Document:

EXHIBIT 10.1(b)

                                     FORM OF
                              EMPLOYMENT AGREEMENT (Form B)

         THIS  AGREEMENT  is made  and  entered  into  as of  __________________
between PAYLESS  CASHWAYS,  INC., a Delaware  corporation (the  "Company"),  and
_________________________ (the "Executive").

         WHEREAS, the Company desires to employ the Executive in the capacity of
______________________________,  and the Executive desires to be employed by the
Company  in such  capacity  and on the  terms and  conditions  set forth in this
Agreement;

         NOW, THEREFORE, in consideration of the mutual covenants of the parties
herein made, it is hereby agreed:

         1. Term of Agreement. The term of this Agreement shall be one (1) year,
commencing  ___________________  and ending  __________________,  unless  sooner
terminated as provided in Paragraph 6 of this Agreement; PROVIDED, however, that
the Agreement shall be  automatically  renewed for an additional term of one (1)
year, at the end of the initial  one-year term and of each  succeeding  one-year
term, unless either the Company or the Executive shall serve notice on the other
at least ninety (90) days prior to the  expiration  of the term,  in  accordance
with the  procedures set out in Paragraph 12 of this  Agreement,  that the party
giving notice intends to end the Agreement at the conclusion of the then-current
term. The Company shall not be required to show Cause,  and the Executive  shall
not be required to show Good Reason,  to require the expiration of the Agreement
under the terms of this Paragraph.

         2.  Employment  and  Duties.  The Company  hereby  agrees to employ the
Executive,  and the Executive hereby accepts employment,  to perform such duties
and responsibilities of  ___________________________  as are, from time to time,
assigned  to  the  Executive  by  ________________________________________.  The
Executive  agrees to devote full  business  time and effort to the  diligent and
faithful  performance  of the  Executive's  duties  under the  direction of such
person as is designated by the Company's Board of Directors.

         3.       Compensation.
                  ------------

                  (a) Base Salary. As compensation for the Executive's services,
the Executive  shall be paid a base salary at a minimum annual rate of $________
payable in equal bi-weekly installments, which salary shall be reviewed annually
and  may be  adjusted  from  time  to time at the  discretion  of the  Board  of
Directors (the "Base  Salary");  provided that the Base Salary shall not be less
than the amount stated in this Paragraph 3(a).

                  (b) Incentive  Compensation.  The Executive shall, in addition
to the Base Salary, also be eligible to receive incentive compensation under the
Company's  Corporate  Management  Incentive  Plan  (the  "CMIP")  or such  other
management and executive incentive  compensation program or plan for officers of
the  Company  as from  time to time may be in  effect,  if any  (the  "Incentive
Compensation").  The  existence  and terms of any such  program or plan shall be
determined  solely at the discretion of the Compensation  Committee of the Board
of Directors.  For fiscal year ____, the Executive's  "Annual  Incentive  Target
Percentage  of Base  Compensation,"  as used in the  CMIP,  shall be  __________
percent (____%) of Base Salary.

<PAGE>2

                  (c)  Other  Benefits.  The  Executive  shall  be  entitled  to
participate  in the  Company's  regular  health,  life,  pension,  vacation  and
disability  plans in accordance with their  respective  terms.  The Company will
also provide  employee  benefits to the Executive in respect of the  Executive's
employment  as the  Company  customarily  provides,  from  time to time,  to its
officers,  as described in Exhibit A attached to this Agreement.  Nothing herein
shall be  construed to limit the  Company's  discretion  to amend,  terminate or
otherwise modify any such plans or benefits,  subject to the Executive's  rights
under Paragraph 6(c)(iii) below.

         4.       Confidentiality, Non-Solicitation, and Non-Disparagement.
                  --------------------------------------------------------

                  (a) Confidentiality of Proprietary Information.  The Executive
agrees  that,  at all times,  both during the  Executive's  employment  with the
Company and after the  expiration  or  termination  thereof for any reason,  the
Executive shall not divulge to any person, firm,  corporation,  or other entity,
or in any way use for the  Executive's  own  benefit,  except as required in the
conduct of the  Company's  business or as authorized in writing on behalf of the
Company,  any  trade  secrets  or  confidential  information  (the  "Proprietary
Information")  obtained during the course of the Executive's employment with the
Company. The Proprietary  Information includes,  but is not limited to, customer
or client lists  (including  the names and/or  positions of persons  employed by
such  customers or clients who play a role in the decisions of such customers or
clients  concerning  products or services of the type  provided by the Company),
financial  matters,  inventory  techniques  and  programs,  Company  records  of
accounts,  business  projections,  Company  contracts,  sales,  merchandising or
marketing  plans and  strategies,  pricing  information  and  formulas,  matters
contained in unpublished records and correspondence,  planned expansion programs
(including  areas of expansion  and  potential  customer  lists) and any and all
information concerning the business or affairs of the Company which is not known
by or generally  available  to the public.  All papers and records of every kind
relating to the Proprietary  Information,  including any such papers and records
which shall at any time come into the possession of the Executive,  shall be the
sole and  exclusive  property  of the Company  and shall be  surrendered  to the
Company upon  termination of the  Executive's  employment for any reason or upon
request by the Company at any time  either  during or after the  termination  of
such  employment.  All  information  relating  to or owned by  customers  of the
Company of which the Executive becomes aware or with which the Executive becomes
familiar  through the  Executive's  employment  with the  Company  shall be kept
confidential  and not disclosed to others or used by the  Executive  directly or
indirectly  except in the course of the  Company's  business.  It is agreed that
Proprietary  Information as herein  described shall be protected from disclosure
under the terms of this  Agreement,  to the  maximum  extent  permitted  by law,
whether or not entitled to protection as a trade secret.

                  (b)   Solicitation   Prohibition.   During   the   Executive's
employment  with  the  Company  and for a  period  of one  (1)  year  after  the
expiration or  termination of this  Agreement or of the  Executive's  employment
with the Company for any reason, the Executive shall not directly or indirectly,
whether as an individual for the  Executive's  own account,  or on behalf of any
other  person,  firm,   corporation,   partnership,   joint  venture  or  entity
whatsoever, solicit or endeavor to entice away from the Company any employee who
is employed by the Company. Additionally, during the Executive's employment with
the Company or for a period of one (1) year after the  expiration or termination
of this Agreement or of Executive's  employment with the

<PAGE>2

Company for any reason,  the Executive shall not, directly or indirectly through
any other  individual  or entity,  solicit the  business of any  customer of the
Company,  or solicit,  entice,  persuade or induce any  individual  or entity to
terminate,   reduce  or  refrain  from   forming,   renewing  or  extending  its
relationship, whether actual or prospective, with the Company.

                  (c) Disparagement Prohibition.  The Executive acknowledges and
agrees  that as a result  of his  position  with  the  Company,  disparaging  or
critical  statements  made by the Executive may be uniquely  detrimental  to the
Company's interests and well-being.  Therefore,  the Executive agrees to use his
best efforts to assist the Company in promoting and preserving the good will and
other business  interests of the Company.  To this end, the Executive  agrees to
refrain  at all times,  both  during the  Executive's  employment  and after the
termination thereof for any reason, from making disparaging  comments or remarks
about the Company or its officers, employees, or directors.

                  (d)      Definition  of  "Company".  For the purposes of Para-
graph 4, the  term  "Company"  shall mean the Company  and  any of its direct or
indirect parent or subsidiary organizations.

         5. Covenant Not to Compete.  During the Executive's employment with the
Company and for a period of one year after the expiration or termination of this
Agreement or of the Executive's employment with the Company (the "Noncompetition
Period"), if such termination is as a result of the expiration of this Agreement
under  Paragraph  6(h), a  termination  for Good Reason by the  Executive  under
Paragraph  6(c), or a termination by the Company  without Cause under  Paragraph
6(d),  the  Executive  agrees  not to act as an owner or  operator,  officer  or
director, employee,  consultant or agent of any other person, firm, corporation,
partnership,  joint  venture or other entity which is engaged in the business of
building materials retailing in any state in which the Company is so engaged, or
has plans to be so  engaged  during the  Noncompetition  Period.  The  foregoing
provisions  shall not prohibit the Executive from investing in any securities of
any  corporation  whose  securities,  or any of them,  are  listed on a national
securities  exchange or traded in the  over-the-counter  market if the Executive
shall own less than one percent  (1%) of the  outstanding  voting  stock of such
corporation.  The  Executive  agrees  that a breach of the  covenants  contained
herein will result in irreparable and continuing damage to the Company for which
there will be no adequate  remedy at law, and in the event of any breach of such
agreement,  the  Company  shall be  entitled  to  injunctive  and such other and
further  relief  as may be  proper,  including  damages,  attorneys'  fees,  and
litigation costs.

