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                                                                  EXHIBIT 10.15

                       THE 1999 EQUITY PARTICIPATION PLAN

                                       OF

                     WILSHIRE FINANCIAL SERVICES GROUP INC.

                  Wilshire Financial Services Group Inc., a Delaware
corporation, has adopted The 1999 Equity Participation Plan of Wilshire
Financial Services Group Inc. (the "Plan"), effective September 30, 1999, for
the benefit of its eligible employees and directors.

                  The purposes of the Plan are as follows:

                  (1) To provide an additional incentive for directors and key
Employees (as such terms are defined below) to further the growth, development
and financial success of the Company by personally benefiting through the
ownership of Company stock and/or rights which recognize such growth,
development and financial success.

                  (2) To enable the Company to obtain and retain the services of
directors and key Employees considered essential to the long range success of
the Company by offering them an opportunity to own stock in the Company and/or
rights which will reflect the growth, development and financial success of the
Company.

                                   ARTICLE I.

                                   DEFINITIONS

                  1.1. GENERAL.

                  Wherever the following terms are used in the Plan they shall
have the meanings specified below, unless the context clearly indicates
otherwise.

                  1.2. ADMINISTRATOR.

                  "Administrator" shall mean the entity that conducts the
general administration of the Plan as provided herein. With reference to the
administration of the Plan with respect to Options granted to Independent
Directors, the term "Administrator" shall refer to the Board. With reference to
the administration of the Plan with respect to any other Award, the term
"Administrator" shall refer to the Committee unless the Board has assumed the
authority for administration of the Plan generally as provided in Section 10.1.

                  1.3.     AWARD.
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                  "Award" shall mean an Option, a Restricted Stock award, a
Performance Award or a Stock Payment award which may be awarded or granted under
the Plan (collectively, "Awards").

                  1.4. AWARD AGREEMENT.

                  "Award Agreement" shall mean a written agreement executed by
an authorized officer of the Company and the Holder which shall contain such
terms and conditions with respect to an Award as the Administrator shall
determine, consistent with the Plan.



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                  1.5.     AWARD LIMIT.

                  "Award Limit" shall mean 400,000 shares of Common Stock, as
adjusted pursuant to Section 10.3 of the Plan.

                  1.6.     BOARD.

                  "Board" shall mean the Board of Directors of the Company.

                  1.7.     CHANGE IN CONTROL.

                  shall mean a change in ownership or control of the Company
effected through any of the following transactions:

                           (a) any person or related group of persons (other
than the Company or a person that, prior to such transaction, directly or
indirectly controls, is controlled by, or is under common control with, the
Company) directly or indirectly acquires beneficial ownership (within the
meaning of Rule 13d-3 under the Exchange Act) of securities possessing more than
ninety percent (90%) of the total combined voting power of the Company's
outstanding securities pursuant to a tender or exchange offer made directly to
the Company's stockholders which the Board does not recommend such stockholders
to accept; or

                           (b) there is a change in the composition of the Board
over a period of thirty-six (36) consecutive months (or less) such that a
majority of the Board members (rounded up to the nearest whole number) ceases,
by reason of one or more proxy contests for the election of Board members, to be
comprised of individuals who either (i) have been Board members continuously
since the beginning of such period or (ii) have been elected or nominated for
election as Board members during such period by at least a majority of the Board
members described in clause (i) who were still in office at the time such
election or nomination was approved by the Board; or

                           (c) the stockholders of the Company approve a merger
or consolidation of the Company with any other corporation (or other entity),
other than a merger or consolidation which would result in the voting securities
of the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) more than 66-2/3% of the combined voting power of the
voting securities of the Company or such surviving entity outstanding
immediately after such merger or consolidation; provided, however, that a merger
or consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no person acquires more than 25% of the combined
voting power of the Company's then outstanding securities shall not constitute a
Change in Control; or

                           (d) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets.


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                  1.8.     CODE.

        "Code" shall mean the Internal Revenue Code of 1986, as amended.

                  1.9.     COMMITTEE.

                           "Committee" shall mean the Compensation Committee of
the Board, or another committee or subcommittee of the Board, appointed as
provided in Section 9.1.

                  1.10. COMMON STOCK.

                           "Common Stock" shall mean the common stock of the
Company, par value $0.01 per share, and any equity security of the Company
issued or authorized to be issued in the future, but excluding any preferred
stock and any warrants, options or other rights to purchase Common Stock.

                  1.11.    COMPANY.

                           "Company" shall mean Wilshire Financial Services
Group Inc., a Delaware corporation.

                  1.12.    DIRECTOR.

                           "Director" shall mean a member of the Board or an
FBBH Director, as the context may require.

                  1.13.    DRO.

                           "DRO" shall mean a domestic relations order as
defined by the Code or Title I of the Employee Retirement Income Security Act of
1974, as amended, or the rules thereunder.


                  1.14.    EMPLOYEE.

                           "Employee" shall mean any officer or other employee
(as defined in accordance with Section 3401(c) of the Code) of the Company, or
of any corporation which is a Subsidiary.

                  1.15.    EXCHANGE ACT.

                           "Exchange Act" shall mean the Securities Exchange Act
of 1934, as amended.

                  1.16. FAIR MARKET VALUE.

                           "Fair Market Value" of a share of Common Stock as of
a given date shall be (a) the price of a share of Common Stock on the principal
exchange on which shares of Common Stock are then trading, if any (or as
reported on any composite index which includes such principal exchange)
(calculated using the trailing average of the listed high and low trading price
for the preceding trading days), or (b) if Common Stock is not traded on an
exchange but is

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quoted on NASDAQ or a successor quotation system, the mean between the closing
representative bid and asked prices for the Common Stock on the trading day
previous to such date as reported by NASDAQ or such successor quotation system;
or (c) if Common Stock is not publicly traded on an exchange and not quoted on
NASDAQ or a successor quotation system, the Fair Market Value of a share of
Common Stock as established by the Administrator acting in good faith.

                  1.17.    FBBH.

                           "FBBH" shall mean First Bank of Beverly Hills, N.A.,
a Subsidiary of the Company.

                  1.18.    FBBH DIRECTOR.

                           "FBBH Director" shall mean a member of the board of
directors of FBBH.

                  1.19.    HOLDER.

                           "Holder" shall mean a person who has been granted or
awarded an Award.

                  1.20. INCENTIVE STOCK OPTION.

                           "Incentive Stock Option" shall mean an option which
conforms to the applicable provisions of Section 422 of the Code and which is
designated as an Incentive Stock Option by the Administrator.

                  1.21.    INDEPENDENT COMPANY DIRECTOR.

                           "Independent Company Director" shall mean a member of
the Board who is not an Employee of the Company.

                  1.22.    INDEPENDENT DIRECTOR.

                           "Independent Director" shall mean an Independent
Company Director or an Independent FBBH Director, as the context may require.

                  1.23.    INDEPENDENT FBBH DIRECTOR.

                           "Independent FBBH Director" shall mean a member of
the board of directors of FBBH who is neither an Employee nor an Independent
Company Director.

                  1.24.    NON-QUALIFIED STOCK OPTION.

                           "Non-Qualified Stock Option" shall mean an Option
which is not designated as an Incentive Stock Option by the Administrator.

                  1.25. OPTION.

                           "Option" shall mean a stock option granted under
Article IV of the Plan. An Option granted under the Plan shall, as determined by
the Administrator, be either a Non-Qualified Stock Option or an Incentive Stock
Option; PROVIDED, HOWEVER, that Options granted to Independent Directors shall
be Non-Qualified Stock Options.


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                  1.26. PERFORMANCE AWARD.

                           "Performance Award" shall mean a stock bonus or other
performance or incentive award that is paid in Common Stock or a combination of
cash and Common Stock, awarded under Article VIII of the Plan.

                  1.27. PERFORMANCE CRITERIA.

                           "Performance Criteria" shall mean the following
business criteria with respect to the Company, any Subsidiary or any division or
operating unit: (a) net income, (b) pre-tax income, (c) operating income, (d)
cash flow, (e) earnings per share, (f) return on equity, (g) return on invested
capital or assets, (h) cost reductions or savings, (i) funds from operations,
(j) appreciation in the fair market value of Common Stock and (k) earnings
before any one or more of the following items: interest, taxes, depreciation or
amortization.

