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EXHIBIT 10.1 - WARRANT AGREEMENT

                                WARRANT AGREEMENT

         AGREEMENT,  dated  this  12th day of June  2003 by and  between  ACTION
PRODUCTS  INTERNATIONAL,  INC.,  a  Florida  corporation  (the  "Company"),  and
REGISTRAR AND TRANSFER COMPANY, as Warrant Agent (the "Warrant Agent").

            WHEREAS,  each record holder of the Company's  common stock,  $0.001
par value (the "Common Stock"), on the record date of June 12, 2003 (the "Record
Date"),  will receive one (1) warrant (a  "Warrant")  to purchase an  additional
share of the Company's  Common Stock for each one (1) share of Common Stock held
on the Record Date at an exercise price as determined herein; and

            WHEREAS, the Warrants shall be exercisable for a one (1) year period
from the date hereof (the "Effective  Date") unless earlier redeemed as provided
herein; and

         WHEREAS,  the Company desires the Warrant Agent to act on behalf of the
Company,  and the  Warrant  Agent is willing to so act, in  connection  with the
issuance,  registration,  transfer and exchange of certificates representing the
Warrants and the exercise of the Warrants.

         NOW,  THEREFORE,  in  consideration  of the  premises  and  the  mutual
agreements  hereinafter  set forth and for the purpose of defining the terms and
provisions of the Warrants and the  certificates  representing  the Warrants and
the respective rights and obligations  thereunder of the Company, the holders of
certificates representing the Warrants and the Warrant Agent, the parties hereto
agree as follows:

         1. DEFINITIONS. Capitalized terms used herein and not otherwise defined
shall have the following meanings, unless the context shall otherwise require:

               "Corporate Office" shall mean the office of the Warrant Agent (or
its successor) at which at any particular  time its principal  business shall be
administered,  which office is located on the date hereof at 10 Commerce  Drive,
Cranford, New Jersey 07016.

               "Exercise  Date" shall mean as to any Warrant,  the date on which
the  Warrant  Agent  shall  have  received  both  (a)  the  Warrant  Certificate
representing  such Warrant,  with the Exercise Form thereon duly executed by the
Registered Holder hereof with such Registered Holder's signature guaranteed, and
(b) payment in cash or by bank or  cashier's  check made  payable to the Warrant
Agent for the  account  of the  Company,  of the  amount in lawful  money of the
United States of America equal to the applicable Exercise Price.

               "Exercise  Price" shall mean $2.00 per share of Common Stock,  if
the  Exercise  Date is after the  Effective  Date but on or before June 11, 2004
subject to modification and adjustment as provided in Section 8.

               "Expiration Date" shall mean, unless the Warrants are redeemed as
provided in Section 9 hereof  prior to such date,  5:00 p.m.  (Eastern  time) on
June 11, 2004.

               "Registered  Holder"  shall  mean the  person  in whose  name any
certificate   representing  the  Warrants  shall  be  registered  on  the  books
maintained by the Warrant Agent pursuant to Section 6.

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               "Warrant Certificate" shall mean a certificate  representing each
of the Warrants substantially in the form annexed hereto as Exhibit A.

         2. WARRANTS AND ISSUANCE OF WARRANT CERTIFICATES.

               (a) Each  Warrant  shall  entitle  the  Registered  Holder of the
Warrant Certificate  representing such Warrant to purchase at the Exercise Price
therefor  from the  Effective  Date until the  Expiration  Date one (1) share of
Common Stock upon the exercise  thereof,  subject to modification and adjustment
as provided in Section 8.

               (b) From time to time,  up to the  Expiration  Date,  the Warrant
Agent  shall   countersign   and  deliver   Warrant   Certificates  in  required
denominations  of one or whole number  multiples  thereof to the person entitled
thereto  in  connection  with any  transfer  or  exchange  permitted  under this
Agreement.   No  Warrant   Certificates  shall  be  issued  except  (i)  Warrant
Certificates  initially  issued  hereunder,  (ii)  those  issued on or after the
Effective Date, upon the exercise of fewer than all Warrants  represented by any
Warrant Certificate, to evidence any unexercised Warrants held by the exercising
Registered  Holder,  (iii)  Warrant  Certificates  issued  upon any  transfer or
exchange of Warrants,  (iv) Warrant  Certificates issued in replacement of lost,
stolen,  destroyed or mutilated Warrant Certificates  pursuant to Section 7, and
(v) at the option of the Company,  Warrant  Certificates  in such form as may be
approved by its Board of Directors,  to reflect any  adjustment or change in the
Exercise Price,  the number of shares of Common Stock  purchasable upon exercise
of the Warrants or the  redemption  price  therefor  made  pursuant to Section 9
hereof.

         3. FORM AND EXECUTION OF WARRANT CERTIFICATES. The Warrant Certificates
shall be substantially in the form annexed hereto as Exhibit A and may have such
letters,  numbers  or other  marks of  identification  or  designation  and such
legends, summaries or endorsements printed,  lithographed or engraved thereon as
the Company may deem appropriate and as are not inconsistent with the provisions
of this Agreement, or as may be required to comply with any law or with any rule
or regulation made pursuant  thereto or with any rule or regulation of any stock
exchange or market on which the Warrants may be listed,  or to conform to usage.
The Warrant  Certificates  shall be dated the date of issuance  thereof (whether
upon initial issuance,  transfer, exchange or in lieu of mutilated, lost, stolen
or destroyed Warrant  Certificates).  Warrant  Certificates shall be executed on
behalf of the  Company  by its  Chairman  of the  Board,  President  or any Vice
President and by its Treasurer or an Assistant  Treasurer or its Secretary or an
Assistant  Secretary,  by manual signatures or by facsimile  signatures  printed
thereon,  and shall have  imprinted  thereon a facsimile of the Company's  seal.
Warrant  Certificates  shall be manually  countersigned by the Warrant Agent and
shall not be valid for any purpose unless so countersigned.  In case any officer
of the Company who shall have signed any of the Warrant Certificates shall cease
to be such  officer of the  Company  before the date of  issuance of the Warrant
Certificates  or  before  countersignature  by the  Warrant  Agent and issue and
delivery thereof, such Warrant Certificates,  nevertheless, may be countersigned
by the Warrant  Agent,  issued and  delivered  with the same force and effect as
though the person who signed such Warrant Certificates had not ceased to be such
officer of the Company.

         4. EXERCISE.

               (a) Warrants may be exercised  commencing at any time on or after
the  Effective  Date,  but not after  the  Expiration  Date,  upon the terms and
subject  to the  conditions  set  forth  herein  and in the  applicable  Warrant
Certificate.  A Warrant shall be deemed to have been exercised immediately prior
to the  close of  business  on the  Exercise  Date,  provided  that the  Warrant
Certificate  representing  such  Warrant,  with the  Exercise  Form thereon duly
executed  by  the  Registered  Holder  thereof  with  such  Registered  Holder's
signature guaranteed, together with payment in cash or by bank or cashier's

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check made payable to the order of the Company, of an amount in lawful money, of
the United States of America equal to the applicable  Exercise  Price,  has been
received in good funds by the Warrant  Agent or the Company.  If received by the
Company, the Company shall deliver the original Warrant Certificate and Exercise
Form to the Warrant Agent as soon as practicable. The person entitled to receive
the securities  deliverable upon such exercise shall be treated for all purposes
as the holder of such  securities  as of the close of business  on the  Exercise
Date.  As soon as  practicable  on or after the  Exercise  Date and in any event
within five  business  days after such date,  the Warrant Agent on behalf of the
Company  shall  cause to be issued to the person or persons  entitled to receive
the same a Common Stock  certificate  or  certificates  for the shares of Common
Stock  deliverable  upon such exercise,  and the Warrant Agent shall deliver the
same to the person or persons entitled  thereto.  Upon the exercise of Warrants,
the Warrant Agent shall promptly  notify the Company in writing of such fact and
of the number of  securities  delivered  upon such  exercise and shall cause all
payments  of an  amount  in cash or by check  made  payable  to the order of the
Company,  equal to the Exercise Price, to be deposited promptly in the Company's
bank account.

               (b) If any Warrants are exercised which exercise was solicited by
a  broker-dealer  with whom the Company  agreed in writing to pay a solicitation
fee for  exercise  of the  Warrant  (a  "Broker-Dealer"),  then  the  soliciting
Broker-Dealer  shall be entitled to receive  from the Company  upon  exercise of
each of the Warrants so  exercised,  a fee of not less than six percent (6%) and
not greater than ten percent (10%),  the exact  percentage to be determined by a
separate agreement between the Company and the  Broker-Dealer,  of the aggregate
price of the Warrants so exercised (the "Exercise Fee"); provided,  that, at the
time of exercise, (i) the market price of the Company's Common Stock is equal to
or greater than the Exercise Price,  (ii) the  Broker-Dealer  is a member of the
National Association of Securities Dealers,  Inc., (iii) the Warrant is not held
in a discretionary account,  unless prior specific written approval for exercise
has been received by the Broker-Dealer from its customer, (iv) disclosure of the
compensation  arrangement  is made in  documents  provided to the holders of the
Warrants,  and  (v) the  solicitation  of the  Warrant  is not in  violation  of
Regulation M promulgated under the Securities  Exchange Act of 1934, as amended.
Within five (5) days after the end of each month,  the Warrant Agent will notify
the Company of each Warrant  Certificate  which has been properly  completed for
exercise by holders of Warrants  during the last month.  The Warrant  Agent will
provide the Company with such  information,  in connection  with the exercise of
each Warrant,  as the Company  shall  reasonably  request.  In the event that an
Exercise Fee is paid to a Broker-Dealer  with respect to a Warrant which was not
properly completed for exercise or in respect of which such Broker-Dealer is not
entitled to an Exercise Fee, such Broker-Dealer will return such Exercise Fee to
the Company.

               (c) The Company  shall not be obligated  to issue any  fractional
share interests or fractional warrant interests upon the exercise of any Warrant
or  Warrants,  nor shall it be  obligated  to issue scrip or pay cash in lieu of
fractional interests. Any fractional interest shall be rounded up to the nearest
whole figure.

               (d) Anything in this Section 4  notwithstanding,  no Warrant will
be  exercisable  unless at the time of  exercise  the Company has filed with the
Securities  and  Exchange  Commission,  and  there  shall be then  effective,  a
registration  statement under the Securities Act of 1933, as amended (the "Act")
covering the offer and sale of the shares of Common Stock issuable upon exercise
of such Warrant and such offer and sale of the shares have been so registered or
qualified  or  deemed to be exempt  under  the  securities  laws of the state of
residence of the holder of such Warrant.

               (e) In addition, if it is required by law and upon instruction by
the  Company,  the  Warrant  Agent  will  deliver  to each  Registered  Holder a
prospectus that complies with the provisions of Section 5 of the Securities Act,
as amended, and the Company agrees to supply the Warrant Agent with a sufficient
number of prospectuses to effectuate that purpose.

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         5. RESERVATION OF SHARES; PAYMENT OF TAXES.

               (a) The Company  covenants  that it will at all times reserve and
keep  available out of its  authorized  Common Stock,  solely for the purpose of
issuance  upon  exercise of  warrants,  such number of shares of Common Stock as
shall then be  issuable  upon the  exercise  of all  outstanding  Warrants.  The
Company  covenants  that all shares of Common Stock which shall be issuable upon
exercise of the Warrants  shall,  at the time of delivery  thereof,  be duly and
validly issued and fully paid and  nonassessable and free from all preemptive or
similar rights, taxes, liens and charges with respect to the issuance thereof.

               (b) The Company shall pay all documentary, stamp or similar taxes
and other governmental  charges that may be imposed with respect to the issuance
of  Warrants,  or the  issuance or  delivery of any shares of Common  Stock upon
exercise of the Warrants;  provided, however, that if shares of Common Stock are
to be  delivered in a name other than the name of the  Registered  Holder of the
Warrant  Certificate  representing  any Warrant  being  exercised,  then no such
delivery  shall be made  unless the person  requesting  the same has paid to the
Warrant Agent the amount of transfer taxes or charges incident thereto, if any.

         6. EXCHANGE AND REGISTRATION OF TRANSFER.

               (a)  Warrant  Certificates  may be  exchanged  for other  Warrant
Certificates  representing  an equal  aggregate  number  of  Warrants  or may be
transferred in whole or in part.  Warrant  Certificates to be so exchanged shall
be  surrendered  to  the  Warrant  Agent  at its  Corporate  Office,  and,  upon
satisfaction of the terms and conditions  hereof,  the Company shall execute and
the Warrant Agent shall countersign,  issue and deliver in exchange therefor the
Warrant  Certificate  or  Certificates  which the  Registered  Holder making the
exchange shall be entitled to receive.

               (b) The Warrant Agent shall keep, at its Corporate Office,  books
in which, subject to such reasonable  regulations as it may prescribe,  it shall
register Warrant Certificates and the transfer thereof. Upon due presentment for
registration of transfer of any Warrant  Certificate at such office, the Company
shall execute and the Warrant Agent shall issue and deliver to the transferee or
transferees a new Warrant  Certificate  or  Certificates  representing  an equal
aggregate number of Warrants.

               (c)  With  respect  to any  Warrant  Certificates  presented  for
registration  of transfer,  or for exchange or  exercise,  the Exercise  Form or
Assignment  Form,  as the  case may be,  on the  reverse  thereof  shall be duly
endorsed or be  accompanied  by a written  instrument or instruments of transfer
and  subscription,  in form  satisfactory  to the Company and the Warrant Agent,
duly executed by the  Registered  Holder thereof with such  Registered  Holder's
signature guaranteed.

               (d) A service  charge may be imposed by the Warrant Agent for any
exchange, registration or transfer of Warrant Certificates.

               (e) All  Warrant  Certificates  surrendered  for  exercise or for
exchange shall be promptly canceled by the Warrant Agent.

               (f)  Prior  to  due  presentment  for  registration  or  transfer
thereof,  the Company and the  Warrant  Agent may deem and treat the  Registered
Holder of any Warrant  Certificate as the absolute owner thereof of each Warrant
represented  thereby  (notwithstanding  any  notations  of  ownership or writing
thereon  made by anyone  other than the  Company or the  Warrant  Agent) for all
purposes and shall not be affected by any notice to the contrary.

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         7. LOSS OR  MUTILATION.  Upon  receipt by the  Company  and the Warrant
Agent of evidence  satisfactory to them of the ownership of and the loss, theft,
destruction or mutilation of any Warrant  Certificate  and (in the case of loss,
theft  or  destruction)  of  indemnity  satisfactory  to  them,  and (in case of
mutilation) upon surrender and cancellation  thereof,  the Company shall execute
and the  Warrant  Agent  shall  countersign  and  deliver in lieu  thereof a new
Warrant  Certificate   representing  an  equal  aggregate  number  of  Warrants.
Applicants  for a  substitute  Warrant  Certificate  shall also comply with such
other  reasonable  requests and pay such other  reasonable costs and expenses as
the Warrant Agent may impose.

         8.  ADJUSTMENTS OF NUMBER AND KIND OF SHARES  PURCHASABLE  AND EXERCISE
PRICE.  The number and kind of securities  or other  property  purchasable  upon
exercise of a Warrant shall be subject to adjustment  from time to time upon the
occurrence, after the date hereof, of any of the following events:

               (a) In case the  Company  shall (i) pay a dividend  in, or make a
distribution of, shares of capital stock on its outstanding  Common Stock,  (ii)
subdivide its  outstanding  shares of Common Stock into a greater number of such
shares or (iii)  combine its  outstanding  shares of Common Stock into a smaller
number of such shares,  the total  number of shares of Common Stock  purchasable
upon the exercise of each Warrant outstanding immediately prior thereto shall be
adjusted so that the holder of any Warrant  Certificate  thereafter  surrendered
for exercise shall be entitled to receive at the same  aggregate  Exercise Price
the number of shares of capital stock (of one or more classes) which such holder
would have owned or have been  entitled  to receive  immediately  following  the
happening of any of the events  described  above had such Warrant been exercised
in full  immediately  prior to the record date with  respect to such event.  Any
adjustment  made  pursuant  to this  subsection  shall,  in the  case of a stock
dividend or  distribution,  become effective as of the record date therefor and,
in the case of a subdivision  or  combination,  be made as of the effective date
thereof. If, as a result of an adjustment made pursuant to this subsection,  the
holder of any Warrant  Certificate  thereafter  surrendered  for exercise  shall
become entitled to receive shares of two or more classes of capital stock of the
Company,  the Board of Directors of the Company  (whose  determination  shall be
conclusive and shall be evidenced by a Board  resolution  filed with the Warrant
Agent) shall determine the allocation of the adjusted  Exercise Price between or
among shares of such classes of capital stock.

               (b)   In   the   event   of  a   capital   reorganization   or  a
reclassification  of the Common Stock (except as provided in subsection a. above
or subsection b. below), any Registered Holder, upon exercise of Warrants, shall
be entitled to receive, in substitution for the Common Stock to which they would
have become entitled upon exercise  immediately prior to such  reorganization or
reclassification,  the shares (of any class or classes) or other  securities  or
property of the Company (or cash) that he would have been entitled to receive at
the same aggregate Exercise Price upon such  reorganization or  reclassification
if such Warrants had been  exercised  immediately  prior to the record date with
respect  to  such  event;  and in  any  such  case,  appropriate  provision  (as
determined by the Board of Directors of the Company,  whose  determination shall
be conclusive and shall be evidenced by a certified Board  resolution filed with
the Warrant  Agent) shall be made for the  application of this  subsection  with
respect  to the  rights  and  interests  thereafter  of the  Registered  Holders
(including  but not limited to the  allocation of the Exercise  Price between or
among  shares of  classes  of capital  stock),  to the end that this  subsection
(including  the  adjustments  of the  number of shares of Common  Stock or other
securities  purchasable  and the Exercise  Price  thereof)  shall  thereafter be
reflected, as nearly as reasonably  practicable,  in all subsequent exercises of
the Warrants for any shares or securities or other property (or cash) thereafter
deliverable upon the exercise of the Warrants.

