EXHIBIT 10.7
                              U.S. ELECTRICAR, INC.
                             1996 STOCK OPTION PLAN


         1. Purposes of the Plan.  The purposes of this Stock Option Plan are to
attract and retain the best  available  personnel for  positions of  substantial
responsibility,  to provide  additional  incentive to  Employees,  Directors and
Consultants  of the Company and its  Subsidiaries  and to promote the success of
the Company's  business.  Options  granted under the Plan may be Incentive Stock
Options or Non-Qualified  Stock Options,  as determined by the  Administrator at
the time of grant.

         2. Definitions. As used herein, the following definitions shall apply:

                  a.  "Administrator"  means the Board or any of the  Committees
appointed to administer the Plan.

                  b.  "Affiliate"  and  "Associate"  shall  have the  respective
meanings  ascribed to such terms in Rule 12b-2  promulgated  under the  Exchange
Act.

                  c. "Applicable Laws" means the legal requirements  relating to
the administration of stock option plans, if any, under applicable provisions of
federal  securities  laws,  state  corporate and securities  laws, the Code, the
rules of any applicable stock exchange or national market system,  and the rules
of any foreign jurisdiction applicable to Options granted to residents therein.

                  d. "Board" means the Board of Directors of the Company

                  e. "Code" means the Internal Revenue Code of 1986, as amended.

                  f. "Committee"  means any committee  appointed by the Board to
administer the Plan.

                  g. "Common Stock" means the common stock of the Company.

                  h.  "Company"  means  U.S.  Electricar,   Inc.,  a  California
corporation.

                  i. "Consultant" means any person who is engaged by the Company
or any Parent or  Subsidiary  to render  consulting  or advisory  services as an
independent contractor and is compensated for such services.

                  j.  "Continuing  Directors"  means  members  of the  Board who
either  (i) have  been  Board  members  continuously  for a  period  of at least
thirty-six  (36) months or (ii) have been Board members for less than thirty-six
(36) months and were  elected or nominated  for election as Board  members 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.

                  k. "Continuous Status as an Employee,  Director or Consultant"
means that the employment, director or consulting relationship with the Company,
any Parent, or Subsidiary,  is not interrupted or terminated.  Continuous Status
as an Employee, Director or Consultant shall not

                                       1.

<PAGE>



be considered  interrupted  in the case of (i) any leave of absence  approved by
the Company or (ii)  transfers  between  locations of the Company or between the
Company,  its  Parent,  any  Subsidiary,  or any  successor.  A leave of absence
approved by the Company shall include sick leave,  military  leave, or any other
personal  leave  approved by an authorized  representative  of the Company.  For
purposes of Incentive Stock Options,  no such leave may exceed ninety (90) days,
unless  reemployment  upon  expiration of such leave is guaranteed by statute or
contract.

                  l.  "Corporate   Transaction"   means  any  of  the  following
stockholder-approved transactions to which the Company is a party:

                           i. 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;

                           ii. the sale, transfer or other disposition of all or
substantially  all of the assets of the Company  (including the capital stock of
the  Company's   subsidiary   corporations)  in  connection  with  the  complete
liquidation or dissolution of the Company; or

                           iii.  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.

                  m.  "Covered  Employee"  means an  Employee  who is a "covered
employee" under Section 162(m)(3) of the Code.

                  n. "Director" means a member of the Board.

                  o.  "Employee"  means any  person,  including  an  Officer  or
Director,  who is an employee of the Company or any Parent or  Subsidiary of the
Company for purposes of Section 422 of the Code. The payment of a director's fee
by the  Company  shall  not be  sufficient  to  constitute  "employment"  by the
Company.

                  p. "Exchange  Act" means the Securities  Exchange Act of 1934,
as amended.

                  q. "Fair Market  Value"  means,  as of any date,  the value of
Common Stock determined as follows:

                           i. Where there exists a public  market for the Common
Stock,  the Fair Market  Value shall be (A) the closing  sales price for a Share
for the last market trading day prior to the time of the  determination  (or, if
no sales were  reported on that date,  on the last  trading  date on which sales
were reported) on the stock exchange  determined by the  Administrator to be the
primary market for the Common Stock or the Nasdaq National Market,  whichever is
applicable  or (B) if the  Common  Stock is not traded on any such  exchange  or
national  market  system,  the average of the closing bid and asked  prices of a
Share  on the  Nasdaq  Small  Cap  Market  for the day  prior to the time of the
determination  (or, if no such prices  were  reported on that date,  on the last
date on which such prices were reported),  in each case, as reported in The Wall
Street Journal or such other source as the Administrator deems reliable; or


                                       2.
<PAGE>


                           ii. In the  absence of an  established  market of the
type  described  in (i),  above,  for the Common  Stock,  the Fair Market  Value
thereof shall be determined by the Administrator in good faith.

                  r.  "Incentive  Stock  Option"  means an  Option  intended  to
qualify as an incentive  stock  option  within the meaning of Section 422 of the
Code

                  s.  "Non-Qualified  Stock Option" means an Option not intended
to qualify as an Incentive Stock Option.

                  t.  "Officer"  means a person who is an officer of the Company
within  the  meaning  of  Section  16 of the  Exchange  Act  and the  rules  and
regulations promulgated thereunder.

                  u. "Option" means a stock option granted pursuant to the Plan.

                  v. "Option  Agreement" means the written agreement  evidencing
the grant of an Option  executed by the Company and the Optionee,  including any
amendments thereto.

                  w.  "Optioned  Stock"  means the  Common  Stock  subject to an
Option.

                  x.  "Optionee"  means an Employee,  Director or Consultant who
receives an Option under the Plan.

                  y.  "Parent"  means a  "parent  corporation,"  whether  now or
hereafter existing, as defined in Section 424(e) of the Code.

                  z.  "Performance  -  Based  Compensation"  means  compensation
qualifying as "performance-based compensation" under Section 162(m) of the Code.

                  aa. "Plan" means this 1996 Stock Option Plan.

                  bb.  "Rule  16b-3"  means  Rule  16b-3  promulgated  under the
Exchange Act or any successor thereto.

                  cc. "Share" means a share of the Common Stock.

                  dd. "Subsidiary" means a "subsidiary corporation", whether now
or hereafter existing, as defined in Section 424(f) of the Code.



                                       3.
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         3. Stock Subject to the Plan.

                  a. Subject to the provisions of Section 10, below, the maximum
aggregate  number of Shares  which may be  optioned  and sold  under the Plan is
45,000,000  Shares.  The Shares may be authorized,  but unissued,  or reacquired
Common Stock.

                  b. If an  Option  expires  or  becomes  unexercisable  without
having been exercised in full, or is surrendered  pursuant to an Option exchange
program,  such  unissued or retained  Shares shall become  available  for future
grant under the Plan (unless the Plan has terminated). Shares that actually have
been  issued  under  the Plan  shall not be  returned  to the Plan and shall not
become available for future distribution under the Plan, except that if unvested
Shares are forfeited,  or repurchased by the Company at their original  purchase
price, such Shares shall become available for future grant under the Plan.

         4. Administration of the Plan.

                  a. Plan Administrator.

                           i.  Administration  with  Respect  to  Directors  and
Officers.  With respect to grants of Options to  Directors or Employees  who are
also Officers or Directors of the Company, the Plan shall be administered by (A)
the Board or (B) a Committee  designated by the Board,  which Committee shall be
constituted  in such a manner as to satisfy  the  Applicable  Laws and to permit
such grants and related  transactions  under the Plan to be exempt from  Section
16(b) of the Exchange Act in accordance with Rule 16b-3.  Once  appointed,  such
Committee  shall  continue to serve in its designated  capacity until  otherwise
directed by the Board.

