Document:

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                                                                   EXHIBIT 10.32
                      FOURTH AMENDMENT TO CREDIT AGREEMENT

          FOURTH AMENDMENT TO CREDIT AGREEMENT (this "Fourth Amendment"), dated
as of March 20, 2000 but effective as of February 29, 2000 (the "Effective
Date") among Miller Oil Corporation, a corporation formed under the laws of the
State of Michigan (the "Borrower"), Miller Exploration Company (the "Parent"),
each of the lenders that is a signatory, or which becomes a signatory, to the
Credit Agreement referred to below (individually, together with its successors
and assigns, a "Lender" and collectively, the "Lenders") and Bank of Montreal, a
foreign bank formed under the laws of Canada in its individual capacity as a
Lender and as agent for Lenders under the Credit Agreement referred to below (in
its capacity as agent, together with its successors and assigns in such
capacity, the "Agent").

                                    RECITALS

          WHEREAS, the Borrower, the Parent, the Lenders and the Agent are
parties to that certain Credit Agreement, dated as of February 9, 1998, as
amended by that certain First Amendment to Credit Agreement, dated as of June
24, 1998, and as amended by that certain Second Amendment to Credit Agreement
dated as of April 14, 1999, and as amended by that certain Third Amendment to
Credit Agreement dated as of October 29, 1999 (as so amended, the "Credit
Agreement"); and

          WHEREAS, the Borrower has advised the Lenders and the Agent that it
desires to amend certain provisions of the Credit Agreement, and the Borrower
has requested that the Lenders and the Agent agree to amend certain provisions
of the Credit Agreement; and

          WHEREAS, the Lenders and the Agent have agreed to so amend certain
provisions of the Credit Agreement upon the terms and subject to the conditions
and limitations of this Third Amendment;

          NOW, THEREFORE, in consideration of the premises, covenants and
agreements contained herein, the parties hereto hereby agrees as follows:

          Section 1. Definitions. Capitalized terms used and not otherwise
defined herein are used with the meanings ascribed thereto in the Credit
Agreement. The following capitalized terms shall have the following respective
meanings when used herein:

          A. "Lending Relationship" shall refer to the Credit Agreement and the
other Loan Documents, including, without limitation, this Fourth Amendment,
together with any and all negotiations, discussions, acts, omissions, renewals,
extensions, and other agreements or events related to the Credit Agreement and
such other Loan Documents, the parties' obligations thereunder and the
transactions contemplated thereby, including, without limitation, any such
negotiations, discussions, acts, omissions,
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renewals, extensions, other agreements or events that (a) occurred prior to the
date hereof, (b) may occur on the date hereof, or (c) occurred prior to the
execution of this Fourth Amendment and the instruments and documents executed
and delivered in connection herewith o r relating hereto.

          B. "Supplemental Mortgages" shall mean, collectively, all those
mortgages and supplements to mortgages necessary to grant to the Agent for the
benefit of the Lenders a first priority perfected Lien on the Oil and Gas
Properties owned by the Parent, the Borrower or any Subsidiary including those
Oil and Gas Properties acquired by the Parent, the Borrower or any Subsidiary
after February 9, 1998, and including without limitation, those properties
listed on Schedule III hereto and those properties located in the State of
Montana, all such mortgages and supplements to mortgages to be delivered within
thirty (30) days of the dat e hereof in accordance with Section 7.

          C. "Released Claims" shall mean any and all claims (including without
limitation any liabilities, damages, demands and causes of action arising
therefrom), whether (a) at law or in equity, (b) on the alleged commission of a
tort, (c) on the alleged breach (or anticipatory breach or repudiation) of any
contract, duty, or warranty (whether oral or written, express or implied), (d)
on the alleged violation of any statute, tariff, or regulation (whether
promulgated by the United States, any state thereof, any foreign state or
country, or any other governmental agency or entity, wherever located), or (e)
on any other factual, legal or equitable theory, including, without limitation,
any claim for damages of any type or nature, for injunctive or other relief, for
attorneys' fees, interest or any other liability whatsoever on any theory,
including without limitation any loss, cost or damage in connection with or
based upon "lender liability", unfair dealing, duress, coercion, control or
undue influence, extortion or commercial bribery, breach of an implied covenant
or duty of good faith and fair dealing, material misrepresentation or omission,
overreaching, unconscionability, conflict of interest, bad faith, malpractice,
disparate bargaining position, detrimental reliance, promissory estoppel,
estoppel by deed, waiver, laches, or any other equitable theory, equitable
subordination, breach of fiduciary duty or any other duty, or tortious
inducement to commit such breach, tortious interference with contract or
prospective business relations, negligent performance of contractual
obligations, or other theories of negligence, negligent or intentional
infliction of emotional distress, slander, libel, other defamation, fraudulent
transfer, conversion, trespass to (or clouding the title of) property, usury,
violations of the Racketeer Influenced and Corrupt Organizations Act, deceptive
trade practices, conspiracy, or any theory of liability as partners or joint
venturers, that any Releasing Party may have as of the date hereof against any
Released P arty with respect to the Lending Relationship.

          D. "Released Party" shall mean each of the Agent, the Lenders and
their respective predecessors, successors, assigns, directors, officers,
partners, employees, agents, attorneys, principals and Affiliates and all other
Persons liable or who might be claimed to be liable on their behalf
(collectively, the "Released Parties").

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          E. "Releasing Party" shall mean each of the Borrower and the
Guarantors and their respective predecessors, successors, assigns, directors,
officers, partners, employees, agents, attorneys, principals, Affiliates and all
other Persons who might have a claim against any Released Party (collectively,
the "Releasing  Parties").

          Section 2. Amendments to Credit Agreement. The Credit Agreement is
amended hereby as follows:

          A.   Section 1.02 is amended hereby:

               (i)   by inserting the reference "and the Fourth Amendment"
after the reference "Th ird Amend ment" in the definition of the term
"Agreement";

               (ii)  "by deleting the reference "January 1, 2001" in the
definition of the term "Final Maturity Date" and substituting the following
therefor "(i) April 1, 2001,".

               (iii) by adding the following definitions where alphabetically
appropriate: "Fourth Amendment" shall mean the Fourth Amendment to Credit
Agreement dated as of March 20, 2000.

               "Fourth Amendment Effective Date" shall mean the "Effective Date"
          as such term is defined in the Fourth Amendment.

               "Second Amendment" shall mean the Second Amendment to Credit
          Agreement dated as of April 14, 1999.

               "Third Amendment" shall mean the Third Amendment to Credit
          Agreement dated as of October 29, 1999.

          B.  Section 2.07 of the Credit Agreement is amended hereby as follows:

               (i) by deleting subsection (b)(i) in its entirety and
substituting therefor the following new subsection (b)(i):

          "(i)  The Borrower shall make prepayments as set forth below:

                    A.  The Borrower shall prepay the Loans as follows:

                              (1) On or before February 29, 2000, after
                         application of any prepayments made pursuant to
                         subsection C. below, the amount of $1,500,000; and

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                              (2) On or before March 31, 2000, after application
                         of any prepayments made pursuant to subsection C. below
                         during such month, the amount of $1,000,000.

                    B.  Upon any Transfer of Property that would be included in
               the Borrowing Base, the Borrower shall prepay the Loans in an
               amount equal to 100% of the net cash proceeds of any such
               Transfer, and any net cash proceeds in excess of the value
               attributable to such Property in the Borrowing Base determined by
               the Agent in its sole discretion at the time of the Transfer
               shall be credited against the prepayments required under
               subsection 2.07(b)(i)(A);

                    C.  Upon any Transfer of Property that would not be included
               in the Borrowing Base, the Borrower shall prepay the Loans in an
               amount equal to 100% of the net cash proceeds of any such
               Transfer, which prepayments shall be credited against the
               prepayments required under subsection 2.07(b)(i)(A);

                    D.  The entire amount of any prepayment made pursuant to
               this subsection shall be applied to reduce the Aggregate Maximum
               Credit Amounts pro rata to each Lender based on its Percentage
               Share."

          C. Section 9.12 of the Credit Agreement is hereby deleted in its
entirety and the following is substituted therefor "Intentionally Omitted."

          Section 3.  Covenants.

          A. Covenants of the Borrower and the Parent. The Borrower or the
Parent, as the case may be, covenants and agrees that during the period from the
Fourth Amendment Effective Date through and including April 15, 2000 (or, if
earlier, the date of the next redetermination of the Borrowing Base in
accordance with Section 2.08 (d) of the Credit Agreement as amended hereby):

               (i)  Every two weeks the Parent shall deliver cash budgets in
form and substance reasonably satisfactory to the Agent and cash flow statements
in form and substance reasonably satisfactory to the Agent with variance
analysis to budget (including accounts receivables and accounts payables
reporting) not later than the Friday following the last week to which such
budgets and statements relate.

               (ii) The Borrower shall not spud any wells or conduct any other
drilling operations (other than with respect to wells identified on Schedule II
hereto and routine workovers normally expensed in accordance with past practice)
without the prior

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written consent of the Agent and the Lenders, and shall not, without the prior
written consent of the Agent and the Lenders, use any amounts to acquire
acreage, leases, seismic data, or for any drilling costs and expenses other than
to acquire, extend or renew the Leases identified on Schedule I hereto or to pay
the drilling costs or expenses identified on Schedule II hereto.

