PUFFIN DESIGNS, INC.

                                 1997 STOCK PLAN


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

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

          (a) "Administrator"  means the Board or any of its Committees as shall
be administering the Plan in accordance with Section 4 hereof.

          (b)  "Applicable   Laws"  means  the  requirements   relating  to  the
administration  of stock  option plans under U.S.  state  corporate  laws,  U.S.
federal and state  securities  laws,  the Code,  any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable  laws of
any foreign country or  jurisdiction  where Options or Stock Purchase Rights are
granted under the Plan.

          (c) "Board" means the Board of Directors of the Company.

          (d) "Code" means the Internal Revenue Code of 1986, as amended.

          (e) "Committee" means a committee of Directors  appointed by the Board
in accordance with Section 4 hereof.

          (f) "Common Stock" means the common stock of the Company.

          (g) "Company" means Puffin Designs, Inc., a California corporation.

          (h) "Consultant" means any person who is engaged by the Company or any
Parent or Subsidiary to render consulting or advisory services to such entity.

          (i) "Director" means a member of the Board.

          (j)  "Employee"  means any person,  including  officers and Directors,
employed by the Company or any Parent or  Subsidiary  of the Company.  A Service
Provider  shall  not  cease to be an  Employee  in the case of (i) any  leave of
absence approved by the Company or (ii) transfers
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between  locations  of the  Company or between  the  Company,  its  Parent,  any
Subsidiary,  or any successor.  For purposes of Incentive Stock Options, no such
leave may exceed ninety days, unless  reemployment upon expiration of such leave
is guaranteed by statute or contract. If reemployment upon expiration of a leave
of absence  approved  by the Company is not so  guaranteed,  on the 181st day of
such leave any  Incentive  Stock Option held by the  Optionee  shall cease to be
treated as an Incentive  Stock Option and shall be treated for tax purposes as a
Nonstatutory  Stock  Option.  Neither  service  as a Director  nor  payment of a
director's fee by the Company shall be sufficient to constitute  "employment" by
the Company.

          (k)  "Exchange  Act" means the  Securities  Exchange  Act of 1934,  as
amended.

          (l) "Fair Market  Value"  means,  as of any date,  the value of Common
Stock determined as follows:

               (i) If the  Common  Stock  is  listed  on any  established  stock
exchange or a national market system,  including  without  limitation the Nasdaq
National Market or The Nasdaq  SmallCap  Market of The Nasdaq Stock Market,  its
Fair  Market  Value  shall be the  closing  sales  price for such  stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system for
the last market trading day prior to the time of  determination,  as reported in
The  Wall  Street  Journal  or such  other  source  as the  Administrator  deems
reliable;

               (ii) If the  Common  Stock is  regularly  quoted by a  recognized
securities  dealer but selling  prices are not  reported,  its Fair Market Value
shall be the mean between the high bid and low asked prices for the Common Stock
on the last market trading day prior to the day of determination; or

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

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

          (n)  "Nonstatutory  Stock  Option"  means an Option  not  intended  to
qualify as an Incentive Stock Option.

          (o) "Option" means a stock option granted pursuant to the Plan.

          (p) "Option Agreement" means a written or electronic agreement between
the Company and an Optionee evidencing the terms and conditions of an individual
Option grant. The Option Agreement is subject to the terms and conditions of the
Plan.

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          (q) "Option  Exchange  Program"  means a program  whereby  outstanding
Options are exchanged for Options with a lower exercise price.

          (r) "Optioned  Stock" means the Common Stock subject to an Option or a
Stock Purchase Right.

          (s)  "Optionee"  means the  holder of an  outstanding  Option or Stock
Purchase Right granted under the Plan.

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

          (u) "Plan" means this 1996 Stock Plan.

          (v) "Restricted  Stock" means shares of Common Stock acquired pursuant
to a grant of a Stock Purchase Right under Section 10 below.

          (w) "Service Provider" means an Employee, Director or Consultant.

          (x)  "Share"  means  a share  of the  Common  Stock,  as  adjusted  in
accordance with Section 12 below.

          (y) "Stock  Purchase  Right"  means a right to purchase  Common  Stock
pursuant to Section 10 below.

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

     3. Stock  Subject to the Plan.  Subject to the  provisions of Section 12 of
the Plan, the maximum  aggregate number of Shares which may be subject to option
and sold under the Plan is 2,000,000  Shares.  The Shares may be authorized  but
unissued, or reacquired Common Stock.

          If an Option or Stock Purchase Right expires or becomes  unexercisable
without having been  exercised in full, or is surrendered  pursuant to an Option
Exchange Program, the unpurchased Shares which were subject thereto shall become
available  for  future  grant  or sale  under  the  Plan  (unless  the  Plan has
terminated). However, Shares that have actually been issued under the Plan, upon
exercise of either an Option or Stock Purchase  Right,  shall not be returned to
the Plan and shall not become available for future  distribution under the Plan,
except  that if Shares of  Restricted  Stock are  repurchased  by the Company at
their original  purchase  price,  such Shares shall become  available for future
grant under the Plan.

     4. Administration of the Plan.

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          (a) The  Plan  shall  be  administered  by the  Board  or a  Committee
appointed by the Board,  which  Committee  shall be  constituted  to comply with
Applicable Laws.

          (b) Powers of the Administrator. Subject to the provisions of the Plan
and, in the case of a Committee,  the specific duties  delegated by the Board to
such  Committee,  and subject to the approval of any relevant  authorities,  the
Administrator shall have the authority in its discretion:

               (i) to determine the Fair Market Value;

               (ii) to select the Service  Providers  to whom  Options and Stock
Purchase Rights may from time to time be granted hereunder;

               (iii) to  determine  the  number of Shares to be  covered by each
such award granted hereunder;

               (iv) to approve forms of agreement for use under the Plan;

               (v) to determine the terms and conditions, of any Option or Stock
Purchase Right granted hereunder. Such terms and conditions include, but are not
limited to, the exercise price, the time or times when Options or Stock Purchase
Rights  may be  exercised  (which  may be based on  performance  criteria),  any
vesting acceleration or waiver of forfeiture  restrictions,  and any restriction
or limitation  regarding any Option or Stock  Purchase Right of the Common Stock
relating thereto,  based in each case on such factors as the  Administrator,  in
its sole discretion, shall determine;

               (vi) to determine whether and under what  circumstances an Option
may be settled in cash under subsection 9(e) instead of Common Stock;

