FORM OF 1996 STOCK OPTION PLAN

 EXHIBIT 10(J)
                       FRONTIER ADJUSTERS OF AMERICA, INC.
                         FORM OF 1996 STOCK OPTION PLAN

                                    ARTICLE I
                                     General

                 1.1 Purpose of Plan; Term

                                       (a) Adoption.  On May 21, 1996, the Board
of Directors  (the "Board") of Frontier  Adjusters of America,  Inc., an Arizona
corporation (the "Company"), adopted a stock option plan to be known as the 1996
Stock Option Plan (the "Plan").

                                       (b)   Defined   Terms.    All   initially
capitalized  terms used  hereby  shall have the  meaning  set forth in Article V
hereto.

                                       (c) General  Purpose.  The purpose of the
Grant Program is to further the interests of the Company and its shareholders by
encouraging  key persons  associated  with the Company (or Parent or  Subsidiary
Corporations)  to acquire  shares of the Company's  Stock,  thereby  acquiring a
proprietary  interest in its business and an increased  personal interest in its
continued success and progress.  Such purpose shall be accomplished by providing
for the  granting of options to acquire the  Company's  Stock  ("Options"),  the
direct granting of the Company's Stock ("Stock  Awards"),  the granting of stock
appreciation  rights  ("SARs"),  or the  granting  of other cash  awards  ("Cash
Awards") (Stock Awards,  SARs and Cash Awards shall be collectively  referred to
herein as "Awards").

                                       (d) Character of Options. Options granted
under  this  Plan  to  employees  of  the  Company  (or  Parent  or   Subsidiary
Corporations)  that are intended to qualify as an  "incentive  stock  option" as
defined in Code section 422 ("Incentive  Stock Option") will be specified in the
applicable  stock option  agreement.  All other Options  granted under this Plan
will be nonqualified options.

                                       (e)  Rule  16b-3  Plan.  If  the  Company
becomes subject to the reporting  requirements of the Securities Exchange Act of
1934, the Plan is thereafter  intended to comply with all applicable  conditions
of Rule 16b-3 (and all subsequent  revisions thereof) promulgated under the 1934
Act. In such  instance,  to the extent any  provision of the Plan or action by a
Plan Administrator  fails to so comply, it shall be deemed null and void, to the
extent  permitted  by law and deemed  advisable by such Plan  Administrator.  In
addition,  the Board may amend the Plan from time to time as it deems  necessary
in order to meet the  requirements  of any  amendments to Rule 16b-3 without the
consent of the shareholders of the Company.

                                       (f)  Duration  of  Plan.  The term of the
Plan is 10 years  commencing on the date of adoption of the original Plan by the
Board as specified in Section 1.1(a) hereof. No Option or Award shall be granted
under the Plan unless granted within 10 years of the adoption of the Plan by the
Board, but Options or Awards outstanding on that date shall not be terminated or
otherwise affected by virtue of the Plan's expiration.

                 1.2 Stock and Maximum Number of Shares Subject to Plan.

                                       (a)  Description  of  Stock  and  Maximum
Shares Allocated.  The shares of stock subject to the provisions of the Plan and
issuable  upon the grant of Stock Awards or upon the exercise of SARs or Options
granted  under the Plan are shares of the  Company's  common  stock,  $0.001 par
value per share (the "Stock"),  which may be either unissued or treasury shares.
The  Company  may not issue more than  300,000  shares of Stock  pursuant to the
Plan,  unless the Plan is  amended as  provided  in Section  1.3 or the  maximum
number of shares subject to the Plan is adjusted as provided in Section 3.1.

                                       (b) Calculation of Available Shares.  The
number of shares of Stock available under the Plan shall be reduced:  (i) by any
shares  of  Stock  issued  (including  any  shares  of  Stock  withheld  for tax
withholding  requirements)  upon exercise of an Option and (ii) by any shares of
Stock  issued  (including  any  shares  of Stock  withheld  for tax  withholding
requirements) upon the grant of a Stock Award or the exercise of an SAR.

                                       (c) Restoration of Unpurchased Shares. If
an Option or SAR expires or  terminates  for any reason prior to its exercise in
full and before the term of the Plan  expires,  the shares of Stock  subject to,
but not issued under, such Option or SAR shall,  without further action or by or
on behalf of the Company, again be available under the Plan.

                 1.3 Approval; Amendments.

                                       (a)  Approval by  Shareholders.  The Plan
shall be submitted to the  shareholders  of the Company for their  approval at a
regular or special meeting to be held within 12 months after the adoption of the
Plan by the Board.  Shareholder  approval shall be evidenced by the  affirmative
vote of the holders of a majority of the shares of the  Company's  Common  Stock
present  in  person  or by proxy  and  voting  at the  meeting.  The  date  such
shareholder  approval  has been  obtained  shall be  referred  to  herein as the
"Effective Date."

                                       (b)  Commencement of Programs.  The Grant
Program  is  effective  immediately,  but if the  Plan  is not  approved  by the
shareholders  within 12 months after its adoption by the Board, the Plan and all
Options and Awards made under the Grant Program will automatically terminate and
be  forfeited to the same extent and with the same effect as though the Plan had
never been adopted.

                                       (c)  Amendments  to Plan.  The Board may,
without action on the part of the Company's  shareholders,  make such amendments
to,  changes in and  additions  to the Plan as it may,  from time to time,  deem
necessary or appropriate and in the best interests of the Company; provided, the
Board may not,  without the  consent of the  applicable  Optionholder,  take any
action  which  disqualifies  any Option  previously  granted  under the Plan for
treatment as an Incentive Stock Option or which adversely affects or impairs the
rights of the Optionholder of any Option outstanding under the Plan, and further
provided  that,  except as provided  in Article  III hereof,  the Board may not,
without the approval of the Company's  shareholders,  (i) increase the aggregate
number of shares of Stock subject to the Plan, (ii) reduce the exercise price at
which  Options  may be granted or the  exercise  price at which any  outstanding
Option may be  exercised,  (iii)  extend the term of the Plan,  (iv)  change the
class of persons  eligible to receive  Options or Awards under the Plan,  or (v)
materially  increase  the  benefits  accruing  to  participants  under the Plan.
Notwithstanding the foregoing,  Options or Awards may be granted under this Plan
to purchase shares of Stock in excess of the number of shares then available for
issuance under the Plan if (A) an amendment to increase the maximum number of

shares  issuable  under the Plan is  adopted by the Board  prior to the  initial
grant of any such Option or Award and within one year  thereafter such amendment
is  approved  by the  Company's  shareholders  and (B) each such Option or Award
granted does not become  exercisable or vested, in whole or in part, at any time
prior to the obtaining of such shareholder approval.

