<PAGE>   1
                                                                    EXHIBIT 10.4


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                                      1991

                                STOCK OPTION PLAN

                                       OF

                         THE GREYSTONE TRADING COMPANY,

                            A CALIFORNIA CORPORATION

                             DATED: AUGUST 16, 1991


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                                TABLE OF CONTENTS
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ARTICLE 1     Purpose; Definition of Company and
              Other Terms ................................................   1

              1.1 Purpose ................................................   1
              1.2 Definition of Company; Subsidiary ......................   2
              1.3 Terminology ............................................   2

ARTICLE 2     Stock Subject to the Plan ..................................   2

              2.1 Type of Stock; Number of Shares. .......................   2
              2.2 Unexercised Shares .....................................   3

ARTICLE 3     Eligibility ................................................   3

ARTICLE 4     Administration .............................................   4

              4.1 Executive Committee ....................................   4
              4.2 Authority of Executive Committee .......................   5
              4.3 Effectuation of Plan by Company ........................   7

ARTICLE 5     Grant of Options ...........................................   7

              5.1 Option Agreements ......................................   7
              5.2 Option Date ............................................   8
              5.3 Acknowledgments, Warranties and
              Representations in Option Agreements .......................   8

ARTICLE 6     Terms and Conditions for options ...........................   9

              6.1    Continued Employment ................................   9
              6.2    Option Price ........................................   9
              6.3    Price Determination .................................  10
              6.4    Exercise of Option; Payment for Shares ..............  10
              6.5    Term of Options; Option Period ......................  10
              6.6    Option Exercise Period ..............................  11
              6.7    Non-Transferability of Option .......................  11
              6.8    Limitations on Exercise; Termination of Employment ..  11
              6.9    Accumulation Rights .................................  12
              6.10   Minimum Share Purchase ..............................  13
              6.11   ISO Limit of $100,000 ...............................  13
              6.12   ISO to Employee Owning More Than
                     10% of Company Stock ................................  13
              6.13   Employee Holding Period .............................  13
              6.14   Retirement of Employee. .............................  13
              6.15   Death of Employee ...................................  14
              6.16   Disability of Employee ..............................  14
              6.17   Options of Employee Not Exercisable
                     at Termination ......................................  14
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                                     (i)
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<TABLE>
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              6.18   Failure of Retired, Deceased or
                     Disabled Optionee to Exercise Option ................  15
              6.19   Ten Year Exercise Limitation ........................  15
              6.20   Grantee Under Company Stock Bonus Plan ..............  15
              6.21   Identification of Type of Stock Option ..............  15
              6.22   Withholding Taxes ...................................  15

ARTICLE 7     Time Limit on Granting of Options ..........................  15

ARTICLE 8     Adjustments by Reason of Recapitalization,
              Stock Split-Ups, Etc .......................................  16

              8.1    Effect of Options on Company's Rights ...............  16
              8.2    Recapitalization ....................................  16
              8.3    Reorganization ......................................  17
              8.4    Stock Dividends .....................................  18
              8.5    Price Adjustment ....................................  18
              8.6    Adjustments .........................................  19

ARTICLE 9     Right to Amend, Suspend or Terminate
              the Plan ...................................................  19

ARTICLE 10    No Obligation to Exercise Option ...........................  19

ARTICLE 11    Use of Proceeds ............................................  20

ARTICLE 12    Modification, Extension and Renewal and
              Cancellation of Options ....................................  20

ARTICLE 13    Compliance with Laws .......................................  20
              13.1   Securities Laws .....................................  20
              13.2   Liability of Company; Compliance
              with Law ...................................................  21

ARTICLE 14    Provisions in Option Agreements ............................  21

ARTICLE 15    Indemnification of Committee ...............................  22

ARTICLE 16    Financial Information ......................................  22

ARTICLE 17    Attorneys' Fees ............................................  23

ARTICLE 18    Governing Law ..............................................  23

ARTICLE 19    Effective Date Of The Plan .................................  23
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                                      (ii)

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                                      1991