         6.       Termination.

                  (a) Death or Disability. In the event of the Executive's death
or if the Executive  should become unable to perform the essential  functions of
the  Executive's  position,  with or  without  reasonable  accommodation  by the
Company,  this  Agreement,  and the  Company's  obligation  to make further Base
Salary payments under the Agreement, shall terminate, and Executive shall not be
entitled to receive severance  benefits.  Executive shall be entitled to receive
any Incentive  Compensation  which the Executive has earned, if any, prorated to
the date of the termination of the Executive's  employment by reason of death or
the date of termination,  due to disability,  of Executive's  performance  under
this Agreement.  The

<PAGE>4

Executive's  rights to other compensation and benefits shall be determined under
the Company's benefit plans and policies applicable to Executive then in effect.

                  (b)  Termination  for Cause by the Company.  By following  the
procedure  set  forth in  Paragraph  6(e) the  Company  shall  have the right to
terminate  this Agreement and the employment of the Executive for "Cause" in the
event Executive:

                           (i)      has  committed  a  significant  act of  dis-
         honesty,  deceit  or  breach  of  fiduciary  duty in the performance of
         the Executive's duties as an employee of the Company; or

                           (ii)     has neglected or failed to perform  substan-
         tially  the duties of the Executive's  employment under this Agreement,
         including but not limited to an act of insubordination; or

                           (iii)  has  acted or  failed  to act in any other way
         that reflects materially and adversely upon the Company,  including but
         not limited to the  Executive's  conviction of, guilty plea, or plea of
         nolo contendere to (A) any felony,  or any misdemeanor  involving moral
         turpitude,  or (B) any  crime  or  offense  involving  dishonesty  with
         respect to the Company; or

                           (iv)     has  knowingly  failed  to  comply  with the
         covenants  contained  in  Paragraphs  4 or 5 of this Agreement.

                  If  the  employment  of the  Executive  is  terminated  by the
Company for Cause,  this Agreement and the Company's  obligation to make further
Base  Salary and  Incentive  Compensation  payments  hereunder  shall  thereupon
immediately  terminate,  and the  Executive  shall not be  entitled  to  receive
severance  benefits.  The Executive's  rights to other compensation and benefits
shall be determined under the Company's benefit plans and policies applicable to
the Executive then in effect.

                  (c) Termination for Good Reason by the Executive. By following
the procedure set forth in Paragraph 6(e), the Executive shall have the right to
terminate this  Agreement and the  Executive's  employment  with the Company for
"Good Reason" in the event:

                           (i)  the Executive is not at all times a duly elected
         officer of the Company; or

                           (ii) there is any material  reduction in the scope of
         the Executive's authority and responsibility (provided, however, in the
         event of any  illness  or injury  which  prevents  the  Executive  from
         performing the Executive's  duties,  Good Reason shall not exist if the
         Company reassigns the Executive's duties to one or more other employees
         until the Executive is able to perform such duties); or

                           (iii) there is a reduction  in the  Executive's  Base
         Salary below the minimum  amount  specified in Paragraph  3(a) above; a
         material  reduction in the Incentive  Compensation  opportunity  of the
         Executive,  if any, under Paragraph 3(b)

<PAGE>5

         above; or a material reduction in the other benefits to which Executive
         is entitled  under  Paragraph  3(c) above,  as compared to the benefits
         available to Executive at the time of execution of this Agreement; or

                           (iv)     the   Company   requires   the   Executive's
         principal place of  employment be relocated  fifty (50) miles  from its
         location as of the date of this Agreement;  or

                           (v)      the Company  otherwise fails to  perform its
         material obligations under this Agreement.

                  Any  notification of the  Executive's  intent to terminate the
Agreement and the  Executive's  employment  for Good Reason under this Paragraph
must be given,  pursuant to Paragraph 6(e), no later than thirty (30) days after
the Executive  learns,  or reasonably  should become aware, of the occurrence of
the event giving rise to the right to terminate for Good Reason.

                  If  the  employment  of the  Executive  is  terminated  by the
Executive  for Good Reason,  the  Executive  shall be entitled to the  severance
benefits set forth in Paragraph 6(f) below, but the Company's obligation to make
further Base Salary payments and incentive  compensation payments shall cease on
the  effective  date  of such  termination.  The  Executive's  rights  to  other
compensation and benefits shall be determined under the Company's  benefit plans
and policies applicable to the Executive then in effect.

                  (d)  Termination  Without  Cause or Without Good  Reason.  The
Company may terminate  this  Agreement and the  Executive's  employment  without
Cause at any time,  and in such event the  Executive  shall be  entitled  to the
severance  benefits  set  forth in  Paragraph  6(f)  below.  The  Executive  may
voluntarily terminate this Agreement and the Executive's employment without Good
Reason at any time, but in such event the Executive shall not be entitled to the
severance  benefits  set  forth  in  Paragraph  6(f)  below.  If  the  Executive
voluntarily  terminates  this Agreement and the Executive's  employment  without
Good Reason,  or if the Company  terminates  this Agreement and the  Executive's
employment  without  Cause,  then the Company's  obligation to make further Base
Salary payments and Incentive Compensation payments shall cease on the effective
date of such  termination.  The  Executive's  rights to other  compensation  and
benefits  shall be  determined  under the  Company's  benefit plans and policies
applicable to the Executive then in effect.

                  (e) Notice and Right to Cure. The party proposing to terminate
this Agreement and the employment of the Executive for Cause or Good Reason,  as
the case may be, under Paragraph 6(b) or 6(c) above shall give written notice to
the other,  specifying the reason therefor with particularity.  In the case of a
termination  pursuant to Paragraphs  6(b)(i),  (iii) or (iv),  or 6(c)(i),  such
termination shall be effective  immediately upon delivery of such notice. In the
case of any other proposed termination for Cause or Good Reason, as the case may
be, the notice shall be given with  sufficient  particularity  so that the other
party  will  have  an  opportunity  to  correct  any  curable  situation  to the
reasonable satisfaction of the party giving the notice within the period of time
specified in the notice,  which shall not be less than thirty (30) days. If such
correction is not so made or the circumstances or situation are not curable, the
party giving such

<PAGE>6

notice may,  within  thirty (30) days after the  expiration of the time fixed to
correct  such  situation,  give  written  notice  to the  other  party  that the
employment is terminated as of the date of that writing. Where the Agreement and
the Executive's  employment are terminated by the Executive  without Good Reason
or by the Company without Cause, the termination date shall be the date on which
notification  of termination  shall be mailed in accordance with Paragraph 12 of
this Agreement,  unless a different  termination date shall be designated by the
party giving notice or agreed upon by the Executive and the Company.

                  (f) Severance Benefits.  If this Agreement and the Executive's
employment with the Company are terminated by reason of the Executive's death or
disability, or by the Company with Cause or by the Executive without Good Reason
then the Executive  shall receive no severance  benefits.  If this Agreement and
the Executive's employment with the Company are terminated due to the expiration
of the Agreement,  by the Company  without  Cause,  or by the Executive for Good
Reason,  then the  Executive  shall be entitled to the  following  benefits (the
"Severance Benefits"):

                           (i) Base Salary. The Company shall continue to pay to
         the Executive the Executive's  Base Salary for a period of one (1) year
         after  the  date  the  Executive's   employment  with  the  Company  is
         terminated (the "Severance Period"), when and as such Base Salary would
         have been paid, and as if the Executive continued to be employed during
         such period and  regardless of the death or disability of the Executive
         after the date of termination.

                           (ii)  Incentive   Compensation.   In  the  event  the
         Compensation  Committee  of the  Board  of  Directors  determines  that
         Incentive  Compensation  is to  be  paid  in  the  year  in  which  the
         Executive's   employment  and  this  Agreement  are  terminated   under
         circumstances  in which  this  Agreement  provides  for the  payment of
         Severance  Benefits,  then, at the  discretion  of the Chief  Executive
         Officer, the Executive may receive Incentive  Compensation prorated for
         the  time  during  which   services   were  rendered  in  the  year  of
         termination,  at the rate determined by the Compensation  Committee for
         the calculation of Incentive Compensation for that year.

                           (iii) Continuation of Benefits.  During the Severance
         Period,  the Company shall provide the Executive with medical,  dental,
         vision,   and  regular  and   supplemental   life  insurance   coverage
         substantially similar to the coverage which the Executive was receiving
         or entitled to receive immediately prior to the date of the termination
         of the  Executive's  employment.  In  addition,  during  the  Severance
         Period,  the Company  shall pay on behalf of the  Executive the cost of
         one annual physical  examination and the cost of the preparation of the
         Executive's federal, state and local tax returns in accordance with the
         terms set out in Exhibit A. The Company  shall provide such benefits to
         the  Executive  at Company  expense,  subject to the same  cost-sharing
         provisions,  if any,  applicable to the Executive  immediately prior to
         the  date  of  the  termination  of  employment.   Notwithstanding  the
         foregoing, the Executive shall not be entitled to receive such benefits
         to the  extent  that  the  Executive  obtains  other  employment  which
         provides comparable benefits during the Severance Period.

