Document:

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                                                                   Exhibit 10.96

                                 EPIMMUNE INC.

                                 2000 STOCK PLAN

                             ADOPTED: APRIL 21, 2000
                     APPROVED BY STOCKHOLDERS: JUNE 9, 2000
                     AMENDED BY THE BOARD: DECEMBER 4, 2001
                     AMENDED BY THE BOARD: JANUARY 14, 2002

                AMENDMENT APPROVED BY STOCKHOLDERS: JUNE __, 2002

                        TERMINATION DATE: APRIL 20, 2010

1. PURPOSES.

        (a) ELIGIBLE STOCK AWARD RECIPIENTS. The persons eligible to receive
Stock Awards are the Employees, Directors and Consultants of the Company and its
Affiliates.

        (b) AVAILABLE STOCK AWARDS. The purpose of the Plan is to provide a
means by which eligible recipients of Stock Awards may be given an opportunity
to benefit from increases in value of the Common Stock through the granting of
the following Stock Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock
Options, (iii) stock bonuses and (iv) rights to acquire restricted stock.

        (c) GENERAL PURPOSE. The Company, by means of the Plan, seeks to retain
the services of the group of persons eligible to receive Stock Awards, to secure
and retain the services of new members of this group and to provide incentives
for such persons to exert maximum efforts for the success of the Company and its
Affiliates.

2. DEFINITIONS.

        (a) "AFFILIATE" means any parent corporation or subsidiary corporation
of the Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.

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

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

        (d) "COMMITTEE" means a committee of one or more members of the Board
appointed by the Board in accordance with subsection 3(c).

        (e) "COMMON STOCK" means the common stock of the Company.

        (f) "COMPANY" means Epimmune Inc., a Delaware corporation.

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        (g) "CONSULTANT" means any person, including an advisor, (i) engaged by
the Company or an Affiliate to render consulting or advisory services and who is
compensated for such services or (ii) who is a member of the Board of Directors
of an Affiliate. However, the term "Consultant" shall not include either
Directors who are not compensated by the Company for their services as Directors
or Directors who are merely paid a director's fee by the Company for their
services as Directors.

        (h) "CONTINUOUS SERVICE" means that the Participant's service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated. The Participant's Continuous Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Participant renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Participant
renders such service, provided that there is no interruption or termination of
the Participant's Continuous Service. For example, a change in status from an
Employee of the Company to a Consultant of an Affiliate or a Director will not
constitute an interruption of Continuous Service. The Board or the chief
executive officer of the Company, in that party's sole discretion, may determine
whether Continuous Service shall be considered interrupted in the case of any
leave of absence approved by that party, including sick leave, military leave or
any other personal leave.

        (i) "COVERED EMPLOYEE" means the chief executive officer and the four
(4) other highest compensated officers of the Company for whom total
compensation is required to be reported to stockholders under the Exchange Act,
as determined for purposes of Section 162(m) of the Code.

        (j) "DIRECTOR" means a member of the Board of Directors of the Company.

        (k) "DISABILITY" means the permanent and total disability of a person
within the meaning of Section 22(e)(3) of the Code.

        (l) "EMPLOYEE" means any person, including Officers and Directors,
employed by the Company or an Affiliate. Mere service as a Director or payment
of a director's fee by the Company or an Affiliate shall not be sufficient to
constitute "employment" by the Company or an Affiliate.

        (m) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

        (n) "FAIR MARKET VALUE" means, as of any date, the value of the Common
Stock determined as follows:

               (i) If the Common Stock is listed on any established stock
exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market,
the Fair Market Value of a share of Common Stock shall be the closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted
on such exchange or market (or the exchange or market with the greatest volume
of trading in the Common Stock) on the day of determination, as reported in The
Wall Street Journal or such other source as the Board deems reliable; provided,
however, that if the day of determination is not a market trading day, then the
Fair Market Value of

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a share of Common Stock shall be the closing sales price
for such stock (or the closing bid, if no sales were reported) as quoted on such
exchange or market (or the exchange or market with the greatest volume of
trading in the Common Stock) on the last market trading day prior to the day of
determination, as reported in The Wall Street Journal or such other source as
the Board deems reliable.

               (ii) In the absence of such markets for the Common Stock, the
Fair Market Value shall be determined in good faith by the Board.

        (o) "INCENTIVE STOCK OPTION" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

        (p) "NON-EMPLOYEE DIRECTOR" means a Director who either (i) is not a
current Employee or Officer of the Company or its parent or a subsidiary, does
not receive compensation (directly or indirectly) from the Company or its parent
or a subsidiary for services rendered as a consultant or in any capacity other
than as a Director (except for an amount as to which disclosure would not be
required under Item 404(a) of Regulation S-K promulgated pursuant to the
Securities Act ("Regulation S-K")), does not possess an interest in any other
transaction as to which disclosure would be required under Item 404(a) of
Regulation S-K and is not engaged in a business relationship as to which
disclosure would be required under Item 404(b) of Regulation S-K; or (ii) is
otherwise considered a "non-employee director" for purposes of Rule 16b-3. In
addition, for purposes of Section 8 only, "Non-Employee Director" also shall
include any Director who is not an Employee of the Company or an Affiliate at
the time an Option is granted to such Director.

        (q) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify
as an Incentive Stock Option.

        (r) "OFFICER" means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

        (s) "OPTION" means an Incentive Stock Option or a Nonstatutory Stock
Option granted pursuant to the Plan.

        (t) "OPTION AGREEMENT" means a written agreement between the Company and
an Optionholder evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of the
Plan.

        (v) "OPTIONHOLDER" means a person to whom an Option is granted pursuant
to the Plan or, if applicable, such other person who holds an outstanding
Option.

        (v) "OUTSIDE DIRECTOR" means a Director who either (i) is not a current
employee of the Company or an "affiliated corporation" (within the meaning of
Treasury Regulations promulgated under Section 162(m) of the Code), is not a
former employee of the Company or an "affiliated corporation" receiving
compensation for prior services (other than benefits under a tax

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qualified pension plan), was not an officer of the Company or an "affiliated
corporation" at any time and is not currently receiving direct or indirect
remuneration from the Company or an "affiliated corporation" for services in any
capacity other than as a Director or (ii) is otherwise considered an "outside
director" for purposes of Section 162(m) of the Code.

        (w) "PARTICIPANT" means a person to whom a Stock Award is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Stock Award.

        (x) "PLAN" means this Epimmune Inc. 2000 Stock Plan.

        (y) "RULE 16b-3" means Rule 16b-3 promulgated under the Exchange Act or
any successor to Rule 16b-3, as in effect from time to time.

        (z) "SECURITIES ACT" means the Securities Act of 1933, as amended.

        (aa) "STOCK AWARD" means any right granted under the Plan, including an
Option, a stock bonus and a right to acquire restricted stock.

        (bb) "STOCK AWARD AGREEMENT" means a written agreement between the
Company and a holder of a Stock Award evidencing the terms and conditions of an
individual Stock Award grant. Each Stock Award Agreement shall be subject to the
terms and conditions of the Plan.

