EXHIBIT 10.1

WILSHIRE FINANCIAL SERVICES GROUP INC.

2002 EQUITY PARTICIPATION PLAN

1.   Purposes of the Plan. The purposes of this Plan are:

       (a) to attract and retain the best available personnel for positions of
substantial responsibility,

       (b) to provide additional incentive to selected key Employees,
Consultants and Directors, and

       (c) to promote the success of the Company's business.

2.   Definitions. For the purposes of this Plan, the following terms will have
the following meanings:

       (a) “Administrator” means the Board or any of its Committees that
administer the Plan, in accordance with Section 4.

       (b) “Applicable Laws” means the legal requirements relating to the
administration of and issuance of securities under stock option plans,
including, without limitation, the requirements of state corporations law,
federal and state securities law, federal and state tax law, and the
requirements of any stock exchange or quotation system upon which the Shares may
then be listed or quoted. For all purposes of this Plan, references to statutes
and regulations shall be deemed to include any successor statutes and
regulations, to the extent reasonably appropriate as determined by the
Administrator.

       (c) “Board” means the Board of Directors of the Company.

       (d) “Cause” shall have the meaning set forth in a Grantee’s employment or
consulting agreement with the Company (if any), or if not defined therein, shall
mean (i) acts or omissions by the Grantee which constitute intentional material
misconduct or a knowing violation of a material policy of the Company or any of
its subsidiaries, (ii) the Grantee personally receiving a benefit in money,
property or services from the Company or any of its subsidiaries or from another
person dealing with the Company or any of its subsidiaries, in material
violation of applicable law or Company policy, (iii) an act of fraud,
conversion, misappropriation, or embezzlement by the Grantee or his conviction
of, or entering a guilty plea or plea of no contest with respect to, a felony,
or the equivalent thereof (other than DUI), or (iv) any material misuse or
improper disclosure of confidential or proprietary information of the Company.

       (e) “Code” means the Internal Revenue Code of 1986, as amended. For all
purposes of this Plan, references to Code sections shall be deemed to include
any successor Code sections, to the extent reasonably appropriate as determined
by the Administrator.

       (f) “Committee” means a Committee appointed by the Board in accordance
with Section 4.

       (g) “Common Stock” means the common stock, $0.01 par value per share, of
the Company.

       (h) “Company” means Wilshire Financial Services Group Inc., a Delaware
corporation.

       (i) “Consultant” means any natural person, including an advisor, engaged
by the Company or a Parent or Subsidiary to render bona fide services and who is
compensated for such services, provided that the term “Consultant” does not
include (i) Employees, (ii) Directors who are paid only a director’s fee by the
Company or who are not compensated by the Company for their services as
Directors, (iii) any person who provides services in connection with the offer
or sale of securities in a capital-raising transaction, or who directly or
indirectly promotes or maintains a market for the securities of the Company.

       (j) “Continuous Status as an Employee, Director or Consultant” means that
the employment, director or consulting relationship is not interrupted or
terminated by the Company, any Parent or Subsidiary, or by the Employee,
Director or Consultant. Continuous Status as an Employee, Director or Consultant
will not be considered interrupted in the case of: (i) any leave of absence
approved by the Board, including sick leave, military leave, or any other
personal leave, provided, that for purposes of Incentive Stock Options, any such
leave may not exceed 90 days, unless reemployment upon the expiration of such
leave is guaranteed by contract (including certain Company policies) or statute;
(ii) transfers between locations of the Company or between the Company, its
Parent, its Subsidiaries or its successor, or (iii) in the case of a
Nonqualified Stock Option or Stock Award, the ceasing of a person to be an
Employee while such person remains a Director or Consultant, the ceasing of a
person to be a Director while such person remains an Employee or Consultant, or
the ceasing of a person to be a Consultant while such person remains an Employee
or Director.

       (k) “Director” means a member of the Board or of the board of directors
of any Parent or Subsidiary.

       (l) “Disability” means total and permanent disability as defined in
Section 22(e)(3) of the Code.

       (m) “Employee” means any person, including Officers and Directors
employed as a common law employee by the Company or any Parent or Subsidiary of
the Company. Neither service as a Director nor payment of a director’s fee by
the Company will be sufficient, in and of itself, to constitute “employment” by
the Company.

       (n) “Exchange Act” means the Securities Exchange Act of 1934, as amended.

       (o) “Fair Market Value” means, as of any date, the value of Common Stock
determined as follows:

(i)   If the Common Stock is listed on any established stock exchange or a
national market system, including without limitation, the National Market System
of NASDAQ, the Fair Market Value of a Share of Common Stock will be (A) the
closing sales price for such stock (or the closing bid, if no sales are
reported) as quoted on that system or exchange (or the system or exchange with
the greatest volume of trading in Common Stock) on the last market trading day
prior to the day of determination, or (B) any sales price for such stock (or the
closing bid, if no sales are reported) as quoted on that system or exchange (or
the system or exchange with the greatest volume of trading in Common Stock) on
the day of determination, as the Administrator may select, in each case as
reported in the Wall Street Journal or any other source the Administrator
considers reliable.

