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                                                                EXHIBIT 10.2


                          CYGNET FINANCIAL CORPORATION
                            1998 STOCK INCENTIVE PLAN
         ARTICLE 1  PURPOSE

         1.1   GENERAL. The purpose of the Cygnet Financial Corporation 1998
Stock Incentive Plan (the "Plan") is to promote the success, and enhance the
value, of Cygnet Financial Corporation (the "Company") by linking the personal
interests of its employees, officers, executives, and nonemployee directors of,
and consultants and advisors to, the Company to those of Company stockholders
and by providing such individuals with an incentive for outstanding performance
in order to generate superior returns to shareholders of the Company. The Plan
is further intended to provide flexibility to the Company in its ability to
motivate, attract, and retain the services of employees, officers, executives,
and nonemployee directors of, and consultants and advisors to, the Company upon
whose judgment, interest, and special effort the successful conduct of the
Company's operation is largely dependent.

         ARTICLE 2    EFFECTIVE DATE

         2.1   EFFECTIVE DATE. The Plan is effective as of the date the Plan is
approved by the Company's shareholders (the "Effective Date").

         ARTICLE 3    DEFINITIONS AND CONSTRUCTION.

         3.1   DEFINITIONS. When a word or phrase appears in this Plan with the
initial letter capitalized, and the word or phrase does not commence a sentence,
the word or phrase shall generally be given the meaning ascribed to it in this
Section or in Sections 1.1 or 2.1 unless a clearly different meaning is required
by the context.
The following words and phrases shall have the following meanings:

                  (a) "Award" means any Option, Stock Appreciation Right,
         Restricted Stock Award, Performance Share Award, Performance-Based
         Award, or Non-Employee Director Restricted Stock Grant granted to a
         Participant under the Plan.

                  (b)   "Award Agreement" means any written agreement, contract,
         or other instrument or document evidencing an Award.

                  (c)   "Board" means the Board of Directors of the Company.

                  (d)   "Cause" means (except as otherwise provided in an Award
         Agreement) if the Committee, in its reasonable and good faith
         discretion, determines that the employee, consultant or advisor (I) has
         developed or pursued interests substantially adverse to the Company,
         (ii) materially breached any employment, engagement or confidentiality
         agreement or otherwise failed to
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         satisfactorily discharge his or her duties, (iii) has not devoted all
         or substantially all of his or her business time, effort and attention
         to the affairs of the Company (or such lesser amount as has been agreed
         to in writing by the Company), (iv) is convicted of a felony involving
         moral turpitude, or (v) has engaged in activities or omissions that are
         detrimental to the well-being of the Company.

                  (e)   "Change of Control" means any of the following:

                           (1) any merger of the Company in which the Company is
         not the continuing or surviving entity, or pursuant to which Stock
         would be converted into cash, securities or other property, other than
         a merger of the Company in which the holders of the Company's Stock
         immediately prior to the merger have the same proportionate ownership
         of beneficial interest of common stock or other voting securities of
         the surviving entity immediately after the merger;

                           (2) any sale, lease, exchange or other transfer (in
         one transaction or a series of related transactions) of assets or
         earning power aggregating more than 40% of the assets or earning power
         of the Company and its subsidiaries (taken as a whole), other than
         pursuant to a sale-leaseback, structured finance or other form of
         financing transaction;

                           (3) the shareholders of the Company shall approve any
         plan or proposal for liquidation or dissolution of the Company;

                           (4) any person (as such term is used in Section 13(d)
         and 14(d)(2) of the Exchange Act), other than any current shareholder
         of the Company or affiliate thereof or any employee benefit plan of the
         Company or any subsidiary of the Company or any entity holding shares
         of capital stock of the Company for or pursuant to the terms of any
         such employee benefit plan in its role as an agent or trustee for such
         plan, shall become the beneficial owner (within the meaning of Rule
         13d-3 under the Exchange Act) of 20% or more of the Company's
         outstanding Stock; or

                           (5) during any period of two consecutive years,
         individuals who at the beginning of such period shall fail to
         constitute a majority thereof, unless the election, or the nomination
         for election by the Company's shareholders, of each new director was
         approved by a vote of at least two-thirds of the directors then still
         in office who were directors at the beginning of the period.

                  (f) "Code" means the Internal Revenue Code of 1986, as
         amended.

                  (g) "Committee" means the committee of the Board described in
         Article 4.

                  (h)   "Covered Employee" means an Employee who is a "covered
         employee" within the meaning of Section 162(m) of the Code.


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                  (i)   "Disability" shall mean any illness or other physical or
         mental condition of a Participant which renders the Participant
         incapable of performing his customary and usual duties for the Company,
         or any medically determinable illness or other physical or mental
         condition resulting from a bodily injury, disease or mental disorder
         which in the judgment of the Committee is permanent and continuous in
         nature. The Committee may require such medical or other evidence as it
         deems necessary to judge the nature and permanency of the Participant's
         condition.

                  (j) "Exchange Act" means the Securities Exchange Act of 1934,
         as amended from time to time.

