered, but shall be rounded to the next lower
whole number of shares.

     4.4  Stockholder Rights.  No person shall have any rights of a stockholder
          ------------------                                                   
as to shares of Common Stock subject to an Award until, after proper exercise of
the Award or other action required, such shares shall have been recorded on the
Company's official stockholder records as having been issued or transferred.
Upon exercise of the Award or any portion thereof, the Company will have thirty
(30) days in which to issue the shares, and the Participant will not be treated
as a stockholder for any purpose whatsoever prior to such issuance.  No
adjustment shall be made for cash dividends or other rights for which the record
date is prior to the date such shares are recorded as issued or transferred in
the Company's official stockholder records, except as provided herein or in an
Agreement.

     4.5  Best Efforts To Register.  The Company will register under the
          ------------------------                                      
Securities Act the Common Stock delivered or deliverable pursuant to Awards on
Commission Form S-8 if available to the Company for this purpose (or any
successor or alternate form that is substantially similar to that form to the
extent available to effect such registration), in accordance with the rules and
regulations governing such forms, as soon as such forms are available for
registration to the Company for this purpose.  The Company will use its best
efforts to cause the registration statement to become effective as soon as
possible and will file such supplements and amendments to the registration
statement as may be necessary to keep the registration statement in effect until
the earliest of (a) one year following the expiration of the Option Period of
the last Option outstanding, (b) the date the Company is no longer a reporting
company under the Exchange Act and (c) the date all Participants have disposed
of all shares delivered pursuant to any Award.  The Company may delay the
foregoing obligation if the Committee reasonably determines that any such
registration would materially and adversely affect the Company's interests or if
there is no material benefit to Participants, and in no event will the Company
file any such registration 

                                      -8-
<PAGE>
 
statement prior to July 11, 1995 (one (1) year following the effective date of
the Company's initial public offering).

     4.6  Anti-Dilution.  In the event of any Company stock dividend, stock
          -------------                                                    
split, combination or exchange of shares, recapitalization or other change in
the capital structure of the Company, corporate separation or division of the
Company (including, but not limited to, a split- up, spin-off, split-off or
distribution to Company stockholders other than a normal cash dividend), sale by
the Company of all or a substantial portion of its assets (measured on either a
stand-alone or consolidated basis), reorganization, rights offering, a partial
or complete liquidation, or any other corporate transaction, Company share
offering or event involving the Company and having an effect similar to any of
the foregoing, then the Committee shall adjust or substitute, as the case may
be, the number of shares of Common Stock available for Awards under the Plan,
the number of shares of Common Stock covered by outstanding Awards, the exercise
price per share of outstanding Awards, and any other characteristics or terms of
the Awards as the Committee shall deem necessary or appropriate to reflect
equitably the effects of such changes to the Participants; provided, however,
that any fractional shares resulting from such adjustment shall be eliminated by
rounding to the next lower whole number of shares with appropriate payment for
such fractional share as shall reasonably be determined by the Committee.


                                   ARTICLE V
                                   ---------

                                  ELIGIBILITY
                                  -----------

     5.1  Eligibility.  Except as herein provided, the persons who shall be
          -----------                                                      
eligible to participate in the Plan and be granted Awards shall be those persons
who are officers, directors, employees, consultants, advisors, independent
contractors or other service providers of the Company or any Affiliate
including, without limitation, the officers, directors and employees of any
other entity which provides services to the Company or any Affiliate, who shall
be in a position, in the opinion of the Committee, to make contributions to the
growth, management, protection and success of the Company and its Affiliates.
Of those persons described in the preceding sentence, the Committee may, from
time to time, select persons to be granted Awards and shall determine the terms
and conditions with respect thereto.  In making any such selection and in
determining the form of the Award, the Committee may give consideration to the
functions and responsibilities of the person's contributions to the Company and
its Affiliates, the value of the individual's service to the Company and its
Affiliates and such other factors deemed relevant by the Committee.  The
Committee may designate in writing any person who is not eligible to participate
in the Plan if such person would otherwise be eligible to participate in the
Plan. Members of the Committee may not participate in the Plan.


                                   ARTICLE VI
                                   ----------

                                 STOCK OPTIONS
                                 -------------

     6.1  General.  The Committee shall have authority to grant Options under
          -------                                                            
the Plan at any time or from time to time.  Stock Options may be granted alone
or in addition to other 

                                      -9-
<PAGE>
 
Awards and may be either Incentive Stock Options or Non-Qualified Stock Options,
provided, however, that Non-Qualified Stock Options may be granted for no more
than 250,000 shares of Common Stock, subject to adjustment under Section 4.6. An
Option shall entitle the Participant to receive shares of Common Stock upon
exercise of such Option, subject to the Participant's satisfaction in full of
any conditions, restrictions or limitations imposed in accordance with the Plan
or an Agreement (the terms and provisions of which may differ from other
Agreements) including without limitation, payment of the Option Price. During
any 3-calendar-year-period, Options for no more than 300,000 shares of Common
Stock shall be granted to any Participant.

     6.2    Grant and Exercise.  The grant of a Stock Option shall occur as of
            ------------------                                                
the date the Committee determines.  Each Option granted under this Plan shall be
evidenced by an Agreement, in a form approved by the Committee, which shall
embody the terms and conditions of such Option and which shall be subject to the
express terms and conditions set forth in the Plan.  Such Agreement shall become
effective upon execution by the Participant.  Only a person who is a common-law
employee of the Company, any parent corporation of the Company or a subsidiary
(as such terms are defined in Section 424 of the Code) on the date of grant
shall be eligible to be granted an Option which is intended to be and is an
Incentive Stock Option.  To the extent that any Stock Option is not designated
as an Incentive Stock Option or even if so designated does not qualify as an
Incentive Stock Option, it shall constitute a Non-Qualified Stock Option.
Anything in the Plan to the contrary notwithstanding, no term of the Plan
relating to Incentive Stock Options shall be interpreted, amended or altered,
nor shall any discretion or authority granted under the Plan be exercised, so as
to disqualify the Plan under Section 422 of the Code or, without the consent of
the Participant affected, to disqualify any Incentive Stock Option under such
Section 422.

     6.3  Terms and Conditions.  Stock Options shall be subject to such terms
          --------------------                                               
and conditions as shall be determined by the Committee, including the following:

     (a)  Option Period.  The Option Period of each Stock Option shall be fixed
          -------------                                                        
by the Committee; provided that no Non-Qualified Stock Option shall be
exercisable more than fifteen (15) years after the date the Stock Option is
granted.  In the case of an Incentive Stock Option, the Option Period shall not
exceed ten (10) years from the date of grant or five (5) years in the case of an
individual who owns more than ten percent (10%) of the combined voting power of
all classes of stock of the Company, a corporation which is a parent corporation
of the Company or any subsidiary of the Company (each as defined in Section 424
of the Code).  No Option which is intended to be an Incentive Stock Option shall
be granted more than ten (10) years from the date the Plan is adopted by the
Company or the date the Plan is approved by the stockholders of the Company,
whichever is earlier.

     (b)  Option Price.  The Option Price per share of the Common Stock
          ------------                                                 
purchasable under an Option shall be determined by the Committee.  If such
Option is intended to qualify as an Incentive Stock Option, the Option Price per
share shall be not less than the Fair Market Value per share on the date the
Option is granted, or where granted to an individual who owns or who is deemed
to own stock possessing more than ten percent (10%) of the combined voting power
of all classes of stock of the Company, a corporation which is a parent
corporation of the Company or any subsidiary of the Company (each as defined in
Section 424 of the Code), not less than one hundred ten percent (110%) of such
Fair Market Value per share.  If the Committee 

                                     -10-
<PAGE>
 
intends that an Option qualify as an Incentive Stock Option, then the Committee
may, in its discretion, provide that the aggregate Fair Market Value (determined
at the Grant Date) of Incentive Stock Options which are exercisable for the
first time during the calendar year shall not exceed $100,000.

     (c) Exercisability.  Subject to Section 11.1, Stock Options shall be
         --------------                                                  
exercisable at such time or times and subject to such terms and conditions as
shall be determined by the Committee. If the Committee provides that any Stock
Option is exercisable only in installments, the Committee may at any time waive
such installment exercise provisions, in whole or in part.  In addition, the
Committee may at any time accelerate the exercisability of any Stock Option.

     (d) Method of Exercise.  Subject to the provisions of this Article VI, a
         ------------------                                                  
Participant may exercise Stock Options, in whole or in part, at any time during
the Option Period by the Participant's giving written notice of exercise on a
form provided by the Committee (if available) to the Company specifying the
number of shares of Common Stock subject to the Stock Option to be purchased.
Such notice shall be accompanied by payment in full of the purchase price by
cash or check or such other form of payment as the Company may accept.  If
approved by the Committee, payment in full or in part may also be made (i) by
delivering Common Stock already owned by the Participant having a total Fair
Market Value on the date of such delivery equal to the Option Price; (ii) by the
execution and delivery of a note or other evidence of indebtedness (and any
security agreement thereunder) satisfactory to the Committee and permitted in
accordance with Section 6.3(e); (iii)  by authorizing the Company to retain
shares of Common Stock which would otherwise be issuable upon exercise of the
Option having a total Fair Market Value on the date of delivery equal to the
Option Price; (iv) by the delivery of cash or the extension of credit by a
broker-dealer to whom the Participant has submitted a notice of exercise or
otherwise indicated an intent to exercise an Option (in accordance with Part
220, Chapter II, Title 12 of the Code of Federal Regulations, so-called
"cashless" exercise); or (v) by any combination of the foregoing.  If payment of
the Option Price of a Non-Qualified Stock Option is made in whole or in part in
the form of Restricted Stock or Deferred Stock, the number of shares of Common
Stock to be received upon such exercise equal to the number of shares of
Restricted Stock or Deferred Stock used for payment of the Option Price shall be
subject to the same forfeiture restrictions or deferral limitations to which
such Restricted Stock or Deferred Stock was subject, unless otherwise determined
by the Committee.  In the case of an Incentive Stock Option, the right to make a
payment in the form of already owned shares of Common Stock of the same class as
the Common Stock subject to the Stock Option may be authorized only at the time
the Stock Option is granted.  No shares of Common Stock shall be issued until
full payment therefor, as determined by the Committee, has been made.  Subject
to any forfeiture restrictions or deferral limitations that may apply if a Stock
Option is exercised using Restricted Stock or Deferred Stock, a Participant
shall have all of the rights of a stockholder of the Company holding the class
of Common Stock that is subject to such Stock Option (including, if applicable,
the right to vote the shares and the right to receive dividends), when the
Participant has given written notice of exercise, has paid in full for such
shares and such shares have been recorded on the Company's official stockholder
records as having been issued or transferred.

     (e) Company Loan or Guarantee.  Upon the exercise of any Option and subject
         -------------------------                                              
to the pertinent Agreement and the discretion of the Committee, the Company may
at the request of the Participant:

                                     -11-
<PAGE>
 
     (i)  lend to the Participant, with recourse, an amount equal to such
          portion of the Option Price as the Committee may determine; or

     (ii) guarantee a loan obtained by the Participant from a third-party for
          the purpose of tendering the Option Price.

     The terms and conditions of any loan or guarantee, including the term,
interest rate, and any security interest thereunder, shall be determined by the
Committee, except that no extension of credit or guarantee shall obligate the
Company for an amount to exceed the lesser of the aggregate Fair Market Value
per share of the Common Stock on the date of exercise, less the par value of the
shares of Common Stock to be purchased upon the exercise of the Award, or the
amount permitted under applicable laws or the regulations and rules of the
Federal Reserve Board and any other governmental agency having jurisdiction.

     (f)  Non-transferability of Options.  Except as provided herein or in an
          ------------------------------                                     
Agreement, no Stock Option or interest therein shall be transferable by the
Participant other than by will or by the laws of descent and distribution, and
all Stock Options shall be exercisable during the Participant's lifetime only by
the Participant.  If and to the extent transferability is permitted by Rule 16b-
3 and except as otherwise provided herein or by an Agreement, every Option
granted hereunder shall be freely transferable, but only if such transfer is
exempt under Rule 16b-3 or is pursuant to a domestic relations order which would
be a "qualified domestic relations order" as defined in Section 414 of the Code
if such section applied to the Award, but only to the extent consistent with an
Award's intended status as an Incentive Stock Option.