                                   ARTICLE II
                                  Grant Program

                 2.1 Participants; Administration.

                                       (a)   Eligibility   and    Participation.
Options and Awards may be granted only to persons  ("Eligible  Persons")  who at
the time of grant are (i) key personnel  (including  officers and  directors) of
the  Company  or Parent  or  Subsidiary  Corporations,  or (ii)  consultants  or
independent  contractors who provide valuable  services to the Company or Parent
or Subsidiary Corporations;  provided that (1) if a Senior Committee exists, the
members of that Senior Committee shall be ineligible, during their tenure on the
Senior  Committee,  to be  granted  Options  or  Awards  under the Plan or to be
granted or awarded equity  securities of the Company  pursuant to any other plan
of  the  Company  or  its  affiliates   except  as  otherwise  allowed  by  Rule
16b-3(c)(2)(i)  promulgated  under the 1934 Act, and (2) Incentive Stock Options
may  only be  granted  to key  personnel  of the  Company  (and  its  Parent  or
Subsidiary  Corporation) who are also employees of the Company (or its Parent or
Subsidiary  Corporation),  and (3) the  maximum  number of shares of stock  with
respect to which Options or SARs may be granted to any employee  during the term
of the Plan shall not  exceed 50  percent of the shares of stock  covered by the
Plan. A Plan Administrator shall have full authority to determine which Eligible
Persons in its  administered  group are to receive Option grants under the Plan,
the  number of shares to be  covered  by each  such  grant,  whether  or not the
granted  Option is to be an Incentive  Stock Option,  the time or times at which
each such Option is to become  exercisable,  and the maximum  term for which the
Option is to be outstanding. A Plan Administrator shall also have full authority
to determine  which  Eligible  Persons in such group are to receive Awards under
the Grant Program and the conditions relating to such Award.

                                       (b) General Administration.  The Eligible
Persons under the Grant Program shall be divided into two groups and there shall
be a separate  administrator  for each  group.  One group will be  comprised  of
Eligible  Persons  that are  Affiliates.  For  purposes  of this Plan,  the term
"Affiliates" shall mean all "officers" (as that term is defined in Rule 16a-1(f)
promulgated under the 1934 Act) and directors of the Company and all persons who
own  ten  percent  or  more  of the  Company's  issued  and  outstanding  equity
securities. Initially, the power to administer the Grant Program with respect to
Eligible  Persons  that are  Affiliates  shall be vested with the Board.  At any
time, however, the Board may vest the power to administer the Grant Program with
respect to Persons that are Affiliates exclusively with a committee (the "Senior
Committee") comprised of two or more Disinterested Directors which are appointed
by the Board. The administration of all Eligible Persons that are not Affiliates
("Non-  Affiliates")  shall be vested  exclusively  with the  Board.  The Board,
however,  may at any time appoint a committee (the "Employee  Committee") of two
or more  persons  who are  members of the Board and  delegate  to such  Employee
Committee  the  power to  administer  the  Grant  Program  with  respect  to the
Non-Affiliates.  In addition, the Board may establish an additional committee or
committees  of persons who are  members of the Board and  delegate to such other
committee or committees  the power to  administer  all or a portion of the Grant
program with respect to all or a portion of the Eligible Persons. Members of the
Senior  Committee,  Employee  Committee or any other committee allowed hereunder
shall serve for such period of time as the Board may

determine  and shall be subject  to removal by the Board at any time.  The Board
may at any time  terminate  all or a  portion  of the  functions  of the  Senior
Committee,  the Employee Committee, or any other committee allowed hereunder and
reassume all or a portion of powers and authority  previously  delegated to such
committee.  The Board in its  discretion  may also  require  the  members of the
Senior  Committee,  the  Employee  Committee  or  any  other  committee  allowed
hereunder to be "outside  directors"  as that term is defined in any  applicable
regulations promulgated under Code section 162(m).

                                       (c) Plan  Administrators.  The Board, the
Employee  Committee,  Senior  Committee,  and/or  any  other  committee  allowed
hereunder,  whichever is applicable, shall be each referred to herein as a "Plan
Administrator." Each Plan Administrator shall have the authority and discretion,
with respect to its  administered  group, to select which Eligible Persons shall
participate  in the Grant  Program,  to grant  Options or Awards under the Grant
Program,  to establish such rules and  regulations as they may deem  appropriate
with respect to the proper  administration of the Grant Program and to make such
determinations  under, and issue such  interpretations of, the Grant Program and
any outstanding Option or Award as they may deem necessary or advisable.  Unless
otherwise  required  by law  or  specified  by the  Board  with  respect  to any
committee,  decisions  among the  members  of a Plan  Administrator  shall be by
majority vote.  Decisions of a Plan Administrator  shall be final and binding on
all parties who have an interest in the Grant Program or any outstanding  Option
or Award.

                                       (d)  Guidelines  for  Participation.   In
designating  and  selecting  Eligible  Persons  for  participation  in the Grant
Program, a Plan  Administrator  shall consult with and give consideration to the
recommendations and criticisms submitted by appropriate managerial and executive
officers of the Company.  A Plan  Administrator also shall take into account the
duties and  responsibilities  of the Eligible Persons,  their past,  present and
potential  contributions to the success of the Company and such other factors as
a Plan  Administrator  shall deem relevant in connection with  accomplishing the
purpose of the Plan.

                 2.2 Terms and Conditions of Options

                                       (a)   Allotment   of   Shares.   A   Plan
Administrator  shall determine the number of shares of Stock to be optioned from
time to time and the number of shares to be optioned to any Eligible Person (the
"Optioned Shares"). The grant of a Option to a person shall neither entitle such
person to, nor disqualify such person from,  participation in any other grant of
Options or Stock  Awards  under this Plan or any other stock  option plan of the
Company.

