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                                                                 EXHIBIT 10.9


                                 AUDIONET, INC.

                             1998 STOCK OPTION PLAN

                                AUGUST 19, 1997
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                               TABLE OF CONTENTS


<TABLE>
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ARTICLE I   PURPOSE OF PLAN . . . . . . . . . . . . . . . . . . . . . . . .  1

ARTICLE II  EFFECTIVE DATE AND TERM OF PLAN . . . . . . . . . . . . . . . .  1

     2.1 Term of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . .  1
     2.2 Effect on Stock Options  . . . . . . . . . . . . . . . . . . . . .  1
     2.3 Stockholder Approval . . . . . . . . . . . . . . . . . . . . . . .  1

ARTICLE III SHARES SUBJECT TO PLAN  . . . . . . . . . . . . . . . . . . . .  1
                                                                         
     3.1 Number of Shares . . . . . . . . . . . . . . . . . . . . . . . . .  1
     3.2 Source of Shares . . . . . . . . . . . . . . . . . . . . . . . . .  1
     3.3 Availability of Unused Shares  . . . . . . . . . . . . . . . . . .  2
     3.4 Adjustment Provisions  . . . . . . . . . . . . . . . . . . . . . .  2
     3.5 Reservation of Shares  . . . . . . . . . . . . . . . . . . . . . .  2
                                                                         
ARTICLE IV ADMINISTRATION OF PLAN . . . . . . . . . . . . . . . . . . . . .  3
                                                                         
     4.1 Administering Body . . . . . . . . . . . . . . . . . . . . . . . .  3
     4.2 Authority of Administering Body  . . . . . . . . . . . . . . . . .  3
     4.3 No Liability . . . . . . . . . . . . . . . . . . . . . . . . . . .  4
     4.4 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . .  4
     4.5 Other Compensation Plans . . . . . . . . . . . . . . . . . . . . .  5
     4.6 Plan Binding on Successors . . . . . . . . . . . . . . . . . . . .  5
     4.7 References to Successor Statutes, Regulations and Rules  . . . . .  5
     4.8 Issuances for Compensation Purposes Only . . . . . . . . . . . . .  5
     4.9 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . . . .  5
     4.10 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . .  6
                                                                         
ARTICLE V GENERAL AWARD PROVISIONS  . . . . . . . . . . . . . . . . . . . .  6
                                                                         
     5.1 Participation in the Plan  . . . . . . . . . . . . . . . . . . . .  6
     5.2 Stock Option Documents . . . . . . . . . . . . . . . . . . . . . .  6
     5.3 Exercise of Stock Options  . . . . . . . . . . . . . . . . . . . .  6
     5.4 Payment for Stock Options  . . . . . . . . . . . . . . . . . . . .  7
     5.5 No Employment Rights . . . . . . . . . . . . . . . . . . . . . . .  7
     5.6 Restrictions Under Applicable Laws and Regulations . . . . . . . .  8
     5.7 Additional Conditions  . . . . . . . . . . . . . . . . . . . . . .  9
     5.8 No Privileges of Stock Ownership . . . . . . . . . . . . . . . . .  9
     5.9 Nonassignability . . . . . . . . . . . . . . . . . . . . . . . . .  9
     5.10 Information to Recipients . . . . . . . . . . . . . . . . . . . . 10
</TABLE>                                                                 



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     5.11 Withholding Taxes . . . . . . . . . . . . . . . . . . . . . . . . 10
     5.12 Legends on Stock Options and Stock Certificates . . . . . . . . . 10
     5.13 Effect of Termination of Employment on Stock Options  . . . . . . 11
     5.14 Limits on Stock Options to Certain Eligible Persons . . . . . . . 12
                                                                         
ARTICLE VI STOCK OPTIONS  . . . . . . . . . . . . . . . . . . . . . . . . . 12
                                                                         
     6.1 Nature of Stock Options  . . . . . . . . . . . . . . . . . . . . . 12
     6.2 Option Exercise Price  . . . . . . . . . . . . . . . . . . . . . . 12
     6.3 Option Period and Vesting  . . . . . . . . . . . . . . . . . . . . 12
     6.4 Special Provisions Regarding Incentive Stock Options . . . . . . . 13
                                                                         
ARTICLE VII REORGANIZATIONS . . . . . . . . . . . . . . . . . . . . . . . . 13
                                                                         
     7.1 Corporate Transactions Not Involving a Change in Control . . . . . 13
     7.2 Corporate Transactions Involving a Change in Control . . . . . . . 13
                                                                         
ARTICLE VIII DEFINITIONS  . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>



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<PAGE>   4
                                 AUDIONET, INC.
                             1998 STOCK OPTION PLAN                

                       -----------------------------------

                                   ARTICLE I
                                PURPOSE OF PLAN

         The Company has adopted this Plan to promote the interests of the
Company and its stockholders by using investment interests in the Company to
attract, retain and motivate its management and other persons, to encourage and
reward their contributions to the performance of the Company and to align their
interests with the interests of the Company's stockholders.  Capitalized terms
not otherwise defined herein shall have the meanings ascribed to them in
Article VIII.

                                   ARTICLE II
                        EFFECTIVE DATE AND TERM OF PLAN

         2.1     TERM OF PLAN.  This Plan became effective as of the Effective
Date and shall continue in effect until the Expiration Date, at which time this
Plan shall automatically terminate.

         2.2     EFFECT ON STOCK OPTIONS.  Stock Options may be granted during
the Plan Term, but no Stock Options may be granted after the Plan Term.
Notwithstanding the foregoing, each Stock Option properly granted under this
Plan during the Plan Term shall remain in effect after termination of this Plan
until such Stock Option has been exercised, terminated or expired in accordance
with its terms and the terms of this Plan.

         2.3     STOCKHOLDER APPROVAL.  This Plan shall be approved by the
Company's stockholders within 12 months after the Effective Date.  The
effectiveness of any Stock Options granted prior to such stockholder approval
shall be subject to such stockholder approval.

                                  ARTICLE III
                             SHARES SUBJECT TO PLAN

         3.1     NUMBER OF SHARES.  The maximum number of shares of Common
Stock that may be issued pursuant to Stock Options granted under this Plan
shall be 2,800,000, subject to adjustment as set forth in Section 3.4.

         3.2     SOURCE OF SHARES.  The Common Stock to be issued under this
Plan will be made available, at the discretion of the Board, either from
authorized but unissued shares of Common Stock or from previously issued shares
of Common Stock reacquired by the Company, including without limitation shares
purchased on the open market.
<PAGE>   5
         3.3     AVAILABILITY OF UNUSED SHARES.  Shares of Common Stock subject
to unexercised portions of any Stock Option granted under this Plan that
expire, terminate or are canceled, and shares of Common Stock issued pursuant
to Stock Options under this Plan that are reacquired by the Company pursuant to
the terms of the Stock Options under which such shares were issued, will again
become available for the grant of further Stock Options under this Plan.