               (vii) to  reduce  the  exercise  price of any  Option to the then
current Fair Market  Value if the Fair Market Value of the Common Stock  covered
by such Option has declined since the date the Option was granted;

               (viii) to initiate an Option Exchange Program;

               (ix) to  prescribe,  amend  and  rescind  rules  and  regulations
relating to the Plan,  including  rules and  regulations  relating to  sub-plans
established  for the purpose of qualifying  for  preferred  tax treatment  under
foreign tax laws;

               (x) to allow Optionees to satisfy  withholding tax obligations by
electing to have the Company withhold from the Shares to be issued upon exercise
of an Option or Stock  Purchase Right that number of Shares having a Fair Market
Value equal to the amount required to be withheld.  The Fair Market Value of the
Shares to be withheld shall be determined on the date that

                                       -4-
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the amount of tax to be withheld is to be determined. All elections by Optionees
to have Shares  withheld for this  purpose  shall be made in such form and under
such conditions as the Administrator may deem necessary or advisable; and

               (xi) to construe and  interpret  the terms of the Plan and awards
granted pursuant to the Plan.

          (c) Effect of Administrator's Decision. All decisions,  determinations
and  interpretations  of the  Administrator  shall be final and  binding  on all
Optionees.

     5. Eligibility.

          (a)  Nonstatutory  Stock  Options  and Stock  Purchase  Rights  may be
granted to Service  Providers.  Incentive  Stock  Options may be granted only to
Employees.

          (b) Each Option shall be designated in the Option  Agreement as either
an  Incentive   Stock  Option  or  a   Nonstatutory   Stock   Option.   However,
notwithstanding  such designation,  to the extent that the aggregate Fair Market
Value  of  the  Shares  with  respect  to  which  Incentive  Stock  Options  are
exercisable  for the first time by the Optionee  during any calendar year (under
all plans of the Company and any Parent or Subsidiary)  exceeds  $100,000,  such
Options shall be treated as  Nonstatutory  Stock  Options.  For purposes of this
Section 5(b),  Incentive  Stock Options shall be taken into account in the order
in which  they  were  granted.  The Fair  Market  Value of the  Shares  shall be
determined as of the time the Option with respect to such Shares is granted.

          (c)  Neither  the Plan nor any Option or Stock  Purchase  Right  shall
confer upon any  Optionee any right with respect to  continuing  the  Optionee's
relationship as a Service  Provider with the Company,  nor shall it interfere in
any  way  with  his or her  right  or the  Company's  right  to  terminate  such
relationship at any time, with or without cause.

     6. Term of Plan.  Subject to Section 18 of the Plan,  the Plan shall become
effective upon its adoption by the Board. It shall continue in effect for a term
of ten (10) years unless sooner terminated under Section 14 of the Plan.

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

     8. Option Exercise Price and Consideration.

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          (a) The per  share  exercise  price for the  Shares to be issued  upon
exercise of an Option shall be such price as is determined by the Administrator,
but shall be subject to the following:

               (i) In the case of an Incentive Stock Option

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

                    (B) granted to any other  Employee,  the per Share  exercise
price shall be no less than 100% of the Fair Market  Value per Share on the date
of grant.

               (ii) In the case of a  Nonstatutory  Stock Option,  the per Share
exercise price shall be determined by the Administrator.

               (iii) Notwithstanding the foregoing,  Options may be granted with
a per Share  exercise price other than as required above pursuant to a merger or
other corporate transaction.

          (b) The  consideration  to be paid for the  Shares to be  issued  upon
exercise of an Option,  including the method of payment,  shall be determined by
the  Administrator  (and,  in the case of an Incentive  Stock  Option,  shall be
determined at the time of grant).  Such  consideration  may consist of (1) cash,
(2) check, (3) promissory note, (4) other Shares which (x) in the case of Shares
acquired  upon  exercise of an Option,  have been owned by the Optionee for more
than six months on the date of  surrender,  and (y) have a Fair Market  Value on
the date of surrender equal to the aggregate  exercise price of the Shares as to
which such Option shall be exercised,  (5) consideration received by the Company
under a cashless exercise program  implemented by the Company in connection with
the Plan, or (6) any combination of the foregoing methods of payment.  In making
its  determination as to the type of consideration to accept,  the Administrator
shall consider if acceptance of such consideration may be reasonably expected to
benefit the Company.

     9. Exercise of Option.

          (a)  Procedure  for  Exercise;  Rights as a  Shareholder.  Any  Option
granted  hereunder  shall be  exercisable  according to the terms hereof at such
times and under such conditions as determined by the Administrator and set forth
in the Option Agreement. Unless the Administrator provides otherwise, vesting of
Options granted hereunder shall be tolled during any unpaid leave of absence. An
Option may not be exercised for a fraction of a Share.

               An Option shall be deemed  exercised  when the Company  receives:
(i) written or  electronic  notice of exercise  (in  accordance  with the Option
Agreement) from the person entitled

                                       -6-
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to exercise  the Option,  and (ii) full  payment for the Shares with  respect to
which the Option is exercised. Full payment may consist of any consideration and
method of payment  authorized by the  Administrator  and permitted by the Option
Agreement and the Plan. Shares issued upon exercise of an Option shall be issued
in the name of the Optionee or, if requested by the Optionee, in the name of the
Optionee and his or her spouse. Until the Shares are issued (as evidenced by the
appropriate  entry on the books of the Company or of a duly authorized  transfer
agent of the Company), no right to vote or receive dividends or any other rights
as a  shareholder  shall exist with respect to the Shares,  notwithstanding  the
exercise of the Option.  The  Company  shall issue (or cause to be issued)  such
Shares promptly after the Option is exercised.  No adjustment will be made for a
dividend  or other  right  for which  the  record  date is prior to the date the
Shares are issued, except as provided in Section 12 of the Plan.

               Exercise of an Option in any manner shall result in a decrease in
the number of Shares thereafter available, both for purposes of the Plan and for
sale  under the  Option,  by the  number  of  Shares  as to which the  Option is
exercised.

          (b) Termination of Relationship as a Service Provider.  If an Optionee
ceases to be a Service  Provider,  such  Optionee may exercise his or her Option
within  such  period of time (of at least  thirty (30) days) and subject to such
conditions  as are  specified  in the Option  Agreement  to the extent  that the
Option is  vested on the date of  termination  (but in no event  later  than the
expiration of the term of the Option as set forth in the Option  Agreement).  In
the absence of a specified time in the Option Agreement, the Option shall remain
exercisable for three (3) months  following the Optionee's  termination.  If, on
the date of  termination,  the  Optionee  is not  vested as to his or her entire
Option, the Shares covered by the unvested portion of the Option shall revert to
the Plan.  If,  after  termination,  the  Optionee  does not exercise his or her
Option  within  the  time  specified  by the  Administrator,  the  Option  shall
terminate, and the Shares covered by such Option shall revert to the Plan.

