Exhibit 10.1


CALIFORNIA COASTAL
COMMUNITIES, INC. 

AMENDED AND RESTATED 

1993 STOCK OPTION/STOCK ISSUANCE PLAN




(As approved by the Board of Directors (i) on February 28, 2006 with required

Stockholder approval obtained on June 27, 2006; and on June 14, 2006

without the requirement of Stockholder approval)


ARTICLE ONE

GENERAL


I.   PURPOSE OF THE AMENDED AND
RESTATED PLAN


A.    This
Amended and Restated 1993 Stock Option/Stock Issuance Plan (“Plan”) is intended
to promote the interests of California Coastal Communities, Inc., a
Delaware corporation (the “Corporation”), by providing (i) key employees
(including officers) of the Corporation (or its parent or subsidiary
corporations) who are responsible for the management, growth and financial
success of the Corporation (or its parent or subsidiary corporations), and
(ii) consultants and other independent contractors who provide valuable
services to the Corporation (or its parent or subsidiary corporations) with the
opportunity to acquire a proprietary interest, or otherwise increase their
proprietary interest, in the Corporation as an incentive for them to remain in
the service of the Corporation (or its parent or subsidiary corporations).


B.     The Plan
amends and restates the Corporation’s Amended and Restated 1993 Stock
Option/Stock Issuance Plan (the “1993 Plan”) which was adopted by the Board on
March 4, 2004 and was approved by the Corporation’s stockholders on
May 27, 2004.


II.   DEFINITIONS


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


Board:           the Corporation’s Board of Directors.


Change in Control:    a
change in ownership or control of the Corporation effected through either of
the following transactions:


a.      any
person or related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common control
with, the Corporation) directly or indirectly acquires beneficial ownership
(within the meaning of Rule 13d-3 of the 1934 Act) of securities
possessing more than fifty percent (50%) of the total combined voting power of
the Corporation’s outstanding securities pursuant to a tender or exchange offer
made directly to the Corporation’s stockholders which the Board does not
recommend such stockholders to accept; or


b.      a change
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 more
contested elections for Board membership, to be comprised of individuals who
either (A) have been Board members continuously since the beginning of
such period or (B) have been elected or nominated for election as Board members
during such period by at least a majority of the Board members



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described
in clause (A) who were still in office at the time such election or
nomination was approved by the Board.


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


Code:    the
Internal Revenue Code of 1986, as amended.


Committee:    the committee
of two (2) or more non-employee Board members appointed by the Board to
administer the Plan.


Corporate Transaction:    any
of the following stockholder-approved transactions to which the Corporation is
a party:


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


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


c.      any
reverse merger in which the Corporation is the surviving entity but in which
securities possessing more than fifty percent (50%) of the total combined
voting power of the Corporation’s outstanding securities are transferred to a
person or persons different from the persons holding those securities
immediately prior to such merger.


Employee:     an individual who performs services while in
the 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 the
work to be performed but also as to the manner and method of performance.


Exercise Date:    the
date on which the Corporation shall have received written notice of the option
exercise.


Fair Market
Value:    the Fair Market Value per share
of Common Stock determined in accordance with the following provisions:


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


b.      If the
Common Stock is at the time listed or admitted to trading on any national stock
exchange, then the Fair Market Value shall be the closing selling price per
share of that security on the date in question on the exchange serving as the
primary market for the Common Stock, as such price is officially quoted in the
composite tape of transactions on such exchange. If there is no reported sale
of Common Stock on such exchange on the date



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in question, then
the Fair Market Value shall be the closing selling price per share of that
security on the exchange on the last preceding date for which such quotation
exists.


Hostile Take-Over:    a
change in ownership of the Corporation effected through the following
transaction:


a.                 any
person or related group of persons (other than the Corporation or a person that
directly or indirectly controls, is controlled by, or is under common control
with, the Corporation) directly or indirectly acquires beneficial ownership
(within the meaning of Rule 13d-3 of the 1934 Act) of securities
possessing more than fifty percent (50%) of the Corporation’s outstanding
securities pursuant to a tender or exchange offer made directly to the
Corporation’s stockholders which the Board does not recommend such stockholders
to accept, and


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


Incentive Option:    a
stock option which satisfies the requirements of Code Section 422.


1934 Act:    the
Securities and Exchange Act of 1934, as amended.


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


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


Permanent Disability or Permanently
Disabled:    the inability of the
Optionee or the Participant to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment expected to
result in death or to be of continuous duration of twelve (12) months or
more.