     6.4  Termination by Reason of Death.  Unless otherwise provided in an
          ------------------------------                                  
Agreement or determined by the Committee, if a Participant incurs a Termination
of Employment due to death, any unexpired and unexercised Stock Option held by
such Participant shall thereafter be fully exercisable for a period of one (1)
year (or such other period or no period as the Committee may specify)
immediately following the date of such death or until the expiration of the
Option Period, whichever period is the shorter.

     6.5  Termination by Reason of Disability.  Unless otherwise provided in an
          -----------------------------------                                  
Agreement or determined by the Committee, if a Participant incurs a Termination
of Employment due to a Disability, any unexpired and unexercised Stock Option
held by such Participant shall thereafter be fully exercisable by the
Participant for the period of one (1) year (or such other period or no period as
the Committee may specify) immediately following the date of such Termination of
Employment or until the expiration of the Option Period, whichever period is
shorter, and the Participant's death at any time following such Termination of
Employment due to Disability shall not affect the foregoing.  In the event of
Termination of Employment by reason of Disability, if an Incentive Stock Option
is exercised after the expiration of the exercise periods that apply for
purposes of Section 422 of the Code, such Stock Option will thereafter be
treated as a Non-Qualified Stock Option.

     6.6  Other Termination.  Unless otherwise provided in an Agreement or
          -----------------                                               
determined by the Committee, if a Participant incurs a Termination of Employment
due to Retirement, or the Termination of Employment is involuntary on the part
of the Participant (but is not due to death, Disability or with Cause), any
Stock Option held by such Participant shall thereupon terminate, 

                                     -12-
<PAGE>
 
except that such Stock Option, to the extent then exercisable, may be exercised
for the lesser of the three-month period commencing with the date of such
Termination of Employment or until the expiration of the Option Period. If the
Participant incurs a Termination of Employment which is either (a) voluntary on
the part of the Participant (and is not due to Retirement) or (b) with Cause,
the Option shall terminate immediately. The death or Disability of a Participant
after a Termination of Employment otherwise provided herein shall not extend the
exercisability of the time permitted to exercise an Option.

     6.7  Cashing Out of Option.  On receipt of written notice of exercise, the
          ---------------------                                                
Committee may elect to cash out all or part of the portion of any Stock Option
to be exercised by paying the Participant an amount, in cash or Common Stock,
equal to the excess of the Fair Market Value of the Common Stock that is subject
to the Option over the Option Price times the number of shares of Common Stock
subject to the Option on the effective date of such cash out.  Cash outs
relating to Options held by Participants who are actually or potentially subject
to Section 16(b) of the Exchange Act shall comply with the "window period"
provisions of Rule 16b-3, to the extent applicable, and, in the case of cash
outs of Non-Qualified Stock Options held by such Participants, the Committee may
determine Fair Market Value under the pricing rule set forth in Section 7.3(b).


                                  ARTICLE VII
                                  -----------

                           STOCK APPRECIATION RIGHTS
                           -------------------------

     7.1  General.  The Committee shall have authority to grant Stock
          -------                                                    
Appreciation Rights under the Plan at any time or from time to time.  Subject to
the Participant's satisfaction in full of any conditions, restrictions or
limitations imposed in accordance with the Plan or an Agreement, a Stock
Appreciation Right shall entitle the Participant to surrender to the Company the
Stock Appreciation Right and to be paid therefor in shares of the Common Stock,
cash or a combination thereof as herein provided, the amount described in
Section 7.3(b).

     7.2  Grant.  Stock Appreciation Rights may be granted in conjunction with
          -----                                                               
all or part of any Stock Option granted under the Plan in which case the
exercise of the Stock Appreciation Right will result in cancellation of a
corresponding portion of the Stock Option, and the exercise of the Stock Option
shall require the cancellation of a corresponding portion of the Stock
Appreciation Right.  In the case of a Non-Qualified Stock Option, such rights
may be granted either at or after the time of grant of such Stock Option.  In
the case of an Incentive Stock Option, such rights may be granted only at the
time of grant of such Stock Option.  A Stock Appreciation Right may also be
granted on a stand alone basis.  The grant of a Stock Appreciation Right shall
occur as of the date the Committee determines.  Each Stock Appreciation Right
granted under this Plan shall be evidenced by an Agreement, which shall embody
the terms and conditions of such Stock Appreciation Right and which shall be
subject to the terms and conditions set forth in the Plan.  During any 3-
calendar-year-period, no more than 300,000 Stock Appreciation Rights shall be
granted to a Participant.

     7.3  Terms and Conditions.  Stock Appreciation Rights shall be subject to
          --------------------                                                
such terms and conditions as shall be determined by the Committee, including the
following:

                                     -13-
<PAGE>
 
          (a) Period and Exercise.  The term of a Stock Appreciation Right shall
              -------------------
     be established by the Committee. If granted in conjunction with a Stock
     Option, the Stock Appreciation Right shall have a term which is the same as
     the Option Period and shall be exercisable only at such time or times and
     to the extent the related Stock Options would be exercisable in accordance
     with the provisions of Article VI. A Stock Appreciation Right which is
     granted on a stand alone basis shall be for such period and shall be
     exercisable at such times and to the extent provided in an Agreement. Stock
     Appreciation Rights shall be exercised by the Participant's giving written
     notice of exercise on a form provided by the Committee (if available) to
     the Company specifying the portion of the Stock Appreciation Right to be
     exercised.

          (b) Amount.  Upon the exercise of a Stock Appreciation Right, a
              ------                                                     
     Participant shall be entitled to receive an amount in cash, shares of
     Common Stock or both as determined by the Committee or as otherwise
     permitted in an Agreement equal in value to the excess of the Fair Market
     Value per share of Common Stock over the Option Price per share of Common
     Stock specified in the related Agreement multiplied by the number of shares
     in respect of which the Stock Appreciation Right is exercised.  In the case
     of a Stock Appreciation Right granted on a stand alone basis, the Agreement
     shall specify the value to be used in lieu of the Option Price per share of
     Common Stock.  The aggregate Fair Market Value per share of the Common
     Stock shall be determined as of the date of exercise of such Stock
     Appreciation Right.

          (c) Special Rules.  In the case of Stock Appreciation Rights relating
              -------------                                                    
     to Stock Options held by Participants who are actually or potentially
     subject to Section 16(b) of the Exchange Act:

              (i)   The Committee may require that such Stock Appreciation
          Rights be exercised only in accordance with the applicable "window
          period" provisions of Rule 16b-3;

              (ii)  The Committee may provide that the amount to be paid upon
          exercise of such Stock Appreciation Rights (other than those relating
          to Incentive Stock Options) during a Rule 16b-3 "window period" shall
          be based on the highest mean sales price of the Common Stock on the
          principal exchange on which the Common Stock is traded, NASDAQ/NMS or
          other relevant market for determining value on any day during such
          "window period"; and

              (iii) No Stock Appreciation Right shall be exercisable during
          the first six months of its term, except that this limitation shall
          not apply in the event of death or Disability of the Participant prior
          to the expiration of the six-month period.

          (d) Non-transferability of Stock Appreciation Rights.  Stock
              ------------------------------------------------        
     Appreciation Rights shall be transferable only when and to the extent that
     a Stock Option would be transferable under the Plan unless otherwise
     provided in an Agreement.

                                     -14-
<PAGE>
 
          (e) Termination.  A Stock Appreciation Right shall terminate at such
              -----------                                                     
     time as a Stock Option would terminate under the Plan, unless otherwise
     provided in an Agreement.

          (f) Effect on Shares Under the Plan.  To the extent required by Rule
              -------------------------------                                 
     16b-3, upon the exercise of a Stock Appreciation Right, the Stock Option or
     part thereof to which such Stock Appreciation Right is related shall be
     deemed to have been exercised for the purpose of the limitation set forth
     in Section 4.2 on the number of shares of Common Stock to be issued under
     the Plan, but only to the extent of the number of shares of Common Stock
     covered by the Stock Appreciation Right at the time of exercise based on
     the value of the Stock Appreciation Right at such time.

          (g) Incentive Stock Option.  A Stock Appreciation Right granted in
              ----------------------                                        
     tandem with an Incentive Stock Option shall not be exercisable unless the
     Fair Market Value of the Common Stock on the date of exercise exceeds the
     Option Price.  In no event shall any amount paid pursuant to the Stock
     Appreciation Right exceed the difference between the Fair Market Value on
     the date of exercise and the Option Price.


                                  ARTICLE VIII
                                  ------------

                                RESTRICTED STOCK
                                ----------------

     8.1  General.  The Committee shall have authority to grant Restricted Stock
          -------                                                               
under the Plan at any time or from time to time.  Shares of Restricted Stock may
be awarded either alone or in addition to other Awards granted under the Plan.
The Committee shall determine the persons to whom and the time or times at which
grants of Restricted Stock will be awarded, the number of shares of Restricted
Shares to be awarded to any Participant, the time or times within which such
Awards may be subject to forfeiture and any other terms and conditions of the
Awards.  Each Award shall be confirmed by, and be subject to the terms of, an
Agreement.  The Committee may condition the grant of Restricted Stock upon the
attainment of specified performance goals by the Participant or by the Company
or an Affiliate (including a division or department of the Company or an
Affiliate) for or within which the Participant is primarily employed or upon
such other factors or criteria as the Committee shall determine.  The provisions
of Restricted Stock Awards need not be the same with respect to any Participant.

     8.2  Awards and Certificates.  Notwithstanding the limitations on issuance
          -----------------------                                              
of shares of Common Stock otherwise provided in the Plan, each Participant
receiving an Award of Restricted Stock shall be issued a certificate in respect
of such shares of Restricted Stock.  Such certificate shall be registered in the
name of such Participant and shall bear an appropriate legend referring to the
terms, conditions, and restrictions applicable to such Award as determined by
the Committee.  The Committee may require that the certificates evidencing such
shares be held in custody by the Company until the restrictions thereon shall
have lapsed and that, as a condition of any Award of Restricted Stock, the
Participant shall have delivered a stock power, endorsed in blank, relating to
the Common Stock covered by such Award.

                                     -15-
<PAGE>
 
     8.3  Terms and Conditions.  Shares of Restricted Stock shall be subject to
          --------------------                                                 
the following terms and conditions:

          (a) Limitations on Transferability.  Subject to the provisions of the
              ------------------------------                                   
     Plan and the Agreement, during a period set by the Committee, commencing
     with the date of such Award (the "Restriction Period"), the Participant
     shall not be permitted to sell, assign, transfer, pledge or otherwise
     encumber any interest in shares of Restricted Stock.

          (b) Rights.  Except as provided in Section 8.3(a), the Participant
              ------                                                        
     shall have, with respect to the shares of Restricted Stock, all of the
     rights of a stockholder of the Company holding the class of Common Stock
     that is the subject of the Restricted Stock, including, if applicable, the
     right to vote the shares and the right to receive any cash dividends.
     Unless otherwise determined by the Committee and subject to the Plan, cash
     dividends on the class of Common Stock that is the subject of the
     Restricted Stock shall be automatically deferred and reinvested in
     additional Restricted Stock, and dividends on the class of Common Stock
     that is the subject of the Restricted Stock payable in Common Stock shall
     be paid in the form of Restricted Stock of the same class as the Common
     Stock on which such dividend was paid.

          (c) Criteria.  Based on service, performance by the Participant or by
              --------                                                         
     the Company or the Affiliate, including any division or department for
     which the Participant is employed or such other factors or criteria as the
     Committee may determine, the Committee may provide for the lapse of
     restrictions in installments and may accelerate the vesting of all or any
     part of any Award and waive the restrictions for all or any part of such
     Award.

          (d) Forfeiture.  Unless otherwise provided in an Agreement or
              ----------                                               
     determined by the Committee, if the Participant incurs a Termination of
     Employment during the Restriction Period due to death or Disability, the
     restrictions shall lapse and the Participant shall be fully vested in the
     Restricted Stock.  Except to the extent otherwise provided in the
     applicable Agreement and the Plan, upon a Participant's Termination of
     Employment for any reason during the Restriction Period other than death or
     Disability, all shares of Restricted Stock still subject to restriction
     shall be forfeited by the Participant, except the Committee shall have the
     discretion to waive in whole or in part any or all remaining restrictions
     with respect to any or all of such Participant's shares of Restricted
     Stock.

