**Exhibit10.01**

**CALIFORNIACOASTAL COMMUNITIES, INC.**

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**AMENDEDAND RESTATED**

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**1993STOCK OPTION/STOCK ISSUANCE PLAN**

**(ASAPPROVED BY THE BOARD OF DIRECTORS ON MARCH 4, 2004)**

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**ARTICLEONE**

**GENERAL**

 

**I.     PURPOSE OF THE AMENDED ANDRESTATED PLAN**

        A.    ThisAmended and Restated 1993 Stock Option/Stock Issuance Plan (“Plan”) is intendedto promote the interests of California Coastal Communities, Inc., aDelaware corporation (the “Corporation”), by providing (i) key employees(including officers) of the Corporation (or its parent or subsidiarycorporations) who are responsible for the management, growth and financialsuccess of the Corporation (or its parent or subsidiary corporations), and(ii) consultants and other independent contractors who provide valuableservices to the Corporation (or its parent or subsidiary corporations) with theopportunity to acquire a proprietary interest, or otherwise increase theirproprietary interest, in the Corporation as an incentive for them to remain inthe service of the Corporation (or its parent or subsidiary corporations).

        B.    ThePlan amends and restates the Corporation’s Amended and Restated 1993 StockOption/Stock Issuance Plan (the “1993 Plan”) which became effective immediatelyupon adoption by the Board on November 29, 1993 and was approved by theCorporation’s stockholders on May 20, 1994.

**II.    DEFINITIONS**

        A.    Forpurposes of the Plan, the following definitions shall be in effect:

**        Board:**    the Corporation’sBoard of Directors.

**        Change inControl:**    achange in ownership or control of the Corporation effected through either ofthe following transactions:

        a.     anyperson or related group of persons (other than the Corporation or a person thatdirectly or indirectly controls, is controlled by, or is under common controlwith, the Corporation) directly or indirectly acquires beneficial ownership(within the meaning of Rule 13d-3 of the 1934 Act) of securitiespossessing more than fifty percent (50%) of the total combined voting power ofthe Corporation’s outstanding securities pursuant to a tender or exchange offermade directly to the Corporation’s stockholders which the Board does notrecommend such stockholders to accept; or

        b.     achange in the composition of the Board over a period of thirty-six(36) consecutive months or less such that a majority of the Board members(rounded up to the next whole number) ceases, by reason of one or morecontested elections for Board membership, to be comprised of individuals whoeither (A) have been Board members continuously since the beginning ofsuch period or (B) have been elected or nominated for election as Boardmembers during such period by at least a majority of the Board membersdescribed in clause (A) who were still in office at the time such electionor nomination was approved by the Board.

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**        Common Stock:**    shares of theCorporation’s Common Stock, par value $.05 per share, on a post 1997 capitalstock combination and one for one hundred (1:100) reverse stock split basis.

**        Code:**    the InternalRevenue Code of 1986, as amended.

**        Committee:**    the committee oftwo (2) or more non-employee Board members appointed by the Board toadminister the Plan.

**        CorporateTransaction:**    anyof the following stockholder-approved transactions to which the Corporation isa party:

        a.     amerger or consolidation in which the Corporation is not the surviving entity,except for a transaction the principal purpose of which is to change the statein which the Corporation is incorporated,

        b.     thesale, transfer or other disposition of all or substantially all of the assetsof the Corporation in complete liquidation or dissolution of the Corporation,or

        c.     anyreverse merger in which the Corporation is the surviving entity but in whichsecurities possessing more than fifty percent (50%) of the total combinedvoting power of the Corporation’s outstanding securities are transferred to aperson or persons different from the persons holding those securitiesimmediately prior to such merger.

**        Employee:**    an individual whoperforms services while in the employ of the Corporation or one or more parentor subsidiary corporations, subject to the control and direction of the employerentity not only as to the work to be performed but also as to the manner andmethod of performance.

**        ExerciseDate:**    thedate on which the Corporation shall have received written notice of the optionexercise.

**        Fair MarketValue:**    theFair Market Value per share of Common Stock determined in accordance with thefollowing provisions:

        a.     Ifthe Common Stock is not at the time listed or admitted to trading on anynational securities exchange but is traded on the Nasdaq National Market, theFair Market Value shall be the closing selling price per share of that securityon the date in question, as such price is reported by the National Associationof Securities Dealers through the Nasdaq National Market or any successorsystem. If there is no reported closing selling price for the Common Stock onthe date in question, then the closing selling price per share of that securityon the last preceding date for which such quotation exists shall bedeterminative of Fair Market Value.

        b.     Ifthe Common Stock is at the time listed or admitted to trading on any nationalstock exchange, then the Fair Market Value shall be the closing selling priceper share of that security on the date in question on the exchange serving asthe primary market for the Common Stock, as such price is officially quoted inthe composite tape of transactions on such exchange. If there is no reportedsale of Common Stock on such exchange on the date in question, then the FairMarket Value shall be the closing selling price per share of that security onthe exchange on the last preceding date for which such quotation exists.