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               (c)  Whenever  the  number of  shares  of  Common  Stock or other
securities  purchasable  upon  exercise  of a Warrant is adjusted as provided in
this  Section,  the  Company  will  promptly  file  with  the  Warrant  Agent  a
certificate signed by a Chairman or co-Chairman of the Board or the President or
a Vice  President of the Company and by the Treasurer or an Assistant  Treasurer
or the  Secretary or an Assistant  Secretary  of the Company  setting  forth the
number and kind of securities or other property  purchasable  upon exercise of a
Warrant, as so adjusted,  stating that such adjustments in the number or kind of
shares or other  securities  or  property  conform to the  requirements  of this
Section,  and setting forth a brief  statement of the facts  accounting for such
adjustments.  Promptly after receipt of such  certificate,  the Company,  or the
Warrant Agent at the Company's request,  will deliver,  by first-class,  postage
prepaid  mail,  a brief  summary  thereof (to be supplied by the Company) to the
registered holders of the outstanding Warrant Certificates;  provided,  however,
that failure to file or to give any notice  required under this  subsection,  or
any defect  therein,  shall not  affect the  legality  or  validity  of any such
adjustments under this Section.

               (d) In case of any  consolidation  of the Company with, or merger
of the Company into,  another  corporation or entity (other than a consolidation
or  merger  which  does not  result  in any  reclassification  or  change of the
outstanding  Common  Stock),  or in case of any sale or  conveyance  to  another
corporation  or  entity  of  the  property  of the  Company  as an  entirety  or
substantially  as  an  entirety,  the  corporation  or  entity  formed  by  such
consolidation  or merger or the  corporation or entity which shall have acquired
such assets,  as the case may be, shall execute and deliver to the Warrant Agent
a supplemental  warrant agreement providing that the holder of each Warrant then
outstanding  shall  have the right  thereafter  (until  the  expiration  of such
Warrant) to receive,  upon exercise of such Warrant,  solely the kind and amount
of shares of stock and other  securities and property (or cash)  receivable upon
such consolidation, merger, sale or transfer 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 as
nearly  equivalent as may be  practicable  to the  adjustments  provided in this
Section.  The  above  provision  of this  subsection  shall  similarly  apply to
successive consolidations,  mergers, sales or transfers. The Warrant Agent shall
not be under any  responsibility  to determine the  correctness of any provision
contained in any such supplemental warrant agreement relating to either the kind
or amount of shares of stock or securities or property (or cash)  purchasable by
holders of Warrant  Certificates  upon the exercise of their  Warrants after any
such  consolidation,  merger,  sale or transfer or of any  adjustment to be made
with respect thereto,  but may accept as conclusive  evidence of the correctness
of any such provisions, and shall be protected in relying upon, a certificate of
a firm of independent  certified public  accountants (who may be the accountants
regularly employed by the Company) with respect thereto.

               (e)  Irrespective  of any  adjustments  in the  number or kind of
shares issuable upon exercise of Warrants,  Warrant Certificates  theretofore or
thereafter  issued may continue to express the same price and number and kind of
shares as are stated in the  similar  Warrant  Certificates  initially  issuable
pursuant to this Agreement.

               (f)  The  Company  may  retain  a  firm  of  independent   public
accountants of recognized standing,  which may be the firm regularly retained by
the  Company,  selected  by the Board of  Directors  of the Company or the Audit
Committee of said Board,  and not  disapproved by the Warrant Agent, to make any
computation  required under this Section,  and a certificate signed by such firm
shall, in the absence of fraud or gross  negligence,  be conclusive  evidence of
the correctness of any computation made under this Section.

               (g) For the purpose of this  Section 8, the term  "Common  Stock"
shall mean (i) the Common Stock or (ii) any other class of stock  resulting from
successive changes or reclassifications of

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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.  In the event that at any
time as a result of an adjustment  made pursuant to this Section,  the holder of
any Warrant thereafter surrendered for exercise shall become entitled to receive
any shares of capital  stock of the Company  other than shares of Common  Stock,
thereafter  the number of such other shares so  receivable  upon exercise of any
Warrant  shall be  subject  to  adjustment  from time to time in a manner and on
terms as nearly  equivalent as practicable to the provisions with respect to the
Common  Stock  contained  in this  Section,  and all  other  provisions  of this
Agreement,  with respect to the Common  Stock,  shall apply on like terms to any
such other shares.

               (h)  Before  taking any action  that  would  cause an  adjustment
pursuant to Section 8 hereof reducing the portion of the Exercise Price required
to  purchase  one share of capital  stock below the then par value (if any) of a
share of such capital  stock,  the Company will use its best efforts to take any
corporate action which, in the opinion of its counsel, may be necessary in order
that the Company may  validly  and legally  issue fully paid and  non-assessable
shares of such capital stock.

         9. REDEMPTION.

               (a)  Commencing  on the  Effective  Date,  the  Company  may,  on
twenty-one (21) days' prior written notice redeem all the Warrants at $0.001 per
Warrant. All Warrants must be redeemed if any are redeemed.

               (b) In the event the Company exercises its right to redeem all of
the  Warrants,  it shall  give or cause to be  given  notice  to the  Registered
Holders  of the  Warrants,  by mailing  to such  Registered  Holders a notice of
redemption, first class, postage prepaid, not later than the twenty-first (21st)
day before the date fixed for redemption,  at their last address as shall appear
on the records of the Warrant  Agent.  Any notice mailed in the manner  provided
herein shall be conclusively presumed to have been duly given whether or not the
Registered Holder receives such notice.

               (c) The notice of  redemption  shall  specify (i) the  redemption
price,  (ii) the date fixed for  redemption,  (iii) the place  where the Warrant
Certificate  shall be delivered and the redemption price shall be paid, and (iv)
that the right to exercise the Warrant  shall  terminate at 5:00 p.m.  (New York
time) on the business day  immediately  preceding the date fixed for redemption.
The date fixed for the redemption of the Warrants shall be the Redemption  Date.
No failure to mail such notice nor any defect therein or in the mailing  thereof
shall affect the validity of the proceedings for such redemption  except as to a
Registered  Holder (i) to whom  notice  was not mailed or (ii) whose  notice was
defective.  An  affidavit  of the Warrant  Agent or the  Secretary  or Assistant
Secretary of the Company that notice of redemption has been mailed shall, in the
absence of fraud, be prima facie evidence of the facts stated therein.

               (d) From  and  after  the  Redemption  Date,  all  rights  of the
Registered  Holders  (except the right to receive the  redemption  price)  shall
terminate,  but only if (i) no later than one day prior to the  redemption  date
the Company shall have  irrevocably  deposited  with the Warrant Agent as paying
agent a sufficient amount to pay on the Redemption Date the redemption price for
all Warrants called for redemption and (ii) the notice of redemption  shall have
stated  the name and  address  of the  Warrant  Agent and the  intention  of the
Company to deposit  such  amount  with the  Warrant  Agent no later than one day
prior to the Redemption Date.

               (e) The  Warrant  Agent  shall  pay to the  holders  of record of
redeemed Warrants all monies received by the Warrant Agent for the redemption of
Warrants to which the holders of record of such redeemed Warrants who shall have
surrendered their Warrants are entitled.

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               (f) Any amounts  deposited  with the  Warrant  Agent that are not
required for redemption of Warrants may be withdrawn by the Company. Any amounts
deposited with the Warrant Agent that shall be unclaimed  after three (3) months
after the  redemption  date may be withdrawn by the Company,  and thereafter the
holders  of the  Warrants  called  for  redemption  for which  such  funds  were
deposited  shall look solely to the Company for  payment.  The Company  shall be
entitled to the interest,  if any, on funds deposited with the Warrant Agent and
the holders of redeemed Warrants shall have no right to any such interest.

               (g) Any right to exercise a warrant shall  terminate at 5:00 p.m.
(New York time) on the business day immediately  preceding the Redemption  Date.
The redemption  price payable to the Registered  Holders shall be mailed to such
persons at their addresses of record.

         10. CONCERNING THE WARRANT AGENT.

               (a)  The  Warrant  Agent  acts   hereunder  as  agent  and  in  a
ministerial  capacity for the Company, and its duties shall be determined solely
by the provisions hereof. The Warrant Agent shall not, by issuing and delivering
Warrant  Certificates  or by any  other  act  hereunder,  be  deemed to make any
representations  as to the  validity  or value or  authorization  of the Warrant
Certificates or the Warrants  represented  thereby or of any securities or other
property delivered upon exercise of any Warrant or whether any stock issued upon
exercise of any Warrant is fully paid and nonassessable.

               (b) The Warrant  Agent shall not at any time be under any duty or
responsibility to any holder of Warrant Certificates to make or cause to be made
any  adjustment  to the Warrant  provided  in this  Agreement,  or to  determine
whether any fact exists which may require any such  adjustment,  or with respect
to the nature or extent of any such  adjustment,  when made,  or with respect to
the  method  employed  in making  the same,  it shall not (i) be liable  for any
recital or statement of fact contained herein or for any action taken,  suffered
or omitted by it in  reliance on any Warrant  Certificate  or other  document or
instrument believed by it in good faith to be genuine and to have been signed or
presented by the proper party or parties, (ii) be responsible for any failure on
the part of the  Company to comply  with any of its  covenants  and  obligations
contained in this  Agreement or in any Warrant  Certificate,  or (iii) be liable
for any act or omission in  connection  with this  Agreement  except for its own
gross negligence or willful misconduct.

               (c) The  Warrant  Agent  may at any  time  consult  with  counsel
satisfactory  to it (who may be  counsel  for the  Company)  and shall  incur no
liability or responsibility  for any action taken,  suffered or omitted by it in
good faith in accordance with the opinion or advice of such counsel.

               (d) Any notice, statement, instruction, request, direction, order
or demand of the Company shall be sufficiently evidenced by an instrument signed
by the Chairman of the Board of Directors,  Vice-Chairman  or Secretary  (unless
other  evidence  in respect  thereof  is herein  specifically  prescribed).  The
Warrant Agent shall not be liable for any action  taken,  suffered or omitted by
it in accordance with such notice, statement,  instruction,  request, direction,
order or demand.

               (e) The  Company  agrees  to pay  the  Warrant  Agent  reasonable
compensation  for its services  hereunder and to reimburse it for its reasonable
expenses  hereunder;  the Company  further agrees to indemnify the Warrant Agent
and save it  harmless  against  any and all losses,  expenses  and  liabilities,
including judgments, costs and counsel fees, for anything done or omitted by the
Warrant Agent in the execution of its duties and powers hereunder except losses,
expenses  and  liabilities  arising  as a result of the  Warrant  Agent's  gross
negligence or willful misconduct.

                                       8
<PAGE>

                  (f) The Warrant  Agent may resign its duties and be discharged
from all further duties and liabilities hereunder (except liabilities arising as
a result of the Warrant  Agent's own  negligence or willful  misconduct),  after
giving 60 days prior  written  notice to the Company.  At least 15 days prior to
the date such resignation is to become effective,  the Warrant Agent shall cause
a copy of such notice of resignation  to be mailed to the  Registered  Holder of
each Warrant  Certificate at the Company's  expense.  Upon such  resignation the
Company  shall  appoint in writing a new  warrant  agent.  After  acceptance  in
writing of such appointment by the new warrant agent is received by the Company,
such new warrant agent shall be vested with the same powers,  rights, duties and
responsibilities as if it had been originally named herein as the warrant agent,
without any further assurance, conveyance, act or deed; but if for any reason it
shall be necessary  or  expedient to execute and deliver any further  assurance,
conveyance,  act or deed,  the same shall be done at the  expense of the Company
and shall be legally and validly executed and delivered by the resigning Warrant
Agent.  Not later than the effective  date of any such  appointment  the Company
shall file notice thereof with the resigning  Warrant Agent and shall  forthwith
cause a copy of such  notice  to be  mailed  to the  Registered  Holder  of each
Warrant Certificate.

               (g) Any  corporation  into  which  the  Warrant  Agent or any new
warrant agent may be converted or merged,  any  corporation  resulting  from any
consolidation  to which the Warrant  Agent or any new  warrant  agent shall be a
party,  or any  corporation  succeeding to the corporate  trust  business of the
Warrant Agent or any new warrant agent shall be a successor  warrant agent under
this  Agreement  without any further  act,  provided  that such  corporation  is
eligible for  appointment as successor to the Warrant Agent under the provisions
of the preceding  paragraph.  Any such  successor  warrant agent shall  promptly
cause notice of its  succession as warrant agent to be mailed to the Company and
to the Registered Holders of each Warrant Certificate.

         11. RIGHTS OF REGISTERED  HOLDERS. No Registered Holder, as such, shall
have any rights of a shareholder  of the Company,  either at law or equity,  and
the rights of the  Registered  Holders,  as such,  are  limited to those  rights
expressly provided in this Agreement or in the Warrant Certificates. The Company
and the Warrant Agent may treat the registered  Registered  Holder in respect of
any  Warrant  Certificates  as the  absolute  owner  thereof  for  all  purposes
notwithstanding any notice to the contrary.

         12. MODIFICATION OF AGREEMENT. The Warrant Agent and the Company may by
supplemental agreement make any changes or corrections in this Agreement without
the approval of any holders of Warrants (i) that they shall deem  appropriate to
cure any  ambiguity  or to correct any  defective or  inconsistent  provision or
manifest mistake or error herein contained; (ii) that they may deem necessary or
desirable and which shall not  adversely  affect the interests of the holders of
Warrant Certificates;  or (iii) which may be required by law; provided, however,
that this  Agreement  shall not otherwise be modified,  supplemented  or altered
except with the consent in writing of the Registered  Holders  representing  not
less than 50% of the  Warrants  then  outstanding;  provided,  further,  that no
change in the number of the  securities  purchasable  upon the  exercise  of any
Warrant,  or an increase in the Exercise Price therefor,  shall be, made without
the  consent in writing of the  Registered  Holder of the  Warrant  Certificate,
other than such  changes as are  specifically  permitted or  prescribed  by this
Agreement as originally executed.

         13. NOTICES. All notices,  requests,  consents and other communications
hereunder  shall be in  writing  and  shall be  deemed  to have  been  made when
delivered or five days after mailed first-class postage prepaid, or upon receipt
when sent by facsimile,  with confirmation received, if to the Registered Holder
of a Warrant Certificate, at the address of such holder as shown on the registry
books maintained by the Warrant Agent; if to the Company at:

                                       9
<PAGE>

         Action Products International, Inc.
         390 North Orange Avenue, Suite 2185
         Orlando, Florida 32801
         Attn: Ronald S. Kaplan

         With a copy to:

         Raice Paykin & Krieg, LLP
         185 Madison Avenue, 10th Floor
         New York, New York 10016
         Attn: James G. Smith, Esq.

or at such other  address as may have been  furnished  to the  Warrant  Agent in
writing by the Company, and if to the Warrant Agent, at its Corporate Office.

         14.  GOVERNING  LAW;  VENUE.  This  Agreement  shall be governed by and
construed in  accordance  with the laws of the State of Florida  without  giving
effect to conflicts of laws. In the event the Company,  the Warrant Agent or any
Registered Holder commences any litigation,  proceeding or other legal action in
connection  with or  relating to this  Agreement  or any  matters  described  or
contemplated  herein, the Company,  the Warrant Agent and the Registered Holders
hereby (a) agree under all circumstances absolutely and irrevocably to institute
any  litigation,  proceeding  or other  legal  action  in a court  of  competent
jurisdiction  located within the County of Orange,  State of Florida,  whether a
state or  federal  court;  (b) agree  that in the event of any such  litigation,
proceeding  or  action,  such  parties  will  consent  and  submit  to  personal
jurisdiction in such court;  and (c) agree to waive to the full extent permitted
by law any  objection  that they may now or  hereafter  have to the venue of any
such  litigation,  proceeding  or  action  in any  such  court  or that any such
litigation, proceeding or action was brought in an inconvenient forum.

         15. BINDING  EFFECT.  This Agreement shall be binding upon and inure to
the benefit of the Company,  the Warrant Agent and their  respective  successors
and assigns and the holders from time to time of Warrant  Certificates or any of
them.  Except as  hereinafter  stated,  nothing in this Agreement is intended or
shall be construed to confer upon any other person any right, remedy or claim or
to impose upon any other person any duty, liability or obligation.

         16. TERMINATION.  This Agreement shall terminate at the Expiration Time
or such earlier date upon which all Warrants have been exercised or surrendered,
except that the Warrant Agent shall account to the  Corporation for cash held by
it and the provisions of Section 8 hereof shall survive such termination.

         17.  INTEGRATION.  As of the date hereof,  this Agreement  contains the
entire and only agreement, understanding, representation, condition, warranty or
covenant  between  the  parties  hereto  with  respect  to the  matters  herein,
supersedes any and all other  agreements  between the parties hereto relating to
such matters,  and may be modified or amended only by a written agreement signed
by both parties hereto.

         18.   COUNTERPARTS.   This   Agreement   may  be  executed  in  several
counterparts, which taken together shall constitute a single document.

                  [remainder of page intentionally left blank]

                                       10
<PAGE>

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

                                       ACTION PRODUCTS INTERNATIONAL, INC.

                                       By: /s/ Ronald S. Kaplan
                                           -----------------------------------
                                           Ronald S. Kaplan
                                           Chief Executive Officer

                                       REGISTRAR AND TRANSFER COMPANY

                                       By: /s/ William P. Tatler
                                           -----------------------------------
                                           Name: William P. Tatler
                                           Title: Vice President

                                       11
<PAGE>

EXHIBIT A

No. _______                                 VOID AFTER 5:00 P M on June 11, 2004

_________ WARRANTS

                        REDEEMABLE WARRANT CERTIFICATE TO
                         PURCHASE SHARES OF COMMON STOCK

                       ACTION PRODUCTS INTERNATIONAL, INC.

