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                                                                    EXHIBIT 10.1

                       PACIFIC SUNWEAR OF CALIFORNIA, INC.

                          EMPLOYEE STOCK PURCHASE PLAN

(Composite Plan Document Reflecting Stock Splits and Amendments Through
November 2004)


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                                TABLE OF CONTENTS

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                                                                                                               Page
<S>      <C>                                                                                                   <C>

1.       PURPOSE..............................................................................................  1

2.       DEFINITIONS..........................................................................................  1

3.       ELIGIBILITY..........................................................................................  3

4.       STOCK SUBJECT TO THIS PLAN; SHARE LIMITATIONS........................................................  3

5.       OFFERING PERIODS.....................................................................................  4

6.       PARTICIPATION........................................................................................  4

7.       METHOD OF PAYMENT OF CONTRIBUTIONS...................................................................  4

8.       GRANT OF OPTION......................................................................................  5

9.       EXERCISE OF OPTION...................................................................................  5

10.      DELIVERY.............................................................................................  6

11.      TERMINATION OF EMPLOYMENT; CHANGE IN ELIGIBLE STATUS.................................................  6

12.      ADMINISTRATION.......................................................................................  6

13.      DESIGNATION OF BENEFICIARY...........................................................................  7

14.      TRANSFERABILITY......................................................................................  7

15.      USE OF FUNDS; INTEREST...............................................................................  8

16.      REPORTS..............................................................................................  8

17.      ADJUSTMENTS OF AND CHANGES IN THE STOCK..............................................................  8

18.      POSSIBLE EARLY TERMINATION OF PLAN AND OPTIONS.......................................................  8

19.      TERM OF PLAN; AMENDMENT OR TERMINATION...............................................................  9

20.      NOTICES..............................................................................................  9

21.      CONDITIONS UPON ISSUANCE OF SHARES...................................................................  9

22.      PLAN CONSTRUCTION....................................................................................  9

23.      EMPLOYEES' RIGHTS....................................................................................  10

24.      MISCELLANEOUS........................................................................................  10

25.      EFFECTIVE DATE.......................................................................................  11
</TABLE>
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                       PACIFIC SUNWEAR OF CALIFORNIA, INC.

                          EMPLOYEE STOCK PURCHASE PLAN

(Composite Plan Document Reflecting Stock Splits and Amendments Through
November 2004)

      The following constitute the provisions of the Pacific Sunwear of
California, Inc. Employee Stock Purchase Plan (this "Plan").

1.    PURPOSE

      The purpose of this Plan is to provide Eligible Employees with an
      incentive to advance the best interests of the Corporation (and those
      Subsidiaries which may be designated by the Committee as "Participating
      Corporations") by providing a method whereby they may voluntarily purchase
      Common Stock at a favorable price and upon favorable terms.

2.    DEFINITIONS

      Capitalized terms used herein which are not otherwise defined shall have
      the following meanings.

            "Account" shall mean the bookkeeping account maintained by the
            Corporation, or by a recordkeeper on behalf of the Corporation, for
            a Participant pursuant to Section 7(a).

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

            "Change in Control" shall mean any of the following:

                  a.    Approval by the shareholders of the Corporation of the
                        dissolution or liquidation of the Corporation;

                  b.    Approval by the shareholders of the Corporation of an
                        agreement to merge or consolidate, or otherwise
                        reorganize, with or into one or more entities other than
                        Subsidiaries, as a result of which less than 50% of the
                        outstanding voting securities of the surviving or
                        resulting entity are, or are to be, owned by former
                        shareholders of the Corporation;

                  c.    Approval by the shareholders of the Corporation of the
                        sale of substantially all of the Corporation's business
                        assets to a person or entity that is not a Subsidiary.

            "Code" shall mean the Internal Revenue Code of 1986, as amended.

            "Committee" shall mean the committee appointed by the Board to
            administer this Plan pursuant to Section 12.

            "Common Stock" shall mean the common stock of the Corporation.

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            "Company" shall mean the Corporation and its Subsidiaries.