(ii)   If the Common Stock is quoted on the NASDAQ System (but not on the NASDAQ
National Market System) or is regularly quoted by recognized securities dealers
but selling prices are not reported, the Fair Market Value of a Share of Common
Stock will be the mean between the high bid and low asked prices for the Common
Stock on (A) the last market trading day prior to the day of determination, or
(B) the day of determination, as the Administrator may select, in each case as
reported in the Wall Street Journal or any other source the Administrator
considers reliable.

(iii)   If the Common Stock is not traded as set forth above, the Fair Market
Value will be determined in good faith by the Administrator with reference to
the earnings history, book value and prospects of the Company in light of market
conditions generally, and any other factors the Administrator considers
appropriate, such determination by the Administrator to be final, conclusive and
binding.

       (p) “Grant Notice” shall mean a written notice evidencing certain terms
and conditions of an individual Option grant. The Grant Notice is part of the
Option Agreement.

       (q) “Grantee” shall mean (i) any Optionee or (ii) any Employee,
Consultant or Director to whom a Stock Award has been granted pursuant to this
Plan.

       (r) “Incentive Stock Option” means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

       (s) “NASDAQ” means the National Association of Securities Dealers, Inc.
Automated Quotation System.

       (t) “Nonqualified Stock Option” means an Option not intended to qualify
as an Incentive Stock Option.

       (u) “Officer” means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

       (v) “Option” means a stock option granted under this Plan.

       (w) “Option Agreement” means a written agreement between the Company and
an Optionee evidencing the terms and conditions of an individual Option grant.
Each Option Agreement is subject to the terms and conditions of this Plan.

       (x) “Option Exchange Program” means a program in which outstanding
Options are surrendered in exchange for Options with a lower exercise price.

       (y) “Optioned Stock” means the Common Stock subject to an Option.

       (z) “Optionee” means an Employee, Consultant or Director who holds an
outstanding Option.

       (aa) “Parent” means a “parent corporation” with respect to the Company,
whether now or later existing, as defined in Section 424(e) of the Code.

       (bb) “Plan” means this 2002 Equity Participation Plan.

       (cc) “Publicly Traded” means that the Shares are traded on an established
stock exchange or on the National Market System of NASDAQ.

       (dd) “Section” means, except as otherwise specified, a section of this
Plan.

       (ee) “Share” means a share of the Common Stock, as adjusted in accordance
with Section 15.

       (ff) “Stock Award” shall mean a grant or sale by the Company of a
specified number of Shares upon terms and conditions determined by the
Administrator.

       (gg) “Subsidiary” means a “subsidiary corporation” with respect to the
Company, whether now or later existing, as defined in Section 424(f) of the
Code.

3.   Stock Subject to the Plan. Subject to the provisions of Section 15 of the
Plan, the maximum aggregate number of Shares which may be issued under the Plan
will be 1,000,000 Shares of Common Stock; provided, however, that while the
Shares are not Publicly Traded the total number of Shares issuable upon the
exercise of all outstanding Options and the total number of Shares provided for
under any stock bonus or similar plan of the Company shall not exceed the
applicable percentage permitted pursuant to Rule 260.140.45 promulgated under
the California Corporations Code unless a higher percentage is approved by
two-thirds of the outstanding shares eligible to vote. The Shares may be
authorized, but unissued, or reacquired Common Stock.

        If an Option expires or becomes unexercisable without having been
exercised in full, or is surrendered pursuant to an Option Exchange Program, or
if a Stock Award shall be cancelled or surrendered or expire for any reason
without having been received in full, the Shares that were not purchased or
received which were subject thereto will become available for future grant or
sale under the Plan (unless the Plan has terminated). If the Company reacquires
Shares which were issued pursuant to the exercise of an Option or grant of a
Stock Award, however, those reacquired Shares will not be available for future
grant under the Plan.

4.   Administration of the Plan.

       (a) Procedure.

(i)   Composition of the Administrator. The Plan will be administered by (A) the
Board, or (B) a Committee designated by the Board, which Committee will be
constituted to satisfy Applicable Laws. Once appointed, a Committee will serve
in its designated capacity until otherwise directed by the Board. The Board may
increase the size of the Committee and appoint additional members, remove
members (with or without cause) and substitute new members, fill vacancies
(however caused), and remove all members of the Committee and thereafter
directly administer the Plan. Notwithstanding the foregoing, unless the Board
expressly resolves to the contrary, from and after such time as the Company is
registered pursuant to Section 12 of the Exchange Act, the Plan will be
administered only by a Committee, which will then consist solely of persons who
are both “non-employee directors” within the meaning of Rule 16b-3 promulgated
under the Exchange Act and “outside directors” within the meaning of Section
162(m) of the Code; provided, however, the failure of the Committee to be
composed solely of individuals who are both “non-employee directors” and
“outside directors” shall not render ineffective or void any awards or grants
made by, or other actions taken by, such Committee.