        (cc) "TEN PERCENT STOCKHOLDER" means a person who owns (or is deemed to
own pursuant to Section 424(d) of the Code) stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of the
Company or of any of its Affiliates.

3. ADMINISTRATION.

        (a) ADMINISTRATION BY BOARD. The Board shall administer the Plan unless
and until the Board delegates administration to a Committee, as provided in
subsection 3(c). Any interpretation of the Plan by the Board and any decision by
the Board under the Plan shall be final and binding on all persons.

        (b) POWERS OF BOARD. The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:

               (i) To determine from time to time which of the persons eligible
under the Plan shall be granted Stock Awards; when and how each Stock Award
shall be granted; what type or combination of types of Stock Award shall be
granted; the provisions of each Stock Award granted (which need not be
identical), including the time or times when a person shall be permitted to
receive Common Stock pursuant to a Stock Award; and the number of shares of
Common Stock with respect to which a Stock Award shall be granted to each such
person.

               (ii) To construe and interpret the Plan and Stock Awards granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any

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Stock Award Agreement, in a manner and to the extent it shall deem necessary or
expedient to make the Plan fully effective.

               (iii) To amend the Plan or a Stock Award as provided in Section

               (iv) Generally, to exercise such powers and to perform such acts
as the Board deems necessary or expedient to promote the best interests of the
Company which are not in conflict with the provisions of the Plan.

        (c) DELEGATION TO COMMITTEE.

               (i) GENERAL. The Board may delegate administration of the Plan to
a Committee or Committees of one (1) or more members of the Board, and the term
"Committee" shall apply to any person or persons to whom such authority has been
delegated. If administration is delegated to a Committee, the Committee shall
have, in connection with the administration of the Plan, the powers theretofore
possessed by the Board, including the power to delegate to a subcommittee any of
the administrative powers the Committee is authorized to exercise (and
references in this Plan to the Board shall thereafter be to the Committee or
subcommittee), subject, however, to such resolutions, not inconsistent with the
provisions of the Plan, as may be adopted from time to time by the Board. The
Board may abolish the Committee at any time and revest in the Board the
administration of the Plan.

               (ii) COMMITTEE COMPOSITION WHEN COMMON STOCK IS PUBLICLY TRADED.
At times when the Common Stock is publicly traded, in the discretion of the
Board, a Committee may consist solely of two or more Outside Directors, in
accordance with Section 162(m) of the Code, and/or solely of two or more
Non-Employee Directors, in accordance with Rule 16b-3. Within the scope of such
authority, the Board or the Committee may (1) delegate to a committee of one or
more members of the Board who are not Outside Directors, the authority to grant
Stock Awards to eligible persons who are either (a) not then Covered Employees
and are not expected to be Covered Employees at the time of recognition of
income resulting from such Stock Award or (b) not persons with respect to whom
the Company wishes to comply with Section 162(m) of the Code and/or (2) delegate
to a committee of one or more members of the Board who are not Non-Employee
Directors the authority to grant Stock Awards to eligible persons who are not
then subject to Section 16 of the Exchange Act.

4. SHARES SUBJECT TO THE PLAN.

        (a) SHARE RESERVE. Subject to the provisions of Section 12 relating to
adjustments upon changes in Common Stock, the Common Stock that may be issued
pursuant to Stock Awards shall not exceed in the aggregate one million two
hundred thousand (1,200,000) shares of Common Stock.

        (b) REVERSION OF SHARES TO THE SHARE RESERVE. If any Stock Award shall
for any reason expire or otherwise terminate, in whole or in part, without
having been exercised in full, the shares of Common Stock not acquired under
such Stock Award shall revert to and again become available for issuance under
the Plan.

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        (c) SOURCE OF SHARES. The shares of Common Stock subject to the Plan may
be unissued shares or reacquired shares, bought on the market or otherwise.

5. ELIGIBILITY.

        (a) ELIGIBILITY FOR SPECIFIC STOCK AWARDS. Incentive Stock Options may
be granted only to Employees. Stock Awards other than Incentive Stock Options
may be granted to Employees, Directors and Consultants.

        (b) TEN PERCENT STOCKHOLDERS. A Ten Percent Stockholder shall not be
granted an Incentive Stock Option unless the exercise price of such Option is at
least one hundred ten percent (110%) of the Fair Market Value of the Common
Stock at the date of grant and the Option is not exercisable after the
expiration of five (5) years from the date of grant.

        (c) SECTION 162(m) LIMITATION. Subject to the provisions of Section 12
relating to adjustments upon changes in the shares of Common Stock, no Employee
shall be eligible to be granted Options subject to Section 6 and restricted
stock purchase rights subject to subsection 7(b) covering, in the aggregate,
more than five hundred thousand (500,000) shares of the Common Stock during any
calendar year.

        (d) CONSULTANTS.

               (i) A Consultant shall not be eligible for the grant of a Stock
Award if, at the time of grant, a Form S-8 Registration Statement under the
Securities Act ("Form S-8") is not available to register either the offer or the
sale of the Company's securities to such Consultant because of the nature of the
services that the Consultant is providing to the Company, or because the
Consultant is not a natural person, or as otherwise provided by the rules
governing the use of Form S-8, unless the Company determines both (i) that such
grant (A) shall be registered in another manner under the Securities Act (e.g.,
on a Form S-3 Registration Statement) or (B) does not require registration under
the Securities Act in order to comply with the requirements of the Securities
Act, if applicable, and (ii) that such grant complies with the securities laws
of all other relevant jurisdictions.

               (ii) Form S-8 generally is available to consultants and advisors
only if (i) they are natural persons; (ii) they provide bona fide services to
the issuer, its parents, its majority-owned subsidiaries or majority-owned
subsidiaries of the issuer's parent; and (iii) the services are not in
connection with the offer or sale of securities in a capital-raising
transaction, and do not promote or maintain, directly or indirectly, a market
for the issuer's securities.

6. OPTION PROVISIONS.

        Each Option shall be in such form and shall contain such terms and
conditions as the Board shall deem appropriate. All Options shall be separately
designated Incentive Stock Options or Nonstatutory Stock Options at the time of
grant, and, if certificates are issued, a separate certificate or certificates
will be issued for shares of Common Stock purchased on exercise of each type of
Option. The provisions of separate Options need not be identical, but each
Option shall include (through incorporation of provisions hereof by reference in
the Option

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or otherwise) the substance of each of the following provisions:

        (a) TERM. Subject to the provisions of subsection 5(b) regarding Ten
Percent Stockholders, no Incentive Stock Option shall be exercisable after the
expiration of ten (10) years from the date it was granted.

        (b) EXERCISE PRICE OF AN INCENTIVE STOCK OPTION. Subject to the
provisions of subsection 5(b) regarding Ten Percent Stockholders, the exercise
price of each Incentive Stock Option shall be not less than one hundred percent
(100%) of the Fair Market Value of the Common Stock subject to the Option on the
date the Option is granted. Notwithstanding the foregoing, an Incentive Stock
Option may be granted with an exercise price lower than that set forth in the
preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of Section
424(a) of the Code.

