**Exhibit 10.1**

**CALIFORNIA COASTALCOMMUNITIES, INC. AMENDED AND RESTATED 1993 STOCK OPTION/STOCK ISSUANCE PLAN**

**(As approved by the Board of Directors (i) on February 28, 2006 with requiredStockholder approval obtained on June 27, 2006; and on June 14, 2006without the requirement of Stockholder approval)**

**ARTICLE **ONEGENERAL****

**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.     The Planamends and restates the Corporation’s Amended and Restated 1993 StockOption/Stock Issuance Plan (the “1993 Plan”) which was adopted by the Board onMarch 4, 2004 and was approved by the Corporation’s stockholders onMay 27, 2004.

**II.   DEFINITIONS**

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

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

**Change in Control:**    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.      a changein 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 Board membersduring such period by at least a majority of the Board members

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describedin clause (A) who were still in office at the time such election ornomination was approved by the Board.

**Common Stock:**    sharesof the Corporation’s Common Stock, par value $.05 per share, on a post 1997capital stock combination and one for one hundred (1:100) reverse stock splitbasis.

**Code:    **theInternal Revenue Code of 1986, as amended.

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

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

a.      a mergeror consolidation in which the Corporation is not the surviving entity, exceptfor a transaction the principal purpose of which is to change the state inwhich the Corporation is incorporated,

b.      the sale,transfer or other disposition of all or substantially all of the assets of theCorporation 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 who performs services while inthe employ of the Corporation or one or more parent or subsidiary corporations,subject to the control and direction of the employer entity not only as to thework to be performed but also as to the manner and method of performance.

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

**Fair MarketValue:**    the Fair Market Value per shareof Common Stock determined in accordance with the following provisions:

a.      If theCommon Stock is not at the time listed or admitted to trading on any nationalsecurities exchange but is traded on the Nasdaq National Market, the FairMarket Value shall be the closing selling price per share of that security onthe date in question, as such price is reported by the National Association ofSecurities Dealers through the Nasdaq National Market or any successor system.If there is no reported closing selling price for the Common Stock on the datein question, then the closing selling price per share of that security on thelast preceding date for which such quotation exists shall be determinative ofFair Market Value.

b.      If theCommon Stock is at the time listed or admitted to trading on any national stockexchange, then the Fair Market Value shall be the closing selling price pershare of that security on the date in question on the exchange serving as theprimary market for the Common Stock, as such price is officially quoted in thecomposite tape of transactions on such exchange. If there is no reported saleof Common Stock on such exchange on the date

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in question, thenthe Fair Market Value shall be the closing selling price per share of thatsecurity on the exchange on the last preceding date for which such quotationexists.

**Hostile Take-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 Corporation’s outstandingsecurities pursuant to a tender or exchange offer made directly to theCorporation’s stockholders which the Board does not recommend such stockholdersto 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.

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

**1934 Act:**    theSecurities and Exchange Act of 1934, as amended.

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

**Optionee:    **any person to whom an option is granted underthe Discretionary Option Grant Program in effect under the Plan.

**Permanent Disability or PermanentlyDisabled:**    the inability of theOptionee or the Participant to engage in any substantial gainful activity byreason of any medically determinable physical or mental impairment expected toresult in death or to be of continuous duration of twelve (12) months ormore.

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

**Service:       **the performance of services on a periodicbasis to the Corporation (or any parent or subsidiary corporation) in thecapacity of an Employee, a non-employee member of the board of directors or anindependent consultant or advisor, except to the extent otherwise specificallyprovided in the applicable stock option or stock issuance agreement.

**Take-Over Price:**    the*greater* of (a) the FairMarket Value per share of the Common Stock subject to the particular optionsurrendered to the Corporation in connection with a Hostile Take-Over on thedate such option surrender is effected or (b) the highest reported priceper share of that security paid by the tender offeror in effecting such HostileTake-Over. However, if the surrendered option is an Incentive Option, theTake-Over Price shall not exceed the clause (a) price per share.

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

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—     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 each such corporation in theunbroken chain (other than the Corporation) owns, at the time of thedetermination, stock possessing fifty percent (50%) or more of the totalcombined voting power of all classes of stock in one of the other corporationsin 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,provided each such corporation in the unbroken chain (other than the lastcorporation) owns, at the time of the determination, stock possessing fiftypercent (50%) or more of the total combined voting power of all classes ofstock in one of the other corporations in such chain.