                                STOCK OPTION PLAN

                                       OF

                         THE GREYSTONE TRADING COMPANY,
                            A CALIFORNIA CORPORATION


                                    ARTICLE 1

                 PURPOSE; DEFINITION OF COMPANY AND OTHER TERMS


        1.1 PURPOSE. The purpose of this Stock Option Plan (the "Plan") is to
aid in maintaining and developing management for The GreyStone Trading Company,
a California corporation (the "Company"), which will best advance the long range
interests and performance of the Company. The Plan will afford present and
future executives, directors, other employees and independent contractors an
opportunity to secure a substantial stock ownership in the Company through the
grant of incentive stock options (as defined herein) and/or options which are
not incentive stock options, both of which are referred to herein as "Options".
Executives and employees will thus be encouraged to acquire a permanent stake in
the prosperity of the Company, and the interest and outlook of an owner with
respect to the Company. The Plan will also permit the Company to compete with
other organizations offering similar plans in obtaining and retaining the
services of executives and other key personnel whom the Company desires to
employ. since a Plan participant may be required to remain in the services of
the Company for at least five years in order to obtain its full benefits, the
Plan is also an inducement to participants to remain with the Company. The Plan
will also permit the Company to compete with other organizations in obtaining
and retaining the services of selected individuals as


<PAGE>   5

directors, as well as obtaining and retaining selected individuals or
organizations as independent contractors in circumstances under which the
Company might otherwise be at a competitive disadvantage in attempting to obtain
those services.

        1.2 DEFINITION OF COMPANY; SUBSIDIARY. The word "Company," when used in
the Plan with reference to employment or where otherwise applicable (e.g.
Section 6.12), shall include a "parent corporation" and/or a "subsidiary
corporation" of the Company as those terms are respectively defined in Sections
425(e) and 425(f) of the Internal Revenue Code of 1986, as amended (the "Code").

        1.3 TERMINOLOGY. If the context so requires, all personal pronouns used
in this Plan, whether used in the masculine, feminine, or neuter gender, shall
include all other genders, and the singular shall include the plural, and vice
versa. Titles of sections and subsections are for convenience only, and shall
neither limit nor amplify the provisions of the Plan itself, and all references
herein to sections or subsections shall refer to the corresponding section or
subsection of this Plan, unless specific reference is made to such sections or
subsections of another document or instrument.

                                    ARTICLE 2

                            STOCK SUBJECT TO THE PLAN

        2.1 TYPE OF STOCK; NUMBER OF SHARES. The shares of stock to be sold
pursuant to the exercise of Options granted under this Plan shall be shares of
authorized but unissued common stock of the Company (hereinafter sometimes
referred to as the "Shares"). The total number of Shares which may be purchased
pursuant to the exercise of Options granted under this Plan shall not, except as


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provided in Article 8 hereof or by shareholder approval, exceed 500,000 in the
aggregate.

         2.2 UNEXERCISED SHARES. In the event that an Option granted under the
Plan expires, is cancelled, or is terminated unexercised as to any Shares
subject thereto, such Shares subject to the unexercised portion of such Option
may again be subject to an Option granted under this Plan.

                                    ARTICLE 3

                                   ELIGIBILITY

        Options will be granted from time to time under the Plan only to:

        3.1 Employees of the Company (including officers and assistant
officers), all of whom are referred to herein as "Employees";

        3.2 Selected members of the Board of Directors of the Company
("Directors"), whether or not employees of the Company and;

        3.3 Certain persons or organizations who are independent contractors,
who have substantial business contacts with the Company which would give rise to
familiarity with the business and financial aspects of the Company, and who
render to the Company services of special importance to the Company in the
management, operation or development of its business (collectively, "Independent
Contractors"). Any grantee may hold more than one Option, but only on the terms
and subject to the restrictions contained herein. Such Employees, Directors and
Independent Contractors (referred to herein collectively as "Participants" or
"Optionees, 11 and individually as a "Participant" or "Optionee") will be
selected from time to time during the period when the Plan is in operation by
the Executive Committee of the Company which will also determine the number of


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Shares which each Participant shall be entitled to purchase under his Option.

                                    ARTICLE 4

                                 ADMINISTRATION

        4.1 EXECUTIVE COMMITTEE. The Plan may be administered by an Executive
Committee (the "Committee") appointed from time to time by the Board of
Directors of the Company (the "Board") from among its members. The Committee
shall consist of not less than two members. The Board may from time to time
remove members from the Committee or add members thereto. Vacancies in the
Committee, however caused, shall be filled by the Board. The Committee shall
select one of its members as its Chairman and shall hold its meetings at such
time and places as it may determine. A majority of the Committee shall
constitute a quorum, and the acts of a majority of the members present at any
meeting at which a quorum is present, or acts approved in writing by all the
members of the Committee, shall be the valid acts of the Committee; provided,
however, that no member of the Committee shall vote upon or approve the granting
of any option hereunder to such member. Notwithstanding the foregoing, if a
Committee is not selected by the Board, or at the Board's discretion, the Board
may itself perform the functions of said Committee; provided, however, that no
member of the Board shall vote upon or approve the granting of any Option to
such member. In the event the Board does not select a Committee, the term
"Committee" as used herein shall be deemed to refer to the Board acting in such
capacity.