        (c) EXERCISE PRICE OF A NONSTATUTORY STOCK OPTION. The exercise price of
each Nonstatutory Stock Option shall be not less than one hundred percent (100%)
of the Fair Market Value of the Common Stock subject to the Option on the date
the Option is granted. Notwithstanding the foregoing, a Nonstatutory Stock
Option may be granted with an exercise price lower than that set forth in the
preceding sentence if such Option is granted pursuant to an assumption or
substitution for another option in a manner satisfying the provisions of Section
424(a) of the Code. This Section 6(c) may not be amended without the affirmative
vote of the holders of a majority of the shares present and represented and
entitled to vote at a duly convened meeting of stockholders of the Company.

        (d) CONSIDERATION. The purchase price of Common Stock acquired pursuant
to an Option shall be paid, to the extent permitted by applicable statutes and
regulations, either (i) in cash at the time the Option is exercised or (ii) at
the discretion of the Board at the time of the grant of the Option (or
subsequently in the case of a Nonstatutory Stock Option) (1) by delivery to the
Company of other Common Stock, (2) according to a deferred payment or other
similar arrangement with the Optionholder or (3) in any other form of legal
consideration that may be acceptable to the Board; provided, however, that at
any time that the Company is incorporated in Delaware, payment of the Common
Stock's "par value," as defined in the Delaware General Corporation Law, shall
not be made by deferred payment.

               In the case of any deferred payment arrangement, interest shall
be compounded at least annually and shall be charged at the minimum rate of
interest necessary to avoid the treatment as interest, under any applicable
provisions of the Code, of any amounts other than amounts stated to be interest
under the deferred payment arrangement.

        (e) TRANSFERABILITY OF AN INCENTIVE STOCK OPTION. An Incentive Stock
Option shall not be transferable except by will or by the laws of descent and
distribution and shall be exercisable during the lifetime of the Optionholder
only by the Optionholder. Notwithstanding the foregoing, the Optionholder may,
by delivering written notice to the Company, in a form satisfactory to the
Company, designate a third party who, in the event of the death of the
Optionholder, shall thereafter be entitled to exercise the Option.

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        (f) TRANSFERABILITY OF A NONSTATUTORY STOCK OPTION. A Nonstatutory Stock
Option shall be transferable to the extent provided in the Option Agreement. If
the Nonstatutory Stock Option does not provide for transferability, then the
Nonstatutory Stock Option shall not be transferable except by will or by the
laws of descent and distribution and shall be exercisable during the lifetime of
the Optionholder only by the Optionholder. Notwithstanding the foregoing, the
Optionholder may, by delivering written notice to the Company, in a form
satisfactory to the Company, designate a third party who, in the event of the
death of the Optionholder, shall thereafter be entitled to exercise the Option.

        (g) VESTING GENERALLY. The total number of shares of Common Stock
subject to an Option may, but need not, vest and therefore become exercisable in
periodic installments that may, but need not, be equal. The Option may be
subject to such other terms and conditions on the time or times when it may be
exercised (which may be based on performance or other criteria) as the Board may
deem appropriate. The vesting provisions of individual Options may vary. The
provisions of this subsection 6(g) are subject to any Option provisions
governing the minimum number of shares of Common Stock as to which an Option may
be exercised.

        (h) TERMINATION OF CONTINUOUS SERVICE. In the event an Optionholder's
Continuous Service terminates (other than upon the Optionholder's death or
Disability), the Optionholder may exercise his or her Option (to the extent that
the Optionholder was entitled to exercise such Option as of the date of
termination) but only within such period of time ending on the earlier of (i)
the date three (3) months following the termination of the Optionholder's
Continuous Service (or such longer or shorter period specified in the Option
Agreement), or (ii) the expiration of the term of the Option as set forth in the
Option Agreement. If, after termination, the Optionholder does not exercise his
or her Option within the time specified, the Option shall terminate.

        (i) EXTENSION OF TERMINATION DATE. An Optionholder's Option Agreement
may also provide that if the exercise of the Option following the termination of
the Optionholder's Continuous Service (other than upon the Optionholder's death
or Disability) would be prohibited at any time solely because the issuance of
shares of Common Stock would violate the registration requirements under the
Securities Act, then the Option shall terminate on the earlier of (i) the
expiration of the term of the Option set forth in subsection 6(a) or (ii) the
expiration of a period of three (3) months after the termination of the
Optionholder's Continuous Service during which the exercise of the Option would
not be in violation of such registration requirements.

        (j) DISABILITY OF OPTIONHOLDER. In the event that an Optionholder's
Continuous Service terminates as a result of the Optionholder's Disability, the
Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise such Option as of the date of termination), but only
within such period of time ending on the earlier of (i) the date twelve (12)
months following such termination (or such longer or shorter period specified in
the Option Agreement) or (ii) the expiration of the term of the Option as set
forth in the Option Agreement. If, after termination, the Optionholder does not
exercise his or her Option within the time specified, the Option shall
terminate.

        (k) DEATH OF OPTIONHOLDER. In the event (i) an Optionholder's Continuous
Service terminates as a result of the Optionholder's death or (ii) the
Optionholder dies within the period

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(if any) specified in the Option Agreement after the termination of the
Optionholder's Continuous Service for a reason other than death, then the Option
may be exercised (to the extent the Optionholder was entitled to exercise such
Option as of the date of death) by the Optionholder's estate, by a person who
acquired the right to exercise the Option by bequest or inheritance or by a
person designated to exercise the option upon the Optionholder's death pursuant
to subsection 6(e) or 6(f), but only within the period ending on the earlier of
(1) the date eighteen (18) months following the date of death (or such longer or
shorter period specified in the Option Agreement) or (2) the expiration of the
term of such Option as set forth in the Option Agreement. If, after death, the
Option is not exercised within the time specified, the Option shall terminate.

        (l) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionholder may elect at any time before the Optionholder's
Continuous Service terminates to exercise the Option as to any part or all of
the shares of Common Stock subject to the Option prior to the full vesting of
the Option. Any unvested shares of Common Stock so purchased may be subject to a
repurchase option in favor of the Company or to any other restriction the Board
determines to be appropriate.

        (m) RE-LOAD OPTIONS. Without in any way limiting the authority of the
Board to make or not to make grants of Options hereunder, the Board shall have
the authority (but not an obligation) to include as part of any Option Agreement
a provision entitling the Optionholder to a further Option (a "Re-Load Option")
in the event the Optionholder exercises the Option evidenced by the Option
Agreement, in whole or in part, by surrendering other shares of Common Stock in
accordance with this Plan and the terms and conditions of the Option Agreement.
Any such Re-Load Option shall (i) except as provided in this subsection 6(m)
below, be exercisable for a number of shares of Common Stock equal to the number
of shares of Common Stock surrendered as part or all of the exercise price of
such Option; (ii) have an expiration date which is the same as the expiration
date of the Option the exercise of which gave rise to such Re-Load Option; and
(iii) have an exercise price which is equal to one hundred percent (100%) of the
Fair Market Value of the Common Stock subject to the Re-Load Option on the date
of exercise of the original Option. Notwithstanding the foregoing, a Re-Load
Option shall be subject to the same exercise price and term provisions
heretofore described for Options under the Plan.