                                       (b) Exercise Price. Upon the grant of any
Option,  a Plan  Administrator  shall specify the option price per share. If the
Option is intended to qualify as an Incentive  Stock Option under the Code,  the
option price per share may not be less than 100 percent of the fair market value
per share of the stock on the date the  Option is  granted  (110  percent if the
Option is granted to a shareholder who at the time the Option is granted owns or
is deemed to own stock  possessing  more than 10 percent  of the total  combined
voting  power of all  classes  of  stock  of the  Company  or of any  Parent  or
Subsidiary Corporation). The

determination  of the fair market value of the Stock shall be made in accordance
with the valuation provisions of Section 3.5 hereof.

                                       (c) Individual  Stock Option  Agreements.
Options  granted under the Plan shall be evidenced by option  agreements in such
form and  content  as a Plan  Administrator  from time to time  approves,  which
agreements  shall  substantially  comply with and be subject to the terms of the
Plan, including the terms and conditions of this Section 2.2. As determined by a
Plan  Administrator,  each option  agreement shall state (i) the total number of
shares to which it pertains,  (ii) the exercise  price for the shares covered by
the Option,  (iii) the time at which the Options vest and become exercisable and
(iv) the Option's  scheduled  expiration date. The option agreements may contain
such other provisions or conditions as a Plan  Administrator  deems necessary or
appropriate to effectuate the sense and purpose of the Plan, including covenants
by the  Optionholder not to compete and remedies for the Company in the event of
the breach of any such covenant.

                                       (d)  Option  Period.  No  Option  granted
under  the Plan  that is  intended  to be an  Incentive  Stock  Option  shall be
exercisable  for a period in excess of 10 years from the date of its grant (five
years if the Option is granted  to a  shareholder  who at the time the Option is
granted  owns or is deemed to own stock  possessing  more than 10 percent of the
total  combined  voting  power of all  classes of stock of the Company or of any
Parent or any  Subsidiary  Corporation),  subject to earlier  termination in the
event of termination of employment,  retirement or death of the Optionholder.  A
Option  may be  exercised  in full or in part at any  time or from  time to time
during the term of the Option or provide for its exercise in stated installments
at stated times during the Option's term.

                                       (e)  Vesting;  Limitations.  The  time at
which Options may be exercised with respect to an  Optionholder  shall be in the
discretion  of  that  Optionholder's  Plan  Administrator.  Notwithstanding  the
foregoing,  to the extent a Option is intended to qualify as an Incentive  Stock
Option, the aggregate fair market value (determined as of the respective date or
dates of grant) of the Stock for which one or more Options granted to any person
under  this Plan (or any  other  option  plan of the  Company  or its  Parent or
Subsidiary  Corporations) may for the first time become exercisable as Incentive
Stock Options  during any one calendar year shall not exceed the sum of $100,000
(referred to herein as the "$100,000 Limitation"). To the extent that any person
holds two or more  Options  which become  exercisable  for the first time in the
same  calendar  year,  the  foregoing  limitation  on the  exercisability  as an
Incentive  Stock Option shall be applied on the basis of the order in which such
Options are granted.

                                       (f) No Fractional  Shares.  Options shall
be exercisable only for whole shares; no fractional shares will be issuable upon
exercise of any Option granted under the Plan.

                                       (g)  Method of  Exercise.  To  exercise a
Option,  an Optionholder (or in the case of an exercise after an  Optionholder's
death, such Optionholder's executor, administrator, heir or legatee, as the case
may be) must take the following action:

                                               (i)  execute  and  deliver to the
Company a written notice of exercise signed in writing by the person  exercising
the Option  specifying  the number of shares of Stock with  respect to which the
Option is being exercised;

                                               (ii)  pay  the  aggregate  Option
Price in one of the alternate forms as set forth in Section 2.2(h) below; and

                                               (iii)     furnish     appropriate
documentation  that the person or persons  exercising  the Option (if other than
the Optionholder) has the right to exercise such Option.

As soon as practical  after the Exercise  Date, the Company will mail or deliver
to or on behalf of the Optionholder  (or any other person or persons  exercising
this Option under the Plan) a certificate or certificates representing the Stock
acquired upon exercise of the Option.

                                       (h) Payment Price.  The aggregate  Option
Price shall be payable in one of the alternative forms specified below:

                                               (i) Full payment in cash or check
made payable to the Company's order; or

                                               (ii)  Full  payment  in shares of
Stock held for the requisite period necessary to avoid a charge to the Company's
reported  earnings  and valued at fair  market  value on the  Exercise  Date (as
determined in accordance with Section 3.5 hereof); or

                                               (iii)  If  a  cashless   exercise
program  has been  implemented  by the Board,  full  payment  through a sale and
remittance  procedure  pursuant  to which the  Optionholder  (A)  shall  provide
irrevocable  written  instructions to a designated  brokerage firm to effect the
immediate sale of the Optioned  Shares to be purchased and remit to the Company,
out of the sale proceeds  available on the settlement date,  sufficient funds to
cover  the  aggregate  exercise  price  payable  for the  Optioned  Shares to be
purchased and (B) shall  concurrently  provide written directives to the Company
to deliver the certificates for the Optioned Shares to be purchased  directly to
such brokerage firm in order to complete the sale transaction.

                                       (i)   Rights   of   a   Shareholder.   An
Optionholder  shall not have any of the rights of a shareholder  with respect to
Optioned Shares until such  individual  shall have exercised the Option and paid
the  Option  Price  for the  Optioned  Shares.  No  adjustment  will be made for
dividends  or other  rights for which the record  date is prior to the date such
stock certificate is issued.

                                       (j)    Repurchase    Right.    The   Plan
Administrator may, in its sole discretion,  set forth other terms and conditions
upon which the  Company  (or its  assigns)  shall  have the right to  repurchase
shares of Stock acquired by an Optionholder pursuant

to a Option.  Any  repurchase  right of the Company shall be  exercisable by the
Company  (or  its  assignees)  upon  such  terms  and  conditions  as  the  Plan
Administrator  may specify in the Stock  Repurchase  Agreement  evidencing  such
right. The Plan Administrator may also in its discretion establish as a term and
condition of one or more Options  granted  under the Plan that the Company shall
have a right  of  first  refusal  with  respect  to any  proposed  sale or other
disposition by the  Optionholder of any shares of Stock issued upon the exercise
of such Options.  Any such right of first refusal  shall be  exercisable  by the
Company (or its assigns) in accordance  with the terms and  conditions set forth
in the Stock Repurchase Agreement.