NO.  _______                                                   CUSIP:

         THIS  CERTIFIES  THAT,  FOR  VALUE  RECEIVED  _____________________  or
registered  assigns  (the  "Registered  Holder")  is the owner of the  number of
Warrants (the "Warrants")  specified above. Each Warrant initially  entitles the
Registered Holder to purchase,  subject to the terms and conditions set forth in
this Certificate and the Warrant Agreement (as hereinafter  defined),  one fully
paid and  non-assessable  share of Common  Stock,  $0.001 par  value,  of Action
Products International, Inc., a Florida corporation (the "Company"), at any time
from June 12, 2003 and prior to the  Expiration  Date (as  hereinafter  defined)
upon  the  presentation  and  surrender  of this  Warrant  Certificate  with the
Exercise Form on the reverse  hereof duly executed,  at the corporate  office of
Registrar and Transfer Company, as Warrant Agent, or its successor (the "Warrant
Agent"),  or the Company,  accompanied by the Exercise Price (as defined below),
in lawful-money of the United States of America in cash or by check made payable
to the Warrant Agent for the account of the Company.

         This Warrant Certificate and each Warrant represented hereby are issued
pursuant to and are  subject in all  respects  to the terms and  conditions  set
forth in the Warrant Agreement (the "Warrant  Agreement"),  dated June 12, 2003,
by and between the Company and the Warrant Agent.

         In the  event of  certain  contingencies  provided  for in the  Warrant
Agreement,  the Exercise  Price and the number of shares of Common Stock subject
to purchase upon the exercise of each Warrant  represented hereby are subject to
modification or adjustment.

         Each Warrant  represented  hereby is  exercisable  at the option of the
Registered  Holder,  but no fractional  interests will be issued. In the case of
the exercise of less than all the warrants represented hereby, the Company shall
cancel this Warrant  Certificate upon the surrender hereof and shall execute and
deliver a new Warrant  Certificate or Warrant  Certificates of like tenor, which
the Warrant Agent shall countersign, for the balance of such Warrants.

         The term "Expiration Date" shall mean 5:00 P.M. (New York time) on June
11,  2004.  If such date shall in the State of New York be a holiday or a day on
which the banks are  authorized to close,  then the  Expiration  Date shall mean
5:00 P.M. (New York time) the next  following day which in the State of New York
is not a holiday or a day on which banks are authorized to close.

                                       12
<PAGE>

         Prior to the exercise of any Warrant represented hereby, the Registered
Holder  shall not be entitled  to any rights of a  shareholder  of the  Company,
including,  without  limitation,  the right to vote or to receive  dividends  or
other  distributions,  and shall not be  entitled  to receive  any notice of any
proceedings of the Company, except as provided in the Warrant Agreement.

         Subject to the provisions of the Warrant Agreement, this Warrant may be
redeemed  at the  option of the  Company,  at a  redemption  price of $0.001 per
Warrant,  at any time commencing after June 12, 2003. Notice of redemption shall
be given not later  than the  twenty-first  (21st) day before the date fixed for
redemption,  all as  provided in the  Warrant  Agreement.  On and after the date
fixed for redemption, the Registered Holder shall have no rights with respect to
this  Warrant  except to receive the $0.001 per Warrant  upon  surrender of this
Certificate.

         Prior to due  presentment  for  registration  or transfer  hereof,  the
Company and the Warrant  Agent may deem and treat the  Registered  Holder as the
absolute owner hereof and of each Warrant  represented  hereby  (notwithstanding
any  notations of  ownership or writing  hereon made by anyone other than a duly
authorized  officer of the Company or the Warrant  Agent) for all  purposes  and
shall not be affected by any notice to the  contrary,  except as provided in the
Warrant Agreement.

         This  Warrant  Certificate  shall  be  governed  by  and  construed  in
accordance  with the laws of the  State of  Florida  without  giving  effect  to
conflicts of laws.

         This Warrant  Certificate  is not,  valid unless  countersigned  by the
Warrant Agent.

         IN WITNESS WHEREOF,  the Company has caused this Warrant Certificate to
be duly executed, manually or in facsimile by two of its officers thereunto duly
authorized.

Dated:

                                       ACTION PRODUCTS INTERNATIONAL, INC.

                                       By:
                                           -----------------------------------
                                           Ronald S. Kaplan
                                           Chief Executive Officer

                                       By:
                                           -----------------------------------
                                           Robert L. Burrows
                                           Secretary

COUNTERSIGNED:

REGISTRAR AND TRANSFER COMPANY
as Warrant Agent

By:
    ------------------------------
         Authorized Officer

                                       13
<PAGE>

                                  EXERCISE FORM

To Be Executed by the Registered Holder in Order to Exercise Warrant

The  undersigned   Registered  Holder  hereby  irrevocably  elects  to  exercise
______________ Warrants represented by this Warrant Certificate, and to purchase
the securities  issuable upon the exercise of such  Warrants,  and requests that
certificates for such securities shall be issued in name of

PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER

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

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

                  ---------------------------------------
                  (please print or type name and address)

and be delivered to:

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

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

                  ---------------------------------------
                  (please print or type name and address)

and if such number of Warrants  shall not be all the Warrants  evidenced by this
Warrant  Certificate,  that a new  Warrant  Certificate  for the balance of such
Warrants be registered in the name of, and delivered to, the  Registered  Holder
at the address stated below.

IMPORTANT: PLEASE CHECK WHICH IS APPLICABLE:

[  ]  The exercise of this Warrant was solicited by:

                                           (name of individual broker)
      ------------------------------------

                                           (name of firm)
      ------------------------------------

[  ]  The exercise of this Warrant was not solicited.
      Dated: _____________, 200__

                                        X
                                            ------------------------------------
                                            Signature

                                            ------------------------------------
                                            Name

                                        X
                                            ------------------------------------
                                            Signature Guaranteed

                                       14
<PAGE>

                                 ASSIGNMENT FORM
                                 ---------------

To Be Executed by the Registered Holder in Order to Assign Warrants

         FOR  VALUE  RECEIVED,  ______________________________,   hereby  sells,
assigns and transfers unto

PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER

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

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

--------------------------------------
(please print or type name and address)

_______________________________________________________    of    the    Warrants
represented by this Warrant Certificate,  and hereby irrevocably constitutes and
appoints  ________________________ Attorney to transfer this Warrant Certificate
on the books of the Company, with full power of substitution in the premises.

Dated: ___________________, 200____

                                        X
                                            ------------------------------------
                                            Signature

                                        X
                                            ------------------------------------
                                            Signature Guaranteed

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

THE SIGNATURE TO THE ASSIGNMENT OR THE EXERCISE FORM MUST CORRESPOND TO THE NAME
AS  WRITTEN  UPON  THE FACE OF THIS  WARRANT  CERTIFICATE  IN EVERY  PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATSOEVER AND MUST BE MEDALLION
GUARANTEED  BY A  COMMERCIAL  BANK OR  TRUST  COMPANY  OR A  MEMBER  FIRM OF THE
AMERICAN  STOCK  EXCHANGE,  NEW YORK STOCK  EXCHANGE,  PACIFIC  STOCK  EXCHANGE,
MIDWEST  STOCK  EXCHANGE  OR  BOSTON  STOCK  EXCHANGE,  WHO IS A  MEMBER  OF THE
MEDALLION PROGRAM.

                                       15
<PAGE>TMI HOLDINGS, INC.

                          2003 OMNIBUS SECURITIES PLAN

<PAGE>

                                TABLE OF CONTENTS

                                                                          PAGE

SECTION 1. PURPOSE...........................................................1

SECTION 2. DEFINITIONS.......................................................1

         (a)      "Award"....................................................1
         (b)      "Board of Directors".......................................1
         (c)      "Change in Control"........................................1
         (d)      "Code".....................................................1
         (e)      "Committee"................................................1
         (f)      "Common-Law Employee"......................................1
         (g)      "Company"..................................................2
         (h)      "Employee".................................................2
         (i)      "Exchange Act".............................................2
         (j)      "Exercise Price"...........................................2
         (k)      "Fair Market Value"........................................2
         (l)      "Incentive Stock Option" or "ISO"..........................2
         (m)      "Nonstatutory Option" or "NSO".............................2
         (n)      "Offeree"..................................................2
         (o)      "Option"...................................................3
         (p)      "Optionee".................................................3
         (q)      "Outside Director".........................................3
         (r)      "Participant"..............................................3
         (s)      "Plan".....................................................3
         (t)      "Plan Year"................................................3
         (u)      "Purchase Price"...........................................3
         (v)      "Restricted Share".........................................3
         (w)      "Service"..................................................3
         (x)      "Share"....................................................3
         (y)      "Stock"....................................................3
         (z)      "Stock Award Agreement"....................................3
         (aa)     "Stock Option Agreement"...................................3
         (bb)     "Stock Purchase Agreement".................................3
         (cc)     "Subsidiary"...............................................3
         (dd)     "Total and Permanent Disability"...........................3
         (ee)     "W-2 Payroll"..............................................3

SECTION 3. ADMINISTRATION....................................................4

         (a)      Committee Membership.......................................4
         (b)      Committee Procedures.......................................4
         (c)      Committee Responsibilities.................................4
         (d)      Committee Liability........................................4
         (e)      Financial Reports..........................................4

SECTION 4. ELIGIBILITY.......................................................4

         (a)      General Rule...............................................4
         (b)      Ten-Percent Shareholders...................................4

                                     - i -

<PAGE>

         (c)      Attribution Rules..........................................5
         (d)      Outstanding Stock..........................................5

SECTION 5. STOCK SUBJECT TO PLAN.............................................5

         (a)      Basic Limitation...........................................5
         (b)      Additional Shares..........................................5

SECTION 6. TERMS AND CONDITIONS OF AWARDS OR SALES...........................5

         (a)      Stock Purchase Agreement...................................5
         (b)      Duration of Offers.........................................5
         (c)      Purchase Price.............................................5
         (d)      Payment for Shares.........................................6
         (e)      Exercise of Awards on Termination of Service...............6

SECTION 7. ADDITIONAL TERMS AND CONDITIONS OF RESTRICTED.....................6

         (a)      Form and Amount of Award...................................6
         (b)      Exercisability.............................................6
         (c)      Effect of Change in Control................................6
         (d)      Voting Rights..............................................7

SECTION 8. TERMS AND CONDITIONS OF OPTIONS...................................7

         (a)      Stock Option Agreement.....................................7
         (b)      Number of Shares...........................................7
         (c)      Exercise Price.............................................7
         (d)      Exercisability.............................................7
         (e)      Effect of Change in Control................................7
         (f)      Term.......................................................7
         (g)      Exercise of Options on Termination of Service..............7
         (h)      Payment of Option Shares...................................8
         (i)      No Rights as a Shareholder.................................8
         (j)      Modification, Extension and Assumption of Options..........8

SECTION 9. ADJUSTMENT OF SHARES..............................................8

         (a)      General....................................................8
         (b)      Reorganizations............................................9
         (c)      Reservation of Rights......................................9

SECTION 10. WITHHOLDING TAXES................................................9

         (a)      General....................................................9
         (b)      Share Withholding..........................................9
         (c)      Cashless Exercise/Pledge...................................9
         (d)      Other Forms of Payment.....................................9

SECTION 11. ASSIGNMENT OR TRANSFER OF AWARDS.................................9

         (a)      General....................................................9
         (b)      Trusts.....................................................9

                                     - ii -

<PAGE>

SECTION 12. LEGAL REQUIREMENTS..............................................10

SECTION 13. NO EMPLOYMENT RIGHTS............................................10

SECTION 14. DURATION AND AMENDMENTS.........................................10

         (a)      Term of the Plan..........................................10
         (b)      Right to Amend or Terminate the Plan......................10
         (c)      Effect of Amendment or Termination........................10

                                    - iii -

<PAGE>

                               TMI HOLDINGS, INC.

                           2003 OMNIBUS SECURITES PLAN

SECTION 1. PURPOSE.

     The purpose of the TMI  Holdings,  Inc. 2003 Omnibus  Securities  Plan (the
"Plan") is to offer selected employees, directors and consultants an opportunity
to acquire a proprietary  interest in the success of the Company, or to increase
such interest, to encourage such selected persons to remain in the employ of the
Company, and to attract new employees with outstanding qualifications.  The Plan
seeks to achieve this purpose by providing  for Awards in the form of Restricted
Shares and Options (which may constitute Incentive Stock Options or Nonstatutory
Stock  Options) as well as the direct  award or sale of Shares of the  Company's
Common Stock. Awards may be granted under this Plan in reliance upon federal and
state securities law exemptions.

SECTION 2. DEFINITIONS.

     (a) "AWARD"  shall mean any award of an Option,  Restricted  Share or other
right under the Plan.

     (b) "BOARD OF DIRECTORS"  shall mean the Board of Directors of the Company,
as constituted from time to time.

     (c) "CHANGE IN CONTROL" shall mean:

          (i) The consummation of a merger, consolidation, sale of the Company's
     stock, or other reorganization of the Company (other than a reincorporation
     of the Company),  if after giving effect to such merger,  consolidation  or
     other  reorganization  of the  Company,  the  stockholders  of the  Company
     immediately prior to such merger,  consolidation or other reorganization do
     not represent a majority interest of the holders of voting securities (on a
     fully diluted basis) with the ordinary  voting power to elect  directors of
     the surviving or resulting entity after such merger, consolidation or other
     reorganization; or

          (ii) The sale of all or substantially all of the assets of the Company
     to a third party who is not an affiliate of the Company.

          (iii) The term Change in Control shall not include:  (a) a transaction
     the  sole  purpose  of  which  is to  change  the  state  of the  Company's
     incorporation, or (b) the Company's initial public offering.

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

     (e)  "COMMITTEE"  shall mean a committee of the Board of Directors which is
authorized to administer the Plan under Section 3.

     (f) "COMMON-LAW EMPLOYEE" shall mean an individual paid from W-2 Payroll of
the Company or a Subsidiary.  If, during any period, the Company (or Subsidiary,
as applicable)  has not treated an individual as a Common-Law  Employee and, for
that  reason,  has not paid such  individual  in a manner  which  results in the
issuance of a Form W-2 and withheld  taxes with respect to him or her, then that
individual  shall  not be an  eligible  Employee  for that  period,  even if any

                                     - 1 -
<PAGE>

person, court of law or government agency determines,  retroactively,  that that
individual  is or was a  Common-Law  Employee  during all or any portion of that
period.

     (g) "COMPANY" shall mean TMI Holdings, Inc., a Florida corporation.

     (h) "EMPLOYEE"  shall mean (i) any individual who is a Common-Law  Employee
of the  Company  or of a  Subsidiary,  (ii) a member of the Board of  Directors,
including (without limitation) an Outside Director,  or an affiliate of a member
of the  Board of  Directors,  (iii) a member  of the  board  of  directors  of a
Subsidiary,  or (iv) an  independent  contractor  who performs  services for the
Company or a Subsidiary. Service as a member of the Board of Directors, a member
of the board of directors of a Subsidiary or an independent  contractor shall be
considered employment for all purposes of the Plan except the second sentence of
Section 4(a).

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

     (j)  "EXERCISE  PRICE"  shall  mean the  amount  for which one Share may be
purchased  upon  exercise of an Option,  as  specified  by the  Committee in the
applicable Stock Option Agreement.

     (k) "FAIR MARKET VALUE" means the market price of Shares, determined by the
Committee as follows:

          (i) If the Shares were traded over-the-counter on the date in question
     but were not  traded on the  Nasdaq  Stock  Market or the  Nasdaq  National
     Market  System,  then  the  Fair  Market  Value  shall be equal to the mean
     between the last  reported  representative  bid and asked prices quoted for
     such date by the principal automated inter-dealer quotation system on which
     the Shares are quoted or, if the Shares are not quoted on any such  system,
     by the "Pink Sheets" published by the National Quotation Bureau, Inc.;

          (ii)  If the  Shares  were  traded  over-the-counter  on the  date  in
     question and were traded on the Nasdaq Stock Market or the Nasdaq  National
     Market  System,   then  the  Fair  Market  Value  shall  be  equal  to  the
     last-transaction  price  quoted for such date by the Nasdaq Stock Market or
     the Nasdaq National Market;

          (iii) If the Shares  were  traded on a stock  exchange  on the date in
     question,  then the Fair Market  Value shall be equal to the closing  price
     reported by the applicable composite transactions report for such date; and

          (iv) If none of the foregoing provisions is applicable,  then the Fair
     Market  Value shall be  determined  by the  Committee in good faith on such
     basis as it deems appropriate.

     In all cases, the determination of Fair Market Value by the Committee shall
be conclusive and binding on all persons.

     (l)  "INCENTIVE  STOCK  OPTION" OR "ISO" shall mean an  employee  incentive
stock option described in Code section 422(b).

     (m) "NONSTATUTORY OPTION" OR "NSO" shall mean an employee stock option that
is not an ISO.

     (n)  "OFFEREE"  shall mean an  individual to whom the Committee has offered
the right to acquire  Shares  under the Plan  (other  than upon  exercise  of an
Option).

                                     - 2 -
<PAGE>

     (o) "OPTION" shall mean an Incentive  Stock Option or  Nonstatutory  Option
granted under the Plan and entitling the holder to purchase Shares.

     (p) "OPTIONEE" shall mean an individual or estate who holds an Option.

     (q)  "OUTSIDE  DIRECTOR"  shall  mean a member  of the  Board  who is not a
Common-Law Employee of the Company or a Subsidiary.

     (r) "PARTICIPANT" shall mean an individual or estate who holds an Award.

