Document:

ALANCO TECHNOLOGIES, INC.

                            2000 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, or the
Executive Committee of such Board;

    (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)  "Employee"  shall mean any person,  including  officers and directors,
employed by the Company who in the judgment of the  Committee has the ability to
positively  affect the  profitability  and economic  well-being  of the Company.
Part-time   employees,   independent   contractors,   consultants  and  advisors
performing  bonafide  services  to the  Company  shall also be deemed  employees
solely  for the  purpose  of  participation  under the Plan.  The  payment  of a
director's  fee by  the  Company  shall  not be  sufficient  to  constitute
"employment" by the Company;

     (f) "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;

     (g)  "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.  "Grant" may
also include a direct grant of stock;

     (h) "Incentive  Stock Option" shall mean a compensatory  Option provided to
an employee of the  Company  giving him or her the right to purchase  Stock at a
predetermined  price  under a plan that  meets  certain  Internal  Revenue  Code
requirements and involves registered stock;

     (i)  "Non-Statutory  Option" shall mean all Options which are not Incentive
Stock Options;

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

     (k)  "Optionee"  shall  mean an  Employee  of the  Company  to whom a Grant
hereunder has been made;

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

     (m)  "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;

     (n) "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 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 Employees 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 personnel whose judgment, initiative, leadership and continued efforts
will  contribute  to the  success  of the  Company.  The  Options  to be granted
hereunder are either "Incentive Stock Options" within the meaning of Section 422
of the  Internal  Revenue  Code of 1986,  as amended,  or  "Non-Statutory  Stock
Options."  However,  at no time  will the Plan be  considered  or  operate  as a
"tandem"  option  plan or will any  Employee  be  subjected  to a tandem  option
provision.

     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

    Any  Employee of the Company,  or of any of its wholly  owned  subsidiaries,
shall be eligible to be granted an Option under the Plan.  The  Committee  shall
adopt  criteria  pursuant to which Options  shall be granted.  The Committee may
grant Options to any eligible Employee in accordance with such determinations as
the Committee may, from time to time, in its sole discretion make. A Director of
the Company or of a  subsidiary  who is not also an Employee of the Company will
not be eligible to receive an "Incentive Stock Option" pursuant to the Plan.

                                  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 at which a
quorum is present or any action taken  without a meeting  evidenced by a writing
executed  by all members of the  Committee  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.  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  1,000,000  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.  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  PARTICIPATION, LIMITATIONS.

          (a) Options  qualifying as "Incentive Stock Options" under Section 422
of the Internal  Revenue Code,  as amended,  may be granted from time to time to
Employees of the Company to purchase shares of the Company's Stock.

               (1) The  maximum  number of shares for which an  Incentive  Stock
Option or Options  may be granted  under the Plan to any one  Employee  shall be
100,000.

          (b) Options  defined as  "Non-Statutory  Stock  Options"  which do not
satisfy the requisites of Section 422 of the Internal  Revenue Code, as amended,
may also be granted under this Plan.

     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 the Employees.

          (b) Options may be  exercised  by  Employees  for whole  shares  only.
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 person to whom  Incentive  Stock Options are granted  hereunder
shall receive Options,  first  exercisable  during any single calendar year, for
Stock,  the fair market value of which  (determined  at the time of the grant of
the Options) exceeds $100,000.

          (d) 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 EMPLOYMENT.

          (a)  If  the  Employee's   relationship  with  the  Company  shall  be
terminated, with or without cause, or by the act of the Employee, the Optionee's
right to exercise such  Incentive  Stock Options shall  terminate and all rights
thereunder  shall cease three (3) months  after the date on which such  person's
association is terminated.  Provided however,  that if the Optionee shall die or
become permanently and totally disabled while employed by the Company, as solely
determined by the Committee in accordance with its policies,  then either his or
her  personal  representatives  or a  transferee  under the  Optionee's  will or
pursuant to the laws of descent and  distribution,  or the disabled Optionee may
exercise the Incentive  Stock Options in full one (1) year from the date of such
death or disability.  In the case of an Optionee's retirement in accordance with
the Company's established  retirement policy, such Incentive Stock Options shall
remain  exercisable  by the  Optionee for three (3) months from the date of such
retirement.

          (b) 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.

          (c) 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) Incentive Stock Options are exercisable  once vested.  Twenty-five
percent (25%) of the shares  issuable  under the  Incentive  Stock Options shall
vest six months from date of Grant  provided  that the  Optionee has remained an
Employee  of the  Company  for not less  than six  months  from  date of  Grant,
twenty-five  percent  (25%) of the shares  issuable  under the  Incentive  Stock
Options  shall  vest one year  from date of Grant  provided  that  Optionee  has
remained  an Employee of the Company for not less than one year from the date of
Grant,  and the remaining  fifty percent (50%) of the shares  issuable under the
Incentive  Stock Options  shall vest two years from date of Grant  provided that
Optionee  has  remained  an  Employee of the Company for not less than two years
from the date of Grant. Otherwise the options shall lapse.

          (c)  Non-Statutory  Stock  Options are  exercisable  once vested.  The
vesting  schedule for  Non-Statutory  Stock  Options will be  determined  by the
Committee when granted.

     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  Internal
Revenue Service. As a condition of the receipt of an Option hereunder,  Optionee
shall agree to make necessary  filings with the Internal  Revenue  Service.  The
Committee  shall assist and  cooperate  with Optionee 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, upon recommendation of the Committee, terminate,
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,  except as contemplated
in Section 5.3 hereof;  (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 an Employee  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.

<PAGE>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.

<PAGE>

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00018-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00018-of-00352.parquet"}]]