<PAGE>
 
                                                                   Exhibit 10.11

                             TERRACE HOLDINGS, INC.

                             1997 STOCK OPTION PLAN

1.   PURPOSE OF THE PLAN

     The purpose of the Terrace Holdings, Inc. 1997 Stock Option Plan (the
"Plan") is to enable Terrace Holdings, Inc. (the "Company") and its subsidiaries
to attract and retain the services of directors, officers and other key
employees with managerial, professional or supervisory responsibilities and to
motivate such persons to use their best efforts on behalf of the Company.

2.   GENERAL PROVISIONS

     2.1  Definitions

     As used in the Plan:

     (a) "Board of Directors" means the Board of Directors of the Company.

     (b) "Code" means the Internal Revenue Code of 1986, including any and all
         amendments thereto.

     (c) "Committee" means the Compensation Committee appointed by the Board of
         Directors from time to time.

     (d) "Common Stock" means the Company's Common Stock, $.001 par value.

     (e) "Fair Market Value" means, with respect to a specific date, the last
         reported sale price of the Common Stock in the NASDAQ SmallCap Market
         on the date such Fair Market Value is being determined, and, in the
         absence of any sale on such day, the Fair Market Value as determined in
         good faith by the Committee on the basis of such quotations and other
         considerations as the Committee deems appropriate.

     (f) "Participant" means a person to whom a Stock Option has been granted
         under the Plan.

     (g) "Rule 16b-3" means Rule 16b-3 promulgated under the Securities Exchange
         Act of 1934, as amended from time to time, or any successor rule.


<PAGE>
 
     (h) "Stock Option" means an option granted under the Plan.

     (l) "Subsidiary" means any corporation (other than the Company) in an
         unbroken chain of corporations beginning with the Company if, at the
         time of the granting of the Stock Option, each of the corporations
         other than the last corporation in the unbroken chain owns 50% or more
         of the total voting power of all classes of stock in one of the other
         corporations in such chain.

     2.2  Administration of the Plan

     (a) The Committee shall have the full power, subject to and within the
         limits of the Plan, to: (i) interpret and administer the Plan, and
         Stock Options granted under it; (ii) make and interpret rules and
         regulations for the administration of the Plan and to make changes in
         and revoke such rules and regulations (and 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 any agreement evidencing the grant of any Stock Option
         in a manner and to the extent it shall deem necessary to make the Plan
         fully effective); (iii) determine those persons to whom Stock Options
         shall be granted and the number of Stock Options to be granted to any
         person; (iv) determine the terms of Stock Options granted under the
         Plan, consistent with the provision of the Plans; and (v) generally,
         exercise such powers and perform such acts in connection with the Plan
         as are deemed necessary or expedient to promote the best interests of
         the Company. The interpretation and construction by the Committee of
         any provision of the Plan or of any Stock Option shall be final,
         binding and conclusive.

     (b) No member of the Committee shall be liable for any action taken or
         omitted to be taken or for any determination made by him or her in good
         faith with respect to the Plan, and the Company shall indemnify and
         hold harmless each member of the Committee against any cost or expense
         (including counsel fees) or liability (including any sum paid in
         settlement of a claim with the approval of the Committee) arising out
         of any act or omission in connection with the administration or
         interpretation of the Plan, unless arising out of such person's own
         fraud or bad faith.

     2.3  Effective Date

     The Plan shall become effective upon its adoption by the Board of
Directors, and Stock Options may be granted upon such adoption and from time to
time thereafter, subject, however, to approval of the Plan by affirmative vote
of the holders of a majority of the shares of the Common Stock present in person
or by proxy and entitled to vote at an annual meeting of the shareholders of the
Company or at a special meeting of the shareholders of the Company expressly
called for such purposes, or any adjournments thereof, within 12 months after
the adoption of the Plan by the Board of Directors. If the Plan is not approved
at such annual or


                                       2
<PAGE>
 
special meeting or at any adjournments thereof, this Plan and all Stock Options
previously granted thereunder shall become null and void.

     2.4  Duration

     If approved by the shareholders of the Company, as provided in Section 2.3,
unless sooner terminated by the Board of Directors, the Plan shall remain in
effect for a period of ten (10) years following its adoption by the Board of
Directors.

     2.5  Shares Subject to the Plan

     The maximum number of shares of Common Stock which may be subject to Stock
Options granted under the Plan shall be 1,250,000. The Stock Options shall be
subject to adjustment in accordance with Section 4.1, as appropriate, and shares
to be issued upon exercise of Stock Options may be either authorized and
unissued shares of Common Stock or authorized and issued shares of Common Stock
purchased or acquired by the Company for any purpose. If a Stock Option or
portion thereof shall expire or is terminated, cancelled or surrendered for any
reason without being exercised in full, the unpurchased shares of Common Stock
which were subject to such Stock Option or portion thereof shall be available
for future grants of Stock Options under the Plan.