**III.  STRUCTUREOF 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 accordance with theprovisions 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.    ADMINISTRATIONOF 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)-month period immediately preceding the date of his or her appointment tothe Committee, received an option grant or direct stock issuance under thisPlan or any other stock plan of the Corporation (or any parent or subsidiarycorporation), other than pursuant to the Director Fee Program.

B.     Members ofthe 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 Grant Programor 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

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exercise no discretionary functions with respect to option grants orshare issuances made pursuant to those programs.

**V.     OPTIONGRANTS AND STOCK ISSUANCES**

A.    The personseligible to participate in the Discretionary Option Grant Program under ArticleTwo 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);

—     members ofthe Board or the members of the board of directors of any parent or subsidiarycorporation; 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.     The PlanAdministrator shall have full authority to determine which eligible individualsare to receive option grants under the Discretionary Option Grant Program, thenumber of shares to be covered by each such grant, the status of the grantedoption as either an Incentive Option or a Non-Statutory Option, the time ortimes at which each granted option is to become exercisable and the maximumterm for which the option is to remain outstanding.

**VI.   STOCKSUBJECT TO THE PLAN**

A.    Shares ofCommon Stock shall be available for issuance under the Plan and shall be drawnfrom either the Corporation’s authorized but unissued shares of Common Stock orfrom reacquired shares of Common Stock, including shares repurchased by theCorporation on the open market. One Million One Hundred Fifty Nine ThousandNine Hundred and Eighty-Four (1,159,984) shares of Common Stock may be issuedover the term of the Plan, subject to adjustment from time to time inaccordance with the provisions of this Section VI. Such authorized sharereserve is comprised of the number of shares of Common Stock which remainedavailable for issuance under the 1993 Plan prior to this amendment, as reducedby this amendment.

B.     In noevent 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 One Million OneHundred Fifty Nine Thousand Nine Hundred and Eighty-Four (1,159,984) shares inthe aggregate of Common Stock. The foregoing share limitations shall be subjectto periodic adjustment in accordance with the provisions of Section F ofthis Article VI.

C.     Should oneor more outstanding options under this Plan expire or terminate for any reasonprior to exercise in full then the shares subject to the portion of each optionnot so exercised shall be available for subsequent issuance under the Plan.Shares subject to any option or portion 

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thereofsurrendered in accordance with Section IV of Article Two and all shareissuances under the Plan, whether or not the shares are subsequentlyrepurchased by the Corporation pursuant to its repurchase rights under thePlan, shall reduce on a share-for-share basis the number of shares of CommonStock available for subsequent issuance under the Plan. In addition, should theexercise price of an outstanding option under the Plan be paid with shares ofCommon Stock or should shares of Common Stock otherwise issuable under the Planbe withheld by the Corporation in satisfaction of the withholding taxesincurred in connection with the exercise of an outstanding option under thePlan or the vesting of a direct share issuance made under the Plan, then thenumber of shares of Common Stock (as the case may be) available for issuance underthe Plan shall be reduced by the gross number of shares for which the option isexercised or which vest under the share issuance, and not by the net number ofshares of Common Stock actually issued to the holder of such option or shareissuance.

D.     Should anychange 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 shallbe final, binding and conclusive.

**ARTICLE TWODISCRETIONARY OPTION GRANT PROGRAM**

**I.     TERMSAND CONDITIONS OF OPTIONS**

Options grantedpursuant to the Discretionary Option Grant Program shall be authorized byaction 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.      Theexercise price per share of Common Stock subject to any option granted underthis Article Two shall be fixed by the Plan Administrator at the time of thegrant, but in no event shall such exercise price be less than one hundredpercent (100%) of the Fair Market Value per share of that security on the grantdate.

2.      Theexercise price shall become immediately due upon exercise of the option and,subject to the provisions of Section I of Article Four and the instrumentevidencing the grant, shall be payable in one of the following alternativeforms specified below:

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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.      to theextent 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 connection with such purchase and (ii) the Corporation todeliver the certificates for the purchased shares directly to such brokeragefirm in order to complete the sale transaction.

Except to theextent the sale and remittance procedure is utilized in connection with theexercise of the option for vested shares, payment of the exercise price for thepurchased shares must accompany the exercise notice.

