EXHIBIT 10.4

                                  TANOX, INC.
                                1997 STOCK PLAN

SECTION 1. Purpose.

     The purpose of the 1997 Stock Plan (the "Plan") is to secure for TANOX,
INC., (the "Company") and any parent or subsidiaries of the Company
(collectively the "Related Company" or "Related Companies") the benefits arising
from capital stock ownership by those employees, directors, officers and
consultants of the Company and any Related Companies who will be responsible for
the Company's future growth and continued success.

     The Plan will provide a means whereby (a) employees of the Company and any
Related Companies may purchase stock in the Company pursuant to options which
qualify as "incentive stock options" ("Incentive Stock Options") under Section
422 of the Internal Revenue Code of 1986, as amended (the "Code"), (b) directors
(including non-employee directors), employees, advisors and consultants of the
Company and any Related Companies may purchase stock in the Company pursuant to
options granted hereunder which do not qualify as Incentive Stock Options
("Non-Qualified Option" or "Non-Qualified Options"); (c) directors (including
non-employee directors), employees, advisors and consultants of the Company and
any Related Companies may be awarded stock in the Company ("Stock Awards"); (d)
directors (including non-employee directors), employees, advisors and
consultants of the Company and any Related Companies may receive stock
appreciation rights ("SARs"); (e) directors (including non-employee directors),
employees, advisors and consultants of the Company and any Related Companies may
make direct purchases of stock in the Company ("Stock Purchases"); and (f)
directors (including non-employee directors), employees, advisors and
consultants of the Company and any Related Companies may receive performance
units ("Performance Units"). Both Incentive Stock Options and Non-Qualified
Options are referred to hereafter individually as an "Option" and collectively
as "Options." With respect to Incentive Stock Options, the terms "parent" and
"subsidiary" mean "parent corporation" and "subsidiary corporation" as those
terms are defined in Section 424 of the Code. With respect to all other Plan
Benefits, the terms (i) "parent" includes any entity in an unbroken chain of
entities ending with the Company if, at the time of grant, each of the entities
other than the Company owns 50 percent or more of the outstanding equity of one
of the other entities in such chain and (ii) "subsidiary" includes any entity in
an unbroken chain of entities beginning with the Company if, at the time of
grant, each of the entities other than the last entity in such chain owns 50
percent or more of the outstanding equity in one of the other entities in such
chain. Options, Stock Awards, SARs, Stock Purchases and Performance Units are
referred to hereafter individually as a "Plan Benefit" and collectively as "Plan
Benefits." Directors (including non-employee directors), employees, advisors and
consultants of the Company and any Related Companies are referred to herein as
"Participants."
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SECTION 2. Administration.

     2.1 Board Of Directors And The Committee. The Plan will be administered by
the Board of Directors of the Company, whose construction and interpretation of
the terms and provisions hereof shall be final and conclusive. Any director to
whom a Plan Benefit is awarded shall be ineligible to vote upon his or her Plan
Benefit, but Plan Benefits may be granted any such director by a vote of the
remainder of the directors, except as limited below. The Board of Directors may
in its sole discretion grant Options, issue shares upon exercise of such
Options, grant Stock Awards, grant SARs and approve Stock Purchases, all as
provided in the Plan. The Board of Directors shall have authority, subject to
the express provisions of the Plan, to construe the Plan and its related
agreements, to prescribe, amend and rescind rules and regulations relating to
the Plan, to determine the terms and provisions of the respective Option, Stock
Award, SAR and Stock Purchase agreements, which need not be identical, and to
make all other determinations in the judgment of the Board of Directors
necessary or desirable for the administration of the Plan. The Board of
Directors may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any related agreement in the manner and to the
extent it shall deem expedient to carry the Plan into effect and it shall be the
sole and final judge of such expediency. No director shall be liable for any
action or determination made in good faith. The Board of Directors may delegate
any or all of its powers under the Plan to a Compensation Committee or other
Committee (the "Committee") appointed by the Board of Directors consisting of at
least two members of the Board of Directors. If the Company has a class of stock
registered pursuant to Section 12 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), then members of the Committee shall at all times
be: (i) "outside directors" as such term is defined in Treas. Reg.
1.162-27(e)(3) (or any successor regulation); and (ii) "non-employee directors"
within the meaning of Rule 16b-3 (or any successor rule) under the Exchange
Act, as such terms are interpreted from time to time. If the Committee is so
appointed, all references to the Board of Directors herein shall mean and relate
to such Committee, unless the context otherwise requires.