            "Compensation" shall mean an Eligible Employee's regular earnings,
            overtime pay, sick pay, shift differential, shift premium, vacation
            pay, incentive compensation, commissions and bonuses. Compensation
            also includes any amounts contributed as salary reduction
            contributions to a plan qualifying under Section 401(k), 125 or 129
            of the Code. Any other form of remuneration is excluded from
            Compensation, including (but not limited to) the following: prizes,
            awards, housing allowances, stock option exercises, stock
            appreciation rights, restricted stock exercises, performance awards,
            auto allowances, tuition reimbursement and other forms of imputed
            income. Notwithstanding the foregoing, Compensation shall not
            include any amounts deferred under or paid from the Corporation's
            Executive Deferred Compensation Plan.

            "Contributions" shall mean all bookkeeping amounts credited to the
            Account of a Participant pursuant to Section 7(a).

            "Corporation" shall mean Pacific Sunwear of California, Inc., a
            California corporation.

            "Eligible Employee" shall mean any employee of the Corporation, or
            of any Subsidiary which has been designated in writing by the
            Committee as a "Participating Corporation" (including any
            Subsidiaries which have become such after the date that this Plan is
            approved by shareholders). Notwithstanding the foregoing, "Eligible
            Employee" shall not include any employee (i) who has not as of the
            Grant Date completed at least three months of continuous employment
            with the Company, or (iii) whose customary employment is for not
            more than five months in a calendar year. In addition, no Officer
            shall be an Eligible Employee.

            "Effective Date" shall mean January 1, 1998.

            "Exchange Act" shall mean the Securities Exchange Act of 1934, as
            amended.

            "Exercise Date" shall mean, with respect to an Offering Period, the
            last day of that Offering Period.

            "Fair Market Value" shall mean the closing price of a Share on The
            New York Stock Exchange on such date (or, in the event that the
            Common Stock is not traded on such date, on the immediately
            preceding trading date), as reported in The Wall Street Journal or,
            in the event the Common Stock is not listed on The New York Stock
            Exchange, the "Fair Market Value" shall be the closing price of the
            Common Stock for such date (or, in the event that the Common Stock
            is not traded on such date, on the immediately preceding trading
            date), as reported by the National Association of Securities Dealers
            Automated Quotation ("NASDAQ") or, if such price is not reported,
            the mean of the bid and asked prices per Share as reported by NASDAQ
            or, if such prices are not so listed or reported, as determined by
            the Committee (or its delegate), in its discretion.

            "Grant Date" shall mean the first day of each Offering Period.

                                       2

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            "Offering Period" shall mean the six-consecutive month periods
            commencing on each January 1 and July 1.

            "Officer" shall mean (i) any individual who is a named officer of
            the Corporation pursuant to the Corporation's By-Laws, and (ii) any
            other individual who the Committee determines, in its sole
            discretion, to be (A) a highly compensated employee (within the
            meaning of Section 414(q) of the Code) and (B) an officer of the
            Company for purposes of this Plan.

            "Option" shall mean the stock option to acquire Shares granted to a
            Participant pursuant to Section 8.

            "Option Price" shall mean the per share exercise price of an Option
            as determined in accordance with Section 8(b).

            "Participant" shall mean an Eligible Employee who has elected to
            participate in this Plan and who has filed a valid and effective
            Subscription Agreement to make Contributions pursuant to Section 6.

            "Plan" shall mean this Pacific Sunwear of California, Inc. Employee
            Stock Purchase Plan, as amended from time to time.

            "Rule 16b-3" shall mean Rule 16b-3 promulgated under Section 16.

            "Section 16" shall mean Section 16 of the Exchange Act.

            "Share" shall mean a share of Common Stock.

            "Subscription Agreement" shall mean the written agreement filed by
            an Eligible Employee with the Corporation pursuant to Section 6 to
            participate in this Plan.

            "Subsidiary" shall mean any corporation in an unbroken chain of
            corporations (beginning with the Corporation) in which each
            corporation (other than the last corporation) owns stock possessing
            50% or more of the total combined voting power of all classes of
            stock in one or more of the other corporations in the chain.

