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                                                                    Exhibit 4(h)

                             Mandalay Resort Group
                           2000 Stock Incentive Plan

                        ARTICLE I--PURPOSE OF THE PLAN

      The purposes of the Mandalay Resort Group 2000 Stock Incentive Plan (the
"Plan") are to enable Mandalay Resort Group (the "Company") and its Affiliates
to attract and retain the services of individuals with managerial,
professional or supervisory skills as employees, officers, members of the
Board, consultants or advisors of the Company and its Affiliates, and to
motivate such persons to use their best efforts on behalf of the Company by
the grant of Stock Options and/or Awards to such individuals as provided under
the terms of the Plan.

                        ARTICLE II--GENERAL PROVISIONS

      2.1 Definitions. As used in the Plan:

      (a) "Affiliate" means a corporation which is a parent corporation or a
subsidiary corporation with respect to the Company within the meaning of
Section 424(e) or (f) of the Code, of any successor provision and any other
entity which would be an Affiliate but for the fact that such entity is not a
corporation.

      (b) "Award" means a grant of shares of Common Stock pursuant to the
provisions of the Plan, which may or may not be subject to restrictions, and
which may or may not consist of a grant of Performance Shares.

      (c) "Award Agreement" means the written agreement establishing the terms
of an Award, as required under Article IV hereof.

      (d) "Board of Directors" or "Board" means the Board of Directors of the
Company.

      (e) "Code" means the Internal Revenue Code of 1986, including any and
all amendments thereto.

      (f) "Committee" means the Board acting in its capacity as administrator
of the Plan or the committee or committees appointed by the Board from time to
time to administer the Plan pursuant to Section 2.2.

      (g) "Common Stock" means the Company's Common Stock, $.01 2/3 par value.

      (h) "Fair Market Value" means, with respect to a specific date, the last
reported sale price of the Common Stock on the NYSE Composite Tape on the date
such Fair Market Value is being determined, and, in the absence of any sale on
such day, the Fair Market Value as determined in good faith by the Committee
on the basis of such quotations and other considerations as the Committee
deems appropriate.

      (i) "ISO" means a Stock Option that is intended to qualify as an
"incentive stock option" as that term is used for purposes of Code Section
422.

      (j) "Non-qualified Stock Option" means a Stock Option that is not
intended or designated to be an ISO.

      (k) "NYSE" means the New York Stock Exchange.
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     (l) "Option" means either an "ISO" or a "Non-qualified Stock Option."

     (m) "Optionee" means the recipient of an "Option."

     (n) "Participant" means a person to whom a Stock Option or Award has been
granted under the Plan.

     (o) "Performance Goal" means, with respect to a Performance Period, an
objective performance goal or goals established by the Committee, consistent
with the express terms of the Plan, which must be met as a precondition to the
vesting of any Performance Shares granted with respect to a Performance Period
under the Plan.

     (p) "Performance Period" means the Company's fiscal year or such other
period as may be established as a Performance Period by the Committee from
time to time.

     (q) "Performance Shares" means the shares of Common Stock granted
pursuant to an Award and designated as Performance Shares by the Committee.

     (r) "Rule 16b-3" means Rule 16b-3 promulgated under the Securities
Exchange Act of 1934, as amended from time to time, or any successor rule.

     (s) "Stock Option" means a stock option granted under the Plan which may
or may not be intended to qualify as an ISO.

     (t) "Stock Option Agreement" means the written agreement evidencing the
terms and conditions of a Stock Option Granted under the Plan, as required
under Article III hereof.

     2.2 Administration of the Plan.

     (a) The Plan shall be administered by the Board or by any committee or
committees as may be designated by the Board for this purpose, or by a
combination of the Board and one or more such committees, each such committee
and the Board in its capacity as administrator of the Plan being referred to
herein as the "Committee." The Board may, at its discretion, establish a
committee that consists of two (2) or more members of the Board, each of whom
qualifies as a "non-employee director" (as that term is used for purposes of
Rule 16b-3) and an "outside director" (as that term is used for purposes of
Section 162(m) of the Code). In the event the Board establishes more than one
committee under this Section 2.2, the Board shall establish as of the time
more than one such committee is established, and from time to time thereafter,
at its discretion, guidelines that establish the groups of employees,
consultants or advisors whose grants under the Plan are to be administered by
such committees. The Board of Directors may from time to time remove members
from, or add members to, the Committee. Vacancies on the Committee, howsoever
caused, shall be filled by the Board of Directors. The Committee shall select
one of its members as Chairman, and shall hold meetings at such times and
places as it may determine.

     (b) The Committee shall have the full power, subject to and within the
limits of the Plan, to: (i) interpret and administer the Plan, and Stock
Options and Awards granted under it; (ii) make and interpret rules and
regulations for the administration of the Plan and to make changes in and
revoke such rules and regulations (and in the exercise of this power, shall
generally determine all questions of policy and expediency that may arise and
may correct any defect, omission, or inconsistency in the Plan or any
agreement evidencing the grant of any Stock Option or Award in a manner and to
the extent it shall deem necessary to make the Plan fully effective); (iii)
determine those persons to whom Stock Options or Awards shall be granted and
the number of Stock Options or Awards to be granted to any person; (iv)
determine the terms of Stock Options and Awards granted under the Plan,
consistent with the provisions of the Plan; and (v) generally, exercise such
powers and perform such acts in connection with the Plan as are deemed
necessary or expedient to promote the best

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interests of the Company. The interpretation and construction by the Committee
of any provisions of the Plan or of any Stock Option or Award shall be final,
binding and conclusive.

      (c) The Committee may act only by a majority of its members then in
office; however, the Committee may authorize any one (1) or more of its members
or any officer of the Company to execute and deliver documents on behalf of the
Committee.

      (d) No member of the Committee shall be liable for any action taken or
omitted to be taken or for any determination made by him or her in good faith
with respect to the Plan, and the Company shall indemnify and hold harmless
each member of the Committee against any cost or expense (including counsel
fees) or liability (including any sum paid in settlement of a claim with the
approval of the Committee) arising out of any act or omission in connection
with the administration or interpretation of the Plan, unless arising out of
such person's own fraud or bad faith.

      2.3 Effective Date. The Plan shall become effective upon its adoption by
the Board of Directors, and Stock Options and Awards may be granted upon such
adoption and from time to time thereafter, provided, however, that the
exercisability of Stock Options and the vesting of Awards granted hereunder
shall be subject to approval of the Plan by the stockholders of the Company,
within 12 months after the adoption of the Plan by the Board of Directors, in a
manner consistent with applicable state law prescribing the method and degree
of stockholder approval required for the issuance of corporate stock or
options. If the Plan is not so approved, this Plan and all Stock Options and
Awards previously granted hereunder shall become null and void.