         3.4     ADJUSTMENT PROVISIONS.

                 (a)      If (i) the outstanding shares of Common Stock of the
Company are increased, decreased or exchanged for a different number or kind of
shares or other securities, or if additional shares or new or different shares
or other securities are distributed in respect of such shares of Common Stock
(or any stock or securities received with respect to such Common Stock),
through merger, consolidation, sale or exchange of all or substantially all of
the assets of the Company, reorganization, recapitalization, reclassification,
stock dividend, stock split, reverse stock split, spin-off or other
distribution with respect to such shares of Common Stock (or any stock or
securities received with respect to such Common Stock), or (ii) the value of
the outstanding shares of Common Stock of the Company is reduced by reason of
an extraordinary cash dividend, an appropriate and proportionate adjustment may
be made in (1) the maximum number and kind of shares subject to this Plan as
provided in Section 3.1, (2) the number and kind of shares or other securities
subject to then outstanding Stock Options and/or (3) the price for each share
or other unit of any other securities subject to then outstanding Stock
Options.

                 (b)      No fractional interests will be issued under this
Plan resulting from any adjustments.

                 (c)      To the extent any adjustments relate to stock or
securities of the Company, such adjustments shall be made by the Administering
Body, whose determination in that respect shall be final, binding and
conclusive.

                 (d)      The grant of Stock Options pursuant to this Plan
shall not affect in any way the right or power of the Company to make
adjustments, reclassifications, reorganizations or changes of its capital or
business structure or to merge or to consolidate or to dissolve, liquidate or
sell, or transfer all or any part of its business or assets.

                 (e)      No adjustment to the terms of an Incentive Stock
Option shall be made unless such adjustment either (i) would not cause such
Option to lose its status as an Incentive Stock Option or (ii) is agreed to in
writing by the Administering Body and the Recipient.

         3.5     RESERVATION OF SHARES.  The Company will at all times reserve
and keep available such number of shares of Common Stock as shall equal at
least the number of shares of Common Stock subject to then outstanding Stock
Options issuable in shares of Common Stock under this Plan.



                                      2
<PAGE>   6
                                   ARTICLE IV
                             ADMINISTRATION OF PLAN

         4.1     ADMINISTERING BODY.

                 (a)      Subject to the provisions of Section 4.1(b)(ii), this
Plan shall be administered by the Board or by the Stock Option Plan Committee
of the Board appointed pursuant to Section 4.1(b).

                 (b)      (i)     The Board in its sole discretion may from
time to time appoint a Stock Option Plan Committee of not less than two Board
members to administer this Plan and, subject to applicable law, to exercise all
of the powers, authority and discretion of the Board under this Plan.  The
Board may from time to time increase or decrease (but not below two) the number
of members of the Stock Option Plan Committee, remove from membership on the
Stock Option Plan Committee all or any portion of its members, and/or appoint
such person or persons as it desires to fill any vacancy existing on the Stock
Option Plan Committee, whether caused by removal, resignation or otherwise.
The Board may disband the Stock Option Plan Committee at any time and revest in
the Board the administration of this Plan.

                          (ii)    Notwithstanding the foregoing provisions of
this Section 4.1(b) to the contrary, upon becoming and so long as the Company
remains an Exchange Act Registered Company, (1) the Board shall appoint the
Stock Option Plan Committee, (2) this Plan shall be administered by the Stock
Option Plan Committee and (3) each member of the Stock Option Plan Committee
shall be a Non-employee Director, and, in addition, if Stock Options are to be
made to persons subject to Section 162(m) of the IRC and such Stock Options are
intended to constitute Performance-Based Compensation, then each member of the
Stock Option Plan Committee shall, in addition to being a Non-employee
Director, be an Outside Director.

                          (iii)   The Stock Option Plan Committee shall report
to the Board the names of Eligible Persons granted Stock Options, the number of
shares of Common Stock covered by each Stock Option and the terms and
conditions of each such Stock Option.

         4.2     AUTHORITY OF ADMINISTERING BODY.

                 (a)      Subject to the express provisions of this Plan, the
Administering Body shall have the power to interpret and construe this Plan and
any Stock Option Documents or other documents defining the rights and
obligations of the Company and Optionees hereunder and thereunder, to determine
all questions arising hereunder and thereunder, to adopt and amend such rules
and regulations for the administration hereof and thereof as it may deem
desirable, and otherwise to carry out the terms of this Plan and such Stock
Option Documents and other documents.  The interpretation and construction by
the Administering Body of any provisions of this Plan or of any Stock Option
shall be conclusive and binding.  Any action taken by, or inaction of, the
Administering Body relating to this Plan or any Stock Options shall be within
the absolute discretion of the Administering Body and shall be conclusive and
binding upon all persons.  Subject only to compliance with the express
provisions hereof, the Administering Body may act in its absolute discretion in
matters related to this Plan and any and all Stock Options.



                                      3
<PAGE>   7
                 (b)      Subject to the express provisions of this Plan, the
Administering Body may from time to time in its discretion select the Eligible
Persons to whom, and the time or times at which, Stock Options shall be
granted, the nature of each Stock Option, the number of shares of Common Stock
that make up or underlie each Stock Option, the period for the exercise of each
Stock Option, and such other terms and conditions applicable to each individual
Stock Option as the Administering Body shall determine.  The Administering Body
may grant at any time new Stock Options to an Eligible Person who has
previously received Stock Options whether such prior Stock Options are still
outstanding, have previously been exercised as a whole or in part, or are
canceled in connection with the issuance of new Stock Options.  The
Administering Body may grant Stock Options singly, in combination or in tandem
with other Stock Options, as it determines in its discretion.  Any and all
terms and conditions of the Stock Options, including exercise price, may be
established by the Administering Body without regard to existing Stock Options.

                 (c)      Any action of the Administering Body with respect to
the administration of this Plan shall be taken pursuant to a majority vote of
the authorized number of members of the Administering Body or by the unanimous
written consent of its members; provided, however, that (i) if the
Administering Body is the Stock Option Plan Committee and consists of two
members, then actions of the Administering Body must be unanimous and (ii) if
the Administering Body is the Board, actions taken at a meeting of the Board
shall be valid if approved by directors constituting a majority of the required
quorum for such meeting.

