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                                                                   EXHIBIT 10.19



                     THE 1998 NEW-HIRE STOCK OPTION PLAN OF
                              SUNTERRA CORPORATION

               Sunterra Corporation, a Maryland corporation, has adopted The
1998 New-Hire Stock Option Plan of Sunterra Corporation (the "Plan"), effective
August 27, 1998, for the benefit of its eligible employees.

               The purposes of this Plan are as follows:

               (1) To provide an additional incentive for eligible key Employees
(as defined below) to further the growth, development and financial success of
the Company by personally benefiting through the ownership of Company stock.

               (2) To enable the Company to obtain the services of eligible key
Employees considered essential to the long range success of the Company by
offering them an opportunity to own stock in the Company.

               (3) To provide a material inducement to eligible key Employees to
enter into employment contracts with the Company.

                                   ARTICLE I.

                                   DEFINITIONS

               1.1. General. Wherever the following terms are used in this Plan
they shall have the meaning specified below, unless the context clearly
indicates otherwise.

               1.2. Award Limit. "Award Limit" shall mean two hundred fifty
thousand (250,000) shares of Common Stock.

               1.3. Board. "Board" shall mean the Board of Directors of the
Company.

               1.4. Change in Control. "Change in Control" shall mean a change
in ownership or control of the Company effected through either of the following
transactions:

               (a) any person or related group of persons (other than the
        Company or a person that directly or indirectly controls, is controlled
        by, or is under common control with, the Company) directly or indirectly
        acquires beneficial ownership (within the meaning of Rule 13d-3 under
        the Exchange Act) of securities possessing more than fifty percent (50%)
        of the total combined voting power of the Company's outstanding
        securities pursuant to a tender or exchange offer made directly to the
        Company's stockholders which the Board does not recommend such
        stockholders to accept; or

               (b) there is a change in the composition of the Board over a
        period of twenty-four (24) consecutive months (or less) such that a
        majority of the Board members (rounded up to the nearest whole number)
        ceases, by reason of one or more proxy




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        contests for the election of Board members, to be comprised of
        individuals who either (i) have been Board members continuously since
        the beginning of such period or (ii) have been elected or nominated for
        election as Board members during such period by at least a majority of
        the Board members described in clause (i) who were still in office at
        the time such election or nomination was approved by the Board.

               1.5. Code. "Code" shall mean the Internal Revenue Code of 1986,
as amended.

               1.6. Committee. "Committee" shall mean the Compensation Committee
of the Board, or another committee, or a subcommittee of the Board, appointed as
provided in Section 6.1.

               1.7. Common Stock. "Common Stock" shall mean the common stock of
the Company, par value $.01 per share, and any equity security of the Company
issued or authorized to be issued in the future, but excluding any preferred
stock and any warrants, options or other rights to purchase Common Stock. Debt
securities of the Company convertible into Common Stock shall be deemed equity
securities of the Company.

               1.8. Company. "Company" shall mean Sunterra Corporation, a
Maryland corporation.

               1.9. Corporate Transaction. "Corporate Transaction" shall mean
any of the following stockholder-approved transactions to which the Company is a
party:

               (a) a merger or consolidation in which the Company is not the
        surviving entity, except for a transaction the principal purpose of
        which is to change the State in which the Company is incorporated, form
        a holding company or effect a similar reorganization as to form
        whereupon this Plan and all Options are assumed by the successor entity;

               (b) the sale, transfer, exchange or other disposition of all or
        substantially all of the assets of the Company, in complete liquidation
        or dissolution of the Company in a transaction not covered by the
        exceptions to clause (a), above; or

               (c) any reverse merger in which the Company is the surviving
        entity but in which securities possessing more than fifty percent (50%)
        of the total combined voting power of the Company's outstanding
        securities are transferred to a person or persons different from those
        who held such securities immediately prior to such merger.

               1.10.  Director.  "Director" shall mean a member of the Board.

               1.11. Employee. "Employee" shall mean any officer or other
employee (as defined in accordance with Section 3401(c) of the Code) of the
Company, or of any corporation which is a Subsidiary.




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               1.12. Exchange Act. "Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.