     2.6  Amendments

     The Plan may be suspended, terminated or reinstated, in whole or in part,
at any time by the Board of Directors. The Board of Directors may from time to
time make such amendments to the Plan as it may deem advisable, provided,
however, that, without the approval of the Company's shareholders, no amendment
shall be made which:

     (a) Increases the maximum number of shares of Common Stock which may be
         subject to Stock Options granted under the Plan (other than as provided
         in Section 4.1, as appropriate); or

     (b)  Extends the term of the Plan; or

     (c) Otherwise materially increases the benefits accruing to Participants
         under the Plan; or

     (d) Materially modifies the requirements as to eligibility for
         participation in the Plan; or

     (e) Will cause Stock Options granted under the Plan to fail to meet the
         requirements of Rule 16b-3.



                                       3
<PAGE>
 
Except as otherwise provided herein, termination or amendment of the Plan shall
not, without the consent of a Participant, affect such Participant's rights
under any Stock Options previously granted to such Participant.

     2.7  Participants and Grants

     Stock Options may be granted by the Committee to (i) directors, officers
and other full-time salaried employees of the Company and its Subsidiaries with
managerial, professional or supervisory responsibilities and (ii) consultants
and advisors who render bona fide services to the Company and its Subsidiaries,
in each case, where the Committee determines that such director, officer or
employee has the capacity to make a substantial contribution to the success of
the Company. The Committee may grant Stock Options to purchase such number of
shares of Common Stock (subject to the limitations of Sections 2.5 and 3.9) as
the Committee may, in its sole discretion, determine. In granting Stock Options
under the Plan, the Committee, on an individual basis, may vary the number of
Stock Options as between Participants and may grant Stock Options to a
Participant in such amounts as the Committee may determine in its sole
discretion.

3.   STOCK OPTIONS

     3.1  General

     All Stock Options granted under the Plan shall be evidenced by written
agreements executed by the Company and the Participant to whom granted, which
agreement shall state the number of shares of Common Stock which may be
purchased upon the exercise thereof and shall contain such investment
representations and other terms and conditions as the Committee may from time to
time determine.

     3.2  Price

     Subject to the provisions of Section 3.6(d) and 4.1, the purchase price per
share of Common Stock subject to a Stock Option shall, in no case, be less than
one hundred percent (100%) of the Fair Market Value of a share of Common Stock
on the date the Stock Option is granted.

     3.3  Period

     The duration or term of each Stock Option granted under the Plan shall be
for such period as the Committee shall determine but in no event more than ten
(10) years from the date of grant thereof.


                                       4
<PAGE>
 
     3.4  Exercise

     Subject to Section 4.4, Stock Options may be exercisable at such other time
or times as the Committee shall specify when granting the Stock Option.  Once
exercisable, a Stock Option shall be exercisable, in whole or in part, by
delivery of a written notice of exercise to the Secretary of the Company at the
principal office of the Company specifying the number of shares of Common Stock
as to which the Stock Option is then being exercised together with payment of
the full purchase price for the shares being purchased upon such exercise.
Until the shares of Common Stock as to which a Stock Option is exercised are
issued, the Participant shall have none of the rights of a shareholder of the
Company with respect to such shares.

     3.5  Payment

     The purchase price for shares of Common Stock as to which a Stock Option
has been exercised and any amount required to be withheld, as contemplated by
Section 4.3, may be paid:

     (a)  In United States dollars in cash, or by check, bank draft or money
          order payable in United States dollars to the order of the Company; or

     (b)  By the delivery by the Participant to the Company of whole shares of
          Common Stock having an aggregate Fair Market Value on the date of
          payment equal to the aggregate of the purchase price of Common Stock
          as to which the Stock Option is then being exercised or by the
          withholding of whole shares of Common Stock having such Fair Market
          Value upon the exercise of such Stock Option; or

     (c)  By a combination of both (a) and (b) above.

The Committee may, in its discretion, impose limitations, conditions and
prohibitions on the use by a Participant of shares of Common Stock to pay the
purchase price payable by such Participant upon the exercise of a Stock Option.

     3.6  Termination of Employment or Other Relationship

     (a)  In the case of Stock Options granted to an Employee of the Company,
          then in the event a Participant's employment by, or relationship with,
          the Company shall terminate for any reason other than those reasons
          specified in Sections 3.7(b), (c), (d) or (e) hereof while such
          Participant holds Stock Options granted under the Plan, then all
          rights of any kind under any outstanding Option held by such
          Participant which shall not have previously lapsed or terminated shall
          expire immediately.

