Document:

<PAGE>

                       Ultimate Sports Entertainment, Inc.

                                                  2444 Wilshire Blvd, Suite 414
                                                  Santa Monica, CA 90404
                                                  Telephone: (310) 829-9590

                                  October 20, 1999

Mr. Michael Lauer
Lancer Partners LP
375 Park Avenue
NewYork, N.Y. 10152

Dear Mr. Lauer:

    This letter set forth the terms of the loan transaction discussed with
you by Martin J. Burke, III.

Lender:                    Lancer Partners LP or its designee.

Borrower:                  Ultimate Sports Entertainment, Inc (the "Company").

Amount of loan:            $600,000

Maturity date:             4 months from date of advance.

Interest:                  10% per annum, payable at maturity.

Addition compensation
for making loan:         The Company will issue to you without any cost to the
                         Lender 250,000 shares of common stock of the Company.
                         The Company will agree to use its best efforts to
                         include these shares in the next registration statement
                         filed by the Company with the Securities Exchange
                         Commission.

Special default right:   In the event the Company fails to repay the loan,
                         together with interest accrued thereon, by its maturity
                         date and such failure continues for a period of 15
                         days, then Lender shall receive without any cost to the
                         Lender 250,000 additional shares for each 80 day period
                         that such, loan remains unpaid following maturity date.

Convertibility:          The Lender has the right at any time prior to receiving
                         repayment of the loan to convert the loan into shares
                         of common stock of the Company at $1.00 per share.

<PAGE>

Mr. Michael Lauer
October 2O, 1999
Page 2.

Special options:         To the extent that the loan (or additional loans made
                         by the Lender up to an aggregate of $1,500,000) is
                         converted into stock pursuant to the foregoing
                         conversion right, Lender shall have the option to
                         purchase aggregately from Jay Botchman, Martin J.
                         Burke, III and Frederick R. Licht at 10 cents per
                         share, such number of shares as equals one share for
                         each $3 of loan principal being so converted, but in no
                         event shall this option relate to more than 500,000
                         shares. This option, if exercised, shall be exercised
                         in such a manner so that Messrs. Botchman, Burke and
                         Licht each deliver one-third of the amount of shares
                         subject to the exercise of the option. Jay Botchman,
                         Martin J. Burke, III and Frederick R. Licht affix their
                         signatures below for the purpose of confirming the
                         grant of this special option.

         If the above accurately reflects the terms of the loan transaction
agreed to between you and Martin J. Burke, III please sign below to indicate
your agreement thereto.

                                            Very truly yours,

                                            Ultimate Sports Entertainment, Inc.

                                            By: /s/Frederick R. Licht
                                                ----------------------------
                                                Frederick R. Licht,
President

The above is confirmed and agreed to:

Lancer Partners LP

By:
Michael Lauer

Agreed to with respect to the special option referred to above.

Jay Botchman

Martin Burke

/s/ Frederick R. Licht
----------------------
Frederick R. Licht<PAGE>

EXHIBIT 10.17

                       ULTIMATE SPORTS ENTERTAINMENT, INC.

                                STOCK OPTION PLAN

                                   ARTICLE 1.
                               GENERAL PROVISIONS

         1.1.     PURPOSE OF THE PLAN

         This Stock Option Plan (the "Plan") is intended to promote the
interests of Ultimate Sports Entertainment, Inc., a Delaware corporation,
(the "Corporation") by providing eligible persons with the opportunity to
acquire or increase their proprietary interest in the Corporation as an
incentive for them to remain in the Service of the Corporation.

         Capitalized terms shall have the meanings assigned to such terms in
the attached Appendix.

