Document:

EXECUTIVE SEVERANCE AGREEMENT

     THIS  AGREEMENT  is  entered  into and effective this 22nd day of February,
2001,  ("Effective  Date")  by and between Coastal Bancorp, Inc. (the "Company")
and  Coastal  Banc  ssb  (the  "Bank")  and  Manuel  J.  Mehos (the "Employee").

     WHEREAS,  the  Employee had heretofore been employed by the Company and the
Bank  as  an  executive  officer, and the Company and the Bank deems it to be in
their  best interest to enter into this Agreement as additional incentive to the
Employee  to  continue as an executive employee of the Company and the Bank; and

     WHEREAS,  the  parties  desire  by  this  writing  to  set  forth  their
understanding  as  to  their  respective  rights  and obligations in the event a
"change  in  control" (as defined herein) occurs with respect to the Bank or the
Company;

     NOW,  THEREFORE,  the  undersigned  parties  AGREE  as  follows:

     1.     Defined  Terms
            --------------

          When  used  anywhere  in the Agreement, the following terms shall have
the  meaning  set  forth  herein.

          (a)     "Change  in  Control"  shall  mean  any  one  of the following
events:  (i) where, during any period of two consecutive years, individuals (the
"Continuing Directors") who at the beginning of such period constitute the Board
of  Directors  of  the  Bank or the Company (the "Existing Board") cease for any
reason  to  constitute at least two-thirds thereof, provided that any individual
whose  election or nomination for election as a member of the Existing Board was
approved  by  a  vote of at least two-thirds of the Continuing Directors then in
office shall be considered a Continuing Director following:  (A) the acquisition
by  a  person of ownership, holding or power to vote more than 25% of the Bank's
or  the Company's voting stock, (B) the acquisition by any person of the ability
to  control  the election of a majority of any class or classes of the Bank's or
the  Company's directors, or (C) the acquisition of a controlling influence over
the management or policies of the Bank or the Company defined as set forth in 12
C.F.R.  574.4(b),(c)  and  (d)  by  any person or to persons acting as a "group"
(within the meaning of Section 13(d) of the Securities Exchange Act of 1934), or
(ii)  the  sale,  exchange, lease, transfer or other disposition (in one or more
transactions)  to  any  person  of  all  or  a  substantial  part of the assets,
liabilities  or  business  of  the  Company  or  the  Bank,  (iii) any merger or
consolidation or share exchange of the Company or the Bank with any other person
which subsequent thereto the Company or the Bank is not the surviving entity, or
(iv)  any  change  in  business of the Company or the Bank such that the Company
does  not  own  the  voting  stock  of  an insured depository institution or the
business  of  the  Bank  is  not  as  an  insured  depository  institution.
Notwithstanding  the  foregoing,  in  the  case  of (i) or (ii) or (iii) hereof,
change  of  ownership  or  control of the Bank by the Company itself to or among
direct or indirect wholly-owned subsidiaries of the Company shall not constitute
a  Change  in  Control.  For  purposes of this paragraph only, the term "person"
refers  to  an  individual  or  a  corporation,  limited  liability  company,
partnership,  trust,  association,  joint  venture,  pool,  syndicate,  sole
proprietorship,  unincorporated  organization  or  any  other form of entity not
specifically  listed  herein.  The decision of the Bank's non-employee directors
as  to  whether or not a Change in Control, as defined herein, has occurred, and
the  date  of  such  occurrence,  shall  be  conclusive  and  binding.

     (b)     "Code"  shall  mean  the  Internal Revenue Code of 1986, as amended
from time to time, and as interpreted through applicable rulings and regulations
in  effect  from  time  to  time.

     (c)     "Code   280G  Maximum"  shall  mean  product  of 2.99 and the "base
amount"  as  defined  in  Code   280G(b)(3).

     (d)     "Good Reason" shall mean any of the following events, which has not
been  consented  to  in advance by the Employee in writing:  (i) the requirement
that  the  Employee  move  his  personal  residence,  or  perform  his principal
executive  functions,  more than thirty (30) miles from his primary office as of
the  date  of the Change in Control; (ii) a material (defined to be 10% or more)
reduction  in  the  Employee's base compensation as in effect on the date of the
Change  in  Control  or  as the same may be increased from time to time; (iii) a
successor  to  the  Company or the Bank fails or refuses to assume the Company's
and  the  Bank's obligations under this Agreement; (iv) the Company, the Bank or
successor  thereto breaches any provision of this Agreement; or (v) the Employee
is  terminated  for  other  than  just  cause  after  the  Change  in  Control.