                           ii.  Administration  With Respect to Consultants  and
Other  Employees.  With respect to grants of Options to Employees or Consultants
who are  neither  Directors  nor  Officers  of the  Company,  the Plan  shall be
administered by (A) the Board or (B) a Committee  designated by the Board, which
Committee  shall be  constituted  in such a manner as to satisfy the  Applicable
Laws. Once  appointed,  such Committee shall continue to serve in its designated
capacity until otherwise  directed by the Board.  The Board may authorize one or
more  Officers to grant such  Options and may limit such  authority by requiring
that such  Options  must be reported to and ratified by the Board or a Committee
within six (6) months of the grant date, and if so ratified,  shall be effective
as of the grant date.

                           iii.   Administration   With   Respect   to   Covered
Employees.  Notwithstanding  the  foregoing,  grants of Options  to any  Covered
Employee  intended to qualify as  Performance-Based  Compensation  shall be made
only by a Committee (or  subcommittee of a Committee)  which is comprised solely
of two or more  Directors  eligible  to  serve  on a  committee  making  Options
qualifying  as  Performance-Based  Compensation.  In the  case of  such  Options
granted  to  Covered  Employees,  references  to  the  "Administrator"  or  to a
"Committee" shall be deemed to be references to such Committee or subcommittee.

                           iv. Administration  Errors. In the event an Option is
granted in a manner  inconsistent  with the provisions of this  subsection  (a),
such  Option  shall be  presumptively  valid as of its grant  date to the extent
permitted by the Applicable Laws.

                                       4.
<PAGE>



                  b. Powers of the Administrator. Subject to Applicable Laws and
the   provisions  of  the  Plan   (including  any  other  powers  given  to  the
Administrator  hereunder),  and except as otherwise  provided by the Board,  the
Administrator shall have the authority, in its discretion:

                           i. to select the Employees, Directors and Consultants
to whom Options may be granted from time to time hereunder;

                           ii. to determine  whether and to what extent  Options
are granted hereunder;

                           iii. to determine  the number of Shares to be covered
by each Option granted hereunder;

                           iv.  to  approve  forms of Option  Agreement  for use
under the Plan;

                           v. to  determine  the  terms  and  conditions  of any
Option granted hereunder;

                           vi. to establish additional terms, conditions,  rules
or  procedures  to  accommodate   the  rules  or  laws  of  applicable   foreign
jurisdictions  and to afford  Optionees  favorable  treatment  under  such laws;
provided,  however,  that no Option shall be granted  under any such  additional
terms,  conditions,  rules or  procedures  with  terms or  conditions  which are
inconsistent with the provisions of the Plan;

                           vii.  to amend  the terms of any  outstanding  Option
granted  under the Plan,  including a  reduction  in the  exercise  price of any
Option to reflect a reduction in the Fair Market Value of the Common Stock since
the grant date of the Option,  provided that any amendment that would  adversely
affect the  Optionee's  rights  under an  outstanding  Option  shall not be made
without the Optionee's written consent;

                           viii. to construe and interpret the terms of the Plan
and Options granted pursuant to the Plan; and

                           ix. to take such other action,  not inconsistent with
the terms of the Plan, as the Administrator deems appropriate.

                  c.  Effect  of   Administrator's   Decision.   All  decisions,
determinations and  interpretations of the Administrator shall be conclusive and
binding on all persons.

         5.  Eligibility.   Non-Qualified   Stock  Options  may  be  granted  to
Employees,  Directors and  Consultants.  Incentive  Stock Options may be granted
only to Employees.  An Employee,  Director or Consultant who has been granted an
Option may, if otherwise eligible, be granted additional Options. Options may be
granted to such Employees of the Company and its  subsidiaries  who are residing
in foreign jurisdictions as the Administrator may determine from time to time.

         6. Terms and Conditions of Options.

                  a. Designation of Options.  Each Option shall be designated as
either an  Incentive  Stock Option or a  Non-Qualified  Stock  Option.  However,
notwithstanding such



                                       5.
<PAGE>


designation,  to the  extent  that the  aggregate  Fair  Market  Value of Shares
subject  to  Options   designated  as  Incentive   Stock  Options  which  become
exercisable  for the first time by an Optionee  during any calendar  year (under
all plans of the Company or any Parent or  Subsidiary)  exceeds  $100,000,  such
excess  Options,  to the extent of the Shares  covered  thereby in excess of the
foregoing limitation,  shall be treated as Non-Qualified Stock Options. For this
purpose,  Incentive  Stock  Options  shall be taken into account in the order in
which  they were  granted,  and the Fair  Market  Value of the  Shares  shall be
determined as of the date the Option with respect to such Shares is granted.