               1.13. Fair Market Value. "Fair Market Value" of a share of Common
Stock as of a given date shall be (i) the closing price of a share of Common
Stock on the principal exchange on which shares of Common Stock are then
trading, if any (or as reported on any composite index which includes such
principal exchange), on the trading day previous to such date, or if shares were
not traded on the trading day previous to such date, then on the next preceding
date on which a trade occurred, or (ii) if Common Stock is not traded on an
exchange but is quoted on NASDAQ or a successor quotation system, the mean
between the closing representative bid and asked prices for the Common Stock on
the trading day previous to such date as reported by NASDAQ or such successor
quotation system; or (iii) if Common Stock is not publicly traded on an exchange
and not quoted on NASDAQ or a successor quotation system, the Fair Market Value
of a share of Common Stock as established by the Committee (or the Board, in the
case of grants to Independent Directors) acting in good faith.

               1.14. Independent Director. "Independent Director" shall mean a
member of the Board who is not an Employee of the Company.

               1.15. Non-Qualified Stock Option. "Non-Qualified Stock Option"
shall mean a stock option which does not constitute an "incentive stock option"
under Section 422 of the Code.

               1.16. Option. "Option" shall mean a Non-Qualified Stock Option
granted under Article III of this Plan. All Options granted under this Plan
shall be Non-Qualified Stock Options.

               1.17. Optionee. "Optionee" shall mean an Employee granted an
Option under this Plan.

               1.18. Plan. "Plan" shall mean The 1998 New-Hire Stock Option Plan
of Sunterra Corporation.

               1.19. QDRO. "QDRO" shall mean a qualified domestic relations
order as defined by the Code or Title I of the Employee Retirement Income
Security Act of 1974, as amended, or the rules thereunder.

               1.20. Rule 16b-3. "Rule 16b-3" shall mean that certain Rule 16b-3
under the Exchange Act, as such Rule may be amended from time to time.

               1.21. Subsidiary. "Subsidiary" shall mean (i) any corporation in
an unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain then owns
stock possessing 50 percent or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain and (ii) any
partnership or limited liability company in which the Company (A) directly or
indirectly



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holds a managing partner or managing member interest or (B) is entitled to 50
percent or more of the profits or assets upon dissolution.

               1.22. Termination of Employment. "Termination of Employment"
shall mean the time when the employee-employer relationship between an Optionee
and the Company or any Subsidiary is terminated for any reason, with or without
cause, including, but not by way of limitation, a termination by resignation,
discharge, death, disability or retirement; but excluding (i) terminations where
there is a simultaneous reemployment or continuing employment of an Optionee by
the Company or any Subsidiary, (ii) at the discretion of the Committee,
terminations which result in a temporary severance of the employee-employer
relationship, and (iii) at the discretion of the Committee, terminations which
are followed by the simultaneous establishment of a consulting relationship by
the Company or a Subsidiary with the former employee. The Committee, in its
absolute discretion, shall determine the effect of all matters and questions
relating to Termination of Employment, including, but not by way of limitation,
the question of whether a Termination of Employment resulted from a discharge
for good cause, and all questions of whether particular leaves of absence
constitute Terminations of Employment. Notwithstanding any other provision of
this Plan, the Company or any Subsidiary has an absolute and unrestricted right
to terminate an Employee's employment at any time for any reason whatsoever,
with or without cause, except to the extent expressly provided otherwise in
writing.

                                   ARTICLE II.

                             SHARES SUBJECT TO PLAN

               2.1.   Shares Subject to Plan.

               (a) The shares of stock subject to Options granted under the Plan
shall be Common Stock, initially shares of the Company's Common Stock, par value
$.01 per share. The aggregate number of such shares which may be issued upon
exercise of such Options shall not exceed two hundred fifty thousand (250,000)
shares of Common Stock. The shares of Common Stock issuable upon exercise of
such Options may be either previously authorized but unissued shares or treasury
shares.

               (b) The maximum number of shares which may be subject to Options
granted under the Plan to any individual in any fiscal year shall not exceed the
Award Limit.

               2.2. Add-back of Options and Other Rights. If any Option expires
or is canceled without having been fully exercised, or is purchased by the
Company in whole or in part for cash as permitted by this Plan, the number of
shares subject to such Option but as to which such Option was not exercised
prior to its expiration, cancellation or exercise may again be optioned or
granted hereunder, subject to the limitations of Section 2.1. Furthermore, any
shares subject to Options which are adjusted pursuant to Section 7.3 and become
exercisable with respect to shares of stock of another corporation shall be
considered cancelled and may again be optioned or granted hereunder, subject to
the limitations of Section 2.1. Shares of





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Common Stock which are delivered by the Optionee or withheld by the Company upon
the exercise of any Option under this Plan, in payment of the exercise price
thereof, may again be optioned or granted hereunder, subject to the limitations
of Section 2.1.

