Document:

EMPLOYMENT AGREEMENT

         This Agreement is effective May 1, 2000 (the "Effective  Date"), by and
between Starcraft Corporation, an Indiana corporation ("Employer"),  and Richard
J. Mullin ("Employee").

                               W I T N E S S E T H

         WHEREAS,  Employee  is  employed  by  Employer  as its Chief  Financial
Officer for itself and each of its subsidiaries  and affiliates,  except Tecstar
("Job Responsibilities");

         WHEREAS,  Employer  desires to provide fair and reasonable  benefits to
Employee on the terms and subject to the conditions set forth in this Agreement;

         WHEREAS,  Employer  desires  reasonable  protection of its confidential
business  and  customer  information  which it has  developed  over the years at
substantial  expense and assurance  that Employee will not compete with Employer
for a  reasonable  period  of time  after  termination  of his  employment  with
Employer, except as otherwise provided herein.

         NOW,  THEREFORE,   in  consideration  of  these  premises,  the  mutual
covenants and  undertakings  herein  contained  and the continued  employment of
Employee to perform Job  Responsibilities  for Employer,  Employer and Employee,
each intending to be legally bound, covenant and agree as follows:

          1. Upon the  terms and  subject  to the  conditions  set forth in this
Agreement,  Employer  employs  Employee  to  perform  Job  Responsibilities  for
Employer,  and  Employee  accepts  such  employment.  Employee  will devote best
efforts to the service of  Employer,  to perform  such duties as may be assigned
and not to engage in other  employment  and/or  activities that conflict with or
impair his obligations as an employee of Employer.

          2. Employee agrees to serve as Employer's Chief Financial  Officer for
Employer and its subsidiaries in connection with the Job Responsibilities and to
perform such Job  Responsibilities  in that office as may reasonably be assigned
to him by  Employer's  President,  or Board  of  Directors,  from  time to time.
Employee  shall  devote  substantially  all his  business  time and  efforts  to
Employer's business and shall not engage in any other business.

          3. The term of this Agreement shall begin on the "Effective  Date" and
shall  end  on  the  date  which  is one  (1)  year  following  such  date  (the
"Anniversary  Date");  provided,  however,  that such term shall be extended for
additional  one (1) year terms on each  Anniversary  Date,  unless  either party
hereto gives  written  notice to the other party not to so extend  within ninety
(90) days prior to such  Anniversary  Date,  in which case no further  extension
shall occur and the term of this Agreement shall end on the Anniversary  Date as
of which the notice not to extend is given (such term,  including  any extension
thereof  shall herein be referred to as the  "Term").  A notice not to extend by
either party shall be a  termination  of  employment  prior to expiration of the
Term of this Agreement for all purposes of this Agreement,  including  section 7
and  section 8 hereof.  Such  notice  not to extend  shall be in the form of the
"Notice of Termination" defined in section 10 hereof, and shall contain specific
reference to specific  provisions  of section 7 hereof  relied upon for any such
termination on the Anniversary Date or otherwise.

          4. Employee  shall receive an annual salary of One Hundred  Sixty-five
Thousand Dollars ($165,000) ("Base  Compensation")  payable at regular intervals
in  accordance  with  Employer's  normal  payroll  practices now or hereafter in
effect.  Employer may  consider  and declare from time to time  increases in the
salary it pays Employee and thereby increases in his Base Compensation. Employer
may also  declare  decreases  in the salary it pays  Employee  if the  operating
results of Employer are  significantly  less favorable than those for the fiscal
year then ending,  and Employer  makes  similar  decreases in the salary it pays
other senior executive officers of Employer.

          5. So long as  Employee is employed  pursuant  to this  Agreement,  he
shall be included as a participant in all present and future  employee  benefit,
retirement, and compensation plans generally available to employees of Employer,
consistent with his Base Compensation, his Job Responsibilities and his position
as Chief Financial Officer of Employer and its subsidiaries,  including, without
limitation,  Employer's 401(k) plan, stock incentive plan, Executive Bonus Plan,
split  dollar  life  insurance   program,   and  group  life   insurance   plans
(collectively, "Benefit Plans").

          6. So long as  Employee  is  employed  by  Employer  pursuant  to this
Agreement, Employee shall receive reimbursement from Employer for all reasonable
business expenses  approved by Employer,  upon submission to Employer of written
vouchers and statements for reimbursement.

          7. Subject to the  respective  continuing  obligations of the parties,
including but not limited to those set forth in subsections 8(A), 8(B), 8(C) and
8(D) hereof,  Employee's  employment by Employer may be terminated  effective on
any  Anniversary  Date or otherwise  prior to the expiration of the Term of this
Agreement as follows:

         (A)      Employer,  upon  written  notice to  Employee,  may  terminate
                  Employee's employment with Employer at any time for cause. For
                  purposes of this subsection 7(A),  "cause" shall be defined as
                  (i)  misconduct,  (ii)  breach  of  fiduciary  duty  involving
                  personal profit,  (iii) intentional  failure to perform stated
                  duties,  (iv)  conviction of a violation of any law,  rule, or
                  regulation (other than minor traffic  violations),  or (v) any
                  breach of any term, condition or covenant of this Agreement.

                                       -1-

<PAGE>

         (B)      Employer  may  fail to  renew  this  Agreement  effective  any
                  Anniversary Date, or may terminate Employee's  employment with
                  Employer at any time, without cause.

         (C)      Employee,  by written  notice to Employer,  may  terminate his
                  employment  with Employer at any time for cause.  For purposes
                  of this subsection  7(C),  "cause" shall be defined as (i) any
                  action by  Employer  to  remove  Employee  as Chief  Financial
                  Officer of Employer  and its  subsidiaries,  except  where the
                  Employer acts to remove  Employee from such office for "cause"
                  as  defined  in  subsection  7(A)  hereof,  or (ii)  breach by
                  Employer of a term, condition or covenant of this Agreement.

         (D)      Except as otherwise provided in section 3 regarding nonrenewal
                  on any Anniversary Date, and in addition thereto, Employee, at
                  any time and upon thirty (30) days written notice to Employer,
                  may terminate his employment with Employer without cause.

          8. In the event of termination of Employee's  employment with Employer
pursuant to section 7 hereof, which shall include a nonrenewal of this Agreement
on any  Anniversary  Date as  provided in section 3 hereof,  compensation  shall
continue to be paid by Employer to Employee as follows:

         (A)      In the event of  termination  for cause by Employer or without
                  cause  by  Employee  pursuant  to  subsection  7(A)  or  7(D),
                  respectively, compensation provided for herein (including Base
                  Compensation)  shall  continue to be paid,  and Employee shall
                  continue  to  participate  in  the  Benefit  Plans  and  other
                  perquisites  as provided  in sections 5 and 6 hereof,  through
                  the  date  of   termination   specified   in  the   notice  of
                  termination.  Any benefits payable under such Benefit Plans as
                  a result of  Employee's  participation  in such plans  through
                  such date shall be paid when due under those  plans.  The date
                  of termination specified in any notice of termination pursuant
                  to  subsection  7(A) shall be no later than the last  business
                  day of the month in which such notice is provided to Employee.

