Document:

<PAGE>

                                                                    EXHIBIT 10.1

                                eMachines, Inc.

                      JOHN DICKINSON EMPLOYMENT AGREEMENT

     This Agreement is entered into as of July 4, 2000 by and between eMachines,
Inc. (the "Company"), and John Dickinson (the "Executive").

     WHEREAS, the Company desires to retain Executive in the capacity of Senior
Vice President & General Manager, Internet Division of the Company, and
Executive desires to accept such employment; and

     WHEREAS the parties desire and agree to enter into an employment
relationship by means of this Agreement;

NOW THEREFORE in consideration of the promises and mutual covenants herein
contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, it is mutually covenanted and
agreed by and among the parties as follows:

     1.     Duties and Scope of Employment.
            ------------------------------

           (a)  Positions and Duties.  As of the Effective Date (as defined
                --------------------
below), Executive will serve as Senior Vice President & General Manager,
Internet Division of the Company. Executive will render such business and
professional services in the performance of his duties, consistent with
Executive's position within the Company, as shall reasonably be assigned to him
by the Company's Board of Directors (the "Board").

           (b)  Obligations.  During the Employment Term, Executive will
                -----------
perform his duties faithfully and to the best of his ability and will devote his
full business efforts and time to the Company. For the duration of the
Employment Term, Executive agrees not to actively engage in any other
employment, occupation or consulting activity for any direct or indirect
remuneration without the prior approval of the Board.

     2.    Term.  Executive's employment with the Company pursuant to this
           ----
Agreement shall commence on July 17, 2000 (the "Effective Date") and shall
continue, unless otherwise terminated as provided in Section 11 hereof, until
July 16, 2003 (the "Employment Term").

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

           (a)  Base Salary.  During the Employment Term, the Company will pay
                -----------
Executive as compensation for his services a base salary at the annualized rate
of $275,000 (the "Base Salary"). The Base Salary will be paid periodically in
accordance with the Company's normal payroll practices and be subject to the
usual, required withholding.
<PAGE>

           (b)  Bonus.  During the Employment Term, the Company will pay
                -----
Executive a bonus of sixty (60) percent of the base salary depending upon
Executive meeting performance objectives from time to time as established by the
Company (the "Bonus").

           (c)  Stock Option.  As of the Effective Date, Executive will be
                ------------
granted a stock option, which will be, to the extent possible under the $100,000
rule of Section 422(d) of the Internal Revenue Code of 1986, as amended (the
"Code") an "incentive stock option" (as defined in Section 422 of the Code), to
purchase 450,000 shares of the Company's Common Stock at an exercise price to be
determined at the next Board meeting (the "Option"). Subject to the accelerated
vesting provisions set forth herein, the Option will vest as to 25% of the
shares subject to the Option one year after the date of grant, and as to 1/48th
of the shares subject to the Option at the end of each calendar month
thereafter, so that the Option will be fully vested and exercisable four (4)
years from the date of grant, subject to Executive's continued service to the
Company on the relevant vesting dates. The Option will be subject to the terms,
definitions and provisions of the Company's Stock Plan (the "Option Plan") and
the stock option agreement by and b etween Executive and the Company (the
"Option Agreement"), both of which documents are incorporated herein by
reference.

           (d)  Signing Bonus.  Executive shall receive a $50,000 signing bonus
                -------------
payable 30 days after the Effective Date (the "Signing Bonus"). Executive shall
repay the Signing Bonus on a pro rated basis by months of employment if
Executive voluntarily terminates his employment with the Company at any time
within 12 months of the Effective Date.

     4.    Employee Benefits.  During the Employment Term, Executive will be
           -----------------
entitled to participate in the employee benefit plans currently and hereafter
maintained by the Company of general applicability to other senior executives of
the Company, including, without limitation, the Company's group medical, dental,
vision, disability, life insurance, and flexible-spending account plans. The
Company reserves the right to cancel or change the benefit plans and programs it
offers to its employees at any time.

     5.    Vacation.  Executive will be entitled to paid vacation of 2 weeks per
           --------
year in accordance with the Company's vacation policy, with the timing and
duration of specific vacations mutually and reasonably agreed to by the parties
hereto.

     6.    Expenses.  The Company will reimburse Executive for reasonable
           --------
travel, entertainment or other expenses incurred by Executive in the furtherance
of or in connection with the performance of Executive's duties hereunder, in
accordance with the Company's expense reimbursement policy as in effect from
time to time.

     7.    Severance.
           ---------

           (a)  Involuntary Termination.  If Executive's employment with the
                -----------------------
Company terminates as a result of an Involuntary Termination (as defined below),
and Executive signs and does not revoke a standard release of claims with the
Company, then Executive shall be entitled to receive continuing payments of
severance pay (less applicable withholding taxes) at a rate equal to his Base
Salary rate, as then in effect, for the remainder of the contract period or the
securing of other employment, in the event that the compensation from that other
employment is less than that

                                      -2-
<PAGE>

received hereunder, the Executive will continue to receive an amount equal to
the difference between the new salary amount and the base salary plus guaranteed
bonus which would have been earned hereunder, from the date of such termination,
to be paid periodically in accordance with the Company's normal payroll
policies. Further all unvested stock options will accelerate and become fully
vested.

                (b)  Other Termination.  If Executive's employment with the
                     -----------------
Company terminates voluntarily by Executive, or other than as described in
Section 11(a) at any time, then (i) all vesting of the Option will terminate
immediately and all payments of compensation by the Company to Executive
hereunder will terminate immediately (except as to amounts already earned) and
(ii) Executive will only be eligible for severance benefits in accordance with
the Company's established policies as then in effect and (iii) all amounts owed
to the company will immediately become due and payable.

                (c)  Termination Following A Change of Control.  If Executive's
                     -----------------------------------------
employment with the Company terminates as a result of an Involuntary Termination
at any time within twelve (12) months after a "Change of Control" (as defined
herein), all stock options granted by the Company to the Executive, including
the Option, prior to the Change of Control shall become fully vested and
exercisable as of the date of the termination to the extent such stock options
are outstanding and unexercisable at the time of such termination.

     8.    Definitions.
           -----------

           (a)  Cause.  For purposes of this Agreement, "Cause" is defined as
                -----
(i) misappropriation or embezzlement of Company funds or an act of fraud upon
the Company made by Executive in connection with Executive's responsibilities as
an employee under this Agreement, (ii) Executive's conviction of, or plea of
nolo contendere to, a felony, (iii) Executive's gross misconduct in connection
---------------
with Executive's responsibilities as an employee under this Agreement, or (iv)
Executive's continued failure to comply with directives of the Board of
Directors.

           (b)  Change of Control.  For purposes of this Agreement, "Change of
                -----------------
Control" of the Company is defined as: (i) a change in the ownership of the
Company's outstanding securities such that any "person" (as such term is used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended)
becomes the "beneficial owner" (as defined in Rule 13d-3 under said Act),
directly or indirectly, of securities of the Company representing 50% or more of
the total voting power represented by the Company's then outstanding voting
securities; or (ii) the date of the consummation of a merger or consolidation of
the Company with any other corporation that has been approved by the
stockholders of the Company, other than a merger or consolidation that would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) more than fifty
percent (50%) of the total voting power represented by the voting securities of
the Company or such surviving entity outstanding immediately after such merger
or consolidation, or the date the stockholders of the Company approve a plan of
complete liquidation of the Company; or (ii) the date of the consummation of the
sale or disposition by the Company of all or substantially all the Company's
assets. ;

                                      -3-
<PAGE>

           (c)  Involuntary Termination.  "Involuntary Termination" shall mean
                -----------------------
(i) without the Executive's express written consent, a significant reduction of
the Executive's duties, position or responsibilities relative to the Executive's
duties, position or responsibilities in effect immediately prior to such
reduction, or the removal of the Executive from such position, duties and
responsibilities, unless the Executive is provided with comparable duties,
position and responsibilities; provided, however, that a reduction in duties,
position or responsibilities solely by virtue of the Company being acquired and
made part of a larger entity (as, for example, when the Chief Financial Officer
of the Company remains as such following a Change of Control but is not made the
Chief Financial Officer of the acquiring corporation) shall not constitute an
"Involuntary Termination;" (ii) without the Executive's express written consent,
a substantial reduction, without good business reasons, of the facilities and
perquisites (including office space and location) available to the Executive
immediately prior to such reduction; (iii) a material reduction by the Company
of the Executive's base salary as in effect immediately prior to such reduction;
(iv) a material reduction by the Company in the kind or level of employee
benefits to which the Executive is entitled immediately prior to such reduction
with the result that the Executive's overall benefits package is significantly
reduced; or (v) any purported termination of the Executive by the Company which
is not effected for Cause.