**        HostileTake-Over:**    achange in ownership of the Corporation effected through the followingtransaction:

        a.     anyperson or related group of persons (other than the Corporation or a person thatdirectly or indirectly controls, is controlled by, or is under common controlwith, the Corporation) directly or indirectly acquires beneficial ownership(within the meaning of Rule 13d-3 of the 1934 Act) of securitiespossessing more than fifty percent (50%) of the total combined voting power of

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the Corporation’s outstanding securities pursuant to atender or exchange offer made directly to the Corporation’s stockholders whichthe Board does not recommend such stockholders to accept, *and*

        b.     morethan fifty percent (50%) of the securities so acquired in such tender orexchange offer are accepted from holders other than the officers and directorsof the Corporation subject to the short-swing profit restrictions ofSection 16 of the 1934 Act.

**        IncentiveOption:**    astock option which satisfies the requirements of Code Section 422.

**        1934 Act:**    the Securitiesand Exchange Act of 1934, as amended.

**        Non-StatutoryOption:**    astock option not intended to meet the requirements of Code Section 422.

**        Optionee:**    any person towhom an option is granted under the Discretionary Option Grant Program ineffect under the Plan.

**        Permanent Disabilityor Permanently Disabled:**    the inability of the Optionee or theParticipant to engage in any substantial gainful activity by reason of anymedically determinable physical or mental impairment expected to result indeath or to be of continuous duration of twelve (12) months or more.

**        PlanAdministrator:**    theCommittee in its capacity as the administrator of the Plan.

**        Service:**    the performanceof services on a periodic basis to the Corporation (or any parent or subsidiarycorporation) in the capacity of an Employee, a non-employee member of the boardof directors or an independent consultant or advisor, except to the extentotherwise specifically provided in the applicable stock option or stockissuance agreement.

**        Take-Over Price:**    the *greater* of (a) the Fair Market Valueper share of the Common Stock subject to the particular option surrendered tothe Corporation in connection with a Hostile Take-Over on the date such optionsurrender is effected or (b) the highest reported price per share of thatsecurity paid by the tender offeror in effecting such Hostile Take-Over.However, if the surrendered option is an Incentive Option, the Take-Over Priceshall not exceed the clause (a) price per share.

        B.    Thefollowing provisions shall be applicable in determining the parent andsubsidiary corporations of the Corporation:

        —    Anycorporation (other than the Corporation) in an unbroken chain of corporationsending with the Corporation shall be considered to be a **parent** of the Corporation, provided eachsuch corporation in the unbroken chain (other than the Corporation) owns, atthe time of the determination, stock possessing fifty percent (50%) or more ofthe total combined voting power of all classes of stock in one of the othercorporations in such chain.

        —    Eachcorporation (other than the Corporation) in an unbroken chain of corporationswhich begins with the Corporation shall be considered to be a **subsidiary** of the Corporation, providedeach such corporation in the unbroken chain (other than the last corporation)owns, at the time of the determination, stock possessing fifty percent (50%) ormore of the total combined voting power of all classes of stock in one of theother corporations in such chain.

**III.  STRUCTURE OF THE PLAN**

        A.*    Stock Programs.*    ThePlan shall be divided into two (2) separate components: the DiscretionaryOption Grant Program specified in Article Two and the Director Fee Programspecified in Article Three. Under the Discretionary Option Grant Program,eligible individuals may, at the discretion of the Plan Administrator, begranted options to purchase shares of Common Stock in

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accordancewith the provisions of Article Two. Under the Director Fee Program, each non-employeeBoard member may, in accordance with the provisions of Article Three, elect toapply all or any portion of his or her annual retainer fee to the acquisitionof unvested shares of Common Stock.

        B.*    General Provisions.*    Unlessthe context clearly indicates otherwise, the provisions of Articles One andFour shall apply to the Discretionary Option Grant Program and the Director FeeProgram and shall accordingly govern the interests of all individuals under thePlan.

**IV.    ADMINISTRATION OF THE PLAN**

        A.    TheDiscretionary Option Grant Program shall be administered by the Committee inits capacity as Plan Administrator. No non-employee Board member shall beeligible to serve on the Committee if such individual has, within the twelve (12)-monthperiod immediately preceding the date of his or her appointment to theCommittee, received an option grant or direct stock issuance under this Plan orany other stock plan of the Corporation (or any parent or subsidiarycorporation), other than pursuant to the Director Fee Program.

        B.    Membersof the Committee shall serve for such period of time as the Board may determineand shall be subject to removal by the Board at any time.

        C.    TheCommittee as Plan Administrator shall have full power and authority (subject tothe express provisions of the Plan) to establish rules and regulations for theproper administration of the Discretionary Option Grant Program and to makesuch determinations under, and issue such interpretations of, the provisions ofsuch program and any outstanding option grants thereunder as it may deemnecessary or advisable. Decisions of the Plan Administrator shall be final andbinding on all parties who have an interest in the Discretionary Option GrantProgram or any outstanding option or unvested share issuance thereunder.

        D.    Administrationof the Director Fee Program shall be self-executing in accordance with theexpress terms and conditions of Article Three and the Committee as PlanAdministrator shall exercise no discretionary functions with respect to optiongrants or share issuances made pursuant to those programs.

**V.     OPTION GRANTS AND STOCKISSUANCES**

        A.    Thepersons eligible to participate in the Discretionary Option Grant Program underArticle Two shall be limited to the following:

        —    officersand other key employees of the Corporation (or its parent or subsidiarycorporations) who render services which contribute to the management, growthand financial success of the Corporation (or its parent or subsidiarycorporations);

        —    membersof the Board or the members of the board of directors of any parent orsubsidiary corporation; and

        —    thoseconsultants or other independent contractors who provide valuable services tothe Corporation (or its parent or subsidiary corporations).