Plan Administrator:    the
Committee in its capacity as the administrator of the Plan.


Service:        the performance of services on a periodic
basis to the Corporation (or any parent or subsidiary corporation) in the
capacity of an Employee, a non-employee member of the board of directors or an
independent consultant or advisor, except to the extent otherwise specifically
provided in the applicable stock option or stock issuance agreement.


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


B.     The
following provisions shall be applicable in determining the parent and
subsidiary corporations of the Corporation:



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—     Any
corporation (other than the Corporation) in an unbroken chain of corporations
ending with the Corporation shall be considered to be a parent of the Corporation, provided each such corporation in the
unbroken chain (other than the Corporation) owns, at the time of the
determination, stock possessing fifty percent (50%) or more of the total
combined voting power of all classes of stock in one of the other corporations
in such chain.


—     Each
corporation (other than the Corporation) in an unbroken chain of corporations
which 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 last
corporation) owns, at the time of the determination, stock possessing fifty
percent (50%) or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain.


III.  STRUCTURE
OF THE PLAN


A.    Stock Programs.    The
Plan shall be divided into two (2) separate components: the Discretionary
Option Grant Program specified in Article Two and the Director Fee Program
specified in Article Three. Under the Discretionary Option Grant Program,
eligible individuals may, at the discretion of the Plan Administrator, be
granted options to purchase shares of Common Stock in accordance with the
provisions of Article Two. Under the Director Fee Program, each non-employee
Board member may, in accordance with the provisions of Article Three, elect to
apply all or any portion of his or her annual retainer fee to the acquisition
of unvested shares of Common Stock.


B.     General Provisions.    Unless
the context clearly indicates otherwise, the provisions of Articles One and
Four shall apply to the Discretionary Option Grant Program and the Director Fee
Program and shall accordingly govern the interests of all individuals under the
Plan.


IV.    ADMINISTRATION
OF THE PLAN


A.    The
Discretionary Option Grant Program shall be administered by the Committee in
its capacity as Plan Administrator. No non-employee Board member shall be
eligible to serve on the Committee if such individual has, within the twelve
(12)-month period immediately preceding the date of his or her appointment to
the Committee, received an option grant or direct stock issuance under this
Plan or any other stock plan of the Corporation (or any parent or subsidiary
corporation), other than pursuant to the Director Fee Program.


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


C.     The
Committee as Plan Administrator shall have full power and authority (subject to
the express provisions of the Plan) to establish rules and regulations for the
proper administration of the Discretionary Option Grant Program and to make
such determinations under, and issue such interpretations of, the provisions of
such program and any outstanding option grants thereunder as it may deem
necessary or advisable. Decisions of the Plan Administrator shall be final and
binding on all parties who have an interest in the Discretionary Option Grant Program
or any outstanding option or unvested share issuance thereunder.


D.     Administration
of the Director Fee Program shall be self-executing in accordance with the
express terms and conditions of Article Three and the Committee as Plan
Administrator shall



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


V.     OPTION
GRANTS AND STOCK ISSUANCES


A.    The persons
eligible to participate in the Discretionary Option Grant Program under Article
Two shall be limited to the following:


—     officers
and other key employees of the Corporation (or its parent or subsidiary
corporations) who render services which contribute to the management, growth
and financial success of the Corporation (or its parent or subsidiary
corporations);


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


—     those
consultants or other independent contractors who provide valuable services to
the Corporation (or its parent or subsidiary corporations).


B.     Non-employee
Board members who serve as Plan Administrator shall not, during their period of service as such, be eligible to
participate in the Discretionary Option Grant Program or in any other stock
option, stock purchase, stock bonus or other stock plan of the Corporation (or
its parent or subsidiary corporations), other than the Director Fee Program, to
the extent they are eligible for participation in those latter programs in
accordance with the provisions of Articles Three.


C.     The Plan
Administrator shall have full authority to determine which eligible individuals
are to receive option grants under the Discretionary Option Grant Program, the
number of shares to be covered by each such grant, the status of the granted
option as either an Incentive Option or a Non-Statutory Option, the time or
times at which each granted option is to become exercisable and the maximum
term for which the option is to remain outstanding.