          (c)  Disability  of  Optionee.  If an Optionee  ceases to be a Service
Provider  as a result of the  Optionee's  total  and  permanent  disability,  as
defined in Section  22(e)(3) of the Code,  the  Optionee may exercise his or her
Option  within  such  period  of time  and  subject  to such  conditions  as are
specified in the Option Agreement to the extent the Option is vested on the date
of  termination  (but in no event later than the  expiration of the term of such
Option as set forth in the Option Agreement). In the absence of a specified time
in the Option  Agreement,  the Option shall remain  exercisable  for twelve (12)
months following the Optionee's termination. If, on the date of termination, the
Optionee is not vested as to his or her entire Option, the Shares covered by the
unvested portion of the Option shall revert to the Plan. If, after  termination,
the  Optionee  does not  exercise  his or her Option  within the time  specified
herein, the Option shall terminate,  and the Shares covered by such Option shall
revert to the Plan.

          (d) Death of Optionee.  If an Optionee dies while a Service  Provider,
the Option  may be  exercised  within  such  period of time and  subject to such
conditions as are specified in the

                                       -7-
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Option  Agreement (but in no event later than the expiration of the term of such
Option as set forth in the Notice of Grant),  by the  Optionee's  estate or by a
person who acquires the right to exercise the Option by bequest or  inheritance,
but only to the extent  that the  Option is vested on the date of death.  In the
absence of a specified  time in the Option  Agreement,  the Option  shall remain
exercisable for twelve (12) months following the Optionee's termination.  If, at
the time of death,  the  Optionee is not vested as to his or her entire  Option,
the Shares  covered by the  unvested  portion  of the Option  shall  immediately
revert to the Plan. The Option may be exercised by the executor or administrator
of the Optionee's estate or, if none, by the person(s)  entitled to exercise the
Option under the Optionee's will or the laws of descent or distribution.  If the
Option is not so exercised  within the time specified  herein,  the Option shall
terminate, and the Shares covered by such Option shall revert to the Plan.

     10. Stock Purchase Rights.

          (a) Rights to Purchase.  Stock  Purchase  Rights may be issued  either
alone,  in addition  to, or in tandem with other awards  granted  under the Plan
and/or cash awards made outside of the Plan. After the Administrator  determines
that it will offer Stock  Purchase  Rights  under the Plan,  it shall advise the
offeree in writing or electronically  of the terms,  conditions and restrictions
related to the offer,  including  the number of Shares that such person shall be
entitled  to  purchase,  the price to be paid,  and the time  within  which such
person must accept such  offer.  The offer shall be accepted by  execution  of a
Restricted Stock purchase agreement in the form determined by the Administrator.

          (b) Repurchase Option. Unless the Administrator  determines otherwise,
the  Restricted  Stock purchase  agreement  shall grant the Company a repurchase
option  exercisable  upon  the  voluntary  or  involuntary  termination  of  the
purchaser's  service  with  the  Company  for any  reason  (including  death  or
disability).   The  purchase  price  for  Shares  repurchased  pursuant  to  the
Restricted  Stock  purchase  agreement  shall be the original  price paid by the
purchaser and may be paid by cancellation  of any  indebtedness of the purchaser
to  the  Company.  The  repurchase  option  shall  lapse  at  such  rate  as the
Administrator may determine;  provided, however, that in no event shall it lapse
at a rate of less than twenty percent (20%) of the shares per year over five (5)
years from the date the option is granted such that any such  repurchase  option
shall  be in  compliance  with  Rule  260.140.42(h)  of the  California  Code of
Regulations, to the extent the Company is subject thereto at such time.

          (c) Other  Provisions.  The Restricted Stock purchase  agreement shall
contain such other terms,  provisions and conditions not  inconsistent  with the
Plan as may be determined by the Administrator in its sole discretion.

          (d)  Rights  as a  Shareholder.  Once  the  Stock  Purchase  Right  is
exercised,  the purchaser shall have rights equivalent to those of a shareholder
and shall be a shareholder  when his or her purchase is entered upon the records
of the duly authorized transfer agent of the Company.

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No  adjustment  shall be made for a dividend or other right for which the record
date is prior to the date the  Stock  Purchase  Right is  exercised,  except  as
provided in Section 12 of the Plan.

     11.  Non-Transferability  of  Options  and Stock  Purchase  Rights.  Unless
determined otherwise by the Administrator, Options and Stock Purchase Rights may
not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any
manner other than by will or by the laws of descent or  distribution  and may be
exercised,  during the lifetime of the Optionee,  only by the  Optionee.  If the
Administrator makes an Option or Stock Purchase Right transferable,  such Option
or Stock  Purchase Right shall contain such  additional  terms and conditions as
the Administrator deems appropriate.

     12. Adjustments Upon Changes in Capitalization, Merger or Asset Sale.

          (a) Changes in  Capitalization.  Subject to any required action by the
shareholders  of the Company,  the number of shares of Common  Stock  covered by
each  outstanding  Option or Stock Purchase  Right,  and the number of shares of
Common Stock which have been  authorized  for issuance  under the Plan but as to
which no Options or Stock  Purchase  Rights have yet been  granted or which have
been returned to the Plan upon  cancellation or expiration of an Option or Stock
Purchase  Right,  as well as the price per share of Common Stock covered by each
such  outstanding  Option  or Stock  Purchase  Right,  shall be  proportionately
adjusted for any  increase or decrease in the number of issued  shares of Common
Stock  resulting  from a stock  split,  reverse  stock  split,  stock  dividend,
combination or  reclassification  of the Common Stock,  or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company. The conversion of any convertible securities of
the  Company  shall  not be deemed to have been  "effected  without  receipt  of
consideration."  Such adjustment shall be made by the Board, whose determination
in that  respect  shall be final,  binding and  conclusive.  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 of Common Stock subject to an Option or Stock Purchase Right.

