Document:

<PAGE>
                                                                   Exhibit 10.29

                                                             Loan No. 76-0000912

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                  PARK MEDICAL ASSOCIATES GENERAL PARTNERSHIP
                                   (Borrower)

                                       to

                      GENERAL ELECTRIC CAPITAL CORPORATION
                                    (Lender)

                           -------------------------

                         ASSIGNMENT OF LEASES AND RENTS

                           -------------------------

                           Dated as of August 2, 1999

                  Property Location: Pineville, North Carolina

                    DRAWN BY AND AFTER RECORDING, RETURN TO:

                             ANDREWS & KURTH L.L.P.
                          1717 Main Street, Suite 3700
                              Dallas, Texas 75201

                       Attention: Britton B. Green, Esq.

                       COLLATERAL IS OR INCLUDES FIXTURES

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<PAGE>
                         ASSIGNMENT OF LEASES AND RENTS

     This Assignment of Leases and Rents (this "AGREEMENT") is executed as of
August 2, 1999 by PARK MEDICAL ASSOCIATES GENERAL PARTNERSHIP, a North Carolina
general partnership, whose address for notice is c/o Brackett Company, 135 S.
Sharon Amity Road, Suite 210, Charlotte, North Carolina 28211, Attention: Diane
B. Rivers ("BORROWER"), to GENERAL ELECTRIC CAPITAL CORPORATION, a New York
corporation, whose address for notice is c/o GE Capital Loan Services, Inc.,
363 North Sam Houston Parkway East, Suite 1200, Houston, Texas 77060,
Attention: Portfolio Manager/Access Program ("LENDER").

                                   AGREEMENT:

     For valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Borrower and Lender agree as follows:

     1.   ABSOLUTE ASSIGNMENT. Borrower unconditionally and absolutely assigns
to Lender all of Borrower's right, title and interest in and to: (a) all
leases, subleases, occupancy agreements, licenses, concessions, rental
contracts and other agreements (written or oral) now or hereafter existing
relating to the use or occupancy of the project located on the real property
described in EXHIBIT A hereto (the "PROPERTY"), together with all guarantees,
letters of credit and other credit support, modifications, extensions and
renewals thereof (whether before or after the filing by or against Borrower of
any petition of relief under 11 U.S.C. Section 101 et seq., as same may be
amended from time to time [the "BANKRUPTCY CODE"]), and all related security
and other deposits (collectively, the "LEASES"); (b) all rents, revenues,
issues, profits, income and proceeds due or to become due from tenants of the
Property, including rentals and all other payments of any kind under the Leases
for using, leasing, licensing, possessing, operating from, rendering in,
selling or otherwise enjoying the Property (collectively, the "RENTS"); (c) all
of Borrower's claims and rights (the "BANKRUPTCY CLAIMS") to the payment of
damages arising from any rejection by a lessee of any Lease under the
Bankruptcy Code; and (d) any and all other rights of Borrower in and to the
items set forth in subsections (a) through (c) above, and all amendments,
modifications, replacements, renewals, proceeds and substitutions thereof.
This Agreement is an absolute assignment to Lender and not an assignment as
security for the performance of the obligations under the Loan Documents
(defined below), or any other indebtedness.

     2.   RIGHTS OF LENDER. Subject to the provisions of Section 6 below,
Lender shall have the right, power and authority to: (a) notify any person that
the Leases have been assigned to Lender and that all Rents are to be paid
directly to Lender, whether or not Lender has commenced or completed
foreclosure or taken possession of the Property; (b) settle, compromise,
release, extend the time of payment of, and make allowances, adjustments and
discounts of any Rents or other obligations under the Leases; (c) enforce
payment of Rents and other rights under the Leases, prosecute any action or
proceeding, and defend against any claim with respect to Rents and Leases; (d)
enter upon, take possession of and operate the Property; (e) lease all or any
part of the Property; and/or (f) perform any and all obligations of Borrower
under the Leases and exercise any and all rights of Borrower therein contained
to the full extent of Borrower's rights and obligations thereunder, with or
without the bringing of any action or the appointment of a receiver. At
Lender's request, Borrower shall deliver a copy of this Agreement to each
tenant under a Lease and to each manager and managing agent or operator of the
Property. Borrower irrevocably directs any tenant, manager, managing agent, or
operator of the Property, without any requirement for notice to or consent by
Borrower, to comply with all demands of Lender under this Agreement and to turn
over to Lender on demand all Rents which it receives.

     3.   NO OBLIGATION OR LIABILITY. Notwithstanding Lender's rights
hereunder, Lender shall not be obligated to perform, and Lender does not
undertake to perform, any obligation, duty or liability with respect to the
Leases, Rents or Property on account of this Agreement. Lender shall have no
responsibility on account of this Agreement for the control, care, maintenance
or repair of the Property, for any waste committed on the Property, for any
dangerous or defective condition of the Property, or for any negligence in the
management, upkeep, repair or control of the Property. Lender shall not be
liable for any loss sustained by Borrower resulting from Lender's failure to
let the

<PAGE>
Property after an Event of Default (as defined in the Loan Agreement) or from
any other act or omission of Lender in managing the Property after an Event of
Default. Nothing herein contained shall be construed as constituting Lender a
"mortgagee in possession" in the absence of the taking of actual possession of
the Property by Lender. In the exercise of the powers herein granted Lender, no
liability shall be asserted or enforced against Lender, all such liability
being expressly waived and released by Borrower.