VI.   STOCK
SUBJECT TO THE PLAN


A.    Shares of
Common Stock shall be available for issuance under the Plan and shall be drawn
from either the Corporation’s authorized but unissued shares of Common Stock or
from reacquired shares of Common Stock, including shares repurchased by the
Corporation on the open market. One Million One Hundred Fifty Nine Thousand
Nine Hundred and Eighty-Four (1,159,984) shares of Common Stock may be issued
over the term of the Plan, subject to adjustment from time to time in
accordance with the provisions of this Section VI. Such authorized share
reserve is comprised of the number of shares of Common Stock which remained
available for issuance under the 1993 Plan prior to this amendment, as reduced
by this amendment.


B.     In no
event shall there be issued over the remaining term of the Plan, from the
effective date of this amendment to the 1993 Plan until the termination of the
Plan pursuant to Article Four, Section IV, more than One Million One
Hundred Fifty Nine Thousand Nine Hundred and Eighty-Four (1,159,984) shares in
the aggregate of Common Stock. The foregoing share limitations shall be subject
to periodic adjustment in accordance with the provisions of Section F of
this Article VI.


C.     Should one
or more outstanding options under this Plan expire or terminate for any reason
prior to exercise in full then the shares subject to the portion of each option
not so exercised shall be available for subsequent issuance under the Plan.
Shares subject to any option or portion 



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thereof
surrendered in accordance with Section IV of Article Two and all share
issuances under the Plan, whether or not the shares are subsequently
repurchased by the Corporation pursuant to its repurchase rights under the
Plan, shall reduce on a share-for-share basis the number of shares of Common
Stock available for subsequent issuance under the Plan. In addition, should the
exercise price of an outstanding option under the Plan be paid with shares of
Common Stock or should shares of Common Stock otherwise issuable under the Plan
be withheld by the Corporation in satisfaction of the withholding taxes
incurred in connection with the exercise of an outstanding option under the
Plan or the vesting of a direct share issuance made under the Plan, then the
number of shares of Common Stock (as the case may be) available for issuance under
the Plan shall be reduced by the gross number of shares for which the option is
exercised or which vest under the share issuance, and not by the net number of
shares of Common Stock actually issued to the holder of such option or share
issuance.


D.     Should any
change be made to the Common Stock issuable under the Plan by reason of any
stock split, stock dividend, recapitalization, combination of shares, exchange
of shares or other change affecting the outstanding Common Stock as a class
without the Corporation’s receipt of consideration, then appropriate
adjustments shall be made to (i) the maximum number and/or class of
securities issuable under the Plan, (ii) the maximum number and/or class
of securities in the aggregate for which any one individual participating in
the Plan may be granted stock options, separately exercisable stock
appreciation rights and direct share issuances over the term of the Plan,
(iii) the number and/or class of securities for which share issuances are
subsequently to be made to non-employee Board members under the Director Fee
Program, and (iv) the number and/or class of securities and price per
share in effect under each option outstanding under the Discretionary Option
Grant. Such adjustments to the outstanding options are to be effected in a
manner which shall preclude the enlargement or dilution of rights and benefits
under such options. The adjustments determined by the Plan Administrator shall
be final, binding and conclusive.


ARTICLE TWO

DISCRETIONARY OPTION GRANT PROGRAM


I.     TERMS
AND CONDITIONS OF OPTIONS


Options granted
pursuant to the Discretionary Option Grant Program shall be authorized by
action of the Plan Administrator and may, at the Plan Administrator’s
discretion, be either Incentive Options or Non-Statutory Options. Individuals
who are not Employees of the Corporation or its parent or subsidiary
corporations may only be granted Non-Statutory Options. Each granted option
shall be evidenced by one or more instruments in the form approved by the Plan
Administrator; provided, however,
that each such instrument shall comply with the terms and conditions specified
below. Each instrument evidencing an Incentive Option shall, in addition, be
subject to the applicable provisions of Section II of this Article Two.