                  (k)   "Fair Market Value" means, as of any given date, the
         fair market value of Stock or other property on a particular date
         determined by such methods or procedures as may be established from
         time to time by the Committee. Unless otherwise determined by the
         Committee, the Fair Market Value of Stock as of any date shall be the
         closing price for the Stock as reported on the NASDAQ National Market
         System (or on any national securities exchange on which the Stock is
         then listed) for that date or, if no closing price is so reported for
         that date, the closing price on the next preceding date for which a
         closing price was reported.

                  (l)   "Grant Date" means, with respect to Initial Grants of
         Restricted Stock under Section 12.1, the effective date of the
         Company's initial registration statement with the Securities Exchange
         Commission. Grant Date means, with respect to Subsequent Grants of
         Restricted Stock under Section 12.2, the date on which an individual
         first becomes a member of the Board.

                  (m)   "Incentive Stock Option" means an Option that is
         intended to meet the requirements of Section 422 of the Code or any
         successor provision thereto.

                  (n)   "Non-Employee Director" means a member of the Board who
         qualifies as a "Non-Employee Director" as defined in Rule 16b-3(b)(3)
         of the Exchange Act, or any successor definition adopted by the Board.
         For purposes of grants under Article 12, a Non-Employee Director shall
         mean any member of the Board who is not otherwise an employee of the
         Company or any Subsidiary.

                  (o)   "Non-Employee Director Restricted Stock Grants" means
         Stock granted to Non-Employee Directors under Article 12 that is
         subject to certain restrictions and to risk of forfeiture.

                  (p)   "Non-Qualified Stock Option" means an Option that is not
         intended to be an Incentive Stock Option.


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                  (q)   "Option" means a right granted to a Participant under
         Article 7 to purchase Stock at a specified price during specified time
         periods. An Option may be either an Incentive Stock Option or a
         Non-Qualified Stock Option.

                  (r) "Participant" means an individual who has been granted an
         Award under the Plan.

                  (s)   "Performance-Based Awards" means the Performance Share
         Awards and Restricted Stock Awards granted to selected Covered
         Employees pursuant to Articles 9 and 10, but which are subject to the
         terms and conditions set forth in Article 11. All Performance-Based
         Awards are intended to qualify as "performance-based compensation"
         under Section 162(m) of the Code.

                  (t)   "Performance Criteria" means the criteria that the
         Committee selects for purposes of establishing the Performance Goal or
         Performance Goals for a Participant for a Performance Period. The
         Performance Criteria that will be used to establish Performance Goals
         are limited to the following: pre- or after-tax net earnings, sales
         growth, operating earnings, operating cash flow, return on net assets,
         return on stockholders' equity, return on assets, return on capital,
         Stock price growth, stockholder returns, gross or net profit margin,
         earnings per share, price per share of Stock, and market share, any of
         which may be measured either in absolute terms or as compared to any
         incremental increase or as compared to results of a peer group. The
         Committee shall, within the time prescribed by Section 162(m) of the
         Code, define in an objective fashion the manner of calculating the
         Performance Criteria it selects to use for such Performance Period for
         such Participant.

                  (u)   "Performance Goals" means, for a Performance Period, the
         goals established in writing by the Committee for the Performance
         Period based upon the Performance Criteria. Depending on the
         Performance Criteria used to establish such Performance Goals, the
         Performance Goals may be expressed in terms of overall Company
         performance or the performance of a division, business unit or an
         individual. The Committee, in its discretion, may, within the time
         prescribed by Section 162(m) of the Code, adjust or modify the
         calculation of Performance Goals for such Performance Period in order
         to prevent the dilution or enlargement of the rights of Participants
         (i) in the event of, or in anticipation of, any unusual or
         extraordinary corporate item, transaction, event, or development, or
         (ii) in recognition of, or in anticipation of, any other unusual or
         nonrecurring events affecting the Company, or the financial statements
         of the Company, or in response to, or in anticipation of, changes in
         applicable laws, regulations, accounting principles, or business
         conditions.

                  (v)   "Performance Period" means the one or more periods of
         time, which may be of varying and overlapping durations, as the
         Committee may select, over


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         which the attainment of one or more Performance Goals will be measured
         for the purpose of determining a Participant's right to, and the
         payment of, a Performance-Based Award.

                  (w)   "Performance Share" means a right granted to a
         Participant under Article 9, to receive cash, Stock, or other Awards,
         the payment of which is contingent upon achieving certain performance
         goals established by the Committee.

                  (x)   "Plan" means the Cygnet Financial Corporation 1998 Stock
         Incentive Plan, as amended from time to time.

                  (y)   "Restricted Stock Award" means Stock granted to a
         Participant other than a Non-Employee Director under Article 10 that is
         subject to certain restrictions and to risk of forfeiture.

                  (z)   "Stock" means the common stock of the Company and such
         other securities of the Company that may be substituted for Stock
         pursuant to Article 13.

                  (aa)   "Stock Appreciation Right" or "SAR" means a right
         granted to a Participant under Article 8 to receive a payment equal to
         the difference between the Fair Market Value of a share of Stock as of
         the date of exercise of the SAR over the grant price of the SAR, all as
         determined pursuant to Article 8.