     (e)     "Just  Cause"  shall  mean,  in the good faith determination of the
Company's  and  the  Bank's  Boards  of  Directors,  the   Employee's   personal
dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving
personal profit, intentional failure to perform stated duties, willful violation
of  any  law,  rule  or  regulation  (other  than  traffic violations or similar
offenses)  or  final cease-and-desist order, or material breach of any provision
of  this Agreement.  The Employee shall have the right to make a presentation to
the Board of Directors with counsel prior to the rendering of such determination
by the Board.  The Employee shall have no right to receive compensation or other
benefits for any period after termination for Just Cause.  No act, or failure to
act,  on  the Employee's part shall be considered "willful" unless he has acted,
or  failed to act, with an absence of good faith and without a reasonable belief
that  his  action or failure to act was in the best interest of the Bank and the
Company.

     (f)     "Protected  Period"  shall  mean the period that begins on the date
six  months before a Change in Control and ends on the later of the third annual
anniversary  of  the Change in Control or the expiration date of this Agreement.

     2.     Trigger  Events
            ---------------

     The  Employee shall be entitled to collect the severance benefits set forth
in  Section  3  of  this Agreement in the event that (a) a Change of Control has
occurred  and  the  Employee  voluntarily  terminates  his employment within the
30-day  period  beginning on the first anniversary of the date of the occurrence
of  a  Change  in  Control,  (b)  the Employee voluntarily terminates employment
within  90  days  of  an  event that both occurs during the Protected Period and
constitutes  Good Reason, or (c) the Bank, the Company, or their successor(s) in
interest  terminate  the  Employee's  employment  for any reason other than Just
Cause  during  the  Protected  Period.

     3.     Amount  of  Severance  Benefit
            ------------------------------

     (a)     If  the  Employee  becomes  entitled  to collect severance benefits
pursuant  to Section 2(a) hereof, the Company and/or the Bank shall pay Employee
one  (1)  times  the  annual  salary  and  bonus  or incentive compensation (not
including  stock  compensation plans) paid to Employee by the Company and/or the
Bank  during  the immediately preceding year of the term of employment, such sum
to  be paid within five (5) days of the date that Employee's employment actually
ceases.
     (b)     If  the  Employee  becomes  entitled  to collect severance benefits
pursuant  to  Section 2(b) or 2(c) hereof, the Company and/or the Bank shall pay
Employee  2.99  times the annual salary and bonus or incentive compensation (not
including  stock  compensation plans) paid to Employee by the Company and/or the
Bank  during  the immediately preceding year of the term of employment, such sum
to  be paid within five (5) days of the date that Employee's employment actually
ceases.

     (c)     The  provisions  of  this  Agreement  shall  not reduce any amounts
otherwise  payable to the Employee or in any way diminish the employee's rights,
whether  existing  now or hereafter under any benefit plan of the Company or the
Bank.  The  Employee shall not be obligated to mitigate any payments entitled to
be  received  hereunder.

     (d)     The foregoing payments and benefits shall be paid to the Employee's
beneficiaries  by  testate  or  intestate  succession in the event of Employee's
death  during  the  period  during  which  such  payments and benefits are being
provided.

     (e)     In  the event that the Employee and the Company or the Bank, as the
case  may  be  (hereinafter, in this Section 3(e), the "Company") agree that the
Employee  has  collected an amount exceeding the Code  280G Maximum, the parties
agree  as  follows:

          (i)     In  the calendar year that the Employee is entitled to receive
a  payment  or  benefits under the provisions of this Agreement, the independent
accountants  of  the  Company shall determine if an excess parachute payment (as
defined  in  Section  4999  of the Code, as amended, and any successor provision
thereto)  exists.