        B.    Non-employeeBoard members who serve as Plan Administrator shall *not*, during their period of service as such, be eligible toparticipate in the Discretionary Option Grant Program or in any other stockoption, stock purchase, stock bonus or other stock plan of the Corporation (orits parent or subsidiary corporations), other than the Director Fee Program, tothe extent they are eligible for participation in those latter programs inaccordance with the provisions of Articles Three.

        C.    ThePlan Administrator shall have full authority to determine which eligibleindividuals are to receive option grants under the Discretionary Option GrantProgram, the number of shares to be

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coveredby each such grant, the status of the granted option as either an IncentiveOption or a Non-Statutory Option, the time or times at which each grantedoption is to become exercisable and the maximum term for which the option is toremain outstanding.

**VI.   STOCK SUBJECT TO THE PLAN**

        A.    Sharesof Common Stock shall be available for issuance under the Plan and shall bedrawn from either the Corporation’s authorized but unissued shares of CommonStock or from reacquired shares of Common Stock, including shares repurchasedby the Corporation on the open market. Nine Hundred Nine Thousand Nine Hundredand Eighty-Four (909,984) shares of Common Stock may be issued over the term ofthe Plan, subject to adjustment from time to time in accordance with theprovisions of this Section VI. Such authorized share reserve is comprisedof the number of shares of Common Stock which remained available for issuanceunder the 1993 Plan prior to this amendment, as reduced by this amendment.

        B.    Inno event shall there be issued over the remaining term of the Plan, from theeffective date of this amendment to the 1993 Plan until the termination of thePlan pursuant to Article Four, Section IV, more than Nine Hundred NineThousand Nine Hundred and Eighty-Four (909,984) shares in the aggregate ofCommon Stock. The foregoing share limitations shall be subject to periodicadjustment in accordance with the provisions of Section F of thisArticle VI.

        C.    Shouldone or more outstanding options under this Plan expire or terminate for anyreason prior to exercise in full then the shares subject to the portion of eachoption not so exercised shall be available for subsequent issuance under thePlan. Shares subject to any option or portion thereof surrendered in accordancewith Section IV of Article Two and all share issuances under the Plan,whether or not the shares are subsequently repurchased by the Corporationpursuant to its repurchase rights under the Plan, shall reduce on a share-for-sharebasis the number of shares of Common Stock available for subsequent issuanceunder the Plan. In addition, should the exercise price of an outstanding optionunder the Plan be paid with shares of Common Stock or should shares of CommonStock otherwise issuable under the Plan be withheld by the Corporation insatisfaction of the withholding taxes incurred in connection with the exerciseof an outstanding option under the Plan or the vesting of a direct shareissuance made under the Plan, then the number of shares of Common Stock (as thecase may be) available for issuance under the Plan shall be reduced by thegross number of shares for which the option is exercised or which vest underthe share issuance, and not by the net number of shares of Common Stock actuallyissued to the holder of such option or share issuance.

        D.    Shouldany change be made to the Common Stock issuable under the Plan by reason of anystock split, stock dividend, recapitalization, combination of shares, exchangeof shares or other change affecting the outstanding Common Stock as a classwithout the Corporation’s receipt of consideration, then appropriateadjustments shall be made to (i) the maximum number and/or class ofsecurities issuable under the Plan, (ii) the maximum number and/or classof securities in the aggregate for which any one individual participating inthe Plan may be granted stock options, separately exercisable stockappreciation rights and direct share issuances over the term of the Plan,(iii) the number and/or class of securities for which share issuances aresubsequently to be made to non-employee Board members under the Director FeeProgram, and (iv) the number and/or class of securities and price pershare in effect under each option outstanding under the Discretionary OptionGrant. Such adjustments to the outstanding options are to be effected in amanner which shall preclude the enlargement or dilution of rights and benefitsunder such options. The adjustments determined by the Plan Administrator shall befinal, binding and conclusive.

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**ARTICLE TWODISCRETIONARY OPTION GRANT PROGRAM**

**I.     TERMS AND CONDITIONS OFOPTIONS**

        Optionsgranted pursuant to the Discretionary Option Grant Program shall be authorizedby action of the Plan Administrator and may, at the Plan Administrator’sdiscretion, be either Incentive Options or Non-Statutory Options. Individualswho are not Employees of the Corporation or its parent or subsidiarycorporations may only be granted Non-Statutory Options. Each granted optionshall be evidenced by one or more instruments in the form approved by the PlanAdministrator; *provided,* however,that each such instrument shall comply with the terms and conditions specifiedbelow. Each instrument evidencing an Incentive Option shall, in addition, besubject to the applicable provisions of Section II of this Article Two.

        A.*    Exercise Price.*

      1.  The exercise price per share of Common Stocksubject to any option granted under this Article Two shall be fixed by the PlanAdministrator at the time of the grant, but in no event shall such exerciseprice be less than one hundred percent (100%) of the Fair Market Value pershare of that security on the grant date.