     9.    Confidential Information.  Executive agrees to enter into the
           ------------------------
Company's standard Confidential Information and Invention Assignment Agreement
(the "Confidential Information Agreement") upon commencing employment hereunder.

    10.    Assignment.  This Agreement will be binding upon and inure to the
           ----------
benefit of (a) the heirs, executors and legal representatives of Executive upon
Executive's death and (b) any successor of the Company. Any such successor of
the Company will be deemed substituted for the Company under the terms of this
Agreement for all purposes. For this purpose, "successor" means any person,
firm, corporation or other business entity which at any time, whether by
purchase, merger or otherwise, directly or indirectly acquires all or
substantially all of the assets or business of the Company. None of the rights
of Executive to receive any form of compensation payable pursuant to this
Agreement may be assigned or transferred except by will or the laws of descent
and distribution. Any other attempted assignment, transfer, conveyance or other
disposition of Executive's right to compensation or other benefits will be null
and void.

    11.    Notices.  All notices, requests, demands and other communications
           -------
called for hereunder shall be in writing and shall be deemed given (i) on the
date of delivery if delivered personally, (ii) one (1) day after being sent by a
well established commercial overnight service, or (iii) four (4) days after
being mailed by registered or certified mail, return receipt requested, prepaid
and addressed to the parties or their successors at the following addresses, or
at such other addresses as the parties may later designate in writing:

                                      -4-
<PAGE>

     If to the Company:

     eMachines, Inc.
     14350 Myford Road, Suite 100
     Irvine, California 92606

     Attn: Chief Executive Officer
     ----
     Fax:  (714)-505-5065

     If to Executive:

     at the last residential address known by the Company.

     12.    Severability.  In the event that any provision hereof becomes or is
            ------------
declared by a court of competent jurisdiction to be illegal, unenforceable or
void, this Agreement will continue in full force and effect without said
provision.

     13.    Arbitration.
            -----------

            (a)  Executive agrees that any dispute or controversy arising out
of, relating to, or in connection with this Agreement, or the interpretation,
validity, construction, performance, breach, or termination thereof, shall be
settled by binding arbitration to be held in Los Angeles, California in
accordance with the National Rules for the Resolution of Employment Disputes
then in effect of the American Arbitration Association (the "Rules"). The
arbitrator may grant injunctions or other relief in such dispute or controversy.
The decision of the arbitrator will be final, conclusive and binding on the
parties to the arbitration. Judgment may be entered on the arbitrator's decision
in any court having jurisdiction. Unless otherwise required by law, the losing
party in any arbitration proceeding shall pay all of the arbitrator's fees and
costs.

           (b)  The arbitrator(s) will apply California law to the merits of any
dispute or claim, without reference to rules of conflicts of law. The
arbitration proceedings will be governed by federal arbitration law and by the
Rules, without reference to state arbitration law. The Executive hereby consents
to the personal jurisdiction of the state and federal courts located in
California for any action or proceeding arising from or relating to this
Agreement or relating to any arbitration in which the parties are participants.

           (c)  EXECUTIVE HAS READ AND UNDERSTANDS THIS SECTION, WHICH DISCUSSES
ARBITRATION. EXECUTIVE UNDERSTANDS THAT BY SIGNING THIS AGREEMENT, EXECUTIVE
AGREES TO SUBMIT ANY CLAIMS ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH
THIS AGREEMENT, OR THE INTERPRETATION, VALIDITY, CONSTRUCTION, PERFORMANCE,
BREACH OR TERMINATION THEREOF TO BINDING ARBITRATION, AND THAT THIS ARBITRATION
CLAUSE CONSTITUTES A WAIVER OF EXECUTIVE'S RIGHT TO A JURY TRIAL AND

                                      -5-
<PAGE>

RELATES TO THE RESOLUTION OF ALL DISPUTES RELATING TO ALL ASPECTS OF THIS
AGREEMENT.

    14.    Integration.  This Agreement, together with the Option Plan, Option
           -----------
Agreement, and the Confidential Information Agreement represents the entire
agreement and understanding between the parties as to the subject matter herein
and supersedes all prior or contemporaneous agreements whether written or oral.
No waiver, alteration, or modification of any of the provisions of this
Agreement will be binding unless in writing and signed by duly authorized
representatives of the parties hereto.

    15.    Tax Withholding.  All payments made pursuant to this Agreement will
           ---------------
be subject to withholding of applicable taxes.

    16.    Governing Law.  This Agreement will be governed by the laws of the
           -------------
State of California (with the exception of its conflict of laws provisions).

    17.    Acknowledgment.  Executive acknowledges that he has had the
           --------------
opportunity to discuss this matter with and obtain advice from his private
attorney, has had sufficient time to, and has carefully read and fully
understands all the provisions of this Agreement, and is knowingly and
voluntarily entering into this Agreement.

    IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Company by their duly authorized officers, as of the day and year
first above written.

    EMACHINES, INC.

    By:  /s/ Stephen Dukker                           Date:  7/4/00
         -----------------------------------------           ------

    Title:  Chief Executive Officer
            -----------------------

    John Dickinson

    /s/ John Dickinson                                     Date:  7/4/00
    ---------------------------------------------------           -------
    John Dickinson

                                      -6-2000 STOCK COMPENSATION PLAN

                                       of

                              AARICA HOLDINGS, INC.

                              (a Texas corporation)

                                       (3)

                                TABLE OF CONTENTS

                          2000 STOCK COMPENSATION PLAN

                                       of

                              AARICA HOLDINGS, INC.
<TABLE>
<S>                     <C>                                                                            <C>

SECTION                             SUBJECT                                             PAGE

    1.            Purpose of Plan   ...........................................................................1

    2.            Stock Subject to the Plan....................................................................1

    3.            Administration of the Plan...................................................................1

                  (a)      General  ...........................................................................1

                  (b)      Changes in Law Applicable...........................................................2

    4.            Types of Awards Under the Plan...............................................................2

    5.            Persons to Whom Options Shall Be Granted.....................................................2

                  (a)      Nonqualified Options................................................................2

                  (b)      Incentive Options...................................................................2

    6.            Factors to Be Considered in Granting Options.................................................3

    7.            Time of Granting Option......................................................................3

    8.            Terms and Conditions of Options..............................................................3

                  (a)      Number of Shares....................................................................3

                  (b)      Type of Option......................................................................3

                  (c)      Option Period.......................................................................3

                           (1)      General....................................................................3

                           (2)      Termination of Employment..................................................3

                           (3)      Cessation of Service as Director

                                    or Advisor.................................................................4

                           (4)      Disability.................................................................4

                           (5)      Death......................................................................4

                           (6)      Acceleration and Exercise Upon Change

                                    of Control.................................................................4

                  (d)      Option Prices.......................................................................5

                           (1)      Nonqualified Options.......................................................5

                           (2)      Incentive Options..........................................................5

                           (3)      Determination of Fair Market Value.........................................5

                  (e)      Exercise of Options.................................................................6

                  (f)      Non-transferability of Options......................................................6

                  (g)      Limitations on 10% Shareholders.....................................................6

                  (h)      Limits on Vesting of Incentive Options..............................................6

                  (i)      Compliance with Securities Laws.....................................................6

                  (j)      Additional Provisions...............................................................7

    9.            Medium and Time of Payment...................................................................7

    10.           Alternate Stock Appreciation Rights..........................................................8

                  (a)      Award of Alternate Stock Rights.....................................................8

                  (b)      Alternate Stock Rights Agreement....................................................8

                  (c)      Exercise ...........................................................................8

                  (d)      Amount of Payment...................................................................8

                  (e)      Form of Payment.....................................................................8

                  (f)      Termination of SAR .................................................................8

                  (g)      Effect of Exercise of SAR...........................................................9

                  (h)      Effect of Exercise of Related Option................................................9

                  (i)      Non-transferability of SAR..........................................................9

    11.           Rights as a Shareholder......................................................................9

    12.           Optionee's Agreement to Serve................................................................10

    13.           Adjustments on Changes in Capitalization.....................................................10

                  (a)      Changes in Capitalization...........................................................10

                  (b)      Reorganization, Dissolution or Liquidation..........................................10

                  (c)      Change in Par Value.................................................................10

                  (d)      Notice of Adjustments...............................................................10

                  (e)      Effect Upon Holder of Option........................................................11

                  (f)      Right of Company to Make Adjustments................................................11

    14.           Investment Purpose...........................................................................11

    15.           No Obligation to Exercise Option or SAR......................................................12

    16.           Modification, Extension, and Renewal of Options..............................................12

    17.           Effective Date of the Plan...................................................................12

    18.           Termination of the Plan......................................................................12

    19.           Amendment of the Plan........................................................................12

    20.           Withholding       ...........................................................................12

    21.           Indemnification of Committee.................................................................12

    22.           Application of Funds.........................................................................13

    23.           Governing Law     ...........................................................................13

</TABLE>

<PAGE>

2000 STOCK COMPENSATION PLAN - Page 12
                          2000 STOCK COMPENSATION PLAN

                                       OF

                              AARICA HOLDINGS, INC.