                  1.28.    PLAN.

                           "Plan" shall mean The 1999 Equity Participation Plan
of Wilshire Financial Services Group Inc.

                  1.29.    REORGANIZATION.

                           "Reorganization" shall mean the prepackaged plan of
reorganization filed with the Bankruptcy Court for the State of Delaware on
March 3, 1999.

                  1.30.    RESTRICTED STOCK.

                           "Restricted Stock" shall mean Common Stock awarded
under Article VII of the Plan.

                  1.31. RULE 16B-3.

                           "Rule 16b-3" shall mean that certain Rule 16b-3 under
the Exchange Act, as such Rule may be amended from time to time.

                  1.32. SECTION 162(m) PARTICIPANT.

                           "Section 162(m) Participant" shall mean any key
Employee designated by the Administrator as a key Employee whose compensation
for the fiscal year in which the key Employee is so designated or a future
fiscal year may be subject to the limit on deductible compensation imposed by
Section 162(m) of the Code.

                  1.33.    SECURITIES ACT.

                           "Securities Act" shall mean the Securities Act of
1933, as amended.

                  1.34. STOCK PAYMENT.


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                           "Stock Payment" shall mean (a) a payment in the form
of shares of Common Stock, or (b) an option or other right to purchase shares of
Common Stock, as part of a deferred compensation arrangement, made in lieu of
all or any portion of the compensation, including without limitation, salary,
bonuses and commissions, that would otherwise become payable to a key Employee
in cash, awarded under Article VIII of the Plan.

                  1.35. SUBSIDIARY.

                           "Subsidiary" shall mean any corporation in an
unbroken chain of corporations beginning with the Company if each of the
corporations other than the last corporation in the unbroken chain then owns
stock possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.

                  1.36. SUBSTITUTE AWARD.

                           "Substitute Award" shall mean an Option granted under
this Plan upon the assumption of, or in substitution for, outstanding equity
awards previously granted by a company or other entity in connection with a
corporate transaction, such as a merger, combination, consolidation or
acquisition of property or stock; PROVIDED, HOWEVER, that in no event shall the
term "Substitute Award" be construed to refer to an award made in connection
with the cancellation and repricing of an Option.

                  1.37. TERMINATION OF DIRECTORSHIP.

                           "Termination of Directorship" shall mean the time
when a Holder who is an Independent Director ceases to be a Director for any
reason, including, but not by way of limitation, a termination by resignation,
failure to be elected, death or retirement. The Board, in its sole and absolute
discretion, shall determine the effect of all matters and questions relating to
Termination of Directorship with respect to Independent Directors.

                  1.38. TERMINATION OF EMPLOYMENT.

                           "Termination of Employment" shall mean the time when
the employee-employer relationship between a Holder and the Company or any
Subsidiary is terminated for any reason, with or without cause, including, but
not by way of limitation, a termination by resignation, discharge, death,
disability or retirement; but excluding (a) terminations where there is a
simultaneous reemployment or continuing employment of a Holder by the Company or
any Subsidiary, (b) at the discretion of the Administrator, terminations which
result in a temporary severance of the employee-employer relationship, and (c)
at the discretion of the Administrator, terminations which are followed by the
simultaneous establishment of a consulting relationship by the Company or a
Subsidiary with the former employee. The Administrator, in its absolute
discretion, shall determine the effect of all matters and questions relating to
Termination of Employment, including, but not by way of limitation, the question
of whether a Termination of Employment resulted from a discharge for good cause,
and all questions of whether a particular leave of absence constitutes a
Termination of Employment; PROVIDED, HOWEVER, that, with respect


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to Incentive Stock Options, unless otherwise determined by the Administrator in
its discretion, a leave of absence, change in status from an employee to an
independent contractor or other change in the employee-employer relationship
shall constitute a Termination of Employment if, and to the extent that, such
leave of absence, change in status or other change interrupts employment for the
purposes of Section 422(a)(2) of the Code and the then applicable regulations
and revenue rulings under said Section.

                                   ARTICLE II.

                             SHARES SUBJECT TO PLAN

                  2.1.     SHARES SUBJECT TO PLAN.

                           (a) The shares of stock subject to Awards shall
         initially be shares of the Company's Common Stock, par value $0.01 per
         share. The aggregate number of such shares which may be issued upon
         exercise of such Options or rights or upon any such awards under the
         Plan shall not exceed Two Million Eight Hundred Thousand (2,800,000) of
         which no more than Five Hundred Thousand (500,000) shares may be issued
         as Restricted Stock or Performance Awards. The shares of Common Stock
         issuable upon exercise of such Options or rights or upon any such
         awards may be either previously authorized but unissued shares or
         treasury shares.

                           (b) The maximum number of shares which may be subject
         to Awards, granted under the Plan to any individual in any fiscal year
         shall not exceed the Award Limit. To the extent required by Section
         162(m) of the Code, shares subject to Options which are canceled
         continue to be counted against the Award Limit.

                  2.2. ADD-BACK OF OPTIONS AND OTHER RIGHTS.

                           If any Option, or other right to acquire shares of
Common Stock under any other Award under the Plan, expires or is canceled
without having been fully exercised, or is exercised in whole or in part for
cash as permitted by the Plan, the number of shares subject to such Option or
other right but as to which such Option or other right was not exercised prior
to its expiration, cancellation or exercise may again be optioned, granted or
awarded hereunder, subject to the limitations of Section 2.1. Furthermore, any
shares subject to Awards which are adjusted pursuant to Section 10.3 and become
exercisable with respect to shares of stock of another corporation shall be
considered canceled and may again be optioned, granted or awarded hereunder,
subject to the limitations of Section 2.1. Shares of Common Stock which are
delivered by the Holder or withheld by the Company upon the exercise of any
Award under the Plan, in payment of the exercise price thereof or tax
withholding thereon, may again be optioned, granted or awarded hereunder,
subject to the limitations of Section 2.1. If any shares of Restricted Stock are
surrendered by the Holder or repurchased by the Company pursuant to Section 7.4
or 7.5 hereof, such shares may again be optioned, granted or awarded hereunder,
subject to the limitations of Section 2.1. Notwithstanding the provisions of
this Section 2.2, no shares of Common Stock may again be optioned, granted or
awarded if such action would cause


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an Incentive Stock Option to fail to qualify as an incentive stock option under
Section 422 of the Code.

                                  ARTICLE III.

                               GRANTING OF AWARDS

                  3.1. AWARD AGREEMENT.

                           Each Award shall be evidenced by an Award Agreement.
Award Agreements evidencing Awards intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code shall contain such
terms and conditions as may be necessary to meet the applicable provisions of
Section 162(m) of the Code. Award Agreements evidencing Incentive Stock Options
shall contain such terms and conditions as may be necessary to meet the
applicable provisions of Section 422 of the Code.

                  3.2. PROVISIONS APPLICABLE TO SECTION 162(M) PARTICIPANTS.

                           (a) The Committee, in its discretion, may determine
         whether an Award is to qualify as performance-based compensation as
         described in Section 162(m)(4)(C) of the Code.

                           (b) Notwithstanding anything in the Plan to the
         contrary, the Committee may grant any Award to a Section 162(m)
         Participant, including Restricted Stock the restrictions with respect
         to which lapse upon the attainment of performance goals which are
         related to one or more of the Performance Criteria and any performance
         or incentive award described in Article VIII that vests or becomes
         exercisable or payable upon the attainment of performance goals which
         are related to one or more of the Performance Criteria.