                  (bb)   "Subsidiary" means any corporation of which a majority
         of the outstanding voting stock or voting power is beneficially owned
         directly or indirectly by the Company.

         ARTICLE 4    ADMINISTRATION

         4.1   COMMITTEE. The Plan shall be administered by the Board or a
Committee appointed by, and which serves at the discretion of, the Board. If the
Board appoints a Committee, the Committee shall consist of at least two
individuals, each of whom qualifies as (i) a Non-Employee Director, and (ii) an
"outside director" under Code Section 162(m) and the regulations issued
thereunder. Reference to the Committee shall refer to the Board if the Board
does not appoint a Committee.

         4.2   ACTION BY THE COMMITTEE. A majority of the Committee shall
constitute a quorum. The acts of a majority of the members present at any
meeting at which a quorum is present and acts approved in writing by a majority
of the Committee in lieu of a meeting shall be deemed the acts of the Committee.
Each member of the Committee is entitled to, in good faith, rely or act upon any
report or other information furnished to that member by any officer or other
employee of the Company or any Subsidiary, the Company's independent certified
public accountants, or any executive compensation consultant or other
professional retained by the Company to assist in the administration of the
Plan.




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         4.3 AUTHORITY OF COMMITTEE. The Committee has the exclusive power,
authority and discretion to:

                  (a)   Designate Participants to receive Awards;

                  (b) Determine the type or types of Awards to be granted to
         each Participant;

                  (c) Determine the number of Awards to be granted and the
         number of shares of Stock to which an Award will relate;

                  (d)   Determine the terms and conditions of any Award granted
         under the Plan including but not limited to, the exercise price, grant
         price, or purchase price, any restrictions or limitations on the Award,
         any schedule for lapse of forfeiture restrictions or restrictions on
         the exercisability of an Award, and accelerations or waivers thereof,
         based in each case on such considerations as the Committee in its sole
         discretion determines; provided, however, that the Committee shall not
         have the authority to accelerate the vesting, or waive the forfeiture,
         of any Performance-Based Awards and provided further that the Committee
         shall not take any actions that would result in the Non-Employee
         Director Restricted Stock Grants under Section 12 not being treated as
         formula grants within the meaning of Rule 16b-3 of the Exchange Act;

                  (e)   Amend, modify, or terminate any outstanding Award, with
         the Participant's consent unless the Committee has the authority to
         amend, modify or terminate an Award without the Participant's consent
         under any other provision of the Plan.

                  (f)   Determine whether, to what extent, and under what
         circumstances an Award may be settled in, or the exercise price of an
         Award may be paid in, cash, Stock, other Awards, or other property, or
         an Award may be canceled, forfeited, or surrendered;

                  (g) Prescribe the form of each Award Agreement, which need not
         be identical for each Participant;

                  (h) Decide all other matters that must be determined in
         connection with an Award;

                  (i) Establish, adopt or revise any rules and regulations as it
         may deem necessary or advisable to administer the Plan; and

                  (j)   Make all other decisions and determinations that may be
         required under the Plan or as the Committee deems necessary or
         advisable to administer the Plan.


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                4.4   DECISIONS BINDING. The Committee's interpretation of the
Plan, any Awards granted under the Plan, any Award Agreement and all decisions
and determinations by the Committee with respect to the Plan are final, binding,
and conclusive on all parties.

                ARTICLE 5    SHARES SUBJECT TO THE PLAN

                5.1   NUMBER OF SHARES. Subject to adjustment provided in
Section 14.1, the aggregate number of shares of Stock reserved and available for
grant under the Plan shall be 1,050,000.

                5.2   LAPSED AWARDS. To the extent that an Award terminates,
expires or lapses for any reason, any shares of Stock subject to the Award will
again be available for the grant of an Award under the Plan and shares subject
to SARs or other Awards settled in cash will be available for the grant of an
Award under the Plan.

                5.3   STOCK DISTRIBUTED. Any Stock distributed pursuant to an
Award may consist, in whole or in part, of authorized and unissued Stock,
treasury Stock or Stock purchased on the open market.

                5.4   LIMITATION ON NUMBER OF SHARES SUBJECT TO AWARDS.
Notwithstanding any provision in the Plan to the contrary, and subject to the
adjustment in Section 14.1, the maximum number of shares of Stock with respect
to one or more Awards that may be granted to any one Participant during the
Company's fiscal year shall be 600,000.

                ARTICLE 6    ELIGIBILITY AND PARTICIPATION

                6.1   ELIGIBILITY.

                  (a) GENERAL. Persons eligible to participate in this Plan
         include all employees, officers, executives and nonemployee directors
         of, and consultants and advisors to, the Company or a Subsidiary, as
         determined by the Committee, including such individuals who are also
         members of the Board.

