EMPLOYMENT AGREEMENT


     AGREEMENT dated the ___ day of ______________, ____, between AI ACQUISITION
COMPANY,  an Arizona  corporation,  (the "Company"),  and  ______________,  (the
"Employee").

                                   WITNESSETH:

     Concurrently with the execution of this Agreement, the Company has acquired
the business and  substantially  all of the assets of Arraid,  Inc.,  an Arizona
corporation  ("Arraid"),  pursuant to the Agreement  and Plan of  Reorganization
among  Arraid,  the Company,  Employee,  and others of even date  herewith  (the
"Purchase Agreement"). Employee is a shareholder of Arraid and immediately prior
to the  execution  of this  Agreement  the  Employee  was  employed by and a key
executive of Arraid.

     The Company  desires to employ  Employee  and Employee is willing to accept
such employment, all on the terms hereinafter set forth.

     NOW, THEREFORE,  in consideration of the mutual covenants contained herein,
the parties agree as follows:

     1. Employment. The Company hereby employs the Employee as its _________ (or
other senior  executive  level position with the Company) for a period of ______
(__) years from the date of this Agreement, and the Employee hereby accepts such
employment.

     2. Duties. The Employee will work with senior management of the Company and
of the parent company of the Company, Alanco Environmental Resources Corporation
("Alanco")  to promote  and extend the  business  of the Company and he will use
best  efforts to further and develop  existing  and new business for the Company
worldwide. The Employee shall report to the ________________________.

     The main office of the  Company  will  constitute  the  Employee's  base of
operations.  The Company may change the location of such office when appropriate
to  accommodate  the Company's  needs as determined by Board of Directors of the
Company.  The Employee,  though,  will render services away from the main office
and  travel  wherever   reasonably  required  to  properly  perform  his  duties
hereunder.  In connection with all such trips,  the Employee will be advanced or
reimbursed for all reasonable  travel and living expenses  provided the Employee
submits appropriate documentation for such expenses satisfactory to the Company.

     3. Exclusivity.  The  Employee  will  devote  all of his  working  time to
performing his duties under this  Agreement,  and during his employment with the
Company,  the Employee  will not (i) act for his own account in any manner which
is competitive  with any of the business of the Company or which would interfere
with the  performance  of his duties under this  Agreement,  or (ii) serve as an
officer, director or employee of or advisor to any other business entity without
the written consent of the Chief Executive Officer of Alanco, or (iii) invest or
have any financial  interest,  direct or indirect,  in any business  competitive
with any of the business of the Company, provided, however, that notwithstanding
the  foregoing,  the  Employee  may  own  up  to 1% of  the  outstanding  equity
securities of any company engaged in any such competitive  business whose shares
are  listed  on a  national  securities  exchange  or  regularly  quoted  in  an
over-the-counter  market by one or more  members of a national or an  affiliated
securities association.

    4.   Compensation.

          4.1 Salary. During the first year of his employment,  the Company will
pay the  Employee a base  salary at the rate of  $_______  per year in  periodic
installments  consistent with the standard  practices of the Company.  Said base
salary shall be subject to  subsequent  increase  upon review of the  Employee's
performance  by the Chief  Executive  Officer  of  Alanco  and  approval  of the
Company's  Board of Directors.  The Employee will not be entitled to overtime or
other additional compensation as a result of services performed during evenings,
weekends, holidays or at other times.

          4.2 Bonus.  It is the  intention  of the parties that  Employee  shall
receive an annual cash bonus of up to fifty  (50%)  percent of  Employee's  base
salary upon review of the Employee's  performance by the Chief Executive Officer
of Alanco and approval of the Company's Board of Directors.

          4.3  Deductions.  The  Company  will  deduct  and  withhold  from  any
compensation  payable to the Employee  under this  Agreement such amounts as the
Company is required to deduct and  withhold by law.  The Company may also deduct
and withhold from any such  compensation,  to the extent  permitted by law, such
amounts as the Employee may owe to the Company.