                                  ARTICLE III.

                               GRANTING OF OPTIONS

               3.1. Eligibility. Any newly hired Employee not previously
employed by the Company and with respect to whom Options are to be granted as a
material inducement to such Employee's entering into an employment contract with
the Company shall be eligible to be granted Options hereunder.

               3.2. Non-Qualified Options. No Option granted under this Plan
shall constitute an "incentive stock option" under Section 422 of the Code.

               3.3.   Granting of Options

               (a) The Committee shall from time to time, in its absolute
discretion, and subject to applicable limitations of this Plan:

                      (i) Determine which eligible Employees are key Employees
        and select from among the key Employees such of them as in its opinion
        should be granted Options;

                      (ii) Subject to the Award Limit, determine the number of
        shares to be subject to such Options granted to the selected key
        Employees;

                      (iii) Determine the terms and conditions of such Options,
        consistent with this Plan.

               (b) Upon the selection of a key Employee to be granted an Option,
the Committee shall instruct the Secretary of the Company to issue the Option
and may impose such conditions on the grant of the Option as it deems
appropriate. Without limiting the generality of the preceding sentence, the
Committee may, in its discretion and on such terms as it deems appropriate,
require as a condition on the grant of an Option to an Employee that the
Employee surrender for cancellation some or all of the unexercised Options which
have been previously granted to him under this Plan or otherwise. An Option, the
grant of which is conditioned upon such surrender, may have an option price
lower (or higher) than the exercise price of such surrendered Option, may cover
the same (or a lesser or greater) number of shares as such surrendered Option,
may contain such other terms as the Committee deems appropriate, and shall be
exercisable in accordance with its terms, without regard to the number of
shares, price, exercise period or any other term or condition of such
surrendered Option.

               3.4. Employment Agreement. Options shall be granted only in
connection with and as a material inducement to the execution of an employment
agreement by and between



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the Optionee and the Company which shall contain such terms and conditions as
the Committee shall determine, consistent with this Plan.



                                   ARTICLE IV.

                                TERMS OF OPTIONS

               4.1. Option Agreement. Each Option shall be evidenced by a
written Stock Option Agreement, which shall be executed by the Optionee and an
authorized officer of the Company and which shall contain such terms and
conditions as the Committee shall determine, consistent with this Plan.

               4.2. Option Price. The price per share of the shares subject to
each Option shall be set by the Committee; provided, however, that such price
shall not be less than 100% of the Fair Market Value of a share of Common Stock
on the date the Option is granted.

               4.3. Option Term. The term of each Option shall be set by the
Committee in its discretion; provided, however, that such term shall not be more
than ten (10) years from the date the Option is granted. Notwithstanding
anything contained herein, unless the Committee provides otherwise pursuant to
the terms of the Option, if an Option (or portion thereof) is not exercisable
solely by reason of Section 4.4(c) on the date on which such Option would
otherwise terminate pursuant to the terms of such Option, such Option (or
portion thereof) shall not terminate until three (3) months after such Option
(or portion thereof) thereafter ceases to be subject to Section 4.4(c). The
Committee may extend the term of any outstanding Option in connection with any
Termination of Employment of the Optionee, or amend any other term or condition
of such Option relating to such a termination.

               4.4. Option Vesting

               (a) The period during which the right to exercise an Option in
whole or in part vests in the Optionee shall be set by the Committee and the
Committee may determine that an Option may not be exercised in whole or in part
for a specified period after it is granted. At any time after grant of an
Option, the Committee may, in its sole and absolute discretion and subject to
whatever terms and conditions it selects, accelerate the period during which an
Option vests.

               (b) No portion of an Option which is unexercisable at Termination
of Employment shall thereafter become exercisable, except as may be otherwise
provided by the Committee either in the Stock Option Agreement or by action of
the Committee following the grant of the Option.

               (c) Notwithstanding anything contained herein, no Option (or
portion thereof) shall be exercisable by any person to the extent that the
Company's federal income tax deduction



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with respect to the exercise of such Option (or portion thereof) would be
subject to disallowance pursuant to Section 162(m) of the Code, or any successor
thereto.