               (iii) The Borrower shall use its best efforts to raise capital,
whether through debt, equity or consummation of asset sales to achieve Borrowing
Base compliance, provided that the Lenders shall not require proceeds raised
through debt or equity offerings to be used for debt prepayments.

               (iv)  The Borrower shall provide to the Agent from time to time
upon request by the Agent the certificate of a Responsible Officer of the
Borrower stating that, except as disclosed in a schedule thereto, the Borrower
has not received written notice that any mechanics' liens have been filed or
will be filed on the Mortgaged Properties; provided that mere receipt of an
invoice for services rendered shall not constitute written notice that a
mechanics' lien will be filed.

          B. The Lenders and the Agent Covenants. Each of the Lenders and the
Agent, as the case may be, covenants and agrees that during the period from the
Fourth Amendment Effective Date through and including April 15, 2000 (or, if
earlier, the date of the next determination of the Borrowing Base in accordance
with Section 2.08(d) of the Credit Agreement as amended hereby):

               (i) the Agent will release any Lien that it may have on assets of
the Borrower sold by the Borrower in one or more arms length transactions for
fair value by the Borrower in accordance with the terms of the Credit Agreement
as amended hereby, the net cash proceeds of which sales are paid to the Bank
pursuant to Section 2.07(b)(i) of the Credit Agreement as amended hereby.

          Section 4. Conditions Precedent. This Fourth Amendment shall become
binding upon receipt by the Agent of the following documents and satisfaction of
the other conditions provided in this Section 4, each of which must be
satisfactory to the Agent in form and substance:

          A. counterparts of this Amendment executed by the Borrower, the Agent
and the Lenders;

          B. certificates of the Secretary or an Assistant Secretary of the
Borrower and the Parent setting forth for each of them (i) the resolutions of
its board of directors, as applicable, with respect to the authorization to
execute and deliver this Amendment and consummate the transactions contemplated
hereby; (ii) the Responsible Officer of such entity authorized to sign as the
case may be this Amendment, and the Consent and Acknowledgements referred to in
this Section 4, and (iii) the signature of such authorized Responsible Officer
of such entity;

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          C. a Consent and Acknowledgement executed by each of the Guarantors;

          D. an opinion of counsel to Borrower and Parent substantially in the
form attached hereto as Exhibit A;

          E. payment to the Agent for the ratable benefit of the Lenders of all
accrued and unpaid Interest outstanding under the Credit Agreement and the
Notes;

          F. payment of the fees and expenses of the Agent and Lenders; and

          G. such other documents as the Agent may reasonably request.

          Section 5.  Representations and Warranties.

          A. The Borrower hereby reaffirms that the representations and
warranties made by the Borrower and the Parent in the Credit Agreement were true
and correct when made and, except as to be described in writing to the Agent as
of the date hereof, are true and correct as though made on and as of the date
hereof, and further, the Borrower represents that,

               (i)   as of the date hereof, no Default or Material Adverse
Effect has occurred and is continuing except as previously disclosed to the
Agent in writing or as set forth in Schedule IV hereto;

               (ii)  neither the Borrower, the Parent nor any Subsidiary has
acquired any additional Oil and Gas Properties since October 29, 1999 except as
identified on S chedule III hereto; and

               (iii) the execution, delivery and performance by the Borrower or
any Guarantor of this Fourth Amendment and the other Loan Documents and all
instruments and documents to be delivered by the Borrower or such Guarantor, to
the extent a party thereto, hereunder and thereunder and the creation of all
Liens provided for herein and therein: (a) are within the Borrower's or such
Guarantor's corporate power; (b) have been duly authorized by all necessary or
proper corporate action, including the consent of stockholders, members and/or
partners therein or thereof; (c) are not in contravention of any provision of
the Borrower's or such Guarantor's certificate of incorporation, bylaws or
similar organizational and/or governing documents; (d) will not violate (1) any
law or regulation or (2) any order or decree of any court or governmental
instrumentality; (e) will not conflict with or result in the breach or
termination of, constitute a default under or accelerate any performance
required by, any indenture, mortgage, deed of trust, lease, agreement or other
instrument to which the Borrower or such Guarantor is a party or by which the
Borrower or such Guarantor or any of their respective property is bound; (f)
will not result in the creation or imposition of any Lien upon any of the
property of the Borrower or such Guarantor other than those in favor of the
Agent pursuant to the terms of this Fourth Amendment and the other Loan

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Documents to be delivered in connection herewith; and (g) do not require the
consent or approval of any governmental body, agency, authority or any other
Person that has not been duly obtained, made or complied with prior to the date
hereof. At or prior to the date hereof, each of the Fourth Amendment and the
other Loan Documents to be delivered in connection herewith shall have been duly
executed and delivered for the benefit of or on behalf of the Borrower or such
Guarantor, in each case to the extent a party thereto, and each shall then
constitute a legal, valid and binding obligation of the Borrower or such
Guarantor, enforceable against it in accordance with its terms.

          B. Each of the Borrower and such Guarantor further represents and
warrants, for itself only that he or it (i) is executing this Fourth Amendment
after consultation with counsel of his or its own choosing, (ii) has read and
understands the release granted by Section 6 hereof, (iii) desires to execute
this Fourth Amendment and (iv) has the requisite authority to enter into and be
bound by this Fourth Amendment, including the release granted by Section 6
hereof.

          Section 6. Release.

          A. Each of the Releasing Parties desires and intends fully to
compromise, release and settle any and all of the Released Claims; and each of
the Releasing Parties hereby covenants, warrants and represents unto each of the
Released Parties that such Releasing Party does hereby FOREVER RELEASE, ACQUIT,
WAIVE AND DISCHARGE each of the Released Parties of and from the Released Claims
and each of the Releasing Parties hereby declares the same FOREVER RELEASED,
ACQUITTED, WAIVED, SETTLED AND DISCHARGED. This release is effective without
regard to whether (i) such Released Claims are known or unknown, (ii) damages
arising out of such Released Claims have yet accrued, (iii) such Released Claims
arose collaterally, directly, derivatively, or otherwise between the parties
hereto or (iv) an ordinary person in the same or similar circumstances would or
would not, through the exercise of due care, have discovered such claims by the
date of this Fourth Amendment. In connection with the foregoing release:

          B. The Borrower and each Guarantor represents and warrants that it has
the full power and authority to perform the release granted in this Section 6
and that it has not in any manner made any assignment of any Released Claim to
any third party.

          C. The release granted in this Section 6 will be effective upon
execution of this Fourth Amendment by all of the parties hereto.

          D. Each party executing this Fourth Amendment understands and agrees
that the release granted in this Section 6 is a full, final and complete release
of the Released Claims and that such release may be pleaded as an absolute and
final bar to any or all suits which may hereafter be filed or prosecuted by any
one or more of the Releasing Parties or anyone claiming by, through or under any
one or more of the Releasing Parties in respect of any of the matters released
hereby, and that no recovery on

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account of the Released Claims may hereafter be had from any of the Released
Parties; and that the consideration given for such release is not an admission
of liability or fault on the part of any of the Released Parties (it being the
express intent of the parties hereto to obtain peace of mind and avoid the
expense and uncertainty of potential litigation), and that none of the Releasing
Parties or those claiming by, through or under any of them will ever claim that
it is.

          E. The parties hereto acknowledge that the release granted by this
Section 6 does not have any effect with respect to relationships between the
Borrower and each Guarantor and the Lenders and the Agent other than in
connection with the Lending Relationship.

          Section 7. Events of Default and Remedies.

          A. The occurrence of the following event (regardless of the reason
therefor) shall constitute an "Event of Default" hereunder:

               (i) The Borrower shall fail to deliver within thirty (30) days
after closing the Supplemental Mortgages and the other documents required under
Section 8.09 of the Credit Agreement (including, without limitation, the legal
opinion), granting to the Agent a first priority Lien interest (subject only to
Excepted Liens) on the Borrower's, the Parent's, or any Subsidiary's interest in
any additional Oil and Gas Property listed on Schedule III hereto.

          B. The occurrence and continuation of an Event of Default hereunder
shall constitute an Event of Default under the Credit Agreement as amended
hereby.

          Section 8. Payment of Fees and Expenses; Form of Payment.

          A. The Borrower confirms its obligation to pay to the Agent for the
ratable benefit of the Lenders the Amendment Fee provided in the Third
Amendment, which Amendment Fee is in an amount equal to two percent (2%) on the
outstanding balance of the Loans as of April 15, 2000, payable on April 15,
2000.

          B. The Borrower agrees, whether or not the transactions contemplated
hereby are consummated, to pay all reasonable expenses of the Agent and the
Lenders (including, without limitation, all reasonable fees and disbursements of
counsel and other outside consultants for the Agent and/or the Lenders) in
connection with the negotiation, investigation, preparation, execution and
delivery of, recording and filing of, preservation of rights under and
enforcement of this Amendment and the other Loan Documents to be delivered in
connection herewith.