                                       (k)   Termination  of  Service.   If  any
Optionholder  ceases to be in Service  to the  Company  for a reason  other than
permanent  disability or death, such Optionholder must, within 90 days after the
date of termination of such Service,  but in no event after the Option's  stated
expiration  date,  exercise some or all of the Options that the Optionholder was
entitled  to  exercise  on  the  date  the  Optionholder's  Service  terminated;
provided,  that if the  Optionholder  is  discharged  for Cause or commits  acts
detrimental to the Company's interests after the Service of the Optionholder has
been  terminated,  then the Option  will  thereafter  be void for all  purposes.
"Cause"  shall  mean a  termination  of  Service  based  upon a  finding  by the
applicable Plan Administrator that the Optionholder:  (i) has committed a felony
involving  dishonesty,  fraud, theft or embezzlement;  (ii) after written notice
from the Company has repeatedly  failed or refused,  in a material  respect,  to
follow reasonable policies or directives established by the Company; (iii) after
written notice from the Company, has willfully and persistently failed to attend
to material duties or  obligations;  (iv) has performed an act or failed to act,
which, if he were prosecuted and convicted, would constitute a theft of money or
property of the Company;  or (v) has misrepresented or concealed a material fact
for purposes of securing employment with the Company. If any Optionholder ceases
to be in Service to the  Company by reason of  permanent  disability  within the
meaning of section  22(e)(3) of the Code (as determined by the  applicable  Plan
Administrator),  the  Optionholder  will  have  12  months  after  the  date  of
termination of Service,  but in no event after the stated expiration date of the
Optionholder's  Options,  to exercise Options that the Optionholder was entitled
to exercise on the date the Optionholder's Service terminated as a result of the
disability.

                                       (l)   Death   of   Optionholder.   If  an
Optionholder  dies  while  in  the  Company's  Service,  any  Options  that  the
Optionholder  was entitled to exercise on the date of death will be  exercisable
within three months after such date or until the stated  expiration  date of the
Optionholder's  Option,  whichever  occurs  first,  by  the  person  or  persons
("successors")  to whom the  Optionholder's  rights  pass under a will or by the
laws of descent and  distribution.  As soon as practicable  after receipt by the
Company of such notice and of payment in full of the Option Price, a certificate
or certificates representing the Optioned Shares shall be registered in the name
or names specified by the successors in the written notice of exercise and shall
be delivered to the successors.

                                       (m)   Other   Plan    Provisions    Still
Applicable. If a Option is exercised upon the termination of Service or death of
an  Optionholder  under this Section 2.2, the other  provisions of the Plan will
continue  to  apply  to  such  exercise,  including  the  requirement  that  the
Optionholder  or its successor may be required to enter into a Stock  Repurchase
Agreement.

                                       (n) Definition of "Service". For purposes
of this Plan, unless it is evidenced  otherwise in the option agreement with the
Optionholder,  the  Optionholder  is deemed to be in "Service" to the Company so
long as such individual renders  continuous  services on a periodic basis to the
Company  (or to any Parent or  Subsidiary  Corporation)  in the  capacity  of an
employee,  director, or an independent  consultant or advisor. In the discretion
of the applicable Plan  Administrator,  an Optionholder will be considered to be
rendering  continuous  services  to the  Company  even if the  type of  services
change, e.g., from employee to independent consultant.  The Optionholder will be
considered  to be an  employee  for so long as such  individual  remains  in the
employ of the Company or one or more of its Parent or Subsidiary Corporations.

                 2.3 Terms and Conditions of Stock Awards

                                       (a)  Eligibility.  All  Eligible  Persons
shall be  eligible  to receive  Stock  Awards.  The Plan  Administrator  of each
administered  group shall  determine the number of shares of Stock to be awarded
from time to time to any  Eligible  Person  in such  group.  Except as  provided
otherwise  in this Plan,  the grant of a Stock  Award to a person (a  "Grantee")
shall  neither   entitle  such  person  to,  nor  disqualify  such  person  from
participation  in, any other grant of options or awards by the Company,  whether
under this Plan or under any other stock option or award plan of the Company.

                                       (b) Award for  Services  Rendered.  Stock
Awards shall be granted in recognition of an Eligible  Person's  services to the
Company.  The  grantee of any such Stock  Award shall not be required to pay any
consideration to the Company upon receipt of such Stock Award,  except as may be
required to satisfy any applicable Arizona corporate law,  employment tax and/or
income tax withholding requirements.

                                       (c) Conditions to Award. All Stock Awards
shall be subject to such terms, conditions,  restrictions, or limitations as the
applicable  Plan  Administrator   deems  appropriate,   including,   by  way  of
illustration  but not by way of  limitation,  restrictions  on  transferability,
requirements of continued  employment,  individual  performance or the financial
performance  of the  Company,  or payment  by the  recipient  of any  applicable
employment  or  withholding   taxes.  Such  Plan  Administrator  may  modify  or
accelerate  the  termination of the  restrictions  applicable to any Stock Award
under the circumstances as it deems appropriate.

                                       (d)    Award    Agreements.     A    Plan
Administrator  may require as a condition to a Stock Award that the recipient of
such Stock Award enter into an award  agreement in such form and content as that
Plan Administrator from time to time approves.

                 2.4 Terms and Conditions of SARs

                                       (a)  Eligibility.  All  Eligible  Persons
shall be eligible to receive SARs. The Plan  Administrator of each  administered
group shall determine

the SARs to be awarded from time to time to any  Eligible  Person in such group.
The grant of an SAR to a person  shall  neither  entitle  such  person  to,  nor
disqualify  such  person  from  participation  in, any other grant of options or
awards by the Company,  whether  under this Plan or under any other stock option
or award plan of the Company.