         (B)      In the event of termination  without cause by Employer or with
                  cause  by  Employee  pursuant  to  subsection  7(B)  or  7(C),
                  respectively, compensation provided for herein (including Base
                  Compensation)  shall  continue to be paid,  and Employee shall
                  continue  to  participate  in  the  Benefit  Plans  and  other
                  perquisites  as provided  in sections 5 and 6 hereof,  through
                  the  date  of   termination   specified   in  the   notice  of
                  termination.  Any benefits payable under such Benefit Plans as
                  a result of  Employee's  participation  in such plans  through
                  such  date  shall  be paid  when due  under  those  plans.  In
                  addition,  Employee  shall be  entitled to continue to receive
                  from Employer his Base  Compensation at the rates in effect at
                  the time of termination and benefits under the health and life
                  insurance  plans for one (1)  additional six (6) month period,
                  provided,  however that  Employer  will not maintain any other
                  Benefit  Plan for the  continued  benefit of Employee  and his
                  dependents during such period.

         9. In order to induce Employer to enter into this  Agreement,  Employee
agrees as follows:

         (A)      Unless otherwise required to do so by law, including the order
                  of a court or government agency, Employee shall not divulge or
                  furnish trade secrets (as defined in IND. CODE Sec.  24-2-3-2)
                  of Employer or any  confidential  information  acquired by him
                  while  employed by Employer  concerning  the policies,  plans,
                  procedures  or  customers  of Employer to any person,  firm or
                  corporation,  other than Employer or upon its written request,
                  or use any  such  trade  secret  or  confidential  information
                  directly or indirectly  for  Employee's own benefit or for the
                  benefit  of  any  person,   firm  or  corporation  other  than
                  Employer,   since  such   trade   secrets   and   confidential
                  information  are  confidential  and shall at all times  remain
                  property of Employer.

         (B)      That during his employment with Employer,  and for a period of
                  one (1) year after  termination  of  Employee's  employment by
                  Employer for reasons other than those set forth in subsections
                  7(B)  or  (C) of  this  Agreement,  Employee  shall  not:  (a)
                  compete, directly or indirectly, with the business of Employer
                  (and  any of its  subsidiaries  or  affiliates)  as  conducted
                  during  the  term of this  Agreement  (defined  as van,  sport
                  utility,  bus, and truck  conversions  and original  equipment
                  manufacturer   approved   supplier),   or  have  any  interest
                  (including  any  interest or  association,  including  but not
                  limited to, that of owner, part owner,  partner,  shareholder,
                  director,  officer,  employee,  agent,  consultant,  lender or
                  advisor) in any person,  firm or entity  which  competes  with
                  Employer in the  geographic  area  described  on the  attached
                  Exhibit A (each such person,  firm or entity is referred to as
                  "Competitor"); (b) solicit or accept business for or on behalf
                  --------- of any Competitor;  (c) solicit, induce or persuade,
                  or attempt to solicit,  induce or persuade, any person to work
                  for or provide services to or provide financial assistance to,
                  any  Competitor;  (d) solicit or accept for or on behalf of or
                  for the  benefit  of any  Competitor,  any  business  from any
                  person, firm or entity which during the term of this Agreement
                  was  a  vendor  or  supplier  to,  or  subcontractor  for,  or
                  commercial  purchaser  from,  Employer;  or (e)  engage in any
                  business,  either as an owner or representative or employee or
                  otherwise, that is competitive with any business engaged in by
                  Employer or any of its  affiliates if my  involvement  in such
                  business   would  require  the   performance   of  duties  and
                  acceptance  of  responsibilities  the  same  or  substantially
                  similar  to those  performed  and  assumed  during  Employee's
                  employment  with Employer.  Employee  recognizes that Employer
                  and its affiliates market products  worldwide and,  therefore,
                  performance of the same or substantially similar duties in any
                  geographic   region  would  be   detrimental   to   Employer's
                  legitimate interests; Employer has a legitimate interest which
                  these provisions are reasonably necessary to

                                       -2-

<PAGE>

                  protect; the restrictions on competition  contained herein are
                  reasonable in time and geographic  scope; and Employee is, and
                  shall not be, unreasonably restricted in gainful employment by
                  these provisions.

         (C)      If Employee's  employment  by Employer is  terminated  for any
                  reason by either Employee or Employer, Employee will turn over
                  immediately    thereafter    to    Employer    all    business
                  correspondence,  letters,  papers, reports,  customers' lists,
                  financial  statements,  records,  drawings,  credit reports or
                  other confidential information or documents of Employer or its
                  affiliates in the  possession  or control of Employee,  all of
                  which  writings  are and  will  continue  to be the  sole  and
                  exclusive property of Employer or its affiliates.

         (D)      If Employee's  employment by Employer is terminated during the
                  Term of this  Agreement  for reasons set forth in  subsections
                  7(B)  or  (C)  of  this  Agreement,  Employee  shall  have  no
                  obligations to Employer with respect to  noncompetition  under
                  subsections 9(A) and 9(B).

         10.  Any   termination  of  Employee's   employment  with  Employer  as
contemplated by section 3 and section 7 hereof,  except in the  circumstances of
Employee's  death,  shall be  communicated by written "Notice of Termination" by
the  terminating  party to the other party hereto.  Any "Notice of  Termination"
must refer to one or more of  subsections  7(A),  7(B),  7(C), or 7(D) and shall
indicate  the  specific  provisions  of this  Agreement  and one or more of such
subsections of section 7 relied upon,  and shall set forth in reasonable  detail
the facts and  circumstances  claimed  to  provide a basis for such  termination
under one or more of such subsections of section 7.

         11. Anything in this Agreement to the contrary notwithstanding, payment
of Base  Compensation  by the  Employer or to or for the benefit of the Employee
pursuant to subsection  8(B) hereof shall be inclusive of payments  attributable
to the  confidentiality  and  noncompetition  covenants  of section 9 hereof and
shall be payable  whether or not  deductible by the Employer for federal  income
tax purposes.

         12. If a dispute arises  regarding other  provisions of this Agreement,
including  enforcement  of the  confidentiality  and  noncompetition  provisions
hereof,  then such  shall be heard  only by the judge and not by a jury,  in any
court of general  jurisdiction  in Elkhart  County,  Indiana,  to which sole and
exclusive  jurisdiction  each party irrevocably  consents.  The prevailing party
shall be entitled to its costs,  expenses and  reasonable  attorney's  fees.  No
attempt will be made to  consolidate,  by  counterclaim  or otherwise,  any such
action or  proceeding  with any other action or  proceeding  in which there is a
trial by jury or in which a jury trial cannot be or has not been waived.

         13.  For   purposes   of  this   Agreement,   notices   and  all  other
communications  provided  for herein  shall be in writing and shall be deemed to
have been given when personally delivered, or mailed by United States registered
or certified  mail,  return receipt  requested,  postage  prepaid,  addressed as
follows:

         If to Employee:   Richard J. Mullin
                           3326 Deer Lake Drive
                           South Bend, IN 46614

         If to Employer:   Starcraft Corporation
                           2703 College Avenue
                           Post Office Box 1903
                           Goshen, IN  46526
                           Attention: Michael H. Schoeffler, President

Or to such address as either party herein may have  furnished to the other party
in writing in  accordance  herewith,  except  that  notices of change of address
shall be effective only upon receipt.