          C. All payments to be made by the Borrower under this Amendment shall
be made in Dollars, in immediately available funds, to the Agent at such account
as the Agent shall specify by notice in accordance with Section 4.01 of the
Credit Agreement.

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          Section 9. Limitations. The amendments set forth herein are limited
precisely as written and shall not be deemed to (a) be a consent to, or waiver
or modification of, any other term or condition of the Credit Agreement or any
of the other Loan Documents, or (b) prejudice any right or rights that the
Lenders or the Agent may have at any time under or in connection with the Credit
Agreement as amended hereby or any of the other Loan Documents. Except as
expressly supplemented, amended or modified hereby, the terms and provisions of
the Credit Agreement or any other Loan Documents are and shall remain in full
force and effect. In the event of a conflict between this Fourth Amendment and
any of the foregoing documents, the terms of this Fourth Amendment shall be
controlling.

          Section 10. Non-Reliance on Agent and Other Lenders. Each Lender
acknowledges and agrees that it has, independently and without reliance on the
Agent or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own decision to enter into this Fourth Amendment,
and that it will, independently and without reliance upon the Agent or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own analysis and decisions in taking or not
taking action under this Fourth Amendment or the Credit Agreement. The Agent
shall not be required to keep itself informed as to the performance or
observance by the Borrower of this Fourth Amendment or any other Loan Document
or any other document referred to or provided for herein or therein or to
inspect the properties or books of the Borrower. Except for notices, reports and
other documents and information expressly required to be furnished to the
Lenders by the Agent hereunder and under the Credit Agreement, the Agent shall
not have any duty or responsibility to provide any Lender with any credit or
other information concerning the affairs, financial condition or business of the
Borrower (or any of its Affiliates) which may come into the possession of the
Agent or any of its Affiliates. In this regard, each Lender acknowledges that
Weil, Gotshal & Manges LLP is acting in this transaction as special counsel to
the Agent only. Each Lender will consult with its own legal counsel to the
extent that it deems necessary in connection with this Fourth Amendment and the
matters contemplated herein.

          Section 11. Governing Law. This Fourth Amendment and the rights and
obligations of the parties hereunder and under the Credit Agreement shall be
construed in accordance with and be governed by the laws of the State of Texas
and the United States of America.

          Section 12. Descriptive Headings, etc. The descriptive headings of the
several Sections of this Fourth Amendment are inserted for convenience only and
shall not be deemed to affect the meaning or construction of any of the
provisions  hereof.

          Section 13. Counterparts. This Fourth Amendment may be executed in any
number of counterparts and by different parties on separate counterparts and all
of such counterparts shall together constitute one and the same instrument.

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          IN WITNESS WHEREOF, the parties hereto have caused this Fourth
Amendment to be executed as of the date first written above.

               NOTICE PURSUANT TO TEX. BUS. & COMM. CODE (Section)26.02

          THIS FOURTH AMENDMENT AND OTHER LOAN DOCUMENTS EXECUTED BY ANY OF THE
PARTIES BEFORE OR SUBSTANTIALLY CONTEMPORANEOUSLY WITH THE EXECUTION HEREOF
TOGETHER CONSTITUTE A WRITTEN LOAN AGREEMENT AND REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO
UNWRITTEN ORAL AGREEMENT BETWEEN THE PARTIES.

BORROWER:                                 MILLER OIL CORPORATION

                                          By: /s/ Kelly E. Miller
                                              -------------------------------
                                          Name: Kelly E. Miller
                                               ------------------------------
                                          Title: President
                                                 ----------------------------

PARENT:                                   MILLER EXPLORATION COMPANY

                                          By: /s/ Kelly E. Miller
                                              ------------------------------
                                          Name: Kelly E. Miller
                                               -----------------------------
                                          Title: President
                                                 ---------------------------

LENDER AND AGENT:                         BANK OF MONTREAL

                                          By: /s/ Thomas E. McGraw
                                              -----------------------------
                                              Thomas E. McGraw
                                              Director

                                       S<PAGE>

                              EMPLOYMENT AGREEMENT

     THIS AGREEMENT is made and entered into by and between  CALIFORNIA  FEDERAL
BANK, A Federal Savings Bank (the "Company"),  having a business address at 135
Main  Street,  San  Francisco,  California,  94105,  and  GERALD  J.  FORD  (the
"Executive"),  having a mailing  address at  200  Crescent  Court,  Suite  1350,
Dallas, Texas 75201.

                                 R E C I T A L S

     The Board of Directors of the Company has determined that it is in the best
interests of the Company to retain the Executive's services and to reinforce and
encourage  the continued  attention  and  dedication of members of the Company's
management,   including  the  Executive,   to  their  assigned   duties  without
distraction in potentially disturbing circumstances arising from the possibility
of a change of control of the Company.

     The Company  wishes to assure  itself of the services of the  Executive for
the period  provided in this Agreement and the Executive  wishes to serve in the
employ of the Company on the terms and conditions hereinafter provided.

     This Agreement  supersedes and replaces (i) the employment agreement by and
between  the  Executive  and  the  Company  dated  as of  October  1,  1994,  as
subsequently  amended as of January 1, 1998 and (ii) the consulting agreement by
and between the  Executive  and First  Nationwide  Management  Corp.  (and their
respective assignees and successors) dated as of October 1, 1994 as subsequently
amended as of January 1, 1995, and December 17, 1997; such  agreements  shall be
terminated  upon the later of the effective  date of this Agreement or execution
of this Agreement.

                                A G R E E M E N T

     NOW,  THEREFORE,  in consideration of the premises and the mutual covenants
herein contained, the Company and the Executive hereby agree as follows:

     1.  Employment.  Upon the terms and subject to the conditions  contained in
this  Agreement,  the  Executive  agrees to provide  full-time  services for the
Company during the term of this  Agreement.  The Executive  agrees to devote his
best efforts to the business of the Company,  and shall  perform his duties in a
diligent,  trustworthy,  and  business-like  manner,  all  for  the  purpose  of
advancing  the business of the Company.  However,  the  Executive  may act as an
executor,  a trustee,  an officer  and/or  director  of  entities  with whom the
Executive has had a continuing  relationship  (including  Liberte' Investors) so
long  as  such  activities  do  not  interfere  in any  material  way  with  the
Executive's duties hereunder.

     2.  Duties;  Location.  The duties of the  Executive  shall be those duties
which can  reasonably  be expected to be performed by a person with the title of
Chief Executive  Officer and,  subject to the approval of the Board of Directors
of the Company,  as Chairman of the Board of the Company.  The  Executive  shall
report directly to the Board of Directors of the Company. The Executive's duties
may, from time to time, be changed or modified at the discretion of the Board of

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Directors of the Company.  The duties to be performed under this Agreement shall
be performed primarily at the offices of the Company in Dallas,  Texas,  subject
to reasonable travel requirements on behalf of the Company.

     3.  Employment  Terms.  Subject  to the terms and  conditions  hereof,  the
Company  agrees to employ the Executive  for a term  commencing as of January 1,
2000 (the "Effective  Date") and continuing  through  December 31, 2002,  unless
renewed under this Section 3.

     Beginning  with  January 1, 2002,  this  Agreement  shall be  automatically
renewed  each  January 1 for one-year  terms,  unless  either the Company or the
Executive  provides  written  notice of election not to renew,  at least 45 days
before the applicable January 1.

     4.  Salary and Benefits.

          (a) Base Salary. The Company shall, during the term of this Agreement,
     pay the  Executive  an annual base salary of  $1,000,000  beginning  on the
     Effective Date, pro rated for periods of fewer than 12 months.  Such salary
     shall be paid in semi-monthly  installments less applicable withholding and
     salary deductions.  Base salary shall be reviewed at least annually and may
     be  increased  by the  Company.  The Company may not,  however,  reduce the
     Executive's base salary at any time during the term of this Agreement.

          (b) Executive  Compensation  Plans. The Executive shall be eligible to
     participate  in any executive  compensation  plan in which any other senior
     executive of the Company  participates;  such executive  compensation plans
     shall include  (without  limitation) the following  types of  compensation,
     incentives, and benefits: stock options,  restricted stock, annual bonuses,
     long term incentive compensation, and stock purchase.

          (c) Non-Qualified Retirement Plans. The Executive shall be entitled to
     participate in any non-qualified retirement plan that is generally provided
     to senior executive officers of the Company.

          (d) Fringe  Benefits.  The Executive shall be entitled to all benefits
     for which the Executive is eligible  under any qualified  retirement  plan,
     group insurance,  other welfare  benefits,  and all "fringe" benefits which
     the Company provides to its employees  generally or to senior executives of
     the Company (including executive medical benefits for the Executive and his
     dependents).

          (e) Medical  Examination.  The  Executive  shall be  reimbursed by the
     Company for the  reasonable  cost of one annual  medical  examination  upon
     presentation of an expense statement.

          (f) Paid Time Off.  The  Executive  shall be entitled to paid time off
     ("PTO")  during each full year of his  employment  hereunder in  accordance
     with the  applicable  policies  adopted by the  Company.  In no event shall
     Executive  be  entitled  to fewer

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<PAGE>

     than five weeks PTO during any  calendar  year.  Such PTO shall be taken at
     such times as are  consistent  with the  reasonable  business  needs of the
     Company.