                  b. Conditions of Option. Subject to the terms of the Plan, the
Administrator  shall  determine the  provisions,  terms,  and conditions of each
Option  including,  but not limited to, the Option vesting schedule (which in no
case  shall be less than 20% per year over five  years  from the date of grant),
repurchase  provisions,  rights of first  refusal,  forfeiture  provisions,  and
satisfaction of any performance  criteria.  The performance criteria established
by the  Administrator may be based on any one of, or combination of, increase in
share price,  earnings per share,  total stockholder  return,  return on equity,
return on  assets,  return on  investment,  net  operating  income,  cash  flow,
revenue,  economic value added, personal management objectives, or other measure
of  performance  selected  by  the  Administrator.  Partial  achievement  of the
specified  criteria  may  result  in  vesting  corresponding  to the  degree  of
achievement as specified in the Option Agreement.

                  c. Term of Option.  The term of each Option  shall be the term
stated in the Option Agreement, provided, however, that the term of an Incentive
Stock  Option  shall  be no more  than  ten  (10)  years  from the date of grant
thereof.  However,  in the  case of an  Incentive  Stock  Option  granted  to an
Optionee who, at the time the Option is granted,  owns stock  representing  more
than ten  percent  (10%) of the  voting  power  of all  classes  of stock of the
Company or any Parent or  Subsidiary,  the term of the Option  shall be five (5)
years from the date of grant  thereof or such shorter term as may be provided in
the Option Agreement.

                  d. Transferability of Options. Incentive Stock Options may not
be sold, pledged,  assigned,  hypothecated,  transferred,  or disposed of in any
manner other than by will or by the laws of descent or  distribution  and may be
exercised,   during  the  lifetime  of  the  Optionee,  only  by  the  Optionee.
Non-Qualified  Stock Options shall be transferable to the extent provided in the
Option Agreement.

                  e. Time of  Granting  Options.  The date of grant of an Option
shall  for all  purposes,  be the  date on which  the  Administrator  makes  the
determination  to grant such Option,  or such other date as is determined by the
Administrator.  Notice  of the  grant  determination  shall  be  given  to  each
Employee,  Director  or  Consultant  to whom an  Option is so  granted  within a
reasonable time after the date of such grant.


                                       6.
<PAGE>

         7. Option Exercise Price, Consideration and Taxes.

                  a. Exercise  Price.  The exercise price for an Option shall be
as follows:

                           i. In the case of an Incentive Stock Option:

                                    (1) granted to an Employee  who, at the time
of the grant of such Incentive  Stock Option owns stock  representing  more than
ten percent  (10%) of the voting power of all classes of stock of the Company or
any Parent or  Subsidiary,  the per Share  exercise price shall be not less than
one hundred ten percent (110%) of the Fair Market Value per Share on the date of
grant.

                                    (2)  granted to any  Employee  other than an
Employee  described in the preceding  paragraph,  the per Share  exercise  price
shall be not less than one hundred  percent  (100%) of the Fair Market Value per
Share on the date of grant.

                           ii. In the case of  Options  intended  to  qualify as
Performance-Based  Compensation,  the per Share exercise price shall be not less
than one hundred  percent  (100%) of the Fair Market Value per Share on the date
of grant.

                           iii. In the case of a Non-Qualified Stock Option:

                                    (1)  granted to a person who, at the time of
the grant of such Option, owns stock representing more than ten percent (10%) of
the  voting  power of all  classes  of stock of the  Company  or any  Parent  or
Subsidiary,  the per Share exercise price shall be no less than 110% of the Fair
Market Value per Share on the date of the grant.

