Document:

Exhibit 10.4

                            CAPSOURCE FINANCIAL, INC.
                  2001 OMNIBUS STOCK OPTION AND INCENTIVE PLAN

1.       PURPOSE.

         The Plan is intended to provide incentive to key employees and
directors, key consultants, vendors, customers, and others expected to provide
significant services to the Corporation, to encourage proprietary interest in
the Corporation, to encourage such key employees to remain in the employ of the
Corporation and its Subsidiaries, to attract new employees with outstanding
qualifications, and to afford additional incentive to consultants, vendors,
customers, and others to increase their efforts in providing significant
services to the Corporation.

2.       DEFINITIONS.

         2.1 "Award" shall mean an Option which may be designated an Incentive
Stock Option or a Non-statutory Stock Option, a Purchase Right, a Stock
Appreciation Right or a Stock Payment, in each case as granted pursuant to the
Plan.

         2.2 "Award Agreement" shall mean a Stock Option Agreement, Restricted
Stock Agreement or a Purchase Right Agreement.

         2.3 "Beneficiary" shall mean the parson, persons, trust or trusts
entitled by will or the laws of descent and distribution to receive the benefits
specified under the Plan in the event of a Participant's death.

         2.4 "Board" shall mean the Board of Directors of the Corporation.

         2.5 "Code" shall mean the internal Revenue Cods of 1986, as amended.

         2.6 "Committee" shall mean the committee, if any, appointed by the
Board in accordance with Section 4 of the Plan.

         2.7 "Common Stock" shall mean the Common Stock of the Corporation.

         2.8 "Corporation" shall mean CapSource Financial, Inc. and its
Subsidiaries.

         2.9 "Disability" shall mean the condition of a Participant who is
unable to (i) perform his or her substantial and material job duties due to
injury or sickness or such others condition as the Board or Committee may
determine in its sole discretion; and/or (ii) engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment
which can be expected to result in death or which has lasted or can be expected
to last for a continuous period of not less than twelve (12) months.

         2.10 "Discount" shall mean, with respect to the Purchase Price of
Purchase Rights, the discount from the Fair Market Value of a Share as set forth
in Section 8.3.

         2.11 "Dividend Equivalent" shall mean a right to receive a number of
Shares or a cash amount, determined as provided in Article 12 hereof

         2.12 "Eligible Employee" shall mean an individual who is employed
(within the meaning of Code Section 3401 and the regulations thereunder) by the
Corporation.

         2.13 "Event" shell mean any of the following:

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                  (a) Any person or entity (or group of affiliated persons or
entities) acquires in one or more transactions, whether before or after the
Effective Date of the Plan, ownership of more than fifty percent (50%) of the
outstanding Shares of stock entitled to vote in the election of directors of the
Corporation; or

                  (b) The dissolution of liquidation of the Corporation or a
reorganization, merger or consolidation of the Corporation with one or more
entities, as a result of which the Corporation is not the surviving entity, or a
sale of all or substantially all of the assets of the Corporation as an entirety
to another entity.

         For purposes of this definition, ownership does not include ownership
(i) by a person owning such Shares merely of record (such as a member of a
securities exchange, a nominee or a securities depository system), (ii) by a
person who is a bona fide pledgee of Shares prior to a default and determination
to exercise powers as an owner of the Shares, (iii) by a person who is not
required to file a statement on Schedule 13D by virtue of Rule 13d-l(b) of the
Securities and Exchange Commission under the Exchange Act, or (iv) by a person
who owns or holds Shares as an underwriter acquired in connection with an
underwritten offering pending and for purposes of resale.

         2.14 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.

         2.15 "Exercise Price" shall mean the price per Share of Common Stock,
determined by the Board or the Committee, at which an Award may be exercised.

         2.16 "Fair Market. Value" shall mean the value of one (1) Share of
Common Stock, determined as follows:

                  (i) if the Shares are traded on an exchange, the price at
which Shares traded at the close of business on the data of valuation; or

                  (ii) if the Shares are traded over-the-counter on the NASDAQ
System, the closing bid price if one is available, or the mean between the bid
and asked prices on said system at the close of business on the date of
valuation; or

                  (iii) if neither (i) nor (ii) above applies, the Fair Market
Value as determined by the Board or the Committee in good faith. Such
determination shall be conclusive and binding on all persons.

         2.17 "Incentive Stock Option" shall mean an option described in Section
422A(b) of the Code.

         2.18 "Nonstatutory Stock Option" shall mean an option not described in
Section 422(b), 422A(b), 423(b) or 424(b) of the Code.

         2.19 "Option" shall mean either an incentive Stock Option or a
Nonstatutory Stock Option granted pursuant to the Plan.

         2.20 "Participant" shall mean an Eligible Employee who has received an
Award under the Plan.

         2.21 "Performance Award" shall mean a cash bonus, stock bonus or other
performance or incentive award that is paid in cash, stock or a combination of
both.

         2.22 "Plan" shall mean the CapSource Financial, Inc. 2000 Omnibus Stock
Option and Incentive Plan, as it may be amended from time to time.

         2.23 "Purchase Price" shall mean the Exercise Price times the number of
Shares with respect to which an Award is exercised.

         2.24 "Purchase Right" shall mean the grant to an Employee of the right
to purchase Shares under the Plan.

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         2.25 "Restricted Stock" shall mean those Shares issued pursuant to a
Restricted Stock Award that are not free of the restrictions set forth in the
related Restricted Stock Agreement.

         2.26 "Restricted Stock Award" shall mean an award of a fixed number of
shares subject to payment of such consideration, if any, and such forfeiture
provisions, as are set forth in the related Restricted Stock Agreement.

         2.27 "Retirement" shall mean the voluntary termination of employment by
an Employee upon the attainment of age sixty-five (65) and the completion of not
less than twenty (20) years of service with the Corporation or a Subsidiary.

         2.28 "Share" shall mean one (1) share of Common Stock, adjusted in
accordance with Section 15.3 of the Plan (if applicable).

         2.29 "Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.

         2.30 "Stock Appreciation Right" shall mean the right to receive a
number of Shares or a cash amount, or a combination of Shares and cash, based
upon the Fair Market Value, book value or other measure determined by the Board
or the Committee, as the case may be, pursuant to Section _____of the Plan.

         2.31 "Stock Payment" shall mean a payment in the form of Shares, or a
Purchase Right, as part of a deferred compensation arrangement made in lieu of
all or any portion of the compensation, including without limitation salary,
bonuses or commissions, that would otherwise become payable in cash to an
Eligible Employee.

         2.32 "Subsidiary" shall mean any corporation at least fifty percent
(50.%) of the total combined voting power of which is owned by the Corporation
or by another subsidiary.

         2.33 "Tax Date" shall have the meaning set forth in Section 15.3
hereof.

3.       EFFECTIVE DATE.

         The Plan was adopted by the Corporation's shareholders and by the Board
on February ______2001. The Effective Date of the Plan shall be February
_____2001 (the "Effective Date").