          (e) Delivery.  If and when the Restriction Period expires without a
              --------                                                       
     prior forfeiture of the Restricted Stock subject to such Restriction
     Period, unlegended certificates for such shares shall be delivered to the
     Participant.

          (f) Election.  A Participant may elect to further defer receipt of the
              --------                                                          
     Restricted Stock for a specified period or until a specified event, subject
     in each case to the Committee's approval and to such terms as are
     determined by the Committee.  Subject to any exceptions adopted by the
     Committee, such election must be made one (1) year prior to completion of
     the Restriction Period.

                                     -16-
<PAGE>
 
                                   ARTICLE IX
                                   ----------

                                 DEFERRED STOCK
                                 --------------

     9.1  General.  The Committee shall have authority to grant Deferred Stock
          -------                                                             
under the Plan at any time or from time to time.  Shares of Deferred Stock may
be awarded either alone or in addition to other Awards granted under the Plan.
The Committee shall determine the persons to whom and the time or times at which
Deferred Stock will be awarded, the number of shares of Deferred Stock to be
awarded to any Participant, the duration of the period (the "Deferral Period")
prior to which the Common Stock will be delivered, and the conditions under
which receipt of the Common Stock will be deferred and any other terms and
conditions of the Awards.  Each Award shall be confirmed by, and be subject to
the terms of, an Agreement.  The Committee may condition the grant of Deferred
Stock upon the attainment of specified performance goals by the Participant or
by the Company or an Affiliate, including a division or department of the
Company or an Affiliate for or within which the Participant is primarily
employed or upon such other factors or criteria as the Committee shall
determine.  The provisions of Deferred Stock Awards need not be the same with
respect to any Participant.

     9.2  Terms and Conditions.  Deferred Stock Awards shall be subject to the
          --------------------                                                
following terms and conditions:

          (a) Limitations on Transferability.  Subject to the provisions of the
              ------------------------------                                   
     Plan and except as provided in an Agreement, neither Deferred Stock Awards
     nor any interest therein may otherwise be sold, assigned, transferred,
     pledged or otherwise encumbered during the Deferral Period.  At the
     expiration of the Deferral Period (or Elective Deferral Period as defined
     in Section 9.2(e), where applicable), the Committee may elect to deliver
     Common Stock, cash equal to the Fair Market Value of such Common Stock or a
     combination of cash and Common Stock, to the Participant for the shares
     covered by the Deferred Stock Award.

          (b) Rights.  Unless otherwise determined by the Committee and subject
              ------                                                           
     to the Plan, cash dividends on the Common Stock that is the subject of the
     Deferred Stock Award shall be automatically deferred and reinvested in
     additional Deferred Stock, and dividends on the Common Stock that is the
     subject of the Deferred Stock Award payable in Common Stock shall be paid
     in the form of Deferred Stock of the same class as the Common Stock on
     which such dividend was paid.

          (c) Criteria.  Based on service, performance by the Participant or by
              --------                                                         
     the Company or the Affiliate, including any division or department for
     which the Participant is employed or such other factors or criteria as the
     Committee may determine, the Committee may provide for the lapse of
     deferral limitations in installments and may accelerate the vesting of all
     or any part of any Award and waive the deferral limitations for all or any
     part of such Award.

          (d) Forfeiture.  Unless otherwise provided in an Agreement or
              ----------                                               
     determined by the Committee, if the Participant incurs a Termination of
     Employment during the Deferral Period due to death or Disability, the
     restrictions shall lapse and the Participant shall be 

                                     -17-
<PAGE>
 
     fully vested in the Deferred Stock. Unless otherwise provided in an
     Agreement or determined by the Committee, upon a Participant's Termination
     of Employment for any reason during the Deferral Period other than death or
     Disability, the rights to the shares still covered by the Award shall be
     forfeited by the Participant, except the Committee shall have the
     discretion to waive in whole or in part any or all remaining deferral
     limitations with respect to any or all of such Participant's Deferred
     Stock.

          (e) Election.  A Participant may elect to further defer receipt of the
              --------                                                          
     Deferred Stock payable under an Award (or an installment of an Award) for a
     specified period or until a specified event, subject in each case to the
     Committee's approval and to such terms as are determined by the Committee.
     Subject to any exceptions adopted by the Committee, such election must be
     made at one (1) year prior to completion of the Deferral Period for the
     Award.


                                   ARTICLE X
                                   ---------

             PROVISIONS APPLICABLE TO STOCK ACQUIRED UNDER THE PLAN
             ------------------------------------------------------

     10.1 Transfer of Shares.  A Participant may at any time make a transfer of
          ------------------                                                   
shares of Common Stock received pursuant to the exercise of an Award to his
parents, spouse or descendants or to any trust for the benefit of the foregoing
or to a custodian under a uniform gifts to minors act or similar statute for the
benefit of any of the Participant's descendants.  Any transfer of shares
received pursuant to the exercise of an Award shall not be permitted or valid
unless and until the transferee agrees to be bound by the provisions of the
Plan, and any provision respecting Common Stock under the Agreement, provided
that "Termination of Employment" shall continue to refer to the Termination of
Employment of the Participant.

     10.2 Limited Transfer During Offering.  In the event there is an effective
          --------------------------------                                     
registration statement under the Securities Act pursuant to which shares of
Common Stock shall be offered for sale in an underwritten offering, a
Participant shall not, during the period requested by the underwriters managing
the registered public offering, effect any public sale or distribution of shares
received directly or indirectly pursuant to an exercise of an Award.

     10.3 Committee Discretion.  The Committee may in its sole discretion
          --------------------                                           
include in any Agreement an obligation that the Company purchase a Participant's
shares of Common Stock received upon the exercise of an Award (including the
purchase of any unexercised Awards which have not expired), or may obligate a
Participant to sell shares of Common Stock to the Company upon such terms and
conditions as the Committee may determine and set forth in an Agreement.  The
provisions of this Article X shall be construed by the Committee in its sole
discretion, and shall be subject to such other terms and conditions as the
Committee may from time to time determine.  Notwithstanding any provision herein
to the contrary, the Company may upon determination by the Committee assign its
right to purchase shares of Common Stock under this Article X, whereupon the
assignee of such right shall have all the rights, duties and obligations of the
Company with respect to purchase of the shares of Common Stock.

                                     -18-
<PAGE>
 
     10.4 No Company Obligation.  None of the Company, an Affiliate or the
          ---------------------                                           
Committee shall have any duty or obligation to affirmatively disclose to a
record or beneficial holder of Common Stock or an Award, and such holder shall
have no right to be advised of, any material information regarding the Company
or any Affiliate at any time prior to, upon or in connection with receipt or the
exercise of an Award or the Company's purchase of Common Stock or an Award from
such holder in accordance with the terms hereof.

     10.5 Sale of Grossman/Issette Interest.  Unless otherwise provided in an
          ---------------------------------                                  
Agreement, the Company shall give notice to each Participant with respect to a
sale or series of sales of any Grossman/Issette Interest other than a sale to a
Grossman/Issette Entity.  Upon receipt of such notice, each Participant shall,
if such notice so directs, sell to such proposed purchaser a percentage of the
Participant's shares of Common Stock owned and acquired pursuant to the Plan
(including any shares of Common Stock which could yet be acquired pursuant to an
Award) equal to that percentage of all shares of Common Stock owned by the
Grossman/Issette Entities which are to be sold by the Grossman/Issette Entities
to such purchaser on the same terms and conditions, including the price per
share of Common Stock to be paid, as in the sale by the Grossman/Issette
Entities.


                                   ARTICLE XI
                                   ----------

                          CHANGE IN CONTROL PROVISIONS
                          ----------------------------

     11.1 Impact of Event.  Notwithstanding any other provision of the Plan to
          ---------------                                                     
the contrary, in the event of a Change in Control (as defined in Section 11.2),
other than a Change in Control consisting of a transaction approved by the Board
of Directors of the Company (which approval included the affirmative vote of
Larry S. Grossman, provided he is then a director, and of Arlen L. Issette,
provided he is then a director):

     (a)  Any Stock Appreciation Rights and Stock Options outstanding as of
the date such Change in Control and not then exercisable shall become fully
exercisable to the full extent of the original grant;

     (b)  The restrictions and deferral limitations applicable to any Restricted
Stock and Deferred Stock shall lapse, and such Restricted Stock and Deferred
Stock shall become free of all restrictions and become fully vested and
transferable to the full extent of the original grant.

     (c)  Notwithstanding any other provision of the Plan, unless the Committee
shall provide otherwise in an Agreement, a Participant shall have the right,
whether or not the Award is fully exercisable or may be otherwise realized by
the Participant, by giving notice during the 60-day period from and after a
Change in Control to the Company, to elect to surrender all or part of the Award
to the Company and to receive cash, within 30 days of such notice, in an amount
equal to the amount by which the "Change in Control Price" (as defined in
Section 11.3) per share of Common Stock on the date of such election shall
exceed the amount which the Participant must pay to exercise the Award per share
of Common Stock under the Award (the "Spread") multiplied by the number of
shares of Common Stock granted under the Award as to which the right granted
hereunder shall have been exercised; provided, however, that if the end of such
60-day period 

                                     -19-
<PAGE>
 
from and after a Change in Control is within six months of the date of grant of
the Award held by a Participant (except a Participant who has died during such
six month period) who is an officer or director of the Company (within the
meaning of Section 16(b) of the Exchange Act), such Award shall be cancelled in
exchange for a payment to the Participant at the time of the Participant's
Termination of Employment equal to the Spread multiplied by the number of shares
of Common Stock granted under the Award and increased from the date of the
change in control to the date of the Termination of Employment by the prime rate
as reported from time to time in The Wall Street Journal or other general
publication. With respect to any Participant who is an officer or director of
the Company (within the meaning of Section 16(b) of the Exchange Act), the 60-
day period shall be extended, if necessary, to include the "window period" of
Rule 16b-3 which first commences on or after the date of the Change in Control,
and the Committee shall have sole discretion, if necessary, to approve the
Participant's exercise hereunder and the date in which the Spread is calculated
may be adjusted, if necessary, to a later date if necessary to avoid liability
to such Participant under Section 16(b). Notwithstanding the foregoing, if any
right under this Section would cause an otherwise eligible transaction to be
ineligible for pooling of interest accounting treatment, the Committee may
modify or adjust the right so that pooling of interest accounting treatment
shall be available, including the substitution of Common Stock having a Fair
Market Value equal to the cash otherwise payable hereunder for the right which
caused the transaction to be so ineligible.

     11.2 Definition of Change in Control.  For purposes of the Plan, a "Change
          -------------------------------                                      
in Control" shall mean the happening of any of the following events:

          (a)  (i)  An acquisition by any individual, entity or group (within
     the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a
     "Person") of the beneficial ownership (within the meaning of Rule 13d-3
     promulgated under the Exchange Act) of 20% or more of the then outstanding
     shares of common stock of the Company (the "Outstanding Company Common
     Stock") or the combined voting power of the then outstanding voting
     securities of the Company entitled to vote generally in the election of
     directors (the "Outstanding Company Voting Securities") or (ii) the
     approval by the stockholders of the Company of a reorganization, merger,
     consolidation, complete liquidation or dissolution of the Company, the sale
     or disposition of all or substantially all of the assets of the Company or
     similar corporate transaction (in each case referred to in this Section
     11.2 as a "Corporate Transaction") or, if consummation of such Corporate
     Transaction is subject, at the time of such approval by stockholders, to
     the consent of any government or governmental agency, the obtaining of such
     consent (either explicitly or implicitly); provided, in the case of the
     acquisition of beneficial ownership, that such acquisition would result in
     the Grossman/Issette Entities beneficially owning (within the meaning of
     Rule 13d-3 promulgated under the Exchange Act) following the acquisition or
     Corporate Transaction less than 40.1% of the Outstanding Company Common
     Stock or less than 40.1% of the Outstanding Company Voting Securities;
     excluding, however, the following: (i) any acquisition by or consummation
     of a Corporate Transaction with any subsidiary of the Company or by an
     employee benefit plan (or related trust) sponsored or maintained by the
     Company or an Affiliate, (ii) any acquisition by or consummation of a
     Corporate Transaction with a Grossman/Issette Entity, (iii) the acquisition
     by or consummation of a Corporate Transaction with any Person who
     beneficially owned, immediately prior to such acquisition or Corporate
     Transaction, directly or indirectly, 20% or more of the 

                                     -20-
<PAGE>
 
     Outstanding Company Common Stock or Outstanding Company Voting Securities,
     or (iv) any Corporate Transaction, if more than a majority of the
     beneficial ownership of the Outstanding Company Voting Securities after the
     Corporate Transaction is held directly or indirectly by Persons who held
     directly or indirectly the beneficial ownership of the Outstanding Company
     Voting Securities before the Corporate Transaction; or

          (b) A change in the composition of the Board such that the individuals
     who, as of July 11, 1994, constitute the Board (such Board shall be
     hereinafter referred to as the "Incumbent Board") cease for any reason to
     constitute at least a majority of the Board; provided, however, for
     purposes of this Section 11.2(b), that any individual who becomes a member
     of the Board subsequent to such date whose election, or nomination for
     election by the Company's stockholders, was approved by a vote of at least
     a majority of those individuals who are members of the Board and who were
     also members of the Incumbent Board (or deemed to be such pursuant to this
     proviso) shall be considered as though such individual were a member of the
     Incumbent Board; but, provided, further, that any such individual whose
     initial assumption of office occurs as a result of either an actual or
     threatened election contest (as such terms are used in Rule 14a-11 of
     Regulation 14A promulgated under the Exchange Act) or other actual or
     threatened solicitation of proxies or consents by or on behalf of a Person
     other than the Board shall not be so considered as a member of the
     Incumbent Board.