                                    (2)  granted  to any  person,  the per Share
exercise  price shall be no less than 85% of the Fair Market  Value per Share on
the date of grant.

                  b.   Consideration.    Subject   to   Applicable   Laws,   the
consideration  to be paid for the Shares to be issued upon exercise of an Option
including the method of payment,  shall be determined by the Administrator (and,
in the case of an Incentive  Stock  Option,  shall be  determined at the time of
grant).  In addition to any other types of consideration  the  Administrator may
determine, the Administrator is authorized to accept as consideration for Shares
issued under the Plan the following:

                           i. cash;

                           ii. check;

                           iii. delivery of Optionee's promissory note with such
recourse,  interest,  security,  and redemption  provisions as the Administrator
determines as appropriate;

                           iv.  surrender of Shares  (including  withholding  of
Shares  otherwise  deliverable  upon  exercise of the Option)  which have a Fair
Market Value on the date of surrender  equal to the aggregate  exercise price of
the Shares as to which said Option shall be exercised (but



                                       7.
<PAGE>


only to the  extent  that such  exercise  of the  Option  would not result in an
accounting  compensation  charge  with  respect  to the  Shares  used to pay the
exercise price unless otherwise determined by the Administrator);

                           v. delivery of a properly  executed  exercise  notice
together with such other  documentation as the  Administrator and the broker, if
applicable,  shall  require to effect an exercise of the Option and  delivery to
the Company of the sale or loan proceeds required to pay the exercise price; or

                           vi.  any  combination  of the  foregoing  methods  of
payment.

                  c. Taxes.  No Shares shall be delivered  under the Plan to any
Optionee  or  other  person  until  such  Optionee  or  other  person  has  made
arrangements  acceptable  to  the  Administrator  for  the  satisfaction  of any
foreign,  federal,  state,  or  local  income  and  employment  tax  withholding
obligations,  including, without limitation, obligations incident to the receipt
of Shares or the disqualifying  disposition of Shares received on exercise of an
Incentive Stock Option.  Upon exercise of an Option,  the Company shall withhold
or collect from Optionee an amount sufficient to satisfy such tax obligations.

         8. Exercise of Option.

                  a. Procedure for Exercise: Rights as a Stockholder.

                           i. Any Option granted  hereunder shall be exercisable
at such times and under such conditions as determined by the Administrator under
the terms of the Plan and specified in the Option Agreement.

                           ii. An Option  shall be deemed to be  exercised  when
written notice of such exercise has been given to the Company in accordance with
the terms of the Option by the person  entitled to exercise  the Option and full
payment for the Shares with  respect to which the Option is  exercised  has been
received by the Company.  Until the issuance  (as  evidenced by the  appropriate
entry on the books of the Company or of a duly authorized  transfer agent of the
Company) of the stock  certificate  evidencing such Shares,  no right to vote or
receive  dividends or any other rights as a stockholder shall exist with respect
to Optioned Stock,  notwithstanding the exercise of an Option. The Company shall
issue (or cause to be issued) such stock  certificate  promptly upon exercise of
the Option.  No adjustment  will be made for a dividend or other right for which
the record date is prior to the date the stock certificate is issued,  except as
provided in the Option Agreement or Section 10, below.

                  b. Exercise of Option  Following  Termination  of  Employment,
Director or Consulting Relationship.

                           i.  Upon  termination  of  an  Optionee's  Continuous
Status as an Employee,  Director or  Consultant,  other than upon the Optionee's
death or  disability,  the Optionee  may exercise his or her Option  within such
period of time as is  specified  in the Option  Agreement to the extent that the
Option is  vested on the date of  termination  (but in no event  later  than the
expiration of the term of such Option as set forth in the Option Agreement).  In
the absence of a specified time in the Option Agreement, the Option shall remain
exercisable for three (3) months  following the Optionee's  termination.  If, on
the date of  termination,  the  Optionee  is not  vested as to his or her entire
Option,



                                       8.
<PAGE>


the Shares  covered by the  unvested  portion of the Option  shall revert to the
Plan.  If, after  termination,  the Optionee does not exercise his or her Option
within the time specified by the Administrator,  the Option shall terminate, and
the Shares covered by such Option shall revert to the Plan.

