Document:

Exhibit 4.1

                          NOVELL, INC. 1991 STOCK PLAN
                         (As amended September 24, 1997)

1.       PURPOSE OF THE PLAN. The purpose of the Novell, Inc. 1991 Stock Plan is
         to enable Novell,  Inc. to provide an incentive to eligible  employees,
         consultants and officers whose present and potential  contributions are
         important  to the  continued  success of the  Company,  to afford these
         individuals  the  opportunity to acquire a proprietary  interest in the
         Company,  and to  enable  the  Company  to  enlist  and  retain  in its
         employment the best available talent for the successful  conduct of its
         business. It is intended that this purpose will be effected through the
         granting of (a) stock  options,  (b) stock purchase  rights,  (c) stock
         appreciation rights, and (d) long-term performance awards.

2. DEFINITIONS. As used herein, the following definitions shall apply:

         (a) "ADMINISTRATOR"  means the Board or such of its Committees as shall
         be administering the Plan, in accordance with Section 5 of the Plan.

         (b)  "APPLICABLE  LAWS " means the legal  requirements  relating to the
         administration of stock option plans under applicable  securities laws,
         Delaware corporate law and the Code.

         (c) "BOARD" means the Board of Directors of the Company.

         (d) "CODE" means the Internal Revenue Code of 1986, as amended.

         (e) "COMMITTEE" means a Committee  appointed by the Board in accordance
         with Section 5 of the Plan.

         (f)  "COMMON  STOCK"  means the Common  Stock,  $.10 par value,  of the
         Company.

         (g) "COMPANY" means Novell, Inc., a Delaware corporation.

         (h) "CONSULTANT" means any person,  including a Director or an advisor,
         engaged by the Company or a parent or Subsidiary to render services and
         who is compensated for such services.

         (i)  "CONTINUOUS  STATUS AS AN EMPLOYEE OR  CONSULTANT"  means that the
         employment or consulting  relationship is not interrupted or terminated
         by the  Company,  any  Parent or  Subsidiary.  Continuous  Status as an
         Employee or Consultant shall not be considered  interrupted in the case
         of:

                  (i) any leave of absence approved by the Board, including sick
                  leave, military leave, or any other personal leave;  provided,
                  however,  that for purposes of Incentive  Stock  Options,  any
                  such  leave  may  not   exceed   ninety   (90)  days,   unless
                  reemployment  upon the  expiration of such leave is guaranteed
                  by contract  (including  certain Company policies) or statute;
                  or

                  (ii) transfers between locations of the Company or between the
                  Company, its Parent, its Subsidiaries or its successor.

         (j) "DIRECTOR" means a member of the Board.

         (k)  "DISABILITY"  means total and  permanent  disability as defined in
         Section 22(e)(3) of the Code.

         (l)  "EMPLOYEE"  means any person,  including  Officers and  Directors,
         employed by the  Company or any Parent or  Subsidiary  of the  Company.
         Neither  service as a Director nor payment of a  director's  fee by the
         Company shall be sufficient to constitute "employment" by the Company.

         (m)  "EXCHANGE  ACT"  means the  Securities  Exchange  Act of 1934,  as
         amended.

         (n) "FAIR  MARKET  VALUE"  means,  as of any date,  the value of Common
         Stock determined as follows:

                  (i) If the  Common  Stock is listed on any  established  stock
                  exchange  or  a  national  market  system,  including  without
                  limitation   the  National   Market  System  of  the  National
                  Association of Securities  Dealers,  Inc. Automated  Quotation
                  ("NASDAQ")  System, the Fair Market Value of a Share of Common
                  Stock shall be the closing  sales price for such stock (or the
                  closing  bid,  if no sales  were  reported)  as quoted on such
                  system or exchange (or the exchange  with the greatest  volume
                  of trading in Common  Stock) on the last  market  trading  day
                  prior to the day of  determination,  as  reported  in The Wall
                  Street Journal or such other source as the Administrator deems
                  reliable;

                  (ii) If the Common  Stock is quoted on the NASDAQ  System (but
                  not on the  National  Market  System  thereof) or is regularly
                  quoted by a recognized  securities  dealer but selling  prices
                  are not  reported,  the Fair Market Value of a Share of Common
                  Stock  shall be the mean  between  the high bid and low  asked
                  prices for the Common  Stock on the last  market  trading  day
                  prior to the day of  determination,  as  reported  in The Wall
                  Street Journal or such other source as the Administrator deems
                  reliable;

                  (iii) In the absence of an  established  market for the Common
                  Stock, the Fair Market Value shall be determined in good faith
                  by the Administrator.

         (o) "INCENTIVE  STOCK OPTION" means an Option intended to qualify as an
         incentive  stock  option  within the meaning of Section 422 of the Code
         and the regulations promulgated thereunder.

         (p) "LONG-TERM PERFORMANCE AWARD" means an award under Section 9 below.
         A Long-Term  Performance  Award shall permit the recipient to receive a
         cash  or  stock  bonus  (as  determined  by  the  Administrator)   upon
         satisfaction  of  such  performance  factors  as  are  set  out  in the
         recipient's  individual  grant.  Long-term  Performance  Awards will be
         based upon the  achievement of Company,  Subsidiary  and/or  individual
         performance  factors or upon such other  criteria as the  Administrator
         may deem appropriate.

         (q) "LONG-TERM  PERFORMANCE  AWARD AGREEMENT" means a written agreement
         between the Company and an Optionee evidencing the terms and conditions
         of an  individual  Long-Term  Performance  Award grant.  The  Long-Term
         Performance  Award  Agreement is subject to the terms and conditions of
         the Plan.

         (r)  "NONSTATUTORY  STOCK  OPTION"  means  any  Option  that  is not an
         Incentive Stock Option.

         (s) "NOTICE OF GRANT" means a written notice  evidencing  certain terms
         and conditions of an individual  Option,  Stock Purchase Right,  SAR or
         Long-Term  Performance  Award grant. The Notice of Grant is part of the
         Option Agreement, the SAR Agreement and the Long-Term Performance Award
         Agreement.

         (t)  "OFFICER"  means a person who is an officer of the Company  within
         the  meaning  of  Section  16 of the  Exchange  Act and the  rules  and
         regulations promulgated thereunder.

         (u) "OPTION" means a stock option granted pursuant to the Plan.

         (v) "OPTION  AGREEMENT" means a written  agreement  between the Company
         and an Optionee  evidencing  the terms and  conditions of an individual
         Option  grant.  The  Option  Agreement  is  subject  to the  terms  and
         conditions of the Plan.

         (w)  "OPTION  EXCHANGE  PROGRAM"  means a program  whereby  outstanding
         options are  surrendered  in exchange for options with a lower exercise
         price.

         (x)  "OPTIONED  STOCK" means the Common  Stock  subject to an Option or
         Right.

         (y) "OPTIONEE" means an Employee or Consultant who holds an outstanding
         Option or Right.

         (z)  "PARENT"  means a "parent  corporation,"  whether now or hereafter
         existing, as defined in Section 424(e) of the Code.

         (aa) "PLAN" means this 1991 Stock Plan.

         (bb)  "RESTRICTED  STOCK"  means  shares of Common  Stock  subject to a
         Restricted  Stock Purchase  Agreement  acquired  pursuant to a grant of
         Stock Purchase Rights under Section 8 below.

         (cc) "RESTRICTED STOCK PURCHASE  AGREEMENT" means a written  agreement
         between the Company and the Optionee  evidencing the terms and
         restrictions  applying to stock purchased under a Stock Purchase Right.
         The Restricted Stock Purchase  Agreement is subject to the terms and
         conditions of the Plan and the Notice of Grant.

         (dd) "RIGHT" means and includes SARs, Long-Term  Performance Awards and
         Stock Purchase Rights granted pursuant to the Plan.

         (ee) "RULE 16B-3" means Rule 16b-3 of the Exchange Act or any successor
         rule  thereto,  as in effect when  discretion is being  exercised  with
         respect to the Plan.

         (ff) "SAR" means a stock appreciation right granted pursuant to Section
         7 of the Plan.

         (gg) "SAR AGREEMENT" means a written  agreement between the Company and
         an Optionee  evidencing  the terms and  conditions of an individual SAR
         grant.  The SAR Agreement is subject to the terms and conditions of the
         Plan.

         (hh)  "SHARE"  means  a share  of the  Common  Stock,  as  adjusted  in
         accordance with Section 11 of the Plan.

         (ii) "STOCK  PURCHASE  RIGHT" means the right to purchase Common Stock
         pursuant to Section 8 of the Plan, as evidenced by a Notice of Grant.

         (jj)  "SUBSIDIARY"  means a  "subsidiary  corporation,"  whether now or
         hereafter existing, as defined in Section 424(f) of the Code.

3.       ELIGIBILITY.  Nonstatutory  Stock  Options and Rights may be granted to
         Employees and Consultants.  Incentive Stock Options may be granted only
         to Employees.  If otherwise eligible, an Employee or Consultant who has
         been  granted an Option or Right may be granted  additional  Options or
         Rights.

4.       STOCK SUBJECT TO THE PLAN.  Subject to the  provisions of Section 11 of
         the  Plan,  the  total  number of Shares  reserved  and  available  for
         issuance under the Plan is 80,278,305  Shares,  which include increases
         each  November  1 from and  including  November  1,  1994  through  and
         including  November 1, 1998 by a number of Shares  equal to 2.9% of the
         number of Shares outstanding as of the Company's  immediately preceding
         fiscal year end. The maximum  number of Shares  reserved and  available
         for issuance pursuant to Incentive Stock Options is 20,000,000 Shares.

         Subject  to  Section  11 of the  Plan,  if any  Shares  that  have been
         optioned under an Option cease to be subject to such Option (other than
         through  exercise  of the  Option),  or if any Option or Right  granted
         hereunder is forfeited, or any such award otherwise terminates prior to
         the issuance of Common Stock to the  participant,  the Shares that were
         subject  to  such  Option  or  Right  shall  again  be  available   for
         distribution in connection with future Option or Right grants under the
         Plan.  Shares that have  actually  been issued under the Plan,  whether
         upon exercise of an Option or Right, shall not in any event be returned
         to the Plan and shall not  become  available  for  future  distribution
         under  the  Plan,  except  that  if  Shares  of  Restricted  Stock  are
         repurchased  by the  Company at their  original  purchase  price,  such
         Shares shall become available for future grant under the Plan.

5.  ADMINISTRATION.

         (A) COMPOSITION OF ADMINISTRATOR.

                  (I)  MULTIPLE  ADMINISTRATIVE  BODIES.  The Plan may (but need
                  not) be administered by different  administrative  bodies with
                  respect to (A) Directors who are  employees,  (B) Officers who
                  are not Directors and (C) Employees who are neither  Directors
                  nor Officers.

                  (II)  SECTION  162(M).  To the extent  that the  Administrator
                  determines  it to be  desirable  to qualify  Options or Rights
                  hereunder  as  "performance-based   compensation"  within  the
                  meaning  of  Section  162(m)  of the Code,  the Plan  shall be
                  administered by a Committee of two or more "outside directors"
                  within the meaning of Section 162(m) of the Code.

                  (III)  RULE  16B-3.   To  the  extent   desirable  to  qualify
                  transactions   hereunder  as  exempt  under  Rule  16b-3,  the
                  transactions  contemplated  hereunder  shall be  structured to
                  satisfy the requirements for exemption under Rule 16b-3.

                  (IV) OTHER  ADMINISTRATION.  Other than as provided above, the
                  Plan  shall  be  administered  by  (A)  the  Board  or  (B)  a
                  Committee,  which  Committee  shall be  constituted to satisfy
                  Applicable Laws.