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        4.2 AUTHORITY OF EXECUTIVE COMMITTEE. Subject to the express provisions
of the Plan, the Committee shall have the sole authority, in its absolute
discretion, to:

            4.2.1 determine and designate from time to time which Employees,
        Directors and Independent Contractors to whom Options to purchase Shares
        shall be granted;

            4.2.2 grant to Employees Options which are "Incentive Stock Options"
        ("ISOs") within the meaning of Section 422A of the Code;

            4.2.3 grant to Employees, Directors and Independent Contractors
        Options which are not Incentive Stock Options ("non-ISOs");

            4.2.4 determine which Employees shall be granted only ISOs, which
        Employees, Directors and Independent Contractors of the Company shall be
        granted only options which are non- and which Employees shall be granted
        both and in what ratio;

            4.2.5 determine the number of Shares to be subject to Options
        (sometimes "Option Shares") granted hereunder (subject, however, to the
        limitations specified in Section 2. 1 and Article 8), and the time or
        times when such options shall be granted;

            4.2.6 determine the option or exercise price of the Option Shares
        (subject, however, to the limitations specified in Section 6.2);

            4.2.7 determine the time or times when each Option becomes
        exercisable, and the duration of the exercise period;


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            4.2.8 prescribe, amend and rescind the form or forms of the Option
        Agreements (as defined in Section 5. 1) under the Plan (which shall be
        consistent with the Plan but need not be identical);

            4.2.9 adopt, amend and rescind such rules and regulations as in its
        opinion may be advisable in the administration of the Plan (subject,
        however, to the limitations specified in Article 9);

            4.2.10 construe and interpret the Plan, the rules and regulations
        and the Option Agreements under the Plan, and to make all other
        determinations deemed necessary or advisable for the administration of
        the Plan; provided, however, that it is intended that ISOs granted under
        the Plan will constitute "Incentive Stock Options" within the meaning of
        Section 422A of the Code. Any provision of the Plan relating to ISOs
        shall be construed so that such ISOs comply with the requirements of
        Sections 421, 422A, and 425 of the Code and the Regulations of the
        Commissioner of Internal Revenue issued thereunder, and the Plan, as to
        such ISOs, shall be administered so as to comply with the requirements
        of these Sections and their implementing Regulations; and

            4.2.11 place such restrictions on sale or other disposition of the
        Shares purchased upon exercise of an Option as may be determined by the
        Committee.

All decisions, determinations and interpretations by the Committee of the terms
of the Plan, and the agreements and other instrument created pursuant to the
Plan, made in good faith shall be final, binding, and conclusive on all
Optionees for all purposes.


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        4.3 EFFECTUATION OF PLAN BY COMPANY. The Company shall effect the grant
of Options under the Plan to Employees, Directors and Independent Contractors of
the Company in accordance with the determinations made by the Committee, by the
execution of agreements with Optionees, and any other necessary instruments in
writing, in form approved by the Committee and conforming to the provisions of
the Plan. The Committee shall, from time to time, authorize and direct the
issuance and sale of Shares of the Company pursuant to such options as and when
the same may be exercised, in whole or in part, in accordance with their
respective terms.

                                   ARTICLE 5

                                GRANT OF OPTIONS

        5.1 OPTION AGREEMENTS. Upon the Committee's determination to grant an
Option to an Optionee, the Committee shall promptly advise the Optionee of its
action, the number of Shares subject to the Option so granted and the price to
be paid for the Shares upon exercise of the Option. If the Optionee has not
previously entered into an agreement with the Company for the grant of such
option which complies with the terms and conditions of this Plan, then within
one month from the date of the grant of such Option the Optionee shall enter
into an agreement for the grant of such Option in such form as the Committee
determines which complies with the terms and conditions of this Plan (an "Option
Agreement") . In the event action taken by the Committee is by written consent
of its members, the action or approval of the Committee shall be deemed to be
taken at the time the last executing member signs the consent unless such action
specifies a later time.


