Exhibit 10.7

                      PARADISE MUSIC & ENTERTAINMENT, INC.

                             1996 STOCK OPTION PLAN
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                      PARADISE MUSIC & ENTERTAINMENT, INC.
                             1996 STOCK OPTION PLAN

                                Table of Contents
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                                                                          Page
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1.  Purpose of the Plan...................................................   1
2.  Stock Subject to the Plan.............................................   1
3.  Administration of the Plan............................................   1
4.  Type of Options.......................................................   2
5.  Eligibility...........................................................   2
6.  Restrictions on Incentive Stock Options...............................   2
7.  Option and SAR Agreements.............................................   3
8.  Option Price..........................................................   4
9.  Manner of Payment; Manner of Exercise.................................   5
10. Exercise of Options and SARs..........................................   5
11. Term of Options and SARs; Exercisability..............................   5
12. Options and SARs Not Transferable.....................................   6
13. Terms and Conditions of SARs..........................................   7
14. Recapitalization, Reorganizations and the Like........................   8
15. No Special Employment Rights..........................................   9
16. Withholding...........................................................   9
17. Restrictions on Issuance of Shares....................................  10
18. Purchase for Investment; Rights of Holder on Subsequent Registration .  10
19. Loans.................................................................  11
20. Modification of Outstanding Options and SARs..........................  11
21. Approval of Stockholders..............................................  11
22. Termination and Amendment of Plan.....................................  11
23. Limitation of Rights in the Option Shares.............................  12
24. Notices...............................................................  12
25. Prohibited Transactions...............................................  12
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                      PARADISE MUSIC & ENTERTAINMENT, INC.
                             1996 STOCK OPTION PLAN

      1. Purpose of the Plan.

      The purpose of the Paradise Music & Entertainment, Inc., 1996 Stock Option
Plan (the "Plan") is to advance the interests of Paradise Music & Entertainment,
Inc., a Delaware corporation (the "Company"), by providing an opportunity for
ownership of the stock (or, in the case of SARs, as defined below, the
appreciation of the value of the stock) of the Company by employees, agents and
directors of, and consultants to, the Company and its subsidiaries. By providing
such oppor tunity, the Company seeks to attract and retain such qualified
personnel, and otherwise to provide additional incentive for grantees to promote
the success of its business.

      2. Stock Subject to the Plan.

      (a) The total number of shares of the authorized but unissued or treasury
shares of the common stock, par value $.01 per share, of the Company (the
"Common Stock") for which options (the "Options") and stock appreciation rights
("SARs") may be granted under the Plan shall be 185,000, subject to adjustment
as provided in Section 14 hereof.

      (b) If an Option granted or assumed hereunder shall expire or terminate
for any reason without having been exercised in full, the unpurchased shares
subject thereto shall again be available for subsequent Option grants under the
Plan; provided, however, that shares as to which an Option has been surrendered
in connection with the exercise of a related SAR will not again be available for
subsequent Option or SAR grants under the Plan.

      (c) Stock issuable upon exercise of an Option may be subject to such
restrictions on transfer, repurchase rights or other restrictions as shall be
determined by a committee (the "Committee") of the Board of Directors of the
Company (the "Board") composed solely of two or more "Non-Employee Directors"
within the meaning of paragraph (b)(3) of Rule 16b-3 promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as such term
is interpreted from time to time.

      3. Administration of the Plan.

      (a) The Plan shall be administered by the Committee. No member of the
Committee shall act upon any matter exclusively affecting any Option or SAR
granted or to be granted to himself or herself under the Plan. A majority of the
members of the Committee, but at least two, shall constitute a quorum, and any
action may be taken by a majority, but at least two, of those present and voting
at any meeting. The decision of the Committee as to all questions of
interpretation and application of the Plan shall be final, binding and
conclusive on all persons. The Committee, in its sole discretion, shall grant
Options to purchase shares of Common Stock and may grant SARs, as provided in
the Plan. Every such grant shall be pre-approved by the Committee. The Committee
shall have authority, subject to express provisions of the Plan, to construe the
respective Option and SAR agreements and the Plan, to prescribe, amend and
rescind rules and regulations relating to the


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Plan, to determine the terms and provisions of the respective Option and SAR
agreements, which may but need not be identical, and to make all other
determinations in the judgment of the Committee necessary or desirable for the
administration of the Plan. The Committee may correct any defect or supply any
omission or reconcile any inconsistency in the Plan or in any Option or SAR
agreement in the manner and to the extent it shall deem expedient to implement
the Plan and shall be the sole and final judge of such expediency. No member of
the Committee shall be liable for any action or determination made in good
faith.