         14. The validity,  interpretation,  and  performance  of this Agreement
shall  be  governed  by the laws of the  State  of  Indiana.  No  agreements  or
representation,  oral or  otherwise,  express or  implied,  with  respect to the
subject  matter hereof have been made by either party which are not set forth in
this  Agreement.  The invalidity or  unenforceability  of any provisions of this
Agreement  shall  not  affect  the  validity  or  enforceability  of  any  other
provisions of this Agreement  which shall remain in full force and effect.  This
Agreement is binding upon and inures to the benefit of personal representatives,
heirs, successors and assigns.

         IN  WITNESS  WHEREOF,  the  parties  have  caused the  Agreement  to be
executed and delivered this 1st day of September, 2000.

"Employee"                                  "Employer"
                                            STARCRAFT CORPORATION

/s/ Richard J. Mullin                       By: /s/ Michael H. Schoeffler
-------------------------------                ---------------------------------
Richard J. Mullin                                  Michael H. Schoeffler,
                                            Its:   President

                                       -3-

<PAGE>

                                    EXHIBIT A

         In Japan,  Europe,  and any of the 48  contiguous  States of the United
States of America;  it being  acknowledged by Employee that the Company conducts
business in all such States,  and also it is  acknowledged  by Employee that the
Company presently  conducts a substantial  amount of its business in each of the
following States:

                                    Wisconsin
                                    Michigan
                                    Illinois
                                    Indiana
                                    Ohio
                                    Pennsylvania
                                    New York
                                    Oklahoma
                                    Texas
                                    California

                                       -4-No. of Shares:  250,000                                  Stock Option No. 00-1

                            STOCK OPTIONS TO PURCHASE

                             SHARES OF COMMON STOCK

                                       OF

                              STARCRAFT CORPORATION

                            Dated: December 12, 2000

<PAGE>

                                TABLE OF CONTENTS

                                                                           Page

SECTION 1.  DEFINITIONS.......................................................1

SECTION 2.  EXERCISE OF STOCK OPTIONS.........................................2
  2.1.  Exercise Generally....................................................2
  2.2.  Shareholder Approval; Alternative Cash Award Upon Exercise............3
  2.3.  Expenses of Exercise..................................................3

SECTION 3.  ANTI-DILUTION.....................................................3

SECTION 4.  RESERVATIONS......................................................3

SECTION 5.  CHANGE OF CONTROL; REORGANIZATIONS................................3

SECTION 6.  DISSOLUTION OR LIQUIDATION........................................4

SECTION 7.  NOTICE OF DIVIDENDS...............................................5

SECTION 8.  FRACTIONAL SHARES.................................................5

SECTION 9.  FULLY PAID STOCK; VOTING RIGHTS UPON EXERCISE; TAXES..............5

SECTION 10.  CLOSING OF TRANSFER BOOKS........................................5

SECTION 11.  REGISTRATION RIGHTS..............................................5
  Section 11.1   Piggyback Registration.......................................5
  Section 11.2.  Registration Procedures......................................6
  Section 11.3.  Information to be Furnished by Holders.......................8
  Section 11.4.  Expenses of Registration.....................................8
  Section 11.5.  Indemnification and Contribution.............................8
  Section 11.6.  Underwriting Agreement.......................................10
  Section 11.7.  Future Registration Rights...................................10

SECTION 12.  LOST, STOLEN STOCK OPTIONS, ETC..................................10

SECTION 13.  SEVERABILITY.....................................................11

SECTION 14.  MISCELLANEOUS....................................................11
         14.1.  Notices.......................................................11
         14.2.  Successors and Assigns........................................11
         14.3.  Amendments 11
         14.4.  Headings   11
         14.5.  Governing Law.................................................11
         14.6.  Exclusive Jurisdiction.  .....................................11

EXHIBIT A....................................................................A-1

<PAGE>

   No. of Shares:  250,000*                               Stock Option No. 00-1
(*subject toss.2.2 of this Stock Option)

                            Dated: December 12, 2000

                            STOCK OPTIONS TO PURCHASE

                             SHARES OF COMMON STOCK

                                       OF

                              STARCRAFT CORPORATION

     THIS IS TO CERTIFY that,  for value  received and subject to the provisions
hereinafter set forth,

                                  Kelly L. Rose

                                   or assigns

is entitled upon the due exercise  hereof at any time during the Exercise Period
(as  hereinafter  defined) to purchase from  Starcraft  Corporation,  an Indiana
corporation  (the  "Company"),   up  to  250,000  shares  of  Common  Stock  (as
hereinafter defined and subject to adjustment as provided herein) of the Company
at the  Exercise  Price (as  hereinafter  defined and subject to  adjustment  as
provided herein) for each share of Common Stock so purchased and to exercise the
other rights, powers and privileges  hereinafter provided,  all on the terms and
conditions and pursuant to the provisions hereinafter set forth.

Attest:                         STARCRAFT CORPORATION

/s/Richard J. Mullin            By: /s/ Michael H. Schoeffler
----------------------             ------------------------------------
Secretary                          President

                    Additional provisions follow on the next
                      15 pages and are incorporated in this
                   Stock Option as if set forth on this page.

<PAGE>

SECTION 1.  DEFINITIONS.

         In addition to the terms defined  elsewhere in this Stock  Option,  the
following terms have the following respective meanings:

         "Business Day" shall mean any day except  Saturday,  Sunday and any day
which shall be a Federal legal holiday or a day on which banking institutions in
the State of Indiana  are  authorized  or  required  by law or other  government
actions to close.

         A "Change of Control"  shall be deemed to have  occurred if during,  or
following the consummation of, a stock purchase program,  tender offer, exchange
offer,  merger,  consolidation,  sale  of  assets,  contested  election,  or any
combination  of the  foregoing  transactions,  any  person,  entity  or group of
persons acting in concert,  directly or indirectly (1) acquires ownership of the
power to vote in excess  of 50% of the  voting  securities  of  Company,  or (2)
otherwise  acquires,  directly or  indirectly,  the power to direct or cause the
direction of the management and policies of the Company.

         "Common  Stock"  shall mean the  Company's  Common  Stock,  without par
value.

         "Commission" shall mean the Securities and Exchange Commission,  or any
other federal agency at the time administering the Securities Act.

         "Company" shall mean Starcraft Corporation, an Indiana corporation, and
any  successor  to all or  substantially  all of the assets and business of such
corporation.

         "Exercise  Period" shall mean the period  commencing on the date hereof
and terminating on the Expiration Date.

         "Exercise  Price" shall mean $3.00 per share,  which is the fair market
value per share of the  Underlying  Shares on the date of issuance of this Stock
Option, adjustable as set forth in ss. 3.

         "Expiration Date" shall mean December 13, 2005.

         "Holder" shall mean the registered holder of this Stock Option, and, if
the context so indicates, the holder of Stock Option Shares.

         "NASD" shall mean the National Association of Securities Dealers, Inc.

         "Person" shall mean an  individual,  partnership,  corporation,  trust,
unincorporated  organization or any other entity,  and a government or agency or
political subdivision thereof.