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        5.2 OPTION DATE. Unless otherwise specified in an option Agreement, the
date of grant or "Option Date" of any option shall be deemed to be the date on
which the grant of such option shall be approved by the Committee or such later
date as the Committee shall, at the time of such approval, fix as the date of
grant thereof.

        5.3 ACKNOWLEDGMENTS, WARRANTIES AND REPRESENTATIONS IN OPTION
AGREEMENTS. As a condition to the exercise of the Option, the Optionee may be
required in said Option Agreement to make certain acknowledgments and
representations regarding the purchase of Shares, including but not limited to:

            5.3.1 In the case of ISOs, although the Company has made a good
        faith attempt to qualify the Options as qualified stock options within
        the meaning of Sections 421, 422A and 425 of the Code, the Company does
        not warrant that ISOs granted pursuant to the Plan constitute "Qualified
        Stock Options" within the meaning of these sections, or that the
        transfer of stock acquired pursuant to such options will be treated for
        federal income tax purposes as specified in Section 421 of the Code.

            5.3.2 The Optionee will, from time to time, notify the Company in
        writing of each disposition (including a sale, exchange, gift or a
        transfer of legal title) of Shares acquired pursuant to the exercise of
        an option made by such Optionee within three years after acquiring the
        Shares. Such notification shall be in writing and shall be made within
        15 days after each such disposition is made.

            5.3.3 The Optionee and his transferees have no rights as a
        shareholder with respect to any Shares covered by the Plan


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<PAGE>   12

        until the date of the issuance of a share certificate to him for such
        Shares. No adjustment shall be made for dividends (ordinary or
        extraordinary, whether in cash, securities or other property) or
        distributions or other rights for which the record date is prior to the
        date such share certificate is issued, except as provided in Article 8
        of the Plan.

            5.3.4 In the case of non-ISOs (and their exercise), such Optionees
        shall not make an election pursuant to Section 83(b) of the Code without
        the prior written approval of the Committee. A breach of this covenant
        shall be deemed for purposes of the Plan as a material breach and the
        breaching Optionee shall be deemed to have intentionally committed an
        act materially inimical to the interests of the Company and he shall be
        subject to the provisions of Section 6.8.1 of the Plan.

                                    ARTICLE 6

                        TERMS AND CONDITIONS FOR OPTIONS

        6.1 CONTINUED EMPLOYMENT. Nothing contained in the Plan or in any Option
granted pursuant to the Plan shall confer upon any Optionee any right to
continue in the employment of the Company, or interfere in any way with the
right of the Company to terminate his employment at any time, with or without
cause.

        6.2 OPTION PRICE. Subject to Section 6.12, each Option granted pursuant
to the Plan shall have a stated exercise price or "Option Price" for each Share
subject to the Option, which price shall be not less than the fair market value
per Share on the option Date, as determined by the Committee in good faith;
provided, however, that a non-ISO may be granted at such lesser exercise price


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(but not less than 85% of the fair market value per share) as may be determined
by the Committee consistent with applicable legal requirements.

        6.3 PRICE DETERMINATION. In making its Option Price determination, the
Committee may use any reasonable valuation method, taking into consideration
prices at which shares of the Company's Common Stock have been recently sold and
purchased, the number of shares traded, and other relevant factors as determined
by the Committee.

        6.4 EXERCISE OF OPTION; PAYMENT FOR SHARES. Shares may be purchased
pursuant to an Option granted under the Plan only upon receipt by the Company of
notice in writing from the Optionee of his intention to purchase and upon such
other terms as may be required by his Option Agreement. Upon the date(s)
specified for the completion of the purchase of his Shares, an Employee who is
purchasing Shares pursuant to an ISO, or an Employee, Director or Independent
Contractor purchasing Shares pursuant to a non-ISO, shall pay the Company in
United States Dollars the full purchase price of the Shares purchased; provided,
however, that, subject to review by Company's counsel, an Employee or Director
who is purchasing Shares pursuant to a non-ISO may (subject to Section 13.1
hereof and the terms of his Option agreement) purchase Shares under terms which
may include forms of payment allowed under California Corporations Code Section
408(a).

        6.5 TERM OF OPTIONS; OPTION PERIOD. Subject to Section 6.12, each option
granted pursuant to this Plan shall have a term of not more than 10 years from
the Option Date (the "Option Period").