                           (c) To the extent necessary to comply with the
         performance-based compensation requirements of Section 162(m)(4)(C) of
         the Code, with respect to any Award granted under Articles VII and VIII
         which may be granted to one or more Section 162(m) Participants, no
         later than ninety (90) days following the commencement of any fiscal
         year in question or any other designated fiscal period or period of
         service (or such other time as may be required or permitted by Section
         162(m) of the Code), the Committee shall, in writing, (i) designate one
         or more Section 162(m) Participants, (ii) select the Performance
         Criteria applicable to the fiscal year or other designated fiscal
         period or period of service, (iii) establish the various performance
         targets, in terms of an objective formula or standard, and amounts of
         such Awards, as applicable, which may be earned for such fiscal year or
         other designated fiscal period or period of service and (iv) specify
         the relationship between Performance Criteria and the performance
         targets and the amounts of such Awards, as applicable, to be earned by
         each Section 162(m) Participant for such fiscal year or other
         designated fiscal period or period of service. Following the completion
         of each fiscal year or other designated fiscal period or period of
         service, the Committee shall certify in writing whether the applicable
         performance targets have been achieved for such fiscal year or other
         designated fiscal period or period of


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         service. In determining the amount earned by a Section 162(m)
         Participant, the Committee shall have the right to reduce (but not to
         increase) the amount payable at a given level of performance to take
         into account additional factors that the Committee may deem relevant to
         the assessment of individual or corporate performance for the fiscal
         year or other designated fiscal period or period of service.

                           (d) Furthermore, notwithstanding any other provision
         of the Plan or any Award which is granted to a Section 162(m)
         Participant and is intended to qualify as performance-based
         compensation as described in Section 162(m)(4)(C) of the Code shall be
         subject to any additional limitations set forth in Section 162(m) of
         the Code (including any amendment to Section 162(m) of the Code) or any
         regulations or rulings issued thereunder that are requirements for
         qualification as performance-based compensation as described in Section
         162(m)(4)(C) of the Code, and the Plan shall be deemed amended to the
         extent necessary to conform to such requirements.

                  3.3. LIMITATIONS APPLICABLE TO SECTION 16 PERSONS.

                       Notwithstanding any other provision of the Plan, the
Plan, and any Award granted or awarded to any individual who is then subject to
Section 16 of the Exchange Act, shall be subject to any additional limitations
set forth in any applicable exemptive rule under Section 16 of the Exchange Act
(including any amendment to Rule 16b-3 of the Exchange Act) that are
requirements for the application of such exemptive rule. To the extent permitted
by applicable law, the Plan and Awards granted or awarded hereunder shall be
deemed amended to the extent necessary to conform to such applicable exemptive
rule.

                  3.4. CONSIDERATION.

                       In consideration of the granting of an Award under the
Plan, the Holder shall agree, in the Award Agreement, to remain in the employ of
(or to consult for or to serve as an Independent Director of, as applicable) the
Company or any Subsidiary for a period of at least one year (or such shorter
period as may be fixed in the Award Agreement or by action of the Administrator
following grant of the Award) after the Award is granted (or, in the case of an
Independent Director, until the next annual meeting of stockholders of the
Company).

                  3.5. AT-WILL EMPLOYMENT.

                       Nothing in the Plan or in any Award Agreement hereunder
shall confer upon any Holder any right to continue in the employ of the Company
or any Subsidiary, or as a director of the Company, or shall interfere with or
restrict in any way the rights of the Company and any Subsidiary, which are
hereby expressly reserved, to discharge any Holder at any time for any reason
whatsoever, with or without cause, except to the extent expressly provided
otherwise in a written employment agreement between the Holder and the Company
and any Subsidiary.


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                                   ARTICLE IV.

                        GRANTING OF OPTIONS TO EMPLOYEES
                            AND INDEPENDENT DIRECTORS

                  4.1. ELIGIBILITY.

                  Any Employee selected by the Committee pursuant to Section
4.4(a)(i) shall be eligible to be granted an Option. Each Independent Director
of the Company shall be eligible to be granted Options at the times and in the
manner set forth in Section 4.5.

                  4.2. DISQUALIFICATION FOR STOCK OWNERSHIP.

                  No person may be granted an Incentive Stock Option under the
Plan if such person, at the time the Incentive Stock Option is granted, owns
stock possessing more than ten percent (10%) of the total combined voting power
of all classes of stock of the Company or any then existing Subsidiary or parent
corporation (within the meaning of Section 422 of the Code) unless such
Incentive Stock Option conforms to the applicable provisions of Section 422 of
the Code.

                  4.3. QUALIFICATION OF INCENTIVE STOCK OPTIONS.

                  No Incentive Stock Option shall be granted to any person who
is not an Employee.

                  4.3. GRANTING OF OPTIONS TO EMPLOYEES.

                       (a) The Committee shall from time to time, in its
absolute discretion, and subject to applicable limitations of the Plan:

                           (i) Determine which Employees are key Employees and
                  select from among the key Employees (including Employees who
                  have previously received Awards under the Plan) such of them
                  as in its opinion should be granted Options;

                           (ii) Subject to the Award Limit, determine the number
                  of shares to be subject to such Options granted to the
                  selected key Employees;

                           (iii) Subject to Section 4.3, determine whether such
                  Options are to be Incentive Stock Options or Non-Qualified
                  Stock Options and whether such Options are to qualify as
                  performance-based compensation as described in Section
                  162(m)(4)(C) of the Code; and

                           (iv) Determine the terms and conditions of such
                  Options, consistent with the Plan; PROVIDED, HOWEVER, that the
                  terms and


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                  conditions of Options intended to qualify as performance-based
                  compensation as described in Section 162(m)(4)(C) of the Code
                  shall include, but not be limited to, such terms and
                  conditions as may be necessary to meet the applicable
                  provisions of Section 162(m) of the Code.

                           (b) Upon the selection of a key Employee to be
         granted an Option, the Committee shall instruct the Secretary of the
         Company to issue the Option and may impose such conditions on the grant
         of the Option as it deems appropriate.

                           (c) Any Incentive Stock Option granted under the Plan
         may be modified by the Committee, with the consent of the Holder, to
         disqualify such Option from treatment as an "incentive stock option"
         under Section 422 of the Code.

                  4.5.     GRANTING OF OPTIONS TO INDEPENDENT DIRECTORS.

                           (a) Each person who is an Independent Company
         Director as of or following the date of the confirmation of the
         Reorganization automatically shall be granted (i) an Option to purchase
         thirty thousand (30,000) shares of Common Stock (subject to adjustment
         as provided in Section 10.3) on the date of the commencement of such
         directorship and (ii) an Option to purchase ten thousand (10,000)
         shares of Common Stock (subject to adjustment as provided in Section
         10.3) on the date of each annual meeting of stockholders at which the
         Independent Company Director is reelected to the Board. Members of the
         Board who are employees of the Company who subsequently retire from the
         Company and remain on the Board will not receive an initial Option
         grant pursuant to clause (i) of the preceding sentence, but to the
         extent that they are otherwise eligible, will receive, after retirement
         from employment with the Company, Options as described in clause (ii)
         of the preceding sentence.

                           (b) Each person who is an Independent FBBH Director
         as of or following the date of the confirmation of the Reorganization
         automatically shall be granted (i) an Option to purchase ten thousand
         (10,000) shares of Common Stock (subject to adjustment as provided in
         Section 10.3) on the date of the commencement of such directorship and
         (ii) an Option to purchase five thousand (5,000) shares of Common Stock
         (subject to adjustment as provided in Section 10.3) on the date of each
         annual meeting of the Company's stockholders. Members of the FBBH Board
         who are Employees who subsequently retire from the Company and remain
         on the FBBH Board will not receive an initial Option grant pursuant to
         clause (i) of the preceding sentence, but to the extent that they are
         otherwise eligible, will receive, after retirement from employment with
         the Company or any Subsidiary, Options as described in clause (ii) of
         the preceding sentence.

                           (c) All the foregoing Option grants authorized by
         this Section 4.5 are subject to stockholder approval of the Plan.


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                  4.6. OPTIONS IN LIEU OF CASH COMPENSATION. Options may be
granted under the Plan to Employees in lieu of cash bonuses which would
otherwise be payable to such Employees and to Independent Directors in lieu of
directors' fees which would otherwise be payable to such Independent Directors,
pursuant to such policies which may be adopted by the Administrator from time to
time.

                                   ARTICLE V.