         "Registration  Expenses"  shall  mean  all  expenses  incident  to  the
Company's  performance  of  or  compliance  with  ss.  11,  including,   without
limitation,  all  registration,  filing and NASD fees,  all fees and expenses of
complying  with  state  securities  or  blue  sky  laws,  all  word  processing,
duplicating and printing expenses, messenger and delivery expenses, the fees and
disbursements  of  counsel  for  the  Company  and  of  its  independent  public
accountants,  including  the  expenses of any special  audits or "cold  comfort"
letters required by or incident to such performance and compliance, the fees and
disbursements of counsel and accountants  retained by the Holder with respect to
Underlying Shares or Stock Option Shares being registered, all fees and expenses
incurred in complying with the Company's indemnification  obligations,  premiums
and other costs of policies of insurance against  liabilities arising out of the
public  offering  of  such  securities  and  any  fees  and   disbursements   of
underwriters customarily paid by issuers or sellers of securities.

         "Securities Act" shall mean the Securities Act of 1933, as amended,  or
any similar  federal  statute,  and the rules and  regulations of the Commission
thereunder, all as the same shall be in effect at the time.

         "Underlying  Shares"  shall  mean the  shares  of  Common  Stock of the
Company issuable upon exercise of this Stock Option.

         "Stock  Option" or "this Stock  Option" as used herein  shall mean this
Stock Option and any stock option  hereafter  issued in exchange or substitution
for this Stock Option.

         "Stock  Option  Shares"  shall mean the  shares of Common  Stock of the
Company issued upon the exercise of this Stock Option.

SECTION 2.  EXERCISE OF STOCK OPTION.

         2.1. Exercise  Generally.  The rights  represented by this Stock Option
are issued as an inducement to the initial Holder to provide a limited  guaranty
of the payment to Foothill Capital Corporation ("Foothill") of up to $750,000 of
the principal amount of certain indebtedness owed by Starcraft Automotive Group,
Inc. and National Mobility  Corporation,  both of which are Indiana corporations
and wholly-owned subsidiaries of the Company (collectively, the "Borrowers"), in
connection  with certain  refinancing  transactions  (the  "Refinancing")  to be
entered into between the Company and Foothill Capital Corporation ("Foothill").

         Subject to the conditions  hereinafter set forth, this Stock Option may
be exercised in whole or in part (but not as to any  fractional  share of Common
Stock), during the Exercise Period, but in no event subsequent to the end of the
Exercise Period, by the surrender of this Stock Option (with the exercise notice
at the end  hereof  duly  completed  and  executed)  at the  office  of any duly
appointed  transfer agent for the Common Stock or at the principal office of the
Company in Goshen,  Indiana, and upon payment to the Company, or for the account
of the Company, of the Exercise Price. Payment of the Exercise Price may be made
by cash in immediately available funds or by certified check or bank draft. This
Stock Option and all rights and options hereunder shall expire at the Expiration
Date,  and shall be wholly null and void to the extent this Stock  Option is not
exercised  before that time.  The Company  agrees that the Stock  Option  Shares
shall be and shall be deemed to be  issued to the  Holder  hereof as the  record
owner of such Stock  Option  Shares as of the close of  business  on the date on
which this Stock  Option shall have been  surrendered  and payment made for such
shares as aforesaid. Certificates for the Stock Option Shares shall be delivered
to the Holder hereof within a reasonable  time,  not exceeding 30 Business Days,
after the Stock  Option  shall have been so  exercised,  and,  unless this Stock
Option has expired,  a new Stock Option  representing  the number of  Underlying
Shares, if any, with respect to which this Stock Option shall not then have been
exercised shall also be issued to the Holder hereof within such time.

         2.2.  Expenses of Exercise.  The Company shall pay all expenses,  taxes
and other charges  payable in  connection  with the  preparation,  execution and
delivery of stock certificates under this ss. 2, regardless of the name or names
in which such stock certificates shall be registered.

SECTION 3.  ANTI-DILUTION.

         The  Underlying  Shares shall be subject to change or adjustment as set
forth in Exhibit A to this Stock Option.

SECTION 4.  RESERVATIONS.

         The Company shall at all times reserve and keep  available  such number
of  authorized  shares of its Common  Stock,  solely for the purpose of issuance
upon the exercise of the rights  represented by this Stock Option, as may at any
time be issuable upon the exercise of this Stock Option.

<PAGE>

SECTION 5.  CHANGE OF CONTROL; REORGANIZATIONS.

         If,  in   connection   with  any  Change  of   Control,   any   capital
reorganization  or  reclassification  of the capital  stock of the Company,  any
other  change  of  outstanding   shares  of  Common  Stock,  or  any  merger  or
consolidation of the Company with or into another Person,  or in the case of any
sale or  conveyance  to another  Person of the  property  of the  Company as, or
materially  as, an entirety (a  "Reorganization"),  the Company shall cause such
Reorganization  to be effected in such a way that  holders of Common Stock shall
be  entitled  to  receive  stock,  securities  or assets  with  respect to or in
exchange for Common  Stock,  then,  as a condition of such  Reorganization,  the
Company  shall cause  effective  provision  to be made  whereby the Holder shall
thereafter  have the  right to  receive,  upon the  basis and upon the terms and
conditions  specified  in this Stock  Option,  and in lieu of the  Common  Stock
immediately  theretofore receivable upon the exercise of this Stock Option, such
shares of stock,  securities  or  assets as would  have been (by  virtue of such
Reorganization) issued or payable with respect to or in exchange for a number of
outstanding shares of Common Stock equal to the number of shares of Common Stock
immediately  theretofore  receivable  upon the  exercise  of this Stock  Option,
assuming such exercise had taken place immediately prior to such Reorganization.
In any such case, appropriate provision shall be made with respect to the rights
and interests of the Holder to the end that the  provisions  hereof  (including,
without limitation, provisions for adjustments of the number of shares of Common
Stock  receivable  upon  exercise  of this Stock  Option)  shall  thereafter  be
applicable,  as nearly as may be, in relation to any shares of stock, securities
or assets  thereafter  receivable  upon the exercise of this Stock  Option.  The
Company  shall  not  effect  any  such  Reorganization,   unless,  prior  to  or
simultaneously  with the  consummation  thereof,  the successor entity (if other
than the  Company)  resulting  from such  transaction  shall  assume by  written
instrument,  executed and mailed or delivered to the Holder,  the  obligation to
deliver  to the  Holder  such  shares of  stock,  securities  or  assets  as, in
accordance with the foregoing provisions, the Holder may be entitled to receive.
Notice  of any  proposed  Reorganization  shall be given by the  Company  to the
Holder as promptly as practicable  after such transaction  appears likely but in
no  event  less  than  30  Business  Days  prior  to  the  consummation  of  the
Reorganization.

SECTION 6.  DISSOLUTION OR LIQUIDATION.

         Upon  any  proposed  distribution  of  the  assets  of the  Company  in
dissolution  or  liquidation  (except  under  circumstances  when ss. 5 shall be
applicable),  the Company shall mail notice thereof to the Holder and shall make
no  distribution  to its  shareholders  until the expiration of 30 days from the
date of mailing of such notice and, in any such event,  the Holder of this Stock
Option may exercise the purchase rights with respect to this Stock Option within
30 days from the date of mailing such notice.  All rights herein  granted not so
exercised within such 30-day period shall thereafter become null and void.