     2.2 Compliance With Section 162(M) of the Code. section 162(m) of the code,
added by the Omnibus Budget Reconciliation Act of 1993, generally limits the tax
deductibility to publicly held companies of compensation in excess of $1,000,000
paid to certain "covered employees" ("Covered Employees"). If the Company is
subject to Section 162(m) of the Code, it is the Company's intention to preserve
the deductibility of such compensation to the extent it is reasonably
practicable and to the extent it is consistent with the Company's compensation
objectives. For purposes of this Plan, Covered Employees of the Company shall be
those employees of the Company described in Section 162(m)(3) of the Code.

SECTION 3. Eligibility.

     3.1 Incentive Stock Options. Participants who are employees shall be
eligible to receive Incentive Stock Options pursuant to the Plan; provided that
no person shall be granted any Incentive Stock Option under the Plan who, at the
time such Option is

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granted, owns, directly or indirectly, Stock (as defined in Section 4)
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or of its Related Companies, unless the requirements of
Section 6.6(b) hereof are satisfied. In determining whether this 10% threshold
has been reached, the stock attribution rules of Section 424(d) of the Code
shall apply. Directors who are not regular employees are not eligible to receive
Incentive Stock Options.

     3.2 Non-qualified Options, Stock Awards, SARs, Stock Purchase Performance
Units. Non-Qualified Options, Stock Awards, SARs, Performance Units and
authorizations to make Stock Purchases may be granted to any Participant.

     3.3 Generally. The Board of Directors may take into consideration a
Participant's individual circumstances in determining whether to grant an
Incentive Stock Option, a Non-Qualified Option, a Stock Award, an SAR or a
Performance Unit or to approve a Stock Purchase. Granting of any Option, Stock
Award, SAR or Performance Unit or approval of any Stock Purchase for any
individual shall neither entitle that individual to, nor disqualify that
individual from, participation in any other grant of Plan Benefits.

SECTION 4. Stock Subject to Plan.

     Subject to adjustment as provided in Sections 11 and 12 hereof, the stock
to be offered under the Plan shall consist of shares of the Company's Common
Stock, $.01 par value, and the maximum number of shares of stock which will be
reserved for issuance, and in respect of which Plan Benefits may be granted
pursuant to the provisions of the Plan, shall not exceed in the aggregate
5,000,000 shares ("Common Stock" or "Stock"). Such shares may be authorized and
unissued shares or may be treasury shares. If an Option or SAR granted hereunder
shall expire or terminate for any reason without having been exercised in full,
or if the Company shall reacquire any unvested shares issued pursuant to Stock
Awards or Stock Purchases, the unpurchased shares subject thereto and any
unvested shares so reacquired shall again be available for subsequent grants of
Plan Benefits under the Plan. Stock issued pursuant to the Plan may be subject
to such restrictions on transfer, repurchase rights or other restrictions as
shall be determined by the Board of Directors.

SECTION 5. Granting of Options, Stock Awards, Sars and Performance Units
and Approvals of Stock Purchases.

     Options, Stock Awards, SARs and Performance Units may be granted and Stock
Purchases may be approved under the Plan at any time during the 10-year period
beginning November l, 1997 and ending October 31, 2007. The date of grant of an
Option, Stock Award, SAR or Performance Unit or approval of a Stock Purchase
under the Plan will be the date specified by the Board of Directors at the time
the Board of Directors grants such Option, Stock Award, SAR or Performance Unit
or approves such Stock Purchase; provided, however, that such date shall not be
prior to the date on which the Board of Directors takes such action. The Board
of Directors shall have the right, with the consent of a Participant, to convert
an Incentive Stock Option granted under the Plan to a

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Non-Qualified Option pursuant to Section 6.7. Plan Benefits may be granted alone
or in addition to other grants under the Plan.

SECTION 6. Special Provisions Applicable to Options and SARs.

     6.1 Purchase Price and Shares Subject to Options and SARs.

          (a) The purchase price per share of stock deliverable upon the
     exercise of an Option shall be determined by the Board of Directors,
     PROVIDED, HOWEVER, that (i) in the case of an Incentive Stock Option, the
     exercise price shall not be less than 100% of the fair market value of such
     stock on the day the option is granted (except as modified in Section
     6.6(b) hereof), and (ii) in the case of a Non-Qualified Option, the
     exercise price shall not be less than 50% of the fair market value of such
     stock on the day such Option is granted.

