Document:

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                                                                EXHIBIT 10.2.2.2

                         LUMINENT MORTGAGE CAPITAL, INC.
                   2003 OUTSIDE ADVISORS STOCK INCENTIVE PLAN
                       NONQUALIFIED STOCK OPTION AGREEMENT

        THIS NONQUALIFIED STOCK OPTION AGREEMENT (this "Option Agreement") by
and between Luminent Mortgage Capital, Inc., a Maryland corporation (the
"Corporation"), and _____________________________ (the "Participant") evidences
the nonqualified stock option (the "Option") granted by the Corporation to the
Participant as to the number of shares of the Corporation's Common Stock, $0.001
par value, first set forth below.

   Number of Shares of Common Stock:/1/ ________ Award Date:  __________________

   Exercise Price per Share:/1/  $________ Expiration Date:/1/,/2/ _____________

   Vesting/1/,/2/ [The Option shall become vested as to one-third of the total
   number of shares of Common Stock subject to the Option on each of the first,
   second and third anniversaries of the Award Date.]

        The Option is granted under the Luminent Mortgage Capital, Inc. 2003
Outside Advisors Stock Incentive Plan (the "Plan") and subject to the Terms and
Conditions of Nonqualified Stock Option (the "Terms") attached to this Option
Agreement (incorporated herein by this reference) and to the Plan. The Option
has been granted to the Participant in addition to, and not in lieu of, any
other form of compensation otherwise payable or to be paid to the Participant.
The Option is not and shall not be deemed to be an incentive stock option within
the meaning of Section 422 of the Code. Capitalized terms are defined in the
Plan if not defined herein. The parties agree to the terms of the Option set
forth herein. The Participant acknowledges receipt of a copy of the Terms and
the Plan, specifically acknowledges and agrees to Section 11 of the Terms, and
agrees to maintain in confidence all information provided to him/her in
connection with the Option.

"PARTICIPANT"                               LUMINENT MORTGAGE CAPITAL, INC.,
                                            a Maryland corporation

---------------------------------
Signature

                                            By:
---------------------------------              ---------------------------------
Print Name                                  Its:
                                               ---------------------------------
---------------------------------
Address

---------------------------------
City, State, Zip Code

                                CONSENT OF SPOUSE

        In consideration of the Corporation's execution of this Option
Agreement, the undersigned spouse of the Participant agrees to be bound by all
of the terms and provisions hereof and of the Plan.

----------------------------------                   ----------------------
Signature of Spouse                                  Date

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/1/  Subject to adjustment under Section 7 of the Plan.
/2/  Subject to early termination under Section 7 of the Plan and Section 4 of
     the Terms.

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                TERMS AND CONDITIONS OF NONQUALIFIED STOCK OPTION

1.      VESTING; LIMITS ON EXERCISE.

        As set forth on the cover page of this Option Agreement, the Option
shall vest and become exercisable in percentage installments of the aggregate
number of shares of Common Stock subject to the Option. The Option may be
exercised only to the extent the Option is vested and exercisable.

        .   Cumulative Exercisability. To the extent that the Option is vested
            and exercisable, the Participant has the right to exercise the
            Option (to the extent not previously exercised), and such right
            shall continue, until the earlier of (a) expiration of the Option on
            the close of business on the Expiration Date set forth on the cover
            page of this Option Agreement (or, if the Expiration Date is not a
            business day, on the close of business on the last business day
            preceding the Expiration Date) or (b) the termination of the Option
            pursuant to Section 7 of the Plan or Section 4 of these Terms.

        .   No Fractional Shares. Fractional share interests shall be
            disregarded, but may be cumulated.

        .   Minimum Exercise. No fewer than 1001 shares of Common Stock may be
            purchased at any one time, unless the number purchased is the total
            number at the time exercisable under the Option.

2.      CONTINUANCE OF EMPLOYMENT/SERVICE REQUIRED; NO EMPLOYMENT/SERVICE
        COMMITMENT.

        The vesting schedule requires continued employment or service, and
continued service by the Management Company to the Corporation, through each
applicable vesting date as a condition to the vesting of the applicable
installment of the Option and the rights and benefits under this Option
Agreement. Employment or service, or service of the Management Company to the
Corporation, for only a portion of a vesting period, even if a substantial
portion, will not entitle the Participant to any proportionate vesting or avoid
or mitigate a termination of rights and benefits upon or following a termination
of employment or services, or a termination of the Management Company's services
to the Corporation, as provided in Section 4 below or under the Plan.

        Nothing contained in this Option Agreement or the Plan constitutes an
employment or service commitment by the Corporation or its affiliates to the
Participant, the Management Company, or any other person, affects the
Participant's status, if he or she is an employee, as an employee at will who is
subject to termination without cause, confers upon the Management Company any
right to continue in the service of the Corporation or its affiliates, or
confers upon the Participant any right to remain employed by or in service to
the Management Company, interferes in any way with the right of the Corporation
or its affiliates or of the Management Company at any time to terminate such
employment or service of the Participant or Management Company, or affects the
right of the Corporation or its affiliates or of the Management Company to
increase or decrease the Participant's or the Management Company's other
compensation. Nothing in this paragraph, however, is intended to adversely
affect any independent right of the Participant or the Management Company under
any contract other than this Agreement.

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3.      METHOD OF EXERCISE OF OPTION.

        The Option shall be exercisable by the delivery to the Chief Financial
Officer of the Corporation of a written notice stating the number of shares of
Common Stock to be purchased pursuant to the Option and accompanied by:

        .   delivery of an executed Exercise Agreement in substantially the form
            attached hereto as Exhibit A or such other form as the Committee may
            require from time to time (the "Exercise Agreement");

        .   payment in full for the Exercise Price of the shares to be
            purchased, in cash or by electronic funds transfer to the
            Corporation, or by certified or cashier's check payable to the order
            of the Corporation subject to such specific procedures or directions
            as the Committee may establish;

        .   satisfaction of the tax withholding provisions of Section 8.5 of the
            Plan; and

        .   any written statements or agreements required pursuant to Section 6
            below.