4.       ADMINISTRATION.

         The Plan shall be administered by the Board in compliance with Rule
16b-3 of the Exchange Act ("Rule 16b-3 "), or by a Committee appointed by the
Board, which Committee shall be constituted to permit the Plan to comply with
Rule 16b-3, and which shall consist of not less than three (3) members. The
Board shall appoint one (1) of the members of the Committee, if there be one, as
Chairman of the Committee. If a Committee has been appointed, the Committee
shall hold meetings at such times and places as it may determine. Acts of
majority of the Committee at which a quorum is present, or acts reduced to or
approved in writing by a majority of the members of the Committee shall be valid
acts of the Committee. The Board, or the Committee, if there be one, shall from
time to time at its discretion select the Eligible Employees and consultants who
are to be granted Awards, determine the number of Shares or cash, or the
combination thereof, to be applicable to such Award and designate any Options as
incentive Stock Options or Nonstatutory Stock Options, except that no Incentive
Stock Option may be granted to non-employee director or a non-employee
consultant. A member of the Board or Committee member shall in no event
participant in any determination relating to Awards held by or to be granted to
such Board or Committee member; however, a member of the Board or a Committee
member shall be entitled to receive Awards approved by the shareholders in
accordance with the provisions of Rule 16b-3. The interpretation and
construction by the Board, or by the Committee, if there be one,. of any
provision of the Plan or of any Award granted thereunder shall be final. No
member of the Board of the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Award granted
thereunder. In addition to any right of indemnification provided by the

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Articles of Incorporation or Bylaws of the Corporation, such person shall be
indemnified and held harmless by the Corporation from any loss, cost, liability
or expense that may be imposed upon or reasonably incurred by him in connection
with any claim, suit, action or proceeding to which he may be a party by reason
of any action or omission under the Plan.

5.       PARTICIPATION.

         5.1 Eligibility. Subject to the terms and conditions of Section 5.2
below, the Participants shall be such persons as the shareholders may approve or
as the Committee may select from among the following classes of persons: (i)
Employees of the Corporation or of a Subsidiary (who may be officers, whether or
not they are directors); and (ii) Consultants, vendors, customers, and others
expected to provide significant services to the Corporation or a Subsidiary.

         For purposes of this Plan, a Participant who is a director or a
consultant, vendor, customer, or other provider of significant services to the
Corporation or a Subsidiary shall be deemed to be an Eligible Employee, and
service as a director, consultant, vendor, customer, or other provider of
significant services to the Corporation or a Subsidiary shall be deemed to be
employment, except that no Incentive Stock Option may be granted to a
non-employee director or non-employee consultant, vendor, customer, or other
provider of significant services to the Corporation or a Subsidiary, except that
no Nonstatutory Stock Option may be granted to a non-employee director or
non-employee consultant, vendor, customer, or other provider of significant
services to the Corporation or a Subsidiary other then upon a vote of a majority
of disinterested directors finding that the value of the services rendered or to
be rendered to the Corporation or a Subsidiary by such non-employee director or
non-employee consultant, vendor, customer, or other provider of services is at
least equal to the value of the Awards granted.

         5.2 Ten-Percent Shareholders. An Eligible Employee who owns more than
ten percent (10%) of the total combined voting power of all classes of
outstanding stock of the Corporation, its parent or any of its Subsidiaries
shall not be eligible to receive an Award for an Incentive Stock Option unless
(i) the Exercise Price of the Shares subject to such Award is at least one
hundred ten percent (I 10%) of the Fair Market Value of such Shares on the date
of grant: and (ii) such Awards by its terms is not exercisable after the
expiration of five (5) years from the date of grant.

         5.3 Stock Ownership. For purposes of Section 5.2 above, in determining
stock ownership, an Eligible Employee shall be considered as owning the stock
owned, directly or indirectly, by or for a corporation, partnership, estate or
trust and shall be considered as being owned proportionately by or for its
shareholders, partners or beneficiaries. Stock with respect to which such
Eligible Employee holds an Award shall not be counted.

         5.4 Outstanding Stock. For purposes of Section 5.2 above, "Outstanding
stock" shall include all stock actually issued and outstanding immediately after
the grant of the Award to the Participant. "Outstanding stock" shall not include
shares authorized for issue under outstanding Options or Purchase Rights held by
the Participant or by any other person.

6.       STOCK SUBJECT TO THE PLAN.

         The stock subject to Awards granted under the Plan shall be Shares of
the Corporation's authorized but unissued or reacquired Common Stock. The
aggregate number of Shares which may be issued as Awards or upon exercise of
Awards under the Plan shall not exceed ______________ (_____) shares. The number
of Shares subject to unexercised Options, Stock Appreciation Rights or Purchase
Rights (plus the number of Shares previously issued under the Plan) shall not at
any time exceed the number of Shares available for issuance under the Plan. In
the event that any unexercised Option, Stock Appreciation Right or Purchase
Right, or any portion thereof, for any reason expires or is terminated, or if
any Shares subject to a Restricted Stock Award do not vest or are not delivered,
the unexercised or unvested Shares allocable to such Option, Stock Appreciation
Right, Purchase Right or Restricted Stock Award may again be made subject to any
Award. Any Shares withheld by the Corporation pursuant to Section 15.3 shall not
be deemed to be issued. The number of withheld Shares shall be deducted from the
applicable Award and shall not entitle the Participant to receive additional
Shares. The limitations established by this Article 6 shall be subject to
adjustment in the manner provided in Section 14.5 hereof upon the occurrence of
an event specified therein.

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7.       OPTIONS.

         7.1 Stock Option Agreements. Options shall be evidenced by written
stock option agreements in such form as the Committee shall from time to time
determine. Such agreements shall comply with and be subject to the terms and
conditions set forth below.

         7.2 Number of Shares. Each Option shall state the number of Shares to
which it pertains and shall provide for the adjustment thereof in accordance
with the provisions of Section 14.5 hereof.

         7.3 Exercise Price. Each Option shall state the Exercise Price thereof
The Exercise Price in the case of any Incentive Stock Option shall not be less
than the Fair Market Value on the date of grant and, in the case of any Option
granted to an Optionee described in Section 5.2 hereof, shall not be less than
one hundred ten percent (110%) of the Fair Market Value on the date of grant.
The Exercise Price in the case of any Nonstatutory Stock Option shall not be
less than eighty-five percent (85%) of the Fair Market Value on the date of
grant.

         7.4 Medium and Time of Payment. The Purchase Price shall be payable in
full in United States dollars upon the exercise of the Option; provided,
however, that if the applicable Stock Option Agreement so provides the Purchase
Price may the paid (i) by the surrender of Shares in good form for transfer,
owned by the Participant and having a Fair Market Value on the date of exercise
equal to the Purchase Price, or in any combination of cash and Shares, as long
as the sum of the cash so paid and the Fair Market Value of the Shares so
surrendered equals the Purchase Price, (ii) by cancellation of indebtedness owed
by the Corporation to the Participant, (iii) with a full recourse promissory
note executed by the Participant, or (iv) any combination of the foregoing. The
interest rate and other terms and conditions of such note shall be determined by
the Committee. The Committee may require that the Participant pledge his or her
Shares to the Corporation for the purpose of securing the payment of such note.
In no event shall the stock certificate(s) representing such Shares be released
to the Participant until such note shall be paid in full.

         7.5 Term and Non-Transferability of Options. Each option shall state
the time or times which all or part thereof becomes exercisable. No Option shall
be exercisable after the expiration of ten (10) years from the date it was
granted, and no Option granted to a Participant described in Section 5.2 hereof
shall be exercisable after the expiration of five (5) years from the date it was
granted. During the lifetime of the Participant, the Option shall be exercisable
only by the Participant and shall not be assignable or transferable. In the
event of the Participant's death, the Option shall not be transferable by the
Participant other than by will or the laws of descent and distribution.

         7.6 Modification, Extension and Renewal of Option. Within the
limitations of the Plan, the Committee may modify, extend or renew outstanding
Options or accept the cancellation of outstanding Options (to the extent not
previously exercised) for the granting of new Options in substitution therefor.
The foregoing notwithstanding, no modifications of an Option shall, without the
consent of the Participant, alter or impair any rights or obligations under any
Option previously granted.

         7.7 Limitation on Grant of Incentive Stock Options. In the case of
Incentive Stock Options granted hereunder, the aggregate Fair Market Value
(determined as of the date of the grant thereof) of the Shares with respect to
which Incentive Stock Options become exercisable by any Participant for the
first time during any calendar year (under this Plan and all other plans
maintained by the Corporation, its parent or it Subsidiaries) shall not exceed
One Hundred Thousand Dollars ($100,000). The Board or Committee may, however,
with the Participant's consent authorize an amendment to the incentive Stock
Option which renders it a Nonstatutory Stock Option.

