Document:

EXHIBIT 10.1

                          MONTEREY GOURMET FOODS, INC.
                             2002 STOCK OPTION PLAN
                       (AS LAST AMENDED ON March 3 , 2006)

                                   ARTICLE 1.
                                  ESTABLISHMENT

1.1  Establishment                                                            1
1.2  Purpose                                                                  1
1.3  Term                                                                     1

                                   ARTICLE 2.
                                   DEFINITIONS

2.1  Definitions                                                              1

                                   ARTICLE 3.
                                 ADMINISTRATION

3.1  Administration by Board or Committee                                     3
3.2  Limitation of Authority With Respect to Outside Director Options         3
3.3  Authority of Officers                                                    3
3.4  Compliance with Section 162(m)                                           3

                                   ARTICLE 4.
                              STOCK SUBJECT TO PLAN

4.1  Shares Subject to Option                                                 4
4.2  Effect of Change in Stock Subject to Plan                                4

                                   ARTICLE 5.
                                EMPLOYEE OPTIONS

5.1  Employee Options Authorized                                              4
5.2  Eligibility for Employee Options                                         4
5.3  Section 162(m) Limitation                                                5
5.4  Terms and Conditions of Employee Options                                 5
5.5  Standard Forms of Agreement for Employee Options                         7

                                   ARTICLE 6.
                            OUTSIDE DIRECTOR OPTIONS

6.1  Outside Director Options Authorized                                      7
6.2  Eligibility for Outside Director Options                                 8
6.3  Terms and Conditions Outside Director Options                            8
6.4  Shareholder Approval                                                     9

                                   ARTICLE 7.
                               GENERAL PROVISIONS

7.1  Transfer of Control                                                      9
7.2  Authority to Vary Terms                                                 10
7.3  Fair Market Value Limitation on Incentive Stock Options                 10
7.4  Provision of Information                                                11
7.5  Options Non-Transferable                                                11
7.6  Termination or Amendment of Plan or Options                             11

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                                   ARTICLE 1.
                                  ESTABLISHMENT

         1.1  ESTABLISHMENT. On August 31, 1993, the Monterey Pasta Company 1993
Employee Incentive Stock Option Plan (the "Initial Plan") was adopted. The
Initial Plan was amended and restated in its entirety and renamed the Monterey
Pasta Company First Amended and Restated 1993 Stock Option Plan effective
October 19, 1994 (the "Effective Date"). That plan was further amended and
restated in its entirety as of August 1, 1996, and renamed the Monterey Pasta
Company Second Amended and Restated 1993 Stock Option Plan (as amended, the
"Plan"), pursuant to resolutions adopted by the Board of Directors on May 7,
1996 and approved by the Company's shareholders on August 1, 1996. The Plan was
further amended by action of the Board on April 30, 2002, to re-adopt the Plan
as the Third Amended and Restated 1993 Stock Option Plan and to extend it for
ten years to April 30, 2012, and to increase the number of shares for which
options may be granted. These actions were approved July 30, 2002, by the
shareholders of the Company. The Plan was last amended by the Board on July 28,
2005, to make numerous technical revisions and corrections, and to remove, under
certain conditions, existing limitations on the post-retirement exercisability
of options granted to directors.

         1.2  PURPOSE. The Purpose of the Plan is to attract, retain and reward
persons providing services to a Participating Company, and to motivate such
persons to contribute to the growth and profits of the Participating Company
Group in the future. The Plan consists of an Employee Stock Option component
plan, providing for the grant of stock options to eligible employees and
consultants, and an Outside Director Stock Option component plan, providing for
the automatic grant of stock options to nonemployee directors of the Company.

         1.3  TERM. All options shall be granted, if at all, on or before April
30, 2012.

                                   ARTICLE 2.
                                   DEFINITIONS

         2.1  DEFINITIONS. Whenever used herein, the following terms shall have
their respective meanings set forth below:

         (a)  "BOARD" means the Board of Directors of the Company.

         (b)  "CODE" means the Internal Revenue Code of 1986, as amended.

         (c)  "COMPANY" means Monterey Gourmet Foods, Inc. and any successor
corporation thereto.

         (d)  "EMPLOYEE OPTION" means an option to purchase Stock granted
pursuant to the terms and conditions of Article 5 below.

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         (e)  "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

         (f)  "INCENTIVE STOCK OPTION" means an incentive stock option as
described in Section 422 of the Code.