         (B) POWERS OF THE ADMINISTRATOR. Subject to the provisions of the Plan,
         and in  the  case  of a  Committee,  subject  to  the  specific  duties
         delegated by the Board to such Committee,  the Administrator shall have
         the authority, in its discretion:

                  (i) to determine the Fair Market Value of the Common Stock, in
                  accordance with Section 2(n) of the Plan;

                  (ii) to select the  Consultants  and Employees to whom Options
                  and Rights may be granted hereunder;

                  (iii) to  determine  whether  and to what  extent  Options and
                  Rights or any combination thereof, are granted hereunder;

                  (iv) to  determine  the number of shares of Common Stock to be
                  covered by each Option and Right granted hereunder;

                  (v) to approve forms of agreement for use under the Plan;

                  (vi) to determine the terms and conditions,  not  inconsistent
                  with the terms of the Plan,  of any award  granted  hereunder.
                  Such terms and conditions include, but are not limited to, the
                  exercise  price,  the time or times when Options or Rights may
                  be exercised (which may be based on performance criteria), any
                  vesting acceleration or waiver of forfeiture restrictions, and
                  any restriction or limitation regarding any Option or Right or
                  the shares of Common  Stock  relating  thereto,  based in each
                  case  on  such  factors  as the  Administrator,  in  its  sole
                  discretion, shall determine;

                  (vii) to construe and interpret the terms of the Plan;

                  (viii) to prescribe,  amend and rescind rules and  regulations
                   relating to the Plan;

                  (ix) to  determine  whether  and under what  circumstances  an
                  Option or Right may be settled in cash instead of Common Stock
                  or Common Stock instead of cash;

                  (x) to reduce the exercise price of any Option or Right;

                  (xi) to  modify or amend  each  Option  or Right  (subject  to
                  Section 13 of the Plan);

                  (xii) to  authorize  any  person to  execute  on behalf of the
                  Company  any  instrument  required  to effect  the grant of an
                  Option or Right previously granted by the Administrator;

                  (xiii) to institute an Option Exchange Program;

                  (xiv) to determine  the terms and  restrictions  applicable to
                  Options and Rights and any Restricted Stock; and

                  (xv) to make all  other  determinations  deemed  necessary  or
                  advisable for administering the Plan.

         (C) EFFECT OF ADMINISTRATOR'S DECISION. The Administrator's  decisions,
         determinations  and  interpretations  shall be final and binding on all
         Optionees and any other holders of Options or Rights.

6.       DURATION OF THE PLAN. The Plan shall remain in effect until  terminated
         by the Board under the terms of the Plan, provided that in no event may
         Incentive  Stock  Options be granted under the Plan later than 10 years
         from the date the Plan was adopted by the Board.

7.  OPTIONS AND SARS.

         (A) OPTIONS. The Administrator, in its discretion, may grant Options to
         eligible participants and shall determine whether such Options shall be
         Incentive  Stock Options or  Nonstatutory  Stock  Options.  Each Option
         shall be evidenced by a Notice of Grant which shall expressly  identify
         the  Options  as  Incentive  Stock  Options  or as  Nonstatutory  Stock
         Options,  and be in  such  form  and  contain  such  provisions  as the
         Administrator  shall  from  time  to  time  deem  appropriate.  Without
         limiting the foregoing, the Administrator may at any time authorize the
         Company,  with the consent of the respective  recipients,  to issue new
         Options or Rights in exchange for the  surrender  and  cancellation  of
         outstanding  Options or Rights.  Option  agreements  shall  contain the
         following terms and conditions:

                  (I) EXERCISE PRICE;  NUMBER OF SHARES.  The per Share exercise
                  price for the Shares  issuable  pursuant to an Option shall be
                  such price as is  determined by the  Administrator;  provided,
                  however,  that in the case of an Incentive  Stock Option,  the
                  price shall be no less than 100% of the Fair  Market  Value of
                  the Common Stock on the date the Option is granted, subject to
                  any additional conditions set out in Section 7(a)(iv) below.

                  The  Notice of Grant  shall  specify  the  number of Shares to
                  which it pertains.

                  (II) WAITING PERIOD AND EXERCISE  DATES. At the time an Option
                  is granted,  the  Administrator  will  determine the terms and
                  conditions  to be satisfied  before  Shares may be  purchased,
                  including the dates on which Shares  subject to the Option may
                  first be  purchased.  The  Administrator  may specify  that an
                  Option  may  not be  exercised  until  the  completion  of the
                  service  period  specified  at the time of  grant.  (Any  such
                  period is referred to herein as the "waiting  period.") At the
                  time an Option is  granted,  the  Administrator  shall fix the
                  period within which the Option may be  exercised,  which shall
                  not be earlier  than the end of the  waiting  period,  if any,
                  nor, in the case of an Incentive Stock Option,  later than ten
                  (10) years, from the date of grant.

                  (III) FORM OF PAYMENT.  The  consideration  to be paid for the
                  Shares to be issued upon exercise of an Option,  including the
                  method of payment,  shall be determined  by the  Administrator
                  (and,  in the  case of an  Incentive  Stock  Option,  shall be
                  determined at the time of grant) and may consist entirely of:

                           (1) cash;

                           (2) check;

                           (3) promissory note;

                           (4)  other  Shares  which  (1) in the case of  Shares
                           acquired upon exercise of an option,  have been owned
                           by the  Optionee for more than six months on the date
                           of surrender, and (2) have a Fair Market Value on the
                           date of  surrender  not  greater  than the  aggregate
                           exercise  price of the Shares as to which said Option
                           shall be exercised;

                           (5) delivery of a properly  executed  exercise notice
                           together  with  such  other   documentation   as  the
                           Administrator  and the broker,  if applicable,  shall
                           require  to  effect an  exercise  of the  Option  and
                           delivery to the Company of the sale or loan  proceeds
                           required to pay the exercise price;

                           (6) any combination of the foregoing methods of
                           payment; or

                           (7) such  other  consideration  and method of payment
                           for the issuance of Shares to the extent permitted by
                           Applicable Laws.

                  (IV) SPECIAL INCENTIVE STOCK OPTION PROVISIONS. In addition to
                  the  foregoing,  Options  granted  under  the Plan  which  are
                  intended to be Incentive  Stock  Options  under Section 422 of
                  the  Code  shall  be  subject  to  the  following   terms  and
                  conditions:

                           (1)  DOLLAR  LIMITATION.   To  the  extent  that  the
                           aggregate  Fair  Market  Value of (a) the Shares with
                           respect  to which  Options  designated  as  Incentive
                           Stock  Options  plus (b) the  shares  of stock of the
                           Company,  Parent and any  Subsidiary  with respect to
                           which other  incentive  stock options are exercisable
                           for the first time by an Optionee during any calendar
                           year  under all plans of the  Company  and any Parent
                           and Subsidiary  exceeds $100,000,  such Options shall
                           be  treated  as  Nonstatutory   Stock  Options.   For
                           purposes of the preceding sentence, (a) Options shall
                           be taken into account in the order in which they were
                           granted,  and (b) the Fair Market Value of the Shares
                           shall be  determined  as of the time  the  Option  or
                           other incentive stock option is granted.

                           (2)  10%  STOCKHOLDER.  If any  Optionee  to  whom an
                           Incentive  Stock Option is to be granted  pursuant to
                           the  provisions of the Plan is, on the date of grant,
                           the  owner  of  Common  Stock  (as  determined  under
                           Section 424(d) of the Code)  possessing more than 10%
                           of the total combined  voting power of all classes of
                           stock of the Company or any Parent or  Subsidiary  of
                           the Company,  then the following  special  provisions
                           shall be  applicable  to the  Option  granted to such
                           individual:

                                    (A) The per  Share  Option  price of  Shares
                                    subject to such Incentive Stock Option shall
                                    not be less  than  110% of the  Fair  Market
                                    Value of Common  Stock on the date of grant;
                                    and

                                    (B)  The  Option  shall  not  have a term in
                                    excess of five (5) years from the date of
                                    grant.

                                    Except   as   modified   by  the   preceding
                                    provisions of this  subsection  7(a)(iv) and
                                    except as  otherwise  limited by Section 422
                                    of the Code,  all of the  provisions  of the
                                    Plan shall be  applicable  to the  Incentive
                                    Stock Options granted hereunder.

                  (V) Other  Provisions.  Each Option granted under the Plan may
                  contain  such other  terms,  provisions,  and  conditions  not
                  inconsistent  with  the  Plan  as  may  be  determined  by the
                  Administrator.

                  (VI)  Buyout  Provisions.  The  Administrator  may at any time
                  offer to buy out for a payment  in cash or  Shares,  an Option
                  previously granted,  based on such terms and conditions as the
                  Administrator  shall establish and communicate to the Optionee
                  at the time that such offer is made.

         (B) SARS.

                  (I) IN CONNECTION WITH OPTIONS.  At the sole discretion of the
                  Administrator,  SARs may be granted in connection  with all or
                  any part of an Option,  either  concurrently with the grant of
                  the  Option or at any time  thereafter  during the term of the
                  Option.  The  following  provisions  apply  to SARs  that  are
                  granted in connection with Options:

                           (1) The SAR shall  entitle  the  Optionee to exercise
                           the SAR by surrendering to the Company  unexercised a
                           portion of the related  Option.  The  Optionee  shall
                           receive in Exchange  from the Company an amount equal
                           to the  excess  of (1) the Fair  Market  Value on the
                           date  of  exercise  of the  SAR of the  Common  Stock
                           covered by the  surrendered  portion  of the  related
                           Option  over (2) the  exercise  price  of the  Common
                           Stock  covered  by  the  surrendered  portion  of the
                           related Option.  Notwithstanding  the foregoing,  the
                           Administrator may place limits on the amount that may
                           be paid upon exercise of an SAR;  PROVIDED,  however,
                           that such limit shall not restrict the exercisability
                           of the related Option.

                           (2) When an SAR is exercised,  the related Option, to
                           the   extent   surrendered,   shall   cease   to   be
                           exercisable.

                           (3) An SAR shall be exercisable  only when and to the
                           extent that the  related  Option is  exercisable  and
                           shall  expire  no later  than  the date on which  the
                           related Option expires.

                           (4) An SAR may only be  exercised  at a time when the
                           Fair Market Value of the Common Stock  covered by the
                           related  Option  exceeds  the  exercise  price of the
                           Common Stock covered by the related Option.

                  (II)  INDEPENDENT  OF OPTIONS.  At the sole  discretion of the
                  Administrator,  SARs may be granted without  related  Options.
                  The following provisions apply to SARs that are not granted in
                  connection with Options:

                           (1) The SAR shall entitle the Optionee, by exercising
                           the SAR, to receive  from the Company an amount equal
                           to the  excess  of (1) the Fair  Market  Value of the
                           Common Stock covered by the exercised  portion of the
                           SAR,  as of the date of such  exercise,  over (2) the
                           Fair Market Value of the Common Stock  covered by the
                           exercised  portion of the SAR,  as of the last market
                           trading  date  prior to the date on which the SAR was
                           granted;  provided,  however,  that the Administrator
                           may place limits on the aggregate  amount that may be
                           paid upon exercise of an SAR.

                           (2) SARs shall be  exercisable,  in whole or in part,
                           at such times as the  Administrator  shall specify in
                           the Optionee's SAR agreement.

                  (III) FORM OF PAYMENT.  The Company's  obligation arising upon
                  the exercise of an SAR may be paid in Common Stock or in cash,
                  or in  any  combination  of  Common  Stock  and  cash,  as the
                  Administrator,  in its sole discretion, may determine.  Shares
                  issued  upon the  exercise  of an SAR shall be valued at their
                  Fair Market Value as of the date of exercise.

         (C) PERFORMANCE-BASED  COMPENSATION  LIMITATIONS.  No Employee shall be
         granted, in any fiscal year of the Company,  Options or SARs to receive
         more than 500,000 Shares of Common Stock, provided that the Company may
         make  an  additional  one-time  grant  of up  to  1,000,000  Shares  to
         newly-hired   Employees.   The  foregoing   limitations   shall  adjust
         proportionately   in  connection  with  any  change  in  the  Company's
         recapitalization as described in Section 11(a).

         (D) METHOD OF EXERCISE.

                  (I)  PROCEDURE  FOR  EXERCISE;  RIGHTS AS A  STOCKHOLDER.  Any
                  Option or SAR granted  hereunder  shall be exercisable at such
                  times  and  under  such   conditions   as  determined  by  the
                  Administrator  and as shall be permissible  under the terms of
                  the Plan.

                  An Option may not be exercised for a fraction of a Share.