               Such  determination  shall  be  made  after taking any reductions
permitted  pursuant  to Section 280G of the Code and the regulations thereunder.
Any  amount  determined  to  be  an  excess  parachute payment after taking into
account  such  reductions  shall be hereafter referred to as the "Initial Excess
Parachute  Payment".  As  soon  as  practicable after a Change in Control of the
Company  or  the Bank, the Initial Excess Parachute Payment shall be determined.
Immediately  following  a  Change  in  Control  of  the Company or the Bank, the
Company  or  the  Bank shall pay the Employee, subject to applicable withholding
requirements  under  applicable  state  or  federal  law  an  amount  equal  to:

(a)     twenty  (20)  percent  of  the Initial Excess Parachute Payment (or such
other  amount  equal  to  the  tax  imposed under Section 4999 of the Code), and

(b)     such additional amount (tax allowance) as may be necessary to compensate
the  Employee  for  the  payment by the Employee of state and federal income and
excise  taxes on the payment provided under Clause (a) and on any payments under
this  Clause (b).  In computing such tax allowance, the payment to be made under
Clause  (a)  shall  be multiplied by the "gross up percentage" ("GUP").  The GUP
shall  be  determined  as  follows:

                    GUP  =     Tax  Rate
                               ---------
                         1  -  Tax  Rate

The  Tax  Rate  for  purposes of computing the GUP shall be the highest marginal
federal  and  state  income  and  employment-related  tax  rate,  including  any
applicable  excise tax rate, applicable to the Employee in the year in which the
payment  under  Clause  (a)  is  made.

     (ii)     Notwithstanding  the  foregoing,  if  it  shall  subsequently  be
determined  in  a  final  judicial  determination  or  a  final  administrative
settlement to which the Employee is a party that the excess parachute payment is
defined  in  Section  4999 of the Code, reduced as described above, is different
from the Initial Excess Parachute Payment (such different amount being hereafter
referred  to as the "Determinative Excess Parachute Payment") then the Company's
independent accountants shall determine the amount (the "Adjustment Amount") the
Employee must pay to the Company or the Bank or the Company or the Bank must pay
to the Employee in order to put the Employee (or the Company or the Bank, as the
case  may  be) in the same position the Employee (or the Company or the Bank, as
the  case  may  be)  would have been if the Initial Excess Parachute Payment had
been  equal  to  the Determinative Excess Parachute Payment.  In determining the
Adjustment  Amount,  the independent accountants shall take into account any and
all  taxes (including any penalties and interest) paid by or for the Employee or
refunded  to the Employee or for the Employee's benefit.  As soon as practicable
after  the  Adjustment  Amount  has  been so determined, the Company or the Bank
shall  pay the Adjustment Amount to the Employee or the Employee shall repay the
Adjustment  Amount  to  the  Company  or  the  Bank,  as  the  case  may  be.

     (iii)     In  any  calendar  year  that  the  Employee receives payments of
benefits  under  this  Agreement,  the  Employee  shall  report on his state and
federal  income  tax  returns  such  information  as  is  consistent  with  the
determination  made  by  the independent accountants of the Company as described
above.  The  Company and the Bank shall indemnify and hold the Employee harmless
from  any  and  all  losses,  costs  and expenses (including without limitation,
reasonable  attorney's  fees,  interest, fines and penalties) which the Employee
incurs  as  a  result of so reporting such information.  Employee shall promptly
notify the Company and the Bank in writing whenever the Employee receives notice
of  the  institution  of  a  judicial  or  administrative  proceeding, formal or
informal,  in  which the federal tax treatment under Section 4999 of the Code of
any amount paid or payable under this the Employment Agreement is being reviewed
or  is  in dispute.  The Company or the Bank shall assume control at its expense
over  all  legal and accounting matters pertaining to such federal tax treatment
(except  to  the extent necessary or appropriate for the Employee to resolve any
such  proceeding with respect to any matter unrelated to amounts paid or payable
pursuant  to  this  contract)  and  the  Employee shall cooperate fully with the
Company  or  the Bank in any such proceeding.  The Employee shall not enter into
any  compromise  or  settlement or otherwise prejudice any rights the Company or
the  Bank  may have in connection therewith without prior consent of the Company
or  the  Bank.