                  (b) FOREIGN PARTICIPANTS. In order to assure the viability of
         Awards granted to Participants employed in foreign countries, the
         Committee may provide for such special terms as it may consider
         necessary or appropriate to accommodate differences in local law, tax
         policy, or custom. Moreover, the Committee may approve such supplements
         to, or amendments, restatements, or alternative versions of the Plan as
         it may consider necessary or appropriate for such purposes without
         thereby affecting the terms of the Plan as in effect for any other
         purpose; provided, however, that no such



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         supplements, amendments, restatements, or alternative versions shall
         increase the share limitations contained in Section 5.1 of the Plan.

                6.2   ACTUAL PARTICIPATION. Subject to the provisions of the
Plan, the Committee may, from time to time, select from among all eligible
individuals, those to whom Awards shall be granted and shall determine the
nature and amount of each Award. No individual shall have any right to be
granted an Award under this Plan.

                ARTICLE 7    STOCK OPTIONS

                7.1   GENERAL. The Committee is authorized to grant Options to
Participants on the following terms and conditions:

                  (a) EXERCISE PRICE. The exercise price per share of Stock
         under an Option shall be determined by the Committee and set forth in
         the Award Agreement. It is the intention under the Plan that the
         exercise price for any Option shall not be less than the Fair Market
         Value as of the date of grant; provided, however that the Committee
         may, in its discretion, grant Options (other than Options that are
         intended to be Incentive Stock Options or Options that are intended to
         qualify as performance-based compensation under Code Section 162(m))
         with an exercise price of less than Fair Market Value on the date of
         grant. (b) TIME AND CONDITIONS OF EXERCISE. The Committee shall
         determine the time or times at which an Option may be exercised in
         whole or in part. The Committee shall also determine the performance or
         other conditions, if any, that must be satisfied before all or part of
         an Option may be exercised.

                  (c) PAYMENT. The Committee shall determine the methods by
         which the exercise price of an Option may be paid, the form of payment,
         including, without limitation, cash, shares of Stock (through actual
         tender or by attestation), or other property (including broker-assisted
         "cashless exercise" arrangements), and the methods by which shares of
         Stock shall be delivered or deemed to be delivered to Participants.

                  (d) EVIDENCE OF GRANT. All Options shall be evidenced by a
         written Award Agreement between the Company and the Participant. The
         Award Agreement shall include such additional provisions as may be
         specified by the Committee.

                7.2   INCENTIVE STOCK OPTIONS. Incentive Stock Options shall be
granted only to employees and the terms of any Incentive Stock Options granted
under the Plan must comply with the following additional rules:

                  (a) EXERCISE PRICE. The exercise price per share of Stock
         shall be set by the Committee, provided that the exercise price for any
         Incentive Stock Option may not be less than the Fair Market Value as of
         the date of the grant.


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                  (b) EXERCISE. In no event, may any Incentive Stock Option be
         exercisable for more than ten years from the date of its grant.

                  (c) LAPSE OF OPTION. An Incentive Stock Option shall lapse
         under the following circumstances:

                                  (1)   The Incentive Stock Option shall lapse
                ten years from the date it is granted, unless an earlier time is
                set in the Award Agreement.

                                  (2)   The Incentive Stock Option shall lapse
                upon termination of employment for Cause or for any other
                reason, other than the Participant's death or Disability, unless
                the Committee determines in its discretion to extend the
                exercise period for no more than ninety (90) days after the
                Participant's termination of employment.

                                  (3)   If the Participant terminates employment
                on account of Disability or death before the Option lapses
                pursuant to paragraph (1) or (2) above, the Incentive Stock
                Option shall lapse, unless it is previously exercised, on the
                earlier of (i) the date on which the Option would have lapsed
                had the Participant not become Disabled or lived and had his
                employment status (i.e., whether the Participant was employed by
                the Company on the date of his Disability or death or had
                previously terminated employment) remained unchanged; or (ii) 12
                months after the date of the Participant's termination of
                employment on account of Disability or death. Upon the
                Participant's Disability or death, any Incentive Stock Options
                exercisable at the Participant's Disability or death may be
                exercised by the Participant's legal representative or
                representatives, by the person or persons entitled to do so
                under the Participant's last will and testament, or, if the
                Participant shall fail to make testamentary disposition of such
                Incentive Stock Option or shall die intestate, by the person or
                persons entitled to receive said Incentive Stock Option under
                the applicable laws of descent and distribution.

                  (d) INDIVIDUAL DOLLAR LIMITATION. The aggregate Fair Market
         Value (determined as of the time an Award is made) of all shares of
         Stock with respect to which Incentive Stock Options are first
         exercisable by a Participant in any calendar year may not exceed
         $100,000.00 or such other limitation as imposed by Section 422(d) of
         the Code, or any successor provision. To the extent that Incentive
         Stock Options are first exercisable by a Participant in excess of such
         limitation, the excess shall be considered Non-Qualified Stock Options.

                  (e) TEN PERCENT OWNERS. An Incentive Stock Option shall be
         granted to any individual who, at the date of grant, owns stock
         possessing more than ten percent of the total combined voting power of
         all classes of Stock of the Company only if such Option is granted at a
         price that is not less



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         than 110% of Fair Market Value on the date of grant and the Option is
         exercisable for no more than five years from the date of grant.