     4.   RIGHT TO APPLY RENTS. Lender shall have the right, but not the
obligation, to use and apply any Rents received hereunder in such order and
such manner as Lender may determine for:

          (a)  ENFORCEMENT OR DEFENSE. The payment of costs and expenses of
     enforcing or defending the terms of this Agreement or the rights of Lender
     hereunder, and collecting any Rents;

          (b)  LOAN PAYMENTS. Interest, principal or other amounts payable
     pursuant to (i) the Loan Agreement of even date between Lender and Borrower
     (the "LOAN AGREEMENT"); (ii) the Promissory Note of even date herewith in
     the stated principal amount of $4,000,000.00, executed by Borrower, bearing
     interest and being payable to the order of Lender (the "NOTE"); (iii) the
     Deed of Trust, Assignment of Leases and Rents, Security Agreement and
     Fixture Filing, of even date, executed by Borrower for the benefit of
     Lender and relating to the Property (the "MORTGAGE"); and all other
     documents and instruments evidencing, governing and securing the loan
     evidenced by the Note (the "LOAN") and any and all modifications,
     amendments or extensions thereof or replacements or substitutions therefor
     (the Loan Agreement, the Note, the Mortgage, such other documents and
     instruments, and such modifications, amendments, extensions, replacements,
     and substitutions thereof being herein collectively called the "LOAN
     DOCUMENTS"); and

          (c)  OPERATING EXPENSES. Payment of costs and expenses of the
     operation and maintenance of the Property, including (i) rentals and other
     charges payable by Borrower under any ground lease or other agreement
     affecting the Property; (ii) electricity, telephone, water and other
     utility costs, taxes, assessments, water charges and sewer rents and other
     utility and governmental charges levied, assessed or imposed against the
     Property; (iii) insurance premiums; (iv) costs and expenses with respect
     to any litigation affecting the Property, the Leases or the Rents; (v)
     wages and salaries of employees, commissions of agents and attorneys' fees
     and expenses; and (vi) all other carrying costs, fees, charges, reserves,
     and expenses whatsoever relating to the Property.

After the payment of all such costs and expenses and after Lender has
established such reserves as it, in its sole and absolute discretion, deems
necessary for the proper management of the Property, Lender shall apply all
remaining Rents received by it to the reduction of the Loan.

     5.   NO WAIVER. The exercise or nonexercise by Lender of the rights
granted in this Agreement or the collection and application of Rents by Lender
or its agent shall not be a waiver of any default by Borrower under this
Agreement or any other Loan Document. No action or failure to act by Lender
with respect to any obligations of Borrower under the Loan Documents, or any
security or guaranty given for the payment or performance thereof, shall in
any manner affect, impair or prejudice any of Lender's rights and privileges
under this Agreement, or discharge, release or modify any of Borrower's duties
or obligations hereunder.

     6.   REVOCABLE LICENSE. Notwithstanding that this Agreement is an absolute
assignment of the Rents and Leases and not merely the collateral assignment of,
or the grant of a lien or security interest in the Rents and Leases, Lender
grants to Borrower a revocable license to collect and receive the Rents and to
retain, use and enjoy such Rents. Such license may be revoked by Lender upon
the occurrence of any Event of Default and Lender shall immediately be entitled
to receive and apply all Rents, whether or not Lender enters upon and takes
control of the Property. Prior to such revocation, Borrower shall apply any
Rents which it receives to the payment of debt service on the Note and other
payments due under the Loan Agreement, taxes, assessments, water charges, sewer
rents and other governmental charges levied, assessed or imposed against the
Property, insurance premiums, operation and maintenance charges relating to the
Property, and other obligations of lessor under the Leases before using such
proceeds for any other purpose. Lender is hereby granted and assigned by
Borrower the right, at its option, upon the revocation of the license granted
herein

<PAGE>
to enter upon the Property in person, by agent or by court-appointed receiver to
collect the Rents. Any Rents collected after the revocation of the license
herein granted may be applied toward payment of the Indebtedness in such
priority and proportion as Lender, in its discretion, shall deem proper.

     7.   TERM. This Agreement shall continue in full force and effect until (a)
all amounts due under the Loan Documents are paid in full, and (b) all other
obligations of Borrower under the Loan Documents are fully satisfied.

     8.   APPOINTMENT. Borrower irrevocably appoints Lender its true and lawful
attorney in fact, which appointment is coupled with an interest, to execute any
or all of the rights or powers described herein with the same force and effect
as if executed by Borrower, and Borrower ratifies and confirms any and all acts
done or omitted to be done by Lender, its agents, servants, employees or
attorneys in, to or about the Property.

     9.   LIABILITY OF LENDER. Lender shall not in any way be liable to Borrower
for any action or inaction of Lender, its employees or agents under this
Agreement.

     10.  INDEMNIFICATION. Borrower shall indemnify, defend and hold harmless
Lender from and against all liability, loss, damage, cost or expense which it
may incur under this Agreement or under any of the Leases, including any claim
against Lender by reason of any alleged obligation, undertaking, action, or
inaction on its part to perform or discharge any terms, covenants or conditions
of the Leases or with respect to Rents, and including attorneys' fees and
expenses, but excluding any claim to the extent caused by Lender's gross
negligence or willful misconduct. Any amount covered by this indemnity shall be
payable on demand, and shall bear interest from the date of demand until the
same is paid by Borrower to Lender at a rate equal to the Default Rate (as
defined in the Loan Agreement).

     11.  MODIFICATION. This Agreement may not be changed orally, but only by an
agreement in writing signed by the party against whom enforcement of such change
is sought.

