Document:

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                                                                    Exhibit 10.4

                              Employment Agreement
                                       of
                                 James F. Verhey

     This EMPLOYMENT AGREEMENT is made and entered into effective as of January
1, 2002 by and between JAMES F. VERHEY ("Employee") and BUSINESS STAFFING, INC.
(the "Company").

                                    Recitals

     A. Employee is currently employed by Kaiser Ventures LLC ("Kaiser") as
Executive Vice President-Finance and Chief Financial Officer pursuant to that
certain Second Amended and Restated Employment Agreement between Employee and
Kaiser Ventures Inc. (now the Company pursuant to a merger by Kaiser Ventures
Inc. with and into Kaiser effective November 30, 2001 (the "Merger")) dated
effective April 11, 2001 (the "Kaiser Employment Agreement").

     B. As a result of the Merger, Kaiser desires to terminate the employment of
Employee effective January 1, 2002, but to lease Employee from the Company to
perform services on behalf of Kaiser. Employee is willing to terminate the
existing Kaiser Employment Agreement without the collection of severance
benefits as provided in the Kaiser Employment Agreement provided that: (i) the
Company enters into this Agreement; (ii) Kaiser immediately transfers to the
Company all amounts necessary to fund the severance obligations that Kaiser
would have had under the Kaiser Employment Agreement and the Company assumes
such obligations; (iii) the Company assumes the responsibility for Kaiser's
401(k) Plan, Money Purchase Plan and Supplemental Executive Retirement Plan and
Kaiser transfers such retirement plans and related funds to the Company, as
applicable; (iv) the Company assumes the responsibility for all payments earned
under the Long Term Transaction Incentive Plan and Kaiser funds the payments due
under the Long Term Transaction Incentive Plan; and (v) the Company assumes all
other benefit and compensation programs of Kaiser applicable to Employee.

     C. The intent of this Agreement is to set forth the terms and conditions of
Employee's employment by the Company and his serving as a leased employee to
Kaiser.

     NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

     1. Employment, Positions and Duties. The Company hereby employs Employee
upon the terms and conditions set forth in this Agreement. Employee acknowledges
and agrees that he will be a leased employee only to Kaiser. Employee's
positions with Kaiser as a leased employee continue to be Executive Vice
President and Chief Financial Officer. In such capacity, Employee shall have the
responsibilities and duties normally incident to such positions, including, but
not limited to, those duties and responsibilities set forth in Schedule "A"
attached hereto and incorporated herein by this reference and such other duties
and responsibilities as may be reasonably assigned to him from time-to-time by
Kaiser's President or Chief Executive Officer. Employee's business time
commitment to the Company and as a leased employee to Kaiser at Kaiser's
corporate offices will be an average of six (6) days per month with Employee's
work schedule to be coordinated with Kaiser's Chief Executive Officer. There
shall be no reduction in Employee's annual base salary or benefits as a result
of Employee's reduced time commitment as provided herein. Kaiser and Employee
acknowledge the need for flexibility in Employee's work schedule so

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that Employee agrees to adjust his general schedule to give priority to, assist
in the preparation for, and attend important meetings for Kaiser or the Company
that may occasionally be scheduled at times other than Employee's general work
schedule.

     2. Term. Employee's employment under the terms of this Agreement shall
commence as of January 1, 2002, and shall continue until terminated as provided
herein; provided, however, upon Employee's termination, Employee shall receive
the severance compensation provided herein. Notwithstanding the date of this
commencement of this Agreement, for purposes of the calculation of benefits or
for any other similar purpose, the Company shall credit Employee with the time
he was employed by Kaiser or any predecessor of Kaiser.

     3. Base Salary. Except in connection with the payment of any severance as
provided herein, Employee's initial annual base salary shall be One Hundred
Twenty-Seven Thousand Three Hundred Five Dollars ($127,305) per year.

     Notwithstanding anything contained in this Agreement to the contrary, for
the purposes of determining the amount of severance benefits to be paid to
Employee for any reason, Employee's base salary shall be deemed to be his base
salary while employed by Kaiser Ventures Inc. ("KVI") as of September 30, 1999
(which was $201,825), and not the new initial annual salary provided in this
Paragraph 3.

     Prior to the first meeting of the Board of Managers of Kaiser in any
calendar year, the Human Relations Committee of the Board will review Employee's
salary and report its recommendations for any revision to the full Board of
Managers at such meeting. Kaiser will communicate its review to the Company and
the Company and Kaiser shall mutually agree as to any adjustments and Employee's
annual base compensation.

     4. Bonus Program.

        a. Discontinuance of Annual Performance Bonus. Employee acknowledges
that Kaiser has discontinued its historical annual performance bonus program
applicable to all executive officers for calendar years beginning in 2001.
Employee acknowledges and agrees that any future bonus shall be in the total
discretion of the Board of the Managers of the Company, as approved by Kaiser if
reimbursement for any such bonus is sought, except for: (i) the Retention Bonus
described in Paragraph 4.b.; (ii) any bonus pursuant to the long term
Transaction Incentive Plan described in Paragraph 4.c.; and (iii) any bonus
described in Paragraph 12.

        b. Retention Bonus. Provided Employee remains in the employ of Kaiser
through and including June 30, 2003, the Company shall pay to Employee a bonus
("Retention Bonus") on that date equal to the sum of (i) six months annual base
salary (based on Employee's annual base salary in effect on September 30, 1999)
plus (ii) an amount equal to 26.9% of the base salary in effect on September 30,
1999 (this is equivalent to six months' average percentage performance bonus
while at Kaiser for the five (5) years prior to and including the final annual
bonus for the year 2000 paid under the former annual performance bonus program;
provided, such amount shall be determined as if Employee's base salary is no
less than his base salary in effect at KVI on September 30, 1999).

        c. Long Term Incentive Plan. Employee shall be eligible to receive
payments in accordance with the terms of the Long Term Transaction Incentive
Plan adopted by Kaiser effective September 19, 2000, to be effective as of June
30, 2000 (the "Long Term Transaction

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Incentive Plan"). The Company has assumed the responsibility for all payments
under the Long Term Transaction Incentive Plan and shall pay any amount due
Employee under such plan. However, Employee acknowledges that Kaiser has
terminated the Long Term Transactions Incentive Plan effective as of January 1,
2002, with regard to future unearned payments and lieu thereof has issued Class
C Units to Employee under the terms of the Kaiser Amended and Restated Operating
Agreement dated October 7, 2002, as further amended by that certain Amendment to
Amended and Restated Operating Agreement dated effective January 15, 2002
(collectively the "Amended Operating Agreement"). Employee understands that
Class D Units may be issued to him in the future under the terms of the Amended
Operating Agreement.

     5. Options and Other Equity Related Incentives. Employee shall be eligible
for the grant of incentive options, non-qualified options and other forms of
unit or equity related incentives (collectively "Equity Incentives") from
time-to-time in the discretion of the Equity Option Committee of the Board of
Managers. The timing, size and amount of any future Equity Incentives will be
determined by the Equity Option Committee of Kaiser.

     It is acknowledged and agreed that all stock options granted to Employee by
Kaiser or it predecessor prior to the date of this Agreement are fully vested in
Employee and all outstanding options have been converted to the right to receive
Class A Units in Kaiser.