SECTION 7.  NOTICE OF DIVIDENDS.

         If the Board of Directors of the Company  shall declare any dividend or
other distribution on its Common Stock, the Company shall mail notice thereof to
the Holder not less than 30 days prior to the record date fixed for  determining
shareholders entitled to participate in such dividend or other distribution, and
the Holder shall not  participate in such dividend or other  distribution  or be
entitled  to any  rights on  account  or as a result  thereof  unless and to the
extent  that this Stock  Option is  exercised  prior to such  record  date or as
otherwise  provided by this Stock Option.  The  provisions of this section shall
not apply to distributions  made in connection with transactions  covered by ss.
5.

SECTION 8.  FRACTIONAL SHARES.

         The  Company  shall  not be  required  to issue  or cause to be  issued
fractional  shares on the exercise of this Stock Option and any such  fractional
share otherwise issuable shall be rounded down to the nearest whole share.

SECTION 9.  FULLY PAID STOCK; VOTING RIGHTS UPON EXERCISE; TAXES.

         (a) The  Company  covenants  and  agrees  that the shares of its Common
Stock  represented  by each  certificate to be delivered on the exercise of this
Stock  Option  shall,  at the  time of such  delivery,  be  validly  issued  and
outstanding,  and be fully paid and  nonassessable.  The Company  covenants  and
agrees that, upon issuance of the Underlying Shares, the Underlying Shares shall
have voting rights equivalent to those of other shares of Common Stock.

<PAGE>

         (b) The Company  covenants  and agrees that it shall pay,  when due and
payable,  any and all federal and state  issuance or transfer  taxes that may be
payable  in respect of this  Stock  Option or any Common  Stock or  certificates
issued  hereunder.  The Company shall not,  however,  be required to pay any tax
which may be payable in respect of any  transfer  involved in the  transfer  and
delivery of stock  certificates  in the name other than that of the Holder,  and
any such tax shall be paid by the Holder at the time of presentation.

SECTION 10.  CLOSING OF TRANSFER BOOKS.

         The right to exercise  this Stock Option shall not be suspended  during
any period that the stock transfer books of the Company for its Common Stock may
be  closed.  The  Company  shall not be  required,  however,  to  deliver  stock
certificates  upon  such  exercise  while  such  books are duly  closed  for any
purpose,  but the Company may postpone the delivery of such  certificates  until
the opening of such books.  In such case,  the  certificates  shall be delivered
promptly after the books are opened.

SECTION 11.  REGISTRATION RIGHTS.

         Section  11.1  Piggyback  Registration.   If at any  time  the  Company
proposes for any reason to register  (including  for this purpose a registration
effected by the Company for securityholders  other than the Holders of the Stock
Options  or Stock  Option  Shares)  securities  under  the  Securities  Act (not
including  securities proposed to be registered pursuant to an employee benefits
plan on Form S-8 or  pursuant  to a  reorganization,  exchange  offer or similar
transaction  on Form S-4), it shall,  each such time,  promptly (but in no event
less than 30 days prior to the proposed  date of the filing of the  registration
statement  relating  thereto)  give  written  notice to the Holders of the Stock
Options and Stock Option Shares  (collectively  the "Eligible  Securities") then
outstanding  of its  intention to do so, and,  upon the written  request,  given
within 20 days after receipt of any such notice,  of a Holder to register any of
his Eligible  Securities,  the Company shall cause all Eligible  Securities with
respect to which Holders shall have so requested  registration  to be registered
under the  Securities  Act promptly upon receipt of the written  request of such
Holders for such registration.

         In the event that any registration  pursuant to this ss. 11.1 shall be,
in whole or in part,  an  underwritten  public  offering  of  securities  of the
Company  registered  under the Securities Act, the Company shall arrange for the
Eligible  Securities  requested to be registered pursuant to this ss. 11.1 to be
included in the underwriting.  The inclusion of the Eligible  Securities will be
on the same terms and conditions as the comparable securities, if any, otherwise
being  sold  through  underwriters  under  such  registration,  or on terms  and
conditions  comparable  to  those  normally  applicable  to  offerings  of  such
securities in reasonably  similar  circumstances in the event that no securities
comparable to the Eligible Securities are being sold through  underwriters under
such registration.

<PAGE>

         If the Company proposes to include in such underwritten public offering
any  securities  owned  by any  shareholder  of the  Company  (such  securities,
"Additional  Securities") and the managing underwriter reasonably determines and
advises in writing that the  inclusion in the offering of all of the  securities
to be sold for the Company's  account,  the Eligible  Securities  covered by the
requests  for  registration  made  under  this  ss.  11.1,  and  the  Additional
Securities would interfere with the successful marketing of the securities to be
sold  for the  Company's  account,  then  (i)  there  shall  first  be  excluded
Additional Securities proposed to be included and then (ii) the requisite number
of  Eligible  Securities  and other  securities  the  holders of which have been
granted  registration  rights by the Company on terms similar to those  provided
herein which are proposed to be included shall be excluded from the underwritten
portion of the  public  offering,  on a basis pro rata among the  holders of the
Eligible  Securities and such other holders  requesting such  registration,  and
such  excluded  eligible  Securities  shall be  withheld  from the market by the
holders  thereof  for  a  period  which  the  managing  underwriter   reasonably
determines  is  necessary  in order to effect  the  underwritten  portion of the
public offering.

         Section 11.2.  Registration Procedures.  If and whenever the Company is
under an  obligation  pursuant  to the  provisions  of ss.  11.1 to use its best
efforts to effect the  registration  of any  Eligible  Securities,  the  Company
shall, as expeditiously as practicable:

         (i)      prepare and file with the Commission a registration  statement
                  with  respect  to such  Eligible  Securities  and use its best
                  efforts  to  cause  such  registration   statement  to  become
                  effective and remain  effective and current in compliance with
                  the  Securities  Act for a period  of 90 days for a  piggyback
                  registration;

         (ii)     prepare  and file  with the  Commission  such  amendments  and
                  supplements to such registration  statement and the prospectus
                  used in connection  therewith as may be necessary to keep such
                  registration  statement  effective  and current in  compliance
                  with the Securities Act for the applicable period specified in
                  clause (i) of this ss. 11.2;

         (iii)    furnish to each selling  stockholder such numbers of copies of
                  each  prospectus  (including each  preliminary  prospectus) in
                  conformity  with the  requirements  of the Securities Act, and
                  such  other   documents   such  selling   shareholders   shall
                  reasonably request, to facilitate the public offering of their
                  Eligible Securities;

         (iv)     register or qualify the  Eligible  Securities  covered by such
                  registration  statement  under the securities or blue sky laws
                  of such  jurisdictions  as each such seller  shall  reasonably
                  request  (provided  that the Company  shall not be required to
                  qualify to do business or file a general consent to service of
                  process in any jurisdiction  where it is not then qualified to
                  do  business);  and do any and all other acts or things  which
                  may be reasonably necessary or advisable to enable such seller
                  to  consummate  the public sale or other  disposition  in such
                  jurisdictions  of such Eligible  Securities  until the sale or
                  other disposition of all Eligible  Securities  covered by such
                  registration statement;

