AMENDED AND RESTATED EMPLOYMENT AGREEMENT

1.

Duties.

1.1

Retention and Board Membership . The Company does hereby retain, engage and employ the Executive as its President and Chief Executive Officer, reporting directly to the Board of Directors of the Company (the “Board”) , and the Executive does hereby accept and agree to such retention, engagement and employment. The Executive shall serve the Company in such positions and shall have the duties, responsibilities and authorities consistent with such positions as well as any other reasonable duties determined by the Board. As long as the Executive remains employed by the Company under this Restated Agreement, the Company shall use its reasonable best efforts to see that he is elected as a member of the Board and as Chairman of the Board. The Executive shall serve as a member of the Board and as Chairman of the Board without any compensation other than provided hereunder for his services as President and Chief Executive Officer. Upon the Executive’s termination of employment hereunder, he shall resign from the Board unless requested to continue by a majority of the other members of the Board.

1.2

No Other Employment. During the Executive’s employment by the Company, the Executive shall devote substantially all of his business time, energy and skill to the performance of his duties for the Company.

1.3

No Breach of Contract . The Executive hereby represents to the Company that the execution and delivery of this Restated Agreement by the Executive and the performance by the Executive of the Executive’s duties hereunder shall not constitute a breach of, or otherwise contravene, the terms of any employment or other agreement or policy to which the Executive is a party or otherwise bound. The Company hereby represents to the Executive that it is authorized to enter into this Restated Agreement and that the execution and delivery of this Agreement to the Executive and the employment of the Executive hereunder shall not constitute a breach of, or otherwise contravene, the terms of any law, agreement or policy by which it is bound.

2.

At-Will Employment.

The Executive and the Company agree that Executive’s employment with the Company is, and shall at all times during the Executive’s employment hereunder be, “at-will” employment. The Company may terminate the Executive’s employment at any time for any reason, with or without Cause, by providing thirty (30) days’ prior written notice to the Executive. The Executive may terminate his employment with the Company by providing thirty (30) days’ prior written notice to the Company. Notwithstanding the foregoing, the Company may relieve the Executive of his duties immediately upon, or at any time during the thirty (30)-day period following, the delivery or receipt of the written termination notice provided by the Company or the Executive hereunder. No provision of this Restated Agreement shall be construed as conferring upon the Executive a right to continue as an employee of the Company, and the “at-will” relationship between the Executive and the Company may not be altered except as agreed by the Executive and the Company in writing.

3.

Compensation.

3.1

Base Salary . The Executive’s Base Salary for the 2008 fiscal year shall be at a rate of $550,000 per year, paid in accordance with the Company’s regular payroll practices in effect from time to time, but not less frequently than monthly. The Executive’s Base Salary shall be reviewed annually and may be adjusted by the Board. As used in this Restated Agreement, “Base Salary” shall mean the Executive’s annual rate of Base Salary as adjusted from time to time.

3.2

Annual Bonus .

shall be deferred and shall vest and be paid out in successive equal annual installments upon the Executive’s completion of each year of continued employment with the Company over a period of years (not to exceed three years) measured from the last day of the performance period to which that Annual Bonus relates (the “Deferral Period”) . The deferred portion of each Annual Bonus shall accrue interest at prime, as such rate is set forth in The Wall Street Journal from time to time, during the Deferral Period, and the unpaid deferred portion of each Annual Bonus, together with such accrued interest, shall immediately vest in the event (i) the Executive terminates employment with Good Reason (as defined in Section 7.2.1) or (ii) the Executive is terminated by the Company other than for Cause (as defined in Section 6.1.1) or (iii) the Executive’s employment terminates by reason of death or Disability (as defined in Section 5.1) or (iv) the Executive’s employment terminates for any reason following a Change in Control or Corporate Transaction. The deferred portion of each Annual Bonus shall be forfeited to the extent the Executive’s employment terminates for any other reason (or under any other circumstances) prior to vesting in that portion. The deferred portion of each Annual Bonus which vests on an accelerated basis shall be paid to the Executive following his Separation from Service, in accordance with the payment provisions of this Restated Agreement governing the particular circumstances under which Executive incurs such Separation from Service; provided, however, that any such accelerated vesting and payment of the deferred portion of each Annual Bonus shall be subject to the Executive’s execution and delivery of an effective release and non-disparagement agreement as required under the terms of this Restated Agreement.