                  An Option or SAR shall be deemed to be exercised  when written
                  notice  of such  exercise  has been  given to the  Company  in
                  accordance  with the terms of the  Option or SAR by the person
                  entitled  to exercise  the Option or SAR and full  payment for
                  the Shares with respect to which the Option is  exercised  has
                  been received by the Company.  Full payment may, as authorized
                  by the  Administrator  (and, in the case of an Incentive Stock
                  Option,  determined at the time of grant) and permitted by the
                  Option Agreement  consist of any  consideration  and method of
                  payment  allowable  under  subsection  7(a)(iii)  of the Plan.
                  Until the issuance (as evidenced by the  appropriate  entry on
                  the  books of the  Company  or of a duly  authorized  transfer
                  agent of the Company) of the stock certificate evidencing such
                  Shares,  no right to vote or  receive  dividends  or any other
                  rights  as a  stockholder  shall  exist  with  respect  to the
                  Optioned Stock, notwithstanding the exercise of the Option. No
                  adjustment  will be made for a  dividend  or other  right  for
                  which  the  record  date  is  prior  to  the  date  the  stock
                  certificate is issued, except as provided in Section 11 of the
                  Plan.

                  Exercise of an Option in any manner shall result in a decrease
                  in the number of Shares which  thereafter  shall be available,
                  both for  purposes  of the Plan and for sale under the Option,
                  by the number of Shares as to which the Option is exercised.

                  (II) TERMINATION OF EMPLOYMENT OR CONSULTING RELATIONSHIP.  In
                  the event an  Optionee's  Continuous  Status as an Employee or
                  Consultant terminates (other than upon the Optionee's death or
                  Disability),  the  Optionee  may exercise his or her Option or
                  SAR, but only within such period of time as is  determined  by
                  the  Administrator at the time of grant, not to exceed six (6)
                  months  (three  (3) months in the case of an  Incentive  Stock
                  Option)  from  the date of such  termination,  and only to the
                  extent that the  Optionee  was  entitled to exercise it at the
                  date of such  termination  (but in no  event  later  than  the
                  expiration  of the term of such  Option or SAR as set forth in
                  the Option or SAR Agreement).  To the extent that Optionee was
                  not  entitled to exercise an Option or SAR at the date of such
                  termination,  and to the  extent  that the  Optionee  does not
                  exercise  such  Option  or SAR (to  the  extent  otherwise  so
                  entitled) within the time specified herein,  the Option or SAR
                  shall terminate.

                  (III)  DISABILITY  OF  OPTIONEE.  In the  event an  Optionee's
                  Continuous Status as an Employee or Consultant terminates as a
                  result of the Optionee's Disability, the Optionee may exercise
                  his or her Option or SAR,  but only within  twelve (12) months
                  from the date of such termination, and only to the extent that
                  the  Optionee  was entitled to exercise it at the date of such
                  termination  (but in no event later than the expiration of the
                  term of such  Option or SAR as set forth in the  Option or SAR
                  Agreement).  To the extent that  Optionee  was not entitled to
                  exercise an Option or SAR at the date of such termination, and
                  to the extent that the Optionee  does not exercise such Option
                  or SAR (to the extent  otherwise so entitled)  within the time
                  specified herein, the Option or SAR shall terminate.

                  (IV) DEATH OF OPTIONEE.  In the event of an Optionee's  death,
                  the  Optionee's  estate or a person who  acquired the right to
                  exercise the deceased  Optionee's  Option or SAR by bequest or
                  inheritance  may  exercise  the Option or SAR, but only within
                  twelve (12) months  following  the date of death,  and only to
                  the extent that the  Optionee  was  entitled to exercise it at
                  the date of death (but in no event  later than the  expiration
                  of the term of such  Option or SAR as set forth in the  Option
                  or SAR  Agreement).  To  the  extent  that  Optionee  was  not
                  entitled  to  exercise  an Option or SAR at the date of death,
                  and to the extent that the  Optionee's  estate or a person who
                  acquired  the right to exercise  such Option does not exercise
                  such  Option  or SAR (to the  extent  otherwise  so  entitled)
                  within  the time  specified  herein,  the  Option or SAR shall
                  terminate.

8.  STOCK PURCHASE RIGHTS.

         (A) RIGHTS TO  PURCHASE.  Stock  Purchase  Rights may be issued  either
         alone, in addition to, or in tandem with other awards granted under the
         Plan  and/or  cash  awards  made   outside  of  the  Plan.   After  the
         Administrator determines that it will offer Stock Purchase Rights under
         the  Plan,  it shall  advise  the  offeree  in  writing  of the  terms,
         conditions and restrictions related to the offer,  including the number
         of Shares that the offeree shall be entitled to purchase,  the price to
         be paid,  and the time within which the offeree must accept such offer,
         which  shall in no event  exceed  thirty  (30)  days from the date upon
         which  the  Administrator  made the  determination  to grant  the Stock
         Purchase  Right.  The  offer  shall  be  accepted  by  execution  of  a
         Restricted  Stock  Purchase  Agreement  in the form  determined  by the
         Administrator.

         (B) REPURCHASE OPTION.  Unless the Administrator  determines otherwise,
         the  Restricted  Stock  Purchase  Agreement  shall  grant the Company a
         repurchase  option   exercisable  upon  the  voluntary  or  involuntary
         termination  of the  purchaser's  employment  with the  Company for any
         reason  (including death or Disability).  The purchase price for Shares
         repurchased  pursuant to the Restricted Stock purchase  agreement shall
         be the  original  price  paid  by the  purchaser  and  may be  paid  by
         cancellation of any  indebtedness of the purchaser to the Company.  The
         repurchase  option  shall lapse at such rate as the  Administrator  may
         determine.

         (C) OTHER  PROVISIONS.  The Restricted  Stock Purchase  Agreement shall
         contain such other terms,  provisions and  conditions not  inconsistent
         with the Plan as may be  determined  by the  Administrator  in its sole
         discretion.  In addition,  the provisions of Restricted  Stock Purchase
         Agreements need not be the same with respect to each purchaser.

         (D)  RIGHTS  AS  A  STOCKHOLDER.  Once  the  Stock  Purchase  Right  is
         exercised, the purchaser shall have the rights equivalent to those of a
         stockholder,  and shall be a  stockholder  when his or her  purchase is
         entered upon the records of the duly  authorized  transfer agent of the
         Company.  No adjustment  will be made for a dividend or other right for
         which the record date is prior to the date the Stock  Purchase Right is
         exercised, except as provided in Section 11 of the Plan.

         (E) WITHHOLDING TAXES. In accordance with any applicable administrative
         guidelines it  establishes,  the Committee may allow a purchaser to pay
         the amount of taxes  required  by law to be  withheld  as a result of a
         purchase of Shares or a lapse of restrictions in connection with Shares
         purchased  pursuant to a Stock Purchase Right, by withholding  from any
         payment of Common  Stock due as a result of such  purchase  or lapse of
         restrictions, or by permitting the purchaser to deliver to the Company,
         Shares  having a Fair Market Value,  as  determined  by the  Committee,
         equal to the amount of such required withholding taxes.

9.  LONG-TERM PERFORMANCE AWARDS.

         (A)  ADMINISTRATION.  Long-Term  Performance  Awards  are cash or stock
         bonus  awards that may be granted  either alone or in addition to other
         awards granted under the Plan. Such awards shall be granted for no cash
         consideration. The Administrator shall determine the nature, length and
         starting date of any performance period (the "Performance  Period") for
         each Long-Term  Performance  Award, and shall determine the performance
         or  employment  factors,  if any,  to be used in the  determination  of
         Long-Term  Performance  Awards and the  extent to which such  Long-Term
         Performance   Awards  are  valued  or  have  been   earned.   Long-Term
         Performance Awards may vary from participant to participant and between
         groups of  participants  and  shall be based  upon the  achievement  of
         Company,  Subsidiary,  Parent and/or individual  performance factors or
         upon such other  criteria as the  Administrator  may deem  appropriate.
         Performance  Periods  may  overlap  and  participants  may  participate
         simultaneously  with respect to Long-Term  Performance  Awards that are
         subject to  different  Performance  Periods and  different  performance
         factors and criteria.  Long-Term  Performance Awards shall be confirmed
         by,  and be  subject  to the terms of, a  Long-Term  Performance  Award
         agreement.  The terms of such awards need not be the same with  respect
         to each participant.

         At the beginning of each  Performance  Period,  the  Administrator  may
         determine  for  each  Long-Term   Performance  Award  subject  to  such
         Performance  Period  the range of dollar  values or number of shares of
         Common  Stock  to be  awarded  to the  participant  at  the  end of the
         Performance  Period if and to the extent that the relevant  measures of
         performance for such Long-Term  Performance  Award are met. Such dollar
         values or number of shares of Common  Stock may be fixed or may vary in
         accordance with such performance or other criteria as may be determined
         by the Administrator.

         (B) ADJUSTMENT OF AWARDS.  The Administrator may adjust the performance
         factors  applicable  to the Long-Term  Performance  Awards to take into
         account  changes  in legal,  accounting  and tax rules and to make such
         adjustments  as the  Administrator  deems  necessary or  appropriate to
         reflect the  inclusion or exclusion of the impact of  extraordinary  or
         unusual items,  events or  circumstances in order to avoid windfalls or
         hardships.

10.      NON-TRANSFERABILITY  OF  OPTIONS.  Options  and Rights may not be sold,
         pledged,  assigned,  hypothecated,  transferred  or  disposed of in any
         manner other than by will or by the laws of descent or distribution and
         may be  exercised,  during the  lifetime of the  Optionee,  only by the
         Optionee.

11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION,  DISSOLUTION, MERGER, ASSET SALE
OR CHANGE OF CONTROL.

         (A) CHANGES IN  CAPITALIZATION.  Subject to any required  action by the
         stockholders  of the  Company,  the  number of  shares of Common  Stock
         covered by each outstanding  Option and Right, and the number of shares
         of Common Stock which have been  authorized for issuance under the Plan
         but as to which no  Options  or Rights  have yet been  granted or which
         have been  returned to the Plan upon  cancellation  or expiration of an
         Option or Right, as well as the price per share of Common Stock covered
         by each such  outstanding  Option or  Right,  shall be  proportionately
         adjusted for any increase or decrease in the number of issued shares of
         Common Stock resulting from a stock split,  reverse stock split,  stock
         dividend,  combination or  reclassification of the Common Stock, or any
         other  increase or  decrease  in the number of issued  shares of Common
         Stock  effected  without  receipt  of  consideration  by  the  Company;
         provided, however, that conversion of any convertible securities of the
         Company shall not be deemed to have been "effected  without  receipt of
         consideration."  Such  adjustment  shall  be made by the  Board,  whose
         determination  in that respect shall be final,  binding and conclusive.
         Except as  expressly  provided  herein,  no  issuance by the Company of
         shares of stock of any class, or securities  convertible into shares of
         stock of any class,  shall affect,  and no adjustment by reason thereof
         shall be made with  respect to, the number or price of shares of Common
         Stock subject to an Option or Right.

         (B)  DISSOLUTION  OR   LIQUIDATION.   In  the  event  of  the  proposed
         dissolution or liquidation of the Company, to the extent that an Option
         or  Right  has  not  been  previously  exercised,   it  will  terminate
         immediately  prior to the  consummation  of such proposed  action.  The
         Board may, in the exercise of its sole  discretion  in such  instances,
         declare that any Option or Right shall  terminate as of a date fixed by
         the Board  and give each  Optionee  the  right to  exercise  his or her
         Option or Right as to all or any part of the Optioned Stock,  including
         Shares  as to  which  the  Option  or  Right  would  not  otherwise  be
         exercisable.

         (C) MERGER OR ASSET SALE.  Subject to the  provisions  of paragraph (d)
         hereof,  in the event of a merger of the Company  with or into  another
         corporation,  or the sale of  substantially  all of the  assets  of the
         Company,  each  outstanding  Option  and Right  shall be  assumed or an
         equivalent Option or Right substituted by the successor  corporation or
         a Parent or Subsidiary of the successor corporation.  In the event that
         the  successor  corporation  does not agree to assume  the Option or to
         substitute an equivalent  option,  the Administrator  shall, in lieu of
         such assumption or  substitution,  provide for the Optionee to have the
         right to  exercise  the  Option or Right as to all or a portion  of the
         Optioned Stock,  including Shares as to which it would not otherwise be
         exercisable.  If the Administrator makes an Option or Right exercisable
         in lieu of assumption or  substitution in the event of a merger or sale
         of assets, the Administrator  shall notify the Optionee that the Option
         or Right shall be  exercisable  for a period of fifteen  (15) days from
         the date of such notice,  and the Option or Right will  terminate  upon
         the expiration of such period. For the purposes of this paragraph,  the
         Option or Right shall be considered assumed if,  immediately  following
         the merger or sale of assets,  the Option or Right confers the right to
         purchase,  for each Share of  Optioned  Stock  subject to the Option or
         Right  immediately  prior  to  the  merger  or  sale  of  assets,   the
         consideration  (whether stock,  cash, or other  securities or property)
         received in the merger or sale of assets by holders of Common Stock for
         each  Share  held  on the  effective  date of the  transaction  (and if
         holders   were  offered  a  choice  of   consideration,   the  type  of
         consideration  chosen by the holders of a majority  of the  outstanding
         Shares); provided,  however, that if such consideration received in the
         merger or sale of assets was not solely  common stock of the  successor
         corporation or its Parent,  the Administrator  may, with the consent of
         the  successor  corporation  and  the  participant,   provide  for  the
         consideration  to be received upon the exercise of the Option or Right,
         for each Share of Optioned Stock subject to the Option or Right,  to be
         solely common stock of the successor corporation or its Parent equal in
         Fair Market Value to the per share consideration received by holders of
         Common Stock in the merger or sale of assets.