     (b)  If a Participant's employment by, or relationship with, the Company or
          its Subsidiaries shall terminate as a result of such Participant's
          total disability, each Stock Option held by such Participant (which
          has not previously lapsed or terminated) shall be exercisable by such
          Participant for a period of six months

                                       5
<PAGE>
 
          after termination but only to the extent the Option is otherwise
          exercisable during that period. For purposes of the foregoing
          sentence, "total disability" shall mean permanent mental or physical
          disability as determined by the Committee.

     (c)  In the event of the death of a Participant, each Stock Option held by
          such Participant (which has not previously lapsed or terminated) shall
          be exercisable by the executor or administrator of the Participant's
          estate or by the person or persons to whom the deceased Participant's
          rights thereunder shall have passed by will or by the laws of descent
          or distribution, for a period of six (6) months after such
          Participant's death but only to the extent the Option is otherwise
          exercisable during that period.

     (d)  In the case of a Participant who is an employee of the Company, if a
          Participant's employment by the Company shall terminate by reason of
          such Participant's retirement in accordance with Company policies,
          each Stock Option held by such Participant at the date of termination
          (which has not previously lapsed or terminated) shall be exercisable
          for a period of three (3) months after termination, but only to the
          extent the Option is otherwise exercisable during that period.

     (e)  In the event the Company terminates the employment of a Participant
          who at the time of such termination was an officer of the Company and
          had been continuously employed by the Company during the two (2) year
          period immediately preceding such termination, for any reason except
          "good cause" (hereafter defined) and except upon such Participant's
          death, total disability or retirement in accordance with Company
          policies, each Stock Option held by such Participant (which has not
          previously lapsed or terminated and which has been held by such
          Participant for more than six (6) months prior to such termination)
          shall be exercisable for a period of three (3) months after such
          termination, but only to the extent the Option is otherwise
          exercisable during that period. A termination for "good cause" shall
          be deemed to have occurred only if the Participant in question (i) is
          terminated by written notice for dishonesty, because of his conviction
          of a felony, or because of his violation of any material provision of
          any employment or other agreement, written or oral, with the Company
          or any of its Subsidiaries, or (ii) shall voluntarily resign or
          terminate his employment with the Company or any of its Subsidiaries
          under or followed by such circumstances as would constitute a breach
          of any material provision of any employment or other agreement between
          him and the Company or any of its Subsidiaries, or (iii) shall have
          committed an act of dishonesty not discovered by the Company or any of
          its Subsidiaries prior to the cessation of his employment with the
          Company or any of its Subsidiaries, but which would have results in
          his discharge if discovered prior to such date, or (iv) shall, either
          before or after cessation of his employment with the Company or any of
          its Subsidiaries, without the written consent of the Company or any of
          its Subsidiaries, use (except for the benefit of the Company or any of
          its Subsidiaries) or disclose to any other person any confidential
          information relating to the continuation of proposed continuation

                                       6
<PAGE>
 
          of the business or any trade secrets of the Company of any of its
          Subsidiaries obtained as a result of or in connection with such
          employment.

     3.7  Effect of Leaves of Absence

          It shall not be considered a termination of employment when a
Participant is on military or sick leave or such other type leave of absence
which is considered as continuing intact the employment relationship of the
Participant with the Company or any of its Subsidiaries.  In case of such leave
of absence, the employment relationship shall be deemed to have continued until
the later of (i) the date when such leave shall have lasted ninety (90) days in
duration, or (ii) the date as of which the Participant's right to employment
shall have no longer been guaranteed either by statute or contract.

     3.8  Limitation on Number of Options Granted to Employees

     The maximum number of shares for which options may be granted to an
employee of the Company during any calendar year shall not exceed 250,000.

4.   MISCELLANEOUS PROVISIONS

     4.1  Adjustments Upon Changes in Capitalization

     In the event of changes to the outstanding shares of Common Stock of the
Company through reorganization, merger, consolidation, recapitalization,
reclassification, stock split-up, stock dividend, stock consolidation or
otherwise, or in the event of a sale of all or substantially all of the assets
of the Company, an appropriate and proportionate adjustment shall be made in the
number and kind of shares as to which Stock Options may be granted.  A
corresponding adjustment changing the number or kind of shares and/or the
purchase price per share of unexercised Stock Options or portions thereof which
shall have been granted prior to any such change shall likewise be made.
Notwithstanding the foregoing, in the case of a reorganization, merger or
consolidation, or sale of all or substantially all of the assets of the Company,
in lieu of adjustments as aforesaid, the Committee may in is discretion
accelerate the date after which a Stock Option may or may not be exercised or
the stated expiration date thereof.  Adjustments or changes under this Section
shall be made by the Committee, whose determination as to what adjustments or
changes shall be made, and the extent thereof, shall be final, binding and
conclusive.