      2.4 Duration. If approved by the stockholders of the Company, as provided
in Section 2.3, unless sooner terminated by the Board of Directors, the Plan
shall remain in effect for a period of ten (10) years following its adoption by
the Board of Directors.

      2.5 Shares Subject to the Plan. The maximum number of shares of Common
Stock which may be subject to Stock Options and Awards granted under the Plan
shall be 3,500,000, subject to adjustment in accordance with Section 5.1, as
appropriate. Stock Options and Awards shall be subject to adjustment in
accordance with Section 5.1, as appropriate, and shares to be issued upon
exercise of Stock Options or in connection with Awards may be either authorized
and unissued shares of Common Stock or authorized and issued shares of Common
Stock purchased or acquired by the Company for any purpose. If a Stock Option
or portion thereof shall expire or is terminated, canceled or surrendered for
any reason without being exercised in full, or if an Award is forfeited under
the terms of the Plan or an Award Agreement, the unpurchased shares of Common
Stock which were subject to such Stock Option or portion thereof and the
forfeited shares of Common Stock that had been granted as an Award shall be
available for future grants of Stock Options or Awards under the Plan.

      2.6 Limitations on Annual Grants. Notwithstanding anything to the
contrary contained herein, the maximum number of shares of Common Stock which
may, in the aggregate, be subject to Stock Options or Awards granted under the
Plan to any individual in any calendar year shall not exceed 1,500,000, subject
to adjustment in accordance with Section 5.1, as appropriate. The method of
counting such shares shall conform to any requirements applicable to
performance-based compensation under Section 162(m) of the Code.

      2.7 Amendments. The Plan may be suspended, terminated or reinstated, in
whole or in part, at any time by the Board of Directors. The Board of Directors
may from time to time make such amendments to the Plan as it may deem
advisable; provided, however, that without the approval of the Company's
stockholders no amendment shall be made which:

          (a) Increases the maximum number of shares of Common Stock which
    may be subject to Stock Options or Awards granted under the Plan (other
    than as provided in Section 5.1, as appropriate); or

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          (b) Extends the term of the Plan; or

          (c) Increases the period during which a Stock Option may be
    exercised beyond ten years from the date of grant; or

          (d) Otherwise materially increases the benefits accruing to
    Participants under the Plan; or

          (e) Materially modifies the requirements as to eligibility for
    Participants in the Plan.

Except as otherwise provided herein, termination or amendment of the Plan shall
not, without the consent of a Participant, affect such Participant's rights
under any Stock Option or Award previously granted to such Participant.

      2.8 Participants and Grants. Stock Options and Awards under this Plan may
be granted by the Committee to those employees, officers, members of the Board,
consultants or advisors of the Company or any of its Affiliates that the
Committee determines, at its sole discretion, qualify for such Stock Options or
Awards. Subject to the limitations on Options and Awards and on the total
number of shares of Common Stock available for grants under the Plan, the
Committee may grant Stock Options and Awards for such number of shares of
Common Stock as the Committee may, in its sole discretion, determine, which may
be established on an individual basis, and may vary from Participant to
Participant, all as the Committee may determine in its sole discretion. The
Committee may amend or modify any term or condition of any Stock Option or
Award Agreement at its discretion; provided, however, that no such amendment or
modification shall be permitted that is detrimental to a grantee without the
grantee's consent; and provided, further, that no such amendment or
modification may be made to an Award Agreement with respect to a Performance
Share that is intended to constitute a grant of performance-based compensation
for purposes of Code Section 162(m), except as is expressly permitted under the
terms of the Plan.

                           ARTICLE III--STOCK OPTIONS

      3.1 General. All Stock Options granted under the Plan shall be evidenced
by a Stock Option Agreement executed by the Company and the Participant to whom
granted, which agreement shall state the number of shares of Common Stock which
may be purchased upon the exercise thereof and shall contain such investment
representations and other terms and conditions as the Committee may from time
to time determine. To the extent required by Section 162(m) of the Code, shares
subject to Stock Options which are canceled shall continue to be counted
against the award limit set forth in Section 2.6 and if, after grant of a Stock
Option, the price of shares subject to such Stock Options is reduced, the
transaction shall be treated as a cancellation of the Stock Option and a grant
of a new Stock Option and both the Stock Option deemed to be canceled and the
Stock Option deemed to be granted shall be counted against the foregoing award
limit.

      3.2 Designation as ISO or Non-qualified Stock Option. Each Stock Option
granted shall be designated in the Stock Option Agreement as constituting
either an ISO or a Non-qualified Stock Option. Any Stock Option that is not
designated shall be deemed to have been designated as a Non-qualified Stock
Option. Any Stock Option that is intended to qualify as an ISO shall meet the
following requirements:

          (a) In the event an ISO is granted to an employee who then owns,
    directly or by attribution under Section 424(d) of the Code, shares
    possessing more than ten percent of the total combined voting power of
    all classes of stock of the Company or an Affiliate, then, to the extent
    required by Section 424(d) of the Code, the option exercise price shall
    not be less than 110% of the Fair Market Value of the shares subject to
    the ISO on the date the ISO is granted.

          (b) In the event an ISO is granted to an employee who then owns,
    directly or by attribution under Section 424(d) of the Code, shares
    possessing more than ten percent of the total combined

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    voting power of all classes of stock of the Company or an Affiliate,
    such ISO shall not be exercisable more than five years from the date of
    grant of such ISO.

          (c) An ISO shall only become exercisable with respect to shares
    having a Fair Market Value of $100,000 or less during any one calendar
    year. To the extent any Stock Option that is designated as an ISO
    becomes exercisable during any one calendar year with respect to shares
    of Common Stock with an aggregate Fair Market Value in excess of
    $100,000, such Stock Option shall, to the extent of such excess, be
    treated as a Stock Option that is not an ISO. For purposes of the
    determinations in this paragraph (c), the Fair Market Value of shares of
    Common Stock shall be determined at the time the Stock Option is
    granted, and in determining the Fair Market Value of the shares as to
    which a Stock Option that is intended to be an ISO first becomes
    exercisable during any one calendar year, that Stock Option shall be
    considered as aggregated with all ISOs granted under any other plan of
    the Company or its Affiliates.

      3.3 Exercise and Purchase Prices. Subject to the provisions of Section
5.1, the purchase price per share of Common Stock subject to a Stock Option
shall be set by the Committee; provided, however, that such price shall be no
less than the Fair Market Value of a share of Common Stock on the date the
Stock Option is granted.

      3.4 Period. The duration or term of each Stock Option granted under the
Plan shall be for such period as the Committee shall determine but in no event
more than ten (10) years from the date of grant thereof.