         (D) CHANGE IN  CONTROL.  In the event of a "Change in  Control"  of the
         Company,  as  defined  in  paragraph  (e)  below,  then  the  following
         acceleration and valuation provisions shall apply:

                  (I)  Except  as  otherwise  determined  by the  Board,  in its
                  discretion,  prior to the  occurrence  of a Change in Control,
                  any Options and Rights  outstanding on the date such Change in
                  Control  is  determined  to  have  occurred  that  are not yet
                  exercisable  and  vested  on  such  date  shall  become  fully
                  exercisable and vested;

                  (II)  Except as  otherwise  determined  by the  Board,  in its
                  discretion,  prior to the  occurrence  of a Change in Control,
                  all  outstanding  Options and  Rights,  to the extent they are
                  exercisable  and vested  (including  Options  and Rights  that
                  shall become  exercisable  and vested pursuant to subparagraph
                  (i) above), shall be terminated in exchange for a cash payment
                  equal to the Change in Control Price, (reduced by the exercise
                  price,  if any,  applicable to such Options or Rights).  These
                  cash  proceeds  shall be paid to the Optionee or, in the event
                  of death of an Optionee prior to payment, to the estate of the
                  Optionee or to a person who acquired the right to exercise the
                  Option or Right by bequest or inheritance.

         (E) DEFINITION OF "CHANGE IN CONTROL". For purposes of this Section 11,
         a "Change in Control" means the happening of any of the following:

                  (I) When any "person," as such term is used in Sections  13(d)
                  and 14(d) of the  Exchange  Act  (other  than the  Company,  a
                  Subsidiary or a Company employee  benefit plan,  including any
                  trustee of such plan  acting as  trustee)  is or  becomes  the
                  "beneficial  owner"  (as  defined  in  Rule  13d-3  under  the
                  Exchange Act),  directly or  indirectly,  of securities of the
                  Company  representing  fifty  percent  (50%)  or  more  of the
                  combined  voting  power  of  the  Company's  then  outstanding
                  securities  entitled  to vote  generally  in the  election  of
                  directors; or

                  (II) The  stockholders  of the  Company  approve  a merger  or
                  consolidation of the Company with any other corporation, other
                  than a merger  or  consolidation  which  would  result  in the
                  voting securities of the Company outstanding immediately prior
                  thereto   continuing   to   represent   (either  by  remaining
                  outstanding or by being  converted  into voting  securities of
                  the  surviving  entity) at least  fifty  percent  (50%) of the
                  total voting power represented by the voting securities of the
                  Company or such surviving entity outstanding immediately after
                  such  merger  or  consolidation,  or the  stockholders  of the
                  Company  approve an agreement for the sale or  disposition  by
                  the Company of all or substantially  all the Company's assets;
                  or

                  (III) A change in the composition of the Board of Directors of
                  the Company, as a result of which fewer than a majority of the
                  directors are Incumbent Directors. "Incumbent Directors" shall
                  mean  directors who either (A) are directors of the Company as
                  of the date the Plan is approved by the  stockholders,  or (B)
                  are  elected,  or  nominated  for  election,  to the  Board of
                  Directors  of the  Company  with the  affirmative  votes of at
                  least a majority  of the  Incumbent  Directors  at the time of
                  such  election  or  nomination   (but  shall  not  include  an
                  individual  whose election or nomination is in connection with
                  an actual or threatened proxy contest relating to the election
                  of directors to the Company).

         (F) CHANGE IN CONTROL  PRICE.  For purposes of this Section 11, "Change
         in Control Price" shall be, as determined by the Board, (i) the highest
         Fair  Market  Value of a Share  within  the 60-day  period  immediately
         preceding the date of  determination  of the Change in Control Price by
         the Board (the  "60-Day  Period"),  or (ii) the  highest  price paid or
         offered  per  Share,  as  determined  by the  Board,  in any bona  fide
         transaction  or bona fide offer related to the Change in Control of the
         Company,  at any time  within  the 60-Day  Period,  or (iii) such lower
         price as the Board,  in its  discretion,  determines to be a reasonable
         estimate of the fair market value of a Share.

12.      DATE OF GRANT.  The date of grant of an Option or Right  shall be,  for
         all  purposes,   the  date  on  which  the   Administrator   makes  the
         determination  granting such Option or Right,  or such other later date
         as is  determined  by the  Administrator.  Notice of the  determination
         shall be provided to each Optionee  within a reasonable  time after the
         date of such grant.

13.  AMENDMENT AND TERMINATION OF THE PLAN.

         (A) AMENDMENT AND TERMINATION.  The Board may at any time amend, alter,
suspend or terminate the Plan.

         (B) STOCKHOLDER APPROVAL. The Company shall obtain stockholder approval
         of any Plan  amendment to the extent  necessary and desirable to comply
         with Rule 16b-3 or with Section 422 of the Code (or any successor  rule
         or statute or other  applicable law, rule or regulation,  including the
         requirements  of any exchange or  quotation  system on which the Common
         Stock is listed or quoted).  Such  stockholder  approval,  if required,
         shall be  obtained in such a manner and to such a degree as is required
         by the applicable law, rule or regulation.

         (C) EFFECT OF  AMENDMENT  OR  TERMINATION.  No  amendment,  alteration,
         suspension  or  termination  of the Plan shall impair the rights of any
         Optionee, unless mutually agreed otherwise between the Optionee and the
         Administrator,  which  agreement  must be in writing  and signed by the
         Optionee and the Company.

14.  CONDITIONS UPON ISSUANCE OF SHARES.

         (A)  LEGAL  COMPLIANCE.  Shares  shall not be  issued  pursuant  to the
         exercise  of an Option or Right  unless the  exercise of such Option or
         Right and the  issuance  and  delivery of such Shares shall comply with
         all relevant  provisions of law,  including,  without  limitation,  the
         Securities  Act of 1933,  as amended,  the Exchange  Act, the rules and
         regulations   promulgated   thereunder,   Applicable   Laws,   and  the
         requirements  of any stock exchange or quotation  system upon which the
         Shares  may then be listed or quoted,  and shall be further  subject to
         the   approval  of  counsel  for  the  Company  with  respect  to  such
         compliance.

         (B)  INVESTMENT  REPRESENTATIONS.  As a condition to the exercise of an
         Option or Right,  the Company may  require the person  exercising  such
         Option  or  Right  to  represent  and  warrant  at the time of any such
         exercise that the Shares are being  purchased  only for  investment and
         without any present  intention to sell or distribute such Shares if, in
         the  opinion of  counsel  for the  Company,  such a  representation  is
         required.

15.  LIABILITY OF COMPANY.

         (A)  INABILITY  TO OBTAIN  AUTHORITY.  The  inability of the Company to
         obtain  authority from any regulatory body having  jurisdiction,  which
         authority  is deemed by the  Company's  counsel to be  necessary to the
         lawful  issuance and sale of any Shares  hereunder,  shall  relieve the
         Company of any  liability  in  respect of the  failure to issue or sell
         such Shares as to which such  requisite  authority  shall not have been
         obtained.

         (B) GRANTS EXCEEDING  ALLOTTED SHARES. If the Optioned Stock covered by
         an Option or Right  exceeds,  as of the date of  grant,  the  number of
         Shares  which  may  be  issued   under  the  Plan  without   additional
         stockholder  approval,  such Option or Right shall be void with respect
         to such  excess  Optioned  Stock,  unless  stockholder  approval  of an
         amendment  sufficiently  increasing the number of Shares subject to the
         Plan is timely obtained in accordance with Section 13(b) of the Plan.

16.      RESERVATION OF SHARES. The Company,  during the term of this Plan, will
         at all times reserve and keep  available such number of Shares as shall
         be sufficient to satisfy the requirements of the Plan.

17.      STOCKHOLDER  APPROVAL.  Continuance  of the Plan  shall be  subject  to
         approval by the  stockholders  of the Company within twelve (12) months
         before or after the date the Plan is adopted. Such stockholder approval
         shall be  obtained  in the  manner  and to the  degree  required  under
         applicable federal and state law.

<PAGE>

                                                                      -5-

                          NOVELL, INC. 1991 STOCK PLAN
                            NONSTATUTORY STOCK OPTION
                                 EXERCISE NOTICE

Novell, Inc.
Attention:  Shareholder Services Department

     EXERCISE  OF  OPTION.  Effective  as  of  today,  ,  199,  the  undersigned
("Purchaser")  hereby  elects to purchase  shares (the  "Shares")  of the Common
Stock of Novell,  Inc. (the  "Company")  under and pursuant to the Novell,  Inc.
1991 Stock Plan (the "Plan") and the Stock Option  Agreement  dated (the "Option
Agreement").

     DELIVERY OF PAYMENT.  Purchaser  herewith  delivers to the Company the full
purchase price for the Shares and any and all required taxes.

     REPRESENTATIONS  OF PURCHASER.  Purchaser  acknowledges  that Purchaser has
received,  read and understood  the Plan and the Option  Agreement and agrees to
abide by and be bound by their terms and conditions.

     RIGHTS  AS  STOCKHOLDER.  Subject  to the  terms  and  conditions  of  this
Agreement,  Purchaser  shall  have all of the  rights  of a  stockholder  of the
Company with respect to the Shares from and after the date the stock certificate
evidencing such Shares is issued,  as evidenced by the appropriate  entry on the
books of the Company or of a duly authorized transfer agent of the Company.

     TAX CONSULTATION.  Purchaser  understands that Purchaser may suffer adverse
tax  consequences  as a result of  Purchaser's  purchase or  disposition  of the
Shares.   Purchaser  represents  that  Purchaser  has  consulted  with  any  tax
consultants  Purchaser  deems  advisable  in  connection  with the  purchase  or
disposition  of the Shares and that  Purchaser is not relying on the Company for
any tax advice.

     ENTIRE  AGREEMENT;  GOVERNING  LAW.  The  Plan  and  Option  Agreement  are
incorporated  herein  by  reference.  This  Agreement,  the Plan and the  Option
Agreement  constitute the entire agreement of the parties and supersede in their
entirety all prior undertakings and agreements of the Company and Purchaser with
respect to the subject matter hereof, and such agreement is governed by Delaware
law except for that body of law pertaining to conflict of laws.

Submitted by:                                                 Accepted by:
                                  NOVELL, INC.

                                                              By:
Signature of Purchaser

                                                              Title:
Printed Name

Social Security Number

Mailing Address:

<PAGE>

                          NOVELL, INC. 1991 STOCK PLAN
                             STOCK OPTION AGREEMENT

     Unless otherwise defined herein, the terms defined in the Novell, Inc. 1991
Stock Plan (the  "Plan")  shall have the same  defined  meanings  in this Option
Agreement.

I.  NOTICE OF STOCK OPTION GRANT

         Employee ID:
         Name:
         Address:

         You have  been  granted  an  option  to  purchase  Common  Stock of the
Company,  subject  to the  terms  and  conditions  of the Plan  and this  Option
Agreement, as follows:

         Grant Number:

         Date of Grant:

         Exercise Price per Share:

         Total Number of Shares Granted:

         Type of Option:

         Term/Expiration Date:

         VESTING  SCHEDULE:  This Option  will vest over four (4) years with 25%
         vesting  one year from grant date and  thereafter
         -----------------
         6.25% per quarter.