         7.8 Other Provisions. The Stock Option Agreements authorized under the
Plan may contain such omer provisions not inconsistent with the terms of the
Plan (including, without limitation, restrictions upon the exercise of the
Option) as the Committee shall deem advisable.

         7.9 Specific Awards Approved by the Shareholders. Subject to the
approval by the vote of the shareholders at the Annual Meeting of the
Shareholders and Annual Meeting of the Board on February 2001, the individuals
whose names are set forth in Exhibit "A", a copy of which is attached hereto and
incorporated herein by

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this reference, shall be deemed granted Nonstatutory Stock Options as of the
Effective Date, in the amounts and for the amount indicated opposite their
respective names, and in accordance with the vesting schedule set forth herein,
all in accordance with the provisions set forth in this Article 7 of the Plan.
The provisions of this Section 7.9 shall not be amended more than once every six
(6) months, other than to comport with changes in the Internal Revenue Code, the
Employee Retirement Income Security Act, or the rules thereunder, and are
intended to be construed in accordance with the provisions pertaining to
"formula awards" under Paragraph (c)(2)(ii) of Rule 16b-3.

8.       RESTRICTED STOCK PURCHASE RIGHTS

         8.1 Stock Purchase Agreements. Purchase Rights shall be evidenced by
written Stock Purchase Agreements in such form as the Committee shall from time
to time determine. Such agreements shall comply with and be subject to the terms
and conditions set forth below.

         8.2 Number of Shares. Each Purchase Right shall state the number of
Shares to which it pertains and shall provide for the adjustment thereof in
accordance with the provisions of Section 14.5 hereof.

         8.3 Purchase Price. Each Stock Purchase Agreement shall state the
Purchase Price per Share at which the Purchase Right may be exercised which
shall not be less than the Fair Market Value of a Share on the date on which the
Purchase Rights are granted unless the Board or Committee otherwise determines,
The Purchase Price per Share at which any Purchase Right granted under the Plan
may be exercised shall not be less than the Fair Market Value of a Share as of
the date on which the Purchase Right is granted, less a discount (the
"Discount") equal to not more than seventy-five percent (75%) of such value.

         8.4 Exercisability and Non-Transferability of Purchase Rights. Purchase
Rights granted to an Eligible Employee pursuant to the Plan must be exercised
within sixty (60) days after the later to occur (i) Board approval of the grant
of the Purchase Right or (ii) delivery of notice of such grant. Purchase Rights
may not be sold, pledged, assigned, hypothecated, transferred or disposed of in
any manner and shall expire immediately upon the death of the Participant or the
termination of such Participant a employment with the Corporation.

         8.5 Medium and Time of Payment. The Purchase Price shall be payable in
full in United States dollars upon exercise of the Purchase Right; provided
however that if the applicable Stock Purchase Agreement so provides the Purchase
Price may be paid (i) by the surrender of Shares in good form for transfer owned
by the person exercising the Purchase Right and having a Fair Market Value on
the date of exercise equal to the Purchase Price or in any combination of cash
and Shares as long as the sum of the cash so paid and the Fair Market Value of
the Shares so surrendered equal the Purchase Price or ii) with a full recourse
promissory note executed by the Participant. The interest rate and other terms
and conditions of such note shall be determined by the Committee. The Committee
may require that the Participant pledge his or her Shares to the Corporation for
the purpose of securing the payment of such note. In no event shall the stock
certificate(s) representing such Shares be released to Participant until such
note shall be paid in full. In the event the Corporation determines that it is
required to withhold state or federal income tax as a result of the exercise of
a Purchase Right, as a condition to the exercise thereof, a Participant may be
required to make arrangements satisfactory to the Corporation to satisfy such
withholding requirements. In addition. the Participant shall agree to
immediately notify the Corporation if he or she files an election pursuant to
Section 83(b) of the Code with respect to receipt of the Shares.

         8.6 Consent of Spouse. Each Participant who is married must cause his
or her spouse to sign and deliver the Stock Purchase Agreement to the
Corporation, in the place provided for such signature on the Stock Purchase
Agreement.

         8.7 Modification, Extension and Renewal of Purchase Rights. Within the
limitation of the Plan, the Board or the Committee may modify, extend or renew
outstanding Purchase Rights or accept the cancellation of outstanding Purchase
Rights (to the extant not previously exercised) for the granting of new Purchase
Rights in substitution therefor. The foregoing notwithstanding, no modification
of a Purchase Right shall, without the consent of the Employee, alter or impair
any rights or obligations under any Purchase Right previously granted.

         8.8 Repurchase Option as to Unvested Shares.

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                  (a) Termination of Employment. In the event of the voluntary
or involuntary termination or cessation of employment or association of the
Participant with the Corporation or any Subsidiary for any reason whatsoever,
with or without cause including death or disability, the Corporation shall, upon
the date of such termination, have an irrevocable, exclusive option to
repurchase (the "Repurchase Option") all or any portion of the Shares held by
the Employee that are subject to the Repurchase Option as of such date at the
original Purchase Price.

                  (b) Vesting. Initially, all of the Shares shall be subject to
the Repurchase Option. Thereafter, the Repurchase Option shall lapse and expire,
or "vest", as to a specified number of the Shares in accordance with a schedule
to be determined by the Board or the Committee, as the case may be, which shall
be attached to the Stock Purchase Agreement to be entered into between the
Participant and the Corporation as provided in Section 8.1 above. All Shares
which continue to be subject to the Repurchase Option are sometimes hereinafter
referred to as "Unvested Shares."

                  (c) Notice. Within ninety (90) days following the date of the
Participant's termination of employment by the Corporation, the Corporation
shall notify the Employee as to whether it wishes to repurchase the Unvested
Shares pursuant to the exercise of the Repurchase Option. If the Corporation
elects to repurchase said Unvested Shares, it shall set a date for the closing
of the transaction at the Executive Offices of the Corporation, not later than
thirty (30) days from the date of such notice.

                  (d) Transfers. Except for transfers to Participant's
descendants and spouses, the Participant shall not transfer by sale, assignment,
hypothecation, donation or otherwise any of the Shares or any interest therein
prior to the release of such Shares from the Repurchase Option.

                  (e) Assignment. The Corporation's Repurchase Option may be
assigned in whole or in part to any stockholder or stockholders of the
Corporation or other persons or organizations.

         8.9 Corporation's Right of First Refusal to Purchase Vested Shares.
Each Stock Purchase Agreement entered into as provided herein shall provide for
a right of first refusal and option on the part of the Corporation to purchase
all or any part of any Shares which are no longer subject to the Repurchase
Option which the Participant purposes to sell, transfer or otherwise dispose of
(except for transfers to Participant's descendants and spouses) on the following
terms and conditions:

                  (a) The Participant must notify the Corporation in writing of
any proposed sale, transfer or other disposition of any of the Shares,
specifying the proposed transferee, the number of Shares proposed to be
transferred, and the price at which such Shares are to be sold, transferred or
otherwise disposed.

                  (b) The Corporation basil have a period of thirty (30) days
from receipt of such notice to notify the Participant in writing as to whether
or not the Corporation elects to purchase all or a specified portion of such
Shares at the lower of i) price per share set forth in the notice given by the
Participant, or ii) the Fair Market Value for a share of the Corporation's
Common Stock, without restrictions, on the date on which the notice is given by
Participant to the Corporation (determined as provided in Section 2.13 above),
less in either case an amount equal to the Discount.