     6. Other Benefits. Except as otherwise provided herein, Employee will be
entitled to participate in all benefits provided by the Company to its employees
and to senior executives in accordance with and subject to the Company's polices
and procedures as they may exist and change from time-to-time (although the
total amount of the benefit may be correspondingly reduced if it is based on
annual base salary), including, but not limited to, medical and dental
insurance, life insurance, disability insurance, 401(k) savings plan, any
pension plan, deferred compensation plan, education and seminar reimbursement,
and reimbursement of reasonable expenses for company business. These benefits
shall be at least at the same level as provided to Employee at the time of the
Merger, include life insurance for the benefit of Employee with a face amount of
not less than Employee's annual base salary in effect as of September 30, 1999,
except that the Company may self-insure if insurance is not available on a
commercially reasonable basis.

     Notwithstanding the foregoing, Employee shall not: (i) accrue vacation
time; and (ii) be paid a car allowance. However, these provisions shall not be
construed to cause any reduction in the severance compensation and benefits as
provided in this Agreement. In addition to paying the normal and reasonable
business expenses typically reimbursed in the course of work for the Company,
the Company shall pay Employee's reasonable travel expenses to and from the
Company's or Kaiser's corporate offices and reasonable hotel expenses while
working at Kaiser's or the Company corporate offices. Employee shall pay for all
of his personal meals.

     7. Death Benefits. In the event of Employee's death, the Company shall pay
to Employee's personal representative or his estate, Employee's salary and
benefits through the end of the month in which the death occurred plus a ratable
portion of Employee's anticipated bonus for the year through the date of
Employee's death plus the compensation and benefits that would be payable to
Employee upon termination without cause as provided in Paragraph 12 of this
Agreement. The proceeds from any life insurance shall be for the sole benefit of
Employee's designated beneficiaries or if there are no designated beneficiaries,
Employee's estate. Employee's estate or personal representative shall have at
least one (1) year after the date of Employee's death while in the employment of
the Company in which to exercise all vested Equity Incentives, unless the terms
of an Equity Incentive provides for a longer period of time.

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     8.  Disability Benefits. In the event of the disability of Employee for any
reason, the Company shall continue to pay to Employee his salary and benefits
less short-term disability payments until long-term disability payments are made
to Employee but in no event shall such salary and benefit payments continue for
longer than six (6) months from the date of disability. In addition, upon
permanent disability, the vesting of all retirement and deferral compensation
plans and all outstanding Equity Incentives shall continue to occur for a period
of two (2) years after the date of disability in the same manner as if Employee
were still employed by the Company and serving as a leased employee during that
period.

     9.  Deductions. Applicable federal and state income taxes, social security
contributions (FICA), Medicare contributions, medical insurance premiums and any
other appropriate or customary deductions shall be withheld from any
compensation paid to Employee by Kaiser.

     10. Transition Payment. In recognition of the reduction of Employee's time
commitment to Kaiser and now the Company as well as his eventual transition from
being an employee of the Company, Employee was paid a transition payment of
$155,203.50 on January 2, 2002 ("Transition Payment"). This Transition Payment
represents an acceleration of the payment of severance in an amount equal to the
sum of (i) six months of Employee's annual base salary (based on Employee's
annual base salary at KVI in effect as of September 30, 1999); and (ii) an
amount equal to 26.9% of the base salary as determined in (i) above.

     11. Constructive Termination. Employee shall be deemed to have been
constructively discharged upon the occurrence of any of the following events:

         a. The assignment to Employee of duties materially and adversely
inconsistent with Employee's positions at Kaiser as a leased employee as of the
effective date of this Agreement. This includes a change in reporting
responsibilities, authority including title, or responsibilities; provided,
however, a lateral transfer within Kaiser or to an Affiliate shall not be deemed
a constructive termination;

         b. Any requirement that Employee permanently relocate to an office more
than 50 miles from the then location to which he is assigned as of the effective
date of this Agreement; and/or

         c. Any failure to provide Employee with compensation and benefits in
the aggregate on terms not materially less favorable than those enjoyed by
Employee under this Agreement as of the effective date of the Agreement, or the
subsequent taking of any action that would materially reduce any of Employee's
compensation and benefits in effect as of the date of the Agreement unless such
compensation and benefits are substantially equally reduced for executive
officers of the Company as a group (as measured by a percentage) or there is
less than a ten percent (10%) reduction in compensation or benefits.

     then, at Employee's option, exercisable within ninety (90) days of the date
Employee knew, or should have known exercising reasonable care, of the
occurrence of any of the foregoing events and the expiration of any applicable
cure period, Employee shall have the right to terminate his employment by
written notice to the Company, and on the date of such termination the Company
will pay Employee the compensation and benefits described in Paragraph 12 below.

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     12. Compensation Payable Upon Actual or Constructive Termination. In the
event Employee is terminated by the Company as a leased employee for any reason
(including a constructive termination) except for death, permanent disability,
or for cause, as defined below, the Company shall give Employee ninety (90) days
advance written notice of termination and the Company shall pay to Employee only
the following compensation and benefits as severance following the expiration of
the ninety (90) day period:

         a. if the termination is effective after March 31 of any year, an
amount equal to the pro rata portion of the annual performance bonus, if any,
that Employee would have been eligible to earn for the year of termination based
upon the performance bonus, if one is paid to his peers for the year of
termination by action of the Company and Board of Managers of Kaiser action,
assuming he would have received a bonus relatively equal to the amount received
by his peers;

         b. if not previously paid to Employee, the Retention Bonus due Employee
under Paragraph 4 of this Agreement shall be immediately paid to Employee;

         c. any payments that become due Employee under the terms of Kaiser's
Long Term Transaction Incentive Plan and distribution, if any, or the Class C
and Class D Units shall continue to be made in accordance with their respective
terms (which distributions can continue to be made to Employee beyond the date
of Employee's termination;

         d. the Company shall continue to provide and pay its portion of all of
Employee's health, welfare, insurance and other benefits for a period of twelve
(12) months following the date of termination, including the Company's portion
of any retirement and deferred compensation plan such as the Company's 401(k)
plan. After such termination, Employee shall be entitled, for a period of three
years to exercise his Equity Incentives as to any then vested, including any
options vesting within one year of termination as provided in the next sentence,
notwithstanding any other applicable provision contained in any option
agreement. In addition to the foregoing related to stock options, with respect
to any restricted Equity Incentives, Employee shall continue to vest in such
securities for a period of one-year following termination. Employee shall also
for the three year period in which he is entitled to exercise his vested stock
options as provided in this Paragraph 12 receive the benefit of any favorable
changes to outstanding Equity Incentives made by the Company, but in all cases
Employee's agreements may not be modified without Employee's written consent;
and

     Except for payments made pursuant to the Long Term Transaction Incentive
Plan or distributions on the Class C and Class D Units, all amounts due Employee
shall be payable in one lump sum or, at Employee's option, over such period of
time not to exceed twelve (12) months. Employee shall have no duty to seek other
employment during this period of time and there shall be no offset for any
compensation paid to Employee from any other source. If after termination of
Employee's employment, the parties shall negotiate the terms of such consulting
agreement which shall be documented in an agreement executed by the parties.

     To illustrate the application of Paragraphs 12.b. Employee was terminated
in February 1, 2002, without cause, having already been paid his Transition
Payment on January 2, 2002, Employee would receive his Retention Bonus which
would amount to six months' salary based upon Employee's base salary in effect
on September 30, 1999, plus 26.9% of the greater of Employee's then current
annual base salary or the base salary in effect on September 30, 1999. If
Employee was terminated on July 1, 2003, without cause, after having been paid
his Transition Payment on January 2, 2002, and his Retention Bonus on June 20,
2003, Employee would not be

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paid any additional cash compensation as severance as he would have already
received his total cash severance compensation package of $310,407 (Transition
Payment and Retention Bonus). In both cases, however, Employee would be entitled
benefits to be provided to him for twelve (12) months pursuant to Paragraph 12.,
and any payments that may be due him under the Long Term Transaction Incentive
Plan or distributions on Class C and Class D Units pursuant to Paragraph 12c.

