ALANCO TECHNOLOGIES, INC.

                          2000 DIRECTORS AND OFFICERS
                               STOCK OPTION PLAN


                                   ARTICLE I

                                  DEFINITIONS

     As used herein, terms have the meaning hereinafter set forth unless the
context should clearly indicate the contrary:

     (a)  "Board" shall mean the Board of Directors of the Company;

     (b) "Committee" shall mean the  Administrative  Committee  appointed by the
Board to oversee the administration of this Plan;

     (c)  "Company" shall mean Alanco Technologies, Inc., an Arizona
corporation;

     (d)  "Director" shall mean a member of the Board;

     (e)  "Fair market value" shall mean the average of the closing price for
ten consecutive trading days at which the Stock is listed in the NASDAQ
quotation system ending on the day prior to the date an Option is granted
hereunder;

     (f)  "Grant"  means the  issuance  of an Option  hereunder  to an  Optionee
entitling  such Optionee to acquire Stock on the terms and  conditions set forth
in a Stock Option Agreement to be entered into with the Optionee;

     (g)  "Officer" shall mean an Executive Officer of the Company;

     (h) "Option"  shall mean the right  granted to an Optionee to acquire Stock
of the Company pursuant to the Plan;

     (i)  "Optionee"  shall mean an Officer of the  Company or a Director of the
Company to whom a Grant hereunder has been made;

     (j)  "Plan" shall mean the Alanco Technologies, Inc. 2000 Directors and
Officers Stock Option Plan, the terms of which are herein set forth;

     (k)  "Stock" shall mean the common stock of the Company or, in the event
the outstanding shares of stock are hereafter changed into or exchanged for
shares of different stock or securities of the Company or some other
corporation, such other stock or securities;

     (l) "Stock Option  Agreement" shall mean the agreement  between the Company
and an Optionee under which an Optionee may acquire Stock pursuant to the Plan.

                                  ARTICLE II

                                   THE PLAN

     2.1  NAME.   The plan shall be known as the "Alanco Technologies, Inc.
2000 Directors and Officers Stock Option Plan."

     2.2  PURPOSE.  The  purpose  of the Plan is to  advance  the  business  and
development  of the Company and its  shareholders  by affording to the Directors
and Officers of the Company the opportunity to acquire an equity interest in the
Company  by the grant of  Options  to such  persons  under the terms  herein set
forth.  By doing so, the Company  seeks to motivate,  retain and attract  highly
competent, highly motivated Executive Officers and Directors to lead the Company
through  this  critical  time in its  evolution  and ensure  the  success of the
Company.  The Options to be granted  hereunder  are  Non-Statutory  Options made
available to Directors and Officers of Alanco Technologies, Inc.

     2.3  EFFECTIVE DATE.   The Plan shall become effective upon its adoption
by the Board of the Company.  Thereafter, the Plan shall be submitted to the
shareholders of the Company for approval within 12 months after the date said
Plan is adopted by the Board.

     2.4 TERMINATION DATE. The Plan shall terminate ten (10) years from the date
the Plan is adopted  by the Board of the  Company  and at such time any  Options
granted hereunder shall be void and of no further force or effect.

                                  ARTICLE III

                                 PARTICIPANTS

     Only  Officers and Directors of the Company shall be eligible to be granted
an Option under the Plan.  The  Committee  may grant  Options to any Director or
Officer in accordance with the terms hereunder and such other  determinations as
the Committee may, from time to time, in its sole discretion make.

                                  ARTICLE IV

                                ADMINISTRATION

     4.1 DUTIES AND POWERS OF THE COMMITTEE.  The Plan shall be  administered by
the  Committee.  Subject to the express  provisions  of the Plan,  the Committee
shall have the sole  discretion  and authority to determine  from among eligible
persons  those to whom and the time or times at which Options may be granted and
the  number of shares of Stock to be  subject  to each  Option.  Subject  to the
express provisions of the Plan, the Committee shall also have complete authority
to interpret  the Plan, to  prescribe,  amend and rescind rules and  regulations
related to it and to determine  the details and  provisions of each Stock Option
Agreement  and to make all other  determinations  necessary  or advisable in the
administration of the Plan.

     4.2 RECORDS OF PROCEEDINGS. The Committee shall maintain written minutes of
its actions which shall be maintained among the records of the Company.

     4.3 MAJORITY. A majority of the members of the Committee shall constitute a
quorum and any action taken by a majority present at such meeting, when properly
noticed,  at which a quorum is  present or any  action  taken  without a meeting
evidenced by a writing executed by all members of the Board shall constitute the
action of the Committee.

     4.4  COMPANY   ASSISTANCE.   The  Company  shall  supply  full  and  timely
information  to the  Committee  in all matters  relating to eligible  Optionees,
their status,  death,  retirement,  disability and such other pertinent facts as
the  Committee may require.  The Company  shall furnish the Committee  with such
clerical and other  assistance as is necessary in the performance of its duties.
All expenses of the Committee shall be paid by the Company.