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        6.6 OPTION EXERCISE PERIOD. Each Optionee to whom an Option has been
granted shall have the right to purchase Shares, at any time, or from time to
time, during the Option Period in accordance with the vesting schedule and other
terms of his Option Agreement. Each Option Agreement shall include a vesting
schedule which sets out the maximum percentage or number of Shares which such
Optionee may purchase in any installment period. The schedule shall provide that
vesting shall occur at the rate of at least 20% per year over a five year
period.

            6.6.1 An Employee Optionee shall be credited with a full year of
        continuous employment by the Company during the Option Period only on an
        anniversary date of his Option Date, and only if on such anniversary
        date he is and has been continuously employed by the Company since the
        Option Date.

            6.6.2 Absence of an Employee Optionee on duly granted leave or due
        to sickness for a combined period of not more than 90 days shall not be
        deemed to be an interruption of the continuity of his employment for
        purposes of this Plan.

        6.7 NON-TRANSFERABILITY OF OPTIONS. No Option shall be transferable by
the Optionee other than by will or, if he dies intestate, by the laws of descent
and distribution of the state of his domicile at the time of his death. All
Options shall be exercisable during an Optionee's lifetime only by such
Optionee.

        6.8 LIMITATIONS ON EXERCISE: TERMINATION OF EMPLOYMENT. Subject to the
provisions of this Plan, the exercise of Options may be limited in whole or in
part for any period or periods of time as specified in each Option Agreement,
and any Option may be exercised to the extent it is exercisable in whole at any
time, or in part


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from time to time, during the option Period (as defined in Section 6.5);
provided, however, that:

            6.8.1 If the Committee determines that the Optionee has committed an
        act materially inimical to the interests of the Company, all of the
        Optionee's rights to purchase Shares not yet purchasable pursuant to his
        Option (i. e. non-vested options) shall cease and terminate as of the
        date of such act; and

            6.8.2 Except as provided in Sections 6.14, 6.15 and 6.16 below, no
        Option granted to an Employee may be exercised more than 30 days after
        such Optionee's employment with the Company has been terminated for any
        reason, and within such 30 day period said Optionee may exercise his
        option only to the extent the same was exercisable on his date of
        termination. If during said 30 day period the Optionee shall die, his
        executors, administrators, legatees or distributees shall have an
        additional period ending six months from the date of death or
        termination of the Option by its terms, whichever occurs first, within
        which to exercise the option. The Committee shall determine what
        constitutes termination of employment, including whether an authorized
        leave of absence, or absence for military or governmental service
        constitutes termination of employment for purposes of the Plan, which
        determination shall be final and conclusive.

        6.9 ACCUMULATION RIGHTS. Unless otherwise provided in an Option
Agreement, to the extent Option Shares are not exercised in any installment
period, such Option Shares shall accumulate and be


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<PAGE>   16

exercisable in whole or in part in any subsequent installment period.

        6.10 MINIMUM SHARE PURCHASE. Each Option Agreement shall provide that
not less than a certain number of Shares (e.g. 10 shares) may be purchased at
any one time, unless the Shares purchased are the total number purchasable at
the time.

        6.11 ISO LIMIT OF $100,000. The aggregate fair market value (determined
at the Option Date) of the Shares with respect to which ISOs of the Company are
exercisable for the first time by an Optionee during any calendar year shall not
exceed $100,000.

        6.12 ISO TO EMPLOYEE OWNING MORE THAN 10% OF COMPANY STOCK. No ISO shall
be granted to any Employee who, at the time the ISO is granted, owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company unless, at the time such ISO is granted, the Option Price
is at least 110% of the fair market value of the Shares subject to the ISO and
such ISO by its terms is not exercisable after the expiration of five years from
the date such ISO is granted.

        6.13 EMPLOYEE HOLDING PERIOD. Except to the extent specifically waived
by the Company in the Option Agreement reflecting an option granted under this
Plan, each Employee to whom an option is granted under the Plan shall, as
consideration therefore and as a condition of its grant, remain in the
continuous employ of the Company for at least one year from the date of grant
before he may exercise any part of the Option.

        6.14 RETIREMENT OF EMPLOYEE. In the event the Company gives written
consent for an Employee's retirement, such Employee's Option (if granted to him
as an Employee) may be exercised by him at any


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<PAGE>   17

time within the period ending with the earlier of the expiration date of his
Option or three months after the date of his retirement, to the extent it was
exercisable on the date of his retirement.