      4. Type of Options.

      Options granted pursuant to the Plan shall be authorized by action of the
Committee as set forth in the Plan and may be designated as either incentive
stock options meeting the requirements of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code"), or non-qualified options which are not
intended to meet the requirements of such Section 422 of the Code, the
designation to be in the sole discretion of the Committee. Options designated as
incentive stock options that fail to continue to meet the requirements of
Section 422 of the Code shall be redesignated as non-qualified options
automatically without further action by the Committee on the date of such
failure to continue to meet the requirements of Section 422 of the Code.

      5. Eligibility.

      Options designated as incentive stock options may be granted only to
officers and key employees of the Company or of any subsidiary corporation
(herein called "subsidiary" or "subsidiar ies"), as defined in Section 424(f) of
the Code and the Income Tax Regulations (the "Regulations") promulgated
thereunder. Directors who are not otherwise employees of the Company or a
subsidiary shall not be eligible to be granted incentive stock options pursuant
to the Plan. Options designated as non-qualified options may be granted to (i)
officers and key employees of the Company or of any of its subsidiaries, or (ii)
agents, directors of and consultants to the Company, whether or not otherwise
employees of the Company.

      In determining the eligibility of an individual to be granted an Option or
SAR, as well as in determining the number of shares to be subject to any such
Option or SAR, the Committee shall take into account the position and
responsibilities of the individual being considered, the nature and value to the
Company or its subsidiaries of his or her service and accomplishments, his or
her present and potential contribution to the success of the Company or its
subsidiaries, and such other factors as the Committee may deem relevant.

      6. Restrictions on Incentive Stock Options.

      Incentive stock options (but not non-qualified options) granted under the
Plan shall be subject to the following restrictions:


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      (a) Limitation on Number of Shares. Ordinarily, the aggregate fair market
      value of the shares of Common Stock with respect to which incentive stock
      options are granted (determined as of the date the incentive stock options
      are granted), exercisable for the first time by an individual during any
      calendar year shall not exceed $100,000. If an incentive stock option is
      granted pursuant to which the aggregate fair market value of shares with
      respect to which it first becomes exercisable in any calendar year by an
      individual exceeds such $100,000 limitation, the portion of such option
      which is in excess of the $100,000 limitation shall be treated as a
      non-qualified option pursuant to Section 422(d)(1) of the Code. In the
      event that an individual is eligible to participate in any other stock
      option plan of the Company or any subsidiary of the Company which is also
      intended to comply with the provisions of Section 422 of the Code, such
      $100,000 limitation shall apply to the aggregate number of shares for
      which incentive stock options may be granted under the Plan and all such
      other plans.

      (b) Ten Percent (10%) Stockholder. If any employee to whom an incentive
      stock option is granted pursuant to the provisions of the Plan is on the
      date of grant the owner of stock (as determined under Section 424(d) of
      the Code) possessing more than ten percent (10%) of the total combined
      voting power of all classes of stock of the Company or any subsidiary of
      the Company, then the following special provisions shall be applicable to
      the incentive stock options granted to such individual:

            (i)   The Option price per share subject to such incentive stock
                  options shall be not less than 110% of the fair market value
                  of the stock determined at the time such Option was granted.
                  In determining the fair market value under this clause (i),
                  the provisions of Section 8 hereof shall apply.

            (ii)  The incentive stock option by its terms shall not be
                  exercisable after the expiration of five (5) years from the
                  date such Option is granted.