The Committee also may, but is not required to, authorize a non-cash payment
alternative specified below at or prior to the time of exercise. In which case,
the Exercise Price and/or applicable withholding taxes, to the extent so
authorized, may be paid in full or in part by delivery to the Corporation of:

        .   shares of Common Stock already owned by the Participant, valued at
            their fair market value (as such term is defined in the Plan) on the
            exercise date, provided, however, that any shares acquired directly
            from the Corporation (upon exercise of a stock option or otherwise)
            must have been owned by the Participant for at least six (6) months
            before the date of such exercise;

        .   if the Common Stock is then registered under the Exchange Act and
            listed or quoted on a recognized national securities exchange or in
            the NASDAQ National Market Quotation System, irrevocable
            instructions to a broker to, upon exercise of the Option, promptly
            sell a sufficient number of shares of Common Stock acquired upon
            exercise of the Option and deliver to the Corporation the amount
            necessary to pay the Exercise Price (and, if applicable, the amount
            of any related tax withholding obligations); and/or

        .   a note meeting the requirements of Section 5.4 of the Plan (or, in
            the case of tax loans, Section 8.5 of the Plan).

4.      EARLY TERMINATION OF OPTION.

        4.1     Dismissal for Cause. If the Participant's employment by or
service to the Management Company terminates (the date of such termination is
referred to as the Participant's "Severance Date"), and such termination is a
termination by the Management Company for Cause (as defined below), the Option
will terminate on the date of such termination, whether or not the Option is
then vested and/or exercisable.

        4.2     Other Terminations of Employment. If the Participant's
employment by or service to the Management Company terminates for any reason
other than a termination by the Management Company for Cause, the Option, to the
extent not vested

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and exercisable on the Participant's Severance Date, will terminate on the
Participant's Severance Date. To the extent that the Option is vested and
exercisable as of the Participant's Severance Date in such circumstances, then:

        .   if the Participant's employment by or service to the Management
            Company terminates for any reason other than the Participant's death
            or Disability (and other than a termination by the Management
            Company for Cause), the Participant will have 90 days following the
            Participant's Severance Date to exercise the portion of his or her
            Option that was vested on his or her Severance Date, and such
            portion of the Option shall terminate at the close of business on
            the last business day of such 90-day period to the extent not
            theretofore exercised.

        .   if the Participant's employment by or service to the Management
            Company terminates due to the Participant's death or Disability, the
            Participant (or his or her personal representative or beneficiary,
            as the case may be) will have 12 months following the Participant's
            Severance Date to exercise the portion of the Participant's Option
            that was vested on the Participant's Severance Date, and such
            portion of the Option shall terminate at the close of business on
            the last business day of such 12-month period to the extent not
            theretofore exercised.

In no case, however, will any portion of the Option continue to be exercisable
following the termination of the Option on its stated Expiration Date and in all
cases the Option remains subject to earlier termination pursuant to Section 7 of
the Plan.

        For purposes of this Agreement, "Cause" means a termination of
employment or service based on a finding by the Management Company, acting in
good faith and based on its reasonable belief at the time, that the Participant
either: (a) has failed to perform his or her job duties in a material respect
without proper cause and, if a cure is reasonably possible in the circumstances,
has failed to cure within a reasonable period of time after written notice of
such conduct (or lack thereof); (b) has materially breached a fiduciary duty, or
willfully and materially violated any other duty, law, regulation or policy of
the Management Company in a manner injurious to the Management Company; (c) has
been convicted of or pled nolo contendere to a felony, or (d) has materially
breached any of the provisions of any agreement with the Management Company and,
if a cure is reasonably possible in the circumstances, has failed to cure within
a reasonable period of time after written notice of the breach. For purposes of
this Agreement, "Disability" means a total disability within the meaning of
Section 22(e)(3) of the Code. Also refer to the provisions of Section 6 of the
Plan which apply with respect to the Option and a termination of employment or
services.

        4.3     Termination of Management Agreement. If the Management Company
ceases for any reason to manage the day-to-day operations of the Corporation,
the following provisions shall apply:

        .   if the Management Agreement by and between the Management Company
            and the Corporation, dated on or about June 11, 2003 (the
            "Management Agreement") is terminated by the Corporation for "cause"
            (as defined in the Management Agreement), the Option will terminate
            on the date of such termination, whether or not the Option is then
            vested and/or exercisable.

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        .   if the Management Agreement is terminated by the Corporation for any
            reason other than for cause prior to the expiration of the term of
            the Management Agreement (as set forth in Section 10 of such
            agreement), the portion of the Option that is outstanding and
            otherwise unvested immediately prior to the time of such termination
            shall thereupon automatically become fully vested and exercisable,
            and the Participant will have 12 months following the date of such
            termination to exercise the vested portion of the Option, and such
            portion of the Option shall terminate at the close of business on
            the last business day of such 12-month period to the extent not
            theretofore exercised.

        .   if the Management Agreement is terminated by the Management Company
            for any reason, or by the Corporation for any reason other than for
            cause after the expiration of the term of the Management Agreement
            (as set forth in Section 10 of such agreement), the Option will
            terminate to the extent that it is not vested and exercisable on the
            date that the Management Agreement terminates, the Participant will
            have 12 months following the date of such termination to exercise
            the portion of the Option that was vested on the date of such
            termination, and such portion of the Option shall terminate at the
            close of business on the last business day of such 12-month period
            to the extent not theretofore exercised.

In no case, however, will any portion of the Option continue to be exercisable
following the termination of the Option on its stated Expiration Date and in all
cases the Option remains subject to earlier termination pursuant to Section 7 of
the Plan.

5.      NON-TRANSFERABILITY AND OTHER RESTRICTIONS.

        The Option and any other rights of the Participant under this Option
Agreement or the Plan are nontransferable and exercisable only by the
Participant, except as set forth in Section 5.6 of the Plan. Any shares of
Common Stock issued on exercise of the Option are subject to substantial
restrictions on transfer, and are subject to call, rights of first refusal, and
other rights in favor of the Corporation as set forth herein and in the Exercise
Agreement.

        The Articles of Incorporation and Bylaws of the Corporation, as either
of them may be amended from time to time, may provide for additional
restrictions and limitations with respect to the Common Stock (including
additional restrictions and limitations on the transfer of shares). To the
extent that these restrictions and limitations are more restrictive than those
set forth in this Agreement, such restrictions and limitations shall apply to
the shares of Common Stock acquired upon exercise of the Option. Such
restrictions and limitations are not, however, in lieu of, nor shall they in any
way reduce or minimize, any limitation or restriction on the shares of Common
Stock acquired upon exercise of the Option imposed under this Agreement.