          (b) Options granted under the Plan may provide for the payment of the
     exercise price by delivery of (i) cash or a check payable to the order of
     the Company in an amount equal to the exercise price of such Options, (ii)
     shares of Common Stock of the Company owned by the Participant having a
     fair market value equal in amount to the exercise price of the Options
     being exercised, or (iii) any combination of (i) and (ii). The fair market
     value of any shares of the Company's Common Stock which may be delivered
     upon exercise of an Option shall be determined by the Board of Directors.
     The Board of Directors may also permit Participants, either on a selective
     or aggregate basis, to simultaneously exercise Options and sell the shares
     of Common Stock thereby acquired, pursuant to a brokerage or similar
     arrangement, approved in advance by the Board of Directors, and to use the
     proceeds from such sale as payment of the purchase price of such shares.

          (c) If, at the time an Option is granted under the Plan, the Company's
     Common Stock is publicly traded, "fair market value" shall be determined as
     of the last business day for which the prices or quotes discussed in this
     sentence are available prior to the date such Option is granted (the
     "Determination Date") and shall mean (i) the average (on the Determination
     Date) of the high and low prices of the Common Stock on the principal
     national securities exchange on which the Common Stock is traded, if such
     Common Stock is then traded on a national securities exchange; (ii) the
     last reported sale price (on the Determination Date) of the Common Stock on
     the NASDAQ Stock Market if the Common Stock is not then traded on a
     national securities exchange; or (iii) the closing bid price (or average of
     bid prices) last quoted (on the Determination Date) by an established
     quotation service for over-the-counter securities, if the Common Stock is
     not reported on the NASDAQ Stock Market. However, if the Common Stock is
     not publicly traded at the time an Option is granted under the Plan, "fair
     market value" shall be deemed to be the fair value of the Common Stock as
     determined by the Board of Directors after taking into consideration all
     factors which it deems appropriate, including,

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     without limitation, recent sale and offer prices of the Common Stock in
     private transactions negotiated at arm's length.

     6.2 Duration of Options and SARs. Subject to Section 6.6(b) hereof, each
Option and SAR and all rights thereunder shall be expressed to expire on such
date as the Board of Directors may determine, but in no event later than ten
years (for Non-Qualified Stock Options and SARs granted in connection therewith,
ten years and one day) from the day on which the Option or SAR is granted and
shall be subject to earlier termination as provided herein.

     6.3 Exercise of Options and Sars.

          (a) Subject to Sections 6.5 and 6.6(b)(ii) hereof, each Option and SAR
     granted under the Plan shall be exercisable at such time or times and
     during such period as shall be set forth in the instrument evidencing such
     Option or SAR. To the extent that an Option or SAR is not exercised by a
     Participant when it becomes initially exercisable, it shall not expire but
     shall be carried forward and shall be exercisable, on a cumulative basis,
     until the expiration of the exercise period. No partial exercise may be for
     less than ten (10) full shares of Common Stock (or its equivalent).

          (b) The Board of Directors shall have the right to accelerate the date
     of exercise of any installments of any Option or SAR; provided that the
     Board of Directors shall not accelerate the exercise date of any
     installment of any Option granted to a Participant as an Incentive Stock
     Option (and not previously converted into a Non-Qualified Option pursuant
     to Section 6.7) if such acceleration would violate the annual vesting
     limitation contained in Section 422(d)(1) of the Code, which provides
     generally that the aggregate fair market value (determined at the time the
     Option is granted) of the stock with respect to which Incentive Stock
     Options granted to any Participant are exercisable for the first time by
     such Participant during any calendar year (under all plans of the Company
     and any Related Companies) shall not exceed $100,000.

     6.4 Nontransferability of Options and SARs. No Option or SAR granted
under the Plan shall be assignable or transferable by the Participant, either
voluntarily or by operation of law, except (i) by will or the laws of descent
and distribution, (ii) with respect to Non-Qualified Options and SARs, pursuant
to a qualified domestic relations order as defined by the Code or Title I of the
Employee Retirement Income Security Act ("ERISA") or the rules promulgated
thereunder, (iii) if the Participant's non-qualified stock option agreement
granting such options (the "Non-Qualified Stock Option Agreement") or the
Participant's SAR agreement granting such SARs (the "SAR Agreement") provides
otherwise, or (iv) with respect to Incentive Stock Options, if the Board of
Directors is advised by counsel that such transfer or assignment is or shall be
permitted under applicable law or regulation without disqualifying such Options
under Section 422 of the Code. Unless otherwise provided by the Non-Qualified
Stock Option Agreement or the SAR Agreement, during the life of the Participant,
the Option or SAR shall be exercisable

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only by him or her. If any Participant should attempt to dispose of or encumber
his or her Options or SARs, other than in accordance with the applicable terms
of a Non-Qualified Stock Option Agreement or SAR Agreement, his or her interest
in such Options or SARs shall terminate.