         1.  Purpose of Plan.  This 2000 Stock  Compensation  Plan  ("Plan")  is
intended to encourage  ownership of the common  stock of AARICA  HOLDINGS,  INC.
("Company")  by certain  officers,  directors,  employees  and  advisors  of the
Company  or any  Subsidiary  or  Subsidiaries  of the  Company  (as  hereinafter
defined) in order to provide  additional  incentive  for such persons to promote
the success and the business of the Company or its Subsidiaries and to encourage
them to remain in the employ of the  Company or its  Subsidiaries  by  providing
such persons an opportunity to benefit from any appreciation of the common stock
of the  Company  through  the  issuance  of  stock  options  and  related  stock
appreciation rights to such persons in accordance with the terms of the Plan. It
is further  intended that options granted pursuant to this Plan shall constitute
either  incentive  stock  options  ("Incentive  Options")  within the meaning of
Section 422  (formerly  Section  422A) of the Internal  Revenue Code of 1986, as
amended  ("Code"),   or  options  which  do  not  constitute  Incentive  Options
("Nonqualified Options") as determined by the Committee (as hereinafter defined)
at the time of issuance of such options. Incentive Options, Nonqualified Options
and Reload  Options  (as  defined in  Section  11 hereof)  are herein  sometimes
referred to  collectively as "Options".  As used herein,  the term Subsidiary or
Subsidiaries shall mean any corporation (other than the employer corporation) in
an unbroken chain of corporations beginning with the employer corporation if, at
the time of granting of the Option, each of the corporations other than the last
corporation in the unbroken chain owns stock  possessing  fifty percent (50%) or
more of the total  combined  voting  power of all classes of stock in one of the
other corporations in such chain.

         2. Stock  Subject to the Plan.  Subject to  adjustment  as  provided in
Section  14 hereof,  there will be  reserved  for the use upon the  exercise  of
Options to be granted  from time to time under the Plan,  an  aggregate of three
hundred fifty thousand  (350,000) shares of the common stock, $.01 par value, of
the  Company  ("Common  Stock"),  which  shares  in  whole  or in part  shall be
authorized,  but unissued, shares of the Common Stock or issued shares of Common
Stock which shall have been reacquired by the Company as determined from time to
time by the  Board of  Directors  of the  Company  ("Board  of  Directors").  To
determine  the number of shares of Common  Stock  available  at any time for the
granting  of Options  under the Plan,  there  shall be  deducted  from the total
number of reserved shares of Common Stock,  the number of shares of Common Stock
in respect of which Options have been granted  pursuant to the Plan which remain
outstanding or which have been  exercised.  If and to the extent that any Option
to purchase  reserved  shares  shall not be  exercised  by the  optionee for any
reason or if such Option to purchase shall  terminate as provided  herein,  such
shares which have not been so purchased  hereunder shall again become  available
for the  purposes  of the Plan unless the Plan shall have been  terminated,  but
such unpurchased  shares shall not be deemed to increase the aggregate number of
shares  specified  above to be reserved  for  purposes  of the Plan  (subject to
adjustment as provided in Section 14 hereof).

         3.       Administration of the Plan.
                  --------------------------

                  (a) General.  The Plan shall be administered by a Compensation
         Committee  ("Committee")  appointed  by the Board of  Directors,  which
         Committee  shall  consist of not less than two (2) members of the Board
         of  Directors,  except that if at any time there shall be less than two
         (2)  directors who are  qualified to serve on the  Committee,  then the
         Plan  shall  be  administered  by the  full  Board  of  Directors.  All
         references  in this  Plan to the  Committee  shall be  deemed  to refer
         instead  to the full  Board  of  Directors  at any time  there is not a
         committee of two (2) members  qualified to act hereunder.  The Board of
         Directors  may from time to time  appoint  members of the  Committee in
         substitution for or in addition to members previously appointed and may
         fill  vacancies,  however  caused,  in the  Committee.  If the Board of
         Directors does not designate a Chairman of the Committee, the Committee
         shall select one of its members as its Chairman.  The  Committee  shall
         hold its meetings at such times and places as it shall deem  advisable.
         A majority of its members shall constitute a quorum.  Any action of the
         Committee shall be taken by a majority vote of its members at a meeting
         at which a quorum is present. Notwithstanding the preceding, any action
         of the Committee  may be taken  without a meeting by a written  consent
         signed by all of the  members,  and any action so taken shall be deemed
         fully as  effective  as if it had been  taken by a vote of the  members
         present in person at the meeting  duly called and held.  The  Committee
         may appoint a Secretary,  shall keep minutes of its meetings, and shall
         make such rules and  regulations  for the conduct of its business as it
         shall deem advisable.

                  The Committee shall have the sole authority and power, subject
         to the express  provisions and limitations of the Plan, to construe the
         Plan and option agreements granted hereunder,  and to adopt, prescribe,
         amend,  and rescind rules and regulations  relating to the Plan, and to
         make all  determinations  necessary or advisable for  administering the
         Plan,  including,  but not limited to, (i) who shall be granted Options
         under  the Plan,  (ii) the term of each  Option,  (iii)  the  number of
         shares covered by such Option, (iv) whether the Option shall constitute
         an Incentive  Option or a Nonqualified  Option or a Reload Option,  (v)
         the  exercise  price for the purchase of the shares of the Common Stock
         covered by the Option,  (vi) the period  during which the Option may be
         exercised,  (vii)  whether the right to  purchase  the number of shares
         covered by the Option  shall be fully  vested on issuance of the Option
         so that such shares may be purchased in full at one time or whether the
         right to purchase such shares shall become vested over a period of time
         so that such shares may only be purchased in  installments,  and (viii)
         the time or times at which  Options shall be granted.  The  Committee's
         determinations   under  the  Plan,   including  the  above   enumerated
         determinations,  need not be uniform and may be made by it  selectively
         among the  persons who  receive,  or are  eligible to receive,  Options
         under the Plan, whether or not such persons are similarly situated.

                  The  interpretation  by the  Committee of any provision of the
         Plan or of any option agreement  entered into hereunder with respect to
         any  Incentive  Option shall be in  accordance  with Section 422 of the
         Code  and  the  regulations  issued  thereunder,  as  such  section  or
         regulations  may be amended from time to time, in order that the rights
         granted  hereunder and under said option  agreements  shall  constitute
         "Incentive  Stock  Options"  within the  meaning of such  section.  The
         interpretation  and  construction  by the Committee of any provision of
         the  Plan  or of any  Option  granted  hereunder  shall  be  final  and
         conclusive,  unless otherwise determined by the Board of Directors.  No
         member of the Board of Directors or the  Committee  shall be liable for
         any action or determination made in good faith with respect to the Plan
         or any Option  granted under it. Upon issuing an Option under the Plan,
         the  Committee  shall report to the Board of Directors  the name of the
         person granted the Option, whether the Option is an Incentive Option or
         a Nonqualified  Option, the number of shares of Common Stock covered by
         the Option, and the terms and conditions of such Option.

                  (b)  Changes  in Law  Applicable.  If  the  laws  relating  to
         Incentive  Options or  Nonqualified  Options  are  changed,  altered or
         amended during the term of the Plan, the Board of Directors  shall have
         full  authority  and power to alter or amend the Plan with  respect  to
         Incentive Options or Nonqualified Options,  respectively, to conform to
         such  changes in the law without the  necessity  of  obtaining  further
         shareholder approval, unless the changes require such approval.

     4. Types of Awards Under the Plan. Awards under the Plan may be in the form
of   either   Options,    ---------------------------------    alternate   stock
appreciation  rights  (as  described  in Section 10  hereof),  or a  combination
thereof.