                           ii.   Disability   of  Optionee.   If  an  Optionee's
Continuous Status as an Employee,  Director or Consultant terminates as a result
of the Optionee's disability, the Optionee may exercise the Option to the extent
the Option is vested on the date of  termination,  but only  within  twelve (12)
months  from  the  date of such  termination  (and in no  event  later  than the
expiration  date  of the  term  of  such  Option  as  set  forth  in the  Option
Agreement).  If such disability is not a "disability" as such term is defined in
Section  22(e)(3) of the Code,  in the case of an  Incentive  Stock  Option such
Incentive  Stock Option shall  automatically  convert to a  Non-Qualified  Stock
Option on the day three months and one day following  such  termination.  If, on
the date of termination, the Optionee is not vested as to the entire Option, the
Shares  covered by the unvested  portion of the Option shall revert to the Plan.
If, after  termination,  the Option is not exercised  within the time  specified
herein, the Option shall terminate,  and the Shares covered by such Option shall
revert to the Plan.

                           iii. Death of Optionee.  In the event of the death of
an Optionee,  the Option may be exercised at any time within  twelve (12) months
following  the date of death (but in no event later than the  expiration  of the
term of such Option as set forth in the Option  Agreement)  to the extent vested
on the date of death. If, at the time of death, the Optionee is not vested as to
the entire  Option,  the Shares  covered by the  unvested  portion of the Option
shall  revert to the Plan.  The  Option  may be  exercised  by the  executor  or
administrator of the Optionee's estate or, if none, by the person(s) entitled to
exercise  the  Option  under  the  Optionee's  will or the  laws of  descent  or
distribution.  If the  Option  is not so  exercised  within  the time  specified
herein, the Option shall terminate,  and the Shares covered by such Option shall
revert to the Plan.

                  c. Buyout Provisions.  The Administrator may at any time offer
to buy out for a payment in cash or Shares, an Option previously granted,  based
on  such  terms  and  conditions  as  the  Administrator   shall  establish  and
communicate to the Optionee at the time that such offer is made.

         9.       Conditions Upon Issuance of Shares.

                  a. Shares  shall not be issued  pursuant to the exercise of an
Option  unless the exercise of such Option and the issuance and delivery of such
Shares  pursuant  thereto shall comply with all  Applicable  Laws,  and shall be
further  subject to the approval of counsel for the Company with respect to such
compliance.

                  b. As a condition  to the  exercise of an Option,  the Company
may require the person  exercising  such Option to represent  and warrant at the
time of any  such  exercise  that  the  Shares  are  being  purchased  only  for
investment and without any present  intention to sell or distribute  such Shares
if, in the opinion of counsel for the Company, such a representation is required
by any Applicable Laws.

         10. Adjustments Upon Changes in Capitalization. Subject to any required
action by the stockholders of the Company,  the number of Shares covered by each
outstanding  Option,  and the number of Shares  which have been  authorized  for
issuance under the Plan but as to which no Options


                                       9.
<PAGE>

have yet been  granted or which have been  returned to the Plan,  as well as the
price per share of Common Stock covered by each such outstanding  Option,  shall
be proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split,  reverse stock split, stock
dividend,  combination  or  reclassification  of the Common Stock,  or any other
similar  event  resulting  in an  increase  or  decrease in the number of issued
shares of Common Stock.  Except as expressly provided herein, no issuance by the
Company of shares of stock of any class, or securities  convertible  into shares
of stock of any class, shall affect, and no adjustment by reason hereof shall be
made with respect to, the number or price of Shares subject to an Option.