                                       (b) Award of SARs.  Concurrently  with or
subsequent  to the grant of any Option to purchase  one or more shares of Stock,
the Plan  Administrator may award to the Optionholder with respect to each share
of Stock, underlying the Option, a related SAR permitting the Optionholder to be
paid  any  appreciation  on that  Stock in lieu of  exercising  the  Option.  In
addition,  a  Plan  Administrator  may  award  to  any  Eligible  Person  an SAR
permitting  the  Eligible  Person to be paid the  appreciation  on a  designated
number of shares of the Stock, whether or not such Shares are actually issued.

                                       (c)  Conditions to SAR. All SARs shall be
subject to such terms, conditions, restrictions or limitations as the applicable
Plan Administrator deems appropriate,  including, by way of illustration but not
by way of limitation, restrictions on transferability, requirements of continued
employment,  individual  performance,  financial  performance of the Company, or
payment by the recipient of any applicable employment or withholding taxes. Such
Plan  Administrator may modify or accelerate the termination of the restrictions
applicable to any SAR under the circumstances as it deems appropriate.

                                       (d) SAR Agreements.  A Plan Administrator
may require as a condition to the grant of an SAR that the recipient of such SAR
enter into an SAR agreement in such form and content as that Plan  Administrator
from time to time approves.

                                       (e) Exercise.  An Eligible Person who has
been granted a SAR may exercise such SAR subject to the conditions  specified in
the SAR agreement by the Plan Administrator.

                                       (f)  Amount  of  Payment.  The  amount of
payment to which the  grantee of an SAR shall be entitled  upon the  exercise of
each SAR shall be equal to the amount, if any, by which the fair market value of
the specified shares of Stock on the exercise date exceeds the fair market value
of the specified  shares of Stock on the date the Option  related to the SAR was
granted or became effective, or, if the SAR is not related to any Option, on the
date the SAR was granted or became effective.

                                       (g) Form of Payment.  The SAR may be paid
in either cash or Stock,  as determined in the discretion of the applicable Plan
Administrator  and set forth in the SAR  agreement.  If the payment is in Stock,
the  number of  shares  to be paid to the  participant  shall be  determined  by
dividing the amount of the payment determined  pursuant to Section 2.4(f) by the
fair market value of a share of Stock on the exercise  date of such SAR. As soon
as practical  after  exercise,  the Company  shall  deliver to the SAR grantee a
certificate or certificates for such shares of Stock.

                                       (h)  Termination  of  Employment;  Death.
Sections 2.2(k) and (l), applicable to Options, shall apply equally to SARs.

                 2.5 Other Cash Awards

                                       (a) In General. The Plan Administrator of
each  administered  group shall have the discretion to make other awards of cash
to Eligible Persons in such group ("Cash  Awards").  Such Cash Awards may relate
to existing  Options or to the  appreciation  in the value of the Stock or other
Company securities.

                                       (b) Conditions to Award.  All Cash Awards
shall be subject to such terms,  conditions,  restrictions or limitations as the
applicable Plan Administrator deems appropriate, and such Plan Administrator may
require as a condition to such Cash Award that the  recipient of such Cash Award
enter into an award agreement in such form and content as the Plan Administrator
from time to time approves.

                                   ARTICLE III
                                  Miscellaneous

                 3.1  Capital  Adjustments.  The  aggregate  number of shares of
Stock subject to the Plan,  the number of shares of Stock covered by outstanding
Options and Awards,  and the price per share stated in all  outstanding  Options
and Awards shall be proportionately adjusted for any increase or decrease in the
number  of  outstanding  shares  of  Stock  of  the  Company  resulting  from  a
subdivision or  consolidation  of shares or any other capital  adjustment or the
payment of a stock  dividend or any other  increase or decrease in the number of
such shares effected without the Company's receipt of consideration  therefor in
money, services or property.

                 3.2 Mergers,  Etc. If the Company is the surviving  corporation
in any merger or  consolidation  (not  including a Corporate  Transaction),  any
Option  or Award  granted  under  the Plan  shall  pertain  to and  apply to the
securities  to which a holder of the  number of shares of Stock  subject  to the
Option or Award would have been entitled  prior to the merger or  consolidation.
Except as provided in Section 3.3 hereof,  a dissolution  or  liquidation of the
Company shall cause every Option or Award outstanding hereunder to terminate.

                 3.3 Corporate Transaction. In the event of shareholder approval
of a Corporate Transaction, the Plan Administrator shall have the discretion and
authority, exercisable at any time, to provide for the automatic acceleration of
one or more of the  outstanding  Options or Awards granted by it under the Plan.
Upon the  consummation of the Corporate  Transaction,  all Options shall, to the
extent not previously exercised, terminate and cease to be outstanding.

                 3.4 Change in Control.

                                       (a)  Grant  Program.  In the  event  of a
Change in Control, a Plan Administrator shall have the discretion and authority,
exercisable  at any time,  whether  before or after the  Change in  Control,  to
provide for the automatic acceleration

of one or more  outstanding  Options or Awards granted by it under the Plan upon
the occurrence of such Change in Control.  A Plan  Administrator may also impose
limitations  upon the  automatic  acceleration  of such Options or Awards to the
extent it deems appropriate.  Any Options or Awards accelerated upon a Change in
Control will remain fully exercisable until the expiration or sooner termination
of the Option term.

                                       (b) Incentive  Stock Option  Limits.  The
exercisability  of any Options which are intended to qualify as Incentive  Stock
Options and which are accelerated by the Plan Administrator in connection with a
pending Corporation  Transaction or Change in Control shall, except as otherwise
provided  in the  discretion  of the Plan  Administrator  and the  Optionholder,
remain  subject to the  $100,000  Limitation  and vest as  quickly  as  possible
without violating the $100,000 Limitation.

                 3.5 Calculation of Fair Market Value of Stock.  The fair market
value of a share of Stock on any relevant date shall be determined in accordance
with the following provisions:

                                       (a) If  the  Stock  is  not  at the  time
listed  or  admitted  to  trading  on any  stock  exchange  but is traded in the
over-the-counter  market,  the fair market  value shall be the mean  between the
highest bid and lowest asked prices (or, if such  information is available,  the
closing  selling  price)  per  share of Stock  on the  date in  question  in the
over-the-counter market, as such prices are reported by the National Association
of Securities  Dealers  through its Nasdaq system or any  successor  system.  If
there are no reported  bid and asked prices (or closing  selling  price) for the
Stock on the date in  question,  then the mean between the highest bid price and
lowest asked price (or the closing selling price) on the last preceding date for
which such quotations exist shall be determinative of fair market value.