3.    ELIGIBILITY

      Any person employed as an Eligible Employee as of a Grant Date shall be
      eligible to participate in this Plan during the Offering Period in which
      such Grant Date occurs, subject to the Eligible Employee satisfying the
      requirements of Section 6.

                                       3

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4.    STOCK SUBJECT TO THIS PLAN; SHARE LIMITATIONS

      The total number of Shares to be made available under this Plan is 607,500
      authorized and unissued or treasury shares of Common Stock, or Shares
      repurchased on the open market, subject to adjustments pursuant to Section
      17. In the event that all of the Shares made available under this Plan are
      subscribed prior to the expiration of this Plan, this Plan may be
      terminated in accordance with Section 19.

5.    OFFERING PERIODS

      During the term of this Plan, the Corporation will offer Options to
      purchase Shares to all Participants during each Offering Period. Each
      Option shall become effective on the Grant Date. The term of each Option
      shall be six months and shall end on the Exercise Date. The first Offering
      Period shall commence on or after the Effective Date. Offering Periods
      shall continue until this Plan is terminated in accordance with Section 18
      or 19, or, if earlier, until no Shares remain available for Options
      pursuant to Section 4.

6.    PARTICIPATION

      An Eligible Employee may become a participant in this Plan by completing a
      Subscription Agreement on a form approved by and in a manner prescribed by
      the Committee (or its delegate). To become effective, a Subscription
      Agreement must be filed with the Corporation prior to the start of the
      Offering Period with respect to which it is to become effective and must
      set forth the percentage of the Eligible Employee's Compensation (which
      shall be a whole percentage point not less than 1% and not more than 10%)
      to be credited to the Participant's Account as Contributions each pay
      period. Subscription Agreements shall contain the Eligible Employee's
      authorization and consent to the Corporation's withholding from his or her
      Compensation the amount of his or her Contributions. Subscription
      Agreements shall remain valid for all Offering Periods until (i) an
      Eligible Employee's participation terminates pursuant to the terms hereof,
      or (ii) until a new Subscription Agreement becomes effective.

7.    METHOD OF PAYMENT OF CONTRIBUTIONS

      (a) The Corporation shall maintain on its books, or cause to be maintained
      by a recordkeeper, an Account in the name of each Participant. The
      percentage of Compensation elected to be applied as Contributions by a
      Participant shall be deducted from such Participant's Compensation on each
      payday during the period for payroll deductions set forth below and such
      payroll deductions shall be credited to that Participant's Account as soon
      as administratively practicable after such date. A Participant may not
      make any additional payments to his or her Account. A Participant's
      Account shall be reduced by any amounts used to pay the Option Price of
      Shares acquired, or by any other amounts distributed pursuant to the terms
      hereof.

      (b) Payroll deductions with respect to an Offering Period shall commence
      as of the first day of the payroll period which coincides with or
      immediately follows the applicable Grant Date and shall end on the last
      day of the payroll period which coincides with or immediately precedes the
      applicable Exercise Date, unless sooner terminated by the

                                       4

<PAGE>

      Participant as provided in this Section or until his or her participation
      terminates pursuant to Section 11.

      (c) A Participant may terminate his or her Contributions during an
      Offering Period by completing and filing with the Corporation, in such
      form and on such terms as the Committee (or its delegate) may prescribe, a
      written withdrawal form which shall be signed by the Participant. Such
      termination shall be effective as soon as administratively practicable
      after its receipt by the Corporation.

      (d) A Participant may discontinue or otherwise change the level of his or
      her Contributions (within Plan limits) effective as of the next Grant Date
      by completing and filing with the Corporation, on such terms as the
      Committee (or its delegate) may prescribe, a new Subscription Agreement.

8.    GRANT OF OPTION

      (a) On each Grant Date, each Eligible Employee who is a participant during
      that Offering Period shall be granted an Option to purchase a number of
      Shares. The Option shall be exercised on the Exercise Date. The number of
      Shares subject to the Option shall be determined by dividing the
      Participant's Account balance as of the applicable Exercise Date by the
      Option Price.