      3.5 Exercise. Subject to Sections 2.3 and 5.4, Stock Options may be
exercisable immediately upon granting of the Stock Option or at such other time
or times as the Committee shall specify when granting the Stock Option, or at
such other time or times as may be provided for pursuant to an amendment or
modification of a Stock Option Agreement, as permitted under the Plan. Once
exercisable, a Stock Option shall be exercisable, in whole or in part, by
delivery of a written notice of exercise to the Secretary of the Company at the
principal office of the Company specifying the number of shares of Common Stock
as to which the Stock Option is then being exercised together with payment of
the full purchase price for the shares being purchased upon such exercise.
Until the shares of Common Stock as to which a Stock Option is exercised are
issued, the Participant shall have none of the rights of a stockholder of the
Company with respect to such shares.

      3.6 Payment. The purchase price for shares of Common Stock as to which a
Stock Option has been exercised and any amount required to be withheld, as
contemplated by Section 5.3, may be paid:

          (a) In United States dollars in cash, or by check, bank draft or
    money order payable in United States dollars to the order of the
    Company; or

          (b) By the delivery by the Participant to the Company of whole
    shares of Common Stock having an aggregate Fair Market Value on the date
    of payment equal to the aggregate of the purchase price of Common Stock
    as to which the Stock Option is then being exercised or by the
    withholding of whole shares of Common Stock having such Fair Market
    Value upon the exercise of such Stock Option; or

          (c) By a combination of both (a) and (b) above.

The Committee may, in its discretion, impose limitations, conditions and
prohibitions on the use by a Participant of shares of Common Stock to pay the
purchase price payable by such Participant upon the exercise of a Stock Option.

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      3.7 Termination of Employment or other Relationship.

      (a) In the event a Participant's employment by, or other service
relationship with, the Company or an Affiliate shall terminate for any reason
other than those reasons specified in Sections 3.7(b), (c), (d), (e) or (f)
hereof while such Participant holds Stock Options granted under the Plan, then
all rights of any kind under any outstanding Stock Option held by such
Participant which shall not have previously lapsed or terminated and which are
exercisable on the date of the termination of employment or other service
relationship shall remain so exercisable by the Optionee for a period of three
months after such termination unless such Stock Option expires earlier by its
terms.

      (b) If a Participant's employment by, or other service relationship with,
the Company or its Affiliates shall terminate as a result of such Participant's
total disability, each Stock Option held by such Participant (which has not
previously lapsed or terminated) shall immediately become fully exercisable as
to the total number of shares of Common Stock subject thereto (whether or not
exercisable to that extent at the time of such termination) and shall remain so
exercisable by such Participant for a period of six months after termination
unless such Stock Option expires earlier by its terms. For purposes of the
foregoing sentence, "total disability" shall mean permanent mental or physical
disability as determined by the Committee.

      (c) In the event of the death of a Participant, each Stock Option held by
such Participant (which has not previously lapsed or terminated) shall
immediately become fully exercisable as to the total number of shares of Common
Stock subject thereto (whether or not exercisable to that extent at the time of
death) by the executor or administrator of the Participant's estate or by the
person or persons to whom the deceased Participant's rights thereunder shall
have passed by will or by the laws of descent or distribution, and shall remain
so exercisable for a period of six months after such Participant's death unless
such Stock Option expires earlier by its terms.

      (d) If a Participant's employment by or other service relationship with
the Company or an Affiliate shall terminate by reason of such Participant's
retirement in accordance with Company policies, each Stock Option held by such
Participant at the date of termination (which has not previously lapsed or
terminated) shall immediately become fully exercisable as to the total number
of shares of Common Stock subject hereto (whether or not exercisable to that
extent at the time of such termination) and shall remain so exercisable by such
Participant for a period of six months after termination, unless such Stock
Option expires earlier by its terms.

      (e) In the event a Participant's relationship with the Company is subject
to an employment or other service agreement that defines a termination without
"Cause" and a termination by the Participant for "Good Reason," and such
Participant's employment or other service relationship is either terminated by
the Company without "Cause" or by the Participant for "Good Reason," (as such
terms are defined in the applicable employment or other service agreement
between the Company and the Participant), each Stock Option held by such
Participant (which has not previously lapsed or terminated) shall immediately
become fully exercisable as to the total number of shares of Common Stock
subject thereto (whether or not exercisable to that extent at the time of such
termination) and shall remain so exercisable for a period of six months after
such termination unless such Stock Option expires earlier by its terms.

      (f) If a Participant (i) shall cease to be employed by, or have a
relationship of consultant or advisor to, the Company or an Affiliate because
of his discharge or termination for dishonesty, or because he violated any
material provision of any employment or other agreement between him and the
Company or an Affiliate, or (ii) shall voluntarily resign or terminate his
employment with or relationship as a consultant or advisor to the Company or an
Affiliate under or followed by such circumstances as would constitute a breach
of any material provision of any employment or other agreement between him and
the Company or an Affiliate, or (iii) shall have committed an act of dishonesty
not discovered by the Company or an Affiliate prior to the cessation of his
employment with or relationship as a consultant or advisor to the Company or an
Affiliate, but which would

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have resulted in his discharge or termination if discovered prior to such date,
or (iv) shall, either before or after cessation of his employment with or
relationship as a consultant or advisor to the Company or an Affiliate, without
the written consent of the Company or an Affiliate, use (except for the benefit
of the Company or an Affiliate) or disclose to any other person any
confidential information relating to the continuation or proposed continuation
of the business or any trade secrets of the Company or an Affiliate obtained as
a result of or in connection with such employment or relationship as a
consultant or advisor, or (v) shall, either before or after the cessation of
his employment with or relationship as a consultant or advisor to the Company
or an Affiliate, without the written consent of the Company or an Affiliate,
directly or indirectly, give advice to, or serve as an employee, director,
officer, or trustee of, or in any similar capacity with, or otherwise directly
or indirectly participate in the management, operation, or control of, or have
any direct or indirect financial interest in, any corporation, partnership, or
other organization which directly or indirectly competes in any respect with
the Company or its Affiliates, or (vi) shall cease to be employed by or have a
relationship as a consultant or advisor to the Company or an Affiliate because
of his inability to continue as an employee, consultant or advisor, as the case
may be, under any law or governmental regulation, including any Nevada gaming
law or regulation, or (vii) shall voluntarily resign or terminate his
employment with or relationship as a consultant or advisor to the Company or an
Affiliate under or followed by such circumstances as would have rendered him
unable to have continued as an employee, consultant or advisor, as the case may
be, under any law or governmental regulation, including any Nevada gaming law
or regulation, then forthwith from the happening of any such event, any Stock
Options then held by such Participant shall terminate and become void to the
extent that they then remain unexercised. Additional forfeiture provisions may
be included within the terms of any Stock Option grant to a Participant as may
be determined by the Committee in its discretion, provided such provisions are
set forth in the written agreement evidencing such Stock Option.