     (s) "PLAN" shall mean this 2003 Omnibus  Securities  Plan of TMI  Holdings,
Inc.

     (t) "PLAN YEAR" shall mean any twelve (12) month period (or shorter  period
during  the final year of this  Plan)  commencing  May 1 during the term of this
Plan.

     (u) "PURCHASE PRICE" shall mean the  consideration  for which one Share may
be acquired under the Plan (other than upon exercise of an Option), as specified
by the Committee.

     (v)  "RESTRICTED  SHARE"  shall mean a Share sold or granted to an eligible
Employee which is nontransferable  and subject to substantial risk of forfeiture
until restrictions lapse.

     (w) "SERVICE" shall mean service as an Employee.

     (x) "SHARE" shall mean one share of Stock,  as adjusted in accordance  with
Section 9 (if applicable).

     (y) "STOCK" shall mean the common stock of the Company.

     (z) "STOCK AWARD  AGREEMENT"  shall mean the agreement  between the Company
and the recipient of a Restricted Share which contains the terms, conditions and
restrictions pertaining to such Restricted Share.

     (aa) "STOCK OPTION  AGREEMENT" shall mean the agreement between the Company
and an Optionee which contains the terms, conditions and restrictions pertaining
to his or her Option.

     (bb)  "STOCK  PURCHASE  AGREEMENT"  shall mean the  agreement  between  the
Company and an Offeree who  acquires  Shares  under the Plan which  contains the
terms, conditions and restrictions pertaining to the acquisition of such Shares.

     (cc)  "SUBSIDIARY"  means any  corporation  (other than the  Company) in an
unbroken  chain  of  corporations  beginning  with the  Company,  if each of the
corporations  other than the last  corporation  in the unbroken chain owns stock
possessing  50% or more of the total  combined  voting  power of all  classes of
stock in one of the other corporations in such chain. A corporation that attains
the status of a  Subsidiary  on a date after the  adoption  of the Plan shall be
considered a Subsidiary commencing as of such date.

     (dd) "TOTAL AND PERMANENT  DISABILITY" means that the Optionee is unable to
engage  in  any  substantial   gainful  activity  by  reason  of  any  medically
determinable physical or mental impairment.

     (ee) "W-2 PAYROLL" means  whatever  mechanism or procedure that the Company
or a Subsidiary  utilizes to pay any individual which results in the issuance of
Form W-2 to the  individual.  "W-2  Payroll"  does not include any  mechanism or
procedure  which results in the issuance of any form other than a Form W-2 to an

                                     - 3 -
<PAGE>

individual,  including, but not limited to, any Form 1099 which may be issued to
an  independent  contractor,  an  agency  employee  or a  consultant.  Whether a
mechanism or procedure  qualifies as a "W-2 Payroll"  shall be determined in the
absolute  discretion  of the Company (or  Subsidiary,  as  applicable),  and the
Company or  Subsidiary  determination  shall be  conclusive  and  binding on all
persons.

SECTION 3. ADMINISTRATION.

     (a)  COMMITTEE   MEMBERSHIP.   The  Plan  shall  be   administered  by  the
Compensation  Committee (the  "Committee")  appointed by the Company's  Board of
Directors  and  comprised  of at least two or more Outside  Directors  (although
Committee functions may be delegated to officers to the extent the awards relate
to persons who are not subject to the  reporting  requirements  of Section 16 of
the Exchange  Act). If no Committee has been  appointed,  the entire Board shall
constitute the Committee.

     (b) COMMITTEE PROCEDURES. The Board of Directors shall designate one of the
members of the Committee as chairperson. The Committee may hold meetings at such
times and places as it shall determine.  The acts of a majority of the Committee
members  present at meetings  at which a quorum  exists,  or acts  reduced to or
approved  in  writing  by all  Committee  members,  shall be  valid  acts of the
Committee.

     (c)  COMMITTEE  RESPONSIBILITIES.  The  Committee has and may exercise such
power and  authority  as may be necessary or  appropriate  for the  Committee to
carry out its functions as described in the Plan. The Committee has authority in
its discretion to determine eligible Employees to whom, and the time or times at
which,  Awards may be granted  and the number of Shares  subject to each  Award.
Subject to the express provisions of the respective Award agreements (which need
not be identical)  and to make all other  determinations  necessary or advisable
for Plan  administration,  the Committee has authority to prescribe,  amend, and
rescind  rules  and  regulations  relating  to the  Plan.  All  interpretations,
determinations,  and actions by the  Committee  will be final,  conclusive,  and
binding upon all persons.

     (d) COMMITTEE  LIABILITY.  No member of the Board or the Committee  will be
liable for any action or determination  made in good faith by the Committee with
respect to the Plan or any Award made under the Plan.

     (e) FINANCIAL  REPORTS.  To the extent  required by applicable law, and not
less often than annually,  the Company shall furnish to Offerees,  Optionees and
Shareholders  who have received  Stock under the Plan its  financial  statements
including a balance  sheet  regarding  the  Company's  financial  condition  and
results of operations,  unless such  Offerees,  Optionees or  Shareholders  have
duties with the Company that assure them access to equivalent information.  Such
financial statements need not be audited.

SECTION 4. ELIGIBILITY.

     (a) GENERAL  RULE.  Only  Employees  shall be eligible for  designation  as
Participants by the Committee. In addition, only individuals who are employed as
Common-Law  Employees by the Company or a  Subsidiary  shall be eligible for the
grant of ISOs.

     (b)  TEN-PERCENT  SHAREHOLDERS.  An Employee who owns more than ten percent
(10%) of the total combined voting power of all classes of outstanding  stock of
the Company or any of its Subsidiaries  shall not be eligible for designation as
an Offeree or Optionee  unless (i) the  Exercise  Price for an ISO (and a NSO to
the extent  required  by  applicable  law) is at least one  hundred  ten percent
(110%)  of the  Fair  Market  Value of a Share  on the  date of  grant,  (ii) if
required by applicable law, the Purchase Price of Shares is at least one hundred

                                     - 4 -
<PAGE>

percent  (100%) of the Fair  Market  Value of a Share on the date of grant,  and
(iii) in the case of an ISO, such ISO by its terms is not exercisable  after the
expiration of five years from the date of grant.

     (c) ATTRIBUTION RULES. For purposes of Subsection (b) above, in determining
stock ownership, an Employee shall be deemed to own the stock owned, directly or
indirectly,  by or for his  brothers,  sisters,  spouse,  ancestors  and  lineal
descendants.  Stock  owned,  directly or  indirectly,  by or for a  corporation,
partnership,  estate or trust shall be deemed to be owned  proportionately by or
for its  shareholders,  partners or  beneficiaries.  Stock with respect to which
such Employee holds an Option shall not be counted.

     (d) OUTSTANDING  STOCK. For purposes of Subsection (b) above,  "outstanding
stock" shall include all stock actually issued and outstanding immediately after
the grant.  "Outstanding Stock" shall not include shares authorized for issuance
under outstanding Options held by the Employee or by any other person.

SECTION 5. STOCK SUBJECT TO PLAN.

     (a) BASIC LIMITATION. Shares offered under the Plan shall be authorized but
unissued  Shares.  Subject to  Sections  5(b) and 9 of the Plan,  the  aggregate
number of Shares which may be issued or  transferred as common stock pursuant to
an Award under the Plan shall not exceed 140,000.

     In any  event,  the number of Shares  which are  subject to Awards or other
rights  outstanding  at any time  under the Plan  shall not exceed the number of
Shares which then remain  available  for issuance  under the Plan.  The Company,
during  the term of the Plan,  shall at all  times  reserve  and keep  available
sufficient Shares to satisfy the requirements of the Plan.

     (b) ADDITIONAL  SHARES.  In the event that any outstanding  Option or other
right for any reason expires or is canceled or otherwise terminated,  the Shares
allocable to the  unexercised  portion of such Option or other right shall again
be available  for the purposes of the Plan.  If a Restricted  Share is forfeited
before any dividends have been paid with respect to such Restricted  Share, then
such Restricted Share shall again become available for award under the Plan.

SECTION 6. TERMS AND CONDITIONS OF AWARDS OR SALES.

     (a) STOCK PURCHASE  AGREEMENT.  Each award or sale of Shares under the Plan
(other than upon exercise of an Option)  shall be evidenced by a Stock  Purchase
Agreement  between  the  Offeree  and the  Company.  Such award or sale shall be
subject to all applicable terms and conditions of the Plan and may be subject to
any other  terms and  conditions  which are not  inconsistent  with the Plan and
which  the  Committee  deems  appropriate  for  inclusion  in a  Stock  Purchase
Agreement.  The provisions of the various Stock Purchase Agreements entered into
under the Plan need not be identical.

     (b) DURATION OF OFFERS.  Any right to acquire  Shares under the Plan (other
than an Option)  shall  automatically  expire if not  exercised  by the  Offeree
within  thirty (30) days after the grant of such right was  communicated  to the
Offeree by the Committee.

     (c) PURCHASE  PRICE.  Unless  otherwise  permitted by  applicable  law, the
Purchase  Price of Shares to be  offered  under the Plan  shall not be less than
eighty-five  percent  (85%) of the Fair  Market  Value of a Share on the date of
grant (100% for 10% shareholders), except as otherwise provided in Section 4(b).
Subject to the preceding sentence, the Purchase Price shall be determined by the
Committee in its sole discretion.  The Purchase Price shall be payable in a form
described in Subsection (d) below.

                                     - 5 -
<PAGE>

     (d) PAYMENT FOR SHARES.  The entire  Purchase  Price of Shares issued under
the Plan shall be payable in lawful money of the United States of America at the
time when such Shares are purchased, except as provided below:

          (i) SURRENDER OF STOCK. To the extent that a Stock Option Agreement so
     provides, payment may be made all or in part with Shares which have already
     been owned by the Optionee or Optionee's representative for any time period
     specified by the Committee and which are surrendered to the Company in good
     form for  transfer.  Such shares shall be valued at their Fair Market Value
     on the date when the new Shares are purchased under the Plan.

          (ii) PROMISSORY  NOTES. To the extent that a Stock Option Agreement or
     Stock  Purchase  Agreement so provides,  payment may be made all or in part
     with a full recourse  promissory  note executed by the Optionee or Offeree.
     The  interest  rate and other  terms and  conditions  of such note shall be
     determined by the Committee. The Committee may require that the Optionee or
     Offeree pledge his or her Shares to the Company for the purpose of securing
     the  payment  of such  note.  In no event  shall the  stock  certificate(s)
     representing  such Shares be released to the Optionee or Offeree until such
     note is paid in full.

          (iii) CASHLESS  EXERCISE.  To the extent that a Stock Option Agreement
     so provides and a public market for the Shares exists,  payment may be made
     all or in part by delivery (on a form  prescribed  by the  Committee) of an
     irrevocable  direction to a securities broker to sell shares and to deliver
     all or part of the sale proceeds to the Company in payment of the aggregate
     Exercise Price.

          (iv)  OTHER  FORMS OF  PAYMENT.  To the extent  provided  in the Stock
     Option Agreement,  payment may be made in any other form that is consistent
     with applicable laws, regulations and rules.

     (e)  EXERCISE  OF  AWARDS ON  TERMINATION  OF  SERVICE.  Each  Stock  Award
Agreement shall set forth the extent to which the recipient shall have the right
to exercise the Award following  termination of the recipient's Service with the
Company and its  Subsidiaries.  Such provisions  shall be determined in the sole
discretion  of the  Committee,  need not be uniform  among all the Awards issued
pursuant  to the Plan,  and may  reflect  distinctions  based on the reasons for
termination of employment.

SECTION 7. ADDITIONAL TERMS AND CONDITIONS OF RESTRICTED SHARES.

     (a) FORM AND AMOUNT OF AWARD.  Each Stock Award Agreement shall specify the
number of Shares that are subject to the Award. Restricted Shares may be awarded
in  combination  with NSOs and such an Award  may  provide  that the  Restricted
Shares will be forfeited in the event that the related NSOs are exercised.

     (b) EXERCISABILITY. Each Stock Award Agreement shall specify the conditions
upon which Restricted Shares shall become vested, in full or in installments. To
the extent required by applicable law, each Stock Award shall become exercisable
no less  rapidly  than the rate of 20% per year for each of the first five years
from the date of grant. Subject to the preceding sentence, the exercisability of
any Stock Award shall be determined by the Committee in its sole discretion.

     (c) EFFECT OF CHANGE IN CONTROL. The Committee may determine at the time of
making an Award or  thereafter,  that such Award shall become fully  vested,  in
whole or in part,  in the event that a Change in Control  occurs with respect to
the Company.

                                     - 6 -
<PAGE>

     (d) VOTING  RIGHTS.  Holders of  Restricted  Shares  awarded under the Plan
shall have the same voting,  dividend and other  rights as the  Company's  other
stockholders.  A Stock Award  Agreement,  however,  may require that the holders
invested any cash  dividends  received in  additional  Restricted  Shares.  Such
additional  Restricted  Shares  shall  be  subject  to the same  conditions  and
restrictions  as the Award with respect to which the dividends  were paid.  Such
additional  Restricted  Shares  shall not reduce the number of Shares  available
under Section 5.

SECTION 8. TERMS AND CONDITIONS OF OPTIONS.

     (a) STOCK OPTION AGREEMENT. Each grant of an Option under the Plan shall be
evidenced by a Stock Option Agreement between the Optionee and the Company. Such
Option shall be subject to all  applicable  terms and conditions of the Plan and
may be subject to any other terms and conditions which are not inconsistent with
the Plan and which the  Committee  deems  appropriate  for  inclusion in a Stock
Option Agreement.  The provisions of the various Stock Option Agreements entered
into under the Plan need not be identical.

     (b) NUMBER OF SHARES.  Each Stock Option Agreement shall specify the number
of Shares that are subject to the Option and shall provide for the adjustment of
such number in accordance with Section 9. The Stock Option  Agreement shall also
specify whether the Option is an ISO or a Nonstatutory Option.

     (c) EXERCISE PRICE.  Each Stock Option Agreement shall specify the Exercise
Price.  The Exercise Price of an ISO shall not be less than one hundred  percent
(100%)  of the Fair  Market  Value of a Share on the date of  grant,  except  as
otherwise provided in Section 4(b). To the extent required by applicable law and
except  as  otherwise  provided  in  Section  4(b),  the  Exercise  Price  of  a
Nonstatutory Option shall not be less than eighty-five percent (85%) of the Fair
Market  Value of a Share on the date of  grant.  Subject  to the  preceding  two
sentences,  the  Exercise  Price  under any Option  shall be  determined  by the
Committee in its sole discretion.  The Exercise Price shall be payable in a form
described in Subsection (h) below.

     (d) EXERCISABILITY. Each Stock Option Agreement shall specify the date when
all or any  installment  of the Option is to become  exercisable.  To the extent
required by applicable  law, an Option shall become  exercisable no less rapidly
than the rate of 20% per year for each of the first  five years from the date of
grant. Subject to the preceding sentence, the exercisability of any Option shall
be determined by the Committee in its sole discretion.

     (e) EFFECT OF CHANGE IN CONTROL.  The Committee may determine,  at the time
of  granting  an Option or  thereafter,  that such  Option  shall  become  fully
exercisable  as to all Shares  subject to such Option in the event that a Change
in Control occurs with respect to the Company.

     (f) TERM. The Stock Option  Agreement shall specify the term of the Option.
The term  shall not  exceed  ten (10)  years from the date of grant (or five (5)
years for ten percent (10%)  shareholders as provided in Section 4(b)).  Subject
to the preceding sentence,  the Committee at its sole discretion shall determine
when an Option is to expire.

     (g) EXERCISE OF OPTIONS ON  TERMINATION  OF SERVICE.  Each Option shall set
forth the  extent to which the  Optionee  shall have the right to  exercise  the
Option following  termination of the Optionee's Service with the Company and its
Subsidiaries.  Such provisions shall be determined in the sole discretion of the
Committee,  need not be uniform among all Options  issued  pursuant to the Plan,
and may reflect distinctions based on the reasons for termination of employment.
Notwithstanding  the foregoing,  to the extent  required by applicable law, each
Option  shall  provide  that the  Optionee  shall have the right to exercise the

                                     - 7 -
<PAGE>

vested  portion of any Option held at  termination  for at least sixty (60) days
following  termination of Service with the Company for any reason,  and that the
Optionee shall have the right to exercise the Option for at least six (6) months
if the Optionee's Service terminates due to death or Disability.

     (h) PAYMENT OF OPTION  SHARES.  The entire  Exercise Price of Shares issued
under the Plan shall be payable in lawful money of the United  States of America
at the time when such Shares are purchased, except as provided below:

          (i) SURRENDER OF STOCK. To the extent that a Stock Option Agreement so
     provides, payment may be made all or in part with Shares which have already
     been owned by the Optionee or Optionee's representative for any time period
     specified by the Committee and which are surrendered to the Company in good
     form for  transfer.  Such shares shall be valued at their Fair Market Value
     on the date when the new Shares are purchased under the Plan.

          (ii) PROMISSORY  NOTES. To the extent that a Stock Option Agreement or
     Stock  Purchase  Agreement so provides,  payment may be made all or in part
     with a full recourse  promissory  note executed by the Optionee or Offeree.
     The  interest  rate and other  terms and  conditions  of such note shall be
     determined by the Committee. The Committee may require that the Optionee or
     Offeree pledge his or her Shares to the Company for the purpose of securing
     the  payment  of such  note.  In no event  shall the  stock  certificate(s)
     representing  such Shares be released to the Optionee or Offeree until such
     note is paid in full.

          (iii) CASHLESS  EXERCISE.  To the extent that a Stock Option Agreement
     so provides and a public market for the Shares exists,  payment may be made
     all or in part by delivery (on a form  prescribed  by the  Committee) of an
     irrevocable  direction to a securities broker to sell shares and to deliver
     all or part of the sale proceeds to the Company in payment of the aggregate
     Exercise Price.