     6.5 Effect of Termination of Employment or Death.

          (a) If a Participant ceases to be employed by the Company or a Related
     Company for any reason, including retirement but other than death, any
     Option or SAR granted to such Participant under the Plan shall immediately
     terminate; PROVIDED, HOWEVER, that any portion of such Option or SAR which
     was otherwise exercisable on the date of termination of the Participant's
     employment may be exercised within the three-month period following the
     date on which the Participant ceased to be so employed, but in no event
     after the expiration of the exercise period. Any such exercise may be made
     only to the extent of the number of shares subject to the Option or SAR
     which were purchasable on the date of such termination of employment. If
     the Participant dies during such three-month period, the Option or SAR
     shall be exercisable by the Participant's personal representatives, heirs
     or legatees to the same extent and during the same period that the
     Participant could have exercised the Option or SAR on the date of his or
     her death. The aforementioned three-month period may be extended at the
     discretion of the Board of Directors by written agreement, recognizing that
     such extension may cause reclassification of an ISO as a Non-Qualified
     Option.

          (b) If the Participant dies while an employee of the Company or any
     Related Company, any Option or SAR granted to such Participant under the
     Plan shall be exercisable by the Participant's personal representatives,
     heirs or legatees, for the purchase of that number of shares and to the
     same extent that the Participant could have exercised the Option or SAR on
     the date of his or her death. The Option or SAR or any unexercised portion
     thereof shall terminate unless so exercised prior to the earlier of the
     expiration of one year from the date of such death or the expiration of the
     exercise period. The aforementioned one year period may be extended at the
     discretion of the Board of Directors by written agreement.

     6.6 Designation of Incentive Stock Options; Limitations. Options granted
under the Plan which are intended to be Incentive Stock Options qualifying under
Section 422 of the Code shall be designated as Incentive Stock Options and shall
be subject to the following additional terms and conditions:

          (a) DOLLAR LIMITATION. The aggregate fair market value (determined at
     the time the option is granted) of the Common Stock for which Incentive
     Stock Options are exercisable for the first time during any calendar year
     by any person under the Plan (and all other incentive stock option plans of
     the Company and any Related Companies) shall not exceed $100,000. In the
     event that Section 422(d)(1) of the Code is amended to alter the limitation
     set forth therein so that following such amendment such limitation shall
     differ from the limitation set forth in this Section

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     6.6(a), the limitation of this Section 6.6(a) shall be automatically
     adjusted accordingly.

          (b) 10% SHAREHOLDER. If any employee to whom an Incentive Stock Option
     is to be granted pursuant to the provisions of the Plan is on the date of
     grant the owner of stock possessing more than 10% of the total combined
     voting power of all classes of stock of the Company or any Related
     Companies, then the following special provisions shall be applicable to the
     Incentive Stock Option granted to such individual:

               (i) The option price per share of the Common Stock subject to
          such Incentive Stock Option shall not be less than 110% of the fair
          market value of one share of Common Stock on the date of grant; and

               (ii) The option exercise period shall not exceed five years from
          the date of grant.

          In determining whether the 10% threshold has been reached, the stock
          attribution rules of Section 424(d) of the Code shall apply.

          (c) Except as modified by the preceding provisions of this Section
     6.6, all of the provisions of the Plan shall be applicable to Incentive
     Stock Options granted hereunder.

     6.7 Conversion of Incentive Stock Options Into Non-qualified Options;
Termination of Incentive Stock Options. The Board of Directors, at the written
request of any Participant, may in its discretion take such actions as may be
necessary to convert such Participant's Incentive Stock Options (or any
installments or portions of installments thereof) that have not been exercised
on the date of conversion into Non-Qualified Options at any time prior to the
expiration of such Incentive Stock Options, regardless of whether the
Participant is an employee of the Company or a Related Company at the time of
such conversion. Such actions may include, but not be limited to, extending the
exercise period or reducing the exercise price of the appropriate installments
of such Options. At the time of such conversion, the Board of Directors (with
the consent of the Participant) may impose such conditions on the exercise of
the resulting Non-Qualified Options as the Board of Directors in its discretion
may determine, provided that such conditions shall not be inconsistent with the
Plan. Nothing in the Plan shall be deemed to give any Participant the right to
have such Participant's Incentive Stock Options converted into Non-Qualified
Options, and no such conversion shall occur until and unless the Board of
Directors takes appropriate action. The Board of Directors, with the consent of
the Participant, may also terminate any portion of any Incentive Stock Option
that has not been exercised at the time of such termination.