A.    Exercise Price.


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


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



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


b.      full
payment in shares of Common Stock held for the requisite period necessary to
avoid a charge to the Corporation’s earnings for financial reporting purposes
and valued at Fair Market Value on the Exercise Date;


c.      full
payment in a combination of shares of Common Stock held for the requisite
period necessary to avoid a charge to the Corporation’s earnings for financial
reporting purposes and valued at Fair Market Value on the Exercise Date and
cash or check drawn to the Corporation’s order; or


d.      to the
extent the option is exercised for vested shares, full payment through a
broker-dealer sale and remittance procedure pursuant to which the Optionee
shall concurrently provide irrevocable written instructions to (i) a
Corporation-designated brokerage firm to effect the immediate sale of the
purchased shares and remit to the Corporation, out of the sale proceeds
available on the settlement date, sufficient funds to cover the aggregate
exercise price payable for the purchased shares plus all applicable Federal,
state and local income and employment taxes required to be withheld by the
Corporation in connection with such purchase and (ii) the Corporation to
deliver the certificates for the purchased shares directly to such brokerage
firm in order to complete the sale transaction.


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


B.     Term and Exercise of Options.    Each
option granted under this Discretionary Option Grant Program shall be exercisable
at such time or times and during such period as is determined by the Plan
Administrator and set forth in the instrument evidencing the grant. No such
option, however, shall have a maximum term in excess of ten (10) years
from the grant date. During the lifetime of the Optionee, the option, together
with any stock appreciation rights pertaining to such option, shall be
exercisable only by the Optionee and shall not be assignable or transferable by
the Optionee except for a transfer of the option effected by will or by the
laws of descent and distribution following the Optionee’s death.


C.     Termination of Service.


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


—     Should an
Optionee cease Service for any reason (including death or Permanent Disability)
while holding one or more outstanding options under this Article Two, then none
of those options shall (except to the extent otherwise provided pursuant to
subparagraph 3 below) remain exercisable for more than a thirty-six (36)-month
period (or such shorter period determined by the Plan Administrator and set
forth in the instrument evidencing the grant) measured from the date of such
cessation of Service.


—     Any option
held by the Optionee under this Article Two and exercisable in whole or in part
on the date of his or her death may be subsequently exercised by the



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personal representative
of the Optionee’s estate or by the person or persons to whom the option is
transferred pursuant to the Optionee’s will or in accordance with 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 such
shorter period determined by the Plan Administrator and set forth in the
instrument evidencing the grant) or (ii) the specified expiration date of
the option term. Accordingly, upon the occurrence of the earlier event, the
option shall terminate and cease to be outstanding.


—     During the
applicable post-Service exercise period, the option may not be exercised in the
aggregate for more than the number of shares (if any) in which the Optionee is
vested at the time of his or her cessation of Service. Upon the expiration of
the limited post-Service exercise period or (if earlier) upon the specified
expiration date of the option term, each such option shall terminate and cease
to he outstanding with respect to any vested shares for which the option has
not otherwise been exercised. However, each outstanding option shall
immediately terminate and cease to be outstanding, at the time of the Optionee’s
cessation of Service, with respect to any shares for which the option is not
otherwise at that time exercisable or in which the Optionee is not otherwise
vested.


—     Under no
circumstances shall any such option be exercisable after the specified
expiration date of the option term.


—     Should
(i) the Optionee’s Service be terminated for misconduct (including, but
not limited to, any act of dishonesty, willful misconduct, fraud or
embezzlement) or (ii) the Optionee make any unauthorized use or disclosure
of confidential information or trade secrets of the Corporation or its parent
or subsidiary corporations, then in any such event all outstanding options held
by the Optionee under this Article Two shall terminate immediately and cease to
be outstanding.


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


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 the option remains outstanding,
to extend the period of time for which the option is to remain exercisable
following the Optionee’s cessation of Service or death from the limited period
in effect under subparagraph 1 above to such greater period of time as the Plan
Administrator shall deem appropriate. In no event, however, shall such option
be exercisable after the specified expiration date of the option term.


D.     Stockholder Rights.    An
Optionee shall have no stockholder rights with respect to any shares covered by
the option until such individual shall have exercised the option and paid the
exercise price for the purchased shares.



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E.     Repurchase Rights.    The
shares of Common Stock acquired upon the exercise of any Article Two option
grant may be subject to repurchase by the Corporation in accordance with the
following provisions:


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


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


—     The Plan
Administrator shall have the discretionary authority, exercisable either before
or after the Optionee’s cessation of Service, to cancel the Corporation’s
outstanding repurchase rights with respect to one or more shares purchased or
purchasable by the Optionee under this Discretionary Option Grant Program and
thereby accelerate the vesting of such shares in whole or in part at any time.


II.    INCENTIVE
OPTIONS


The terms and
conditions specified below shall be applicable to all Incentive Options granted
under this Article Two. Incentive Options may only be granted to individuals
who are Employees of the Corporation. Options which are specifically designated
as Non-Statutory Options when issued under the Plan shall not be subject to such terms and
conditions.