<PAGE>7

                           (iv)     Outplacement Benefits.  The Company,  at its
         expense,  will provide  to the Executive  outplacement  services,  at a
         maximum  cost  of $30,000,  to be  provided by an  outplacement service
         provider selected solely by the Company.

                           (v)  Termination  of  Benefits.  Notwithstanding  any
         other provision of this  Agreement,  in the event that the Executive at
         any time violates the provisions of Paragraph 4(a), 4(b), 4(c), or 5 of
         this Agreement, then the Company's obligations, if any, to provide base
         salary  continuation  and  other  severance  benefits  as  set  out  in
         Paragraph  6(f) of this  Agreement  shall cease,  and such payments and
         benefits shall immediately cease.

                  (g) Expiration of Term of Agreement.  At the expiration of the
term of this Agreement as defined in Paragraph 1 above, if the Agreement has not
been  previously  terminated  under  Paragraph  6(a),  (b),  (c) or (d) of  this
Agreement,  all duties and  obligations  of the  parties  under this  Agreement,
except those set out in Paragraphs 4, 5 and 6(f), when applicable, shall cease.

                  (h)  Survival  of  Certain  Provisions.   Notwithstanding  the
expiration or termination of this Agreement, and the Executive's employment with
the Company for any reason under this Agreement, the provisions of Paragraphs 4,
5 and 6(f), when applicable,  to the extent provided  therein,  survive any such
termination  and  shall  be  binding  upon  the  Executive  and the  Company  in
accordance with the provisions of Paragraphs 4, 5 and 6(f).

         7.  Arbitration.  Except as otherwise  provided in this Paragraph,  the
parties hereby agree that any dispute  arising under this Agreement or any claim
for breach or violation of any provision of this Agreement shall be submitted to
arbitration,  pursuant to the National  Rules for the  Resolution  of Employment
Disputes of the American Arbitration Association ("AAA"), to a single arbitrator
selected by mutual  agreement  of the parties or, if the parties do not mutually
agree on the  arbitrator,  in  accordance  with the rules of the AAA.  The award
determination  of the  arbitrator  shall be final and binding  upon the parties.
Either  party shall have the right to bring an action in any court of  competent
jurisdiction  to enforce this  Paragraph and to enforce any  arbitrator's  award
rendered  pursuant  to  this  Paragraph.   The  venue  for  all  proceedings  in
arbitration under this provision,  and for any judicial  proceedings  related to
the arbitration,  shall be in Kansas City, Missouri.  Nothing in this Paragraph,
however,  shall prevent the Company from seeking  injunctive  relief to preserve
its rights under Paragraph 4 or 5 of this Agreement.

         8. Business  Expenses.  The Company  shall  reimburse the Executive for
entertainment  and  travel  expenses  related  to  the  Company's   business  in
accordance  with the policies of the Company  applicable to the Executive on the
date of this  Agreement,  subject  to the right of the  Company  to  modify  its
general policies relating to expense reimbursement for employees.

         9.       Severability.  If  any  one or  more of the provisions of this
Agreement  shall be  held  invalid or  unenforceable,  the remaining  provisions
shall remain valid and enforceable to the maximum extent permitted by law.

<PAGE>8

         10.  Entire  Agreement.  This  Agreement  contains a  statement  of all
agreements  and  understandings  between  the  Executive  and the Company on the
subject  matters  covered by the  Agreement,  and it replaces and supersedes all
prior contracts and agreements  between the Executive and the Company concerning
such matters.  No additions or modifications to this Agreement will be effective
unless made in writing and signed by the Executive and the Company.

         11.      Binding  Effect.  This  Agreement  shall be binding  upon  and
inure to the benefit of the  personal  representatives, heirs and assigns of the
Executive and to any successors in interest and assigns of the Company.

         12.      Notices.  All notices required or permitted  to be given here-
under shall be sent registered  or  certified  mail, addressed to the respective
parties at their addresses set forth below:

                  To the Executive:    ______________________________

                  To the Company:      Payless Cashways, Inc.
                                       P. O. Box 648001
                                       Lee's Summit, MO 64064-8001
                                       Attn:    Vice President - Human Resources
                                       or
                                       800 Northwest Chipman Road, Suite 5900
                                       Lee's Summit, MO 64063
                                       Attn:    Vice President - Human Resources

                                       Blackwell Sanders Peper Martin LLP

                                       Two Pershing Square
                                       2300 Main, Suite 1000
                                       Kansas City, MO  64108
                                       Attn:  Gary D. Gilson

        or such other address as a party hereto may notify the other in writing.

         13.      Applicable  Law. This  Agreement,  or any  portion  thereof,
shall be interpreted in accordance  with the laws of  the     State of Missouri.

         14.      Assignment.  The rights and  obligations of the Company  under
this Agreement  shall inure to the benefit of and shall be  binding  upon  the
successors  and assigns of the Company.  Executive   may  not assign any of his
rights or delegate any of his duties or obligations under this Agreement without
the Company's express written consent.

         15. Non-Waiver Provision. The failure of either party of this Agreement
to insist upon strict  adherence to any term of this Agreement,  or to object to
any  failure  to comply  with any  provision  of this  Agreement,  shall not (a)
constitute  or  operate  as a waiver of that term or  provision,  (b) estop that
party from  enforcing  that  term  or  provision,  or (c)  preclude  that party

<PAGE>9

from enforcing that term or provision or  any  other  term  or  provision.  The
receipt of a party to this Agreement of any benefit from this Agreement  shall
not effect a waiver or estoppel of the right of that party to enforce any provi-
sion  of this Agreement.

         16.  Golden  Parachute  Savings  Provision.  If, in the absence of this
provision,  any amount  received or to be received by the Executive  pursuant to
this Agreement would be subject to the "Excise Tax" imposed on "excess parachute
payments"  by  Section  4999  of  the  Internal  Revenue  Code  of  1986  or any
corresponding  provision of any later Federal tax law, the Company shall, in its
reasonable  discretion,  reduce the amounts  payable to the largest  amount that
will result in elimination of any Excise Tax liability.

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

[EXECUTIVE NAME]                            PAYLESS CASHWAYS, INC.

                                            By:_________________________
_____________________________________       Name:_______________________
                                            Title:______________________

<PAGE>10
                       Schedule for Exhibit 10.1(b)

         The following executive officers of Payless Cashways, Inc. have entered
into an employment  agreement with Payless Cashways,  Inc., in substantially the
form hereto:

<TABLE>

<CAPTION>
                                                                           Annual Incentive
                                                                     Base    Target Percentage of
       Name                             Title                       Salary    Base Compensation
--------------------   ----------------------------------------    --------  --------------------
<S>                    <C>                                         <C>            <C>

Renae G. Gonner        Vice President - Marketing and              $145,000       40%
                         Advertising
Kenneth D. Kuehn       Vice President - Professional Sales         $180,000       40%

Dennis R. Knowles      Regional Vice President                     $142,000       40%
Ronald D. Long         Vice President - Merchandising, Building    $200,000       40%
                         Products
</TABLE>LAHAINA ACQUISITIONS, INC.
        AMENDED AND RESTATED 1999 STOCK OPTION PLAN 1999 STOCK OPTION PLAN

                                    ARTICLE I
                                   DEFINITIONS

     As used herein,  the following terms have the following meanings unless the
context clearly indicates to the contrary:

     1.1 "Award" shall mean a grant of Restricted Stock or an SAR.

     1.2 "Board" shall mean the Board of Directors of the Company.