               4.5. Consideration. In consideration of the granting of an
Option, the Optionee shall agree, in the written Stock Option Agreement, to
remain in the employ of the Company or any Subsidiary for a period of at least
one year after the Option is granted (or such shorter period as may be fixed in
the Stock Option Agreement or by action of the Committee or the Board following
grant of the Option). Nothing in this Plan or in any Stock Option Agreement
hereunder shall confer upon any Optionee any right to continue in the employ of
the Company or any Subsidiary, or shall interfere with or restrict in any way
the rights of the Company and any Subsidiary, which are hereby expressly
reserved, to discharge any Optionee at any time for any reason whatsoever, with
or without good cause.

                                   ARTICLE V.

                               EXERCISE OF OPTIONS

               5.1. Partial Exercise. An exercisable Option may be exercised in
whole or in part. However, an Option shall not be exercisable with respect to
fractional shares and the Committee may require that, by the terms of the
Option, a partial exercise be with respect to a minimum number of shares.

               5.2. Manner of Exercise. All or a portion of an exercisable
Option shall be deemed exercised upon delivery of all of the following to the
Secretary of the Company or his office:

               (a) A written notice complying with the applicable rules
established by the Committee stating that the Option, or a portion thereof, is
exercised. The notice shall be signed by the Optionee or other person then
entitled to exercise the Option or such portion;

               (b) Such representations and documents as the Committee, in its
absolute discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act of 1933, as amended, and any other
federal or state securities laws or regulations. The Committee or Board may, in
its absolute discretion, also take whatever additional actions it deems
appropriate to effect such compliance including, without limitation, placing
legends on share certificates and issuing stop-transfer notices to agents and
registrars;

               (c) In the event that the Option shall be exercised pursuant to
Section 7.1 by any person or persons other than the Optionee, appropriate proof
of the right of such person or persons to exercise the Option; and

               (d) Full cash payment to the Secretary of the Company for the
shares with respect to which the Option, or portion thereof, is exercised.
However, the Committee may in its discretion (i) allow a delay in payment up to
thirty (30) days from the date the Option, or portion thereof, is exercised;
(ii) allow payment, in whole or in part, through the delivery of shares of



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Common Stock owned by the Optionee, duly endorsed for transfer to the Company
with a Fair Market Value on the date of delivery equal to the aggregate exercise
price of the Option or exercised portion thereof; (iii) allow payment, in whole
or in part, through the delivery of property of any kind which constitutes good
and valuable consideration; (iv) allow payment, in whole or in part, through the
delivery of a full recourse promissory note bearing interest (at no less than
such rate as shall then preclude the imputation of interest under the Code) and
payable upon such terms as may be prescribed by the Committee or the Board, or
(v) allow payment through any combination of the consideration provided in the
foregoing subparagraphs (ii), (iii) and (iv). In the case of a promissory note,
the Committee may also prescribe the form of such note and the security to be
given for such note. The Option may not be exercised, however, by delivery of a
promissory note or by a loan from the Company when or where such loan or other
extension of credit is prohibited by law.

               5.3. Conditions to Issuance of Stock Certificates. The Company
shall not be required to issue or deliver any certificate or certificates for
shares of stock purchased upon the exercise of any Option or portion thereof
prior to fulfillment of all of the following conditions:

               (a) The admission of such shares to listing on all stock
exchanges on which such class of stock is then listed;

               (b) The completion of any registration or other qualification of
such shares under any state or federal law, or under the rulings or regulations
of the Securities and Exchange Commission or any other governmental regulatory
body which the Committee or Board shall, in its absolute discretion, deem
necessary or advisable;

               (c) The obtaining of any approval or other clearance from any
state or federal governmental agency which the Committee shall, in its absolute
discretion, determine to be necessary or advisable;

               (d) The lapse of such reasonable period of time following the
exercise of the Option as the Committee may establish from time to time for
reasons of administrative convenience; and

               (e) The receipt by the Company of full payment for such shares,
including payment of any applicable withholding tax.

               5.4. Rights as Stockholders. The holders of Options shall not be,
nor have any of the rights or privileges of, stockholders of the Company in
respect of any shares purchasable upon the exercise of any part of an Option
unless and until certificates representing such shares have been issued by the
Company to such holders.