      2.   The exercise price shall become immediatelydue upon exercise of the option and, subject to the provisions ofSection I of Article Four and the instrument evidencing the grant, shallbe payable in one of the following alternative forms specified below:

             a.     fullpayment in cash or check made payable to the Corporation’s order;

             b.     fullpayment in shares of Common Stock held for the requisite period necessary toavoid a charge to the Corporation’s earnings for financial reporting purposesand valued at Fair Market Value on the Exercise Date;

             c.     fullpayment in a combination of shares of Common Stock held for the requisiteperiod necessary to avoid a charge to the Corporation’s earnings for financialreporting purposes and valued at Fair Market Value on the Exercise Date andcash or check drawn to the Corporation’s order; or

             d.     tothe extent the option is exercised for vested shares, full payment through abroker-dealer sale and remittance procedure pursuant to which the Optioneeshall concurrently provide irrevocable written instructions to (i) aCorporation-designated brokerage firm to effect the immediate sale of thepurchased shares and remit to the Corporation, out of the sale proceedsavailable on the settlement date, sufficient funds to cover the aggregateexercise price payable for the purchased shares plus all applicable Federal,state and local income and employment taxes required to be withheld by theCorporation in directly to such brokerage firm in order to complete the saletransaction.

        Exceptto the extent the sale and remittance procedure is utilized in connection withthe exercise of the option for vested shares, payment of the exercise price forthe purchased shares must accompany the exercise notice.

        B.*    Term and Exercise of Options.*    Eachoption granted under this Discretionary Option Grant Program shall beexercisable at such time or times and during such period as is determined bythe Plan Administrator and set forth in the instrument evidencing the grant. Nosuch option, however, shall have a maximum term in excess of ten(10) years from the grant date. During the lifetime of the Optionee, theoption, together with any stock appreciation rights pertaining to such option,shall be exercisable

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only bythe Optionee and shall not be assignable or transferable by the Optionee exceptfor a transfer of the option effected by will or by the laws of descent anddistribution following the Optionee’s death.

        C.*    Termination of Service.*

1.     The following provisions shall govern the exercise periodapplicable to any outstanding options under this Article Two held by theOptionee at the time of cessation of Service or death.

—    Shouldan Optionee cease Service for any reason (including death or PermanentDisability) while holding one or more outstanding options under this ArticleTwo, then none of those options shall (except to the extent otherwise providedpursuant to subparagraph 3 below) remain exercisable for more than a thirty-six(36)-month period (or such shorter period determined by the Plan Administratorand set forth in the instrument evidencing the grant) measured from the date ofsuch cessation of Service.

—    Anyoption held by the Optionee under this Article Two and exercisable in whole orin part on the date of his or her death may be subsequently exercised by thepersonal representative of the Optionee’s estate or by the person or persons towhom the option is transferred pursuant to the Optionee’s will or in accordancewith the laws of descent and distribution. The right to exercise such option,however, shall lapse upon the *earlier*of (i) the third anniversary of the date of the Optionee’s death (or suchshorter period determined by the Plan Administrator and set forth in theinstrument evidencing the grant) or (ii) the specified expiration date ofthe option term. Accordingly, upon the occurrence of the earlier event, theoption shall terminate and cease to be outstanding.

—    Duringthe applicable post-Service exercise period, the option may not be exercised inthe aggregate for more than the number of shares (if any) in which the Optioneeis vested at the time of his or her cessation of Service. Upon the expirationof the limited post-Service exercise period or (if earlier) upon the specifiedexpiration date of the option term, each such option shall terminate and ceaseto he outstanding with respect to any vested shares for which the option hasnot otherwise been exercised. However, each outstanding option shallimmediately terminate and cease to be outstanding, at the time of the Optionee’scessation of Service, with respect to any shares for which the option is nototherwise at that time exercisable or in which the Optionee is not otherwisevested.

—    Underno circumstances shall any such option be exercisable after the specifiedexpiration date of the option term.

—    Should(i) the Optionee’s Service be terminated for misconduct (including, butnot limited to, any act of dishonesty, willful misconduct, fraud orembezzlement) or (ii) the Optionee make any unauthorized use or disclosureof confidential information or trade secrets of the Corporation or its parentor subsidiary corporations, then in any such event all outstanding options heldby the Optionee under this Article Two shall terminate immediately and cease tobe outstanding.

2.     The Plan Administrator shall have complete discretion,exercisable either at the time the option is granted or at any time while theoption remains outstanding, to permit one or more options held by the Optioneeunder this Article Two to be exercised, during the limited post-Serviceexercise period applicable under subparagraph 1 above, not only with respect tothe number of vested shares of Common Stock for which each such option isexercisable at the time of the Optionee’s cessation of Service but also withrespect to one or more subsequent installments of vested shares for which theoption would otherwise have become exercisable had such cessation of Servicenot occurred.

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3.     The Plan Administrator shall also have full power and authority,exercisable either at the time the option is granted or at any time while theoption remains outstanding, to extend the period of time for which the optionis to remain exercisable following the Optionee’s cessation of Service or deathfrom the limited period in effect under subparagraph 1 above to such greaterperiod of time as the Plan Administrator shall deem appropriate. In no event,however, shall such option be exercisable after the specified expiration dateof the option term.

        D.*    Stockholder Rights.*    AnOptionee shall have no stockholder rights with respect to any shares covered bythe option until such individual shall have exercised the option and paid theexercise price for the purchased shares.

        E.*    Repurchase Rights.*    Theshares of Common Stock acquired upon the exercise of any Article Two optiongrant may be subject to repurchase by the Corporation in accordance with thefollowing provisions:

        —    ThePlan Administrator shall have the discretion to authorize the issuance ofunvested shares of Common Stock under this Article Two. Should the Optioneecease Service while holding such unvested shares, the Corporation shall havethe right to repurchase any or all of those unvested shares at the exercise pricepaid per share. The terms and conditions upon which such repurchase right shallbe exercisable (including the period and procedure for exercise and theappropriate vesting schedule for the purchased shares) shall be established bythe Plan Administrator and set forth in the instrument evidencing suchrepurchase right.