     13. Possible Reduction in Certain Benefits.

         a. Except as provided in Paragraph 12(b) below, Employee shall in no
circumstances receive "payments in the nature of compensation" from the Company
which would result in "excess parachute payments" (as that term is defined in
Sections 280G and 4999 of the Internal Revenue Code of 1954, as amended, or any
equivalent or analogous term as shall in the future be defined in any law or
regulation governing the amount of severance compensation that may be paid
without penalty to an officer of a company upon a change in control of the
Company). In the event either Employee or the Company shall be advised in
writing by his or its counsel that Employee would receive excess parachute
payments if all payments under all contacts between Employee and the Company
were made, such opinion shall be confidentially disclosed to the other party. If
it is mutually determined that such payments would trigger the excess parachute
payments provisions, Employee shall receive only such compensation and benefits
under his contracts with the Company (not to exceed those permitted without
constituting excess parachute payments) which he, in his sole discretion, has
designated in written notice to the Company. Employee shall have a minimum of
thirty (30) days in which to make such written designation. In the event of a
disagreement between the counsel of the respective parties as to whether a
payment would result in excess parachute payments, such counsel shall jointly
designate an independent tax counsel (whose fees shall be paid by the Company)
within 10 days who shall promptly make a conclusive determination of the matter.

         b. Notwithstanding anything else to the contrary, in the event Employee
is terminated pursuant to Paragraph 12 above, Employee shall have the right, in
his sole discretion, to elect to receive all or any part of the compensation
payable to him upon termination (or which would have been due under Paragraph 12
but for a previous election under Paragraph 13(a)) without regard to whether any
such amounts may constitute "excess parachute payments." If Employee fails to
provide the Company a written designation within thirty (30) days, he shall be
presumed to have elected to receive all compensation and benefits due him
without regard to whether any such compensation or benefits shall constitute
"excess parachute payments."

         c. Nothing in this Paragraph 13 shall be construed or deemed to be a
forfeiture of any compensation or benefits that Employee may elect not to
accelerate due to any concern about the receipt of "excess parachute payments."

     14. Termination for Cause. If the Company elects to terminate Employee's
employment for cause (as defined below Paragraph 15 below), Employee's
employment will terminate on the date fixed for termination by the Company and
thereafter the Company will not be obligated to pay Employee any additional
compensation, other than the compensation due and owing up to the date of
termination and as may be required by law. After such termination, Employee
shall be entitled, for a period of one hundred and twenty (120) days, to
exercise any Equity Incentives that are vested as of the date of termination.

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     15. Definition of "Cause." "Cause" for the purposes of this Agreement shall
mean any of the following:

         a. Willful breach by Employee of any provision of this Agreement,
provided, however, if the breach is not a material breach, the Company shall
give Employee written notice of such breach and Employee shall have thirty (30)
days in which to cure such breach. No written notice or cure period shall be
required in the event of a willful and material breach of this Agreement by
Employee;

         b. Gross negligence or dishonesty in the performance of Employee's
duties or responsibilities hereunder;

         c. Engaging in conduct or activities or holding any position that
materially conflicts with the interest of, or materially interferes with
Employee's duties and responsibilities to the Company, Kaiser or their
Affiliates; or

         d. Engaging in conduct which is materially detrimental to the business
of the Company, Kaiser or their Affiliates.

     16. Voluntary Termination. Employee's employment by the Company may be
terminated at any time upon the parties' mutual written agreement or voluntarily
by either party upon ninety (90) days prior written notice to the other. Upon
termination of Employee by the Company for any reason (including a constructive
termination) except for death, permanent disability or for cause, Employee shall
receive the compensation and benefits set forth in Paragraph 12 of this
Agreement. In the event of Employee's voluntary termination, the Company shall
not be obligated to pay Employee any compensation except as follows: (i) the
compensation due and owing as through the date of termination and as may be
required by law; (ii) any distributions on the Class A, Class B and Class D
Units held by Employee (which distributions can continue to be made to Employee
beyond the date of Employee's termination ; and (iii) Employee shall also
receive six (6) months (instead of twelve (12) months) of the paid benefits
described in Paragraph 12(f). After voluntary termination by Employee, Employee
shall be entitled for a period of one hundred twenty (120) days to exercise any
Equity Incentives that are vested as of the date of termination.

     17. Confidentiality.

         a. Employee's Obligations. Employee agrees that (a) except as provided
in this Agreement Employee shall maintain the confidential nature of any
Proprietary Information received or acquired by him, and (b) Employee shall use
such Proprietary Information solely for the purpose of meeting his obligations
under this Agreement and not in connection with any other business or activity.
"Proprietary Information" means all oral, written or recorded information about
or related to the Company, Kaiser or any of their Affiliates or its or their
technology, assets, liabilities, or business, whether acquired before or after
the date hereof, and regardless of the manner in which it is acquired, together
with any documents or other materials prepared by Employee which contain or
reflect such information. After termination of employment upon demand of the
Company, Kaiser, as applicable, Employee agrees to return or destroy any and all
materials containing any Proprietary Information.

         b. Company'S Obligations. The Company agrees that it shall maintain and
provide information regarding Employee in accordance with generally accepted
industry and business practices and that it will seek to require Kaiser to
follow the same requirements.

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         c. Limitations on Confidential Obligations and Use Restrictions. The
restrictions in Paragraph 17(a) above do not apply to information which Employee
can demonstrate (i) is then in the public domain by acts not attributable to
such disclosing party or (ii) is hereafter received on an unrestricted basis by
such Employee from a third party source who, to Employee's knowledge after due
inquiry, is not and was not bound by confidentiality obligations to the Company,
Kaiser or any Affiliate thereof. In addition, Employee, the Company and Kaiser
are permitted to disclose any Proprietary Information as necessary in the
defense or prosecution of any legal action.

         d. Actions if Disclosure Required. If Employee is required by law to
make any disclosure otherwise prohibited hereunder, such party shall use its
best efforts to provide the other with prompt prior notice where possible so
that (a) the other party (with the reasonable cooperation of the party required
to make such disclosure) may seek an appropriate protection order or other
remedy and/or (b) the parties can seek in good faith to agree on the appropriate
scope and approach to disclosure. If a protective order or other remedy is not
obtained, the party required to make such disclosure may furnish only that
portion of information protected hereby which it is legally compelled to
disclose and shall use its reasonable efforts to obtain confidential treatment
for all information so disclosed.

         e. Injunction. Each party agrees that remedies at law may be inadequate
to protect against breach of this Paragraph 17, and hereby agrees to the
granting of injunctive relief without proof of actual damage.

     18. Arbitration of Disputes. If Employee and the Company cannot resolve a
dispute (whether arising in contract or tort or any other legal theory, whether
based on federal, state or local statute or common law and regardless of the
identities of any other defendants) that in any way relates to or arises out of
this Agreement, the termination of Employee's employment relationship with the
Company, Kaiser or any Affiliate thereof, (without limiting the generality of
any other Paragraph herein), then such dispute shall be settled as follows:

         a. The Company and Employee agree to jointly select a judicial officer
who is affiliated with the Judicial Arbitration and Mediation Service, or such
other equivalent organization as the Company and Employee may mutually select,
to act as the trier of fact and judicial officer in such dispute resolution;

         b. If the Company and Employee are unable to agree upon a particular
judicial officer, then the decision shall be made by the chief executive officer
of the Judicial Arbitration and Mediation Service, after consulting with Kaiser
and Employee;

         c. The Company and Employee shall have the same rights of discovery as
if the dispute were being resolved in the Superior Court of the State of
California. However, the judicial officer shall, on his own motion, or the
request of either Kaiser or Employee, have the authority to extend or reduce the
time periods therefore; and,

         d. The judicial officer serving hereunder shall be designated as a
referee under the provisions of Title VIII, Chapter 6 of the California Code of
Civil Procedure (Sections 638 through 645. 1, inclusive). Payment for the
services of the judicial officer and the rights and procedure of appeal, and/or
other review of the decision, shall be made as provided in such sections.