          (g)  Automobile.  The  Company  will  provide  the  Executive  with an
     automobile (the  "Automobile")  for use by the Executive in connection with
     the  performance  of his duties under this  Agreement and the Company shall
     provide  garaging near the Executive's  office.  The Automobile  shall be a
     late model  top-of-the-line  luxury automobile to be reasonable selected by
     the  Executive.  The Executive may also use the  Automobile  for reasonable
     personal  use.  The  Executive  agrees  to pay all  operating  costs of the
     Automobile  and the Company  agrees to reimburse to the  Executive to cover
     operating costs of the Automobile (including insurance,  maintenance,  toll
     charges,  and rental of garage space), upon the submission by the Executive
     to the Company of  receipts  evidencing  such  operating  costs.  Except as
     otherwise  provided in Section 5 below,  the Executive agrees to return the
     Automobile  to the  Company at the  termination  of this  Agreement  or the
     Executive  may  purchase  the  Automobile  from  the  Company  as its  then
     wholesale  value.  The  Company  shall  also  provide  the  Executive  with
     comparable automobiles in San Francisco and southern California on the same
     terms.

          (h) Clubs. The Company will reimburse the Executive, upon presentation
     of  proper  expense  statements,  for all  reasonable  initiation  fees and
     periodic dues for  memberships  in golf,  country,  and social clubs of the
     Executive's choice.

          (i) Life  Insurance.  The Company shall  purchase a split dollar whole
     life  insurance  policy on the life of the  Executive  with an initial face
     amount of $3,000,000 (the "Policy"). The Policy shall be adjusted every two
     years on January 1 (with the first  adjustment  on  January 1, 2001)  based
     upon  increases in the  Executive's  base salary,  and such  adjusted  face
     amount shall be equal to (i) the  Executive's  base salary,  multiplied  by
     (ii)  three.  The Policy  shall be owned by a trust for the  benefit of the
     heirs of the Executive (the  "Trust").  The trustee of the Trust shall have
     the  right to  designate  one or more  beneficiaries,  and to  change  such
     designation at any time and from time to time, in accordance with the terms
     of the Trust and the  Policy.  The  Company  shall pay all  premiums on the
     Policy. The Trust and the Company shall have the rights and obligations set
     forth in the separate  split  dollar life  insurance  agreement  previously
     executed  with respect to the Policy,  as the same may be amended from time
     to time.  Such insurance  coverage shall be in addition to, and not in lieu
     of, any other insurance normally provided by the Company to officers of the
     Company. In the event the Executive's employment shall terminate (A) at any
     time during the term of this Agreement for any reason other than (i) death,
     (ii) termination for Cause, or (iii) voluntary termination by the Executive
     without Good Reason,  or (B) at the end of the term of this Agreement,  the
     split dollar life insurance  agreement  referred to herein shall  terminate
     and the Company shall release all of its rights with respect to the Policy,
     including its right to be repaid any amount,  its rights to any accumulated
     cash surrender  value in the Policy,  and its collateral  assignment of the
     Policy,  and the Trust shall own the Policy and the  Company  shall have no
     further interest or rights in the Policy.

          (j)  Reimbursement  of  Expenses.  The  Company  shall  reimburse  the
     Executive  for  all  reasonable  out-of-pocket  expenses  incurred  by  the
     Executive in the course of his

                                       3

<PAGE>

     duties, in accordance with normal policies.  The Company  acknowledges that
     the  Executive  shall be permitted to travel first class when  traveling on
     behalf of the Company.

          (k) Employee Benefits.  The Executive shall be entitled to participate
     in the employee  benefit programs  generally  available to employees of the
     Company,  and  to all  normal  perquisites  provided  to  senior  executive
     officers of the  Company.  Upon  termination  of this  Agreement  by normal
     expiration of its term as specified in Section 3 hereof, medical and dental
     benefits  provided to the Executive prior to termination  shall continue to
     be provided to the Executive for a period of three (3) years.

          (l) San Francisco and New York  Apartments.  The Company shall provide
     the  Executive  with access to, and use of, an apartment in San  Francisco,
     California  and in New York City, New York, at the Company's  expense,  for
     use by the Executive  when he is in such cities to perform his duties under
     this Agreement.

          (m) Office. The Company shall maintain (including the payment of rent,
     repairs,  utilities,  furnishings,  improvements,  insurance, and all other
     reasonable  ancillary costs) its offices at 200 Crescent Court, Suite 1350,
     Dallas,  Texas 75201, or such other comparable offices in the Dallas, Texas
     metropolitan area as are suitable to the conduct to its business.

          (n) Use of Corporate Aircraft. The Company shall provide the Executive
     with the use of a private corporate aircraft for his use.

          (o) Benefits  not in Lieu of  Compensation.  No benefit or  perquisite
     provided  to the  Executive  shall be deemed to be in lieu of base  salary,
     bonus, or other compensation.

     5.  Termination  of  Employment.  The Board of Directors of the Company may
terminate the  employment of the Executive at any time as it deems  appropriate.
Except as may otherwise be provided in Section 6 below, the following provisions
shall apply with respect to the termination of the Executive's employment.

          (a) Disability.  The Company may terminate the Executive's  employment
     for Disability if the Executive is incapacitated and absent from his duties
     hereunder on a full-time basis for six  consecutive  months or for at least
     180 days during any 12 month period. If, during the term of this Agreement,
     the  Executive's  employment  terminates due to  Disability,  the Executive
     shall be entitled to (i) receive  continued  payments in an amount equal to
     60% of the  Executive's  base  salary at the time of such  termination,  in
     accordance  with  Section 4 (a) above  during  the  remaining  term of this
     Agreement (as provided in Section 3 above) but for not less than two years,
     and (ii) continuation of group life insurance  benefits and continuation of
     benefits under Section 4(i). In addition, so long as such benefits continue
     to be provided to the Company's employees,  the Executive shall be entitled
     to  continuation  of benefits under the group medical  plan(s) in which the
     Executive  is  participating  at the  time of such  termination  (including
     executive  medical  benefits)  for  the  Executive,  his  spouse,  and  his
     dependents;  such medical  benefits  shall  terminate no later than

                                       4

<PAGE>

     (x) the date on which the Executive ceases to be Disabled,  or (y) the date
     on which the Executive attains age 70.

          (b) Voluntary  Resignation or Termination  for Cause. If the Executive
     shall voluntarily terminate his employment for other than Good Reason or if
     the Company shall  discharge the Executive for Cause,  this Agreement shall
     terminate  immediately and the Company shall have no further  obligation to
     make any payment under this Agreement which has not already become payable,
     but has not yet been  paid.  Provided,  however,  that with  respect to any
     stock options,  restricted stock,  incentive plans,  deferred  compensation
     arrangements,  or  other  plans  or  programs  in which  the  Executive  is
     participating at the time of termination of his employment, the Executive's
     rights and benefits  under each such plan shall be determined in accordance
     with the terms,  conditions,  and  limitations of the plan and any separate
     agreement executed by the Executive which may then be in effect.

          For the purposes of this Agreement,  the Company shall have "Cause" to
     terminate the  Executive's  employment  hereunder  upon (A) the willful and
     continued  failure by the  Executive to perform his duties with the Company
     (other than any such failure  resulting from  incapacity due to physical or
     mental illness), after a demand for substantial performance is delivered to
     the  Executive  by the Board which  specifically  identifies  the manner in
     which  the  Board  believes  that he has not  substantially  performed  his
     duties,  or (B) the willful  engaging by the Executive in gross  misconduct
     materially and demonstrably  injurious to the Company, or (C) occurrence of
     any event which  would  provide a basis of  termination  for cause under 12
     C.F.R.   Section   563.39(b)(1)  or  any  successor   regulation   defining
     termination  for cause in employment  agreements for employees of a savings
     association.  For purposes of this paragraph, no act, or failure to act, on
     the Executive's part shall be considered  "willful" unless done, or omitted
     to be done, by him not in good faith and without reasonable belief that his
     action  or  omission  was  not  in  the  best   interest  of  the  Company.
     Notwithstanding  the foregoing,  the Executive  shall not be deemed to have
     been  terminated for Cause unless and until there shall have been delivered
     to him a copy of a resolution duly adopted by the  affirmative  vote of not
     less than two-thirds (2/3) of the entire authorized membership of the Board
     at a meeting of the Board called and held for the purpose (after reasonable
     notice and an opportunity for the Executive,  together with counsel,  to be
     heard  before the  Board),  finding  that in the good faith  opinion of the
     Board he was guilty of conduct set forth above in clauses (A) or (B) of the
     first sentence of this paragraph and specifying the particulars  thereof in
     detail.