        —    Allof the Corporation’s outstanding repurchase rights under this Article Two shallautomatically terminate, and all shares subject to such terminated rights shallimmediately vest in full, upon the occurrence of a Corporate Transaction,except to the extent: (i) any such repurchase right is expressly assignedto the successor corporation (or parent thereof) in connection with theCorporate Transaction or (ii) such termination is precluded by otherlimitations imposed by the Plan Administrator at the time the repurchase rightis issued.

        —    ThePlan Administrator shall have the discretionary authority, exercisable eitherbefore or after the Optionee’s cessation of Service, to cancel the Corporation’soutstanding repurchase rights with respect to one or more shares purchased orpurchasable by the Optionee under this Discretionary Option Grant Program andthereby accelerate the vesting of such shares in whole or in part at any time.

**II.    INCENTIVE OPTIONS**

        Theterms and conditions specified below shall be applicable to all IncentiveOptions granted under this Article Two. Incentive Options may only be grantedto individuals who are Employees of the Corporation. Options which arespecifically designated as Non-Statutory Options when issued under the Planshall *not*be subject to suchterms and conditions.

        A.*    Dollar Limitation.*    Theaggregate Fair Market Value (determined as of the respective date or dates ofgrant) of the Common Stock for which one or more options granted to anyEmployee under this Plan (or any other option plan of the Corporation or itsparent or subsidiary corporations) may for the first time become exercisable asincentive stock options under the Federal tax laws during any one calendar yearshall not exceed the sum of One Hundred Thousand Dollars ($100,000). To theextent the Employee holds two (2) or more such options which becomeexercisable for the first time in the same calendar year, the foregoinglimitation on the exercisability of such options as incentive stock optionsunder the Federal tax laws shall be applied on the basis of the order in whichsuch options are granted. Should the number of shares of Common Stock for whichany Incentive Option first becomes exercisable in any calendar year exceed theapplicable One Hundred Thousand Dollar ($100,000)

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limitation,then that option may nevertheless be exercised in that calendar year for theexcess number of shares as a non-statutory option under the Federal tax laws.

        B.*    10% Stockholder.*    Ifany individual to whom an incentive Option is granted is the owner of stock (asdetermined under Section. 424(d) of the Code) possessing ten percent (10%) ormore of the total combined voting power of all classes of stock of theCorporation or any one of its parent or subsidiary corporations, then theexercise price per share of the Common Stock subject to that option shall notbe less than one hundred and ten percent (110%) of the Fair Market Value pershare of that security on the grant date, and the option term shall not exceedfive (5) years, measured from the grant date.

        Exceptas modified by the preceding provisions of this Section II, the provisionsof Articles One, Two and Four of the Plan shall apply to all Incentive Optionsgranted hereunder.

**III.  CORPORATE TRANSACTIONS/CHANGES IN CONTROL**

        A.    Inthe event of any Corporate Transaction, each option which is at the timeoutstanding under this Article Two shall automatically accelerate so that eachsuch option shall, immediately prior to the specified effective date for theCorporate Transaction, become fully exercisable for all of the shares of CommonStock at the time subject to such option and may be exercised for all or anyportion of such shares. However, an outstanding option under this Article Twoshall **not**so accelerate if and tothe extent: (i) such option is, in connection with the CorporateTransaction, either to be assumed by the successor corporation or parentthereof or to be replaced with a comparable option to purchase shares of thecapital stock of the successor corporation or parent thereof, (ii) suchoption is to be replaced with a cash incentive program of the successorcorporation which preserves the option spread existing at the time of theCorporate Transaction and provides for subsequent payout in accordance with thesame vesting schedule applicable to such option or (iii) the accelerationof such option is subject to other limitations imposed by the PlanAdministrator at the time of the option grant. The determination of optioncomparability under clause (i) above shall be made by the PlanAdministrator, and its determination shall be final, binding and conclusive.

        B.    Immediatelyfollowing the consummation of the Corporate Transaction, all outstandingoptions under this Article Two shall terminate and cease to be outstanding,except to the extent assumed by the successor corporation or its parentcompany.

        C.    Eachoutstanding option under this Article Two which is assumed in connection withthe Corporate Transaction or is otherwise to continue in effect shall beappropriately adjusted, immediately after such Corporate Transaction, to applyand pertain to the number and class of securities which would have been issuedto the option holder, in consummation of such Corporate Transaction, had suchperson exercised the option immediately prior to such Corporate Transaction.Appropriate adjustments shall also be made to the exercise price payable pershare, *provided* the aggregateexercise price payable for such securities shall remain the same. In addition,the class and number of securities available for issuance under the Plan onboth an aggregate and per participant basis following the consummation of theCorporate Transaction shall be appropriately adjusted.

        D.    ThePlan Administrator shall have the discretion, exercisable either at the timethe option is granted or at any time while the option remains outstanding, toprovide (upon such terms as it may deem appropriate) for both (i) theautomatic acceleration of one or more outstanding options granted under thisArticle Two Plan which are assumed or replaced in a Corporate Transaction anddo not otherwise accelerate at that time and (ii) the immediatetermination of one or more of the Corporation’s outstanding repurchase rightswhich are assigned in connection with such Corporate Transaction and do nototherwise terminate at that time, in the event the Optionee’s Service should

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subsequentlyterminate within a designated period following the effective date of suchCorporate Transaction.