         5.       Persons to Whom Options Shall be Granted.
                  ----------------------------------------

                  (a)  Nonqualified  Options.   Nonqualified  Options  shall  be
granted  only  to  officers,  directors  of  the  Company  or a  Subsidiary  [as
hereinafter defined], employees and advisors of the Company or a Subsidiary who,
in the judgment of the  Committee,  are  responsible  for or  contribute  to the
management or success of the Company or a Subsidiary and who, at the time of the
granting of the Nonqualified Options, are either officers, directors,  employees
or advisors of the Company or a Subsidiary.

                  (b) Incentive Options. Incentive Options shall be granted only
to  employees  of the  Company  or a  Subsidiary  who,  in the  judgment  of the
Committee, are responsible for or contribute to the management or success of the
Company or a Subsidiary  and who, at the time of the  granting of the  Incentive
Option are either an  employee of the  Company or a  Subsidiary.  Subject to the
provisions of Section 8(g) hereof,  no individual  shall be granted an Incentive
Option who, immediately before such Incentive Option was granted, would own more
than  ten  percent  (10%) of the  total  combined  voting  power or value of all
classes of stock of the Company ("10% Shareholder").

         6.  Factors  to Be  Considered  in  Granting  Options.  In  making  any
determination  as to persons  to whom  Options  shall be  granted  and as to the
number of shares to be covered by such Options,  the  Committee  shall take into
account the duties and responsibilities of the respective  officers,  directors,
employees, or advisors, their current and potential contributions to the success
of the Company or a Subsidiary,  and such other  factors as the Committee  shall
deem relevant in connection with accomplishing the purpose of the Plan.

         7. Time of Granting Options.  Neither anything contained in the Plan or
in any  resolution  adopted or to be adopted  by the Board of  Directors  or the
Shareholders  of the  Company  or a  Subsidiary  nor  any  action  taken  by the
Committee shall constitute the granting of any Option. The granting of an Option
shall be effected only when a written  Option  Agreement  acceptable in form and
substance to the Committee, subject to the terms and conditions hereof including
those set forth in Section 8 hereof, shall have been duly executed and delivered
by or on behalf of the  Company  and the  person  to whom such  Option  shall be
granted. No person shall have any rights under the Plan until such time, if any,
as a written Option Agreement shall have been duly executed and delivered as set
forth in this Section 7.

         8. Terms and  Conditions of Options.  All Options  granted  pursuant to
this  Plan  must be  granted  within  ten (10)  years  from the date the Plan is
adopted  by the  Board  of  Directors  of the  Company.  Each  Option  Agreement
governing an Option granted hereunder shall be subject to at least the following
terms and  conditions,  and shall contain such other terms and  conditions,  not
inconsistent therewith, that the Committee shall deem appropriate:

     (a)  Number of  Shares.  Each  Option  shall  state the number of shares of
Common Stock which ----------------
         it represents.

     (b) Type of Option. Each Option shall state whether it is intended to be an
Incentive -------------- Option or a Nonqualified Option.

                  (c)      Option Period.
                           -------------

                           (1)  General.  Each Option  shall state the date upon
                  which it is granted. Each Option shall be exercisable in whole
                  or in part during  such period as is provided  under the terms
                  of the Option  subject to any vesting  period set forth in the
                  Option,  but in no event shall an Option be exercisable either
                  in whole or in part  after the  expiration  of ten (10)  years
                  from the date of grant;  provided,  however,  if an  Incentive
                  Option is granted to a 10% Shareholder,  such Incentive Option
                  shall not be  exercisable  more  than five (5) years  from the
                  date of grant thereof.

                           (2)  Termination of  Employment.  Except as otherwise
                  provided in case of Disability (as hereinafter defined), death
                  or Change of Control (as hereinafter defined), no Option shall
                  be  exercisable  after an  optionee  who is an employee of the
                  Company or a  Subsidiary  ceases to be employed by the Company
                  or a Subsidiary as an employee;  provided,  however,  that the
                  Committee shall have the right in its sole discretion, but not
                  the  obligation,  to extend the  exercise  period for not more
                  than three (3) months  following  the date of  termination  of
                  such optionee's employment; provided further, however, that no
                  Option shall be  exercisable  after the expiration of ten (10)
                  years from the date it is granted  and  provided  further,  no
                  Incentive  Option  granted  to  a  10%  Shareholder  shall  be
                  exercisable  after the  expiration  of five (5) years from the
                  date it is granted.

                           (3)  Cessation of Service as Director or Advisor.  In
                  the event an  optionee  who was a  director  or advisor of the
                  Company or a Subsidiary  ceases to be a director or advisor of
                  the  Company  or a  Subsidiary  for  any  reason,  other  than
                  Disability or death, prior to the full exercise of the Option,
                  such optionee may exercise his Option at any time within three
                  years after such optionee's status as a director or advisor of
                  the Company or a Subsidiary  is so terminated to the extent he
                  was  entitled  to  exercise  such  Option  at  the  date  such
                  optionee's status as a director or advisor of the Company or a
                  Subsidiary terminated; provided, however, that no Option shall
                  be exercisable after the expiration of ten (10) years from the
                  date it is granted.

                           (4)  Disability.   If  an  optionee's  employment  is
                  terminated by reason of the permanent and total  Disability of
                  such  optionee or if an optionee  who is a director or advisor
                  of the Company or a  Subsidiary  ceases to serve as a director
                  or advisor by reason of the permanent and total  Disability of
                  such optionee,  the Committee shall have the right in its sole
                  discretion,  but not the  obligation,  to extend the  exercise
                  period for not more than five (5) years  following the date of
                  termination  of the  optionee's  employment  or the date  such
                  optionee  ceases to be a director or advisor of the Company or
                  a  Subsidiary,  as the case may be,  subject to the  condition
                  that no Option shall be  exercisable  after the  expiration of
                  ten (10) years from the date it is granted  and subject to the
                  further  condition  that no Incentive  Option granted to a 10%
                  Shareholder  shall be exercisable after the expiration of five
                  (5) years from the date it is  granted.  For  purposes of this
                  Plan,  the term  "Disability"  shall mean the inability of the
                  optionee to fulfill such optionee's obligations to the Company
                  or a Subsidiary by reason of any physical or mental impairment
                  which can be  expected  to result in death or which has lasted
                  or can be expected to last for a continuous period of not less
                  than  twelve  (12)  months  as   determined   by  a  physician
                  acceptable to the Committee in its sole discretion.

                           (5) Death. If an optionee dies while in the employ of
                  the Company or a Subsidiary, or while serving as a director or
                  advisor  of the  Company or a  Subsidiary,  and shall not have
                  fully  exercised  Options  granted  pursuant to the Plan, such
                  Options  may be  exercised  in  whole  or in part at any  time
                  within  five  years year after the  optionee's  death,  by the
                  executors or administrators of the optionee's estate or by any
                  person or persons who shall have acquired the Options directly
                  from the optionee by bequest or  inheritance,  but only to the
                  extent that the optionee was entitled to exercise  such Option
                  at the date of such optionee's death, subject to the condition
                  that no Option shall be  exercisable  after the  expiration of
                  ten (10) years from the date it is granted  and subject to the
                  further  condition  that no Incentive  Option granted to a 10%
                  Shareholder  shall be exercisable after the expiration of five
                  (5) years from the date it is granted.