     6.8 Stock Appreciation Rights. An SAR is the right to receive, without
payment, an amount equal to the excess, if any, of the fair market value of a
share of Common Stock on the date of exercise over the grant price, which amount
will be

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multiplied by the number of shares with respect to which the SARs shall have
been exercised. The grant of SARs under the Plan shall be subject to the
following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the express terms of the Plan, as the Board of
Directors shall deem desirable:

          (a) GRANT. SARs may be granted in tandem with, in addition to or
     completely independent of any Plan Benefit.

          (b) GRANT PRICE. The grant price of an SAR may be the fair market
     value of a share of Common Stock on the date of grant or such other price
     as the Board of Directors may determine.

          (c) EXERCISE. An SAR may be exercised by a Participant in accordance
     with procedures established by the Board of Directors or as otherwise
     provided in any agreement evidencing any SARs. The Board of Directors may
     provide that an SAR shall be automatically exercised on one or more
     specified dates.

          (d) FORM OF PAYMENT. Payment upon exercise of an SAR may be made in
     cash, in shares of Common Stock or any combination thereof, as the Board of
     Directors shall determine.

          (e) FAIR MARKET VALUE. Fair market value shall be determined in
     accordance with Section 6.1(c) with the "Determination Date" being
     determined by reference to the date of grant or the date of exercise of an
     SAR, as applicable.

     6.9 Rights as a Shareholder. The holder of an Option or SAR shall have no
rights as a shareholder with respect to any shares covered by the Option or SAR
until the date of issue of a stock certificate to him or her for such shares.
Except as otherwise expressly provided in the Plan, no adjustment shall be made
for dividends or other rights for which the record date is prior to the date
such stock certificate is issued.

     6.10 Special Provisions Applicable to Non-qualified Options and SARs
Granted to Covered Employees. If the Company is subject to Section 162(m) of the
Code, in order for the full value of Non-Qualified Options or SARs granted to
Covered Employees to be deductible by the Company for federal income tax
purposes, the Company may intend for such Non-Qualified Options or SARs to be
treated as "qualified performance-based compensation" as described in Treas.
Reg. 1.162-27(e) (or any successor regulation). In such case, Non-Qualified
Options or SARs granted to Covered Employees shall be subject to the following
additional requirements:

          (a) such options and rights shall be granted only by the Board of
     Directors; and

          (b) the exercise price of such Options and the grant price of such
     SARs granted shall in no event be less than the fair market value of the
     Common Stock as of the date of grant of such Options or SARs.

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SECTION 7. Special Provisions Applicable to Stock Awards

     7.1 Grants of Stock Awards. The Board of Directors may grant a Participant
a Stock Award subject to such terms and conditions as the Board of Directors
deems appropriate, including, without limitation, restrictions on the pledging,
sale, assignment, transfer or other disposition of such shares and the
requirement that the Participant forfeit all or a portion of such shares back to
the Company upon termination of employment.

     7.2 Conditions. Approvals of Stock Awards may be subject to the following
conditions:

          (a) Each Participant receiving a Stock Award shall enter into an
     agreement (a "Stock Restriction Agreement") with the Company, if required
     by the Board of Directors, in a form specified by the Board of Directors
     agreeing to such restrictions on and terms and conditions of the Stock
     Award as the Board of Directors deems appropriate. The Board may in its
     sole discretion provide that such restrictions, terms or conditions
     terminate, lapse or accelerate without regard to the terms of any Stock
     Restriction Agreement.

          (b) Shares issued and transferred to a Participant pursuant to a Stock
     Award may, if required by the Board of Directors, be deposited with the
     Treasurer or other officer of the Company designated by the Board of
     Directors to be held until the lapse of the restrictions upon such shares,
     and each Participant shall execute and deliver to the Company stock powers
     enabling the Company to exercise its rights hereunder.

          (c) Certificates for shares issued pursuant to a Stock Award shall, if
     the Company shall deem it advisable, bear a legend to the effect that they
     are issued subject to specified restrictions.