A.    Dollar Limitation.    The
aggregate Fair Market Value (determined as of the respective date or dates of
grant) of the Common Stock for which one or more options granted to any
Employee under this Plan (or any other option plan of the Corporation or its
parent or subsidiary corporations) may for the first time become exercisable as
incentive stock options under the Federal tax laws during any one calendar year
shall not exceed the sum of One Hundred Thousand Dollars ($100,000). To the
extent the Employee holds two (2) or more such options which become
exercisable for the first time in the same calendar year, the foregoing
limitation on the exercisability of such options as incentive stock options
under the Federal tax laws shall be applied on the basis of the order in which
such options are granted. Should the number of shares of Common Stock for which
any Incentive Option first becomes exercisable in any calendar year exceed the
applicable One Hundred Thousand Dollar ($100,000) limitation, then that option
may nevertheless be exercised in that calendar year for the excess number of
shares as a non-statutory option under the Federal tax laws.


B.     10% Stockholder.    If
any individual to whom an incentive Option is granted is the owner of stock (as
determined under Section. 424(d) of the Code) possessing ten percent (10%) or
more of the total combined voting power of all classes of stock of the
Corporation or any one of its



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parent or subsidiary corporations, then the exercise
price per share of the Common Stock subject to that option shall not be less
than one hundred and ten percent (110%) of the Fair Market Value per share of
that 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 this
Section II, the provisions of Articles One, Two and Four of the Plan shall
apply to all Incentive Options granted hereunder.


III.  CORPORATE
TRANSACTIONS/CHANGES IN CONTROL


A.    In the
event of any Corporate Transaction, each option which is at the time outstanding
under this Article Two shall automatically accelerate so that each such option
shall, immediately prior to the specified effective date for the Corporate
Transaction, become fully exercisable for all of the shares of Common Stock at
the time subject to such option and may be exercised for all or any portion of
such shares. However, an outstanding option under this Article Two shall not so
accelerate if and to the extent: (i) such option is, in connection with
the Corporate Transaction, either to be assumed by the successor corporation or
parent thereof or to be replaced with a comparable option to purchase shares of
the capital stock of the successor corporation or parent thereof,
(ii) such option is to be replaced with a cash incentive program of the
successor corporation which preserves the option spread existing at the time of
the Corporate Transaction and provides for subsequent payout in accordance with
the same vesting schedule applicable to such option or (iii) the
acceleration of such option is subject to other limitations imposed by the Plan
Administrator at the time of the option grant. The determination of option
comparability under clause (i) above shall be made by the Plan
Administrator, and its determination shall be final, binding and conclusive.


B.     Immediately
following the consummation of the Corporate Transaction, all outstanding
options 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.     Each
outstanding option under this Article Two which is assumed in connection with
the Corporate Transaction or is otherwise to continue in effect shall be
appropriately adjusted, immediately after such Corporate Transaction, to apply
and pertain to the number and class of securities which would have been issued
to the option holder, in consummation of such Corporate Transaction, had such
person exercised the option immediately prior to such Corporate Transaction.
Appropriate adjustments shall also be made to the exercise price payable per
share, provided the aggregate
exercise price payable for such securities shall remain the same. In addition,
the class and number of securities available for issuance under the Plan on
both an aggregate and per participant basis following the consummation of the
Corporate Transaction shall be appropriately adjusted.


D.     The Plan
Administrator shall have the discretion, exercisable either at the time the
option is granted or at any time while the option remains outstanding, to
provide (upon such terms as it may deem appropriate) for both (i) the
automatic acceleration of one or more outstanding options granted under this
Article Two Plan which are assumed or replaced in a Corporate Transaction and
do not otherwise accelerate at that time and (ii) the immediate
termination of one or more of the Corporation’s outstanding repurchase rights
which are assigned in connection with such Corporate Transaction and do not
otherwise terminate at that time, in the event the Optionee’s Service should
subsequently terminate within a designated period following the effective date
of such Corporate Transaction.



