EXHIBIT 10.32
                                                                       EXHIBIT A


                             ANNIE'S HOMEGROWN, INC.

                                 1996 STOCK PLAN
                                 ---------------


      1. PURPOSE.  The purpose of the Annie's Homegrown,  Inc.'s 1996 Stock Plan
(the  "Plan") is to encourage  key  employees of Annie's  Homegrown,  Inc.  (the
"Company")  and of any  present or future  parent or  subsidiary  of the Company
(collectively, "Related Corporations") and other individuals who render services
to  the  Company  or  a  Related  Corporation,  by  providing  opportunities  to
participate  in the ownership of the Company and its future  growth  through (a)
the grant of options which qualify as "incentive  stock options"  ("ISOs") under
Section  422(b) of the Internal  Revenue Code of 1986,  as amended (the "Code");
(b) the grant of options which do not qualify as ISOs ("Non-Qualified Options");
(c) awards of stock in the Company  ("Awards");  and (d)  opportunities  to make
direct  purchases  of  stock  in  the  Company  ("Purchases").   Both  ISOs  and
Non-Qualified Options are referred to hereafter  individually as an "Option" and
collectively as "Options." Options,  Awards and authorizations to make Purchases
are referred to hereafter  collectively as "Stock  Rights." As used herein,  the
terms  "parent" and  "subsidiary"  mean  "parent  corporation"  and  "subsidiary
corporation,"  respectively,  as those  terms are  defined in Section 424 of the
Code.

      2.      ADMINISTRATION OF THE PLAN.

              A.  BOARD  OR   COMMITTEE   ADMINISTRATION.   The  Plan  shall  be
      administered  by the Board of Directors  of the Company (the  "Board") or,
      subject to Paragraph 2D (relating to compliance with Section 162(m) of the
      Code),  by  a  committee   appointed  by  the  Board  (the   "Committee").
      Hereinafter, all references in this Plan to the "Committee" shall mean the
      Board if no Committee has been  appointed.  Subject to ratification of the
      grant or authorization of each Stock Right by the Board (if so required by
      applicable state law), and subject to the terms of the Plan, the Committee
      shall have the authority to (i) determine to whom (from among the class of
      employees  eligible  under  paragraph  3 to  receive  ISOs)  ISOs shall be
      granted,  and to whom (from among the class of  individuals  and  entities
      eligible under paragraph 3 to receive Non-Qualified Options and Awards and
      to make Purchases)  Non-Qualified  Options,  Awards and  authorizations to
      make  Purchases may be granted;  (ii) determine the time or times at which
      Options or Awards shall be granted or Purchases made;  (iii) determine the
      purchase price of shares subject to each Option or Purchase,  which prices
      shall not be less than the minimum  price  specified  in paragraph 6; (iv)
      determine  whether each Option granted shall be an ISO or a  Non-Qualified
      Option; (v) determine (subject to paragraph 7) the time or times when each
      Option shall become  exercisable and the duration of the exercise  period;
      (vi) extend the period during which outstanding  Options may be exercised;
      (vii) determine whether  restrictions such as repurchase options are to be
      imposed on shares subject to










      Options, Awards and Purchases and the nature of such restrictions, if any,
      and  (viii)  interpret  the Plan  and  prescribe  and  rescind  rules  and
      regulations  relating  to it.  If the  Committee  determines  to  issue  a
      Non-Qualified  Option,  it shall take whatever actions it deems necessary,
      under Section 422 of the Code and the regulations  promulgated thereunder,
      to ensure that such Option is not  treated as an ISO.  The  interpretation
      and  construction by the Committee of any provisions of the Plan or of any
      Stock Right granted under it shall be final unless otherwise determined by
      the  Board.  The  Committee  may from time to time  adopt  such  rules and
      regulations for carrying out the Plan as it may deem advisable.  No member
      of  the  Board  or the  Committee  shall  be  liable  for  any  action  or
      determination  made in good  faith  with  respect to the Plan or any Stock
      Right granted under it.