                  (f) EXPIRATION OF INCENTIVE STOCK OPTIONS. No Award of an
         Incentive Stock Option may be made pursuant to this Plan after the
         tenth anniversary of the Effective Date.

                  (g) RIGHT TO EXERCISE. During a Participant's lifetime, an
         Incentive Stock Option may be exercised only by the Participant.

                ARTICLE 8    STOCK APPRECIATION RIGHTS

                8.1   GRANT OF SARs. The Committee is authorized to grant SARs
to Participants on the following terms and conditions:

                  (a) RIGHT TO PAYMENT. Upon the exercise of a Stock
         Appreciation Right, the Participant to whom it is granted has the right
         to receive the excess, if any, of:

                           (1) The Fair Market Value of a share of Stock on the
                  date of exercise; over

                           (2) The grant price of the Stock Appreciation Right
                  as determined by the Committee, which shall not be less than
                  the Fair Market Value of a share of Stock on the date of grant
                  in the case of any SAR related to any Incentive Stock Option.

                  (b) OTHER TERMS. All awards of Stock Appreciation Rights shall
         be evidenced by an Award Agreement. The terms, methods of exercise,
         methods of settlement, form of consideration payable in settlement, and
         any other terms and conditions of any Stock Appreciation Right shall be
         determined by the Committee at the time of the grant of the Award and
         shall be reflected in the Award Agreement.

                ARTICLE 9    PERFORMANCE SHARES

                9.1   GRANT OF PERFORMANCE SHARES. The Committee is authorized
to grant Performance Shares to Participants on such terms and conditions as may
be selected by the Committee. The Committee shall have the complete discretion
to determine the number of Performance Shares granted to each Participant. All
Awards of Performance Shares shall be evidenced by an Award Agreement.

                9.2   RIGHT TO PAYMENT. A grant of Performance Shares gives the
Participant rights, valued as determined by the Committee, and payable to, or
exercisable




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by, the Participant to whom the Performance Shares are granted, in whole or in
part, as the Committee shall establish at grant or thereafter. The Committee
shall set performance goals and other terms or conditions to payment of the
Performance Shares in its discretion which, depending on the extent to which
they are met, will determine the number and value of Performance Shares that
will be paid to the Participant.

                9.3   OTHER TERMS. Performance Shares may be payable in cash,
Stock, or other property, and have such other terms and conditions as determined
by the Committee and reflected in the Award Agreement.

                ARTICLE 10   RESTRICTED STOCK AWARDS

                10.1   GRANT OF RESTRICTED STOCK. The Committee is authorized to
make Awards of Restricted Stock to Participants in such amounts and subject to
such terms and conditions as may be selected by the Committee. All Awards of
Restricted Stock shall be evidenced by a Restricted Stock Award Agreement.

                10.2   ISSUANCE AND RESTRICTIONS. Restricted Stock shall be
subject to such restrictions on transferability and other restrictions as the
Committee may impose (including, without limitation, limitations on the right to
vote Restricted Stock or the right to receive dividends on the Restricted
Stock). These restrictions may lapse separately or in combination at such times,
under such circumstances, in such installments, or otherwise, as the Committee
determines at the time of the grant of the Award or thereafter.

                10.3   FORFEITURE. Except as otherwise determined by the
Committee at the time of the grant of the Award or thereafter, upon termination
of employment during the applicable restriction period, Restricted Stock that is
at that time subject to restrictions shall be forfeited, provided, however, that
the Committee may provide in any Restricted Stock Award Agreement that
restrictions or forfeiture conditions relating to Restricted Stock will be
waived in whole or in part in the event of terminations resulting from specified
causes, and the Committee may in other cases waive in whole or in part
restrictions or forfeiture conditions relating to Restricted Stock.

                10.4   CERTIFICATES FOR RESTRICTED STOCK. Restricted Stock
granted under the Plan may be evidenced in such manner as the Committee shall
determine. If certificates representing shares of Restricted Stock are
registered in the name of the Participant, certificates must bear an appropriate
legend referring to the terms, conditions, and restrictions applicable to such
Restricted Stock, and the Company may, at its discretion, retain physical
possession of the certificate until such time as all applicable restrictions
lapse.


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                ARTICLE 11  PERFORMANCE-BASED AWARDS

                11.1   PURPOSE. The purpose of this Article 11 is to provide the
Committee the ability to qualify the Performance Share Awards under Article 9
and the Restricted Stock Awards under Article 10 as "performance-based
compensation" under Section 162(m) of the Code. If the Committee, in its
discretion, decides to grant a Performance-Based Award to a Covered Employee,
the provisions of this Article 11 shall control over any contrary provision
contained in Articles 9 or 10.

                11.2   APPLICABILITY. This Article 11 shall apply only to those
Covered Employees selected by the Committee to receive Performance-Based Awards.
The Committee may, in its discretion, grant Restricted Stock Awards or
Performance Share Awards to Covered Employees that do not satisfy the
requirements of this Article 11. The designation of a Covered Employee as a
Participant for a Performance Period shall not in any manner entitle the
Participant to receive an Award for the period. Moreover, designation of a
Covered Employee as a Participant for a particular Performance Period shall not
require designation of such Covered Employee as a Participant in any subsequent
Performance Period and designation of one Covered Employee as a Participant
shall not require designation of any other Covered Employees as a Participant in
such period or in any other period.