                  (c) if the Corporation elects not to purchase all of the
Shares specified in the notice, the Participant may sell, transfer or otherwise
dispose of the remaining Shares in strict accordance with the terms specified in
the notice within ninety (90) days following the date of the notice. It is
understood and agreed that any transferee of any of such Shares (other than the
Corporation) will take and acquire all of such Shares subject to the continuing
right of first refusal and option on the part of the Corporation to purchase all
or any portion of such Shares from the transferee on all of the same terms and
conditions as are set forth in the Stock Purchase Agreement, unless the
Participant shall have paid to the Corporation, out of the proceeds from the
sale of such Shares or otherwise, an amount equal to the lesser of (i) the
Discount, or (ii) the amount by which the Fair Market Value for a share of the
Corporation's Common Stock, without restrictions, on the date on which the
notice is given by Participant to the Corporation (determined as provided in
Section 2.13 above) exceeds the price per Share paid by the Participant for such
Shares.

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         8.10 Other Provisions. The Stock Purchase Agreements authorized may
contain such other provisions not inconsistent with the terms of the Plan as the
Board or the Committee shall deem advisable.

9.       STOCK APPRECIATION RIGHTS.

         9.1 Grant. Stock Appreciation Rights related or unrelated to Options or
other Awards may be granted to Eligible Employees (i) at any time if unrelated
to an Award or if related to an Award other than an Incentive Stock Option; or
(ii) only at the time of grant of an Option if related thereto. A Stock
Appreciation Right may extend to all or a portion of the Shares covered by a
related Award.

         9.2 Exercise of Stock Appreciation Rights. A Stock Appreciation Right
granted in connection with an Award shall be exercisable only at such time or
times, and to the extent, that a related Award is exercisable. A Stock
Appreciation Right granted in connection with on Option may be exercisable only
when the Fair Market Value of the stock subject to the Option exceeds the
Exercise Price of the incentive Stock Option.

         9.3 Payment.

                  (a) Upon the exercise of a Stock Appreciation Right, and, if
such Stock Appreciation Right is related to an Award, surrender of an
exercisable portion of related Award, the Participant shall be entitled to
receive payment of an amount determined by multiplying: (i) the difference
obtained by subtracting the purchase price of a share of Common Stock specified
in the related Award, or if such Stock Appreciation Right is unrelated to an
Award, from the Fair Market Value, book value or other measure specified in the
Award of such Stock Appreciation Right of a share of Common Stock on the date of
exercise of such Stock Appreciation Right, by (ii) the number of Shares as to
which such Stock Appreciation Right has been exercised.

                  (b) The Board or the Committee, as the case may be, in its
sole discretion, may require settlement of the amount determined under paragraph
(a) above solely in cash, solely in Shares of Common Stock (valued at Fair
Market Value on the business day next preceding the date of exercise of such
Stock Appreciation Right), or partly in such Shares and partly in cash.

         9.4 Maximum Stock Appreciation Right Tenn. Each Stock Appreciation
Right and all fights and obligations thereunder shall expire on such date as
shall be determined by the Board or the Committed but not later than ten (10)
years after the date of the Award thereof, and shall be subject to earlier
termination as provided in the related Award Agreement and Sections 14.6, 14.7,
14.8, 14.9 and 15. 1.

10.      PERFORMANCE AWARDS.

         One or more Performance Awards may be granted to any Eligible Employee.
The value of such Awards may be linked to the market value, book value or other
measure of the value of the Common Stock or other specific performance criteria
determined appropriate by the Board or the Committee, in each case on a
specified date or over any period determined by the Board or the Committee, or
may be based upon the appreciation in the market value, book value or other
measure of the value of a specified number of Shares of Conunon Stock over a
fixed period determined by the Board or the Committees. In making such
determinations, the Board or the Committees may consider (among such other
factors as it deems relevant in light of the specific type of award) the
contributions, responsibilities and other compensation of the Participant.

11.      DIVIDEND EQUIVALENTS.

         A Participant may also be granted "Dividend Equivalents" based on the
dividends declared on the Common Stock, to be credited as of dividend payment
dates, during the period between the Award Date and the date such Award is
exercised, vests or expires as determined by the Board or the Committee. Such
Dividend Equivalents shall be converted to cash or additional Shares of Common
Stock by such formula and at such time and subject to such limitations as may be
determined by the Board or the Committee.

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12.      STOCK PAYMENTS.

         The Board or the Committee may approve Stock Payments to Eligible
Employees who elect to receive such payments in the manner determined from time
to time by the Board or the Committee. The number of Shares shall be determined
by the Board or the Committee and may be based upon the Fair Market Value, book
value or other measure of the value of such Shares on the Award Date or on any
date thereafter.

13.      LOANS.

         The Corporation may, with the Board's or the Committee's approval,
extend one or more loans to Participants in connection with the exercise or
receipt of outstanding Awards granted under the Plan; provided any such loan
shall be subject to the following terms and conditions;

                  (i) The principal of the loan shall not exceed the amount
required to be paid to the Corporation upon the exercise or receipt of one or
more Awards under the Plan less the aggregate Par Value of any Common Stock
deliverable on such event, and the loan proceeds shall be paid directly to the
Corporation in consideration of such exercise or receipt.

                  (ii) The initial term of the loan shall be determined by the
Board or the Committee; provided that the term of the loan, including
extensions, shall not exceed a period of ten (10) years.

                  (iii) The loan shall be with full recourse to the Participant,
shall be evidenced by the Participant's promissory note and shall bear interest
at a rate determined by the Board or the Committee but not less than the
Corporation's average cost of funds as of a date within thirty-one (31) days of
the date of such loan, as determined by the Board or Committee.

                  (iv) in the event a Participant terminates his or her
employment at the request of the Corporation, the unpaid principal balance of
the note shall become due and payable on the tenth (10th) business day after
such termination; provided, however, that if a sale of such Shares would cause
such Participant to incur liability under Section 16(b) of the Exchange Act, the
unpaid balance shall become due and payable on the tenth (10th) business day
after the first day on which a sale of such Shares could have bean made without
incurring such liability assuming for these purposes that there are no other
transactions by the Participant subsequent to such termination. In the event a
Participant terminates employment other than at the request of the Corporation,
the unpaid principal balance of the note shall become due and payable six (6)
months after the date of such termination.

14.      RIGHTS OF ELIGIBLE EMPLOYEES, PARTICIPANTS AND BENEFICIARIES.

         14.1 Employee Status. Status as an Eligible Employee shall not be
construed as a commitment that any Award will be made under the Plan to an
Eligible Employee or to Eligible Employees generally.

         14.2 No Employment Contract. Nothing contained in the Plan (or in the
Award Agreements or in any other documents related to the Plan or to Awards)
shall confer upon say Eligible Employee or any Participant any right to continue
in the employee of the Corporation or constitute any contract or agreement of
employment, or interfere in any way with the fight of the Corporation to reduce
such person's compensation or to terminate the employment of such Eligible
Employee or Participant, with, or without cause, but nothing contained in the
Plan or any document related thereto shall affect any other contractual right of
any Eligible employee or Participant. Nothing contained in the Plan (or in the
Award Agreements or in any other documents related to the Plan or the Awards)
shall confer upon any director of the Corporation any right to continue as a
director of the Corporation.

         14.3 No Transferability. Awards may be exercised only by, and amounts
payable or Shares issued pursuant to an Award shall be paid only to or
registered only in the name of the Participant or, in the event of the
Participant's death, to the Participant's Beneficiary or, in the event of the
Participant's Disability, to the participant's Personal Representative or, if
there is none, to the Participant. Other than by will or the laws of descent and
distribution, no right or benefit under the Plan or any Award, including,
without limitation, any Option or share of Restricted Stock that has not vested,
shall be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance or charge and any such attempted action shall be
void and no such right or benefit shall be, in any manner, liable for, or
subject to, debts, contract, liabilities, engagements, or torts of any Eligible

                                       9
<PAGE>

Employee, Participant or Beneficiary, in any case except as may otherwise by
expressly required by applicable law. The Board or the Committee shall disregard
any attempt at transfer, assignment or other alienation prohibited by the
preceding sentence and shall pay or deliver such cash or Shares of Common Stock
in accordance with the provisions of the Plan. Notwithstanding the foregoing,
the Board or the Committee may authorize exercise by or transfers or payments to
a third party in a specific case or more generally; provided, however, with
respect to any option or similar fight (including any Stock Appreciation Right)
such discretion may only be exercised to the extent that applicable rules under
Section 16 of the Exchange Act would so permit without disqualifying the Plan
from certain benefits thereunder.