                                TERMS OF OPTIONS

                  5.1. OPTION PRICE.

                  The price per share of the shares subject to each Option
granted to Employees shall be set by the Committee; PROVIDED, HOWEVER, that
such price shall be no less than the par value of a share of Common Stock,
unless otherwise permitted by applicable state law and:

                           (a) in the case of Options intended to qualify as
         performance-based compensation as described in Section 162(m)(4)(C) of
         the Code, such price shall not be less than 100% of the Fair Market
         Value of a share of Common Stock on the date the Option is granted;

                           (b) in the case of Incentive Stock Options such price
         shall not be less than 100% of the Fair Market Value of a share of
         Common Stock on the date the Option is granted (or the date the Option
         is modified, extended or renewed for purposes of Section 424(h) of the
         Code);

                           (c) in the case of Incentive Stock Options granted to
         an individual then owning (within the meaning of Section 424(d) of the
         Code) more than 10% of the total combined voting power of all classes
         of stock of the Company or any Subsidiary or parent corporation thereof
         (within the meaning of Section 422 of the Code), such price shall not
         be less than 110% of the Fair Market Value of a share of Common Stock
         on the date the Option is granted (or the date the Option is modified,
         extended or renewed for purposes of Section 424(h) of the Code).

                  5.2. OPTION TERM.

                  The term of an Option granted to an Employee shall be set by
the Committee in its discretion; PROVIDED, HOWEVER, that, in the case of
Incentive Stock Options, the term shall not be more than ten (10) years from the
date the Incentive Stock Option is granted, or five (5) years from the date the
Incentive Stock Option is granted if the Incentive Stock Option is granted to an
individual then owning (within the meaning of Section 424(d) of the Code) more
than 10% of the total combined voting power of all classes of stock of the
Company or any Subsidiary or parent corporation thereof (within the meaning of
Section 422 of the Code). Except as limited by requirements of Section 422 of
the Code and regulations and rulings thereunder applicable to Incentive Stock
Options, the Committee may extend the term of any outstanding Option in


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connection with any Termination of Employment of the Holder, or amend any other
term or condition of such Option relating to such a termination.

                  5.3.     OPTION VESTING

                           (a) The period during which the right to exercise, in
         whole or in part, an Option granted to an Employee vests in the Holder
         shall be set by the Committee and the Committee may determine that an
         Option may not be exercised in whole or in part for a specified period
         after it is granted; PROVIDED, HOWEVER, that, unless the Committee
         otherwise provides in the terms of the Award Agreement or otherwise, no
         Option shall be exercisable by any Holder who is then subject to
         Section 16 of the Exchange Act within the period ending six months and
         one day after the date the Option is granted. At any time after grant
         of an Option, the Committee may, in its sole and absolute discretion
         and subject to whatever terms and conditions it selects, accelerate the
         period during which an Option granted to an Employee vests.

                           (b) No portion of an Option granted to an Employee
         which is unexercisable at Termination of Employment shall thereafter
         become exercisable, except as may be otherwise provided by the
         Committee either in the Award Agreement or by action of the Committee
         following the grant of the Option.

                           (c) To the extent that the aggregate Fair Market
         Value of stock with respect to which "incentive stock options" (within
         the meaning of Section 422 of the Code, but without regard to Section
         422(d) of the Code) are exercisable for the first time by a Holder
         during any calendar year (under the Plan and all other incentive stock
         option plans of the Company and any parent or subsidiary corporation,
         within the meaning of Section 422 of the Code) of the Company, exceeds
         $100,000, such Options shall be treated as Non-Qualified Options to the
         extent required by Section 422 of the Code. The rule set forth in the
         preceding sentence shall be applied by taking Options into account in
         the order in which they were granted. For purposes of this Section
         5.3(c), the Fair Market Value of stock shall be determined as of the
         time the Option with respect to such stock is granted.

                           (d) Notwithstanding any other provision of this Plan,
         in the event of a Change in Control as defined in Section 1.7(c) that
         is or is to be accounted for as a "pooling of interests", each
         outstanding Option shall, immediately prior to the effective date of
         the Change in Control, automatically become fully exercisable for all
         of the shares of Common Stock at the time subject to such rights and
         may be exercised for any or all of those shares as fully-vested shares
         of Common Stock.

                  5.4. TERMS OF OPTIONS GRANTED TO INDEPENDENT DIRECTORS.

                           (a) The price per share of the shares subject to each
Option granted to an Independent Director shall equal 100% of the Fair Market
Value of a share of Common Stock on the date the Option is granted; PROVIDED,
HOWEVER, that the price of each share subject to each


                                       14
<PAGE>


Option granted to Independent Directors on the date of the confirmation of the
Reorganization shall equal the price per share of Common Stock calculated using
the trailing average of the listed high and low trading price for the following
twenty trading days. Options granted to Independent Directors shall become
exercisable in cumulative annual installments of 33.3% on each of the first,
second and third anniversaries of the date of Option grant and, subject to
Section 6.6, the term of each Option granted to an Independent Director shall be
ten (10) years from the date the Option is granted, except that any Option
granted to an Independent Director may by its terms become immediately
exercisable in full upon the retirement of the Independent Director in
accordance with the Company's retirement policy applicable to directors. No
portion of an Option which is unexercisable at Termination of Directorship shall
thereafter become exercisable.

                           (b) Notwithstanding any other provision of this Plan,
in the event of a Change in Control, each outstanding Award to an Independent
Director shall, immediately prior to the effective date of the Change in
Control, automatically become fully exercisable for all of the shares of Common
Stock at the time subject to such rights and may be exercised for any or all of
those shares as fully-vested shares of Common Stock.

                  5.5.     SUBSTITUTE AWARDS.

                  Notwithstanding the foregoing provisions of this Article V to
the contrary, in the case of an Option that is a Substitute Award, the price per
share of the shares subject to such Option may be less than the Fair Market
Value per share on the date of grant, PROVIDED, that the excess of:

                           (a) the aggregate Fair Market Value (as of the date
         such Substitute Award is granted) of the shares subject to the
         Substitute Award; over

                           (b) the aggregate exercise price thereof; does not
         exceed the excess of;

                           (c) the aggregate fair market value (as of the time
         immediately preceding the transaction giving rise to the Substitute
         Award, such fair market value to be determined by the Committee) of the
         shares of the predecessor entity that were subject to the grant assumed
         or substituted for by the Company; over

                           (d) the aggregate exercise price of such shares.

                                   ARTICLE VI.

                               EXERCISE OF OPTIONS

                  6.1. PARTIAL EXERCISE.

                  An exercisable Option may be exercised in whole or in part.
However, an Option shall not be exercisable with respect to fractional shares
and the Administrator may require that, by the terms of the Option, a partial
exercise be with respect to a minimum number of shares.

                                       15
<PAGE>



                  6.2. MANNER OF EXERCISE.

                  All or a portion of an exercisable Option shall be deemed
exercised upon delivery of all of the following to the Secretary of the Company
or his office:

                           (a) A written notice complying with the applicable
         rules established by the Administrator stating that the Option, or a
         portion thereof, is exercised. The notice shall be signed by the Holder
         or other person then entitled to exercise the Option or such portion of
         the Option;

                           (b) Such representations and documents as the
         Administrator, in its absolute discretion, deems necessary or advisable
         to effect compliance with all applicable provisions of the Securities
         Act and any other federal or state securities laws or regulations. The
         Administrator may, in its absolute discretion, also take whatever
         additional actions it deems appropriate to effect such compliance
         including, without limitation, placing legends on share certificates
         and issuing stop-transfer notices to agents and registrars;

                           (c) In the event that the Option shall be exercised
         pursuant to Section 10.1 by any person or persons other than the
         Holder, appropriate proof of the right of such person or persons to
         exercise the Option; and

                           (d) Full cash payment to the Secretary of the Company
         for the shares with respect to which the Option, or portion thereof, is
         exercised. However, the Administrator, may in its discretion (i) allow
         a delay in payment up to thirty (30) days from the date the Option, or
         portion thereof, is exercised; (ii) allow payment, in whole or in part,
         through the delivery of shares of Common Stock which have been owned by
         the Holder for at least six months, duly endorsed for transfer to the
         Company with a Fair Market Value on the date of delivery equal to the
         aggregate exercise price of the Option or exercised portion thereof;
         (iii) allow payment, in whole or in part, through the surrender of
         shares of Common Stock then issuable upon exercise of the Option having
         a Fair Market Value on the date of Option exercise equal to the
         aggregate exercise price of the Option or exercised portion thereof;
         (iv) allow payment, in whole or in part, through the delivery of
         property of any kind which constitutes good and valuable consideration;
         (v) allow payment, in whole or in part, through the delivery of a full
         recourse promissory note bearing interest (at no less than such rate as
         shall then preclude the imputation of interest under the Code) and
         payable upon such terms as may be prescribed by the Administrator; (vi)
         allow payment, in whole or in part, through the delivery of a notice
         that the Holder has placed a market sell order with a broker with
         respect to shares of Common Stock then issuable upon exercise of the
         Option, and that the broker has been directed to pay a sufficient
         portion of the net proceeds of the sale to the Company in satisfaction
         of the Option exercise price, PROVIDED that payment of such proceeds is
         then made to the Company upon settlement of such sale; or (vii) allow
         payment through any combination of the consideration provided in the
         foregoing subparagraphs (ii), (iii), (iv), (v) and (vi). In the case of
         a promissory note, the Administrator may also prescribe the


                                       16
<PAGE>


         form of such note and the security to be given for such note. The
         Option may not be exercised, however, by delivery of a promissory note
         or by a loan from the Company when or where such loan or other
         extension of credit is prohibited by law.