          (b)  Dissolution  or  Liquidation.   In  the  event  of  the  proposed
dissolution or liquidation of the Company,  the Administrator  shall notify each
Optionee as soon as  practicable  prior to the  effective  date of such proposed
transaction.  The Administrator in its discretion may provide for an Optionee to
have the right to exercise  his or her Option  until  fifteen (15) days prior to
such  transaction  as to all of the Optioned  Stock covered  thereby,  including
Shares as to which the Option would not otherwise be  exercisable.  In addition,
the Administrator  may provide that any Company  repurchase option applicable to
any Shares  purchased  upon exercise of an Option or Stock  Purchase Right shall
lapse as to all such Shares,  provided the proposed  dissolution  or liquidation
takes place at the time and in the manner contemplated. To the extent it has not
been  previously  exercised,  an Option or Stock  Purchase  Right will terminate
immediately prior to the consummation of such proposed action.

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          (c) Merger or Asset Sale. In the event of a merger of the Company with
or into another  corporation,  or the sale of substantially all of the assets of
the Company,  each outstanding  Option and Stock Purchase Right shall be assumed
or an equivalent option or right  substituted by the successor  corporation or a
Parent  or  Subsidiary  of the  successor  corporation.  In the  event  that the
successor  corporation  refuses to assume or substitute  for the Option or Stock
Purchase  Right,  the  Administrator  shall  notify the  Optionee  in writing or
electronically  at  least  thirty  (30)  days  prior  to  the  closing  of  such
transaction,  and the Option or Stock Purchase Right shall terminate thirty (30)
days after such notice. For the purposes of this paragraph,  the Option or Stock
Purchase Right shall be considered  assumed if,  following the merger or sale of
assets,  the option or right confers the right to purchase or receive,  for each
Share  of  Optioned  Stock  subject  to  the  Option  or  Stock  Purchase  Right
immediately prior to the merger or sale of assets,  the  consideration  (whether
stock,  cash, or other securities or property) received in the merger or sale of
assets by holders of Common Stock for each Share held on the  effective  date of
the transaction (and if holders were offered a choice of consideration, the type
of consideration chosen by the holders of a majority of the outstanding Shares);
provided,  however, that if such consideration received in the merger or sale of
assets is not solely  common stock of the successor  corporation  or its Parent,
the Administrator  may, with the consent of the successor  corporation,  provide
for the  consideration  to be received  upon the exercise of the Option or Stock
Purchase Right,  for each Share of Optioned Stock subject to the Option or Stock
Purchase  Right,  to be solely common stock of the successor  corporation or its
Parent  equal in fair market  value to the per share  consideration  received by
holders of Common Stock in the merger or sale of assets.

     13. Time of Granting Options and Stock Purchase  Rights.  The date of grant
of an Option or Stock  Purchase  Right shall,  for all purposes,  be the date on
which the Administrator  makes the  determination  granting such Option or Stock
Purchase Right, or such other date as is determined by the Administrator. Notice
of the  determination  shall be given to each Service Provider to whom an Option
or Stock Purchase Right is so granted within a reasonable time after the date of
such grant.

     14. Amendment and Termination of the Plan.

          (a) Amendment and Termination. The Board may at any time amend, alter,
suspend or terminate the Plan.

          (b) Shareholder Approval.  The Board shall obtain shareholder approval
of any Plan  amendment  to the extent  necessary  and  desirable  to comply with
Applicable Laws.

          (c) Effect of  Amendment or  Termination.  No  amendment,  alteration,
suspension or  termination  of the Plan shall impair the rights of any Optionee,
unless mutually  agreed  otherwise  between the Optionee and the  Administrator,
which  agreement  must be in writing and signed by the Optionee and the Company.
Termination of the Plan shall not affect the Administrator's ability to

                                      -10-
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exercise  the powers  granted to it hereunder  with  respect to Options  granted
under the Plan prior to the date of such termination.

     15. Conditions Upon Issuance of Shares.

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

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

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

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

     18.  Shareholder  Approval.  The Plan shall be subject to  approval  by the
shareholders of the Company within twelve (12) months after the date the Plan is
adopted.  Such  shareholder  approval shall be obtained in the degree and manner
required under Applicable Laws.

     19.  Information  to Optionees  and  Purchasers.  The Company shall provide
copies of its annual financial statements to each Optionee, to each recipient of
a Stock Purchase Right and to each other individual who acquires Shares pursuant
to the Plan, not less  frequently  than annually during the period such Optionee
has one or more Options or Stock Purchase Rights outstanding and, in the case of
any individual who acquires Shares pursuant to the Plan,  during the period such
individual  owns such Shares.  The Company shall not be required to provide such
statements to key employees  whose duties in connection  with the Company assure
their access to equivalent information.

                                      -11-
<PAGE>
                              PUFFIN DESIGNS, INC.

                                 1997 STOCK PLAN

                             STOCK OPTION AGREEMENT


     Unless otherwise  defined herein,  the terms defined in the Plan shall have
the same defined meanings in this Option Agreement.

     NAME

     ADDRESS

NOTICE OF STOCK OPTION GRANT

     The  undersigned  Optionee  has been  granted an Option to purchase  Common
Stock of the Company,  subject to the terms and  conditions of the Plan and this
Option Agreement, as follows:

     Date of Grant

     Vesting Commencement Date

     Exercise Price per Share                       $

     Total Number of Shares Granted

     Total Exercise Price                           $

     Type of Option:                                Incentive Stock Option

     Term/Expiration Date:                          10 years from date of grant,
                                                    unless 10% owner

     Vesting Schedule:

     This Option  shall be  exercisable,  in whole or in part,  according to the
following vesting schedule:

     Such Shares shall vest at a rate of 1/3 of the Shares  twelve  months after
the  Vesting  Commencement  Date,  and 1/36 each  month  thereafter,  subject to
Optionee's continuing to be as Service Provider on such dates.
<PAGE>
     Exercise Schedule:

     This Option shall be  exercisable by the Optionee only to the extent vested
under the  Vesting  Schedule  set forth above and only as provided in the Option
Agreement below.

I.   AGREEMENT

     1. Grant of Option.  The Plan Administrator of the Company hereby grants to
the  Optionee  named in the Notice of Grant  (the  "Optionee"),  an option  (the
"Option") to purchase the number of Shares set forth in the Notice of Grant,  at
the  exercise  price per Share set forth in the Notice of Grant  (the  "Exercise
Price"),  and  subject  to the  terms  and  conditions  of the  Plan,  which  is
incorporated  herein by reference.  Subject to Section 14(c) of the Plan, in the
event of a conflict between the terms and conditions of the Plan and this Option
Agreement, the terms and conditions of the Plan shall prevail.