          For purposes of this Agreement, "Good Reason" shall mean:

               (i) Without his express  written  consent,  the assignment to the
          Executive  of any  duties  inconsistent  with his  positions,  duties,
          responsibilities  and  status  with the  Company,  or a change  in his
          reporting  responsibilities,  titles or offices, or any removal of the
          Executive from or any failure to re-elect the Executive to any of such
          positions, except in connection with the termination of his employment
          by the Company for Cause or as a result of the Executive's Disability,
          or as a result of his death,  or by the Executive  other than for Good
          Reason;

                                       5

<PAGE>

               (ii) A reduction by the Company in the Executive's base salary as
          in effect on the date hereof or as the same may be increased from time
          to time;

               (iii) The Company's  requiring the Executive to be based anywhere
          other than Dallas,  Texas, or, in the event the Executive  consents to
          any  relocation,  the failure by the Company to pay (or  reimburse the
          Executive) for all reasonable moving expenses incurred by him relating
          to a  change  of his  principal  residence  in  connection  with  such
          relocation and to indemnify the Executive against any loss (defined as
          the difference between the actual sale price of such residence and the
          higher of (a) his aggregate  investment  in such  residence of (b) the
          fair market  value of such  residence as  determined  by a real estate
          appraiser  designated by the Executive and reasonably  satisfactory to
          the  Company)  realized  on  the  sale  of the  Executive's  principal
          residence in connection with any such change of residence;

               (iv) The failure by the Company to continue in effect any benefit
          or  compensation  plan  (including but not limited to any stock option
          plan,  pension plan, life insurance plan,  health and accident plan or
          disability  plan) in which the  Executive is  participating  (or plans
          providing substantially similar benefits), the taking of any action by
          the Company which would adversely affect the Executive's participation
          in or  materially  reduce  his  benefits  under  any of such  plans or
          deprive  him of any  material  fringe  benefit  enjoyed by him, or the
          failure by the Company to provide the Executive with the number of PTO
          days to which he is then  entitled  on the  basis of years of  service
          with the Company in accordance with the Company's normal PTO policy in
          effect on the date hereof;

               (v) Any  failure of the Company to obtain the  assumption  of, or
          the  agreement  to  perform,   this  Agreement  by  any  successor  as
          contemplated in Section 17(a) hereof; or

               (vi) Any  purported  termination  of the  Executive's  employment
          which is not effected  pursuant to a notice of termination  satisfying
          the requirements of Section 5(b) above (and, if applicable,  Section 3
          above);  and  for  purposes  of  this  Agreement,  no  such  purported
          termination shall be effective.

          (c)  Termination  Without  Cause;  Resignation  for Good  Reason.  The
     Company  shall pay the  Executive  and  provide to the  Executive  (and his
     dependents,  where applicable),  the amounts and benefits set forth in this
     Section 5(c) if, during the term of this  Agreement,  either (x) prior to a
     Change of Control, the Executive's  employment is terminated by the Company
     without Cause or the Executive  voluntarily  terminates  his employment for
     Good  Reason,  or (y)  within 24  months  after a Change  of  Control,  the
     Executive's  employment is  terminated by the Company  without Cause or the
     Executive voluntarily terminates his employment for any reason:

               (i) The Company  shall pay the  Executive  in one lump sum within
          ten business days after  termination of his employment an amount equal
          to (i) the sum of

                                        6

<PAGE>

          his base salary as provided in Section 4(a) plus the Executive's Bonus
          Amount  (as  defined  below),   multiplied  by  (ii)  three  (3).  The
          Executive's  "Bonus  Amount"  shall be equal to the greater of (x) the
          Executive's   average  annual   incentive   bonus  earned  during  the
          performance  period  representing the three calendar years immediately
          preceding  the  year in  which he  terminates  employment,  or (y) the
          Executive's  target  annual  incentive  bonus for the year in which he
          terminates employment.

               (ii) The Company shall  maintain in full force and effect for the
          continued benefit of the Executive,  for a three-year period after the
          date of his  termination of employment  ("Date of  Termination"),  all
          employee  benefit  plans and  programs  or  arrangements  in which the
          Executive was entitled to participate immediately prior to the Date of
          Termination,  provided  that his continued  participation  is possible
          under the general terms and provisions of such plans and programs.  In
          the  event  that the  Executive's  participation  in any such  plan or
          program is barred,  the Company shall arrange to provide the Executive
          with benefits  substantially  similar to those which he is entitled to
          receive  under  such plans and  programs.  At the end of the period of
          coverage,  the Executive shall have the option to have assigned to him
          at no  cost  and  with  no  apportionment  of  prepaid  premiums,  any
          assignable   insurance  policy  owned  by  the  Company  and  relating
          specifically to him.

               (iii)  The  Executive  shall  be  entitled  to  the  use  of  the
          Automobile  until the earliest to occur of (x) the date the  Executive
          is  employed   elsewhere,   or  (y)  three  years  from  the  Date  of
          Termination;  provided,  however,  that during such time  period,  the
          Executive shall be solely responsible for all expenses incurred in the
          use of the  Automobile,  including  maintaining  insurance of the same
          types and at the same levels as  previously  maintained by the Company
          immediately prior to such termination.

               (iv) All  outstanding  but  unvested  stock  options,  restricted
          stock, SARs, deferred compensation,  and SERP payments shall, upon the
          Date of Termination, be accelerated, fully vested, and exercisable for
          three years after the Date of Termination; provided, however, that the
          foregoing shall not be construed to cause an "Incentive  Stock Option"
          to fail to meet  the  statutory  requirements  of  Section  422 of the
          Internal Revenue Code of 1986, as amended.  If any option,  restricted
          stock,  SAR, or other  benefit is governed by a plan which  limits the
          acceleration of vesting or extension of exercises rights,  the Company
          shall take all reasonable  action to comply with this subsection (iv),
          and, with respect to any such benefit the Company is unable to provide
          in  accordance  with this  subsection,  the  Company  shall pay to the
          Executive within thirty (30) days after the Date of Termination a lump
          sum amount  equal to the value of such  benefits  as  determined  by a
          third party appraiser acceptable to the Executive.

               (v)  The  Company  shall  provide  outplacement  services  to the
          Executive,  the scope and duration of which shall be at the discretion
          of the Executive.

                                       7

<PAGE>

          "Change of Control" means the occurrence of any of the following:

               (A) The  acquisition by any  individual,  entity or group (within
          the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
          Act of 1934, as amended) (a "Person") of beneficial  ownership (within
          the meaning of Rule 13d-3  promulgated  under the Securities  Exchange
          Act  of  1934,   as  amended)   of  20%  or  more  of  either   (1)the
          then-outstanding  shares of common stock (the  "Outstanding GSB Common
          Stock") of GSB or (2)the combined voting power of the then-outstanding
          voting securities of GSB entitled to vote generally in the election of
          directors  (the  "Outstanding  GSB  Voting   Securities");   provided,
          however,   that  for  purposes  of  this  paragraph(A)  the  following
          acquisitions shall not constitute,  or be deemed to cause, a Change of
          Control  Event:  (i)any  increase in such  percentage  ownership  of a
          Person to 20% or more resulting  solely from any acquisition of shares
          directly  from GSB or any  acquisition  of  shares  by GSB,  provided,
          however,  that any  subsequent  acquisitions  of shares by such Person
          that would add, in the aggregate,  2% or more (measured as of the date
          of each  such  subsequent  acquisition)  to such  Person's  beneficial
          ownership of Outstanding  GSB Common Stock or  Outstanding  GSB Voting
          Securities  shall be deemed to  constitute a Change of Control  Event,
          (ii) any  acquisition by any employee  benefit plan (or related trust)
          sponsored or maintained by GSB or any  corporation  controlled by GSB;
          (iii)  any  acquisition  by  Ronald  O.Perelman,  Gerald J. Ford or an
          entity controlled by either or both of them; or (iv)any acquisition by
          any corporation  pursuant to a transaction which complies with clauses
          (1), (2) and (3) of paragraph (C) below; or

               (B) Individuals who, as of the date hereof,  constitute the Board
          of Directors of GSB (the  "Incumbent  Board")  cease for any reason to
          constitute  at least a  majority  of the  Board of  Directors  of GSB;
          provided,  however, that any individual becoming a director subsequent
          to the date hereof whose election, or nomination for election by GSB's
          stockholders,  was  approved  by a vote of at least a majority  of the
          directors then  comprising the Incumbent  Board shall be considered as
          though  such  individual  were a member of the  Incumbent  Board,  but
          excluding,  for  this  purpose,  any  such  individual  whose  initial
          assumption  of office  occurs  as a result of an actual or  threatened
          election  contest with respect to the election or removal of directors
          or other actual or threatened  solicitation of proxies or consents, by
          or on behalf of a person other than the Board of Directors of GSB; or

               (C) Consummation of a reorganization, merger or consolidation, or
          sale or other disposition of all or substantially all of the assets of
          GSB (a "Business  Combination"),  in each case, unless, following such
          Business Combination,  (1) all or substantially all of the individuals
          and entities who were the beneficial owners, respectively, of the then
          Outstanding GSB Common Stock and  Outstanding  GSB Voting  Securities,
          immediately  prior  to such  Business  Combination  beneficially  own,
          directly  or  indirectly,   more  than  50%  of,   respectively,   the
          then-outstanding  shares of common stock and the combined voting power
          of the  then-outstanding  voting securities entitled to vote generally
          in the election of directors,  as the case may be,