     12.  BANKRUPTCY.

          (a)  Upon or at any time after the occurrence of a Event of Default,
Lender shall have the right to proceed in its own name or in the name of
Borrower in respect of any claim, suit, action or proceeding relating to the
rejection of any Lease, including, without limitation, the right to file and
prosecute, to the exclusion of Borrower, any proofs of claim, complaints,
motions, applications, notices and other documents, in any case in respect of
the lessee under such Lease under the Bankruptcy Code.

          (b)  If there shall be filed by or against Borrower a petition under
the Bankruptcy Code, and Borrower, as lessor under any Lease, shall determine to
reject such Lease pursuant to Section 365(a) of the Bankruptcy Code, then
Borrower shall give Lender not less than ten (10) days' prior notice of the date
on which Borrower shall apply to the bankruptcy court for authority to reject
the Lease. Lender shall have the right, but not the obligation, to serve upon
Borrower within such ten-day period a notice stating that (i) Lender demands
that Borrower assume and assign the Lease to Lender pursuant to Section 365 of
the Bankruptcy Code and (ii) Lender covenants to cure or provide adequate
assurance of future performance under the Lease. If Lender serves upon Borrower
the notice described in the preceding sentence, Borrower shall not seek to
reject the Lease and shall comply with the demand provided for in clause (i) of
the preceding sentence within thirty (30) days after the notice shall have been
given, subject to the performance by Lender of the covenant provided for in
clause (ii) of the preceding sentence.

     13.  AUTHORITY. Borrower represents and warrants that it has full power and
authority to execute and deliver this Agreement and the execution and delivery
of this Agreement has been duly authorized and does not conflict with or
constitute a default under any law, judicial order or other agreement affecting
Borrower or the Property.

     14.  LIABILITY. If Borrower consists of more than one person, the
obligations and liabilities of each such person hereunder shall be joint and
several.

<PAGE>
     15.  HEADINGS, ETC. The headings and captions of various paragraphs of this
Agreement are for convenience of reference only and are not to be construed as
defining or limiting, in any way, the scope or intent of the provisions hereof.

     16.  NOTICES. Any notice required or permitted to be given under this
Agreement shall be (a) in writing, (b) sent in the manner set forth in the Loan
Agreement, and (c) effective in accordance with the terms of the Loan Agreement.

     17.  SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
Lender and its successors and assigns and shall be binding on Borrower and its
successors and assigns.

     18.  GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State where the Property is located and the
applicable laws of the United States of America.

     19.  CONFLICT. If any conflict or inconsistency exists between the
absolute assignment of the Rents and the Leases in this Agreement and the
assignment of the Rents and Leases as security in the Mortgage, the terms of
this Agreement shall control.

     20.  LIMITATION ON LIABILITY. Borrower's liability hereunder is subject to
the limitation on liability provisions of Article 12 of the Loan Agreement.

     21.  COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall constitute an original, but all of which
shall constitute one document.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

<PAGE>
     IN WITNESS WHEREOF, Borrower has caused this Agreement to be executed under
seal by its duly authorized representatives as of the date first above written.

                                   PARK MEDICAL ASSOCIATES GENERAL PARTNERSHIP,
                                   a North Carolina general partnership

                                   By:  P-51 ASSOCIATES,
                                        a North Carolina general partnership,
                                        Its: Managing General Partner

                                   By:  Diane Brackett Company, Inc.,
                                        a North Carolina corporation,
                                        Its: Managing General Partner

                                                                          [SEAL]

                                   BY:  /s/ DIANE B. RIVERS
ATTEST:                               ------------------------------------------
                                      Diane B. Rivers, President

/s/ SELMA INMAN
------------------------
Selma Inman, Secretary

     [Corporate Seal]

STATE OF NORTH CAROLINA  )
                         )ss
MECKLENBURG COUNTY       )

     I, A. Donovan Rivers, Jr., a Notary Public of the County and State
aforesaid, certify that Diane B. Rivers personally appeared before me this day
and acknowledged that she is the Secretary of Diane Brackett Company, Inc., a
North Carolina corporation which is the Managing General Partner of P-51
Associates, a North Carolina general partnership which is the Managing General
Partner of PARK MEDICAL ASSOCIATES GENERAL PARTNERSHIP, a North Carolina
general partnership, and that by authority duly given and as Managing General
Partner of Park Medical Associates General Partnership, the foregoing instrument
was signed in its name by its President, sealed with its corporate seal and
attested by me as its Secretary.

     WITNESS my hand and official stamp or seal, this 2 day of Aug., 1999.

[NOTARIAL SEAL]

                                   /s/ A. DONOVAN RIVERS, JR.
                                   --------------------------------------------
                                   Notary Public
                                   March 24, 2001
<PAGE>
                                   EXHIBIT A

Those tracts of land located in Mecklenburg County, North Carolina, as more
particularly described as follows:

                                    TRACT 1

To find the true point of BEGINNING, commence at N.C.G.S. control monument
"M098" azimuth mark (State Plane Coordinates: Northing 493,458.92, Easting
1,440,763.09) and run North 34-27-39 West 512.59 feet (ground distance) to a
new nail on the northerly line of the property leased to Mercy Hospital Holding
Company, Inc., as described in Deed Book 4760, Page 709 of the Mecklenburg
County Public Registry; said nail being the true point and place of BEGINNING;
and runs thence with the Mercy Hospital Holding Company, Inc. line North
72-36-32 West 369.10 feet to a new iron rod at the southeast corner of the
Mercy Equipment Corporation property as described in Deed Book 8410, Page 696
of said registry; thence with the easterly line of Mercy Equipment Corporation
property North 26-40-14 East 243.46 feet to an existing iron rod at the
southwest corner of Lot 6, Park Fifty One Professional Center - Map 1 as
recorded in Map Book 26, Page 331 of said Registry; thence with the southerly
line of Lot 6 the following two (2) courses and distances: 1) South 63-26-57
East 69.99 feet to an existing iron rod; 2) North 26-34-41 East 50.17 feet to
an existing iron rod at a corner of Lot 6; thence with a third line of Lot 6,
and continuing along the southerly line of Lot 5B, South 72-36-36 East 252.64
feet to a new nail at the northwest corner of Lot 2A; thence with the westerly
line of Lot 2A South 17-23-24 West, passing a new nail at the southwesterly
corner of Lot 2A at 277.50 feet, for a total distance of 278.50 feet to the
point and place of BEGINNING; containing 93,343 square feet or 2.1429 acres of
land as shown on a survey prepared by R.B. Pharr & Associates, P.A., dated
April 14, 1999, last revised May 12, 1999, and bearing File No. W-2400.

                                    TRACT 2

To find the true point of BEGINNING, commence at N.C.G.S. control monument
"M098" azimuth mark (State Plane Coordinates: Northing 493,458.92, Easting
1,400,763.09) and run North 34-27-39 West 512.59 feet (ground distance) to a new
nail on the northerly line of the property leased to Mercy Hospital Holding
Company, Inc. as described in Deed Book 4760, Page 709 of the Mecklenburg County
Public Registry, said nail being the southeasterly corner of Tract 1 as
described above, said nail also being the true point and place of BEGINNING, and
runs thence with the easterly line of Tract 1 as described above North 17-23-24
East 1.00 foot to a new nail at the southwest corner of Lot 2A, Park Fifty One
Professional Center - Map 1 as recorded in the Map Book 26, Page 331 of said
Registry; thence with the southerly line of Lot 2A and continuing along the
southerly line of Lot 2B, and with the southerly line of the Magnolia
Enterprises property as described in Deed Book 6951, Page 11 of said Registry,
South 72-36-32 East 480.13 feet to a new iron rod on the westerly margin of Park
Road (60' public right-of-way); thence with the westerly margin of Park Road
South 26-17-24 West 1.01 feet to a new iron rod at the northeasterly corner of
the property leased to Mercy Hospital Holding Company, Inc. as described in Deed
Book 4760, Page 709 of Registry; thence with the northerly line of the Mercy
Hospital Holding Company, Inc. property North 72-36-32 West 479.98 feet to the
point and place of Beginning; containing 480 square feet or 0.0110 acres of land
as shown on a survey prepared by R.B. Pharr & Associates, P.A. dated April 14,
1999, last revised May 12, 1999, and bearing File Number W-2400.
<PAGE>
                                    TRACT 3
                             ENTRANCE ROAD EASEMENT

To find the true point of BEGINNING, commence at N.C.G.S. control monument
"MO98" azimuth mark (State Plane Coordinates: Northing 493,458.92, Easting
1,440,763.09) and run the following two (2) courses and distances: 1) North
34-27-39 West 512.59 feet (ground distance) to a new nail, said nail being on
the northerly line of the property leased to Mercy Hospital Holding Company,
Inc. as described in Deed Book 4760, Page 709 of the Mecklenburg County Public
Registry, said nail being the southeasterly corner of Tract 1 as described
above; 2) with the Mercy Holding Company, Inc. property North 72-36-32 West
13.80 feet to a point, the true point and place of BEGINNING; and runs thence
North 17-23-24 East 264.45 feet to a point; thence with the arc of a circular
curve to the right having a radius of 48.76 feet an arc length of 14.25 feet
(chord: North 25-45-48 East 14.20 feet) to a point; thence with the arc of a
circular curve to the right having a radius of 48.76 feet an arc length of 72.05
feet (chord: North 76-27-58 East 65.67 feet) to a point; thence with the arc of
a circular curve to the left having a radius of 222.59 feet an arc length of
44.41 feet (chord: South 66-55-09 East 44.34 feet) to a point; thence South
72-38-04 East 244.47 feet to a point; thence with the arc of a circular curve to
the left having a radius of 136.37 feet an arc length of 49.65 feet (chord:
South 83-03-56 East 49.38 feet) to a point; thence North 81-00-40 East 35.85
feet to a point; thence with the arc of a circular curve to the right having a
radius of 111.72 feet an arc length of 68.49 feet (chord: South 81-25-11 East
67.42 feet) to a point; thence South 63-51-20 East 38.20 feet to a point; thence
with the arc of a circular curve to the left having a radius of 39.20 feet an
arch length of 14.75 feet (chord: South 74-36-40 East 14.63 feet) to a point in
the westerly margin of Park Road (60' public right-of-way); thence with the
westerly margin of Park Road South 26-17-24 West 55.01 feet to a point; thence
with the arc of a circular curve to the left having a radius of 39.20 feet an
arc length of 14.56 feet (chord: North 53-12-45 West 14.48 feet) to a point;
thence North 63-51-24 West 59.43 feet to a point; thence with the arc of a
circular curve to the left having a radius of 116.76 feet an arc length of 60.77
feet (chord: North 78-45-33 West 60.09 feet) to a point; thence with the arc of
a circular curve to the right having a radius of 164.37 feet an arc length of
60.38 feet (chord: North 83-09-25 West 60.04 feet) to a point; thence North
72-38-04 West 244.47 feet to a point; thence with the arc of a circular curve to
the right having a radius of 250.59 feet an arc length of 50.00 feet (chord:
North 66-55-09 West 49.92 feet) to a point; thence with the arc of a circular
curve to the left having a radius of 20.76 feet an arc length of 36.74 feet
(chord: South 68-05-37 West 32.13 feet) to a point; thence South 17-23-24 West
264.45 feet to a point; thence North 72-36-32 West 28.00 feet to the point and
place of BEGINNING, as shown on a survey prepared by R.B. Pharr & Associates,
P.A. dated April 14, 1999, last revised May 12, 1999, bearing File Number
W-2400.Exhibit 4.1