        E.    ThePlan Administrator shall have the discretionary authority, exercisable eitherin advance of any actually-anticipated Change in Control or at the time of anactual Change in Control, to provide for the automatic acceleration of one ormore outstanding options under this Article Two (and the immediate terminationof one or more of the Corporation’s outstanding repurchase rights under thisArticle Two) upon the occurrence of the Change in Control. The PlanAdministrator shall also have full power and authority to condition any suchoption acceleration (and the termination of any outstanding repurchase rights)upon the subsequent termination of the Optionee’s Service within a specifiedperiod following the Change in Control.

        F.     Anyoptions accelerated in connection with the Change in Control shall remain fullyexercisable until the expiration or sooner termination of the option term.

        G.    Thegrant of options under this Article Two shall in no way affect the right of theCorporation to adjust, reclassify, reorganize or otherwise change its capitalor business structure or to merge, consolidate, dissolve, liquidate or sell ortransfer all or any part of its business or assets.

        H.    Theexercisability as incentive stock options under the Federal tax laws of anyoptions accelerated under this Section III in connection with a CorporateTransaction or Change in Control shall remain subject to the dollar limitationof Section II of this Article Two. To the extent such dollar limitation isexceeded, the accelerated option shall be exercisable as a non-statutory optionunder the Federal tax laws.

**IV.    STOCK APPRECIATION RIGHTS.**

        A.    Providedand only if the Plan Administrator determines in its discretion to implementthe stock appreciation right provisions of this Section IV, one or moreOptionees may be granted the right, exercisable upon such terms and conditionsas the Plan Administrator may establish, to surrender all or part of anunexercised option under this Article Two in exchange for a distribution fromthe Corporation in an amount equal to the excess of (i) the Fair Market Value (onthe option surrender date) of the number of shares of Common Stock in which theOptionee is at the time vested under the surrendered option (or surrenderedportion thereof) over (ii) the aggregate exercise price payable for suchvested shares.

        B.    Nosurrender of an option shall be effective hereunder unless it is approved bythe Plan Administrator. If the surrender is so approved, then the distributionto which the Optionee shall accordingly become entitled under this Section IVmay be made in shares of Common Stock valued at Fair Market Value on the optionsurrender date, in cash, or partly in shares and partly in cash, as the PlanAdministrator shall in its sole discretion deem appropriate.

        C.    Ifthe surrender of an option is rejected by the Plan Administrator, then theOptionee shall retain whatever rights the Optionee had under the surrenderedoption (or surrendered portion thereof) on the option surrender date and mayexercise such rights at any time prior to the *later*of (i) five (5) business days after the receipt of the rejectionnotice or (ii) the last day on which the option is otherwise exercisablein accordance with the terms of the instrument evidencing such option, but inno event may such rights be exercised more than ten (10) years after thedate of the option grant.

        D.    Oneor more officers of the Corporation subject to the short-swing profitrestrictions of the Federal securities laws may, in the Plan Administrator’ssole discretion, be granted limited stock appreciation rights with respect totheir outstanding options under the Plan. Upon the occurrence of a HostileTake-Over, the officer shall have a thirty (30)-day period in which he or shemay surrender any outstanding options with such a limited stock appreciationright in effect for at least six (6) months to the Corporation, to theextent such option is at the time exercisable for fully-vested shares of Common

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Stock.The officer shall in return be entitled to a cash distribution from theCorporation in an amount equal to the excess of (i) the Take-Over Price ofthe vested shares of Common Stock at the time subject to each surrenderedoption (or surrendered portion of such option) over (ii) the aggregateexercise price payable for such shares. The cash distribution payable upon suchoption surrender shall be made within five (5) days following the date theoption is surrendered to the Corporation. Neither the approval of the PlanAdministrator nor the consent of the Board shall be required in connection withsuch option surrender and cash distribution. Any unsurrendered portion of theoption shall continue to remain outstanding and become exercisable inaccordance with the terms of the instrument evidencing such grant.

        E.    Theshares of Common Stock subject to any option surrendered for an appreciationdistribution pursuant to this Section IV shall not be available forsubsequent issuance under the Plan.

**ARTICLE THREEDIRECTOR FEE PROGRAM**

**I.     ELIGIBILITY**

        Subjectto the availability of shares of Common Stock under the Plan pursuant toArticle One, Section VI of the Plan, each individual serving as a non-employeeBoard member shall be eligible to apply all or any portion of the annualretainer fee otherwise payable to him or her in cash to the acquisition ofunvested shares of Common Stock under this Article Three Program.

**II.    ELECTION PROCEDURE**

        A.*    Filing.*    Thenon-employee Board member must make the stock-in-lieu-of-fee election prior tothe start of the calendar year for which the election is to be effective. Thefirst calendar year for which any such election may be filed shall be the 1994calendar year. The election must be filed with the Plan Administrator on theappropriate form provided for this purpose, and the election, once filed, shallbe irrevocable. The election for any upcoming calendar year may be filed at anytime prior to the start of that year, but in no event later thanDecember 31 of the immediately preceding calendar year. The non-employeeBoard member may file a standing election to be in effect for two or moreconsecutive calendar years or to remain in effect indefinitely until revoked bywritten instrument filed with the Plan Administrator at least six(6) months prior to the start of the first calendar year for which suchstanding election is no longer to remain in effect.