     4.     Term  of  the  Agreement
            ------------------------

     The term of this Agreement shall be to and through May 31, 2003, subject to
earlier  termination as provided herein.  Beginning on June 1, 2003, and on each
day thereafter, the term of this Agreement shall be extended for a period of one
day in addition to the then-remaining term, provided that the Employers have not
given notice to the Executive in writing at least 30 days prior to such day that
the  term  of this Agreement shall not be extended further.  Reference herein to
the  term  of  this  Agreement  shall  refer  to both such initial term and such
extended  terms.  The  Board  of  Directors of the Corporation shall review on a
periodic  basis (and no less frequently than annually) whether to permit further
extensions  of the term of this Agreement.  As part of such review, the Board of
Directors  shall  consider  all  relevant  factors,  including  the  Executive's
performance  hereunder, and shall either expressly approve further extensions of
the  time  of  this  Agreement  or  decide  to  provide notice to the contrary."

     5.     Termination  or  Suspension  Under  Federal  Law
            ------------------------------------------------

     Any payments made to the Employee pursuant to this Agreement, or otherwise,
are subject to and conditioned upon their compliance with 12 U.S.C.  1828(k) and
any  regulations  promulgated  thereunder.

     6.     Expense  Reimbursement
            ----------------------

     In  the  event that any dispute arises between the Employee and the Company
or  the  Bank  as  to  the  terms  or interpretations of this Agreement, whether
instituted  by  formal legal proceedings or otherwise, including any action that
the  Employee  takes to enforce the terms of this Agreement or to defend against
any  action  taken  by the Company or the Bank, the Employee shall be reimbursed
for  all  costs and expenses, including reasonable attorneys' fees, arising from
such  dispute, proceedings or actions, provided that the Employee shall obtain a
final  judgment in favor of the Employee in a court or competent jurisdiction or
in  binding arbitration under the rules of the American Arbitration Association.
Such  reimbursement,  which  may  be  in  advance  of  any  final  judgment  or
determination  in arbitration, if requested in writing by the Employee, shall be
paid  within  ten  (10) days of Employee's furnishing to the Company or the Bank
written  evidence,  which  may be in the form, among other things, or a canceled
check  or  receipt,  of  any  costs  or  expenses  incurred  by  the  Employee.

     7.     Successors  and  Assigns
            ------------------------

     (a)     This  Agreement  shall  inure to the benefit of and be binding upon
any  corporate  or  other  successor  or assign of the Company or the Bank which
shall  acquire,  directly  or  indirectly, by merger, consolidation, purchase or
otherwise,  all  or  substantially  all  of  the  assets or stock of the Bank or
Company.  This Agreement shall inure to the benefit of and be enforceable by the
Employee's  personal  and  legal  representatives,  executors,  administrators,
successors,  heirs, devisees and legatees.  If the Employee should die while any
amounts  are  still payable to him/her hereunder, all such amounts shall be paid
in  accordance  with  the  terms  of  this  Agreement to the Employee's devisee,
legatee  or  other  designee, or if there be no such designee, to the Employee's
Estate.

     (b)     Since  the  Company and the Bank are contracting for the unique and
personal  skills of the Employee, the Employee shall be precluded from assigning
or delegating his rights or duties hereunder without first obtaining the written
consent  of  the  Company  or  the  Bank.

     8.     Amendments
            ----------

     No  amendments  or additions to this Agreement shall be binding unless made
in  writing  and  signed  by  all  of  the  parties,  except as herein otherwise
specifically  provided.  No  waiver  by  either  party hereto at any time of any
breach  by  the  other  party  hereto,  or  of compliance with, any condition or
provision  of  this Agreement to be performed by such other party will be deemed
to be a waiver of similar or dissimilar provisions or conditions, at the same or
any  prior  or  subsequent  time.

     9.     Applicable  Law
            ---------------

     Except  to  the  extent  preempted by Federal law, the laws of the State of
Texas  shall  govern this Agreement in all respects, whether as to its validity,
construction,  capacity,  performance  or  otherwise.

     10.     Severability
             ------------

     The  provisions  of  this  Agreement  shall  be  deemed  severable  and the
invalidity or unenforceability of any provision shall not affect the validity or
enforceability  of  the  other  provisions  hereof.

     11.     Entire  Agreement
             -----------------

     This Agreement, together with any understanding or modifications thereof as
agreed  to  in  writing  by  the  parties, shall constitute the entire agreement
between  the  parties  hereto.