                              MERITAGE CORPORATION
                                STOCK OPTION PLAN

1.   ESTABLISHMENT, PURPOSE AND DEFINITIONS.

     a.   The Stock  Option  Plan (the  "Option  Plan") of  Meritage  Homes (the
          "Company")  is hereby  adopted.  The Option Plan shall provide for the
          issuance of incentive stock options  ("ISOs") and  nonqualified  stock
          options ("NSOs").

     b.   The purpose of this Option Plan is to promote the long-term success of
          the Company by attracting,  motivating  and retaining key  executives,
          consultants  and  directors  (the  "Participants")  through the use of
          competitive   long-term  incentives  which  are  tied  to  stockholder
          interests by providing  incentives to the  Participants in the form of
          stock   options  which  offer  rewards  for  achieving  the  long-term
          strategic and financial objectives of the Company.

     c.   The Option Plan is intended  to provide a means  whereby  Participants
          may be given an  opportunity  to purchase  shares of Stock (as defined
          herein) of the Company  pursuant  to (i) options  which may qualify as
          ISOs  under  Section  422 of the  Internal  Revenue  Code of 1986,  as
          amended (the "Internal  Revenue Code"),  or (ii) NSOs which may not so
          qualify.

     d.   The term  "Affiliates"  as used in this  Option  Plan means  parent or
          subsidiary  corporations,  as defined in Section 424(e) and (f) of the
          Code (but  substituting  "the  Company" for  "employer  corporation"),
          including parents or subsidiaries  which become such after adoption of
          the Option Plan.

2.   ADMINISTRATION OF THE PLAN

     a.   The  Option  Plan  shall be  administered  by  members of the Board of
          Directors of the Company (the  "Board")  qualifying  as  "non-employee
          directors"  as such term is defined in Rule 16b-3  promulgated  by the
          Securities and Exchange Commission (the "Commission").

     b.   The Board  may from  time to time  determine  which  employees  of the
          Company or its  Affiliates or other  individuals  or entities (each an
          "option  holder") shall be granted  options under the Option Plan, the
          terms thereof (including without  limitation  determining  whether the
          option is an incentive stock option and the times at which the options
          shall become exercisable), and the number of shares of Stock for which
          an option or options may be granted.

     c.   If rights of the Company to  repurchase  Stock are imposed,  the Board
          may, in its sole discretion, accelerate, in whole or in part, the time
          for lapsing of any rights of the Company to repurchase  shares of such
          Stock or forfeiture restrictions.

     d.   If  rights  of the  Company  to  repurchase  Stock  are  imposed,  the
          certificates  evidencing  such  shares  of  Stock  awarded  hereunder,
          although issued in the name of the option holder  concerned,  shall be
          held by the Company or a third party designated by the Board in escrow
          subject to  delivery  to the option  holder or to the  Company at such
          times and in such  amounts as shall be directed by the Board under the
          terms of this Option Plan. Share certificates  representing Stock that
          is subject to repurchase  rights shall have imprinted or typed thereon
          a legend or legends summarizing or referring to the repurchase rights.

     e.   The Board shall have the sole authority,  in its absolute  discretion,
          to adopt,  amend and rescind  such rules and  regulations,  consistent
          with the  provisions  of the Option Plan,  as, in its opinion,  may be
          advisable in the  administration  of the Option Plan,  to construe and
          interpret  the  Option  Plan,  the  rules  and  regulations,  and  the
          instruments  evidencing  options  granted under the Option Plan and to
          make all other  determinations  deemed  necessary or advisable for the
          administration of the Option Plan. All decisions,  determinations  and
          interpretations  of the Board  shall be binding on all option  holders
          under the Option Plan.
<PAGE>
3.   STOCK SUBJECT TO THE PLAN

     a.   "Stock" shall mean Common Stock of the Company or such stock as may be
          changed as  contemplated  by Section 3(c) below.  Stock shall  include
          shares drawn from either the Company's  authorized but unissued shares
          of Common Stock or from reacquired  shares of Common Stock,  including
          without  limitation  shares  repurchased  by the  Company  in the open
          market.  The  maximum  number of shares  of Common  Stock  that can be
          issued  under this Option Plan is  2,150,000  shares,  and the maximum
          number of shares of Common  Stock that can be issued to any one person
          under this Option Plan is 300,000 shares.

     b.   Options  may be  granted  under the  Option  Plan from time to time to
          eligible  persons.  Stock options awarded  pursuant to the Option Plan
          which are  forfeited,  terminated,  surrendered  or  canceled  for any
          reason prior to exercise shall again become available for grants under
          the Option Plan  (including any option canceled in accordance with the
          cancellation regrant provisions of Section 6(f) herein).

     c.   If there shall be any changes in the Stock subject to the Option Plan,
          including  Stock  subject to any  option  granted  hereunder,  through
          merger,     consolidation,      recapitalization,      reorganization,
          reincorporation,  stock split,  reverse stock split,  stock  dividend,
          combination  or  reclassification  of the  Company's  Stock  or  other
          similar events,  an appropriate  adjustment shall be made by the Board
          in the number of shares of Stock.  Consistent  with the foregoing,  in
          the event that the outstanding  Stock is changed into another class or
          series  of  capital  stock  of the  Company,  outstanding  options  to
          purchase  Stock granted under the Option Plan shall become  options to
          purchase such other class or series and the provisions of this Section
          3(c) shall apply to such new class or series.

     d.   The  aggregate  number of shares of Stock  approved by the Option Plan
          may not be exceeded  without  amending  the Option Plan and  obtaining
          stockholder approval within twelve months of such amendment.