     11.3 Change in Control Price.  For purposes of the Plan, "Change in Control
          -----------------------                                               
Price" means the higher of (a) the highest reported sales price of a share of
Common Stock in any transaction reported on the principal exchange on which such
shares are listed or on NASDAQ/NMS during the 60-day period prior to and
including the date of a Change in Control or (b) if the Change in Control is the
result of a tender or exchange offer or a Corporate Transaction, the highest
price per share of Common Stock paid in such tender or exchange offer or a
Corporate Transaction, except that, in the case of Incentive Stock Options and
Stock Appreciation Rights relating to Incentive Stock Options, such price shall
be based only on the Fair Market Value of the Common Stock on the date such
Incentive Stock Option or Stock Appreciation Right is exercised.  To the extent
that the consideration paid in any such transaction described above consists all
or in part of securities or other non-cash consideration, the value of such
securities or other non-cash consideration shall be determined in the sole
discretion of the Committee.


                                  ARTICLE XII
                                  -----------

                                 MISCELLANEOUS
                                 -------------

     12.1 Amendments and Termination.  The Board may amend, alter, or
          --------------------------                                 
discontinue the Plan at any time, but no amendment, alteration or
discontinuation shall be made which would (a) impair the rights of a Participant
under a Stock Option, Stock Appreciation Right, Restricted Stock Award or
Deferred Stock Award theretofore granted without the Participant's consent,
except such an amendment made to cause the Plan to qualify for the exemption
provided by Rule 16b-3 or (b) disqualify the Plan from the exemption provided by
Rule 16b-3.  In addition, no such 

                                     -21-
<PAGE>
 
amendment shall be made without the approval of the Company's stockholders to
the extent such approval is required by law or agreement.

     The Committee may amend the Plan at any time provided that (a) no amendment
shall impair the rights of any Participant under any Award theretofore granted
without the Participant's consent, (b) no amendment shall disqualify the Plan
from the exemption provided by Rule 16b-3, and (c) any amendment shall be
subject to the approval or rejection of the Board.

     The Committee may amend the terms of any Award or other Award theretofore
granted, prospectively or retroactively, but no such amendment shall impair the
rights of any Participant without the Participant's consent, except such an
amendment made to cause the Plan or Award to qualify for the exemption provided
by Rule 16b-3.  The Committee may also substitute new Stock Options or Stock
Appreciation Rights for previously granted Stock Options, including previously
granted Stock Options or Stock Appreciation Rights having higher Option Prices,
but no such substitution shall be made which would impair the rights of
Participants under such Stock Option or Stock Appreciation Right theretofore
granted without the Participant's consent.

     Subject to the above provisions, the Board shall have authority to amend
the Plan to take into account changes in law and tax and accounting rules, as
well as other developments and to grant Awards which qualify for beneficial
treatment under such rules without stockholder approval.

     12.2 Unfunded Status of Plan.  It is intended that the Plan be an
          -----------------------                                     
"unfunded" plan for incentive and deferred compensation.  The Committee may
authorize the creation of trusts or other arrangements to meet the obligations
created under the Plan to deliver Common Stock or make payments; provided,
however, that, unless the Committee otherwise determines, the existence of such
trusts or other arrangements is consistent with the "unfunded" status of the
Plan.

     12.3 General Provisions.
          ------------------ 

          (a) Representation.  The Committee may require each person purchasing
              --------------                                                   
     or receiving shares pursuant to an Award to represent to and agree with the
     Company in writing that such person is acquiring the shares without a view
     to the distribution thereof. The certificates for such shares may include
     any legend which the Committee deems appropriate to reflect any
     restrictions on transfer.

          (b) No Additional Obligation.  Nothing contained in the Plan shall
              ------------------------                                      
     prevent the Company or an Affiliate from adopting other or additional
     compensation arrangements for its employees.

          (c) Withholding.  No later than the date as of which an amount first
              -----------                                                     
     becomes includible in the gross income of the Participant for Federal
     income tax purposes with respect to any Award, the Participant shall pay to
     the Company (or other entity identified by the Committee), or make
     arrangements satisfactory to the Company or other entity identified by the
     Committee regarding the payment of, any Federal, state, local or foreign
     taxes of any kind required by law to be withheld with respect to such
     amount required in order for the Company or an Affiliate to obtain a
     current deduction.  If the Participant 

                                     -22-
<PAGE>
 
     disposes of shares of Common Stock acquired pursuant to an Incentive Stock
     Option in any transaction considered to be a disqualifying transaction
     under the Code, the Participant must give written notice of such transfer
     and the Company shall have the right to deduct any taxes required by law to
     be withheld from any amounts otherwise payable to the Participant. Unless
     otherwise determined by the Committee, withholding obligations may be
     settled with Common Stock, including Common Stock that is part of the Award
     that gives rise to the withholding requirement provided that any applicable
     requirements under Section 16 of the Exchange Act are satisfied. The
     obligations of the Company under the Plan shall be conditional on such
     payment or arrangements, and the Company and its Affiliates shall, to the
     extent permitted by law, have the right to deduct any such taxes from any
     payment otherwise due to the Participant.

          (d) Reinvestment.  The reinvestment of dividends in additional
              ------------                                              
     Deferred or Restricted Stock at the time of any dividend payment shall only
     be permissible if sufficient shares of Common Stock are available for such
     reinvestment (taking into account then outstanding Options and other
     Awards).

          (e) Representation.  The Committee shall establish such procedures as
              --------------                                                   
     it deems appropriate for a Participant to designate a Representative to
     whom any amounts payable in the event of the Participant's death are to be
     paid.

          (f) Controlling Law.  The Plan and all Awards made and actions taken
              ---------------                                                 
     thereunder shall be governed by and construed in accordance with the laws
     of the State of Delaware (other than its law respecting choice of law).
     The Plan shall be construed to comply with all applicable law and to avoid
     liability to the Company, an Affiliate or a Participant, including, without
     limitation, liability under Section 16(b) of the Exchange Act.  With
     respect to persons subject to Section 16 of the Exchange Act, transactions
     under this Plan are intended to comply with all applicable conditions of
     Rule 16b-3.  To the extent any provision of this Plan or action by the
     Committee fails so to comply, it shall be deemed null and void to the
     extent permitted by law and deemed advisable by the Committee.  Moreover,
     in the event this Plan does not include a provision required by Rule 16b-3
     to be stated herein, such provision (other than one relating to eligibility
     requirements, or the price and amount of Awards) shall be deemed to be
     incorporated by reference herein with respect to Participants subject to
     Section 16.

          (g) Offset.  Any amounts owed to the Company or an Affiliate by the
              ------                                                         
     Participant of whatever nature may be offset by the Company from the value
     of any shares of Common Stock, cash or other thing of value under this Plan
     or an Agreement to be transferred to the Participant, and no shares of
     Common Stock, cash or other thing of value under this Plan or an Agreement
     shall be transferred unless and until all disputes between the Company and
     the Participant have been fully and finally resolved and the Participant
     has waived all claims to such against the Company or an Affiliate.

     12.4 Mitigation of Excise Tax.  If any payment or right accruing to a
          ------------------------                                        
Participant under this Plan (without the application of this Section 12.4),
either alone or together with other payments or rights accruing to the
Participant from the Company or an Affiliate ("Total Payments") would constitute
a "parachute payment" (as defined in Section 280G of the Code and 

                                     -23-
<PAGE>
 
regulations thereunder), such payment or right shall be reduced to the largest
amount or greatest right that will result in no portion of the amount payable or
right accruing under the Plan being subject to an excise tax under Section 4999
of the Code or being disallowed as a deduction under Section 280G of the Code.
The determination of whether any reduction in the rights or payments under this
Plan is to apply shall be made by the Committee in good faith after consultation
with the Participant, and such determination shall be conclusive and binding on
the Participant. The Participant shall cooperate in good faith with the
Committee in making such determination and providing the necessary information
for this purpose. The foregoing provisions of this Section 12.4 shall apply with
respect to any person only if after reduction for any applicable federal excise
tax imposed by Section 4999 of the Code and federal income tax imposed by the
Code, the Total Payments accruing to such person would be less than the amount
of the Total Payments as reduced, if applicable, under the foregoing provisions
of the Plan and after reduction for only federal income taxes.

     12.5 Rights with Respect to Continuance of Employment.  Nothing contained
          ------------------------------------------------                    
herein shall be deemed to alter the relationship between the Company or an
Affiliate and a Participant, or the contractual relationship between a
Participant and the Company or an Affiliate if there is a written contract
regarding such relationship.  Nothing contained herein shall be construed to
constitute a contract of employment between the Company or an Affiliate and a
Participant.  The Company or an Affiliate and each of the Participants continue
to have the right to terminate the employment or service relationship at any
time for any reason, except as provided in a written contract.  The Company or
an Affiliate shall have no obligation to retain the Participant in its employ or
service as a result of this Plan.  There shall be no inference as to the length
of employment or service hereby, and the Company or an Affiliate reserves the
same rights to terminate the Participant's employment or service as existed
prior to the individual becoming a Participant in this Plan.

     12.6 Awards in Substitution for Awards Granted by Other Corporations.
          ---------------------------------------------------------------  
Awards may be granted under the Plan from time to time in substitution for
awards held by employees, directors or service providers of other corporations
who are about to become officers, directors or employees of the Company or an
Affiliate as the result of a merger or consolidation of the employing
corporation with the Company or an Affiliate, or the acquisition by the Company
or an Affiliate of the assets of the employing corporation, or the acquisition
by the Company or Affiliate of the stock of the employing corporation, as the
result of which it becomes a designated employer under the Plan.  The terms and
conditions of the Awards so granted may vary from the terms and conditions set
forth in this Plan at the time of such grant as the majority of the members of
the Committee may deem appropriate to conform, in whole or in part, to the
provisions of the awards in substitution for which they are granted.

     12.7 Procedure for Adoption.  Any Affiliate of the Company may by
          ----------------------                                      
resolution of such Affiliate's board of directors, with the consent of the Board
of Directors and subject to such conditions as may be imposed by the Board of
Directors, adopt the Plan for the benefit of its employees as of the date
specified in the board resolution.

     12.8 Procedure for Withdrawal.  Any Affiliate which has adopted the Plan
          ------------------------                                           
may, by resolution of the board of directors of such direct or indirect
subsidiary, with the consent of the Board of Directors and subject to such
conditions as may be imposed by the Board of Directors, terminate its adoption
of the Plan.  If the Participant disposes of shares of Common Stock 

                                     -24-
<PAGE>
 
acquired pursuant to an Incentive Stock Option in any transaction considered to
be a disqualifying transaction under the Code, the Participant must give written
notice of such transfer and the Company shall have the right to deduct any taxes
required by law to be withheld from any amounts otherwise payable to the
Participant.