     4.2  Non-Transferability

     No Stock Option shall be transferable except by will or the laws of descent
and distribution, nor shall any Stock Option be exercisable during the
Participant's lifetime by any person other than the Participant or his guardian
or legal representative.

     4.3  Withholding

                                       7
<PAGE>
 
     The Company's obligations under this Plan shall be subject to applicable
federal, state and local tax withholding requirements.  Federal, state and local
withholding tax due at the time of a grant or upon the exercise of any Stock
Option may, in the discretion of the Committee, be paid in shares of Common
Stock already owned by the Participant or through the withholding of shares
otherwise issuable to such Participant, upon such terms and conditions as the
Committee shall determine.  If the Participant shall fail to pay, or make
arrangements satisfactory to the Committee for the payment, to the Company of
all such federal, state and local taxes required to be withheld by the Company,
then the Company shall, to the extent permitted by law, have the right to deduct
from any payment of any kind otherwise due to such Participant an amount equal
to any federal, state or local taxes of any kind required to be withheld by the
Company.

     4.4  Compliance with Law and Approval of Regulatory Bodies

     No Stock Option shall be exercisable and no shares will be delivered under
the Plan except in compliance with all applicable federal and state laws and
regulations including, without limitation, compliance with all federal and state
securities laws and withholding tax requirements and with the rules of the
NASDAQ SmallCap Market and of all other domestic stock exchanges on which the
Common Stock may be listed.  Any share certificate issued to evidence shares for
which a Stock Option is exercised may bear legends and statements the Committee
shall deem advisable to assure compliance with federal and state laws and
regulations.  No Stock Option shall be exercisable and no shares will be
delivered under the Plan, until the Company has obtained consent or approval
from regulatory bodies, federal or state, having jurisdiction over such matters
as the Committee may deem advisable.  In the case of the exercise of a Stock
Option by a person or estate acquiring the right to exercise the Stock Option as
a result of the death of the Participant, the Committee may require reasonable
evidence as to the ownership of the Stock Option and may require consents and
releases of taxing authorities that it may deem advisable.

     4.5  No Right to Employment

     Neither the adoption of the Plan nor its operation, nor any document
describing or referring to the Plan, or any part thereof, nor the granting of
any Stock Options hereunder, shall confer upon any Participant under the Plan
any right to continue in the employ of the Company or any Subsidiary, or shall
in any way affect the right and power of the Company or any Subsidiary to
terminate the employment of any Participant at any time with or without
assigning a reason therefore, to the same extent as might have been done if the
Plan had not been adopted.

     4.6  Exclusion from Pension Computations

     By acceptance of a grant of a Stock Option under the Plan, the recipient
shall be deemed to agree that any income realized upon the receipt or exercise
thereof or upon the disposition of the shares received upon exercise will not be
taken into account as "base remuneration", "wages", "salary" or "compensation"
in determining the amount of any contribution to or payment or any other benefit
under any pension, retirement, incentive, profit-sharing or deferred
compensation plan of the Company or any Subsidiary.

                                       8
<PAGE>
 
     4.7  Abandonment of Options

     A Participant may at any time abandon a Stock Option prior to its
expiration date.  The abandonment shall be evidenced in writing, in such form as
the Committee may from time to time prescribe.  A Participant shall have no
further rights with respect to any Stock Option so abandoned.

     4.8  Severability

     If any of the terms or provisions of the Plan conflict with the
requirements of Rule 16b-3, then such terms or provisions shall be deemed
inoperative to the extent they so conflict with the requirements of Rule 16b-3.

     4.9  Interpretation of the Plan

     Headings are given to the Sections of the Plan solely as a convenience to
facilitate reference.  Such headings, numbering and paragraphing shall not in
any case be deemed in any way material or relevant to the construction of the
Plan or any provision hereof.  The use of the masculine gender shall also
include within its meaning the feminine.  The use of the singular shall also
include within its meaning the plural and vice versa.

     4.10 Use of Proceeds

     Funds received by the Company upon the exercise of Stock Options shall be
used for the general corporate purposes of the Company.

     4.11 Construction of Plan

     The place of administration of the Plan shall be in the State of Florida,
and the validity, construction, interpretation, administration and effect of the
Plan and of its rules and regulations, and rights relating to the Plan, shall be
determined solely in accordance with the laws of the State of Florida.

                                       9