(ii)   Multiple Administrative Bodies. The Plan may be administered by different
bodies with respect to Directors, Officers who are not Directors, and Employees
and Consultants who are neither Directors nor Officers.

       (b) Powers of the Administrator. Subject to the provisions of the Plan,
and in the case of a Committee, subject to the specific duties delegated by the
Board to that Committee, the Administrator will have the authority, in its
discretion:

(i)   to determine the Fair Market Value of the Common Stock, in accordance with
Section 2(o);

(ii)   to select the Consultants, Employees or Directors to whom Options or
Stock Awards may be granted;

(iii)   to determine whether and to what extent Options or Stock Awards are
granted, and whether Options are intended as Incentive Stock Options or
Nonqualified Stock Options;

(iv)   to determine the number of Shares to be covered by each Option or Stock
Award granted;

(v)   to approve forms of Grant Notices, Option Agreements and agreements
governing Stock Awards;

(vi)   to determine the terms and conditions, not inconsistent with the terms of
this Plan, of any grant of Options or Stock Awards, including, but not limited
to, (A) the Options’ exercise price, (B) the time or times when Options may be
exercised or Stock Awards will be vested, which may be based on performance
criteria or other reasonable conditions such as Continuous Status as an
Employee, Director or Consultant; provided, however, that while the Shares are
not Publicly Traded, Options or Stock Awards granted to an Employee who is
neither a Director nor an Officer will vest at a rate of at least 20% per year
over five years from the date of grant, subject to reasonable conditions such as
Continuous Status as an Employee, (C) any vesting acceleration or waiver of
forfeiture restrictions, and any restriction or limitation regarding any Option,
Optioned Stock or Stock Award, based in each case on factors that the
Administrator determines in its sole discretion, including but not limited to a
requirement subjecting the Optioned Stock or Shares to (1) certain restrictions
on transfer (including without limitation a prohibition on transfer for a
specified period of time and/or a right of first refusal in favor of the
Company), and (2) a right of repurchase in favor of the Company upon termination
of the Grantee’s Continuous Status as an Employee, Director or Consultant, which
right will terminate no later than the date on which the Company’s securities
become Publicly Traded and will satisfy, if applicable, the requirements of Rule
260.140.41(k) promulgated under the California Corporations Code, as amended;

(vii)   to construe and interpret the terms of this Plan;

(viii)   to prescribe, amend, and rescind rules and regulations relating to the
administration of this Plan;

(ix)   to modify or amend each Option or Stock Award, subject to Section 17(c);

(x)   to authorize any person to execute on behalf of the Company any instrument
required to effect the grant of an Option previously granted by the
Administrator;

(xi)   to institute an Option Exchange Program;

(xii)   to accelerate the vesting or exercisability of an Option or Stock Award;

(xiii)   to determine the terms and restrictions applicable to Options or Stock
Awards; and

(xiv)   to make all other determinations it considers necessary or advisable for
administering this Plan.

Notwithstanding the foregoing, the Administrator shall not have the power to
reduce the exercise price of any Option to the Fair Market Value at the time of
the reduction, if the Fair Market Value of the Common Stock covered by that
Option has declined since the date it was granted.

       (c) Effect of Administrator's Decision. The Administrator's decisions,
determinations and interpretations will be final and binding on all holders of
Options or Stock Awards.

5.   Eligibility. Options granted under this Plan may be Incentive Stock Options
or Nonqualified Stock Options, as determined by the Administrator at the time of
grant. Nonqualified Stock Options and Stock Awards may be granted to Employees,
Consultants and Directors. Incentive Stock Options may be granted only to
Employees. If otherwise eligible, an Employee, Consultant or Director who has
been granted an Option or a Stock Award may be granted additional Options or
Stock Awards.

6.   Limitations on Grants of Incentive Stock Options. Each Option will be
designated in the Grant Notice as either an Incentive Stock Option or a
Nonqualified Stock Option. However, notwithstanding such designations, if the
Shares subject to an Optionee’s Incentive Stock Options (granted under all plans
of the Company or any Parent or Subsidiary), which become exercisable for the
first time during any calendar year, have a Fair Market Value in excess of
$100,000, the Options accounting for this excess will be treated as Nonqualified
Stock Options. For purposes of this Section 6, Incentive Stock Options will be
taken into account in the order in which they were granted, and the Fair Market
Value of the Shares will be determined as of the time of grant.