    5.   Option To Purchase Alanco Common Stock.

          5.1 Option.  Alanco  shall grant the Employee a  non-statutory  option
(the "Option"), exercisable as hereinafter provided, to purchase ________ shares
of common stock of Alanco with the following performance vesting schedule:

               50%   Upon  the  Company  achieving  an  Annual  Running
                     Rate(1) of $15,000,000 sales revenue.

               50%   Upon  the  Company  achieving  an  Annual  Running
                     Rate(1) of $25,000,000 sales revenue.

     (1)  "Annual Running Rate" shall mean the annualized  sales revenues of the
          Company  at any point in time  based upon the  monthly  average  sales
          revenue for the previous three (3) calendar  months.

     Each share shall have an exercise price determined to be the average of the
NASDAQ  closing market price for five (5) trading days prior to the execution of
this contract.

          5.2. Exercise of Option:  Vesting;  Exercise Period.  The Option shall
irrevocably  vest in the Employee  upon the  Company's  attainment  of the sales
revenue  goals  referenced  in Section  5.1 above,  provided  that the  Employee
remains employed by the Company.  If the Company terminates the Employee without
cause,  or if the Employee  terminates his employment by reason of the Company's
material  breach  of  this  Agreement,   the  Option  to  purchase  all  of  the
above-referenced  shares shall vest immediately.  The Option may be exercised as
to all or any  portion of the stock  subject to the  Option.  The Option must be
exercised by giving written  notice of exercise to Alanco  specifying the number
of  shares  of  stock as to which  the  Option  is  exercised  accompanied  by a
certified or bank check for the full amount of the purchase  price.  Alanco will
issue  and  deliver  to the  Employee  the  certificates  or  other  instruments
representing  stock  purchased  within  fifteen  (15) days after  receipt of the
notice of  exercise  and the check for the  purchase  price.  The  Option  shall
terminate five (5) years from the date of this Agreement.

          5.3   Anti-Dilution   Provision:   Stock   Dividends;   Stock  Splits;
Reorganization. If after the date of this agreement the Company issues any stock
or  other  securities  upon a stock  dividend,  stock  split,  recapitalization,
reclassification  or other change in its  outstanding  capital stock,  or if any
stock  or  other  securities  are  issued  upon  a  reorganization,   merger  or
consolidation  involving  the  Company,  or if  any  other  distribution  of the
Company's stock or other  securities is made on, with respect to, or in exchange
for any of its  outstanding  stock or other  securities,  then  Employee will be
entitled to purchase under the Option,  for the aggregate purchase price then in
effect under the Option, the stock and other securities which he would have held
had he  exercised  the Option  with  respect  to all stock and other  securities
subject  thereto  and had he been the owner of record  thereof  as of the record
date for  determining  the persons  entitled to  participate in such issuance or
other distribution.

          5.4 Termination of Employment; Loss of Unvested Shares. If the Company
properly terminates the Employee for cause under this Agreement,  or if Employee
wrongfully  terminates or repudiates his employment  hereunder,  the Option will
terminate with respect to any  non-vested  options on the effective date of such
termination or repudiation  without prejudice to any vested options or any prior
exercise of the Option,  or any stock purchased  pursuant to a prior exercise of
the Option.  For purposes of this section 5.4,  "cause"  shall mean  termination
following (i)  Employee's  conviction  of a crime  constituting  a felony,  (ii)
Employee  engaging  in  willful  and  continued  misconduct,  or (iii)  Employee
engaging in willful and continued  failure to substantially  perform  Employee's
duties with the Company,  provided  that Employee  shall have  received  written
notice of such failure or misconduct  and shall have continued to engage in such
failure or misconduct  after 30 days  following  receipt of such notice from the
Board,  which  notice  specifically  identifies  the  manner  in which the Board
believes  that  Employee has engaged in such failure or  misconduct.  Employee's
death or  Disability  (as defined in Section 8.2 below) shall not  terminate any
vested options.