     12.9  Delay.  If at the time a Participant incurs a Termination of
           -----                                                       
Employment (other than due to Cause) or if at the time of a Change in Control,
the Participant is subject to "short-swing" liability under Section 16 of the
Exchange Act, any time period provided for under the Plan or an Agreement to the
extent necessary to avoid the imposition of liability shall be suspended and
delayed during the period the Participant would be subject to such liability,
but not more than six (6) months and one (1) day and not to exceed the Option
Period, or the period for exercise of a Stock Appreciation Right as provided in
the Agreement, whichever is shorter.  The Company shall have the right to
suspend or delay any time period described in the Plan or an Agreement if the
Committee shall determine that the action may constitute a violation of any law
or result in liability under any law to the Company, an Affiliate or a
stockholder of the Company until such time as the action required or permitted
shall not constitute a violation of law or result in liability to the Company,
an Affiliate or a stockholder of the Company.  The Committee shall have the
discretion to suspend the application of the provisions of the Plan required
solely to comply with Rule 16b-3 if the Committee shall determine that Rule 16b-
3 does not apply to the Plan.

     12.10 Headings.  The headings contained in this Plan are for reference
           --------                                                        
purposes only and shall not affect the meaning or interpretation of this Plan.

     12.11 Severability.  If any provision of this Plan shall for any reason
           ------------                                                     
be held to be invalid or unenforceable, such invalidity or unenforceability
shall not effect any other provision hereby, and this Plan shall be construed as
if such invalid or unenforceable provision were omitted.

     12.12 Successors and Assigns.  This Plan shall inure to the benefit of and
           ----------------------
be binding upon each successor and assign of the Company. All obligations
imposed upon a Participant, and all rights granted to the Company hereunder,
shall be binding upon the Participant's heirs, legal representatives and
successors.

     12.13 Entire Agreement.  This Plan and the Agreement constitute the entire
           ----------------
agreement with respect to the subject matter hereof and thereof, provided that
in the event of any inconsistency between the Plan and the Agreement, the terms
and conditions of the Agreement shall control.

     Executed on this _____ day of ________, 1995.



                              FLUOROSCAN IMAGING SYSTEMS, INC.


                              By:___________________________________

                              Its:__________________________________

                                     -25-
<PAGE>
 
=DOCUMENT#: CHG003 (04434-00002-4) 118753.4;DATE:03/27/95/TIME;15:17=

                                     -26-
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.3
<SEQUENCE>6
<DESCRIPTION>1994 DIRECTORS STOCK OPTION PLAN
<TEXT>

<PAGE>
 
                       FLUOROSCAN IMAGING SYSTEMS, INC.

                       1994 DIRECTORS STOCK OPTION PLAN
<PAGE>
 
                       FLUOROSCAN IMAGING SYSTEMS, INC.
                       1994 DIRECTORS STOCK OPTION PLAN
                              TABLE OF CONTENTS
                              -----------------

<TABLE>
<CAPTION>
                                                                         Page
                                                                         ----


  <C>          <S>                                                       <C>
  ARTICLE I    ESTABLISHMENT..............................................  1
      1.1      Purpose....................................................  1
               -------

  ARTICLE II   DEFINITIONS................................................  1
      2.1      "Affiliate"................................................  1
                ---------
      2.2      "Agreement" or "Option Agreement"..........................  1
                ---------      ----------------
      2.3      "Board of Directors" or "Board"............................  1
                ------------------      -----
      2.4      "Cause"....................................................  1
                -----
      2.5      "Change in Control"........................................  2
                -----------------
      2.6      "Change in Control Price"..................................  3
                -----------------------
      2.7      "Code" or "Internal Revenue Code"..........................  3
                ----      ---------------------
      2.8      "Commission"...............................................  3
                ----------
      2.9      "Committee"................................................  3
                ---------
      2.10     "Common Stock".............................................  3
                ------------
      2.11     "Company"..................................................  3
                -------
      2.12     "Director".................................................  3
                --------
      2.13     "Disability"...............................................  3
                ----------
      2.14     "Disinterested Person".....................................  4
                --------------------
      2.15     "Effective Date"...........................................  4
                --------------
      2.16     "Exchange Act".............................................  4
                ------------
      2.17     "Fair Market Value"........................................  4
                -----------------
      2.18     "Grant Date"...............................................  4
                ----------
      2.19     "Grossman/Issette Entities"................................  4
                -------------------------
      2.20     "Grossman/Issette Interest"................................  5
                -------------------------
      2.21     "Option"...................................................  5
                ------
      2.22     "Option Period"............................................  5
                -------------
      2.23     "Option Price".............................................  5
                ------------
      2.24     "Participant"..............................................  5
                -----------
      2.25     "Plan".....................................................  5
                ----
      2.26     "Representative"...........................................  5
                --------------
      2.27     "Rule 16b-3"...............................................  5
                ----------
      2.28     "Securities Act"...........................................  5
                --------------
      2.29     "Spread"...................................................  6
                ------
      2.30     "Termination of Directorship"..............................  6
                ---------------------------

  ARTICLE III  ADMINISTRATION.............................................  6
      3.1      Committee Structure and Authority..........................  6
               ---------------------------------
</TABLE>

                                      -i-
<PAGE>
 
<TABLE>
<CAPTION>
                                                                          Page
                                                                          ----
  <C>           <S>                                                       <C>
  ARTICLE IV    STOCK SUBJECT TO PLAN......................................  8
      4.1       Number of Shares...........................................  8
                ----------------
      4.2       Release of Shares..........................................  8
                -----------------
      4.3       Restrictions on Shares.....................................  8
                ----------------------
      4.4       Stockholder Rights.........................................  9
                ------------------
      4.5       Best Efforts To Register...................................  9
                ------------------------
      4.6       Anti-Dilution..............................................  9
                -------------

  ARTICLE V     OPTION GRANTS.............................................  10
      5.1       Eligibility...............................................  10
                -----------
      5.2       Grant and Exercise........................................  10
                ------------------
      5.3       Terms and Conditions......................................  10
                --------------------

  ARTICLE VI    PROVISIONS APPLICABLE TO STOCK ACQUIRED UNDER
                THE PLAN..................................................  12
      6.1       Transfer of Shares........................................  12
                ------------------
      6.2       Limited Transfer During Offering..........................  12
                --------------------------------
      6.3       Committee Discretion......................................  12
                --------------------
      6.4       No Company Obligation.....................................  13
                ---------------------
      6.5       Sale of Grossman/Issette Interest.........................  13
                ---------------------------------

  ARTICLE VII   CHANGE IN CONTROL PROVISIONS..............................  13
      7.1       Impact of Event...........................................  13
                ---------------

  ARTICLE VIII  MISCELLANEOUS.............................................  14
      8.1       Amendments and Termination................................  14
                --------------------------
      8.2       Unfunded Status of Plan...................................  15
                -----------------------
      8.3       General Provisions........................................  15
                ------------------
      8.4       Certain Rights............................................  16
                --------------
      8.5       Options in Substitution for Options Granted by Other
                ----------------------------------------------------
                Corporations..............................................  16
                ------------
      8.6       Procedure for Adoption....................................  16
                ----------------------
      8.7       Procedure for Withdrawal..................................  17
                ------------------------
      8.8       Delay.....................................................  17
                -----
      8.9       Headings..................................................  17
                --------
      8.10      Severability..............................................  17
                ------------
      8.11      Successors and Assigns....................................  17
                ----------------------
      8.12      Entire Agreement..........................................  17
                ----------------
</TABLE>

                                      -ii-
<PAGE>
 
                        FLUOROSCAN IMAGING SYSTEMS, INC.

                        1994 DIRECTORS STOCK OPTION PLAN


                                   ARTICLE I
                                   ---------

                                 ESTABLISHMENT
                                 -------------

     1.1  Purpose.
          ------- 

     The FluoroScan Imaging Systems, Inc. 1994 Directors Stock Option Plan
("Plan") is hereby established by FluoroScan Imaging Systems, Inc. ("Company").
The purpose of the Plan is to promote the overall financial objectives of the
Company and its stockholders by motivating directors of the Company who are not
employees to achieve long-term growth in stockholder equity in the Company and
to retain the association of those individuals. The Plan and the grant of
Options thereunder is expressly conditioned upon the Plan's approval by the
security holders of the Company to the extent required by Rule 16b-3 of the
Securities Exchange Act of 1934, as amended, and if such approval is not
obtained then the Plan and all grants of Options thereunder shall be null and
void ab initio.
     --------- 


                                   ARTICLE II
                                   ----------

                                  DEFINITIONS
                                  -----------

     For purposes of the Plan, the following terms are defined as set forth 
below:

     2.1  "Affiliate" means any individual, corporation, partnership,
           ---------                                                 
association, joint-stock company, trust, unincorporated association or other
entity (other than the Company) that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with, the
Company including, without limitation, any member of an affiliated group of
which the Company is a common parent corporation as provided in Section 1504 of
the Code.

     2.2  "Agreement" or "Option Agreement" means, individually or collectively,
           ---------      ----------------                        
any agreement entered into pursuant to the Plan pursuant to which an Option is
granted to a Participant.

     2.3  "Board of Directors" or "Board" means the Board of Directors of the
           ------------------      -----
Company.

     2.4  "Cause" shall mean for purposes of whether and when a Participant has
           -----                                                           
incurred a Termination of Directorship for Cause (a) any act or failure to act
deemed to constitute cause under the Company's established practices, policies
or guidelines applicable to the Participant or (b) the Participant's act or
omission of gross misconduct with respect to the Company or an Affiliate in any
material respect.
<PAGE>
 
     2.5  "Change in Control" means the happening of any of the following 
           -----------------
events:


          (a)  (i)  An acquisition by any individual, entity or group (within
     the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act (a
     "Person") of the beneficial ownership (within the meaning of Rule 13d-3
     promulgated under the Exchange Act) of 20% or more of the then outstanding
     shares of common stock of the Company (the "Outstanding Company Common
     Stock") or the combined voting power of the then outstanding voting
     securities of the Company entitled to vote generally in the election of
     directors (the "Outstanding Company Voting Securities") or (ii) the
     approval by the stockholders of the Company of a reorganization, merger,
     consolidation, complete liquidation or dissolution of the Company, the sale
     or disposition of all or substantially all of the assets of the Company or
     similar corporate transaction (in each case referred to in this Section 2.5
     as a "Corporate Transaction") or, if consummation of such Corporate
     Transaction is subject, at the time of such approval by stockholders, to
     the consent of any government or governmental agency, the obtaining of such
     consent (either explicitly or implicitly); provided, in the case of the
     acquisition of beneficial ownership, that such acquisition would result in
     the Grossman/Issette Entities beneficially owning (within the meaning of
     Rule 13d-3 promulgated under the Exchange Act) following the acquisition or
     Corporate Transaction less than 40.1% of the Outstanding Company Common
     Stock or less than 40.1% of the Outstanding Company Voting Securities;
     excluding, however, the following: (i) any acquisition by or consummation
     of a or Corporate Transaction with any subsidiary of the Company or by an
     employee benefit plan (or related trust) sponsored or maintained by the
     Company or an Affiliate, (ii) any acquisition by or consummation of a
     Corporate Transaction with a Grossman/Issette Entity, (iii) the acquisition
     by or consummation of a Corporate Transaction with any Person who
     beneficially owned, immediately prior to such acquisition or Corporate
     Transaction, directly or indirectly, 20% or more of the Outstanding Company
     Common Stock or Outstanding Company Voting Securities, or (iv) any
     Corporate Transaction, if more than a majority of the beneficial ownership
     of the Outstanding Company Voting Securities after the Corporate
     Transaction is held directly or indirectly by Persons who held directly or
     indirectly the beneficial ownership of the Outstanding Company Voting
     Securities before the Corporate Transaction; or

          (b)  A change in the composition of the Board such that the
     individuals who, as of the Effective Date, constitute the Board (such Board
     shall be hereinafter referred to as the "Incumbent Board") cease for any
     reason to constitute at least a majority of the Board; provided, however,
     for purposes of this Section 2.5(b), that any individual who becomes a
     member of the Board subsequent to the Effective Date whose election, or
     nomination for election by the Company's stockholders, was approved by a
     vote of at least a majority of those individuals who are members of the
     Board and who were also members of the Incumbent Board (or deemed to be
     such pursuant to this proviso) shall be considered as though such
     individual were a member of the Incumbent Board; but, provided, further,
     that any such individual whose initial assumption of office occurs as a
     result of either an actual or threatened election contest (as such terms
     are used in Rule 14a-11 of Regulation 14A promulgated under the Exchange
     Act) or other actual or threatened

                                      -2-
<PAGE>
 
     solicitation of proxies or consents by or on behalf of a Person other than
     the Board shall not be so considered as a member of the Incumbent Board.