                11.3   DISCRETION OF COMMITTEE WITH RESPECT TO PERFORMANCE
AWARDS. With regard to a particular Performance Period, the Committee shall have
full discretion to select the length of such Performance Period, the type of
Performance-Based Awards to be issued, the kind and/or level of the Performance
Goal, and whether the Performance Goal is to apply to the Company, a Subsidiary
or any division or business unit thereof.

                11.4   PAYMENT OF PERFORMANCE AWARDS. Unless otherwise provided
in the relevant Award Agreement, a Participant must be employed by the Company
or a Subsidiary on the last day of the Performance Period to be eligible for a
Performance Award for such Performance Period. Furthermore, a Participant shall
be eligible to receive payment under a Performance-Based Award for a Performance
Period only if the Performance Goals for such period are achieved.

                In determining the actual size of an individual
Performance-Based Award, the Committee may reduce or eliminate the amount of the
Performance-Based Award earned for the Performance Period, if in its sole and
absolute discretion, such reduction or elimination is appropriate.

                11.5   MAXIMUM AWARD PAYABLE. The maximum Performance-Based
Award payable to any one Participant under the Plan for a Performance Period is
600,000 shares of Stock, or in the event the Performance-Based Award is paid in
cash, such maximum Performance-Based Award shall be determined by multiplying
600,000 by the



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Fair Market Value of one share of Stock as of the date of grant of the
Performance-Based Award.

                ARTICLE 12    NONEMPLOYEE DIRECTOR RESTRICTED STOCK GRANTS

                12.1   INITIAL GRANT OF RESTRICTED STOCK. Each individual who is
a Nonemployee Director on the Grant Date shall be granted that number of shares
of restricted stock equal to the number derived by dividing 50,000 by the Fair
Market Value per share of Stock on such Grant Date.

                12.2   SUBSEQUENT GRANTS OF RESTRICTED STOCK. Each individual
who, after the Effective Date, first becomes a Nonemployee Director shall be
granted that number of shares of restricted stock equal to the number derived by
dividing 50,000 by the Fair Market Value per share of Stock on the Grant Date.

                12.3   RESTRICTED STOCK AGREEMENT. Each Non-Employee Director
Restricted Stock Grant shall be evidenced by an Award Agreement that will not
include any terms or conditions that are inconsistent with the terms and
conditions of the Plan.

                12.4   NONTRANSFERABILITY OF RESTRICTED STOCK. The shares of
restricted stock granted under this Article 12 may not be sold, transferred,
pledged, assigned, or otherwise alienated until the end of the applicable period
of restriction.

                12.5   PERIOD OF RESTRICTION. Restricted stock granted at each
Grant Date shall be deemed a separate grant. The period of restriction for each
grant of shares of restricted stock under this Article 12 shall expire on the
date the Non-Employee Director Restricted Stock Grant vests in accordance with
the schedule below.

<TABLE>
<CAPTION>
================================================================================

   PERCENTAGE OF SHARES IN GRANT BECOME              DATE RESTRICTED STOCK
               UNRESTRICTED                               GRANT VESTS
--------------------------------------------------------------------------------

<S>                                                <C>
                First 34%                          First anniversary of the
                                                          Grant Date

                Second 33%                         Second anniversary of the
                                                          Grant Date

                Third 33%                          Third anniversary of the
                                                          Grant Date
</TABLE>



                12.6   CERTIFICATE LEGEND. Any certificate representing shares
of restricted stock granted pursuant to the Plan shall bear a legend
substantially in the form that follows:


                                       13
<PAGE>   14
                         "The sale or other transfer of the shares of Stock
                         represented by this certificate, whether voluntary,
                         involuntary, or by operation of law, is subject to
                         certain restrictions on transfer as set forth in the
                         Cygnet Financial Corporation 1998 Stock Incentive Plan,
                         and the corresponding Award Agreement. A copy of the
                         Plan and the Agreement may be obtained from the
                         Secretary of Cygnet Financial Corporation."

                12.7   REMOVAL OF RESTRICTIONS. Except as otherwise provided in
the Plan, shares of restricted stock covered by each Non-Employee Director
Restricted Stock Grant made under the Plan shall become freely transferable by
the director after the last day of the period of restriction. Once the shares
are released from the restrictions, the director shall be entitled to have the
legend required by Section 12.6 removed from his or her Stock certificate. All
rights with respect to the restricted stock granted to a director under the Plan
shall be available during his or her lifetime only to such director.

                12.8   VOTING RIGHTS. During the period of restriction,
directors holding shares of restricted stock granted hereunder shall have voting
rights with respect to those shares of Stock.

                12.9   DIVIDENDS AND OTHER DISTRIBUTIONS. During the period of
restriction, directors holding shares of restricted stock granted hereunder
shall be entitled to receive any dividend or other distribution paid with
respect to those shares while they are so held.