7.   Limit on Annual Grants to Individuals. From and after such time as the
Company is required to be registered pursuant to Section 12 of the Exchange Act,
no Optionee may receive grants, during any fiscal year of the Company or portion
thereof, of Options which, in the aggregate, cover more than 1,000,000 Shares,
subject to adjustment as provided in Section 15. If an Option expires or
terminates for any reason without having been exercised in full, the unpurchased
shares subject to that expired or terminated Option will continue to count
against the maximum numbers of shares for which Options may be granted to an
Optionee during any fiscal year of the Company or portion thereof.

8.   Term of the Plan. Subject to Section 21, this Plan will become effective
upon the earlier to occur of its adoption by the Board or its approval by the
shareholders of the Company as described in Section 21. It will continue in
effect for a term of ten years unless terminated earlier under Section 17.
Unless otherwise provided in this Plan, its termination will not affect the
validity of any Option or Stock Award outstanding at the date of termination.

9.   Term of Option. The term of each Option will be stated in the Option
Agreement; provided, however, that in no event may the term be more than ten
years from the date of grant. In addition, in the case of an Incentive Stock
Option granted to an Optionee who, at the time the Incentive Stock Option is
granted, owns stock representing more than ten percent of the voting power of
all classes of capital stock of the Company or any Parent or Subsidiary, the
term of the Incentive Stock Option will be five years from the date of grant or
any shorter term specified in the Option Agreement.

10.   Option Exercise Price and Consideration.

       (a) Exercise Price of Incentive Stock Options. The exercise price for
Shares to be issued pursuant to exercise of an Incentive Stock Option will be
determined by the Administrator provided that the per Share exercise price will
be no less than 100% of the Fair Market Value per Share on the date of grant;
provided, further that in the case of an Incentive Stock Option granted to an
Employee who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent of the voting power of all classes of capital
stock of the Company or any Parent or Subsidiary, the per Share exercise price
will be no less than 110% of the Fair Market Value per Share on the date of
grant.

       (b) Exercise Price of Nonqualified Stock Options. In the case of a
Nonqualified Stock Option granted while the Shares are not Publicly Traded, the
exercise price will be determined by the Administrator provided that the per
Share exercise price will be no less than 85% of the Fair Market Value per Share
on the date of grant; provided, further that in the case of an Option granted to
an Optionee who, at the time the Option is granted, owns stock representing more
than ten percent of the voting power of all classes of capital stock of the
Company or any Parent or Subsidiary, the per Share exercise price will be no
less than 110% of the Fair Market Value per Share on the date of grant.

       (c) Waiting Period and Exercise Dates. At the time an Option is granted,
the Administrator will fix the period within which the Option may be exercised
and will determine any conditions which must be satisfied before the Option may
be exercised. Exercise of an Option may be conditioned upon performance criteria
or other reasonable conditions such as Continuous Status as an Employee,
Director or Consultant.

       (d) Form of Consideration. The Administrator will determine the
acceptable form of consideration for exercising an Option, including the method
of payment. Such consideration may consist partially or entirely of:

(i)   cash;

(ii)   a promissory note made by the Optionee in favor of the Company;

(iii)   other Shares which have a Fair Market Value on the date of surrender
equal to the aggregate exercise price of the Shares as to which an Option will
be exercised;

(iv)   delivery of a properly executed exercise notice together with any other
documentation as the Administrator and the Optionee’s broker, if applicable,
require to effect an exercise of the Option and delivery to the Company of the
sale or loan proceeds required to pay the exercise price; or

(v)   any other consideration and method of payment for the issuance of Shares
to the extent permitted by Applicable Laws.

11.   Exercise of Option.

       (a) Procedure for Exercise; Rights as a Shareholder. Any Option granted
hereunder will be exercisable according to the terms of the Plan and at times
and under conditions determined by the Administrator and set forth in the Option
Agreement; provided, however, that an Option may not be exercised for a fraction
of a Share.

        An Option will be deemed exercised when the Company receives: (i)
written notice of exercise (in accordance with the Option Agreement) from the
person entitled to exercise the Option, (ii) full payment for the Shares with
respect to which the Option is exercised, and (iii) all representations,
indemnifications and documents reasonably requested by the Administrator. Full
payment may consist of any consideration and method of payment authorized by the
Administrator and permitted by the Option Agreement and this Plan. Shares issued
upon exercise of an Option will be issued in the name of the Optionee or, if
requested by the Optionee, in the name of the Optionee and his or her spouse.
Until the stock certificate evidencing such Shares is issued (as evidenced by
the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any
other rights as a shareholder will exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. Subject to the provisions of
Sections 13(c), 18, and 19, the Company will issue (or cause to be issued) such
stock certificate promptly after the Option is exercised. No adjustment will be
made for a dividend or other right for which the record date is prior to the
date the stock certificate is issued, except as provided in Section 15 of the
Plan. Notwithstanding the foregoing, the Administrator in its discretion may
require the Company to retain possession of any certificate evidencing Shares of
Common Stock acquired upon exercise of an Option, if those Shares remain subject
to repurchase under the provisions of the Option Agreement or any other
agreement between the Company and the Optionee, or if those Shares are
collateral for a loan or obligation due to the Company.