               Any such Re-Load Option may be an Incentive Stock Option or a
Nonstatutory Stock Option, as the Board may designate at the time of the grant
of the original Option; provided, however, that the designation of any Re-Load
Option as an Incentive Stock Option shall be subject to the one hundred thousand
dollar ($100,000) annual limitation on the exercisability of Incentive Stock
Options described in subsection 11(d) and in Section 422(d) of the Code. There
shall be no Re-Load Options on a Re-Load Option. Any such Re-Load Option shall
be subject to the availability of sufficient shares of Common Stock under
subsection 4(a) and the "Section 162(m) Limitation" on the grants of Options
under subsection 5(c) and shall be subject to such other terms and conditions as
the Board may determine which are not inconsistent with the express provisions
of the Plan regarding the terms of Options.

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7. PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS.

        (a) STOCK BONUS AWARDS. Each stock bonus agreement shall be in such form
and shall contain such terms and conditions as the Board shall deem appropriate.
The terms and conditions of stock bonus agreements may change from time to time,
and the terms and conditions of separate stock bonus agreements need not be
identical, but each stock bonus agreement shall include (through incorporation
of provisions hereof by reference in the agreement or otherwise) the substance
of each of the following provisions:

               (i) CONSIDERATION. A stock bonus may be awarded in consideration
for past services actually rendered to the Company or an Affiliate for its
benefit.

               (ii) VESTING. Shares of Common Stock awarded under the stock
bonus agreement may, but need not, be subject to a share repurchase option in
favor of the Company in accordance with a vesting schedule to be determined by
the Board.

               (iii) TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. In the
event a Participant's Continuous Service terminates, the Company may reacquire
any or all of the shares of Common Stock held by the Participant which have not
vested as of the date of termination under the terms of the stock bonus
agreement.

               (iv) TRANSFERABILITY. Rights to acquire shares under the stock
bonus agreement shall be transferable by the Participant only upon such terms
and conditions as are set forth in the stock bonus agreement, as the Board shall
determine in its discretion, so long as Common Stock awarded under the stock
bonus agreement remains subject to the terms of the stock bonus agreement.

        (b) RESTRICTED STOCK AWARDS. Each restricted stock purchase agreement
shall be in such form and shall contain such terms and conditions as the Board
shall deem appropriate. The terms and conditions of restricted stock purchase
agreements may change from time to time, and the terms and conditions of
separate restricted stock purchase agreements need not be identical, but each
restricted stock purchase agreement shall include (through incorporation of
provisions hereof by reference in the agreement or otherwise) the substance of
each of the following provisions:

               (i) PURCHASE PRICE. The purchase price under each restricted
stock purchase agreement shall be such amount as the Board shall determine and
designate in such restricted stock purchase agreement. The purchase price shall
not be less than one hundred percent (100%) of the Common Stock's Fair Market
Value on the date such award is made or at the time the purchase is consummated;
provided, however, that this Section 7(b)(i) may be amended to provide, or any
restricted stock purchase agreement granted under the Plan may provide, that the
purchase price shall not be less than eighty five percent (85%) of the Common
Stock's Fair Market Value on the date such award is made or at the time the
purchase is consummated if such amendment or grant is approved by the holders of
a majority of the shares present or represented and entitled to vote at a duly
convened meeting of stockholders. This Section 7(b)(i) may not be

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amended without the affirmative vote of the holders of a majority of the shares
present and represented and entitled to vote at a duly convened meeting of
stockholders of the Company.

               (ii) CONSIDERATION. The purchase price of Common Stock acquired
pursuant to the restricted stock purchase agreement shall be paid either: (i) in
cash at the time of purchase; (ii) at the discretion of the Board, according to
a deferred payment or other similar arrangement with the Participant; or (iii)
in any other form of legal consideration that may be acceptable to the Board in
its discretion; provided, however, that at any time that the Company is
incorporated in Delaware, then payment of the Common Stock's "par value," as
defined in the Delaware General Corporation Law, shall not be made by deferred
payment.

               (iii) VESTING. Shares of Common Stock acquired under the
restricted stock purchase agreement may, but need not, be subject to a share
repurchase option in favor of the Company in accordance with a vesting schedule
to be determined by the Board.

               (iv) TERMINATION OF PARTICIPANT'S CONTINUOUS SERVICE. In the
event a Participant's Continuous Service terminates, the Company may repurchase
or otherwise reacquire any or all of the shares of Common Stock held by the
Participant which have not vested as of the date of termination under the terms
of the restricted stock purchase agreement.

               (v) TRANSFERABILITY. Rights to acquire shares under the
restricted stock purchase agreement shall be transferable by the Participant
only upon such terms and conditions as are set forth in the restricted stock
purchase agreement, as the Board shall determine in its discretion, so long as
Common Stock awarded under the restricted stock purchase agreement remains
subject to the terms of the restricted stock purchase agreement.

8. NON-EMPLOYEE DIRECTORS.

        (a) Non-Employee Directors shall be eligible to receive any form of
Stock Award provided for by the Plan, other than Incentive Stock Options, and
such Stock Awards shall be subject to all the terms of the Plan, including
Sections 6 and 12, except as modified by this Section 8. Unless otherwise
specifically provided in the applicable Option Agreement, Nonstatutory Options
granted to Non-Employee Directors ("Non-Employee Director Options") shall be
subject to the provisions of this Section 8.

        (b) The term of each Non-Employee Director Option shall commence on the
date it is granted and expire on the date ten (10) years from the date of grant,
unless sooner terminated due to the Non-Employee Director's termination of
Continuous Service. Non-Employee Director Options may be exercised following the
Optionholder's termination of Continuous Service, for whatever reason (to the
extent such Optionholder was entitled to exercise such Option on the date of
such termination), within the period of time ending on the earlier of (i) the
date twelve (12) months following such termination or (ii) the expiration of the
Option as set forth in the Option Agreement.

                                      11.
<PAGE>

        (c) The exercise price of each Nonstatutory Option granted to a
Non-Employee Director Option shall be one hundred percent (100%) of the Fair
Market Value of the Common Stock subject to the Option on the date of grant.

        (d) In the event of a transaction or event described in any of
subsections 12(b), 12(c), 12(d) or 12(e), then, with respect to Non-Employee
Director Options held by Participants whose Continuous Service has not
terminated, the vesting of such Non-Employee Director Options (and, if
applicable, the time during which such Non-Employee Director Options may be
exercised) shall be accelerated in full.