      Notwithstanding anything to the contrary in this Section 3.7, the
Committee may vary the time at which any Stock Option granted under the Plan
shall terminate by including contrary provisions in the Stock Option Agreement,
at its discretion.

      3.8 Effect of Leaves of Absence. Except as provided in the next sentence,
it shall not be considered a termination of employment or other service
relationship when a Participant is on military or sick leave or such other type
of leave of absence which is considered a continuing intact of the employment
or other service relationship of the Participant with the Company or any of its
Affiliates. In case of such leave of absence, the employment or other service
relationship shall be deemed to have continued until the later of (i) the date
when such leave shall have lasted ninety days in duration, or (ii) the date as
of which the Participant's right to reemployment shall have no longer been
guaranteed either by statute or contract.

      3.9 Amendment of Outstanding Options. Subject to such other explicit
limitations as may be set forth in the Plan, the Committee shall have the right
to amend the option documents issued to an Optionee, at its discretion;
provided, however, that no such amendment may be made without the Optionee's
consent if such amendment is not favorable to the Optionee; and provided,
further, that no amendment to an Option that has the effect of adjusting or
amending the purchase price otherwise provided under the terms of such Option,
and no other action by the Committee, whether by cancellation and replacement
of Options, or otherwise, that would be treated as resulting in an adjustment
or amendment of the purchase price under the Option, shall be permitted without
the consent of the stockholders of the Company.

                               ARTICLE IV--AWARDS

      4.1 Terms and Conditions of Awards. Awards granted pursuant to the Plan
shall be evidenced by written Award Agreements in such form as the Committee
shall from time to time approve, which Award Agreements shall comply with and
be subject to the following terms and conditions and such other terms and
conditions which the Committee shall from time to time require which are not
inconsistent with the terms of the Plan.

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          (a) Number of Shares. Each Award Agreement shall state the number
    of shares of Common Stock to which it pertains.

          (b) Purchase Price. Each Award Agreement shall specify the
    purchase price, if any, which applies to the shares subject to the
    Award. If the Committee specifies a purchase price, the grantee of such
    Award shall be required to make payment on or before the payment date
    specified in the Award Agreement in cash, by certified check payable to
    the order of the Company, or by such other mode of payment as the
    Committee may approve.

          (c) Grant. In the case of an Award which provides for a grant of
    shares of Common Stock without any payment, the grant shall take place
    on the date or dates or on the occurrence of such event or events as may
    be specified in the Award Agreement. In the case of an Award which
    provides for a payment, the grant shall take place on the date the
    initial payment is delivered to the Company, unless the Committee or the
    Award Agreement otherwise specifies. Stock certificates evidencing
    shares of Common Stock granted pursuant to an Award shall be issued in
    the sole name of the grantee.

          (d) Conditions. The Committee may specify in an Award Agreement
    any conditions under which the grantee of that Award shall be required
    to convey to the Company the shares of Common Stock covered by the
    Award. Upon the occurrence of any such specified condition, the grantee
    of such Award shall forthwith surrender and deliver to the Company the
    certificates evidencing such shares as well as completely executed
    instruments of conveyance. The Committee, in its discretion, may provide
    that certificates for shares of Common Stock transferred pursuant to an
    Award be held in escrow by the Company or its designee until such time
    as each and every condition has lapsed and that the grantee of an Award
    be required, as a condition of the Award, to deliver to such escrow
    agent or an officer of the Company duly endorsed transfer powers
    covering the shares granted by such Award. Dividends and other
    distributions made on shares held in escrow shall, except to the extent
    otherwise provided by the Committee or in the Award Agreement, be
    deposited in escrow, to be distributed to the party becoming entitled to
    the Shares on which the distribution was made. Stock certificates
    evidencing shares of Common Stock subject to conditions shall bear a
    legend to the effect that the shares evidenced thereby are subject to
    repurchase by, or conveyance to, the Company in accordance with the
    terms applicable to such shares under an Award made pursuant to the
    Plan, and that the shares of Common Stock may not be sold or otherwise
    transferred, except to the Company in accordance with such conditions.

          (e) Lapse of Conditions. Upon termination or lapse of all
    forfeiture conditions, the Company shall cause certificates without the
    legend referring to the Company's repurchase or acquisition right (but
    with any other legends that may be appropriate) evidencing the shares
    covered by the Award to be issued to the grantee upon the grantee's
    surrender to the Company of the legended certificates held by the
    grantee.

          (f) Rights as Stockholder. Upon payment of the purchase price, if
    any, for shares of Common Stock covered by an Award and compliance with
    any other requirements for transfer of such shares, the grantee shall
    have all of the rights of a stockholder with respect to the shares of
    Common Stock covered thereby, including the right to vote such shares
    and receive all dividends and other distributions paid or made with
    respect thereto, except to the extent otherwise provided by the
    Committee or in the Award Agreement.

      4.2 Performance Shares. The Committee may, from time to time, and at its
sole discretion, make an Award of Performance Shares with respect to a
Performance Period, in which case the Committee shall establish in writing
prior to or within the first ninety (90) days of such Performance Period (but
in no event after 25 percent of the period of service represented by the
Performance Period has elapsed) one or more specific Performance Goals which
must be met in order for the Performance Shares to be granted or to become

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vested. In connection with an Award of Performance Shares, the Committee shall
specify in the applicable Award Agreement the terms and conditions applicable
to such Award, which shall include the extent to which the Common Stock subject
to such Award shall be granted or shall be eligible to become vested on the
achievement of the applicable Performance Goals, and which may or may not
include such additional terms and conditions, including conditions of
forfeiture and additional vesting requirements, as the Committee deems
appropriate, at its sole discretion.

      4.3 Performance Goals. Performance Goals shall be based upon one or more
of the following business criteria for the Company as a whole or any of its
Affiliates, operating divisions or other operating units: Stock price, market
share, gross revenue, net revenue, pretax income, operating income, cash flow,
earnings per share, return on equity, return on invested capital or assets,
cost reductions and savings, return on revenues or productivity, or any
variations of the preceding business criteria, which may be modified at the
discretion of the Committee, to take into account extraordinary items or which
may be adjusted to reflect such costs or expense as the Committee deems
appropriate. In addition, to the extent consistent with the goal of providing
for deductibility under Section 162(m) of the Code, Performance Goals may be
based upon a Participant's attainment of personal objectives with respect to
any of the foregoing Performance Goals or implementing policies and plans,
negotiating transactions and sales, developing long-term business goals or
exercising managerial responsibility. Measurements of the Company's or a
Participant's performance against the Performance Goals established by the
Committee shall be objectively determinable and shall be determined according
to generally accepted accounting principles as in existence on the date on
which the Performance Goals are established and without regard to any changes
in such principles after such date.