     2.6   "Change in Control Price" means the higher of (a) the highest
            -----------------------    
reported sales price of a share of Common Stock in any transaction reported on
the principal exchange on which such shares are listed or on the Nasdaq National
Market System ("NASDAQ/NMS") during the 60-day period prior to and including the
date of a Change in Control or (b) if the Change in Control is the result of a
tender or exchange offer, the highest price per share of Common Stock paid in
such tender or exchange offer. To the extent that the consideration paid in any
such transaction described above consists all or in part of securities or other
non-cash consideration, the value of such securities or other non-cash
consideration shall be determined in the sole discretion of the Committee.

     2.7   "Code" or "Internal Revenue Code" means the Internal Revenue Code of
            ----      ---------------------
1986, as amended, final Treasury Regulations thereunder and any subsequent
Internal Revenue Code.

     2.8   "Commission" means the Securities and Exchange Commission or any
            ----------                     
successor agency.

     2.9   "Committee" means the person or persons who administer the Plan,
            ---------                      
as further described in the Plan.

     2.10  "Common Stock" means the shares of the regular voting Common Stock,
            ------------
$.0001 par value per share, whether presently or hereafter issued, and any other
stock or security resulting from adjustment thereof as described hereinafter or
the common stock of any successor to the Company which is designated for the
purpose of the Plan.

     2.11  "Company" means FluoroScan Imaging Systems, Inc., a Delaware
            -------                             
corporation, and includes any successor or assignee corporation or corporations
into which the Company may be merged, changed or consolidated; any corporation
for whose securities the securities of the Company shall be exchanged; and any
assignee of or successor to substantially all of the assets of the Company.

     2.12  "Director" means each and any director who serves on the Board and
            --------
who is not an officer or employee of the Company or any of its Affiliates.

     2.13  "Disability" means a mental or physical illness that renders a
            ----------                                                   
Participant totally and permanently incapable of performing the Participant's
duties for the Company or an Affiliate. Notwithstanding the foregoing, a
Disability shall not qualify under the Plan if it is the result of (i) a
willfully self-inflicted injury or willfully self-induced sickness; or (ii) an
injury or disease contracted, suffered, or incurred, while participating in a
criminal offense.  The determination of Disability shall be made by the
Committee.  The determination of Disability for purposes of the Plan shall not
be construed to be an admission of disability for any other purpose.

                                      -3-
<PAGE>
 
     2.14  "Disinterested Person" shall have the meaning set forth in Rule 16b-
            --------------------
3, or any successor definition adopted by the Commission.

     2.15  "Effective Date" means August 20, 1994 or such other date specified
            --------------      
by the Board.

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

     2.17  "Fair Market Value" means:
            -----------------        

           (a)   the value determined on the basis of the good faith
determination of the Committee, without regard to whether the Common Stock is
restricted or represents a minority interest, pursuant to the applicable method
described below:

                 (i)    if the Common Stock is listed on a national securities
           exchange or quoted on NASDAQ/NMS, the closing price of the Common
           Stock on the relevant date (or, if such date is not a business day or
           a day on which quotations are reported, then on the immediately
           preceding date on which quotations were reported), as reported by the
           principal national exchange on which such shares are traded (in the
           case of an exchange) or by the NASDAQ/NMS, as the case may be;

                 (ii)   if the Common Stock is not listed on a national
           securities exchange or quoted on the NASDAQ/NMS, but is actively
           traded in the over-the-counter market, the average of the closing bid
           and asked prices for the Common Stock on the relevant date, or the
           most recent preceding date for which such quotations are reported;
           and

                 (iii)  if, on the relevant date, the Common Stock is not
           publicly traded or reported as described in (i) or (ii), the value
           determined in good faith by the Committee.

     2.18  "Grant Date" means (a) with respect to a Director on the Effective
            ----------                                                       
Date, the Effective Date and (b) with respect to any person who continues as a
Director or who becomes a Director after the Effective Date, the first business
day immediately following each annual meeting of stockholders of the Company
(provided the person is a Director on such date).

     2.19  "Grossman/Issette Entities" means Larry S. Grossman and Arlen L.
            -------------------------                                      
Issette, their spouses, their heirs, and any group (within the meaning of
Section 13(d)(3) of the Exchange Act) of which any of Larry S. Grossman or Arlen
L. Issette, their spouses or their heirs is a member for purposes of acquiring,
holding or disposing of securities of the Company, any trust established by or
for the benefit of any of the foregoing and any other entity controlled by or
for the benefit of any of the foregoing.

                                      -4-
<PAGE>
 
     2.20  "Grossman/Issette Interest" means the beneficial ownership (within
            -------------------------
the meaning of Rule 13d-3 promulgated under the Exchange Act) or the pecuniary
interest (within the meaning of Rule 16a-1 promulgated under the Exchange Act)
of the Grossman/Issette Entities in the outstanding voting securities of the
Company entitled to vote generally in the election of directors or such other
securities as may be specifically referenced.

     2.21  "Option" means the right to purchase the number of shares of
            ------                                                     
Common Stock specified by the Plan at a price and for a term fixed by the Plan,
subject to such other limitations and restrictions as the Plan and the Committee
imposes.

     2.22  "Option Period" means the period during which the Option shall be
            -------------                                                   
exercisable in accordance with the Agreement and the Plan.

     2.23  "Option Price" means the price at which the Common Stock may be
            ------------                                                  
purchased under an Option.

     2.24  "Participant" means any Director to whom an Option has been granted
            -----------                                                       
under the Plan, and in the event a Representative is appointed for a Participant
or a former spouse becomes a Representative, then the term "Participant" shall
mean such appointed Representative, successor Representative, or spouse as the
case may be.  The term shall also include a trust for the benefit of the
Participant, the Participant's parents, spouse or descendants, or a custodian
under a uniform gifts to minors act or similar statute for the benefit of the
Participant's descendants, to the extent permitted.  Notwithstanding the
foregoing, the term "Termination of Directorship" shall mean the Termination of
Directorship of the Participant, as set forth in Section 2.30.

     2.25  "Plan" means the FluoroScan Imaging Systems, Inc. 1994 Directors
            ----
Stock Option Plan, as herein set forth and as may be amended from time to time.

     2.26  "Representative" means (a) the person or entity acting as the
            --------------
executor or administrator of a Participant's estate pursuant to the last will
and testament of a Participant or pursuant to the laws of the jurisdiction in
which the Participant had the Participant's primary residence at the date of the
Participant's death; (b) the person or entity acting as the guardian or
temporary guardian of a Participant; (c) the person or entity which is the
beneficiary of the Participant upon or following the Participant's death; or (d)
any person to whom an Option has been permissibly transferred; provided that
only one of the foregoing shall be the Representative at any point in time as
determined under applicable law and recognized by the Committee.

     2.27  "Rule 16b-3" means Rule 16b-3, as promulgated under the Exchange Act,
            ----------                                                          
as amended from time to time, or any successor thereto.

     2.28  "Securities Act" means the Securities Act of 1933, as amended, and
            --------------
the rules and regulations promulgated thereunder.

                                      -5-
<PAGE>
 
     2.29 "Spread" means (a) prior to a Change in Control, the amount, on the
           ------                                                            
relevant date, by which the Fair Market Value of Common Stock exceeds the Option
Price and (b) with respect to a Change in Control, the amount by which the
Change in Control Price exceeds the Option Price.

     2.30 "Termination of Directorship" means the occurrence of any act or event
           ---------------------------                                          
that actually or effectively causes or results in the person's ceasing, for
whatever reason, to be a Director of the Company or of any Affiliate, including,
without limitation, death, Disability, removal, severance at the election of the
Participant, retirement, failure to be elected or stand for election as a
Director, or severance as a result of the discontinuance, liquidation, sale or
transfer by the Company or its Affiliates of all businesses owned or operated by
the Company or its Affiliates.

     In addition, certain other terms used herein have definitions given to them
in the first place in which they are used.


                                  ARTICLE III
                                  -----------

                                ADMINISTRATION
                                --------------

     3.1  Committee Structure and Authority.  The Plan shall be administered by
          ---------------------------------                                    
the Committee, which, except as provided herein, may be comprised of one or more
persons.  In the absence of an appointment, the Board or the portion thereof
that is a Disinterested Person shall be the Committee.  A majority of the
Committee shall constitute a quorum at any meeting thereof (including telephone
conference) and the acts of a majority of the members present, or acts approved
in writing by a majority of the entire Committee without a meeting, shall be the
acts of the Committee for purposes of the Plan.  The Committee may authorize any
one or more of its members or an officer of the Company to execute and deliver
documents on behalf of the Committee.  A member of the Committee shall not
exercise any discretion respecting himself or herself under the Plan.  Any
member of the Committee may resign upon notice to the Board.  The Committee may
allocate among one or more of its members, or may delegate to one or more of its
agents, such duties and responsibilities as it determines.

     Among other things, the Committee shall have the authority, subject to the
terms of the Plan and the limitation of Rule 16b-3 so that the Plan is qualified
thereunder:

          (a) to determine the terms and conditions of any Option hereunder
     (including, but not limited to, the Option Price and Period, any exercise
     restriction or limitation and any exercise acceleration or forfeiture
     waiver regarding any Option and the shares of Common Stock relating
     thereto);

          (b) to adjust the terms and conditions, at any time or from time to
     time, of any Option, subject to the limitations of Section 10.1;

                                      -6-
<PAGE>
 
          (c) to provide for the forms of Agreement to be utilized in connection
     with the Plan;

          (d) to determine whether a Participant has a Disability or a
     retirement;

          (e) to determine what securities law requirements are applicable to
     the Plan, Options, and the issuance of shares of Common Stock and to
     require of a Participant that appropriate action be taken with respect to
     such requirements;

          (f) to cancel, with the consent of the Participant or as otherwise
     provided in the Plan or an Agreement, outstanding Options;

          (g) to interpret and make a final determination with respect to the
     remaining number of shares of Common Stock;

          (h) to require as a condition of the exercise of an Option or the
     issuance or transfer of a certificate of Common Stock, the withholding from
     a Participant of the amount of any federal, state or local taxes as may be
     necessary in order for the Company or any other employer to obtain a
     deduction or as may be otherwise required by law;

          (i) to determine whether and with what effect an individual has
     incurred a Termination of Directorship;

          (j) to determine whether the Company or any other person has a right
     or obligation to purchase Common Stock from a Participant and, if so, the
     terms and conditions on which such Common Stock is to be purchased;

          (k) to determine the restrictions or limitations on the transfer of
     Common Stock;

          (l) to determine whether an Option is to be adjusted, modified or
     purchased, or is to become fully exercisable, under the Plan or the terms
     of an Agreement;

          (m) to determine the permissible methods of Option exercise and
     payment, including cashless exercise arrangements;

          (n) to adopt, amend and rescind such rules and regulations as, in its
     opinion, may be advisable in the administration of the Plan; and

          (o) to appoint and compensate agents, counsel, auditors or other
     specialists to aid it in the discharge of its duties.

     The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable, to interpret the terms and provisions of the
Plan and any Option issued under the Plan (and any 

                                      -7-
<PAGE>
 
Agreement) and to otherwise supervise the administration of the Plan. The
Committee's policies and procedures may differ with respect to different
Options.

     Any determination made by the Committee pursuant to the provisions of the
Plan shall be made in its sole discretion, and in the case of any determination
relating to an Option, may be made at the time of the grant of the Option or,
unless in contravention of any express term of the Plan or an Agreement, at any
time thereafter.  All decisions made by the Committee pursuant to the provisions
of the Plan shall be final and binding on all persons, including the Company and
Participants.  Any determination shall not be subject to de novo review if
                                                         -- ----          
challenged in court.


                                  ARTICLE IV
                                  ----------

                             STOCK SUBJECT TO PLAN
                             ---------------------

     4.1  Number of Shares.  Subject to the adjustment under Section 4.6, the
          ----------------                                                   
total number of shares of Common Stock reserved and available for distribution
pursuant to Options under the Plan shall be six hundred thousand (600,000)
shares of Common Stock authorized for issuance on the Effective Date.  Such
shares may consist, in whole or in part, of authorized and unissued shares or
treasury shares.