       Exercising an Option in any manner will decrease the number of Shares
thereafter available, both for purposes of this Plan and for sale under the
Option, by the number of Shares as to which the Option is exercised.

       (b) Termination of Employment or Consulting Relationship or Directorship.
If an Optionee holds exercisable Options on the date his or her Continuous
Status as an Employee, Director or Consultant terminates (other than because of
termination due to Cause, death or Disability), the Optionee may exercise the
Options that were vested and exercisable as of the date of termination for a
period of 90 days following such termination (or such other period as is set
forth in the Option Agreement or determined by the Administrator); provided,
however, in no event shall such period expire before the 30th day following the
date of termination. If the Optionee is not entitled to exercise his or her
entire Option at the date of such termination, the Shares covered by the
unexercisable portion of the Option will revert to the Plan, unless otherwise
set forth in the Option Agreement or determined by the Administrator. The
Administrator may determine in its sole discretion that such unexercisable
portion of the Option will become exercisable at such times and on such terms as
the Administrator may determine in its sole discretion. If the Optionee does not
exercise an Option within the time specified above after termination, that
Option will expire, and the Shares covered by it will revert to the Plan, unless
otherwise set forth in the Option Agreement or determined by the Administrator.

       (c) Disability of Optionee. If an Optionee holds exercisable Options on
the date his or her Continuous Status as an Employee, Director or Consultant
terminates because of Disability, the Optionee may exercise the Options that
were vested and exercisable as of the date of termination for a period of twelve
months following such termination (or such other period as is set forth in the
Option Agreement or determined by the Administrator); provided, however, in no
event shall such period expire prior to 6 months following the date of
termination. If the Optionee is not entitled to exercise his or her entire
Option at the date of such termination, the Shares covered by the unexercisable
portion of the Option will revert to the Plan, unless otherwise set forth in the
Option Agreement or determined by the Administrator. The Administrator may
determine in its sole discretion that such unexercisable portion of the Option
will become exercisable at such times and on such terms as the Administrator may
determine in its sole discretion. If the Optionee does not exercise an Option
within the time specified above after termination, that Option will expire, and
the Shares covered by it will revert to the Plan, unless otherwise set forth in
the Option Agreement or determined by the Administrator.

       (d) Death of Optionee. If an Optionee holds exercisable Options on the
date his or her death, the Optionee’s estate or a person who acquired the right
to exercise the Option by bequest or inheritance may exercise the Options that
were vested and exercisable as of the date of death for a period of twelve
months following the date of death (or such other period as is set forth in the
Option Agreement or determined by the Administrator); provided, however, in no
event shall such period expire prior to 6 months following the date of death. If
the Optionee is not entitled to exercise his or her entire Option at the date of
death, the Shares covered by the unexercisable portion of the Option will revert
to the Plan, unless otherwise set forth in the Option Agreement or determined by
the Administrator. The Administrator may determine in its sole discretion that
such unexercisable portion of the Option will become exercisable at such times
and on such terms as the Administrator may determine in its sole discretion. If
the Optionee’s estate or a person who acquired the right to exercise the Option
by bequest or inheritance does not exercise an Option within the time specified
above after termination, that Option will expire, and the Shares covered by it
will revert to the Plan, unless otherwise set forth in the Option Agreement or
determined by the Administrator.

       (e) Termination for Cause. If an Optionee’s Continuous Status as an
Employee, Director or Consultant is terminated for Cause, then all Options
(including any vested Options) held by Optionee shall immediately be terminated
and cancelled.

       (f) Disqualifying Dispositions of Incentive Stock Options. If Common
Stock acquired upon exercise of any Incentive Stock Option is disposed of in a
disposition that, under Section 422 of the Code, disqualifies the holder from
the application of Section 421(a) of the Code, the holder of the Common Stock
immediately before the disposition will comply with any requirements imposed by
the Company in order to enable the Company to secure the related income tax
deduction to which it is entitled in such event.

12.   Non-Transferability of Options.

       (a) No Transfer. An Option may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner other than by will or by
the laws of descent or distribution and may be exercised, during the lifetime of
the Optionee, only by the Optionee. Notwithstanding the foregoing, to the extent
that the Administrator so authorizes at the time a Nonqualified Stock Option is
granted or amended, (i) such Option may be assigned, in whole or in part, during
the Optionee’s lifetime by gift to one or more members of Optionee’s “immediate
family” as defined in the rules adopted pursuant to Section 16 of the Exchange
Act. Rights under the assigned portion may be exercised by the family member(s)
who acquire a proprietary interest in such Option pursuant to the assignment,
and (ii) after the Shares are Publicly Traded, such Option may be assigned
pursuant to a qualified domestic relations order as defined in the Code, and
exercised by the spouse of the Optionee who obtained such Option pursuant to
such qualified domestic relations order. The terms applicable to the assigned
portion shall be the same as those in effect for the Option immediately before
such assignment and shall be set forth in such documents issued to the assignee
as the Administrator deems appropriate.