         14.4 Plan Not Funded. No Participant, Beneficiary or other person shall
have any right, title or interest in any fund or in any specific asset
(including Shares of Common Stock) of the Corporation by reason of any Award
granted hereunder. There shall be no funding of any benefits which may become
payable hereunder. Neither the provision of the Plan (or of any documents
related hereto, nor the creation or adoption of the Plan, nor any action taken
pursuant to the provisions of the Plan) shall create, or be construed to create,
a trust of any kind or a fiduciary relationship between the Corporation and any
Participant or Beneficiary. To the extent that a Participant, a Beneficiary or
other person acquires a right to receive an Award hereunder, such right shall be
no greater than the fight of any unsecured general creditor of the Corporation.
Awards payable under the Plan shall be paid in Shares of Common Stock or from
the general assets of the Corporation, and no special or separate fund or
deposit shall be established and no segregation of assets or Shares shall be
made to assure payment of such Awards.

         14.5 Adjustment Upon Recapitalization and Corporate Changes. If the
outstanding Shares of Common Stock are changed into or exchanged for cash or a
different number or kind of Shares or securities of the Corporation, or if the
outstanding Shares of the Common Stock are increased, decreased, exchanged for,
or otherwise changes, or if additional Shares or new or different shares or
securities are distributed with respect to the outstanding Shares of the Common
Stock, through a reorganization or merger in which the Corporation is the
surviving entity or through a combination, consolidation, recapitalization,
reclassification, stock split, stock dividend, reverse stock split, stock
consolidation or other capital change or adjustment, an appropriate adjustment
shall be made in the number and kind or shares of other consideration that is
subject to or may be developed under the Plan and pursuant to * outstanding
Awards. A corresponding adjustment to the consideration payable with respect to
Awards granted prior to any such change and to the price, if any, to be paid in
connection with Restricted Stock Awards shall also be made as appropriate.
Corresponding adjustments shall be made with respect to Stock Appreciation
Rights related to Options to which they are related. In addition, the Board or
the Committee may grant such additional rights in the foregoing circumstances as
the Board or the Committee deems to be in the best interest of any Participant
and the Corporation in order to preserve for the participant the benefits of an
Award.

         14.6 Termination of Employment Except by Death, Disability or
Retirement. If a Participant ceases to be an Employee for any reason other than
his or her death, disability or retirement, such Participant shall have the
right, subject to the restrictions of Section 14.3 above, to exercise any Award
at any time within three (3) months after termination of employment, but only to
the extent that, at the date of termination of employment, the Participant's
right to exercise such Award had accrued pursuant to the terms of the applicable
agreement and had not previously been exercised; provided, however, that if the
Participant was terminated for cause (as defined in the applicable agreement)
any Award not exercised in full prior to such termination shall be canceled. For
this purpose, the employment relationship shall be treated as continuing intact
while the Participant is on military leave, sick leave or other bona fide leave
of absence (to be determined in the sole discretion of the Board or the
Committee). The foregoing notwithstanding, in the case of an incentive Stock
Option, employment shall not be deemed to continue beyond the ninetieth (90th)
day after the Participant's re-employment rights are guaranteed by statute or by
contract.

         14.7 Death of Participant. If a Participant dies while an Employee, or
after ceasing to be an Employee but during the period while he or she could have
exercised the Award under this Section 14.7, and has not fully exercised the
Award, than the Award may be exercised in full at any time within twelve (12)
months after the Participant's death (but no later than the date of termination
fixed in the applicable agreement), by the executors or administrators of his or
her estate or by any person or persons who have acquired the Award directly from
the Participant by bequest or inheritance, but only to the extent that, at the
date of death, the Participant's right to exercise such Award had accrued and
had not been forfeited pursuant to the terms of the applicable agreement and had
not previously been exercised.

                                       10
<PAGE>

         14.8 Disability of Participant. If a Participant ceases to be an
Employee by reason of Disability, such Participant shall have the right to
exercise the Award at any time within twelve (12) months after termination of
employment (but not later than the termination date fixed in the applicable
agreements) but only to the extent that at the date of termination of
employment, the Participant's fight to exercise such Award had accrued pursuant
to the terms of the applicable agreement and had not previously been exercised.

         14.9 Retirement of Participant. If a Participant ceases to be an
Employee by reason of Retirement, such Participant shall have the fight to
exercise the Award at any time within three (3) months after termination of
employment (but not later than the termination date fixed in the applicable
agreements) but only to the extant that. at the data of termination of
employment, the Participant's fight to exercise such Award had accrued pursuant
to the terms of the applicable agreement and had not previously been exercised.

         14.10 Rights as a Stockholder. A Participant, or a transferee of a
Participant, shall have no rights as a stockholder with respect to any Shares
covered by his or her Award until the date of the issuance of a stock
certificate for such Shares. No adjustment shall be made for dividends (ordinary
or extraordinary, whether in cash, securities or other property), distributions
or other rights for which the record date is prior to the date such stock
certificate is issued, except as provided in Section 14.5 hereof.

         14.11 Deferral of Payments. The Board or the Committee may approve the
deferral of any payments that may become due under the Plan. Such deferrals
shall be subject to any conditions, restrictions or requirements as the Board or
the Committee may determine.

         14.12 Acceleration of Awards. Immediately prior to the occurrence of an
Event, (i) each Option and Stock Appreciation Right under the Plan shall become
exercisable in full; (ii) Restricted Stock delivered under the Plan shall
immediately vest free of restriction; and (iii) each other Award outstanding
under the Plan shall be fully vested or exercisable unless prior to the Event,
the Board or the Committed otherwise determines that there shall be no such
acceleration or vesting of an Award or otherwise determines those Awards which
shall be accelerated or vested and to the extent to which they shall be
accelerated or vested, or that an Award shall terminate, or unless in connection
with such Event the Board provides (a) for the assumption of such Awards
theretofore granted; or (b) for the substitution for such Awards of new awards
covering securities or obligations (or any combination thereof) of a successor
corporation, or a parent or subsidiary thereof, with appropriate adjustments as
to number and kind of shares and prices; or (c) for the payment of the Fair
Market Value of the then outstanding Awards. In addition, the Board or the
Committee may grant such additional fights in the foregoing circumstances as the
Board or the Committee deems to be in the best interest ofthe Participant and
the Corporation in order to preserve for the Participant the benefits of an
Award. For purposed of this Section 14.12 only, Board shall mean the Board of
Directors of the Corporation as constituted immediately prior to the Event. In
addition, the Board may in its sole discretion accelerate the exercisability or
vesting of any or all Awards outstanding under the Plan in circumstances under
which the Board or the Committee determines such acceleration appropriate.

15.      MISCELLANEOUS

         15.1 Termination, Suspension and Amendment. The Board or the Committee
may, at anytime suspend, amend, modify of terminate the Plan (or any part
thereof) and may, with the consent of a Participant, authorize such
modifications of the terms and conditions of such Participant's Award as it
shall deem advisable; provided that, except as permitted under the provision of
Section 14.5 hereof, no amendment or modification of the Plan may be adopted
without approval by a majority of the Shares of the Common Stock represented in
person or by proxy) at a meeting of stockholders at which a quorum is present
and entitled to vote thereon, if such amendment or modification would:

                  (i) materially increase the benefits accruing to Participants
under the Plan within the meaning of Rule 16b-3 under the Exchange Act or any
successor provision;

                  (ii) materially increase the aggregate number of Shares which
may be delivered pursuant to Awards granted under the Plan; or

                                       11
<PAGE>

                  (iii) materially modify the requirements of eligibility for
either adoption of the Plan.