         4.3     NO LIABILITY.  No member of the Board or the Stock Option Plan
Committee or any designee thereof will be liable for any action or inaction
with respect to this Plan or any Stock Option or any transaction arising under
this Plan or any Stock Option, except in circumstances constituting bad faith
of such member.

         4.4     AMENDMENTS.

                 (a)      The Administering Body may, insofar as permitted by
applicable law, rule or regulation, from time to time suspend or discontinue
this Plan or revise or amend it in any respect whatsoever, and this Plan as so
revised or amended will govern all Stock Options hereunder, including those
granted before such revision or amendment; provided, however, that no such
revision or amendment shall alter, impair or diminish any rights or obligations
under any Stock Option previously granted under this Plan, without the written
consent of the Optionee.  Without limiting the generality of the foregoing, the
Administering Body is authorized to amend this Plan to comply with or take
advantage of amendments to applicable laws, rules or regulations, including
amendments to the Securities Act, Exchange Act or the IRC or any rules or
regulations promulgated thereunder.  No stockholder approval of any amendment
or revision shall be required unless (i) such approval is required by
applicable law, rule or regulation or (ii) an amendment or revision to this
Plan would materially increase the number of shares subject to this Plan (as
adjusted under Section 3.4), materially modify the requirements as to
eligibility for participation in this Plan, extend the final date upon which
Stock Options may be granted under this Plan, or otherwise materially increase
the benefits accruing to Recipients in a manner not specifically contemplated
herein, or affect this Plan's compliance with Rule 16b-3 or applicable



                                      4
<PAGE>   8
provisions of or regulations under the IRC, and stockholder approval of the
amendment or revision is required to comply with Rule 16b-3 or applicable
provisions of or rules under the IRC.

                 (b)      The Administering Body may, with the written consent
of an Optionee, make such modifications in the terms and conditions of a Stock
Option as it deems advisable.  Without limiting the generality of the
foregoing, the Administering Body may, in its discretion with the written
consent of Optionee, at any time and from time to time after the grant of any
Stock Option accelerate or extend the vesting or exercise period of any Stock
Option as a whole or in part, and adjust or reduce the exercise price of Stock
Options held by such Optionee by cancellation of such Stock Options and
granting of Stock Options at lower or exercise prices or by modification,
extension or renewal of such Stock Options.  In the case of Incentive Stock
Options, Recipients acknowledge that extensions of the exercise period may
result in the loss of the favorable tax treatment afforded incentive stock
options under Section 422 of the IRC.

                 (c)      Except as otherwise provided in this Plan or in the
applicable Stock Option Document, no amendment, revision, suspension or
termination of this Plan will, without the written consent of the Optionee,
alter, terminate, impair or adversely affect any right or obligation under any
Stock Option previously granted under this Plan.

         4.5     OTHER COMPENSATION PLANS.  The adoption of this Plan shall not
affect any other stock option, incentive or other compensation plans in effect
for the Company, and this Plan shall not preclude the Company from establishing
any other forms of incentive or other compensation for employees, directors,
advisors or consultants of the Company, whether or not approved by
stockholders.

         4.6     PLAN BINDING ON SUCCESSORS.  This Plan shall be binding upon
           the successors and assigns of the Company.

         4.7     REFERENCES TO SUCCESSOR STATUTES, REGULATIONS AND RULES.  Any
reference in this Plan to a particular statute, regulation or rule shall also
refer to any successor provision of such statute, regulation or rule.

         4.8     ISSUANCES FOR COMPENSATION PURPOSES ONLY.  This Plan
constitutes an "employee benefit plan" as defined in Rule 405 promulgated under
the Securities Act.  Stock Options to eligible employees or directors shall be
granted for any lawful consideration, including compensation for services
rendered, promissory notes or otherwise.  Stock Options to consultants and
advisors shall be granted only in exchange for bona fide services rendered by
such consultants or advisors and such services must not be in connection with
the offer and sale of securities in a capital-raising transaction.

         4.9     INVALID PROVISIONS.  In the event that any provision of this
Plan is found to be invalid or otherwise unenforceable under any applicable
law, such invalidity or unenforceability shall not be construed as rendering
any other provisions contained herein invalid or unenforceable, and all such
other provisions shall be given full force and effect to the same extent as
though the invalid and unenforceable provision were not contained herein.



                                      5
<PAGE>   9
         4.10    GOVERNING LAW.  This Agreement shall be governed by and
interpreted in accordance with the internal laws of the State of Delaware,
without giving effect to the principles of the conflicts of laws thereof.

                                   ARTICLE V
                             GENERAL AWARD PROVISIONS

         5.1     PARTICIPATION IN THE PLAN.

                 (a)      A person shall be eligible to receive grants of Stock
Options under this Plan if, at the time of the grant of the Stock Option, such
person is an Eligible Person.

                 (b)      Incentive Stock Options may be granted only to
Eligible Persons meeting the employment requirements of Section 422 of the IRC.

                 (c)      Notwithstanding anything to the contrary herein, the
Administering Body may, in order to fulfill the purposes of this Plan, modify
grants of Stock Options to Recipients who are foreign nationals or employed
outside of the United States to recognize differences in applicable law, tax
policy or local custom.

         5.2     STOCK OPTION DOCUMENTS.

                 (a)      Each Stock Option granted under this Plan shall be
evidenced by an agreement duly executed on behalf of the Company and by the
Recipient or, in the Stock Option Plan Committee's discretion, a confirming
memorandum issued by the Company to the Recipient, setting forth such terms and
conditions applicable to the Stock Option as the Stock Option Plan Committee
may in its discretion determine.  Stock Option Documents may but need not be
identical and shall comply with and be subject to the terms and conditions of
this Plan, a copy of which shall be provided to each Recipient and incorporated
by reference into each Stock Option Document.  Any Stock Option Document may
contain such other terms, provisions and conditions not inconsistent with this
Plan as may be determined by the Stock Option Plan Committee.

                 (b)      In case of any conflict between this Plan and any
Stock Option Document, this Plan shall control.

         5.3     EXERCISE OF STOCK OPTIONS.  No Stock Option shall be
exercisable except in respect of whole shares, and fractional share interests
shall be disregarded.  Not less than 100 shares of Common Stock (or such other
amount as is set forth in the applicable Stock Option Documents) may be
purchased at one time and Stock Options must be exercised in multiples of 100
unless the number purchased is the total number at the time available for
purchase under the terms of the Stock Option.  A Stock Option shall be deemed
to be exercised when the Secretary or other designated official of the Company
receives written notice of such exercise from the Optionee, together with
payment of the exercise price made in accordance with Section 5.4 and any
amounts required under Section 5.11.  Notwithstanding any other provision of
this Plan, the Administering Body may impose, by rule and/or in Stock Option
Documents, such conditions



                                      6
<PAGE>   10
upon the exercise of Stock Options (including without limitation conditions
limiting the time of exercise to specified periods) as may be required to
satisfy applicable regulatory requirements, including without limitation Rule
16b-3 and Rule 10b-5 under the Exchange Act, and any amounts required under
Section 5.12 or other applicable section of or regulation under the IRC.