     1.3 "Cause" (i) with respect to the Company or any  subsidiary or affiliate
which employs the recipient of an Award or Option (the "recipient") or for which
such recipient  primarily performs services,  the commission by the recipient of
an act of fraud, embezzlement,  theft or proven dishonesty, or any other illegal
act  or  practice   (whether  or  not  resulting  in  criminal   prosecution  or
conviction),  or any act or practice which the Committee  shall,  in good faith,
deem  to  have  resulted  in  the  recipient's  becoming  unbondable  under  the
Company's,  the subsidiary's or the affiliate's  fidelity bond; (ii) the willful
engaging by the recipient in  misconduct  which is deemed by the  Committee,  in
good faith, to be materially  injurious to the Company,  any subsidiary,  or any
affiliate,  monetarily  or  otherwise,  including,  but not limited,  improperly
disclosing trade secrets or other confidential or sensitive business information
and data about the Company or any  subsidiaries or affiliates and competing with
the  Company  or its  subsidiaries  and  affiliates,  or  soliciting  employees,
consultants or customers of the Company in violation of law or any employment or
other  agreement  to which the  recipient  is a party;  or (iii) the willful and
continued  failure or habitual  neglect by the  recipient  to perform his or her
duties  with  the  Company  or the  subsidiary  or  affiliate  substantially  in
accordance  with the  operating  and  personnel  policies and  procedures of the
Company  or the  subsidiary  or  affiliate  generally  applicable  to all  their
employees.  For purposes of this Plan, no act or failure to act by the recipient
shall be deemed be "willful"  unless done or omitted to be done by recipient not
in good faith and  without  reasonable  belief  that the  recipient's  action or
omission  was in the best  interest  of the  Company  and/or the  subsidiary  or
affiliate.  Notwithstanding the foregoing,  if the recipient has entered into an
employment  agreement that is binding as of the date of employment  termination,
and if such employment agreement defines "Cause," then the definition of "Cause"
in such  agreement  shall apply to the  recipient  in this Plan.  "Cause"  under
either (i), (ii) or (iii) shall be determined by the Committee.

                                       9

<PAGE>
     1.4 "Change in Control" shall mean any occurrence by which any "person" (as
such term is used in sections 13(d) and 14(d) of the Exchange  Act),  other than
any person who is a shareholder of the Company on or before the Effective  Date,
by the  acquisition  or  aggregation  of securities is or becomes the beneficial
owner,  directly or  indirectly,  of securities of the Company  representing  50
percent or more of the combined  voting power of the Company's then  outstanding
securities   ordinarily   (and  apart  from  rights   accruing   under   special
circumstances)  having the right to vote at elections  of  directors  (the "Base
Capital Stock");  except that any change in the relative beneficial ownership of
the Company's  securities by any person resulting solely from a reduction in the
aggregate  number of outstanding  shares of Base Capital Stock, and any decrease
thereafter in such person's ownership of securities,  shall be disregarded until
such person  increases  in any manner,  directly or  indirectly,  such  person's
beneficial ownership of any securities of the Company.

     1.5 "Code"  shall mean the United  States  Internal  Revenue  Code of 1986,
including  effective  date and transition  rules (whether or not codified).  Any
reference  herein to a specific section of the Code shall be deemed to include a
reference to any corresponding provision of future law.

     1.6 "Committee" shall mean a committee of at least two Directors  appointed
from time to time by the Board, having the duties and authority set forth herein
in  addition  to any other  authority  granted by the Board.  In  selecting  the
Committee, the Board shall consider (i) the benefits under Section 162(m) of the
Code of having a  Committee  composed of  "outside  directors"  (as that term is
defined  in the  Code)  for  certain  grants of  Options  to highly  compensated
executives,  and (ii) the  benefits  under  Rule  16b-3  of  having a  Committee
composed of either the entire Board or a Committee of at least two Directors who
are  Non-Employee  Directors  for  Options  granted to or held by any Section 16
Insider.  At any time that the Board shall not have  appointed  a  committee  as
described above, any reference herein to the Committee shall mean the Board.

     1.7 "Company" shall mean Lahaina Acquisitions, Inc. a Colorado Corporation.

     1.8  "Effective  Date" of the  original  1999 Stock  Option Plan shall mean
October 1, 1999,  and for this  Amended  and  Restated  Plan shall mean June 15,
2000.

     1.9  "Director"  shall  mean a member of the Board and any person who is an
advisory or honorary  director  of the  Company if such person is  considered  a
director for the purposes of Section 16 of the Exchange  Act, as  determined  by
reference to such Section 16 and to the rules, regulations,  judicial decisions,
and  interpretative  or  "no-action"  positions  with  respect  thereto  of  the
Securities  and Exchange  Commission,  as the same may be in effect or set forth
from time to time.

     1.10  "Exchange  Act" shall mean the  Securities  Exchange Act of 1934,  as
amended. Any reference herein to a specific section of the Exchange Act shall be
deemed to include a reference to any corresponding provision of future law.

                                       10

<PAGE>
     1.11  "Exercise  Price"  shall  mean the  price at  which an  Optionee  may
purchase a share of Stock under a Stock Option Agreement.

     1.12 "Fair Market Value" on any date shall mean (i) the closing sales price
of the Stock,  regular  way, on such date on the  national  securities  exchange
having the greatest volume of trading in the Stock during the thirty-day  period
preceding  the day the value is to be  determined  or, if such  exchange was not
open for  trading on such date,  the next  preceding  date on which it was open;
(ii) if the Stock is not traded on any national securities exchange, the average
of  the   closing   high  bid  and  low  asked   prices  of  the  Stock  on  the
over-the-counter  market on the day such  value is to be  determined,  or in the
absence of closing bids on such day, the closing bids on the next  preceding day
on which  there  were  bids;  or (iii) if the  Stock  also is not  traded on the
over-the-counter  market,  the fair market value as  determined in good faith by
the Board or the Committee  based on such relevant  facts as may be available to
the Board, which may include opinions of independent experts, the price at which
recent  sales have been made,  the book  value of the Stock,  and the  Company's
current and future earnings.

     1.13  "Grantee"  shall mean a person who is an Optionee or a person who has
received an Award of Restricted Stock or an SAR.

     1.14 "Incentive Stock Option" shall mean an option to purchase any stock of
the Company,  which complies with and is subject to the terms,  limitations  and
conditions  of  Section  422 of the Code and any  regulations  promulgated  with
respect thereto

     1.15 "Non-Employee Director" shall have the meaning set forth in Rule 16b-3
under the  Exchange  Act, as the same may be in effect from time to time,  or in
any successor  rule thereto,  and shall be determined for all purposes under the
Plan according to interpretative  or "no-action"  positions with respect thereto
issued by the Securities and Exchange Commission.

     1.16  "Officer"  shall  mean a person  who  constitutes  an  officer of the
Company for the purposes of Section 16 of the  Exchange  Act, as  determined  by
reference to such Section 16 and to the rules, regulations,  judicial decisions,
and  interpretative  or  "no-action"  positions  with  respect  thereto  of  the
Securities  and Exchange  Commission,  as the same may be in effect or set forth
from time to time.

     1.17  "Option"  shall mean an option,  whether  or not an  Incentive  Stock
Option,  to purchase  Stock  granted  pursuant to the  provisions  of Article VI
hereof.

     1.18  "Optionee"  shall  mean a person to whom an Option  has been  granted
hereunder.

     1.19 "Permanent and Total  Disability" shall have the same meaning as given
to that term by Code Section 22(e)(3) and any regulations or rulings promulgated
thereunder.

                                       11
<PAGE>
     1.20 "Plan" shall mean Lahaina Acquisitions, Inc. Amended and Restated 1999
Stock Option Plan, the terms of which are set forth herein.

     1.21  "Purchasable"  shall  refer to Stock  which  may be  purchased  by an
Optionee  under the terms of this Plan on or after a certain  date  specified in
the applicable Stock Option Agreement.

     1.22 "Qualified  Domestic Relations Order" shall have the meaning set forth
in the Code or in the Employee  Retirement  Income  Security Act of 1974, or the
rules and regulations promulgated under the Code or such Act.

     1.23  "Reload  Option"  shall have the  meaning  set forth in  Section  6.8
hereof.

     1.24 "Restricted  Stock" shall mean Stock issued,  subject to restrictions,
to a Grantee pursuant to Article VII hereof.

     1.25  "Restriction  Agreement"  shall mean the agreement  setting forth the
terms of an Award, and executed by a Grantee as provided in Section 7.1 hereof.

     1.26 "SAR" means a stock appreciation  right, which is the right to receive
an amount equal to the appreciation, if any, in the Fair Market Value of a share
of Stock from the date of the grant of the right to the date of its payment, all
as provided in Article VIII hereof.

     1.27 "SAR Price" means the base value  established  by the Committee for an
SAR on the date the SAR is granted and which is used in  determining  the amount
of benefit, if any, paid to a Grantee.

     1.28  "Section  16  Insider"  shall  mean any  person who is subject to the
provisions  of  Section 16  of the  Exchange  Act,  as  provided  in Rule  16a-2
promulgated pursuant to the Exchange Act.

     1.29 "Stock"  shall mean the common stock,  no par value per share,  of the
Company  or, in the event  that the  outstanding  shares of Stock are  hereafter
changed into or exchanged  for shares of a different  stock or securities of the
Company or some other entity, such other stock or securities.

     1.30 "Stock Option  Agreement" shall mean an agreement  between the Company
and an Optionee under which the Optionee may purchase Stock hereunder,  a sample
form of which is  attached  hereto as Exhibit A (which form may be varied by the
Committee in granting an Option).