               5.5. Ownership and Transfer Restrictions. The Committee, in its
absolute discretion, may impose such restrictions on the ownership and
transferability of the shares purchasable upon the exercise of an Option as it
deems appropriate. Any such restriction shall be



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set forth in the respective Stock Option Agreement and may be referred to on the
certificates evidencing such shares.

                                   ARTICLE VI.

                                 ADMINISTRATION

               6.1. Compensation Committee. The Compensation Committee (or
another committee or a subcommittee of the Board assuming the functions of the
Committee under this Plan) shall consist solely of two or more Independent
Directors appointed by and holding office at the pleasure of the Board, each of
whom is a "non-employee director" (as defined by Rule 16b-3). Appointment of
Committee members shall be effective upon acceptance of appointment. Committee
members may resign at any time by delivering written notice to the Board.
Vacancies in the Committee may be filled by the Board.

               6.2. Duties and Powers of Committee. It shall be the duty of the
Committee to conduct the general administration of this Plan in accordance with
its provisions. The Committee shall have the power to interpret this Plan and
the agreements pursuant to which Options are granted, and to adopt such rules
for the administration, interpretation, and application of this Plan as are
consistent therewith and to interpret, amend or revoke any such rules. Any such
grant under this Plan need not be the same with respect to each Optionee. In its
absolute discretion, the Board may at any time and from time to time exercise
any and all rights and duties of the Committee under this Plan except with
respect to matters which under Rule 16b-3, or any regulations or rules issued
thereunder, are required to be determined in the sole discretion of the
Committee.

               6.3. Majority Rule; Unanimous Written Consent. The Committee
shall act by a majority of its members in attendance at a meeting at which a
quorum is present or by a memorandum or other written instrument signed by all
members of the Committee.

               6.4. Compensation; Professional Assistance; Good Faith Actions.
Members of the Committee shall receive such compensation for their services as
members as may be determined by the Board. All expenses and liabilities which
members of the Committee incur in connection with the administration of this
Plan shall be borne by the Company. The Committee may, with the approval of the
Board, employ attorneys, consultants, accountants, appraisers, brokers, or other
persons. The Committee, the Company and the Company's officers and Directors
shall be entitled to rely upon the advice, opinions or valuations of any such
persons. All actions taken and all interpretations and determinations made by
the Committee or the Board in good faith shall be final and binding upon all
Optionees, the Company and all other interested persons. No member of the
Committee or the Board shall be personally liable for any action, determination
or interpretation made in good faith with respect to this Plan or Options, and
all members of the Committee and the Board shall be fully protected by the
Company in respect of any such action, determination or interpretation.





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                                  ARTICLE VII.

                            MISCELLANEOUS PROVISIONS

               7.1. Not Transferable. No Option under this Plan may be sold,
pledged, assigned, or transferred in any manner other than by will or the laws
of descent and distribution or pursuant to a QDRO, unless and until such Option
has been exercised, the shares underlying such Option have been issued, and all
restrictions applicable to such shares have lapsed. No Option or interest or
right therein shall be liable for the debts, contracts or engagements of the
Optionee or his successors in interest or shall be subject to disposition by
transfer, alienation, anticipation, pledge, encumbrance, assignment or any other
means whether such disposition be voluntary or involuntary or by operation of
law by judgment, levy, attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy), and any attempted disposition thereof shall
be null and void and of no effect, except to the extent that such disposition is
permitted by the preceding sentence.

               During the lifetime of the Optionee, only he may exercise an
Option (or any portion thereof) granted to him under the Plan, unless it has
been disposed of pursuant to a QDRO. After the death of the Optionee, any
exercisable portion of an Option may, prior to the time when such portion
becomes unexercisable under the Plan or the applicable Stock Option Agreement,
be exercised by his personal representative or by any person empowered to do so
under the deceased Optionee's will or under the then applicable laws of descent
and distribution.

               7.2. Amendment, Suspension or Termination of this Plan. Except as
otherwise provided in this Section 7.2, this Plan may be wholly or partially
amended or otherwise modified, suspended or terminated at any time or from time
to time by the Board or the Committee. No amendment, suspension or termination
of this Plan shall, without the consent of the Optionee, alter or impair any
rights or obligations under any Options theretofore granted, unless the Option
itself otherwise expressly so provides. No Options may be granted during any
period of suspension or after termination of this Plan.

               7.3. Changes in Common Stock or Assets of the Company,
Acquisition or Liquidation of the Company and Other Corporate Events.