         5.4     PAYMENT FOR STOCK OPTIONS.

                 (a)      The exercise price or other payment for a Stock
Option shall be payable upon the exercise of a Stock Option pursuant to a Stock
Option granted hereunder by delivery of legal tender of the United States or
payment of such other consideration as the Administering Body may from time to
time deem acceptable in any particular instance.

                 (b)      The Company may assist any person to whom Stock
Options are granted hereunder (including without limitation any officer or
director of the Company) in the payment of the exercise price or other amounts
payable in connection with the receipt or exercise of that Stock Option, by
lending such amounts to such person on such terms and at such rates of interest
and upon such security (if any) as shall be approved by the Administering Body.

                 (c)      In the discretion of the Administering Body, Stock
Options may be exercised by capital stock of the Company delivered in transfer
to the Company by or on behalf of the person exercising the Stock Option and
duly endorsed in blank or accompanied by stock powers duly endorsed in blank,
with signatures guaranteed in accordance with the Exchange Act if required by
the Administering Body, or retained by the Company from the stock otherwise
issuable upon exercise or surrender of vested and/or exercisable Stock Options
previously granted to the Recipient and being exercised (if applicable) (in
either case valued at Fair Market Value as of the exercise date); or such other
consideration as the Administering Body may from time to time in the exercise
of its discretion deem acceptable in any particular instance; provided,
however, that the Administering Body may, in the exercise of its discretion,
(i) allow exercise of Stock Options in a broker-assisted or similar transaction
in which the exercise price is not received by the Company until promptly after
exercise, and/or (ii) allow the Company to loan the exercise price to the
Optionee, if the exercise will be followed by a prompt sale of some or all of
the underlying shares and a portion of the sale proceeds is dedicated to full
payment of the exercise price and amounts required pursuant to Section 5.11.

         5.5     NO EMPLOYMENT RIGHTS.  Nothing contained in this Plan (or in
Stock Option Documents or in any other documents related to this Plan or to
Stock Options granted hereunder) shall confer upon any Eligible Person or
Recipient any right to continue in the employ of the Company or any Affiliated
Entity or constitute any contract or agreement of employment or engagement, or
interfere in any way with the right of the Company or any Affiliated Entity to
reduce such person's compensation or other benefits or to terminate the
employment or engagement of such Eligible Person or Recipient, with or without
cause.  Except as expressly provided in this Plan or in any statement
evidencing the grant of Stock Options pursuant to this Plan, the Company shall
have the right to deal with each Recipient in the same manner as if this Plan
and any such statement evidencing the grant of Stock Options pursuant to this
Plan did not exist, including without limitation with respect to all matters
related to the hiring, discharge,



                                      7
<PAGE>   11
compensation and conditions of the employment or engagement of the Recipient.
Any questions as to whether and when there has been a termination of a
Recipient's employment or engagement, the reason (if any) for such termination,
and/or the consequences thereof under the terms of this Plan or any statement
evidencing the grant of Stock Options pursuant to this Plan shall be determined
by the Administering Body and the Administering Body's determination thereof
shall be final and binding.

         5.6     RESTRICTIONS UNDER APPLICABLE LAWS AND REGULATIONS.

                 (a)      All Stock Options granted under this Plan shall be
subject to the requirement that, if at any time the Company shall determine, in
its discretion, that the listing, registration or qualification of the shares
subject to Stock Options granted under this Plan upon any securities exchange
or under any federal, state or foreign law, or the consent or approval of any
government regulatory body, is necessary or desirable as a condition of, or in
connection with, the granting of such Stock Options or the issuance, if any, or
purchase of shares in connection therewith, such Stock Options may not be
exercised as a whole or in part unless and until such listing, registration,
qualification, consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Company.  During the term of this Plan,
the Company will use its reasonable efforts to seek to obtain from the
appropriate regulatory agencies any requisite qualifications, consents,
approvals or authorizations in order to issue and sell such number of shares of
its Common Stock as shall be sufficient to satisfy the requirements of this
Plan.  The inability of the Company to obtain from any such regulatory agency
having jurisdiction thereof the qualifications, consents, approvals or
authorizations deemed by the Company to be necessary for the lawful issuance
and sale of any shares of its Common Stock hereunder shall relieve the Company
of any liability in respect of the nonissuance or sale of such stock as to
which such requisite authorization shall not have been obtained.

                 (b)      The Company shall be under no obligation to register
or qualify the issuance of Stock Options or underlying shares under the
Securities Act or applicable state securities laws.  Unless the issuance of
Stock Options and underlying shares have been registered under the Securities
Act and qualified or registered under applicable state securities laws, the
Company shall be under no obligation to issue any Stock Options or underlying
shares of Common Stock covered by any Stock Options unless the Stock Options
and underlying shares may be issued pursuant to applicable exemptions from such
registration or qualification requirements.  In connection with any such exempt
issuance, the Administering Body may require the Optionee to provide a written
representation and undertaking to the Company, satisfactory in form and scope
to the Company and upon which the Company may reasonably rely, that such
Optionee is acquiring such Stock Options and underlying shares for such
Optionee's own account as an investment and not with a view to, or for sale in
connection with, the distribution of any such shares of stock, and that such
person 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 Securities Act
and other applicable law, and that if shares of stock are issued without such
registration, a legend to this effect (together with any other legends deemed
appropriate by the Administering Body) may be endorsed upon the securities so
issued.  The Company may also order its transfer agent to stop transfers of
such shares.  The Administering Body may also



                                      8
<PAGE>   12
require the Optionee to provide the Company such information and other
documents as the Administering Body may request in order to satisfy the
Administering Body as to the investment sophistication and experience of the
Optionee and as to any other conditions for compliance with any such exemptions
from registration or qualification.

         5.7     ADDITIONAL CONDITIONS.  Any Stock Option may also be subject
to such other provisions (whether or not applicable to any other Stock Option
or Optionee) as the Administering Body determines appropriate including without
limitation provisions to assist the Optionee in financing the purchase of
Common Stock through the exercise of Stock Options, provisions for the
forfeiture of or restrictions on resale or other disposition of shares of
Common Stock acquired under any form of benefit, provisions giving the Company
the right to repurchase shares of Common Stock acquired under any form of
benefit in the event the Optionee elects to dispose of such shares, and
provisions to comply with federal and state securities laws and federal and
state income tax withholding requirements.