6.      SECURITIES LAWS.

        6.1     Participant's Representations. The Participant acknowledges that
the Option and the shares of Common Stock are not being registered under the
Securities Act of 1933 ("Securities Act"), based, in part, in reliance upon an
exemption from registration under the Securities Act and an exemption from
qualification under applicable state securities laws, as each may be amended
from time to time. The Participant, by executing this Option Agreement, hereby
makes the following

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representations to the Corporation and acknowledges that the Corporation's
reliance on federal and state securities law exemptions from registration and
qualification is predicated, in substantial part, upon the accuracy of these
representations:

     .  Accredited Investor. The Participant is an "accredited investor" as
        defined in Rule 501 of the Securities Act.

     .  No Intent to Sell. The Participant is acquiring the Option and, if and
        when he/she exercises the Option, will acquire the shares of Common
        Stock solely for the Participant's own account, for investment purposes
        only, and not with a view to or an intent to sell, or to offer for
        resale in connection with any unregistered distribution, all or any
        portion of the shares within the meaning of the Securities Act, the
        California Corporate Securities Law, or other applicable state
        securities laws.

     .  Information; No Reliance on Company. The Participant has had an
        opportunity to ask questions and receive answers from the Corporation
        regarding the terms and conditions of the Option and the restrictions
        imposed on any shares of Common Stock purchased upon exercise of the
        Option. The Participant has been furnished with, and/or has access to,
        such information as he or she considers necessary or appropriate for
        deciding whether to exercise the Option and purchase shares of Common
        Stock. However, in evaluating the merits and risks of an investment in
        the Common Stock, the Participant has and will rely upon the advice of
        his/her own legal counsel, tax advisors, and/or investment advisors and
        is not relying on any representations made by the Corporation, or any of
        its agents, other than those expressly set forth in this Option
        Agreement.

     .  Risk of Loss. The Participant is aware that the Option may be of no
        practical value, that any value it may have depends on its vesting and
        exercisability as well as an increase in the Fair Market Value of the
        underlying shares of Common Stock to an amount in excess of the Exercise
        Price, and that any investment in common shares of a closely held
        corporation such as the Corporation is non-marketable, non-transferable
        and could require capital to be invested for an indefinite period of
        time, possibly without return, and at substantial risk of loss.

     .  Restrictions on Shares. The Participant understands that any shares of
        Common Stock acquired on exercise of the Option will be characterized as
        "restricted securities" under the federal securities laws, and that,
        under such laws and applicable regulations, such securities may be
        resold without registration under the Securities Act only in certain
        limited circumstances, including in accordance with the conditions of
        Rule 144 promulgated under the Securities Act, as presently in effect,
        and represents that he or she is familiar with such rule, and
        understands the resale limitations imposed thereby and by the Securities
        Act and applicable state securities laws.

     .  Additional Restrictions. The Participant has read and understands the
        restrictions and limitations set forth in the Plan, the Corporation's
        Articles of Incorporation and Bylaws, this Option Agreement (including
        these Terms), and the Exercise Agreement, which are imposed on the
        Option and any shares of Common Stock which may be acquired upon
        exercise of the Option. The Participant acknowledges having received and
        reviewed copies of the Articles of

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        Incorporation and Bylaws of the Corporation and a copy of the Management
        Agreement.

     .  No Company Representations. At no time was an oral representation made
        to the Participant relating to the Option or the purchase of shares of
        Common Stock and the Participant was not presented with or solicited by
        any promotional meeting or material relating to the Option or the Common
        Stock.

     .  Share Certificate Legend. The Participant understands and acknowledges
        that any certificate evidencing the shares of Common Stock acquired
        pursuant to the Option when issued shall bear, in addition to any other
        legends which may be provided for under the Corporation's Articles of
        Incorporation and/or required by applicable state securities laws, the
        legends set forth in Section 6.3.

     .  Tax Matters. The Participant has obtained and is relying upon the advice
        of his or her own tax advisors with respect to the tax consequences of
        the grant, vesting, and/or exercise of the Option and any acquisition or
        sale of the shares of Common Stock subject to the Option. The
        Participant is not relying on any representations by the Corporation or
        any of its agents with respect to such matters.

        6.2     Compliance with Securities Laws. Neither the Participant nor any
permitted transferee shall sell, pledge or otherwise transfer shares of Common
Stock acquired pursuant to the Option or any interest in such shares except in
accordance with the express terms of the Plan and this Agreement. Any attempted
transfer in violation of this Section 6.2 shall be void and of no effect.
Without in any way limiting the provisions set forth above, the Participant (or
permitted transferee) shall not make any disposition of all or any portion of
shares of Common Stock acquired or to be acquired pursuant to the Option, except
in compliance with all applicable federal and state securities laws and unless
and until:

        (a)     there is then in effect a registration statement under the
                Securities Act covering such proposed disposition and such
                disposition is made in accordance with such registration
                statement; or

        (b)     such disposition is made in accordance with Rule 144 under the
                Securities Act; or

        (c)     the Participant notifies the Corporation of the proposed
                disposition and furnishes the Corporation with a statement of
                the circumstances surrounding the proposed disposition, and, if
                requested by the Corporation, furnishes to the Corporation an
                opinion of counsel acceptable to the Corporation's counsel, that
                such disposition will not require registration under the
                Securities Act and will be in compliance with all applicable
                state securities laws.

Notwithstanding anything else herein to the contrary, the Corporation has no
obligation to register the Common Stock or file any registration statement under
either federal or state securities laws, nor does the Corporation make any
representation concerning the likelihood of a public offering of the Common
Stock or any other securities of the Corporation.

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        6.3     Share Legends. All certificates evidencing shares of Common
Stock issued or delivered under this Agreement shall bear substantially the
following legends, as well as the legends provided for under the Corporation's
Articles of Incorporation and/or any other appropriate or required legends under
applicable laws:

        "BY ITS ACQUISITION HEREOF, THE HOLDER AGREES TO BE BOUND BY THE
        PROVISIONS OF THE NONQUALIFIED STOCK OPTION AGREEMENT DATED AS OF
        ______________, 2003, AND RELATED EXERCISE AGREEMENT (TOGETHER, THE
        "AGREEMENT"), BY AND BETWEEN THE CORPORATION AND THE HOLDER. THE
        AGREEMENT CONTAINS SUBSTANTIAL RESTRICTIONS ON TRANSFER, INCLUDING
        RESTRICTIONS ON SALE, ASSIGNMENT, PLEDGE, TRANSFER OR OTHER
        DISPOSITION."