                                       12
<PAGE>
                                   ARTICLE II
                                    THE PLAN

     2.1 Name. This Plan shall be known as "Lahaina  Acquisitions,  Inc. Amended
and Restated 1999 Stock Option Plan."

     2.2  Purpose.  The purpose of the Plan is to advance the  interests  of the
Company, its subsidiaries,  its affiliates that perform services for the Company
and its  subsidiaries,  and its shareholders by affording  certain employees and
Directors of the Company and its  subsidiaries  and  affiliates,  as well as key
consultants  and  advisors to the Company or any  subsidiary  or  affiliate,  an
opportunity to acquire or increase their  proprietary  interests in the Company.
The objective of the issuance of the Options and Awards is to promote the growth
and  profitability of the Company,  its subsidiaries and its affiliates  because
the  Grantees  will be  provided  with an  additional  incentive  to achieve the
Company's  objectives  through  participation  in its  success and growth and by
encouraging their continued association with or service to the Company.

     2.3 Effective  Date.  The Plan  originally  became  effective on October 1,
1999; as amended and restated, it became effective on June 15, 2000.

     2.4 Shareholder  Approval.  If shareholder approval is required by the Code
for Incentive Stock Options and such shareholder  approval has not been obtained
(or is not obtained  within 12 months  thereof),  any  Incentive  Stock  Options
issued under the Plan shall automatically become options which do not qualify as
Incentive Stock Options.

                                   ARTICLE III
                                  PARTICIPANTS

     The class of persons  eligible to  participate in the Plan shall consist of
all persons whose  participation  in the Plan the Committee  determines to be in
the best  interests of the Company which shall  include,  but not be limited to,
all Directors and employees,  including but not limited to executive  personnel,
of the Company or any subsidiary or affiliate,  as well as key  consultants  and
advisors to the Company or any subsidiary or affiliate.

                                   ARTICLE IV
                                 ADMINISTRATION

     4.1 Duties and Powers of the Committee.  The Plan shall be  administered by
the Committee. The Committee shall select one of its members as its Chairman and
shall  hold its  meetings  at such  times and  places as it may  determine.  The
Committee  shall  keep  minutes  of its  meetings  and shall make such rules and
regulations for the conduct of its business as it may deem necessary. The

                                       13

<PAGE>
Committee shall have the power to act by unanimous written consent in lieu of a
meeting,  and to  meet  by  telephone.  In  administering  the  Plan,  the
Committee's  actions  and  determinations  shall be  binding  on all  interested
parties.  The  Committee  shall  have the  power to grant  Options  or Awards in
accordance  with the  provisions  of the Plan and may grant  Options  and Awards
singly, in combination, or in tandem. Subject to the provisions of the Plan, the
Committee shall have the discretion and authority to determine those individuals
to whom  Options or Awards  will be granted and whether  such  Options  shall be
accompanied  by the right to  receive  Reload  Options,  the number of shares of
Stock  subject  to each  Option or Award,  such other  matters as are  specified
herein,  and any other  terms and  conditions  of a Stock  Option  Agreement  or
Restriction  Agreement.  The  Committee  shall  also  have  the  discretion  and
authority to delegate to any Officer its powers to grant Options or Awards under
the Plan to any person who is an  employee  of the Company but not an Officer or
Director.  To the extent not  inconsistent  with the provisions of the Plan, the
Committee  may give a Grantee an  election  to  surrender  an Option or Award in
exchange for the grant of a new Option or Award, and shall have the authority to
amend or modify an outstanding Stock Option Agreement or Restriction  Agreement,
or to waive any provision  thereof,  provided that the Grantee  consents to such
action.

     4.2 Interpretation;  Rules.  Subject to the express provisions of the Plan,
the  Committee  also shall have  complete  authority to interpret  the Plan,  to
prescribe, amend, and rescind rules and regulations relating to it, to determine
the details and provisions of each Stock Option Agreement, and to make all other
determinations  necessary  or  advisable  for the  administration  of the  Plan,
including,  without  limitation,  the  amending  or altering of the Plan and any
Options or Awards  granted  hereunder  as may be  required  to comply with or to
conform to any federal, state, or local laws or regulations.

     4.3 No  Liability.  Neither  any  member of the Board nor any member of the
Committee  shall be liable to any  person for any act or  determination  made in
good faith with respect to the Plan or any Option or Award granted hereunder.

     4.4  Majority  Rule.  A  majority  of the  members of the  Committee  shall
constitute a quorum,  and any action taken by a majority at a meeting at which a
quorum is present,  or any action taken without a meeting evidenced by a writing
executed by all the members of the Committee, shall constitute the action of the
Committee.

     4.5  Company   Assistance.   The  Company  shall  supply  full  and  timely
information to the Committee on all matters relating to eligible persons,  their
employment,  death, retirement,  disability, or other termination of employment,
and such other pertinent  facts as the Committee may require.  The Company shall
furnish the Committee with such clerical and other assistance as is necessary in
the performance of its duties.

                                       14

<PAGE>
                                    ARTICLE V
                         SHARES OF STOCK SUBJECT TO PLAN

     5.1  Limitations.  Subject to any antidilution  adjustment  pursuant to the
provisions of Section 5.2 hereof and the next  sentence,  the maximum  number of
shares of Stock that may be issued  hereunder  shall be 2,000,000,  and not more
than 750,000 shares of Stock may be made subject to Options to any individual in
the  aggregate  in any one fiscal year of the  Company,  such  limitation  to be
applied in a manner  consistent with the requirements of, and only to the extent
required for compliance with, the exclusion from the limitation on deductibility
of compensation  under Section 162(m) of the Code. The number of shares of Stock
available  for  issuance  hereunder  shall  automatically  increase on the first
trading day each calendar year beginning  January 1, 2000, by an amount equal to
ten  percent  (10%)  of the  shares  of Stock  outstanding  on the  trading  day
immediately  preceding January 1; but in no event shall any such annual increase
exceed  750,000  shares  (subject to adjustment  under Section 5.2).  Any or all
shares  of Stock  subject  to the  Plan  may be  issued  in any  combination  of
Incentive Stock Options, non-Incentive Stock Options, Restricted Stock, or SARs,
and the amount of Stock  subject to the Plan may be increased  from time to time
in accordance  with Article X, provided that the total number of shares of Stock
issuable  pursuant to Incentive  Stock Options may not be increased to more than
1,000,000  (other than  pursuant  to  anti-dilution  adjustments  and the annual
increase  provided  above) without  shareholder  approval.  Shares subject to an
Option or issued as an Award may be either  authorized  and  unissued  shares or
shares  issued and later  acquired  by the  Company.  The shares  covered by any
unexercised  portion  of an Option or Award that has  terminated  for any reason
(except as set forth in the following paragraph), or any forfeited portion of an
Option or Award,  and shares  tendered  for  cashless  exercise and withheld for
taxes may again be optioned or awarded under the Plan, and such shares shall not
be  considered  as having  been  optioned or issued in  computing  the number of
shares of Stock remaining available for option or award hereunder.

     If Options are issued in respect of options to acquire  stock of any entity
acquired,  by merger or  otherwise,  by the  Company (or any  subsidiary  of the
Company),  to the extent that such issuance shall not be  inconsistent  with the
terms,  limitations  and  conditions of Code Section 422 or Rule 16b-3 under the
Exchange Act, the  aggregate  number of shares of Stock for which Options may be
granted  hereunder  shall  automatically  be  increased  by the number of shares
subject to the Options so issued;  provided,  however, that the aggregate number
of  shares  of  Stock  for  which  Options  may  be  granted   hereunder   shall
automatically  be decreased by the number of shares  covered by any  unexercised
portion  of an Option so issued  that has  terminated  for any  reason,  and the
shares subject to any such unexercised  portion may not be optioned to any other
person.

                                       15
<PAGE>
     5.2 Antidilution.

     (a) If (1) the  outstanding  shares of Stock are changed  into or exchanged
for a different  number or kind of shares or other  securities of the Company or
any  other   entity  by  reason  of   merger,   consolidation,   reorganization,
recapitalization,  reclassification, combination or exchange of shares, or stock
split or stock  dividend,  (2) any spin-off,  spin-out or other  distribution of
assets materially  affects the price of the Company's stock, or (3) there is any
assumption  and  conversion to the Plan by the Company of an acquired  company's
outstanding option grants, then:

     (i) the  aggregate  number and kind of shares of Stock for which Options or
Awards  may be  granted  hereunder  shall  be  adjusted  proportionately  by the
Committee; and

     (ii) the rights of Optionees  (concerning  the number of shares  subject to
Options and the Exercise Price) under outstanding  Options and the rights of the
holders  of Awards  (concerning  the terms  and  conditions  of the lapse of any
then-remaining   restrictions),   shall  be  adjusted   proportionately  by  the
Committee.