         Neither adoption of the Plan nor the provisions hereof shall limit the
authority of the Board to adopt other Plans or to authorize other payment of
compensation and benefits under applicable law. No Awards under the Plan may be
granted or amended during any suspension of the Plan or after its termination.
The amendment, suspension or termination of the Plan shall not, without the
consent of the Participant, alter or impair any rights or obligations pertaining
to any Awards granted under the Plan prior to such amendment, suspension or
termination.

         15.2 No Fractional Shares. No Award or installment thereof shall be
exercisable except in respect to whole Shares, and fractional share interest
shall be disregarded.

         15.3 Tax Withholding and Tax Bonuses. As required by law, federal,
state or local taxes that are subject to the withholding of tax at the source
shall be withheld by the Corporation as necessary to satisfy such requirement.
The Corporation is entitled to require deduction from other compensation payable
to such Participant or, in the alternative; i) the Corporation may require the
Participant to advance such sums: or ii) if Participant elects, the Corporation
may withhold (or require the return o~ Shares having the Fair Market Value equal
to the sums required to be withheld. If the Participant elects to advance such
sums directly written notice of that election shall be delivered prior to such
exercise and, whether pursuant to such election or pursuant to a requirement
imposed by the Corporation, payment in cash or by check of such sums for taxes
shall be delivered within ten (10) days after the Exercise Date. If the
Participant elects to have the Corporation withhold Shares (or be entitled to
the return of Shares) having a Fair Market Value equal to the sums required to
be withheld, the value of the Shares to be withheld (or returned) will be equal
to the Fair Market Value on the day the amount of tax to be withheld (or subject
to return) is to be determined (the "Tax Date").

         15.4 Restriction on Elections Made by Participants. Elections by
Participants to have Shares withheld (or subject to return) for this purpose
will be subject to the following restrictions: i) the election must be made
prior to the Tax Date; ii) the election must be irrevocable; iii) the election
will be subject to the Board's disapproval; and (iv) if the Participant is an
"officer" within the meaning of Section 16 of the Exchange Act, the election
shall be subject to such additional restrictions as the Board or the Committee
may impose in an effort to secure the benefits of any regulations thereunder.

         15.5 Limitations on the Corporation's Obligations. The Corporation
shall not be obligated to issue Shares and/or distribute cash to the Participant
upon any Award exercise until such payment has been received or Shares have been
withheld, unless withholding for offset against a cash payment) as of or prior
to the Exercise Date is sufficient to cover all such sums due or which may be
due with respect to such exercisable. In addition, the Board or the Committee
may grant to a Participant a cash bonus in any amount required by federal,
state, or local tax law to be withheld with respect to an Award.

         15.6 Compliance with Laws. The Plan, the granting of Awards under the
Plan, the Stock Option Agreements and Stock Purchase Agreements and the delivery
of Options, Shares and Awards (and/or the payment of money of Common Stock)
pursuant thereto and the extension of any loans hereunder are subject to such
additional requirements as the Board or the Committee may impose to assure or
facilitate compliance with all applicable federal and state laws, rules and
regulation (including, without limitation, securities laws and margin
requirements) and to such approvals by any regulatory or governmental agency
which may be necessary or advisable in connection therewith. In connection with
the administration of the Plan or the grant of any Award, the Board or the
Committee may impose such further limitations or conditions as in its opinion
may be required or advisable to satisfy, or secure the benefits of, applicable
regulatory requirements (including those rules promulgated under Section 16 of
the Exchange Act or those rules that facilitate exemption from or compliance
with the Securities Act or the Exchange Act), the requirements of any stock
exchange upon which such Shares or shares of the same class are then listed, and
any Blue Sky or other securities laws applicable to such Shares.

         15.7 Governing Laws. The Plan and all Awards granted under the Plan and
the documents evidencing Awards shall be governed by, and construed in
accordance with, the laws of the State of Minnesota, except as to matters
governed by the laws of the State of Colorado as the state of incorporation of
the Corporation.

         15.8 Securities Law Requirements.

                                       12
<PAGE>

                  (a) Legality of issuance. The issuance an any Shares upon the
exercise of any Option and the grant of any Option shall be contingent upon the
following:

                  (i) the Corporation and the Participant shall have taken all
actions required to register the Shares under the Securities Act, and to qualify
the Option and the Shares under any and all applicable state securities or "Blue
Sky" laws or regulations, or to perfect an exemption from the respective
registration and qualification requirements thereof,

                  (ii) any applicable listing requirement of any stock exchange
on which the Common Stock is listed shall have been satisfied; and iii) any
other applicable provision of federal law shall have been satisfied.

                  (b) Restrictions on Transfer. Regardless of whether the
offering and sale of Shares under the Plan has been registered under the
Securities Act or has been registered or qualified under the securities laws of
any state, the Corporation may impose restrictions on the sale, pledge or other
transfer of such Shares (including the placement of appropriate legends on stock
certificates) if, in the judgment of the Corporation and its counsel, such
restrictions are necessary or desirable in order to achieve compliance with the
provision of the Securities Act, the securities laws of any state or any other
law. In the event that the sale of Shares under the Plan is not registered under
the Securities Act but an exemption is available which required an investment
representation or other representation, each Participant shall be required to
represent that such Shares are being acquired for investment, and not with a
view to the sale or distribution thereof, and to make such other representations
as are deemed necessary or appropriate by the Corporation and its counsel. Any
determination by the Corporation and its counsel in connection with any of the
matter set forth in this Section 15.8(b) shall be conclusive and binding on all
persons. Stock certificates evidencing Shares acquired under the Plan pursuant
to an unregistered transaction shall bear the following restrictive legend and
such other restrictive legends as are required or deemed advisable under the
provisions of any applicable law:

                  THE SALE OF THE SECURITIES REPRESENTED HEREBY RAS
                  NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
                  (THE "SECURITIES ACT"). ANY TRANSFER OF SUCH
                  SECURITIES WILL BE INVALID UNLESS A REGISTRATION
                  STATEMENT UNDER THE SECURITIES ACT IS IN EFFECT AS
                  TO SUCH TRANSFER OR IN THE OPINION OF COUNSEL FOR
                  THE ISSUER SUCH REGISTRATION IS UNNECESSARY IN ORDER
                  FOR SUCH TRANSFER TO COMPLY WITH THE SECURITIES ACT.

                  (c) Registration or Qualification of Securities. The
Corporation may, but shall not be obligated to register or qualify the issuance
of Awards and/or the sale of Shares under the Securities Act or any other
applicable law. The Corporation shall not be obligated to take any affirmative
action in order to cause the issuance of Awards or the sale of Shares under the
Plan to comply with any law.

                  (d) Exchange of Certificates. If, in the opinion of the
Corporation and its counsel, any legend placed on a certificate representing
Shares issued under that Plan is no longer required, the holder of such
certificate shall be entitled to exchange such certificate for a certificate
representing the same number of Shares but lacking such legend.

         15.9 Execution. To record the adaption of the Plan in the form set
forth above by the Board effective as of February ____2001, the Corporation has
caused this Plan to be executed in the name and on behalf of the Corporation
where provided below by an officer of the Corporation thereunto duly authorized.

                                            CAPSOURCE FINANCIAL, INC.