          (iv)  OTHER  FORMS OF  PAYMENT.  To the extent  provided  in the Stock
     Option Agreement,  payment may be made in any other form that is consistent
     with applicable laws, regulations and rules.

     (i)  MODIFICATION,   EXTENSION  AND  ASSUMPTION  OF  OPTIONS.   Within  the
limitations of the Plan, the Committee may modify,  extend or assume outstanding
Options or may accept the  cancellation of outstanding  Options (whether granted
by the Company or another issuer) in return for the grant of new Options for the
same or a  different  number of Shares and at the same or a  different  Exercise
Price or for other consideration.

SECTION 9. ADJUSTMENT OF SHARES.

     (a) GENERAL.  In the event of a subdivision  of the  outstanding  Stock,  a
declaration of a dividend  payable in Shares,  a combination or consolidation of
the  outstanding  Stock into a lesser number of Shares,  a  recapitalization,  a
reclassification or a similar  occurrence,  the Committee shall make appropriate
adjustments,  subject to the  limitations  set forth in Section  9(c), in one or
more of (i) the number of Shares  available  for future  Awards under Section 5,
(ii) the  number of  Shares  covered  by each  outstanding  Option  or  Purchase
Agreement or (iii) the Exercise Price or Purchase  Price under each  outstanding
Option or Stock Purchase Agreement.

                                     - 8 -
<PAGE>

     (b)  REORGANIZATIONS.  In the event that the Company is a party to a merger
or  reorganization,  outstanding  Options  shall be subject to the  agreement of
merger or  reorganization,  provided however,  that the limitations set forth in
Section 9(c) shall apply.

     (c)  RESERVATION  OF  RIGHTS.  Except as  provided  in this  Section  9, an
Optionee or an Offeree shall have no rights by reason of (i) any  subdivision or
consolidation of shares of stock of any class,  (ii) the payment of any dividend
or (iii) any other  increase or decrease in the number of shares of stock of any
class.  Any issue by the Company of shares of stock of any class,  or securities
convertible  into  shares  of stock  of any  class,  shall  not  affect,  and no
adjustment by reason thereof shall be made with respect to, the number, Exercise
Price or Purchase  Agreement  of Shares  subject to an Option or Stock  Purchase
Agreement.  The grant of an Award  pursuant  to the Plan shall not affect in any
way the right or power of the  Company to make  adjustments,  reclassifications,
reorganizations  or changes of its  capital or business  structure,  to merge or
consolidate or to dissolve,  liquidate,  sell or transfer all or any part of its
business or assets.

SECTION 10. WITHHOLDING TAXES.

     (a) GENERAL. To the extent required by applicable federal,  state, local or
foreign  law, a  Participant  or his or her  successor  shall make  arrangements
satisfactory  to the  Committee  for the  satisfaction  of any  withholding  tax
obligations  that arise in  connection  with the Plan.  The Company shall not be
required to issue any Shares or make any cash payment  under the Plan until such
obligations are satisfied.

     (b) SHARE  WITHHOLDING.  The Committee may permit a Participant  to satisfy
all or part of his or her  withholding  or income tax  obligations by having the
Company  withhold all or a portion of any Shares that otherwise  would be issued
to him or her or by  surrendering  all or a portion of any Shares that he or she
previously  acquired.  Such Shares shall be valued at their Fair Market Value on
the date when taxes otherwise would be withheld in cash. Any payment of taxes by
assigning  Shares to the Company may be subject to  restrictions,  including any
restrictions  required by rules of any federal or state regulatory body or other
authority.

     (c) CASHLESS  EXERCISE/PLEDGE.  The  Committee  may provide that if Company
Shares are publicly traded at the time of exercise,  arrangements may be made to
meet the Optionee's withholding obligation by cashless exercise or pledge.

     (d) OTHER FORMS OF PAYMENT.  The  Committee  may permit such other means of
tax withholding as it deems appropriate.

SECTION 11. ASSIGNMENT OR TRANSFER OF AWARDS.

     (a)  GENERAL.  An Award  granted  under the Plan shall not be  anticipated,
assigned,  attached,  garnished,  optioned,  transferred  or made subject to any
creditor's process,  whether voluntarily,  involuntarily or by operation of law,
except as approved by the Committee. Notwithstanding the foregoing, ISOs may not
be transferable.  Also notwithstanding the foregoing, Offerees and Optionees may
not transfer their rights hereunder except by will,  beneficiary  designation or
the laws of descent and distribution.

     (b) TRUSTS.  Neither  this  Section 11 nor any other  provision of the Plan
shall preclude a Participant from transferring or assigning Restricted Shares to
(a) the trustee of a trust that is revocable by such Participant  alone, both at
the time of the transfer or assignment and at all times thereafter prior to such
Participant's  death,  or (b) the  trustee  of any  other  trust  to the  extent
approved by the  Committee in writing.  A transfer or  assignment  of Restricted

                                     - 9 -
<PAGE>

Shares  from such  trustee to any other  person than such  Participant  shall be
permitted  only to the extent  approved in advance by the  Committee in writing,
and  Restricted  Shares  held  by  such  trustee  shall  be  subject  to all the
conditions and  restrictions  set forth in the Plan and in the applicable  Stock
Award Agreement, as if such trustee were a party to such Agreement.

SECTION 12. LEGAL REQUIREMENTS.

     Shares  shall not be issued under the Plan unless the issuance and delivery
of such Shares complies with (or is exempt from) all applicable  requirements of
law, including (without  limitation) the Securities Act of 1933, as amended, the
rules  and  regulations  promulgated  thereunder,   state  securities  laws  and
regulations,  and the  regulations  of any stock exchange on which the Company's
securities may then be listed.

SECTION 13. NO EMPLOYMENT RIGHTS.

     No provision of the Plan,  nor any right or Option  granted under the Plan,
shall be construed to give any person any right to become,  to be treated as, or
to remain an  Employee.  The Company and its  Subsidiaries  reserve the right to
terminate any person's Service at any time and for any reason.

SECTION 14. DURATION AND AMENDMENTS.

     (a) TERM OF THE PLAN. The Plan, as set forth herein, shall become effective
on the date of its adoption by the Board of  Directors,  subject to the approval
of the  Company's  shareholders.  In the  event  that the  shareholders  fail to
approve the Plan within  twelve (12) months  after its  adoption by the Board of
Directors,  any grants  already made shall be null and void,  and no  additional
grants shall be made after such date. The Plan shall terminate automatically ten
(10) years after its adoption by the Board of Directors and may be terminated on
any earlier date pursuant to Subsection (b) below.

     (b) RIGHT TO AMEND OR TERMINATE THE PLAN.  The Board of Directors may amend
the Plan at any time and from time to time.  Rights  and  obligations  under any
right or Option  granted  before  amendment of the Plan shall not be  materially
altered,  or impaired adversely,  by such amendment,  except with consent of the
person to whom the right or Option was  granted.  An amendment of the Plan shall
be subject to the  approval  of the  Company's  shareholders  only to the extent
required by applicable  laws,  regulations  or rules  including the rules of any
applicable exchange.

     (c) EFFECT OF AMENDMENT OR  TERMINATION.  No Shares shall be issued or sold
under the Plan after the termination thereof,  except upon exercise of an Option
granted prior to such termination. The termination of the Plan, or any amendment
thereof,  shall not affect any Shares previously issued or any Option previously
granted under the Plan.

                                     - 10 -
<PAGE>

THE SECURITIES  REPRESENTED  HEREBY HAVE NOT BEEN  REGISTERED OR QUALIFIED UNDER
THE  SECURITIES  ACT OF 1933 OR THE  SECURITIES  LAWS OF ANY  STATE,  AND MAY BE
OFFERED AND SOLD ONLY IF  REGISTERED  AND  QUALIFIED  PURSUANT  TO THE  RELEVANT
PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS PROVIDED AN
OPINION  OF  COUNSEL   SATISFACTORY  TO  THE  COMPANY  THAT   REGISTRATION   AND
QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED.

                               TMI HOLDINGS, INC.
                          2003 OMNIBUS SECURITIES PLAN

                        INCENTIVE STOCK OPTION AGREEMENT

         TMI Holdings, Inc. (the "Company"), hereby grants an Option to purchase
shares of its common stock ("Shares") to the Optionee named below. The terms and
conditions  of the Option are set forth in this cover sheet,  in the  attachment
and in the Company's 2003 Omnibus Securities Plan (the "Plan").

Date of Grant:
               --------------------------------------

Name of Optionee:
                  -----------------------------------------------------

Optionee's Social Security Number:
                                   ------------------------------------

Number of Shares Covered by Option:
                                    -----------------------------------

Exercise Price per Share:  $
                            -------------------------
[must be at least 100% fair market value on Date of Grant]

Vesting Start Date:
                    ---------------------------------

___  Check here if Optionee is a 10% owner (so that exercise  price must be 110%
     of fair market value and term will not exceed 5 years).

     BY SIGNING THIS COVER SHEET,  YOU AGREE TO ALL OF THE TERMS AND  CONDITIONS
     DESCRIBED  IN THE  ATTACHED  AGREEMENT  AND IN THE PLAN, A COPY OF WHICH IS
     ALSO ATTACHED.

Optionee:
                  --------------------------------------------
                         (Signature)

Company:
                  --------------------------------------------
                         (Signature)

                Title:
                       ---------------------------------------

                                     - 1 -
<PAGE>

THE SECURITIES  REPRESENTED  HEREBY HAVE NOT BEEN  REGISTERED OR QUALIFIED UNDER
THE  SECURITIES  ACT OF 1933 OR THE  SECURITIES  LAWS OF ANY  STATE,  AND MAY BE
OFFERED AND SOLD ONLY IF  REGISTERED  AND  QUALIFIED  PURSUANT  TO THE  RELEVANT
PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS PROVIDED AN
OPINION  OF  COUNSEL   SATISFACTORY  TO  THE  COMPANY  THAT   REGISTRATION   AND
QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED.

                               TMI HOLDINGS, INC.
                          2003 OMNIBUS SECURITIES PLAN

                        INCENTIVE STOCK OPTION AGREEMENT

INCENTIVE STOCK       This Option is intended to be an  incentive  stock  option
OPTION                under section 422 of the Internal Revenue Code and will be
                      interpreted accordingly.

VESTING               No Shares  will vest  until you have  performed  _________
                      (____)  months of Service  from the  commencement  of your
                      employment with the Company.  Your Option shall vest as to
                      ________ of the Shares on the date _______  (____)  months
                      from the Vesting  Start Date as shown on the cover  sheet.
                      Thereafter,  Shares  shall  vest at the rate of _______ of
                      the Shares at the end of each full month thereafter. After
                      you have completed _________ (____) months of Service, the
                      number of  Shares  which  vest  under  this  Option at the
                      Exercise Price shall be equal to the product of the number
                      of full  months  of your  continuous  employment  with the
                      Company  ("Service")  (including  any  approved  leaves of
                      absence)  from the Vesting  Start Date times the number of
                      Shares  covered  by  this  Option  times   ________.   The
                      resulting  number of Shares will be rounded to the nearest
                      whole number.  No  additional  Shares will vest after your
                      Service has terminated for any reason.

                      You should note that you may  exercise the Option prior to
                      vesting.  In  that  case,  the  Company  has  a  right  to
                      repurchase  the unvested  shares at the original  exercise
                      price if you terminate  employment  before  vesting in all
                      shares  you  purchased.   Also,  if  you  exercise  before
                      vesting,  you should  consider  making an 83(b)  election.
                      Please see the attached Tax  Summary.  THE 83(B)  ELECTION
                      MUST BE FILED WITHIN 30 DAYS OF THE DATE YOU EXERCISE.

TERM                  Your  Option  will  expire  in any  event at the  close of
                      business  at  Company  headquarters  on the day before the
                      tenth anniversary  (fifth  anniversary for a 10% owner) of
                      the Date of Grant,  as shown on the cover sheet.  (It will
                      expire  earlier if your Service  terminates,  as described
                      below.)

                                      - 2 -

<PAGE>

REGULAR TERMINATION   If your Service  terminates  for any reason  except death,
                      Disability  or for "Cause," your Option will expire at the
                      close of business at Company  headquarters on the 30th day
                      after your  termination  date.  During that 30-day period,
                      you may  exercise  that  portion of your  Option  that was
                      vested on your termination date.

DEATH                 If you die while in Service with the Company,  your Option
                      will   expire  at  the  close  of   business   at  Company
                      headquarters  on the date  six  months  after  the date of
                      death.  During that six-month period, your estate or heirs
                      may  exercise  that portion of your Option that was vested
                      on the date of death.

DISABILITY            If your  Service  terminates  because of your  Disability,
                      your  Option  will  expire  at the  close of  business  at
                      Company  headquarters  on the date six  months  after your
                      termination  date.  (However,  if your  Disability  is not
                      expected  to result  in death or to last for a  continuous
                      period of at least 12 months, your Option will be eligible
                      for ISO tax treatment only if it is exercised within three
                      months  following the termination of your Service.) During
                      that  six-month  period,  you may exercise that portion of
                      your   Option   that  was  vested  on  the  date  of  your
                      Disability.

                      "Disability"  means  that you are  unable to engage in any
                      substantial  gainful  activity by reason of any  medically
                      determinable physical or mental impairment.

LEAVES OF ABSENCE     For  purposes  of  this  Option,  your  Service  does  not
                      terminate when you go on a bona fide leave of absence that
                      was  approved by the  Company in writing,  if the terms of
                      the leave provide for continued service crediting, or when
                      continued service crediting is required by applicable law.
                      However,  your Service will be treated as  terminating  30
                      days after you went on leave,  unless your right to return
                      to active work is guaranteed by law or by a contract. Your
                      Service  terminates  in any event when the approved  leave
                      ends unless you  immediately  return to active  work.  The
                      Company  determines  which leaves count for this  purpose,
                      and when your Service  terminates  for all purposes  under
                      the Plan. The Company also  determines the extent to which
                      you may exercise the vested  portion of your Option during
                      a leave of absence.

NOTICE OF EXERCISE    When you wish to exercise  this  Option,  you must execute
                      EXHIBIT A (and, if exercise is prior to vesting,  you must
                      also  execute  EXHIBITS B AND D).  Your  exercise  will be
                      effective  when it is received by the Company.  If someone
                      else wants to exercise this Option after your death,  that
                      person must prove to the Company's satisfaction that he or
                      she is entitled to do so.

FORM OF PAYMENT       When you submit EXHIBIT A, you must include payment of the
                      Exercise Price for the Shares you are purchasing.  Payment
                      may be  made in one (or a  combination)  of the  following
                      forms at the discretion of the committee:

                                     - 3 -
<PAGE>

                      o    Your  personal  check,  a cashier's  check or a money
                           order.

                      o    Shares  which you have owned for six months and which
                           are  surrendered  to the  Company.  The  value of the
                           Shares,  determined as of the  effective  date of the
                           Option  exercise,  will be  applied  to the  Exercise
                           Price.

                      o    To the  extent  that a public  market  for the Shares
                           exists as determined by the Company,  by delivery (on
                           a form prescribed by the Committee) of an irrevocable
                           direction to a  securities  broker to sell Shares and
                           to deliver  all or part of the sale  proceeds  to the
                           Company in payment of the aggregate Exercise Price.

                      o    Any other form of legal consideration approved by the
                           Committee.

WITHHOLDING TAXES     You will not be allowed to exercise this Option unless you
                      make  acceptable  arrangements  to pay any  withholding or
                      other  taxes  that  may be due as a result  of the  Option
                      exercise or the sale of Shares  acquired  upon exercise of
                      this Option.

RESTRICTIONS ON       By signing this Agreement,  you agree not to exercise this
RESALE                Option or sell any Shares  acquired  upon exercise of this
                      Option  at a time when  applicable  laws,  regulations  or
                      Company or underwriter  trading policies prohibit exercise
                      or sale. In  particular,  the Company shall have the right
                      to designate  one or more  periods of time,  each of which
                      shall not  exceed 180 days in  length,  during  which this
                      Option shall not be exercisable if the Company  determines
                      (in its sole  discretion) that such limitation on exercise
                      could in any way facilitate a lessening of any restriction
                      on transfer  pursuant to the  Securities  Act or any state
                      securities laws with respect to any issuance of securities
                      by   the   Company,   facilitate   the   registration   or
                      qualification  of any  securities by the Company under the
                      Securities Act or any state securities laws, or facilitate
                      the perfection of any exemption from the  registration  or
                      qualification  requirements  of the  Securities Act or any
                      applicable  state  securities  laws  for the  issuance  or
                      transfer of any  securities.  Such  limitation on exercise
                      shall  not alter the  vesting  schedule  set forth in this
                      Agreement  other than to limit the  periods  during  which
                      this Option shall be exercisable.

                      Furthermore,   in  respect  of  any  underwritten   public
                      offering by the Company,  you agree that you will not sell
                      or otherwise  transfer or dispose of any Shares covered by
                      this Option during a reasonable  and  customary  period of
                      time as agreed to by the Company and the underwriters, not
                      to  exceed  the  greater  of (a) 180  days  following  the
                      effective  date  of  the  registration  statement  of  the
                      Company filed under the  Securities Act in respect of such
                      offering and (b) such other period of time as agreed to by
                      holders of a majority of the then outstanding  Shares.  By
                      signing  this  Agreement  you agree to execute and deliver
                      such other  agreements as may be  reasonably  requested by
                      the Company or the  underwriter  which are consistent with

                                     - 4 -
<PAGE>

                      the  foregoing  or which  are  necessary  to give  further
                      effect  thereto.  The  Company  may  impose  stop-transfer
                      instructions  with  respect to the  Shares  subject to the
                      foregoing restriction until the end of such period.