     4.5  COMPOSITION  OF THE  COMMITTEE.  The Committee  shall consist of up to
three (3)  individuals  appointed by the Board from among its members,  at least
two (2) of which are non-employee Directors.  Appointment to the Committee shall
be for a term of one (1) year or until  new  individuals  are  appointed  to the
Committee by the Board. Any individual designated and serving as a member of the
Committee  shall be entitled to  indemnification  in relation to such service by
the Company to the fullest  extent  called for or  permitted by Article X of the
Bylaws of the Company.

     4.6 COMMITTEE AUTHORITY. If the Committee deems it necessary or in the best
interest  of  the  Company  or  its  shareholders,   the  Committee  may  impose
restrictions  of the  subsequent  transferability  of Stock  issued  pursuant to
Options  to be granted  hereunder.  In the event of the  imposition  of any such
conditions, the Stock of the Company to be issued pursuant to the exercise of an
Option  shall have any such  restrictions  prominently  displayed as a legend on
such certificate.

                                   ARTICLE V

                      SHARES OF STOCK SUBJECT TO THE PLAN

     5.1 LIMITATION. Subject to adjustment pursuant to the provisions of Section
5.3 hereof, the number of shares of Stock which may be issued and sold hereunder
shall not exceed 500,000 shares. The Company shall take such action as necessary
to reserve the aforesaid number of shares for issuance pursuant to the Plan.

     5.2 OPTIONS  GRANTED UNDER THE PLAN.  Shares of stock with respect to which
an Option is granted  hereunder,  but which lapses  prior to exercise,  shall be
considered  available  for  grant  hereunder.   Therefore,  if  Options  granted
hereunder  shall  terminate for any reason without being wholly  exercised,  new
Options  may be granted  hereunder  covering  the number of shares to which such
terminated Options related.

     5.3  ANTI-DILUTION.  In the event the Stock subject to Options hereunder is
changed  into or  exchanged  for a  different  number  or kind of stock or other
securities  of the  Company  or of  another  organization  by reason of  merger,
consolidation or reorganization, recapitalization, reclassification, combination
of shares, stock split or stock dividend;

          (a) The  aggregate  number of shares of Stock subject to Options which
may be granted hereunder shall be adjusted appropriately;

          (b) Rights under outstanding Options granted hereunder, both as to the
number of subject shares and the Option price, shall be adjusted appropriately;

          (c) Where  dissolution  or liquidation of the Company or any merger or
consolidation  in which the Company is not a surviving  corporation is involved,
each  outstanding  Option shall  terminate and the Optionee  holding such Option
shall have the right immediately prior to such dissolution,  liquidation, merger
or combination  to exercise his Option,  in whole or in part, to the extent that
it shall not have been  exercised  without  regard to any  installment  exercise
provision.

     The manner of  application of the foregoing  provision  shall be determined
solely by the Committee and any such  adjustment may provide for the elimination
of fractional share interests.

                                  ARTICLE VI

     6.1  OPTIONS.

          (a) The Company will grant to  non-employee  Directors newly appointed
to the Board of Directors an option to purchase 20,000 shares of common stock at
fair market value.

          (b) Upon each  subsequent  anniversary of the election to the Board of
Directors, the non-employee directors will be granted from the Company an option
to purchase 20,000 shares of common stock at fair market value.

          (c) The Board of Directors or the  Administrative  Committee may grant
additional  options to Directors  and  Executive  Officers,  setting  forth such
terms, conditions,  and exercise schedules as may be determined by the Committee
or Board of Directors.

          (d) Each Option granted  hereunder  shall be evidenced by minutes of a
meeting of or the written consent of the Committee and by a written Stock Option
Agreement  dated as of the date of grant and  executed  by the  Company  and the
Optionee,  which  agreement  shall set forth such terms and conditions as may be
determined by the Committee consistent with the Plan.

     6.2 LIMITATIONS.  The Options granted hereunder are  non-statutory  Options
which do not satisfy the requisites of Section 422 of the Internal Revenue Code,
as amended.

     6.3 OPTION PRICE.  The per share Option price for the stock subject to each
Option shall be determined by the  Committee,  but the per share  exercise price
shall not be less than the fair market value of the Stock on the date the Option
is granted.

     6.4 OPTION PERIOD. Each Option granted hereunder must be granted within ten
(10) years from the effective  date of the Plan.  The period for the exercise of
each Option shall be determined by the Committee,  but in no instance shall such
period exceed ten (10) years from the date of grant of the Option. The Committee
may prescribe  such period after the grant of an Option which must expire before
such Option may be exercised as the Committee deems appropriate.

     6.5  OPTION EXERCISE.

          (a) Options  granted  hereunder may not be exercised  until and unless
the Optionee  shall meet the conditions  precedent  established by the Committee
for Officers and Directors.

