CORONADO INDUSTRIES, INC.

                             STOCK OPTION AGREEMENT
                          UNDER 1998 STOCK OPTION PLAN

                                                Date of Grant: December 21, 1998

         CORONADO  INDUSTRIES,  INC., a Nevada  corporation (the  "Corporation")
hereby  grants to GARY R. SMITH  (the  "Optionee"),  pursuant  to the 1998 Stock
Option Plan of the  Corporation  (the "Plan")  which is  incorporated  herein by
reference,  an option to  purchase a total of FOUR  HUNDRED  THOUSAND  (400,000)
Shares as defined in the Plan (the  "Option"),  on the terms and  conditions set
forth in the Plan and  hereinafter.  This Option shall not be exercisable  later
than December 20, 2008 (herein referred to as the "Expiration Date").

         1. VESTING.  Subject to the terms and conditions of this Agreement, the
Shares  subject to this Option shall be fully vested and  exercisable as of this
date of grant, December 21, 1998.

         2. OPTION PRICE. The Option price for the 400,000 Shares of this Option
shall be $.05 per share.

         3. TERMINATION. This option and all rights hereunder to the extent such
rights shall not have been exercised shall terminate and become null and void if
the Optionee ceases to be a employee of the Company or its subsidiaries (whether
by resignation,  retirement,  dismissal, death or otherwise), except that (a) in
the event of the death or  disability  of the Optionee  while an employee of the
Company,  this  option  only to the extent  exercisable  at the date of death or
disability  may be  exercised  within the  applicable  period of time and by the
persons  indicated  in Article VII (6) of the Plan,  and (b) in the event of the
termination  of the  Optionee's  employment by the Company for any other reason,
this option only to the extent  exercisable at the date of such  termination may
be exercised  prior to the  expiration of three (3) months from the date of such
termination,  and shall terminate in all other respects; PROVIDED, HOWEVER, that
in no event may this option be exercised after the Expiration Date.

         4. EXERCISE.  This Option is  exercisable  with respect to all, or from
time to time with respect to any portion,  of the Shares  described  above which
have at that time become vested, by delivering  written notice of such exercise,
in the form prescribed by the Board, to the principal office of the Secretary of
the Corporation. Each such notice shall be accompanied by payment in full of the
Option price of such Shares.  The Corporation  hereby grants to the Optionee the
right to make payment for the Shares of this Option  pursuant to Article VIII of
the Plan (i.e., with Stock Appreciation Rights).
<PAGE>
         5.  NON-TRANSFERABLE.  This Option shall during the Optionee's lifetime
be  exercisable  only by the  Optionee,  and  neither  this Option nor any right
thereunder  shall  be  transferable  except  by  will or  laws  of  descent  and
distribution,  or be subject to attachment,  execution or other similar process.
In the  event of any  attempt  by the  Optionee  to  alienate,  assign,  pledge,
hypothecate or otherwise dispose of the Option or any right  thereunder,  except
as provided for herein, or in the event of the levy of any attachment, execution
or similar process upon the rights or interest hereby conferred, the Corporation
may  terminate  this  Option by notice to the  Optionee  and this  Option  shall
thereupon become null and void.

         6. LEGAL RESTRICTIONS. If the sale of the Shares purchased hereunder is
not  registered  under the Securities Act of 1933, but an exemption is available
which  requires  an  investment  or other  representation,  the  Optionee  shall
represent and agree at the time of exercise that the Shares being  acquired upon
exercising this Option are being acquired for  investment,  and not with view to
the sale or distribution  thereof, and shall make such other  representations as
are deemed  necessary or  appropriate  by the  Corporation  and its counsel.  In
addition,  the Optionee agrees that the following  legend may be included on the
certificate representing the Shares:

         The shares represented hereby have not been registered under the United
States  Securities  Act of 1933, as amended,  and may not be sold,  pledged,  or
otherwise  transferred without an effective  registration thereof under such act
or an opinion of counsel, satisfactory to the company and its counsel, that such
registration is not required.

         7. CORPORATE TRANSACTIONS.

         (a) If the Corporation is merged or  consolidated  into or with another
corporation (other than by a merger or consolidation in which the Corporation is
the surviving  corporation) or the Corporation or the  Corporation's  assets are
purchased by another company in exchange for stock,  the Corporation  shall give
the  Optionee  written  notice  of  the  Corporation's  initial  or  preliminary
agreement to the transaction and the details of the transaction at least 60 days
prior to the closing of the transaction and an additional 30 days written notice
prior to the closing date of the transaction and each postponed  closing date of
the  transaction.  The then  exercisable but  unexercised  Shares granted in the
Option may be exercised by the Optionee at any time prior to the closing date of
the  transaction and such exercised  Shares shall then be deemed  outstanding at
the close of the transaction.

                                       2
<PAGE>
         8. MISCELLANEOUS.

         (a) Neither the granting of this Option nor the exercise  thereof shall
be  construed  as  conferring  upon the  Optionee  any right to  continue in the
engagement of the Corporation or any of its subsidiaries, or as interfering with
or  restricting  in any way the  right  of the  Corporation  to  terminate  such
engagement at any time.

         (b)  Neither the  Optionee,  nor any person  entitled  to exercise  his
rights in the event of his death,  shall have any of the rights of a stockholder
with respect to the Shares  subject to this  Option,  except after such date the
Optionee  or such person has been  issued the Shares by the  Corporation  or its
agent.

         (c) The Corporation is relieved from any liability for the non-issuance
or  non-transfer  or any delay in the issuance or transfer of any Shares subject
to this Option which results from the inability of the Corporation to obtain, or
in any delay in obtaining,  from each  regulatory body having  jurisdiction  all
requisite   authority  to  issue  or  transfer  Shares  of  the  Corporation  in
satisfaction of this Option if counsel for the Corporation  deems such authority
necessary for the lawful issuance or transfer of any such shares.

         (d) No Shares  acquired by  exercise  of this  Option  shall be sold or
otherwise  disposed of in  violation of any federal or state  securities  law or
regulation in the Untied States.

         (e)  This  Option   shall  be  exercised   in   accordance   with  such
administrative  regulations  as the  Corporation's  Board  may from time to time
adopt. All decisions of the Board upon any legitimate question arising under the
Plan or under this Stock Option  Agreement  shall be conclusive and binding upon
the Optionee and all other persons, if determined in good faith.

         IN WITNESS WHEREOF, this Stock Option Agreement has been executed as of
the day and year first written above.


                                      CORONADO INDUSTRIES, INC.


                                      By: /s/ G. Richard Smith
                                         ---------------------------
                                         G. Richard Smith, Chairman

                                       3