                           (6) Acceleration and Exercise Upon Change of Control.
                  Notwithstanding the preceding provisions of this Section 8(c),
                  if any Option  granted  under the Plan provides for either (a)
                  an incremental  vesting period whereby such Option may only be
                  exercised in installments as such  incremental  vesting period
                  is  satisfied  or (b) a delayed  vesting  period  whereby such
                  Option may only be  exercised  after the lapse of a  specified
                  period of time,  such as after the expiration of one (1) year,
                  such vesting period shall be  accelerated  upon the occurrence
                  of a  Change  of  Control  (as  hereinafter  defined)  of  the
                  Company,  or a threatened  Change of Control of the Company as
                  determined  by  the  Committee,  so  that  such  Option  shall
                  thereupon  become  exercisable  immediately  in  part  or  its
                  entirety by the holder  thereof,  as such holder  shall elect.
                  For the purposes of this Plan, a "Change of Control"  shall be
                  deemed to have occurred if:

                                    (i) Any  "person",  including  a "group"  as
                           determined in accordance with Section 13(d)(3) of the
                           Securities  Exchange Act of 1934 ("Exchange Act") and
                           the Rules and Regulations promulgated thereunder,  is
                           or  becomes,  through  one  or a  series  of  related
                           transactions  or through one or more  intermediaries,
                           the  beneficial  owner,  directly or  indirectly,  of
                           securities of the Company representing 25% or more of
                           the  combined  voting  power  of the  Company's  then
                           outstanding  securities,  other  than a person who is
                           such a beneficial  owner on the effective date of the
                           Plan and any affiliate of such person;

                                    (ii) As a result of, or in connection  with,
                           any tender offer or exchange  offer,  merger or other
                           business  combination,  sale of assets  or  contested
                           election,   or  any   combination  of  the  foregoing
                           transactions  ("Transaction"),  the  persons who were
                           Directors of the Company before the Transaction shall
                           cease  to  constitute  a  majority  of the  Board  of
                           Directors  of the  Company  or any  successor  to the
                           Company;

                               (iii)  Following the effective  date of the Plan,
                           the Company is merged or  consolidated  with  another
                           corporation  and  as  a  result  of  such  merger  or
                           consolidation less than 40% of the outstanding voting
                           securities of the surviving or resulting  corporation
                           shall  then be owned in the  aggregate  by the former
                           stockholders of the Company, other than (x) any party
                           to  such   merger  or   consolidation,   or  (y)  any
                           affiliates of any such party;

                                    (iv) A  tender  offer or  exchange  offer is
                           made and  consummated for the ownership of securities
                           of  the  Company  representing  25%  or  more  of the
                           combined   voting   power  of  the   Company's   then
                           outstanding voting securities; or

                                    (v) The Company  transfers  more than 50% of
                           its  assets,  or the  last of a series  of  transfers
                           result in the transfer of more than 50% of the assets
                           of the Company,  to another corporation that is not a
                           wholly-owned corporation of the Company. For purposes
                           of this subsection  8(c)(6)(v),  the determination of
                           what  constitutes  more than 50% of the assets of the
                           Company shall be  determined  based on the sum of the
                           values  attributed to (i) the Company's real property
                           as determined by an  independent  appraisal  thereof,
                           and (ii) the net book  value of all  other  assets of
                           the  Company,  each  taken  as of  the  date  of  the
                           Transaction involved.

                           In  addition,  upon a Change of Control,  any Options
                  previously  granted  under the Plan to the extent not  already
                  exercised  may  be  exercised  in  whole  or  in  part  either
                  immediately  or at any time  during  the term of the Option as
                  such holder shall elect.

                  (d)      Option Prices.
                           -------------

                           (1)  Nonqualified  Options.  The  purchase  price  or
                  prices  of the  shares  of the  Common  Stock  which  shall be
                  offered  to  any  person  under  the  Plan  and  covered  by a
                  Nonqualified  Option  shall  be the  price  determined  by the
                  Committee at the time of granting of the Nonqualified  Option,
                  which  price may be less  than,  equal to or  higher  than one
                  hundred  percent (100%) of the fair market value of the Common
                  Stock at the time of granting the Nonqualified Option.

                           (2) Incentive  Options.  The purchase price or prices
                  of the shares of the Common  Stock  which  shall be offered to
                  any person under the Plan and covered by an  Incentive  Option
                  shall be one hundred  percent  (100%) of the fair market value
                  of the  Common  Stock at the time of  granting  the  Incentive
                  Option or such higher  purchase  price as may be determined by
                  the  Committee at the time of granting the  Incentive  Option;
                  provided,  however, if an Incentive Option is granted to a 10%
                  Shareholder,  the  purchase  price of the shares of the Common
                  Stock of the Company covered by such Incentive  Option may not
                  be less than one hundred ten percent (110%) of the fair market
                  value  of  such  shares  on the day the  Incentive  Option  is
                  granted.

                           (3)  Determination of Fair Market Value.  During such
                  time as the Common  Stock of the Company is not listed upon an
                  established  stock  exchange,  the fair market value per share
                  shall be deemed to be the  closing  sales  price of the Common
                  Stock  on  the  National  Association  of  Securities  Dealers
                  Automated Quotation System ("NASDAQ") on the day the Option is
                  granted,  as  reported  by NASDAQ,  if the Common  Stock is so
                  quoted,  and if not so quoted,  the mean between  dealer "bid"
                  and  "ask,"  prices  of  the  Common  Stock  in the  New  York
                  over-the-counter  market on the day the Option is granted,  as
                  reported by the National  Association  of Securities  Dealers,
                  Inc. If the Common Stock is listed upon an  established  stock
                  exchange or exchanges,  such fair market value shall be deemed
                  to be the highest  closing  price of the Common  Stock on such
                  stock  exchange or  exchanges on the day the Option is granted
                  or, if no sale of the Common  Stock of the Company  shall have
                  been made on  established  stock  exchange on such day, on the
                  next preceding day on which there was a sale of such stock. If
                  there is no market price for the Common Stock,  then the Board
                  of Directors and the Committee  may, after taking all relevant
                  facts into  consideration,  determine the fair market value of
                  the Common Stock.

                           (e) Exercise of Options.  To the extent that a holder
                  of an Option has a current  right to exercise,  the Option may
                  be  exercised  from  time  to time by  written  notice  to the
                  Company at its principal place of business.  Such notice shall
                  state the election to exercise the Option, the number of whole
                  shares in  respect  of which it is being  exercised,  shall be
                  signed by the person or persons so exercising the Option,  and
                  shall  contain  any  investment   representation  required  by
                  Section  8(i)  hereof.  Such notice  shall be  accompanied  by
                  payment of the full  purchase  price of such shares and by the
                  Option Agreement  evidencing the Option.  In addition,  if the
                  Option  shall be  exercised,  pursuant  to Section  8(c)(4) or
                  Section  8(c)(5)  hereof,  by any person or persons other than
                  the  optionee,  such  notice  shall  also  be  accompanied  by
                  appropriate  proof of the right of such  person or  persons to
                  exercise the Option.  The Company  shall deliver a certificate
                  or   certificates   representing   such   shares  as  soon  as
                  practicable  after the  aforesaid  notice and  payment of such
                  shares shall be received.  The certificate or certificates for
                  the shares as to which the Option shall have been so exercised
                  shall be  registered  in the name of the  person or persons so
                  exercising  the Option.  In the event the Option  shall not be
                  exercised in full,  the Secretary of the Company shall endorse
                  or cause to be  endorsed  on the  Option  the number of shares
                  which has been  exercised  thereunder and the number of shares
                  that  remain  exercisable  under the Option  and  return  such
                  Option Agreement to the holder thereof.

                           (f) Non-transferability of Options. An Option granted
                  pursuant to the Plan shall be exercisable only by the optionee
                  or the  optionee's  court  appointed  guardian as set forth in
                  Section  8(c)(4)  hereof  during the  optionee's  lifetime and
                  shall  not be  assignable  or  transferable  by  the  optionee
                  otherwise   than  by  Will  or  the   laws  of   descent   and
                  distribution. An Option granted pursuant to the Plan shall not
                  be assigned,  pledged or  hypothecated  in any way (whether by
                  operation of law or  otherwise  other than by Will or the laws
                  of  descent  and  distribution)  and shall not be  subject  to
                  execution,  attachment,  or  similar  process.  Any  attempted
                  transfer,   assignment,   pledge,   hypothecation,   or  other
                  disposition of any Option or of any rights granted  thereunder
                  contrary to the foregoing  provisions of this Section 8(f), or
                  the levy of any  attachment or similar  process upon an Option
                  or such rights, shall be null and void.

                           (g)  Limitations  on 10%  Shareholders.  No Incentive
                  Option  may be granted  under the Plan to any 10%  Shareholder
                  unless (i) such Incentive Option is granted at an option price
                  not less  than one  hundred  ten  percent  (110%)  of the fair
                  market value of the shares on the day the Incentive  Option is
                  granted and (ii) such  Incentive  Option expires on a date not
                  later than five (5) years from the date the  Incentive  Option
                  is granted.

                           (h)  Limits  on  Vesting  of  Incentive  Options.  An
                  individual  may be  granted  one or  more  Incentive  Options,
                  provided that the aggregate  fair market value (as  determined
                  at the time such  Incentive  Option is  granted)  of the stock
                  with respect to which  Incentive  Options are  exercisable for
                  the first time by such  individual  during any  calendar  year
                  shall  not  exceed  $100,000.   To  the  extent  the  $100,000
                  limitation in the preceding sentence is exceeded,  such option
                  shall  be  treated  as an  option  which  is not an  Incentive
                  Option.