                                       (b) If the Stock is at the time listed or
admitted to trading on any stock  exchange,  then the fair market value shall be
the  closing  selling  price per share of Stock on the date in  question  on the
stock  exchange  determined by the Board to be the primary market for the Stock,
as such price is officially quoted in the composite tape of transactions on such
exchange.  If there is no reported sale of Stock on such exchange on the date in
question,  then the fair market value shall be the closing  selling price on the
exchange on the last preceding date for which such quotation exists.

                                       (c) If the  Stock at the time is  neither
listed  nor  admitted  to  trading  on any  stock  exchange  nor  traded  in the
over-the-counter  market,  then the fair market value shall be determined by the
Board  after   taking  into  account  such  factors  as  the  Board  shall  deem
appropriate, including one or more independent professional appraisals.

                 3.6 Use of Proceeds.  The proceeds received by the Company from
the sale of Stock  pursuant to the exercise of Options or Awards  hereunder,  if
any, shall be used for general corporate purposes.

                 3.7 Cancellation of Options. Each Plan Administrator shall have
the authority to effect,  at any time and from time to time, with the consent of
the affected

Optionholders,  the cancellation of any or all outstanding Options granted under
the Plan by that Plan  Administrator and to grant in substitution  therefore new
Options under the Plan covering the same or different numbers of shares of Stock
as long as such new Options  have an  exercise  price per share of Stock no less
than the minimum exercise price as set forth in Section 2.2(b) hereof on the new
grant date.

                 3.8 Regulatory  Approvals.  The implementation of the Plan, the
granting of any Option or Award  hereunder,  and the  issuance of Stock upon the
exercise of any such Option or Award shall be subject to the  procurement by the
Company of all approvals and permits required by regulatory  authorities  having
jurisdiction over the Plan, the Options or Awards granted under it and the Stock
issued pursuant to it.

                 3.9  Indemnification.  In  addition  to such  other  rights  of
indemnification as they may have, the members of a Plan  Administrator  shall be
indemnified  and held  harmless by the Company,  to the extent  permitted  under
applicable law, for, from and against all costs and expenses reasonably incurred
by them in  connection  with any action,  legal  proceeding  to which any member
thereof may be a party by reason of any action taken, failure to act under or in
connection  with the Plan or any  rights  granted  thereunder  and  against  all
amounts paid by them in settlement  thereof or paid by them in satisfaction of a
judgment of any such action, suit or proceeding,  except a judgment based upon a
finding of bad faith.

                 3.10 Plan Not  Exclusive.  This Plan is not  intended to be the
exclusive  means by which the Company  may issue  options or warrants to acquire
its Stock,  stock awards or any other type of award. To the extent  permitted by
applicable  law, any such other option,  warrants or awards may be issued by the
Company other than pursuant to this Plan without shareholder approval.

                 3.11  Company  Rights.  The grants of  Options  shall in no way
affect the right of the Company to adjust,  reclassify,  reorganize or otherwise
change its capital or business  structure  or to merge,  consolidate,  dissolve,
liquidate or sell or transfer all or any part of its business or assets.

                 3.12  Assignment.  The right to acquire  Stock or other  assets
under the Plan may not be assigned,  encumbered or otherwise  transferred by any
Optionholder except as specifically  provided herein. No Option or Award granted
under the Plan or any of the rights and  privileges  conferred  thereby shall be
assignable or  transferable  by an Optionholder or grantee other than by will or
the laws of  descent  and  distribution,  and  such  Option  or  Award  shall be
exercisable  during  the  Optionholder's  or  grantee's  lifetime  only  by  the
Optionholder or grantee.  Notwithstanding  the foregoing,  any Options or Awards
granted  pursuant to the Grant Program may be assigned,  encumbered or otherwise
transferred by the  Optionholder or grantee if specifically  allowed by the Plan
Administrator upon the grant of such Option or Award. The provisions of the Plan
shall  inure to the  benefit  of,  and be  binding  upon,  the  Company  and its
successors or assigns, and the Optionholders, the legal representatives of their
respective  estates,  their  respective  heirs or legatees  and their  permitted
assignees.

                 3.13 Securities Restrictions

                                       (a)   Legend   on    Certificates.    All
certificates  representing  shares  of Stock  issued  under  the  Plan  shall be
endorsed with a legend reading as follows:

                    The shares  ofCommonStock  evidenced by
                    this  certificate  have been  issued to
                    the  registered  owner in reliance upon
                    written   representations   that  these
                    shares have been  purchased  solely for
                    investment.  These  shares  may  not be
                    sold, transferred or assigned unless in
                    the  opinion  of the  Company  and  its
                    legal  counsel  such sale,  transfer or
                    assignment  will not be in violation of
                    the Securities Act of 1933, as amended,
                    and   the   rules    and    regulations
                    thereunder.

                                       (b) Private Offering for Investment Only.
The Options and Awards are and shall be made  available only to a limited number
of present and future key executives, directors and employees who have knowledge
of the Company's financial  condition,  management and its affairs.  The Plan is
not intended to provide  additional  capital for the  Company,  but to encourage
ownership of Stock among the Company's key personnel. By the act of accepting an
Option or Award, each grantee agrees (i) that, any shares of Stock acquired will
be solely for investment not with any intention to resell or redistribute  those
shares and (ii) such intention  will be confirmed by an appropriate  certificate
at the time the Stock is acquired if requested  by the  Company.  The neglect or
failure to execute such a  certificate,  however,  shall not limit or negate the
foregoing agreement.

                                       (c)   Registration    Statement.   If   a
Registration  Statement  covering the shares of Stock issuable under the Plan as
filed under the  Securities  Exchange Act of 1933,  as amended,  and as declared
effective by the  Securities  Exchange  Commission,  the  provisions of Sections
3.13(a) and (b) shall terminate during the period of time that such Registration
Statement, as periodically amended, remains effective.