      4.4 Certification of Achievement of Performance Goals. As soon as
practicable following the end of a Performance Period, the Committee shall
determine whether and to what extent the Company and/or the Participants have
achieved the Performance Goal or Goals established for such Performance Period,
shall determine whether and to what extent the Performance Shares under the
terms of the applicable Award Agreement are to be granted or are vested or
become eligible to be vested, and shall certify such determination in writing,
which certification may take the form of minutes of the Committee documenting
such determination. The Committee shall have the discretion to limit, but not
increase, the extent to which Performance Shares are to be granted or are
eligible to become vested under the terms of an Award and the Plan, in order to
reflect the Participant's individual performance or to take into account any
other factors the Committee deems appropriate.

      4.5 Interpretation. The provisions of this Article IV relating to
Performance Shares are intended to permit the grant of Awards that are treated
as meeting the requirements to be treated as performance-based compensation
under Section 162(m) of the Code, and the provisions of this Article IV, and
the other provisions of the Plan as they relate to the grant of Awards that are
Performance Shares, are to be interpreted in a manner that is consistent with
the requirements of Section 162(m) and Treasury Regulations promulgated
pursuant thereto, as they relate to the definition of performance-based
compensation.

                      ARTICLE V--MISCELLANEOUS PROVISIONS

      5.1 Adjustments Upon Changes in Capitalization. In the event of changes
to the outstanding shares of Common Stock of the Company through
reorganization, merger, consolidation, recapitalization, reclassification,
stock split-up, stock dividend, stock consolidation or otherwise, or in the
event of a sale of all or substantially all of the assets of the Company, an
appropriate and proportionate adjustment shall be made in the number and kind
of shares as to which Stock Options and Awards may be granted, including with
respect to the share limit provided in Section 2.5 and the award limit provided
in Section 2.6. A corresponding adjustment changing the number or kind of
shares and/or the purchase price per share of unexercised Stock Options or
Awards or, in either case, portions thereof which shall have been granted prior
to any such change shall likewise be made. Notwithstanding the foregoing, in
the case of a reorganization, merger or consolidation, or sale of all or
substantially all of the assets of the Company, in lieu of adjustments as
aforesaid, the Committee may in its discretion accelerate the date after which
a Stock Option may or may not be exercised or

                                       9
<PAGE>

the stated expiration date thereof and may, in its discretion, accelerate the
vesting or grant of any Award. Adjustments or changes under this Section shall
be made by the Committee, whose determination as to what adjustments or changes
shall be made, and the extent thereof, shall be final, binding and conclusive.

      5.2 Non-Transferability. Except as otherwise provided herein, no Stock
Option and no rights under an Award shall be transferable except by will or the
laws of descent and distribution, nor shall any Stock Option be exercisable
during the Participant's lifetime by any person other than the Participant or
his guardian or legal representative. Notwithstanding the foregoing, any Option
that is not an ISO shall be transferable pursuant to a "domestic relations
order" as defined in the Code or Title I of the Employee Retirement Income
Security Act, or the rules thereunder, and also, if so provided in the option
document by the Committee, at its discretion, shall be transferable without
payment of consideration, to any of the following: immediate family members of
the holder (i.e., spouse or former spouse, parents, issue, including adopted
and "step" issue, or siblings); trusts for the benefit of such immediate family
members; partnerships whose only partners are such immediate family members; or
to any transferee permitted by a rule adopted by the Committee or approved by
the Committee in an individual case. Any transferee will be subject to all of
the conditions set forth in the option document with respect to the Option
prior to its transfer.

      5.3 Withholding. The Company's obligations under this Plan shall be
subject to applicable federal, state and local tax withholding requirements.
Federal, state and local withholding tax due at the time of a grant or upon the
exercise of any Stock Option or in connection with an Award may, in the
discretion of the Committee, be paid in shares of Common Stock already owned by
the Participant or through the withholding of shares otherwise issuable to such
Participant, upon such terms and conditions as the Committee shall determine.
If the Participant shall fail to pay, or make arrangements satisfactory to the
Committee for the payment, to the Company of all such federal, state and local
taxes required to be withheld by the Company, then the Company shall, to the
extent permitted by law, have the right to deduct from any payment of any kind
otherwise due to such Participant an amount equal to any federal, state or
local taxes of any kind required to be withheld by the Company.

      5.4 Compliance with Law and Approval of Regulatory Bodies. No Stock
Option shall be exercisable and no shares will be delivered under the Plan
except in compliance with all applicable federal and state laws and regulations
including, without limitation, compliance with all federal and state securities
laws and withholding tax requirements and with the rules of the NYSE and of all
other domestic stock exchanges on which the Common Stock may be listed. Any
share certificate which evidences shares issued upon the exercise of a Stock
Option or granted pursuant to an Award may bear legends and statements the
Committee shall deem advisable to assure compliance with federal and state laws
and regulations. No Stock Option shall be exercisable and no shares will be
delivered under the Plan, until the Company has obtained consent or approval
from regulatory bodies, federal or state, having jurisdiction over such matters
as the Committee may deem advisable. In the case of the acquisition of a Stock
Option or an Award by a person or estate acquiring the right to such Stock
Option or Award as a result of the death of the Participant, the Committee may
require reasonable evidence as to the ownership of the Stock Option or Award
and may require consents and releases of taxing authorities that it may deem
advisable.

      5.5 No Right to Employment or other Service. Neither the adoption of the
Plan nor its operation, nor any document describing or referring to the Plan,
or any part thereof, nor the granting of any Stock Options or Awards hereunder,
shall confer upon any Participant under the Plan any right to continue in the
employ or other service of the Company or any Affiliate, or shall in any way
affect the right and power of the Company or any Affiliate to terminate the
employment or other service relationship of any Participant at any time with or
without assigning a reason therefor, to the same extent as might have been done
if the Plan had not been adopted.

      5.6 Exclusion from Pension Computations. By acceptance of a grant of a
Stock Option or an Award under the Plan, the recipient shall be deemed to agree
that any income realized upon the receipt or

                                      10
<PAGE>

exercise thereof or upon the disposition of the shares received upon the
exercise thereof or in accordance with the terms thereof will not be taken into
account as "base remuneration," "wages," "salary" or "compensation" in
determining the amount of any contribution to or payment or any other benefit
under any pension, retirement, incentive, profit-sharing or deferred
compensation plan of the Company or any Affiliate.