     12.     Notices
             -------

     For  purposes  of this Agreement, notices and other communications provided
for  in this Agreement shall be in writing and shall be deemed to have been duly
given  when  delivered  or  mailed  by U.S. registered or certified mail, return
receipt  requested, postage prepaid, as follows:  If to the Company or the Bank:
Chairman  of  the Board and Chief Executive Officer, Coastal Bancorp, Inc., 5718
Westheimer,  Suite  600,  Houston,  Texas  77057.  If  to  the  Employee:

     Manuel  J.  Mehos
     5322  Institute
     Houston,  Texas  77005
     ss#  ###-##-####

                            Signature Page to Follow

<PAGE>

     IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year  first  herein  above  written.

ATTEST:                            COASTAL  BANCORP,  INC.

/s/  Linda  B.  Frazier            By:     /s/  James  C.  Niver
-----------------------                    ---------------------
     Secretary                             James  C.  Niver
                                           Chairman,  Compensation  Committee

                                   By:     /s/  D.  Fort  Flowers,  Jr.
                                           ----------------------------
                                           D.  Fort  Flowers,  Jr.

ATTEST:                            COASTAL  BANC  ssb

/s/  Linda  B.  Frazier            By:     /s/  James  C.  Niver
-----------------------                    ---------------------
     Secretary                             James  C.  Niver
                                           Chairman,  Compensation  Committee

                                   By:     /s/  D.  Fort  Flowers,  Jr.
                                           ----------------------------
                                           D.  Fort  Flowers,  Jr.

WITNESS:

/s/  Pamela  S.  Watkins           By:     /s/  Manuel  J.  Mehos
------------------------                   ----------------------
     Pamela  S.  Watkins                   Manuel  J.  Mehos
                                           Chairman  of  the  Board  and
                                           Chief  Executive  OfficerINCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
                           UNITED CAPITAL CORPORATION

                  This is a Stock  Option  Plan (the  "Plan") of United  Capital
Corporation, a Delaware corporation (the "Corporation"), under which options may
be granted from time to time to eligible  employees of the Corporation or any of
its  subsidiary   corporations  to  purchase  shares  of  common  stock  of  the
Corporation,  par value $.10 per share,  subject to the limitations,  provisions
and requirements hereinafter stated.

                  The Plan is as follows:

1.                PURPOSE OF PLAN

                  The general  purpose of the Plan is to aid in maintaining  and
developing  a  management   capable  of  assuring  the  future  success  of  the
Corporation. The Plan is designed to aid the Corporation and its subsidiaries in
retaining  the services of executives  and key  employees and in attracting  new
management personnel; to offer such personnel additional incentives to put forth
maximum   efforts  for  the  success  of  the  business;   and  to  afford  them
opportunities to obtain or increase a proprietary interest in the Corporation on
a favorable basis and, thereby, to have an opportunity to share in its success.

                  Furthermore,  the Plan will  enable the  Corporation  to grant
"incentive stock options" as provided in Section 422A of the Internal Revenue of
1986, as amended,  in  substitution  for "incentive  stock  options"  previously
granted  by  Metex  Corporation,   a  Delaware  corporation   ("Metex"),   which
corporation   will  be  a  wholly-owned   subsidiary  of  the  Corporation  upon
consummation  of the  merger of Metex with and into MTX  Merger  Corporation,  a
Delaware corporation and a wholly-owned subsidiary of the Corporation,  pursuant
to the terms and  provisions  of an Amended and Restated  Agreement  and Plan of
Reorganization,  dated as of November  3, 1988 and amended on January 24,  1989.
The substituted  options to be granted by the Corporation shall be substantially
similar to, but not more  favorable  than,  the terms of the options  previously
granted by Metex, to the extent practicable.

2.                AUTHORITY TO GRANT OPTIONS

                  The  Board  of   Directors,   or  a  stock  option   committee
(hereinafter  the  "Committee")  designated by it, may from time to time, in its
discretion, grant to eligible employees or non-employees, including non-employee
Directors and  Consultants,  options  (hereinafter the "Options") to purchase an
aggregate  number not to exceed  1,325,000  shares of the Common Stock ($.10 par
value) of the Corporation (hereinafter the "Stock"), on the terms and subject to
the conditions hereinafter provided. The Stock shall be made available from

<PAGE>

authorized  and unissued  Stock or from Stock issued and held in the Treasury of
the   Corporation,   as  shall  be   determined   by  the  Board  of  Directors.
Notwithstanding  anything contained in the Plan to the contrary, no recipient of
options may be granted  options to  purchase in excess of ninety  percent of the
maximum number of shares of stock authorized to be issued under the Plan.