         (v)      notify  each  selling  shareholder  any time a  prospectus  is
                  required to be delivered  under the  Securities Act within the
                  appropriate period mentioned in clause (i) of thisss.11.2,  of
                  the happening of any event as a result of which the prospectus
                  included in such  registration  statement,  as then in effect,
                  includes or may include an untrue  statement of material  fact
                  or  omits to  state a  material  fact  required  to be  stated
                  therein  or  necessary  to make  the  statements  therein  not
                  misleading, and at the request of any such seller, prepare and
                  furnish  to such  seller a  reasonable  number  of copies of a
                  supplement  to or an  amendment of such  prospectus  as may be
                  necessary so that, as thereafter  delivered to the  purchasers
                  of such Eligible Securities, such prospectus shall not include
                  an  untrue  statement  of a  material  fact  omit  to  state a
                  material  fact  required to be stated  therein or necessary to
                  make the statements therein not misleading; and

         (vi)     furnish,  at the  request of any Holder or Holders  requesting
                  registration  pursuant  to the terms  hereof,  on or about the
                  date  that  any  Eligible  Securities  are  delivered  to  the
                  underwriters  for sale  pursuant to such  registration  or, if
                  such   Eligible   Securities   are  not  being  sold   through
                  underwriters, on the date that the registration statement with
                  respect to such Eligible Securities becomes effective:  (a) an
                  opinion,  dated such date,  of the  counsel  representing  the
                  Company for the  purposes of such  registration,  addressed to
                  the underwriters,  if any, and to the Holder or Holders making
                  such request, in form and substance as is customarily given in
                  an underwritten public offering;  and (b) a letter, dated such
                  date, from the independent certified public accountants of the
                  Company (the "Accountants"), addressed to the underwriters, if
                  any, and to the Holder or Holders making such request, in form
                  and substance as is customarily given by independent certified
                  public  accountants to underwriters in an underwritten  public
                  offering.

         Section  11.3.  Information  to be  Furnished by Holders.  Prior to the
Company being obligated to register a particular  prospective  seller's Eligible
Securities pursuant to this Section 11, such seller shall furnish to the Company
such  information and execute such documents  regarding the Eligible  Securities
held by such  seller  and the  intended  method of  disposition  thereof  as the
Company shall  reasonably  request in connection  with the action to be taken by
the Company.

         Section  11.4.  Expenses of  Registration.   The Company  shall pay all
Registration Expenses in connection with each registration pursuant to ss. 11.1.

         Section 11.5.  Indemnification and Contribution.  (a) The Company shall
indemnify  and hold  harmless  each  Holder,  each of its  officers,  directors,
partners,  agents,  employees and controlling persons (within the meaning of the
Securities  Act)  and  each  person  who   participates  as  an  underwriter  or
controlling person of an underwriter  (within the meaning of the Securities Act)
with  respect to a  registration  statement  pursuant  to ss.  11.1  against any
losses,  claims, damages or liabilities (or actions in respect thereof) to which
any of them may become subject under the Securities Act or otherwise  insofar as
such losses,  claims,  damages or  liabilities  (or actions in respect  thereof)
arise out of or are based upon any untrue  statement or alleged untrue statement
of  a  material  fact  in  a  registration   statement  including  any  Eligible
Securities, any preliminary prospectus or final prospectus contained therein, or
any amendment or supplement  thereto,  or in any  application  or other document
(such   applications   and  documents  are   hereinafter   collectively   called
"Applications") filed in any jurisdiction in order to qualify all or part of the
Eligible  Securities  under  the  securities  laws  thereof  or  filed  with the
Commission  or the  NASD,  or arise  out of or are based  upon the  omission  or
alleged  omission to state therein a material fact required to be stated therein
or necessary to make the statements  therein not misleading,  and will reimburse
any of them for any legal or other expenses  reasonably  incurred by any of them
in connection  with  investigating  or defending any such loss,  claim,  damage,
liability or action;  provided,  however,  that the Company  shall not be liable
hereunder in any such case if any such loss, claim,  damage, or liability arises
out of or is based upon any such untrue  statement or allegedly untrue statement
or such  omission  or  alleged  omission  made in such  registration  statement,
prospectus or amendment or supplement  thereto or in any Application in reliance
upon and in conformity with written information furnished to the Company by such
Holder for inclusion therein;  provided,  however,  that the indemnity agreement
contained in this  paragraph of this ss. 11.5 shall not apply to amounts paid in
settlement of any loss, claim,  damage,  liability,  action or violation if such
settlement is effected  without the consent of the Company  (which consent shall
not be unreasonably withheld).

         (b)  To the  extent  permitted  by  law,  each  Holder  whose  Eligible
Securities are registered on any registration  statement of the Company pursuant
to ss. 11.1 shall indemnify and hold harmless the Company, each of its officers,
directors,  partners,  agents,  employees and  controlling  persons  (within the
meaning of the Securities Act) with respect to a registration statement pursuant
to ss. 11.1 against any losses,  claims,  damages or liabilities  (or actions in
respect  thereof) to which any of them may become  subject under the  Securities
Act or otherwise  insofar as such losses,  claims,  damages or  liabilities  (or
actions in respect  thereof) arise out of or are based upon any untrue statement
or alleged untrue  statement of a material fact, or omission or alleged omission
of a  material  fact  required  to be stated  therein or  necessary  to make the
statements  therein not misleading,  made in such  registration  statement,  any
preliminary  prospectus or final prospectus  contained therein, or any amendment
or supplement thereto or in any Application,  in reliance upon and in conformity
with written  information  furnished to the Company by such Holder for inclusion
therein,  and  will  reimburse  any of them  for any  legal  or  other  expenses
reasonably  incurred by them in connection with investigation or defending,  any
such loss, claim, damage,  liability or action,  provided that the obligation of
each Holder  under this ss. 11.5 shall be limited to an amount  equal to the net
proceeds  to such  Holder  of the  Eligible  Securities  sold  pursuant  to such
registration  statement,   provided,   however,  that  the  indemnity  agreement
contained in this  paragraph of this ss. 11.5 shall not apply to amounts paid in
settlement of any loss, claim,  damage,  liability,  action or violation if such
settlement is effected  without the Holder's consent (which consent shall not be
unreasonably withheld).

         (c) Promptly after receipt by an indemnified  party under this ss. 11.5
of notice of the commencement of any action,  such indemnified  party will, if a
claim in respect thereof is to be made against an indemnifying party, notify the
indemnifying  party in writing of the commencement  thereof and the indemnifying
party shall have the right to participate  in and to assume the defense  thereof
at its expense with counsel mutually satisfactory to the parties. The failure to
notify an indemnifying party promptly of the commencement of any such action, if
prejudicial   to  the  ability  to  defend  such  action,   shall  relieve  such
indemnifying  party of any  liability  to the  indemnified  party under this ss.
11.5, but the omission so to notify the indemnifying party will not relieve such
party of any liability that such party may have to any  indemnified  party other
than under this ss. 11.5.