                12.10   TERMINATION OF SERVICE ON BOARD. If a Participant's
service on the Board terminates for any reason before the end of a period of
restriction with respect to any Non-Employee Director Restricted Stock Grant,
the restricted stock that is subject to a period of restriction shall be
forfeited (and will be again available for grant under the Plan).


                ARTICLE 13    PROVISIONS APPLICABLE TO AWARDS

                13.1   STAND-ALONE, TANDEM, AND SUBSTITUTE AWARDS. Awards
granted under the Plan may, in the discretion of the Committee, be granted
either alone or in addition to, in tandem with, or in substitution for, any
other Award granted under the Plan. If an Award is granted in substitution for
another Award, the Committee may require the surrender of such other Award in
consideration of the grant of the new Award. Awards granted in addition to or in
tandem with other Awards may be granted either at the same time as or at a
different time from the grant of such other Awards.


                                       14
<PAGE>   15
                13.2   EXCHANGE PROVISIONS. The Committee may at any time offer
to exchange or buy out any previously granted Award for a payment in cash,
Stock, or another Award (subject to Section 13.1), based on the terms and
conditions the Committee determines and communicates to the Participant at the
time the offer is made.

                13.3   TERM OF AWARD. The term of each Award shall be for the
period as determined by the Committee, provided that in no event shall the term
of any Incentive Stock Option or a Stock Appreciation Right granted in tandem
with the Incentive Stock Option exceed a period of ten years from the date of
its grant.

                13.4   FORM OF PAYMENT FOR AWARDS. Subject to the terms of the
Plan and any applicable law or Award Agreement, payments or transfers to be made
by the Company or a Subsidiary on the grant or exercise of an Award may be made
in such forms as the Committee determines at or after the time of grant,
including without limitation, cash, Stock, other Awards, or other property, or
any combination, and may be made in a single payment or transfer, in
installments, or on a deferred basis, in each case determined in accordance with
rules adopted by, and at the discretion of, the Committee.

                13.5   LIMITS ON TRANSFER. No right or interest of a Participant
in any Award may be pledged, encumbered, or hypothecated to or in favor of any
party other than the Company or a Subsidiary, or shall be subject to any lien,
obligation, or liability of such Participant to any other party other than the
Company or a Subsidiary. Except as otherwise provided by the Committee, no Award
shall be assignable or transferable by a Participant other than by will or the
laws of descent and distribution.

                13.6   BENEFICIARIES. Notwithstanding Section 13.5, a
Participant may, in the manner determined by the Committee, designate a
beneficiary to exercise the rights of the Participant and to receive any
distribution with respect to any Award upon the Participant's death. A
beneficiary, legal guardian, legal representative, or other person claiming any
rights under the Plan is subject to all terms and conditions of the Plan and any
Award Agreement applicable to the Participant, except to the extent the Plan and
Award Agreement otherwise provide, and to any additional restrictions deemed
necessary or appropriate by the Committee. If the Participant is married, a
designation of a person other than the Participant's spouse as his beneficiary
with respect to more than 50 percent of the Participant's interest in the Award
shall not be effective without the written consent of the Participant's spouse.
If no beneficiary has been designated or survives the Participant, payment shall
be made to the person entitled thereto under the Participant's will or the laws
of descent and distribution. Subject to the foregoing, a beneficiary designation
may be changed or revoked by a Participant at any time provided the change or
revocation is filed with the Committee.

                13.7   STOCK CERTIFICATES. All Stock certificates delivered
under the Plan are subject to any stop-transfer orders and other restrictions as
the Committee deems necessary or advisable to comply with Federal or state
securities laws, rules and regulations and the rules of any national securities
exchange or automated quotation



                                       15
<PAGE>   16
system on with the Stock is listed, quoted, or traded. The Committee may place
legends on any Stock certificate to reference restrictions applicable to the
Stock.

                13.8   ACCELERATION UPON A CHANGE OF CONTROL. If a Change of
Control occurs, all outstanding Options, Stock Appreciation Rights, and other
Awards shall become fully exercisable and all restrictions on outstanding Awards
shall lapse, except in the event that the surviving or resulting entity agrees
to assume the Awards on terms and conditions that substantially preserve the
Participant's rights and benefits of the Award then outstanding. To the extent
that this provision causes Incentive Stock Options to exceed the dollar
limitation set forth in Section 7.2(d), the excess Options shall be deemed to be
Non-Qualified Stock Options. Upon, or in anticipation of, such an event, the
Committee may cause every Award outstanding hereunder to terminate at a specific
time in the future and shall give each Participant the right to exercise Awards
during a period of time as the Committee, in its sole and absolute discretion,
shall determine, except in the event that the surviving or resulting entity
agrees to assume the Awards on terms and conditions that substantially preserve
the Participant's rights and benefits of the Award then outstanding.