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     The judicial officer shall have the right to grant injunctive relief,
specific performance and other equitable remedies.

     19. Miscellaneous.

         a. Entire Agreement; Amendments. This Agreement states the entire
understanding and agreement between the parties with respect to its subject
matter as of the date of this Agreement, and may only be amended by a written
instrument duly executed by Employee and the Company and to the extent that it
directly impacts Kaiser, the written consent of Kaiser.

         b. Assignment. This Agreement and the rights and obligations of
Employee may not be sold, transferred, assigned, pledged or hypothecated by
Employee.

         c. Non-Waiver. Failure to insist upon strict compliance with any
provision of this Agreement or the waiver of any specific event of
non-compliance shall not be deemed to be or operate as a waiver of such
provision or any other provision hereof or any other event of non-compliance.

         d. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the Company, its successors and assigns and, Employee's heirs,
successors, and legal or personal representatives.

         e. Headings. The headings throughout this Agreement are for convenience
only and shall in no way be deemed to define, limit, or add to the meaning of
any provision of this Agreement.

         f. Context. Whenever required by the context, the singular shall
include the plural, the plural the singular, and one gender such other gender as
is appropriate.

         g. Notices. All notices, request, demands, consents and other
communications hereunder shall be transmitted in writing and shall be deemed to
have been duly given when hand delivered or sent by certified United States
mail, postage prepaid, with return by certified requested, addressed to the
parties as follows:

             Business Staffing, Inc.
             3633 E. Inland Empire Blvd., Suite 480
             Ontario, CA  91764
             Attention:  General Counsel

             James F. Verhey
             4221 Big Ranch Road
             Napa, CA  94558

         h. Costs. In any action taken to enforce the provisions of this
Agreement, the prevailing party shall be reimbursed all reasonable costs
incurred in such legal action including reasonable attorney's fees in such
action.

         i. Severability. If any provision or clause of this Agreement, as
applied to any party or circumstances shall be adjudged by a court to be invalid
or unenforceable, said adjudication shall in no manner effect any other
provision of this Agreement, the application of such provision to any other
circumstances or the validity or enforceability of this Agreement.

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         j. Definition of Affiliate and Enforceability by Kaiser. The term
"Affiliate" for purposes of this Agreement shall mean any person or entity now
or hereafter in control, controlled by or in common control with Kaiser and the
Company. It shall also include any direct or indirect subsidiary of such
Corporation and any company in which Kaiser has more than a ten percent (10%)
ownership interest. The parties agree that Kaiser shall be a third party
beneficiary of this Agreement and shall have the right to enforce its terms.

         k. Acknowledgment Regarding ISO's. Employee acknowledges that he is
responsible for the tax consequences of all severance compensation he may
receive and that certain actions may need to be taken by Employee within limited
periods of time to preserve the tax status of any incentive stock options. The
Company makes no representation or warranty that any past or future grant of a
stock option or Equity Incentives to Employee qualifies as an incentive option.

         l. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.

     IN WITNESS WHEREOF, the parties hereto have executed this Employment
Agreement to be effective as of the day and year first written above not
withstanding the actual date of signature.

"Employee"                                    "Kaiser"
James F. Verhey                               Kaiser Ventures Inc.

/s/ James F. Verhey                           By: /s/ Richard E. Stoddard
------------------------------------              -----------------------
James F. Verhey                                   Richard E. Stoddard
                                                  President

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                      Consent of Human Relations Committee

                                       of

                               Kaiser Ventures LLC

                                       to

                      James F. Verhey Employment Agreement

     The Human Relations Committee of Kaiser Ventures LLC ("Kaiser") hereby
consents to the employment agreement between Business Staffing, Inc. (the
"Company") and James F. Verhey set forth above and the payment of all sums of
Kaiser that may be required to reimburse the Company under the terms of such
agreement as provided in the Administrative Services Agreement between the
Company and Kaiser dated as of January 1, 2002.

                                            Kaiser Ventures LLC
                                            Human Relations Committee

                                            By:  /s/ Todd G. Cole
                                                 -------------------------------
                                                 Todd G. Cole, Chairman

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                                                                    Exhibit 10.4

                                  Schedule "A"

                                 JAMES F. VERHEY
                    Executive Vice President - Finance & CFO

     This position will report to the President and Chief Executive Officer of
Kaiser Ventures LLC. The positions for Kaiser Ventures LLC are to be filled by
Business Staffing, Inc. through the services of James F. Verhey.

Responsibilities:

     This position has the responsibility to manage all accounting, finance,
tax, and treasury functions for Kaiser and its subsidiaries; to represent Kaiser
with all outside entities coming under the purview of corporate finance; to
ensure all reporting requirements are met in a satisfactory and timely manner;
to assist senior management in analyzing, evaluating and pursuing new business
and growth opportunities; to manage Kaiser's annual budget and capital plan
processes; to manage Kaiser's financial analysis and modeling function; to
manage Kaiser's insurance program; and to monitor all project development
activities from the financial perspective. These duties include the following:

     .    Assist CEO in analyzing, evaluating and pursuing business and growth
          opportunities.

     .    Oversee investor relations program implementation,
          shareholder/investor communications.

     .    Oversee implementation of real estate financing strategy.

     .    Manage and oversee financial aspects of SEC compliance.

     .    Oversee the treasury and controller functions. Oversee all audit
          procedures, outside auditors, and report to the Chairman of the Audit
          Committee.

     .    Manage all aspects of the accounting function of Kaiser, employing
          Generally Accepted Accounting Procedures.

     .    Manage Kaiser's annual budget and capital plan processes.

     .    Manage Kaiser's financial analysis and modeling function.

     .    Manage all tax planning and reporting.

     .    Manage all debt and equity structuring.

     .    Manage all insurance programs.

     .    Manage and oversee the Kaiser Eagle Mountain, operations, insuring
          both smooth functioning of all administrative departments and
          operations.

     .    Monitor all project development activities from the financial
          perspective.

     .    Participate in major negotiations with third parties.

     .    Direct and manage, in coordination with the Executive Vice President
          and General Counsel, the operations of Kaiser in the absence of the
          Chief Executive Officer.

                                       12<PAGE>

                                                                     Exhibit 4.1

                         ALLIANCE BANCSHARES CALIFORNIA

           1996 COMBINED INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN

                               (Amended June 1996)

1.   Purpose

     The purpose of the Alliance Bancshares California 1996 Combined Incentive
and Non-Qualified Stock Option Plan (the "Plan") is to strengthen Alliance
Bancshares California (the "Bank") and those corporations which are or may
hereafter become subsidiaries (the "Subsidiaries") by providing to participating
officers, employees and directors added incentive for high levels of performance
and for unusual efforts to increase the earnings of the Bank and any
Subsidiaries. The Plan seeks to accomplish these purposes and achieve these
results by providing a means whereby such officers, employees and directors may
purchase shares of the common stock (the "Common Stock") of the Bank pursuant to
stock options (the "Stock Options") granted in accordance with this Plan.