        "THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
        1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED OR SOLD
        EXCEPT (A) TO THE CORPORATION OR ANY SUBSIDIARY THEREOF, (B) PURSUANT TO
        AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, OR (C) IN
        A TRANSACTION EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION
        REQUIREMENTS OF THE SECURITIES ACT (AND BASED ON AN OPINION OF COUNSEL
        SATISFACTORY TO THE CORPORATION AND THE INITIAL PURCHASER)."

        6.4     Delivery of Financial Statements. The Corporation shall deliver
annually to the Participant such financial statements of the Corporation as are
required to satisfy applicable securities laws.

        6.5     Confidential Information. Any financial or other information
relating to the Corporation obtained by the Participant in connection with or as
a result of the Plan or Awards thereunder shall be treated as confidential.

7.      LOCK-UP AGREEMENT.

        Neither the Participant nor any permitted transferee may, directly or
indirectly, offer, sell or transfer or dispose of any of the shares of Common
Stock acquired upon exercise of the Option (the "Shares") or any interest
therein (or agree to do any thereof) (collectively, a "Transfer") during the
period commencing as of 14 days prior to and ending one year, or such lesser
period of time as the relevant underwriters may permit, after the effective date
of a registration statement covering any public offering of the Corporation's
securities of which the Participant has notice. (The term "Participant"
includes, where the context so requires, any permitted direct or indirect
transferee of the Participant.) The Participant shall agree and consent to the
entry of stop transfer instructions with the Corporation's transfer agent
against the Transfer of the Corporation's securities beneficially owned by the
Participant and shall conform the limitations hereunder and under the Exercise
Agreement by agreement with and for the benefit of the relevant underwriters by
a lock-up agreement or other agreement in customary form. Notwithstanding
anything else herein to the contrary, this Section 7 shall not be construed so
as to prohibit the Participant from participating in a registration or a public
offering of the Common Stock with respect to any shares which he or she may hold
at that time, provided, however, that such participation shall be at the sole
discretion of the Board.

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8.      NOTICES.

        Any notice to be given under the terms of this Option Agreement or the
Exercise Agreement shall be in writing and addressed to the Corporation at its
principal office to the attention of the Chief Financial Officer, and to the
Participant at the address reflected on the signature page of this Option
Agreement. Any notice shall be delivered in person or shall be enclosed in a
properly sealed envelope, addressed as aforesaid, registered or certified, and
deposited (postage and registry or certification fee prepaid) in a post office
or branch post office regularly maintained by the United States Government. Any
such notice shall be given only when received, but if the Participant is no
longer an Eligible Person, shall be deemed to have been duly given as of the
date mailed in accordance with the foregoing provisions of this Section 8.

9.      PLAN.

        The Option and all rights of the Participant under this Option Agreement
are subject to, and the Participant agrees to be bound by, all of the terms and
conditions of the Plan, incorporated herein by this reference. In the event of a
conflict or inconsistency between the terms and conditions of this Option
Agreement and of the Plan, the terms and conditions of the Plan shall govern.
The Participant acknowledges receipt of a copy of the Plan and agrees to be
bound by the terms thereof and of this Option Agreement. The Participant
acknowledges reading and understanding the Plan and this Option Agreement.
Unless otherwise expressly provided in other sections of this Option Agreement,
provisions of the Plan that confer discretionary authority on the Board or the
Committee do not and shall not be deemed to create any rights in the Participant
unless such rights are expressly set forth herein or are otherwise in the sole
discretion of the Board or the Committee so conferred by appropriate action of
the Board or the Committee under the Plan after the date hereof.

10.     ENTIRE AGREEMENT.

        This Option Agreement (including these Terms and together with the form
of Exercise Agreement attached hereto) and the Plan together constitute the
entire agreement and supersede all prior understandings and agreements, written
or oral, of the parties hereto with respect to the subject matter hereof.

        The Corporation's Articles of Incorporation and Bylaws are outside of
the scope of the integration provision of the preceding paragraph.

        The Plan, this Option Agreement and the Exercise Agreement may be
amended pursuant to Section 8.6 of the Plan. Such amendment must be in writing
and signed by the Corporation. The Corporation may, however, unilaterally waive
any provision hereof or of the Exercise Agreement in writing to the extent such
waiver does not adversely affect the interests of the Participant hereunder, but
no such waiver shall operate as or be construed to be a subsequent waiver of the
same provision or a waiver of any other provision hereof. The Corporation's
Articles of Incorporation and Bylaws may be amended in accordance with their
respective terms.

11.     SATISFACTION OF ALL RIGHTS TO EQUITY.

        The Option is in complete satisfaction of any and all rights that the
Participant may have (under an employment, consulting, or other written or oral
agreement with the

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Corporation, or otherwise) to receive (1) stock options or a restricted stock
award with respect to the Corporation's securities, and/or (2) any other equity
or derivative security in or with respect to the Corporation. This Option
Agreement supersedes the terms of all prior understandings and agreements,
written or oral, of the parties with respect to such matters. The Participant
shall have no further rights or benefits under any prior agreement conveying any
right with respect to any security or derivative security in or with respect to
the Corporation. The foregoing notwithstanding, this Section 11 shall not
adversely affect the Participant's rights under any prior option or restricted
stock agreement under the Plan (provided such agreement is expressly labeled as
an option, restricted stock, or award agreement under the Plan and is similar in
form to this Option Agreement) which has been signed by an authorized officer of
the Corporation.

12.     GOVERNING LAW; LIMITED RIGHTS; SEVERABILITY.

        12.1. Maryland Law, Construction. This Option Agreement and the Exercise
Agreement shall be governed by and construed and enforced in accordance with the
laws of the State of Maryland without regard to conflict of law principles
thereunder. The terms of the Option grant have resulted from the negotiations of
the parties and each of the parties has had an opportunity to obtain and consult
with its own counsel. The language of all parts of the Plan, this Option
Agreement (including these Terms) and the Exercise Agreement shall in all cases
be construed as a whole, according to its fair meaning, and not strictly for or
against either of the parties. Captions and headings are given to the sections
and subsections of this Option Agreement (including these Terms) and the
Exercise Agreement solely as a convenience to facilitate reference. Such
headings shall not be deemed in any way material or relevant to the construction
or interpretation of such document or any provision hereof or thereof.

        12.2. Limited Rights. The Participant has no rights as a stockholder of
the Corporation with respect to the Option as set forth in Section 8.7 of the
Plan. The Option does not place any limit on the corporate authority of the
Corporation as set forth in Section 8.11 of the Plan.