                                        By:
                                            ------------------------------------
                                            Fred C. Boethling, President

Attest:

------------------------------------
Steven E. Reichert, Secretary

                                       13Exhibit 10.5

THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER EITHER THE SECURITIES ACT OF
1933, AS AMENDED (THE ACT), OR APPLICABLE BLUE SKY LAWS, AND ARE SUBJECT TO
CERTAIN INVESTMENT REPRESENTATIONS. THESE SECURITIES MAY NOT BE SOLD, OFFERED
FOR SALE OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION UNDER THE
ACT, AND THE APPLICABLE BLUE SKY LAWS, OR AN EXEMPTION THEREFROM.

                                WARRANT AGREEMENT

                            CAPSOURCE FINANCIAL, INC.

                            (A Colorado Corporation)
         This Warrant Agreement dated July 1, 2001 certifies that _____________,
("Warrantholder") is entitled to purchase _________________________, (***,***)
shares of Common Stock of CapSource Financial, Inc., a Colorado corporation
("Company"), subject to the terms and conditions hereinafter set forth.

Section 1.

         1.1 Grant.

         Upon the terms and provisions contained herein, and subject to
adjustments provided for in Section 2 hereof, the Warrantholder hereby granted
the right to purchase shares of the Company's no par value Common Stock ("Common
Stock"), at an initial exercise price of __________________, ($*.**) per share
("Exercise Price"). The Exercise Price maybe adjusted from time to time as more
fully set forth below.

         1.2 Exercise of Warrants

                  1.2.1 Subject to the Company's rights of redemption
("Redemption Rights") set forth in Section V, this Warrant Agreement may be
exercised in whole or in part, in the manner provided for in Subsection 1.2(b)
hereof, at any time on or after __________________, through ________________,
("Expiration Date").

                  1.2.2 The Warrant may be exercised in whole or in part by
delivering to the Company a completed and duly executed Subscription Notice, in
the form attached hereto and made a part hereof, together with payment in full,
in lawful money of the United States, of the Exercise Price for each share of
Common Stock with respect to which the Warrant is exercised.

                  1.2.3 As soon as practicable after the exercise of the
Warrant, in whole or in part, the Company shall cause to be issued to the
Warrantholder a certificate for the number of shares of Common Stock purchased
pursuant to such exercise.

                  1.2.4 All shares of Common Stock issued upon the exercise of
the Warrant shall be validly issued, fully paid and nonassessable.

                  1.2.5 The Warrantholder in whose name any such certificate for
shares of Common Stock is issued pursuant to the exercise of the Warrant shall
for all purposes be deemed to have become the holder of record of such shares at
the close of business on the date upon which the Warrant was exercised and
payment of the Exercise Price was made irrespective of the date of issue or
delivery of such stock certificate(s) except that, if the date of such surrender
and payment is a date when the stock transfer books of the Company are closed,
such person shall be deemed to have become the holder of such shares at the
opening of business on the next succeeding date on which the stock transfer
books are open.

<PAGE>

                  1.2.6 In the event the Warrant is exercised in part only, the
Company shall cause to be issued and delivered to the Warrantholder a new
Warrant Certificate in the name of the Warrantholder evidencing his right to
purchase the number of shares purchasable hereunder as to which the Warrant has
not been exercised.

         1.3 Termination of Warrant

         If the subscription rights represented hereby shall not be exercised by
the Expiration Date, the Warrant shall be void and of no further force and
effect and all rights represented hereby shall cease and expire. The Warrant
shall not be exercised by the Warrantholder in any state where such exercise
would be unlawful.

         1.4 Fractional Shares

         No fractional shares will be issued upon the exercise of the Warrant
hereunder; however, in the event any adjustments pursuant to Section 11 would
result in the issuance of fractional shares, upon exercise of the Warrant such
fractional shares shall be rounded to the nearest whole share. The
Warrantholder, by his acceptance of the Warrant, waives any right to receive any
fractional share of Common Stock upon its exercise.

Section 2.

         2.1 Stock Dividends

         If prior to the expiration of the Warrant, by exercise or by its terms
the Company issues shares of Common Stock as a stock dividend or shall subdivide
the number of outstanding shares of Common Stock into a greater number of
outstanding shares of Common Stock, then at the beginning of business on the
date following the date fixed for the determination of shareholders entitled to
receive such dividend or greater number of shares the number of shares issuable
upon exercise of the Warrant shall be increased to reflect proportionately the
change in the number of outstanding shares of Common Stock, and the Exercise
Price shall be correspondingly decreased. The purpose of this subsection is to
place the Warrantholder in the same position he would have been had he held all
of the shares issuable upon exercise of the Warrant.

         2.2 Consolidation of Shares

         If prior to the expiration of the Warrant by exercise or by its terms
the Company decreases the number of outstanding shares of Common Stock by a
combination, consolidation, or reclassification of shares, then, after the
effective date of such combination, consolidation, or reclassification, the
number of shares issuable upon the exercise of the Warrant shall be decreased to
reflect proportionately such decrease in outstanding shares and the Exercise
Price shall be correspondingly increased. The purpose of this subsection is to
place the Holder in the same position after such combination, consolidation or
reclassification as he would have been had he held all the shares issuable upon
exercise of the Warrant immediately prior to such combination, consolidation or
reclassification.

         2.3 Stock Splits

         If prior to termination of the Warrant by exercise or by its terms the
Company increases the number of outstanding shares of Common Stock by a split-up
of shares, then on the day following the date fixed for the determination of
shareholders entitled to receive shares resulting from such split-up, the number
of shares issuable upon exercise of the Warrant shall be increased to reflect
proportionately such increase in outstanding shares and the Exercise Price shall
be correspondingly decreased. The purpose of this subsection is to place the
Holder in the same position, immediately after such stock split, as he would
have been had he held all the shares issuable upon exercise of the Warrant
immediately prior to such stock split.

         2.4 Special Stock Dividends

         If prior to the termination of the Warrant by exercise or by its terms
the Company issues shares of any class of the Company's stock (other than Common
Stock) or securities convertible into shares of the Company's Common Stock by
way of a stock dividend on outstanding Common Stock then commencing with the day
following the date

                                       2
<PAGE>

fixed for the determination of shareholders entitled to receive such stock
dividend in addition to any share of Common Stock receivable upon exercise of
the Warrant, the Warrantholder shall, upon such exercise of the Warrant, be
entitled to receive, as nearly as practicable, the same number of shares such
dividend stock, plus any shares issued upon any subsequent change, replacement,
subdivision, or combination there ' of to which the Warrantholder would have
been entitled had the Warrant been exercised prior to such stock dividend. No
adjustment in the Exercise Price shall be made merely by virtue of the happening
of any event specified in this Section 2.4.

         2.5 Reorganization, Merger, Sale, Etc.

         If prior to the expiration of the Warrant by exercise or by its terms
there is effected any (i) capital reorganization or reclassification of the
Common Stock, or (ii) consolidation or merger into or with another corporation,
or (iii) sale or all or substantially all of the Company's assets to another
corporation or entity (any such other corporation being included to mean any
"successor corporation" including any consolidation, merger or sale of all or
substantially all of the property of any such other corporation or
corporations), then, as a condition of such event, the Company shall make lawful
and fair provisions whereby the Warrantholder shall thereafter have the right to
purchase and receive on the basis and upon the terms and conditions specified
herein and in lieu of the shares of Common Stock immediately theretofore
purchasable and receivable upon exercise of the Warrant such shares of stock,
securities or assets as may be issued or payable with respect to or in exchange
for a number of outstanding shares of such common stock equal to the number of
shares of such Common Stock which would have been purchasable upon exercise of
the Warrant immediately prior to such event. In any case, the Company shall make
appropriate provision with respect to the rights and interests of the
Warrantholder, so that the provisions contained in the Warrant (including
without limitation provisions for adjustment of the Exercise Price and the
number of shares issuable upon exercise of the Warrant), shall thereafter be
applicable, as nearly as practicable in relation to any share of stock,
security, or asset thereafter deliverable upon the exercise of the Warrant. The
Company shall not effect any such consolidation, merger, or sale unless prior to
the consumption thereof the successor corporation or entity (if other than the
Corporation) resulting from the such consolidation or merger, or the corporation
purchasing such assets, shall assume by written instrument executed and
delivered to the Warrantholder the obligation to deliver to the Warrantholder,
such shares of stock, securities, or assets as, in accordance with the foregoing
provisions, such Warrantholder may be then entitled to purchase.