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E.     The Plan
Administrator shall have the discretionary authority, exercisable either in
advance of any actually-anticipated Change in Control or at the time of an
actual Change in Control, to provide for the automatic acceleration of one or
more outstanding options under this Article Two (and the immediate termination
of one or more of the Corporation’s outstanding repurchase rights under this
Article Two) upon the occurrence of the Change in Control. The Plan
Administrator shall also have full power and authority to condition any such
option acceleration (and the termination of any outstanding repurchase rights)
upon the subsequent termination of the Optionee’s Service within a specified
period following the Change in Control.


F.     Any
options accelerated in connection with the Change in Control shall remain fully
exercisable until the expiration or sooner termination of the option term.


G.     The grant
of options under this Article Two shall in no way affect the right of the
Corporation to adjust, reclassify, reorganize or otherwise change its capital
or business structure or to merge, consolidate, dissolve, liquidate or sell or
transfer all or any part of its business or assets.


H.     The
exercisability as incentive stock options under the Federal tax laws of any
options accelerated under this Section III in connection with a Corporate
Transaction or Change in Control shall remain subject to the dollar limitation
of Section II of this Article Two. To the extent such dollar limitation is
exceeded, the accelerated option shall be exercisable as a non-statutory option
under the Federal tax laws.


IV.    STOCK
APPRECIATION RIGHTS.


A.    Provided
and only if the Plan Administrator determines in its discretion to implement
the stock appreciation right provisions of this Section IV, one or more
Optionees may be granted the right, exercisable upon such terms and conditions
as the Plan Administrator may establish, to surrender all or part of an
unexercised option under this Article Two in exchange for a distribution from
the 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 which
the Optionee is at the time vested under the surrendered option (or surrendered
portion thereof) over (ii) the aggregate exercise price payable for such
vested shares.


B.     No
surrender of an option shall be effective hereunder unless it is approved by
the Plan Administrator. If the surrender is so approved, then the distribution
to which the Optionee shall accordingly become entitled under this
Section IV may be made in shares of Common Stock valued at Fair Market
Value on the option surrender date, in cash, or partly in shares and partly in
cash, as the Plan Administrator shall in its sole discretion deem appropriate.


C.     If the
surrender of an option is rejected by the Plan Administrator, then the Optionee
shall retain whatever rights the Optionee had under the surrendered option (or
surrendered portion thereof) on the option surrender date and may exercise such
rights at any time prior to the later
of (i) five (5) business days after the receipt of the rejection
notice or (ii) the last day on which the option is otherwise exercisable
in accordance with the terms of the instrument evidencing such option, but in
no event may such rights be exercised more than ten (10) years after the
date of the option grant.


D.     One or
more officers of the Corporation subject to the short-swing profit restrictions
of the Federal securities laws may, in the Plan Administrator’s sole
discretion, be granted limited stock appreciation rights with respect to their
outstanding 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 limited
stock appreciation right in effect for at least six (6) months to the
Corporation, to the extent such option is at the time exercisable for
fully-vested shares of Common Stock. The officer shall in return be entitled to
a 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 time
subject to each surrendered option (or surrendered portion of such option) over
(ii) the aggregate exercise price payable for such shares. The cash
distribution 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 Board
shall be required in connection with such option surrender and cash
distribution. Any unsurrendered portion of the option shall continue to remain
outstanding and become exercisable in accordance with the terms of the
instrument evidencing such grant.


E.     The shares
of Common Stock subject to any option surrendered for an appreciation
distribution pursuant to this Section IV shall not be available for
subsequent issuance under the Plan.


ARTICLE THREE

DIRECTOR FEE PROGRAM


I.     ELIGIBILITY


Subject to the availability of shares of Common Stock
under the Plan pursuant to Article One, Section VI of the Plan, each individual
serving as a non-employee Board member shall be eligible to apply all or any
portion of the annual retainer fee otherwise payable to him or her in cash to
the acquisition of unvested shares of Common Stock under this Article Three
Program.


II.    ELECTION
PROCEDURE


A.    Filing.    The
non-employee Board member must make the stock-in-lieu-of-fee election prior to
the start of the calendar year for which the election is to be effective. The
first calendar year for which any such election may be filed shall be the 1994
calendar year. The election must be filed with the Plan Administrator on the
appropriate form provided for this purpose, and the election, once filed, shall
be irrevocable. The election for any upcoming calendar year may be filed at any
time prior to the start of that year, but in no event later than
December 31 of the immediately preceding calendar year. The non-employee
Board member may file a standing election to be in effect for two or more
consecutive calendar years or to remain in effect indefinitely until revoked by
written instrument filed with the Plan Administrator at least six
(6) months prior to the start of the first calendar year for which such
standing election is no longer to remain in effect.