     If designated in the Notice of Grant as an Incentive  Stock Option ("ISO"),
this Option is intended to qualify as an  Incentive  Stock  Option as defined in
Section  422 of the Code.  Neverthe-less,  to the  extent  that it  exceeds  the
$100,000  rule of Code  Section  422(d),  this  Option  shall  be  treated  as a
Nonstatutory Stock Option ("NSO").

     2. Exercise of Option.

          (a) Right to Exercise.  This Option shall be exercisable to the extent
vested according to the Vesting Schedule set out in the Notice of Grant upon the
earlier to occur of any of the following:

               (i) The initial pubic offering of the Company's Common Stock that
is registered with the Securities and Exchange Commission;

               (ii) The  Company  becomes  a "C"  corporation,  as such  term is
defined in Section 1361(a)(2) of the Code;

               (iii) The dissolution or liquidation of the Company;

               (iv) The sale of substantially all of the assets of the Company;

               (v) Five (5) years after the Vesting Commencement Date.

          (b) Method of Exercise.  This Option shall be  exercisable by delivery
of an exercise notice in the form attached as Exhibit A (the "Exercise  Notice")
which shall state the election to exercise the Option, the number of Shares with
respect to which the Option is being exercised,  and such other  representations
and agreements as may be required by the Company.  The Exercise  Notice shall be
accompanied  by  payment of the  aggregate  Exercise  Price as to all  Exercised
Shares.  This Option shall be deemed to be exercised upon receipt by the Company
of such fully executed  Exercise  Notice  accompanied by the aggregate  Exercise
Price.

          No Shares shall be issued pursuant to the exercise of an Option unless
such issuance and such exercise  complies with  Applicable  laws.  Assuming such
compliance,  for income tax purposes the Shares shall be considered  transferred
to the  Optionee on the date on which the Option is  exercised  with  respect to
such Shares.

     3.  Optionee's  Representations.  In the  event  the  Shares  have not been
registered under the Securities Act of 1933, as amended, at the time this Option
is exercised, the Optionee shall, if required by the Company,  concurrently with
the exercise of all or any portion of this Option, deliver to the Company his or
her Investment  Representation  Statement in the form attached hereto as Exhibit
B.

                                       -2-
<PAGE>
     4. Lock-Up  Period.  Optionee  hereby  agrees that,  if so requested by the
Company or any representative of the under-writers (the "Managing  Underwriter")
in connection  with any  registration  of the offering of any  securities of the
Company under the Securities Act, Optionee shall not sell or otherwise  transfer
any Shares or other securities of the Company during the 180-day period (or such
other  period as may be requested  in writing by the  Managing  Underwriter  and
agreed to in writing by the Company) (the "Market  Standoff  Period")  following
the effective  date of a  registration  statement of the Company filed under the
Securities  Act.  Such  restriction  shall apply only to the first  registration
statement  of the  Company to become  effective  under the  Securities  Act that
includes  securities  to be sold on behalf of the  Company  to the  public in an
underwritten  public  offering under the Securities  Act. The Company may impose
stop-transfer  instructions with respect to securities  subject to the foregoing
restrictions until the end of such Market Standoff Period.

     5. Method of Payment.  Payment of the aggregate  Exercise Price shall be by
any of the following, or a combination thereof, at the election of the Optionee:

          (a) cash or check;

          (b)  consideration  received  by the Company  under a formal  cashless
exercise program adopted by the Company in connection with the Plan; or

          (c)  surrender  of  other  Shares  which,  (i) in the  case of  Shares
acquired  upon  exercise of an option,  have been owned by the Optionee for more
than six (6) months on the date of surrender,  and (ii) have a Fair Market Value
on the date of surrender equal to the aggregate  Exercise Price of the Exercised
Shares.

     6.  Restrictions  on Exercise.  This Option may not be exercised until such
time as the Plan has been approved by the shareholders of the Company, or if the
issuance  of such  Shares  upon  such  exercise  or the  method  of  payment  of
consideration  for such shares would  constitute  a violation of any  Applicable
Law.

     7. Termination of Relationship. In the event Optionee's status as a Service
Provider  terminates,  Optionee may exercise this Option subject to Section 2 to
the extent  vested and  exercisable  for three (3) months after the date of such
termination  (twelve  (12)  months  in the case of  termination  as a result  of
Disability  or  death).  If upon the date of such  termination  this  Option  is
partially or fully vested but not exercisable as provided in Section 2, then, to
the  extent  vested on such date,  this  Option  shall  remain in full force and
effect  and shall not  terminate  until  three (3) months (or up to a maximum of
twelve  (12) months if such  termination  is the result of  Disability  or death
occurring  nine (9) or fewer months prior to this Option  becoming  exercisable)
after the date it  becomes  exercisable  as  provided  in Section 2. In no event
shall this Option be exercised later than the Term/Expiration  Date set forth in
the Notice of Grant.  After such  period  and,  in any event,  to the extent not
vested at the time of such  termination,  the  Option  shall  terminate.  If the
Optionee exercises this Option more than three (3) months after the date of such
termination  (twelve  (12)  months  in the case of  termination  as a result  of
Disability or death),  this Option shall be treated as a Nonstatutory Option for
income tax purposes.

     8. Non-Transferability of Option. This Option may not be transferred in any
manner  otherwise than by will or by the laws of descent or distribution and may
be exercised during the lifetime of Optionee only by Optionee.  The terms of the
Plan  and  this  Option   Agreement   shall  be  binding  upon  the   executors,
administrators, heirs, successors and assigns of the Optionee.

     9. Term of Option.  This Option may be  exercised  only within the term set
out in the  Notice  of  Grant,  and may be  exercised  during  such term only in
accordance with the Plan and the terms of this Option.

     10. Tax Consequences.  Set forth below is a brief summary as of the date of
this Option of some of the federal tax  consequences  of exercise of this Option
and disposition of the Shares. THIS SUMMARY IS NECESSARILY  INCOMPLETE,  AND THE
TAX LAWS AND  REGULATIONS  ARE SUBJECT TO CHANGE.  THE OPTIONEE SHOULD CONSULT A
TAX ADVISER BEFORE EXERCISING THIS OPTION OR DISPOSING OF THE SHARES.

                                       -3-
<PAGE>
          (a) Exercise of ISO. If this Option qualifies as an ISO, there will be
no regular  federal  income  tax  liability  upon the  exercise  of the  Option,
although the excess,  if any, of the Fair Market Value of the Shares on the date
of exercise  over the  Exercise  Price will be treated as an  adjustment  to the
alternative minimum tax for federal tax purposes and may subject the Optionee to
the alternative minimum tax in the year of exercise.