                 3.14 Tax Withholding.

                                       (a) General.  The Company's obligation to
deliver  Stock  under  the Plan  shall be  subject  to the  satisfaction  of all
applicable federal, state and local income tax withholding requirements.

                                       (b)  Shares to Pay for  Withholding.  The
Board may, in its  discretion  and in  accordance  with the  provisions  of this
Section  3.14(b) and such  supplemental  rules as it may from time to time adopt
(including the applicable safe-harbor provisions of SEC Rule 16b-3), provide any
or all Optionholders or Grantees with the right to

use shares of Stock in  satisfaction  of all or part of the  federal,  state and
local  income tax  liabilities  incurred  by such  Optionholders  or Grantees in
connection  with the receipt of Stock  ("Taxes").  Such right may be provided to
any such Optionholder or Grantee in either or both of the following formats:

                                               (i)   Stock    Withholding.    An
Optionholder or Grantee may be provided with the election,  which may be subject
to approval by the Plan  Administrator,  to have the Company withhold,  from the
Stock otherwise  issuable,  a portion of those shares of Stock with an aggregate
fair market value equal to the percentage of the applicable Taxes (not to exceed
100 percent) designated by the Optionholder or Grantee.

                                               (ii)  Stock  Delivery.  The Board
may, in its discretion, provide the Optionholder or Grantee with the election to
deliver to the Company, at the time the Option is exercised or Stock is awarded,
one or more shares of Stock previously  acquired by such individual  (other than
pursuant to the transaction  triggering the Taxes) with an aggregate fair market
value equal to the  percentage  of the taxes  incurred in  connection  with such
Option  exercise or Stock Award (not to exceed 100  percent)  designated  by the
Optionholder or Grantee.

                 3.15  Governing  Law.  The Plan  shall be  governed  by and all
questions hereunder shall be determined in accordance with the laws of the State
of Arizona.

                                   ARTICLE IV
                                   Definitions

                 The  following  capitalized  terms used in this Plan shall have
the meaning described below:

                 "Affiliates" shall mean all "executive  officers" (as that term
is defined in Rule 16a- 1(f)  promulgated  under the 1934 Act) and  directors of
the Company and all persons who own ten percent or more of the Company's  issued
and outstanding Stock.

                 "Annual Grant Date" shall mean the date of the Company's annual
shareholder meeting.

                 "Award"  shall mean a Stock Award,  SAR or Cash Award under the
Grant Program.

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

                 "Cash Award" shall mean an award to be paid in cash and granted
under Section 2.5 hereunder.

                 "Change  in  Control"  shall  mean and  include  the  following
transactions or situations:

                                               (i) A sale,  transfer,  or  other
disposition  by  the  Company  through  a  single  transaction  or a  series  of
transactions of securities of the Company representing 30 percent or more of the
combined  voting  power of the  Company's  then  outstanding  securities  to any
"Unrelated  Person" or "Unrelated  Persons"  acting in concert with one another.
For  purposes  of this  Section,  the term  "Person"  shall mean and include any
individual, partnership, joint venture, association, trust corporation, or other
entity (including a "group" as referred to in Section 13(d)(3) of the 1934 Act).
For purposes of this Section, the term "Unrelated Person" shall mean and include
any Person other than the Company, a wholly-owned  subsidiary of the Company, or
an employee benefit plan of the Company.

                                               (ii) A sale,  transfer,  or other
disposition  through a single  transaction or a series of transactions of all or
substantially  all of the  assets  of the  Company  to an  Unrelated  Person  or
Unrelated Persons acting in concert with one another.

                                               (iii) A change  in the  ownership
of the Company  through a single  transaction or a series of  transactions  such
that any  Unrelated  Person or  Unrelated  Persons  acting in  concert  with one
another become the "Beneficial Owner," directly or indirectly,  of securities of
the Company representing at least 30 percent of the combined voting power of the
Company's then outstanding  securities.  For purposes of this Section,  the term
"Beneficial  Owner"  shall  have the same  meaning as given to that term in Rule
13d-3  promulgated under the Act, provided that any pledgee of voting securities
is not deemed to be the  Beneficial  Owner thereof prior to its  acquisition  of
voting rights with respect to such securities.

                                               (iv) Any  consolidation or merger
of the Company with or into an Unrelated  Person,  unless  immediately after the
consolidation  or  merger  the  holders  of the  common  stock  of  the  Company
immediately  prior to the  consolidation or merger are the Beneficial  Owners of
securities of the surviving corporation  representing at least 50 percent of the
combined  voting  power  of  the  surviving   corporation's   then   outstanding
securities.

                                               (v)  During  any  period  of  two
years,  individuals who, at the beginning of such period,  constituted the Board
of Directors of the Company  cease,  for any reason,  to  constitute  at least a
majority  thereof,  unless the election or  nomination  for election of each new
director was approved by the vote of at least  two-thirds of the directors  then
still in office who were directors at the beginning of such period.

                                               (vi) A change in  control  of the
Company of a nature  that would be  required  to be reported in response to item
6(e) of Schedule 14A of Regulation  14A  promulgated  under the 1934 Act, or any
successor  regulation  of similar  import,  regardless of whether the Company is
subject to such reporting requirement.

                 Notwithstanding  any  provision  hereof  to the  contrary,  the
filing of a proceeding for the reorganization of the Company under Chapter 11 of
the General  Bankruptcy Code or any successor or other statute of similar import
shall not be deemed to be a Change of Control for purposes of this Plan.

                 "Code"  shall  mean  the  Internal  Revenue  Code of  1986,  as
amended.

                 "Company"  shall mean Frontier  Adjusters of America,  Inc., an
Arizona corporation.

                 "Corporate   Transaction"   shall   mean   (a)  a   merger   or
consolidation  in which the Company is not the  surviving  entity,  except for a
transaction the principal  purposes of which is to change the state in which the
Company is incorporated;  (b) the sale,  transfer of or other disposition of all
or  substantially  all of the assets of the Company and complete  liquidation or
dissolution  of the Company,  or (c) any reverse  merger in which the Company is
the surviving entity but in which the securities possessing more than 50 percent
of the total combined voting power of the Company's  outstanding  securities are
transferred to a person or persons different from those who held such securities
immediately prior to such merger.