     Stock Options granted pursuant to this Plan are intended to be either
Incentive Stock Options or Non-Qualified Stock Options (defined below) as shall
be designated by the Board of Directors upon the grant of each Stock Option
hereunder.

2.   Definitions.

     For purposes of this Plan, the following terms shall have the following
meanings:

          (a) "Common Stock" - This term shall mean shares of the Bank's common
     stock, subject to adjustment pursuant to Paragraph 16, "Adjustment Upon
     Changes in Capitalization," hereunder.

          (b) "Bank" - This term shall mean Alliance Bancshares California.

          (c) "Eligible Incentive Plan Participants" - This term shall mean all
     full-time salaried officers and employees of the Bank or any Subsidiary who
     have completed six (6) months of service.

          (d) "Eligible Non-Qualified Plan Participants" - This term shall mean
     all full-time salaried officers and employees and all Directors of the Bank
     or any Subsidiary.

          (e) "Fair Market Value" - This term shall mean the fair market value
     of the Common Stock as determined in accordance with any reasonable
     valuation method selected by the Board of Directors.

          (f) "Incentive Stock Option" - This term shall mean a Stock Option
     which is an "incentive stock option" within the meaning of Section 422A of
     the Internal Revenue Code of 1986, as amended.

                                        1

<PAGE>

          (g) "Non-Qualified Stock Option" - This term shall mean a Stock Option
     which does not qualify as an Incentive Stock Option.

          (h) "Option Share" - This term shall mean Common Stock covered by and
     subject to any outstanding unexercised Stock Option granted pursuant to
     this Plan.

          (i) "Optionee" - This term shall mean any Eligible Incentive or
     Non-Qualified Plan Participant to whom a Stock Option has been granted
     pursuant to this Plan, provided that at least part of the Stock Option is
     outstanding and unexercised.

          (j) "Plan" - This term shall mean the Alliance Bancshares California
     1996 Combine Incentive and Non-Qualified Stock Option Plan as embodied
     herein and as may be amended from time to time in accordance with the terms
     hereof and applicable law.

          (k) "Stock Option" - This term shall mean the right to purchase Common
     Stock under this Plan in a specified number of shares, at a price and upon
     the terms and conditions determined by the Board of Directors. The maximum
     term of each option granted shall be 10 years from date of grant.

3.   Administration.

          (a) Administration of the Plan. Any action of the Board of Directors
     with respect to the administration of the Plan shall be taken pursuant to a
     majority vote of its members, provided, however, that with respect to
     action taken by the Board of Directors in granting an option to an
     individual director, such action must be authorized by the required number
     of directors without counting the interested director, who shall abstain as
     to any vote on his option. An interested Director may be counted in
     determining the presence of a quorum at a meeting of the Board of Directors
     where such action will be taken. Any such action taken by the Board of
     Directors in the administration of this Plan shall be valid and binding, so
     long as the same is not inconsistent with the terms and conditions of this
     Plan, subject to the compliance with the terms, conditions and restrictions
     set forth in this Plan, including the power to: (i) establish the number of
     Stock Options, if any, to be granted hereunder, in the aggregate and with
     regard to each Eligible Incentive or Non-Qualified Plan Participant; (ii)
     determine the time or times when such Stock Options, or parts thereof, may
     be exercised; (iii) determine the Eligible Incentive or Non-Qualified Plan
     Participants, if any, to whom Stock Options are granted; (iv) determine the
     duration and purposes, if any, of leaves of absence which may be permitted
     to holders of unexercised, unexpired Stock Options without such
     constituting a termination of employment under this Plan; and (v) prescribe
     and amend the terms, provisions and form of each instrument and agreement
     setting forth the terms and conditions of every Stock Option granted
     hereunder.

          (b) Decision and Determinations. Subject to the express provisions of
     the Plan, the Board of Directors shall have the authority to construe and
     interpret this Plan, to define the terms used herein, to prescribe, amend
     and rescind the rules and regulations relating to the administration of the
     Plan, and to make all other determinations necessary or advisable for
     administration of the Plan. Determinations of the Board of Directors on
     matters referred to in this Section 3 shall be final and conclusive so long
     as the same are not inconsistent with the terms of this Plan.

                                        2

<PAGE>
4.   Participation.

     All full-time salaried officers and employees of the Bank and its
subsidiary corporations who have completed six (6) months of service shall be
eligible for selection to receive both Incentive and Non-Qualified Stock
Options. Directors of the Bank and its subsidiary corporations who are not also
full-time salaried officers or employees of the Bank or a subsidiary corporation
shall be eligible to receive only Non-Qualified Stock Options. Subject to the
express provisions of the Plan, the Board of Directors shall select from the
eligible class and determine the individuals to whom Stock Options shall be
granted, whether such Stock Options shall be Incentive or Non-Qualified Stock
Options, and the terms and provisions of the respective Stock Option Agreements
(which need not be identical), the times at which such Stock Options shall be
granted, and the number of shares subject to each Stock Option. An individual
who has been granted a Stock Option may, if such individual is otherwise
eligible, be granted additional Stock Options if the Board of Directors shall so
determine. However, no Stock Options may be granted to any individual who,
immediately before the option is granted, owns beneficially more than ten
percent (10~) of the outstanding stock of the Bank (whether acquired upon
exercise of options or otherwise), unless: (i) with regard to Incentive Stock
Options, the option is not exercisable by its terms after five (5) years from
the date of its grant and the option price is at least one hundred ten percent
(110%) of the Fair Market Value (at the time the option is granted) of the stock
subject to option; or (ii) with regard to Non-Qualified Stock Options, the
option price is at least one hundred ten percent (110%) of the Fair Market Value
(at the time the option is granted) of the stock subject to option. For this
purpose, shares of stock subject to options may be considered beneficially owned
by an optionee but are not treated as outstanding stock of the Bank.

     The Board of Directors shall determine the individuals who shall receive
Stock Options and the terms and provisions of the Stock Options, and shall grant
such Options to such individuals.

5.   Shares Subject to the Plan.

     Subject to adjustments as provided in Section 16 hereof, the maximum number
of shares of Common Stock which may be issued upon exercise of all Stock
Options, whether Incentive or Non-Qualified Stock Options, granted under this
Plan is limited to 17.0596 percent of the outstanding shares in the aggregate at
the time of adoption of the Plan. Two-thirds (2/3) of such shares shall be
reserved exclusively for the grant of Stock Options to Eligible Incentive Plan
Participants. The remaining one-third (1/3) of such shares may be granted to
Eligible Non-Qualified Plan Participants.

     If a Stock Option shall be canceled, surrendered, or expire for any reason
without having been exercised in full, or an Optionee shall be terminated,
whether or not for cause, die or become disabled and such Stock Option shall be
deemed under this Plan to be exercisable only as to certain increments, if any,
then the Option Shares represented thereby which are not purchased or which may
not be purchased because the Stock Option is not fully exercisable shall again
be available for grants of Stock Options under this Plan.

6.   Eligibility.

     Only Eligible Incentive Plan Participants shall be eligible to receive
grants of Incentive Stock Options under this Plan. Only Eligible Non-Qualified
Plan Participants shall be eligible to receive grants of Non-Qualified Stock
Options under this Plan.