          (b)  Exercise of  Nonstatutory  Stock  Option.  There may be a regular
federal income tax liability  upon the exercise of a Nonstatutory  Stock Option.
The Optionee will be treated as having received  compensation income (taxable at
ordinary income tax rates) equal to the excess, if any, of the Fair Market Value
of the Shares on the date of exercise over the Exercise Price. If Optionee is an
Employee or a former  Employee,  the Company  will be required to withhold  from
Optionee's  compensation  or collect  from  Optionee  and pay to the  applicable
taxing  authorities an amount in cash equal to a percentage of this compensation
income at the time of exercise,  and may refuse to honor the exercise and refuse
to deliver Shares if such  withholding  amounts are not delivered at the time of
exercise.

          (c)  Disposition of Shares.  In the case of an NSO, if Shares are held
for at least one year,  any gain realized on  disposition  of the Shares will be
treated as long-term  capital gain for federal income tax purposes.  In the case
of an ISO,  if Shares  transferred  pursuant to the Option are held for at least
one year after  exercise and of at least two years after the Date of Grant,  any
gain  realized on  disposition  of the Shares will also be treated as  long-term
capital gain for federal income tax purposes.  If Shares  purchased under an ISO
are  disposed  of within one year after  exercise or two years after the Date of
Grant,  any gain realized on such  disposition  will be treated as  compensation
income  (taxable  at  ordinary  income  rates) to the  extent of the  difference
between the  Exercise  Price and the lesser of (1) the Fair Market  Value of the
Shares  on the date of  exercise,  or (2) the  sale  price  of the  Shares.  Any
additional gain will be taxed as capital gain, short-term or long-term depending
on the period that the ISO Shares were held.

          (d) Notice of Disqualifying  Disposition of ISO Shares.  If the Option
granted  to  Optionee  herein  is an ISO,  and if  Optionee  sells or  otherwise
disposes  of any of the  Shares  acquired  pursuant  to the ISO on or before the
later of (1) the date two years  after  the Date of  Grant,  or (2) the date one
year after the date of  exercise,  the  Optionee  shall  immediately  notify the
Company in writing of such  disposition.  Optionee  agrees that  Optionee may be
subject to income tax  withholding  by the  Company on the  compensation  income
recognized by the Optionee.

     11. Entire  Agreement;  Governing Law. The Plan is  incorporated  herein by
reference. The Plan and this Option Agreement constitute the entire agreement of
the parties with  respect to the subject  matter  hereof and  supersede in their
entirety all prior  undertakings and agreements of the Company and Optionee with
respect to the subject matter hereof,  and may not be modified  adversely to the
Optionee's  interest  except by means of a writing  signed  by the  Company  and
Optionee.  This agreement is governed by the internal  substantive  laws but not
the choice of law rules of California.

     12. No Guarantee of Continued  Service.  OPTIONEE  ACKNOWLEDGES  AND AGREES
THAT THE VESTING OF SHARES  PURSUANT TO THE  VESTING  SCHEDULE  HEREOF IS EARNED
ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (NOT THROUGH
THE  ACT  OF  BEING  HIRED,  BEING  GRANTED  THIS  OPTION  OR  ACQUIRING  SHARES
HEREUNDER).  OPTIONEE FURTHER  ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT,  THE
TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO
NOT  CONSTITUTE  AN EXPRESS OR IMPLIED  PROMISE  OF  CONTINUED  ENGAGEMENT  AS A
SERVICE  PROVIDER FOR THE VESTING PERIOD,  FOR ANY PERIOD,  OR AT ALL, AND SHALL
NOT  INTERFERE  IN ANY WAY  WITH  OPTIONEE'S  RIGHT  OR THE  COMPANY'S  RIGHT TO
TERMINATE  OPTIONEE'S  RELATIONSHIP  AS A SERVICE  PROVIDER AT ANY TIME, WITH OR
WITHOUT CAUSE.

     Optionee  acknowledges receipt of a copy of the Plan and represents that he
or she is familiar with the terms and  provisions  thereof,  and hereby  accepts
this Option subject to all of the terms and provisions thereof.

                                       -4-
<PAGE>
Optionee  has reviewed  the Plan and this Option in their  entirety,  has had an
opportunity  to obtain the advice of counsel prior to executing  this Option and
fully understands all provisions of the Option. Optionee hereby agrees to accept
as  binding,  conclusive  and  final all  decisions  or  interpretations  of the
Administrator upon any questions arising under the Plan or this Option. Optionee
further  agrees to notify the Company upon any change in the  residence  address
indicated below.

OPTIONEE:                               PUFFIN DESIGNS, INC.


-----------------------------------     ----------------------------------------
Signature                               By

-----------------------------------     ----------------------------------------
Print Name                              Title


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

-----------------------------------
Residence Address

                                       -5-
<PAGE>
                                    EXHIBIT A

                                 1997 STOCK PLAN

                                 EXERCISE NOTICE

Puffin Designs, Inc.
80 Liberty Ship Way, Suite 24
Sausalito, CA  94965

Attention: Secretary

     1.  Exercise  of Option.  Effective  as of today,  ___________,  20__,  the
undersigned ("Optionee") hereby elects to exercise Optionee's option to purchase
_________ shares of the Common Stock (the "Shares") of Puffin Designs, Inc. (the
"Company")  under and pursuant to the 1997 Stock Plan (the "Plan") and the Stock
Option Agreement dated _________, 20__ (the "Option Agreement").

     2. Delivery of Payment. Purchaser herewith delivers to the Company the full
purchase price of the Shares, as set forth in the Option Agreement.

     3.  Representations  of Optionee.  Optionee  acknowledges that Optionee has
received,  read and understood  the Plan and the Option  Agreement and agrees to
abide by and be bound by their terms and conditions.

     4. Rights as Shareholder. Until the issuance of the Shares (as evidenced by
the  appropriate  entry on the  books  of the  Company  or of a duly  authorized
transfer  agent of the  Company),  no right to vote or receive  dividends or any
other rights as a  shareholder  shall exist with respect to the Optioned  Stock,
notwithstanding  the  exercise of the Option.  The Shares shall be issued to the
Optionee as soon as  practicable  after the Option is  exercised.  No adjustment
shall be made for a dividend  or other  right for which the record date is prior
to the date of issuance except as provided in Section 12 of the Plan.