          (d) Certificates representing the shares issued pursuant to a Stock
     Award shall be registered in the name of the Participant and shall be owned
     by such Participant. Such Participant shall be the holder of record of such
     shares for all purposes, including voting and receipt of dividends paid
     with respect to such shares.

     7.3 Nontransferability. Shares issued pursuant to a Stock Award may not be
sold, assigned, transferred, alienated, commuted, anticipated, or otherwise
disposed of (except, subject to the provisions of such Participant's Stock
Restriction Agreement, by will or the laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the Code or Title
I of ERISA or the rules promulgated thereunder), or pledged or hypothecated as
collateral for a loan or as security for the performance of any obligation, or
be otherwise encumbered, and are not subject to attachment, garnishment,
execution or other legal or equitable process, prior to the lapse of
restrictions on such shares, and any attempt at action in contravention of this
Section shall be null and void. If

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any Participant should attempt to dispose of or encumber his or her shares
issued pursuant to a Stock Award prior to the lapse of the restrictions imposed
on such shares, his or her interest in such shares shall terminate.

     7.4 Effect of Termination of Employment or Death On Stock Awards. If, prior
to the lapse of restrictions applicable to Stock Awards, the Participant ceases
to be an employee of the Company or the Related Companies for any reason, Stock
Awards to such Participant, as to which restrictions have not lapsed, shall be
forfeited to the Company, effective on the date of the Participant's termination
of employment. The Board of Directors (i) shall have the sole power to decide in
each case to what extent leaves of absence shall be deemed a termination of
employment and (ii) may in its sole discretion provide for complete or partial
exceptions to the requirements of this Section 7.4 as it deems appropriate.

SECTION 8. Special Provisions Applicable to Stock Purchases.

     All approvals of Stock Purchases which provide that the Company has a right
to repurchase the shares subject to such Stock Purchase (the "Restricted
Shares") shall be subject to the terms and conditions set forth in the related
agreement (the "Stock Purchase Restriction Agreement") approved by the Board of
Directors, and shall be subject to the other terms and conditions of this
Section 8.

     8.1 Conditions. All approvals of Stock Purchases shall be subject to the
following conditions:

          (a) Prior to the issuance and transfer of Restricted Shares, the
     Participant shall (i) pay to the Company the purchase price determined by
     the Board of Directors (the "Purchase Price") of the Restricted Shares in
     cash or in such other manner as shall be approved by the Board of Directors
     and (ii) enter into an agreement (a "Stock Restriction Agreement") with the
     Company, if required by the Board of Directors, in a form specified by the
     Board of Directors agreeing to the terms and conditions of the Stock
     Purchase. The Board may in its sole discretion provide that such
     restrictions, terms or conditions terminate, lapse or accelerate without
     regard to the terms of any Stock Restriction Agreement.

          (b) Restricted Shares issued and transferred to a Participant may, if
     required by the Board of Directors, be deposited with the Treasurer or
     other officer of the Company designated by the Board of Directors to be
     held until the lapse of the restrictions upon such Restricted Shares, and
     each Participant shall execute and deliver to the Company stock powers
     enabling the Company to exercise its rights hereunder.

          (c) Certificates for Restricted Shares shall, if the Company shall
     deem it advisable, bear a legend to the effect that they are issued subject
     to specified restrictions.

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          (d) Certificates representing the Restricted Shares shall be
     registered in the name of the Participant and shall be owned by such
     Participant. Such Participant shall be the holder of record of such
     Restricted Shares for all purposes, including voting and receipt of
     dividends paid with respect to such Restricted Shares.

     8.2 Nontransferability. A Participant's Restricted Shares may not be sold,
assigned, transferred, alienated, commuted, anticipated, or otherwise disposed
of (except, subject to the provisions of such Participant's Stock Restriction
Agreement by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order as defined by the Code or Title I of ERISA or
the rules promulgated thereunder), or pledged or hypothecated as collateral for
a loan or as security for the performance of any obligation, or be otherwise
encumbered, and are not subject to attachment, garnishment, execution or other
legal or equitable process, prior to the lapse of restrictions on such
Restricted Shares, and any attempt at action in contravention of this Section
shall be null and void. If any Participant should attempt to dispose of or
encumber his or her Restricted Shares prior to the lapse of the restrictions
imposed on such Restricted Shares, his or her interest in the Restricted Shares
awarded to him or her shall terminate.

SECTION 9. Performance Units.