     (b) In the event of an  anticipated  Change in Control or the Company shall
be  a  party  to  any  reorganization,   involving  merger,  consolidation,   or
acquisition  of the stock or  substantially  all the assets of the Company,  the
Board or the Committee, in its discretion, may:

     (i)  notwithstanding  other  provisions  hereof,  declare  that all Options
granted under the Plan shall become exercisable immediately  notwithstanding the
provisions of the respective Stock Option Agreements  regarding  exercisability,
that all such Options shall  terminate 90 days after the Committee gives written
notice of the  immediate  right to exercise all such Options and of the decision
to terminate all Options not exercised  within such 90-day period,  and that all
then-remaining   restrictions   pertaining   to  Awards  under  the  Plan  shall
immediately lapse; and/or

     (ii) notify all Grantees that all Options or Awards  granted under the Plan
shall be assumed by the successor  corporation  or  substituted  on an equitable
basis with options or restricted stock issued by such successor corporation.

     (c) If the Company is to be liquidated  or dissolved in  connection  with a
reorganization described in Section 5.2(b), the provisions of such Section shall
apply.  In all  other  instances,  the  adoption  of a plan  of  dissolution  or
liquidation of the Company shall, notwithstanding other provisions hereof, cause
all  then-remaining  restrictions  pertaining to Awards under the Plan to lapse,
and shall cause every Option outstanding under the Plan to terminate to the

                                       16

<PAGE>
extent not exercised prior to the adoption of the plan of dissolution or
liquidation by the shareholders, provided that, notwithstanding other provisions
hereof,  the  Committee  may declare all  Options  granted  under the Plan to be
exercisable  at any time on or before  the fifth  business  day  following  such
adoption   notwithstanding   the  provisions  of  the  respective  Stock  Option
Agreements regarding exercisability.

     (d) The adjustments described in paragraphs (a) through (c) of this Section
5.2,  and the manner of their  application,  shall be  determined  solely by the
Board or the Committee,  and any such adjustment may provide for the elimination
of fractional share interests;  provided,  however,  that any adjustment made by
the  Board or the  Committee  shall be made in a manner  that  will not cause an
Incentive  Stock  Option  to be  other  than an  Incentive  Stock  Option  under
applicable statutory and regulatory  provisions.  The adjustments required under
this  Article V shall apply to any  successors  of the Company and shall be made
regardless  of  the  number  or  type  of  successive   events   requiring  such
adjustments.

                                   ARTICLE VI
                                     OPTIONS

     6.1 Types of Options  Granted.  The Committee may,  under this Plan,  grant
either  Incentive  Stock  Options or Options  which do not qualify as  Incentive
Stock  Options.  Within the  limitations  provided  in this Plan,  both types of
Options  may be granted to the same  person at the same  time,  or at  different
times, under different terms and conditions, as long as the terms and conditions
of  each  Option  are  consistent  with  the  provisions  of the  Plan.  Without
limitation of the foregoing,  Options may be granted subject to conditions based
on the  financial  performance  of the Company or any other factor the Committee
deems relevant.

     6.2 Option Grant and  Agreement.  Each Option  granted  hereunder  shall be
evidenced by minutes of a meeting or the written consent of the Committee and by
a written Stock Option Agreement  executed by the Company and the Optionee.  The
terms of the Option, including the Option's duration, time or times of exercise,
exercise price,  whether the Option is intended to be an Incentive Stock Option,
and  whether  the Option is to be  accompanied  by the right to receive a Reload
Option, shall be stated in the Stock Option Agreement. No Incentive Stock Option
may be granted  more than ten years after the earlier to occur of the  Effective
Date or the date the Plan is approved by the Company's shareholders.

     Separate  Stock Option  Agreements  may be used for Options  intended to be
Incentive  Stock Options and those not so intended,  but any failure to use such
separate  agreements  shall not invalidate,  or otherwise  adversely  affect the
Optionee's interest in, the Options evidenced thereby.

                                       17

<PAGE>
     6.3 Optionee  Limitation.  The Committee shall not grant an Incentive Stock
Option to any person who, at the time the Incentive Stock Option is granted:

     (a) is not an employee of the Company or any of its subsidiaries; or

     (b) owns or is considered to own stock possessing at least 10% of the total
combined  voting  power of all  classes  of stock of the  Company  or any of its
parent or subsidiary corporations; provided, however, that this limitation shall
not apply if at the time an Incentive Stock Option is granted the Exercise Price
is at least 110% of the Fair  Market  Value of the Stock  subject to such Option
and such Option by its terms would not be exercisable  after five years from the
date on which the Option is granted.

     6.4 $100,000 Limitation.  Except as provided below, the Committee shall not
grant an  Incentive  Stock  Option  to, or modify  the  exercise  provisions  of
outstanding  Incentive  Stock  Options  held by, any person who, at the time the
Incentive  Stock Option is granted (or modified),  would thereby receive or hold
any  Incentive  Stock Options of the Company and any parent or subsidiary of the
Company,  such  that the  aggregate  Fair  Market  Value  (determined  as of the
respective  dates of grant or  modification  of each  option)  of the stock with
respect to which such Incentive Stock Options are exercisable for the first time
during any calendar year is in excess of $100,000 (or such other limit as may be
prescribed  by the  Code  from  time  to  time);  provided  that  the  foregoing
restriction on  modification  of outstanding  Incentive  Stock Options shall not
preclude the Committee from modifying an outstanding  Incentive Stock Option if,
as a result of such  modification  and with the  consent of the  Optionee,  such
Option no longer  constitutes an Incentive  Stock Option;  and provided that, if
the  $100,000  limitation  (or such  other  limitation  prescribed  by the Code)
described in this Section 6.4 is  exceeded,  the  Incentive  Stock  Option,  the
granting or modification of which resulted in the exceeding of such limit, shall
be treated as an  Incentive  Stock  Option up to the  limitation  and the excess
shall be treated as an Option not qualifying as an Incentive Stock Option.

     6.5 Exercise Price.  The Exercise Price of the Stock subject to each Option
shall be  determined  by the  Committee.  Subject to the  provisions  of Section
6.3(b) hereof, the Exercise Price of an Incentive Stock Option shall not be less
than the Fair Market Value of the Stock as of the date the Option is granted (or
in the case of an Incentive Stock Option that is subsequently  modified,  on the
date of such modification).

     6.6 Exercise  Period.  The period for the  exercise of each Option  granted
hereunder shall be determined by the Committee,  but the Stock Option  Agreement
with  respect to each Option  intended to be an  Incentive  Stock  Option  shall
provide that such Option shall not be  exercisable  after the  expiration of ten
years from the date of grant (or  modification) of the Option.  In addition,  no
Incentive  Stock Option  granted  under the Plan shall be  exercisable  prior to
shareholder approval of the Plan.

                                       18

<PAGE>
     6.7 Option Exercise.

     (a) Unless otherwise  provided in the Stock Option Agreement or Section 6.6
hereof,  an Option may be  exercised at any time or from time to time during the
term of the Option as to any or all full shares  which have  become  Purchasable
under  the  provisions  of the  Option,  but not at any time as to less than 100
shares unless the remaining shares that have become so Purchasable are less than
100 shares.  The  Committee  shall have the  authority to prescribe in any Stock
Option  Agreement  that the Option may be exercised  only in  accordance  with a
vesting schedule during the term of the Option.

     (b) An Option  shall be  exercised  by (i)  delivery  to the Company at its
principal office a written notice of exercise with respect to a specified number
of shares of Stock and (ii)  payment to the  Company at that  office of the full
amount of the  Exercise  Price for such  number  of  shares in  accordance  with
Section 6.7(c). If requested by an Optionee, an Option may be exercised with the
involvement  of a stockbroker  in accordance  with the federal  margin rules set
forth  in  Regulation  T  (in  which  case  the  certificates  representing  the
underlying shares will be delivered by the Company directly to the stockbroker).

     (c) The  Exercise  Price is to be paid in full in cash upon the exercise of
the Option and the Company shall not be required to deliver certificates for the
shares purchased until such payment has been made;  provided,  however,  that in
lieu of cash,  all or any portion of the Exercise Price may be paid by tendering
to the  Company  shares of Stock duly  endorsed  for  transfer  and owned by the
Optionee,  or by  authorization  to the  Company  to  withhold  shares  of Stock
otherwise  issuable  upon  exercise of the  Option,  in each case to be credited
against the  Exercise  Price at the Fair Market Value of such shares on the date
of  exercise  (however,  no  fractional  shares may be so  transferred,  and the
Company shall not be obligated to make any cash payments in consideration of any
excess  of the  aggregate  Fair  Market  Value of  shares  transferred  over the
aggregate  Exercise Price);  provided  further,  that the Board may provide in a
Stock Option Agreement (or may otherwise determine in its sole discretion at the
time of  exercise)  that,  in lieu of cash or  shares,  all or a portion  of the
Exercise Price may be paid by the Optionee's  execution of a recourse note equal
to the Exercise Price or relevant  portion  thereof,  subject to compliance with
applicable state and federal laws, rules and regulations.