               (a) Subject to Section 7.3(d), in the event that the Committee
determines that any dividend or other distribution (whether in the form of cash,
Common Stock, other securities, or other property), recapitalization,
reclassification, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, liquidation,
dissolution, or sale, transfer, exchange or other disposition of all or
substantially all of the assets of the Company (including, but not limited to a
Corporate Transaction), or exchange of Common Stock or other securities of the
Company, issuance of warrants or other rights to purchase Common Stock or other
securities of the Company, or other similar corporate transaction or event, in
the Committee's sole discretion, affects the Common Stock such that an
adjustment is determined by the Committee to be appropriate in order to prevent
dilution or enlargement of the



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benefits or potential benefits intended to be made available under the Plan or
with respect to an Option, then the Committee shall, in such manner as it may
deem equitable, adjust any or all of

                      (i) the number and kind of shares of Common Stock (or
        other securities or property) with respect to which Options may be
        granted under the Plan (including, but not limited to, adjustments of
        the limitations in Section 2.1 on the maximum number and kind of shares
        which may be issued and adjustments of the Award Limit),

                      (ii) the number and kind of shares of Common Stock (or
        other securities or property) subject to outstanding Options, and

                      (iii) the grant or exercise price with respect to any
        Option.

               (b) Subject to Section 7.3(d), in the event of any Corporate
Transaction or other transaction or event described in Section 7.3(a) or any
unusual or nonrecurring transactions or events affecting the Company, any
affiliate of the Company, or the financial statements of the Company or any
affiliate, or of changes in applicable laws, regulations, or accounting
principles, the Committee in its discretion is hereby authorized to take any one
or more of the following actions whenever the Committee determines that such
action is appropriate in order to prevent dilution or enlargement of the
benefits or potential benefits intended to be made available under the Plan or
with respect to any Option under this Plan, to facilitate such transactions or
events or to give effect to such changes in laws, regulations or principles:

                      (i) In its sole and absolute discretion, and on such terms
        and conditions as it deems appropriate, the Committee may provide,
        either by the terms of the applicable Stock Option Agreement or by
        action taken prior to the occurrence of such transaction or event and
        either automatically or upon the Optionee's request, for either the
        purchase of any such Option for an amount of cash equal to the amount
        that could have been attained upon the exercise of such Option had such
        Option been currently exercisable or fully vested or the replacement of
        such Option with other rights or property selected by the Committee in
        its sole discretion;

                      (ii) In its sole and absolute discretion, the Committee
        may provide, either by the terms of such Option or by action taken prior
        to the occurrence of such transaction or event that it cannot be
        exercised after such event;

                      (iii) In its sole and absolute discretion, and on such
        terms and conditions as it deems appropriate, the Committee may provide,
        either by the terms of such Option or by action taken prior to the
        occurrence of such transaction or event, that for a specified period of
        time prior to such transaction or event, such Option shall be
        exercisable as to all shares covered thereby, notwithstanding anything
        to the contrary in (i) Section 4.4 or (ii) the provisions of such
        Option;




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                      (iv) In its sole and absolute discretion, and on such
        terms and conditions as it deems appropriate, the Committee may provide,
        either by the terms of such Option or by action taken prior to the
        occurrence of such transaction or event, that upon such event, such
        Option be assumed by the successor or survivor corporation, or a parent
        or subsidiary thereof, or shall be substituted for by similar options,
        rights or awards covering the stock of the successor or survivor
        corporation, or a parent or subsidiary thereof, with appropriate
        adjustments as to the number and kind of shares and prices; and

                      (v) In its sole and absolute discretion, and on such terms
        and conditions as it deems appropriate, the Committee may make
        adjustments in the number and type of shares of Common Stock (or other
        securities or property) subject to outstanding Options and/or in the
        terms and conditions of (including the grant or exercise price), and the
        criteria included in, outstanding Options and Options which may be
        granted in the future.

               (c) Subject to Section 7.3(d) and 7.8, the Committee may, in its
discretion, include such further provisions and limitations in any Stock Option
Agreement, as it may deem equitable and in the best interests of the Company.

               (d) No such adjustment or action shall be authorized to the
extent such adjustment or action would result in short-swing profits liability
under Section 16 or violate the exemptive conditions of Rule 16b-3 unless the
Committee determines that the Option is not to comply with such exemptive
conditions. The number of shares of Common Stock subject to any Option shall
always be rounded to the next whole number.