         5.8     NO PRIVILEGES OF STOCK OWNERSHIP.  Except as otherwise set
forth herein, an Optionee shall have no rights as a stockholder with respect to
any shares issuable or issued in connection with the Stock Option until the
date of the receipt by the Company of all amounts payable in connection with
exercise of the Stock Option and performance by the Optionee of all obligations
thereunder.  Status as an Eligible Person shall not be construed as a
commitment that any Stock Option will be granted under this Plan to an Eligible
Person or to Eligible Persons generally.  No person shall have any right, title
or interest in any fund or in any specific asset (including shares of capital
stock) of the Company by reason of any Stock Option granted hereunder.  Neither
this Plan (or any documents related hereto) nor any action taken pursuant
hereto shall be construed to create a trust of any kind or a fiduciary
relationship between the Company and any person.  To the extent that any person
acquires a right to receive Stock Options hereunder, such right shall be no
greater than the right of any unsecured general creditor of the Company.

         5.9     NONASSIGNABILITY.         No Stock Option granted under this
Plan shall be assignable or transferable except (a) by will or by the laws of
descent and distribution, or (b) subject to the final sentence of this Section
5.9, upon dissolution of marriage pursuant to a qualified domestic relations
order or, in the discretion of the Administering Body and under circumstances
that would not adversely affect the interests of the Company, pursuant to a
nominal transfer that does not result in a change in beneficial ownership;
provided, however, that the Administering Body may in the applicable Stock
Option Document evidencing Stock Options granted hereunder or at any time
thereafter provide that Stock Options granted hereunder may be transferred
without consideration by the Recipient, subject to such rules as the
Administering Body may adopt to preserve the purposes of the Plan, to one or
more Permitted Transferees; provided further, that the Recipient gives the
Administering Body advance written notice describing the terms and conditions
of the proposed transfer and the Administering Body notifies the Recipient in
writing that such transfer would comply with the requirements of the Plan and
any applicable Stock Option Document.  The terms of any Stock Option
transferred to Permitted Transferees in accordance with the immediately
preceding sentence shall apply to the Permitted Transferee, except that (a)
Permitted Transferees shall not be entitled to transfer any Stock Options,
other



                                      9
<PAGE>   13
than by will or the laws of descent and distribution; and (b) Permitted
Transferees shall not be entitled to exercise any transferred Stock Options
unless there shall be in effect a registration statement on an appropriate form
covering the shares of Common Stock to be acquired pursuant to the exercise of
such Stock Option if the Administering Body determines that such a registration
statement is necessary or appropriate.  During the lifetime of an Optionee,
Stock Options shall be exercisable only by the Optionee or such person's
guardian or legal representative.

         Notwithstanding the foregoing, (a) no Stock Option owned by an
Optionee subject to Section 16 of the Exchange Act may be assigned or
transferred in any manner inconsistent with Rule 16b-3, and (b) Incentive Stock
Options (or other Stock Options subject to transfer restrictions under the IRC)
may not be assigned or transferred in violation of Section 422(b)(5) of the IRC
(or any comparable or successor provision) or the regulations thereunder, and
nothing herein is intended to allow such assignment or transfer.

         5.10    INFORMATION TO OPTIONEES.

                 (a)      The Administering Body in its sole discretion shall
determine what, if any, financial and other information shall be provided to
Optionees and when such financial and other information shall be provided after
giving consideration to applicable federal and state laws, rules and
regulations, including without limitation applicable federal and state
securities laws, rules and regulations.

                 (b)      The furnishing of financial and other information
that is confidential to the Company shall be subject to the Optionee's
agreement that the Optionee shall maintain the confidentiality of such
financial and other information, shall not disclose such information to third
parties, and shall not use the information for any purpose other than
evaluating an investment in the Company's securities under this Plan.  The
Administering Body may impose other restrictions on the access to and use of
such confidential information and may require an Optionee to acknowledge the
Optionee's obligations under this Section 5.10(b) (which acknowledgment shall
not be a condition to the Optionee's obligations under this Section 5.10(b)).

         5.11    WITHHOLDING TAXES.  Whenever the granting, vesting or exercise
of any Stock Option granted under this Plan, or the transfer of any shares
issued upon exercise of any Stock Option, gives rise to tax or tax withholding
liabilities or obligations, the Administering Body shall have the right to
require the Optionee to remit to the Company an amount sufficient to satisfy
any federal, state and local withholding tax requirements prior to issuance of
such shares.  The Administering Body may, in the exercise of its discretion,
allow satisfaction of tax withholding requirements by accepting delivery of
stock of the Company or by withholding a portion of the stock otherwise
issuable in connection with Stock Options.

         5.12    LEGENDS ON STOCK OPTIONS AND STOCK CERTIFICATES.  Each Stock
Option Document and each certificate representing shares acquired upon or
exercise of Stock Options shall be endorsed with all legends, if any, required
by applicable federal and state securities and other laws to be placed on the
Stock Option Document and/or the certificate.  The determination



                                     10
<PAGE>   14
of which legends, if any, shall be placed upon Stock Option Documents or the
certificates shall be made by the Administering Body in its sole discretion and
such decision shall be final and binding.

         5.13    EFFECT OF TERMINATION OF EMPLOYMENT ON STOCK OPTIONS.

                      (a)         TERMINATION FOR JUST CAUSE.  Subject to
Section 5.13(c), and except as otherwise provided in a written agreement
between the Company and the Optionee which may be entered into at any time
before or after termination of employment of the Recipient, in the event of a
Just Cause Dismissal of a Recipient, all of the Optionee's unexercised Stock
Options, whether or not vested, shall expire and become unexercisable as of the
date of such Just Cause Dismissal.

                      (b)         TERMINATION OTHER THAN FOR JUST CAUSE
DISMISSAL.  Subject to Section 5.13(c) and except as otherwise provided in a
written agreement between the Company and the Optionee, which may be entered
into at any time before or after termination of employment, in the event of a
Recipient's termination of employment for:

                                  (i)      any reason other than for Just Cause
                 Dismissal, death, Permanent Disability or normal retirement,
                 the Optionee's Stock Options, whether or not vested, shall
                 expire and become unexercisable as of the earlier of (A) the
                 date such Stock Options would expire in accordance with their
                 terms had the Recipient remained employed and (B) 30 days
                 after the date of employment termination.