         TERMINATION  PERIOD:  This  Option may be  exercised  for 60 days after
         termination  of Optionee's  employment or consulting  relationship,  or
         such longer  period as may be  applicable  upon death or  Disability of
         Optionee  as  provided  in the  Plan,  but in no event  later  than the
         Term/Expiration Date as provided above.

II.  AGREEMENT

         1. GRANT OF OPTION. The Plan Administrator of the Company hereby grants
to the  Optionee  named  in the  Notice  of  Grant  attached  as  Part I of this
Agreement  (the  "Optionee")  an option (the "Option") to purchase the number of
Shares  set  forth in the  Notice of Grant at the  exercise  price per share set
forth in the Notice of Grant (the  "Exercise  Price"),  subject to the terms and
conditions of the Novell,  Inc. 1991 Stock Plan, which is incorporated herein by
reference.  Subject  to  Section  13(c) of the Plan,  in the event of a conflict
between the terms and  conditions  of the Plan and the terms and  conditions  of
this Option Agreement, the terms and conditions of the Plan shall prevail.

         If designated in the Notice of Grant as an Incentive Stock Option, this
Option is intended to qualify as an Incentive  Stock Option under Section 422 of
the Code.

         2.  EXERCISE OF OPTION.

                  (a) RIGHT TO EXERCISE.  This Option is exercisable  during its
term in accordance with the Vesting  Schedule set out in the Notice of Grant and
the applicable provisions of the Plan and this Option Agreement. In the event of
Optionee's death,  Disability or other  termination of Optionee's  employment or
consulting  relationship,  the  exercisability  of the Option is governed by the
applicable provisions of the Plan and this Option Agreement.

         (b) METHOD OF EXERCISE.  This Option is  exercisable  by delivery of an
exercise notice in the form attached as Exhibit A (the "Exercise  Notice") which
shall  state the  election to  exercise  the Option,  the number of Shares as to
which the Option is being  exercised  (the  "Exercised  Shares")  and such other
representations and agreements as may be required by the Company pursuant to the
provisions of the Plan. The Exercise  Notice shall be signed by the Optionee and
shall be delivered in person or by certified  mail to the  Shareholder  Services
Department of the Company.  The Exercise  Notice shall be accompanied by payment
of the aggregate Exercise Price as to all Exercised Shares. This Option shall be
deemed to be  exercised  upon  receipt by the  Company  of such  fully  executed
Exercise  Notice  accompanied by such aggregate  Exercise Price and any required
withholding tax.

         No Shares  shall be issued  pursuant  to the  exercise  of this  Option
unless such issuance and exercise  complies with all relevant  provisions of law
and the  requirements  of any stock  exchange  upon  which the  Shares  are then
listed.  Assuming such compliance,  for income tax purposes the Exercised Shares
shall be  considered  transferred  to the  Optionee  on the date the  Option  is
exercised with respect to such Exercised Shares.

         3. METHOD OF PAYMENT.  Payment of the aggregate Exercise Price shall be
by any of the  following,  or a  combination  thereof,  at the  election  of the
Optionee:

         (a)  cash; or

                  (b)  check; or

         (c) delivery of a properly  executed Exercise Notice together with such
other  documentation as the Administrator  and the broker, if applicable,  shall
require to effect an exercise  of the Option and  delivery to the Company of the
sale or loan proceeds required to pay the exercise price; or

         (d) surrender of other Shares which (I) in the case of Shares  acquired
upon  exercise of an option,  have been owned by the  Optionee for more than six
(6) months on the date of  surrender,  and  (ii)have a Fair Market  Value on the
date of surrender equal to the aggregate Exercise Price of the Exercised Shares.

         4. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in
any manner  otherwise than by will or by the laws of descent or distribution and
may be exercised during the lifetime of Optionee only by the Optionee. The terms
of the Plan and this  Option  Agreement  shall be  binding  upon the  executors,
administrators, heirs, successors and assigns of the Optionee.

         5. TERM OF OPTION. This Option will expire ten (10) years from the date
of its grant.

         6. TAX CONSEQUENCES.  Some of the federal tax consequences  relating to
this Option, as of the date of this Option, are set forth below. THIS SUMMARY IS
NECESSARILY INCOMPLETE,  AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
THE  OPTIONEE  SHOULD  CONSULT A TAX ADVISER  BEFORE  EXERCISING  THIS OPTION OR
DISPOSING OF THE SHARES.

         (a)  EXERCISING THE OPTION.

         (I) NONQUALIFIED STOCK OPTION ("NSO").  If this Option does not qualify
as an ISO, the Optionee may incur  regular  federal  income tax  liability  upon
exercise.  The Optionee will be treated as having received  compensation  income
(taxable at ordinary income tax rates) equal to the excess,  if any, of the fair
market  value  of the  Exercised  Shares  on the  date of  exercise  over  their
aggregate  Exercise Price. If the Optionee is an employee or a former  employee,
the Company will be required to withhold from his or her compensation or collect
from Optionee and pay to the applicable taxing  authorities an amount equal to a
percentage of this compensation income at the time of exercise.

         (ii) INCENTIVE  STOCK OPTION  ("ISO").  If this Option  qualifies as an
ISO, the Optionee will have no regular  federal  income tax  liability  upon its
exercise, although the excess, if any, of the fair market value of the Exercised
Shares on the date of  exercise  over  their  aggregate  Exercise  Price will be
treated as an adjustment to the alternative minimum tax for federal tax purposes
and may subject the Optionee to alternative minimum tax in the year of exercise.

         (b) DISPOSITION OF SHARES.

                  (I) NSO.  If the  Optionee  holds NSO  Shares for at least one
year,  any gain  realized  on  disposition  of the  Shares  will be  treated  as
long-term capital gain for federal income tax purposes.

                  (ii) ISO.  If the  Optionee  holds ISO Shares for at least one
year after  exercise  and two years after the grant date,  any gain  realized on
disposition of the Shares will be treated as long-term  capital gain for federal
income tax  purposes.  If the  Optionee  disposes of ISO Shares  within one year
after  exercise  or two years after the grant  date,  any gain  realized on such
disposition  will be treated as compensation  income (taxable at ordinary income
rates) to the extent of the excess,  if any, of the lesser of (A) the difference
between the fair market value of the Shares acquired on the date of exercise and
the aggregate  Exercise Price,  or (B) the difference  between the sale price of
such Shares and the aggregate Exercise Price.

         (c) NOTICE OF DISQUALIFYING  DISPOSITION OF ISO SHARES. If the Optionee
sells or otherwise  disposes of any of the Shares acquired pursuant to an ISO on
or  before  the later of (I) two years  after the grant  date,  or (ii) one year
after the exercise date, the Optionee  shall  immediately  notify the Company in
writing of such  disposition.  The Optionee agrees that he or she may be subject
to income tax withholding by the Company on the compensation  income  recognized
from such  early  disposition  of ISO  Shares by  payment  in cash or out of the
current earnings paid to the Optionee.

         By your  signature and the  signature of the  Company's  representative
below,  you and the Company agree that this Option is granted under and governed
by the terms and conditions of the Plan and this Option Agreement.  Optionee has
reviewed  the Plan and  this  Option  Agreement  in their  entirety,  has had an
opportunity  to obtain the  advice of counsel  prior to  executing  this  Option
Agreement and fully understands all provisions of the Plan and Option Agreement.
Optionee hereby agrees to accept as binding,  conclusive and final all decisions
or  interpretations of the Administrator upon any questions relating to the Plan
and  Option  Agreement.  It is  agreed  that  this  Option  Agreement  shall  be
interpreted  and construed in accordance  with the laws of that  jurisdiction in
which enforcement is sought.  Should any portion of this Agreement be judicially
held to be  invalid,  unenforceable  or void,  such  holding  shall not have the
effect of  invalidating  the  remainder  of this  Agreement  or any  other  part
thereof,  the parties  hereby  agreeing  that the portion so held to be invalid,
unenforceable,  or void  shall,  if  possible,  be deemed  amended or reduced in
scope. This Option Agreement shall supersede the terms of any prior agreement or
understanding  between  Optionee and the Company  regarding  the subject  matter
hereof, and constitutes the full and entire  understanding and agreement between
Optionee  and the Company  regarding  the  subject  matter  hereof.  This Option
Agreement may be modified or amended only in writing signed by an officer of the
Company and by Optionee.  Optionee  agrees and  acknowledges  the  Company's "at
will"  employment  policy,  which  is that the  Company  reserves  the  right to
discontinue  Optionee's  employment  at any time  for any  reason  or no  reason
without notice,  and that the Company accords  Optionee the right to discontinue
employment at any time for any reason or no reason without  notice.  The Company
agrees  and  acknowledges  that  it's "at  will"  employment  policy  may not be
enforceable in the jurisdiction in which Optionee is domiciled.  Optionee agrees
that nothing in this Agreement  shall be construed as a limitation of the rights
of the Company to terminate  Optionee's  employment with the Company at any time
for any reason or no reason without notice.

OPTIONEE:                                NOVELL, INC.:

                                                   By:
Signature                                              David R. Bradford

                                                Title: Sr. V.P., General Counsel
Print Name                                              & Corporate Secretary

Mailing Address:

<PAGE><PAGE>

                  [FORM OF REPRESENTATIVES' WARRANT AGREEMENT]

                         [SUBJECT TO ADDITIONAL REVIEW]

--------------------------------------------------------------------------------

                               b2bstores.com Inc.

                                       AND

                              GAINES, BERLAND INC.

                                       AND

                             NOLAN SECURITIES CORP.

                                REPRESENTATIVES'

                                WARRANT AGREEMENT

                          Dated as of January ___, 2000

--------------------------------------------------------------------------------
<PAGE>

                   REPRESENTATIVES' WARRANT AGREEMENT dated as of January ___,
2000 by and between b2bstores.com Inc., a Delaware corporation (the "Company"),
and GAINES, BERLAND INC. and NOLAN SECURITIES CORP. (hereinafter referred to as
the "Holders" or the "Representatives").

                              W I T N E S S E T H:
                               - - - - - - - - - -

                  WHEREAS, the Company proposes to issue to the Representatives
or their designees warrants ("Warrants") to purchase up to an aggregate 280,000
shares of common stock, par value $.01 per share, of the Company ("Common
Stock"); and

                  WHEREAS, the Representatives have agreed pursuant to the
underwriting agreement (the "Underwriting Agreement") dated as of the date
hereof between Gaines, Berland Inc. and Nolan Securities Corp., as the
Representatives of the several Underwriters named in Schedule A thereto, and the
Company to act as the Representatives in connection with the Company's proposed
public offering of up to 2,800,000 shares of Common Stock at a public offering
price of $10.00 per share of Common Stock (the "Public Offering"); and

                  WHEREAS, the Warrants to be issued pursuant to this Agreement
will be issued on the Closing Date (as such term is defined in the Underwriting
Agreement) by the Company to the Representatives in consideration for, and as
part of the Representatives' compensation in connection with, the
Representatives acting as the Representatives pursuant to the Underwriting
Agreement;

                  NOW, THEREFORE, in consideration of the premises, the payment
by the Representatives to the Company of an aggregate of twenty-eight dollars
($28.00) the agreements herein set forth and other good and valuable
consideration, hereby acknowledged, the parties hereto agree as follows:

<PAGE>

                   SECTION 1. Grant. The Representatives are hereby granted the
right to purchase, at any time from [___________], 2001 [one year from the
effective date of the registration statement], until 5:30 P.M., New York time,
on [______________], 2005 [five years from the effective date of the
registration statement], up to an aggregate of 280,000 shares of Common Stock
(the "Shares") at an initial exercise price (subject to adjustment as provided
in Section 8 hereof) of $[_____] per share [165% of the public offering price
per share] of Common Stock subject to the terms and conditions of this
Agreement. Except as set forth herein, the Shares issuable upon exercise of the
Warrants are in all respects identical to the shares of Common Stock being
purchased by the Underwriters for resale to the public pursuant to the terms and
provisions of the Underwriting Agreement.

                   SECTION 2. Warrant Certificates. The warrant certificates
(the "Warrant Certificates") delivered and to be delivered pursuant to this
Agreement shall be in the form set forth in Exhibit A, attached hereto and made
a part hereof, with such appropriate insertions, omissions, substitutions, and
other variations as required or permitted by this Agreement.

                   SECTION 3. Exercise of Warrant.