              B. COMMITTEE ACTIONS.  The Committee may select one of its members
      as its chairman, and shall hold meetings at such time and places as it may
      determine.  A majority of the Committee shall constitute a quorum and acts
      of a  majority  of the  members of the  Committee  at a meeting at which a
      quorum is  present,  or acts  reduced to or approved in writing by all the
      members of the Committee (if consistent with applicable  state law), shall
      be the  valid  acts of the  Committee.  From  time to time the  Board  may
      increase the size of the Committee and appoint additional members thereof,
      remove  members  (with or  without  cause)  and  appoint  new  members  in
      substitution  therefor,  fill  vacancies  however  caused,  or remove  all
      members of the Committee and thereafter directly administer the Plan.

              C. GRANT OF STOCK  RIGHTS TO BOARD  MEMBERS.  Stock  Rights may be
      granted to members of the Board.  All grants of Stock Rights to members of
      the Board shall in all respects be made in accordance  with the provisions
      of this Plan  applicable to other eligible  persons.  Members of the Board
      who either (i) are eligible to receive grants of Stock Rights  pursuant to
      the Plan or (ii) have been  granted  Stock  Rights may vote on any matters
      affecting the  administration of the Plan or the grant of any Stock Rights
      pursuant  to the  Plan,  except  that no such  member  shall  act upon the
      granting to himself or herself of Stock Rights, but any such member may be
      counted in  determining  the  existence  of a quorum at any meeting of the
      Board  during  which  action is taken with respect to the granting to such
      member of Stock Rights.

              D. PERFORMANCE-BASED  COMPENSATION.  The Board, in its discretion,
      may take such  action as may be  necessary  to ensure  that  Stock  Rights
      granted   under  the  Plan   qualify   as   "qualified   performance-based
      compensation"  within  the  meaning  of  Section  162(m)  of the  Code and
      applicable   regulations   promulgated   thereunder    ("Performance-Based
      Compensation").  Such action may include, in the Board's discretion,  some
      or all of the  following  (i) if the Board  determines  that Stock  Rights
      granted  under  the  Plan  generally  shall  constitute  Performance-Based
      Compensation,  the Plan shall be administered,  to the extent required for
      such  Stock  Rights to  constitute  Performance-Based  Compensation,  by a
      Committee consisting solely of two or more "outside directors" (as defined
      in applicable  regulations  promulgated under Section 162(m) of the Code),
      (ii) if any  Non-Qualified  Options  with an 






                                      -2-

      exercise  price less than the fair market  value per share of Common Stock
      are  granted  under the Plan and the Board  determines  that such  Options
      should constitute  Performance-Based  Compensation,  such options shall be
      made exercisable only upon the attainment of a pre-established,  objective
      performance  goal  established by the  Committee,  and such grant shall be
      submitted for, and shall be contingent upon shareholder approval and (iii)
      Stock Rights granted under the Plan may be subject to such other terms and
      conditions as are necessary for compensation recognized in connection with
      the  exercise or  disposition  of such Stock Right or the  disposition  of
      Common  Stock  acquired  pursuant  to  such  Stock  Right,  to  constitute
      Performance-Based Compensation.

      3. ELIGIBLE EMPLOYEES AND OTHERS. ISOs may be granted only to employees of
the  Company  or any  Related  Corporation.  Non-Qualified  Options,  Awards and
authorizations  to make  Purchases  may be granted to any  employee,  officer or
director  (whether or not also an employee) or  consultant of the Company or any
Related  Corporation.  The Committee may take into  consideration  a recipient's
individual  circumstances  in  determining  whether to grant a Stock Right.  The
granting of any Stock Right to any  individual or entity shall  neither  entitle
that  individual or entity to, nor  disqualify  such  individual or entity from,
participation in any other grant of Stock Rights.