                  6.3. CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES.

                  The Company shall not be required to issue or deliver any
certificate or certificates for shares of stock purchased upon the exercise of
any Option or portion thereof prior to fulfillment of all of the following
conditions:

                           (a) The admission of such shares to listing on all
         stock exchanges on which such class of stock is then listed;

                           (b) The completion of any registration or other
         qualification of such shares under any state or federal law, or under
         the rulings or regulations of the Securities and Exchange Commission or
         any other governmental regulatory body which the Administrator shall,
         in its absolute discretion, deem necessary or advisable;

                           (c) The obtaining of any approval or other clearance
         from any state or federal governmental agency which the Administrator
         shall, in its absolute discretion, determine to be necessary or
         advisable;

                           (d) The lapse of such reasonable period of time
         following the exercise of the Option as the Administrator may establish
         from time to time for reasons of administrative convenience; and

                           (e) The receipt by the Company of full payment for
         such shares, including payment of any applicable withholding tax, which
         in the discretion of the Administrator may be in the form of
         consideration used by the Holder to pay for such shares under Section
         6.2(d).

                  6.4. RIGHTS AS STOCKHOLDERS.

                  Holders shall not be, nor have any of the rights or privileges
of, stockholders of the Company in respect of any shares purchasable upon the
exercise of any part of an Option unless and until certificates representing
such shares have been issued by the Company to such Holders.

                  6.5. OWNERSHIP AND TRANSFER RESTRICTIONS.

                  The Administrator, in its absolute discretion, may impose such
restrictions on the ownership and transferability of the shares purchasable upon
the exercise of an Option as it deems appropriate. Any such restriction shall be
set forth in the respective Award Agreement and may be referred to on the
certificates evidencing such shares. The Holder shall give the Company prompt
notice of any disposition of shares of Common Stock acquired by exercise of an
Incentive Stock Option within (a) two years from the date of granting (including
the date the


                                       17
<PAGE>


Option is modified, extended or renewed for purposes of Section 424(h) of the
Code) such Option to such Holder or (b) one year after the transfer of such
shares to such Holder.

                  6.6. LIMITATIONS ON EXERCISE OF OPTIONS GRANTED TO INDEPENDENT
DIRECTORS.

                  No Option granted to an Independent Director may be exercised
to any extent by anyone after the first to occur of the following events:

                       (a) The expiration of twelve (12) months from the date of
the Holder's death;

                       (b) the expiration of twelve (12) months from the date of
the Holder's Termination of Directorship by reason of his permanent and total
disability (within the meaning of Section 22(e)(3) of the Code);

                       (c) the expiration of three (3) months from the date of
the Holder's Termination of Directorship for any reason other than such Holder's
death or his permanent and total disability, unless the Holder dies within said
three-month period; or

                       (d) The expiration of ten (10) years from the date the
Option was granted.

                  6.7. ADDITIONAL LIMITATIONS ON EXERCISE OF OPTIONS. Holders

                  may be required to comply with any timing or other
restrictions with respect to the settlement or exercise of an Option, including
a window-period limitation, as may be imposed in the discretion of the
Administrator.

                                  ARTICLE VII.

                            AWARD OF RESTRICTED STOCK

                  7.1. ELIGIBILITY.

                  Subject to the Award Limit, Restricted Stock may be awarded to
any Employee who the Committee determines is a key Employee.

                  7.2.     AWARD OF RESTRICTED STOCK

                           (a) The Committee may from time to time, in its
                  absolute discretion:

                               (i) Determine which Employees are key Employees
                  and select from among the key Employees (including Employees
                  who have previously received other awards under the Plan) such
                  of them as in its opinion should be awarded Restricted Stock;
                  and

                                    (ii) Determine the purchase price, if any,
                  and other


                                       18
<PAGE>


                  terms and conditions applicable to such Restricted Stock,
                  consistent with the Plan.

                           (b) The Committee shall establish the purchase price,
         if any, and form of payment for Restricted Stock; PROVIDED, HOWEVER,
         that such purchase price shall be no less than the par value of the
         Common Stock to be purchased, unless otherwise permitted by applicable
         state law. In all cases, legal consideration shall be required for each
         issuance of Restricted Stock.

                           (c) Upon the selection of a key Employee to be
         awarded Restricted Stock, the Committee shall instruct the Secretary of
         the Company to issue such Restricted Stock and may impose such
         conditions on the issuance of such Restricted Stock as it deems
         appropriate.

                  7.3. RIGHTS AS STOCKHOLDERS.

                  Subject to Section 7.4, upon delivery of the shares of
Restricted Stock to the escrow holder pursuant to Section 7.6, the Holder shall
have, unless otherwise provided by the Committee, all the rights of a
stockholder with respect to said shares, subject to the restrictions in his
Award Agreement, including the right to receive all dividends and other
distributions paid or made with respect to the shares; PROVIDED, HOWEVER, that
in the discretion of the Committee, any extraordinary distributions with respect
to the Common Stock shall be subject to the restrictions set forth in Section
7.4.

                  7.4. RESTRICTION.

All shares of Restricted Stock issued under the Plan (including any shares
received by holders thereof with respect to shares of Restricted Stock as a
result of stock dividends, stock splits or any other form of recapitalization)
shall, in the terms of each individual Award Agreement, be subject to such
restrictions as the Committee shall provide, which restrictions may include,
without limitation, restrictions concerning voting rights and transferability
and restrictions based on duration of employment with the Company, Company
performance and individual performance; PROVIDED, HOWEVER, that, unless the
Committee otherwise provides in the terms of the Award Agreement or otherwise,
no share of Restricted Stock granted to a person subject to Section 16 of the
Exchange Act shall be sold, assigned or otherwise transferred until at least six
months and one day have elapsed from the date on which the Restricted Stock was
issued, and PROVIDED, further, that, except with respect to shares of Restricted
Stock granted to Section 162(m) Participants, by action taken after the
Restricted Stock is issued, the Committee may, on such terms and conditions as
it may determine to be appropriate, remove any or all of the restrictions
imposed by the terms of the Award Agreement. Restricted Stock may not be sold or
encumbered until all restrictions are terminated or expire. If no consideration
was paid by the Holder upon issuance, a Holder's rights in unvested Restricted
Stock shall lapse, and such Restricted Stock shall be surrendered to the Company
without consideration, upon Termination of Employment with the Company;
PROVIDED, HOWEVER, that except with respect to shares of Restricted Stock
granted to Section 162(m) Participants, the Committee in its sole and absolute


                                       19
<PAGE>


discretion may provide that no such lapse or surrender shall occur in the event
of a Termination of Employment without cause or following any Change in Control
of the Company or because of the Holder's retirement, death, disability or
otherwise. Notwithstanding anything to the contrary in this Section 7.4, in the
event of and immediately prior to a Change in Control as defined in Section
1.7(c) that is to be accounted for as a "pooling of interests", all unvested
shares of Restricted Stock shall immediately vest such that no such lapse or
surrender shall occur following such Change in Control.