          5.5  Transfer of Stock  Option.  Employee  may not  transfer,  assign,
pledge,  encumber  or grant  any  rights  in the  Option  or to any  stock to be
purchased  under the Option  without the prior  written  consent of Alanco.  Any
transfer,  assignment,  pledge,  encumbrance  or grant of rights and any attempt
thereat which does not comply with the terms of this  paragraph will be null and
void.  Notwithstanding the foregoing, the Employee may make a transfer of vested
options to a trust under which (i) the Employee is a trustee for the entire life
or term of capacity of the Employee;  (ii) the sole  authority to vote the stock
is held by the Employee  for his entire life or term of capacity;  and (iii) the
Employee is the sole income  beneficiary of the portion of the trust  consisting
of the stock while the Employee is alive. Such right to transfer to a trust will
be subject to the  Company's  right to condition  such transfer upon a review of
the trust  agreement  by counsel for the Company and the  determination  of such
counsel that the trust  satisfies the  foregoing  requirements.  Any  subsequent
amendment  of the trust  agreement  governing  such trust  shall be deemed a new
transfer.  Moreover,  upon the death of the Employee, the trust shall be subject
to all of the  provisions  of this  Agreement.  The Employee  may also  transfer
vested options by will.

          5.6 Covenants and Warranties. The Company warrants and covenants that:

               (a) it has,  and during the term of the Option will  maintain,  a
sufficient quantity of authorized but unissued shares of common stock to satisfy
any exercise of the Option;

               (b) during the term of the Option,  the Company  will furnish the
Employee with such additional information as he may from time to time reasonably
request  concerning  the  Company's  business,   operations  and  financial
condition;

               (c) if and as long as  shares  or  other  securities  of the kind
subject to the Option are publicly  traded,  the Company will  register with the
appropriate governmental authorities the like shares or securities which are the
subject of the Option,  so that such shares and securities  may, when and if the
Option is exercised,  be freely traded subject only to any applicable limitation
by reason of the  Employee's  position or positions with the Company at the time
of any sale by the Employee of any such shares or other securities;

               (d) if and as long as  shares  or  other  securities  of the kind
subject to the Option are  approved  for  listing on any  national  or  regional
securities exchange,  the Company will cause the like shares or securities which
are the  subject  of the  Option,  when and if the  Option is  exercised,  to be
approved for listing on such exchange so that they may be freely traded thereon.

     6. Expenses. The Company will reimburse the Employee for all proper, normal
and reasonable  expenses  incurred by the Employee in performing his obligations
under this  Agreement  upon the  Employee's  furnishing  the  Company  with
satisfactory  evidence of such  expenditures.  The  Employee  will not incur any
unusual or major  expenditures  without the prior written  approval of the Chief
Executive Officer of Alanco.

     7. Benefits.

          7.1 The Company will provide the Employee,  at the Company's  expense,
with medical,  hospital,  dental,  disability  insurance,  401k plan,  and other
standard  benefits  offered to the officers of the  Company,  which are not less
favorable than that which it provides to any other employee of the Company.

          7.2 The  Employee  will be entitled to vacation  during each  calendar
year  (January 1 to  December  31) in  accordance  with the  Company's  standard
policies in addition to any holidays which the Company  observes.  Vacation time
must be used during each calendar year; if it is not used, it will be forfeited.
No payment will be made for unused vacation time.

          7.3 The  Employee's  salary and other rights and  benefits  under this
Agreement will not be suspended or terminated because the Employee is reasonably
absent from work due to illness, accident or other disability in accordance with
the Company's standard policies;  but the Company may deduct from the Employee's
salary any payment received by the Employee under any disability insurance which
the Company  provides the Employee  pursuant to Section 7.1. The  provisions  of
this  Section  7.3 will not limit or affect  the  rights  of the  Company  under
Section 8.

     8. Death And Disability.

          8.1 If the  Employee  dies  prior  to  expiration  of the  term of his
employment,  all obligations of the Company to the Employee will cease as of the
date of the Employee's  death,  except vested  options shall not terminate,  but
shall pass to Employee's  estate.  However,  the Company shall pay, pro rata, to
the estate of the Employee or to whom the Employee may direct, any amounts owing
under  Sections  4.1 and 4.2 for past  services,  or Section 6 for  reimbursable
expenses.