     9.1 General Requirements. The Board of Directors may grant performance
units ("Performance Units") to Participants. Each Performance Unit shall
represent the right of the Participant to receive an amount based on the value
of the Performance Unit, if performance goals established by the Board of
Directors are met. A Performance Unit shall be based on the fair market value of
a share of Company Stock or on such other measurement base as the Board of
Directors deems appropriate. The Board of Directors shall determine the number
of Performance Units to be granted and the requirements applicable to such
Units.

     9.2 Performance Period and Performance Goals. When Performance Units are
granted, the Board of Directors shall establish the performance period during
which performance shall be measured (the "Performance Period"), performance
goals applicable to the Units ("Performance Goals") and such other conditions of
the Grant as it deems appropriate. Performance Goals may relate to the financial
performance of the Company or its operating units, the performance of Company
Stock, individual performance, or such other criteria as the Board of Directors
deems appropriate.

     9.3 Payment With Respect to Performance Units. At the end of each
Performance Period, the Board of Directors shall determine to what extent the
Performance Goals and other conditions of the Performance Units are met and the
amount, if any, to be paid with respect to the Performance Units. Payments with
respect to Performance Units shall be made in cash, in Company Stock, or in a
combination of the two, as determined by the Board of Directors.

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     9.4 Requirement of Employment. If the Participant ceases to be employed by
the Company (as defined in Section 5(e)) during a Performance Period, or if
other conditions established by the Board of Directors are not met, the
Participant's Performance Units shall be forfeited. The Board of Directors may,
however, provide for complete or partial exceptions to this requirement as it
deems appropriate.

SECTION 10. Requirements of Law.

     10.1 Violations of Law. No shares shall be issued and delivered upon
exercise of any Option or the making of any Stock Award or Stock Purchase or the
payment of any SAR unless and until, in the opinion of counsel for the Company,
any applicable registration requirements of the Securities Act of 1933, as
amended, any applicable listing requirements of any national securities exchange
on which stock of the same class is then listed, and any other requirements of
law or of any regulatory bodies having jurisdiction over such issuance and
delivery shall have been fully complied with. Each Participant may, by accepting
Plan Benefits, be required to represent and agree in writing, for himself or
herself and for his or her transferees by will or the laws of descent and
distribution, that the stock acquired by him, her or them is being acquired for
investment. The requirement for any such representation may be waived at any
time by the Board of Directors.

     10.2 Compliance With Rule 16B-3. If the Company has a class of stock
registered pursuant to Section 12 of the Exchange Act, the intent of this Plan
is to qualify for the exemption provided by Rule 16b-3 under the Exchange Act.
To the extent any provision of the Plan does not comply with the requirements of
Rule 16b-3, it shall be deemed inoperative to the extent permitted by law and
deemed advisable by the Board of Directors and shall not affect the validity of
the Plan. In the event Rule 16b-3 is revised or replaced, the Board of Directors
may exercise discretion to modify this Plan in any respect necessary to satisfy
the requirements of the revised exemption or its replacement.

SECTION II. Recapitalization.

     In the event that dividends are payable in Common Stock of the Company (or
other securities are distributed with respect to the Common Stock) or in the
event there are splits, sub-divisions, combinations, reclassifications,
exchanges of shares of Common Stock of the Company, through merger,
consolidation, sale of all or substantially all the property of the Company,
recapitalization or reorganization, (i) the number of shares available under the
Plan shall be increased or decreased proportionately, as the case may be and
(ii) the number of shares deliverable upon the exercise thereafter of any Option
previously granted and the price for each share shall be increased or decreased
proportionately, as the case may be, but without change in the aggregate
purchase price. The number of shares to which granted SARs relate shall be
increased or decreased proportionately, as the case may be, and the grant price
of such SARs shall be decreased or increased proportionately, as the case may
be.

SECTION 12. Reorganization.