        12.3. Severability. If a court of competent jurisdiction determines that
any portion of this Option Agreement, the Plan, or the Exercise Agreement is in
violation of any statute or public policy, then only the portions of this Option
Agreement, the Plan, or the Exercise Agreement, as applicable, which violate
such statute or public policy shall be stricken, and all portions of this Option
Agreement, the Plan, and the Exercise Agreement which do not violate any statute
or public policy shall continue in full force and effect. Furthermore, it is the
parties' intent that any court order striking any portion of this Option
Agreement, the Plan, and/or the Exercise Agreement should modify the stricken
terms as narrowly as possible to give as much effect as possible to the
intentions of the parties hereunder.

(Remainder of Page Intentionally Left Blank)

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                                                                       EXHIBIT A

                         LUMINENT MORTGAGE CAPITAL, INC.
                   2003 OUTSIDE ADVISORS STOCK INCENTIVE PLAN
                            OPTION EXERCISE AGREEMENT

        The undersigned (the "Purchaser") hereby irrevocably elects to exercise
his/her right, evidenced by that certain Nonqualified Stock Option Agreement
dated as of ____________________ (the "Option Agreement") under the Luminent
Mortgage Capital, Inc. 2003 Outside Advisors Stock Incentive Plan (the "Plan"),
as follows:

        .   the Purchaser hereby irrevocably elects to purchase
            __________________ shares of Common Stock, par value $0.001 per
            share (the "Shares"), of Luminent Mortgage Capital, Inc., a Maryland
            corporation (the "Corporation"), and

        .   such purchase shall be at the price of $__________________ per
            share, for an aggregate amount of $__________________ (subject to
            applicable withholding taxes pursuant to Section 8.5 of the Plan).

        Capitalized terms are defined in the Plan if not defined herein.

        1.      Delivery of Share Certificate. The Purchaser requests that a
certificate representing the Shares be registered to Purchaser and delivered to:
________________________________________________________________________________

        2.      Investment Representations. The Purchaser acknowledges that the
sale of the Shares by the Purchaser is restricted by SEC Rule 701. The Purchaser
hereby affirms as made as of the date hereof the representations in Section 6.1
of the "Terms and Conditions of Nonqualified Stock Option" (which are attached
to and a part of the Option Agreement, the "Terms") and such representations are
incorporated herein by this reference. The Purchaser represents that he/she has
no need for liquidity in this investment, has the ability to bear the economic
risk of this investment, and can afford a complete loss of the purchase price
for the Shares.

        The Purchaser acknowledges receipt of the Corporation's condensed
consolidated financial information.

        The Purchaser also understands and acknowledges (a) that the
certificates representing the Shares will be legended as provided for in Section
6.3 of the Terms, and (b) that the Corporation has no obligation to register the
Shares or file any registration statement under federal or state securities
laws.

        3.      Limitation on Disposition and Other Restrictions. The Shares are
subject to and the Purchaser hereby agrees to the following terms and conditions
of the sale of the Shares to the Purchaser:

        .   any transfer of the Shares must comply with all applicable laws as
            set forth in Section 6 of the Terms;

        .   the Shares are subject to restrictions on transfer under Section 5.6
            of the Plan, under Section 5 of the Terms, and under the
            Corporation's Articles of Incorporation and Bylaws;

                                        1

<PAGE>

        .   the Shares are subject to, and following any otherwise permitted
            transfer of the Shares, the Shares shall remain subject to and the
            transferee shall be bound by, the lock-up provisions set forth in
            Section 7 of the Terms, the share legend requirements of Section 6.3
            of the Terms, and the foregoing provisions of this Section 3; and

        .   as a condition to any otherwise permitted transfer of the Shares,
            the Corporation may require the transferee to execute a written
            agreement, in a form acceptable to the Committee, that the
            transferee acknowledges and agrees to the foregoing terms and
            restrictions imposed on the Shares.

        4.      Plan and Option Agreement. The Purchaser acknowledges that all
of his/her rights are subject to, and the Purchaser agrees to be bound by, all
of the terms and conditions of the Plan and the Option Agreement (including the
Terms), both of which are incorporated herein by this reference. If a conflict
or inconsistency between the terms and conditions of this Exercise Agreement and
of the Plan or the Option Agreement shall arise, the terms and conditions of the
Plan and/or the Option Agreement shall govern. The Purchaser acknowledges
receipt of a copy of all documents referenced herein (including the Terms, a
disclosure statement, and the Corporation's Articles of Incorporation and
Bylaws) and acknowledges reading and understanding these documents and having an
opportunity to ask any questions that he/she may have had about them.

        5.      Entire Agreement. This Exercise Agreement, the Option Agreement
(including the Terms), and the Plan together constitute the entire agreement and
supersede all prior understandings and agreements, written or oral, of the
parties hereto with respect to the subject matter hereof.

        The Corporation's Articles of Incorporation and Bylaws are outside of
the scope of the integration provision of the preceding paragraph.

        The Plan, the Option Agreement and this Exercise Agreement may be
amended pursuant to Section 8.6 of the Plan. Such amendment must be in writing
and signed by the Corporation. The Corporation may, however, unilaterally waive
any provision hereof or of the Option Agreement in writing to the extent such
waiver does not adversely affect the interests of the Participant hereunder, but
no such waiver shall operate as or be construed to be a subsequent waiver of the
same provision or a waiver of any other provision hereof. The Corporation's
Articles of Incorporation and Bylaws maybe amended in accordance with their
respective terms.

"PURCHASER"                              ACCEPTED BY:
                                         LUMINENT MORTGAGE CAPITAL, INC.

---------------------------------
Signature                                By:
                                             -----------------------------------
---------------------------------        Its:
Print Name
                                             -----------------------------------
                                         (To be completed by the corporation
---------------------------------         after the price (including applicable
Date                                      withholding taxes), value (if
                                          applicable) and receipt of funds is
                                          verified.)

                                        2<PAGE>

                                                                    EXHIBIT 10.3

                               INDEMNITY AGREEMENT

        THIS INDEMNITY AGREEMENT (this "Agreement") is made as of ________,
2003, by and between Luminent Mortgage Capital, Inc., a Maryland corporation
(the "Company"), and ____________, a [director and/or officer] of the Company
(the "Indemnitee").

        THE PARTIES TO THIS AGREEMENT enter into this Agreement on the basis of
the following facts, intentions and understandings:

        A.      The Indemnitee is currently serving as a [director and/or
officer] of the Company and in such capacity renders valuable services to the
Company.