9. COVENANTS OF THE COMPANY.

        (a) AVAILABILITY OF SHARES. During the terms of the Stock Awards, the
Company shall keep available at all times the number of shares of Common Stock
required to satisfy such Stock Awards.

        (b) SECURITIES LAW COMPLIANCE. The Company shall seek to obtain from
each regulatory commission or agency having jurisdiction over the Plan such
authority as may be required to grant Stock Awards and to issue and sell shares
of Common Stock upon exercise of the Stock Awards; provided, however, that this
undertaking shall not require the Company to register under the Securities Act
the Plan, any Stock Award or any Common Stock issued or issuable pursuant to any
such Stock Award. If, after reasonable efforts, the Company is unable to obtain
from any such regulatory commission or agency the authority which counsel for
the Company deems necessary for the lawful issuance and sale of Common Stock
under the Plan, the Company shall be relieved from any liability for failure to
issue and sell Common Stock upon exercise of such Stock Awards unless and until
such authority is obtained.

10. USE OF PROCEEDS FROM STOCK.

       Proceeds from the sale of Common Stock pursuant to Stock Awards shall
constitute general funds of the Company.

11. MISCELLANEOUS.

        (a) ACCELERATION OF EXERCISABILITY AND VESTING. The Board shall have the
power to accelerate the time at which a Stock Award may first be exercised or
the time during which a Stock Award or any part thereof will vest in accordance
with the Plan, notwithstanding the provisions in the Stock Award stating the
time at which it may first be exercised or the time during which it will vest.

        (b) STOCKHOLDER RIGHTS. No Participant shall be deemed to be the holder
of, or to have any of the rights of a holder with respect to, any shares of
Common Stock subject to such Stock Award unless and until such Participant has
satisfied all requirements for exercise of the Stock Award pursuant to its
terms.

        (c) NO EMPLOYMENT OR OTHER SERVICE RIGHTS. Nothing in the Plan or any
instrument executed or Stock Award granted pursuant thereto shall confer upon
any Participant any right to

                                      12.
<PAGE>

continue to serve the Company or an Affiliate in
the capacity in effect at the time the Stock Award was granted or shall affect
the right of the Company or an Affiliate to terminate (i) the employment of an
Employee with or without notice and with or without cause, (ii) the service of a
Consultant pursuant to the terms of such Consultant's agreement with the Company
or an Affiliate or (iii) the service of a Director pursuant to the Bylaws of the
Company or an Affiliate, and any applicable provisions of the corporate law of
the state in which the Company or the Affiliate is incorporated, as the case may
be.

        (d) INCENTIVE STOCK OPTION $100,000 LIMITATION. To the extent that the
aggregate Fair Market Value (determined at the time of grant) of Common Stock
with respect to which Incentive Stock Options are exercisable for the first time
by any Optionholder during any calendar year (under all plans of the Company and
its Affiliates) exceeds one hundred thousand dollars ($100,000), the Options or
portions thereof which exceed such limit (according to the order in which they
were granted) shall be treated as Nonstatutory Stock Options.

        (e) INVESTMENT ASSURANCES. The Company may require a Participant, as a
condition of exercising or acquiring Common Stock under any Stock Award, (i) to
give written assurances satisfactory to the Company as to the Participant's
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Stock Award; and (ii) to
give written assurances satisfactory to the Company stating that the Participant
is acquiring Common Stock subject to the Stock Award for the Participant's own
account and not with any present intention of selling or otherwise distributing
the Common Stock. The foregoing requirements, and any assurances given pursuant
to such requirements, shall be inoperative if (1) the issuance of the shares of
Common Stock upon the exercise or acquisition of Common Stock under the Stock
Award has been registered under a then currently effective registration
statement under the Securities Act or (2) as to any particular requirement, a
determination is made by counsel for the Company that such requirement need not
be met in the circumstances under the then applicable securities laws. The
Company may, upon advice of counsel to the Company, place legends on stock
certificates issued under the Plan as such counsel deems necessary or
appropriate in order to comply with applicable securities laws, including, but
not limited to, legends restricting the transfer of the Common Stock.

        (f) WITHHOLDING OBLIGATIONS. To the extent provided by the terms of a
Stock Award Agreement, the Participant may satisfy any federal, state or local
tax withholding obligation relating to the exercise or acquisition of Common
Stock under a Stock Award by any of the following means (in addition to the
Company's right to withhold from any compensation paid to the Participant by the
Company) or by a combination of such means: (i) tendering a cash payment; (ii)
authorizing the Company to withhold shares of Common Stock from the shares of
Common Stock otherwise issuable to the Participant as a result of the exercise
or acquisition of Common Stock under the Stock Award; provided, however, that no
shares are withheld with a value exceeding the minimum amount of tax required to
withheld by law; or (iii) delivering to the Company owned and unencumbered
shares of the Common Stock.

                                      13.
<PAGE>

        (g) CANCELLATION AND RE-GRANT OF OPTIONS. The Board shall not have the
authority, at any time, without obtaining the approval of a majority of the
shares present or represented and entitled to vote at a duly convened meeting of
stockholders, to (1) reduce the exercise price of any Options under the Plan
that are either currently outstanding or will be granted in the future; (2)
cancel any outstanding Options under the Plan and grant in substitution therefor
new Options under the Plan at a lower exercise price (including entering into
any "6 month and 1 day" cancellation and re-grant scheme), regardless of whether
or not the cancelled Options revert to and again become available for issuance
under the Plan; (3) replace Options having an exercise price higher than the
then current Fair Market Value with rights to acquire restricted stock and/or
stock bonus awards in an exchange, buy-back or other scheme; or (4) replace any
outstanding Options under the Plan with new Options under the Plan having a
lower exercise price or accelerated vesting schedule in an exchange, buy-back or
other scheme. This Section 11(g) may not be amended without the affirmative vote
of the holders of a majority of the shares present or represented and entitled
to vote at a duly convened meeting of the stockholders of the Company.

12. ADJUSTMENTS UPON CHANGES IN STOCK.

        (a) CAPITALIZATION ADJUSTMENTS. If any change is made in the Common
Stock subject to the Plan, or subject to any Stock Award, without the receipt of
consideration by the Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company), the Plan will be appropriately
adjusted in the class(es) and maximum number of securities subject to the Plan
pursuant to subsection 4(a) and the maximum number of securities subject to
award to any person pursuant to subsection 5(c), and the outstanding Stock
Awards will be appropriately adjusted in the class(es) and number of securities
and price per share of Common Stock subject to such outstanding Stock Awards.
The Board shall make such adjustments, and its determination shall be final,
binding and conclusive. (The conversion of any convertible securities of the
Company shall not be treated as a transaction "without receipt of consideration"
by the Company.)