3.                ADMINISTRATION

                  This Plan shall be  administered by the Board of Directors or,
at their discretion, by a Committee consisting of not less than three members of
the Board of Directors,  a majority of whom shall not be eligible to participate
in the Plan.  Decisions and  designations  of the  Committee  shall be made by a
majority of its members.  Subject to the  provisions of this Plan,  the Board of
Directors  or the  Committee,  as the case may be,  shall  have  full  power and
authority  to  construe,   interpret  and  administer  this  Plan  and  to  make
determinations  which shall be final,  conclusive  and binding upon all persons,
including, without limitation, the Corporation, the stockholders,  the directors
(if the Committee shall act) and any Option Holder, as hereinafter defined, and,
by a resolution  or  resolutions  providing for the creation and issuance of any
Option,  to fix the terms upon which,  the time or times at or within which, and
the price or prices at which  any Stock may be  purchased  from the  Corporation
upon the exercise of such Option, which terms, time or times and price or prices
shall,  in  every  case,  be set  forth  or  incorporated  by  reference  in the
instrument or instruments evidencing such Option.

4.                ELIGIBILITY

                  Full-time  employees of the Corporation  and its  subsidiaries
shall be  eligible  to  participate  in this Plan and  receive  Options and will
hereinafter be referred to as "Eligible Employees".

5.                ALLOTMENT OF STOCK

                  Options may be allotted to such Eligible Employees  (sometimes
individually  referred  to as an "Option  Holder"  and  collectively  as "Option
Holders"),  and in such amounts, as the Board of Directors or the Committee,  as
the case may be, in its discretion, may from time to time determine.

6.                TERM OF PLAN

                  No Option  shall be granted or modified  pursuant to this Plan
after December 31, 2008, but the expiration of the Options  theretofore  granted
may extend beyond that date.

                                       -2-

<PAGE>

7.                TERMS AND CONDITIONS OF OPTIONS

                  Subject to the terms and  conditions of this Plan, all Options
granted under this Plan shall be in such form and upon such terms and conditions
as the  Board  of  Directors  or the  Committee,  as the  case  may  be,  in its
discretion, may from time to time determine, except that:

                           (a)  Option  Price - The  Option  price  per share of
                  Stock with respect to each Option shall be  determined  by the
                  Board of  Directors or the  Committee,  as the case may be, on
                  the date the Option is granted;  provided,  however, that such
                  price shall not be less than the fair market  value of a share
                  of Stock on the date of grant;  and  provided,  further,  that
                  such  price  shall not be less  than  110% of the fair  market
                  value of a share of Stock on the date of grant for an employee
                  who receives  incentive stock options and who on such date, is
                  the owner of more than 10% of the total combined  voting power
                  of all classes of stock of the Corporation (a "10% Holder").

                           (b) Period of Option - In no event  (including  those
                  specified in paragraphs (f) and (g) hereof),  shall the period
                  of an Option exceed ten (10) years (or five years with respect
                  to a 10% Holder who receives  the grant of an incentive  stock
                  option) from the date on which the Option is granted.

                           (c)  Payment - Payment for all Stock shall be made in
                  cash at the  time  that an  Option,  or any part  thereof,  is
                  exercised,  and no Stock  shall be issued  until full  payment
                  therefor has been made.

                           (d) Exercise of Option - An Option Holder must remain
                  in the continuous  employ of the Corporation or any subsidiary
                  of the Corporation for one (1) year from the date on which the
                  Option  is  granted  before  he may  exercise  any part of the
                  Option;  thereafter  and  during the life of the  Option,  the
                  Option may be exercised as follows:

                                    (i)  After   one  (1)  year  of   continuous
                           employment  from  the  date on which  the  Option  is
                           granted,  not exceeding  one-third (1/3) of the Stock
                           subject to the Option;

                                    (ii)  After  two  (2)  years  of  continuous
                           employment  from  the  date on which  the  Option  is
                           granted,  not exceeding one-third (1/3) of the shares
                           subject to the Option,  plus any Stock not  purchased
                           under (i);

                                    (iii)  After  three (3) years of  continuous
                           employment  from  the  date on which  the  Option  is
                           granted, not exceeding one-third (1/3) of the

                                       -3-

<PAGE>

                           Stock  subject  to the  Option,  plus any  shares not
                           purchased under (i) and (ii).