        B.      The Company has investigated the availability and sufficiency of
liability insurance and Maryland statutory indemnification provisions to provide
its directors and officers with adequate protection against various legal risks
and potential liabilities to which directors and officers are subject in
connection with their position with the Company and has concluded that insurance
and statutory provisions may provide inadequate and unacceptable protection to
certain individuals requested to serve as its directors and officers.

        C.      In order to induce and encourage highly experienced and capable
persons such as the Indemnitee to continue to serve as a [director and/or
officer] of the Company, the Board of Directors of the Company has determined,
after due consideration and investigation of the terms and provisions of this
Agreement and the various other options available to the Company and the
Indemnitee in lieu of this Agreement, that this Agreement is not only reasonable
and prudent but necessary to promote and ensure the best interests of the
Company and its stockholders.

        NOW, THEREFORE, In consideration of the continued services of the
Indemnitee and in order to induce the Indemnitee to continue to serve as a
[director and/or officer], the Company and the Indemnitee agree as follows:

        1.      Definitions.  As used in this Agreement:

                (a)     A "Change in Control" shall be deemed to have occurred
if (i) any "person" (as that term is used in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")), other than a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company or a corporation owned directly or indirectly by the stockholders of
the Company in substantially the same proportions as their ownership of stock of
the Company, is or becomes the "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act), directly or indirectly, of securities of the Company
representing fifteen percent (15%) or more of the total voting power represented
by the Company's then outstanding voting securities, or (ii) during any period
of two consecutive years, individuals who at the beginning of the two year
period constitute the Board of Directors of the Company and any new director
whose election by the Board of Directors or nomination for election by the
Company's stockholders was approved by a vote of at least two-thirds (2/3) of
the directors then still in office who either were directors at the beginning of
the period or whose election or

<PAGE>

nomination for election was previously so approved, cease for any reason to
constitute a majority of the Board of Directors, or (iii) 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 to
such a merger or consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of the surviving
entity) at least eighty-five percent (85%) of the total voting power represented
by the voting securities of the Company or the surviving entity outstanding
immediately after the merger or consolidation, or the stockholders of the
Company approve a plan of liquidation, dissolution or winding up of the Company
or an agreement for the sale or disposition by the Company (in one transaction
or a series of transactions) of all or substantially all the Company's assets.

                (b)     The term "Expenses" includes, without limitation,
attorneys' fees, disbursements and retainers, accounting and witness fees,
travel and deposition costs, expenses of investigations, judicial or
administrative proceedings or appeals, amounts paid in settlement by or on
behalf of Indemnitee, and any expenses of establishing a right to
indemnification, pursuant to this Agreement or otherwise including reasonable
compensation for time spent by the Indemnitee in connection with the
investigation, defense or appeal of a Proceeding or action for indemnification
for which he is not otherwise compensated by the Company or any third party. The
term "Expenses" does not include the amount of judgments, fines, penalties or
ERISA excise taxes actually levied against the Indemnitee.

                (c)     The term "fullest extent permitted by applicable law"
shall mean the fullest extent authorized or permitted under applicable statutory
or decisional law as amended or interpreted from time to time.

                (d)     A "Potential Change in Control" shall be deemed to have
occurred if (i) the Company enters into an agreement or arrangement, the
consummation of which would result in the occurrence of a Change in Control;
(ii) any person (including the Company) publicly announces an intention to take
or to consider taking actions which if consummated would constitute a Change in
Control; (iii) any person (other than a trustee or other fiduciary holding
securities under an employee benefit plan of the Company acting in such capacity
or a corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of stock of the
Company), who is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing ten percent (10%) or more of the combined
voting power of the Company's then outstanding voting securities increases his
beneficial ownership of the securities by five percent (5%) or more over the
percentage so owned by that person on the date this Agreement is executed; or
(iv) the Board adopts a resolution to the effect that, for purposes of this
Agreement, a Potential Change in Control has occurred.

                (e)     The term "Proceeding" shall include any threatened,
pending or completed action, suit or proceeding, whether brought by or in the
name of the Company or otherwise and whether of a civil, criminal,
administrative, investigative or other nature, by reason of the fact that the
Indemnitee is or was a director, officer, employee, agent or fiduciary of the
Company, or is or was serving at the request of the Company as a director,
officer, employee, agent, partner, member, trustee or fiduciary of another
corporation, partnership, joint venture, limited liability

                                        2

<PAGE>

company, employee benefit plan or other enterprise (each, an "Enterprise"),
whether or not he is serving in such capacity at the time any liability or
Expense is incurred for which indemnification or reimbursement is to be provided
under this Agreement.

        2.      Indemnification.

                2.1     Indemnification in Third Party Actions. The Company
shall indemnify the Indemnitee in accordance with the provisions of this
subsection 2.1 if the Indemnitee is a party to or threatened to be made a party
to or otherwise involved in any manner (including, without limitation,
involvement as witness) in any Proceeding (other than a Proceeding by or in the
name of the Corporation to procure a judgment in its favor), by reason of the
fact that the Indemnitee is or was a director, officer, employee, agent or
fiduciary of the Company, or is or was serving at the request of the Company as
a director, officer, employee, agent, partner, member, trustee or fiduciary of
another Enterprise, against all Expenses, judgments, fines, penalties and ERISA
excise tax actually and reasonably incurred by the Indemnitee in connection with
the Proceeding, to the fullest extent permitted by applicable law; provided that
any settlement be approved in writing by the Company, which approval shall not
be unreasonably withheld or delayed or applied in an inconsistent manner.

                2.2     Indemnification in Proceedings by or In the Name of the
Company. The Company shall indemnify the Indemnitee in accordance with the
provisions of this subsection 2.2 if the Indemnitee is a party to or threatened
to be made a party to or otherwise involved in any manner (including, without
limitation, involvement as witness) in any Proceeding by or in the name of the
Company to procure a judgment in its favor by reason of the fact that Indemnitee
was or is a director, officer, employee, agent or fiduciary of the Company, or
is or was serving at the request of the Company as a director, officer,
employee, agent, partner, member, trustee or fiduciary of another Enterprise,
against all Expenses actually and reasonably incurred by Indemnitee in
connection the Proceeding, to the fullest extent permitted by applicable law.