         (g)  "NONSTATUTORY STOCK OPTION" means a stock option which shall not
be treated as an incentive stock option as described in Section 422 of the Code.

         (h)  "OPTION" means an Employee Option or an Outside Director Option.

         (i)  "OPTIONEE" means a person who has received one or more Options.

         (j)  "OUTSIDE DIRECTOR" means a person who is (i) a member of the Board
and (ii) not an employee of a Participating Company.

         (k)  "OUTSIDE DIRECTOR OPTION" means an option to purchase Stock
automatically granted pursuant to the terms and conditions of Article 6 below.

         (l)  "PARENT CORPORATION" and "SUBSIDIARY CORPORATION" shall have the
meaning given to such terms in sections 424(e) and 424(f) of the Code,
respectively.

         (m)  "PARTICIPATING COMPANY" means the Company or any present or future
parent or subsidiary corporation of the Company, all of whom are collectively
referred to as the "PARTICIPATING COMPANY GROUP".

         (n)  "RULE 16b-3" means Rule 16b-3 as promulgated under the Exchange
Act and amended from time to time or any successor rule or regulation.

         (o)  "SECTION 162(m)" means Section 162(m) of the Code, as amended by
the Revenue Reconciliation Act of 1993 (P.L. 103-66), and the regulations
promulgated thereunder.

         (p)  "STOCK" means the authorized but unissued common stock of the
Company.

         (q)  "TEN PERCENT OWNER OPTIONEE" means an Optionee who at the time the
Option is granted owns stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of a Participating Company within
the meaning of Section 422(b)(6) of the Code.

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                                   ARTICLE 3.
                                 ADMINISTRATION

         3.1  ADMINISTRATION BY BOARD OR COMMITTEE. The Plan shall be
administered by the Board or a duly appointed committee of the Board which meets
the requirements of Section 162(m)(4)(C)(i) of the Code (the "Committee") and
regulations thereunder, comprised solely of two (2) or more Outside Directors,
having such powers as shall be specified by the Board. Any subsequent references
herein to the Board shall also mean the Committee if such Committee has been
appointed and, unless the powers of the Committee have been specifically
limited, the Committee shall have all of the powers of the Board granted herein,
including, without limitation, the power to terminate or amend the Plan at any
time, subject to the terms of the Plan and any applicable limitations imposed by
law. All questions of interpretation of the Plan or of any Options granted under
the Plan shall be determined by the Committee or the Board, and such
determinations shall be final and binding upon all persons having an interest in
the Plan and/or any Option. The Committee or the Board determines the criteria
upon which Employee Options are granted.

         3.2  LIMITATION OF AUTHORITY WITH RESPECT TO OUTSIDE DIRECTOR OPTIONS.

         Notwithstanding any provision herein to the contrary, the Committee
shall have no authority, discretion, or power to select the Outside Directors of
the Company who will receive Outside Director Options under the Plan, to set the
exercise price of Outside Director Options granted under the Plan, to determine
the number of shares of Stock to be granted under an Outside Director Option or
the time at which such options are to be granted, to establish the duration of
Outside Director Options, or alter any other terms or conditions specified in
the Plan with respect to Outside Director Options, except in the sense of
administering the Plan subject to the provisions of the Plan.

         3.3  AUTHORITY OF OFFICERS. Any officer of a Participating Company
shall have the authority to act on the behalf of the Company with respect to any
matter, right, obligation, or election which is the responsibility of or which
is allocated to the Company herein, provided the officer has apparent authority
with respect to such matter, right, obligation, or election.

         3.4  COMPLIANCE WITH SECTION 162(m). In the event a Participating
Company becomes a "publicly held corporation" as defined in paragraph (2) of
Section 162(m), the Company may establish a committee of outside directors
meeting the requirements of Section 162(m) to approve the grant of Employee
Options which might reasonably be anticipated to result in the payment of
employee remuneration that would otherwise exceed the limit on employee
remuneration deductible for income tax purposes pursuant to Section 162(m).

         In order to satisfy the requirements of Section 162(m) with respect to
the grant of an Option, the following requirements must be satisfied:

         (a)  The performance goals must be determined by a compensation
committee of the Board of the Company which is comprised solely of two or more
Outside Directors;

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         (b)  The material terms under which the remuneration is to be paid,
including the performance goals, must be disclosed to shareholders and approved
by a majority of the vote in a separate shareholder vote before the payment of
such remuneration; and

         (c)  Before any payment of such remuneration, the compensation
committee referred to in clause (a) above shall certify that the performance
goals and any other material terms were in fact satisfied.