         11. Corporate Transactions.

                  a. In the  event of any  Corporate  Transaction,  each  Option
which is at the time outstanding under the Plan automatically shall become fully
vested and  exercisable  and be released from any  restrictions  on transfer and
repurchase or forfeiture  rights,  immediately prior to the specified  effective
date  of  such  Corporate  Transaction,  for  all of  the  Shares  at  the  time
represented by such Option.  However, an outstanding Option under the Plan shall
not so fully vest and be exercisable  and released from such  limitations if and
to the extent: (i) such Option is, in connection with the Corporate Transaction,
either to be assumed by the  successor  corporation  or Parent  thereof or to be
replaced with a comparable Option with respect to shares of the capital stock of
the  successor  corporation  or Parent  thereof,  or (ii)  such  Option is to be
replaced  with a cash  incentive  program  of the  successor  corporation  which
preserves the  compensation  element of such Option  existing at the time of the
Corporate  Transaction and provides for subsequent payout in accordance with the
same vesting  schedule  applicable to such Option.  The  determination of Option
comparability under clause (i) above shall be made by the Administrator, and its
determination shall be final, binding and conclusive.

                  b.   Effective   upon  the   consummation   of  the  Corporate
Transaction, all outstanding Options under the Plan shall terminate and cease to
remain outstanding, except to the extent assumed by the successor company or its
Parent.

                  c. The portion of any Incentive Stock Option accelerated under
this  Section  11 in  connection  with  a  Corporate  Transaction  shall  remain
exercisable  as an Incentive  Stock Option under the Code only to the extent the
$100,000 dollar limitation of Section 422(d) of the Code is not exceeded. To the
extent such dollar  limitation is exceeded,  the  accelerated  excess portion of
such Option shall be exercisable as a Non-Qualified Stock Option.

         12. Term of Plan.  The Plan shall become  effective upon the earlier to
occur of its  adoption by the Board or its approval by the  stockholders  of the
Company.  It shall continue in effect for a term of ten (10) years unless sooner
terminated.

         13. Amendment, Suspension or Termination of the Plan.

                  a. The Board may at any time amend,  suspend or terminate  the
Plan. To the extent  necessary to comply with Applicable Laws, the Company shall
obtain stockholder approval of any Plan amendment in such a manner and to such a
degree as required.

                  b. No Option may be granted  during any suspension of the Plan
or after termination of the Plan.



                                      10.
<PAGE>

                  c. Any amendment,  suspension or termination of the Plan shall
not affect Options already granted,  and such Options shall remain in full force
and effect as if the Plan had not been amended, suspended or terminated,  unless
mutually  agreed  otherwise  between the Optionee and the  Administrator,  which
agreement must be in writing and signed by the Optionee and the Company.

         14. Reservation of Shares.

                  a. The Company, during the term of the Plan, will at all times
reserve  and keep  available  such  number of Shares as shall be  sufficient  to
satisfy the requirements of the Plan.

                  b. The inability of the Company to obtain  authority  from any
regulatory body having jurisdiction,  which authority is deemed by the Company's
counsel to be necessary to the lawful issuance and sale of any Shares hereunder,
shall relieve the Company of any liability in respect of the failure to issue or
sell  such  Shares  as to which  such  requisite  authority  shall not have been
obtained.

         15. No Effect on Terms of  Employment.  The Plan shall not confer  upon
any Optionee any right with respect to  continuation of employment or consulting
relationship with the Company, nor shall it interfere in any way with his or her
right or the Company's  right to terminate  his or her  employment or consulting
relationship at any time, with or without cause.

         16.  Stockholder  Approval.  The grant of Incentive Stock Options under
the Plan shall be subject to approval by the  stockholders of the Company within
twelve  (12)  months  before  or  after  the  date  the  Plan is  adopted.  Such
stockholder  approval shall be obtained in the degree and manner  required under
Applicable Laws. The  Administrator  may grant Incentive Stock Options under the
Plan prior to approval by the stockholders, but until such approval is obtained,
no  such  Incentive  Stock  Option  shall  be  exercisable.  In the  event  that
stockholder  approval  is not  obtained  within  the twelve  (12)  month  period
provided above,  all Incentive Stock Options  previously  granted under the Plan
shall terminate.

         17. Information to Optionees and Purchasers.  The Company shall provide
to each Optionee, not less frequently than annually,  copies of annual financial
statements.  The Company shall also provide such  statements to each  individual
who acquires Shares pursuant to the Plan while such individual owns such Shares.
The Company  shall not be  required to provide  such  statements  to  Employees,
Directors or  Consultants  whose duties in  connection  with the Company  assure
their access to equivalent information.



                                      11.