        (b) DISSOLUTION OR LIQUIDATION. In the event of a dissolution or
liquidation of the Company, then, with respect to Stock Awards held by
Participants whose Continuous Service has not terminated, the vesting of such
Stock Awards (and, if applicable, the time during which such Stock Awards may be
exercised) shall be accelerated in full, and the Stock Awards shall terminate if
not exercised (if applicable) at or prior to such event, except to the extent
that such Stock Awards are assumed or substituted by a surviving or acquiring
corporation pursuant to subsection 12(c). With respect to any other Stock Awards
outstanding under the Plan, such Stock Awards shall terminate if not exercised
(if applicable) prior to such event.

        (c) ASSET SALE, MERGER, CONSOLIDATION OR REVERSE MERGER. In the event of
(i) a sale, lease or other disposition of all or substantially all of the assets
of the Company, (ii) a merger or consolidation in which the Company is not the
surviving corporation or (iii) a reverse merger in which the Company is the
surviving corporation but the shares of Common Stock outstanding immediately
preceding the merger are converted by virtue of the merger into other property,
whether in the form of securities, cash or otherwise, then any surviving
corporation or

                                      14.
<PAGE>

acquiring corporation may assume or continue any Stock Awards outstanding under
the Plan or may substitute similar stock awards (including an award to acquire
the same consideration paid to the stockholders in the transaction described in
this subsection 12(c)) for those outstanding under the Plan. In the event any
surviving corporation or acquiring corporation does not assume or continue such
Stock Awards or substitute similar stock awards for those outstanding under the
Plan, then, with respect to Stock Awards held by Participants whose Continuous
Service has not terminated, the vesting of such Stock Awards (and, if
applicable, the time during which such Stock Awards may be exercised) shall be
accelerated in full, and the Stock Awards shall terminate if not exercised (if
applicable) at or prior to such event. With respect to any other Stock Awards
outstanding under the Plan, such Stock Awards shall terminate if not exercised
(if applicable) prior to such event.

        (d) CHANGE IN CONTROL--SECURITIES ACQUISITION. In the event of an
acquisition by any person, entity or group within the meaning of Section 13(d)
or 14(d) of the Exchange Act, or any comparable successor provisions (excluding
any employee benefit plan, or related trust, sponsored or maintained by the
Company or an Affiliate) of the beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act, or comparable successor rule) of
securities of the Company representing at least fifty percent (50%) of the
combined voting power entitled to vote in the election of Directors, then with
respect to Stock Awards held by Participants whose Continuous Service has not
terminated, the vesting of such Stock Awards (and, if applicable, the time
during which such Stock Awards may be exercised) shall be accelerated in full;
provided, however, that this subsection 12(d) shall not apply if the securities
acquisition described in this subsection 12(d) is the result of or also
constitutes a transaction described in subsection 12(c) above, in which case the
provisions of subsection 12(c) shall apply.

        (e) CHANGE IN CONTROL--CHANGE IN INCUMBENT BOARD. In the event that the
individuals who, as of the date of the adoption of this Plan, are members of the
Board (the "Incumbent Board"), cease for any reason to constitute at least fifty
percent (50%) of the Board, then with respect to Stock Awards held by persons
whose Continuous Service has not terminated, the vesting of such Stock Awards
(and, if applicable, the time during which such Stock Awards may be exercised)
shall be accelerated in full; provided, however, that this subsection 12(e)
shall not apply if the change in the Incumbent Board described in this
subsection 12(e) occurs solely as a result of and/or following a transaction
described in subsection 12(c), in which case the provisions of subsection 12(c)
shall apply. If the election, or nomination for election, by the Company's
stockholders of any new Director was approved by a vote of at least fifty
percent (50%) of the Incumbent Board, such new Director shall be considered as a
member of the Incumbent Board.

13. AMENDMENT OF THE PLAN AND STOCK AWARDS.

        (a) AMENDMENT OF PLAN. The Board at any time, and from time to time, may
amend the Plan. However, except as provided in Section 12 relating to
adjustments upon changes in Common Stock, no amendment shall be effective unless
approved by the stockholders of the Company to the extent stockholder approval
is necessary pursuant to the terms of the Plan or necessary to satisfy the
requirements of Section 422 of the Code, Rule 16b-3 or any Nasdaq or securities
exchange listing requirements.

                                      15.
<PAGE>

        (b) STOCKHOLDER APPROVAL. The Board may, in its sole discretion, submit
any other amendment to the Plan for stockholder approval, including, but not
limited to, amendments to the Plan intended to satisfy the requirements of
Section 162(m) of the Code and the regulations thereunder regarding the
exclusion of performance-based compensation from the limit on corporate
deductibility of compensation paid to certain executive officers.

        (c) CONTEMPLATED AMENDMENTS. It is expressly contemplated that the Board
may amend the Plan in any respect the Board deems necessary or advisable to
provide eligible Employees with the maximum benefits provided or to be provided
under the provisions of the Code and the regulations promulgated thereunder
relating to Incentive Stock Options and/or to bring the Plan and/or Incentive
Stock Options granted under it into compliance therewith.

        (d) NO IMPAIRMENT OF RIGHTS. Rights under any Stock Award granted before
amendment of the Plan shall not be impaired by any amendment of the Plan unless
(i) the Company requests the consent of the Participant and (ii) the Participant
consents in writing.

        (e) AMENDMENT OF STOCK AWARDS. Subject to Section 6(c), 7(b)(i) and
11(g), the Board at any time, and from time to time, may amend the terms of any
one or more Stock Awards; provided, however, that the rights under any Stock
Award shall not be impaired by any such amendment unless (i) the Company
requests the consent of the Participant and (ii) the Participant consents in
writing. Notwithstanding the foregoing, subject to Section 6(c), 7(b)(i) and
11(g), any action by the Board to (A) reduce the exercise price of outstanding
Options previously granted, (B) cancel outstanding Options and replace them with
Options with a lower exercise price, or (C) effect an exchange of outstanding
Options for new Options with a lower exercise price, shall be effective only if
approved by the Company's stockholders, unless taken pursuant to subsection
12(a), in connection a transaction described in subsection 12(c) or otherwise in
a manner that would satisfy the provisions of Section 424(a) of the Code or
regulations promulgated thereunder.

14. TERMINATION OR SUSPENSION OF THE PLAN.

        (a) PLAN TERM. The Board may suspend or terminate the Plan at any time.
Unless sooner terminated, the Plan shall terminate on the day before the tenth
(10th) anniversary of the date the Plan is adopted by the Board or approved by
the stockholders of the Company, whichever is earlier. No Stock Awards may be
granted under the Plan while the Plan is suspended or after it is terminated.

        (b) NO IMPAIRMENT OF RIGHTS. Suspension or termination of the Plan shall
not impair rights and obligations under any Stock Award granted while the Plan
is in effect, except with the written consent of the Participant.

15. EFFECTIVE DATE OF PLAN.

       The Plan shall become effective on the date the Plan is approved by the
stockholders, which approval shall be within twelve (12) months before or after
the date the Plan is adopted by the Board.

                                      16.
<PAGE>

16. CHOICE OF LAW.

        The law of the State of California shall govern all questions concerning
the construction, validity and interpretation of this Plan, without regard to
such state's conflict of laws rules.