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


III.  SHARE
ISSUANCE


A.    Issue Date.    On the
first trading day in January of the calendar year for which the election is
effective, the portion of the retainer fee subject to such election shall
automatically be applied to the acquisition of the selected shares of Common
Stock by dividing the elected dollar amount by the Fair Market Value per share
of the Common Stock on that trading day. The number



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of issuable shares
shall be rounded down to the next whole share, and the issued shares shall be
held in escrow by the Secretary of the Corporation until the non-employee Board
member vests in those shares. The non-employee Board member shall have full
stockholder rights, including voting, dividend and liquidation rights, with
respect to all issued shares held in escrow on his or her behalf, but such
shares shall not be assignable or transferable while they remain unvested.


B.     Vesting.    Upon
completion of each calendar quarter of Board service during the year for which
the election is in effect, the non-employee Board member shall vest in
one-fourth of the issued shares, and the stock certificate for those shares
shall be released from escrow. Immediate vesting in all the issued shares shall
occur in the event (i) the non-employee Board member should die or become
Permanently Disabled during his or her period of Board service or
(ii) there should occur a Corporate Transaction or Change in Control while
such individual remains in Board service. Should such individual cease Board
service prior to vesting in one or more quarterly installments of the issued
shares, then those unvested shares shall immediately be surrendered to the
Corporation for cancellation, and the non-employee Board member shall not be
entitled to any cash payment or other consideration from the Corporation with
respect to the cancelled shares and shall have no further stockholder rights
with respect to such shares.


IV.    AMENDMENT
OF THE DIRECTOR FEE PROGRAM


A.    Limited Amendments.    The
provisions of this Director Fee Program, together with the unvested share
issuances outstanding under this Article Three, may not be amended at intervals
more frequently than once every six (6) months, other than to the extent
necessary to comply with applicable Federal income tax laws and regulations.


ARTICLE FOUR

MISCELLANEOUS


I.    NO LOANS
OR INSTALLMENT PAYMENTS


A.    The Plan
Administrator shall not, assist any Optionee (including an officer of the
Corporation) in the exercise of one or more options granted to such Optionee
under the Discretionary Option Grant Program, including the satisfaction of any
Federal, state and local income and employment tax obligations arising
therefrom, by (i) authorizing the extension of a loan from the Corporation
to such Optionee or (ii) permitting the Optionee to pay the exercise price
for the purchased shares in installments over a period of years. in connection
with the acquisition of such shares.


II.    AMENDMENT
OF THE PLAN AND AWARDS


A.    The Board
has complete and exclusive power and authority to amend or modify the Plan (or
any component thereof) in any or all respects whatsoever. However, (i) no
such amendment or modification shall adversely affect rights and obligations
with respect to options at the time outstanding under the Plan, unless the
Optionee consents to such amendment, and (ii) any amendment made to the
Director Fee Program (or any stock options or share issuances outstanding
thereunder) shall be in compliance with the limitation of Section IV of
Article Four. In addition, the Board may not, without the approval of the
Corporation’s stockholders, amend the Plan to (i) materially increase the
maximum number of shares issuable under the Plan, or increase the maximum
number of shares of Common Stock for which any one participant may receive
stock options, separately exercisable stock appreciation rights and direct
share issuances over the term of the Plan, except for permissible adjustments
under Section VI.F of Article One, (ii) materially



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modify the
eligibility requirements for plan participation or (iii) materially
increase the benefits accruing to plan participants.


B.     Options to
purchase shares of Common Stock may be granted under the Discretionary Option
Grant Program, which are in excess of the number of shares then available for
issuance under the Plan, provided any excess shares actually issued under the
Discretionary Option Grant Program are held in escrow until stockholder
approval is obtained for a sufficient increase in the number of shares
available for issuance under the Plan. If such stockholder approval is not
obtained within twelve (12) months after the date the first such excess
option grants are made, then (i) any unexercised excess options shall
terminate and cease to be exercisable and (ii) the Corporation shall
promptly refund the purchase price paid for any excess shares actually issued
under the Plan and held in escrow, together with interest (at the applicable
Short Term Federal Rate) for the period the shares were held in escrow.