                           (i) Compliance with Securities Laws. The Plan and the
                  grant and exercise of the rights to purchase shares hereunder,
                  and the Company's  obligations to sell and deliver shares upon
                  the exercise of rights to purchase shares, shall be subject to
                  all applicable  federal and state laws, rules and regulations,
                  and to such approvals by any regulatory or governmental agency
                  as  may,  in the  opinion  of  counsel  for  the  Company,  be
                  required,  and shall also be subject to all  applicable  rules
                  and  regulations  of any stock  exchange upon which the Common
                  Stock  of the  Company  may  then be  listed.  At the  time of
                  exercise of any Option,  the Company may require the  optionee
                  to execute any  documents or take any action which may be then
                  necessary  to  comply  with the  Securities  Act of  1933,  as
                  amended  ("Securities  Act"),  and the rules  and  regulations
                  promulgated  thereunder,  or any other  applicable  federal or
                  state laws regulating the sale and issuance of securities, and
                  the Company may, if it deems necessary,  include provisions in
                  the stock option  agreements  to assure such  compliance.  The
                  Company may, from time to time,  change its requirements  with
                  respect  to  enforcing   compliance  with  federal  and  state
                  securities laws,  including the request for and enforcement of
                  letters  of  investment   intent,   such  requirements  to  be
                  determined  by the  Company in its  judgment as  necessary  to
                  assure  compliance  with said laws.  Such  changes may be made
                  with  respect to any  particular  Option or stock  issued upon
                  exercise  thereof.  Without  limiting  the  generality  of the
                  foregoing,  if the Common Stock  issuable  upon exercise of an
                  Option  granted  under  the Plan is not  registered  under the
                  Securities  Act,  the  Company  at the time of  exercise  will
                  require  that the  registered  owner  execute  and  deliver an
                  investment  representation  agreement  to the  Company in form
                  acceptable  to the  Company and its  counsel,  and the Company
                  will place a legend on the certificate  evidencing such Common
                  Stock restricting the transfer thereof,  which legend shall be
                  substantially as follows:

                           THE  SHARES  OF  COMMON  STOCK  REPRESENTED  BY  THIS
                           CERTIFICATE   HAVE  NOT  BEEN  REGISTERED  UNDER  THE
                           SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE
                           STATE  SECURITIES  LAW BUT HAVE BEEN ACQUIRED FOR THE
                           PRIVATE  INVESTMENT  OF THE HOLDER HEREOF AND MAY NOT
                           BE OFFERED,  SOLD OR  TRANSFERRED  UNTIL EITHER (i) A
                           REGISTRATION  STATEMENT  UNDER SUCH SECURITIES ACT OR
                           SUCH  APPLICABLE  STATE  SECURITIES  LAWS  SHALL HAVE
                           BECOME  EFFECTIVE  WITH REGARD  THERETO,  OR (ii) THE
                           COMPANY  SHALL  HAVE  RECEIVED  AN OPINION OF COUNSEL
                           ACCEPTABLE  TO  THE  COMPANY  AND  ITS  COUNSEL  THAT
                           REGISTRATION   UNDER  SUCH  SECURITIES  ACT  OR  SUCH
                           APPLICABLE  STATE  SECURITIES LAWS IS NOT REQUIRED IN
                           CONNECTION   WITH  SUCH  PROPOSED   OFFER,   SALE  OR
                           TRANSFER.

                           (j)  Additional  Provisions.  The  Option  Agreements
                  authorized  under the Plan shall contain such other provisions
                  as the  Committee  shall deem  advisable,  including,  without
                  limitation,  restrictions upon the exercise of the Option. Any
                  such Option  Agreement  with  respect to an  Incentive  Option
                  shall  contain  such  limitations  and  restrictions  upon the
                  exercise  of the  Incentive  Option as shall be  necessary  in
                  order that the option will be an  "Incentive  Stock Option" as
                  defined in Section 422 of the Code.

         9. Medium and Time of Payment.  The purchase price of the shares of the
Common  Stock as to which the Option  shall be  exercised  shall be paid in full
either (i) in cash at the time of exercise of the Option,  (ii) by  tendering to
the Company shares of the Company's  Common Stock having a fair market value (as
of the date of  receipt of such  shares by the  Company)  equal to the  purchase
price for the number of shares of Common  Stock  purchased,  or (iii)  partly in
cash and partly in shares of the  Company's  Common  Stock valued at fair market
value as of the date of receipt of such shares by the Company.  Cash payment for
the shares of the Common Stock purchased upon exercise of the Option shall be in
the form of either a cashier's check,  certified check or money order.  Personal
checks may be submitted, but will not be considered as payment for the shares of
the Common Stock  purchased  and no  certificate  for such shares will be issued
until the personal check clears in normal banking channels.  If a personal check
is not paid upon presentment by the Company,  then the attempted exercise of the
Option will be null and void.  In the event the optionee  tenders  shares of the
Company's Common Stock in full or partial payment for the shares being purchased
pursuant  to the  Option,  the  shares  of  Common  Stock so  tendered  shall be
accompanied by fully executed stock powers endorsed in favor of the Company with
the  signature  on such stock power  being  guaranteed.  If an optionee  tenders
shares,  such  optionee  assumes  sole  and  full  responsibility  for  the  tax
consequences, if any, to such optionee arising therefrom, including the possible
application of Code Section 424(c), or its successor Code section, which negates
any  nonrecognition  of income rule with respect to such transferred  shares, if
such  transferred  shares have not been held for the minimum  statutory  holding
period to receive preferential tax treatment.

         10.      Alternate Stock Appreciation Rights.
                  -----------------------------------

                  (a) Award of  Alternate  Stock  Rights.  Concurrently  with or
         subsequent to the award of any Option to purchase one or more shares of
         Common Stock, the Committee may in its sole discretion,  subject to the
         provisions  of the Plan and such  other  terms  and  conditions  as the
         Committee  may  prescribe,  award to the optionee  with respect to each
         share of Common  Stock  covered  by an  Option  ("Related  Option"),  a
         related  alternate  stock  appreciation  right ("SAR"),  permitting the
         optionee to be paid the  appreciation  on the Related Option in lieu of
         exercising  the  Related  Option.  A SAR  granted  with  respect  to an
         Incentive  Option must be granted  together with the Related Option.  A
         SAR  granted  with  respect  to a  Nonqualified  Option  may be granted
         together with or subsequent to the grant of such Related Option.

                  (b)  Alternate  Stock Rights  Agreement.  Each SAR shall be on
         such  terms  and  conditions  not  inconsistent  with  this Plan as the
         Committee may  determine and shall be evidenced by a written  agreement
         executed by the Company and the optionee receiving the Related Option.

                  (c)  Exercise.  An SAR  may be  exercised  only  if and to the
         extent that its Related  Option is eligible to be exercised on the date
         of  exercise  of the SAR.  To the  extent  that a holder of a SAR has a
         current right to exercise,  the SAR may be exercised  from time to time
         by written  notice to the Company at its  principal  place of business.
         Such notice shall state the election to exercise the SAR, the number of
         shares in  respect of which it is being  exercised,  shall be signed by
         the  person  so  exercising  the SAR and  shall be  accompanied  by the
         agreement  evidencing the SAR and the Related Option.  In the event the
         SAR shall not be exercised in full,  the Secretary of the Company shall
         endorse or cause to be endorsed  on the SAR and the Related  Option the
         number of shares which have been exercised thereunder and the number of
         shares that remain exercisable under the SAR and the Related Option and
         return such SAR and Related Option to the holder thereof.

                  (d)  Amount of  Payment.  The  amount of  payment  to which an
         optionee shall be entitled upon the exercise of each SAR shall be equal
         to 100% of the  amount,  if any,  by which the fair  market  value of a
         share of Common  Stock on the  exercise  date  exceeds  the fair market
         value of a share of Common Stock on the date the Option related to said
         SAR was  granted  or became  effective,  as the case may be;  provided,
         however,  the Company may, in its sole  discretion,  withhold from such
         cash payment any amount  necessary to satisfy the Company's  obligation
         for withholding  taxes with respect to such payment.  For this purpose,
         the fair market value of a share of Common Stock shall be determined as
         set forth in Section 8(d) hereof.