      7. Option and SAR Agreements.

      Each Option and SAR shall be evidenced by an agreement (the "Agreement")
duly executed on behalf of the Company and by the grantee to whom such Option or
SAR is granted, which Agreement shall comply with and be subject to the terms
and conditions of the Plan. The Agreement may contain such other terms,
provisions and conditions which are not inconsistent with the Plan as may be
determined by the Committee; provided that Options designated as incentive stock
options shall meet all of the conditions for incentive stock options as defined
in Section 422 of the Code. No Option or SAR shall be granted within the meaning
of the Plan and no purported grant of any Option or SAR shall be effective until
the Agreement shall have been duly executed on behalf of the Company and the
grantee. More than one Option and SAR may be granted to an individual, subject,
if applicable, to the limitations of Section 6 hereof.


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      8. Option Price.

      (a) Subject to the conditions set forth in Section 8(d) hereof, the option
price or prices of shares of the Common Stock for Options designated as
non-qualified stock options shall be as determined by the Committee; provided,
however, that such option price shall be not less than the fair market value of
the shares subject to such Option, determined as of the date of grant of such
Option.

      (b) Subject to the conditions set forth in Section 6(b) hereof, the option
price or prices of shares of the Common Stock for incentive stock options shall
be at least the fair market value of such Common Stock at the time the Option is
granted as determined by the Committee in accordance with the Regulations
promulgated under Section 422 of the Code.

      (c) If such shares are then listed on any national securities exchange,
the fair market value shall be the mean between the high and low sales prices,
if any, on the largest such exchange on the date of the grant of the Option or,
if none, shall be determined by taking a weighted average of the means between
the highest and lowest sales prices on the nearest date before and the nearest
date after the date of grant in accordance with Section 25.2512-2 of the
Regulations. If the shares are not then listed on any such exchange, the fair
market value of such shares shall be the mean between the closing "Bid" and the
closing "Ask" prices, if any, as reported in the National Association of
Securities Dealers Automated Quotation System ("NASDAQ") for the date of the
grant of the Option, or, if none, shall be determined by taking a weighted
average of the means between the highest and lowest sales prices on the nearest
date before and the nearest date after the date of grant in accordance with
Section 25.2512-2 of the Regulations. If the shares are not then either listed
on any such exchange or quoted in NASDAQ, the fair market value shall be the
mean between the average of the "Bid" and "Ask" prices on the National Daily
Quotation Service for the date of the grant of the Option, or, if none, shall be
determined by taking a weighted average of the means between the highest and
lowest sales prices on the nearest date before and the nearest date after the
date of grant in accordance with Section 25.2512-2 of the Regulations. If the
fair market value cannot be determined under the preceding three sentences, it
shall be determined in good faith by the Committee.

      9. Manner of Payment; Manner of Exercise.

      (a) Options granted under the Plan may provide for the payment of the
option price by delivery of (i) cash or a check payable to the order of the
Company in an amount equal to the option price of such Options, (ii) shares of
Common Stock owned by the grantee having a fair market value equal in amount to
the option price of the Options being exercised, or (iii) any combination of (i)
and (ii); provided, however, that payment of the option price by delivery of
shares of Common Stock owned by such grantee may be made only upon the condition
that such payment does not result in a charge to earnings for financial
accounting purposes as determined by the Committee, unless such condition is
waived by the Committee. The fair market value of any shares of Common Stock
which


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may be delivered as payment upon exercise of an Option shall be determined by
the Committee in accordance with Section 8 hereof.

      (b) To the extent that the right to purchase shares under an Option has
accrued and is in effect, Options may be exercised in full at one time or in
part from time to time, by giving written notice, signed by the person or
persons exercising the Option, to the Company, stating the number of shares with
respect to which the Option is being exercised, accompanied by payment in full
for such shares as provided in Section 9(a) hereof. Upon such exercise, delivery
of a certificate for paid-up non-assessable shares shall be made at the
principal office of the Company to the person or persons exercising the Option
at such time, during ordinary business hours, after thirty (30) days but not
more than ninety (90) days from the date of receipt of the notice by the
Company, as shall be designated in such notice, or at such time, place and
manner as may be agreed upon by the Company and the person or persons exercising
the Option.