                           At  the   expiration  of  the  third  (3rd)  year  of
                  continuous  employment  from the date on which  the  Option is
                  granted, the Option may be exercised at any time and from time
                  to time within its terms in whole or in part, but it shall not
                  be exercisable after the expiration of ten (10) years from the
                  date on which it was granted.

                           (a) Non-Transferability of Options - During an Option
                  Holder's lifetime, an Option shall be exercisable only by him.
                  An Option  shall not be  transferable  except for  exercise as
                  provided in paragraph (g) hereof.

                           (b)  Termination  of Employment - In the event of the
                  termination of an Option  Holder's  employment (for any reason
                  other than death or discharge for cause) any Option granted to
                  him  or  unexercised   portion  thereof  which  was  otherwise
                  exercisable  on the date of  termination  of employment  shall
                  terminate   unless,   such  Option  to  the  extent  otherwise
                  exercisable,  is exercised within thirty (30) days of the date
                  on which he ceases to be an employee,  provided  such time may
                  be extended by the Board of Directors or the Committee, as the
                  case may be, to a date no later than the date of expiration of
                  the Option. If an Option Holder's employment is terminated for
                  cause,  as  determined  by  the  Board  of  Directors  or  the
                  Committee,  as the  case may be,  any  Option  or  unexercised
                  portion  thereof  granted to him shall  terminate and be of no
                  further force and effect from the date of discharge.

                           (c)  Death of  Option  Holder - Upon the  death of an
                  Option Holder,  any Option  granted to him or the  unexercised
                  portion thereof,  which was otherwise  exercisable on his date
                  of death,  shall  terminate  unless  such Option to the extent
                  exercisable is exercised by the executor or  administrator  of
                  his  estate,  within six  months  after the date of his death,
                  provided  such time may be extended by the Board of  Directors
                  or the Committee,  as the case may be, to a date no later than
                  the date of the expiration of the Option.

                           (d)   Restriction   on   Issuance   of  Stock  -  The
                  Corporation  shall be  obligated  to sell and  issue the Stock
                  pursuant  to  any  Option   granted  under  the  Plan  and  in
                  accordance  with the terms  thereof  but not  before the Stock
                  with  respect  to  which  the  Option  is being  exercised  is
                  effectively  registered or exempt from registration  under the
                  Securities Act of 1933, as amended,  in the opinion of counsel
                  for the  Corporation  and the Stock is listed on any  exchange
                  upon which it is traded.

                                       -4-

<PAGE>

                           (e) Rights as a Stockholder - The Option Holder shall
                  have no  rights as a  stockholder  with  respect  to any Stock
                  covered by his Option  until the date of  issuance  of a stock
                  certificate to him for such Stock.

                           (f) Time of Granting an Option - Nothing contained in
                  the  Plan  shall   constitute   the  granting  of  any  Option
                  hereunder.  An Option  shall be  granted  only  pursuant  to a
                  resolution of the Board of Directors or the Committee,  as the
                  case may be, and shall not be  effective  until there has been
                  executed by both the  Corporation  and the  optionee an Option
                  Agreement  in such form as shall be  required  by the Board of
                  Directors or the Committee, as the case may be.

                           (g)  Miscellaneous  - The Board of  Directors  or the
                  Committee,  as the case may be, may require, as a condition to
                  the sale of  Stock on the  exercise  of any  Option,  that the
                  person  exercising  such  Option  give  to  the  Company  such
                  documents,     including    such    appropriate     investment
                  representations   as  may  be  required  by  counsel  for  the
                  Corporation,  and such representations,  additional agreements
                  and documents as the Board of Directors or the  Committee,  as
                  the case may be, shall determine to be in the best interest of
                  the Corporation.