        6.15 DEATH OF EMPLOYEE. Upon the death of an Employee (while still
employed by the Company), the executor or administrator of his estate, or the
person to whom his Option shall have been transferred pursuant to his will or
the laws of descent and distribution may, within the period ending with the
earlier of the expiration date of his Option or one year from the date of the
Optionee's death, exercise the Employee's Option to the extent it was
exercisable on his date of death.

        6.16 DISABILITY OF EMPLOYEE. In the event of the termination of his
employment by the Company due to the disability (within the meaning of section
105(d)(4) of the Code) of an Optionee who was granted his Option as an Employee,
the disabled Optionee (or a legal representative who is a mere custodian of the
Optionee's property, stands in a fiduciary relationship to such Optionee, and is
subject to court supervision) may, within the earlier of the period ending with
the expiration date of his Option or one year after the termination of the
Optionee's employment with the Company, exercise said Option to the extent it
was exercisable on the date of said termination of employment.

        6.17 OPTIONS OF EMPLOYEE NOT EXERCISABLE AT TERMINATION. Notwithstanding
anything herein to the contrary, no Option granted to an Employee which is not
exercisable at the termination of such Participant's employment with the Company
shall thereafter become exercisable, regardless of the reason for such
termination.


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        6.18 FAILURE OF RETIRED, DECEASED OR DISABLED OPTIONEE TO EXERCISE
OPTION. To the extent that any Option of a retired, deceased, or disabled
Optionee, who was granted his option as an Employee, is not exercised within the
limited periods specified in Sections 6.14, 6.15 and 6.16, all further rights to
purchase Shares pursuant to such Option shall cease and terminate as of the
expiration of such period.

        6.19 TEN YEAR EXERCISE LIMITATION. Notwithstanding anything herein to
the contrary, no Option shall be exercised after the date 10 years from the
Option Date of such Option.

        6.20 GRANTEE UNDER COMPANY STOCK BONUS PLAN. An Optionee who has
received bonus shares under any stock bonus plan of the Company will not by
reason thereof be ineligible to receive an option pursuant to this Plan.

        6.21 IDENTIFICATION OF TYPE OF STOCK OPTION. Options which are ISOs
shall be clearly identified as Incentive Stock Options, and options which are
non-ISOs shall be clearly identified as not Incentive Stock Options.

        6.22 WITHHOLDING TAXES. Whenever Shares are to be issued under the Plan,
the Company shall have the right to require the recipient to remit to the
Company an amount sufficient to satisfy federal, state and local withholding tax
requirements prior to the delivery of any certificate or certificates for such
Shares.

                                   ARTICLE 7

                       TIME LIMIT ON GRANTING OF OPTIONS

No Options may be granted under the Plan subsequent to 10 years after the date
this Plan became effective. Any Option outstanding under the Plan at the time of
its termination shall remain in effect


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<PAGE>   19

until it shall have been exercised, or shall have expired or otherwise
terminated pursuant to the provisions of this Plan.

                                    ARTICLE 8

                            ADJUSTMENTS BY REASON OF
                     RECAPITALIZATION, STOCK SPLIT-UPS, ETC.

        8.1 EFFECT OF OPTIONS ON COMPANY'S RIGHTS. The grant of an option
pursuant to the Plan shall not affect in any way the right or power of the
Company to make adjustments, reclassifications, reorganizations or changes of
its capital or business structure, or to merge, or to consolidate, or to
dissolve, liquidate, sell or transfer all or any part of its business or assets.

        Except as expressly provided in this Article 8, an Optionee shall have
no other rights by reason of any subdivision or consolidation of shares of stock
of any class or the payment of any stock dividend or any other increase or
decrease in the number of shares of stock of any class or by reason of any
dissolution, liquidation, merger or consolidation or spin-off of assets or stock
of another corporation. Any issue by the Company of shares of stock of any class
or securities convertible into shares of stock of any class shall not affect,
and no adjustment by reason thereof shall be made with respect to, the number or
price of Shares subject to any option.

        8.2 RECAPITALIZATION. In the event there are splits, subdivisions,
combinations or reclassifications of the Company's common stock subsequent to
the effective date of this Plan, the number of Shares reserved for issuance
pursuant to the Plan, including the shares issuable upon the exercise of
outstanding


                                      -16-
<PAGE>   20

Options, shall be increased or decreased proportionately, as the case may be, to
appropriately reflect such event.