         1.2.     ADMINISTRATION OF THE PLAN

                  a. Prior to the Section 12(g) Registration Date, the Plan
shall be administered by the Board or a committee of the Board.

                  b. Beginning with the Section 12(g) Registration Date, the
Primary Committee shall have sole and exclusive authority to administer the
Plan with respect to Section 16 Insiders. Administration of the Plan with
respect to all other persons eligible under the Plan may, at the Board's
discretion, be vested in the Primary Committee or a Secondary Committee, or
the Board may retain the power to administer the Plan with respect to all
such persons.

                  c. Members of the Primary Committee or any Secondary
Committee shall serve for such period of time as the Board may determine and
may be removed by the Board at any time. The Board may also terminate the
functions of any Secondary Committee at any time and reassume all powers and
authority previously delegated to such committee.

                  d. Each Plan Administrator shall, within the scope of its
administrative functions under the Plan, have full power and authority to
establish such rules and regulations as it may deem appropriate for proper
administration of the Plan and to make such determinations under, and issue
such interpretations of, the provisions of the Plan and any outstanding
options thereunder as it may deem necessary or advisable. Decisions of the
Plan Administrator within the scope of its administrative functions under the
Plan shall be final and binding on all parties who have an interest in the
Plan under its jurisdiction or any option thereunder.

                  e. Service on the Primary Committee or the Secondary
Committee shall constitute service as a Board member, and members of each
such committee shall accordingly be entitled to full indemnification and
reimbursement as Board members for their service on such

<PAGE>

committee. No member of the Primary Committee or the Secondary Committee
shall be liable for any act or omission made in good faith with respect to
the Plan or any option grants under the Plan.

                  f. Each Plan Administrator shall, within the scope of its
administrative jurisdiction under the Plan, have full authority (subject to
the provisions of the Plan) to determine which eligible persons are to
receive option grants, the time or times when such option grants are to be
made, 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 option is to become exercisable, the vesting
schedule (if any) applicable to the option shares, the acceleration of such
vesting schedule, the maximum term for which the option is to remain
outstanding, whether the option shares shall be subject to rights of
repurchase and/or rights of first refusal, and all other terms and conditions
of the option grants.

         1.3.     ELIGIBILITY

         The following persons shall be eligible to participate in the Plan:

                  a. Employees, as to both Incentive and/or Non-Statutory
Options,

                  b. non-employee members of the Board or the board of
directors of any Parent or Subsidiary as to Non-Statutory Options, and

                  c. consultants and other independent advisors who provide
Services to the Corporation or any Parent or Subsidiary, as to Non-Statutory
Options.

         1.4.     STOCK SUBJECT TO THE PLAN

                  a. The stock issuable under the Plan shall be shares of
authorized but unissued Common Stock, including shares repurchased by the
Corporation on the open market. The maximum number of shares of Common Stock
which may be issued over the term of the Plan shall not exceed one million
(1,000,000) shares, which number of shares may be changed from time to time
in accordance with Section 3.4 below.

                  b. Shares of Common Stock subject to outstanding options
shall be available for subsequent issuance under the Plan to the extent the
options expire or terminate for any reason prior to exercise in full.
However, should the Exercise Price 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 option under the Plan, then the number of
shares of Common Stock available for issuance under the Plan shall be reduced
by the gross number of shares for which the option is exercised, and not by
the net number of shares of Common Stock issued to the holder of such option.

<PAGE>

                  c. Should any change be made to the Common Stock 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, appropriate
adjustments shall be made to (i) the maximum number and/or class of
securities issuable under the Plan, (ii) the number and/or class of
securities for which any one person may be granted options per calendar year,
and (iii) the number and/or class of securities and the Exercise Price in
effect under each outstanding option in order to prevent the dilution or
enlargement of benefits thereunder. The adjustments determined by the Plan
Administrator shall be final, binding, and conclusive.

                                   ARTICLE 2.
                              OPTION GRANT PROGRAM

         2.l.     OPTION TERMS

         Each option shall be evidenced by one or more documents in the form
approved by the Plan Administrator; provided, however, that each such
document shall comply with the terms specified below. Each document
evidencing an Incentive Option shall, in addition, be subject to the
provisions of Section 2.2 of the Plan, below.

                  a.  Exercise Price

                      (1) The Exercise Price shall be fixed by the Plan
Administrator but shall not be less than one hundred percent (100%) of the
Fair Market Value per share of Common Stock on the Grant Date.