      4.  STOCK.  The stock  subject to Stock  Rights  shall be  authorized  but
unissued  shares of Common Stock of the Company,  par value $.001 per share (the
"Common  Stock"),  or shares of Common  Stock  reacquired  by the Company in any
manner.  The aggregate number of shares which may be issued pursuant to the Plan
is 200,000,  subject to  adjustment  as provided in paragraph  13. If any Option
granted under the Plan shall expire or terminate for any reason  without  having
been  exercised in full or shall cease for any reason to be exercisable in whole
or in part or shall be repurchased  by the Company,  the  unpurchased  shares of
Common Stock subject to such Option shall again be available for grants of Stock
Rights under the Plan.

      No  employee  of the  Company or any  Related  Corporation  may be granted
Options to  acquire,  in the  aggregate,  more than  140,000 of shares of Common
Stock  under the Plan  during  any  fiscal  year of the  Company.  If any Option
grnated under the Plan shall expire or terminate for any reason  without  having
been  exercised in full or shall cease for any reason to be exercisable in whole
or in part or shall be  repurchased  by the Company,  the shares subject to such
Option shall be included in the  determination of the aggregate number of shares
of Common Stock deemed to have been granted to such employee under the Plan.

      5. GRANTING OF STOCK RIGHTS. Stock Rights may be granted under the Plan at
any time on or after  September  24, 1996 and prior to September  24, 2006.  The
date of grant of a Stock Right under the Plan will be the date  specified by the
Committee at the time it grants the Stock Right;  provided,  however,  that such
date shall not be prior to the date on which the  Committee  acts to approve the
grant.

      6.      MINIMUM OPTION PRICE; ISO LIMITATIONS.






                                      -4-

              A. PRICE FOR NON-QUALIFIED OPTIONS, AWARDS AND PURCHASES.  Subject
      to Paragraph 2D (relating to compliance  with Section 162(m) of the Code),
      the exercise price per share  specified in the agreement  relating to each
      Non-Qualified  Option  granted,  and the purchase price per share of stock
      granted in any Award or  authorized  as a Purchase,  under the Plan may be
      less than the fair market  value of the Common Stock of the Company on the
      date of grant;  provided  that, in no event shall such  exercise  price or
      such purchase price be less than the minimum legal consideration  required
      therefor  under the laws of any  jurisdiction  in which the Company or its
      successors in interest may be organized.

              B. PRICE FOR ISOS. The exercise  price per share  specified in the
      agreement  relating to each ISO  granted  under the Plan shall not be less
      than the fair market  value per share of Common  Stock on the date of such
      grant.  In the case of an ISO to be granted to an  employee  owning  stock
      possessing  more than ten percent (10%) of the total combined voting power
      of all  classes of stock of the Company or any  Related  Corporation,  the
      price per share specified in the agreement  relating to such ISO shall not
      be less than one hundred ten percent  (110%) of the fair market  value per
      share of Common Stock on the date of grant.  For  purposes of  determining
      stock ownership  under this paragraph,  the rules of Section 424(d) of the
      Code shall  apply.  The date of grant for  purposes  of this  subparagraph
      shall mean the date that the Company or Related Corporation  completes the
      corporate action constituting an offer of stock for sale to an individual.

              C.  $100,000  ANNUAL  LIMITATION  ON ISO  VESTING.  Each  eligible
      employee may be granted  Options  treated as ISOs only to the extent that,
      in the aggregate  under this Plan and all incentive  stock option plans of
      the Company and any Related  Corporation,  ISOs do not become  exercisable
      for the first time by such employee  during any calendar year with respect
      to stock having a fair market value  (determined at the time the ISOs were
      granted) in excess of  $100,000.  The  Company  intends to  designate  any
      Options granted in excess of such limitation as Non-Qualified Options, and
      the Company shall issue separate certificates to the optionee with respect
      to Options that are Non-Qualified Options and Options that are ISOs.