      10. Exercise of Options and SARs.

      Each Option and SAR granted under the Plan shall, subject to Section 11(b)
and Section 14 hereof, be exercisable at such time or times and during such
period as shall be set forth in the Agree ment; provided, however, that no
Option or SAR granted under the Plan shall have a term in excess of ten (10)
years from the date of grant. To the extent that an Option or SAR is not
exercised by a grantee when it becomes initially exercisable, it shall not
expire but shall be carried forward and shall be exercisable, on a cumulative
basis, until the expiration of the exercise period. No partial exercise may be
made for less than one hundred (100) full shares of Common Stock. The exercise
of an Option shall result in the cancellation of any related SAR with respect to
the same number of shares of Common Stock as to which the Option was exercised.

      11. Term of Options and SARs; Exercisability.

      (a) Term.

            (i)   Each Option and SAR shall expire on a date determined by the
                  Committee which is not more than ten (10) years from the date
                  of the granting thereof, except (a) as otherwise provided
                  pursuant to the provi sions of Section 6(b) hereof, and (b)
                  for earlier termination as herein provided.

            (ii)  Except as otherwise provided in this Section 11, an Option or
                  SAR granted to any grantee whose employment, by the Company or
                  any of its subsidiaries, is terminated, shall terminate on the
                  earlier of (a) ninety (90) days after the date such grantee's
                  employment, for the Company or any such subsidiary, is
                  terminated, or (b) the date on which the Option or SAR expires
                  by its terms.


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            (iii) If the employment of a grantee is terminated by the Company or
                  any of its subsidiaries for cause or because the grantee is in
                  breach of any employment agreement or because the grantee
                  voluntarily terminates such employment, such Option or SAR
                  will terminate on the date the grantee's employment is
                  terminated by the Company or any such subsidiary, unless the
                  Committee determines, at the time of such option, to extend
                  such option for a specified period (but not beyond the period
                  described in Section 11(a)(ii)).

            (iv)  If the employment of a grantee is terminated by the Company or
                  any of its subsidiaries because the grantee has become
                  permanently disabled (within the meaning of Section 22(e)(3)
                  of the Code), such Option or SAR shall terminate on the
                  earlier of (a) one (1) year after the date such grantee's
                  employment, by the Company or any such subsidiary, is
                  terminated, or (b) the date on which the Option or SAR expires
                  by its terms.

            (v)   In the event of the death of any grantee, any Option or SAR
                  granted to such grantee shall terminate one (1) year after the
                  date of death, or on the date on which the Option or SAR
                  expires by its terms, whichever occurs first.

      (b) Exercisability. An Option or SAR granted to a grantee whose
      employment, by the Company or any of its subsidiaries, is terminated, for
      whatever reason, including, without limitation, death or disability, shall
      be exercisable only to the extent that such Option or SAR has accrued and
      is in effect on the date such grantee's employment, by the Company or any
      such subsidiary, is terminated.

      12. Options and SARs Not Transferable.

      The right of any grantee to exercise any Option or SAR granted to him or
her shall not be assignable or transferable by such grantee other than by will
or the laws of descent and distribution, or the rules thereunder, and any such
Option or SAR shall be exercisable during the lifetime of such grantee only by
him or her. Any Option or SAR granted under the Plan shall be null and void and
without effect upon the bankruptcy of the grantee to whom the Option or SAR is
granted, or upon any attempted assignment or transfer, except as herein
provided, including without limitation, any purported assignment, whether
voluntary or by operation of law, pledge, hypothecation or other disposition,
attachment, trustee process or similar process, whether legal or equitable, upon
such Option or SAR.


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      13. Terms and Conditions of SARs.

      (a) An SAR may be granted separately or in connection with an Option
(either at the time of grant or at any time during the term of the Option).

      (b) The exercise of an SAR shall result in the cancellation of the Option
to which it relates with respect to the same number of shares of Common Stock as
to which the SAR was exercised.