                                      17.<PAGE>
                                                                    EXHIBIT 10.3

                              EMPLOYMENT AGREEMENT

        Agreement made as of the first day of January, 2001, between THE BANK OF
HEMET with its administrative office at 3715 Sunnyside Drive, Riverside, CA
92506, hereinafter referred to as "EMPLOYER", and JAMES B. JAQUA, 440 Emerald
Bay, Laguna Beach, California 92651, hereinafter referred to as "EXECUTIVE".

                                   WITNESSETH

        WHEREAS, EMPLOYER is desirous of employing EXECUTIVE in the capacity
hereinafter stated, and EXECUTIVE is desirous of entering into the employ of
EMPLOYER in such capacity, for the period and on the terms and conditions set
forth herein;

        NOW, THEREFORE, in consideration of the promises and the mutual
covenants and conditions herein contained, the parties hereto, intending to be
legally bound, do hereby agree as follows:

        1.     EMPLOYMENT

               EMPLOYER hereby employs EXECUTIVE as President and Chief
               Executive Officer of EMPLOYER, and EXECUTIVE accepts the duties
               that are customarily performed by the President and Chief
               Executive Officer of a commercial bank in California, and accepts
               all other duties described herein, and agrees to discharge the
               same faithfully to the best of his ability and consistent with
               the customary standards of the banking industry, in accordance
               with the policies of the Board of Directors of EMPLOYER as
               established, and in compliance with all laws and EMPLOYER'S
               Articles of Incorporation and Bylaws. EXECUTIVE shall devote his
               full business time and attention to the business and affairs of
               EMPLOYER to which he may be elected or appointed and shall
               perform the duties thereof to the best of his ability. For the
               duration of this Agreement, EMPLOYER shall continue to nominate
               EXECUTIVE as a Director of EMPLOYER. In the event that EMPLOYER
               shall hire a new President and Chief Operating Officer of The
               Bank of Hemet, EMPLOYER and EXECUTIVE agree that EXECUTIVE shall
               assume the title of Chairman of the Board and Chief Executive
               Officer of The Bank of Hemet.

        2.     TERM

                                       1
<PAGE>

               EMPLOYER hereby employs EXECUTIVE and EXECUTIVE hereby accepts
               employment with EMPLOYER for the period of three (3) years,
               hereinafter called the "TERM", commencing with the date of this
               Agreement, subject however, to prior termination of this
               Agreement as hereinafter provided. Where used herein, TERM shall
               refer to the entire three year period of employment of EXECUTIVE
               by EMPLOYER, whether for the period provided above, or whether
               terminated earlier as hereinafter provided, or extended by mutual
               agreement in writing by EMPLOYER and EXECUTIVE.

        3.     COMPENSATION

               In consideration for all services to be rendered by EXECUTIVE to
               EMPLOYER, EXECUTIVE'S base salary for 2001 shall be Two Hundred
               Thirty-Eight Thousand Three Hundred Dollars ($238,300).
               EXECUTIVE'S salary shall be paid semi-monthly as per the policy
               of EMPLOYER. EMPLOYER shall deduct from EXECUTIVE'S salary all
               taxes and withholding which may be required to be deducted or
               withheld under any provision of California law.

        4.     INCENTIVE COMPENSATION

               Immediately following each calendar year end throughout the term
               of this Agreement EXECUTIVE shall be given a performance
               evaluation by the Compensation Committee of EMPLOYER'S Board of
               Directors, which shall address his achievement of corporate
               goals, both quantitative and qualitative. Based upon this
               evaluation, the Committee shall make a decision concerning
               incentive compensation for EXECUTIVE. The granting of such
               compensation and the amount thereof shall be entirely
               discretionary on the part of the Committee and must be
               appropriate to the contribution and performance of EXECUTIVE and
               the performance of EMPLOYER as a whole. Such additional
               compensation, if any, shall be paid to EXECUTIVE no later than
               sixty (60) days after each year end, or thirty (30) days after
               release of EMPLOYER'S audited financial statements, whichever is
               later. If EXECUTIVE shall terminate employment prior to the
               termination of this Agreement, EXECUTIVE shall receive a pro-rata
               portion (based on the amount of time EXECUTIVE worked during the
               partial year, exclusive of any vacation or sick time) of the
               additional compensation, if any, provided in this paragraph.

        5.     REIMBURSEMENT

               EMPLOYER agrees to reimburse EXECUTIVE for all ordinary and
               necessary expenses incurred by EXECUTIVE on behalf of EMPLOYER,
               including entertainment, meals and

                                       2
<PAGE>

               travel expenses. Any costs incurred by EXECUTIVE for conventions,
               meetings, and seminars will be reimbursed, as will special social
               entertainment expenses, provided the Board of Directors of
               EMPLOYER approves such. EXECUTIVE agrees to maintain and provide
               EMPLOYER with adequate records of expenses incurred in connection
               with any cost which EMPLOYER has agreed to provide reimbursement.
               EMPLOYER also agrees to pay the cost of an annual Executive
               Physical Examination at a location of EXECUTIVE'S choice.

        6.     INSURANCE

               EMPLOYER agrees to provide EXECUTIVE and his wife with such
               medical insurance benefits as are provided by the group insurance
               programs of EMPLOYER which are now or hereinafter be in effect.
               EMPLOYER may apply for a "Keyman" life insurance policy with
               EMPLOYER as beneficiary of the policy.

        7.     VACATION

               EXECUTIVE shall be entitled to five (5) weeks of vacation, two
               (2) weeks of which shall be consecutive, during each year of the
               TERM. EXECUTIVE shall not be entitled to vacation pay in lieu of
               vacation, and any vacation time not used shall be deemed waived.
               EMPLOYER may waive the provision with respect to unused vacation
               time.

        8.     TERMINATION

               EMPLOYER shall have the right to terminate this Employment
               Agreement for any of following reasons by serving written notice
               upon EXECUTIVE:

               (a)    Willful breach of, or acts amounting to gross negligence
                      with respect to, or willful misconduct in the performance
                      of EXECUTIVE'S duties and obligations as President or
                      Chairman of the Board and Chief Executive Officer;

               (b)    Conviction of a felony;

               (c)    Removal order from a banking regulatory agency;

               (d)    Physical or mental disability rendering EXECUTIVE
                      incapable of performing his duties;

               (e)    Determination by a majority of EMPLOYER'S Board of
                      Directors that the continued employment of EXECUTIVE is
                      detrimental to the best interest of EMPLOYER'S
                      shareholders, or for any reason whatsoever as determined
                      by a majority of EMPLOYER'S Board of Directors and in
                      their sole and absolute discretion.

                                       3
<PAGE>

        (f)    Death

               In the event this Agreement is terminated for any of the reasons
               specified in the paragraphs (a), (b), or (c) above, EXECUTIVE
               shall be paid no further salary, but shall receive any pay in
               lieu of vacation accrued but not taken, as of the date of
               termination. The medical insurance benefits provided herein shall
               be extended at EMPLOYEE'S sole cost, pursuant to C.O.B.R.A.
               regulations.