              D.  DETERMINATION  OF FAIR MARKET VALUE. If, at the time an Option
      is granted under the Plan, the Company's  Common Stock is publicly traded,
      "fair market value" shall be determined as of the date of grant or, if the
      prices or quotes discussed in this sentence are unavailable for such date,
      the last business day for which such prices or quotes are available  prior
      to the date of grant and shall mean (i) the  average (on that date) of the
      high  and  low  prices  of the  Common  Stock  on the  principal  national
      securities  exchange  on which the Common  Stock is traded,  if the Common
      Stock is then traded on a national securities  exchange;  or (ii) the last
      reported  sale  price (on that  date) of the  Common  Stock on the  Nasdaq
      National  Market,  if the  Common  Stock is not then  traded on a national
      securities  exchange;  or (iii) the  closing  bid price (or average of bid
      prices) last quoted (on that date) by an









                                      -5-

      established  quotation  service for  over-the-counter  securities,  if the
      Common Stock is not reported on the Nasdaq National Market.  If the Common
      Stock is not  publicly  traded at the time an Option is granted  under the
      Plan, "fair market value" shall mean the fair value of the Common Stock as
      determined by the Committee  after taking into  consideration  all factors
      which it deems appropriate, including, without limitation, recent sale and
      offer prices of the Common  Stock in private  transactions  negotiated  at
      arm's length.

      7.  OPTION  DURATION.  Subject  to  earlier  termination  as  provided  in
paragraphs 9 and 10 or in the  agreement  relating to such  Option,  each Option
shall expire on the date specified by the  Committee,  but not more than (i) ten
years  from the date of grant in the case of  Options  generally  and (ii)  five
years from the date of grant in the case of ISOs  granted to an employee  owning
stock  possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or any Related Corporation, as determined
under paragraph 6(B). Subject to earlier termination as provided in paragraphs 9
and 10,  the term of each  ISO  shall  be the  term  set  forth in the  original
instrument  granting such ISO,  except with respect to any part of such ISO that
is converted into a Non-Qualified Option pursuant to paragraph 16.

      8. EXERCISE OF OPTION.  Subject to the  provisions of Paragraphs 9 through
12, each Option granted under the Plan shall be exercisable as follows:

              A. VESTING.  The Option shall either be fully  exercisable  on the
      date of grant or shall become exercisable  thereafter in such installments
      as the Committee may specify.

              B. FULL  VESTING  OF  INSTALLMENTS.  Once an  installment  becomes
      exercisable,  it shall remain  exercisable until expiration or termination
      of the Option, unless otherwise specified by the Committee.

              C. PARTIAL  EXERCISE.  Each Option or installment may be exercised
      at any time or from time to time, in whole or in part, for up to the total
      number of shares with respect to which it is then exercisable.

              D. ACCELERATION OF VESTING.  The Committee shall have the right to
      accelerate   the  date  that  any   installment   of  any  Option  becomes
      exercisable; provided that the Committee shall not, without the consent of
      an optionee,  accelerate the permitted exercise date of any installment of
      any Option granted to any employee as an ISO (and not previously converted
      into a Non-Qualified Option pursuant to paragraph 16) if such acceleration
      would violate the annual vesting limitation contained in Section 422(d) of
      the Code, as described in paragraph 6(C).

      9. TERMINATION OF EMPLOYMENT.  Unless otherwise specified in the agreement
relating  to such ISO, if an ISO  optionee  ceases to be employed by the Company
and all  Related  Corporations  other than by reason of death or  disability  as
defined in






                                      -6-

paragraph  10,  no  further  installments  of  his  or  her  ISOs  shall  become
exercisable,  and his or her ISOs shall  terminate  on the  earlier of (a) three
months  after the date of  termination  of his or her  employment,  or (b) their
specified  expiration dates, except to the extent that such ISOs (or unexercised
installments thereof) have been converted into Non-Qualified Options pursuant to
paragraph 16. For purposes of this paragraph 9,  employment  shall be considered
as continuing uninterrupted during any bona fide leave of absence (such as those
attributable to illness,  military obligations or governmental service) provided
that the period of such leave does not exceed 90 days or, if longer,  any period
during which such  optionee's  right to reemployment is guaranteed by statute or
by  contract.  A bona fide leave of absence  with the  written  approval  of the
Committee  shall not be considered  an  interruption  of  employment  under this
paragraph 9, provided  that such written  approval  contractually  obligates the
Company or any Related  Corporation  to continue the  employment of the optionee
after the approved  period of absence.  ISOs granted under the Plan shall not be
affected  by any change of  employment  within or among the  Company and Related
Corporations, so long as the optionee continues to be an employee of the Company
or any  Related  Corporation.  Nothing  in the Plan  shall be deemed to give any
grantee  of any Stock  Right the right to be  retained  in  employment  or other
service by the Company or any Related Corporation for any period of time.