     4.2  Release of Shares.   If any shares of Common Stock that have been
          -----------------                                                
optioned cease to be subject to an Option, if any shares of Common Stock that
are subject to any Option are forfeited, if any Option otherwise terminates
without issuance of shares of Common Stock being made to the Participant, or if
any shares (whether or not restricted) of Common Stock are received by the
Company in connection with the exercise of an Option, such shares, in the
discretion of the Committee, may again be available for distribution in
connection with Options under the Plan.

     4.3  Restrictions on Shares.  Shares of Common Stock issued upon exercise
          ----------------------                                              
of an Option shall be subject to the terms and conditions specified herein and
to such other terms, conditions and restrictions as the Committee in its
discretion may determine or provide in the Option Agreement.  The Company shall
not be required to issue or deliver any certificates for shares of Common Stock,
cash or other property prior to (i) the listing of such shares on any stock
exchange (or other public market) on which the Common Stock may then be listed
(or regularly traded), (ii) the completion of any registration or qualification
of such shares under federal or state law, or any ruling or regulation of any
government body which the Committee determines to be necessary or advisable, and
(iii) the satisfaction of any applicable withholding obligation in order for the
Company or an Affiliate to obtain a deduction with respect to the exercise of an
Option. The Company may cause any certificate for any share of Common Stock to
be delivered to be properly marked with a legend or other notation reflecting
the limitations on transfer of such Common Stock as provided in the Plan or as
the Committee may otherwise require.  The Committee may require any person
exercising an Option to make such representations and furnish such information
as it may consider appropriate in connection with the issuance or delivery of
the 

                                      -8-
<PAGE>
 
shares of Common Stock in compliance with applicable law or otherwise.
Fractional shares shall not be delivered, but shall be rounded to the next lower
whole number of shares.

     4.4  Stockholder Rights.  No person shall have any rights of a stockholder
          ------------------                                                   
as to shares of Common Stock subject to an Option until, after proper exercise
of the Option or other action required, such shares shall have been recorded on
the Company's official stockholder records as having been issued or transferred.
Upon exercise of the Option or any portion thereof, the Company will have thirty
(30) days in which to issue the shares, and the Participant will not be treated
as a stockholder for any purpose whatsoever prior to such issuance.  No
adjustment shall be made for cash dividends or other rights for which the record
date is prior to the date such shares are recorded as issued or transferred in
the Company's official stockholder records, except as provided herein or in an
Agreement.

     4.5  Best Efforts To Register.  The Company will register under the
          ------------------------                                      
Securities Act the Common Stock delivered or deliverable pursuant to Options on
Commission Form S-8 if available to the Company for this purpose (or any
successor or alternate form that is substantially similar to that form to the
extent available to effect such registration), in accordance with the rules and
regulations governing such forms, as soon as such forms are available for
registration to the Company for this purpose.  The Company will use its best
efforts to cause the registration statement to become effective as soon as
possible and will file such supplements and amendments to the registration
statement as may be necessary to keep the registration statement in effect until
the earliest of (a) one year following the expiration of the Option Period of
the last Option outstanding, (b) the date the Company is no longer a reporting
company under the Exchange Act and (c) the date all Participants have disposed
of all shares delivered pursuant to any Option.  The Company may delay the
foregoing obligation if the Committee reasonably determines that any such
registration would materially and adversely affect the Company's interests or if
there is no material benefit to Participants.

     4.6  Anti-Dilution.  In the event of any Company stock dividend, stock
          -------------                                                    
split, combination or exchange of shares, recapitalization or other change in
the capital structure of the Company, corporate separation or division of the
Company (including, but not limited to, a split- up, spin-off, split-off or
distribution to Company stockholders other than a normal cash dividend), sale by
the Company of all or a substantial portion of its assets (measured on either a
stand-alone or consolidated basis), reorganization, rights offering, a partial
or complete liquidation, or any other corporate transaction, Company share
offering or event involving the Company and having an effect similar to any of
the foregoing, then the Committee shall adjust or substitute, as the case may
be, the number of shares of Common Stock available for Options under the Plan,
the number of shares of Common Stock covered by outstanding Options, the
exercise price per share of outstanding Options, and any other characteristics
or terms of the Options as the Committee shall deem necessary or appropriate to
reflect equitably the effects of such changes to the Participants; provided,
however, that any fractional shares resulting from such adjustment shall be
eliminated by rounding to the next lower whole number of shares with appropriate
payment for such fractional share as shall reasonably be determined by the
Committee.

                                      -9-
<PAGE>
 
                                   ARTICLE V
                                   ---------

                                 OPTION GRANTS
                                 -------------

     5.1  Eligibility.  Each Director shall be eligible to be granted Options to
          -----------                                                           
purchase shares of Common Stock as provided in the Plan.

     5.2  Grant and Exercise.  Each Director who is a Director on the Effective
          ------------------                                                   
Date shall be granted an Option on the Effective Date to purchase ten thousand
(10,000) shares of Common Stock without further action by the Board or the
Committee.  On each Grant Date after the Effective Date each person who is a
Director on such Grant Date shall be granted an Option to purchase one thousand
(1,000) shares of Common Stock without further action by the  Board or the
Committee.  If the number of shares of Common Stock available to grant under the
Plan on a scheduled date of grant is insufficient to make all automatic grants
required to be made pursuant to the Plan on such date, then each eligible
Director shall receive an Option to purchase a pro rata number of the remaining
shares of Common Stock available under the Plan; provided further, however, that
if such proration results in fractional shares of Common Stock, then such Option
shall be rounded down to the nearest number of whole shares of Common Stock.
Each Option granted under the Plan shall be evidenced by an Agreement, in a form
approved by the Committee, which shall embody the terms and conditions of such
Option and which shall be subject to the express terms and conditions set forth
in the Plan.

     5.3  Terms and Conditions.  Options shall be subject to such terms and
          --------------------                                             
conditions as shall be determined by the Committee and, unless otherwise
provided in an Agreement, shall include the following:

          (a) Option Price.  The Option Price of all Options shall be the Fair
              ------------                                                    
     Market Value per share on the Grant Date.

          (b) Option Period.  The Option Period of each Option shall be ten (10)
              -------------                                                     
     years.

          (c) Exercisability.  Subject to Section 8.1 and any Agreement, Options
              --------------                                                    
     shall be exercisable upon the earliest of the date of the Participant's
     death or Disability and the date that is the six-month anniversary of the
     Grant Date.  If the Committee provides that any Option is exercisable only
     in installments, the Committee may at any time waive such installment
     exercise provisions, in whole or in part.  In addition, the Committee may
     at any time accelerate the exercisability of any Option.  Any Option not
     yet exercised shall be forfeited if the Participant incurs a Termination of
     Directorship due to Cause.

          (d) Method of Exercise.  A Participant desiring to exercise an Option,
              ------------------                                                
     in whole or in part, at any time during the Option Period must give written
     notice of exercise on a form provided by the Committee (if available) to
     the Company specifying the number of shares of Common Stock subject to the
     Option to be purchased.  Such notice shall be accompanied by payment in
     full of the purchase price by cash or check or such other form 

                                      -10-
<PAGE>
 
     of payment as the Company may accept. If approved by the Committee, payment
     in full or in part may also be made (i) by delivering Common Stock already
     owned by the Participant having a total Fair Market Value on the date of
     such delivery equal to the Option Price; (ii) by the execution and delivery
     of a note or other evidence of indebtedness (and any security agreement
     thereunder) satisfactory to the Committee and permitted in accordance with
     Section 5.3(e); (iii) by authorizing the Company to retain shares of Common
     Stock which would otherwise be issuable upon exercise of the Option having
     a total Fair Market Value on the date of delivery equal to the Option
     Price; (iv) by the delivery of cash or the extension of credit by a broker-
     dealer to whom the Participant has submitted a notice of exercise or
     otherwise indicated an intent to exercise (in accordance with Part 220,
     Chapter II, Title 12 of the Code of Federal Regulations, so-called
     "cashless" exercise); or (v) by any combination of the foregoing. No shares
     of Common Stock shall be issued until full payment therefor has been made.

          (e) Company Loan or Guarantee.  Upon the exercise of any Option and
              -------------------------                                      
     subject to the pertinent Agreement and the discretion of the Committee, the
     Company may at the request of the Participant:

                    (i)  lend to the Participant, with recourse, an amount equal
          to such portion of the Option Price as the Committee may determine; or

                    (ii) guarantee a loan obtained by the Participant from a
          third-party for the purpose of tendering the Option Price.

          The terms and conditions of any loan or guarantee, including the term,
     interest rate, and any security interest thereunder, shall be determined by
     the Committee, except that no extension of credit or guarantee shall
     obligate the Company for an amount to exceed the lesser of the aggregate
     Fair Market Value per share of the Common Stock on the date of exercise,
     less the par value of the shares of Common Stock to be purchased upon the
     exercise of the Option, or the amount permitted under applicable laws or
     the regulations and rules of the Federal Reserve Board and any other
     governmental agency having jurisdiction.

          (f) Non-transferability of Options.  Except as provided herein or in
              ------------------------------                                  
     an Agreement, no Option shall be transferable by the Participant other than
     by will or by the laws of descent and distribution, and all Options shall
     be exercisable during the Participant's lifetime only by the Participant.
     If and to the extent transferability is permitted by Rule 16b-3 and except
     as otherwise provided herein or in an Agreement, every Option granted
     hereunder shall be freely transferable but only if such transfer is exempt
     under Rule 16b-3 or is made pursuant to a domestic relations order which
     would be a "qualified domestic relations order" as defined in Section 414
     of the Code if such section applied to the Option.

                                      -11-
<PAGE>
 
          (g) Cashing Out of Option; Settlement of Spread Value in Stock.  On
              ----------------------------------------------------------     
     receipt of written notice of exercise of any Option for which at least six
     months has elapsed since the Grant Date (provided that such limitation of
     six months shall not apply to an Option granted to a Participant who has
     subsequently died), the Committee may elect to cash out all or part of the
     portion of any Option to be exercised by paying the Participant an amount,
     in cash or Common Stock, equal to the Spread times the number of shares of
     Common Stock subject to the Option on the effective date of such cash out.
     Cash outs relating to Options held by a Participant who is actually or
     potentially subject to Section 16(b) of the Exchange Act shall comply with
     the "window period" provisions of Rule 16b-3, to the extent applicable, and
     the Committee may determine the Spread by applying the Fair Market Value
     based on the highest mean sales price of the Common Stock on any exchange
     on which the Common Stock is listed (or NASDAQ) on any day during such
     "window period."


                                   ARTICLE VI
                                   ----------

             PROVISIONS APPLICABLE TO STOCK ACQUIRED UNDER THE PLAN
             ------------------------------------------------------

     6.1  Transfer of Shares.  A Participant may at any time make a  transfer of
          ------------------                                                    
shares of Common Stock received pursuant to the exercise of an Option to his
parents, spouse or descendants or to any trust for the benefit of the foregoing
or to a custodian under a uniform gifts to minors act or similar statute for the
benefit of any of the Participant's descendants.  Any transfer of shares
received pursuant to the exercise of an Option shall not be permitted or valid
unless and until the transferee agrees to be bound by the provisions of the
Plan, and any provision respecting Common Stock under the Agreement, provided
that "Termination of Employment" shall continue to refer to the Termination of
Employment of the Participant.

     6.2  Limited Transfer During Offering.  In the event there is an effective
          --------------------------------                                     
registration statement under the Securities Act pursuant to which shares of
Common Stock shall be offered for sale in an underwritten offering, a
Participant shall not, during the  period requested by the underwriters managing
the registered public offering, effect any public sale or distribution of shares
received directly or indirectly pursuant to an exercise of an Option.

     6.3  Committee Discretion.  The Committee may in its sole discretion
          --------------------                                           
include in any Agreement an obligation that the Company purchase a Participant's
shares of Common Stock received upon the exercise of an Option (including the
purchase of any unexercised Options which have not expired), or may obligate a
Participant to sell shares of Common Stock to the Company upon such terms and
conditions as the Committee may determine and set forth in an Agreement.  The
provisions of this Article X shall be construed by the Committee in its sole
discretion, and shall be subject to such other terms and conditions as the
Committee may from time to time determine.  Notwithstanding any provision herein
to the contrary, the Company may upon determination by the Committee assign its
right to purchase shares of Common Stock under 

                                      -12-
<PAGE>
 
this Article X, whereupon the assignee of such right shall have all the rights,
duties and obligations of the Company with respect to purchase of the shares of
Common Stock.