                                   ARTICLE 4.
                              STOCK SUBJECT TO PLAN

         4.1  SHARES SUBJECT TO OPTION. Options shall be for the purchase of
Stock, subject to adjustment as provided in Section 4.2. The maximum number of
shares of Stock which may be issued under the Plan shall be three million two
hundred forty thousand (3,240,000) shares. In the event that any outstanding
Option for any reason expires or is terminated or canceled or shares of Stock
subject to repurchase are repurchased by the Company, the shares allocable to
the unexercised portion of such Option, or such repurchased shares, may again be
subject to an Option grant. Notwithstanding the foregoing, any such shares shall
be made subject to a new Option only if the grant of such new Option and the
issuance of such shares pursuant to such new Option would not cause the Plan or
any Option granted under the Plan to contravene Rule 16b-3.

         4.2  EFFECT OF CHANGE IN STOCK SUBJECT TO PLAN. Appropriate adjustments
shall be made in the number and class of shares of Stock subject to the Plan, to
the Section 162(m) limitation set forth in Section 5.3 below, to the automatic
grant of Outside Director Options as provided in Section 6.3(a) below, and to
any outstanding Options and in the exercise price of any outstanding Options in
the event of a stock dividend, stock split, reverse stock split,
recapitalization, combination, reclassification, or like change in the capital
structure of the Company. In the event a majority of the shares which are of the
same class as the shares that are subject to outstanding Options are exchanged
for, converted into, or otherwise become (whether or not pursuant to a Transfer
of Control (as defined in Section 7.1 below)) shares of another corporation (the
"New Shares"), the Company may unilaterally amend the outstanding Options to
provide that such Options are exercisable for New Shares. In the event of any
such amendment, the number of shares and the exercise price of the outstanding
Options shall be adjusted in a fair and equitable manner.

                                   ARTICLE 5.
                                EMPLOYEE OPTIONS

         5.1  EMPLOYEE OPTIONS AUTHORIZED. Employee Options may be either
Incentive Stock Options or Nonstatutory Stock Options.

         5.2  ELIGIBILITY FOR EMPLOYEE OPTIONS. Employee Options may be granted
only to employees (including officers and directors who are also employees) of
the Participating Company Group or to individuals (excluding Outside Directors)
who are rendering services as consultants, advisors, or other independent
contractors to the Participating Company Group. For purposes of the foregoing
sentence, "employees" shall include prospective employees to whom Employee
Options are granted in connection with written offers of employment with the
Participating Company Group and "consultants" or "advisors" shall include
prospective consultants or advisors to whom Employee Options are granted in
connection with written consulting or advising offers with the Participating
Company Group. The Board shall, in its sole discretion, determine which eligible
persons shall be granted Employee Options. Notwithstanding anything to the
contrary herein, an individual who is rendering services as a consultant,
advisor, or other independent contractor or who is a prospective employee,
consultant, or advisor may only be granted a Nonstatutory Stock Option. Eligible
persons may be granted more than one Employee Option.

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         5.3  SECTION 162(m) LIMITATION. Subject to adjustment as provided in
Section 4.2, no persons shall be granted within any fiscal year of the Company
Employee Options which in the aggregate cover more than shares; provided,
however, that the foregoing limit shall be shares with respect to Options
granted to any person during the first fiscal year of such person's employment
with the Company

         5.4  TERMS AND CONDITIONS OF EMPLOYEE OPTIONS. Subject to the
provisions of the Plan, the Committee or the Board shall determine for each
Employee Option (which need not be identical) the number of shares of Stock for
which the Employee Option shall be granted, the exercise price of the Employee
Option, the timing and terms of exercisability and vesting of the Employee
Option, the time of expiration of the Employee Option, the effect of the
Optionee's termination of employment or service, whether the Employee Option is
to be treated as an Incentive Stock Option or as a Nonstatutory Stock Option,
and all other terms and conditions of the Employee Option not inconsistent with
the Plan. Employee Options granted pursuant to the Plan shall be evidenced by
written agreements specifying the number of shares of Stock covered thereby, in
such form as the Committee or the Board shall from time to time establish, which
agreements may incorporate all or any of the terms of the Plan by reference and
shall comply with and be subject to the following terms and conditions:

         (a)  EMPLOYEE OPTION EXERCISE PRICE. The exercise price for each
Employee Option shall be established in the sole discretion of the Committee or
the Board; provided, however, that (i) the exercise price per share for an
Employee Option shall be not less than the fair market value, as determined by
Committee or the Board, of a share of Stock on the date of the granting of the
Employee Option and (ii) no Incentive Stock Option granted to a Ten Percent
Owner Optionee shall have an exercise price per share less than one hundred ten
percent (110%) of the fair market value, as determined by the Committee or the
Board, of a share of Stock on the date of the granting of the Incentive Stock
Option. Notwithstanding the foregoing, an Employee Option (whether an Incentive
Stock Option or a Nonstatutory Stock Option) may be granted with an exercise
price lower than the minimum exercise price set forth above if such Employee
Option is granted pursuant to an assumption or substitution for another option
in a manner qualifying with the provisions of section 424(a) of the Code.

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         (b)  EMPLOYEE OPTION EXERCISE PERIOD. The Committee or the Board shall
have the power to set, including by amendment of an Employee Option, the time or
times within which each Employee Option shall be exercisable or the event or
events upon the occurrence of which all or a portion of each Employee Option
shall be exercisable and the term of each Employee Option; provided, however,
that (i) no Incentive Stock Option shall be exercisable after the expiration of
ten (10) years after the date such Incentive Stock Option is granted, and (ii)
no Incentive Stock Option granted to a Ten Percent Owner Optionee shall be
exercisable after the expiration of five (5) years after the date such Incentive
Stock Option is granted.

         (c)  PAYMENT OF EMPLOYEE OPTION EXERCISE PRICE.

         (i)  FORMS OF PAYMENT AUTHORIZED. Payment of the exercise price for the
number of shares of Stock being purchased pursuant to any Employee Option shall
be made (1) in cash, by check, or cash equivalent, (2) by tender to the Company
of shares of the Company's common stock owned by the Optionee having a value, as
determined by the Committee or the Board (but without regard to any restrictions
or transferability applicable to such stock by reason of federal or state
securities laws or agreements with an underwriter for the Company), not less
than the exercise price, (3) by the Optionee's recourse promissory note in a
form approved by the Company, (4) by the assignment of the proceeds of a sale of
some or all of the shares being acquired upon the exercise of the Employee
Option (including, without limitation, through an exercise complying with the
provisions of Regulation T as promulgated from time to time by the Board of
Governors of the Federal Reserve System), or (5) by any combination thereof. The
Committee or the Board may at any time or from time to time, by adoption of or
by amendment to either of the standard forms of stock option agreement described
in Section 5.6, or by other means, grant Employee Options which do not permit
all of the foregoing forms of consideration to be used in payment of the
exercise price and/or which otherwise restrict one (1) or more forms of
consideration.

         (ii)  TENDER OF COMPANY STOCK. Notwithstanding the foregoing, an
Employee Option may not be exercised by tender to the Company of shares of the
Company's common stock to the extent such tender of stock would constitute a
violation of the provisions of any law, regulation and/or agreement restricting
the redemption of the Company's stock. Unless otherwise provided by the
Committee or the Board, an Employee Option may not be exercised by tender to the
Company of shares of the Company's common stock unless such shares of the
Company's stock either have been owned by the Optionee for more than (6) months
or were not acquired, directly or indirectly, from the Company.

         (iii)  PROMISSORY NOTES. No promissory note shall be permitted if an
exercise using a promissory note would be a violation of any law. Any permitted
promissory note shall be due and payable not more than four (4) years after the

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Employee Option is exercised, and interest shall be payable at least annually
and be at least equal to the minimum interest rate necessary to avoid imputed
interest pursuant to all applicable sections of the Code. The Committee or the
Board shall have the authority to permit or require the Optionee to secure any
promissory note used to exercise an Employee Option with the shares of Stock
acquired on exercise of the Employee Option and/or with other collateral
acceptable to the Company. Unless otherwise provided by the Committee or the
Board, in the event the Company at any time is subject to the regulations
promulgated by the Board of Governors of the Federal Reserve System or any other
governmental entity affecting the extension of credit in connection with the
Company's securities, any promissory note shall comply with such applicable
regulations, and the Optionee shall pay the unpaid principal and accrued
interest, if any, to the extent necessary to comply with such applicable
regulations.