               In the event this Agreement is terminated for the reasons
               specified in paragraph (d) above, EMPLOYER shall be responsible
               for continuing the base salary and benefits due EXECUTIVE for a
               period of twelve (12) months from the date of the disability, to
               be offset by any disability insurance proceeds received during
               the twelve (12) month period. In the event this Agreement is
               terminated for the reason specified in paragraph (f) above,
               EMPLOYER shall have no obligation to pay any salary or benefits
               after the date of EXECUTIVE'S death, other than any pay in lieu
               of vacation, accrued but not taken, prior to EXECUTIVE'S death,
               which shall be paid to EXECUTIVE'S estate within thirty (30)
               days. In the event this Agreement is terminated for the reasons
               specified in paragraph (e) above, EXECUTIVE shall, within thirty
               (30) days, be paid lump-sum termination pay in the amount of the
               remainder of the base salary called for in this Agreement. Where
               termination is pursuant to paragraph (e) above, any pay in lieu
               of vacation accrued to, but not taken as of the date of
               termination, shall be paid within thirty (30) days. In such case,
               the medical insurance benefits provided herein shall be extended
               at EMPLOYER'S sole cost for twelve (12) months following the date
               of termination.

               EXECUTIVE shall give one hundred twenty (120) days prior notice,
               in writing, to EMPLOYER in the event EXECUTIVE resigns or
               voluntarily terminates employment. The Board of Directors, at its
               sole discretion, may reduce the number of days of prior notice
               required or may waive the provision in its entirety.

               Should EXECUTIVE resign or voluntarily terminate employment,
               EXECUTIVE shall, for a period of one year, not become employed
               with another banking institution whose Head Office is within a
               fifty (50) mile radius of the Head Office of EMPLOYER. As the
               degree of damage to EMPLOYER, should EXECUTIVE violate the
               preceding non-competition clause, would be difficult and
               impractical to determine, EXECUTIVE and EMPLOYER agree that any
               sums owed by EMPLOYER to EXECUTIVE at the time a

                                       4
<PAGE>

               violation might occur would constitute the total liquidated
               damages owed by EXECUTIVE to EMPLOYER.

               EXECUTIVE may exercise his right to exercise any stock options
               vested prior to termination or resignation, if any, and as
               provided in a Stock Option Plan and a Stock Option Agreement to
               which EXECUTIVE is a party.

        9.     ACQUISITION OR DISSOLUTION OF EMPLOYER

               This Employment Agreement shall not be terminated by the
               voluntary or involuntary dissolution of EMPLOYER or by any merger
               of consolidation affecting EMPLOYER. In the event of any merger
               or consolidation, or upon transfer of all or substantially all of
               the assets of EMPLOYER, the provisions of this Employment
               Agreement shall be binding upon and inure to the benefit of the
               surviving or resulting corporation or the corporation to which
               such assets shall be transferred. Notwithstanding the foregoing,
               in the event proceedings for liquidation of EMPLOYER are
               commenced by a banking regulatory agency, this Agreement and all
               rights and benefits hereunder shall terminate.

        10.    INDEMNIFICATION

               To the fullest extent permitted by law, EMPLOYER shall indemnify
               EXECUTIVE, who may be a party or is threatened to be made a party
               to any action brought by a third party against the EXECUTIVE
               (whether or not EMPLOYER is joined as a party defendant), against
               expenses, judgements, fines, settlements, and other amounts
               actually and reasonably incurred in connection with said action
               if EXECUTIVE acted in good faith and in a manner EXECUTIVE
               reasonably believed to be in the best interest of the EMPLOYER,
               provided that the alleged conduct of EXECUTIVE arose out of and
               was within the course and scope of his employment as an officer
               of EMPLOYER.

        11.    RETURN OF DOCUMENTS

               EXECUTIVE expressly agrees that all manuals, documents, files,
               reports, studies, instruments or other materials used or
               developed by EXECUTIVE during the TERM are solely the property of
               EMPLOYER, and EXECUTIVE has no right, title or interest therein.
               Upon termination of this Agreement, EXECUTIVE or EXECUTIVE'S
               representative shall promptly deliver possession of all said
               property to EMPLOYER in good condition.

        12.    NOTICES

                                       5
<PAGE>

               Any notice, request, or demand, or other communication required
               or permitted hereunder shall be deemed to be properly given when
               personally served in writing, when deposited in the United States
               mail, postage prepaid, addressed to the party at the address
               given at the beginning of the Agreement or at any other address
               as EMPLOYER or EXECUTIVE may designate to the other in writing.

        13.    BENEFIT OF AGREEMENT

               This Agreement shall inure to the benefit of and be binding upon
               the parties hereto and their respective executors,
               administrators, successors and assigns.

        14.    APPLICABLE LAW

               This agreement is to be governed by and construed under the laws
               of the State of California.

        15.    CAPTIONS AND PARAGRAPH HEADINGS

               Captions and paragraph headings used herein are for convenience
               only and are not part of this Agreement and shall not be used in
               construing it.

        16.    INVALID PROVISIONS

               Should any provision of this Agreement for any reason be declared
               invalid, void, or unenforceable by a Court of competent
               jurisdiction, the validity and binding effect of any remaining
               portion shall not be affected and the remaining portions of this
               Agreement shall remain in full force and effect as if this
               Agreement had been executed with said provisions eliminated.

        17.    ENTIRE AGREEMENT

               This Agreement contains the entire agreement of the parties and
               it supersedes any and all other agreements, either oral or in
               writing, between the parties hereto with respect to the
               employment of EXECUTIVE by EMPLOYER. Each party to this Agreement
               acknowledges that no representations, inducements, promises, or
               agreements, oral or otherwise, have been made by any party, or
               anyone acting on behalf of any party, which are not embodied
               herein, and that no other agreement, statement, or promise not
               contained in this Agreement shall be valid or binding. This
               Agreement may not be modified or amended by oral agreement, but
               only in an Agreement in signed by EMPLOYER and EXECUTIVE.

                                       6
<PAGE>

        18.    ARBITRATION

               Any controversy or claim arising out of or relating to this
               Employment Agreement, breach thereof, shall be settled in
               accordance with the rules of the American Arbitration Assoc and
               judgement upon the award rendered by the arbitrator(s) may be
               entered into any court having jurisdiction thereof.

        19.    LEGAL COSTS

               If either party commences an action against the other party
               arising out of, or in connection with this Agreement, the
               prevailing party shall be entitled to have and recover from the
               losing party reasonable attorney's fees, costs of arbitration,
               and costs of suit.

        IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

                                    THE BANK OF HEMET, "EMPLOYER"

                                    By: /s/ Eric J. Gosch            Director
                                        -------------------------

                                    By: /s/ John J. McDonough        Director
                                        -------------------------

                                    By: /s/ James B. Jaqua           "EXECUTIVE"
                                        -------------------------

                                       7

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