      10.  DEATH; DISABILITY.

              A. DEATH.  If an ISO optionee ceases to be employed by the Company
      and all Related  Corporations by reason of his or her death, any ISO owned
      by such optionee may be exercised,  to the extent otherwise exercisable on
      the date of death, by the estate,  personal  representative or beneficiary
      who  has  acquired  the  ISO  by  will  or by  the  laws  of  descent  and
      distribution,  until the earlier of (i) the specified  expiration  date of
      the ISO or (ii) 180 days from the date of the optionee's death.

              B.  DISABILITY.  If an ISO  optionee  ceases to be employed by the
      Company and all Related  Corporations  by reason of his or her disability,
      such optionee  shall have the right to exercise any ISO held by him or her
      on the date of  termination  of  employment,  for the number of shares for
      which he or she could have exercised it on that date, until the earlier of
      (i) the  specified  expiration  date of the ISO or (ii) 180 days  from the
      date of the termination of the optionee's employment.  For the purposes of
      the  Plan,  the  term   "disability"   shall  mean  "permanent  and  total
      disability"  as defined in Section  22(e)(3) of the Code or any  successor
      statute.

      11.  ASSIGNABILITY.  No ISO shall be  assignable  or  transferable  by the
optionee except by will or by the laws of descent and  distribution,  and during
the lifetime of the optionee shall be exercisable  only by such optionee.  Stock
Rights  other  than ISOs  shall be  transferable  to the extent set forth in the
agreement relating to such Stock Right.

      12.  TERMS AND  CONDITIONS  OF  OPTIONS.  Options  shall be  evidenced  by
instruments  (which need not be  identical)  in such forms as the  Committee may
from time to time  approve.  Such  instruments  shall  conform  to the terms and
conditions  set forth in 







                                      -7-

paragraphs  6 through 11 hereof and may  contain  such other  provisions  as the
Committee deems advisable which are not  inconsistent  with the Plan,  including
restrictions  applicable  to shares of Common Stock  issuable  upon  exercise of
Options.  The  Committee  may specify  that any  Non-Qualified  Option  shall be
subject to the  restrictions  set forth herein with respect to ISOs,  or to such
other  termination and  cancellation  provisions as the Committee may determine.
The Committee may from time to time confer authority and  responsibility  on one
or more of its own members and/or one or more officers of the Company to execute
and deliver such instruments.  The proper officers of the Company are authorized
and directed to take any and all action necessary or advisable from time to time
to carry out the terms of such instruments.

      13.  ADJUSTMENTS.  Upon the occurrence of any of the following  events, an
optionee's  rights with respect to Options  granted to such  optionee  hereunder
shall  be  adjusted  as  hereinafter  provided,  unless  otherwise  specifically
provided in the written  agreement between the optionee and the Company relating
to such Option:

              A. STOCK DIVIDENDS AND STOCK SPLITS. If the shares of Common Stock
      shall be subdivided or combined into a greater or smaller number of shares
      or if the  Company  shall  issue any  shares  of  Common  Stock as a stock
      dividend on its outstanding  Common Stock,  the number of shares of Common
      Stock  deliverable  upon the  exercise of Options  shall be  appropriately
      increased or decreased proportionately,  and appropriate adjustments shall
      be made in the  purchase  price per  share to  reflect  such  subdivision,
      combination or stock dividend.