      (b) The Option Price per Share of the Shares subject to an Option shall be
      the lesser of: (i) 90% of the Fair Market Value of a Share on the
      applicable Grant Date; or (ii) 90% of the Fair Market Value of a Share on
      the applicable Exercise Date.

      (c) Notwithstanding anything else contained herein, a person who is
      otherwise an Eligible Employee shall not be granted any Option or other
      right to purchase Shares under this Plan to the extent (i) it would, if
      exercised, cause the person to own "stock" (as such term is defined for
      purposes of Section 423(b)(3) of the Code) possessing 5% or more of the
      total combined voting power or value of all classes of stock of the
      Corporation, or any Subsidiary, or (ii) such Option causes such individual
      to have rights to purchase stock under this Plan and any other plan of the
      Company qualified under Section 423 of the Code which accrue at a rate
      which exceeds $25,000 of the fair market value of the stock of the
      Corporation or of a Subsidiary (determined at the time the right to
      purchase such Stock is granted) for each calendar year in which such right
      is outstanding. For this purpose a right to purchase Shares accrues when
      it first become exercisable during the calendar year. In determining
      whether the stock ownership of an Eligible Employee equals or exceeds the
      5% limit set forth above, the rules of Section 424(d) of the Code
      (relating to attribution of stock ownership) shall apply.

9.    EXERCISE OF OPTION

      Unless a Participant's Plan participation is terminated as provided in
      Section 11, his or her Option for the purchase of Shares shall be
      exercised automatically on the Exercise Date for that Offering Period,
      without any further action on the Participant's part, and the maximum
      number of whole Shares subject to such Option shall be purchased at the
      Option Price with the balance of such Participant's Account. If any amount
      (which is not sufficient to purchase a whole Share) remains in a
      Participant's Account after the

                                       5

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      exercise of his or her Option on the Exercise Date: (i) such amount shall
      be credited to such Participant's Account for the next Offering Period, if
      he or she is then a Participant; or (ii) if such Participant is not a
      Participant in the next Offering Period, or if the Committee so elects,
      such amount shall be refunded to such Participant as soon as
      administratively practicable after such date.

10.   DELIVERY

      As soon as administratively practicable after the Exercise Date, the
      Corporation shall deliver to each Participant a certificate representing
      the Shares purchased upon exercise of his or her Option. The Corporation
      may make available an alternative arrangement for delivery of Shares to a
      recordkeeping service. The Committee (or its delegate), in its discretion,
      may either require or permit the Participant to elect that such
      certificates be delivered to such recordkeeping service. In the event the
      Corporation is required to obtain from any commission or agency authority
      to issue any such certificate, the Corporation will seek to obtain such
      authority. Inability of the Corporation to obtain from any such commission
      or agency authority which counsel for the Corporation deems necessary for
      the lawful issuance of any such certificate shall relieve the Corporation
      from liability to any Participant except to return to the Participant the
      amount of the balance in his or her Account.

11.   TERMINATION OF EMPLOYMENT; CHANGE IN ELIGIBLE STATUS

      (a) Upon a Participant's termination from employment with the Company for
      any reason or in the event that a Participant is no longer an Eligible
      Employee or if the Participant elects to terminate Contributions pursuant
      to Section 7(c), at any time prior to the last day of an Offering Period
      in which he or she participates, such Participant's Account shall be paid
      to him or her or in cash, or, in the event of such Participant's death,
      paid to the person or persons entitled thereto under Section 13, and such
      Participant's Option and participation in the Plan shall be automatically
      terminated.

      (b) A Participant's termination from Plan participation precludes the
      Participant from again participating in this Plan during that Offering
      Period. However, such termination shall not have any effect upon his or
      her ability to participate in any succeeding Offering Period, provided
      that the applicable eligibility and participation requirements are again
      then met. A Participant's termination from Plan participation shall be
      deemed to be a revocation of that Participant's Subscription Agreement and
      such Participant must file a new Subscription Agreement to resume Plan
      participation in any succeeding Offering Period.