                 "Disinterested   Directors"  shall  mean  those  Directors  who
satisfy the  definition  of  "Disinterested  Person"  under Rule  16b-3(c)(2)(i)
promulgated under the 1934 Act.

                 "Effective  Date"  shall  mean the date  that the Plan has been
approved by the shareholders as required by Section 1.3(a) hereof.

                 "Eligible  Persons"  shall  mean,  with  respect  to the  Grant
Program, those persons who, at the time that the Option or Award is granted, are
(i) key personnel (including officers and directors) of the Company or Parent or
Subsidiary  Corporations,  or (ii)  consultants or independent  contractors  who
provide valuable  services to the Company or Parent or Subsidiary  Corporations;
provided that if a Senior Committee is formed pursuant to Section 2.1(b) hereof,
the members of that Committee shall not be included as "Eligible  Persons" under
the Grant Program during their tenure on the Senior Committee.

                 "Employee Committee" shall mean that committee appointed by the
Board to administer the Plan with respect to the Non-Affiliates and comprised of
one or more persons who are members of the Board.

                 "Exercise  Date" shall be the date on which  written  notice of
the  exercise of an Option is delivered  to the Company in  accordance  with the
requirements of the Plan.

                 "Grantee"  shall mean an Eligible  Person or Eligible  Director
that has received an Award.

                 "Grant Program" shall mean the program  described in Article II
of this Agreement pursuant to which certain Eligible Persons are granted Options
or Awards in the discretion of the Plan Administrator.

                 "Incentive  Stock  Option" shall mean a Option that is intended
to qualify as an "incentive stock option" under Code section 422.

                 "Non-Affiliates" shall mean all persons who are not Affiliates.

                 "$100,000  Limitation"  shall mean the  limitation in which the
aggregate fair market value  (determined  as of the respective  date or dates of
grant) of the Stock for which one or more  Options  granted to any person  under
this Plan (or any other  option plan of the Company or any Parent or  Subsidiary
Corporation)  may for the first time be exercisable  as Incentive  Stock Options
during any one calendar year shall not exceed the sum of $100,000.

                 "Optionholder"  shall mean an Eligible  Person to whom  Options
have been granted.

                 "Optioned Shares" shall be those shares of Stock to be optioned
from time to time to any Eligible Person.

                 "Option  Price"  shall  mean  the  option  price  per  share as
specified by the Plan Administrator or by the terms of the Plan.

                 "Options"  shall mean options granted under the Plan to acquire
Stock.

                 "Parent Corporation" shall mean any corporation in the unbroken
chain of corporations ending with the employer corporation,  where, at each link
of the chain, the corporation and the link above owns at least 50 percent of the
combined  total voting power of all classes of the stock in the  corporation  in
the link below.

                 "Plan" shall mean this stock option plan for Frontier Adjusters
of America, Inc.

                 "Plan  Administrator"  shall mean (a)  either  the  Board,  the
Senior Committee, or any other committee,  whichever is applicable, with respect
to the  administration  of the Grant Program as it relates to Affiliates and (b)
either the Board, the Employee Committee,  or any other committee,  whichever is
applicable,  with  respect  to the  administration  of the Grant  Program  as it
relates to Non-Affiliates.

                 "Registration Date" shall have the meaning set forth in Section
1.3(b) hereof.

                 "SAR" shall mean stock appreciation  rights granted pursuant to
Section 2.4 hereof.

                 "Senior  Committee" shall mean that committee  appointed by the
Board to  administer  the Grant  Program  with  respect  to the  Affiliates  and
comprised of two or more Disinterested Directors.

                 "Service"  shall have the meaning  set forth in Section  2.2(n)
hereof.

                 "Stock" shall mean shares of the Company's common stock,  $.001
par value per share,  which may be unissued or treasury shares, as the Board may
from time to time determine.

                 "Stock  Awards"  shall mean Stock  directly  granted  under the
Grant Program.

                 "Subsidiary  Corporation"  shall  mean any  corporation  in the
unbroken chain of corporations starting with the employer corporation, where, at
each link of the  chain,  the  corporation  and the link  above owns at least 50
percent of the combined  voting power of all classes of stock in the corporation
below.

                   EXECUTED as of the 21st day of May , 1996.

                       FRONTIER ADJUSTERS OF AMERICA, INC.

                                            By       :      /s/ Jean E. Ryberg
                                                            ------------------
                                            Name     :      Jean E. Ryberg
                                                            ------------------
                                            Its      :      President
                                                            ------------------
ATTESTED BY:

    /s/ James S. Rocke
- ----------------------------------
Secretary 

Basic Info X:

Name: FORM OF 1996 STOCK OPTION PLAN
Type: Stock Option Plan
Date: Aug. 21, 1996
Company: FRONTIER ADJUSTERS OF AMERICA INC
State: Arizona

Other info:

Date:

  • May 21 , 1996
  • 21st day of May , 1996

Organization:

  • Maximum Number of Shares Subject
  • Description of Stock and Maximum Shares Allocated
  • b Calculation of Available Shares
  • Company 's Common Stock
  • b Commencement of Programs
  • b Exercise Price
  • Individual Stock Option Agreements
  • g Method of Exercise
  • k Termination of Service
  • Optionholder 's Service
  • Company 's Service
  • Conditions of Stock Awards
  • b Award for Services Rendered
  • III Miscellaneous 3.1 Capital Adjustments
  • Incentive Stock Option Limits
  • Incentive Stock Options
  • Calculation of Fair Market Value of Stock
  • National Association of Securities Dealers
  • Securities Exchange Commission
  • the State of Arizona
  • Board of Directors of the Company
  • Beneficial Owner thereof
  • Change of Control
  • Frontier Adjusters of America , Inc.

Location:

  • Etc
  • Arizona
  • AMERICA

Money:

  • $ 0.001
  • $ 100,000
  • $ .001

Person:

  • Optionholders
  • Jean E. Ryberg
  • James S. Rocke

Percent:

  • 10 percent
  • 100 percent
  • ten percent
  • 30 percent
  • 50 percent