8.                ADJUSTMENT IN EVENT OF RECAPITALIZATION

                           (a) If the  outstanding  shares  of the  Stock of the
                  Corporation   are  increased,   decreased,   changed  into  or
                  exchanged  for  a  different   number  or  kind  of  stock  or
                  securities  of the  Corporation  or stock of a  different  par
                  value  or   without   par   value,   through   reorganization,
                  recapitalization,   reclassification,  stock  dividend,  stock
                  split,   amendment  to  the   Corporation's   Certificate   of
                  Incorporation  or reverse  stock  split,  an  appropriate  and
                  proportionate  adjustment  shall be made in the maximum number
                  and/or kind of securities allocated to the Options theretofore
                  and thereafter  granted under the Plan,  without change in the
                  aggregate purchase price applicable to the unexercised portion
                  of the outstanding options but with a corresponding adjustment
                  in the  price  for each  share  of Stock or other  unit of any
                  security covered by the Options.

                           (b) Upon the  effective  date of the  dissolution  or
                  liquidation of the Corporation, or of a reorganization, merger
                  or   consolidation   of  the  Corporation  with  one  or  more
                  corporations  in which the  Corporation  is not the  surviving
                  corporation,  or  of  a  transfer  of  substantially  all  the
                  property or more than eighty  percent of the then  outstanding
                  shares of the Stock of the Corporation to another corporation,
                  the Plan and any Option  theretofore  granted  hereunder shall
                  terminate  unless  provision be made in writing in  connection
                  with such  transaction for the continuance of the Plan and for
                  the  assumption  of  Options   theretofore   granted,  or  the
                  substitution for such Options of new options

                                       -5-

<PAGE>

                  covering the shares of a successor employer corporation,  or a
                  parent or subsidiary thereof, with appropriate  adjustments as
                  to number and kind of stock and prices in which event the Plan
                  and  the  Options  theretofore  granted  or  the  new  options
                  substituted  therefor,  shall continue in the manner and under
                  the  terms so  provided.  In the  event  of such  dissolution,
                  liquidation,  reorganization,  merger, consolidation, transfer
                  of assets or transfer of Stock,  and if  provision is not made
                  in such  transaction  for the  continuance of the Plan and for
                  the   assumption  of  Options   theretofore   granted  or  the
                  substitution  for such  Options of new  Options  covering  the
                  shares  of a  successor  employer  corporation  or a parent or
                  subsidiary  thereof,  then each Option  Holder  under the Plan
                  shall be  entitled,  prior to the  effective  date of any such
                  transaction,  to  purchase  the full number of shares of Stock
                  under his Option which he would  otherwise  have been entitled
                  to purchase during the remaining term of such Option.

                           (c)  Adjustments  under this Section shall be made by
                  the Board of Directors,  whose  determination as to what shall
                  be made, and the extent thereof,  shall be final,  binding and
                  conclusive.  No  fractional  shares  of Stock  shall be issued
                  under the Plan or any such adjustment.

9.                REALLOCATION OF LAPSED OPTIONS

                  Stock covered by Options which have lapsed may be  reallocated
by the  Board of  Directors  or the  Committee,  as the case may be, at any time
during the term of the Plan.

10.               GOVERNMENTAL REGULATIONS

                  This Plan,  and the grant and  exercise of Options  hereunder,
shall be subject to all applicable  rules and regulations of government or other
authorities.

11.               DISCONTINUANCE OR AMENDMENT OF THE PLAN AND
                  MODIFICATION OF OPTIONS

                  The  Board  of  Directors  of  the  Corporation  may  suspend,
terminate,  modify or amend the Plan,  provided  that any  amendment  that would
increase  the  aggregate  number of shares  which may be issued  under the Plan;
materially  increase the benefits  accruing to  participants  under the Plan; or
materially  modify the  requirements as to eligibility for  participation in the
Plan; shall be subject to the approval of the Corporation's stockholders, except
that  any  such  increase  or  modification  that may  result  from  adjustments
authorized  by  paragraph  8 does not  require  such  approval.  No  suspension,
termination,  modification or amendment of the Plan may,  without the consent of
the employee to whom an option shall  theretofore have been granted,  affect the
rights of such employee under such option.

                                       -6-

<PAGE>

12.               EMPLOYMENT

                  Nothing in the Plan or in any option  agreement under the Plan
shall  confer  on any  employee  any  right to  continue  in the  employ  of the
Corporation  or effect in any way the right of the  Corporation to terminate his
employment at any time.

13.               EFFECTIVE DATE OF PLAN

                  The Plan became effective on January 1,1989.

                                       -7-

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