                       Section 3.1  Method of Exercise. The Warrants initially
are exercisable at an aggregate initial exercise price (subject to adjustment as
provided in Section 8 hereof) per share of Common Stock set forth in Section 6
hereof payable by certified or official bank check in New York Clearing House
funds. Upon surrender of a Warrant Certificate with the annexed Form of Election
to Purchase duly executed, together with payment of the Exercise Price (as
hereinafter defined) for the shares of Common Stock purchased at the Company's
principal offices in Long Beach, California (presently located at 249 East Ocean
Boulevard, Long Beach, California 90802) the registered holder of a Warrant
Certificate ("Holder" or "Holders") shall be entitled to receive a certificate
or certificates for the shares of Common Stock so purchased. The purchase rights
represented by each Warrant Certificate are exercisable at the option of the

                                       2
<PAGE>

Holder thereof, in whole or in part (but not as to fractional shares of the
Common Stock underlying the Warrants). Warrants may be exercised to purchase all
or part of the shares of Common Stock represented thereby. In the case of the
purchase of less than all the shares of Common Stock purchasable under any
Warrant Certificate, the Company shall cancel said Warrant Certificate upon the
surrender thereof and shall execute and deliver a new Warrant Certificate of
like tenor for the balance of the shares of Common Stock purchasable thereunder.

                       Section 3.2 Exercise by Surrender of Warrant. In addition
to the method of payment set forth in Section 3.1 and in lieu of any cash
payment required thereunder, the Holders of the Warrants shall have the right at
any time and from time to time during the exercise term of the Warrants to
exercise the Warrants in full or in part by surrendering the Warrant Certificate
in the manner specified in Section 3.1 in exchange for the number of Shares
equal to the product of (x) the number of Shares as to which the Warrants are
being exercised multiplied by (y) a fraction, the numerator of which is the
Market Price (as defined in Section 3.3 below) of the Shares less the Exercise
Price and the denominator of which is such Market Price. Solely for the purposes
of this paragraph, Market Price shall be calculated either (i) on the date which
the form of election attached hereto is deemed to have been sent to the Company
pursuant to Section 13 hereof ("Notice Date") or (ii) as the average of the
Market Prices for each of the five trading days preceding the Notice Date,
whichever of (i) or (ii) is greater.

                       Section 3.3 Definition of Market Price. As used herein,
the phrase "Market Price" at any date shall be deemed to be the last reported
sale price, or, in case no such reported sale takes place on such day, the
average of the last reported sale prices for the last three (3) trading days, in
either case as officially reported by the principal securities exchange on which
the Common Stock is listed or admitted to trading or by the Nasdaq National
Market or Nasdaq SmallCap Market (as the case may be "Nasdaq"), or, if the
Common Stock is not listed or admitted to trading on any national securities
exchange or quoted by Nasdaq, the average closing bid price as furnished by the
NASD through Nasdaq or similar organization if Nasdaq is

                                       3
<PAGE>

no longer reporting such information, or if the Common Stock is not quoted on
Nasdaq, as determined in good faith by resolution of the Board of Directors of
the Company, based on the best information available to it.

                  Section 4. Issuance of Certificates. Upon the exercise of the
Warrants, the issuance of certificates for shares of Common Stock and/or other
securities, properties or rights underlying such Warrants, shall be made
forthwith (and in any event within five (5) business days thereafter) without
charge to the Holders thereof including, without limitation, any tax which may
be payable in respect of the issuance thereof, and such certificates shall
(subject to the provisions of Sections 5 and 7 hereof) be issued in the name of,
or in such names as may be directed by, the Holders thereof; provided, however,
that the Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issuance and delivery of any such
certificates in a name other than that of the Holders, and the Company shall not
be required to issue or deliver such certificates unless or until the person or
persons requesting the issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction of the Company
that such tax has been paid.

                  The Warrant Certificates and the certificates representing the
Shares underlying the Warrants (and/or other securities, property or rights
issuable upon the exercise of the Warrants) shall be executed on behalf of the
Company by the manual or facsimile signature of the then Chairman or Vice
Chairman of the Board of Directors, Chief Executive Officer or President or Vice
President of the Company. Warrant Certificates shall be dated the date of
execution by the Company upon initial issuance, division, exchange, substitution
or transfer.

                  Section 5. Restriction On Transfer of Warrants. The Holders of
a Warrant Certificate, by its acceptance thereof, covenants and agrees that the
Warrants are being acquired as an investment and not with a view to the
distribution thereof; that the Warrants are restricted from sale, assignment or
hypothecation for a period of one (1) year from the effective date

                                       4
<PAGE>

of the offering except to officers or partners (not directors) of the
underwriter and members of the selling group and/or their officers or partners.

                  Section 6. Exercise Price.

                       Section 6.1 Initial and Adjusted Exercise Price. Except
as otherwise provided in Section 8 hereof, the initial exercise price of each
Warrant shall be $[____] per share [165% of the public offering price per share]
of Common Stock. The adjusted exercise price shall be the price which shall
result from time to time from any and all adjustments of the initial exercise
price in accordance with the provisions of Section 8 hereof.

                       Section 6.2 Exercise Price. The term "Exercise Price"
herein shall mean the initial exercise price or the adjusted exercise price,
depending upon the context.

                  Section 7. Registration Rights.

                       Section 7.1 Registration Under the Securities Act of
1933. The Warrants, the Shares, and any other securities issuable upon exercise
of the Warrants have been registered under the Securities Act of 1933, as
amended (the "Act"), pursuant to the Company's Registration Statement on Form
SB-2 (Registration No. 333-88511) (the "Registration Statement"). All of the
representations and warranties of the Company contained in the Underwriting
Agreement relating to the Registration Statement, the Preliminary Prospectus and
Prospectus (as such terms are defined in the Underwriting Agreement) and made as
of the dates provided therein, are hereby incorporated by reference. The Company
agrees and covenants to use commercially reasonable efforts to file promptly
post effective amendments to such Registration Statement as may be necessary to
maintain the effectiveness of the Registration Statement as long as any Warrants
are outstanding. In the event that, for any reason, whatsoever, the Company
shall fail to maintain the effectiveness of the Registration Statement, upon
exercise, in part or in whole, of the Warrants, certificates representing the
Shares underlying the

                                       5
<PAGE>

Warrants, and any of the other securities issuable upon exercise of the Warrants
(collectively, the "Warrant Securities") shall bear the following legend:

                       The securities represented by this certificate have
                       not been registered under the Securities Act of 1933,
                       as amended ("Act"), and may not be offered or sold
                       except pursuant to (i) an effective registration
                       statement under the Act, (ii) to the extent
                       applicable, Rule 144 under the Act (or any similar
                       rule under such Act relating to the disposition of
                       securities), or (iii) an opinion of counsel, if such
                       opinion shall be reasonably satisfactory to counsel
                       to the issuer, that an exemption from registration
                       under such Act is available.

                      Section 7.2 Piggyback Registration. If, at any time
commencing after the date hereof and expiring five (5) years from the date
hereof, the Company proposes to register any of its securities under the Act
(other than in connection with a merger or pursuant to Forms S-4 or S-8) and the
Warrant Securities are not registered in a then current and effective
registration statement that would permit resale of such Warrant Securities, it
will give written notice by registered mail, at least thirty (30) days prior to
the filing of each such registration statement, to the Representatives and to
all other Holders of the Warrants and/or the Warrant Securities of its intention
to do so. If the Representatives or other Holders of the Warrants and/or Warrant
Securities notify the Company within twenty (20) days after receipt of any such
notice of its or their desire to include any such securities in such proposed
registration statement, the Company shall afford the Representatives and such
Holders of the Warrants and/or Warrant Securities the opportunity to have any
such Warrant Securities registered under such registration statement (sometimes
referred to herein as the "Piggyback Registration"); provided, however, that if,
in the written opinion of the Company's managing underwriter, if any, for such
offering, the inclusion of all or a portion of the Warrant Securities requested
to be registered, when added to the securities being registered by the Company
or to other selling stockholder(s), will exceed the maximum amount of the
Company's securities which can be marketed (i) at a price reasonably related to
their then current market value, or (ii) without otherwise materially

                                       6
<PAGE>

adversely affecting the entire offering, then the Company may exclude from such
offering all or a portion of the Warrant Securities which it has been requested
to register.

                  If securities are proposed to be offered for sale pursuant to
such Registration Statement by other security holders of the Company and the
total number of securities to be offered by the Holders requesting registration
under Section 7.2 hereof (the "Requesting Holders") and such other selling
security holders is required to be reduced pursuant to a request from the
managing underwriter (which request shall be made only for the reasons in the
manner set forth above), the aggregate number of Warrant Securities to be
offered by Requesting Holders pursuant to such Registration Statement shall
equal the number which bears the same ratio to the maximum number of securities
that the underwriter believes may be included for all the selling security
holders (including the Requesting Holders) as the original number of securities
proposed to be sold by the Requesting Holders bears to the total original number
of securities proposed to be offered by the Requesting Holders and the other
selling security holders.

                  Notwithstanding the provisions of this Section 7.2 and Section
7.4 hereof, the Company shall have the right at any time after it shall have
given written notice pursuant to this Section 7.2 (irrespective of whether a
written request for inclusion of any such securities shall have been made) to
elect not to file any such proposed registration statement, or to withdraw the
same after the filing but prior to the effective date thereof.

                       Section 7.3  Demand Registration.

                       (a) At any time commencing after the date hereof and
expiring five (5) years from the effective date of the Public Offering, the
Holders of the Warrants and/or Warrant Securities representing a "Majority" (as
hereinafter defined) of such securities (assuming the exercise of all of the
Warrants) shall have the right (which right is in addition to the registration
rights under Section 7.2 hereof), exercisable by written notice to the Company,
to have the

                                       7
<PAGE>

Company prepare and file with the Securities and Exchange Commission (the
"Commission"), on one occasion, a registration statement and such other
documents, including a prospectus, as may be necessary in the opinion of both
counsel for the Company and counsel for the Representatives and Holders, in
order to comply with the provisions of the Act, so as to permit a public
offering and sale of their respective Warrant Securities for nine (9)
consecutive months by such Holders and any other Holders of the Warrants and/or
Warrant Securities who notify the Company within ten (10) days after receiving
notice from the Company of such request; provided, however, upon a request for a
registration pursuant to this Section 7.3, the Company may, one time, in any 12
month period (i) postpone the filing of a registration statement for a period
not to exceed ninety (90) days from the date of receipt of such request, if the
President of the Company furnishes to the Holders requesting registration a
certificate signed by the Company's President stating that in the good faith
judgment of the Board of Directors of the Company it would be seriously
detrimental to the Company for a public offering of the Company's securities to
be commenced in the near future or (ii) postpone the filing of a registration
statement for a period not to exceed ninety (90) days from the effective date of
any registration statement relating to a primary underwritten offering of
securities of the Company which has been declared effective prior to the date of
receipt of a request for registration. If the Company so determines to postpone
a registration requested by the Holders pursuant to this Section 7.3, it shall
promptly notify the requesting Holders of such determination including the
reason therefor, whereupon the requesting Holders shall be entitled to withdraw
such request and such registration shall not count as a registration under this
Section 7.3. In addition, the Company may, one time, in any 12 month period,
suspend the effectiveness of any registration statement filed pursuant to this
Section 7.3 for a period of forty-five (45) days, if the President of the
Company furnishes to the Holders of securities registered pursuant to this
Section 7.3 a certificate signed by the Company's President stating that the
Board of Directors of the Company has determined, upon advice of counsel, that
it would be required to disclose any significant corporate development which
disclosure would have a material effect on the Company;

                                       8
<PAGE>

provided, however, that the period of time which such registration statement is
required to be effective shall be increased by the number of days that the
registration statement was suspended (the "Suspension Period"); and provided,
further, that the Company shall furnish to each Holder of securities registered
pursuant to Section 7.3 a notice stating that the Suspension Period has been
terminated within three (3) business days following the date of termination.

                       (b) The Company covenants and agrees to give written
notice of any registration request under this Section 7.3 by any Holder or
Holders to all other registered Holders of the Warrants and the Warrant
Securities within ten (10) days from the date of the receipt of any such
registration request.