              B. CONSOLIDATIONS OR MERGERS. If the Company is to be consolidated
      with or acquired by another entity in a merger or other  reorganization in
      which  the  holders  of  the  outstanding  voting  stock  of  the  Company
      immediately  preceding the consummation of such event, shall,  immediately
      following such event, hold, as a group, less than a majority of the voting
      securities of the surviving or successor entity, or in the event of a sale
      of all or substantially all of the Company's assets or otherwise (each, an
      "Acquisition"),  the  Committee  or the board of  directors  of any entity
      assuming the obligations of the Company hereunder (the "Successor Board"),
      shall, as to outstanding  Options,  either (i) make appropriate  provision
      for the continuation of such Options by substituting on an equitable basis
      for the shares then subject to such Options  either (a) the  consideration
      payable  with  respect  to the  outstanding  shares  of  Common  Stock  in
      connection with the  Acquisition,  (b) shares of stock of the surviving or
      successor  corporation or (c) such other securities as the Successor Board
      deems  appropriate,  the fair market  value of which shall not  materially
      exceed the fair market value of the shares of Common Stock subject to such
      Options immediately preceding the Acquisition; or (ii) upon written notice
      to the  optionees,  provide  that all Options  must be  exercised,  to the
      extent  then  exercisable  or  to  be  exercisable  as  a  result  of  the
      Acquisition, within a specified number of days of the date of such notice,
      at the end of which period the Options shall terminate; or (iii) terminate
      all Options in exchange for a cash payment equal to the excess of the 






                                      -8-

      fair  market  value of the shares  subject to such  Options (to the extent
      then exercisable or to be exercisable as a result of the Acquisition) over
      the exercise price thereof.

              C.   RECAPITALIZATION  OR  REORGANIZATION.   In  the  event  of  a
      recapitalization   or   reorganization   of  the  Company  (other  than  a
      transaction   described  in   subparagraph  B  above)  pursuant  to  which
      securities  of the  Company or of  another  corporation  are  issued  with
      respect  to the  outstanding  shares of Common  Stock,  an  optionee  upon
      exercising  an Option shall be entitled to receive for the purchase  price
      paid upon such exercise the securities he or she would have received if he
      or she  had  exercised  such  Option  prior  to such  recapitalization  or
      reorganization.

              D.  MODIFICATION  OF  ISOS.  Notwithstanding  the  foregoing,  any
      adjustments  made pursuant to subparagraphs A, B or C with respect to ISOs
      shall be made only after the Committee,  after consulting with counsel for
      the  Company,  determines  whether  such  adjustments  would  constitute a
      "modification" of such ISOs (as that term is defined in Section 424 of the
      Code) or would cause any adverse tax  consequences for the holders of such
      ISOs. If the Committee  determines that such adjustments made with respect
      to ISOs  would  constitute  a  modification  of such  ISOs or would  cause
      adverse tax  consequences to the holders,  it may refrain from making such
      adjustments.

              E.  DISSOLUTION  OR  LIQUIDATION.  In the  event  of the  proposed
      dissolution  or  liquidation  of the Company,  each Option will  terminate
      immediately  prior to the  consummation of such proposed action or at such
      other time and subject to such other  conditions as shall be determined by
      the Committee.

              F. ISSUANCES OF SECURITIES.  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  thereof shall be made with respect to, the number or
      price of shares  subject  to  Options.  No  adjustments  shall be made for
      dividends  paid  in cash  or in  property  other  than  securities  of the
      Company.

              G. FRACTIONAL  SHARES.  No fractional shares shall be issued under
      the Plan and the optionee  shall  receive from the Company cash in lieu of
      such fractional shares.

              H. ADJUSTMENTS.  Upon the happening of any of the events described
      in subparagraphs A, B or C above, the class and aggregate number of shares
      set forth in  paragraph 4 hereof that are  subject to Stock  Rights  which
      previously have been or  subsequently  may be granted under the Plan shall
      also be  appropriately  adjusted to reflect the events  described  in such
      subparagraphs.  The Committee or the Successor  Board shall  determine the
      specific  adjustments to be made under this  paragraph 13 and,  subject to
      paragraph 2, its determination shall be conclusive.