     6.4  No Company Obligation.  None of the Company, an Affiliate or the
          ---------------------                                           
Committee shall have any duty or obligation to affirmatively disclose to a
record or beneficial holder of Common Stock or an Option, and such holder shall
have no right to be advised of any material information regarding the Company or
any Affiliate at any time prior to, upon or in connection with receipt or the
exercise of an Option or the Company's purchase of Common Stock or an Option
from such holder in accordance with the terms hereof.

     6.5  Sale of Grossman/Issette Interest.  Unless otherwise provided in an
          ---------------------------------                                  
Agreement, the Company shall give notice to each Participant with respect to a
sale or series of sales of any Grossman/Issette Interest other than a sale to a
Grossman/Issette Entity.  Upon receipt of such notice, each Participant shall,
if such notice so directs, sell to such proposed purchaser a percentage of the
Participant's shares of Common Stock owned and acquired pursuant to the Plan
(including any shares of Common Stock which could yet be acquired pursuant to an
Option) equal to that percentage of all shares of Common Stock owned by the
Grossman/Issette Entities which are to be sold by the Grossman/Issette Entities
to such purchaser on the same terms and conditions, including at the price per
share of Common Stock to be paid, as in the sale by the Grossman/Issette
Entities.


                                   ARTICLE VII
                                   -----------

                          CHANGE IN CONTROL PROVISIONS
                          ----------------------------

     7.1  Impact of Event.  Notwithstanding any other provision of the Plan to
          ---------------                                                     
the contrary, in the event of a Change in Control:

          (a) Any Options outstanding as of the date such Change in Control and
     not then exercisable shall become fully exercisable to the full extent of
     the original grant;

          (b) Notwithstanding any other provision of the Plan, unless the
     Committee shall provide otherwise in an Agreement, a Participant shall have
     the right, whether or not the Option is fully exercisable or may be
     otherwise realized by the Participant, by giving notice during the 60-day
     period from and after a Change in Control to the Company, to elect to
     surrender all or part of the Option to the Company and to receive cash,
     within 30 days of such notice, in an amount equal to the Spread, based on
     the Change in Control Price, times the number of shares of Common Stock
     subject to Option on the date of such election as to which the right
     granted hereunder shall have been exercised; provided, however, that if the
     end of such 60-day period from and after a Change in Control is within six
     months of the date of grant of the Option held by a Participant (except a
     Participant who has died during such six month period), such Option shall
     be cancelled in exchange for a payment to the Participant on the date of
     the Participant's Termination of 

                                      -13-
<PAGE>
 
         Directorship, equal to the Spread multiplied by the number of shares of
         Common Stock granted under the Option, and increased from the date of
         the change in control to the date of the Termination of Directorship by
         the prime rate as reported from time to time in The Wall Street Journal
         or other general publication. The 60-day period shall be extended, if
         necessary, to include the "window period" of Rule 16(b)-3 which first
         commences on or after the date of the Change in Control, and the
         Committee shall have sole discretion, if necessary, to approve the
         Participant's exercise hereunder and the date in which the Spread is
         calculated may be adjusted, if necessary, to a later date if necessary
         to avoid liability to such Participant under Section 16(b).



                                 ARTICLE VIII
                                 ------------

                                 MISCELLANEOUS
                                 -------------
                                        
       8.1     Amendments and Termination.  The Board may amend, alter,
               --------------------------
discontinue or terminate the Plan at any time, but no amendment, alteration,
discontinuation or termination shall be made which would (a) reduce the current
value of an Account or impair the rights of a Participant under an Option
theretofore granted without the Participant's consent, except such an amendment
made to cause the Plan to qualify for the exemption provided by Rule 16b-3 or
(b) disqualify the Plan from the exemption provided by Rule 16b-3. In addition,
no such amendment shall be made without the approval of the Company's
stockholders to the extent such approval is required by law or agreement.
Notwithstanding the foregoing, the Plan may not be amended more than once every
six (6) months to change the Plan provisions listed in section (c)(2)(ii)(A) of
Rule 16b-3, other than to comport with changes in the Code or Rule 16b-3.

         The Committee may amend the Plan at any time provided that (a) no
amendment shall impair the rights of any Participant under any Option
theretofore granted without the Participant's consent, (b) no amendment shall
disqualify the Plan from the exemption provided by Rule 16b-3, and (c) any
amendment shall be subject to the approval or rejection of the Board.

         The Committee may amend the terms of any Option, prospectively or
retroactively, but no such amendment shall impair the rights of any Participant
without the Participant's consent, except such an amendment made to cause the
Plan or Option to qualify for the exemption provided by Rule 16b-3. The
Committee may also substitute new Options for previously granted Options,
including previously granted Options having higher Option Prices but no such
substitution shall be made which would impair the rights of Participants under
such Option theretofore granted without the Participant's consent. The
Committee's discretion to amend the Plan or Agreement shall be limited to the
Plan's constituting a plan described in Rule 16b-3.

                                      -14-
<PAGE>
 
         Subject to the above provisions, the Board shall have authority to
amend the Plan to take into account changes in law and tax and accounting rules,
as well as other developments and to grant Options which qualify for beneficial
treatment under such rules without stockholder approval.

         The Board may terminate the Plan at any time.

       8.2     Unfunded Status of Plan.  It is intended that the Plan be an
               -----------------------                                     
"unfunded" plan for incentive and deferred compensation. The Committee may
authorize the creation of trusts or other arrangements to meet the obligations
created under the Plan to deliver Common Stock or make payments; provided,
however, that, unless the Committee otherwise determines, the existence of such
trusts or other arrangements is consistent with the "unfunded" status of the
Plan.

       8.3     General Provisions.
               ------------------ 

               (a)    Representation.  The Committee may require each person
         purchasing or receiving shares pursuant to an Option to represent to
         and agree with the Company in writing that such person is acquiring the
         shares without a view to the distribution thereof. The certificates for
         such shares may include any legend which the Committee deems
         appropriate to reflect any restrictions on transfer.

               (b)    No Additional Obligation.  Nothing contained in the Plan
                      ------------------------
         shall prevent the Company or an Affiliate from adopting other or
         additional compensation arrangements for Directors or employees.

               (c)    Withholding.  No later than the date as of which an amount
                      -----------
         first becomes includible in the gross income of the Participant for
         Federal income tax purposes with respect to any Option, the Participant
         shall pay to the Company (or other entity identified by the Committee),
         or make arrangements satisfactory to the Company or other entity
         identified by the Committee regarding the payment of, any Federal,
         state, local or foreign taxes of any kind required by law to be
         withheld with respect to such amount required in order for the Company
         or an Affiliate to obtain a current deduction. Unless otherwise
         determined by the Committee, withholding obligations may be settled
         with Common Stock, including Common Stock that is part of the Option
         that gives rise to the withholding requirement provided that any
         applicable requirements under Section 16 of the Exchange Act are
         satisfied. The obligations of the Company under the Plan shall be
         conditional on such payment or arrangements, and the Company and its
         Affiliates shall, to the extent permitted by law, have the right to
         deduct any such taxes from any payment otherwise due to the
         Participant.

               (d)    Representation.  The Committee shall establish such
                      --------------
         procedures as it deems appropriate for a Participant to designate a
         Representative to whom any amounts payable in the event of the
         Participant's death are to be paid.

                                      -15-
<PAGE>
 
               (e)    Controlling Law.  The Plan and all Options made and
                      ---------------
         actions taken thereunder shall be governed by and construed in
         accordance with the laws of the State of Delaware (other than its law
         respecting choice of law). The Plan shall be construed to comply with
         all applicable law, and to avoid liability to the Company, an Affiliate
         or a Participant, including, without limitation, liability under
         Section 16(b) of the Exchange Act.

               (f)    Offset.  Any amounts owed to the Company or an Affiliate
                      ------
         by the Participant of whatever nature may be offset by the Company from
         the value of any shares of Common Stock, cash or other thing of value
         under the Plan or an Agreement to be transferred to the Participant,
         and no shares of Common Stock, cash or other thing of value under the
         Plan or an Agreement shall be transferred unless and until all disputes
         between the Company and the Participant have been fully and finally
         resolved and the Participant has waived all claims to such against the
         Company or an Affiliate.

       8.4     Certain Rights.  Nothing contained herein shall be deemed to
               --------------
alter the relationship between the Company or an Affiliate and a Participant, or
the contractual relationship between a Participant and the Company or an
Affiliate if there is a written contract regarding such relationship. Nothing
contained herein shall be construed to constitute a contract of employment or
appointment between the Company or an Affiliate and a Participant. The Company
or an Affiliate and each of the Participants continue to have the right to
terminate the employment or other relationship at any time for any reason,
except as provided in a written contract. The Company or an Affiliate shall have
no obligation to retain the Participant in its employ or service as a result of
the Plan. There shall be no inference as to the length of employment or service
hereby, and the Company or an Affiliate reserves the same rights to terminate
the Participant's employment or service as existed prior to the individual
becoming a Participant in the Plan.

       8.5     Options in Substitution for Options Granted by Other
               ----------------------------------------------------  
Corporations.  Options may be granted under the Plan from time to time in
- ------------
substitution for awards held by employees, directors or service providers of
other corporations who are about to become Directors of the Company or an
Affiliate as the result of a merger or consolidation of the employing
corporation with the Company or an Affiliate, or the acquisition by the Company
or an Affiliate of the assets of the employing corporation, or the acquisition
by the Company or Affiliate of the stock of the employing corporation, as the
result of which it becomes a designated employer under the Plan. The terms and
conditions of the Options so granted may vary from the terms and conditions set
forth in the Plan at the time of such grant as the majority of the members of
the Committee may deem appropriate to conform, in whole or in part, to the
provisions of the awards in substitution for which they are granted.

       8.6     Procedure for Adoption.  Any Affiliate of the Company may by
               ----------------------                                      
resolution of such Affiliate's board of directors, with the consent of the Board
of Directors and subject to such conditions as may be imposed by the Board of
Directors, adopt the Plan for the benefit of its Directors as of the date
specified in the board resolution.

                                      -16-
<PAGE>
 
       8.7     Procedure for Withdrawal.  Any Affiliate which has adopted the
               ------------------------ 
Plan may, by resolution of the board of directors of such direct or indirect
subsidiary, with the consent of the Board of Directors and subject to such
conditions as may be imposed by the Board of Directors, terminate its adoption
of the Plan.

       8.8     Delay.  If at the time a Participant incurs a Termination of
               -----                                                       
Directorship (other than due to Cause) or if at the time of a Change in Control,
the Participant is subject to "short-swing" liability under Section 16 of the
Exchange Act, any time period provided for under the Plan or an Agreement to the
extent necessary to avoid the imposition of liability shall be suspended and
delayed during the period the Participant would be subject to such liability,
but not more than six (6) months and one (1) day and not to exceed the Option
Period. The Company shall have the right to suspend or delay any time period
described in the Plan or an Agreement if the Committee shall determine that the
action may constitute a violation of any law or result in liability under any
law to the Company, an Affiliate or a stockholder of the Company until such time
as the action required or permitted shall not constitute a violation of law or
result in liability to the Company, an Affiliate or a stockholder of the
Company. The Committee shall have the discretion to suspend the application of
the provisions of the Plan required solely to comply with Rule 16b-3 if the
Committee shall determine that Rule 16b-3 does not apply to the Plan.

       8.9     Headings.  The headings contained in the Plan are for reference
               --------                                                       
purposes only and shall not affect the meaning or interpretation of the Plan.

       8.10    Severability.  If any provision of the Plan shall for any reason
               ------------
be held to be invalid or unenforceable, such invalidity or unenforceability
shall not effect any other provision hereby, and the Plan shall be construed as
if such invalid or unenforceable provision were omitted.

       8.11    Successors and Assigns. The Plan shall inure to the benefit of
               ---------------------- 
and be binding upon each successor and assign of the Company. All obligations
imposed upon a Participant, and all rights granted to the Company hereunder,
shall be binding upon the Participant's heirs, legal representatives and
successors.

       8.12    Entire Agreement.  The Plan and the Agreement constitute the
               ----------------
entire agreement with respect to the subject matter hereof and thereof, provided
that in the event of any inconsistency between the Plan and the Agreement, the
terms and conditions of the Plan shall control.

       Executed on this      day of         , 199  .
                        ----        --------     --


                              FLUOROSCAN IMAGING SYSTEMS, INC.


                              By:   
                                  ---------------------------------------

                                      -17-
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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