3.2.3

The Compensation Committee may establish different performance objectives or different target levels for each Annual Bonus opportunity provided the Executive hereunder. In addition, the maximum level of such Annual Bonus as a percentage of Base Salary shall be reviewed annually by the Compensation Committee and may be adjusted by the Compensation Committee, including (without limitation) an adjustment to increase the maximum level of Annual Bonus as a percentage of Base Salary.

3.2.4

The portion of any bonus earned by the Executive for a particular fiscal year performance period and not deferred pursuant to Section 3.2.2 shall be paid by the 15th day of the third calendar month following the close of that fiscal year or as soon thereafter as administratively practicable, but in no event shall such payment be made prior to the first day of the fiscal year next succeeding the fiscal year for which that bonus is earned or later than the last day of that succeeding fiscal year.

3.3.1

Future Grants. In addition to the stock options previously granted to the Executive, the Executive shall be eligible for periodic grants of stock options or other equity awards under the Company’s equity award program, subject to the Executive’s continued employment hereunder. The term, exercise price (if

applicable), vesting period, any post-employment provisions (including post-employment exercise periods) and the remaining provisions of each stock option or other equity award granted pursuant to this Section 3.3 shall, subject to the express provisions of this Restated Agreement, be determined by the Compensation Committee at the time of grant.

3.3.2

Acceleration and Extension . Notwithstanding Section 3.3.1, if the Executive’s employment is terminated (i) by the Company for any reason other than for Cause (as defined in Section 6.1.1) or (ii) by the Executive with Good Reason (as defined in Section 7.2.1) or (iii) on account of death or Disability, then each stock option and other equity award granted on or after July 21, 2003 shall thereupon vest as to an additional 25% of the shares of stock subject thereto (or such lesser percentage as to make the award 100% vested). Further, in the event of a Change of Control (as defined in Section 8.1.1) or a Corporate Transaction (as defined in Section 8.1.2), all of the options or other equity awards described in the preceding sentence shall immediately vest in full. To the extent that the equity awards described in this Section 3.3.2 are stock options that have vested in accordance with their normal vesting terms or that otherwise vest on an accelerated basis in accordance with this Section 3.3.2, the period for which such stock options shall remain exercisable for the vested option shares shall be extended until a date at least one year and ninety (90) days after the termination of the Executive’s employment under the circumstance described in clauses (i), (ii) or (iii) of this Section 3.3.2 or the termination of the Executive’s employment under any circumstances following a Change of Control or a Corporate Transaction (or until such later date as may be specified in the award agreement), but in no event will such options be exercisable after the expiration of their original ten-year (or shorter) maximum terms. Each of the Executive’s stock options granted prior to July 21, 2003 shall be amended to add the foregoing extended exercise provisions at such time, if any, that the Compensation Committee determines, in its sole discretion, that such amendment and the related accounting charges would not in any way adversely affect, when relevant, the Company’s condition (financial or otherwise), financial statements, earnings, earnings per share or other relevant Company information.

4.2.1

Expense Reimbursement. The Executive is authorized to incur reasonable expenses in carrying out his duties and responsibilities under this Restated Agreement, and the Company shall reimburse him for all business expenses incurred in connection with carrying out the business of the Company. Such

reimbursements shall be subject to the Company’s then-existing policies and procedures for reimbursement of business expenses, including submission of written requests for reimbursement, accompanied by supporting documentation and receipts. The Executive must submit proper documentation for each such expense within sixty (60) days after the later of (i) the Executive’s incurrence of such expense or (ii) the Executive’s receipt of the invoice for such expense. If such expense qualifies hereunder for reimbursement, then the Company will reimburse the Executive for that expense within fifteen (15) business days thereafter.

4.2.2

Perquisites. During the Executive’s employment hereunder, the Executive shall be entitled to participate in any of the Company’s executive fringe benefit arrangements provided to its senior level executives generally. In addition, the Executive shall be entitled to the use of a Company car, which shall be a Mercedes Benz SL600 or equivalent and which shall be replaced with a new Mercedes Benz SL600 or equivalent no less frequently than once every three years.

4.2.3

Legal Expenses. The Company shall promptly reimburse the Executive for his legal expenses, up to a maximum of $3,000, incurred in obtaining advice with respect to the changes effected by this Restated Agreement. Executive must submit proper documentation for such legal expenses within sixty (60) days after the Executive’s receipt of the invoice for such expenses, and the Company will reimburse the Executive for those expenses within fifteen (15) business days thereafter.