12.   ADMINISTRATION

      (a) The Board shall appoint the Committee, which shall be composed of not
      less than two members of the Board. Each member of the Committee, in
      respect of any transaction at a time when an affected Participant may be
      subject to Section 16 of the Exchange Act, shall be a "non-employee
      director" within the meaning of Rule 16b-3 promulgated under Section 16.
      The Board may, at any time, increase or decrease the number of members of
      the Committee, may remove from membership on the Committee all or any
      portion of its members, and may appoint such person or persons as it
      desires to fill any vacancy

                                       6

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      existing on the Committee, whether caused by removal, resignation, or
      otherwise. The Board may also, at any time, assume or change the
      administration of this Plan.

      (b) The Committee shall supervise and administer this Plan and shall have
      full power and discretion to adopt, amend and rescind any rules deemed
      desirable and appropriate for the administration of this Plan and not
      inconsistent with the terms of this Plan, and to make all other
      determinations necessary or advisable for the administration of this Plan.
      The Committee shall act by majority vote or by unanimous written consent.
      No member of the Committee shall be entitled to act on or decide any
      matter relating solely to himself or herself or any of his or her rights
      or benefits under this Plan. The Committee shall have full power and
      discretionary authority to construe and interpret the terms and conditions
      of this Plan, which construction or interpretation shall be final and
      binding on all parties including the Corporation, Participants and
      beneficiaries. The Committee may delegate ministerial non-discretionary
      functions to third parties, including officers of the Corporation.

      (c) Any action taken by, or inaction of, the Corporation, the Board or the
      Committee relating to this Plan shall be within the absolute discretion of
      that entity or body. No member of the Board or Committee, or officer of
      the Corporation shall be liable for any such action or inaction.

13.   DESIGNATION OF BENEFICIARY

      (a) A Participant may file, in a manner prescribed by the Committee (or
      its delegate), a written designation of a beneficiary who is to receive
      any Shares or cash from such Participant's Account under this Plan in the
      event of such Participant's death. If a Participant's death occurs
      subsequent to the end of an Offering Period but prior to the delivery to
      him or her of any Shares deliverable under the terms of this Plan, such
      Shares and any remaining balance of such Participant's Account shall be
      paid to such beneficiary (or such other person as set forth in Section
      13(b)) as soon as administratively practicable after the Corporation
      receives notice of such Participant's death and any outstanding
      unexercised Option shall terminate. If a Participant's death occurs at any
      other time, the balance of such Participant's Account shall be paid to
      such beneficiary (or such other person as set forth in Section 13(b)) in
      cash as soon as administratively practicable after the Corporation
      receives notice of such Participant's death and such Participant's Option
      shall terminate. If a Participant is married and the designated
      beneficiary is not his or her spouse, spousal consent shall be required
      for such designation to be effective.

      (b) Beneficiary designations may be changed by the Participant (and his or
      her spouse, if required) at any time on forms provided and in the manner
      prescribed by the Committee (or its delegate). If a Participant dies with
      no validly designated beneficiary under this Plan who is living at the
      time of such Participant's death, the Corporation shall deliver all Shares
      and/or cash payable pursuant to the terms hereof to the executor or
      administrator of the estate of the Participant, or if no such executor or
      administrator has been appointed, the Corporation, in its discretion, may
      deliver such Shares and/or cash to the spouse or to any one or more
      dependents or relatives of the Participant, or if no spouse, dependent or
      relative is known to the Corporation, then to such other person as the
      Corporation may designate.

                                       7

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14.   TRANSFERABILITY

      Neither Contributions credited to a Participant's Account nor any Options
      or rights with respect to the exercise of Options or right to receive
      Shares under this Plan may be anticipated, alienated, encumbered,
      assigned, transferred, pledged or otherwise disposed of in any way (other
      than by will, the laws of descent and distribution, or as provided in
      Section 13) by the Participant. Any such attempt at anticipation,
      alienation, encumbrance, assignment, transfer, pledge or other disposition
      shall be without effect and all amounts shall be paid and all shares shall
      be delivered in accordance with the provisions of this Plan. Amounts
      payable or Shares deliverable pursuant to this Plan shall be paid or
      delivered only to the Participant or, in the event of the Participant's
      death, to the Participant's beneficiary pursuant to Section 13.