                      If the sale of  Shares  under  the Plan is not  registered
                      under  the   Securities  Act  of  1933,  as  amended  (the
                      "Securities  Act"),  but an exemption  is available  which
                      requires an investment or other representation,  you shall
                      represent  and  agree  at the  time of  exercise  that the
                      Shares  being  acquired  upon  exercise of this Option are
                      being acquired for investment,  and not with a view to the
                      sale or  distribution  thereof,  and shall make such other
                      representations  as are deemed necessary or appropriate by
                      the Company and its counsel.

THE COMPANY'S RIGHT   In the event that you propose to sell, pledge or otherwise
OF FIRST REFUSAL      transfer to a third party any Shares  acquired  under this
                      Agreement,  or any  interest in such  Shares,  the Company
                      shall have the "Right of First  Refusal"  with  respect to
                      all (and not less than all) of such Shares.  If you desire
                      to transfer Shares acquired under this Agreement, you must
                      give a written "Transfer Notice" to the Company describing
                      fully  the  proposed  transfer,  including  the  number of
                      Shares proposed to be transferred,  the proposed  transfer
                      price and the name and address of the proposed transferee.
                      The Transfer Notice shall be signed both by you and by the
                      proposed   transferee   and  must   constitute  a  binding
                      commitment of both parties to the transfer of the Shares.

                      The  Company  and its  assignees  shall  have the right to
                      purchase  all, and not less than all, of the Shares on the
                      terms described in the Transfer Notice (subject,  however,
                      to  any  change  in  such  terms  permitted  in  the  next
                      paragraph)  by  delivery  of a Notice of  Exercise  of the
                      Right of First Refusal  within 30 days after the date when
                      the  Transfer  Notice was  received  by the  Company.  The
                      Company's  rights  under this  Subsection  shall be freely
                      assignable, in whole or in part.

                      If the  Company  fails  to  exercise  its  Right  of First
                      Refusal within 30 days after the date when it received the
                      Transfer Notice, you may, not later than 60 days following
                      receipt of the Transfer Notice by the Company,  conclude a
                      transfer of the Shares  subject to the Transfer  Notice on
                      the terms and conditions described in the Transfer Notice.
                      Any proposed  transfer on terms and  conditions  different
                      from those  described in the Transfer  Notice,  as well as
                      any  subsequent  proposed  transfer by you, shall again be
                      subject to the Right of First  Refusal  and shall  require
                      compliance  with the procedure  described in the paragraph
                      above.  If  the  Company  exercises  its  Right  of  First
                      Refusal,  you and the  Company  (or its  assignees)  shall
                      consummate  the sale of the  Shares on the terms set forth
                      in the Transfer Notice.

                                     - 5 -
<PAGE>

                      The Company's  Right of First Refusal shall terminate upon
                      the Company's initial public offering.

                      The  Company's  Right of First  Refusal shall inure to the
                      benefit of its successors and assigns and shall be binding
                      upon any transferee of the Shares.

RIGHT OF REPURCHASE   Following  termination of your Service for any reason, the
                      Company  shall  have the  right to  purchase  all of those
                      vested  Shares  that you have or will  acquire  under this
                      Option  (unvested  Shares  which have been  exercised  are
                      subject to a Repurchase Option set forth in EXHIBIT A). If
                      the Company  fails to provide you with  written  notice of
                      its  intention to purchase such Shares before or within 30
                      days of the date the Company  receives written notice from
                      you of your termination of Service, the Company's right to
                      purchase  such  Shares  shall  terminate.  If the  Company
                      exercises its right to purchase  such Shares,  the Company
                      will consummate the purchase of such Shares within 60 days
                      of the date of its  written  notice to you.  The  purchase
                      price for any  Shares  repurchased  shall be the higher of
                      the  fair  market  value  of the  Shares  on the  date  of
                      purchase or the aggregate  Exercise  Price for such Shares
                      and  shall  be  paid  in  cash.  The  Company's  right  of
                      repurchase  shall  terminate  in the event  that  Stock is
                      listed  on an  established  stock  exchange  or is  quoted
                      regularly on the Nasdaq National  Market.  The fair market
                      value shall be determined by the Board of Directors in its
                      sole discretion.

TRANSFER OF OPTION    Prior to your death,  only you may  exercise  this Option.
                      You cannot  transfer or assign this Option.  For instance,
                      you may not sell this Option or use it as  security  for a
                      loan.  If you  attempt  to do any of  these  things,  this
                      Option will immediately become invalid.  You may, however,
                      dispose  of this  Option in your will.  Regardless  of any
                      marital property settlement agreement,  the Company is not
                      obligated  to honor a Notice of Exercise  from your spouse
                      or  former  spouse,   nor  is  the  Company  obligated  to
                      recognize such individual's interest in your Option in any
                      other way.

RETENTION RIGHTS      This  Agreement does not give you the right to be retained
                      by the Company in any capacity.  The Company  reserves the
                      right to  terminate  your  Service at any time and for any
                      reason.

SHAREHOLDER RIGHTS    Neither you, nor your estate or heirs,  have any rights as
                      a shareholder  of the Company until a certificate  for the
                      Shares  acquired  upon  exercise  of this  Option has been
                      issued.  No  adjustments  are made for  dividends or other
                      rights if the  applicable  record date occurs  before your
                      stock  certificate  is issued,  except as described in the
                      Plan.

ADJUSTMENTS           In the  event  of a stock  split,  a stock  dividend  or a
                      similar  change  in the  Company's  Stock,  the  number of
                      Shares  covered by this Option and the Exercise  Price per
                      share may be adjusted  pursuant  to the Plan.  Your Option
                      shall be subject to the terms of the  agreement of merger,
                      liquidation or  reorganization in the event the Company is
                      subject to such corporate activity.

                                     - 6 -
<PAGE>

LEGENDS               All  certificates  representing  the  Shares  issued  upon
                      exercise  of this Option  shall,  where  applicable,  have
                      endorsed thereon the following legends:

                           "THE SECURITIES  REPRESENTED BY THIS  CERTIFICATE ARE
                      SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND OPTIONS TO
                      PURCHASE SUCH SHARES SET FORTH IN AN AGREEMENT BETWEEN THE
                      COMPANY  AND  THE  REGISTERED  HOLDER,  OR  SUCH  HOLDER'S
                      PREDECESSOR IN INTEREST.  SUCH AGREEMENT  IMPOSES  CERTAIN
                      TRANSFER RESTRICTIONS AND GRANTS CERTAIN REPURCHASE RIGHTS
                      TO THE  COMPANY  (OR ITS  ASSIGNS)  UPON  THE  SALE OF THE
                      SHARES OR UPON TERMINATION OF SERVICE WITH THE COMPANY.  A
                      COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL  OFFICE
                      OF THE COMPANY AND WILL BE FURNISHED UPON WRITTEN  REQUEST
                      TO THE  SECRETARY  OF THE  COMPANY BY THE HOLDER OF SHARES
                      REPRESENTED BY THIS CERTIFICATE.

                           THE SECURITIES  REPRESENTED BY THIS  CERTIFICATE HAVE
                      NOT BEEN  REGISTERED  UNDER THE SECURITIES ACT OF 1933, OR
                      THE SECURITIES  LAWS OF ANY STATE,  AND MAY BE OFFERED AND
                      SOLD ONLY IF  REGISTERED  AND  QUALIFIED  PURSUANT  TO THE
                      RELEVANT  PROVISIONS OF FEDERAL AND STATE  SECURITIES LAWS
                      OR IF THE  COMPANY IS  PROVIDED  AN  OPINION  OF  COUNSEL,
                      SATISFACTORY   TO  THE  COMPANY  AND  ITS  COUNSEL,   THAT
                      REGISTRATION  AND  QUALIFICATION  UNDER  FEDERAL AND STATE
                      SECURITIES LAWS IS NOT REQUIRED."

APPLICABLE LAW        This Agreement will be interpreted  and enforced under the
                      laws of the  State of  Florida  (without  regard  to their
                      choice of law provisions).

THE PLAN AND OTHER    The text of the Plan is  incorporated in this Agreement by
AGREEMENTS            reference.   Certain   capitalized   terms  used  in  this
                      Agreement are defined in the Plan.

                      This Agreement,  including its  attachments,  and the Plan
                      constitute  the entire  understanding  between you and the
                      Company  regarding  this  Option.  Any  prior  agreements,
                      commitments or  negotiations  con-cerning  this Option are
                      superseded.

     BY SIGNING THE COVER SHEET OF THIS AGREEMENT, YOU AGREE TO ALL OF THE TERMS
     AND CONDITIONS  DESCRIBED ABOVE AND IN THE PLAN. YOU ALSO  ACKNOWLEDGE THAT
     YOU HAVE READ  SECTION  11,  "PURCHASER'S  INVESTMENT  REPRESENTATIONS"  OF
     ATTACHMENT  A AND THAT YOU CAN AND HEREBY DO MAKE THE SAME  REPRESENTATIONS
     WITH RESPECT TO THE GRANT OF THIS OPTION.

                                     - 7 -

<PAGE>

THE SECURITIES  REPRESENTED  HEREBY HAVE NOT BEEN  REGISTERED OR QUALIFIED UNDER
THE  SECURITIES  ACT OF 1933 OR THE  SECURITIES  LAWS OF ANY  STATE,  AND MAY BE
OFFERED AND SOLD ONLY IF  REGISTERED  AND  QUALIFIED  PURSUANT  TO THE  RELEVANT
PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS PROVIDED AN
OPINION  OF  COUNSEL   SATISFACTORY  TO  THE  COMPANY  THAT   REGISTRATION   AND
QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED.

                               TMI HOLDINGS, INC.
                          2003 OMNIBUS SECURITIES PLAN

                       NONSTATUTORY STOCK OPTION AGREEMENT

         TMI Holdings, Inc. (the "Company"), hereby grants an Option to purchase
shares of its common stock ("Shares") to the Optionee named below. The terms and
conditions  of the Option are set forth in this cover sheet,  in the  attachment
and in the Company's 2003 Omnibus Securities Plan (the "Plan").

Date of Grant:
               --------------------------------------

Name of Optionee:
                  -----------------------------------------------------

Optionee's Social Security Number:
                                   ------------------------------------

Number of Shares Covered by Option:
                                    -----------------------------------

Exercise Price per Share:  $
                            -------------------------

Vesting Start Date:
                    ---------------------------------
[must be at least 85% fair market value on Date of Grant]

___  Check here if Optionee is a 10% owner (so that exercise  price must be 110%
     of fair market value and term will not exceed 5 years).

     BY SIGNING THIS COVER SHEET,  YOU AGREE TO ALL OF THE TERMS AND  CONDITIONS
     DESCRIBED  IN THE  ATTACHED  AGREEMENT  AND IN THE PLAN, A COPY OF WHICH IS
     ALSO ATTACHED.

Optionee:
                  -----------------------------------------------------
                        (Signature)

Company:
                  -----------------------------------------------------
                        (Signature)

                  Title:
                         ----------------------------------------------

                                     - 1 -
<PAGE>

THE SECURITIES  REPRESENTED  HEREBY HAVE NOT BEEN  REGISTERED OR QUALIFIED UNDER
THE  SECURITIES  ACT OF 1933 OR THE  SECURITIES  LAWS OF ANY  STATE,  AND MAY BE
OFFERED AND SOLD ONLY IF  REGISTERED  AND  QUALIFIED  PURSUANT  TO THE  RELEVANT
PROVISIONS OF FEDERAL AND STATE SECURITIES LAWS OR IF THE COMPANY IS PROVIDED AN
OPINION  OF  COUNSEL   SATISFACTORY  TO  THE  COMPANY  THAT   REGISTRATION   AND
QUALIFICATION UNDER FEDERAL AND STATE SECURITIES LAWS IS NOT REQUIRED.

                               TMI HOLDINGS, INC.
                          2003 OMNIBUS SECURITIES PLAN

                       NONSTATUTORY STOCK OPTION AGREEMENT

NONSTATUTORY STOCK OPTION    This  Option  is not  intended  to be an  incentive
                             stock  option  under  section  422 of the  Internal
                             Revenue Code and will be interpreted accordingly.

VESTING                      No  Shares  will  vest  until  you  have  performed
                             _______   (____)   months  of   Service   from  the
                             commencement  of your  employment with the Company.
                             Your Option  shall vest as to _______ of the Shares
                             on the date _______  (____) months from the Vesting
                             Start Date as shown on the cover sheet. Thereafter,
                             Shares  shall vest at the rate of  ________  of the
                             Shares  at the end of each full  month  thereafter.
                             After you have completed  ________ (____) months of
                             Service, the number of Shares which vest under this
                             Option at the Exercise  Price shall be equal to the
                             product  of the  number  of  full  months  of  your
                             continuous  employment with the Company ("Service")
                             (including any approved leaves of absence) from the
                             Vesting  Start  Date  times  the  number  of Shares
                             covered  by  this  Option   times   ________.   The
                             resulting  number of Shares  will be rounded to the
                             nearest  whole number.  No  additional  Shares will
                             vest  after your  Service  has  terminated  for any
                             reason.

                             You should  note that you may  exercise  the Option
                             prior to vesting.  In that case,  the Company has a
                             right to  repurchase  the  unvested  shares  at the
                             original exercise price if you terminate employment
                             before vesting in all shares you  purchased.  Also,
                             if you exercise before vesting, you should consider
                             making an 83(b)  election.  Please see the attached
                             Tax  Summary.  THE  83(B)  ELECTION  MUST BE  FILED
                             WITHIN 30 DAYS OF THE DATE YOU EXERCISE.

TERM                         Your  Option  will expire in any event at the close
                             of  business  at  Company  headquarters  on the day
                             before the tenth anniversary (fifth anniversary for
                             a 10% owner) of the Date of Grant,  as shown on the
                             cover  sheet.  (It  will  expire  earlier  if  your
                             Service terminates, as described below.)

REGULAR TERMINATION          If your Service  terminates  for any reason  except
                             death, Disability,  or for "Cause" your Option will
                             expire  at  the  close  of   business   at  Company
                             headquarters on the 30th day after your termination

                                      - 2 -
<PAGE>

                             date.  During such 30-day period,  you may exercise
                             that portion of your Option that was vested on your
                             termination date.

DEATH                        If you die while in Service with the Company,  your
                             Option  will  expire  at the close of  business  at
                             Company  headquarters  on the date six months after
                             the date of death.  During that  six-month  period,
                             your estate or heirs may  exercise  that portion of
                             your Option that was vested on your date of death.

DISABILITY                   If  your   Service   terminates   because  of  your
                             Disability, your Option will expire at the close of
                             business  at Company  headquarters  on the date six
                             months  after your  termination  date.  During that
                             six-month period,  you may exercise that portion of
                             your  Option  that  was  vested  on  your  date  of
                             Disability.

                             "Disability" means that you are unable to engage in
                             any substantial  gainful  activity by reason of any
                             medically    determinable    physical   or   mental
                             impairment.

LEAVES OF ABSENCE            For purposes of this Option,  your Service does not
                             terminate  when  you go on a  bona  fide  leave  of
                             absence   that  was  approved  by  the  Company  in
                             writing,  if the  terms of the  leave  provide  for
                             continued  service  crediting,  or  when  continued
                             service  crediting is required by  applicable  law.
                             However,   your   Service   will  be   treated   as
                             terminating 30 days after you went on leave, unless
                             your right to return to work is  guaranteed  by law
                             or by a contract.  Your service  terminates  in any
                             event  when the  approved  leave  ends  unless  you
                             immediately   return  to   Service.   The   Company
                             determines which leaves count for this purpose, and
                             when your Service terminates for all purposes under
                             the Plan. The Company also determines the extent to
                             which you may exercise  the vested  portion of your
                             Option during a leave of absence.

NOTICE OF EXERCISE           When you wish to  exercise  this  Option,  you must
                             execute  EXHIBIT  A (and if  exercise  is  prior to
                             vesting  you must also  execute  EXHIBITS B AND D).
                             Your Exercise will be effective when it is received
                             by the  Company.  If someone else wants to exercise
                             this  Option  after your  death,  that  person must
                             prove to the Company's  satisfaction that he or she
                             is entitled to do so.

FORM OF  PAYMENT             When you submit EXHIBIT A, you must include payment
                             of the  Exercise  Price  for  the  Shares  you  are
                             purchasing.  Payment  may  be  made  in  one  (or a
                             combination)   of  the   following   forms  at  the
                             discretion of the committee:

                             o        Your personal check, a cashier's check  or
                                      a money order.

                             o        Shares which you have owned for six months
                                      and which are  surrendered to the Company.
                                      The value of the Shares,  determined as of
                                      the effective date of the Option exercise,
                                      will be applied to the Exercise Price.

                                     - 3 -
<PAGE>

                             o        To the extent that a public market for the
                                      Shares   exists  as   determined   by  the
                                      Company, by delivery (on a form prescribed
                                      by  the   Committee)  of  an   irrevocable
                                      direction to a  securities  broker to sell
                                      Shares and to  deliver  all or part of the
                                      sale proceeds to the Company in payment of
                                      the aggregate Exercise Price.

                             o        Any  other  form  of  legal  consideration
                                      approved by the Committee.

WITHHOLDING TAXES            You will not be allowed  to  exercise  this  Option
                             unless you make acceptable  arrangements to pay any
                             withholding  or  other  taxes  that may be due as a
                             result of the Option exercise or the sale of Shares
                             acquired upon exercise of this Option.