                      (2) The Exercise Price shall become immediately due
upon exercise of the option and shall, subject to the provisions of Article
3. 1, and the documents evidencing the option, be payable in one or more of
the forms specified below:

                          (a) cash or check made payable to the Corporation,

                          (b) 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, or

                          (c) to the extent the option is exercised for
vested shares, through a special sale and remittance procedure pursuant to
which the Optionee shall concurrently provide irrevocable written
instructions to (a) 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 by reason of such exercise and (b) the
Corporation to deliver the certificates for the Purchased Shares directly to
such brokerage firm in order to complete the sale.

<PAGE>

                      Except to the extent the sale and remittance procedure
is utilized, payment of the Exercise Price for the Purchased Shares must be
made on the Exercise Date.

                  b.  Exercise and Term of Options. Each option shall be
exercisable at such time or times, during such period and for such number of
shares as shall be determined by the Plan Administrator and set forth in the
documents evidencing the option. However, no option shall have a term in
excess of ten (10) years measured from the Grant Date.

                  c.  Effect of Termination of Service

                      (1) The following provisions shall govern the exercise
of any options held by the Optionee at the time of cessation of Service:

                          (a) Any option outstanding at the time of the
         Optionee's cessation of Service for any reason except death,
         Permanent Disability or Misconduct shall remain exercisable for a
         three (3) month period thereafter, provided no option shall be
         exercisable after the Expiration Date.

                          (b) Any option outstanding at the time of the
         Optionee's cessation of Service due to death or Permanent Disability
         shall remain exercisable for a twelve (12) month period thereafter,
         provided no option shall be exercisable after the Expiration Date.
         Subject to the foregoing, any option exercisable in whole or in part
         by the Optionee at the time of death may be exercised subsequently by
         the 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.

                          (c) Should the Optionee's Service be terminated for
         Misconduct, then all outstanding options held by the Optionee shall
         terminate immediately and cease to be outstanding.

                          (d) During the applicable post-Service exercise
         period, the option may not be exercised in the aggregate for more
         than the number of shares for which the option is exercisable on the
         date of the Optionee's cessation of Service; the option shall,
         immediately upon the Optionee's cessation of Service, terminate and
         cease to be outstanding to the extent the option is not otherwise at
         that time exercisable. Upon the expiration of the applicable exercise
         period or (if earlier) upon the Expiration Date, the option shall
         terminate and cease to be outstanding for any shares for which the
         option has not been exercised.

                      (2) The Plan Administrator shall have the discretion,
exercisable either at the time an option is granted or at any time while the
option remains outstanding, to:

                          (a) extend the period of time for which the option
         is to remain exercisable following the Optionee's cessation of
         Service from the period otherwise in

<PAGE>

         effect for that option to such greater period of time as the Plan
         Administrator shall deem appropriate, but in no event beyond the
         Expiration Date, and/or

                          (b) permit the option to be exercised, during the
         applicable post-Service exercise period, not only with respect to
         the number of shares of Common Stock for which such option is
         exercisable at the time of the Optionee's cessation of Service but
         also with respect to one or more additional shares that would have
         vested under the option had the Optionee continued in Service.

                  d. Stockholder Rights. The holder of an option shall have
no stockholder rights with respect to the shares subject to the option until
such person shall have exercised the option, paid the Exercise Price, and
become a holder of record of the Purchased Shares.

                  e. Limited Transferability of Options. During the lifetime
of the Optionee, Incentive Options may be exercised only by the Optionee, and
shall not be assignable or transferable except by will or the laws of descent
and distribution following the Optionee's death. Non-Statutory Options may be
assigned or transferred in whole or in part only (i) during the Optionee's
lifetime if in connection with the Optionee's estate plan to one or more
members of the Optionee's immediate family (spouse and children) or to a
trust established exclusively for the benefit of one or more such immediate
family members, or (ii) by will or the laws of descent and distribution
following the Optionee's death. The assigned portion may only be exercised by
the person or persons who acquire a proprietary interest in the option
pursuant to the assignment. The terms applicable to the assigned portion
shall be the same as those in effect for the option immediately prior to such
assignment and shall be set forth in such documents issued to the assignee as
the Plan Administrator may deem appropriate.