          8.2 If the  Employee  is unable to  perform  substantially  all of his
duties under this  Agreement  because of illness,  accident or other  disability
(collectively  referred to as  "Disability"),  and the Disability  continues for
more than  three  consecutive  months or an  aggregate  of more than six  months
during any 12-month period,  then the Company may suspend its obligations to the
Employee  under  Sections 4.1 and 4.2 on or after the  expiration  of said 3- or
6-month  period until the Company  terminates  such  suspension  as  hereinafter
provided.  The Company will terminate any such  suspension  after the Disability
has, in fact,  ended and after it has received  written notice from the Employee
that the Disability has ended and that he is ready,  willing and able to perform
fully his services under this Agreement.  Termination of such suspension will be
no later than one week after the  Company  has  received  such  notice  from the
Employee.

     If the  Employee  or the Company  asserts at any time that the  Employee is
suffering a  Disability,  the Company may cause the Employee to be examined by a
doctor or doctors  selected by the Company,  and the Employee will submit to all
required  examinations and will cooperate fully with such doctor or doctors and,
if requested  to do so, will make  available  to them his medical  records.  The
Employee's own doctor may be present.

    9.   Results of the Employee's Services.

          9.1 The  Company  will be entitled to and will own all the results and
proceeds of the Employee's  services under this  Agreement,  including,  without
limitation, all rights throughout the world to any copyright,  patent, trademark
or other right and to all ideas,  inventions,  products,  programs,  procedures,
formats  and  other  materials   (collectively   referred  to  as  "Intellectual
Property") of any kind created or developed or worked on by the Employee  during
his employment by the Company the same shall be the sole and exclusive  property
of the Company;  and the Employee will not have any right,  title or interest of
any nature or kind therein.  The Employee will take such action and execute such
documents as the Company may request to warrant and confirm the Company's  title
to and  ownership of all such results and proceeds and to transfer and assign to
the Company any rights which the Employee may have therein. The Employee's right
to any  compensation or other amounts under this Agreement will not constitute a
lien on any results or proceeds of the Employee's services under this Agreement.

          9.2  The  Employee  acknowledges  that  the  violation  of  any of the
provisions  of Section 9.1 will cause  irreparable  loss and harm to the Company
which cannot be reasonably or adequately  compensated by damages in an action at
law, and, accordingly,  that the Company will be entitled,  without posting bond
or other  security,  to  injunctive  and other  equitable  relief to enforce the
provisions of that Section; but no action for any such relief shall be deemed to
waive the right of the Company to an action for damages.

     10.  Insurance.  If the Company desires at any time or from time to time to
apply for,  in its own name or  otherwise,  but at its  expense,  life,  health,
accident or other insurance covering the Employee, the Company may do so and may
take out such insurance for any sum that it deems  desirable.  The Employee will
have  no  right,  title  or  interest  in or to  such  insurance.  The  Employee
nevertheless  will assist the Company in procuring the same by  submitting  from
time to time to the customary medical,  physical and other examinations,  and by
signing such  applications,  statements  and other  instruments as any reputable
insurer may require.

     11. Uniqueness Of Services.  The Employee acknowledges that (i) the Company
acquired  the  business  and assets of the Company in  reliance on the  Employee
entering  into this  Agreement,  and (ii) that his services  hereunder  are of a
special, unique, unusual,  extraordinary and intellectual character, the loss of
which cannot be reasonably or adequately  compensated by damages in an action at
law.  Accordingly,  the Company will be entitled,  without posting bond or other
security, to injunctive and other equitable relief to prevent or cure any breach
or threatened  breach of this  Agreement by the Employee,  but no action for any
such relief  shall be deemed to waive the right of the Company or the Company to
an action for damages.

     12. Confidentiality; Non-Competition.

          12.1 Confidentiality.  The Employee will not, during or after the term
of this  Agreement,  disclose  to any third  person or use or take any  personal
advantage  of any  confidential  information  or any trade secret of any kind or
nature  obtained by him during the term hereof or during his  employment  by the
Company.