                2.3     Partial Indemnification. If the Indemnitee is entitled
under any provision of this Agreement to indemnification by the Company for some
or a portion of, but not the total amount of, the Expenses, judgments, fines,
penalties or ERISA excise taxes actually and reasonably incurred by him in the
investigation, defense, appeal or settlement of any Proceeding or otherwise in
connection with any Proceeding, the Company shall nevertheless indemnify the
Indemnitee for the portion of the Expenses, judgments, fines, penalties or ERISA
excise taxes to which the Indemnitee is entitled.

                2.4     Indemnification Hereunder Not Exclusive. The
indemnification provided by this Agreement shall not be deemed exclusive of, and
shall be in addition to, any indemnification or other rights to which the
Indemnitee may be entitled under the charter of the Company, as the same may be
amended from time to time (the "Charter"), the bylaws of the Company, as may be
amended from time to time (the "Bylaws"), any agreement, any vote of
stockholders or disinterested directors, applicable law, or otherwise, both as
to action in his official capacity and as to action in another capacity on
behalf of the Company while holding office; provided, however, that to the
extent that the Indemnitee otherwise would have any greater right to
indemnification under any provision of the Charter or Bylaws as in effect on the
date hereof, the Indemnitee shall be deemed to have such greater right
hereunder; provided,

                                        3

<PAGE>

further, that to the extent that any changes made to the Charter and/or Bylaws
which permits any greater right to indemnification than that provided under this
Agreement, the Indemnitee shall be entitled to have such greater right. The
Company shall not adopt any amendment to the Charter or Bylaws, the effect of
which (intended or otherwise) would be to deny, diminish or encumber the
Indemnitee's right to indemnification under the Charter, Bylaws, applicable law
or otherwise as applied to any act or failure to act occurring in whole or in
part prior to the date upon which the amendment was approved by the Board of
Directors of the Company and/or its stockholders, as the case may be.

                2.5     Indemnification of Expenses of Successful Party.
Notwithstanding any other provisions of this Agreement, to the extent that the
Indemnitee has been successful in defense of any Proceeding or in defense of any
claim, issue or matter in the Proceeding, on the merits or otherwise, including
the dismissal of a Proceeding without prejudice, the Indemnitee shall be
indemnified against all Expenses incurred in connection therewith to the fullest
extent permitted by applicable law.

        3.      Presumptions.

                3.1     Presumption Regarding Standard of Conduct. The
Indemnitee shall be conclusively presumed to have met the relevant standards of
conduct as defined by applicable law for indemnification pursuant to this
Agreement, unless a determination that the Indemnitee has not met the relevant
standards is made by (i) the Board of Directors of the Company by a majority
vote of a quorum consisting of directors who were not parties to the Proceeding,
(ii) the stockholders of the Company by a majority of the votes cast at a duly
called meeting at which a quorum is present, or (iii) in a written opinion by
independent legal counsel, selection of whom has been approved by the Indemnitee
in writing, which approval shall not be unreasonably withheld or delayed.

                3.2     Determination of Right to Indemnification. If a claim
under this Agreement is not paid by the Company within sixty (60) days of
receipt of written notice, the right to indemnification as provided by this
Agreement shall be enforceable by the Indemnitee in any court of competent
jurisdiction. The burden of proving by clear and convincing evidence that
indemnification or advances are not appropriate shall be on the Company. Neither
the failure of the directors or stockholders of the Company or independent legal
counsel to have made a determination prior to the commencement of the action
that indemnification or advances are proper in the circumstances because the
Indemnitee has met the applicable standard of conduct, nor an actual
determination by the directors or stockholders of the Company or independent
legal counsel that the Indemnitee has not met the applicable standard of
conduct, shall be a defense to the action or create a presumption that the
Indemnitee has not met the applicable standard of conduct.

                The Indemnitee's Expenses incurred in connection with any
Proceeding concerning his right to indemnification or advances in whole or in
part pursuant to this Agreement, the Charter or the Bylaws shall also be
indemnified by the Company regardless of the outcome of the Proceeding, unless a
court of competent jurisdiction determines that each of the material assertions
made by the Indemnitee in the Proceeding was not made in good faith or was
frivolous.

                                        4

<PAGE>

        4.      Advances of Expenses. The Expenses incurred by the Indemnitee in
any Proceeding shall be paid promptly by the Company in advance of the final
disposition of the Proceeding at the written request of the Indemnitee to the
fullest extent permitted by applicable law (but only to the extent permissible
under Section 402 of the Sarbanes-Oxley Act of 2002, as may be amended from time
to time) and without requiring any preliminary determination of the ultimate
entitlement of the Indemnitee to indemnification, provided that if applicable
law requires an undertaking, the Indemnitee shall undertake in writing to repay
the amount advanced to the extent that it is ultimately determined that the
Indemnitee is not entitled to indemnification.

        5.      Change in Control. The Company agrees that if there is a
Potential Change in Control of the Company (other than in connection with a
Change in Control which has been approved by a majority of the Company's Board
of Directors who were directors immediately prior to the Change in Control) then
with respect to all matters thereafter arising concerning the rights of
Indemnitee to indemnity payments and Expense advances under this Agreement or
any other agreement, the Charter or Bylaws in effect relating to claims for
indemnifiable events, the Company shall seek legal advice only from independent
counsel selected by Indemnitee and approved by the Company (which approval shall
not be unreasonably withheld), and who has not otherwise performed services for
the Company or Indemnitee within the last five years (other than in connection
with such matters) ("Special Independent Counsel"). The Special Independent
Counsel, among other things, shall render its written opinion to the Company and
Indemnitee as to whether and to what extent the Indemnitee would be permitted to
be indemnified under applicable law. The Company agrees to pay the reasonable
fees of the Special Independent Counsel referred to above and may fully
indemnify the Special Independent Counsel against any and all expenses
(including attorneys' fees), claims, liabilities and damages arising out of or
relating to this Agreement.

        6.      Indemnification Procedure.

                6.1     Notice. Promptly after receipt by the Indemnitee of
notice of the commencement of any Proceeding or notice of the Indemnitee's
involvement in any Proceeding, if later, the Indemnitee will, if a claim is to
be made against the Company under this Agreement, notify the Company of the
commencement of the Proceeding, or the Indemnitee's involvement in such
Proceeding, as applicable. The omission to notify the Company will not relieve
it from any liability which it may have to the Indemnitee otherwise than under
this Agreement.