      5.7 Abandonment of Stock Options and Awards. A Participant may at any
time abandon a Stock Option or Award prior to its expiration date. The
abandonment shall be evidenced in writing, in such form as the Committee may
from time to time prescribe. A Participant shall have no further rights with
respect to any Stock Option or Award so abandoned.

      5.8 Severability. If any of the terms or provisions of the Plan conflict
with the requirements of Rule 16b-3, then such terms or provisions shall be
deemed inoperative to the extent they so conflict with the requirements of Rule
16b-3.

      5.9 Interpretation of the Plan. Headings are given to the Sections of the
Plan solely as a convenience to facilitate reference, and headings, numbering
and paragraphing shall not in any case be deemed in any way material or
relevant to the construction of the Plan or any provision hereof. The use of
the masculine gender shall also include within its meaning the feminine. The
use of the singular shall also include within its meaning the plural and vice
versa.

      5.10 Use of Proceeds. Funds received by the Company upon the exercise of
Stock Options or payments made in connection with Awards shall be used for the
general corporate purposes of the Company.

      5.11 Construction of Plan. The place of administration of the Plan shall
be in the State of Nevada, and the validity, construction, interpretation,
administration and effect of the Plan and of its rules and regulations, and
rights relating to the Plan, shall be determined solely in accordance with the
laws of the State of Nevada.

                                      11LEXON, INC.
                   INVESTOR RELATIONS SERVICES AGREEMENT WITH
                              MORGAN-PHILLIPS, INC.

     This  ("Agreement")  is entered  into and  effective  August 7, 2000 by and
between Lexon, Inc. ("Lexon") and Morgan-Phillips, Inc. ("MPI").

     WHEREAS,  the parties recognize and acknowledge the November 1998 Investors
Relations Services Agreement, hereinafter "November 1998 Agreement".

     WHEREAS,  the parties  recognize and  acknowledge  that under the November,
1998 Agreement,  MPI has seventy thousand (70,000) options that have vested, the
parties  further  recognize  and  acknowledge  that all other  options under the
November 1998 Agreement have expired.

     WHEREAS,  it is the intention of the parties,  that this Agreement  replace
the November 1998 Agreement in it's entirety.  Fully,  releasing the parties all
rights and obligations under the November 1998 Agreement.

     WHEREAS,  Lexon is a  development  stage  company  which owns the exclusive
right to manufacture and market a cancer detection test kit in development whose
stock is traded on the Over the Counter  Bulletin Board under the symbol "LXXN";
and

     WHEREAS,  MPI is in the business of providing  companies with  shareholder,
investor, and broker relations services; and

     WHEREAS,  Lexon has agreed to engage MPI and MPI has accepted an engagement
to provide  shareholder,  investor,  and broker relations services in accordance
with the terms and conditions of this Agreement.

     Now,  therefore,  in  consideration  of the premises and for other good and
valuable consideration, the receipt, adequacy and sufficiency of which is hereby
acknowledged, parties agree as follows:

     1.   Acceptance  of  Engagement.  Lexon  hereby  agrees  to  engage  MPI to
          provide, and MPI agrees to accept the engagement from Lexon to provide
          traditional  financial  public  relations  and  shareholder  relations
          information and other services in accordance with this Agreement.

     2.   Scope of  Services  of MPI.  MPI agrees to provide  public  relations,
          education, information and the following related services:

          A.   Generate potential  investor leads and inform,  follow up, update
               and  create  interest  in  Lexon  and its  common  stock  through
               providing current  information  concerning  Lexon,  including due
               diligence material;

          B.   Provide  direct  one-on-one   telephonic  contact  with  brokers,
               investors, potential investors and others with respect to Lexon;

          C.   Prepare and distribute  periodically  detailed "research reports"
               regarding Lexon along with an abbreviated  "corporate profile" of
               Lexon;

          D.   Prepare  and  distribute  news  releases  which are  approved  in
               advance by Lexon;

          E.   Distribute  initial and updated investor  information  packets to
               brokers and potential  investors  information  containing current
               information  concerning Lexon, including any disclosure materials
               filed  with the SEC,  applicable  state  securities  commissions,
               financial rating services, independent analysts' reports, product
               reports and similar information;

          F.   Prepare and distribute audio and video  presentations  concerning
               Lexon and its business and products;

          G.   Arrange and attend press conferences regarding Lexon;

                                            SB-2 Sequential Page Number 62 of 77
<PAGE>

          H.   Arrange  and  assist  Lexon in  attending  television  and  radio
               investment forums;

          I.   Write news  articles  approved  by Lexon and  distribute  them to
               investments clubs,  investment  newsletters,  investor magazines,
               and public print media;

          J.   Develop and maintain an Internet Website for Lexon which provides
               current information regarding Lexon;

          K.   Respond  accurately  and  promptly  to  faxes,  email  and  other
               electronic inquiries concerning Lexon;

          L.   Write and distribute articles for investor club newsletters;

          M.   Arrange and  participate  in investor  information  meetings with
               potential investors, the brokerage community and others regarding
               Lexon;

          N.   Place articles at least quarterly regarding Lexon in investor and
               news magazines;

          O.   Arrange,   attend  and  assist  Lexon  in  attending  and  making
               presentations at investor trade shows at least 2 times a year;

          P.   Use its good faith  diligent  efforts to know the  current  facts
               concerning    Lexon   and   ensure   that   its   employees   and
               representatives  remain  current in their  information  regarding
               Lexon;

          Q.   Establish  and  maintain a data bank with the  names,  addresses,
               telephone numbers, fax numbers, email addresses and other similar
               information  regarding investors,  potential investors,  brokers,
               and others in the investment community; and

          R.   Generally,  keep  the  public,  the  investor  community  and the
               brokerage  community  well informed  with  concise,  accurate and
               timely  information   concerning  Lexon  and  its  business,  its
               progress and its potential.

     3.   Scope of Information to be Provided by MPI. MPI agrees to provide only
          information  that is received  from and approved by Lexon.  MPI agrees
          not to provide any information that is false or materially  misleading
          or omit to provide any information  regarding Lexon which is necessary
          so that  whatever  information  is  provided  by MPI is not  false  or
          materially  misleading.  If MPI receives any inquiry which calls for a
          response with information that has not been approved by Lexon or as to
          which MPI does not know the correct and current answer,  MPI agrees to
          request  the  information  from  Lexon  and not  provide  a  guess,  a
          projection, an assumption, or information not approved by Lexon.

     4.   Applicable  Securities  Laws.  MPI  agrees  to abide by all  state and
          federal   securities  laws.   Specifically,   MPI  acknowledges   it's
          understanding  of the laws which govern  investor  relations firms and
          agrees not to violate any section or law  including but not limited to
          Sections 10(b) and/or 17(b) o the Securities Act.