          12.2  Non-Competition.  To the  full  extent  permitted  by  law,  the
Employee  will not for a period of two years  following the  termination  of his
employment with the Company (the "Restricted Period"):

               (i) attempt to cause any person,  firm or corporation  which is a
customer of or has a  contractual  relationship  with the Company at the time of
the  termination  of his  employment  to terminate  such  relationship  with the
Company,  and this provision shall apply regardless of whether such customer has
a valid contractual arrangement with the Company;

               (ii)  attempt to cause any  employee of the Company to leave such
employment;

               (iii) engage in any activity or perform any services  competitive
with any business conducted by the Company at the time of such termination.

     Notwithstanding  the foregoing,  in the event the Employee is terminated by
the Company  without cause (as defined in Section 13 below),  or if the Employee
terminates  his  employment by reason of the Company's  material  breach of this
Agreement,  the Restricted  Period shall be the longer of (i) one year following
such  termination of employment,  or the term ending two years after the closing
of the Purchase Agreement.

          12.3  The  Employee  acknowledges  that  the  violation  of any of the
provisions  of this  Section  12 will  cause  irreparable  loss  and harm to the
Company which cannot be reasonably  or adequately  compensated  by damages in an
action at law,  and,  accordingly,  that the Company will be  entitled,  without
posting bond or other  security,  to injunctive  and other  equitable  relief to
prevent or cure any breach or threatened  breach thereof,  but no action for any
such  relief  shall be deemed to waive the right of the Company to an action for
damages.

     13. Severance Upon Termination  Without Cause. In the event the Employee is
terminated  by the Company  without  cause,  or if the Employee  terminates  his
employment by reason of the Company's  material  breach of this  Agreement,  the
Company shall pay  severance  pay to Employee  equal to the lesser of (i) twelve
(12) months base salary or (ii) the amount of the  remaining  base salary  which
would  have  been  paid to  Employee  hereunder  if  Employee  had  not  been so
terminated.  For purposes of this  section 13,  "cause"  shall mean  termination
following (i)  Employee's  conviction  of a crime  constituting  a felony,  (ii)
Employee  engaging  in  willful  and  continued  misconduct,  or (iii)  Employee
engaging in willful and continued  failure to substantially  perform  Employee's
duties with the Company,  provided  that Employee  shall have  received  written
notice of such failure or misconduct  and shall have continued to engage in such
failure or misconduct  after 30 days  following  receipt of such notice from the
Board,  which  notice  specifically  identifies  the  manner  in which the Board
believes that Employee has engaged in such failure or misconduct.

     14. Governing Law; Remedies

          14.1 This  Agreement  has been  executed  in the State of Arizona  and
shall be governed  by and  construed  in all  respects  in  accordance  with the
internal laws of the State of Arizona.

          14.2 Except as otherwise  expressly  provided in this  Agreement,  any
dispute  or  claim  arising  under or with  respect  to this  Agreement  will be
resolved by arbitration  in Phoenix,  Arizona,  in accordance  with the National
Rules for the  Resolution  of  Employment  Disputes of the American  Arbitration
Association  before a  single  arbitrator  appointed  by said  Association.  The
decision or award of the arbitrator shall be final and binding upon the parties.
Any  arbitration  award may be entered  as a  judgment  or order in any court of
competent jurisdiction.

          14.3 Notwithstanding the provisions for arbitration  contained in this
Agreement, the Company will be entitled to injunctive and other equitable relief
from the courts as provided  in Sections  9.2, 11 and 12.3 and as the courts may
otherwise determine  appropriate;  and the Employee agrees that it will not be a
defense to any request  for such relief that the Company has an adequate  remedy
at law. For purposes of any such proceeding, the Company and the Employee submit
to the  non-exclusive  jurisdiction of the courts of the State of Arizona and of
the United States located in the County of Maricopa  State of Arizona,  and each
agrees not to raise and waives any objection to or defense based on the venue of
any such court or forum non conveniens.