                6.2     Company Participation. With respect to any Proceeding
for, or with respect to, which indemnification is requested, the Company will be
entitled to participate in the Proceeding at its own expense and, except as
otherwise provided below, to the extent that it may wish, the Company may assume
the defense of the Proceeding, with counsel satisfactory to the Indemnitee.
After notice from the Company to the Indemnitee of its election to assume the
defense of a Proceeding, during the Company's good faith active defense the
Company will not be liable to the Indemnitee under this Agreement for any legal
or other expenses subsequently incurred by the Indemnitee in connection with the
defense of the Proceeding, other than reasonable costs of investigation or as
otherwise provided below. The Company shall not settle

                                        5

<PAGE>

any Proceeding in any manner which would impose any penalty or limitation on the
Indemnitee without the Indemnitee's written consent. The Indemnitee shall have
the right to employ his counsel in any Proceeding but the fees and expenses of
the counsel incurred after notice from the Company of its assumption of the
defense of the Proceeding shall be at the expense of the Indemnitee, unless (i)
the employment of counsel by the Indemnitee has been authorized by the Company,
(ii) the Indemnitee shall have reasonably concluded that there may be a conflict
of interest between the Company and the Indemnitee in the conduct of the defense
of a Proceeding, or (iii) the Company shall not in fact have employed counsel to
assume the defense of a Proceeding, in each of which cases the fees and expenses
of the Indemnitee's counsel shall be at the expense of the Company. The Company
shall not be entitled to assume the defense of any Proceeding brought by or on
behalf of the Company or as to which the Indemnitee has made the conclusion that
there may be a conflict of interest between the Company and the Indemnitee.

        7.      Limitations on Indemnification. No payments pursuant to this
Agreement shall be made by the Company:

                (a)     to indemnify or advance Expenses to the Indemnitee with
respect to Proceedings initiated or brought voluntarily by the Indemnitee and
not by way of defense, except with respect to Proceedings brought to establish
or enforce a right to indemnification under this Agreement, the Charter or
Bylaws or any other statute or law or otherwise as required under applicable
law, but the indemnification or advancement of Expenses may be provided by the
Company in specific cases if the Board of Directors finds it to be appropriate;

                (b)     to indemnify the Indemnitee for any Expenses, judgments,
fines, penalties or ERISA excise taxes for which payment is actually made to the
Indemnitee under a valid and collectible insurance policy, except in respect of
any excess beyond the amount of payment under the insurance;

                (c)     to indemnify the Indemnitee for any Expenses, judgments,
fines or penalties sustained in any Proceeding for an accounting of profits made
from the purchase or sale by Indemnitee of securities of the Company pursuant to
the provisions of Section 16(b) of the Securities Exchange Act of 1934, the
rules and regulations promulgated thereunder and amendments thereto or similar
provisions of any federal, state or local statutory law; or

                (d)     if a court of competent jurisdiction shall finally
determine that any indemnification hereunder is unlawful.

        8.      Maintenance of Liability Insurance.

                8.1     Affirmative Covenant of the Company. The Company
covenants and agrees that, as long as the Indemnitee shall continue to serve as
a [director and/or officer] of the Company and thereafter so long as the
Indemnitee shall be subject to any possible Proceeding, the Company, subject to
subsection 8.3 of this Agreement, shall promptly obtain and maintain in full
force and effect directors' and officers' liability insurance ("D&O Insurance")
in reasonable amounts from established and reputable insurers.

                8.2     Indemnitee Named as Insured. In all D&O Insurance
policies, the Indemnitee shall be named as an insured in a manner that provides
the Indemnitee the same

                                        6

<PAGE>

rights and benefits as are accorded to the most favorably insured of the
Company's [directors and/or officers].

                8.3     Exemption from Maintenance of Insurance. Notwithstanding
the foregoing, the Company shall have no obligation to obtain or maintain D&O
Insurance if the Company determines in good faith that insurance is not
reasonably available, the premium costs for insurance are disproportionate to
the amount of coverage provided, the coverage provided by insurance is so
limited by exclusions that it provides an insufficient benefit, or the
Indemnitee is covered by similar insurance maintained by a subsidiary of the
Company.

        9.      Miscellaneous.

                9.1     Successors and Assigns. This Agreement shall be binding
upon, and shall inure to the benefit of the Indemnitee and his heirs, personal
representatives and assigns, and the Company and its successors and assigns.

                9.2     Separability. Each provision of this Agreement is a
separate and distinct agreement and independent of the others, so that if any
provision of this Agreement shall be held to be invalid or unenforceable for any
reason, the invalidity or unenforceability shall not affect the validity or
enforceability of the other provisions of this Agreement. To the extent
required, any provision of this Agreement may be modified by a court of
competent jurisdiction to preserve its validity and to provide the Indemnitee
with the broadest possible indemnification permitted under applicable law.

                9.3     Savings Clause. If this Agreement or any portion of it
is invalidated on any ground by any court of competent jurisdiction, then the
Company shall nevertheless indemnify Indemnitee as to Expenses, judgments,
fines, penalties or ERISA excise taxes with respect to any Proceeding to the
full extent permitted by any applicable portion of this Agreement that shall not
have been invalidated or by any other applicable law.

                9.4     Interpretation; Governing Law. This Agreement shall be
construed as a whole and in accordance with its fair meaning. Headings are for
convenience only and shall not be used in construing meaning. This Agreement
shall be governed and interpreted in accordance with the laws of the State of
Maryland.

                9.5     Amendments. No amendment, waiver, modification,
termination or cancellation of this Agreement shall be effective unless in
writing signed by the party against whom enforcement is sought. The
indemnification rights afforded to the Indemnitee by this Agreement are contract
rights and may not be diminished, eliminated or otherwise affected by amendments
to the Charter, Bylaws or agreements including D&O Insurance policies.

                9.6     Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each party and delivered to the other.

                9.7     Notices. Any notice required to be given under this
Agreement shall be directed to the Company at 909 Montgomery Street, Suite 500,
San Francisco, California 94133,

                                        7

<PAGE>

Attention: President, with a copy to Peter T. Healy, Esq. 275 Battery Street,
Suite 2600, San Francisco, California 94111, and to Indemnitee at the address
set forth below or to another address as either shall designate in writing.

                            [signature page attached]

                                        8

<PAGE>

        IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.

                                                "Indemnitee"

                                                --------------------------------
                                                [Name:_________________________]

                                                Notice Address:

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

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

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

                                                "Company"

                                                LUMINENT MORTGAGE CAPITAL, INC.,
                                                a Maryland corporation

                                                By:
                                                   ----------------------------
                                                       Albert J. Gutierrez, CFA
                                                       President

                                       S-1

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