     (d) In addition to and at the time of payment of the  Exercise  Price,  the
Optionee shall pay to the Company in cash the full amount of any federal, state,
and local  income,  employment,  or other  withholding  taxes  applicable to the
taxable income of such Optionee  resulting from such exercise.  However,  in the
discretion of the Committee any Stock Option Agreement may provide that all or

                                       19
<PAGE>
any portion of such tax  obligations,  together with  additional  taxes not
exceeding the actual  additional taxes to be owed by the Optionee as a result of
such exercise,  may, upon the irrevocable  election of the Optionee,  be paid by
tendering to the Company  whole  shares of Stock duly  endorsed for transfer and
owned by the Optionee,  or by authorization to the Company to withhold shares of
Stock  otherwise  issuable upon  exercise of the Option,  in either case in that
number of shares having a Fair Market Value on the date of exercise equal to the
amount of such taxes thereby being paid, and subject to such  restrictions as to
the approval and timing of any such  election as the  Committee may from time to
time  determine to be necessary or  appropriate to satisfy the conditions of the
exemption  set forth in Rule  16b-3  under  the  Exchange  Act,  if such rule is
applicable.

     (e)  The  holder  of an  Option  shall  not  have  any of the  rights  of a
shareholder with respect to the shares of Stock subject to the Option until such
shares have been issued and transferred to the Optionee upon the exercise of the
Option.

     6.8 Reload Options.

     (a) The Committee may specify in a Stock Option Agreement (or may otherwise
determine in its sole discretion) that a Reload Option shall be granted, without
further  action of the  Committee,  (i) to an Optionee  who  exercises an Option
(including  a Reload  Option)  by  surrendering  shares of Stock in  payment  of
amounts specified in Sections 6.7(c) or 6.7(d) hereof,  (ii) for the same number
of shares as are  surrendered to pay such amounts,  (iii) as of the date of such
payment and at an Exercise  Price equal to the Fair Market Value of the Stock on
such date,  and (iv)  otherwise on the same terms and  conditions  as the Option
whose exercise has occasioned such payment,  subject to such other conditions or
terms as the  Committee  shall  specify  at the time  such  exercised  Option is
granted.

     (b) Unless  provided  otherwise  in the Stock  Option  Agreement,  a Reload
Option may not be  exercised  by an Optionee  (i) prior to the end of a one-year
period  from the date that the Reload  Option is  granted,  and (ii)  unless the
Optionee  retains  beneficial  ownership  of the shares of Stock  issued to such
Optionee upon exercise of the Option referred to above in Section  6.8(a)(i) for
a period of one year from the date of such exercise.

     6.9  Nontransferability  of Option.  No Option shall be  transferable by an
Optionee other than by will or the laws of descent and  distribution  or, in the
case of Options  other than  Incentive  Stock  Options,  pursuant to a Qualified
Domestic Relations Order, and no Option shall be transferable by an Optionee who
is a Section 16 Insider prior to  shareholder  approval of the Plan.  During the
lifetime of an Optionee,  Options shall be exercisable only by such Optionee (or
by such Optionee's guardian or legal representative, should one be appointed).

                                       20
<PAGE>
     6.10  Termination  of Employment or Service.  The Committee  shall have the
power to specify,  with respect to the Options granted to a particular Optionee,
the effect upon such  Optionee's  right to exercise an Option of  termination of
such Optionee's employment or service under various circumstances,  which effect
may include immediate or deferred termination of such Optionee's rights under an
Option, or acceleration of the date at which an Option may be exercised in full;
provided,  however,  that in no event may an Incentive Stock Option be exercised
after the expiration of ten years from the date of grant thereof. Unless a Stock
Option Agreement specifically provides otherwise,  in the event the recipient of
an Option or Award is terminated  from his or her employment or other service to
the Company or its subsidiaries for Cause, Options and Awards, whether vested or
unvested,  granted to such  person  shall  terminate  immediately  and shall not
thereafter be exercisable.

     6.11  Employment  Rights.  Nothing  in  the  Plan  or in any  Stock  Option
Agreement  shall confer on any person any right to continue in the employ of the
Company or any of its subsidiaries, or shall interfere in any way with the right
of the Company or any of its subsidiaries to terminate such person's  employment
at any time.

     6.12 Certain  Successor  Options.  To the extent not inconsistent  with the
terms,  limitations  and  conditions  of Code  Section  422 and any  regulations
promulgated with respect thereto,  an Option issued in respect of an option held
by an employee to acquire stock of any entity acquired,  by merger or otherwise,
by the Company (or any  subsidiary of the Company) may contain terms that differ
from those  stated in this  Article  VI, but solely to the extent  necessary  to
preserve  for any such  employee  the  rights  and  benefits  contained  in such
predecessor option, or to satisfy the requirements of Code Section 424(a).

     6.13 Effect of Change in Control. The Committee may determine,  at the time
of granting an Option or thereafter,  that such Option shall become  exercisable
on an  accelerated  basis in the event  that a Change  in  Control  occurs  with
respect to the Company (and the  Committee  shall have the  discretion to modify
the definition of a Change in Control in a particular Option Agreement).  If the
Committee  finds  that  there  is a  reasonable  possibility  that,  within  the
succeeding  six  months,  a Change in Control  will  occur  with  respect to the
Company,  then the Committee may determine that all outstanding Options shall be
exercisable on an accelerated basis.

                                   ARTICLE VII
                                RESTRICTED STOCK

     7.1  Awards  of  Restricted  Stock.  The  Committee  may  grant  Awards  of
Restricted Stock, which shall be governed by a Restriction Agreement between the
Company  and  the  Grantee.   Each  Restriction  Agreement  shall  contain  such
restrictions,  terms,  and conditions as the Committee  may, in its  discretion,
determine, and may require that an appropriate legend be placed on the

                                       21

<PAGE>
certificates evidencing the subject Restricted Stock. Shares of Restricted
Stock granted  pursuant to an Award hereunder shall be issued in the name of the
Grantee as soon as reasonably  practicable after the Award is granted,  provided
that the Grantee has executed the Restriction Agreement governing the Award, the
appropriate  blank stock powers,  and, in the  discretion of the  Committee,  an
escrow  agreement and any other  documents  which the Committee may require as a
condition to the issuance of such shares. If a Grantee shall fail to execute the
foregoing  documents  within any time period  prescribed by the  Committee,  the
Award  shall be void.  At the  discretion  of the  Committee,  shares  issued in
connection  with an Award  may be held by the  Company  for the  account  of the
Grantee  or  deposited  together  with the stock  powers  with an  escrow  agent
designated by the Committee.  Unless the Committee  determines  otherwise and as
set forth in the Restriction Agreement, upon issuance of the shares, the Grantee
shall  have all of the rights of a  shareholder  with  respect  to such  shares,
including  the right to vote the shares and to receive  all  dividends  or other
distributions  paid or made with  respect to the  shares.  Unless the  Committee
determines  otherwise,  not more than 20,000 shares of  Restricted  Stock may be
awarded  to any  individual  in the  aggregate  in any  one  fiscal  year of the
Company,  such  limitation  to  be  applied  in a  manner  consistent  with  the
requirements  of, and only to the  extent  required  for  compliance  with,  the
exclusion from the limitation on  deductibility  of  compensation  under Section
162(m) of the Code.

     7.2  Non-Transferability.  Until any  restrictions  upon  Restricted  Stock
awarded  to a Grantee  shall have  lapsed in a manner set forth in Section  7.3,
such shares of Restricted Stock shall not be transferable  other than by will or
the laws of descent  and  distribution,  or  pursuant  to a  Qualified  Domestic
Relations Order, nor shall they be delivered to the Grantee.

     7.3 Lapse of  Restrictions.  Restrictions  upon  Restricted  Stock  awarded
hereunder  shall lapse at such time or times and on such terms and conditions as
the Committee may, in its discretion, determine at the time the Award is granted
or thereafter.

     7.4  Termination  of  Employment.  The  Committee  shall  have the power to
specify,  with  respect to each Award  granted to any  particular  Grantee,  the
effect upon such Grantee's  rights with respect to such Restricted  Stock of the
termination  of such Grantee's  employment  under various  circumstances,  which
effect may include immediate or deferred  forfeiture of such Restricted Stock or
acceleration of the date at which any then-remaining restrictions shall lapse.