                                  (ii)     death, Permanent Disability or
                 normal retirement, the Optionee's unexercised Stock Options
                 shall, whether or not vested, expire and become unexercisable
                 as of the earlier of (A) the date such Stock Options would
                 expire in accordance with their terms had the Recipient
                 remained employed and (B) six months after the date of
                 employment termination.

                      (c)         ALTERATION OF VESTING AND EXERCISE PERIODS.
Notwithstanding anything to the contrary in Section 5.13(a) or Section 5.13(b),
the Administering Body may in its discretion designate shorter or longer
periods to exercise Stock Options following a Recipient's termination of
employment; provided, however, that any shorter periods determined by the
Administering Body shall be effective only if provided for in the instrument
that evidences the grant to the Optionee of such Stock Options or if such
shorter period is agreed to in writing by the Optionee.  Notwithstanding
anything to the contrary herein, Stock Options shall be exercisable by a an
Optionee following such Optionee's termination of employment only to the extent
that installments thereof had become exercisable on or prior to the date of
such termination; and provided, further, that the Administering Body may, in
its discretion, elect to accelerate the vesting of all or any portion of any
Stock Options that had not become exercisable on or prior to the date of such
termination.

                      (d)         LEAVE OF ABSENCE.  In the case of any
employee on an approved leave of absence, the Administering Body may make such
provision respecting continuance of Stock Options as the Administering Body in
its discretion deems appropriate, except that in no event shall a Stock Option
be exercisable after the date such Stock Option would expire in accordance with
its terms had the Recipient remained continuously employed.



                                     11
<PAGE>   15
         5.14    LIMITS ON STOCK OPTIONS TO ELIGIBLE PERSONS.  Notwithstanding
any other provision of this Plan, in order for the compensation attributable to
Stock Options hereunder to qualify as Performance-Based Compensation, no one
Eligible Person shall be granted any Stock Options with respect to more than
250,000 shares of Common Stock in any one calendar year.  The limitation set
forth in this Section 5.14 shall be subject to adjustment as provided in
Section 3.4 or under Article VII, but only to the extent such adjustment would
not affect the status of compensation attributable to Stock Options hereunder
as Performance-Based Compensation.

                                 ARTICLE VI
                                STOCK OPTIONS

         6.1     NATURE OF STOCK OPTIONS.  Stock Options may be Incentive Stock
Options or Non-qualified Stock Options.

         6.2     OPTION EXERCISE PRICE.  The exercise price for each Stock
Option shall be determined by the Administering Body as of the date such Stock
Option is granted.  The exercise price shall be no less than the Fair Market
Value of the Common Stock subject to the Option.  The Administering Body may,
with the consent of the Optionee and subject to compliance with statutory or
administrative requirements applicable to Incentive Stock Options, amend the
terms of any Stock Option to provide that the exercise price of the shares
remaining subject to the Stock Option shall be reestablished at a price not
less than 100% of the Fair Market Value of the Common Stock on the effective
date of the amendment.  No modification of any other term or provision of any
Stock Option that is amended in accordance with the foregoing shall be
required, although the Administering Body may, in its discretion, make such
further modifications of any such Stock Option as are not inconsistent with
this Plan.

         6.3     OPTION PERIOD AND VESTING.  Stock Options granted hereunder
shall vest and may be exercised as determined by the Administering Body, except
that exercise of such Stock Options after termination of the Recipient's
employment shall be subject to Section 5.13.  Each Stock Option granted
hereunder and all rights or obligations thereunder shall expire on such date as
shall be determined by the Administering Body, but not later than 10 years
after the date the Stock Option is granted and shall be subject to earlier
termination as provided herein or in the Stock Option Document.  The
Administering Body may, in its discretion at any time and from time to time
after the grant of a Stock Option, accelerate vesting of such Option as a whole
or in part by increasing the number of shares then purchasable, provided that
the total number of shares subject to such Stock Option may not be increased.
Except as otherwise provided herein, a Stock Option shall become exercisable,
as a whole or in part, on the date or dates specified by the Administering Body
and thereafter shall remain exercisable until the expiration or earlier
termination of the Stock Option.



                                     12
<PAGE>   16
         6.4     SPECIAL PROVISIONS REGARDING INCENTIVE STOCK OPTIONS.

          (a)    Notwithstanding anything in this Article VI to the contrary,
the exercise price and vesting period of any Stock Option intended to qualify
as an Incentive Stock Option shall comply with the provisions of Section 422 of
the IRC and the regulations thereunder.  As of the Effective Date, such
provisions require, among other matters, that (i) the exercise price must not
be less than the Fair Market Value of the underlying stock as of the date the
Incentive Stock Option is granted, and not less than 110% of the Fair Market
Value as of such date in the case of a grant to a Significant Stockholder; and
(ii) that the Incentive Stock Option not be exercisable after the expiration of
five years from the date of grant in the case of an Incentive Stock Option
granted to a Significant Stockholder.

          (b)    The aggregate Fair Market Value (determined as of the
respective date or dates of grant) of the Common Stock for which one or more
Options granted to any Recipient under this Plan (or any other option plan of
the Company or any of its subsidiaries or affiliates) may for the first time
become exercisable as Incentive Stock Options under the federal tax laws during
any one calendar year shall not exceed $100,000.

          (c)    Any Options granted as Incentive Stock Options pursuant to
this Plan that for any reason fail or cease to qualify as such shall be treated
as Non-qualified Stock Options.

                                  ARTICLE VII
                                REORGANIZATIONS

         7.1     CORPORATE TRANSACTIONS NOT INVOLVING A CHANGE IN CONTROL.  If
the Company shall consummate any Reorganization not involving a Change in
Control in which holders of shares of Common Stock are entitled to receive in
respect of such shares any securities, cash or other consideration (including
without limitation a different number of shares of Common Stock), each Stock
Option outstanding under this Plan shall thereafter be exercisable, in
accordance with this Plan, only for the kind and amount of securities, cash
and/or other consideration receivable upon such Reorganization by a holder of
the same number of shares of Common Stock as are subject to that Stock Option
immediately prior to such Reorganization, and any adjustments will be made to
the terms of the Stock Option in the sole discretion of the Administering Body
as it may deem appropriate to give effect to the Reorganization.