     5.   Ability  to  perform.  MPI  represents  that  MPI  it's  officers  and
          principal   are  not  subject  to  any  federal,   state  or  industry
          self-regulatory  order or ruling  concerning any financial  (including
          banking, insurance and securities) activities,  dealings or licensing.
          The  licenses  are to include all banking,  securities  and  insurance
          licenses  issued  by  the  federal  government,  state  government  or
          self-regulatory agencies.

          Furthermore, MPI represents that MPI's officers, directors, principals
          and  employees  have  not  been  convicted  of any  state  or  federal
          Securities  Violations,  Banking  violations,   Insurance  violations,
          fraud(bank, wire or otherwise),  money laundering,  theft by deception
          or similar crime.

                                            SB-2 Sequential Page Number 63 of 77
<PAGE>

     6.   Compensation.  MPI shall be compensated  with Lexon's Common Stock and
          Common Stock Options.  The offer of this Common Stock is being made in
          reliance upon the  provisions  of  Regulation D promulgated  under the
          Act,  Section 4(2) of the Act,  and/or such other  exemption  from the
          registration  requirements of the Act as may be available with respect
          to all  purchases of Common Stock to be made  hereunder.  The terms of
          the exemption and compensation  shall be set forth in the Compensation
          Agreement  which  shall be executed  contemporaneously  and made apart
          hereof.

     7.   Nature of Relationship.  MPI and Lexon are independent contractors and
          are  not  partners,  joint  venturers,  employees,  agents,  or  other
          representatives  of the other.  Neither MPI nor Lexon is authorized or
          empowered  to bind the other in contract or in any other way or to act
          as a  representative  of the other in any capacity without the express
          written consent of the other. Each party is solely responsible for all
          costs and liabilities  arising from taxes of every kind or relating to
          its own  employees  and  other  representatives,  or  relating  to the
          conduct  of its  business  as an  independent  entity,  and each party
          agrees to indemnify and hold the other party harmless  therefrom.  MPI
          is in the business of providing  information  to the investing  public
          and  the  investment  community.  MPI is not a  registered  broker  or
          investment advisor, and MPI agrees not to undertake any activity which
          will require it to be so registered.

     8.   Costs of Investor Relations  Function.  MPI will bear the costs of and
          be  solely  responsible  for  the  investor  relations  activities  as
          described in paragraph 2, above MPI and Lexon  understand that MPI has
          the discretion  and duty to spend its resources in the manner,  at the
          time  and for  the  purposes  for  which  MPI  believes  in its  best,
          reasonable good faith  determination will be the most effective in the
          furtherance of providing the investing  public  current,  accurate and
          timely  information  regarding  Lexon.  MPI will coordinate in writing
          with  Lexon  regarding  any  material  deviations  from  the  investor
          relations  activities.  Failure  to  perform  the  investor  relations
          activities  in a  material  way  shall  constitute  a  breach  of this
          Agreement.

     9.   No Conflicting Activities.  MPI agrees not to engage in any activities
          that  violate its duties under this  Agreement or represent  any other
          entity  that is  engaged in the  manufacture  or sale of  products  or
          services that directly compete with the business, products or services
          of Lexon.

     10.  Inside and Confidential  Information.  MPI agrees not to disclose, use
          or  disseminate  any  information  of or  relating  to Lexon  which is
          proprietary,  confidential  and  competitively  sensitive  without the
          prior written  approval of Lexon.  MPI further  agrees not to act upon
          for its own  account or for the account of another and not to disclose
          or disseminate any non-public  information that is used to purchase or
          sell securities of Lexon.

     11.  Disclosure  of  Relationship  with Lexon.  MPI agrees to disclose in a
          manner  consistent with applicable laws, rules and regulations that it
          is  providing  investor  relations  and public  relations  services in
          exchange  for common  stock of Lexon and that it maintains a financial
          and ownership  interest in the success of Lexon.  The disclosure shall
          be  made  to  all   persons   contacted   ,  and  set   forth  on  all
          communications(including  all fax cover  sheets  and press  releases).
          These contacts and  communications are to be construed in the broadest
          sense,  including  but  not  limited  to all  electronic,  telephonic,
          facsimile,  written or verbal  communications.  This disclosure  shall
          also  include  the  amounts  of all  compensation  and  consideration,
          received or to be received by MPI in the past, present and future.

          Specifically,  MPI agrees to abide by Section 17(b) of the  Securities
          Act which  provides  that it is unlawful for any person:  "to publish,
          give  publicity  to,  or  to  circulate  any  notice,   circular,   or
          advertisement,  newspaper  article,  letter,  investment  service,  or
          communication  which,  though not  purporting  to offer a security for
          sale,  describes such security for a  consideration  received or to be
          received,  directly or  indirectly,  from an issuer,  underwriter,  or
          dealer,  without  fully  disclosing  the  receipt,   whether  past  or
          prospective, of such consideration and the amount thereof."

                                            SB-2 Sequential Page Number 64 of 77
<PAGE>

     12.  Ownershipof Information. MPI will receive information concerning Lexon
          and MPI will create  advertising and other  promotional  materials for
          the benefit of Lexon.  MPI agrees that all such material belong to and
          are the property of Lexon. Likewise, MPI maintains certain information
          regarding  potential  investors  that it considers to be  proprietary.
          Lexon agrees not to disclosure or use any such information only in the
          furtherance of its business,  provided that Lexon investor information
          shall not be deemed for any purpose to belong to MPI.

     13.  Short Sales. MPI, it's officers, directors,  employees, affiliates and
          related  parties  (including  all family  members) shall not under any
          circumstances  engage either  directly or indirectly in short sales of
          the Companies  stock.  MPI shall not direct any third parties to short
          sales of Lexon's stock.

     14.  Assignment. No part of this Agreement shall be assignable. MPI may not
          transfer any portion of it's rights,  obligations or duties under this
          contract to a third party without Lexon's prior written  consent.  MPI
          further agrees that it shall not engage  independent  contractors,  to
          perform  any  services  which  in any  way  relate  to  Lexon  or this
          Agreement without Lexon's prior written consent. If Lexon's gives it's
          written consent all third parties must agree in writing to be bound by
          the  terms  of this  Agreement  in it's  entirety.  Furthermore,  this
          Agreement  is not  assignable  in any  part  with or  without  Lexon's
          written  consent to any third  parties who have been  convicted of any
          state or federal Securities Violations, Banking violations,  Insurance
          violations, fraud(bank, wire or otherwise), money laundering, theft by
          deception or similar crime. A conviction shall be meant to include any
          final   order  of  a  state  or   federal   agency  or  any   industry
          self-regulatory agency,  including but not limited to cease and desist
          orders.  In addition  this  Agreement  shall not be  assignable to any
          third parties who have had any financial  license suspended or revoked
          for cause.  The licenses are to include all  banking,  securities  and
          insurance licenses issued by the federal government,  state government
          or self regulatory agencies.

