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                                                                    EXHIBIT 10.7

                         ALTERNATIVE PUBLIC SCHOOLS LLC
                       1996 POINTS OF INTEREST OPTION PLAN

         1.       Purpose. The purpose of the Alternative Public Schools LLC
1996 Points of Interest Option Plan (the "Plan") is to advance the growth and
prosperity of Alternative Public Schools LLC (the "Company") and its
subsidiaries by providing key employees with an additional incentive to
contribute to the best interests of the Company. Without prejudice to other
compensation programs approved from time to time by the Managing Members of the
Company, such additional incentive is to be given key employees by means of
contribution allowance agreements as that term is defined in the Tennessee
Limited Liability Company Act, (the "Act"), provided for under the Plan.

         2.       Administration of the Plan.

                  (a)      The Plan shall be administered by the Managing
Members unless and until such time as the Managing Members delegate
administration to a committee pursuant to subparagraph 2(c) (the "Committee").

                  (b)      The Managing Members shall have the power, subject
to, and within, the limits of the express provisions of the Plan:

                           (i)      To determine from time to time which of the
                  eligible persons shall be granted options under the Plan, the
                  term of each granted option, the time or times during the term
                  of each option within which all or portions of each option may
                  be exercised, and the number of Class B points of interest
                  ("Class B Points of Interest") for which each option shall be
                  granted.

                           (ii)     To construe and interpret the Plan and
                  options granted under it, and to establish, amend and revoke
                  rules and regulations for its administration. The Managing
                  Members, in the exercise of this power, shall generally
                  determine all questions of policy and expediency that may
                  arise and may correct any defect, omission or inconsistency in
                  the Plan or in any contribution allowance agreement in a
                  manner and to the extent it shall deem necessary or expedient
                  to make the Plan fully effective.

                           (iii)    To prescribe the terms and provisions of
                  each option granted (which need not be identical).

                           (iv)     To amend the Plan as provided herein.

                           (v)      Generally, to exercise such powers and to
                  perform such acts as are deemed necessary or expedient to
                  promote the best interests of the Company.

                  (c)      The Managing Members may delegate administration of
the Plan (including, without limitation, the Managing Members' powers under
subparagraph 2(b)) to a Committee


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composed of not less than two (2) members. If administration is delegated to a
Committee, the Committee shall have, in connection with the administration of
the Plan, the powers theretofore possessed by the Managing Members, subject,
however, to such constraints, not inconsistent with the provisions of the Plan,
as may be adopted from time to time by the Managing Members. The initial members
of the Committee shall be William R. Deloache, Jr. and John C. Eason. The
Managing Members at any time may remove members from or add members to the
Committee or may abolish the Committee and revest in the Managing Members the
administration of the Plan. Vacancies on the Committee, howsoever caused, shall
be filled by the Managing Members.

                  (d)      The interpretation and construction by the Managing
Members of any provisions of the Plan or of any option granted under it shall be
final, and the interpretation or construction by any Committee appointed
pursuant to subparagraph 2(c) of any such provisions or option shall also,
unless otherwise determined by the Managing Members, be final. No member of such
Committee or any of the Managing Members shall be liable for any action or
determination made in good faith with respect to the Plan or any option granted
under it.

         3.       Eligible Employees. The Managing Members or the Committee
shall determine from time to time those officers, key employees and consultants
of the Company and its subsidiaries to whom options shall be granted and,
pursuant to the provisions of the Plan, the amount thereof and the terms and
conditions, including requirements as to continued employment by the
participant, upon which such options or rights are granted and are exercisable.
Managing Members of the Company who are not also employees of the Company or its
subsidiaries shall not be eligible to participate in the Plan.

         4.       The Points of Interest. The Points of Interest subject to the
options and other provisions of the Plan shall be Class B Points of Interest of
the Company. The total number of the Company's Class B Points of Interest that
may be transferred pursuant to the exercise of options under the Plan shall not
exceed in the aggregate 50,000 Class B Points of Interest. Interests subject to
options which terminate or expire prior to exercise shall be available for
further option hereunder.

         Each option granted under this Plan shall be subject to the requirement
that if at any time the Managing Members or the Committee shall determine that
the consent or approval of any governmental regulatory body is necessary or
desirable in connection with the issue or transfer of membership interests
subject thereto, no such option may be exercised in whole or in part unless such
consent or approval shall have been effected or obtained free of any conditions
not acceptable to the Managing Members or the Committee. If required at any time
by the Managing Members or the Committee, an option may not be exercised until
the optionee has delivered an investment letter to the Company containing the
representations that all interests being purchased are being acquired for
investment and not with a view to, or for resale in connection with, any
distribution of such interests.


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         5.       Terms and Conditions of Options. All interest options granted
pursuant to the Plan shall be in such form as the Managing Members or the
Committee shall from time to time determine and shall be subject to the
following terms and conditions:

                  (a)      Option Price. The price per Class B Point of Interest
under each option granted under the Plan shall be determined and fixed by the
Managing Members or the Committee.

                  (b)      Option Period. The period during which an option may
be exercised shall be determined by the Managing Members or the Committee,
provided, however, that in no event shall an option be exercisable after the
expiration of 10 years from the date such option was granted. Options may be
made exercisable in installments, and such options or installments thereof may
be exercised in part from time to time after they become exercisable. The
maturity of any installment or installments may be accelerated at the discretion
of the Managing Members or the Committee.