       (b) Designation of Beneficiary. An Optionee may file a written
designation of a beneficiary who is to receive any Options that remain
unexercised in the event of the Optionee’s death. If a participant is married
and the designated beneficiary is not the spouse, spousal consent will be
required for the designation to be effective. The Optionee may change such
designation of beneficiary at any time by written notice to the Administrator,
subject to the above spousal consent requirement.

       (c) Effect of No Designation. If an Optionee dies and there is no
beneficiary validly designated and living at the time of the Optionee’s death,
the Company will deliver such Optionee’s Options to the executor or
administrator of his or her estate, or if no such executor or administrator has
been appointed (to the knowledge of the Company), the Company, in its
discretion, may deliver such Options to the spouse or to any one or more
dependents or relatives of the Optionee, or if no spouse, dependent or relative
is known to the Company, then to such other person as the Company may designate.

       (d) Death of Spouse or Dissolution of Marriage. If an Optionee designates
his or her spouse as beneficiary, that designation will be deemed automatically
revoked if the Optionee’s marriage is later dissolved. Similarly, any
designation of a beneficiary will be deemed automatically revoked upon the death
of the beneficiary if the beneficiary predeceases the Optionee. Without limiting
the generality of the preceding sentence, the interest in Options of a spouse of
an Optionee who has predeceased the Optionee or (except as provided in Section
12(a) regarding qualified domestic relations orders) whose marriage has been
dissolved will automatically pass to the Optionee, and will not be transferable
by such spouse in any manner, including but not limited to such spouse’s will,
nor will any such interest pass under the laws of intestate succession.

13.   Stock Awards.

       (a) Grant. Subject to the express provisions and limitations of the Plan,
the Administrator, in its sole and absolute discretion, may grant Stock Awards
to Employees, Consultants or Directors for a number of shares of Common Stock on
such terms and conditions and to such Employees, Consultants or Directors as it
deems advisable and specifies in the respective grants. Subject to the
limitations and restrictions set forth in the Plan, an Employee, Consultant or
Director who has been granted an Option or Stock Award may, if otherwise
eligible, be granted additional Options or Stock Awards if the Administrator
shall so determine. Notwithstanding the foregoing, while the Shares are not
Publicly Traded, no Stock Award shall be made unless such Stock Award provides
that the Grantee will pay an amount not less than 85% of the Fair Market Value
per Share on the date of grant of the Stock Award in exchange for the Shares
awarded pursuant to such Stock Award (and, in the case of a Grantee who, at the
time the Stock Award is granted, owns stock representing more than ten percent
of the voting power of all classes of capital stock of the Company or any Parent
or Subsidiary, such amount shall be no less than 110% of the Fair Market Value
per Share on the date of grant of the Stock Award).

       (b) Restrictions. The Administrator, in its sole and absolute discretion,
may impose restrictions in connection with any Stock Award, including without
limitation, (i) imposing a restricted period during which all or a portion of
the Common Stock subject to the Stock Award may not be sold, assigned,
transferred, pledged or otherwise encumbered (the “Restricted Period”), (ii)
providing for a vesting schedule with respect to such Common Stock such that if
a Grantee ceases to be an Employee, Consultant or Director during the Restricted
Period, some or all of the shares of Common Stock subject to the Stock Award
shall be immediately forfeited and returned to the Company. The Administrator
may, at any time, reduce or terminate the Restricted Period. Each certificate
issued in respect of shares of Common Stock pursuant to a Stock Award which is
subject to restrictions shall be registered in the name of the Grantee, shall be
deposited by the Grantee with the Company together with a stock power endorsed
in blank and shall bear an appropriate legend summarizing the restrictions
imposed with respect to such shares of Common Stock.

       (c) Rights As Shareholder. Subject to the terms of any agreement
governing a Stock Award, the Grantee of a Stock Award shall have all the rights
of a shareholder with respect to the Common Stock issued pursuant to a Stock
Award, including the right to vote such Shares; provided, however, that
dividends or distributions paid with respect to any such Shares which have not
vested shall be deposited with the Company and shall be subject to forfeiture
until the underlying Shares have vested unless otherwise released by the
Administrator in its sole discretion. A Grantee shall not be entitled to
interest with respect to the dividends or distributions so deposited.