C.     The Board
will not have the authority, at any time, without the approval of  the holders of a majority of the issued and
outstanding Common Stock to (i) reduce the exercise price of any Incentive
Options or Non-Statutory Options (“Options”) under the Plan that are currently
outstanding; or (ii) cancel any outstanding Options under the Plan and grant in
substitution therefore new Options under the Plan at a lower exercise price,
regardless of whether or not the cancelled Options revert to and again become
available for issuance under the Plan. 
This Section II C of Article Four may not be amended without the
affirmative vote of the holders of a majority of the shares of Common Stock
present or represented and entitled to vote at a duly convened meeting of the
stockholders. Notwithstanding the foregoing, this paragraph will not be
construed to apply to (i) “issuing or assuming a stock option in a transaction
to which section 424(a) applies,” within the meaning of Section 424 of the
Code; (ii) the provisions of Options which relate to adjustments for any
Corporate Transaction or any stock split, stock or cash dividend,
recapitalization, combination of shares, exchange of shares or other change
affecting the outstanding Common Stock as a class.


III.  TAX
WITHHOLDING


A.    The
Corporation’s obligation to deliver shares of Common Stock upon the exercise of
stock options for such shares or the vesting of such shares under the Plan
shall be subject to the satisfaction of all applicable Federal, state and local
income and employment tax withholding requirements.


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


Stock Withholding:    The
holder of the Non-Statutory Option or unvested shares may be provided with the
election to have the Corporation withhold, from the shares of Common Stock
otherwise issuable upon the exercise of such Non-Statutory Option or the
vesting of the shares, a portion of those shares with an aggregate Fair Market
Value equal to the percentage of the applicable Taxes (not to exceed one hundred
percent (100%)) designated by the holder.



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Stock Delivery:    The
Plan Administrator may, in its discretion, provide the holder of the
Non-Statutory Option or the unvested shares with the election to deliver to the
Corporation, at the time the Non-Statutory Option is exercised or the shares
vest, one or more shares of Common Stock previously acquired by such individual
(other than in connection with the option exercise triggering the Taxes) with
an aggregate Fair Market Value equal to the percentage of the Taxes incurred in
connection with such option exercise or share vesting (not to exceed one
hundred percent (100%)) designated by the holder.


IV.    EFFECTIVE
DATE AND TERM OF PLAN


A.    The 1993
Plan originally became effective immediately upon adoption by the Board on
November 29, 1993. The Plan, as amended hereby, will become effective
immediately upon approval by the Company’s stockholders at the Annual Meeting
on June  27, 2006. Stock options may be made under the Plan, as amended
hereby, immediately thereafter upon the effective date of this amendment.


B.     The Plan
shall terminate upon the earlier
of (i) December 31, 2020 or (ii) the date on which all shares
available for issuance under the Plan shall have been issued or cancelled
pursuant to the exercise, surrender or cash-out of the options granted under
the Plan or the issuance of shares (whether vested or unvested) under the
Director Fee Program. If the date of termination is determined under
clause (i) above, then all option grants and unvested share issuances
outstanding on such date shall thereafter continue to have force and effect in
accordance with the provisions of the instruments evidencing such grants or
issuances.


V.     USE
OF PROCEEDS


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


VI.   REGULATORY
APPROVALS


A.    The
implementation of the Plan, the granting of any option under the Plan, the
issuance of any shares under the Director Fee Program and the issuance of
Common Stock upon the exercise or surrender of the option grants made hereunder
shall be subject to the Corporation’s procurement of all approvals and permits
required by regulatory authorities having jurisdiction over the Plan, the
options granted under it and the Common Stock issued pursuant to it.


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


VII.   NO
EMPLOYMENT/SERVICE RIGHTS


Neither the action of the Corporation in establishing
the Plan, nor any action taken by the Plan Administrator hereunder, nor any
provision of the Plan shall be construed so as to grant any individual the
right to remain in the Service of the Corporation (or any parent or subsidiary
corporation) for any period of specific duration, and the Corporation (or any
parent or subsidiary corporation retaining the services of such individual) may
terminate such individual’s Service at any time and for any reason, with or
without cause.



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VIII.   MISCELLANEOUS
PROVISIONS


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


B.     The
provisions of the Plan relating to the exercise of options and the vesting of
shares shall be governed by the laws of the State of California, as such laws
are applied to contracts entered into and performed in such State.


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


IN WITNESS WHEREOF, the undersigned being the duly authorized and
elected President and Chief Executive Officer of the Corporation has executed
this 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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