         (iv)  ASSIGNMENT OF PROCEEDS OF SALE. The Company reserves, at any and
all times, the right, in the Company's sole and absolute discretion, to
establish, decline to approve and/or terminate any program for the exercise of
Employee Options by means of assignment of the proceeds of a sale of some or all
of the shares of Stock to be acquired upon such exercise.

         5.5  STANDARD FORMS OF AGREEMENT FOR EMPLOYEE OPTIONS.

         (a)  INCENTIVE STOCK OPTIONS. Unless otherwise provided for by the
Committee or the Board at the time an Employee Option is granted, an Employee
Option designated as an "Incentive Stock Option" shall comply with and be
subject to the terms and conditions set forth in the form of incentive stock
option agreement attached hereto as EXHIBIT A and incorporated herein by
reference.

         (b)  NONSTATUTORY STOCK OPTIONS. Unless otherwise provided for by the
Committee or the Board at the time an Employee Option is granted, an Employee
Option designated as a "Nonstatutory Stock Option" shall comply with and be
subject to the terms and conditions set forth in the form of nonstatutory stock
option agreement attached hereto as EXHIBIT B and incorporated herein by
reference.

         (c)  STANDARD TERM FOR EMPLOYEE OPTIONS. Except as provided in Section
5.4(b) or otherwise provided for by the Board in the grant of an Employee
Option, any Employee Option granted hereunder shall have a term of ten (10)
years.

                                   ARTICLE 6.
                            OUTSIDE DIRECTOR OPTIONS

         6.1  OUTSIDE DIRECTOR OPTIONS AUTHORIZED. Outside Director Options
shall be Nonstatutory Stock Options.

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         6.2  ELIGIBILITY FOR OUTSIDE DIRECTOR OPTIONS. Outside Director Options
may be granted only to Outside Directors.

         6.3  TERMS AND CONDITIONS OF OUTSIDE DIRECTOR OPTIONS. Outside Director
Options granted pursuant to the Plan shall be evidenced by written agreements
specifying the number of shares of Stock covered thereby, in substantially the
form attached hereto as EXHIBIT C (the "Outside Director Option Agreement"),
which written agreement may incorporate all or any of the terms of the Plan by
reference and shall comply with and be subject to the following terms and
conditions:

         (a)  AUTOMATIC GRANT OF OPTIONS. Subject to execution by each Outside
Director of the appropriate Option Agreement, Outside Director Options shall be
granted automatically and without further action of the Board as follows:

         (i)  On the Effective Date, each person serving as an Outside Director
shall be granted an Outside Director Option to purchase ten thousand (10,000)
shares of Stock.

         (ii)  Each person who is newly appointed or elected as an Outside
Director after the Effective Date shall be granted an Outside Director Option to
purchase ten thousand (10,000) shares of Stock upon the date of such initial
appointment or election.

         (iii)  Each Outside Director shall be granted an Outside Director
Option to purchase ten thousand (10,000) shares of Stock on each anniversary
of his or her Anniversary Date (as defined below).

         (iv)  The Anniversary Date of each Outside Director shall be (1) if the
Outside Director held office as an Outside Director on the Effective Date, the
Effective Date and (2) for each other Outside Director, the date upon which he
or she was first granted an Outside Director Option under the Plan.

         (v)  Notwithstanding the foregoing, any Outside Director may elect not
to receive an Outside Director Option granted pursuant to this Section 6.3(a)
by delivering written notice of such election to the Board (1) in the case of
an initial Outside Director Option grant, no later than the Effective Date or,
if later, the upon which such Outside Director commences service on the Board,
or (2) in the case of an anniversary Outside Director Option grant, no later
than six (6) months prior to the applicable Anniversary Date.

         (vi)  Notwithstanding any other provision of the Plan, no Outside
Director Option shall be granted to any individual on his or her Anniversary
Date when he or she is no longer serving as an Outside Director of the Company
on such Anniversary Date.