         In the event that a participant shall cease to be employed by or a
consultant to the Company or one of its subsidiaries for any reason other than
his death, all options held by him pursuant to the Plan and not previously
exercised at the date of such termination shall terminate immediately and become
void and of no effect; provided, however, that the Managing Members or the
Committee shall have the right to extend the exercise period not in excess of
one year following the date of termination of the participant's employment.
Notwithstanding the fore going, if the termination is due to disability, or to
retirement with the consent of the Company, such disabled or retiring
participant shall have the right to exercise his options which have not
previously been exercised at the date of such termination of employment at any
time within one year after such termination. Whether termination of employment
is due to disability or is to be considered retirement with the consent of the
Company shall be determined by the Managing Members or the Committee, which
determination shall be final and conclusive.

         If the participant should die or become disabled (as defined in the
Company's long term disability insurance policy or by the Managing Members)
while in the employ of the Company or a subsidiary of the Company or within a
period of one year after the termination of his employment by retirement and
shall not have fully exercised vested options granted under the Plan, such
options may be exercised in whole or in part at any time within 12 months
following the participant's death by the executors or administrators of the
participant's estate or by any person or persons who shall have acquired the
options directly from the participant by bequest or inheritance.

         The exercise of an option granted under the Plan shall not affect the
optionee's right or ability to exercise any other option granted under the Plan
or any other points of interest option plan of the Company or its subsidiaries.

         6.       Contribution for Points of Interest. Contribution for Points
of Interest subject to options granted under the Plan shall be made by the
optionee in the form of cash. Payment shall


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be made upon the exercise of the option. Payment in currency or by check, bank
draft, cashier's check or postal money order shall be considered payment in
cash.

         7.       Non-Assignability. No option shall be transferable otherwise
than by will or the laws of descent and distribution and an option is
exercisable during the lifetime of the optionee only by him.

         8.       Adjustment Upon Changes in Points of Interest.

                  (a)      The number of Class B Points of Interest available
for the granting of options under the Plan and the number of Class B Points of
Interest and price per Class B Point of Interest subject to outstanding options
granted pursuant to the Plan may be adjusted by the Managing Members or the
Committee in an equitable manner to reflect changes in the capitalization of the
Company, including, but not limited to, such changes as result from merger,
consolidation, reorganization, recapitalization, dividend in property other than
cash, points of interest split, liquidating dividend, exchange of points of
interest, and change in corporate structure. If any adjustment under this
subparagraph 8(a) would create a fractional interest or a right to acquire a
fractional membership interest, such fractional membership interest shall be
disregarded and the number of interests available under the Plan and the number
covered under any options granted pursuant to the Plan shall be the next lower
number of interests, rounding all fractions downward.

                  (b)      Notwithstanding the foregoing, in the event of: (1) a
dissolution or liquidation of the Company; (2) a sale of all or substantially
all of the assets of the Company; (3) a merger in which the Company is not the
surviving corporation; or (4) other capital reorganization in which more than
fifty percent (50%) of the ownership of the Company entitled to vote is
transferred, any outstanding options hereunder immediately shall be fully
exercisable by an optionee.

                  (c)      Any adjustment made by the Managing Members or the
Committee under this paragraph 8 shall be conclusive and binding on all affected
persons.

         9.       Amendment. The Managing Members from time to time may amend
this Plan, but except as provided above with respect to dilutions or other
adjustments or mergers or exchanges, or with the approval of the Company's
members, may not (a) increase the aggregate number of interests available for
option hereunder, (b) change the price at which options may be granted, (c)
extend the maximum period during which an option may be exercised, or (d) change
the eligibility requirements for options hereunder. Rights and obligations under
any option granted before amendment of the Plan shall not be altered or impaired
by amendment of the Plan, except with the consent of the person to whom the
option was granted.

         10.      Fair Market Value of Points of Interest. Whenever pursuant to
the terms of the Plan the fair market value of the Company's Class B Points of
Interest is required to be determined


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as of a particular date, such fair market value shall equal the fair value of
such Class B Points of Interest as determined by the Managing Members, in each
case, on the business day immediately preceding the date on which the
determination is made. Fair market value shall be determined in all cases
without regard to any restriction other than a restriction which, by its terms,
will never lapse.

         11.      No Rights as Members. A participant in the Plan shall have no
rights as a member with respect to any shares covered by his option until the
date of the issuance of the points of interest to him. No adjustment shall be
made for dividends (ordinary or extraordinary, whether in cash, securities or
other property) or distributions or other rights for which the record date is
prior to the date such Points of Interest are purchased.

         12.      Indemnification of Committee. In addition to such other rights
of indemnification as they may have as Managing Members or as members of the
Committee, the members of the Committee shall be indemnified by the Company
against the reasonable expenses, including attorneys' fees actually and
necessarily incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal therein, to which they or any of
them may be a party by reason of any action taken or failure to act under or in
connection with the Plan or any option granted thereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by independent legal counsel selected by the Company) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such Committee member is liable for negligence or misconduct in
the performance of his duties; provided that within 60 days after institution of
any such action, suit or proceeding, the Committee member shall in writing offer
the Company the opportunity, at its own expense, to handle and defend the same.

         13.      Termination. This Plan shall terminate on October 2, 2006,
unless sooner terminated by action of the Managing Members. No option may be
granted hereunder after termination of the Plan, but such termination shall not
affect the validity of any option then outstanding.

Date Approved by Managing Members: October 2, 1996


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