                  7.5. REPURCHASE OF RESTRICTED STOCK.

The Committee shall provide in the terms of each individual Award Agreement that
the Company shall have the right to repurchase from the Holder the Restricted
Stock then subject to restrictions under the Award Agreement immediately upon a
Termination of Employment between the Holder and the Company, at a cash price
per share equal to the price paid by the Holder for such Restricted Stock;
PROVIDED, HOWEVER, that, except with respect to shares of Restricted Stock
granted to Section 162(m) Participants, the Committee in its sole and absolute
discretion may provide that no such right of repurchase shall exist in the event
of a Termination of Employment without cause or following any Change in Control
of the Company or because of the Holder's retirement, death, disability or
otherwise. Notwithstanding anything to the contrary in this Section 7.5, in the
event of and immediately prior to a Change in Control as defined in Section
1.7(c) that is to be accounted for as a "pooling of interests", any such
repurchase rights shall expire.

                  7.6. ESCROW.

                  The Secretary of the Company or such other escrow holder as
the Committee may appoint shall retain physical custody of each certificate
representing Restricted Stock until all of the restrictions imposed under the
Award Agreement with respect to the shares evidenced by such certificate expire
or shall have been removed.

                  7.7. LEGEND.

                  In order to enforce the restrictions imposed upon shares of
Restricted Stock hereunder, the Committee shall cause a legend or legends to be
placed on certificates representing all shares of Restricted Stock that are
still subject to restrictions under Award Agreements, which legend or legends
shall make appropriate reference to the conditions imposed thereby.

                  7.8. SECTION 83(b) ELECTION.

                  If a Holder makes an election under Section 83(b) of the Code,
or any successor section thereto, to be taxed with respect to the Restricted
Stock as of the date of transfer of the Restricted Stock rather than as of the
date or dates upon which the Holder would otherwise be taxable under Section
83(a) of the Code, the Holder shall deliver a copy of such election to the
Company immediately after filing such election with the Internal Revenue
Service.


                                       20
<PAGE>


                                  ARTICLE VIII.

                      PERFORMANCE AWARDS AND STOCK PAYMENTS

                  8.1. ELIGIBILITY.

                  Subject to the Award Limit, one or more Performance Awards
and/or Stock Payments may be granted to any Employee whom the Committee
determines is a key Employee.

                  8.2. PERFORMANCE AWARDS.

                  Any key Employee selected by the Committee may be granted one
or more Performance Awards. The value of such Performance Awards may be linked
to any one or more of the Performance Criteria or other specific performance
criteria determined appropriate by the Committee, in each case on a specified
date or dates or over any period or periods determined by the Committee. In
making such determinations, the Committee shall consider (among such other
factors as it deems relevant in light of the specific type of award) the
contributions, responsibilities and other compensation of the particular key
Employee.

                  8.3. STOCK PAYMENTS.

                  Any key Employee selected by the Committee may receive Stock
Payments in the manner determined from time to time by the Committee. The number
of shares shall be determined by the Committee and may be based upon the
Performance Criteria or other specific performance criteria determined
appropriate by the Committee, determined on the date such Stock Payment is made
or on any date thereafter.

                  8.4.     TERM.

                  The term of a Performance Award and/or Stock Payment shall be
set by the Committee in its discretion.

                  8.5. EXERCISE OR PURCHASE PRICE.

                  The Committee may establish the exercise or purchase price of
a Performance Award or shares received as a Stock Payment; PROVIDED, HOWEVER,
that such price shall not be less than the par value for a share of Common
Stock, unless otherwise permitted by applicable state law.

                  8.6. EXERCISE UPON TERMINATION OF EMPLOYMENT.

A Performance Award, and/or Stock Payment is exercisable or payable only while
the Holder is an Employee; PROVIDED, HOWEVER, that except with respect to
Performance Awards granted to Section 162(m) Participants, the Administrator in
its sole and absolute discretion may provide that Performance Awards may be
exercised or paid following a Termination of Employment without cause, or
following a Change in Control of the Company, or because of the Holder's


                                       21
<PAGE>


retirement, death or disability, or otherwise. Notwithstanding anything to the
contrary in this Article 8, in the event of a Change in Control as defined in
Section 1.7(c) that is or is to be accounted for as a "pooling of interests",
all outstanding Performance Awards and Stock Payments shall be immediately
exercisable or payable following such Change in Control.

                  8.7. FORM OF PAYMENT. Payment of the amount determined under
Section 8.2 or 8.3 above shall be in cash, in Common Stock or a combination of
both, as determined by the Committee. To the extent any payment under this
Article VIII is effected in Common Stock, it shall be made subject to
satisfaction of all provisions of Section 6.3.

                                   ARTICLE X.

                                 ADMINISTRATION

                   9.1. COMPENSATION COMMITTEE.

                   The Compensation Committee (or another committee or a
subcommittee of the Board assuming the functions of the Committee under the
Plan) shall consist solely of two or more Independent Company Directors
appointed by and holding office at the pleasure of the Board, each of whom is
both a "non-employee director" as defined by Rule 16b-3 and an "outside
director" for purposes of Section 162(m) of the Code. Appointment of Committee
members shall be effective upon acceptance of appointment. Committee members may
resign at any time by delivering written notice to the Board. Vacancies in the
Committee may be filled by the Board.

                   9.2. DUTIES AND POWERS OF COMMITTEE.

                   It shall be the duty of the Committee to conduct the general
administration of the Plan in accordance with its provisions. The Committee
shall have the power to interpret the Plan and the Award Agreements, and to
adopt such rules for the administration, interpretation, and application of the
Plan as are consistent therewith, to interpret, amend or revoke any such rules
and to amend any Award Agreement provided that the rights or obligations of the
Holder of the Award that is the subject of any such Award Agreement are not
affected adversely. Any such grant or award under the Plan need not be the same
with respect to each Holder. Any such interpretations and rules with respect to
Incentive Stock Options shall be consistent with the provisions of Section 422
of the Code. In its absolute discretion, the Board may at any time and from time
to time exercise any and all rights and duties of the Committee under the Plan
except with respect to matters which under Rule 16b-3 or Section 162(m) of the
Code, or any regulations or rules issued thereunder, are required to be
determined in the sole discretion of the Committee. Notwithstanding the
foregoing, the full Board, acting by a majority of its members in office, shall
conduct the general administration of the Plan with respect to Options granted
to Independent Directors.


                                       22
<PAGE>


                   9.3. MAJORITY RULE; UNANIMOUS WRITTEN CONSENT.

                   The Committee shall act by a majority of its members in
attendance at a meeting at which a quorum is present or by a memorandum or other
written instrument signed by all members of the Committee.

                   9.4. COMPENSATION; PROFESSIONAL ASSISTANCE; GOOD FAITH
ACTIONS.

                   Members of the Committee shall receive such compensation, if
any, for their services as members as may be determined by the Board. All
expenses and liabilities which members of the Committee incur in connection with
the administration of the Plan shall be borne by the Company. The Committee may,
with the approval of the Board, employ attorneys, consultants, accountants,
appraisers, brokers, or other persons. The Committee, the Company and the
Company's officers and Directors shall be entitled to rely upon the advice,
opinions or valuations of any such persons. All actions taken and all
interpretations and determinations made by the Committee or the Board in good
faith shall be final and binding upon all Holders, the Company and all other
interested persons. No members of the Committee or Board shall be personally
liable for any action, determination or interpretation made in good faith with
respect to the Plan or Awards, and all members of the Committee and the Board
shall be fully protected by the Company in respect of any such action,
determination or interpretation.

                   9.5. DELEGATION OF AUTHORITY TO GRANT AWARDS.

                   The Committee may, but need not, delegate from time to time
some or all of its authority to grant Awards under the Plan to a committee
consisting of one or more members of the Committee or of one or more officers of
the Company; provided, however, that the Committee may not delegate its
authority to grant Awards to individuals (i) who are subject on the date of the
grant to the reporting rules under Section 16(a) of the Exchange Act, (ii) who
are Section 162(m) Participants or (iii) who are officers of the Company who are
delegated authority by the Committee hereunder. Any delegation hereunder shall
be subject to the restrictions and limits that the Committee specifies at the
time of such delegation of authority and may be rescinded at any time by the
Committee. At all times, any committee appointed under this Section 9.5 shall
serve in such capacity at the pleasure of the Committee.