          (b)  Options may be  exercised  by Officers  and  Directors  for whole
shares only.  Officer and Director  Optionees may exercise their Option in whole
at any time,  or in part from  time to time in each year on a  cumulative  basis
with any portion not  exercised to be carried  over for  exercise in  subsequent
years.  Options  shall be exercised by written  notice of intent to exercise the
Option with respect to a specified  number of shares delivered to the Company at
its  principal  office and  payment in full to the Company at said office of the
amount of the Option  price for the number of shares  with  respect to which the
Option(s) are then being exercised.

          (c) No Option may be exercised by any Optionee  unless a  registration
statement,  such as form S-8,  covering the Stock subject thereto has been filed
with and declared  effective by the  Securities  and Exchange  Commission and an
appropriate  registration or exemption  therefrom,  is in effect or available in
the state of residence of the exercising Optionee.

     6.6  NON-TRANSFERABILITY OF OPTION. No Option or any right relative thereto
shall be  transferred  by an Optionee  otherwise  than by will or by the laws of
descent and distribution.  During the lifetime of an Optionee,  the Option shall
be exercisable only by him or her.

     6.7  EFFECT OF DEATH OR OTHER TERMINATION OF RELATIONSHIP.

          (a) The exercise  schedule for  Non-Statutory  Stock Options following
termination,  death or total and permanent  disablement  of the Optionee will be
determined by the Committee at the time of grant.

          (b) No  transfer  of an Option by the  Optionee by will or the laws of
descent and  distribution  shall be  effective  to bind the  Company  unless the
Company  shall  have  been  furnished  with  a  written  notice  thereof  and an
authenticated  copy of the will and/or such other  evidence as the Committee may
deem  necessary to establish the validity of the transfer and the  acceptance by
the transferee or transferees of the terms and conditions of such Option.

     6.8  RIGHTS AS A SHAREHOLDER/VESTING OF OPTIONS.

          (a) An Optionee or a transferee of an Option shall have no rights as a
shareholder of the Company with respect to any shares subject to any unexercised
Options.

          (b) Options are  exercisable  once vested.  All of the shares issuable
under the Options shall vest one year from date of Grant  provided that Optionee
has  remained a Director or  Executive  Officer of the Company for not less than
one year from the date of Grant. Otherwise, the Options shall lapse.

     6.9 REQUIRED  FILINGS.  An Optionee to whom an Option is granted  under the
terms of the Plan is required to file  appropriate  reports with the  Securities
and Exchange  Commission and the Internal Revenue Service. As a condition of the
receipt of an Option  hereunder,  Optionees  shall  agree to make the  necessary
filings.  The Company shall assist and cooperate with Optionees by providing the
necessary information required for compliance of this condition.

                                  ARTICLE VII

                              STOCK CERTIFICATES

     The Company shall not be required to issue or deliver any  certificate  for
shares of Stock purchased upon the exercise of any Option granted hereunder,  or
any portion  thereof,  prior to the obtaining of any approval or clearance  from
any federal or state governmental  agency which the Committee shall, in its sole
discretion, determine to be necessary or advisable.

                                 ARTICLE VIII

              TERMINATION, AMENDMENT, OR MODIFICATION OF THE PLAN

     The Board may at any time  terminate the plan, and may at any time and from
time to time and in any respect amend or modify the Plan. Provided,  however, if
the Plan has been submitted to and approved by the  shareholders  of the Company
no such action by the Board may be taken without approval of the majority of the
shareholders  of the Company which:  (a) increases the total number of shares of
Stock  subject to the Plan;  (b)  changes the manner of  determining  the Option
price; or (c) withdraws the administration of the Plan from the Committee.

                                  ARTICLE IX

                                  EMPLOYMENT

     9.1 EMPLOYMENT.  Nothing in the Plan or any Option granted  hereunder or in
any Stock Option Agreement shall confer upon a non-employee  Director  receiving
such Option or Stock Option  Agreement the status as an employee of the Company.
Further, nothing in the Plan or any Option granted hereunder shall in any manner
create in any Optionee the right to continue their relationship with the Company
or create any vested interest in such relationship, including employment.

     9.2 OTHER COMPENSATION PLANS. The adoption of the Plan shall not effect any
other stock  option,  incentive,  or other  compensation  plan in effect for the
Company or any of its  subsidiaries,  nor shall the Plan preclude the Company or
any subsidiary  thereof from  establishing any other forms of incentive or other
compensation  for  employees or  non-employee  Directors of the Company,  or any
subsidiary thereof.

     9.3 PLAN EFFECT.  The Plan shall be binding upon the successors and assigns
of the Company.

     9.4 TENSE.  When used  herein,  nouns in the  singular  shall  include  the
plural.

     9.5 HEADINGS OF SECTIONS ARE NOT PART OF THE PLAN. Headings of articles and
sections  hereof are inserted for  convenience  and reference and  constitute no
part of the Plan.





As approved by the Shareholders on November 10, 2000.


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