14.   Withholding Taxes. The Company will have the right to take whatever steps
the Administrator deems necessary or appropriate to comply with all applicable
federal, state, local, and employment tax withholding requirements, and the
Company’s obligations to deliver Shares upon the exercise of an Option or in
connection with a Stock Award will be conditioned upon compliance with all such
withholding tax requirements. Without limiting the generality of the foregoing,
upon the exercise of an Option, the Company will have the right to withhold
taxes from any other compensation or other amounts which it may owe to the
Optionee, or to require the Optionee to pay to the Company the amount of any
taxes which the Company may be required to withhold with respect to the Shares
issued on such exercise. Without limiting the generality of the foregoing, the
Administrator in its discretion may authorize the Grantee to satisfy all or part
of any withholding tax liability by (a) having the Company withhold from the
Shares which would otherwise be issued in connection with a Stock Award or on
the exercise of an Option that number of Shares having a Fair Market Value, as
of the date the withholding tax liability arises, equal to or less than the
amount of the Company’s withholding tax liability, or (b) by delivering to the
Company previously-owned and unencumbered Shares of the Common Stock having a
Fair Market Value, as of the date the withholding tax liability arises, equal to
or less than the amount of the Company’s withholding tax liability.

15.   Adjustments Upon Changes in Capitalization, Dissolution, Merger or Asset
Sale.

       (a) Changes in Capitalization. Subject to any required action by the
shareholders of the Company, if the outstanding shares of Common Stock are
increased, decreased, changed into or exchanged for a different number or kind
of shares or securities of the Company or a successor entity, or for other
property (including without limitation, cash), through reorganization,
recapitalization, reclassification, stock combination, stock dividend, stock
split, reverse stock split, spin off or other similar transaction, an
appropriate and proportionate adjustment will be made in the maximum number and
kind of shares as to which Options and Stock Awards may be granted under this
Plan. A corresponding adjustment changing the number or kind of shares allocated
to Stock Awards or unexercised Options which have been granted prior to any such
change will likewise be made. Any such adjustment in the outstanding Options
will be made without change in the aggregate purchase price applicable to the
unexercised portion of the Options but with a corresponding adjustment in the
price for each share or other unit of any security covered by the Option. Such
adjustment will be made by the Administrator, whose determination in that
respect will be final, binding, and conclusive.

        Where an adjustment under this Section 15(a) is made to an Incentive
Stock Option, the adjustment will be made in a manner which will not be
considered a “modification” under the provisions of subsection 424(h)(3) of the
Code.

       (b) Dissolution or Liquidation. In the event of the proposed dissolution
or liquidation of the Company, to the extent that an Option had not been
previously exercised or a Stock Award had not previously vested, it will
terminate immediately prior to the consummation of such proposed dissolution or
liquidation. In such instance, the Administrator may, in the exercise of its
sole discretion, declare that any Stock Award shall become vested or any Option
will terminate as of a date fixed by the Administrator and give each Optionee
the right to exercise his or her Option as to all or any part of the Optioned
Stock, including Shares as to which the Option would not otherwise be
exercisable.

       (c) Corporate Transaction. Upon the happening of a merger, reorganization
or sale of substantially all of the assets of the Company, the Administrator,
may, in its sole discretion, do one or more of the following: (i) shorten the
period during which Options are exercisable (provided they remain exercisable
for at least 30 days after the date notice of such shortening is given to the
Optionees); (ii) accelerate any vesting schedule to which an Option or Stock
Award is subject; (iii) arrange to have the surviving or successor entity or any
parent entity thereof assume the Stock Awards and the Options or grant
replacement options with appropriate adjustments in the option prices and
adjustments in the number and kind of securities issuable upon exercise or
adjustments so that the Options or their replacements represent the right to
purchase the shares of stock, securities or other property (including cash) as
may be issuable or payable as a result of such transaction with respect to or in
exchange for the number of Shares of Common Stock purchasable and receivable
upon exercise of the Options had such exercise occurred in full prior to such
transaction; or (iv) cancel Options or Stock Awards upon payment to the
Optionees or Grantees in cash, with respect to each Option or Stock Award to the
extent then exercisable or vested (including, if applicable, any Options or
Stock Awards as to which the vesting schedule has been accelerated as
contemplated in clause (ii) above), of an amount that is the equivalent of the
excess of the Fair Market Value of the Common Stock (at the effective time of
the merger, reorganization, sale or other event) over (in the case of Options)
the exercise price of the Option. The Administrator may also provide for one or
more of the foregoing alternatives in any particular Option Agreement or
agreement governing a Stock Award.

16.   Date of Grant. The date of grant of an Option or Stock Award will be, for
all purposes, the date as of which the Administrator makes the determination
granting such Option or Stock Award, or any other, later date determined by the
Administrator and specified in the Option Agreement. Notice of the determination
will be provided to each Grantee within a reasonable time after the date of
grant.

17.   Amendment and Termination of the Plan.

       (a) Amendment and Termination. The Board may at any time amend, alter or
suspend or terminate the Plan.