                                   ARTICLE XI.

                            MISCELLANEOUS PROVISIONS

                  10.1. NOT TRANSFERABLE.

                   No Award under the Plan may be sold, pledged, assigned or
transferred in any manner other than by will or the laws of descent and
distribution or, subject to the consent of the Administrator, pursuant to a DRO,
unless and until such Award has been exercised, or the shares underlying such
Award have been issued, and all restrictions applicable to such shares have
lapsed. No Award or interest or right therein shall be liable for the debts,
contracts or


                                       23
<PAGE>


engagements of the Holder or his successors in interest or shall be subject to
disposition by transfer, alienation, anticipation, pledge, encumbrance,
assignment or any other means whether such disposition be voluntary or
involuntary or by operation of law by judgment, levy, attachment, garnishment or
any other legal or equitable proceedings (including bankruptcy), and any
attempted disposition thereof shall be null and void and of no effect, except to
the extent that such disposition is permitted by the preceding sentence.

                  During the lifetime of the Holder, only he may exercise an
Option or other Award (or any portion thereof) granted to him under the Plan,
unless it has been disposed of with the consent of the Administrator pursuant to
a DRO. After the death of the Holder, any exercisable portion of an Option or
other Award may, prior to the time when such portion becomes unexercisable under
the Plan or the applicable Award Agreement, be exercised by his personal
representative or by any person empowered to do so under the deceased Holder's
will or under the then applicable laws of descent and distribution.
Notwithstanding the foregoing provisions of this Section 10.1, the
Administrator, in its sole discretion, may determine to grant to any Holder an
Award which, by its terms as set forth in the applicable Award Agreement, may be
transferred by the Holder, in writing and with prior written notice to the
Administrator, by gift, without the receipt of any consideration, to a member of
the Holder's immediate family, as defined in Rule 16a-1 under the Exchange Act,
or to a trust for the exclusive benefit of, or any other entity owned solely by,
such members, provided, that an Award that has been so transferred shall
continue to be subject to all of the terms and conditions of the Award as
applicable to the original Holder, and the transferee shall execute any and all
such documents requested by the Administrator in connection with the transfer,
including without limitation to evidence the transfer and to satisfy any
requirements for an exemption for the transfer under applicable federal and
state securities laws.

                  10.2. AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN.

                   Except as otherwise provided in this Section 10.2, the Plan
may be wholly or partially amended or otherwise modified, suspended or
terminated at any time or from time to time by the Administrator. However,
without approval of the Company's stockholders given within twelve months before
or after the action by the Administrator, no action of the Administrator may,
except as provided in Section 10.3, increase the limits imposed in Section 10.3
on the maximum number of shares which may be issued under the Plan. No
amendment, suspension or termination of the Plan shall, without the consent of
the Holder alter or impair any rights or obligations under any Award theretofore
granted or awarded, unless the Award itself otherwise expressly so provides. No
Awards may be granted or awarded during any period of suspension or after
termination of the Plan, and in no event may any Incentive Stock Option be
granted under the Plan after the first to occur of the following events:

                           (a) The expiration of ten years from the date the
         Plan is adopted by the Board; or

                           (b) The expiration of ten years from the date the
         Plan is approved by the Company's stockholders under Section 10.4.


                                       24
<PAGE>


                  10.3. CHANGES IN COMMON STOCK OR ASSETS OF THE COMPANY,
ACQUISITION OR LIQUIDATION OF THE COMPANY AND OTHER CORPORATE EVENTS.

                           (a) Subject to Section 10.3 (d), in the event that
         the Administrator determines that any dividend or other distribution
         (whether in the form of cash, Common Stock, other securities, or other
         property), recapitalization, reclassification, stock split, reverse
         stock split, reorganization, merger, consolidation, split-up, spin-off,
         combination, repurchase, liquidation, dissolution, or sale, transfer,
         exchange or other disposition of all or substantially all of the assets
         of the Company, or exchange of Common Stock or other securities of the
         Company, issuance of warrants or other rights to purchase Common Stock
         or other securities of the Company, or other similar corporate
         transaction or event, in the Administrator's sole discretion, affects
         the Common Stock such that an adjustment is determined by the
         Administrator to be appropriate in order to prevent dilution or
         enlargement of the benefits or potential benefits intended to be made
         available under the Plan or with respect to an Award, then the
         Administrator shall, in such manner as it may deem equitable, adjust
         any or all of

                                    (i) the number and kind of shares of Common
                  Stock (or other securities or property) with respect to which
                  Awards may be granted or awarded (including, but not limited
                  to, adjustments of the limitations in Section 2.1 on the
                  maximum number and kind of shares which may be issued and
                  adjustments of the Award Limit),

                                    (ii) the number and kind of shares of Common
                  Stock (or other securities or property) subject to outstanding
                  Awards, and

                                    (iii) the grant or exercise price with
                  respect to any Award.

                           (b) Subject to Sections 5.3(d), 5.4(b) and 10.3(d),
         in the event of any transaction or event described in Section 10.3(a)
         or any unusual or nonrecurring transactions or events affecting the
         Company, any affiliate of the Company, or the financial statements of
         the Company or any affiliate, or of changes in applicable laws,
         regulations, or accounting principles, the Administrator, in its sole
         and absolute discretion, and on such terms and conditions as it deems
         appropriate, either by the terms of the Award or by action taken prior
         to the occurrence of such transaction or event and either automatically
         or upon the Holder's request, is hereby authorized to take any one or
         more of the following actions whenever the Administrator determines
         that such action is appropriate in order to prevent dilution or
         enlargement of the benefits or potential benefits intended to be made
         available under the Plan or with respect to any Award under the Plan,
         to facilitate such transactions or events or to give effect to such
         changes in laws, regulations or principles:

                                    (i) To provide for either the purchase of
                  any such Award for an amount of cash equal to the amount that
                  could have been


                                       25
<PAGE>


                  attained upon the exercise of such Award or realization of the
                  Holder's rights had such Award been currently exercisable or
                  payable or fully vested or the replacement of such Award with
                  other rights or property selected by the Administrator in its
                  sole discretion;

                                    (ii) To provide that the Award cannot vest,
                  be exercised or become payable after such event;

                                    (iii) To provide that such Award shall be
                  exercisable as to all shares covered thereby, notwithstanding
                  anything to the contrary in the provisions of such Award;

                                    (iv) To provide that such Award be assumed
                  by the successor or survivor corporation, or a parent or
                  subsidiary thereof, or shall be substituted for by similar
                  options, rights or awards covering the stock of the successor
                  or survivor corporation, or a parent or subsidiary thereof,
                  with appropriate adjustments as to the number and kind of
                  shares and prices;

                                    (v) To make adjustments in the number and
                  type of shares of Common Stock (or other securities or
                  property) subject to outstanding Awards, and in the number and
                  kind of outstanding Restricted Stock and/or in the terms and
                  conditions of (including the grant or exercise price), and the
                  criteria included in, outstanding options, rights and awards
                  and options, rights and awards which may be granted in the
                  future;

                                    (vi) To provide that, for a specified period
                  of time prior to such event, the restrictions imposed under an
                  Award Agreement upon some or all shares of Restricted Stock
                  may be terminated, and, in the case of Restricted Stock, some
                  or all shares of such Restricted Stock may cease to be subject
                  to repurchase under Section 7.5 or forfeiture under Section
                  7.4 after such event

                                    (vii) To provide that, in the event of a
                  Change in Control, each outstanding Award shall, immediately
                  prior to the effective date of the Change in Control,
                  automatically become fully exercisable for all of the shares
                  of Common Stock at the time subject to such rights and may be
                  exercised for any or all of those shares as fully-vested
                  shares of Common Stock; and

                                    (viii) To provide that, in the event of any
                  transaction described in Section 10.3(a), each outstanding
                  Award shall, immediately prior to the effective date of such
                  transaction, automatically become fully exercisable for all of
                  the shares of Common Stock at the time subject to such rights
                  or fully vested, as applicable, and may be exercised for any
                  or

                                       26
<PAGE>


                  all of those shares as fully-vested shares of Common Stock.
                  However, an outstanding right shall not so accelerate if and
                  to the extent: (i) such right is, in connection with such
                  transaction, either to be assumed by the successor or survivor
                  corporation (or parent thereof) or to be replaced with a
                  comparable right with respect to shares of the capital stock
                  of the successor or survivor corporation (or parent thereof)
                  or (ii) the acceleration of exercisability of such right is
                  subject to other limitations imposed by the Administrator at
                  the time of grant. The determination of comparability of
                  rights under clause (i) above shall be made by the
                  Administrator, and its determination shall be final, binding
                  and conclusive

                           (c) Subject to Sections 3.2, 3.3, 5.3(d), 5.4(b),
         7.4, 7.5, 8.6 and 10.3(d), the Administrator may, in its discretion,
         include such further provisions and limitations in any Award, agreement
         or certificate, as it may deem equitable and in the best interests of
         the Company.