     7.5  Treatment of Dividends.  At the time an Award of  Restricted  Stock is
made the Committee  may, in its  discretion,  determine  that the payment to the
Grantee of any dividends,  or a specified  portion thereof,  declared or paid on
such  Restricted  Stock shall be (i) deferred  until the lapsing of the relevant
restrictions  and (ii) held by the Company for the account of the Grantee  until
such lapsing. In the event of such deferral,  there shall be credited at the end
of each year (or portion thereof) interest on the amount of the account at the

                                       22
<PAGE>
beginning of the year at a rate per annum determined by the Committee.
Payment of deferred  dividends,  together with interest  thereon,  shall be made
upon the  lapsing of  restrictions  imposed on such  Restricted  Stock,  and any
dividends deferred (together with any interest thereon) in respect of Restricted
Stock shall be forfeited upon any forfeiture of such Restricted Stock.

     7.6 Delivery of Shares.  Except as provided  otherwise in Article IX below,
within a reasonable  period of time following the lapse of the  restrictions  on
shares of Restricted  Stock, the Committee shall cause a stock certificate to be
delivered  to the Grantee  with  respect to such shares and such shares shall be
free of all restrictions hereunder.

                                  ARTICLE VIII
                            STOCK APPRECIATION RIGHTS

     8.1 SAR Grants.  The Committee,  in its sole  discretion,  may grant to any
Grantee an SAR. The Committee may impose such  conditions or restrictions on the
exercise of any SAR as it may deem appropriate,  including,  without limitation,
restricting  the time of  exercise  of the SAR to  specified  periods  as may be
necessary  to satisfy  the  requirements  of Rule  16b-3.  Unless the  Committee
determines  otherwise,  an SAR  providing  for not more than  20,000  equivalent
shares of Stock may be awarded to any  individual  in the  aggregate  in any one
fiscal year of the Company, such limitation to be applied in a manner consistent
with the  requirements  of, and only to the extent required for compliance with,
the exclusion from the limitation on deductibility of compensation under Section
162(m) of the Code.

     8.2  Determination  of Price.  The SAR Price  shall be  established  by the
Committee in its sole  discretion.  The SAR Price shall not be less than 100% of
the Fair  Market  Value of the Stock on the date the SAR is  granted  for an SAR
issued in tandem with an Incentive Stock Option.

     8.3  Exercise  of an SAR.  Upon  exercise of an SAR,  the Grantee  shall be
entitled, subject to the terms and conditions of this Plan and the Agreement, to
receive  the  excess for each share of Stock  being  exercised  under the SAR of
(i) the  Fair Market  Value of such share of Stock on the date of exercise  over
(ii) the SAR Price for such share of Stock.

     8.4  Payment  for an SAR.  At the sole  discretion  of the  Committee,  the
payment of such  excess  shall be made in  (i) cash,  (ii) shares  of Stock,  or
(iii) a  combination  of both.  Shares of Stock used for this  payment  shall be
valued at their Fair Market Value on the date of exercise of the applicable SAR.

     8.5 Status of an SAR under the Plan. Shares of Stock subject to an Award of
an SAR shall be  considered  shares of Stock which may be issued  under the Plan
for purposes of Section 5.1 hereof, unless the Agreement making the Award of the

                                       23
<PAGE>
SAR provides that the exercise of such SAR results in the termination of an
unexercised Option for the same number of shares of Stock.

     8.6  Termination  of  Employment.  The  Committee  shall  have the power to
specify,  with respect to each SAR granted to any particular Grantee, the effect
upon such Grantee's  rights with respect to such SAR of the  termination of such
Grantee's  employment  under  various  circumstances,  which  effect may include
immediate  or deferred  forfeiture  of such SAR or  acceleration  of the date at
which any then-remaining restrictions shall lapse.

     8.7  No  Shareholder  Rights.  The  Grantee  shall  have  no  rights  as  a
shareholder with respect to an SAR. In addition, no adjustment shall be made for
dividends  (ordinary  or  extraordinary,  whether in cash,  securities  or other
property) or distributions or rights except as provided in Section 5.2 hereof.

                                   ARTICLE IX
                               STOCK CERTIFICATES

     The Company shall not be required to issue or deliver any  certificate  for
shares of Stock  purchased upon the exercise of any Option granted  hereunder or
any portion  thereof,  or deliver any certificate for shares of Restricted Stock
granted hereunder, prior to fulfillment of all of the following conditions:

     (a) The admission of such shares to listing on all stock exchanges on which
the Stock is then listed;

     (b) The  completion  of any  registration  or other  qualification  of such
shares which the Committee  shall deem necessary or advisable  under any federal
or state law or under the rulings or  regulations of the Securities and Exchange
Commission or any other governmental regulatory body;

     (c) The  obtaining of any approval or other  clearance  from any federal or
state  governmental  agency or body which the  Committee  shall  determine to be
necessary or advisable; and

     (d) The lapse of such  reasonable  period of time following the exercise of
the  Option  as the  Board  from  time to time  may  establish  for  reasons  of
administrative convenience.

     Stock  certificates  issued  and  delivered  to  Grantees  shall  bear such
restrictive legends as the Company shall deem necessary or advisable pursuant to
applicable federal and state securities laws.

                                       24

<PAGE>
                                    ARTICLE X
                            TERMINATION AND AMENDMENT

     10.1  Termination  and  Amendment.  The Board may at any time terminate the
Plan,  and may at any time and from  time to time and in any  respect  amend the
Plan;  provided,  however,  that the Board  (unless its actions are  approved or
ratified by the  shareholders  of the Company  within  twelve months of the date
that the Board amends the Plan) may not amend the Plan to:

     (a)  Increase  the total  number of shares of Stock  issuable  pursuant  to
Incentive Stock Options, except as contemplated in Sections 5.1 and 5.2;

     (b) Change the class of  employees  eligible  to  receive  Incentive  Stock
Options that may participate in the Plan; or

     (c) Otherwise  materially  increase the benefits  accruing to recipients of
Incentive Stock Options under the Plan.

     10.2 Effect on Grantee's Rights. No termination, amendment, or modification
of the Plan shall  affect  adversely a  Grantee's  rights  under a Stock  Option
Agreement  or  Restriction  Agreement  without the consent of the Grantee or his
legal representative.

                                   ARTICLE XI
                    RELATIONSHIP TO OTHER COMPENSATION PLANS

     The  adoption  of the  Plan  shall  not  affect  any  other  stock  option,
incentive,  or other  compensation plans in effect for the Company or any of its
subsidiaries;  nor shall the adoption of the Plan preclude the Company or any of
its  subsidiaries  from  establishing  any  other  form of  incentive  or  other
compensation  plan for  employees  or  Directors  of the  Company  or any of its
subsidiaries.

                                   ARTICLE XII
                                  MISCELLANEOUS

     12.1  Replacement  or  Amended  Grants.  At  the  sole  discretion  of  the
Committee,  and  subject  to the terms of the Plan,  the  Committee  may  modify
outstanding  Options or Awards or accept the surrender of outstanding Options or
Awards and grant new Options or Awards in  substitution  for them.  However,  no
modification  of an Option or Award shall  adversely  affect a Grantee's  rights
under a Stock Option Agreement or Restriction  Agreement  without the consent of
the Grantee or his legal representative.

                                       25
<PAGE>
     12.2  Forfeiture  for  Competition.  If a Grantee  provides  services  to a
competitor  of the Company or any of its  subsidiaries,  whether as an employee,
officer, director, independent contractor, consultant, agent, or otherwise, such
services being of a nature that can reasonably be expected to involve the skills
and experience used or developed by the Grantee while an employee of the Company
or  subsidiary,  then  that  Grantee's  rights  under  any  Options  outstanding
hereunder shall be forfeited and terminated,  and any shares of Restricted Stock
held by such  Grantee  subject to  remaining  restrictions  shall be  forfeited,
subject in each case to a determination to the contrary by the Committee.

     12.3  Plan  Binding  on  Successors.  The Plan  shall be  binding  upon the
successors and assigns of the Company.

     12.4 Singular,  Plural; Gender. Whenever used herein, nouns in the singular
shall include the plural,  and the masculine  pronoun shall include the feminine
gender.

     12.5  Headings,  etc.,  No Part of Plan.  Headings of Articles and Sections
hereof are inserted for convenience  and reference;  they do not constitute part
of the Plan.

     12.6  Interpretation.  With  respect to Section 16  Insiders,  transactions
under this Plan are intended to comply with all  applicable  conditions  of Rule
16b-3 or its  successors  under the Exchange Act. To the extent any provision of
the Plan or action by the Plan  administrators  fails to so comply,  it shall be
deemed  void to the extent  permitted  by law and deemed  advisable  by the Plan
administrators.

                                       26

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