          14.4 A court of competent jurisdiction, if it determines any provision
of this  Agreement to be  unreasonable  in scope,  time or geography,  is hereby
authorized  by the Employee and the Company to enforce the same in such narrower
scope,  shorter  time  or  lesser  geography  as  such  court  determines  to be
reasonable and proper under all the circumstances.

          14.5 The Company  will also have such other  legal  remedies as may be
appropriate under the circumstance  including,  inter alia,  recovery of damages
occasioned by a breach. The Company's rights and remedies are cumulative and the
exercise or enforcement of any one or more of them will not preclude the Company
from exercising or enforcing any other right or remedy.

     15.  Severability of Provisions.  If any provision of this Agreement or the
application of any such provision to any person or circumstance is held invalid,
the remainder of this  Agreement,  and the  application of such provision  other
than to the  extent it is held  invalid,  will not be  invalidated  or  affected
thereby.

     16. Waiver.  No failure by any party to insist upon the strict  performance
of any term or  condition  of this  Agreement or to exercise any right or remedy
available to it will constitute a waiver.  No breach or default of any provision
of this  Agreement will be waived,  altered or modified,  and no party may waive
any of its  rights,  except by a written  instrument  executed  by the  affected
party.  No waiver  of any  breach or  default  will  affect or alter any term or
condition of this  Agreement,  and such term or condition  will continue in full
force and effect with respect to any other then existing or subsequent breach or
default thereof.

     17. Miscellaneous.

          17.1 This  Agreement  may be amended only by an  instrument in writing
signed by the Company and the Employee,  and as approved by the Chief  Executive
Officer of Alanco.

          17.2  This  Agreement  shall be  binding  upon the  parties  and their
respective  successors  and  assigns.  The Company may,  without the  Employee's
consent,  transfer  or assign  any of its  rights  and  obligations  under  this
Agreement  to any  corporation  which,  directly or  indirectly,  controls or is
controlled by the Company or is under common  control with the Company or to any
corporation succeeding to all or a substantial portion of the Company's business
and  assets,  provided  that the Company  shall not be released  from any of its
obligations under this Agreement,  and provided further that any such transferee
or  assignee  agrees in  writing to assume all the  obligations  of the  Company
hereunder.  Control  means the power to elect a majority of the  directors  of a
corporation  or in any other manner to control or determine the  management of a
corporation. Except as provided above, neither the Company nor the Employee may,
without the other's  prior written  consent,  transfer or assign any of their or
his  rights or  obligations  under  this  Agreement,  and any such  transfer  or
assignment or attempt thereat without such consent shall be null and void.

          17.3 All notices under or in connection  with this Agreement  shall be
in writing and may be delivered  personally or sent by mail,  courier,  or other
written means of communication to the parties at their addresses set forth below
or to such other addresses as duly specified by the parties:

                  (a)      if to Alanco:

                           Alanco Environmental Resources Corporation
                           Attn: Chief Executive Officer
                           15900 North 78th Street, Suite 101
                           Scottsdale, Arizona 85260

                  (b)      if to the Company
                           AI Acquisition Company
                           Attn: Chairman
                           15900 North 78th Street, Suite 101
                           Scottsdale, Arizona 85260

                  (c)      if to the Employee:
                           Name
                           Address
                           City, ST  Zip

                  Notice will be deemed given on receipt.

          17.4 Section  headings are for purposes of convenient  reference  only
and will not  affect the  meaning or  interpretation  of any  provision  of this
Agreement.

          17.5 This Agreement  constitutes  the entire  agreement of the parties
and supersedes any and all prior agreements or understandings between them.

     IN WITNESS  WHEREOF,  the parties hereto have executed this Agreement as of
the day and year first above written.


COMPANY:

AI ACQUISITION COMPANY


By: /s/ Robert R. Kauffman
    ----------------------------
    Robert R. Kauffman, Chairman


EMPLOYEE


--------------------------------
Name

For the  purpose  of  confirming  the Option to  purchase  Alanco  common  stock
contained herein:

ALANCO ENVIRONMENTAL RESOURCES CORPORATION
an Arizona corporation


By: /s/ Robert R. Kauffman
    -----------------------
    Robert R. Kauffman, CEO



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