                           (d) With respect to Awards which are granted to
         Section 162(m) Participants and are intended to qualify as
         performance-based compensation under Section 162(m)(4)(C), no
         adjustment or action described in this Section 10.3 or in any other
         provision of the Plan shall be authorized to the extent that such
         adjustment or action would cause such Award to fail to so qualify under
         Section 162(m)(4)(C), or any successor provisions thereto. No
         adjustment or action described in this Section 10.3 or in any other
         provision of the Plan shall be authorized to the extent that such
         adjustment or action would cause the Plan to violate Section 422(b)(1)
         of the Code. Furthermore, no such adjustment or action shall be
         authorized to the extent such adjustment or action would result in
         short-swing profits liability under Section 16 or violate the exemptive
         conditions of Rule 16b-3 unless the Administrator determines that the
         Award is not to comply with such exemptive conditions. The number of
         shares of Common Stock subject to any Award shall always be rounded to
         the next whole number.

                           (e) Notwithstanding the foregoing, in the event that
         the Company becomes a party to a transaction that is intended to
         qualify for "pooling of interests" accounting treatment and, but for
         one or more of the provisions of this Plan or any Award Agreement would
         so qualify, then this Plan and any Award Agreement shall be interpreted
         so as to preserve such accounting treatment, and to the extent that any
         provision of the Plan or any Award Agreement would disqualify the
         transaction from pooling of interests accounting treatment (including,
         if applicable, an entire Award Agreement), then such provision shall be
         null and void. All determinations to be made in connection with the
         preceding sentence shall be made by the independent accounting firm
         whose opinion with respect to "pooling of interests" treatment is
         required as a condition to the Company's consummation of such
         transaction.

                           (f) The existence of the Plan, the Award Agreement
         and the Awards granted hereunder shall not affect or restrict in any
         way the right or power of the Company or the shareholders of the
         Company to make or authorize any adjustment,


                                       27
<PAGE>


                  recapitalization, reorganization or other change in the
                  Company's capital structure or its business, any merger or
                  consolidation of the Company, any issue of stock or of
                  options, warrants or rights to purchase stock or of bonds,
                  debentures, preferred or prior preference stocks whose rights
                  are superior to or affect the Common Stock or the rights
                  thereof or which are convertible into or exchangeable for
                  Common Stock, or the dissolution or liquidation of the
                  company, or any sale or transfer of all or any part of its
                  assets or business, or any other corporate act or proceeding,
                  whether of a similar character or otherwise.

                  10.4. APPROVAL OF PLAN BY STOCKHOLDERS.

                  The Plan will be submitted for the approval of the Company's
stockholders within twelve months after the date of the Board's initial adoption
of the Plan. Awards may be granted or awarded prior to such stockholder
approval, provided that such Awards shall not be exercisable nor shall such
Awards vest prior to the time when the Plan is approved by the stockholders, and
provided further that if such approval has not been obtained at the end of said
twelve-month period, all Awards previously granted or awarded under the Plan
shall thereupon be canceled and become null and void. In addition, if the Board
determines that Awards other than Options which may be granted to Section 162(m)
Participants should continue to be eligible to qualify as performance-based
compensation under Section 162(m)(4)(C) of the Code, the Performance Criteria
must be disclosed to and approved by the Company's stockholders no later than
the first stockholder meeting that occurs in the fifth year following the year
in which the Company's stockholders previously approved the Performance
Criteria.

                  10.5. TAX WITHHOLDING.

                  The Company shall be entitled to require payment in cash or
deduction from other compensation payable to each Holder of any sums required by
federal, state or local tax law to be withheld with respect to the issuance,
vesting, exercise or payment of any Award. The Administrator may in its
discretion and in satisfaction of the foregoing requirement allow such Holder to
elect to have the Company withhold shares of Common Stock otherwise issuable
under such Award (or allow the return of shares of Common Stock) having a Fair
Market Value equal to the sums required to be withheld.

                  10.6. LOANS.

                  The Committee may, in its discretion, extend one or more loans
to key Employees in connection with the exercise or receipt of an Award granted
or awarded under the Plan, or the issuance of Restricted Stock awarded under the
Plan. The terms and conditions of any such loan shall be set by the Committee.

                  10.7. FORFEITURE PROVISIONS.

                  Pursuant to its general authority to determine the terms and
conditions applicable to Awards under the Plan, the Administrator shall have the
right to provide, in the terms of


                                       28
<PAGE>


Awards made under the Plan, or to require a Holder to agree by separate written
instrument, that (a) (i) any proceeds, gains or other economic benefit actually
or constructively received by the Holder upon any receipt or exercise of the
Award, or upon the receipt or resale of any Common Stock underlying the Award,
must be paid to the Company, and (ii) the Award shall terminate and any
unexercised portion of the Award (whether or not vested) shall be forfeited, if
(b)(i) a Termination of Employment or Termination of Directorship occurs prior
to a specified date, or within a specified time period following receipt or
exercise of the Award, or (ii) the Holder at any time, or during a specified
time period, engages in any activity in competition with the Company, or which
is inimical, contrary or harmful to the interests of the Company, as further
defined by the Administrator or (iii) the Holder incurs a Termination of
Employment or Termination of Directorship for cause.

                  10.8. EFFECT OF PLAN UPON OPTIONS AND COMPENSATION PLANS.

                  The adoption of the Plan shall not affect any other
compensation or incentive plans in effect for the Company or any Subsidiary.
Nothing in the Plan shall be construed to limit the right of the Company (a) to
establish any other forms of incentives or compensation for Employees or
Directors of the Company or any Subsidiary or (b) to grant or assume options or
other rights or awards otherwise than under the Plan in connection with any
proper corporate purpose including but not by way of limitation, the grant or
assumption of options in connection with the acquisition by purchase, lease,
merger, consolidation or otherwise, of the business, stock or assets of any
corporation, partnership, limited liability company, firm or association.

                  10.9. COMPLIANCE WITH LAWS.

                  The Plan, the granting and vesting of Awards under the Plan
and the issuance and delivery of shares of Common Stock and the payment of money
under the Plan or under Awards granted or awarded hereunder are subject to
compliance with all applicable federal and state laws, rules and regulations
(including but not limited to state and federal securities law and federal
margin requirements) and to such approvals by any listing, regulatory or
governmental authority as may, in the opinion of counsel for the Company, be
necessary or advisable in connection therewith. Any securities delivered under
the Plan shall be subject to such restrictions, and the person acquiring such
securities shall, 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 legal requirements. To the extent
permitted by applicable law, the Plan and Awards granted or awarded hereunder
shall be deemed amended to the extent necessary to conform to such laws, rules
and regulations.

                  10.10.   TITLES.

                  Titles are provided herein for convenience only and are not to
serve as a basis for interpretation or construction of the Plan.

                  10.11. GOVERNING LAW.


                                       29
<PAGE>


                  The Plan and any agreements hereunder shall be administered,
interpreted and enforced under the internal laws of the State of Oregon without
regard to conflicts of laws thereof.

                                     * * *

                  I hereby certify that the foregoing Plan was duly adopted by
the Board of Directors of Wilshire Financial Services Group Inc. on September
30, 1999.

                  Executed on this 30th day of September 1999.



                                                 ------------------------------
                                                            Secretary
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