                                       8

<PAGE>

          of  the   corporation   resulting   from  such  Business   Combination
          (including,  without  limitation,  a corporation  which as a result of
          such transaction owns GSB or all or substantially  all of GSB's assets
          either directly or through one or more  subsidiaries) in substantially
          the same  proportions as their  ownership,  immediately  prior to such
          Business   Combination  of  the   Outstanding  GSB  Common  Stock  and
          Outstanding GSB Voting  Securities,  as the case may be, (2) no Person
          (excluding any corporation resulting from such Business Combination or
          any  employee  benefit  plan  (or  related  trust)  of GSB or of  such
          corporation  resulting  from such Business  Combination)  beneficially
          owns,  directly  or  indirectly,  20% or more  of,  respectively,  the
          then-outstanding  shares of common stock of the corporation  resulting
          from such  Business  Combination  or the combined  voting power of the
          then-outstanding  voting securities of such corporation  except to the
          extent that such ownership  existed prior to the Business  Combination
          and  (3)  individuals  who  were  on  the  Incumbent  board  cease  to
          constitute  at  least  a  majority  of the  members  of the  board  of
          directors of the corporation  resulting from the Business Combination;
          provided,  however, that any individual becoming a director subsequent
          to the date hereof whose election, or nomination for election by GSB's
          stockholders,  was  approved  by a vote of at least a majority  of the
          directors then  comprising the Incumbent  Board shall be considered as
          though  such  individual  were a member of the  Incumbent  Board,  but
          excluding,  for  this  purpose,  any  such  individual  whose  initial
          assumption  of office  occurs  as a result of an actual or  threatened
          election  contest with respect to the election or removal of directors
          or other actual or threatened  solicitation of proxies or consents, by
          or on behalf of a person other than the Board of Directors of GSB; or

          Notwithstanding the foregoing, the occurrence of an event described in
          the above paragraphs (A) through (C),  inclusive,  shall not be deemed
          to constitute a Change of Control Event if,  following the  occurrence
          of such event,  Gerald J.  Ford continues to serve as the Chairman and
          Chief  Executive  Officer  of the  Company  (in the case of a Business
          Combination,  of the surviving company in such Business  Combination).
          However, if a Change of Control Event does not occur solely because of
          the  operation  of the  preceding  sentence,  then a Change of Control
          Event shall occur upon the subsequent death or permanent disability of
          Gerald J. Ford.

          (d)  Death.  If the  Executive  shall die  before  termination  of his
     employment  hereunder,  the Executive's estate shall be entitled to receive
     continued payments in an amount equal to 60% of the Executive's base salary
     at the time of his death in  accordance  with Section 4(a) above during the
     remaining term of this Agreement (as provided in Section 3 above).

          (e) No Mitigation of Amounts  Payable  Hereunder.  The Executive shall
     not be required to mitigate the amount of any payment  provided for in this
     Section 5 by seeking other employment or otherwise, nor shall the amount of
     any payment  provided for in this Section 5 be reduced by any  compensation
     earned by the  Executive as the result of  employment  by another  employer
     after the Date of Termination, or otherwise.

                                       9

<PAGE>

          (f) Limitations on Payments.

               (i) Anything in this  Section 5 to the contrary  notwithstanding,
          in the event it shall be determined  that any payment or  distribution
          made, or benefit provided, by the Company to or for the benefit of the
          Executive  (whether paid or payable or distributed or distributable or
          provided pursuant to the terms hereof or otherwise) would constitute a
          "parachute payment" as defined in Section 280G of the Internal Revenue
          Code of 1986,  as amended (the  "Code"),  then the lump sum  severance
          payment  payable  pursuant to Section  5(c)(i) shall be reduced so hat
          the  aggregate  present  value  of  all  payments  in  the  nature  of
          compensation  to (or  for the  benefit  of) the  Executive  which  are
          contingent  on a  change  of  control  (as  defined  in  Code  Section
          280G(b)(2)(A))  is One Dollar  ($1.00)  less than the amount which the
          Executive could receive without being  considered to have received any
          parachute  payment  (the  amount  of this  reduction  in the  lump sum
          severance  payment is referred to herein as "the Excess Amount").  The
          determination of the amount of any reduction  required by this Section
          5(f)(i) shall be made by an  independent  accounting  firm (other than
          the Company's independent accounting firm) selected by the Company and
          acceptable  to  the  Executive,   and  such  determination   shall  be
          conclusive and binding on the parties hereto.

               (ii)  Notwithstanding the provisions of Section 5(f)(i), if it is
          established,  pursuant  to a  final  determination  of a  court  or an
          Internal  Revenue  Service  proceeding  which  has  been  finally  and
          conclusively  resolved,  that an Excess  Amount  was  received  by the
          Executive  from the Company,  then such Excess  Amount shall be deemed
          for all  purposes to be a loan to the  Executive  made on the date the
          Executive received the Excess Amount and the Executive shall repay the
          Excess Amount to the Company on demand (but no less than ten (10) days
          after  written  demand is received  by the  Executive)  together  with
          interest on the4 Excess  Amount at the  "applicable  Federal rate" (as
          defined  in  Section  1274(d)  of  the  Code)  from  the  date  of the
          Executive's  receipt  of such  Excess  Amount  until  the date of such
          repayment.

     6. Termination Under Banking Laws.

          (a) If the  Executive  is  suspended or  temporarily  prohibited  from
     participating  in the conduct of the  Company's  affairs by a notice served
     under Section 8(e)(3) or (g)(1) of the Federal  Deposit  Insurance Act (the
     "FDIA")  (12  U.S.C.   Section  1818  (e)(3)  and  (g)(1)),  the  Company's
     obligations  under  this  Agreement  shall be  suspended  as of the date of
     service of such notice unless  stayed by  appropriate  proceedings.  If the
     charges in the notice are dismissed,  the Company may in its discretion (1)
     pay the  Executive  all or  part of the  compensation  withheld  while  its
     obligations  hereunder were  suspended,  and (ii) reinstate (in whole or in
     part) any of its obligations which were suspended.

          (b) If  the  Executive  is  removed  or  permanently  prohibited  from
     participating  in the conduct of the  Company's  affairs by an order issued
     under Section 8(e)(4) or (g)(1) of

                                       10

<PAGE>

     the FDIA (12 U.S.C.  Section 1818(e)(4) or (g)(1)),  all obligations of the
     Company under this  Agreement  shall  terminate as of the effective date of
     the  order,  but  vested  rights of the  contracting  parties  shall not be
     affected.

          (c) If the Company is in default (as defined in Section 3(x)(1) of the
     FDIA), all obligations  under this Agreement shall terminate as of the date
     of default, but this Section 6(c) shall not affect any vested rights of the
     Company or of the Executive.

          (d)  All  obligations  of the  Company  under  this  Agreement  may be
     terminated,  except to the  extent  determined  that  continuation  of this
     Agreement is necessary  for the  continued  operation of the Company (i) by
     the Director of the Office of Thrift Supervision (the "Director") or his or
     her  designee,  at  the  time  Federal  Deposit  Insurance  Corporation  or
     Resolution Trust Corporation enters into an agreement to provide assistance
     to or on behalf of the Company  under the  authority  contained  in Section
     13(c) of the FDIA; or (ii) by the Director or his or her  designee,  at the
     time the Director or his or her designee  approves a supervisory  merger to
     resolve  problems  related to operations of the Company or when the Company
     is determined by the Director to be in an unsafe or unsound condition.  Any
     rights of the  parties  that have  already  vested,  however,  shall not be
     affected by such action.

     7. Confidential Information. The Executive recognizes and acknowledges that
he will have access to certain  information  of members of the Company Group (as
defined  below)  and that  such  information  is  confidential  and  constitutes
valuable,  special and unique property of such members of the Company Group. The
Executive shall not at any time, either during or subsequent to the term of this
Agreement,  disclose  to others,  use,  copy or permit to be  copied,  except in
pursuance of his duties for and on behalf of the Company, it successors, assigns
or nominees,  any  Confidential  Information  of any member of the Company Group
(regardless  of whether  developed by the  Executive)  without the prior written
consent of the Company.

     As used herein,  "Company  Group"  means the  Company,  and any entity that
directly or indirectly  controls,  is controlled  by, or is under common control
with,  the Company,  and for  purposes of this  definition  "control"  means the
possession,  directly  or  indirectly,  of the  power to  direct  or  cause  the
direction of the  management  and policies of such entity,  whether  through the
ownership of voting securities, by contract or otherwise.

     The term  "Confidential  Information"  with respect to any person means any
secret or confidential  information or know-how and shall include, but shall not
be limited to, the plans,  customers,  costs,  prices, uses, and applications of
products and services,  results of investigations,  studies or experiments owned
or used by such person, and all apparatus,  products,  processes,  compositions,
samples,  formulas,  computer  programs,  computer  hardware  designs,  computer
firmware  designs,  and  servicing,   marketing  or  manufacturing  methods  and
techniques  at any  time  used,  developed,  investigated,  made or sold by such
person,  before  or  during  the term of this  Agreement,  that are not  readily
available to the public or that are maintained as  confidential  by such person.
The Executive shall maintain in confidence any Confidential Information of third
parties  received as a result of his  employment  with the Company in accordance
with  the  Company's   obligations  to  such  third  parties  and  the  policies
established by the Company.