     5. Company's Right of First Refusal.  Before any Shares held by Optionee or
any transferee  (either being sometimes  referred to herein as the "Holder") may
be sold or  otherwise  transferred  (including  transfer by gift or operation of
law),  the  Company or its  assignee(s)  shall have a right of first  refusal to
purchase the Shares on the terms and  conditions  set forth in this Section (the
"Right of First Refusal").

          (a)  Notice of  Proposed  Transfer.  The  Holder of the  Shares  shall
deliver to the Company a written notice (the "Notice") stating: (i) the Holder's
bona fide intention to sell or otherwise transfer such Shares;  (ii) the name of
each proposed purchaser or other transferee ("Proposed  Transferee");  (iii) the
number of Shares to be  transferred  to each Proposed  Transferee;  and (iv) the
bona fide cash price or other  consideration  for which the Holder  pro-poses to
transfer the Shares (the "Offered Price"), and the Holder shall offer the Shares
at the Offered Price to the Company or its assignee(s).

          (b) Exercise of Right of First Refusal. At any time within thirty (30)
days after receipt of the Notice,  the Company  and/or its  assignee(s)  may, by
giving  written  notice to the Holder,  elect to purchase all, but not less than
all, of the Shares proposed to be transferred to any one or more of the Proposed
Transferees,  at the purchase price determined in accordance with subsection (c)
below.

          (c) Purchase  Price.  The purchase  price  ("Purchase  Price") for the
Shares  purchased by the Company or its assignee(s)  under this Section shall be
the Offered Price. If the Offered Price includes  consideration other than cash,
the cash equivalent value of the non-cash  consideration  shall be determined by
the Board of Directors of the Company in good faith.
<PAGE>
          (d)  Payment.  Payment of the  Purchase  Price  shall be made,  at the
option of the Company or its assignee(s), in cash (by check), by cancellation of
all or a portion of any outstanding  indebted-ness  of the Holder to the Company
(or, in the case of  repurchase  by an  assignee,  to the  assignee),  or by any
combination  thereof within 30 days after receipt of the Notice or in the manner
and at the times set forth in the Notice.

          (e) Holder's Right to Transfer.  If all of the Shares  proposed in the
Notice to be transferred to a given Proposed Transferee are not purchased by the
Company and/or its assignee(s) as provided in this Section,  then the Holder may
sell or  otherwise  transfer  such  Shares to that  Proposed  Transferee  at the
Offered Price or at a higher price,  provided that such sale or other  trans-fer
is consummated within 120 days after the date of the Notice,  that any such sale
or other transfer is effected in accordance with any applicable  securities laws
and that the Proposed  Transferee  agrees in writing that the provisions of this
Section  shall  continue  to apply to the Shares in the hands of such  Pro-posed
Transferee.  If the Shares  described in the Notice are not  transferred  to the
Proposed  Transferee  within  such  period,  a new Notice  shall be given to the
Company,  and the Company and/or its assignees  shall again be offered the Right
of First  Refusal  before any Shares held by the Holder may be sold or otherwise
transferred.

          (f) Exception for Certain Family  Transfers.  Anything to the contrary
contained  in this  Section  notwithstanding,  the transfer of any or all of the
Shares  during the  Optionee's  lifetime or on the  Optionee's  death by will or
intestacy to the Optionee's  immediate  family or a trust for the benefit of the
Optionee's immediate family shall be exempt from the provisions of this Section.
"Immediate  Family" as used  herein  shall mean  spouse,  lineal  descendant  or
antecedent,  father,  mother, brother or sister. In such case, the transferee or
other recipient shall receive and hold the Shares so transferred  subject to the
provisions  of this  Section,  and there  shall be no further  transfer  of such
Shares except in accordance with the terms of this Section.

          (g) Termination of Right of First Refusal.  The Right of First Refusal
shall  terminate  as to any Shares  upon the first  sale of Common  Stock of the
Company to the general public  pursuant to a registration  statement  filed with
and declared  effective by the  Securities  and  Exchange  Commission  under the
Securities Act of 1933, as amended.

     6. Tax Consultation.  Optionee understands that Optionee may suffer adverse
tax  consequences  as a result of  Optionee's  purchase  or  disposition  of the
Shares. Optionee represents that Optionee has consulted with any tax consultants
Optionee deems  advisable in connection  with the purchase or disposition of the
Shares and that Optionee is not relying on the Company for any tax advice.

     7. Restrictive Legends and Stop-Transfer Orders.

          (a) Legends.  Optionee  understands  and agrees that the Company shall
cause the legends set forth below or legends  substantially  equivalent thereto,
to be placed upon any certificate(s) evidencing ownership of the Shares together
with any  other  legends  that may be  required  by the  Company  or by state or
federal securities laws:

          THE SECURITIES  REPRESENTED  HEREBY HAVE NOT BEEN REGISTERED UNDER THE
          SECURITIES  ACT OF 1933 (THE  "ACT") AND MAY NOT BE  OFFERED,  SOLD OR
          OTHERWISE  TRANSFERRED,  PLEDGED  OR  HYPOTHECATED  UNLESS  AND  UNTIL
          REGISTERED  UNDER  THE ACT  OR,  IN THE  OPINION  OF  COMPANY  COUNSEL
          SATISFACTORY TO THE ISSUER OF THESE  SECURITIES,  SUCH OFFER,  SALE OR
          TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.

          THE SHARES  REPRESENTED  BY THIS  CERTIFICATE  ARE  SUBJECT TO CERTAIN
          RESTRICTIONS  ON  TRANSFER  AND A RIGHT OF FIRST  REFUSAL  HELD BY THE
          ISSUER OR ITS  ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE BETWEEN
          THE ISSUER AND THE ORIGINAL HOLDER OF THESE

                                       -2-
<PAGE>
          SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE
          ISSUER.  SUCH  TRANSFER  RESTRICTIONS  AND RIGHT OF FIRST  REFUSAL ARE
          BINDING ON TRANSFEREES OF THESE SHARES.

          (b)  Stop-Transfer  Notices.  Optionee agrees that, in order to ensure
compliance  with the  restrictions  referred  to herein,  the  Company may issue
appropriate  "stop  transfer"  instructions  to its transfer  agent, if any, and
that,  if the Company  transfers  its own  securities,  it may make  appropriate
notations to the same effect in its own records.

          (c)  Refusal to  Transfer.  The Company  shall not be required  (i) to
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the  provisions of this  Agreement or (ii) to treat as owner
of such Shares or to accord the right to vote or pay  dividends to any purchaser
or other transferee to whom such Shares shall have been so transferred.