                ARTICLE 14    CHANGES IN CAPITAL STRUCTURE

                14.1   GENERAL. In the event a stock dividend is declared upon
the Stock, the shares of Stock then subject to each Award (and the number of
shares subject thereto) shall be increased proportionately without any change in
the aggregate purchase price therefor. In the event the Stock shall be changed
into or exchanged for a different number or class of shares of Stock or of
another corporation, whether through reorganization, recapitalization, stock
split-up, combination of shares, merger or consolidation, there shall be
substituted for each such share of Stock then subject to each Award the number
and class of shares of Stock into which each outstanding share of Stock shall be
so exchanged, all without any change in the aggregate purchase price for the
shares then subject to each Award.

                ARTICLE 15    AMENDMENT, MODIFICATION AND TERMINATION

                15.1   AMENDMENT, MODIFICATION AND TERMINATION. With the
approval of the Board, at any time and from time to time, the Committee may
terminate, amend or modify the Plan; provided, however, that to the extent
necessary and desirable to comply with any applicable law, regulation, or stock
exchange rule, the Company shall obtain shareholder approval of any Plan
amendment in such a manner and to such a degree as required.

                15.2   AWARDS PREVIOUSLY GRANTED. No termination, amendment, or
modification of the Plan shall adversely affect in any material way any Award
previously granted under the Plan, without the written consent of the
Participant.


                                       16
<PAGE>   17
                ARTICLE 16    GENERAL PROVISIONS

                16.1   NO RIGHTS TO AWARDS. No Participant , employee, or other
person shall have any claim to be granted any Award under the Plan, and neither
the Company nor the Committee is obligated to treat Participants, employees, and
other persons uniformly.

                16.2   NO STOCKHOLDERS RIGHTS. No Award gives the Participant
any of the rights of a stockholder of the Company unless and until shares of
Stock are in fact issued to such person in connection with such Award.

                16.3   WITHHOLDING. The Company or any Subsidiary shall have the
authority and the right to deduct or withhold, or require a Participant to remit
to the Company, an amount sufficient to satisfy Federal, state, and local taxes
(including the Participant's FICA obligation) required by law to be withheld
with respect to any taxable event arising as a result of this Plan.

                16.4   NO RIGHT TO EMPLOYMENT. Nothing in the Plan or any Award
Agreement shall interfere with or limit in any way the right of the Company or
any Subsidiary to terminate any Participant's employment at any time, nor confer
upon any Participant any right to continue in the employ of the Company or any
Subsidiary.

                16.5   UNFUNDED STATUS OF AWARDS. The Plan is intended to be an
"unfunded" plan for incentive compensation. With respect to any payments not yet
made to a Participant pursuant to an Award, nothing contained in the Plan or any
Award Agreement shall give the Participant any rights that are greater than
those of a general creditor of the Company or any Subsidiary.

                16.6   INDEMNIFICATION. To the extent allowable under applicable
law, each member of the Committee or of the Board shall be indemnified and held
harmless by the Company from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by such member in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action or failure
to act under the Plan and against and from any and all amounts paid by him or
her in satisfaction of judgment in such action, suit, or proceeding against him
or her provided he or she gives the Company an opportunity, at its own expense,
to handle and defend the same before he or she undertakes to handle and defend
it on his or her own behalf. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such persons may be
entitled under the Company's Articles of Incorporation or By-Laws, as a matter
of law, or otherwise, or any power that the Company may have to indemnify them
or hold them harmless.

                16.7   RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan
shall be taken into account in determining any benefits under any pension,
retirement,



                                       17
<PAGE>   18
savings, profit sharing, group insurance, welfare or other benefit plan of the
Company or any Subsidiary.

                16.8   EXPENSES. The expenses of administering the Plan shall be
borne by the Company and its Subsidiaries.

                16.9   TITLES AND HEADINGS. The titles and headings of the
Sections in the Plan are for convenience of reference only, and in the event of
any conflict, the text of the Plan, rather than such titles or headings, shall
control.

                16.10   FRACTIONAL SHARES. No fractional shares of stock shall
be issued and the Committee shall determine, in its discretion, whether cash
shall be given in lieu of fractional shares or whether such fractional shares
shall be eliminated by rounding up or down as deemed appropriate by the
Committee.

                16.11   SECURITIES LAW COMPLIANCE. With respect to any person
who is, on the relevant date, obligated to file reports under Section 16 of the
Exchange Act, transactions under this Plan are intended to comply with all
applicable conditions of Rule 16b-3 or its successors under the Exchange Act. To
the extent any provision of the Plan or action by the Committee fails to so
comply, it shall be void to the extent permitted by law and voidable as deemed
advisable by the Committee.

                16.12   GOVERNMENT AND OTHER REGULATIONS. The obligation of the
Company to make payment of awards in Stock or otherwise shall be subject to all
applicable laws, rules, and regulations, and to such approvals by government
agencies as may be required. The Company shall be under no obligation to
register under the Securities Act of 1933, as amended (the "1933 Act"), any of
the shares of Stock paid under the Plan. If the shares paid under the Plan may
in certain circumstances be exempt from registration under the 1933 Act, the
Company may restrict the transfer of such shares in such manner as it deems
advisable to ensure the availability of any such exemption.

                16.13   GOVERNING LAW. The Plan and all Award Agreements shall
be construed in accordance with and governed by the laws of the State of
Arizona.


                                       18