         (b)  OUTSIDE DIRECTOR OPTION EXERCISE PRICE. The exercise price per
share of Stock subject to an Outside Director Option shall be the fair market
value of a share of Stock on the date of the granting of the Outside Director
Option. For purposes of this Section 6.3(b), where there is a public market
for the Stock, the fair market value per share of Stock shall be the mean of
the bid and asked prices of the Stock on the date of the granting of the

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Outside Director Option, as reported in the Wall Street Journal (or, if not so
reported, as otherwise reported by the National Association of Securities
Dealers Automated Quotation ("NASDAQ") system) or, in the event the Stock is
listed on the NASDAQ National Market System or a national or regional
securities exchange, the fair market value per share of Stock shall be the
closing price on such National Market System or exchange on the date of the
granting of the Outside Director Option, as reported in the Wall Street
Journal. If the date of the granting of an Outside Director Option does not
fall on a day on which the Stock is trading on NASDAQ, the NASDAQ National
Market System or other national or regional securities exchange, the date on
which the Outside Director Option exercise price per share shall be
established shall be the last day on which the Stock was so traded prior to
the date of the granting of the Outside Director Option.

         (c)  VESTING AND EXERCISABILITY OF OUTSIDE DIRECTOR OPTIONS. An
Outside Director Option granted pursuant to the Plan shall have a term of ten
(10) years. Outside Director Options granted pursuant to the Plan shall vest
in three (3) approximately equal annual installments commencing one (1) year
after the date of grant and shall be exercisable after termination of service
as a director as provided in EXHIBIT C.

         (d)  PAYMENT OF OPTION EXERCISE PRICE. Payment of the exercise price
for the number of shares of Stock being purchased pursuant to any Option shall
be made (i) in cash, by check, or in cash equivalent, (ii) by the assignment
of the proceeds of a sale of some or all of the shares being acquired upon the
exercise of an Option (including, without limitation, through an exercise
complying with the provisions of Regulation T as promulgated from time to time
by the Board of Governors of the Federal Reserve System), or (iii) by any
combination thereof. The Company reserves, at any and all times, the right, in
the Company's sole and absolute discretion, to establish, decline to approve
and/or terminate any program and/or procedure for the exercise of Options by
means of an assignment of the proceeds of a sale of some or all of the shares
of Stock to be acquired upon such exercise.

         6.4  SHAREHOLDER APPROVAL. Shareholder approval of the Plan, and of
all amendments of the Plan for which shareholder approval was or is required
by law or regulation, was obtained August 31, 1993, January 6, 1995, August 1,
1996 and July 30, 2002. No Option shall be granted or exercisable under the
Plan prior to any shareholder approval required to be obtained prior to such
grant or exercise by law or regulation, including but not limited to Rule
16b-3 and NASD Marketplace Rule 4350.

                                  ARTICLE 7.
                              GENERAL PROVISIONS

         7.1  TRANSFER OF CONTROL. A "Transfer of Control" shall be deemed to
have occurred in the event any of the following occurs with respect to the
Company:

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         (a)  The direct or indirect sale or exchange by the shareholders of
the Company of all or substantially all of the stock of the Company where the
shareholders of the Company before such sale or exchange do not retain,
directly or indirectly, at least a majority of the beneficial interest in the
voting stock of the Company after such a sale or exchange;

         (b)  A merger or consolidation in which the Company is not the
surviving corporation;

         (c)  A merger or consolidation in which the Company is the surviving
corporation where the shareholders of the Company before such merger or
consolidation do not retain, directly or indirectly, at least a majority of
the beneficial interest in the voting stock of the Company after such a merger
or consolidation;

         (d)  The sale, exchange, or transfer of all or substantially all of
the assets of the Company (other than a sale, exchange, or transfer to one (1)
or more subsidiary corporations (as defined in Section 2.1 above) of the
Company); or

         (e)  A liquidation of the Company.

         In the event of a Transfer of Control, the surviving, continuing,
successor, or purchasing corporation or parent corporation thereof, as the
case may be (the "Acquiring Corporation"), shall either assume the Company's
rights and obligations under outstanding Options or substitute options for the
Acquiring Corporation's stock for such outstanding Options. In the event the
Acquiring Corporation elects not to assume or substitute for such outstanding
Options in connection with the Transfer of Control, any unexercisable and/or
unvested portion of the outstanding Options shall be immediately exercisable
and vested as of the date thirty (30) days prior to the date of the Transfer
of Control. The exercise and/or vesting of any Option that was permissible
solely by reason of this Section 7.1 shall be conditioned upon the
consummation of the Transfer of Control. Any Options which are neither assumed
or substituted for by the Acquiring Corporation in the connection with the
Transfer of Control nor exercised as of the date of the Transfer of Control
shall terminate and cease to be outstanding effective as of the date of the
Transfer of Control.