        B.*    Election Form.*    Onthe election form, the non-employee Board member must indicate the percentageor dollar amount of his or her annual retainer fee to be applied to theacquisition of unvested shares under this Article Three Program to be issued inlieu of such fee. The non-employee Board member may elect to apply a portion ofthe fee to the acquisition of Common Stock.

**III.  SHARE ISSUANCE**

        A.*    Issue Date.*    Onthe first trading day in January of the calendar year for which the election iseffective, the portion of the retainer fee subject to such election shallautomatically be applied to the acquisition of the selected shares of CommonStock by dividing the elected dollar amount by the Fair Market Value per shareof the Common Stock on that trading day. The number of issuable shares shall berounded down to the next whole share, and the issued shares shall be held inescrow by the Secretary of the Corporation until the non-employee Board membervests in those shares. The non-employee Board member shall have fullstockholder rights, including voting, dividend and liquidation rights, withrespect to all issued shares held in escrow on his or her behalf, but suchshares shall not be assignable or transferable while they remain unvested.

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        B.*    Vesting.*    Uponcompletion of each calendar quarter of Board service during the year for whichthe election is in effect, the non-employee Board member shall vest inone-fourth of the issued shares, and the stock certificate for those sharesshall be released from escrow. Immediate vesting in all the issued shares shalloccur in the event (i) the non-employee Board member should die or becomePermanently Disabled during his or her period of Board service or(ii) there should occur a Corporate Transaction or Change in Control whilesuch individual remains in Board service. Should such individual cease Boardservice prior to vesting in one or more quarterly installments of the issuedshares, then those unvested shares shall immediately be surrendered to theCorporation for cancellation, and the non-employee Board member shall not beentitled to any cash payment or other consideration from the Corporation with respectto the cancelled shares and shall have no further stockholder rights withrespect to such shares.

**IV.    AMENDMENT OF THE DIRECTOR FEEPROGRAM**

        A.*    Limited Amendments.*    Theprovisions of this Director Fee Program, together with the unvested shareissuances outstanding under this Article Three, may not be amended at intervalsmore frequently than once every six (6) months, other than to the extentnecessary to comply with applicable Federal income tax laws and regulations.

**ARTICLE FOURMISCELLANEOUS**

**I.     LOANS OR INSTALLMENT PAYMENTS**

        A.    ThePlan Administrator may, in its discretion, assist any Optionee (including anofficer of the Corporation) in the exercise of one or more options granted tosuch Optionee under the Discretionary Option Grant Program, including thesatisfaction of any Federal, state and local income and employment taxobligations arising therefrom, by (i) authorizing the extension of a loanfrom the Corporation to such Optionee or (ii) permitting the Optionee to paythe exercise price for the purchased shares in installments over a period ofyears. The terms of any loan or installment method of payment (including theinterest rate and terms of repayment) shall be upon such terms as the PlanAdministrator specifies in the applicable option agreement or otherwise deemsappropriate under the circumstances. Loans or installment payments may beauthorized with or without security or collateral. However, the maximum creditavailable to the Optionee may not exceed the exercise price of the acquiredshares (less the par value of such shares) plus any Federal, state and localincome and employment tax liability incurred by the Optionee in connection withthe acquisition of such shares.

        B.    ThePlan Administrator may, in its absolute discretion, determine that one or moreloans extended under this financial assistance program shall be subject toforgiveness by the Corporation in whole or in part upon such terms andconditions as the Plan Administrator may deem appropriate.

**II.    AMENDMENT OF THE PLAN AND AWARDS**

        A.    TheBoard has complete and exclusive power and authority to amend or modify thePlan (or any component thereof) in any or all respects whatsoever. However,(i) no such amendment or modification shall adversely affect rights andobligations with respect to options at the time outstanding under the Plan,unless the Optionee consents to such amendment, and (ii) any amendmentmade to the Director Fee Program (or any stock options or share issuances outstandingthereunder) shall be in compliance with the limitation of Section IV ofArticle Four. In addition, the Board may not, without the approval of theCorporation’s stockholders, amend the Plan to (i) materially increase themaximum number of shares issuable under the Plan, or increase the maximumnumber of shares of Common Stock for which any one participant may receivestock options, separately exercisable stock appreciation rights and directshare issuances over the term of the Plan, except for permissible adjustmentsunder

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SectionVI.F of Article One, (ii) materially modify the eligibility requirementsfor plan participation or (iii) materially increase the benefits accruingto plan participants.

        B.    Optionsto purchase shares of Common Stock may be granted under the DiscretionaryOption Grant Program, which are in excess of the number of shares thenavailable for issuance under the Plan, provided any excess shares actuallyissued under the Discretionary Option Grant Program are held in escrow untilstockholder approval is obtained for a sufficient increase in the number ofshares available for issuance under the Plan. If such stockholder approval isnot obtained within twelve (12) months after the date the first suchexcess option grants are made, then (i) any unexercised excess optionsshall terminate and cease to be exercisable and (ii) the Corporation shallpromptly refund the purchase price paid for any excess shares actually issuedunder the Plan and held in escrow, together with interest (at the applicableShort Term Federal Rate) for the period the shares were held in escrow.