         2.6 Additional Issuances of Shares

         If, prior to the expiration of the Warrant by exercise or by its terms
the Company shall at any time or from time to time hereunder issue or sell any
Common Stock without consideration or for consideration per share less than the
current market price immediately prior to such sale, the Exercise Price shall be
adjusted to a price computed to the nearest cent determined by dividing the (i)
sum of the Common Stock outstanding immediately prior to such issue or sale
multiplied by the existing price in effect immediately prior to such issue or
sale plus the consideration, if any, received by the Company upon such issue or
sale, by (ii) the total number of shares of Common Stock outstanding immediately
after such issue or sale,

         2.7 Notice of Adjustment

         Upon any adjustment of the Exercise Price of the number of share of
Common Stock issuable upon exercise of the Warrant, then in each case the
Company shall give written notice thereof to the Warrantholder which notice
shall state the Exercise Price and the number of shares of Common Stock issuable
upon exercise of the Warrant as established by such adjustment. The notice shall
also set forth in reasonable detail the method of calculation and the facts upon
which such adjustment is based. The notice may be accompanied by a certificate
of a firm of independent public accountants selected by the Company confirming
the calculations and adjustments in which event such certificate shall be
conclusive evidence of the correctness of such matters. Failure to give such
notice or any defect therein shall not affect the legality or validity of the
adjustments.

         2.8 Other Notices

         In case at any time:

                                       3
<PAGE>

                  2.8.1 The Company shall take any action which would result in
an adjustment under Sections 2.1 through 2.6;

                  2.8.2 The Company shall offer for subscription pro rata to the
holders of its Common Stock any additional shares of stock of any class or other
rights;

                  2.8.3 There shall be any capital reorganization, or
reclassification of the capital stock of the Company, or consolidation or merger
of the Company with, or sale or all or substantially all of its assets to
another corporation; or

                  2.8.4 There shall be a voluntary or involuntary liquidation,
dissolution or winding up of the Company, then in any one or more of such cases,
the Company shall give written notice to the Warrantholder, of the date on which
(i) the books of the Company shall close or record shall be taken for such
dividend, distribution or subscription rights, or (ii) such reorganization,
reclassification, consolidation, merger, sale, dissolution, liquidation or
winding up shall take place. Such notice shall be given at least twenty (20)
days prior to the action in question and not less than twenty (20) days to the
record date or the date on which the Company's transfer books are closed with
respect thereto. Such notice shall specify the date as of which the record is to
be taken; the purpose for which such record is to be taken; the number, amount,
price and nature of the securities and/or assets which will be deliverable upon
exercise of the Warrant after the action for which such record will be taken has
been consummated. Failure to give said notice or the defect therein shall not
affect the legality or validity of any of the matters set forth in the foregoing
(a) though (d), both inclusive.

Section 3.

         3.1 No Rights as Shareholders Conferred

         The Warrant does not entitle the Warrantholder to any rights of a
shareholder of the Company until or unless and except to the extent that the
Warrant shall be exercised.

         3.2 Reservation of Common Stock

         The Company shall at all times reserve and keep available a number of
its authorized but unissued treasury shares that will be sufficient to permit
the exercise in full of the Warrant. The Subscription Notice attached hereto,
duly completed and signed, shall constitute sufficient evidence of the number of
shares of Common Stock which have been issued upon exercise of the Warrant
hereunder, require listing upon any national securities exchange before such
shares may be issued upon exercise, the Company will in good faith and as
expeditiously as possible, endeavor to cause such shares to be duly listed and
will do all acts necessary to keep such listing in effect.

Section 4.

         4.1 Restriction Upon Stock Underlying Warrant

         Neither the Warrant or the Common Stock issuable upon exercise of the
Warrant have been registered under the Act or registered or qualified under any
state securities laws. The Common Stock purchased upon exercise of the Warrant
must be held indefinitely unless subsequently registered under the Act and
qualified under applicable state securities laws or unless and exemption to such
registration requirements is available. A restrictive ledged in substantially
the form set forth below will be placed on the certificates representing the
Common Stock and stop transfer instructions will be issued to prevent illegal
sale of the Common Stock.

                  THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
                  BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
                  AMENDED, 15 U.S.C. SEC. 77A ET SEQ., ("SECURITIES
                  ACT"), THE COLORADO SECURITIES LAWS OR ANY OTHER
                  APPLICABLE

                                       4
<PAGE>

                  STATE SECURITIES LAWS, AND MAY NOT BE SOLD,
                  ASSIGNED, TRADED, TRANSFERRED, PLEDGED OR OTHERWISE
                  DISPOSED OF WITHOUT REGISTRATION UNDER AND IN
                  COMPLIANCE WITH THE SECURITIES ACT, THE COLORADO
                  SECURITIES LAWS AND ANY OTHER APPLICABLE STATE
                  SECURITIES LAWS, OR WITHOUT WRITTEN OPINION LETTERS
                  OF LEGAL COUNSEL FOR BOTH THE SELLER AND THE COMPANY
                  THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
                  SECURITIES ACT, THE COLORADO LAWS AND ANY OTHER
                  APPLICABLE STATE SECURITIES LAWS.

         4.2 Investment Representations

         By accepting the Warrant the Warrantholder represents and warrants that
the Warrant acquired hereby, and any purchase of Common Stock by exercise of the
Warrant will be for his own account for the purpose of investment and with no
view to resale or other distribution of any kind. The Warrantholder also agrees
that in order to exercise the Warrant he must execute the Subscription Notice
and other instrument(s) reasonable satisfactory to the Company.

Section 5.

         5.1 Redemption of Warrants

         The Company may redeem ("Warrant Redemption") the Warrants at a price
equal to $.05 per Warrant upon thirty (3 0) days written notice ("Redemption
Notice") to the Warrantholder at any time prior to the Expiration Date if the
reported average bid price or reported last sale price of the Company's common
stock on NASDAQ or any recognized securities exchange for the thirty (30) day
period immediately preceding such notice is greater than one hundred twenty
percent (120%) of the then Exercise Price.

         5.2 Warrantholder's Rights Upon Redemption

         The Warrantholder shall have all rights to purchase the common stock of
the Company as set forth in Section 1.2 during the thirty (30) period after the
issuance of the Redemption Notice.

Section 6.

         6.1 Notices

         All notices which are required or may be given pursuant to the terms of
this Warrant Agreement shall be in writing and shall be delivered personally, by
certified mail or facsimile as follows:

         If intended for the Company, to:

                  CapSource Financial, Inc.
                  2305 Canyon Boulevard, Suite 103
                  Boulder, Colorado 80202
                  Tel: (303) 245-0515
                  Fax: (303) 245-0521

         If intended for the Warrantholder, to:

                                       5
<PAGE>

         The Company or the Warrantholder may change the address to which
notices intended for it shall be sent to the other party by notice given in the
manner specified in this Section V.

         IN WITNESS WHEREOF, the Company has caused this Warrant Agreement to be
signed by its duly authorized officers.

Dated: __________________                   CAPSOURCE FINANCIAL, INC.

                                        By:
                                            ------------------------------------
                                            Fred C. Boethling, President
Attest:

------------------------------------
Steven E. Reichert, Secretary

                                       6

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