                                       11

<PAGE>

     8. Delivery of Documents Upon  Termination.  The Executive shall deliver to
the  Company  or  its  designee  at  the   termination  of  his  employment  all
correspondence,  memoranda, notes, records, drawings,  sketches, plans, customer
lists, product compositions,  and other documents and all copies thereof,  made,
composed or received by the Executive,  solely or jointly with others,  that are
in the Executive's  possession,  custody, or control at termination and that are
related in any  manner to the past,  present,  or  anticipated  business  or any
member of the Company  Group.  In this regard,  the Executive  hereby grants and
conveys  to the  Company  all right,  title and  interest  in and to,  including
without  limitation,  the right to possess,  print,  copy, and sell or otherwise
dispose of, any reports,  records, papers, summaries,  photographs,  drawings or
other documents,  and writings, and copies, abstracts or summaries thereof, that
may be prepared by the  Executive  or under his  direction or that may come into
his  possession  in any way during the term of his  employment  with the Company
that relate in any manner to the past,  present or  anticipated  business of any
member of the Company Group.

     9. Disclosure and Receipt of Confidential Information.  The Executive shall
not, at any time during his employment, receive from persons not employed by the
Company, any Confidential Information,  as described above, not belonging to the
Company,  unless a valid agreement is authorized by the Company and is signed by
both the Company and by the  disclosing  party.  The Executive  shall not use or
disclose to other  employees  of the  Company,  during his  employment  with the
Company,  Confidential  Information  belonging to his former  employers,  former
business  associates,  or any other third parties unless written  permission has
been given by such third  parties to the Company and  accepted by the Company to
allow the Company to use and/or disclose such  information.  The Executive shall
defend and indemnify the Company Group for any breach of the covenant  contained
in the preceding sentence.

     10.  Intellectual  Property.  The  Executive  shall  hold in trust  for the
benefit of the Company,  and shall disclose promptly and fully to the Company in
writing, and hereby assigns, and binds his heirs, executors,  and administrators
to assign, to the Company any and all inventions,  discoveries, ideas, concepts,
improvements,  copyrightable  works, and other developments (the "Developments")
conceived,  made, discovered or developed by him, solely or jointly with others,
during the term of his  employment by the Company,  whether during or outside of
usual working hours and whether on the Company's premises or not, that relate in
any manner to the past,  present or  anticipated  business  of any member of the
Company  Group.  All works of  authorship  created by the  Executive,  solely or
jointly with others, shall be considered works made for hire under the Copyright
Act of 1976, as amended, and shall be owned entirely by the Company. Any and all
such  Developments  shall be the sole and  exclusive  property  of the  Company,
whether patentable,  copyrightable,  or neither,  and the Executive shall assist
and fully  cooperate  in every  way,  at the  Company's  expense,  in  securing,
maintaining,  and  enforcing,  for the benefit of the  Company or its  designee,
patents,  copyrights  or other types of  proprietary  or  intellectual  property
protection  for such  Developments  in any and all  countries.  Within  one year
following  the end of the  term of  this  Agreement  and  without  limiting  the
generality of the foregoing,  any  Development of the Executive  relating to any
subject  matter  on which  the  Executive  worked  or was  informed  during  his
employment by the Company shall be conclusively  presumed to have been conceived
and made  prior to the  termination  of his  employment  (unless  the  Executive
clearly  proves that such  Development

                                       12

<PAGE>

was conceived and made following the termination of his  employment),  and shall
accordingly  belong and be  assigned to the Company and shall be subject to this
Agreement.

     11.  Further  Acts.  At the request of the Company (but without  additional
compensation  from  the  Company  during  his  employment  by the  Company)  the
Executive  shall execute any and all papers and perform all lawful acts that the
Company may deem necessary or  appropriate to further  evidence or carry out the
transactions contemplated in this Agreement including,  without limitation, such
acts  as  may  be  necessary  for  the  preparation,  filing,  prosecution,  and
maintenance of applications for United States letters patent and foreign letters
patent, or for United States and foreign copyright, on the Developments.

     12. No Competition.  Throughout the term of this  Agreement,  the Executive
shall not directly or indirectly engage in the business of banking, or any other
business in which the Company directly or indirectly  engages during the term of
this Agreement; provided, however, that the restriction in this Section 12 shall
apply only to the reasonable and limited geographic area consisting of any state
in which  the  Company  directly  or  indirectly  has  offices,  operations,  or
customers,  or otherwise conducts business. For purposes of this Section 12, the
Executive  shall be deemed to engage in a business if he directly or indirectly,
engages or invests in, owns, manages, operates,  controls or participates in the
ownership, management, operation or control of, is employed by, associated or in
any manner  connected  with,  or  renders  services  or advice to, any  business
engaged in banking;  provided,  however,  that the  Executive  may invest in the
securities  of  any  enterprise  (but  without  otherwise  participating  in the
activities of such enterprise) if (x) such securities are listed on any national
or regional  securities  exchange or have been registered under Section 12(g) of
the Securities  Exchange Act of 1934 and (y) the Executive does not beneficially
own (as defined in Rule 13d-3 promulgated  under the Securities  Exchange Act of
1934) in excess of 5% of the outstanding capital stock of such enterprise.

     The Executive agrees that if a court of competent  jurisdiction  determines
that the length of time or any other restriction,  or portion thereof, set forth
in this Section 12 is overly restrictive and unenforceable, the court may reduce
or modify such  restrictions to those which it deems  reasonable and enforceable
under the circumstances, and as so reduced or modified, the parties hereto agree
that the  restrictions of this Section 12 shall remain in full force and effect.
The  Executive  further  agrees  that  if  a  court  of  competent  jurisdiction
determines  that any provision of this  Section 12 is invalid or against  public
policy,  the remaining  provisions of this  Section 12 and the remainder of this
Agreement  shall not be  affected  thereby,  and shall  remain in full force and
effect.

     The Executive  acknowledges that the business of the Company is national in
scope  and that the  restrictions  imposed  by this  Agreement  are  legitimate,
reasonable  and necessary to protect the Company's  investment in its businesses
and the goodwill thereof. The Executive acknowledges that the scope and duration
of the  restrictions  contained  herein are reasonable in light of the time that
the Executive has been engaged in the business of the Company,  the  Executive's
reputation  in the  markets for the  Company's  businesses  and the  Executive's
relationship  with the  suppliers,  customers  and clients of the  Company.  The
Executive further  acknowledges  that the restrictions  contained herein are not
burdensome to the Executive in light of the consideration  paid therefor and the
other

                                       13

<PAGE>

opportunities  that  remain  open  to the  Executive.  Moreover,  the  Executive
acknowledges  that he has other  means  available  to him for the pursuit of his
livelihood.

     13. No  Tampering.  Throughout  the term of this  Agreement and through the
second  anniversary  of the  expiration  thereof,  the  Executive  shall not (a)
request,  induce or attempt to influence any distributor or supplier of goods or
services  to any member of the Company  Group to curtail or cancel any  business
they may transact with any member of the Company Group;  (b) request,  induce or
attempt to influence  any customers of any member of the Company Group that have
done  business with or potential  customers  which have been in contact with any
member of the Company  Group to curtail or cancel any business they may transact
with any  member of the  Company  Group;  or (c)  request,  induce or attempt to
influence  any employee of any member of the Company  Group to terminate  his or
her employment with such member of the Company Group.

     14.  Publicity and  Advertising.  The Executive agrees that the Company may
use his name,  picture,  or likeness for any  advertising,  publicity,  or other
business  purpose at any time,  during the term of this Agreement by the Company
and may continue to use materials  generated  during the term of this  Agreement
for a  period  of six  months  thereafter.  Such  use of the  Executive's  name,
picture,  or  likeness  shall not be deemed  to  result in any  invasion  of the
Executive's  privacy or in a violation of any property  right the  Executive may
have; and the Executive shall receive no additional  consideration  if his name,
picture or likeness is so used. The Executive further agrees that any negatives,
prints or other  material  for  printing or  reproduction  purposes  prepared in
connection with the use of his name, picture or likeness by the Company shall be
and are the sole property of the Company.

     15.  Remedies.  The  Executive  acknowledges  that a remedy  at law for any
breach or  attempted  breach of the  Executive's  obligations  under  Sections 7
through  14 may be  inadequate,  agrees  that the  Company  may be  entitled  to
specific  performance and injunctive and other equitable remedies in case of any
such breach or attempted breach, and further agrees to waive any requirement for
the securing or posting of any bond in connection with the obtaining of any such
injunctive or other equitable relief. The Company shall have the right to offset
against  amounts to be paid to the  Executive  pursuant to the terms  hereof any
amounts from time to time owing by the Executive to the Company. The termination
of this Agreement  pursuant to Section 3, 5(a) or 5(b) shall not be deemed to be
a waiver by the Company of any breach by the Executive of this  Agreement or any
other obligation owed the Company,  and  notwithstanding  such a termination the
Executive shall be liable for all damages attributable to such a breach.

     16. Dispute  Resolution.  Subject to the Company's right to seek injunctive
relief in court as  provided  in  Section 15  of this  Agreement,  any  dispute,
controversy or claim arising out of or in relation to or in connection with this
Agreement,  including  without  limitation  any dispute as to the  construction,
validity,  interpretation,  enforceability or breach of this Agreement, shall be
exclusively and finally  settled by  arbitration,  and any party may submit such
dispute,  controversy or claim, including for indemnification under this Section
16,  to  arbitration.