                       Section 7.4 Covenants of the Company With Respect to
Registration. In connection with any registration under Section 7.2 or 7.3
hereof, the Company covenants and agrees as follows:

                       (a) The Company shall use its best efforts to file a
registration statement within forty-five (45) days of receipt of any demand
therefor, shall use its best efforts to have any registration statements
declared effective at the earliest possible time, and shall furnish each Holder
desiring to sell Warrant Securities such number of prospectuses as shall
reasonably be requested.

                       (b) The Company shall pay all costs (excluding fees and
expenses of Holders' counsel and any underwriting or selling commissions), fees
and expenses in connection with all registration statements filed pursuant to
Sections 7.2 and 7.3 hereof including, without limitation, the Company's legal
and accounting fees, printing expenses and blue sky fees and expenses.

                       (c) The Company will take all necessary action which may
be required in qualifying or registering the Warrant Securities included in a
registration statement for

                                       9
<PAGE>

offering and sale under the securities or blue sky laws of such states as
reasonably are requested by the Holders, provided that the Company shall not be
obligated to execute or file any general consent to service of process or to
qualify as a foreign corporation to do business under the laws of any such
jurisdiction.

                       (d) The Company shall indemnify the Holders of the
Warrant Securities to be sold pursuant to any registration statement and each
person, if any, who controls such Holders within the meaning of Section 15 of
the Act or Section 20(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), against all loss, claim, damage, expense or liability
(including all expenses reasonably incurred in investigating, preparing or
defending against any claim whatsoever) to which any of them may become subject
under the Act, the Exchange Act or otherwise, arising from such registration
statement but only to the same extent and with the same effect as the provisions
pursuant to which the Company has agreed to indemnify each of the Underwriters
contained in Section 7 of the Underwriting Agreement.

                       (e) The Holders of the Warrant Securities to be sold
pursuant to a registration statement, and their successors and assigns, shall
severally, and not jointly, indemnify the Company, its officers and directors
and each person, if any, who controls the Company within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act, against all loss, claim,
damage or expense or liability (including all expenses reasonably incurred in
investigating, preparing or defending against any claim whatsoever) to which
they may become subject under the Act, the Exchange Act or otherwise, arising
from information furnished by or on behalf of such Holders, or their successors
or assigns, for specific inclusion in such registration statement to the same
extent and with the same effect as the provisions contained in Section 7 of the
Underwriting Agreement pursuant to which the Underwriters have agreed to
indemnify the Company.

                                       10
<PAGE>

                       (f) Nothing contained in this Agreement shall be
construed as requiring the Holders to exercise their Warrants prior to the
initial filing of any registration statement or the effectiveness thereof.

                       (g) The Company shall not permit the inclusion of any
securities other than the Warrant Securities to be included in any registration
statement filed pursuant to Section 7.3 hereof, without the prior written
consent of the Holders of the Warrants and Warrant Securities representing a
Majority of such securities.

                       (h) The Company shall furnish to each Holder
participating in the offering and to each underwriter, if any, a signed
counterpart, addressed to such Holder or underwriter, of (i) an opinion of
counsel to the Company, dated the effective date of such registration statement
(and, if such registration includes an underwritten public offering, an opinion
dated the date of the closing under the underwriting agreement), and (ii) a
"cold comfort" letter dated the effective date of such registration statement
(and, if such registration includes an underwritten public offering, a letter
dated the date of the closing under the underwriting agreement) signed by the
independent public accountants who have issued a report on the Company's
financial statements included in such registration statement, in each case
covering substantially the same matters with respect to such registration
statement (and the prospectus included therein) and, in the case of such
accountants' letter, with respect to events subsequent to the date of such
financial statements, as are customarily covered in opinions of issuer's counsel
and in accountants' letters delivered to underwriters in underwritten public
offerings of securities.

                       (i) The Company shall, as soon as practicable after the
effective date of the registration statement, and in any event within 15 months
thereafter, make "generally available to its security holders" (within the
meaning of Rule 158 under the Act) an earnings statement (which need not be
audited) complying with Section 11(a) of the Act and covering a

                                       11
<PAGE>

period of at least 12 consecutive months beginning after the effective date of
the registration statement. The Company shall deliver promptly to each Holder
participating in the offering and to the managing underwriters, copies of all
correspondence between the Commission and the Company, its counsel or auditors
with respect to the registration statement and permit each Holder and
underwriter to do such investigation, upon reasonable advance notice, with
respect to information contained in or omitted from the registration statement
as it deems reasonably necessary to comply with applicable securities laws or
rules of the National Association of Securities Dealers, Inc. ("NASD"). Such
investigation shall include access to books, records and properties and
opportunities to discuss the business of the Company with its officers and
independent auditors, all to such reasonable extent and at such reasonable times
and as often as any such Holder or underwriter shall reasonably request.

                       (j) The Company shall enter into an underwriting
agreement with the managing underwriters selected for such underwriting by
Holders holding a Majority of the Warrant Securities requested to be included in
such underwriting, which may be either of the Representatives or both
Representatives. Such agreement shall be satisfactory in form and substance to
the Company, each Holder and such managing underwriter(s), and shall contain
such representations, warranties and covenants by the Company and such other
terms as are customarily contained in agreements of that type used by the
managing underwriter(s). The Holders shall be parties to any underwriting
agreement relating to an underwritten sale of their Warrant Securities and may,
at their option, require that any or all the representations, warranties and
covenants of the Company to or for the benefit of such underwriter(s) shall also
be made to and for the benefit of such Holders. Such Holders shall not be
required to make any representations or warranties to or agreements with the
Company or the underwriter(s) except as are customarily made by selling
securityholders in underwritten offerings.

                       (k) In addition to the Warrant Securities, upon the
written request therefor by any Holders, the Company shall include in the
registration statement any other

                                       12
<PAGE>

securities of the Company held by such Holders as of the date of filing of such
registration statement, including without limitation restricted shares of Common
Stock, options, warrants or any other securities convertible into shares of
Common Stock.

                       (l) For purposes of this Agreement, the term "Majority"
in reference to the Holders of Warrants or Warrant Securities, shall mean in
excess of fifty percent (50%) of the then outstanding Warrants or Warrant
Securities that (i) are not held by the Company, an affiliate, officer,
creditor, employee or agent thereof or any of their respective affiliates,
members of their family, persons acting as nominees or in conjunction therewith
and (ii) have not been resold to the public pursuant to a registration statement
filed with the Commission under the Act or pursuant to Rule 144.

                  Section 8.  Adjustments to Exercise Price and Number of
                              Securities.

                       Section 8.1 Subdivision and Combination. In case the
Company shall at any time subdivide or combine the outstanding shares of Common
Stock, the Exercise Price shall forthwith be proportionately decreased in the
case of subdivision or increased in the case of combination.

                       Section 8.2 Stock Dividends and Distributions. In case
the Company shall pay a dividend in, or make a distribution of, shares of Common
Stock or of the Company's capital stock convertible into Common Stock to which
all holders of Common Stock are entitled to participate, the Exercise Price
shall forthwith be proportionately decreased. An adjustment made pursuant to
this Section 8.2 shall be made as of the record date for the subject stock
dividend or distribution.

                       Section 8.3 Adjustment in Number of Securities. Upon each
adjustment of the Exercise Price pursuant to the provisions of this Section 8,
the number of Warrant Securities issuable upon the exercise at the adjusted
exercise price of each Warrant shall

                                       13
<PAGE>

be adjusted to the nearest whole number by multiplying a number equal to the
Exercise Price in effect immediately prior to such adjustment by the number of
Warrant Securities issuable upon exercise of the Warrants immediately prior to
such adjustment and dividing the product so obtained by the adjusted Exercise
Price.

                       Section 8.4 Definition of Common Stock. For the purpose
of this Agreement, the term "Common Stock" shall mean (i) the class of stock
designated as Common Stock in the Certificate of Incorporation of the Company as
may be amended as of the date hereof, or (ii) any other class of stock resulting
from successive changes or reclassifications of such Common Stock consisting
solely of changes in par value, or from par value to no par value, or from no
par value to par value.

                       Section 8.5 Merger or Consolidation. In case of any
consolidation of the Company with, or merger of the Company with, or merger of
the Company into, another corporation (other than a consolidation or merger
which does not result in any reclassification or change of the outstanding
Common Stock), the corporation formed by such consolidation or merger shall
execute and deliver to the Holders a supplemental warrant agreement providing
that the holder of each Warrant then outstanding or to be outstanding shall have
the right thereafter (until the expiration of such Warrant) to receive, upon
exercise of such Warrant, the kind and amount of shares of stock and other
securities and property receivable upon such consolidation or merger, by a
holder of the number of shares of Common Stock of the Company for which such
Warrant might have been exercised immediately prior to such consolidation,
merger, sale or transfer. Such supplemental warrant agreement shall provide for
adjustments which shall be identical to the adjustments provided in this Section
8. The above provision of this subsection shall similarly apply to successive
consolidations or mergers.

                  Section 8.6  No Adjustment of Exercise Price in Certain Cases.
No adjustment of the Exercise Price shall be made:

                                       14
<PAGE>

                                    If the amount of said adjustment shall be
                  less than two cents (2(cent)) per Warrant Security, provided,
                  however, that in such case any adjustment that would otherwise
                  be required then to be made shall be carried forward and shall
                  be made at the time of and together with the next subsequent
                  adjustment which, together with any adjustment so carried
                  forward, shall amount to at least two cents (2(cent)) per
                  Warrant Security.

                  Section 9. Exchange and Replacement of Warrant Certificates.
Each Warrant Certificate is exchangeable without expense, upon the surrender
thereof by the registered Holders at the principal executive office of the
Company, for a new Warrant Certificate of like tenor and date representing in
the aggregate the right to purchase the same number of Warrant Securities in
such denominations as shall be designated by the Holders thereof at the time of
such surrender.

                  Upon receipt by the Company of evidence reasonably
satisfactory to it of the loss, theft, destruction or mutilation of any Warrant
Certificate, and, in case of loss, theft or destruction, of indemnity or
security reasonably satisfactory to it, and reimbursement to the Company of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
the Warrants, if mutilated, the Company will make and deliver a new Warrant
Certificate of like tenor, in lieu thereof.

                  Section 10. Elimination of Fractional Interests. The Company
shall not be required to issue certificates representing fractions of shares of
Common Stock upon the exercise of the Warrants, nor shall it be required to
issue scrip or pay cash in lieu of fractional interests, it being the intent of
the parties that all fractional interests shall be eliminated by rounding any
fraction up to the nearest whole number of shares of Common Stock or other
securities, properties or rights.

                                       15
<PAGE>

                  Section 11. Reservation and Listing of Securities. The Company
shall at all times reserve and keep available out of its authorized shares of
Common Stock, solely for the purpose of issuance upon the exercise of the
Warrants, such number of shares of Common Stock or other securities, properties
or rights as shall be issuable upon the exercise thereof. The Company covenants
and agrees that, upon exercise of the Warrants and payment of the Exercise Price
therefor, all shares of Common Stock and other securities issuable upon such
exercise shall be duly and validly issued, fully paid, non-assessable and not
subject to the preemptive rights of any stockholder. As long as the Warrants
shall be outstanding, the Company shall use its best efforts to cause all shares
of Common Stock issuable upon the exercise of the Warrants to be listed (subject
to official notice of issuance) on all securities exchanges on which the Common
Stock issued to the public in connection herewith may then be listed and/or
quoted.

                  Section 12. Notices to Warrant Holders. Nothing contained in
this Agreement shall be construed as conferring upon the Holders the right to
vote or to consent or to receive notice as a stockholder in respect of any
meetings of stockholders for the election of directors or any other matter, or
as having any rights whatsoever as a stockholder of the Company. If, however, at
any time prior to the expiration of the Warrants and their exercise, any of the
following events shall occur:

                       (i)    the Company shall take a record of the holders of
                  its shares of Common Stock for the purpose of entitling them
                  to receive a dividend or distribution payable otherwise than
                  in cash, or a cash dividend or distribution payable otherwise
                  than out of current or retained earnings, as indicated by the
                  accounting treatment of such dividend or distribution on the
                  books of the Company; or

                       (ii)   the Company shall offer to all the holders of its
                  Common Stock any additional shares of capital stock of the
                  Company or securities convertible

                                       16

<PAGE>

                  into or  exchangeable  for  shares of  capital  stock of the
                  Company,  or any  option,  right  or  warrant  to  subscribe
                  therefor; or

                       (iii)  a dissolution, liquidation or winding up of the
                  Company (other than in connection with a consolidation or
                  merger) or a sale of all or substantially all of its property,
                  assets and business as an entirety shall be proposed;

then, in any one or more of said events, the Company shall give written notice
of such event at least fifteen (15) days prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
stockholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, or entitled to vote on such
proposed dissolution, liquidation, winding up or sale. Such notice shall specify
such record date or the date of closing the transfer books, as the case may be.
Failure to give such notice or any defect therein shall not affect the validity
of any action taken in connection with the declaration or payment of any such
dividend, or the issuance of any convertible or exchangeable securities, or
subscription rights, options or warrants, or any proposed dissolution,
liquidation, winding up or sale.

