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                                                                    Exhibit 10.3



                      SECOND AMENDMENT TO OPTION AGREEMENT


         This Second Amendment (the "Second Amendment") to that Amended and
Restated Option Agreement (the "Option"), dated as of March 17, 1995, between
Gargoyles, Inc., a Washington corporation (the "Company"), Dennis Burns
("Burns"), and Douglas B. Hauff ("Hauff"), a copy of which is attached as
Exhibit A hereto, is entered into as of June 28, 1996 by Hauff and those persons
designated as Investors on the signature pages hereof (the "Investors").

                                    RECITALS

         A. Burns granted Hauff an option to purchase 100,000 shares of the
common stock of the Company at an exercise price of $5.00 per share (the
"Original Option") pursuant to an employment agreement between Burns, Hauff and
the Company, dated January 5, 1995 (the "Employment Agreement"). On March 17,
1995, the Original Option was amended and restated as the Option.

         B. On March 22, 1995, Burns assigned all of his rights under the Option
to the Investors, who, concurrently with their purchase of a portion of the
stock of the Company from Burns, assumed all of the obligations of Burns under
the Option, pursuant to an Assignment and Assumption of Amended and Restated
Option Agreement, a copy of which is attached hereto as Exhibit B.

         C. Hauff, the Company and the Investors wish to amend the Option to
provide for immediate vesting and to extend the term thereof.

                                    AGREEMENT

         Now, therefore, the parties hereto agree as follows:

1.       ACCELERATION OF VESTING SCHEDULE.

         Section 2 of the Option, under the heading "Vesting Schedule.", is
deleted and replaced in its entirety by the following:

         "2. Vesting. The Option shall vest and become exercisable in full on
June 28, 1996."

2.       DELIVERY TO TRILLIUM CORPORATION.

         Section 3 of the Option, under the heading "Exercise." shall be deleted
and replaced in its entirety by the following:
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         "3. Exercise. The Option may exercised in while or in part at any time
and from time to time; provided, however, that no fewer than 1000 shares may be
purchased upon any exercise hereunder. An Option shall be exercised by
delivering to Trillium Corporation (the "Escrow Agent") in its capacity as the
escrow agent for the shares to be issued to Hauff by the Investors hereunder, of
written notice of the number of shares with respect to which the Option is
exercised, together with payment of the exercise price. The exercise price shall
be paid in cash, by wire transfer into an account specified by the Escrow Agent,
or by bank certified or cashier's check. Upon receipt of the exercise price, the
Escrow Agent shall deliver to Hauff stock certificates representing the shares
exercised, duly endorsed in blank or accompanied by stock powers duly executed
by the Investors. During his lifetime, only Hauff can exercise the Option. Upon
his death, his personal representative may exercise the Option."

3.       EXTENSION OF TERM.

         Section 5 of the Option is deleted and replaced in its entirety by the
following:

         "5. Term. To the extent not exercised, the Option expires on June 28,
2006 unless earlier terminated by the operation of another Section hereof. This
provision overrides and replaces any provision regarding the term of the Option
set forth in the Employment Agreement or otherwise."

4.       DELETION OF EXERCISE REQUIREMENT UPON AN ISO.

         Section 6.3 of the Option, under the heading "Upon Sale of Corporation
or IPO." is deleted and replaced in its entirety by the following:

         "6.3 Upon Sale of Corporation. If substantially all the assets or stock
of the Corporation is sold, Hauff may exercise his option no later than the date
of the closing of the sale. If Hauff fails to exercise the vested portion of the
Option on or before such dates, the Option and his rights hereunder shall
terminate."

5.       DEFINITION OF DISABILITY.

         A new Section 6.4 is added to the Option to read as follows:

         "6.4 Definition of Disability. For purposes of this Agreement, the term
"disability" shall mean that Hauff is unable to perform his duties as proscribed
by the Corporation by reason of any medically determinable physical or mental
impairment which can be expected to result in death or which has lasted or can
be expected to last for a period of not less than 90 days. Determination of
whether Hauff is disabled shall be made in good faith by the Board of Directors
of the Corporation on the basis



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of medical evidence provided by Hauff's physician and, if the Corporation and
Hauff disagree, a physician chosen by the Board of Directors."

6.       WITHHOLDING TAXES AND PAYROLL REPORTING.

         Section 7 of the Option, under the heading "Withholding Tax
Requirement.", is amended by adding a new sentence to the end thereof as
follows:

         "Hauff and the Investors will provide all reasonable necessary
assistance requested by the Company regarding the payroll and information tax
reporting requirements associated with the Option."

7.       NO EFFECT ON REMAINDER OF OPTION.

         Except as otherwise provided in this Second Amendment, the Option shall
remain in full force and effect.

8.       GOVERNING LAW.

         This Second Amendment shall be governed by the internal law of the
state of Washington as applied to all matters, including but not limited to
matters of validity, construction, effect and performance.

9.       COUNTERPARTS.

         This Second Amendment may be executed in two or more counterparts, each
of which shall be deemed an original but all of which shall constitute one and
the same instrument.




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         IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Second Amendment as of the date first set forth above.

                                     THE COMPANY

                                     GARGOYLES, INC., a Washington corporation


                                     By: /s/ Douglas B. Hauff
                                         ---------------------------------------
                                     Its:    President

                                     HAUFF:

                                     /s/ Douglas B. Hauff
                                     -------------------------------------------
                                         Douglas B. Hauff

                                     INVESTORS:



                                     /s/ Douglas B. Hauff
                                     -------------------------------------------
                                         Douglas B. Hauff

                                     TRILLIUM CORPORATION, a Washington
                                     corporation


                                     By: /s/ Steven R. Brinn
                                         ---------------------------------------
                                     Its:    President



                                     /s/ Douglas B. Hauff
                                     -------------------------------------------
                                         Douglas B. Hauff



                                     /s/ Tim Buckley
                                     -------------------------------------------
                                         Tim Buckley




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                                     /s/ John Rudolf
                                     -------------------------------------------
                                         John Rudolf



                                     /s/ Bruce Hosford
                                     -------------------------------------------
                                         Bruce Hosford



                                     /s/ Peter von Reichbauer
                                     -------------------------------------------
                                         Peter von Reichbauer



                                     /s/ Stan Walderhaug
                                     -------------------------------------------
                                         Stan Walderhaug



                                     /s/ Gary Gigot
                                     -------------------------------------------
                                         Gary Gigot



                                     /s/ Allen Shoup
                                     -------------------------------------------
                                         Allen Shoup



                                     /s/ Robert E. Manne
                                     -------------------------------------------
                                         Robert E. Manne

                                     THE ARTHUR KERN REVOCABLE TRUST U/A DATED
                                     DECEMBER 7, 1992

                                     By: /s/ Arthur H. Kern
                                         ---------------------------------------
                                     Its:    Arthur H. Kern, Trustee



                                     /s/ Steve Kingma
                                     -------------------------------------------
                                         Steve Kingma




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                                     /s/ David Jobe
                                     -------------------------------------------
                                         David Jobe



                                     /s/ Gary Waterman
                                     -------------------------------------------
                                         Gary Waterman



                                     /s/ Tom Johnson
                                     -------------------------------------------
                                         Tom Johnson




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