         2.2. INCENTIVE OPTIONS

         The terms specified below shall apply to all Incentive Options.
Except as modified by the provisions of this Section 2.2, all the provisions
of this Plan shall apply to Incentive Options. Options specifically
designated as Non-Statutory Options when issued under the Plan shall NOT be
subject to the terms of this Section 2.2.

                  a. Eligibility. Incentive Options may only be granted to
Employees.

                  b. Exercise Price. The Exercise Price shall not be less
than one hundred percent (100%) of the Fair Market Value per share of Common
Stock on the Grant Date.

                  c. Dollar Limitation. The aggregate Fair Market Value of
the shares of Common Stock (determined as of the respective date or dates of
grant) for which one or more options granted to any Employee under the Plan
(or any other option plan of the Corporation or any Parent or Subsidiary) may
for the first time become exercisable as Incentive Options during any one (1)
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

<PAGE>

first time in the same calendar year, the foregoing limitation on the
exercisability of such options as Incentive Options shall be applied in the
order in which such options are granted.

                  d. 10% Stockholder. If an Employee to whom an Incentive
Option is granted is a 10% Stockholder, then the Exercise Price shall not be
less than one hundred ten percent (110%) of the Fair Market Value per share
of Common Stock on the Grant Date, and the option term shall not exceed five
(5) years measured from the Grant Date.

                  e. Holding Period. Shares purchased pursuant to an option
shall cease to qualify for favorable tax treatment as Incentive Option Shares
if and to the extent Optionee disposes of such shares within two (2) years of
the Grant Date or within one (1) year of Optionee's purchase of said shares.

         2.3.     CORPORATE TRANSACTION/CHANGE IN CONTROL

                  a. In the event of any Corporate Transaction, the Board of
Directors shall have the sole discretion to elect that each outstanding
option shall automatically accelerate so that each such option shall,
immediately prior to the effective date of 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 any or all of those shares as
fully-vested shares of Common Stock. The Board may exercise its discretion to
accelerate the vesting of options whether or not (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 spread existing on
the unvested option shares at the time of the Corporate Transaction and
provides for subsequent payout in accordance with the same vesting schedule
applicable to such option, except to the extent that 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, whose determination
shall be final, binding and conclusive.

                  b. In the event of any Corporate Transaction, the Board of
Directors shall have sole discretion to elect that all outstanding repurchase
rights may also be terminated automatically whether or not those repurchase
rights are to be assigned to the successor corporation (or Parent thereof) in
connection with such Corporate Transaction.

                  c. The Plan Administrator's discretion under Sections
2.3.a. and b. above shall be exercisable either at the time the option is
granted or at any time while the option remains outstanding, whether or not
those options are to be assumed or replaced (or those repurchase rights are
to be assigned) in the Corporate Transaction. The Plan Administrator shall
also have the discretion to grant options which do not accelerate whether or
not such options are assumed (and to provide for repurchase rights that do
not terminate whether or not such rights are assigned) in connection with a
Corporate Transaction.