        8.3 REORGANIZATION.

            8.3.1 In case the Company is merged or consolidated with another
        corporation and the Company is the surviving corporation, each
        outstanding Option, whether or not then exercisable, shall pertain to
        and apply to the securities to which a holder of the number the Option
        Shares subject to such option would otherwise have been entitled.

            8.3.2 Subject to any required action by the Company's shareholders,
        in case the Company is merged or consolidated with another corporation
        and the Company is not the surviving corporation, or in case the
        property or stock of the Company is acquired by another corporation, or
        in case of a separation, reorganization or liquidation of the Company,
        the Board, or the board of directors of any corporation assuming the
        obligations of the Company hereunder, shall, in its sole discretion as
        to each outstanding Option, either: (a) make appropriate provision for
        protection of such Option by the substitution on an equitable basis of
        appropriate stock of the Company, or of the merged, consolidated or
        otherwise reorganized corporation which will be issuable in respect to
        the stock of the Company, provided only that the excess of the aggregate
        fair market value of the shares subject to such Option immediately after
        such substitution over the purchase price thereof is substantially the
        same as, but in no event more than, the excess of the aggregate fair
        market value of the Option Shares subject to such Option immediately
        before such substitution


                                      -17-
<PAGE>   21

over the purchase price thereof; or (b) upon written notice to the holder of
such Option, provide that such option must be exercised within a specified
period not exceeding 60 days of the date of such notice to the extent such
option is exercisable on the last day of such specified period or it will be
terminated. Any portion of such Option which is not exercisable on the last day
of such specified period will be terminated and any portion of such Option which
is not exercised on or before said last day shall terminate on said last day.

        8.4 STOCK DIVIDENDS. In the event the Company shall pay any dividend in
common shares of the Company upon the common stock of the Company during the
period of any Option, the number of Shares then subject to such option and the
number of Shares reserved for issuance pursuant to the Plan but not yet subject
to any Option shall be adjusted by adding to each such Share the shares of stock
which would have been distributed as a stock dividend thereon had such Share
been outstanding at the record date for the payment of the stock dividend.

        8.5 PRICE ADJUSTMENT. If, after the granting of an Option to any
Optionee hereunder, a substitution or an adjustment shall be required to be made
under this Article 8 in the number or kind of shares of stock or other
securities then subject to such option, the price per unit payable by the
Optionee for shares or securities which he may thereafter be entitled to
purchase under such option shall be concurrently adjusted so that the aggregate
purchase price of all shares or securities not theretofore purchased under such
option will be apportioned ratably and equitably to and among the


                                      -18-
<PAGE>   22

substituted or adjusted number or kind of shares of stock or other securities.

        8.6 ADJUSTMENTS. The foregoing adjustments and the manner of application
of the foregoing provisions shall be determined by the Committee in its sole
discretion. Any such adjustment may provide for the elimination of any
fractional share which might otherwise become subject to an option.

                                    ARTICLE 9

                  RIGHT TO AMEND, SUSPEND OR TERMINATE THE PLAN

        The Board shall have the right to amend, suspend or terminate the Plan
at any time; provided, however, that no such action shall affect or in any way
impair the rights of an Optionee under any option theretofore granted under the
Plan without the consent of the Optionee or the transferee of the Option, and
provided further that no such action, without approval of the Company's
shareholders, may: (a) increase the total number of shares of stock which may be
sold or transferred pursuant to Options granted under the Plan, except as
permitted pursuant to Article 8; (b) change the designation of class of persons
eligible to participate in the Plan; (c) decrease the minimum Option Price
specified in Article 6; (d) extend the maximum term of Options granted
hereunder; or (e) extend the term of the Plan.

                                   ARTICLE 10

                        NO OBLIGATION TO EXERCISE OPTION

        The granting of an Option shall impose no obligation on the recipient to
exercise such Option.


                                      -19-
<PAGE>   23

                                   ARTICLE 11

                                 USE OF PROCEEDS

        The proceeds received from the sale of Shares pursuant to the Plan shall
be used for general corporate purposes.