B.     *Term and Exercise of Options.*    Eachoption granted under this Discretionary Option Grant Program shall be exercisableat such time or times and during such period as is determined by the PlanAdministrator and set forth in the instrument evidencing the grant. No suchoption, however, shall have a maximum term in excess of ten (10) yearsfrom the grant date. During the lifetime of the Optionee, the option, togetherwith any stock appreciation rights pertaining to such option, shall beexercisable only by the Optionee and shall not be assignable or transferable bythe Optionee except for a transfer of the option effected by will or by thelaws of descent and distribution following the Optionee’s death.

C.     *Termination of Service*.

1.      Thefollowing provisions shall govern the exercise period applicable to anyoutstanding options under this Article Two held by the Optionee at the time ofcessation of Service or death:

—     Should anOptionee cease Service for any reason (including death or Permanent Disability)while holding one or more outstanding options under this Article Two, then noneof those options shall (except to the extent otherwise provided pursuant tosubparagraph 3 below) remain exercisable for more than a thirty-six (36)-monthperiod (or such shorter period determined by the Plan Administrator and setforth in the instrument evidencing the grant) measured from the date of suchcessation of Service.

—     Any optionheld by the Optionee under this Article Two and exercisable in whole or in parton the date of his or her death may be subsequently exercised by the

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personal representativeof the Optionee’s estate or by the person or persons to whom the option istransferred pursuant to the Optionee’s will or in accordance with the laws ofdescent and distribution. The right to exercise such option, however, shalllapse 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.

—     During theapplicable post-Service exercise period, the option may not be exercised in theaggregate for more than the number of shares (if any) in which the Optionee isvested at the time of his or her cessation of Service. Upon the expiration ofthe 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.

—     Under nocircumstances 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 PlanAdministrator shall have complete discretion, exercisable either at the timethe option is granted or at any time while the option remains outstanding, topermit one or more options held by the Optionee under this Article Two to beexercised, during the limited post-Service exercise period applicable undersubparagraph 1 above, not only with respect to the number of vested shares ofCommon Stock for which each such option is exercisable at the time of theOptionee’s cessation of Service but also with respect to one or more subsequentinstallments of vested shares for which the option would otherwise have becomeexercisable had such cessation of Service not occurred.

3.      The PlanAdministrator shall also have full power and authority, exercisable either atthe time the option is granted or at any time while the option remains outstanding,to extend the period of time for which the option is to remain exercisablefollowing the Optionee’s cessation of Service or death from the limited periodin effect under subparagraph 1 above to such greater period of time as the PlanAdministrator shall deem appropriate. In no event, however, shall such optionbe exercisable after the specified expiration date of 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.

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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:

—     The PlanAdministrator shall have the discretion to authorize the issuance of unvestedshares of Common Stock under this Article Two. Should the Optionee ceaseService while holding such unvested shares, the Corporation shall have theright 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.

—     All of theCorporation’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.

—     The PlanAdministrator shall have the discretionary authority, exercisable either beforeor 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.    INCENTIVEOPTIONS**

The terms andconditions specified below shall be applicable to all Incentive Options grantedunder this Article Two. Incentive Options may only be granted to individualswho are Employees of the Corporation. Options which are specifically designatedas Non-Statutory Options when issued under the Plan shall *not*be subject to such terms andconditions.

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) limitation, then that optionmay nevertheless be exercised in that calendar year for the excess number ofshares 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

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parent or subsidiary corporations, then the exerciseprice per share of the Common Stock subject to that option shall not be lessthan one hundred and ten percent (110%) of the Fair Market Value per share ofthat security on the grant date, and the option term shall not exceed five(5) years, measured from the grant date.

Except as modified by the preceding provisions of thisSection II, the provisions of Articles One, Two and Four of the Plan shallapply to all Incentive Options granted hereunder.