         (d) If the indemnification provided for in this ss. 11.5 is unavailable
to or insufficient to hold harmless an indemnified  party under  subsections (a)
and (b) above in respect of any losses, claims, damages, liabilities or expenses
(or actions or proceedings in respect  thereof)  referred to therein,  then each
indemnifying  party  shall  contribute  to the  amount  paid or  payable by such
indemnified party as a result of such losses,  claims,  damages,  liabilities or
expenses (or actions or proceedings in respect thereof) in such proportion as is
appropriate  to reflect the relative  benefits and relative fault of the Company
on the one hand and the Holder on the other in connection with the statements or
omissions  which  resulted  in such  losses,  claims,  damages,  liabilities  or
expenses (or actions or  proceedings in respect  thereof),  as well as any other
relevant equitable considerations. The relative benefits received by the Company
on the one hand and the  Holder on the  other  shall be deemed to be in the same
proportion  as the  total  net  proceeds  from the  offering  (before  deducting
expenses) received by the Company bear to the total net proceeds received by the
Holder.  The relative  fault shall be  determined  by reference  to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged  omission to state a material  fact  relates to  information
supplied  by the  Company  on the one hand or the  Holder  on the  other and the
parties'  relative intent,  knowledge,  access to information and opportunity to
correct or prevent such statement or omission.

         The  Company  and the  Holder  agree  that  it  would  not be just  and
equitable if contribution pursuant to this ss. 11(d) were determined by pro rata
allocation  (even if all Holders were treated as one entity for such purpose) or
by any other method of  allocation  which does not take account of the equitable
considerations  referred to above in this ss. 11(d).  The amount paid or payable
by an indemnified party as a result of the losses, claims, damages,  liabilities
or expenses (or actions or proceedings in respect thereto)  referred to above in
this ss. 11(d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such  action or  claim.  No person  guilty of  fraudulent  misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution   from  any  person   who  was  not   guilty  of  such   fraudulent
misrepresentation.

         Section 11.6. Underwriting Agreement.  If Eligible Securities are to be
sold pursuant to a registration  statement in an underwritten  offering pursuant
to ss.  11.1,  the  Company  agrees  to  enter  into an  underwriting  agreement
containing customary representations and warranties with respect to the business
and  operations of an issuer of the  securities  being  registered and customary
covenants  and  agreements  to be performed by such issuer,  including,  without
limiting the generality of the foregoing,  customary  provisions with respect to
indemnification by the Company of the underwriters of such offering.

         Section 11.7. Future  Registration  Rights.  If, subsequent to the date
hereof,  the  Company  grants  piggyback   registration  rights  to  holders  or
prospective  holders  of its  securities  to  include  their  securities  on any
registration  statement proposed to be filed by the Company at the demand of the
Holders made under this  Agreement,  such  piggyback  registration  rights shall
provide for the  exclusion of such  holders'  securities  from the  registration
statement if the managing underwriter of the offering proposed to be made of the
Eligible  Securities  determines that the inclusion of such holders'  securities
would be seriously detrimental to the offering of the Eligible Securities or, if
all or part of the offering of Eligible  Securities  is not to be  underwritten,
the Holders of more than 50% of the  Eligible  Securities  to be included in the
registration statement so determine.

         If,   subsequent  to  the  date  hereof,   the  Company  grants  demand
registration  rights to holders or  prospective  holders  of its  securities  to
demand  that the  Company  register  any  securities  of the  Company  under the
Securities  Act,  such demand  registration  rights  shall be granted  under and
subject to the  piggyback  registration  right of the  Holders to include all or
part of their  Eligible  Securities  in any such  registration  on the terms and
conditions of ss. 11.1.

SECTION 12.  LOST, STOLEN STOCK OPTIONS, ETC.

         If this Stock Option shall be mutilated, lost, stolen or destroyed, the
Company shall issue a new Stock Option of like date,  tenor and denomination and
deliver  the  same in  exchange  and  substitution  for and upon  surrender  and
cancellation of the mutilated Stock Option, or in lieu of the Stock Option lost,
stolen or destroyed, upon receipt of evidence satisfactory to the Company of the
loss,  theft or destruction of such Stock Option,  and upon receipt of indemnity
satisfactory to the Company.

SECTION 13.  SEVERABILITY.

         Should  any  part of this  Stock  Option  for any  reason  be  declared
invalid,  such decision shall not affect the validity of any remaining  portion,
which shall remain in force and effect as if this Stock Option had been executed
with the invalid portion thereof eliminated. It is hereby declared the intention
of the parties  hereto that they would have  executed and accepted the remaining
portion of this Stock Option without  including  therein any such part, parts or
portion which may, for any reason, be hereafter declared invalid.

SECTION 14.  MISCELLANEOUS.

         14.1.  Notices.  Any notice,  demand or delivery to be made pursuant to
the  provisions of this Stock Option shall be in writing and (a) shall be deemed
to have been given or made one day after the date sent (i) if by the Company, by
prepaid  overnight  delivery,  addressed to the Holder at his last known address
appearing on the books of the Company  maintained for such purpose or (ii) if by
the Holder, by prepaid overnight delivery, addressed to the Company at P. O. Box
1903, 2703 College Avenue,  Goshen,  Indiana 46526; and (b) if given by courier,
confirmed telegram, confirmed facsimile transmission or confirmed telex shall be
deemed to have been made or given when received.  The Holder and the Company may
each designate a different address by notice to the other in the manner provided
in this ss. 14.1.

         14.2.  Successors  and  Assigns.   This  Stock  Option  and the  rights
evidenced  hereby  shall  inure  to  the  benefit  of and be  binding  upon  the
successors and permitted  assigns of the Company and the Holder.  The provisions
of this Stock  Option are  intended  to be for the benefit of the Holder of this
Stock Option or the Stock Option Shares and shall be enforceable by the Holder.

         14.3. Amendments.  This Stock Option may not be modified, supplemented,
varied or amended  except by an instrument in writing  signed by the Company and
the Holder.

         14.4. Headings.  The index and the descriptive  headings of sections of
this Stock Option are provided  solely for  convenience  of reference  and shall
not, for any purpose, be deemed a part of this Stock Option.

         14.5. Governing Law.  THIS STOCK OPTION AND ALL MATTERS CONCERNING THIS
STOCK OPTION SHALL BE GOVERNED BY THE LAWS OF THE STATE OF INDIANA FOR CONTRACTS
ENTERED INTO AND TO BE PERFORMED IN SUCH STATE  WITHOUT  REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS.

         14.6. Exclusive Jurisdiction.  Each party, and each express beneficiary
of this Stock  Option as a condition of its right to enforce or defend any right
under or in connection  with this Stock Option,  (1) agrees that any action with
respect  to this  Stock  Option or any  transaction  contemplated  by this Stock
Option shall be brought exclusively in the courts of the State of Indiana,  City
of Goshen or of the United  States of America  sitting in the State of  Indiana,
City of Goshen, (2) accepts for itself and in respect of its property, generally
and  unconditionally,  the jurisdiction of those courts, (3) agrees that service
of process may be made on such party, or such express  beneficiary,  as the case
may be, by prepaid  certified mail with a proof of mailing receipt  validated by
the United States Postal Service  constituting  evidence of valid  service,  and
that  service  made  pursuant to this clause (3) shall have the same legal force
and effect as if served upon such person personally within the State of Indiana,
and (4) irrevocably waives any objection,  including,  without  limitation,  any
objection  to the  laying  of  venue  or  based  on the  grounds  of  forum  non
conveniens,  which it may now or  hereafter  have to the  bringing  of any legal
action in those jurisdictions;  provided,  however, that any party may assert in
an action in any other jurisdiction or venue each mandatory defense, third-party
claim or similar claim that, if not so asserted in such action,  may  thereafter
not be asserted by such party in an original action in the courts referred to in
clause (1) above.