                                   ARTICLE 12

                           MODIFICATION, EXTENSION AND
                       RENEWAL AND CANCELLATION OF OPTIONS

        Subject to the terms and conditions and within the limitations of the
Plan, the Committee may (a) modify, extend or renew outstanding options granted
under the Plan; (b) accept the surrender or cancellation of outstanding Options
(to the extent not theretofore exercised); and (c) authorize the granting of new
options in substitution therefore (to the extent not theretofore exercised).
Notwithstanding the foregoing, however, no modification of an Option shall,
without the consent of the Optionee, alter or impair any rights or obligations
under any such Option theretofore granted under the Plan.

                                   ARTICLE 13

                              COMPLIANCE WITH LAWS


        13.1 SECURITIES LAWS. Each Option under the Plan shall be granted on
such terms and conditions, including investment intent, as are deemed advisable
by the Committee in order to comply with applicable federal, state and local
securities laws, rules and regulations. No Options shall be granted, and no
Shares shall be sold or issued upon the exercise of any option, unless and until
the issuance, as determined by the Committee, complies with any then applicable
requirements of the Securities and Exchange Commission, the California
Commissioner of Corporations, other regulatory


                                      -20-
<PAGE>   24

agencies having jurisdiction thereof and any securities exchanges upon which
stock of the Corporation may be listed.

        13.2 LIABILITY OF COMPANY; COMPLIANCE WITH LAW. The Company and the
members of the Committee shall be relieved from any liability for the
non-issuance or non-transfer, or any delay of issuance or transfer, of any
Shares subject to Options under the Plan which results from the inability of the
Company to comply with, or to obtain, or from any delay in obtaining from any
regulatory body having jurisdiction, all requisite authority to issue or
transfer Shares upon exercise of the options under the Plan, if counsel for the
Company deems such authority reasonably necessary for lawful issuance or
transfer of any such shares. Appropriate legends may be placed on the stock
certificates evidencing shares issued upon exercise of options to reflect such
transfer restrictions.

                                   ARTICLE 14

                         PROVISIONS IN OPTION AGREEMENTS

        The Option Agreements authorized under this Plan shall contain such
other provisions, including, without limitation, conditions and restrictions
upon the exercise of the Option and/or upon the sale or other disposition of the
Shares purchased upon the exercise of an Option, as the Committee shall deem
advisable in its absolute discretion (and which may be more restrictive as to
the Optionee than those herein); provided, however, that such provisions shall
contain in substance the terms and conditions set forth herein.


                                      -21-
<PAGE>   25

                                   ARTICLE 15

                          INDEMNIFICATION OF COMMITTEE

        In addition to such other rights of indemnification as they may have as
directors, the members of the Committee shall be indemnified by the Company
against the reasonable expenses, including attorneys' fees actually and
necessarily incurred in connection with the defense of any action, suit or
proceeding, or in the connection with any appeal therein, to which they or any
of them may be a party by reason of any action taken or failure to act under or
in connection with this Plan or agreements made hereunder, and against all
amounts paid by them in settlement thereof or in satisfaction of a judgment
therefore, provided such settlement is approved by independent legal counsel
selected by the Company, except in relation to matters as to which it shall be
adjudged in such action, suit or proceeding that such Committee member is liable
for gross negligence or willful misconduct in the performance of his duties;
provided further that within 60 days after institution of any such action, suit
or proceeding such Committee member shall, in writing, offer the Company the
opportunity, at its own expense, to handle and defend the same.

                                   ARTICLE 16

                              FINANCIAL INFORMATION

        The Company shall provide to each Optionee on an annual basis a copy of
the annual financial report prepared by the Company's independent certified
public accountants, or such other periodic financial report which conforms with
Section 260.140.41.2 of Title 10 of the California Code of Regulations.


                                      -22-
<PAGE>   26

                                   ARTICLE 17

                                 ATTORNEYS' FEES

        The prevailing party in any court action brought to interpret or enforce
any provision of this Plan or an Option Agreement shall be entitled to recover,
as an element of the costs of suit, and not as damages, an award of reasonable
attorneys' fees, to be fixed by the Court. Such award may be made as part of a
judgment by default or as part of a judgment after trial or after appeal.

                                   ARTICLE 18

                                  GOVERNING LAW

        This Plan shall be governed by the laws of the State of California.

                                   ARTICLE 19

                           EFFECTIVE DATE OF THE PLAN

        The Plan became effective when approved by the Board; provided, however,
that the holders of a majority of the outstanding capital stock of the Company
must approve the Plan within 12 months of the date the Plan was approved by the
Board.


Approved by the directors on: August 16, 1991
Approved by the shareholders on: August 16, 1991


                                      -23-