                                      -9-


      14. MEANS OF  EXERCISING  OPTIONS.  An Option (or any part or  installment
thereof)  shall be  exercised  by giving  written  notice to the  Company at its
principal  office  address,  or to such  transfer  agent  as the  Company  shall
designate. Such notice shall identify the Option being exercised and specify the
number of shares as to which such Option is being exercised, accompanied by full
payment of the purchase  price  therefor  either (a) in United States dollars in
cash or by check,  (b) at the discretion of the Committee,  through  delivery of
shares of Common  Stock  having a fair market  value equal as of the date of the
exercise to the cash exercise price of the Option,  (c) at the discretion of the
Committee,  by delivery of the grantee's personal recourse note bearing interest
payable  not less than  annually  at no less than 100% of the lowest  applicable
Federal rate, as defined in Section  1274(d) of the Code,  (d) at the discretion
of the Committee and consistent with applicable law,  through the delivery of an
assignment  to the Company of a sufficient  amount of the proceeds from the sale
of the Common Stock acquired upon exercise of the Option and an authorization to
the broker or selling agent to pay that amount to the Company,  which sale shall
be at  the  participant's  direction  at the  time  of  exercise,  or (e) at the
discretion of the Committee,  by any combination of (a), (b), (c) and (d) above.
If the  Committee  exercises its  discretion  to permit  payment of the exercise
price of an ISO by means of the methods set forth in clauses  (b),  (c),  (d) or
(e) of the preceding sentence,  such discretion shall be exercised in writing at
the time of the grant of the ISO in question.  The holder of an Option shall not
have the rights of a  shareholder  with  respect  to the shares  covered by such
Option until the date of issuance of a stock certificate to such holder for such
shares.  Except as  expressly  provided  above in  paragraph  13 with respect to
changes in capitalization  and stock dividends,  no adjustment shall be made for
dividends  or similar  rights for which the record  date is before the date such
stock certificate is issued.

      15.  TERM AND  AMENDMENT  OF PLAN.  This Plan was  adopted by the Board on
September  24, 1996,  subject,  with respect to the  validation  of ISOs granted
under the Plan,  to approval of the Plan by the  stockholders  of the Company at
the next Meeting of Stockholders or, in lieu thereof, by written consent. If the
approval of stockholders is not obtained prior to September 24, 1997, any grants
of ISOs under the Plan made prior to that date will be rescinded. The Plan shall
expire  at the  end of the day on  September  23,  2006  (except  as to  Options
outstanding  on that  date).  Subject to the  provisions  of  paragraph 5 above,
Options may be granted under the Plan prior to the date of stockholder  approval
of the Plan.  The Board may  terminate  or amend the Plan in any  respect at any
time, except that,  without the approval of the stockholders  obtained within 12
months  before or after the Board  adopts a  resolution  authorizing  any of the
following  actions:  (a) the total number of shares that may be issued under the
Plan may not be increased  (except by adjustment  pursuant to paragraph 13); (b)
the provisions of paragraph 3 regarding  eligibility  for grants of ISOs may not
be modified;  (c) the  provisions of paragraph 6(B) regarding the exercise price
at which shares may be offered  pursuant to ISOs may not be modified  (except by
adjustment  pursuant to paragraph 13); and (d) the  expiration  date of the Plan
may not be extended.  Except as otherwise  provided in this  paragraph 15, in no
event may  action of the Board or  stockholders  alter or impair the rights of a
grantee,  without  such  grantee's  consent,  under any Stock  Right  previously
granted to such grantee.