RESTRICTIONS ON RESALE       By  signing  this  Agreement,   you  agree  not  to
                             exercise  this  Option or sell any Shares  acquired
                             upon  exercise  of  this  Option  at  a  time  when
                             applicable   laws,   regulations   or   Company  or
                             underwriter  trading policies  prohibit exercise or
                             sale.  In  particular,  the Company  shall have the
                             right to  designate  one or more  periods  of time,
                             each of which  shall not exceed 180 days in length,
                             during which this Option  shall not be  exercisable
                             if the Company  determines (in its sole discretion)
                             that such  limitation on exercise  could in any way
                             facilitate  a  lessening  of  any   restriction  on
                             transfer  pursuant  to  the  Securities  Act or any
                             state  securities laws with respect to any issuance
                             of  securities  by  the  Company,   facilitate  the
                             registration or  qualification of any securities by
                             the Company under the  Securities  Act or any state
                             securities  laws, or facilitate  the  perfection of
                             any   exemption    from   the    registration    or
                             qualification requirements of the Securities Act or
                             any  applicable   state  securities  laws  for  the
                             issuance  or  transfer  of  any  securities.   Such
                             limitation on exercise  shall not alter the vesting
                             schedule set forth in this Agreement  other than to
                             limit the periods during which this Option shall be
                             exercisable.

                             Furthermore,  in respect of any underwritten public
                             offering  by the  Company,  you agree that you will
                             not sell or  otherwise  transfer  or dispose of any
                             Shares  covered by this Option  during a reasonable
                             and  customary  period  of time as agreed to by the
                             Company  and the  underwriters,  not to exceed  the
                             greater  of (a) 180 days  following  the  effective
                             date of the  registration  statement of the Company
                             filed under the  Securities  Act in respect of such
                             offering  and  (b)  such  other  period  of time as
                             agreed  to by  holders  of a  majority  of the then
                             outstanding  Shares.  By signing this Agreement you
                             agree to execute and deliver such other  agreements
                             as may be  reasonably  requested  by the Company or
                             the  underwriter  which  are  consistent  with  the
                             foregoing  or which are  necessary  to give further
                             effect    thereto.    The    Company   may   impose
                             stop-transfer  instructions  with  respect  to  the
                             Shares subject to the foregoing  restriction  until
                             the end of such period.

                             If  the  sale  of  Shares  under  the  Plan  is not
                             registered  under the  Securities  Act of 1933,  as
                             amended (the "Securities Act"), but an exemption is

                                     - 4 -
<PAGE>

                             available  which  requires an  investment  or other
                             representation,  you shall  represent  and agree at
                             the time of exercise that the Shares being acquired
                             upon exercise of this Option are being acquired for
                             investment,  and  not  with a view  to the  sale or
                             distribution  thereof,  and shall  make such  other
                             representations   as  are   deemed   necessary   or
                             appropriate by the Company and its counsel.

THE COMPANY'S RIGHT OF       In the event that you  propose  to sell,  pledge or
FIRST REFUSAL                otherwise  transfer  to a third  party  any  Shares
                             acquired under this  Agreement,  or any interest in
                             such Shares,  the Company  shall have the "Right of
                             First  Refusal"  with  respect to all (and not less
                             than all) of such Shares. If you desire to transfer
                             Shares acquired under this Agreement, you must give
                             a  written   "Transfer   Notice"  to  the   Company
                             describing fully the proposed  transfer,  including
                             the number of Shares  proposed  to be  transferred,
                             the  proposed  transfer  price  and  the  name  and
                             address of the  proposed  transferee.  The Transfer
                             Notice  shall  be  signed  both  by you  and by the
                             proposed  transferee and must  constitute a binding
                             commitment  of both  parties to the transfer of the
                             Shares.

                             The Company and its assignees  shall have the right
                             to  purchase  all,  and not less than  all,  of the
                             Shares  on the  terms  described  in  the  Transfer
                             Notice  (subject,  however,  to any  change in such
                             terms  permitted in the next paragraph) by delivery
                             of a  notice  of  exercise  of the  Right  of First
                             Refusal  within  30 days  after  the date  when the
                             Transfer Notice was received by the Company.

                             The Company's rights under this Subsection shall be
                             freely assignable, in whole or in part.

                             If the Company fails to exercise its Right of First
                             Refusal  within  30 days  after  the  date  when it
                             received  the Transfer  Notice,  you may, not later
                             than  60 days  following  receipt  of the  Transfer
                             Notice by the  Company,  conclude a transfer of the
                             Shares subject to the Transfer  Notice on the terms
                             and  conditions  described in the Transfer  Notice.
                             Any  proposed  transfer  on  terms  and  conditions
                             different  from  those  described  in the  Transfer
                             Notice, as well as any subsequent proposed transfer
                             by you,  shall  again be  subject  to the  Right of
                             First Refusal and shall require compliance with the
                             procedure  described in the paragraph above. If the
                             Company  exercises its Right of First Refusal,  you
                             and the Company (or its assignees) shall consummate
                             the sale of the  Shares  on the  terms set forth in
                             the Transfer Notice.

                             The   Company's   Right  of  First   Refusal  shall
                             terminate   upon  the  Company's   initial   public
                             offering.

                             The Company's Right of First Refusal shall inure to
                             the benefit of its successors and assigns and shall
                             be binding upon any transferee of the Shares.

                                     - 5 -
<PAGE>

RIGHT OF REPURCHASE          Following  termination  of  your  Service  for  any
                             reason,   the  Company  shall  have  the  right  to
                             purchase all of those  vested  Shares that you have
                             or will acquire under this Option  (unvested Shares
                             which  have  been   exercised   are  subject  to  a
                             Repurchase  Option set forth in EXHIBIT  A). If the
                             Company fails to provide you with written notice of
                             its  intention  to purchase  such Shares  before or
                             within  30 days of the  date the  Company  receives
                             written  notice  from  you of your  termination  of
                             Service,  the  Company's  right  to  purchase  such
                             Shares shall  terminate.  If the Company  exercises
                             its right to purchase such Shares, the Company will
                             consummate  the  purchase of such Shares  within 60
                             days of the date of its written  notice to you. The
                             purchase price for any Shares  repurchased shall be
                             the higher of the fair  market  value of the Shares
                             on the date of purchase or the  aggregate  Exercise
                             Price  for such  Shares  and shall be paid in cash.
                             The Company's  right of repurchase  shall terminate
                             in the event that Stock is listed on an established
                             stock exchange or is quoted regularly on the Nasdaq
                             National  Market.  The fair  market  value shall be
                             determined  by the Board of  Directors  in its sole
                             discretion.

TRANSFER OF OPTION           Prior to your  death,  only you may  exercise  this
                             Option.  You cannot transfer or assign this Option.
                             For  instance,  you may not sell this Option or use
                             it as security for a loan. If you attempt to do any
                             of  these  things,  this  Option  will  immediately
                             become invalid.  You may, however,  dispose of this
                             Option in your will.

                             Regardless  of  any  marital  property   settlement
                             agreement,  the Company is not obligated to honor a
                             Notice  of  Exercise  from  your  spouse  or former
                             spouse,  nor is the Company  obligated to recognize
                             such  individual's  interest  in your Option in any
                             other way.

RETENTION RIGHTS             This  Agreement  does not give you the  right to be
                             retained  by  the  Company  in  any  capacity.  The
                             Company   reserves  the  right  to  terminate  your
                             Service at any time and for any reason.

SHAREHOLDER RIGHTS           Neither  you,  nor your  estate or heirs,  have any
                             rights  as a  shareholder  of the  Company  until a
                             certificate  for the Shares  acquired upon exercise
                             of this Option has been issued.  No adjustments are
                             made  for   dividends   or  other   rights  if  the
                             applicable  record  date  occurs  before your stock
                             certificate  is issued,  except as described in the
                             Plan.

ADJUSTMENTS                  In the event of a stock split,  a stock dividend or
                             a similar change in the Company  Stock,  the number
                             of Shares  covered by this Option and the  Exercise
                             Price  per share may be  adjusted  pursuant  to the
                             Plan.  Your Option shall be subject to the terms of
                             the   agreement   of   merger,    liquidation    or
                             reorganization  in the event the Company is subject
                             to such corporate activity.

LEGENDS                      All  certificates  representing  the Shares  issued
                             upon   exercise   of  this  Option   shall,   where
                             applicable,  have  endorsed  thereon the  following
                             legends:

                                     - 6 -
<PAGE>

                                      "THE   SECURITIES   REPRESENTED   BY  THIS
                             CERTIFICATE ARE SUBJECT TO CERTAIN  RESTRICTIONS ON
                             TRANSFER  AND OPTIONS TO  PURCHASE  SUCH SHARES SET
                             FORTH IN AN  AGREEMENT  BETWEEN THE COMPANY AND THE
                             REGISTERED HOLDER, OR SUCH HOLDER'S  PREDECESSOR IN
                             INTEREST.  SUCH AGREEMENT  IMPOSES CERTAIN TRANSFER
                             RESTRICTIONS AND GRANTS CERTAIN  REPURCHASE  RIGHTS
                             TO THE  COMPANY (OR ITS  ASSIGNS)  UPON THE SALE OF
                             THE SHARES OR UPON  TERMINATION OF SERVICE WITH THE
                             COMPANY. A COPY OF SUCH AGREEMENT IS ON FILE AT THE
                             PRINCIPAL   OFFICE  OF  THE  COMPANY  AND  WILL  BE
                             FURNISHED UPON WRITTEN  REQUEST TO THE SECRETARY OF
                             THE COMPANY BY THE HOLDER OF SHARES  REPRESENTED BY
                             THIS CERTIFICATE.

                                      THE   SECURITIES   REPRESENTED   BY   THIS
                             CERTIFICATE  HAVE NOT  BEEN  REGISTERED  UNDER  THE
                             SECURITIES ACT OF 1933, OR THE  SECURITIES  LAWS OF
                             ANY  STATE,  AND MAY BE  OFFERED  AND SOLD  ONLY IF
                             REGISTERED  AND QUALIFIED  PURSUANT TO THE RELEVANT
                             PROVISIONS OF FEDERAL AND STATE  SECURITIES LAWS OR
                             IF THE  COMPANY IS  PROVIDED AN OPINION OF COUNSEL,
                             SATISFACTORY  TO THE COMPANY AND ITS COUNSEL,  THAT
                             REGISTRATION  AND  QUALIFICATION  UNDER FEDERAL AND
                             STATE SECURITIES LAWS IS NOT REQUIRED."

APPLICABLE LAW               This  Agreement  will be  interpreted  and enforced
                             under  the laws of the  State of  Florida  (without
                             regard to their choice of law provisions).

THE PLAN AND OTHER           The  text  of the  Plan  is  incorporated  in  this
AGREEMENTS                   Agreement by reference.  Certain  capitalized terms
                             used in this Agreement are defined in the Plan.

                             This  Agreement and the Plan  constitute the entire
                             understanding between you and the Company regarding
                             this Option.  Any prior agreements,  commitments or
                             negotiations concerning this Option are superseded.

         BY SIGNING THE COVER SHEET OF THIS  AGREEMENT,  YOU AGREE TO ALL OF THE
         TERMS  AND  CONDITIONS  DESCRIBED  ABOVE  AND IN  THE  PLAN.  YOU  ALSO
         ACKNOWLEDGE  THAT YOU HAVE READ  SECTION  11,  "PURCHASER'S  INVESTMENT
         REPRESENTATIONS"  OF  ATTACHMENT  A AND THAT YOU CAN AND HEREBY DO MAKE
         THE SAME REPRESENTATIONS WITH RESPECT TO THE GRANT OF THIS OPTION.

                                     - 7 -
<PAGE>

                                    EXHIBIT A

                               TMI HOLDINGS, INC.

             NOTICE OF EXERCISE AND COMMON STOCK PURCHASE AGREEMENT

         THIS AGREEMENT is dated as of ___________,  ____, between TMI Holdings,
Inc. (the "Company"), and _________________ ("Purchaser").

                              W I T N E S S E T H:

         WHEREAS,  the Company  and  Purchaser  are parties to that  certain ___
Incentive ___ Nonstatutory Stock Option Agreement dated as of ___________,  ____
(the  "Option  Agreement")  pursuant  to which  the  Purchaser  has the right to
purchase up to  __________  shares of the  Company's  common  stock (the "Option
Shares"); and

         WHEREAS,  the  Option is  exercisable  with  respect  to certain of the
Option Shares as of the date hereof; and

         WHEREAS,  pursuant  to  the  Option  Agreement,  Purchaser  desires  to
purchase shares of the Company as herein described,  on the terms and conditions
set forth in this  Agreement,  the Option  Agreement and the TMI Holdings,  Inc.
2003 Omnibus  Securities Plan (the "Plan").  Certain  capitalized  terms used in
this Agreement are defined in the Plan.

         NOW, THEREFORE, it is agreed between the parties as follows:

SECTION 1: PURCHASE OF SHARES.

         (a)  Pursuant to the terms of the Option  Agreement,  Purchaser  hereby
agrees to purchase from the Company and the Company  agrees to sell and issue to
Purchaser  _________  shares of the Company's common stock (the "Stock") for the
Exercise Price per share specified in the Option  Agreement  payable by personal
check, cashier's check or money order, if permitted by the Option Agreement,  as
follows:  _______________________________.  Payment  shall be  delivered  at the
Closing, as such term is hereinafter defined.

         (b) The closing hereunder (the "Closing") shall occur at the offices of
the  Company  on  __________,  ____,  or such  other  time  and  place as may be
designated by the Company (the "Closing Date").

SECTION 2: REPURCHASE OPTION

         All unvested shares of the Stock purchased by the Purchaser pursuant to
this Agreement (sometimes referred to as the "Repurchase Option Stock") shall be
subject to the following option (the "Repurchase Option"):

         (a) In the event the  Purchaser  terminates  service  with the  Company
("Service") for any reason,  with or without cause, the Company may exercise the
Repurchase Option.

                                     - 1 -
<PAGE>

         (b)  Purchaser  understands  that the  Stock is being  sold in order to
induce Purchaser to become and/or remain associated with the Company and to work
diligently for the success of the Company and that the  Repurchase  Option Stock
will  continue to vest in  accordance  with the schedule set forth in the Option
Agreement.  Accordingly,  the Company shall have the right at any time within 90
days after the  termination of Service to purchase from the Purchaser all shares
of Stock purchased  hereunder which have not vested in accordance with the terms
of such vesting  schedule in the Option  Agreement.  The purchase price for such
unvested shares of Repurchase Option Stock shall be the Exercise Price per share
paid by Purchaser for such shares  pursuant to the Option (the "Option  Price").
The  purchase  price  shall  be paid  by  certified  or  cashier's  check  or by
cancellation of any indebtedness of Purchaser to the Company.

         (c)  Nothing  in this  Agreement  shall  be  construed  as a  right  by
purchaser to be employed by Company, or a parent or subsidiary of Company.

SECTION 3: EXERCISE OF REPURCHASE OPTION

         The Repurchase Option shall be exercised by written notice signed by an
officer of the Company and delivered or mailed as provided in Section 16 of this
Agreement  and to the Escrow Agent as provided in Section 16 of the Joint Escrow
Instructions attached as Exhibit B to the Option Agreement.

SECTION 4: WAIVER, ASSIGNMENT, EXPIRATION OF REPURCHASE OPTION

         If the Company waives or fails to exercise the Repurchase  Option as to
all of the shares  subject  thereto,  the Company may, in the  discretion of its
Board of Directors,  assign the Repurchase Option to any other holder or holders
of preferred or common stock of the Company in such proportions as such Board of
Directors may determine. In the event of such an assignment,  the assignee shall
pay to the  Company  in cash an  amount  equal to the fair  market  value of the
Repurchase  Option.  The Company shall  promptly,  upon expiration of the 90-day
period referred to in Section 2 above,  notify Purchaser of the number of shares
subject to the Repurchase  Option assigned to such stockholders and shall notify
both the Purchaser and the assignees of the time,  place and date for settlement
of such  purchase,  which must be made within 90 days from the date of cessation
of continuous employment. In the event that the Company and/or such assignees do
not elect to  exercise  the  Repurchase  Option as to all or part of the  shares
subject to it, the  Repurchase  Option  shall  expire as to all shares which the
Company and/or such assignees have not elected to purchase.

SECTION 5: ESCROW OF SHARES

         (a) As security for  Purchaser's  faithful  performance of the terms of
this Agreement and to ensure the availability for delivery of Purchaser's shares
upon exercise of the Repurchase Option herein provided for,  Purchaser agrees at
the Closing hereunder,  to deliver to and deposit with the Escrow Agent named in
the Joint Escrow Instructions attached to the Option Agreement as Exhibit B, the
certificate  or  certificates   evidencing  the  Option  Stock  subject  to  the
Repurchase  Option and two Assignments  Separate from  Certificate duly executed
(with  date and  number of shares in blank) in the form  attached  to the Option
Agreement  as Exhibit D. Such  documents  are to be held by the Escrow Agent and
delivered by the Escrow Agent pursuant to the Joint Escrow  Instructions,  which
instructions  shall  also  be  delivered  to the  Escrow  Agent  at the  Closing
hereunder.

         (b)  Within  30 days  after the last day of each  successive  completed
calendar  quarter after the Closing  Date, if Purchaser so requests,  the Escrow
Agent will  deliver to  Purchaser  certificates  representing  so many shares of
Stock as are no longer  subject to the  Repurchase  Option  (less such shares as
have been  previously  delivered).  Ninety days after  cessation of  Purchaser's
employment  with the Company the Company will direct the Escrow Agent to deliver
to Purchaser a certificate or certificates representing the number of shares not
repurchased  by the  Company  or  its  assignees  pursuant  to  exercise  of the
Repurchase Option (less such shares as have been previously delivered).