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     In case the Company is merged or consolidated with another corporation and
the Company is not the surviving corporation, or, in case the property or stock
of the Company is acquired by any other corporation, or in case of a
reorganization or liquidation of the Company, the Board of Directors of the
Company, or the board of directors of any corporation assuming the obligations
of the Company hereunder, shall, as to outstanding Plan Benefits, either (i)
make appropriate provision for the protection of any such outstanding Plan
Benefits by the substitution on an equitable basis of appropriate stock of the
Company or of the merged, consolidated or otherwise reorganized corporation
which will be issuable in respect of the shares of Common Stock of the Company,
provided only that the excess of the aggregate fair market value of the shares
subject to the Plan Benefits immediately after such substitution over the
purchase price thereof is not more than the excess of the aggregate fair market
value of the shares subject to such Plan Benefits immediately before such
substitution over the purchase price thereof, (ii) upon written notice to the
Participants, provide that all unexercised Plan Benefits must be exercised
within a specified number of days of the date of such notice or such Plan
Benefits will be terminated, or (iii) upon written notice to the Participants,
provide that the Company or the merged, consolidated or otherwise reorganized
corporation shall have the right, upon the effective date of any such merger,
consolidation, sale of assets or reorganization, to purchase all Plan Benefits
held by each Participant and unexercised as of that date at an amount equal to
the aggregate fair market value on such date of the shares subject to the Plan
Benefits held by such Participant over the aggregate purchase price therefor,
such amount to be paid in cash or, if stock of the merged, consolidated or
otherwise reorganized corporation is issuable in respect of the shares of the
Common Stock of the Company, then, in the discretion of the Board of Directors,
in stock of such merged, consolidated or otherwise reorganized corporation equal
in fair market value to the aforesaid amount. In any such case the Board of
Directors shall, in good faith, determine fair market value and may, in its
discretion, (i) advance the lapse of any waiting or installment periods and
exercise dates, (ii) accelerate the vesting of any outstanding Options and SARs,
(iii) advance the lapse of any restrictions and conditions on any outstanding
Stock Awards or Stock Purchases and/or (iv) make payment in settlement of any
outstanding Performance Units, in an amount determined by the Board of
Directors, based on the Participant's target payment for the Performance Period
and the portion of the Performance Period that precedes such event.

SECTION 13. No Special Employment Rights.

     Nothing contained in the Plan or in any Plan Benefit documentation shall
confer upon any Participant receiving a grant of any Plan Benefit any right with
respect to the continuation of his or her employment by the Company (or any
Related Company) or interfere in any way with the right of the Company (or any
Related Company), subject to the terms of any separate employment agreement to
the contrary, at any time to terminate such employment or to increase or
decrease the compensation of the Participant from the rate in existence at the
time of the grant of any Plan Benefit. Whether an authorized leave of absence,
or absence in military or government service, shall constitute termination of
employment shall be determined by the Board of Directors.

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SECTION 14. Amendment of the Plan.

     The Board of Directors may at any time and from time to time modify or
amend the Plan in any respect. The termination or any modification or amendment
of the Plan shall not, without the consent of a recipient of any Plan Benefit,
affect his or her rights under any Plan Benefit previously granted. With the
consent of the affected Participant, the Board of Directors may amend
outstanding agreements relating to any Plan Benefit, in a manner not
inconsistent with the Plan. The Board of Directors hereby reserves the right to
amend or modify the terms and provisions of the Plan and of any outstanding
Options to the extent necessary to qualify any or all Options under the Plan for
such favorable federal income tax treatment (including deferral of taxation upon
exercise) as may be afforded incentive stock options under Section 422 of the
Code, provided, however, that the consent of an optionee is required if such
amendment or modification would cause unfavorable income tax treatment for such
optionee.

SECTION 15. Withholding.

     The Company's obligation to deliver shares of stock upon the exercise of
any Option or the granting of a Stock Award or to make payment upon any exercise
of any SAR or making of a Stock Purchase shall be subject to the satisfaction by
the Participant of all applicable federal, state and local income and employment
tax withholding requirements.

SECTION 16. Effective Date and Duration of the Plan.

     16.1 Effective Date. The Plan shall become effective on November 1, 1997,
but no Incentive Stock Option granted under the Plan shall become exercisable
unless and until the Plan shall have been approved by the Company's
shareholders. If such shareholder approval is not obtained within 12 months
after the date of the Board's adoption of the Plan, then any Incentive Stock
Options previously granted under the Plan shall terminate and no further
Incentive Stock Options shall be granted. Subject to such limitation, Options
may be granted under the Plan at any time after the effective date and before
the date fixed herein for termination of the Plan.

     16.2 Duration. Unless sooner terminated in accordance with Section 12
hereof, the Plan shall terminate upon the earlier of (i) October 31, 2007, or
(ii) the date on which all shares available for issuance under the Plan shall
have been issued pursuant to any Stock Awards or Stock Purchases or the exercise
or cancellation of Options and SARs granted hereunder. If the date of
termination is determined under (i) above, then Plan Benefits outstanding on
such date shall continue to have force and effect in accordance with the
provisions of the instruments evidencing such Plan Benefits.

SECTION 17. Governing Law.

     The Plan and all actions taken thereunder shall be governed by the laws of
the State of Texas.

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