       (b) Shareholder Approval. The Company will obtain shareholder approval of
any Plan amendment that increases the number of Shares for which Options or
Stock Awards may be granted, or to the extent necessary and desirable to comply
with Section 422 of the Code (or any successor statute) or other Applicable
Laws, or the requirements of any exchange or quotation system on which the
Common Stock is listed or quoted. Such shareholder approval, if required, will
be obtained in such a manner and to such a degree as is required by the
Applicable Law or requirement.

       (c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan will impair the rights of a Grantee,
unless mutually agreed otherwise between the Grantee and the Administrator. Any
such agreement must be in writing and signed by the Grantee and the Company.

18.   Conditions Upon Issuance of Shares.

       (a) Legal Compliance. Shares will not be issued in connection with a
Stock Award or pursuant to the exercise of an Option unless the exercise of such
Option and the issuance and delivery of such Shares will comply with all
Applicable Laws, and will be further subject to the approval of counsel for the
Company with respect to such compliance. Any securities delivered under the Plan
will be subject to such restrictions, and the person acquiring such securities
will, if requested by the Company, provide such assurances and representations
to the Company as the Company may deem necessary or desirable to assure
compliance with all Applicable Laws. To the extent permitted by Applicable Laws,
the Plan and Options and Stock Awards granted hereunder will be deemed amended
to the extent necessary to conform to such laws, rules and regulations.

       (b) Investment Representation. As a condition to the exercise of an
Option or grant of a Stock Award, the Company may require the person exercising
such Option or receiving such Stock Award to represent and warrant at the time
of any such exercise or receipt that the Shares are being acquired only for
investment and without any present intention to sell, transfer, or distribute
such Shares.

19.   Liability of Company.

       (a) Inability to Obtain Authority. If the Company cannot, by the exercise
of commercially reasonable efforts, obtain authority from any regulatory body
having jurisdiction for the sale of any Shares under this Plan, and such
authority is deemed by the Company’s counsel to be necessary to the lawful
issuance of those Shares, the Company will be relieved of any liability for
failing to issue or sell those Shares.

       (b) Grants Exceeding Allotted Shares. If the Optioned Stock covered by an
Option or Shares subject to a Stock Award exceed, as of the date of grant, the
number of Shares which may be issued under the Plan without additional
shareholder approval, that Option or Stock Award will be contingent with respect
to such excess Shares, unless and until shareholder approval of an amendment
sufficiently increasing the number of Shares subject to this Plan is timely
obtained in accordance with Section 17(b).

       (c) Rights of Participants and Beneficiaries. The Company will pay all
amounts payable under this Plan only to the Grantee, or beneficiaries entitled
thereto pursuant to this Plan. The Company will not be liable for the debts,
contracts, or engagements of any Grantee or his or her beneficiaries, and rights
to cash payments under this Plan may not be taken in execution by attachment or
garnishment, or by any other legal or equitable proceeding while in the hands of
the Company.

20.   Reservation of Shares. The Company will at all times reserve and keep
available for issuance a number of Shares sufficient to satisfy this Plan's
requirements during its term.

21.   Shareholder Approval. Continuance of this Plan will be subject to approval
by the shareholders of the Company within 12 months before or after the date of
its adoption. Such shareholder approval will be obtained in the manner and to
the degree required under Applicable Laws. Options or Stock Awards may be
granted but Options may not be exercised prior to shareholder approval of the
Plan. If any Options or Stock Awards are so granted and shareholder approval is
not obtained within 12 months of the date of adoption of this Plan by the Board,
those Options or Stock Awards will terminate retroactively as of the date they
were granted.

22.   Information to Optionees. While the Shares are not Publicly Traded, each
Optionee will be provided with a copy of financial statements of the Company at
least annually, and, in any event, prior to his or her acquisition of Common
Stock pursuant to the exercise of an Option. The provisions of this Section 22
are intended to comply with the requirements of Rule 260.140.46 promulgated
under the California Corporations Code.

23.   Legending Stock Certificates. In order to enforce any restrictions imposed
upon Common Stock issued in connection with a Stock Award or upon exercise of an
Option granted under this Plan or to which such Common Stock may be subject, the
Administrator may cause a legend or legends to be placed on any certificates
representing such Common Stock, which legend or legends will make appropriate
reference to such restrictions, including, but not limited to, a restriction
against sale of such Common Stock for any period of time as may be required by
Applicable Laws. Additionally, and not by way of limitation, the Administrator
may impose such restrictions on any Common Stock issued pursuant to the Plan as
it may deem advisable.

24.   No Employment Rights. Neither this Plan nor any Option or Stock Award will
confer upon a Grantee any right with respect to continuing the Grantee’s
employment or consulting relationship with the Company, or continuing service as
a Director, nor will they interfere in any way with the Grantee’s right or the
Company’s right to terminate such employment or consulting relationship or
directorship at any time, with or without cause.

25.   Governing Law. The Plan will be governed by, and construed in accordance
with the laws of the State of Delaware (without giving effect to conflicts of
law principles).