                  (e) Form of Payment.  The amount  payable by the Company to an
         optionee  upon exercise of a SAR may be paid in shares of Common Stock,
         cash or a combination  thereof. The number of shares of Common Stock to
         be paid to an optionee  upon such  optionee's  exercise of SAR shall be
         determined  by dividing  the amount of payment  determined  pursuant to
         Section  10(d)  hereof  by the fair  market  value of a share of Common
         Stock on the exercise date of such SAR. For purposes of this Plan,  the
         exercise date of a SAR shall be the date the Company  receives  written
         notification from the optionee of the exercise of the SAR in accordance
         with the  provisions of Section 10(c)  hereof.  As soon as  practicable
         after  exercise,  the Company shall either  deliver to the optionee the
         amount of cash due such optionee or a certificate or  certificates  for
         such shares of Common  Stock.  All such shares shall be issued with the
         rights and restrictions specified herein.

                  (f) Termination of SAR.  Except as otherwise  provided in case
         of Disability (as defined in Section  8(c)(4)  hereof) or death, no SAR
         shall  be  exercisable  after an  optionee  ceases  to be an  employee,
         director or advisor of the Company or  Subsidiary;  provided,  however,
         that the Committee shall have the right in its sole discretion, but not
         the  obligation,  to extend the exercise period for not more than three
         (3) months following the date such optionee ceases to be an employee or
         five (5) years if the  optionee  ceases to be a director  or advisor of
         the Company or a Subsidiary;  provided further,  that the Committee may
         not extend the period during which an optionee may exercise a SAR for a
         period  greater  than the period  during which an optionee may exercise
         the Related Option. If an optionee's position as an employee,  director
         or advisor of the Company is terminated  due to the Disability or death
         of such  optionee,  the  Committee  shall have the  right,  in its sole
         discretion,  but not the  obligation,  to extend  the  exercise  period
         applicable  to the SAR for a period  not to exceed  the period in which
         the optionee  may exercise the Option  related to said SAR as set forth
         in Sections 8(c)(4) and 8(c)(5) hereof, respectively.

                  (g) Effect of Exercise of SAR.  The  exercise of any SAR shall
         cancel and  terminate  the right to purchase an equal  number of shares
         covered by the Related Option.

                  (h) Effect of Exercise of Related Option. Upon the exercise or
         termination of any Related Option, the SAR with respect to such Related
         Option shall  terminate to the extent of the number of shares of Common
         Stock as to which the Related Option was exercised or terminated.

                  (i) Non-transferability of SAR. A SAR granted pursuant to this
         Plan shall be exercisable  only by the optionee or the optionee's court
         appointed  guardian as set forth in Section  8(c)(4)  hereof during the
         optionee's  lifetime  and,  subject to the  provisions of Section 10(f)
         hereof,  shall not be assignable or transferable by the optionee. A SAR
         granted  pursuant  to the  Plan  shall  not  be  assigned,  pledged  or
         hypothecated  in any way (whether by operation of law or otherwise) and
         shall not be subject to execution,  attachment, or similar process. Any
         attempted  transfer,  assignment,   pledge,  hypothecation,   or  other
         disposition of any SAR or of any rights granted thereunder  contrary to
         the  foregoing  provisions  of this Section  10(i),  or the levy of any
         attachment or similar process upon a SAR or such rights,  shall be null
         and void.

         11.  Rights as a  Shareholder.  The  holder of an Option or a SAR shall
have no rights as a shareholder with respect to the shares covered by the Option
or SAR until the due exercise of the Option, Related Option, or SAR and the date
of issuance of one or more stock certificates to such holder for such shares. No
adjustment shall be made for dividends  (ordinary or  extraordinary,  whether in
cash,  securities or other property) or  distributions or other rights for which
the record date is prior to the date such stock certificate is issued, except as
provided in Section 14 hereof.

         12.  Optionee's  Agreement to Serve. If requested by the Company,  each
employee  receiving an Option shall, as one of the terms of the Option Agreement
agree that such  employee will remain in the employ of the Company or Subsidiary
for a period of at least one (1) year from the date on which the Option shall be
granted to such employee;  and that such employee will,  during such employment,
devote such  employee's  entire  time,  energy,  and skill to the service of the
Company or a Subsidiary as may be required by the management thereof, subject to
vacations,  sick leaves, and military absences. Such employment,  subject to the
provisions of any written  contract between the Company or a Subsidiary and such
employee, shall be at the pleasure of the Board of Directors of the Company or a
Subsidiary,  and at such  compensation  as the  Company  or a  Subsidiary  shall
reasonably  determine.  Any termination of such employee's employment during the
period which the employee has agreed  pursuant to the  foregoing  provisions  of
this Section 13 to remain in employment that is either for cause or voluntary on
the part of the  employee  shall be deemed a violation  by the  employee of such
employee's agreement. In the event of such violation, any Option or Options held
by such  employee,  to the extent not  theretofore  exercised,  shall  forthwith
terminate,  unless otherwise  determined by the Committee.  Notwithstanding  the
preceding,  neither the action of the Company in  establishing  the Plan nor any
action taken by the Company,  a Subsidiary or the Committee under the provisions
hereof  shall be  construed as granting the optionee the right to be retained in
the employ of the Company or a Subsidiary,  or to limit or restrict the right of
the Company or a Subsidiary,  as applicable,  to terminate the employment of any
employee of the Company or a Subsidiary, with or without cause.

         13.      Adjustments on Changes in Capitalization.
                  ----------------------------------------

                  (a) Changes in Capitalization.  Subject to any required action
         by the  Shareholders  of the  Company,  the  number of shares of Common
         Stock covered by the Plan, the number of shares of Common Stock covered
         by each  outstanding  Option,  and the exercise price per share thereof
         specified in each such Option,  shall be  proportionately  adjusted for
         any increase or decrease in the number of issued shares of Common Stock
         of the Company  resulting from a subdivision or consolidation of shares
         or the payment of a stock  dividend  (but only on the Common  Stock) or
         any other  increase or  decrease in the number of such shares  effected
         without  receipt of  consideration  by the  Company  after the date the
         Option is granted,  so that upon  exercise of the Option,  the optionee
         shall  receive  the same  number  of shares  the  optionee  would  have
         received had the optionee been the holder of all shares subject to such
         optionee's  outstanding Option immediately before the effective date of
         such change in the number of issued  shares of the Common  Stock of the
         Company.

                  (b) Reorganization, Dissolution or Liquidation. Subject to any
         required  action by the  Shareholders  of the  Company,  if the Company
         shall be the surviving corporation in any merger or consolidation, each
         outstanding  Option  shall  pertain to and apply to the  securities  to
         which a holder of the number of shares of Common  Stock  subject to the
         Option would have been  entitled.  A dissolution  or liquidation of the
         Company or a merger or  consolidation  in which the  Company is not the
         surviving corporation, shall cause each outstanding Option to terminate
         as of a date to be fixed by the Committee (which date shall be as of or
         prior to the effective  date of any such  dissolution or liquidation or
         merger or consolidation); provided, that not less than thirty (30) days
         written notice of the date so fixed as such  termination  date shall be
         given to each optionee,  and each optionee shall,  in such event,  have
         the right,  during the said period of thirty (30) days  preceding  such
         termination  date,  to exercise such  optionee's  Option in whole or in
         part in the manner herein set forth.

                  (c)  Change  in Par  Value.  In the  event of a change  in the
         Common Stock of the Company as presently  constituted,  which change is
         limited to a change of all of its authorized shares with par value into
         the same  number of shares  with a  different  par value or without par
         value,  the shares  resulting from any change shall be deemed to be the
         Common Stock within the meaning of the Plan.

                  (d) Notice of Adjustments.  To the extent that the adjustments
         set forth in the  foregoing  paragraphs  of this  Section  14 relate to
         stock or securities of the Company, such adjustments,  if any, shall be
         made by the  Committee,  whose  determination  in that respect shall be
         final,  binding and  conclusive,  provided that each  Incentive  Option
         granted  pursuant  to this Plan shall not be  adjusted in a manner that
         causes  the  Incentive  Option to fail to  continue  to  qualify  as an
         "Incentive Stock Option" within the meaning of Section 422 of the Code.
         The Company  shall give timely notice of any  adjustments  made to each
         holder  of an Option  under  this  Plan and such  adjustments  shall be
         effective and binding on the optionee.