**III.  TAX WITHHOLDING**

        A.    TheCorporation’s obligation to deliver shares of Common Stock upon the exercise ofstock options for such shares or the vesting of such shares under the Planshall be subject to the satisfaction of all applicable Federal, state and localincome and employment tax withholding requirements.

        B.    ThePlan Administrator may, in its discretion and in accordance with the provisionsof this Section III of Article Four and such supplemental rules as thePlan Administrator may from time to time adopt (including the applicablesafe-harbor provisions of Securities and Exchange Commission Rule 16b-3),provide any or all holders of Non-Statutory Options or unvested shares (otherthan the unvested shares issued under the Director Fee Program) with the rightto use shares of the Corporation’s Common Stock in satisfaction of all or partof the Federal, state and local income and employment tax liabilities incurredby such holders in connection with the exercise of their options or the vestingof their shares (the “Taxes”). Such right may be provided to any such holder ineither or both of the following formats:

*        StockWithholding:*    Theholder of the Non-Statutory Option or unvested shares may be provided with theelection to have the Corporation withhold, from the shares of Common Stockotherwise issuable upon the exercise of such Non-Statutory Option or thevesting of the shares, a portion of those shares with an aggregate Fair MarketValue equal to the percentage of the applicable Taxes (not to exceed onehundred percent (100%)) designated by the holder.

*        StockDelivery:*    ThePlan Administrator may, in its discretion, provide the holder of theNon-Statutory Option or the unvested shares with the election to deliver to theCorporation, at the time the Non-Statutory Option is exercised or the sharesvest, one or more shares of Common Stock previously acquired by such individual(other than in connection with the option exercise triggering the Taxes) withan aggregate Fair Market Value equal to the percentage of the Taxes incurred inconnection with such option exercise or share vesting (not to exceed onehundred percent (100%)) designated by the holder.

**IV.    EFFECTIVE DATE AND TERM OF PLAN**

        A.    The1993 Plan originally became effective immediately upon adoption by the Board onNovember 29, 1993. The Plan, as amended hereby, will become effectiveimmediately upon approval by the Company’s stockholders at the Annual Meetingon May 27, 2004. Stock options may be made under the Plan, as amendedhereby, immediately thereafter upon the effective date of this amendment.

        B.    ThePlan shall terminate upon the *earlier*of (i) December 31, 2013 or (ii) the date on which all sharesavailable for issuance under the Plan shall have been issued or cancelledpursuant to the exercise, surrender or cash-out of the options granted underthe Plan or the issuance of shares (whether vested or unvested) under theDirector Fee Program. If the date of termination is determined

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underclause (i) above, then all option grants and unvested share issuancesoutstanding on such date shall thereafter continue to have force and effect inaccordance with the provisions of the instruments evidencing such grants orissuances.

**V.     USE OF PROCEEDS**

        Anycash proceeds received by the Corporation from the sale of shares pursuant tooption grants or share issuances under the Plan shall be used for generalcorporate purposes

**VI.   REGULATORY APPROVALS**

        A.    Theimplementation of the Plan, the granting of any option under the Plan, theissuance of any shares under the Director Fee Program and the issuance ofCommon Stock upon the exercise or surrender of the option grants made hereundershall be subject to the Corporation’s procurement of all approvals and permitsrequired by regulatory authorities having jurisdiction over the Plan, theoptions granted under it and the Common Stock issued pursuant to it.

        B.    Noshares of Common Stock or other assets shall be issued or delivered under thisPlan unless and until there shall have been compliance with all applicablerequirements of Federal, and state securities laws, including the filing andeffectiveness of the Form S-8 registration statement for the shares ofCommon Stock issuable under the Plan, and all applicable listing requirementsof any securities exchange on which the Common Stock is then listed for trading.

**VII.   NO EMPLOYMENT/SERVICE RIGHTS**

        Neitherthe action of the Corporation in establishing the Plan, nor any action taken bythe Plan Administrator hereunder, nor any provision of the Plan shall beconstrued so as to grant any individual the right to remain in the Service ofthe Corporation (or any parent or subsidiary corporation) for any period ofspecific duration, and the Corporation (or any parent or subsidiary corporationretaining the services of such individual) may terminate such individual’s Serviceat any time and for any reason, with or without cause.

**VIII.   MISCELLANEOUS PROVISIONS**

        A.    Exceptto the extent otherwise expressly provided under the Plan, the right to acquireCommon Stock or other assets under the Plan may not be assigned, encumbered orotherwise transferred by any Optionee or Participant.

        B.    Theprovisions of the Plan relating to the exercise of options and the vesting ofshares shall be governed by the laws of the State of California, as such lawsare applied to contracts entered into and performed in such State.

        C.    Theprovisions of the Plan shall inure to the benefit of, and be binding upon, theCorporation and its successors or assigns, whether by Corporate Transaction orotherwise, and the Optionees and any holders of unvested shares under the Plan,the legal representatives of their respective estates, their respective heirsor legatees and their permitted assignees.

        INWITNESS WHEREOF, the undersigned being the duly authorized and electedPresident and Chief Executive Officer of the Corporation has executed thisAmended and Restated 1993 Stock Option/Stock Issuance Plan as of May 27,2004. 
|   |   | /s/ Raymond J. Pacini                                    |   |
|--------|--------|----------------------------------------------------------|--------|
|   |   | Raymond J. Pacini*President and Chief Executive Officer* |

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