                                        3

<PAGE>

7.   Grants of Stock Options.

          (a) Grant. Subject to the express provisions of the Plan, the Board of
     Directors in its sole and absolute discretion, may grant Stock Options of
     the Bank at the price(s) and time(s), on the terms and conditions and to
     such Eligible Incentive or Non-Qualified Plan Participants as it deems
     advisable and specifies in the respective grants, subject to the
     limitations and restrictions set forth in the Plan and applicable
     approvals. All such grants must be exercisable at the rate of at least
     twenty percent (20%) per year over five (5) years from the date the option
     is granted. An Eligible Incentive or Non-Qualified Plan Participant who has
     been granted an Incentive or Non-Qualified Stock Option may, if otherwise
     eligible, be granted additional Stock Options if the Board of Directors
     shall so determine.

          (b) Date of Grant and Rights of Optionee. The determination of the
     Board of Directors to grant a Stock Option shall not in any way constitute
     or be deemed to constitute an obligation of the Bank, or a right of the
     Eligible Incentive or Non-Qualified Plan Participant who is the proposed
     subject of the grant, and shall not constitute or be deemed to constitute
     the grant of a Stock Option hereunder unless and until both the Bank and
     the Eligible Incentive or Non-Qualified Plan Participant have executed and
     delivered to the other a stock option agreement ("Stock Option Agreement")
     in the form then required by the Board of Directors evidencing the grant of
     the Stock Option, together with such other instrument or instruments as may
     be required by the Board of Directors pursuant to this Plan; provided,
     however, that the Board of Directors may fix the date of grant as any date
     on or after the date of its final determination to grant the Stock Option
     (or if no date is fixed, then the date of grant shall be the date on which
     the determination was finally made by the Board of Directors to grant the
     Stock Option), and such date shall be set forth in the Stock Option
     Agreement. The date of grant as so determined shall be deemed the date of
     grant of the Stock Option for purposes of this Plan.

          (c) Shareholder-Employees. A Stock Option granted hereunder to an
     Eligible Incentive Plan Participant who is an employee of the Bank or any
     Subsidiary, who also owns (within the meaning of Section 424(d) of the
     Internal Revenue Code) at the date of the grant of the Stock Option more
     than ten percent (10%) of the total combined voting power of all classes of
     capital stock of the Bank or a Subsidiary, shall not qualify as an
     Incentive Stock Option unless: (i) the purchase once of the Option Shares
     subject to said Stock Option is at least 110% of the Fair Market Value of
     the Option Shares, determined as of the date said Stock Option is granted;
     and (ii) the Stock Option by its terms is not exercisable after five (5)
     years from the date that it is granted.

8.   Stock Option Exercise Price.

     The exercise price of any Option Shares shall be determined by the Board of
Directors, in its sole and absolute discretion, upon the grant of a Stock
Option. Except as provided in Section 7 hereof, the exercise price of any
Incentive Stock Option shall not be less than one hundred percent (100%) of the
Fair Market Value of the Common Stock represented by the Option Shares on the
date of grant of the related Stock Option. The Fair Market Value of such stock
shall be determined in accordance with any reasonable valuation method. The
exercise price of any Non-Qualified Stock Option shall not be less than one
hundred percent (100%) of the Fair Market Value of such stock. As to any Stock
Option granted to any individual who, immediately before the option is granted,
owns beneficially more than ten percent (10%) of the outstanding stock of the
Bank (whether acquired upon exercise of options or otherwise), the exercise
price must be at least one hundred ten percent (110%) of the Fair Market Value
of the stock at the time when such Stock Option is granted.

                                        4

<PAGE>

9.   Exercise of Stock Option.

          (a) Exercise. Except as otherwise provided elsewhere herein, each
     Stock Option shall be exercisable in such increments, which need not be
     equal, and upon such contingencies as the Board of Directors shall
     determine at the time of grant of the Stock Option; provided, however, that
     if an Optionee shall not in any given period exercise such part of the
     Stock Option which has become exercisable during that period, the
     Optionee's right to exercise such part of the Stock Option shall continue
     until expiration of the Stock Option or any part thereof as may be provided
     in the related Stock Option Agreement. No Stock Option or part thereof
     shall be exercisable except with respect to whole shares of Common Stock,
     and fractional share interests shall be disregarded except that they may be
     accumulated.

          (b) Notice and Payment. Stock Options granted hereunder shall be
     exercised by a ten (10) day written notice delivered to the Bank specifying
     the number of Option Shares with respect to which the Stock Option is being
     exercised, together with concurrent payment in full of the exercise price
     as hereinafter provided. If the Stock Option is being exercised by any
     person or persons other than the Optionee, said notice shall be accompanied
     by proof, satisfactory to counsel for the Bank, of the right of such person
     or persons to exercise the Stock Option. The Bank's receipt of notice of
     exercise without concurrent receipt of the full amount of the exercise
     price shall not be deemed an exercise of a Stock Option by an Optionee, and
     the Bank shall have no obligation to an Optionee for any Option Shares
     unless and until full payment of the exercise price is received by the Bank
     and all of the terms and provisions of the Plan and the related Stock
     Option agreement have been fully complied with.

          (c) Payment of Exercise Price. The exercise price of any Option Share
     purchased upon the proper exercise of a Stock Option shall be paid in full
     at the time of each exercise of a Stock Option in cash, by bank draft,
     cashier's or certified check which has an aggregate Fair Market Value equal
     to the full amount of the exercise price of the Stock Option, or part
     thereof, then being exercised. Payment by an Optionee as provided herein
     shall be made in full in cash or by cashier's or certified check
     concurrently with the Optionee's notification to the Bank of his intention
     to exercise all or part of a Stock Option.

          (d) Minimum Exercise. Not less than ten (10) Option Shares may be
     purchased at any one time upon exercise of a Stock Option unless the number
     of shares purchased is the total number which remains to be purchased under
     the Stock Option.

          (e) Compliance With Law. No shares of Common Stock shall be issued
     upon exercise of any Stock Option, and an Optionee shall have no right or
     claim to such shares, unless and until: (i) payment in full as provided
     herein above has been received by the Bank; (ii) in the opinion of the
     counsel for the Bank, all applicable requirements of law and of regulatory
     bodies having jurisdiction over such issuance and delivery have been fully
     complied with; and (iii) if required by federal or state law or regulation,
     the Optionee shall have paid to the Bank the amount, if any, required to be
     withheld on the amount deemed to be compensation to the Optionee as a
     result of the exercise of his or her Stock Option, or made other
     arrangements satisfactory to the Bank, in its sole discretion, to satisfy
     applicable income tax withholding requirements.

                                        5

<PAGE>

          (f) Reorganization. Notwithstanding any provision in any Stock Option
     Agreement pertaining to the time of exercise of a Stock Option, or part
     thereof, upon adoption by the requisite holders of the outstanding shares
     of Common Stock of any plan of dissolution, liquidation, reorganization,
     merger, consolidation or sale of all or substantially all of the assets of
     the Bank to another bank or corporation which would, upon consummation,
     result in termination of a Stock Option in accordance with Section 17
     hereof, all Stock Options previously granted may, in the discretion of the
     Board of Directors, become immediately exercisable as to all unexercised
     Option Shares for such period of time as may be determined by the Board of
     Directors, but in any event not less than 30 days, on the condition that
     the terminating event is consummated. If such terminating event is not
     consummated, Stock Options granted pursuant to the Plan shall be
     exercisable in accordance with their respective terms.

10.  Nontransferability of Stock Options.

     Each Stock Option shall, by its terms, be nontransferable by the Optionee
other than by will or the laws of descent and distribution, and shall be
exercisable during the Optionee's lifetime only by the Optionee.