15.   USE OF FUNDS; INTEREST

      All Contributions received or held by the Corporation under this Plan will
      be included in the general assets of the Corporation and may be used for
      any corporate purpose. No interest will be paid to any Participant or
      credited to his or her Account under this Plan.

16.   REPORTS

      Statements shall be provided to Participants as soon as administratively
      practicable following each Exercise Date. Each Participant's statement
      shall set forth, as of such Exercise Date, that Participant's Account
      balance immediately prior to the exercise of his or her Option, the Fair
      Market Value of a Share, the Option Price, the number of whole Shares
      purchased and his or her remaining Account balance, if any.

17.   ADJUSTMENTS OF AND CHANGES IN THE STOCK

      In the event that the Shares shall be changed into or exchanged for a
      different number or kind of shares of stock or other securities of the
      Corporation or of another corporation (whether by reason of merger,
      consolidation, recapitalization, stock split, combination of shares, or
      otherwise), or if the number of Shares shall be increased through a stock
      split or the payment of a stock dividend, then there shall be substituted
      for or added to each Share theretofore reserved for sale under this Plan,
      the number and kind of shares of stock or other securities into which each
      outstanding Share shall be so changed, or for which each such Share shall
      be exchanged, or to which each such Share is entitled, as the case may be,
      or the number or kind of securities which may be sold under this Plan and
      the purchase price per Share shall be appropriately adjusted consistent
      with such change in such manner as the Committee (or its delegate) may
      deem equitable to prevent substantial dilution or enlargement of rights
      granted to, or available for, Eligible Employees under this Plan.

18.   POSSIBLE EARLY TERMINATION OF PLAN AND OPTIONS

      Upon a dissolution of the Corporation, an event described in Section 17
      that the Corporation does not survive, or the occurrence of a Change in
      Control, the Plan and, if prior to the last day of an Offering Period, any
      outstanding Option granted with respect to that Offering Period shall
      terminate, subject to any provision that has been expressly

                                       8

<PAGE>

      made by the Committee through a plan or reorganization approved by the
      Board or otherwise for the survival, substitution, assumption, exchange or
      other settlement of the Plan and Options. In the event a Participant's
      Option is terminated pursuant to this Section 18, such Participant's
      Account shall be paid to him or her in cash without interest.

19.   TERM OF PLAN; AMENDMENT OR TERMINATION

      (a) This Plan shall become effective as of the Effective Date. No new
      Offering Periods shall commence on or after the tenth anniversary of the
      Effective Date and this Plan shall terminate on such date unless sooner
      terminated pursuant to Section 18 or this Section 19.

      (b) The Board may amend, modify or terminate this Plan at any time without
      notice. Shareholder approval for any amendment or modification shall not
      be required, except to the extent required by Section 423 of the Code or
      other applicable law, or deemed necessary or advisable by the Board. No
      amendment, modification, or termination pursuant to this Section 18(b)
      shall, without written consent of the Participant, affect in any manner
      materially adverse to the Participant any rights or benefits of such
      Participant or obligations of the Corporation under any Option granted
      under this Plan prior to the effective date of such change. Changes
      contemplated by Section 17 shall not be deemed to constitute changes or
      amendments requiring Participant consent. Notwithstanding the foregoing,
      the Committee shall have the right to designate from time to time the
      Subsidiaries whose employees may be eligible to participate in this Plan
      and such designation shall not constitute any amendment to this Plan
      requiring shareholder approval.

20.   NOTICES

      All notices or other communications by a Participant to the Corporation
      contemplated by this Plan shall be deemed to have been duly given when
      received in the form and manner specified by the Committee (or its
      delegate) at the location, or by the person, designated by the Committee
      (or its delegate) for that purpose.