                  SECTION 13. Notices.

                  All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made and
sent when delivered, or mailed by registered or certified mail, return receipt
requested:

                       (i)    If to the registered Holders of the Warrants, to
                  the address of such Holders as shown on the books of the
                  Company; or (ii) If to the Company, to the address set forth
                  in Section 3 hereof or to such other address as the Company
                  may designate by notice to the Holders.

                  SECTION 14. Supplements and Amendments. The Company and the
Representatives may from time to time supplement or amend this Agreement without
the

                                       17
<PAGE>

approval of any Holders of Warrant Certificates (other than the Representatives)
in order to cure any ambiguity, to correct or supplement any provision contained
herein which may be defective or inconsistent with any provisions herein, or to
make any other provisions in regard to matters or questions arising hereunder
which the Company and the Representatives may deem necessary or desirable and
which the Company and the Representatives deem shall not adversely affect the
interests of the Holders of Warrant Certificates.

                  SECTION 15. Successors. All the covenants and provisions of
this Agreement shall be binding upon and inure to the benefit of the Company,
the Holders and their respective successors and assigns hereunder.

                  SECTION 16. Termination.  This Agreement shall terminate at
the close of business on _____________, 2006. Notwithstanding the foregoing, the
indemnification provisions of Section 7 shall survive such termination until the
close of business on ______________, 2012.

                  SECTION 17. Governing Law; Submission to Jurisdiction. This
Agreement and each Warrant Certificate issued hereunder shall be deemed to be a
contract made under the laws of the State of New York and for all purposes shall
be construed in accordance with the laws of said State without giving effect to
the rules of said State governing the conflicts of laws.

                  The Company, the Representatives and the Holders hereby agree
that any action, proceeding or claim against it arising out of, or relating in
any way to, this Agreement shall be brought and enforced in the courts of the
State of New York or of the United States of America for the Southern District
of New York, and irrevocably submits to such jurisdiction, which jurisdiction
shall be exclusive. The Company, the Representatives and the Holders hereby
irrevocably waive any objection to such exclusive jurisdiction or inconvenient
forum. Any such process or summons to be served upon any of the Company, the
Representatives and the Holders (at the option of the party bringing such
action, proceeding or claim) may be served by

                                       18
<PAGE>

transmitting a copy thereof, by registered or certified mail, return receipt
requested, postage prepaid, addressed to it at the address set forth in Section
13 hereof. Such mailing shall be deemed personal service and shall be legal and
binding upon the party so served in any action, proceeding or claim. The
Company, the Representatives and the Holders agree that the prevailing
party(ies) in any such action or proceeding shall be entitled to recover from
the other party(ies) all of its/their reasonable legal costs and expenses
relating to such action or proceeding and/or incurred in connection with the
preparation therefor.

                  SECTION 18. Entire Agreement; Modification. This Agreement
(including the Underwriting Agreement to the extent portions thereof are
referred to herein) contains the entire understanding between the parties hereto
with respect to the subject matter hereof and may not be modified or amended
except by a writing duly signed by the party against whom enforcement of the
modification or amendment is sought.

                  SECTION 19. Severability. If any provision of this Agreement
shall be held to be invalid or unenforceable, such invalidity or
unenforceability shall not affect any other provision of this Agreement.

                  SECTION 20. Captions. The caption headings of the Sections of
this Agreement are for convenience of reference only and are not intended, nor
should they be construed as, a part of this Agreement and shall be given no
substantive effect.

                  SECTION 21. Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any person or corporation other than the
Company and the Representatives and any other registered Holders of the Warrant
Certificates or Warrant Securities any legal or equitable right, remedy or claim
under this Agreement; and this Agreement shall be for the sole benefit of the
Company and the Representatives and any other registered Holders of Warrant
Certificates or Warrant Securities.

                                       19
<PAGE>

                  SECTION 22. Counterparts. This Agreement may be executed in
any number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and such counterparts shall together constitute but
one and the same instrument.

                                       20
<PAGE>

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

                                      b2bstores.com Inc.

                                      By:
                                         --------------------------------
                                         Name:
                                         Title:

                                      GAINES, BERLAND INC.

                                      By:
                                         ---------------------------------
                                         Name:
                                         Title:

                                      NOLAN SECURITIES CORP.

                                      By:
                                         ---------------------------------
                                         Name:
                                         Title:

<PAGE>

                                                                      EXHIBIT A

                          [FORM OF WARRANT CERTIFICATE]

THE WARRANTS REPRESENTED BY THIS CERTIFICATE AND THE OTHER SECURITIES ISSUABLE
UPON EXERCISE THEREOF MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO (i) AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "ACT"), (ii) TO THE EXTENT APPLICABLE, RULE 144 UNDER THE ACT (OR ANY
SIMILAR RULE UNDER THE ACT RELATING TO THE DISPOSITION OF SECURITIES), OR (iii)
AN OPINION OF COUNSEL, IF SUCH OPINION SHALL BE REASONABLY SATISFACTORY TO
COUNSEL FOR THE ISSUER, THAT AN EXEMPTION FROM REGISTRATION UNDER THE ACT IS
AVAILABLE.

THE TRANSFER OR EXCHANGE OF THE WARRANTS REPRESENTED BY THIS CERTIFICATE IS
RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT REFERRED TO HEREIN.

                            EXERCISABLE ON OR BEFORE
                 5:30 P.M., NEW YORK TIME, ______________, 2005

No. W-___                       Warrants to Purchase ____ Shares of Common Stock

                               WARRANT CERTIFICATE

                  This Warrant Certificate certifies that , or registered
assigns, is the registered holder of ________Warrants to purchase initially, at
any time from ___________, 2001 [one year from the effective date of the
Registration Statement] until 5:30 p.m. New York time on ____________, 2005
[five years from the effective date of the Registration Statement] ("Expiration
Date"), up to __________ fully-paid and non-assessable shares of common stock,
("Common Stock") of b2bstores.com Inc., a Delaware corporation (the "Company"),
(one share of Common Stock referred to individually as a "Security" and
collectively as the "Securities") at the initial exercise price, subject to
adjustment in certain events (the "Exercise Price"), of $____ per share [165% of
the initial public offering price per share] of Common Stock upon surrender of
this Warrant Certificate and payment of the Exercise Price at an office or
agency of the Company, but subject to the conditions set forth herein and in the
warrant agreement dated as of ______________, 2000 between the Company and
GAINES, BERLAND INC. and NOLAN SECURITIES CORP. (the "Warrant Agreement").
Payment of the Exercise Price shall be made by certified or official bank check
in New York Clearing House funds payable to the order of the Company.

                  No Warrant may be exercised after 5:30 p.m., New York time, on
the Expiration Date, at which time all Warrants evidenced hereby, unless
exercised prior thereto, hereby shall thereafter be void.

<PAGE>

                  The Warrants evidenced by this Warrant Certificate are part of
a duly authorized issue of Warrants issued pursuant to the Warrant Agreement,
which Warrant Agreement is hereby incorporated by reference in and made a part
of this instrument and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Company and the Holders (the words "holder" or "Holders" meaning the registered
holder or registered Holders) of the Warrants.

                  The Warrant Agreement provides that upon the occurrence of
certain events the Exercise Price and the type and/or number of the Company's
securities issuable thereupon may, subject to certain conditions, be adjusted.
In such event, the Company will, at the request of the holder, issue a new
Warrant Certificate evidencing the adjustment in the Exercise Price and the
number and/or type of securities issuable upon the exercise of the Warrants;
provided, however, that the failure of the Company to issue such new Warrant
Certificates shall not in any way change, alter, or otherwise impair, the rights
of the holder as set forth in the Warrant Agreement.

                  The Warrants evidenced by this Warrant Certificate are
restricted from sale, assignment or hypothecation for a period of one (1) year
from the effective date of the offering except to officers or partners (not
directors) of the underwriter and members of the selling group and/or their
officers or partners.

                  Upon due presentment for registration of transfer of this
Warrant Certificate at an office or agency of the Company, a new Warrant
Certificate or Warrant Certificates of like tenor and evidencing in the
aggregate a like number of Warrants shall be issued to the transferee(s) in
exchange for this Warrant Certificate, subject to the limitations provided
herein and in the Warrant Agreement, without any charge except for any tax or
other governmental charge imposed in connection with such transfer.

                  Upon the exercise of less than all of the Warrants evidenced
by this Certificate, the Company shall forthwith issue to the holder hereof a
new Warrant Certificate representing such number of unexercised Warrants.

                  The Company may deem and treat the registered Holders hereof
as the absolute owner(s) of this Warrant Certificate (notwithstanding any
notation of ownership or other writing hereon made by anyone), for the purpose
of any exercise hereof, and of any distribution to the Holders hereof, and for
all other purposes, and the Company shall not be affected by any notice to the
contrary.

                  All terms used in this Warrant Certificate which are defined
in the Warrant Agreement shall have the meanings assigned to them in the Warrant
Agreement.

                                       2
<PAGE>

                  IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be duly executed under its corporate seal.

Dated as of ___________, 2000

                                    b2bstores.com Inc.

                                    By:
                                       --------------------------------
                                       Name:
                                       Title:

[SEAL]

Attest:
       ---------------------
       Secretary

<PAGE>

             [FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.1]

                  The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to purchase:

                  _______ shares of Common Stock;

and herewith tenders in payment for such securities a certified or official bank
check payable in New York Clearing House Funds to the order of b2bstores.com
Inc. in the amount of $____, all in accordance with the terms of Section 3.1 of
the Representatives' Warrant Agreement dated as of ______________, 2000 between
b2bstores.com Inc. and Gaines, Berland Inc. and Nolan Securities Corp. The
undersigned requests that a certificate for such securities be registered in the
name of _________ whose address is ________ and that such Certificate be
delivered to _________ whose address is _________.

Dated:
                                    Signature
                                             -----------------------------------
                                    (Signature must conform in all respects to
                                    name of holder as specified on the face of
                                    the Warrant Certificate.)

                                    --------------------------------------------
                                    (Insert Social Security or Other Identifying
                                    Number of Holder)

<PAGE>

             [FORM OF ELECTION TO PURCHASE PURSUANT TO SECTION 3.2]

                  The undersigned hereby irrevocably elects to exercise the
right, represented by this Warrant Certificate, to purchase:

                  __________ shares of Common Stock;

and herewith tenders in payment for such securities ________ Warrants all in
accordance with the terms of Section 3.2 of the Representatives' Warrant
Agreement dated as of ___________, 2000 between b2bstores.com Inc. and Gaines,
Berland Inc. and Nolan Securities Corp. The undersigned requests that a
certificate for such securities be registered in the name of __________whose
address is __________ and that such Certificate be delivered to _________ whose
address is ________________.

Dated:
                                    Signature
                                             -----------------------------------
                                    (Signature must conform in all respects to
                                    name of holder as specified on the face of
                                    the Warrant Certificate.)

                                    --------------------------------------------
                                    (Insert Social Security or Other Identifying
                                    Number of Holder)

<PAGE>

                              [FORM OF ASSIGNMENT]

             (To be executed by the registered holder if such holder
                  desires to transfer the Warrant Certificate.)

          FOR VALUE RECEIVED __________ hereby sells, assigns and transfers unto

                  (Please print name and address of transferee)

this Warrant Certificate, together with all right, title and interest therein,
and does hereby irrevocably constitute and appoint Attorney, to transfer the
within Warrant Certificate on the books of the within-named Company, with full
power of substitution.

Dated:
                                    Signature
                                             -----------------------------------
                                    (Signature must conform in all respects to
                                    name of holder as specified on the face of
                                    the Warrant Certificate.)

                                    --------------------------------------------
                                    (Insert Social Security or Other Identifying
                                    Number of Holder)

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