<PAGE>

                  d. If the Board of Directors elects the automatic
acceleration of some or all of the outstanding options upon the occurrence of
a Corporate Transaction, all such outstanding options shall terminate and
cease to be outstanding, except to the extent assumed by the successor
corporation (or parent thereof) immediately following the consummation of the
Corporate Transaction.

                  e. Each option which is assumed in connection with a
Corporate Transaction shall be appropriately adjusted, immediately after such
Corporate Transaction, to apply to the number and class of securities that
would have been issuable to the Optionee in consummation of such Corporate
Transaction had the option been exercised immediately prior to such Corporate
Transaction. Appropriate adjustments shall also be made to (i) the number and
class of securities available for issuance under the Plan following the
consummation of such Corporate Transaction, (ii) the exercise price payable
per share under each outstanding option, provided the aggregate exercise
price payable for such securities shall remain the same and (iii) the maximum
number of securities and/or class of securities for which any one person may
be granted stock options.

                  f. The Plan Administrator shall have the discretion,
exercisable at the time the option is granted or at any time while the option
remains outstanding, to provide for the automatic acceleration of any options
assumed or replaced in a Corporate Transaction that do not otherwise
accelerate at that time (and the termination of any of the Corporation's
outstanding repurchase rights that do not otherwise terminate at the time of
the Corporate Transaction) in the event the Optionee's Service should
subsequently terminate by reason of an Involuntary Termination within
eighteen (18) months following the effective date of such Corporate
Transaction. Any options so accelerated shall remain exercisable for shares
until the earlier of (i) the expiration of the option term or (ii) the
expiration of the one (l)-year period measured from the effective date of the
Involuntary Termination.

                  g. 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 (i) provide for the automatic acceleration of
one or more outstanding options (and the automatic termination of one or more
outstanding repurchase rights) upon the occurrence of a Change in Control or
(ii) condition any such option acceleration (and the termination of any
outstanding repurchase rights) upon the subsequent Involuntary Termination of
the Optionee's Service within a specified period (not to exceed eighteen (18)
months) following the effective date of such Change in Control. Any options
accelerated in connection with a Change in Control shall remain fully
exercisable until the expiration or sooner termination of the option term.

                  h. The portion of any Incentive Option accelerated in
connection with a Corporate Transaction or Change in Control shall remain
exercisable as an Incentive Option only to the extent the applicable One
Hundred Thousand Dollar ($100,000) limitation is not exceeded. To the extent
such dollar limitation is exceeded, the accelerated portion of such option
shall be exercisable as a Non-Statutory Option under the federal tax laws.

                  i. The grant of options under the Plan shall in no way
affect the right of the Corporation to adjust, reclassify, reorganize or
otherwise change its capital or business structure

<PAGE>

or to merge, consolidate, dissolve, liquidate or sell or transfer all or any
part of its business or assets.

                                   ARTICLE 3.
                                  MISCELLANEOUS

         3.1.     FINANCING

                  a. The Plan Administrator may permit any Optionee to pay
the option Exercise Price by delivering a promissory note payable in one or
more installments. The terms of any such promissory note (including the
interest rate and the terms of repayment) shall be established by the Plan
Administrator in its sole discretion. Promissory notes may be authorized with
or without security or collateral. In all events, the maximum credit
available to the Optionee may not exceed the sum of (i) the aggregate option
Exercise Price payable for the Purchased Shares plus (ii) the amount of any
federal, state and local income and employment tax liability incurred by the
Optionee in connection with the option exercise.

                  b. The Plan Administrator may, in its discretion, determine
that one or more such promissory notes shall be subject to forgiveness by the
Corporation in whole or in part upon such terms as the Plan Administrator may
deem appropriate.

         3.2.     TAX WITHHOLDING

                  a. The Corporation's obligation to deliver shares of Common
Stock upon the exercise of options 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, provide
any or all holders of Non-Statutory Options under the Plan with the right to
use shares of Common Stock in satisfaction of all or part of the Taxes
incurred by such holders in connection with the exercise of their options.
Such right may be provided to any such holder in either or both of the
following formats:

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

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

<PAGE>

         3.3.     EFFECTIVE DATE AND TERM OF THE PLAN

                  a. The Plan shall become effective on the Plan Effective
Date. However, no shares shall be issued under the Plan pursuant to Incentive
Options until the Plan is approved by the Corporation's stockholders. If such
stockholder approval is not obtained within twelve (12) months after the Plan
Effective Date, then all Incentive Options previously granted under this Plan
shall automatically convert into Non-Statutory Options.

                  b. The Plan shall terminate upon the earliest of (i)
December 31, 2009, (ii) the date on which all shares available for issuance
under the Plan shall have been issued, or (iii) the termination of all
outstanding options in connection with a Corporate Transaction. Upon such
Plan termination, all outstanding options shall continue to have force and
effect in accordance with the provisions of the documents evidencing such
options.