**III.  CORPORATETRANSACTIONS/CHANGES IN CONTROL**

A.    In theevent of any Corporate Transaction, each option which is at the time outstandingunder this Article Two shall automatically accelerate so that each such optionshall, immediately prior to the specified effective date for the CorporateTransaction, become fully exercisable for all of the shares of Common Stock atthe time subject to such option and may be exercised for all or any portion ofsuch shares. However, an outstanding option under this Article Two shall not****soaccelerate if and to the extent: (i) such option is, in connection withthe Corporate Transaction, either to be assumed by the successor corporation orparent thereof or to be replaced with a comparable option to purchase shares ofthe capital stock of the successor corporation or parent thereof,(ii) such option is to be replaced with a cash incentive program of thesuccessor corporation which preserves the option spread existing at the time ofthe Corporate Transaction and provides for subsequent payout in accordance withthe same vesting schedule applicable to such option or (iii) theacceleration of 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 parent company.

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.     The PlanAdministrator shall have the discretion, exercisable either at the time theoption 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 shouldsubsequently terminate within a designated period following the effective dateof such Corporate Transaction.

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E.     The PlanAdministrator shall have the discretionary authority, exercisable either inadvance 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.     The grantof 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.    STOCKAPPRECIATION 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(on the option surrender date) of the number of shares of Common Stock in whichthe Optionee 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 thisSection IV may be made in shares of Common Stock valued at Fair MarketValue on the option surrender date, in cash, or partly in shares and partly incash, as the Plan Administrator shall in its sole discretion deem appropriate.

C.     If thesurrender of an option is rejected by the Plan Administrator, then the Optioneeshall retain whatever rights the Optionee had under the surrendered option (orsurrendered portion thereof) on the option surrender date and may exercise suchrights 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.     One ormore officers of the Corporation subject to the short-swing profit restrictionsof the Federal securities laws may, in the Plan Administrator’s solediscretion, be granted limited stock appreciation rights with respect to theiroutstanding options under the Plan. Upon the occurrence of a Hostile Take-Over,the officer shall have a thirty (30)-day period in which he or she may

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surrender any outstanding options with such a limitedstock appreciation right in effect for at least six (6) months to theCorporation, to the extent such option is at the time exercisable forfully-vested shares of Common Stock. The officer shall in return be entitled toa cash distribution from the Corporation in an amount equal to the excess of(i) the Take-Over Price of the vested shares of Common Stock at the timesubject to each surrendered option (or surrendered portion of such option) over(ii) the aggregate exercise price payable for such shares. The cashdistribution payable upon such option surrender shall be made within five(5) days following the date the option is surrendered to the Corporation.Neither the approval of the Plan Administrator nor the consent of the Boardshall be required in connection with such option surrender and cashdistribution. Any unsurrendered portion of the option shall continue to remainoutstanding and become exercisable in accordance with the terms of theinstrument evidencing such grant.

E.     The sharesof 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**

Subject to the availability of shares of Common Stockunder the Plan pursuant to Article One, Section VI of the Plan, each individualserving as a non-employee Board member shall be eligible to apply all or anyportion of the annual retainer fee otherwise payable to him or her in cash tothe acquisition of unvested shares of Common Stock under this Article ThreeProgram.

**II.    ELECTIONPROCEDURE**

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.  SHAREISSUANCE**

A.    *Issue Date.*    On thefirst 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

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of issuable sharesshall be rounded down to the next whole share, and the issued shares shall beheld in escrow by the Secretary of the Corporation until the non-employee Boardmember vests 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.

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 withrespect to the cancelled shares and shall have no further stockholder rightswith respect to such shares.

**IV.    AMENDMENTOF THE DIRECTOR FEE PROGRAM**

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.    NO LOANSOR INSTALLMENT PAYMENTS**

A.    The PlanAdministrator shall not, assist any Optionee (including an officer of theCorporation) in the exercise of one or more options granted to such Optioneeunder the Discretionary Option Grant Program, including the satisfaction of anyFederal, state and local income and employment tax obligations arisingtherefrom, by (i) authorizing the extension of a loan from the Corporationto such Optionee or (ii) permitting the Optionee to pay the exercise pricefor the purchased shares in installments over a period of years. in connectionwith the acquisition of such shares.

**II.    AMENDMENTOF THE PLAN AND AWARDS**

A.    The Boardhas complete and exclusive power and authority to amend or modify the Plan (orany component thereof) in any or all respects whatsoever. However, (i) nosuch amendment or modification shall adversely affect rights and obligationswith respect to options at the time outstanding under the Plan, unless theOptionee consents to such amendment, and (ii) any amendment made to theDirector 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 Section VI.F of Article One, (ii) materially

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modify theeligibility requirements for plan participation or (iii) materiallyincrease the benefits accruing to plan participants.