               (e) In the event of any Corporate Transaction or Change in
Control, each outstanding Option shall, immediately prior to the effective date
of the Corporate Transaction or Change in Control, automatically become fully
exercisable for all of the shares of Common Stock underlying such Option, and
may be exercised for any or all of those shares as fully-vested shares of Common
Stock.

               7.4. Tax Withholding. The Company shall be entitled to require
payment in cash or deduction from other compensation payable to each Optionee of
any sums required by federal, state or local tax law to be withheld with respect
to the issuance, vesting or exercise of any Option. The Committee may in its
discretion and in satisfaction of the foregoing requirement allow such Optionee
to elect to have the Company withhold shares of Common Stock otherwise issuable
under such Option (or allow the return of shares of Common Stock) having a Fair
Market Value equal to the sums required to be withheld.

               7.5. Loans. The Committee may, in its discretion, extend one or
more loans to key Employees in connection with the exercise or receipt of an
Option granted under this Plan. The terms and conditions of any such loan shall
be set by the Committee.




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               7.6. Forfeiture Provisions. Pursuant to its general authority to
determine the terms and conditions applicable to Options under the Plan, the
Committee shall have the right (to the extent consistent with the applicable
exemptive conditions of Rule 16b-3) to provide, in the terms of any Option
granted under the Plan, or to require the recipient to agree by separate written
instrument, that (i) any proceeds, gains or other economic benefit actually or
constructively received by the recipient upon any receipt or exercise of the
Option, or upon the receipt or resale of any Common Stock underlying such
Option, must be paid to the Company, and (ii) the Option shall terminate and any
unexercised portion of such Option (whether or not vested) shall be forfeited,
if (a) a Termination of Employment occurs prior to a specified date, or within a
specified time period following receipt or exercise of the Option, or (b) the
recipient at any time, or during a specified time period, engages in any
activity in competition with the Company, or which is inimical, contrary or
harmful to the interests of the Company, as further defined by the Committee (or
the Board, as applicable).

               7.7. Limitations Applicable to Section 16 Persons and
Performance-Based Compensation. Notwithstanding any other provision of this
Plan, this Plan, and any Option granted to any individual who is then subject to
Section 16 of the Exchange Act, shall be subject to any additional limitations
set forth in any applicable exemptive rule under Section 16 of the Exchange Act
(including any amendment to Rule 16b-3 of the Exchange Act) that are
requirements for the application of such exemptive rule. To the extent permitted
by applicable law, the Plan and Options granted hereunder shall be deemed
amended to the extent necessary to conform to such applicable exemptive rule.

               7.8. Effect of Plan Upon Options and Compensation Plans. The
adoption of this Plan shall not affect any other compensation or incentive plans
in effect for the Company or any Subsidiary. Nothing in this Plan shall be
construed to limit the right of the Company (i) to establish any other forms of
incentives or compensation for Employees, Independent Directors or consultants
of the Company or any Subsidiary or (ii) to grant or assume options or other
rights otherwise than under this Plan in connection with any proper corporate
purpose including but not by way of limitation, the grant or assumption of
options in connection with the acquisition by purchase, lease, merger,
consolidation or otherwise, of the business, stock or assets of any corporation,
partnership, firm or association.

               7.9. Compliance with Laws. This Plan, the granting and vesting of
Options under this Plan and the issuance and delivery of shares of Common Stock
and the payment of money under this Plan or under Options granted hereunder are
subject to compliance with all applicable federal and state laws, rules and
regulations (including but not limited to state and federal securities law and
federal margin requirements) and to such approvals by any listing, regulatory or
governmental authority as may, in the opinion of counsel for the Company, be
necessary or advisable in connection therewith. Any securities delivered under
this Plan shall be subject to such restrictions, and the person acquiring such
securities shall, if requested by the Company, provide such assurances and
representations to the Company as the Company may deem necessary or desirable to
assure compliance with all applicable legal requirements. To the



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extent permitted by applicable law, the Plan and Options granted hereunder shall
be deemed amended to the extent necessary to conform to such laws, rules and
regulations.

               7.10. Titles. Titles are provided herein for convenience only and
are not to serve as a basis for interpretation or construction of this Plan.

               7.11. Governing Law. This Plan and any agreements hereunder shall
be administered, interpreted and enforced under the internal laws of the State
of Maryland without regard to conflicts of laws thereof.







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