         3.4.     AMENDMENT OF THE PLAN

                  a. The Board shall have complete and exclusive power and
authority to amend or modify the Plan in any or all respects. However, no
such amendment or modification shall adversely affect any rights and
obligations with respect to options at the time outstanding under the Plan
unless each affected Optionee consents to such amendment or modification. In
addition, amendments to the Plan shall be subject to approval of the
Corporation's stockholders to the extent required by applicable laws or
regulations.

                  b. Options to purchase shares of Common Stock may be
granted under the Plan that are in each instance in excess of the number of
shares then available for issuance under the Plan, provided any excess shares
actually issued are held in escrow until there is obtained Board approval
(and shareholder approval if required by applicable laws or regulations) of
an amendment sufficiently increasing the number of shares of Common Stock
available for issuance under the Plan.

         3.5. USE OF PROCEEDS

         Any cash proceeds received by the Corporation from the sale of
shares of Common Stock under the Plan shall be used for general corporate
purposes.

         3.6.     REGULATORY APPROVALS

                  a. The implementation of the Plan, the granting of any
option under the Plan, and the issuance of any shares of Common Stock upon
the exercise of any option shall be subject to the Corporation's obtaining
all approvals and permits required by regulatory authorities having
jurisdiction over the Plan and the options granted under it, and the shares
of Common Stock issued pursuant to the Plan.

                  b. No shares of Common Stock shall be issued or delivered
under the Plan unless and until there shall have been compliance with all
applicable requirements of federal and

<PAGE>

state securities laws and all applicable listing requirements of any stock
exchange (or the Nasdaq market, if applicable) on which Common Stock is then
listed for trading.

         3.7. NO EMPLOYMENT/SERVICE RIGHTS

         Nothing in the Plan shall confer upon the Optionee any right to
continue in Service for any period of specific duration or interfere with or
otherwise restrict in any way the rights of the Corporation (or any Parent or
Subsidiary employing or retaining such person) or of the Optionee, which
rights are hereby expressly reserved by each, to terminate such person's
Service at any time for any reason, with or without cause.

         IN WITNESS WHEREOF the Corporation has executed this Plan effective
as of the Effective Date.

                                       Ultimate Sports Entertainment, Inc.

                                       By: /s/ Frederick R. Licht, President

<PAGE>

                                    APPENDIX

         The following definitions shall be in effect under the Plan and the
Plan Documents:

         1. Board shall mean the Corporation's Board of Directors.

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

              a. the acquisition, directly or indirectly, by 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), of 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 ceases, by reason of one or more contested elections for Board
membership, to be comprised of individuals who either (i) have been Board
members continuously since the beginning of such period or (ii) have been
elected or nominated for election as Board members during such period by at
least a majority of the Board members described in clause (i) who were still
in office at the time the Board approved such election or nomination.

         3. Code shall mean the Internal Revenue Code of 1986, as amended.

         4. Common Stock shall mean the Corporation's common stock.

         5. Corporate Transaction shall mean either of the following
stockholder-approved transactions to which the Corporation is a party:

              a. a merger or consolidation 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
transaction; or

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

         6. Eligible Director shall mean a non-employee Board member eligible
to participate in the Plan.

<PAGE>

         7. Employee shall mean an individual who is in the employ of the
Corporation (or any Parent or Subsidiary), subject to the control and
direction of the employer entity as to both the work to be performed and the
manner and method of performance.