                                   * * * * * *

                                                                       EXHIBIT A

                            ANTI-DILUTION PROVISIONS

         1. Anti-Dilution Provisions.  The Underlying Shares shall be subject to
change or adjustment as
follows:

                  (a) Common Stock Dividends, Subdivisions, Combinations. If the
Company shall (i) pay or make a dividend or other distribution to all holders of
its Common Stock in shares of Common Stock, (ii) subdivide,  split or reclassify
the  outstanding  shares of its Common Stock into a larger number of shares,  or
(iii) combine or reclassify  the  outstanding  shares of its Common Stock into a
smaller number of shares,  then in each such case the Underlying Shares shall be
adjusted  to equal the  number of such  shares to which the Holder of this Stock
Option would have been entitled upon the occurrence of such event had this Stock
Option been  exercised  immediately  prior to the happening of such event or, in
the case of a stock dividend or other distribution, prior to the record date for
determination of such Shareholder  entitled thereto. An adjustment made pursuant
to this paragraph 1 shall become effective  immediately  after such record date,
in the case of a dividend or distribution,  and immediately  after the effective
date, in the case of a subdivision, split, combination or reclassification.

                  (b) Reorganization or Reclassification. In case of any capital
reorganization  or any  reclassification  of the  Common  Stock  of the  Company
(whether pursuant to a merger of consolidation or otherwise),  this Stock Option
shall  thereafter  be  exercisable  for the  number  of shares of stock or other
securities  or  property   receivable  upon  such  capital   reorganization   or
reclassification  of Common Stock, as the case may be, by a holder of the number
of  shares of  Common  Stock  into  which  this  Stock  Option  was  exercisable
immediately prior to such capital  reorganization or  reclassification of Common
Stock; and, in any case, appropriate adjustment shall be made in the application
of the  provisions  herein  set forth with  respect to the rights and  interests
thereafter of the Holder of this Stock Option to the end that the provisions set
forth herein shall thereafter be applicable,  as nearly as reasonably may be, in
relation  to any  shares of stock or other  securities  or  property  thereafter
deliverable upon the exercise of this Stock Option.

                  (c)  Distributions  of Assets or Securities  Other Than Common
Stock.  In case the Company shall,  by dividend or otherwise,  distribute to all
holders of its Common  Stock  shares of any of its  capital  stock  (other  than
Common Stock), rights or Stock Options to purchase any of its securities,  cash,
other  assets  or  evidences  of its  indebtedness,  then in each  such case the
Underlying  Shares  shall be  adjusted  by  multiplying  the  Underlying  Shares
immediately prior to the date of such dividend or distribution by a fraction, of
which the numerator  shall be the fair market value per share of Common Stock at
the record  date for  determining  shareholders  entitled  to such  dividend  or
distribution,  and of which the denominator  shall be such fair market value per
share less the fair market  value (as  determined  in good faith by the Board of
Directors  of the  Company) of the portion of the  securities,  cash,  assets or
evidences  of  indebtedness  so  distributed  applicable  to one share of Common
Stock.  An  adjustment  made  pursuant  to this  subparagraph  (c) shall  become
effective immediately after such distribution date.

                  (d) No  Impairment.  The Company shall not,  without the prior
consent of the Holder,  by amendment of its Articles of Incorporation or through
any reorganization,  transfer of the assets, consolidation, merger, dissolution,
issue or sale of  securities  or any other  voluntary  action,  avoid or seek to
avoid  the  observance  or  performance  of any of the terms to be  observed  or
performed hereunder by the Company,  but shall at all times in good faith assist
in the carrying out of all the  provisions of this paragraph 1 and in the taking
of all such action as may be  necessary or  appropriate  in order to protect the
exercise rights of the Holder against impairment.

                  (e)  Readjustment.  Upon  the  termination  of  any  right  of
conversion or exchange of any securities  convertible  into or exchangeable  for
Common Stock, or upon the expiration of any rights or options to purchase Common
Stock  (other  than this Stock  Option) or any  securities  convertible  into or
exchangeable  for  Common  Stock,  or upon any change in the number of shares of
Common  Stock  issuable  upon  exercise,  conversion  or  exchange  of any  such
securities,  rights or  options,  the  Underlying  Shares  then in effect  shall
forthwith be readjusted to such  Underlying  Shares as would have been in effect
had the adjustments made upon the issuance or sale of such securities, rights or
options been made upon the basis of the issuance of only the number of shares of
Common Stock  actually  issued or to be issued upon the exercise,  conversion or
exchange or such securities, rights or options.

         2.  Notice of  Certain  Corporation  Transactions.  The  Company  shall
promptly  mail  to the  Holder  a  notice  of  any  proposed  dividend,  merger,
dissolution,  liquidation  or winding up of the  Company,  stating the  proposed
record  date (if any) or  effective  date for any such  transaction  and briefly
describing the transaction.

         3. Certificate of Adjustment. Upon the occurrence of each adjustment or
readjustment  pursuant to this Exhibit A, the Company  (acting through its Board
of  Directors  in the exercise of its  reasonable  discretion),  at its expense,
shall as promptly as  practicable  compute such  adjustment or  readjustment  in
accordance with the provisions of this Exhibit A, and prepare and furnish to the
Holder a certificate  setting forth such adjustment or readjustment  and showing
in reasonable  detail the facts upon which such  adjustment or  readjustment  in
based.

         4.  Information to be Furnished  Upon Request.  Upon the request at any
time of the Holder,  the Company  shall as  promptly as  practicable  furnish or
cause to be furnished,  to the Holder, at his address set forth in such request,
a  certificate  setting  forth the number of shares of Common  Stock that at the
time would be received  upon the  exercise of the Stock  Option and the Exercise
Price thereof.

<PAGE>
                                EXERCISE NOTICE

TO STARCRAFT CORPORATION:

         The  undersigned  registered  holder of the within Stock Option  hereby
irrevocably  exercises the Stock Option,  purchases thereunder 250,000 shares of
the Common Stock of the Company,  herewith makes payment of $3.000 therefor, and
requests  that the  certificate(s)  for such shares be issued in the name of the
undersigned Holder or its nominee and delivered to it at Holder's address on the
books of the Company.

                                    Signature: _____________________________

                                    Printed Name: __________________________

                                    Dated:  ______________________________

ASSIGNMENT

         FOR VALUE  RECEIVED,  the undersigned  registered  Holder of the within
Stock Option hereby sells,  assigns and transfers  unto  __________________  the
Stock Option and all rights evidenced  thereby and does  irrevocably  constitute
and appoint _________________ attorney to transfer the Stock Option on the books
of the Company.

                                    Signature: _____________________________

                                    Printed Name: __________________________

                                    Dated: ________________________________

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