4.   ELIGIBILITY

     Persons who shall be eligible to receive  stock  options  granted under the
     Option  Plan shall be those  individuals  and  entities as the Board in its
     discretion  determines  should be awarded  such  incentives  given the best
     interests  of the  Company;  provided,  however,  that (i) ISOs may only be
     granted to employees of the Company and its  Affiliates and (ii) any person
     holding capital stock possessing more than 10% of the total combined voting
     power of all classes of Stock of the Company or any Affiliate  shall not be
     eligible to receive ISOs unless the exercise price per share of Stock is at
     least 110% of the fair market  value of the Stock on the date the option is
     granted.

5.   EXERCISE PRICE FOR OPTIONS GRANTED UNDER THE PLAN

     a.   All ISOs and NSOs will have option  exercise  prices per option  share
          not less  than the fair  market  value of a share of the  Stock on the
          date the option is granted, except that in the case of ISOs granted to
          any person possessing more than 10% of the total combined voting power
          of all  classes  of stock of the  Company or any  Affiliate  the price
          shall be not less than 110% of such fair  market  value.  The price of
          ISOs or NSOs  granted  under  the  Option  Plan  shall be  subject  to
          adjustment to the extent provided in Section 3(c) above.

     b.   The fair market value on the date of grant shall be  determined  based
          upon the closing  price on an exchange on that day or, if the Stock is
          not listed on an exchange, on the average of the closing bid and asked
          prices in the Over the Counter Market on that day.

6.   TERMS AND CONDITIONS OF OPTIONS

     a.   Each option granted  pursuant to the Option Plan shall be evidenced by
          a written stock option agreement (the "Option Agreement")  executed by
          the Company and the person to whom such option is granted.  The Option
          Agreement shall designate whether the option is an ISO or an NSO.

     b.   The term of each ISO and NSO shall be no more  than 10  years,  except
          that the term of each ISO  issued to any person  possessing  more than
          10% of the voting  power of all classes of stock of the Company or any

                                       2
<PAGE>
          Affiliate shall be no more than 5 years.  Subsequently issued options,
          if Stock becomes available because of further allocations or the lapse
          of previously outstanding options, will extend for terms determined by
          the Board or the  Committee  but in no event shall an ISO be exercised
          after the expiration of 10 years from the date of its grant.

     c.   In the case of ISOs, the aggregate fair market value (determined as of
          the time  such  option  is  granted)  of the  Stock to which  ISOs are
          exercisable for the first time by such individual  during any calendar
          year (under this Option Plan and any other plans of the Company or its
          Affiliates  if any) shall not exceed the amount  specified  in Section
          422(d) of the Internal  Revenue Code,  or any  successor  provision in
          effect at the time an ISO becomes exercisable.

     d.   The Option  Agreement  may contain  such other terms,  provisions  and
          conditions regarding vesting, repurchase or other provisions as may be
          determined  by the Board.  To the extent  such terms,  provisions  and
          conditions  are  inconsistent  with this  Option  Plan,  the  specific
          provisions of the Option Plan shall prevail. If an option, or any part
          thereof,  is intended to qualify as an ISO, the Option Agreement shall
          contain those terms and conditions,  which the Board  determines,  are
          necessary  to so qualify  under  Section 422 of the  Internal  Revenue
          Code.

     e.   The Board shall have full power and  authority to extend the period of
          time for which any option  granted  under the Option Plan is to remain
          exercisable  following the option holder's  cessation of service as an
          employee,   director  or  consultant,   including  without  limitation
          cessation as a result of death or disability;  provided, however, that
          in no event  shall  such  option be  exercisable  after the  specified
          expiration date of the option term.

     f.   As a condition  to option  grants  under the Option  Plan,  the option
          holder  agrees  to grant  the  Company  the  repurchase  rights as the
          Company  may at its  option  require  and  as  may be set  forth  in a
          separate  repurchase  agreement.  Any option  granted under the Option
          Plan may be subject to a vesting  schedule  as  provided in the Option
          Agreement and,  except as provided in this Section 6 herein,  only the
          vested  portion of such option may be exercised at any time during the
          Option Period. All rights to exercise any option shall lapse and be of
          no  further  effect  whatsoever  immediately  if the  option  holder's
          service as an employee  is  terminated  for  "Cause"  (as  hereinafter
          defined) or if the option  holder  voluntarily  terminates  the option
          holder's  service as an employee.  The unvested  portion of the option
          will  lapse  and  be  of  no  further  effect   immediately  upon  any
          termination of employment of the option holder for any reason.  In the
          remaining  cases where the option  holder's  service as an employee is
          terminated due to death, permanent disability, or is terminated by the
          Company  (or  its  affiliates)  without  Cause  at  any  time,  unless
          otherwise provided by the Committee,  the vested portion of the option
          will extend for a period of three (3) months following the termination
          of  employment  and shall  lapse and be of no further  force or effect
          whatsoever  only if it is not  exercised  before the end of such three
          (3) month period.  "Cause" shall be defined in an Employment Agreement
          between  Company and option  holder and if none there shall be "Cause"
          for  termination  if (i) the option  holder is  convicted of a felony,
          (ii) the option holder  engages in any  fraudulent or other  dishonest
          act to the detriment of the Company,  (iii) the option holder fails to
          report for work on a regular  basis,  except for periods of authorized
          absence or bona fide illness,  (iv) the option holder  misappropriates
          trade  secrets,   customer  lists  or  other  proprietary  information
          belonging  to the Company for the option  holder's  own benefit or for
          the  benefit of a  competitor,  (v) the option  holder  engages in any
          willful  misconduct  designed to harm the Company or its stockholders,
          or (vi) the option holder fails to perform properly assigned duties.