         7.2     CORPORATE TRANSACTIONS INVOLVING A CHANGE IN CONTROL.  As of
the effective time and date of any Change in Control, this Plan and any then
outstanding Stock Options (whether or not vested) shall automatically terminate
unless (a) provision is made in writing in connection with such transaction for
the continuance of this Plan and for the assumption of such Stock Options, or
for the substitution for such Stock Options of new awards covering the
securities of a successor entity or an affiliate thereof, with appropriate
adjustments as to the number and kind of securities and exercise prices, in
which event this Plan and such outstanding Stock Options shall continue or be
replaced, as the case may be, in the manner and under the terms so provided; or
(b) the Board otherwise shall provide in writing for such adjustments as it
deems appropriate in the terms and conditions of the then-outstanding Stock
Options (whether or not vested), including without limitation (i) accelerating
the vesting of outstanding Stock Options



                                     13
<PAGE>   17
and/or (ii) providing for the cancellation of Stock Options and their automatic
conversion into the right to receive the securities, cash or other
consideration that a holder of the shares underlying such Stock Options would
have been entitled to receive upon consummation of such Change in Control had
such shares been issued and outstanding immediately prior to the effective date
and time of the Change in Control (net of the appropriate option exercise
prices).  If, pursuant to the foregoing provisions of this Section 7.2, this
Plan and the Stock Options shall terminate by reason of the occurrence of a
Change in Control without provision for any of the actions described in clause
(a) or (b) hereof, then any Optionee holding outstanding Stock Options shall
have the right, at such time immediately prior to the consummation of the
Change in Control as the Board shall designate, to exercise the Optionee's
Stock Options to the full extent not theretofore exercised, including any
installments which have not yet become vested.

                                  ARTICLE VIII
                                  DEFINITIONS

         Capitalized terms used in this Plan and not otherwise defined shall
have the meanings set forth below:

         "ADMINISTERING BODY" shall mean the Board as long as no Stock Option
Plan Committee has been appointed and is in effect and shall mean the Stock
Option Plan Committee as long as the Stock Option Plan Committee is appointed
and in effect.

         "AFFILIATED ENTITY" means any Parent Corporation or Subsidiary
Corporation.

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

         "CHANGE IN CONTROL" means the following and shall be deemed to occur
if any of the following events occur:

                 (a)      Any Person becomes after the Effective Date the
         beneficial owner (within the meaning of Rule 13d-3 promulgated under
         the Exchange Act) of thirty percent (30%) or more of either the then
         outstanding shares of Common Stock or the combined voting power of the
         Company's then outstanding securities entitled to vote generally in
         the election of directors; or

                 (b)      Individuals who, as of the effective date hereof,
         constitute the Board of Directors of the Company (the INCUMBENT
         BOARD") cease for any reason to constitute at least a majority of the
         Board of Directors of the Company, provided that any individual who
         becomes a director after the effective date hereof whose election, or
         nomination for election by the Company's stockholders, is approved by
         a vote of at least a majority of the directors then comprising the
         Incumbent Board shall be considered to be a member of the Incumbent
         Board unless that individual was nominated or elected by any Person
         having the power to exercise, through beneficial ownership, voting
         agreement and/or proxy, twenty percent (20%) or more of either the
         outstanding shares of Common Stock or the combined voting power of the
         Company's then outstanding voting securities entitled to vote
         generally in the election of directors, in which case that individual
         shall not be


                                     14
<PAGE>   18
         considered to be a member of the Incumbent Board unless such
         individual's election or nomination for election by the Company's
         stockholders is approved by a vote of at least two-thirds of the
         directors then comprising the Incumbent Board; or

                 (c)     Consummation by the Company of the sale or other 
         disposition by the Company of all or substantially all of the Company's
         assets or a reorganization or merger or consolidation of the Company
         with any other person, entity or corporation, other than

                         (i)      a reorganization or merger or consolidation 
                 that would result in the voting securities of the Company
                 outstanding immediately prior thereto (or, in the case of a
                 reorganization or merger or consolidation that is preceded or
                 accomplished by an acquisition or series of related
                 acquisitions by any Person, by tender or exchange offer or
                 otherwise, of voting securities representing five percent (5%)
                 or more of the combined voting power of all securities of the
                 Company, immediately prior to such acquisition or the first
                 acquisition in such series of acquisitions) continuing to
                 represent, either by remaining outstanding or by being
                 converted into voting securities of another entity, more than
                 fifty percent (50%) of the combined voting power of the voting
                 securities of the Company or such other entity outstanding
                 immediately after such reorganization or merger or
                 consolidation (or series of related transactions involving
                 such a reorganization or merger or consolidation), or

                         (ii)     a reorganization or merger or consolidation
                 effected to implement a recapitalization or reincorporation of
                 the Company (or similar transaction) that does not result in a
                 material change in beneficial ownership of the voting 
                 securities of the Company or its successor; or

                 (d)     Approval by the stockholders of the Company or any 
         order by a court of competent jurisdiction of a plan of liquidation of
         the Company.

Notwithstanding the foregoing, a Change in Control of the type described in
paragraph (b), (c) or (d) shall be deemed to be completed on the date it
occurs, and a Change in Control of the type described in paragraph (a) shall be
deemed to be completed as of the date the entity or group attaining thirty
percent (30%) or greater ownership has elected its representatives to the
Company's Board of Directors and/or caused its nominees to become officers of
the Company with the authority to terminate or alter the terms of employee's
employment.

         "COMMISSION" means the Securities and Exchange Commission.

         "COMMON STOCK" means the common stock of the Company, par value $0.01
per share, as constituted on the Effective Date of this Plan, and as thereafter
adjusted as a result of any one or more events requiring adjustment of
outstanding Stock Options under Section 3.4 above.

         "COMPANY" means AudioNet, Inc., a Delaware corporation.



                                     15
<PAGE>   19
         "EFFECTIVE DATE" means August 19, 1997, which is the date this Plan 
was adopted by the Board.

         "ELIGIBLE PERSON" shall include directors (other than non-employee
directors of the Company), officers, employees, consultants and advisors of the
Company or of any Affiliated Entity.

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

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

         "EXCHANGE ACT REGISTERED COMPANY" means that the Company has any class
of any equity security registered pursuant to Section 12 of the Exchange Act.

         "EXPIRATION DATE" means the tenth anniversary of the Effective Date.

         "FAIR MARKET VALUE" of a share of the Company's capital stock as of a
particular date shall be: (a) if the stock is listed on an established stock
exchange or exchanges (including for this purpose, the Nasdaq National Market),
the average of the highest and lowest sale prices of the stock quoted for such
date as reported in the Transactions Index of each such exchange, as published
in The Wall Street Journal and determined by the Administering Body, or, if no
sale price was quoted in any such Index for such date, then as of the next
preceding date on which such a sale price was quoted; or (b) if the stock is
not then listed on an exchange or the Nasdaq National Market, the average of
the closing bid and asked prices per share for the stock in the
over-the-counter market as quoted on The Nasdaq Small Cap Market on such date
(in the case of (a) or (b), subject to adjustment as and if necessary and
appropriate to set an exercise price not less than 100% of the Fair Market
Value of the stock on the date an option is granted); or (c) if the stock is
not then listed on an exchange or quoted in the over-the-counter market, an
amount determined in good faith by the Administering Body; provided, however,
that (i) when appropriate, the Administering Body, in determining Fair Market
Value of capital stock of the Company, may take into account such other factors
as it may deem appropriate under the circumstances and (ii) if the stock is
traded on the Nasdaq Small Cap Market and both sales prices and bid and asked
prices are quoted or available, the Administering Body may elect to determine
Fair Market Value under either clause (i) or (ii) above.  Notwithstanding the
foregoing, the Fair Market Value of capital stock for purposes of grants of
Incentive Stock Options shall be determined in compliance with applicable
provisions of the IRC.