     8.  Successors and Assigns.  The Company may assign any of its rights under
this Agreement to single or multiple  assignees,  and this Agreement shall inure
to the  benefit of the  successors  and assigns of the  Company.  Subject to the
restrictions on transfer herein set forth,  this Agreement shall be binding upon
Optionee  and  his or  her  heirs,  executors,  administrators,  successors  and
assigns.

     9.  Interpretation.  Any  dispute  regarding  the  interpretation  of  this
Agreement  shall be  submitted  by Optionee or by the Company  forthwith  to the
Administrator  which shall review such dispute at its next regular meeting.  The
resolution of such a dispute by the Administrator  shall be final and binding on
all parties.

     10. Governing Law; Severability. This Agreement is governed by the internal
substantive laws but not the choice of law rules, of California.

     11. Entire Agreement. The Plan and Option Agreement are incorporated herein
by reference.  This Agreement, the Plan, the Option Agreement and the Investment
Representation  Statement  constitute  the entire  agreement of the parties with
respect to the subject  matter hereof and supersede in their  entirety all prior
undertakings  and  agreements  of the Company and  Optionee  with respect to the
subject  matter  hereof,  and may not be modified  adversely  to the  Optionee's
interest except by means of a writing signed by the Company and Optionee.

Submitted by:                           Accepted by:

OPTIONEE:                               PUFFIN DESIGNS, INC.

-----------------------------------     ----------------------------------------
Signature                               By

-----------------------------------     ----------------------------------------
Print Name                              Its

Address:                                Address:

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

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


                                        ----------------------------------------
                                        Date Received

                                       -3-
<PAGE>
                                    EXHIBIT B

                       INVESTMENT REPRESENTATION STATEMENT


OPTIONEE:

COMPANY:       PUFFIN DESIGNS, INC.

SECURITY:      COMMON STOCK

AMOUNT:

DATE:


In connection with the purchase of the above-listed Securities,  the undersigned
Optionee represents to the Company the following:

          (a) Optionee is aware of the Company's  business affairs and financial
condition and has acquired sufficient  information about the Company to reach an
informed  and  knowledgeable  decision  to acquire the  Securities.  Optionee is
acquiring  these  Securities  for investment for Optionee's own account only and
not with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the  Securities  Act of 1933, as amended (the  "Securities
Act").

          (b)  Optionee   acknowledges   and  understands  that  the  Securities
constitute  "restricted  securities"  under the Securities Act and have not been
registered  under the  Securities  Act in  reliance  upon a  specific  exemption
therefrom,  which  exemption  depends upon,  among other  things,  the bona fide
nature of Optionee's  investment intent as expressed herein. In this connection,
Optionee   understands  that,  in  the  view  of  the  Securities  and  Exchange
Commission,  the  statutory  basis  for such  exemption  may be  unavailable  if
Optionee's representation was predicated solely upon a present intention to hold
these  Securities  for the minimum  capital  gains  period  specified  under tax
statutes,  for a deferred  sale,  for or until an  increase  or  decrease in the
market price of the  Securities,  or for a period of one year or any other fixed
period in the future.  Optionee further  understands that the Securities must be
held indefinitely  unless they are subsequently  registered under the Securities
Act or an  exemption  from such  registration  is  available.  Optionee  further
acknowledges and understands that the Company is under no obligation to register
the  Securities.  Optionee  understands  that  the  certificate  evidencing  the
Securities  will be imprinted with a legend which  prohibits the transfer of the
Securities  unless they are registered or such  registration  is not required in
the opinion of counsel  satisfactory to the Company,  a legend prohibiting their
transfer without the consent of the Commissioner of Corporations of the State of
California and any other legend required under applicable state securities laws.

          (c) Optionee is familiar with the provisions of Rule 701 and Rule 144,
each promulgated  under the Securities Act, which, in substance,  permit limited
public resale of "restricted  securities" acquired,  directly or indirectly from
the issuer  thereof,  in a non-public  offering  subject to the  satisfaction of
certain  conditions.  Rule 701 provides that if the issuer  qualifies under Rule
701 at the time of the grant of the Option to the Optionee, the exercise will be
exempt  from  registration  under the  Securities  Act. In the event the Company
becomes  subject to the  reporting  requirements  of Section 13 or 15 (d) of the
Securities  Exchange Act of 1934,  ninety (90) days  thereafter  (or such longer
period as any market  stand-off  agreement  may require) the  Securities  exempt
under Rule 701 may be  resold,  subject  to the  satisfaction  of certain of the
conditions specified by Rule 144, including: (1) the resale being made through a
broker in an unsolicited "broker's transaction" or in transactions directly with
a market  maker (as said term is defined  under the  Securities  Exchange Act of
1934); and, in the case
<PAGE>
of an affiliate,  (2) the availability of certain public  information  about the
Company,  (3) the amount of Securities  being sold during any three month period
not  exceeding  the  limitations  specified in Rule  144(e),  and (4) the timely
filing of a Form 144, if applicable.

          In the event that the Company  does not qualify  under Rule 701 at the
time of grant of the  Option,  then the  Securities  may be  resold  in  certain
limited  circumstances subject to the provisions of Rule 144, which requires the
resale  to  occur  not  less  than  one  year  after  the  later of the date the
Securities  were sold by the Company or the date the Securities  were sold by an
affiliate  of the Company,  within the meaning of Rule 144;  and, in the case of
acquisition  of  the  Securities  by an  affiliate,  or by a  non-affiliate  who
subsequently  holds the Securities less than two years,  the satisfaction of the
conditions  set  forth  in  sections  (1),  (2),  (3) and  (4) of the  paragraph
immediately above.

          (d)  Optionee  further  understands  that  in  the  event  all  of the
applicable requirements of Rule 701 or 144 are not satisfied, registration under
the Securities Act,  compliance  with  Regulation A, or some other  registration
exemption will be required;  and that,  notwithstanding  the fact that Rules 144
and 701 are not exclusive,  the Staff of the Securities and Exchange  Commission
has  expressed  its opinion  that persons  proposing  to sell private  placement
securities  other than in a registered  offering and otherwise  than pursuant to
Rules 144 or 701 will have a substantial burden of proof in establishing that an
exemption from registration is available for such offers or sales, and that such
persons and their respective  brokers who participate in such transactions do so
at their own risk. Optionee understands that no assurances can be given that any
such other registration exemption will be available in such event.


                                        Signature of Optionee:


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

                                        Date: ___________________________,20 ___

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