                                      -10-


      16. MODIFICATIONS OF ISOS; CONVERSION OF ISOS INTO NON-QUALIFIED  OPTIONS.
Subject to Paragraph 13D,  without the prior written consent of the holder of an
ISO, the Committee shall not alter the terms of such ISO (including the means of
exercising such ISO) if such alteration would constitute a modification  (within
the meaning of Section  424(h)(3) of the Code).  The  Committee,  at the written
request or with the written consent of any optionee,  may in its discretion take
such  actions  as may be  necessary  to  convert  such  optionee's  ISOs (or any
installments or portions of  installments  thereof) that have not been exercised
on the date of conversion  into  Non-Qualified  Options at any time prior to the
expiration  of such ISOs,  regardless  of whether the optionee is an employee of
the  Company  or a  Related  Corporation  at the time of such  conversion.  Such
actions may include,  but shall not be limited to, extending the exercise period
or reducing the exercise price of the appropriate  installments of such ISOs. At
the time of such  conversion,  the Committee  (with the consent of the optionee)
may impose  such  conditions  on the  exercise  of the  resulting  Non-Qualified
Options as the Committee in its  discretion  may  determine,  provided that such
conditions shall not be inconsistent  with this Plan.  Nothing in the Plan shall
be deemed to give any optionee the right to have such  optionee's ISOs converted
into Non-Qualified  Options, and no such conversion shall occur until and unless
the Committee  takes  appropriate  action.  Upon the taking of such action,  the
Company  shall issue  separate  certificates  to the  optionee  with  respect to
Options that are Non-Qualified Options and Options that are ISOs.

      17.  APPLICATION OF FUNDS.  The proceeds  received by the Company from the
sale of shares  pursuant to Options granted and Purchases  authorized  under the
Plan shall be used for general corporate purposes.

      18. NOTICE TO COMPANY OF  DISQUALIFYING  DISPOSITION.  By accepting an ISO
granted under the Plan,  each  optionee  agrees to notify the Company in writing
immediately after such optionee makes a Disqualifying  Disposition (as described
in Sections  421,  422 and 424 of the Code and  regulations  thereunder)  of any
stock  acquired  pursuant to the  exercise  of ISOs  granted  under the Plan.  A
Disqualifying  Disposition is generally any  disposition  occurring on or before
the later of (a) the date two years  following  the date the ISO was  granted or
(b) the date one year following the date the ISO was exercised.

      19.  WITHHOLDING  OF  ADDITIONAL  INCOME  TAXES.  Upon the  exercise  of a
Non-Qualified  Option, the transfer of a Non-Qualified  Stock Option pursuant to
an arm's-length transaction,  the grant of an Award, the making of a Purchase of
Common Stock for less than its fair market value,  the making of a Disqualifying
Disposition  (as defined in paragraph 18), the vesting or transfer of restricted
stock or  securities  acquired on the  exercise of an Option  hereunder,  or the
making  of a  distribution  or  other  payment  with  respect  to such  stock or
securities, the Company may withhold taxes in respect of amounts that constitute
compensation  includible in gross income.  The Committee in its  discretion  may
condition  (i) the exercise of an Option,  (ii) the transfer of a  Non-Qualified
Stock  Option,  (iii) the grant of an Award,  (iv) the making of a  Purchase  of
Common  







                                      -11-

Stock for less than its fair market value, or (v) the vesting or transferability
of  restricted  stock or securities  acquired by  exercising  an Option,  on the
grantee's making satisfactory arrangement for such withholding. Such arrangement
may  include  payment  by the  grantee  in cash or by check of the amount of the
withholding  taxes or, at the  discretion  of the  Committee,  by the  grantee's
delivery of previously held shares of Common Stock or the  withholding  from the
shares of Common Stock  otherwise  deliverable  upon exercise of a Option shares
having an aggregate  fair market  value equal to the amount of such  withholding
taxes.

      20. GOVERNMENTAL REGULATION.  The Company's obligation to sell and deliver
shares of the Common  Stock  under this Plan is subject to the  approval  of any
governmental  authority required in connection with the authorization,  issuance
or sale of such shares.

      Government  regulations may impose  reporting or other  obligations on the
Company  with respect to the Plan.  For example,  the Company may be required to
send tax information  statements to employees and former employees that exercise
ISOs under the Plan,  and the Company  may be  required to file tax  information
returns  reporting the income received by grantees of Options in connection with
the Plan.

      21.  GOVERNING  LAW.  The validity  and  construction  of the Plan and the
instruments evidencing Options shall be governed by the laws of The Commonwealth
of  Massachusetts,  or the laws of any  jurisdiction in which the Company or its
successors in interest may be organized.