         7.2  AUTHORITY TO VARY TERMS. The Board shall have the authority from
time to time to vary the terms of the standard forms of stock option agreement
described in Section 5.5 and Section 6.3 either in connection with the grant
or amendment of an individual Option or in connection with the authorization
of a new standard form or forms; provided, however, that the terms and
conditions of such revised or amended standard form or forms of stock option
agreement shall be in accordance with the terms of the Plan as amended from
time to time

         7.3  FAIR MARKET VALUE LIMITATION ON INCENTIVE STOCK OPTIONS. To the
extent that the aggregate fair market value (determined at the time the
Incentive Stock Option is granted) of the stock for which Incentive Stock
Options are exercisable for the first time by an Optionee during any calendar

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year (under the Plan and any other stock option plan of the Participating
Company Group) exceeds One Hundred Thousand Dollars ($100,000), such options
shall be treated as Nonstatutory Stock Options. This paragraph shall be
applied by taking Incentive Stock Options into account in the order in which
they were granted.

         7.4  PROVISIONS OF INFORMATION. Each Optionee shall be given access to
information concerning the Company equivalent to that information generally
made available to holders of the Company's common stock.

         7.5  OPTIONS NON-TRANSFERABLE. During the lifetime of the Optionee,
the Option shall be exercisable only by the Optionee. No Option shall be
assignable or transferable by the Optionee, except by will or by the laws of
descent and distribution.

         7.6  TERMINATION OR AMENDMENT OF PLAN OR OPTIONS. The Board, including
any duly appointed committee of the Board, may terminate or amend the Plan of
any Option at any time; provided, however, that without the approval of the
Company's shareholders, there shall be (a) no increase in the total number of
shares of Stock covered by the Plan (except by operation of the provisions of
Section 4.2), (b) no change in the class of persons eligible to receive
Incentive Stock Options and (c) no expansion in the class of persons eligible
to receive Nonstatutory Stock Options. Furthermore, the provisions of the Plan
addressing eligibility for Outside Director Options and the amount, price and
timing of grants of Outside Director Options shall not be amended more than
once every six (6) months, other than to comport to changes in the Code, or
the rules thereunder. In addition to the foregoing, the approval of the
Company's shareholders shall be sought for any amendment to the Plan or an
Option for which the Board deems shareholder approval necessary in order to
comply with Rule 16b-3. In any event, no amendment may adversely affect any
then outstanding Option or any unexercised portion thereof, without the
consent of the Optionee, unless such amendment is required to enable an Option
designated as a Nonstatutory Stock Option to qualify as an Incentive Stock
Option.

                                      11<PAGE>

EXHIBIT 10.1

                                 PROMISSORY NOTE

$500,000.00                                             Date:  February 21, 2006

For value received the undersigned SUPERIOR GALLERIES, INC. (the "Promisor")
promises to pay to the order of KEVIN LIPTON RARE COINS, INC. (the "Payee"),

At Beverly Hills, California or such other place as the Payee may designate in
writing, the sum of $500,000.00 with interest from February 21, 2006, on the
unpaid principal at the rate of 12.00% percent annually.

The unpaid principal shall be payable on March 23, 2006. Interest for 30 days
shall be paid in advance. All payments on this Note shall be applied first in
payment of any accrued interest and any remainder in payment of principal.

This Note shall be secured by specific coins "Coin Collateral" from Superior's
rare coin inventory as listed in Exhibit A. The Coin Collateral may be held by
the Payee or another third party designated by the Payee.

If any one or more of the provisions of this Note is determined to be
unenforceable, in whole or in part, or any reason, the remaining provisions
shall remain fully operative.

All payments of principal and interest on this Note shall be paid in the legal
currency of the United States. Promisor waives presentment for payment, protest
and notice of protest and nonpayment of this Note.

No renewal or extension of this Note, delay in enforcing any right of the Payee
under this Note, or assignment by Payee of this Note shall affect the liability
of the Promisor. All rights for the Payee under this Note are cumulative and may
be excised concurrently or consecutively at the Payee's option.

This note shall be construed in accordance with the laws of the State of
California.

Signed this 21st day of February, 2006 at Beverly Hills, California.

By:  /s/ Larry Abbott
     -------------------------------------
     Larry Abbott,
     Secretary and Chief Operating Officer

                                    Page 38

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