B.     Options topurchase shares of Common Stock may be granted under the Discretionary OptionGrant Program, which are in excess of the number of shares then available forissuance under the Plan, provided any excess shares actually issued under theDiscretionary Option Grant Program are held in escrow until stockholderapproval is obtained for a sufficient increase in the number of sharesavailable for issuance under the Plan. If such stockholder approval is notobtained within twelve (12) months after the date the first such excessoption grants are made, then (i) any unexercised excess options shallterminate 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.

C.     The Boardwill not have the authority, at any time, without the approval of  the holders of a majority of the issued andoutstanding Common Stock to (i) reduce the exercise price of any IncentiveOptions or Non-Statutory Options (“Options”) under the Plan that are currentlyoutstanding; or (ii) cancel any outstanding Options under the Plan and grant insubstitution therefore new Options under the Plan at a lower exercise price,regardless of whether or not the cancelled Options revert to and again becomeavailable for issuance under the Plan. This Section II C of Article Four may not be amended without theaffirmative vote of the holders of a majority of the shares of Common Stockpresent or represented and entitled to vote at a duly convened meeting of thestockholders. Notwithstanding the foregoing, this paragraph will not beconstrued to apply to (i) “issuing or assuming a stock option in a transactionto which section 424(a) applies,” within the meaning of Section 424 of theCode; (ii) the provisions of Options which relate to adjustments for anyCorporate Transaction or any stock split, stock or cash dividend,recapitalization, combination of shares, exchange of shares or other changeaffecting the outstanding Common Stock as a class.

**III.  TAXWITHHOLDING**

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.     The PlanAdministrator may, in its discretion and in accordance with the provisions ofthis Section III of Article Four and such supplemental rules as the PlanAdministrator may from time to time adopt (including the applicable safe-harborprovisions of Securities and Exchange Commission Rule 16b-3), provide anyor all holders of Non-Statutory Options or unvested shares (other than theunvested shares issued under the Director Fee Program) with the right to useshares of the Corporation’s Common Stock in satisfaction of all or part of theFederal, state and local income and employment tax liabilities incurred by suchholders in connection with the exercise of their options or the vesting oftheir shares (the “Taxes”). Such right may be provided to any such holder ineither or both of the following formats:

*Stock Withholding:*    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 one hundredpercent (100%)) designated by the holder.

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*Stock Delivery:*    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.    EFFECTIVEDATE AND TERM OF PLAN**

A.    The 1993Plan 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 June  27, 2006. Stock options may be made under the Plan, as amendedhereby, immediately thereafter upon the effective date of this amendment.

B.     The Planshall terminate upon the *earlier*of (i) December 31, 2020 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 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.     USEOF PROCEEDS**

Any cash proceeds received by the Corporation from thesale of shares pursuant to option grants or share issuances under the Planshall be used for general corporate purposes

**VI.   REGULATORYAPPROVALS**

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.     No sharesof Common Stock or other assets shall be issued or delivered under this Planunless and until there shall have been compliance with all applicable requirementsof Federal, and state securities laws, including the filing and effectivenessof the Form S-8 registration statement for the shares of Common Stockissuable under the Plan, and all applicable listing requirements of anysecurities exchange on which the Common Stock is then listed for trading.

**VII.   NOEMPLOYMENT/SERVICE RIGHTS**

Neither the action of the Corporation in establishingthe Plan, nor any action taken by the Plan Administrator hereunder, nor anyprovision of the Plan shall be construed so as to grant any individual theright to remain in the Service of the Corporation (or any parent or subsidiarycorporation) for any period of specific duration, and the Corporation (or anyparent or subsidiary corporation retaining the services of such individual) mayterminate such individual’s Service at any time and for any reason, with orwithout cause.

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**VIII.   MISCELLANEOUSPROVISIONS**

A.    Except tothe 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.

**IN WITNESS WHEREOF**, the undersigned being the duly authorized andelected President and Chief Executive Officer of the Corporation has executedthis Amended and Restated 1993 Stock Option/Stock Issuance Plan as of June 27,2006.
|          | /s/Raymond J. Pacini                     |
|----------|------------------------------------------|
|     | Raymond J.  Pacini                       |
| * * | *President  and Chief Executive Officer* |

 

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