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

         9. Exercise Price shall mean the exercise price per share as
specified in the Stock Option Grant.

         10. Expiration Date shall mean the date on which the option expires
as specified in the Stock Option Grant.

         11. Fair Market Value per share of Common Stock on any relevant date
shall be determined in accordance with the following provisions:

              a. If the Common Stock is traded at the time on the Nasdaq
National Market, then the Fair Market Value shall be the closing selling
price per share of Common Stock on the date in question, as such price is
reported by the National Association of Securities Dealers on the Nasdaq
National Market or any successor system. If there is no closing selling price
for the Common Stock on the date in question, then the Fair Market Value
shall be the closing selling price on the last preceding date for which such
quotation exists.

              b. If the Common Stock is at the time listed on any Stock
Exchange, then the Fair Market Value shall be the closing selling price per
share of Common Stock on the date in question on the Stock Exchange
determined by the Plan Administrator to be 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 closing selling price for the
Common Stock on the date in question, then the Fair Market Value shall be the
closing selling price on the last preceding date for which such quotation
exists.

              c. If the Common Stock is not listed on any Stock Exchange nor
traded on the Nasdaq National Market, then the Fair Market Value shall be
determined by the Plan Administrator after taking into account such factors
as the Plan Administrator shall deem appropriate.

              d. In all instances the determination of Fair Market Value
shall be made in accordance with Regulation Sections 1.421-7(e)(2) and
20.2031-2(f)(2) as promulgated under Sections 421 and 2031 of the Code, as
then in effect.

         12. Grant Date shall mean the date on which the option is granted to
Optionee as specified in the Stock Option Grant.

         13. Incentive Option shall mean an option which satisfies the
requirements of Code Section 422.

<PAGE>

         14. Involuntary Termination shall mean the termination of the
Service of any individual which occurs by reason of:

              a. such individual's involuntary dismissal or discharge by the
Corporation for reasons other than Misconduct, or

              b. such individual's voluntary resignation following (i) a
change in his or her position with the Corporation which materially reduces
his or her level of responsibility, (ii) a reduction in his or her level of
compensation (including base salary, fringe benefits and participation in
corporate-performance based bonus or incentive programs) by more than fifteen
percent (15 %) or (iii) a relocation of such individual's place of employment
by more than fifty (50) miles, provided and only if such change, reduction or
relocation is effected by the Corporation without the individual's consent.

         15. Misconduct shall mean the commission of any act of fraud,
embezzlement or dishonesty by the Optionee, any unauthorized use or
disclosure by such person of confidential information or trade secrets of the
Corporation (or any Parent or Subsidiary), or any other intentional
misconduct by such person adversely affecting the business or affairs of the
Corporation (or any Parent or Subsidiary) in a material manner. The foregoing
definition shall not be deemed to be inclusive of all the acts or omissions
which the Corporation (or any Parent or Subsidiary) may consider as grounds
for the dismissal or discharge of any Optionee or other person in the Service
of the Corporation (or any Parent or Subsidiary).

         16. 1933 Act shall mean the Securities Act of 1933, as amended.

         17. 1934 Act shall mean the Securities Exchange Act of 1934, as
amended.

         18. Non-Statutory Option shall mean an option not intended to
satisfy the requirements of Code Section 422.

         19. Optionee shall mean any person to whom an option is granted
under Plan.

         20. Option Shares shall mean the number of shares of Common Stock
subject to the option as specified in the Stock Option Grant.

         21. Owner shall mean Optionee and all subsequent holders of the
Purchased Shares who derive their chain of ownership through a Permitted
Transfer from Optionee.

         22. Parent shall mean any corporation (other than the Corporation)
in an unbroken chain of corporations ending with the Corporation, provided
each 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 or the
other corporations in such chain.

<PAGE>

         23. Permanent Disability or Permanently Disabled shall mean the
inability of the Optionee 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.