21.   CONDITIONS UPON ISSUANCE OF SHARES

      Shares shall not be issued with respect to an Option unless the exercise
      of such Option and the issuance and delivery of such Shares complies with
      all applicable provisions of law, domestic or foreign, including, without
      limitation, the Securities Act of 1933, as amended, the Exchange Act, any
      applicable state securities laws, the rules and regulations promulgated
      thereunder, and the requirements of any stock exchange upon which the
      Shares may then be listed.

      As a condition precedent to the exercise of any Option, if, in the opinion
      of counsel for the Corporation such a representation is required under
      applicable law, the Corporation may require any person exercising such
      Option to represent and warrant that the Shares subject thereto are being
      acquired only for investment and without any present intention to sell or
      distribute such Shares.

                                       9

<PAGE>

22.   PLAN CONSTRUCTION

      (a) It is the intent of the Corporation that transactions in and affecting
      Options in the case of Participants who are or may be subject to the
      prohibitions of Section 16 satisfy any then applicable requirements of
      Rule 16b-3 so that such persons (unless they otherwise agree) will be
      entitled to the exemptive relief of Rule 16b-3 in respect of those
      transactions and will not be subject to avoidable liability thereunder.
      Accordingly, this Plan shall be deemed to contain and the Shares issued
      upon exercise thereof shall be subject to, such additional conditions and
      restrictions as may be required by Rule 16b-3 to qualify for the maximum
      exemption from Section 16 with respect to Plan transactions.

      (b) This Plan and Options are intended to qualify under Section 423 of the
      Code.

      (c) If any provision of this Plan or of any Option would otherwise
      frustrate or conflict with the intents expressed above, that provision to
      the extent possible shall be interpreted so as to avoid such conflict. If
      the conflict remains irreconcilable, the Committee may disregard the
      provision if it concludes that to do so furthers the interest of the
      Corporation and is consistent with the purposes of this Plan as to such
      persons in the circumstances.

23.   EMPLOYEES' RIGHTS

      Nothing in this Plan (or in any agreement related to this Plan) shall
      confer upon any Eligible Employee or Participant any right to continue in
      the service or employ of the Company or constitute any contract or
      agreement of service or employment, or interfere in any way with the right
      of the Company to reduce such person's compensation or other benefits or
      to terminate the services or employment or such Eligible Employee or
      Participant, with or without cause, but nothing contained in this Plan or
      any document related hereto shall affect any other contractual right of
      any Eligible Employee or Participant. No Participant shall have any rights
      as a shareholder until a certificate for Shares has been issued in the
      Participant's name following exercise of his or her Option. No adjustment
      will be made for dividends or other rights as a shareholder for which a
      record date is prior to the issuance of such Share certificate. Nothing in
      this Plan shall be deemed to create any fiduciary relationship between the
      Corporation and any Participant.

24.   MISCELLANEOUS

      (a) This Plan and related documents shall be governed by, and construed in
      accordance with, the laws of the State of California. If any provision
      shall be held by a court of competent jurisdiction to be invalid and
      unenforceable, the remaining provisions of this Plan shall continue to be
      fully effective.

      (b) Captions and headings are given to the sections of this Plan solely as
      a convenience to facilitate reference. Such captions and headings shall
      not be deemed in any way material or relevant to the construction of
      interpretation of this Plan or any provision hereof.

      (c) The adoption of this Plan shall not affect any other compensation or
      incentive plans in effect for the Company. Nothing in this Plan shall be
      construed to limit the right of the Company (i) to establish any other
      forms of incentives or compensation for

                                       10

<PAGE>

      employees of the Company, or (ii) to grant or assume options (outside the
      scope of and in addition to those contemplated by this Plan) in connection
      with any proper corporate purpose.

25.   EFFECTIVE DATE

      This Plan shall be effective on the Effective Date, subject, however, to
      the approval of this Plan by the shareholders of the Company within twelve
      months after the date on which the Board approved this Plan.
      Notwithstanding anything else contained herein to the contrary, no Shares
      shall be issued or delivered under this Plan until such shareholder
      approval is obtained and, if such shareholder approval is not obtained
      within such 12-month period of time, all Contributions credited to a
      Participant's Account hereunder shall be refunded to such Participant
      (without interest) as soon as practicable after the end of such 12-month
      period.

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