      (c) An SAR granted in connection with an Option shall be exercisable or
transferable only to the extent that such related Option is exercisable or
transferable.

      (d) Upon the exercise of an SAR related to an Option, the holder will be
entitled to receive payment of an amount determined by multiplying:

            (i) The difference obtained by subtracting the option price of a
share of Common Stock specified in the related Option from the fair market value
of a share of Common Stock on the date of exercise of such SAR (as determined by
the Committee), by

            (ii) The number of shares as to which such SAR is exercised.

      (e) An SAR granted without relationship to an Option shall be exercisable
as determined by the Committee, but in no event after ten (10) years from the
date of grant.

      (f) An SAR granted without relationship to an Option will entitle the
holder, upon exercise of the SAR, to receive payment of an amount determined by
multiplying:

            (i) The difference obtained by subtracting the fair market value of
the a share of Common Stock on the date the SAR was granted from the fair market
value of a share of Common Stock on the date of exercise of such SAR (as
determined by the Committee), by

            (ii) The number of shares as to which such SAR is exercised.

      (g) Notwithstanding Sections 13 (d) and 13 (f) hereof, the Committee may
limit the amount payable upon exercise of an SAR. Any such limitation shall be
determined as of the date of grant and noted on the instrument evidencing the
SAR granted.

      (h) At the discretion of the Committee, payment of the amount determined
under Sections 13 (d) and 13 (f) hereof may be made solely in whole shares of
Common Stock valued at their fair market value on the date of exercise of the
SAR (as determined by the Committee), or solely in cash, or in a combination of
cash and shares. If the Committee decides to make full payment in


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shares of Common Stock and the amount payable results in a fractional share,
payment for the fractional share shall be made in cash.

      14. Recapitalization, Reorganizations and the Like.

      In the event that the outstanding shares of the Common Stock are changed
into or exchanged for a different number or kind of shares or other securities
of the Company or of another corporation by reason of any reorganization,
merger, consolidation, recapitalization, reclassification, stock split-up,
combination of shares, or dividends payable in capital stock, appropriate
adjustment shall be made in the number and kind of shares as to which Options
and SARs may be granted under the Plan and as to which outstanding Options,
SARs, or portions thereof then unexercised, shall be exercisable, to the end
that the proportionate interest of the grantee shall be maintained as before the
occurrence of such event; such adjustment in outstanding Options and SARs shall
be made without change in the total price applicable to the unexercised portion
of such Options and SARs and with a corresponding adjustment in the option price
per share.

      In addition, unless otherwise determined by the Committee in its sole
discretion, in the case of any (i) sale or conveyance to another entity of all
or substantially all of the property and assets of the Company or (ii) Change in
Control (as hereinafter defined) of the Company, the purchaser(s) of the
Company's assets or stock, in his, her or its sole discretion, may deliver to
the grantee the same kind of consideration that is delivered to the stockholders
of the Company as a result of such sale, conveyance or Change in Control, or the
Committee may cancel all outstanding Options in exchange for consideration in
cash or in kind, which consideration in both cases shall be equal in value to
the value of those shares of stock or other securities the grantee would have
received had the Option been exercised (but only to the extent then exercisable)
and had no disposition of the shares acquired upon such exercise been made prior
to such sale, conveyance or Change in Control, less the option price therefor.
Upon receipt of such consideration, all Options (whether or not then
exercisable) shall immediately terminate and be of no further force or effect.
The value of the stock or other securities the grantee would have received if
the Option had been exercised shall be determined in good faith by the
Committee, and in the case of shares of Common Stock, in accordance with the
provisions of Section 8 hereof.

      The Committee shall also have the power and right to accelerate the
exercisability of any Option, notwithstanding any limitations in this Plan or in
the Agreement upon such a sale, conveyance or Change in Control. Upon such
acceleration, any Option or portion thereof originally designated as an
incentive stock option that no longer qualifies as an incentive stock option
under Section 422 of the Code as a result of such acceleration shall be
redesignated as a non-qualified stock option without the necessity of further
Committee action.