4.2.4

Conditions to Reimbursement. The following conditions shall be applicable to each expense reimbursable pursuant to the provisions of this Restated Agreement: (i) no such expense shall be reimbursed later than the close of the calendar year following the calendar year in which that expense is incurred, (ii) the amounts eligible for reimbursement in any one calendar year shall not affect the amounts reimbursable in any other calendar year and (iii) the right to such reimbursement may not be liquidated or exchanged for any other benefit.

4.4.1

Notwithstanding anything contained herein to the contrary, the Executive and his spouse on the date of his termination of employment (his “Spouse”) shall each be entitled to the retiree health care coverage described herein for the remainder of his or her life following the termination of the Executive’s employment for any reason. The retiree health care coverage to be provided by the Company to the Executive and his Spouse until they become entitled to Medicare coverage shall be comparable to the health care coverage provided by the Company to the

Executive and his Spouse immediately prior to the termination of the Executive’s employment. Once the Executive or his Spouse becomes covered by Medicare, the Company shall provide retiree health care coverage that, together with such Medicare coverage, is comparable to the coverage that the Company provided to him or her immediately prior to the Executive’s termination of employment.

4.4.2

The Executive and his Spouse shall, following his termination of employment with the Company, elect to continue health care coverage in accordance with the provisions of Section 4980B of the Code and Section 10116.5 of the California Insurance Code (“COBRA”) . For the period of such COBRA coverage, the retiree health care coverage for the Executive and his Spouse shall be provided under the Company’s group health plan. Following the expiration of the applicable period of COBRA coverage, such retiree health care coverage shall continue to be provided under one or more of the Company’s group health care plans; provided, however, that to the extent such group health care coverage is not available, the retiree health coverage for the Executive and his Spouse shall be provided through health insurance policy or policies acquired by the Executive and/or his Spouse that provides the required level of health care coverage hereunder, until each of them attains age sixty-five (65) and thereafter through insurance policy or policies providing Medicare supplemental coverage. The Company shall reimburse the Executive for the cost of such retiree health care coverage for the Executive and his Spouse during each applicable period of coverage hereunder as follows:

5.

Death or Disability.

5.1

Definition of Disabled and Disability. For purposes of this Restated Agreement, the terms “Disabled” and “Disability” shall mean the Executive’s inability, because of physical or mental illness or injury, to perform his customary duties pursuant to this Restated Agreement, with or without reasonable accommodation, and the continuation of such disabled condition for a period of one hundred eighty (180) continuous days as determined by an approved medical doctor. For purposes hereof, an approved medical doctor shall mean a doctor selected by the Company and the Executive. If the Company and the Executive cannot agree on a medical doctor, each shall select a medical doctor, and the two doctors shall select a third who shall be the approved medical doctor for this purpose.

5.2

Termination Due to Death or Disability. If the Executive dies or becomes Disabled while employed hereunder and prior to a Change of Control (as defined in Section 8.1.1) or a Corporate Transaction (as defined in Section 8.1.2), this Restated Agreement and the

Executive’s employment shall automatically cease and terminate as of the date of the Executive’s death or the date of Disability (which date shall be determined in accordance with Section 5.1 and referred to as the “Disability Date”), as the case may be. In the event of the termination of the Executive’s employment due to his death or Disability, the Executive (or, in the event of his death, his estate) shall be entitled to receive:

6.

Termination by the Company.

6.1

Termination For Cause.

(i)

the Executive’s repeated failure to perform any essential duty of his position other than due to Disability or such illness or injury as described in and determined under Section 5.1 that would result in Disability if it continued for the period of time prescribed in Section 5.1;

(ii)

the Executive’s commitment of an act that constitutes gross misconduct and is injurious to the Company, any subsidiary of the Company or any successor to the Company;

(iii)

the Executive’s conviction of or pleading guilty or nolo contendere to any felony involving theft, embezzlement, dishonesty or moral turpitude;

(iv)

the Executive’s commission of an act of fraud against, or the misappropriation of property belonging to, the Company, any subsidiary of the Company or any successor to the Company;

(v)

the Executive’s commitment of an act of dishonesty in connection with his responsibilities as an employee that is intended to result in his personal enrichment or the personal enrichment of his family or others; or

(vi)

the Executive’s material breach of this Restated Agreement or other agreement between the Executive and the Company or any subsidiary of the Company or successor to the Company.

should Executive fail to cure the stated reason within such cure period. In the event of the termination of the Executive’s employment hereunder due to a termination by the Company for Cause prior to a Change of Control (as defined in Section 8.1.1) or a Corporate Transaction (as defined in Section 8.1.2), then the Executive shall be entitled to receive:

6.2

Termination Without Cause.