                  (e)  Effect  Upon  Holder of  Option.  Except as  hereinbefore
         expressly  provided in this  Section 14, the holder of an Option  shall
         have no rights by reason of any subdivision or  consolidation of shares
         of stock of any class or the payment of any stock dividend or any other
         increase  or  decrease in the number of shares of stock of any class by
         reason of any  dissolution,  liquidation,  merger,  reorganization,  or
         consolidation,  or spin-off of assets or stock of another  corporation,
         and 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  or price of shares of  Common  Stock  subject  to the
         Option. Without limiting the generality of the foregoing, no adjustment
         shall be made with respect to the number or price of shares  subject to
         any  Option  granted  hereunder  upon  the  occurrence  of  any  of the
         following events:

                           (1) The grant or exercise of any other  options which
                  may  be  granted  or   exercised   under  any   qualified   or
                  nonqualified  stock  option  plan or under any other  employee
                  benefit  plan of the Company  whether or not such options were
                  outstanding  on the date of grant of the Option or  thereafter
                  granted;

                           (2) The sale of any  shares  of  Common  Stock in the
                  Company's   initial  or  any   subsequent   public   offering,
                  including,  without limitation,  shares sold upon the exercise
                  of any  overallotment  option  granted to the  underwriter  in
                  connection with such offering;

                           (3) The issuance, sale or exercise of any warrants to
                  purchase  shares of Common Stock  whether or not such warrants
                  were  outstanding  on the  date  of  grant  of the  Option  or
                  thereafter issued;

                           (4) The issuance or sale of rights,  promissory notes
                  or other securities convertible into shares of Common Stock in
                  accordance  with the  terms of such  securities  ("Convertible
                  Securities")  whether or not such Convertible  Securities were
                  outstanding  on the  date  of  grant  of the  Option  or  were
                  thereafter issued or sold;

                           (5)  The  issuance  or  sale  of  Common  Stock  upon
                  conversion or exchange of any Convertible Securities,  whether
                  or not  any  adjustment  in the  purchase  price  was  made or
                  required  to be  made  upon  the  issuance  or  sale  of  such
                  Convertible  Securities  and  whether or not such  Convertible
                  Securities were outstanding on the date of grant of the Option
                  or were thereafter issued or sold; or

                           (6) Upon any  amendment  to or change in the terms of
                  any  rights or  warrants  to  subscribe  for or  purchase,  or
                  options  for the  purchase  of,  Common  Stock or  Convertible
                  Securities  or in the  terms  of any  Convertible  Securities,
                  including, but not limited to, any extension of any expiration
                  date of any such right,  warrant or option,  any change in any
                  exercise or  purchase  price  provided  for in any such right,
                  warrant or option, any extension of any date through which any
                  Convertible  Securities are  convertible  into or exchangeable
                  for  Common  Stock or any  change  in the  rate at  which  any
                  Convertible  Securities are  convertible  into or exchangeable
                  for Common Stock.

                  (f)  Right of  Company  to Make  Adjustments.  The grant of an
         Option  pursuant  to the Plan  shall not affect in any way the right or
         power   of  the   Company   to  make   adjustments,   reclassification,
         reorganizations,  or changes of its capital or business structure or to
         merge or to consolidate or to dissolve,  liquidate or sell, or transfer
         all or any part of its business or assets.

         14. Investment Purpose.  Each Option under the Plan shall be granted on
the condition that the purchase of the shares of stock  thereunder  shall be for
investment  purposes,  and not with a view to resale or distribution;  provided,
however,  that in the  event the  shares of stock  subject  to such  Option  are
registered  under the  Securities Act or in the event a resale of such shares of
stock without such registration  would otherwise be permissible,  such condition
shall be inoperative if in the opinion of counsel for the Company such condition
is  not  required  under  the  Securities  Act  or  any  other  applicable  law,
regulation, or rule of any governmental agency.

     15. No Obligation  to Exercise  Option or SAR. The granting of an Option or
SAR shall impose no -------------------------------------------  obligation upon
the optionee to exercise such Option or SAR.

         16.  Modification,  Extension,  and Renewal of Options.  Subject to the
terms and conditions  and within the  limitations of the Plan, the Committee and
the Board of Directors may modify,  extend or renew outstanding  Options granted
under the Plan,  or accept the surrender of  outstanding  Options (to the extent
not  theretofore  exercised).  Neither the  Committee nor the Board of Directors
shall, however, modify any outstanding Options so as to specify a lower price or
accept the  surrender of  outstanding  Options and authorize the granting of new
Options in substitution  therefor specifying a lower price.  Notwithstanding the
foregoing,  however, no modification of an Option shall,  without the consent of
the  optionee,  alter or impair  any  rights  or  obligations  under any  Option
theretofore granted under the Plan.

     17. Effective Date of the Plan. The Plan shall become effective on the date
of  execution  hereof,  ---------------------------  which  date is the date the
Board of Directors and  Shareholders  approved and adopted the Plan  ("Effective
Date").
         18.  Termination  of the Plan.  This  Plan  shall  terminate  as of the
expiration  of ten (10) years from the  Effective  Date.  Options may be granted
under this Plan at any time and from time to time prior to its termination.  Any
Option outstanding under the Plan at the time of its termination shall remain in
effect until the Option shall have been exercised or shall have expired.

         19.  Amendment of the Plan.  The Plan may be  terminated at any time by
the Board of Directors of the  Company.  The Board of Directors  may at any time
and from time to time without  obtaining the approval of the Shareholders of the
Company or a Subsidiary, modify or amend the Plan (including such form of Option
Agreement as hereinabove  mentioned) in such respects as it shall deem advisable
in order that the Incentive  Options  granted under the Plan shall be "Incentive
Stock Options" as defined in Section 422 of the Code or to conform to any change
in the law, or in any other  respect  which  shall not  change:  (a) the maximum
number of shares  for which  Options  may be granted  under the Plan,  except as
provided in Section 14 hereof; or (b) the option prices other than to change the
manner of determining  the fair market value of the Common Stock for the purpose
of Section 8(d) hereof to conform  with any then  applicable  provisions  of the
Code or regulations  thereunder;  or (c) the periods during which Options may be
granted or exercised;  or (d) the provisions  relating to the  determination  of
persons to whom Options  shall be granted and the number of shares to be covered
by such Options;  or (e) the provisions  relating to adjustments to be made upon
changes in  capitalization.  The termination or any modification or amendment of
the Plan shall not,  without the consent of the person to whom any Option  shall
theretofore  have been  granted,  affect that  person's  rights  under an Option
theretofore  granted to such person. With the consent of the person to whom such
Option was  granted,  an  outstanding  Option may be  modified or amended by the
Committee  in such manner as it may deem  appropriate  and  consistent  with the
requirements of this Plan applicable to the grant of a new Option on the date of
modification or amendment.

         20.  Withholding.  Whenever an optionee  shall  recognize  compensation
income as a result of the exercise of any Option or SAR granted  under the Plan,
the optionee shall remit in cash to the Company or Subsidiary the minimum amount
of federal income and employment tax withholding which the Company or Subsidiary
is required to remit to the Internal Revenue Service in accordance with the then
current  provisions of the Code.  The full amount of such  withholding  shall be
paid by the optionee  simultaneously  with the award or exercise of an Option or
SAR, as applicable.

         21.  Indemnification of Committee.  In addition to such other rights of
indemnification  as they may have as Directors  or as members of the  Committee,
the members of the Committee  shall be  indemnified  by the Company  against the
reasonable expenses, including attorneys' fees actually and necessarily incurred
in  connection  with the  defense  of any  action,  suit or  proceedings,  or in
connection with any appeal therein,  to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection  with the
Plan or any Option granted  thereunder,  and against all amounts paid by them in
settlement  thereof  (provided such settlement is approved by independent  legal
counsel  selected by the Company) or paid by them in  satisfaction of a judgment
in any such  action,  suit or  proceeding,  except in  relation to matters as to
which it  shall  be  adjudged  in such  action,  suit or  proceeding  that  such
Committee  member is liable for  negligence or misconduct in the  performance of
his duties;  provided that within sixty (60) days after  institution of any such
action, suit or proceeding a Committee member shall in writing offer the Company
the opportunity, at its own expense, to pursue and defend the same.

     22.  Application  of Funds.  The proceeds  received by the Company from the
sale of Common Stock --------------------- pursuant to Options granted hereunder
will be used for general corporate purposes.
     23.  Governing Law. This Plan shall be governed and construed in accordance
with the laws of the -------------- state of incorporation of the Company.

         EXECUTED this 12th day of April, 2000..

                                                     AARICA HOLDINGS, INC.

                                      By:      /s/ Carol Kolozs______________

                                     Carol Kolozs, Chief Executive Officer

ATTEST:

/s/ James R.Schnorf______

James R. .Schnorf, Secretary

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