      A "Change in Control" shall be deemed to have occurred if any person, or
any two (2) or more persons acting as a group, and all affiliates of such person
or persons, who prior to such time owned less than fifty percent (50%) of the
then outstanding Common Stock, shall acquire such additional shares of Common
Stock in one (1) or more transactions, or series of transactions, such


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that following such transaction or transactions, such person or group and
affiliates beneficially own fifty percent (50%) or more of the Common Stock
outstanding.

      Upon dissolution or liquidation of the Company, all Options and SARs
granted under this Plan shall terminate, but each grantee (if at such time in
the employ of or otherwise associated with the Company or any of its
subsidiaries as a director, agent or consultant) shall have the right, immedi
ately prior to such dissolution or liquidation, to exercise his or her Option or
SAR to the extent then exercisable.

      If by reason of a corporate merger, consolidation, acquisition of property
or stock, separation, reorganization, or liquidation, the Committee shall
authorize the issuance or assumption of a stock option or stock options in a
transaction to which Section 424(a) of the Code applies, then, notwithstanding
any other provision of the Plan, the Committee may grant an option or options
upon such terms and conditions as it may deem appropriate for the purpose of
assumption of the old Option, or substitution of a new option for the old
Option, in conformity with the provisions of such Section 424(a) of the Code and
the Regulations thereunder, and any such option grant shall not reduce the
number of shares otherwise available for issuance under the Plan.

      No fraction of a share shall be purchasable or deliverable upon the
exercise of any Option, but in the event any adjustment hereunder in the number
of shares covered by the Option shall cause such number to include a fraction of
a share, such fraction shall be adjusted to the nearest smaller whole number of
shares.

      15. No Special Employment Rights.

      Nothing contained in the Plan or in any Option or SAR granted under the
Plan shall confer upon any grantee any right with respect to the continuation of
his or her employment by the Company or any subsidiary or interfere in any way
with the right of the Company or any subsidiary, subject to the terms of any
separate employment agreement to the contrary, at any time to terminate such
employment or to increase or decrease the compensation of the Option or SAR
holder from the rate in existence at the time of the grant of an Option or SAR.
Whether an authorized leave of absence, or absence in military or government
service, shall constitute termination of employment shall be determined by the
Committee at the time of such occurrence pursuant to uniform nondiscriminatory
criteria.

      16. Withholding.

      The Company's obligation to deliver shares upon the exercise of any
non-qualified Option granted under the Plan, or cash upon the exercise of an SAR
granted under the Plan, shall be subject to the grantee's satisfaction of all
applicable Federal, state and local income and employment tax withholding
requirements. The Company and grantee may agree to withhold shares of Common
Stock purchased upon exercise of an Option to satisfy the above-mentioned
withholding requirements.


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      17. Restrictions on Issuance of Shares.

      (a) Notwithstanding the provisions of Section 9 hereof, the Company may
delay the issuance of shares covered by the exercise of an Option and the
delivery of a certificate for such shares until one of the following conditions
shall be satisfied:

            (i)   The shares with respect to which such Option has been
                  exercised are at the time of the issue of such shares
                  effectively registered or qualified under applicable Federal
                  and state securities acts now in force or as hereafter
                  amended; or

            (ii)  Counsel for the Company shall have given an opinion, which
                  opinion shall not be unreasonably conditioned or withheld,
                  that such shares are exempt from registration and
                  qualification under applicable Federal and state securities
                  acts now in force or as hereafter amended.

      (b) It is intended that all exercises of Options shall be effective, and
the Company shall use its reasonable efforts to bring about compliance with the
above conditions within a reasonable time, except that the Company shall be
under no obligation to qualify shares or to cause a registration statement or a
post-effective amendment to any registration statement to be prepared for the
purpose of covering the issue of shares in respect of which any Option may be
exercised, except as otherwise agreed to by the Company in writing in its sole
discretion.