                                     - 2 -
<PAGE>

SECTION 6: ADJUSTMENT OF SHARES

         Subject to the  provisions  of the  Articles  of  Incorporation  of the
Company, if, from time to time during the term of the Repurchase Option:

         (a) there is any stock dividend or liquidating  dividend of cash and/or
property,  stock split or other change in the  character or amount of any of the
outstanding securities of the Company, or

         (b) there is any consolidation,  merger or sale of all or substantially
all, of the assets of the Company,

then, in such event,  any and all new,  substituted or additional  securities or
other property to which Purchaser is entitled by reason of Purchaser's ownership
of the shares shall be immediately  subject to such  Repurchase  Option with the
same force and effect as the shares of Option Stock from time to time subject to
the Repurchase Option.  While the total Option Price shall remain the same after
each such event, the Option Price per share of Option Stock upon exercise of the
Repurchase Option shall be appropriately and equitably adjusted as determined by
the Board of Directors of the Company.

SECTION 7: THE COMPANY'S RIGHT OF FIRST REFUSAL.

         Before any shares of Stock  registered in the name of Purchaser and not
subject to the Repurchase  Option may be sold or transferred,  such shares shall
first be offered to the Company as set forth in the Option Agreement.

SECTION 8:  PURCHASER'S  RIGHTS AFTER EXERCISE OF REPURCHASE  OPTION OR RIGHT OF
FIRST REFUSAL.

         If the Company makes available, at the time and place and in the amount
and form  provided  in this  Agreement,  the  consideration  for the Stock to be
repurchased  in  accordance  with the  provisions  of  Sections  2 and 7 of this
Agreement, then from and after such time the person from whom such shares are to
be repurchased shall no longer have any rights as a holder of such shares (other
than the right to receive payment of such  consideration in accordance with this
Agreement).  Such shares shall be deemed to have been  repurchased in accordance
with  the  applicable  provisions  hereof,  whether  or not  the  certificate(s)
therefor have been delivered as required by this Agreement.

SECTION 9: TRANSFER BY PURCHASER TO CERTAIN TRUSTS.

         Purchaser  shall  have the  right to  transfer  all or any  portion  of
Purchaser's  interest in the shares issued under this Agreement  which have been
delivered to Purchaser under the provisions of Section 5 of this Agreement, to a
trust established by Purchaser for the benefit of Purchaser,  Purchaser's spouse
or  Purchaser's  children,  without being subject to the provisions of Section 7
hereof,  provided that the trustee on behalf of the trust shall agree in writing
to be bound by the terms and conditions of this Agreement.  The transferee shall
execute a copy of Exhibit C attached to the Option  Agreement  and file the same
with the Secretary of the Company.

                                     - 3 -
<PAGE>

SECTION 10: LEGEND OF SHARES.

         All certificates  representing the Stock purchased under this Agreement
shall,  where  applicable,  have  endorsed  thereon the legends set forth in the
Option Agreement and any other legends required by applicable securities laws.

SECTION 11: PURCHASER'S INVESTMENT REPRESENTATIONS.

         (a) This Agreement is made with Purchaser in reliance upon  Purchaser's
representation to the Company,  which by Purchaser's acceptance hereof Purchaser
confirms,  that the Stock which  Purchaser  will receive  will be acquired  with
Purchaser's  own funds for investment for an indefinite  period for  Purchaser's
own  account,  not as a  nominee  or  agent,  and not with a view to the sale or
distribution of any part thereof, and that Purchaser has no present intention of
selling,  granting  participation  in, or otherwise  distributing  the same, but
subject,  nevertheless,  to any  requirement  of law  that  the  disposition  of
Purchaser's  property  shall at all  times be  within  Purchaser's  control.  By
executing this Agreement,  Purchaser further  represents that Purchaser does not
have any contract, understanding or agreement with any person to sell, transfer,
or grant  participation,  to such person or to any third person, with respect to
any of the Stock.

         (b)  Purchaser  understands  that the Stock will not be  registered  or
qualified  under  federal or state  securities  laws on the ground that the sale
provided for in this  Agreement  is exempt from  registration  or  qualification
under federal or state  securities laws and that the Company's  reliance on such
exemption is predicated on Purchaser's representations set forth herein.

         (c) Purchaser agrees that in no event will Purchaser make a disposition
of any of the Stock (including a disposition under Section 9 of this Agreement),
unless and until (i)  Purchaser  shall have notified the Company of the proposed
disposition  and shall  have  furnished  the  Company  with a  statement  of the
circumstances surrounding the proposed disposition and (ii) Purchaser shall have
furnished the Company with an opinion of counsel  satisfactory to the Company to
the  effect  that  (A)  such  disposition  will  not  require   registration  or
qualification  of such  Stock  under  federal  or state  securities  laws or (B)
appropriate action necessary for compliance with the federal or state securities
laws has been taken or (iii) the Company  shall have  waived,  expressly  and in
writing, its rights under clauses (i) and (ii) of this section.

         (d) With respect to a transaction  occurring  prior to such date as the
Plan and Stock  thereunder  are  covered by a valid Form S-8 or similar  federal
registration  statement,  this subsection  shall apply unless the transaction is
covered by the exemption in Florida  General  Corporation Law or a similar broad
based exemption. In connection with the investment  representations made herein,
Purchaser  represents  that  Purchaser is able to fend for himself or herself in
the  transactions  contemplated  by  this  Agreement,  has  such  knowledge  and
experience in financial and business  matters as to be capable of evaluating the
merits and risks of Purchaser's investment, has the ability to bear the economic
risks of  Purchaser's  investment and has been furnished with and has had access
to such  information  as would be made  available in the form of a  registration
statement  together with such  additional  information as is necessary to verify
the accuracy of the information  supplied and to have all questions  answered by
the Company.

         (e)  Purchaser  understands  that if the Company does not register with
the Securities and Exchange  Commission pursuant to Section 12 of the Securities
Exchange  Act of 1934,  as amended  (the  "Exchange  Act") or if a  registration
statement  covering  the  Stock  (or a filing  pursuant  to the  exemption  from
registration  under  Regulation  A of the  Securities  Act of  1933)  under  the
Securities  Act of 1933 is not in  effect  when  Purchaser  desires  to sell the
Stock,  Purchaser may be required to hold the Stock for an indeterminate period.
Purchaser  also  acknowledges  that Purchaser  understands  that any sale of the
Stock  which  might be made by  Purchaser  in  reliance  upon Rule 144 under the
Securities  Act of 1933 may be made only in limited  amounts in accordance  with
the terms and conditions of that Rule.

                                     - 4 -
<PAGE>

SECTION 12: ASSISTANCE TO PURCHASER UNDER RULE 144.

         The Company  covenants  and agrees that (a) at all times after it first
becomes  subject  to the  reporting  requirements  of Section 13 or 15(d) of the
Exchange  Act, it will use its best  efforts to comply  with the current  public
information requirements of Rule 144(c)(1) under the Securities Act of 1933, and
that  if  prior  to  becoming   subject  to  such  reporting   requirements   an
over-the-counter  market develops for the Stock, it will make publicly available
the information required by Rule 144(c)(2); (b) it will furnish Purchaser,  upon
request,  with all  information  required for the preparation and filing of Form
144;  and (c) it will on a timely basis use its best efforts to file all reports
required  to be  filed  and  make  all  disclosures,  including  disclosures  of
materially  adverse  information,  required  to  permit  Purchaser  to make  the
required representations in Form 144.

SECTION 13: NO DUTY TO TRANSFER IN VIOLATION HEREUNDER.

         The  Company  shall not be  required  (a) to  transfer on its books any
shares of Stock of the  Company  which  shall have been sold or  transferred  in
violation of any of the  provisions  set forth in this Agreement or (b) to treat
as owner of such  shares or to accord  the right to vote as such owner or to pay
dividends to any transferee to whom such shares shall have been so transferred.

SECTION 14: RIGHTS OF PURCHASER.

         Except as otherwise provided herein,  Purchaser shall,  during the term
of this  Agreement,  exercise all rights and  privileges of a stockholder of the
Company with respect to the Stock.

SECTION 15: OTHER NECESSARY ACTIONS.

         The parties agree to execute such further  instruments and to take such
further  action as may  reasonably  be necessary to carry out the intent of this
Agreement.

SECTION 16: NOTICE.

         Any notice  required or permitted  hereunder  shall be given in writing
and shall be deemed  effectively  given upon the earliest of personal  delivery,
receipt or the third full day following deposit in the United States Post Office
with  postage  and fees  prepaid,  addressed  to the other  party  hereto at the
address  last known or at such other  address as such party may  designate by 10
days' advance written notice to the other party hereto.

SECTION 17: SUCCESSORS AND ASSIGNS.

         This Agreement shall inure to the benefit of the successors and assigns
of the Company and, subject to the restrictions on transfer herein set forth, be
binding  upon  Purchaser  and  Purchaser's  heirs,  executors,   administrators,
successors  and assigns.  The failure of the Company in any instance to exercise
the  Repurchase  Option or  rights of first  offer  described  herein  shall not
constitute a waiver of any other Repurchase  Option or right of first offer that
may subsequently arise under the provisions of this Agreement.  No waiver of any
breach  or  condition  of this  Agreement  shall be deemed to be a waiver of any
other or subsequent breach or condition, whether of a like or different nature.

                                     - 5 -
<PAGE>

SECTION 18: APPLICABLE LAW.

         This Agreement shall be governed by, and construed in accordance  with,
the laws of the State of Florida,  as such laws are applied to contracts entered
into and performed in such state.

SECTION 19: NO STATE QUALIFICATION.

         THE SALE OF THE SECURITIES  WHICH ARE THE SUBJECT OF THIS AGREEMENT HAS
NOT BEEN QUALIFIED WITH THE COMMISSIONER OF CORPORATIONS OF THE STATE OF FLORIDA
AND THE ISSUANCE OF SUCH SECURITIES OR THE PAYMENT OR RECEIPT OF ANY PART OF THE
CONSIDERATION THEREFOR PRIOR TO SUCH QUALIFICATION IS UNLAWFUL,  UNLESS THE SALE
OF  SECURITIES  IS EXEMPT FROM THE  QUALIFICATION.  THE RIGHTS OF ALL PARTIES TO
THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED,
UNLESS THE SALE IS SO EXEMPT.

SECTION 20: NO ORAL MODIFICATION.

         No modification of this Agreement shall be valid unless made in writing
and signed by the parties hereto.

SECTION 21: ENTIRE AGREEMENT.

         This Agreement and the Option Agreement  constitute the entire complete
and final agreement between the parties hereto with regard to the subject matter
hereof.

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

TMI HOLDINGS, INC.                                   PURCHASER

By
   -----------------------------------------         ---------------------------

                                     - 6 -
<PAGE>

                                    EXHIBIT B
                            JOINT ESCROW INSTRUCTIONS

                                                  ---------, -----

Secretary
---------------------

Dear Sir or Madam:

         As Escrow  Agent  for both TMI  Holdings,  Inc.  (the  "Company"),  and
___________________  ("Purchaser"),  you are hereby  authorized  and directed to
hold the documents delivered to you pursuant to the terms of that certain Common
Stock Purchase  Agreement (the  "Agreement")  of even date herewith,  to which a
copy of these Joint  Escrow  Instructions  is attached as Exhibit B to a certain
Stock  Option  dated  ________  ("Option  Agreement"),  in  accordance  with the
following instructions:

         1. In the event the  Company  shall elect to  exercise  the  Repurchase
Option set forth in the Agreement, the Company shall give to Purchaser and you a
written  notice as provided in the  Agreement.  Purchaser and the Company hereby
irrevocably  authorize and direct you to close the  transaction  contemplated by
such notice, including prompt delivery of stock certificates.

         2. At the closing,  you are  directed (a) to date the stock  assignment
form or forms necessary for the transfer in question,  (b) to fill in the number
of  shares  being  transferred,  and (c) to  deliver  same,  together  with  the
certificate  or  certificates  evidencing the shares to be  transferred,  to the
Company  against  the  simultaneous  delivery to you of the  purchase  price (by
certified  or bank  cashier's  check) for the number of shares  being  purchased
pursuant to the exercise of the Repurchase Option.

         3. Purchaser irrevocably authorizes the Company to deposit with you any
certificates evidencing shares to be held by you hereunder and any additions and
substitutions to said shares as defined in the Agreement.  Purchaser does hereby
irrevocably constitute and appoint you as Purchaser's attorney-in-fact and agent
for the term of this  escrow to  execute  with  respect to such  securities  all
documents  necessary or  appropriate to make such  securities  negotiable and to
complete any transaction herein contemplated.  Subject to the provisions of this
Section 3, Purchaser shall exercise all rights and privileges, including but not
limited  to,  the  right  to  vote  and to  receive  dividends  (if  any),  of a
stockholder of the Company while the shares are held by you.

         4. In accordance with the terms of Section 5 of the Agreement,  you may
from  time  to  time  deliver  to  Purchaser  a  certificate   or   certificates
representing so many shares as are no longer subject to the Repurchase Option.

         5. This  escrow  shall  terminate  upon the  release of all shares held
under the terms and provisions hereof.

                                     - 1 -
<PAGE>

         6. If at the time of termination of this escrow you should have in your
possession any documents,  securities or other property  belonging to Purchaser,
you shall  deliver all of same to  Purchaser  and shall be  discharged  from all
further obligations hereunder.

         7. Your duties hereunder may be altered,  amended,  modified or revoked
only by a writing signed by all of the parties hereto.

         8. You shall be obligated  only for the  performance  of such duties as
are specifically set forth herein and may rely and shall be protected in relying
or refraining  from acting on any  instrument  reasonably  believed by you to be
genuine and to have been signed or presented by the proper party or parties. You
shall not be personally liable for any act you may do or omit to do hereunder as
Escrow Agent or as  attorney-in-fact of Purchaser while acting in good faith and
in the  exercise of your own good  judgment,  and any act done or omitted by you
pursuant to the advice of your own  attorneys  shall be  conclusive  evidence of
such good faith.

         9.  You  are  hereby  expressly  authorized  to  disregard  any and all
warnings  given  by  any  of the  parties  hereto  or by  any  other  person  or
corporation,  excepting  only orders or process of courts of law, and are hereby
expressly authorized to comply with and obey orders, judgments or decrees of any
court. In case you obey or comply with any such order, judgment or decree of any
court,  you shall not be  liable  to any of the  parties  hereto or to any other
person,  firm or corporation by reason of such compliance,  notwithstanding  any
such order, judgment or decree being subsequently reversed,  modified, annulled,
set aside, vacated or found to have been entered without jurisdiction.

         10. You shall not be liable in any respect on account of the  identity,
authority or rights of the parties  executing or  delivering  or  purporting  to
execute or deliver the Agreement or any documents or papers  deposited or called
for hereunder.

         11. You shall not be liable for the  outlawing  of any rights under any
statute of limitations  with respect to these Joint Escrow  Instructions  or any
documents deposited with you.

         12.  You shall be  entitled  to employ  such  legal  counsel  and other
experts as you may deem necessary properly to advise you in connection with your
obligations hereunder and may rely upon the advice of such counsel.

         13. Your  responsibilities as Escrow Agent hereunder shall terminate if
you shall cease to be Secretary of the Company or if you shall resign by written
notice of each party.  In the event of any such  termination,  the Company shall
appoint any officer of the Company as successor Escrow Agent.

         14.  If  you  reasonably  require  other  or  further   instruments  in
connection  with these  Joint  Escrow  Instructions  or  obligations  in respect
hereto, the necessary parties hereto shall join in furnishing such instruments.

         15. It is  understood  and agreed that  should any  dispute  arise with
respect  to  the  delivery  and/or  ownership  or  right  of  possession  of the
securities  held by you hereunder,  you are authorized and directed to retain in
your possession  without  liability to anyone all or any part of said securities
until such dispute shall have been settled either by mutual written agreement of
the  parties  concerned  or by a final  order,  decree or judgment of a court of
competent  jurisdiction  after the time for appeal has expired and no appeal has
been perfected, but you shall be under no duty whatsoever to institute or defend
any such proceedings.

                                     - 2 -
<PAGE>

         16.  Any  notice  required  or  permitted  hereunder  shall be given in
writing and shall be deemed  effectively  given upon  personal  delivery or upon
deposit in the United States Post Office,  by registered or certified  mail with
postage  and fees  prepaid,  addressed  to each of the other  parties  thereunto
entitled.

         17. By signing  these  Joint  Escrow  Instructions,  you become a party
hereto only for the purpose of said Joint Escrow Instructions; you do not become
a party to the Agreement.

         18. This  instrument  shall be governed by and  construed in accordance
with the laws of the State of Florida.

         19. This  instrument  shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns.

                                                     Very truly yours,

                                                     TMI HOLDINGS, INC.

                                                     By ________________________

ESCROW AGENT:                                        PURCHASER:

--------------------------.                          ---------------------------

                                     - 3 -
<PAGE>

                                    EXHIBIT C

                   ACKNOWLEDGMENT OF AND AGREEMENT TO BE BOUND

        BY THE NOTICE OF EXERCISE AND COMMON STOCK PURCHASE AGREEMENT OF

                               TMI HOLDINGS, INC.

         The undersigned,  as transferee of shares of TMI Holdings, Inc., hereby
acknowledges  that he or she has read and  reviewed  the terms of the  Notice of
Exercise and Common Stock  Purchase  Agreement of TMI Holdings,  Inc. and hereby
agrees to be bound by the terms and conditions  thereof,  as if the  undersigned
had executed said Agreement as an original party thereto.

         Dated:  ____________________, ____.

                                      By ___________________________

                                     - 1 -
<PAGE>

                                    EXHIBIT D

                      ASSIGNMENT SEPARATE FROM CERTIFICATE

         FOR  VALUE  RECEIVED  _________________________________  hereby  sells,
assigns and transfers  unto  _________________________  ________________________
(________)  shares of the Common Stock of TMI Holdings,  Inc.  (the  "Company"),
standing in ___________________  name on the books of the Company represented by
Certificate  No.  ___________  herewith and hereby  irrevocably  constitutes and
appoints  ________________  Attorney to transfer  said stock on the books of the
Company with full power of substitution in the premises.

         Dated:  ____________________, ____.

                                     - 1 -

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