     15.  Term.  This  Agreement  shall  expire 2 years  from the date set forth
          above, unless sooner terminated by either party by it giving the other
          not less than 30 days' prior written notice of termination.

     16.  Termination  of Agreement.  This  Agreement  shall  terminate upon the
          occurrence of any of the  following  events:  (a) voluntary  notice of
          termination  given in writing  not less than 60 days by either  party;
          (b) a party  becomes  legally or  practically  unable to  perform  its
          obligations  hereunder;  and (c) for  cause.  "Cause"  shall  mean (i)
          material  breach  of  this  Agreement;  (ii)  misrepresentation  of  a
          material  fact;  (iii)  omission  of a  material  fact;  (iv)  willful
          misconduct;  (v) material negligence;  and (vi) failure to comply with
          an  applicable  law,  rule or  regulation.  In the event of a proposed
          termination  for  cause,   notice  of  the  facts  and   circumstances
          surrounding  the  alleged  cause shall be given to the other party and
          the party  against whom a termination  for cause is asserted  shall be
          provided  with an  opportunity  to present a response  to the  alleged
          reason  for  cause and to cure the  cause  within  20 days.  If not so
          cured, the party against whom a cause is asserted shall be entitled to
          no further benefits under this Agreement and shall immediately  return
          all client lists, client files,  manuals,  documents,  files, reports,
          property and equipment relating to or owned by the other and all other
          Confidential Information (as described above).

     17.  Return of Compensation  in the event of Termination.  If the Agreement
          is terminated  for any of the reasons set forth in paragraph  thirteen
          (13)  above,  MPI's  compensation  shall be  calculated  on a pro-rata
          basis,  without  allowance for expenses.  After the pro-rata  share is
          deducted from the total compensation of this Agreement,  the remainder
          of shares and  options,  or the fair  market  value of such shares and
          options  shall  be   transferred  to  Lexon  within  fifteen  days  of
          termination.

     18.  Remedies.  Each party  shall be  entitled  to  exercise  all  remedies
          available  to it under a law or in equity in the event the other party
          breaches its obligations hereunder.  The remedies set forth herein are
          cumulative,  may be exercised individually or together with one or all
          other  remedies and are not  exclusive  but instead are in addition to
          all other  rights and  remedies  available to the parties at law or in
          equity  in  the  event  the  other  party  breaches  its   obligations
          hereunder.

                                            SB-2 Sequential Page Number 65 of 77
<PAGE>

     19.  Miscellaneous.

          A.   Notices.  Any  notice,  request,  demand  or other  communication
               required to be made or which may be given to either  party hereto
               shall be delivered by certified U.S. mail,  postage  prepaid,  to
               that party's  attention at the address set forth below or at such
               other  address  as shall be  changed  from time to time by giving
               notice hereunder.

          B.   Entire  Agreement.  This  document  constitutes  the complete and
               entire  employment  agreement  between  the  parties  hereto with
               reference  to  the  subject  matters  hereof.   No  statement  or
               agreement,  oral or  written,  made  prior  to or at the  signing
               hereof,  and no prior  course of  dealing or  practice  by either
               party shall vary or modify the written terms hereof.

          C.   Headings.  The headings and captions  contained in this Agreement
               are for ease and  convenience  of reference only and shall not be
               deemed for any purpose to affect the  substantive  meaning of the
               rights and duties of the parties hereto in any way.

          D.   Binding Effect. This Agreement shall be binding upon and inure to
               the benefit of the parties hereto and their respective successors
               and assigns.

          E.   Counterparts.   This   Agreement  may  be  executed  in  multiple
               counterparts,  each of which  has the same text and each of which
               shall be deemed an original for all  purposes,  but together they
               constitute one single and the same agreement.

          F.   Amendments.  This  Agreement  may be  amended  only by a  written
               document  signed by the parties and stating  that the document is
               intended to amend this Agreement.

          G.   Applicable Law. This Agreement shall be governed by and construed
               in accordance with Oklahoma law.

          H.   Disputes. All disputes not resolved by mutual agreement within 60
               days, or such longer time as the parties mutually agree, shall be
               submitted to binding arbitration pursuant to the Commercial Rules
               of  Arbitration  of the  American  Arbitration  Association.  All
               arbitration  hearings  shall  be held  in  Tulsa,  Oklahoma.  The
               parties  agree to be finally bound by all  arbitration  awards to
               the extent  permitted  by law.  In any dispute or  proceeding  to
               construe this  Agreement not resolved by final  arbitration or to
               enforce an arbitration  award, the parties  expressly  consent to
               the exclusive  jurisdiction  of state and federal courts in Tulsa
               County,  Oklahoma,  the  principal  place  of  business  of  both
               Morgan-Phillips  and  Lexon.  The  prevailing  party  in any suit
               brought to interpret this Agreement  shall be entitled to recover
               reasonable  attorney's fees and expenses in addition to any other
               relief which it is entitled.

          I.   Additional  Documents.  The parties  hereto  shall enter into and
               execute such additional agreements, understandings,  documents or
               instruments  as may be necessary to implement  the intent of this
               Agreement.

          J.   Cumulative  Remedies.  The  remedies  of the parties as set forth
               herein  are  cumulative  and  may be  exercised  individually  or
               together  with one or all other  remedies,  and are not exclusive
               but  instead are in  addition  to all other  rights and  remedies
               available to the parties at law or in equity.

          K.   Severability.   If  any  provision  of  this   Agreement  or  the
               application  thereof to any person or circumstances shall be held
               invalid or  unenforceable  to any extent,  the  remainder of this
               Agreement and the application of such provisions to other persons
               or  circumstances  shall  not be  affected  thereby  and shall be
               enforced to the greatest extent permitted by law.

          L.   Waiver.  The failure of a party to enforce any  provision of this
               Agreement  shall not constitute a waiver of such party's right to
               thereafter  enforce  such  provision  or  to  enforce  any  other
               provision at any time.

                                            SB-2 Sequential Page Number 66 of 77
<PAGE>

     IN WITNESS  WHEREOF,  the parties hereto have duly caused this Agreement to
be executed effective this 1st day of August, 2000.

LEXON, INC.                                          MORGAN-PHILLIPS, INC.

BY___________________________               BY________________________________
GIFFORD M. MABIE, PRESIDENT                 RAY LARSON, MANAGING DIRECTOR

                                            SB-2 Sequential Page Number 67 of 77

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