     g.   No  fractional  shares of Stock shall be issued under the Option Plan,
          whether by initial grants or any adjustments to the Option Plan.

                                        3
<PAGE>
7.   USE OF PROCEEDS

     Cash  proceeds  realized from the sale of Stock under the Option Plan shall
     constitute general funds of the Company.

8.   AMENDMENT, SUSPENSION OR TERMINATION OF PLAN

     a.   The Board may at any time  suspend or terminate  the Option Plan,  and
          may amend it from time to time in such  respects as the Board may deem
          advisable provided that (i) such amendment,  suspension or termination
          complies  with all  applicable  state  and  federal  requirements  and
          requirements  of any stock exchange on which the Stock is then listed,
          including  any  applicable  requirement  that  the  Option  Plan or an
          amendment to the Option Plan be approved by the stockholders, and (ii)
          the Board  shall not amend the Option  Plan to  increase  the  maximum
          number of shares of Stock  subject to ISOs under the Option Plan or to
          change the  description  or class of persons  eligible to receive ISOs
          under the Option Plan without the consent of the  stockholders  of the
          Company  sufficient to approve the Option Plan in the first  instance.
          The  Option  Plan  shall   terminate  on  the  earlier  of  (i)  tenth
          anniversary  of the  Plan's  approval  or (ii)  the  date on  which no
          additional shares of Stock are available for issuance under the Option
          Plan.

     b.   No  option  may  be  granted   during  any  suspension  or  after  the
          termination  of the  Option  Plan,  and no  amendment,  suspension  or
          termination  of the Option  Plan shall,  without  the option  holder's
          consent,  alter or impair  any rights or  obligation  under any option
          granted under the Option Plan.

     c.   [Reserved.]

     d.   Nothing  contained  herein shall be construed to permit a termination,
          modification or amendment adversely affecting the rights of any option
          holder  under an  existing  option  theretofore  granted  without  the
          consent of the option holder.

9.   ASSIGNABILITY OF OPTIONS AND RIGHTS

     Each ISO and NSO granted  pursuant  to this  Option Plan shall,  during the
     option holder's  lifetime,  be exercisable  only by the option holder,  and
     neither  the option nor any right to purchase  Stock shall be  transferred,
     assigned or pledged by the option holder, by operation of law or otherwise,
     other than upon a beneficiary designation executed by the option holder and
     delivered to the Company or the laws of descent and distribution.

10.  PAYMENT UPON EXERCISE

     Payment  of the  purchase  price  upon  exercise  of any option or right to
     purchase  Stock  granted under this Option Plan shall be made by giving the
     Company  written  notice of such  exercise,  specifying  the number of such
     shares of Stock as to which the option is  exercised.  Such notice shall be
     accompanied  by  payment  of an amount  equal to the  Option  Price of such
     shares of Stock.  Such payment may be (i) cash, (ii) by check drawn against
     sufficient funds, (iii) such other  consideration as the Board, in its sole
     discretion, determines and is consistent with the Option Plan's purpose and
     applicable law, or (iv) any combination of the foregoing. Any Stock used to
     exercise  options to purchase  Stock  (including  Stock  withheld  upon the
     exercise of an option to pay the  purchase  price of the shares of Stock as
     to which the  option is  exercised)  shall be  valued  in  accordance  with
     procedures  established  by the Board.  If accepted by the Committee in its
     discretion,  such  consideration  also may be paid through a  broker-dealer
     sale and remittance procedure pursuant to which the option holder (i) shall
     provide irrevocable written  instructions to a designated brokerage firm to
     effect the immediate sale of the purchased  Stock and remit to the Company,
     out of the sale proceeds available on the settlement date, sufficient funds
     to cover the aggregate  option price  payable for the purchased  Stock plus
     all applicable Federal and State income and employment taxes required to be
     withheld by the Company in  connection  with such  purchase  and (ii) shall
     provide written  directives to the Company to deliver the  certificates for
     the purchased  Stock  directly to such  brokerage firm in order to complete
     the sale transaction.

11.  WITHHOLDING TAXES

     a.   Shares  of Stock  issued  hereunder  shall be  delivered  to an option
          holder  only upon  payment by such person to the Company of the amount
          of any withholding tax required by applicable federal, state, local or
          foreign law.  The Company  shall not be required to issue any Stock to
          an option holder until such obligations are satisfied.

                                        4
<PAGE>
     b.   The  Board  may,   under  such  terms  and   conditions  as  it  deems
          appropriate,  authorize an option  holder to satisfy  withholding  tax
          obligations  under this  Section 11 by  surrendering  a portion of any
          Stock  previously  issued to the option  holder or by electing to have
          the  Company  withhold  shares of Stock from the Stock to be issued to
          the option  holder,  in each case having a fair market  value equal to
          the amount of the withholding tax required to be withheld.