          (a) Arbitrators.  The arbitration shall be heard and determined by one
     arbitrator,  who shall be  impartial  and who shall be  selected  by mutual
     agreement of the parties;

                                       14

<PAGE>

     provided,  however, that if the dispute involves more than $2,000,000, then
     the arbitration shall be heard and determined by three (3) arbitrators.  If
     three (3) arbitrators  are necessary as provided above,  then (i) each side
     shall  appoint an  arbitrator  of its choice within thirty (30) days of the
     submission  of  a  notice  of  arbitration  and  (ii)  the  party-appointed
     arbitrators  shall in turn appoint a presiding  arbitrator  of the tribunal
     within   thirty  (30)  days   following   the   appointment   of  the  last
     party-appointed  arbitrator.  If (x) the parties  cannot  agree on the sole
     arbitrator, (y) one party refuses to appoint its party-appointed arbitrator
     within said thirty (30) day period or (z) the  party-appointed  arbitrators
     cannot reach agreement on a presiding arbitrator of the tribunal,  then the
     appointing  authority for the implementation of such procedure shall be the
     Senior United States District Judge for the Northern District of Texas, who
     shall  appoint an  independent  arbitrator  who does not have any financial
     interest in the dispute,  controversy or claim. If the Senior United States
     District  Judge for the Northern  District of Texas refuses or fails to act
     as the appointing  authority  within ninety (90) days after being requested
     to do so,  then  the  appointing  authority  shall be the  Chief  Executive
     Officer  of the  American  Arbitration  Association,  who shall  appoint an
     independent  arbitrator  who does not have any  financial  interest  in the
     dispute,  controversy or claim. All decisions and awards by the arbitration
     tribunal shall be made by majority vote.

          (b) Proceedings.  Unless otherwise  expressly agreed in writing by the
     parties to the arbitration proceedings:

               (i) The arbitration  proceedings shall be held in Dallas,  Texas,
          at a site chosen by mutual agreement of the parties, or if the parties
          cannot reach  agreement on a location  within  thirty (30) days of the
          appointment  of the  last  arbitrator,  then at a site  chosen  by the
          arbitrator(s);

               (ii) The  arbitrator(s)  shall be and remain at all times  wholly
          independent and impartial;

               (iii)  The   arbitration   proceedings   shall  be  conducted  in
          accordance  with the  Commercial  Arbitration  Rules  of the  American
          Arbitration Association, as amended from time to time;

               (iv) Any  procedural  issues not  determined  under the  arbitral
          rules selected pursuant to item (iii) above shall be determined by the
          law of the place of  arbitration,  other than  those laws which  would
          refer the matter to another jurisdiction;

               (v)  The  costs  of  the   arbitration   proceedings   (including
          attorneys' fees and costs) shall be borne in the manner  determined by
          the arbitrator(s);

               (vi)  The  decision  of the  arbitrator(s)  shall be  reduced  to
          writing;  final and binding without the right of appeal;  the sole and
          exclusive  remedy  regarding  any  claims,  counterclaims,  issues  or
          accounting  presented to the arbitrator(s);  made and promptly paid in
          United States  dollars free of any deduction or offset;  and any costs

                                       15

<PAGE>

          or fees incident to enforcing the award shall,  to the maximum  extent
          permitted  by  law,  be  charged  against  the  party  resisting  such
          enforcement;

               (vii)  The  award  shall  include  interest  from the date of any
          breach or violation of this  Agreement,  as determined by the arbitral
          award,  and from the date of the award  until paid in full,  at 6% per
          annum; and

               (viii) Judgment upon the award may be entered in any court having
          jurisdiction  over the  person or the  assets  of the party  owing the
          judgment  or  application  may be made to such  court  for a  judicial
          acceptance of the award and an order of  enforcement,  as the case may
          be.

          (c) Acknowledgment Of Parties.  Each party acknowledges that he or she
     or  it  has  voluntarily  and  knowingly   entered  into  an  agreement  to
     arbitration under this Section by executing this Agreement.

          17. Miscellaneous Provisions.

          (a) Successors of the Company.  The Company will require any successor
     (whether  direct  or  indirect,  by  purchase,  merger,   consolidation  or
     otherwise) to all or substantially all of the business and/or assets of the
     Company, by agreement in form and substance  satisfactory to the Executive,
     expressly to assume and agree to perform this  Agreement in the same manner
     and to the same extent that the Company  would be required to perform it if
     no such  succession had taken place.  Failure of the Company to obtain such
     agreement  prior to the  effectiveness  of any such  succession  shall be a
     breach of this  Agreement and shall  entitle the Executive to  compensation
     from the Company in the same amount and on the same terms as the  Executive
     would be entitled hereunder if the Executive  terminated his employment for
     Good Reason,  except that for purposes of implementing  the foregoing,  the
     date on which any such  succession  becomes  effective  shall be deemed the
     Date of Termination.  As used in this  Agreement,  "Company" shall mean the
     Company as  hereinbefore  defined and any successor to its business  and/or
     assets as aforesaid which executes and delivers the agreement  provided for
     in this Section 17 or which  otherwise  becomes  bound by all the terms and
     provisions of this Agreement by operation of law.

          (b) Executive's Heirs, etc. The Executive may not assign his rights or
     delegate his duties or obligations hereunder without the written consent of
     the  Company.  This  Agreement  shall  inure  to  the  benefit  of  and  be
     enforceable  by  the   Executive's   personal  or  legal   representatives,
     executors,  administrators,  successors, heirs, distributees,  devisees and
     legatees.  If the  Executive  should die while any  amounts  would still be
     payable to him hereunder as if he had continued to live,  all such amounts,
     unless other provided herein, shall be paid in accordance with the terms of
     this  Agreement to his designee  or, if there be no such  designee,  to his
     estate.

          (c) Notice. For the purposes of this Agreement,  notices and all other
     communications  provide for in this Agreement shall be in writing and shall
     be deemed to

                                       16

<PAGE>

     have been duly given when  delivered or mailed by United States  registered
     or certified mail, return receipt requested,  postage prepaid, addressed to
     the  respective  addresses  set forth on the first page of this  Agreement,
     provided that all notices to the Company shall be directed to the attention
     of the Chief Operating  Officer of the Company with a copy to the Secretary
     of the Company, or to such other in writing in accordance herewith,  except
     that notices of change of address shall be effective only upon receipt.

          (d)  Amendment;  Waiver.  No  provisions  of  this  Agreement  may  be
     modified,  waived  or  discharged  unless  such  waiver,   modification  or
     discharge is agreed to in writing  signed by the Executive and such officer
     as may be specifically designated by the Board of Directors of the Company.
     No  waiver by either  party  hereto at any time of any  breach by the other
     party hereto of, or  compliance  with,  any  condition or provision of this
     Agreement  to be  performed by such other party shall be deemed a waiver of
     similar or dissimilar  provisions or conditions at the same or at any prior
     or subsequent  time. No agreements or  representations,  oral or otherwise,
     express or implied,  with  respect to the subject  matter  hereof have been
     made by either party which are not set forth expressly in this Agreement.

          (e)  Invalid  Provisions.  Should  any  portion of this  Agreement  be
     adjudged or held to be invalid,  unenforceable  or void, such holding shall
     not have the  effect of  invalidating  or  voiding  the  remainder  of this
     Agreement  and the parties  hereby agree that the portion so held  invalid,
     unenforceable  or void shall, if possible,  be deemed amended or reduced in
     scope,  or otherwise be stricken from this Agreement to the extent required
     for the purposes of validity and enforcement thereof.

          (f)  Survival  of  the   Executive's   Obligations.   The  Executive's
     obligations  under this Agreement  shall survive  regardless of whether the
     Executive's  employment  by  the  Company  is  terminated,  voluntarily  or
     involuntarily, by the Company or the Executive, with or without Cause.

          (g)  Counterparts.  This  Agreement  may be  executed  in one or  more
     counterparts,  each of which shall be deemed to be an  original  but all of
     which together will constitute one and the same instrument.

          (h) Governing Law. This  Agreement  shall be governed by and construed
     under the laws of the State of Texas.

          (i)  Captions  and Gender.  The use of captions  and Section  headings
     herein  is for  purposes  of  convenience  only and shall  not  affect  the
     interpretation or substance of any provisions contained herein.  Similarly,
     the use of the masculine  gender with respect to

                                       17

<PAGE>

     pronouns in this  Agreement  is for  purposes of  convenience  and includes
     either sex who may be a signatory.

     IN WITNESS WHEREOF, the parties hereto have signed this Agreement as of the
22nd day of November, 1999.

                                 CALIFORNIA FEDERAL BANK, A FEDERAL SAVINGS BANK

                                 By:      /s/  Carl  B.  Webb
                                    --------------------------------------------
                                 Name:  Carl  B.  Webb
                                 Title:  President and Chief Operating Officer

                                 GERALD J. FORD

                                          /s/ Gerald J. Ford
                                 -----------------------------------------------

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