11.  Continuation of Affiliation.

     Nothing contained in this Plan (or in any Stock Option Agreement) shall
obligate the Bank or any Subsidiary to employ or continue to employ any Optionee
or any Eligible Incentive or Non-Qualified Plan Participant for any period of
time or interfere in any way with the right of the Bank or a Subsidiary to
reduce or increase the Optionee's or Eligible Incentive or Non-Qualified Plan
Participant's compensation.

12.  Continuation of Affiliation.

     Except as provided in Section 13 hereof, if for any reason other than
disability or death, an Optionee ceases to be employed by the Bank or a
Subsidiary, the Stock Options granted to such Optionee shall expire not later
than 30 days thereafter. During such period after cessation of affiliation, such
Stock Options shall be exercisable only as to those increments, if any, which
had become exercisable as of the date of on which such Optionee ceased to be
affiliated with the Bank or the Subsidiary, and any Stock Options or increments
which had not become exercisable as of such date shall expire and terminate
automatically on such date. Except as provided in Section 13 hereof, if an
Optionee ceases to be employed by the Bank or a Subsidiary by reason of
disability, such Optionee's Stock Options shall expire not later than one (1)
year thereafter. During such period after cessation of affiliation, such Stock
Options shall be exercisable only as to those increments, if any, which had
become exercisable as of the date on which such Optionee ceased to be affiliated
with the Bank or the Subsidiary, and any Stock Options or increments which had
not become exercisable as of such date shall expire and terminate automatically
on such date.

13.  Termination for Cause; Removal of Director for Cause.

                                        6

<PAGE>

     If the Stock Option Agreement so provides and if an Optionee's employment
or affiliation with the Bank or a Subsidiary is terminated for cause, the Stock
Options granted to such Optionee shall automatically expire and terminate in
their entirety immediately upon such termination; provided, however, that the
Board of Directors may, in its sole discretion, within thirty (30) days of such
termination, reinstate such Stock Options by giving written notice of such
reinstatement to the Optionee. In the event of such reinstatement, the Optionee
may exercise the Stock Options only to such extent, for such time, and upon such
terms and conditions as if the Optionee had ceased to be employed by or
affiliated with the Bank or a Subsidiary upon the date of such termination for a
reason other than cause, disability or death. In the case of an employee,
termination for cause shall include, but shall not be limited to, termination
for malfeasance or gross misfeasance in the performance of duties or conviction
of illegal activity in connection therewith and, in any event, the determination
of the Board of Directors with respect thereto shall be final and conclusive. In
the case of a Director, termination for cause shall include removal pursuant to
Sections 302 and 304 of the California Corporations Code or removal pursuant to
the exercise of regulatory authority by the Federal Deposit Insurance
Corporation or other bank supervisory agency.

14.  Death of Optionee.

     If an Optionee dies while employed by or affiliated with the Bank or a
Subsidiary or during the thirty (30) day period referred to in Section 12 hereof
or the one (1) year period referred to in Section 15 hereof, the Stock Options
granted to such Optionee shall expire on the expiration dates specified for said
Stock Options at the time of their grant, or one (1) year after the date of such
death, whichever is earlier. After such death, but before such expiration,
subject to the terms and provisions of the Plan and the related Stock Option
Agreements, the person or persons to whom such Optionee's rights under the Stock
Options shall have passed by will or by the applicable laws of descent and
distribution, or the executor or administrator of the Optionee's estate, shall
have the right to exercise such Stock Options to the extent that increments, if
any, had become exercisable as of the date on which the Optionee died.

15.  Disability of Optionee.

     If an Optionee is disabled while employed by or affiliated with the Bank or
a Subsidiary or during the thirty day period referred to in Section 12 hereof,
the Stock Options granted to such Optionee shall expire on the expiration dates
specified for said Stock Options at the time of their grant, or one (1) year
after the date such disability occurred, whichever is earlier. After such
disability occurs, but before such expiration, the Optionee or the guardian or
conservator of the Optionee's estate, as duly appointed by a court of competent
jurisdiction, shall have the right to exercise such Stock Options to the extent
that increments, if any, had become exercisable as of the date on which the
Optionee became disabled or ceased to be employed by or affiliated with the Bank
or a Subsidiary as a result of the disability. An Optionee shall be deemed to be
"disabled" if it shall appear to the Board of Directors, upon written
certification delivered to the Bank of a qualified licensed physician, that the
Optionee has become permanently and totally disabled within the meaning of
Section 422(c)(6) of the Internal Revenue Code.

16.  Adjustment Upon Changes in Capitalization.

     If the outstanding shares of Common Stock of the Bank are increased or
decreased, or changed into or exchanged for a different number or kind of shares
or securities of the Bank, through a reorganization, merger, recapitalization,
reclassification, stock split, stock dividend, stock

                                        7

<PAGE>

consolidation, or otherwise, without consideration to the Bank, an appropriate
and proportionate adjustment shall be made in the number and kind of shares as
to which Stock Options may be granted. A corresponding adjustment changing the
number or kind of Option Shares and the exercise prices per share allocated to
unexercised Stock Options, or portions thereof, which shall have been granted
prior to any such change, shall likewise be made. Such adjustments shall be made
without change in the total price applicable to the unexercised portion of the
Stock Option, but with a corresponding adjustment in the price for each Option
Share subject to the Stock Option. Adjustments under this Section shall be made
by the Board of Directors, whose determination as to what adjustments shall be
made, and the extent thereof, shall be final and conclusive. No fractional
shares of stock shall be issued or made available under the Plan on account of
such adjustments, and fractional share interests shall be disregarded, except
that they may be accumulated.

17.  Termination Events.

     Not less than 30 days prior to dissolution or liquidation of the Bank, or
upon consummation of a plan of reorganization, merger or consolidation of the
Bank with one or more banks or corporations, as a result of which the Bank is
not the surviving entity, or upon the sale of all or substantially all of the
assets of the Bank to another bank or corporation, or in the event of any other
transaction involving the Bank where there is a change in ownership of at least
twenty-five percent (25 %), except as may result from a transfer of shares to
another corporation in exchange for at least eighty percent (80%) control of
that corporation (a "Terminating Event"), the Board of Directors shall notify
each optionee of the pendency of the Terminating Event. Upon delivery of said
notice, any Option granted prior to the Terminating Event shall be,
notwithstanding the provisions of Section 9 hereof, exercisable in full and not
only as to those shares with respect to which installments, if any, have then
accrued, subject, however, to earlier expiration or termination as provided
elsewhere in the Plan. Upon the date thirty (30) days after delivery of said
notice, any Option or portion thereof not exercised shall terminate, and upon
the effective date of the Terminating Event, the Plan and any options granted
thereunder shall terminate, unless provision is made in connection with the
Terminating Event for assumption of Options or new options covering stock of a
successor employer corporation, or a parent or subsidiary corporation thereof,
with appropriate adjustments as to number and kind of shares and prices. All
Stock Options theretofore granted under the Plan shall become immediately
exercisable, unless provision is made in connection with such transaction for
assumption of Stock Options theretofore granted, or substitution for such Stock
Options with new stock options covering stock of a successor employer bank or
corporation, or a parent or subsidiary corporation thereof, with appropriate
adjustments as to the number and kind of shares and prices.