12.  RATIFICATION

     This  Option Plan and all  options  issued  under this Option Plan shall be
     void  unless  this  Option  Plan is or was  approved or ratified by (i) the
     Board;  and (ii) a majority of the votes cast at a  stockholder  meeting at
     which a quorum  representing at least a majority of the outstanding  shares
     of Stock is (either in person or by proxy) present and voting on the Option
     Plan  within  twelve  months of the date this Option Plan is adopted by the
     Board.  No ISOs  shall be  exercisable  prior to the date such  stockholder
     approval is obtained.

13.  CORPORATE TRANSACTIONS

     a.   For the purpose of this  Section 13, a "Corporate  Transaction"  shall
          include  any of the  following  stockholder-approved  transactions  to
          which the Company is a party:

          (i)   a merger  or  consolidation  in  which  the  Company  is not the
                surviving entity, except for a transaction the principal purpose
                of which is to change the State of the Company's incorporation;

          (ii)  the sale,  transfer or other disposition of all or substantially
                all of the assets of the Company in  liquidation  or dissolution
                of the Company; or

          (iii) any reverse merger in which the Company is the surviving  entity
                but in which beneficial ownership of securities  possessing more
                than fifty percent (50%) of the total  combined  voting power of
                the Company's outstanding  securities are transferred to holders
                different from those who held such securities  immediately prior
                to such merger.

     b.   Upon the  occurrence  of a  Corporate  Transaction,  if the  surviving
          corporation or the purchaser,  as the case may be, does not assume the
          obligations of the Company under the Option Plan, then irrespective of
          the vesting provisions contained in individual option agreements,  all
          outstanding  options shall become immediately  exercisable in full and
          each option holder will be afforded an  opportunity  to exercise their
          options prior to the consummation of the merger or sale transaction so
          that they can participate on a pro rata basis in the transaction based
          upon the number of shares of Stock  purchased  by them on  exercise of
          options if they so  desire.  To the  extent  that the  Option  Plan is
          unaffected  and  assumed by the  successor  corporation  or its parent
          company a  Corporate  Transaction  will have no effect on  outstanding
          options and the options  shall  continue in effect  according to their
          terms.

     c.   Each  outstanding  option  under this  Option Plan which is assumed in
          connection with the Corporate  Transaction or is otherwise to continue
          in effect  shall be  appropriately  adjusted,  immediately  after such
          Corporate Transaction, to apply and pertain to the number and class of
          securities  which  would  have  been  issued to the  option  holder in
          connection  with the  consummation  of such Corporate  Transaction had
          such person exercised the option  immediately  prior to such Corporate
          Transaction.  Appropriate adjustments shall also be made to the option
          price payable per share,  provided the aggregate  option price payable
          for such securities shall remain the same. In addition,  the class and
          number of  securities  available  for issuance  under this Option Plan
          following  the  consummation  of the  Corporate  Transaction  shall be
          appropriately adjusted.

     d.   The grant of options under this Option Plan shall in no way affect the
          right of the Company to adjust,  reclassify,  reorganize  or otherwise
          change its capital or  business  structure  or to merge,  consolidate,
          dissolve,  liquidate  or  sell  or  transfer  all or any  part  of its
          business or assets.

                                        5
<PAGE>
14.  REGULATORY APPROVALS

     The  obligation  of the Company with respect to Stock issued under the Plan
     shall be subject to all applicable  laws,  rules and  regulations  and such
     approvals  by  any  governmental  agencies  or  stock  exchanges  as may be
     required.  The Company reserves the right to restrict, in whole or in part,
     the  delivery  of  Stock  under  the  Plan  until  such  time as any  legal
     requirements  or  regulations  have been met  relating  to the  issuance of
     Stock, to their registration or qualification under the Securities Exchange
     Act of 1934, if applicable,  or any applicable state securities laws, or to
     their  listing  on any stock  exchange  at which time such  listing  may be
     applicable.

15.  NO EMPLOYMENT/SERVICE RIGHTS

     Neither the action of the Company in establishing this Option Plan, nor any
     action taken by the Board or the Committee hereunder,  nor any provision of
     this Option Plan shall be construed so as to grant any individual the right
     to  remain  in the  employ  or  service  of the  Company  (or  any  parent,
     subsidiary or affiliated  corporation) for any period of specific duration,
     and the  Company  (or any  parent,  subsidiary  or  affiliated  corporation
     retaining  the  services of such  individual)  may  terminate or change the
     terms of such  individual's  employment  or service at any time and for any
     reason, with or without cause.

16.  MISCELLANEOUS PROVISIONS

     a.   The  provisions  of this  Option Plan shall be governed by the laws of
          the State of Arizona,  as such laws are applied to  contracts  entered
          into  and  performed  in  such  State,  without  regard  to its  rules
          concerning conflicts of law.

     b.   The provisions of this Option Plan shall insure to the benefit of, and
          be binding upon, the Company and its successors or assigns, whether by
          Corporate Transaction or otherwise,  and the option holders, the legal
          representatives of their respective estates, their respective heirs or
          legatees and their permitted assignees.

     c.   The option holders shall have no dividend rights, voting rights or any
          other rights as a  stockholder  with respect to any options  under the
          Option  Plan prior to the  issuance  of a stock  certificate  for such
          Stock.

     d.   If there is a conflict  between the terms of any employment  agreement
          pursuant  to which  options  under this Plan are to be granted and the
          provisions of this Plan, the terms of the employment  agreement  shall
          prevail.

                                        6

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