         "IMMEDIATE FAMILY" means the Recipient's spouse, children or
grandchildren (including adopted and stepchildren and grandchildren).

         "INCENTIVE STOCK OPTION" means a Stock Option that qualifies as an
incentive stock option under Section 422 of the IRC, or any successor statute
thereto.

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



                                     16
<PAGE>   20
         "JUST CAUSE DISMISSAL" shall mean a termination of a Recipient's
employment for any of the following reasons: (a) the Recipient violates any
reasonable rule or regulation of the Board, the Company's Chief Executive
Officer or the Recipient's superiors that results in damage to the Company or
which, after written notice to do so, the Recipient fails to correct within a
reasonable time; (b) any willful misconduct or gross negligence by the
Recipient in the responsibilities assigned to the Recipient; (c) any willful
failure to perform the Recipient's job as required to meet Company objectives;
(d) any wrongful conduct of a Recipient which has an adverse impact on the
Company or which constitutes a misappropriation of Company assets; (e) the
Recipient's performing services for any other person or entity which competes
with the Company while the Recipient is employed by the Company, without the
written approval of the Chief Executive Officer of the Company; or (f) any
other conduct that the Administering Body determines constitutes Just Cause for
Dismissal; provided, however, that if a Recipient is party to an employment
agreement with the Company providing for just cause dismissal (or some
comparable notion) of Recipient from Recipient's employment with the Company,
"Just Cause Dismissal" for purposes of this Plan shall have the same meaning as
ascribed thereto or to such comparable notion in such employment agreement.

         "NON-EMPLOYEE DIRECTOR" means any director of the Company who
qualifies as a "non-employee director" within the meaning of Rule 16b-3.

         "NON-QUALIFIED STOCK OPTION" means a Stock Option that is not an 
Incentive Stock Option.

         "OPTIONEE" means a Recipient or the Recipient's successor in interest.

         "OUTSIDE DIRECTOR" means an "outside director" as defined in the
regulations adopted under Section 162(m) of the IRC.

          "PARENT CORPORATION" means any Parent Corporation as defined in
Section 424(e) of the IRC.

         "PERFORMANCE-BASED COMPENSATION" means performance-based compensation
as described in Section 162(m) of the IRC.  If the amount of compensation an
Eligible Person will receive under any Stock Option is not based solely on an
increase in the value of Common Stock after the date of grant or award, the
Stock Option Plan Committee, in order to qualify Stock Options as
performance-based compensation under Section 162(m) of the IRC, can condition
the grant, award, vesting, or exercisability of such Stock Options on the
attainment of a preestablished, objective performance goal.  For this purpose,
a preestablished, objective performance goal may include one or more of the
following performance criteria:  (a) cash flow; (b) earnings per share
(including earning before interest, taxes, and amortization); (c) return on
equity; (d) total stockholder return; (e) return on capital; (f) return on
assets or net assets; (g) income or net income; (h) operating income or net
operating income; (i) operating margin; (j) return on operating revenue; (k)
attainment of stated goals related to the Company's capitalization, costs,
financial condition or results of operations; and (l) any other similar
performance criteria.



                                     17
<PAGE>   21
         "PERSON" means any person, entity or group, within the meaning of
Section 13(d) or 14(d) of the Exchange Act, but excluding (a) the Company and
its subsidiaries, (b) any employee stock ownership or other employee benefit
plan maintained by the Company that is qualified under ERISA and (c) an
underwriter or underwriting syndicate that has acquired the Company's
securities solely in connection with a public offering thereof.

         "PERMANENT DISABILITY" shall mean that the Recipient becomes
physically or mentally incapacitated or disabled so that the Recipient is
unable to perform substantially the same services as the Recipient performed
prior to incurring such incapacity or disability (the Company, at its option
and expense, being entitled to retain a physician to confirm the existence of
such incapacity or disability, and the determination of such physician to be
binding upon the Company and the Recipient), and such incapacity or disability
continues for a period of three consecutive months or six months in any
12-month period or such other period(s) as may be determined by the Stock
Option Plan Committee with respect to any Stock Option, provided that for
purposes of determining the period during which an Incentive Stock Option may
be exercised pursuant to Section 5.13(b)(ii) hereof, Permanent Disability shall
mean "permanent and total disability" as defined in Section 22(e) of the IRC.

         "PERMITTED TRANSFEREE" means (a) the Recipient's Immediate Family; (b)
a trust solely for the benefit of the Recipient and/or his or her Immediate
Family; or (c) a partnership or limited liability company the partners or
shareholders of which are limited to the Recipient and his or her Immediate
Family.

         "PLAN" means this 1997 Stock Option Plan of the Company.

         "PLAN TERM" means the period during which this Plan remains in effect
(commencing on the Effective Date and ending on the Expiration Date).

         "RECIPIENT" means a person who has received Stock Options under this
Plan.

         "REORGANIZATION" means any merger, consolidation or other
reorganization.

         "RULE 16b-3" means Rule 16b-3 under the Exchange Act.

         "SECURITIES ACT" means the Securities Act of 1933, as amended.

         "SIGNIFICANT STOCKHOLDER" is an individual who, at the time a Stock
Option is granted to such individual under this Plan, owns more than ten
percent (10%) of the combined voting power of all classes of stock of the
Company or of any Parent Corporation or Subsidiary Corporation (after
application of the attribution rules set forth in Section 424(d) of the IRC).

         "STOCK OPTION" means a right to purchase stock of the Company granted
under Article VI of this Plan to an Eligible Person.

         "STOCK OPTION DOCUMENT" means the agreement or confirming memorandum
setting forth the terms and conditions of Stock Options.



                                     18
<PAGE>   22
         "STOCK OPTION PLAN COMMITTEE" means the committee appointed by the
Board to administer this Plan pursuant to Section 4.1.
 
        "SUBSIDIARY CORPORATION" means any Subsidiary Corporation as defined
in Section 425(f) of the IRC.



                                     19