      18. Purchase for Investment; Rights of Holder on Subsequent Registration.

      Unless and until the shares to be issued upon exercise of an Option
granted under the Plan have been effectively registered under the Securities Act
of 1933, as amended (the "1933 Act"), as now in force or hereafter amended, the
Company shall be under no obligation to issue any shares covered by any Option
or SAR unless the person who exercises such Option or SAR, in whole or in part,
shall give a written representation and undertaking to the Company which is
satisfactory in form and scope to counsel for the Company and upon which, in the
opinion of such counsel, the Company may reasonably rely, that he or she is
acquiring the shares issued pursuant to such exercise of the Option or SAR for
his or her own account as an investment and not with a view to, or for sale in
connection with, the distribution of any such shares, and that he or she will
make no transfer of the same except in compliance with any rules and regulations
in force at the time of such transfer under the 1933 Act, or any other
applicable law, and that if shares are issued without such registration, a
legend to this effect may be endorsed upon the securities so issued.

      In the event that the Company shall, nevertheless, deem it necessary or
desirable to register under the 1933 Act or other applicable statutes any shares
with respect to which an Option shall have been exercised, or to qualify any
such shares for exemption from the 1933 Act or other applicable statutes, then
the Company may take such action and may require from each grantee such
information in writing for use in any registration statement, supplementary
registration statement, prospectus,


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<PAGE>

preliminary prospectus or offering circular as is reasonably necessary for such
purpose and may require reasonable indemnity to the Company and its officers and
directors from such holder against all losses, claims, damages and liabilities
arising from such use of the information so furnished and caused by any untrue
statement of any material fact therein or caused by the omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances under which they were
made.

      19. Loans.

      At the discretion of the Committee, the Company may loan to the grantee
some or all of the option price of the shares acquired upon exercise of an
Option.

      20. Modification of Outstanding Options and SARs.

      Subject to any applicable limitations contained herein, the Committee may
authorize the amendment of any outstanding Option or SAR with the consent of the
grantee when and subject to such conditions as are deemed to be in the best
interests of the Company and in accordance with the purposes of the Plan.

      21. Approval of Stockholders.

      The Plan shall become effective upon adoption by the Board; provided,
however, that the Plan shall be submitted for approval by the stockholders of
the Company no later than twelve (12) months after the date of adoption of the
Plan by the Board. Should the stockholders of the Company fail to approve the
Plan within such twelve-month period, all Options granted thereunder shall be
and become null and void.

      22. Termination and Amendment of Plan.

      Unless sooner terminated as herein provided, the Plan shall terminate ten
(10) years from the date upon which the Plan was duly adopted by the Committee.
The Committee may at any time terminate the Plan or make such modification or
amendment thereof as it deems advisable; provided, however, that (i) the
Committee may not, without the approval of the stockholders of the Company
obtained in the manner stated in Section 21 hereof, increase the maximum number
of shares for which Options and SARs may be granted or change the designation of
the class of persons eligible to receive Options and SARs under the Plan, and
(ii) any such modification or amendment of the Plan shall be approved by a
majority of the stockholders of the Company to the extent that such stockholder
approval is necessary to comply with applicable provisions of the Code, rules
promulgated pursuant to Section 16 of the Exchange Act (if applicable),
applicable state law, or applicable NASD or exchange listing requirements.
Termination or any modification or amendment of the Plan shall not, without the
consent of a grantee, affect his or her rights under an Option or SAR
theretofore granted to him or her.


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<PAGE>

      23. Limitation of Rights in the Option Shares.

      A grantee shall not be deemed for any purpose to be a stockholder of the
Company with respect to any of the Options except to the extent that the Option
shall have been exercised with respect thereto and, in addition, a certificate
shall have been issued theretofore and delivered to the grantee.

      24. Notices.

      Any communication or notice required or permitted to be given under the
Plan shall be in writing, and mailed by registered or certified mail or
delivered by hand, if to the Company, to the attention of the Chief Executive
Officer at the Company's principal place of business; and, if to a grantee, to
his or her address as it appears on the records of the Company.

      25. Prohibited Transactions.

      "Discretionary Transactions" within the meaning of paragraph (b)(1) of
Rule 16b-3 promulgated under the Exchange Act shall be prohibited under the
Plan.


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