         24. Permitted Transfer shall mean (i) a gratuitous transfer of the
Purchased Shares, provided and only if Optionee obtains the Corporation's
prior written consent to such transfer, (ii) a transfer of title to the
Purchased Shares effected pursuant to Optionee's will or the laws of
intestate succession following Optionee's death, or (iii) a transfer to the
Corporation in pledge as security for any purchase-money indebtedness
incurred by Optionee in connection with the acquisition of the Purchased
Shares.

         25. Plan Administrator shall mean the particular entity, whether the
Board or a committee of the Board, which is authorized to administer the Plan
with respect to one or more classes of eligible persons, to the extent such
entity is carrying out its administrative functions under the Plan with
respect to the persons under its jurisdiction.

         26. Plan Documents shall mean the Plan, the Stock Option Grant, and
Stock Option Exercise Notice and Purchase Agreement, collectively.

         27. Plan Effective Date shall mean January 11, 2000, the date as of
which the Plan was adopted by the Board.

         28. Primary Committee shall mean the committee of two (2) or more
non-employee Board members (as defined in the regulations to Section 16 of
the 1934 Act) appointed by the Board to administer the Plan with respect to
Section 16 Insiders.

         29. Purchased Shares shall mean the shares purchased upon exercise
of the Option.

         30. Recapitalization shall mean any stock split, stock dividend,
recapitalization, combination of shares, exchange of shares or other charge
affecting the Corporation's outstanding Common Stock as a class without the
Corporation's receipt of consideration.

         31. Reorganization shall mean any of the following transactions:

              a. a merger or consolidation in which the Corporation is not
the surviving entity;

              b. a sale, transfer, or other disposition of all or
substantially all of the Corporation's assets;

              c. a reverse merger in which the Corporation is the surviving
entity but in which the Corporation's outstanding voting securities are
transferred in whole or in part to a person or persons different from the
persons holding those securities immediately prior to the merger; or

<PAGE>

              d. any transaction effected primarily to change the state in
which the Corporation is incorporated or to create a holding company
structure.

         32. SEC shall mean the Securities Exchange Commission.

         33. Secondary Committee shall mean a committee of two (2) or more
Board members appointed by the Board to administer the Plan with respect to
eligible persons other than Section 16 Insiders.

         34. Section 12(g) Registration Date shall mean the date on which the
Common Stock is first registered under Section 12(g) of the 1934 Act.

         35. Section 16 Insider shall mean an officer or director of the
Corporation subject to the short-swing profit liabilities of Section 16 of
the 1934 Act.

         36. Service shall mean the performance of services to the
Corporation (or any Parent or Subsidiary) by a person in the capacity of an
Employee, a non-employee member of the board of directors or a consultant or
independent advisor, except to the extent otherwise specifically provided in
the documents evidencing the option grant.

         37. Stock Exchange shall mean either the American Stock Exchange,
the New York Stock Exchange, or another regional stock exchange.

         38. Stock Option Exercise Notice and Purchase Agreement shall mean
the agreement of said title in substantially the form of Exhibit A to the
Stock Option Grant, pursuant to which Optionee gives notice of his intent to
exercise the option and purchase Shares.

         39. Stock Option Grant shall mean the Stock Option Grant document,
pursuant to which Optionee has been informed of the basic terms of the option
granted under the Plan.

         40. Subsidiary shall mean any corporation (other than the
Corporation) in an unbroken chain of corporations beginning with the
Corporation, provided each corporation (other than the last corporation) in
the unbroken chain 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.

         41. Taxes shall mean the Federal, state and local income and
employment tax liabilities incurred by the holder of Non-Statutory Options in
connection with the exercise of those options.

         42. 10% Stockholder shall mean the owner of stock (as determined
under Code Section 424(d)) possessing more than ten percent (10%) of the
total combined voting power of all classes of stock of the Corporation (or
any Parent or Subsidiary).

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00002-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00002-of-00352.parquet"}]]