18.  Amendment and Termination.

     The Board of Directors of the Bank may at any time and from time to time
suspend, amend or terminate the Plan and may, with the consent of an Optionee,
make such modifications of the terms and conditions of that Optionee's Stock
Option as it shall deem advisable; provided that, except as permitted under the
provisions of Section 16 hereof, no amendment or modification may be adopted
without the Bank having first obtained the approval of the holders of at least a
majority of the Bank's outstanding shares of Common Stock entitled to vote at a
duly held meeting of shareholders of the Bank, and the approval of the holders
of a majority of the disinterested shares represented and voting at the meeting,
or if the amendment or modification is approved by written consent the approval
of the majority of the outstanding shares and the approval of the majority of
the disinterested shares outstanding, and the approval of all applicable
regulatory authorities if the amendment or modification would:

                                        8

<PAGE>

          (a) Materially increase the number of securities which may be issued
     under the Plan or increase the maximum number of shares which may be
     purchased pursuant to Options granted under the Plan, either in the
     aggregate or by an individual;

          (b) Materially modify the requirements as to eligibility for
     participation in the

          (c) Increase or decrease the exercise price of any Stock Option
     granted under the Plan;

          (d) Increase the maximum term of Stock Options provided herein;

          (e) Permit Stock Options to be granted to any person who is not either
     an Eligible Incentive Plan Participant or an Eligible Non-Qualified Plan
     Participant;

          (f) Change any provision of the Plan which would affect the
     qualification as an Incentive Stock Option under the Internal Revenue laws
     then applicable of any Stock Option granted as an Incentive Stock Option
     under the Plan; or

          (g) Materially increase benefits to any key employee who is subject to
     the restrictions of Section 16 of the Securities Exchange Act of 1934.

     Such amendment or modification shall be deemed adopted as of the date of
the action of the Board of Directors effecting such amendment or modification
and shall be effective immediately, unless otherwise provided therein, subject
to approval thereof within twelve (12) months before or after the effective date
by shareholders of the Bank holding not less than a majority of the voting power
of the Bank; provided, however, the Board of Directors may amend the Plan in
total without shareholder approval if the Plan has not yet been approved by the
shareholders.

     Notwithstanding the above, the Board of Directors grant to an Optionee, if
such Optionee is otherwise eligible, additional Stock Options or, with the
consent of the Optionee, grant a new Stock Option in lieu of an outstanding
Option for a number of shares, at a purchase price and for a term which in any
respect is greater or less than that of the earlier Stock Option, subject to the
limitations of Section 8 and 24 hereof, and the approval of all applicable
regulatory authorities.

     No Stock Option may be granted during any suspension of the Plan or after
termination of the Plan. Amendment, suspension, or termination of the Plan shall
not (except as otherwise provided in Section 16 hereof, without the consent of
the Optionee, alter or impair any rights or obligations under the Stock Option
thereto granted.

19.  Rights of Eligible Participants and Optionees.

     No Eligible Incentive or Non-Qualified Plan Participant, Optionee or other
person shall have any claim or right to be granted a Stock Option under this
Plan, and neither this Plan nor any action taken hereunder shall be deemed to
give or be construed as giving any Eligible Incentive or Non-Qualified Plan
Participant, Optionee or other person any right to be retained in the employ of
the Bank or any subsidiary. Without limiting the generality of the foregoing, no
person shall have any rights as a result of his or her classification as an
Eligible Incentive or Non-Qualified Plan Participant or Optionee, such
classification being made solely to describe, define and limit those persons who
are eligible for consideration for privileges under the Plan.

                                        9

<PAGE>

20.  Privileges of Stock Ownership, Regulatory Law Compliance Notice of Sale.

     No Optionee shall be entitled to the privileges of stock ownership as to
any Option Share not actually issued and delivered. No Option Shares may be
purchased upon the exercise of a Stock Option unless and until all then
applicable requirements of all regulatory agencies having jurisdiction and all
applicable requirements of the securities exchanges upon which securities of the
Bank are listed (if any) shall have been fully complied with. The Optionee
shall, not more than five (5) days after each sale or other disposition of
shares of Common Stock acquired pursuant to the exercise of Stock Options, give
the Bank notice in writing of such sale or other disposition. In the event that
the Optionee disposes of any Common Stock acquired by the exercise of an
Incentive Stock Option within the two-year period following grant of the Stock
Option, or within the one-year period following exercise of the Stock Option,
the Bank shall have the right to require the Optionee to remit to the Bank an
amount sufficient to satisfy all federal, state and local withholding tax
requirements as a condition to registration of the transfer of such Common Stock
on the Bank's books.

21.  Effective Date of Plan.

     The Plan shall be deemed adopted as of February 23, 1996 and shall be
effective immediately, subject to approval of the Plan within twelve months from
such date by the holders of at least a majority of the Bank's outstanding shares
of Common Stock present, or represented, and entitled to vote at a duly held
meeting of shareholders, and by a majority of the holders of the disinterested
shares represented and voting at the meeting, or if the Plan is approved by
written consent the approval of the majority of the outstanding shares and the
approval of the majority of the disinterested shares outstanding, and all
applicable regulatory authorities, if any.

22.  Termination.

     Unless previously terminated as aforesaid, the Plan shall terminate ten
(10) years from the earliest date of: (i) adoption of the Plan by the Board of
Directors of the Bank; or (ii) approval of the Plan by holders of at least a
majority of the outstanding shares of Common Stock present, or represented, and
entitled to vote at a duly held meeting of shareholders, and by a majority of
the holders of the disinterested shares represented and voting at the meeting.
No Stock Options shall be granted under the Plan thereafter, but such
termination shall not affect any Stock Options theretofore granted.

23.  Option Agreement.

     Each Stock Option granted under the Plan shall be evidenced by a written
Stock Option Agreement executed by the Bank and the Optionee, and shall contain
each of the provisions and agreements herein specifically required to be
contained therein, and such other terms and conditions as are deemed desirable
by the Board of Directors and are not inconsistent with this Plan.

24.  Stock Option Period.

     Each Stock Option and all rights and obligations thereunder shall expire on
such date as the Board of Directors may determine, but not later than ten (10)
years from the date such Stock Option is granted, and shall be subject to
earlier termination as provided elsewhere in this Plan.

                                       10

<PAGE>

25.  Notices.

     All notices and demands of any kind which the Board of Directors, any
Optionee, Eligible Incentive or Non-Qualified Plan Participant, or other person
may be required or desires to give under the terms of this Plan shall be in
writing. Delivery by mail shall be deemed made at the expiration of the third
day after the day of mailing, except for notice of the exercise of a Stock
Option and payment of the Stock Option exercise price, both of which must be
actually received by the Bank.

26.  Limitations on Obligations of the Bank.

     All obligations of the Bank arising under or as a result of this Plan or
Stock Options granted hereunder shall constitute general unsecured obligations
of the Bank, the Board of Directors, any member thereof, any officer of the
Bank, or any other person or any Subsidiary, and none of the foregoing, except
the Bank, shall be liable for any debt, obligation, cost or expense hereunder.

27.  Limitations of Rights.

     The Board of Directors, in its sole and absolute discretion, is entitled to
determine who, if anyone, is an Eligible Incentive or Non-Qualified Plan
Participant under this Plan, and which, if any, Eligible Incentive or
Non-Qualified Plan Participant shall receive any grant of Stock Option. No oral
or written agreement by any person on behalf of the Bank relating to this Plan
or any Stock Option granted hereunder is authorized, and such may not bind the
Bank or the Board of Directors to grant any Stock Option to any person.

28.  Severability.

     If any provision of this Plan as applied to any person or to any
circumstances shall be adjudged by a court of competent jurisdiction to be void,
invalid, or unenforceable, the same shall in no way affect any other provision
hereof, the application of any such provision in any other circumstances, or the
validity of enforceability hereof.

29.  Successors.

     This Plan shall be binding upon the respective successors, assigns, heirs,
executors, administrators, guardians and personal representatives of the Bank
and Optionees.

                                       11

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