Document:

Exhibit 10.51

Exhibit 10.51

EMPLOYMENT AGREEMENT

SPORT CHALET, INC., a Delaware corporation (“Employer”), and CLAUDIA G. REICH
(“Executive”), in consideration of the mutual promises made herein, do, as of
June 1, 2001, agree as follows:

A. Executive has served as the Vice President-Marketing and Advertising since
June 2, 1999; and the Senior Vice President — Marketing and Advertising since
April 1, 2001 and

B. The Employer desires to be assured of the continued association and services
of Executive in order to take advantage of his experience, knowledge and
abilities in Employer’s business, and is willing to employ Executive, and
Executive desires to be so employed, on the terms and conditions set forth in
this Agreement;

1. TERM OF EMPLOYMENT

      1.1 Specified Term. Employer hereby employs Executive, and Executive
hereby accepts employment with Employer, for an initial term beginning on April
1, 2001 and ending at the close of business on June 30, 2002. Executive’s
employment hereunder shall automatically renew for succeeding twelve-month
periods, unless notice of termination is given by either party at least 30 days
prior to the end of the initial term or any renewal term. Executive’s
employment may be subject to earlier termination as otherwise provided in this
Agreement.

      1.2 “Employment Term.” The phrase “Employment Term” shall mean the entire
period of Executive’s employment by Employer hereunder, whether for the periods
provided above, or whether terminated earlier as hereinafter provided or
extended by mutual agreement between Employer and Executive.

2. DUTIES

      2.1 General Duties. Executive shall serve as the Senior Vice
President-Marketing and Advertising of Employer. In this capacity, Executive
shall, to the best of his ability, perform all services, acts or things
(i)advertising and marketing strategy, campaigns, and execution, with the
appropriate budgeting responsibilities; (ii) as are provided in Employer’s
Certificate of Incorporation and Bylaws, (iii) as may be assigned by Employer’s
President, Chief Executive Officer or Board of Directors or (iv) as may be
specified in the job description or performance objectives adopted from time to
time by Employer’s Board of Directors, President and Chief Executive Officer.
Executive shall perform such duties subject at all times to the policies of
Employer and its Board of Directors and the direction of Employer’s President
and Chief Executive Officer. Executive shall report to Employer’s President
and Chief Executive Officer.

      2.2 Conduct of Executive. Executive shall at all times during the
Employment Term conduct herself in a manner consistent with her position with
Employer and shall not knowingly perform any act contrary to the best interests
of Employer.

      2.3 Devotion to Employer’s Business.

            (a) Executive shall devote the full working portion of her entire
productive time, ability and attention to the business of Employer during the
Employment Term.

            (b) During the Employment Term, Executive shall not engage in any other
business duties or pursuits whatsoever, or directly or indirectly render any
services of a business, commercial or professional nature to any other person
or organization, whether for compensation or otherwise, without

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 the prior consent of Employer’s Board of Directors, President or Chief
Executive Officer; provided, however, that the expenditure of reasonable
amounts of time for educational, charitable or professional activities shall
not be deemed a breach of this Agreement if those activities do not materially
interfere with the services required under this Agreement and shall not require
the prior written consent of Employer as set forth above.

            (c) This Agreement shall not be interpreted to prohibit Executive from
making passive personal investments or conducting private business affairs if
those activities do not materially interfere with the services required under
this Agreement. Notwithstanding the foregoing, Executive shall not, to the
best of his knowledge, directly or indirectly, acquire, hold or retain any
interest in any vendor or supplier of Employer or in any business competing
with or similar in nature to the business of Employer; provided, however, that
Executive shall have a reasonable period from the date hereof to dispose of any
such prohibited investments.

      2.4 Competitive Activities. Except as otherwise expressly provided in
this Agreement, during the Employment Term, Executive shall not, directly or
indirectly, either as an employee, employer, consultant, agent, principal,
partner, stockholder, corporate officer or director, or in any other individual
or representative capacity, engage or participate in any business that is in
competition in any manner whatsoever with the business of Employer.

      2.5 Trade Secrets.

            (a) Executive shall not, without the prior written consent of Employer in
each instance, disclose or use in any way, either during her employment by
Employer or thereafter, except as required in the course of such employment,
any confidential business or technical information or trade secret of Employer
acquired in the course of such employment, whether or not patentable,
copyrightable or otherwise protected by law, and whether or not conceived of or
prepared by her (collectively, the “Trade Secrets”), including, without
limitation, any confidential information concerning customer lists, products,
procedures, operations, investments, financing, costs, employees, purchasing,
accounting, marketing, merchandising, sales, salaries, pricing, profits and
plans for future development, the identity, requirements, preferences,
practices and methods of doing business of specific parties with whom Employer
transacts business, and all other information which is related to any product,
service or business of Employer, other than information which is generally
known in the industry in which Employer transacts business or is acquired from
public sources or was known to Executive prior to her employment by Employer;
all of which Trade Secrets are the exclusive and valuable property of Employer.

            (b) All files, accounts, records, documents, books, forms, notes, reports,
memoranda, studies, compilations of information, correspondence and all copies,
abstracts and summaries of the foregoing, and all other physical items related
to Employer, other than a merely person item, whether of a public nature or
not, and whether prepared by Executive or not, are and shall remain the
exclusive property of Employer and shall not be removed from the premises of
Employer except as required in the course of Executive’s employment, without
the prior written consent of Employer in each instance, and the same shall be
promptly returned to Employer by Executive on the expiration or termination of
his employment or at any time prior thereto upon the request of Employer.

            (c) Executive hereby acknowledges and agrees that it would be difficult to
fully compensate Employer for damages resulting from the breach or threatened
breach of Sections 2.4 or 2.5 and, accordingly, that Employer shall be entitled
to temporary and injunctive relief, including temporary restraining orders,
preliminary injunctions and permanent injunctions, to enforce such provisions
without the necessity of proving actual damages and without the necessity of
posting any bond or other

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 undertaking in connection therewith. This provision with respect to
injunctive relief shall not, however, diminish Employer’s right to claim and
recover damages.

3. COMPENSATION

      3.1 Compensation. As compensation for the services to be performed
hereunder, Executive shall receive a salary in the amount of One Hundred Forty
Four Thousand Dollars ($144,000) per annum, payable in arrears in equal
installments not less than once per month on the first business day of each
month with respect to the preceding calendar month (or part thereof) of
employment during the Employment Term. Executive shall receive such increases
in salary, if any, as may be determined by the Board of Directors in its sole
discretion.

      3.2 Severance.

            (a) Upon the termination of Executive’s employment hereunder during the
Covered Period, which termination is initiated either (i) by Employer other
than for Cause or (ii) by Executive by reason of a Change of Duties, Employer
shall continue to pay Executive’s Base Salary to Executive for a period of
twelve months following the date of termination on such dates as Executive’s
salary otherwise would have been paid had such termination not occurred. The
aggregate amount paid under the preceding sentence is referred to herein as the
“Severance Amount.” The Severance Amount shall be paid as severance and only
upon execution by Executive of Employer’s standard form of Severance Agreement
and Release. Payment of the Severance Amount shall be in lieu of all other
claims, damages or liabilities Executive might otherwise assert against
Employer, including, without limitation, those for breach of this Agreement by
Employer. All capitalized terms used in this Section 3.2 shall have the
meanings set forth on Exhibit A.

            (b) It is the intention of the parties that any payment of the Severance
Amount shall not constitute “excess parachute payments” within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended, and any
regulations thereunder. If the independent accountants acting as auditors for
Employer on the date of a Change of Control (or another accounting firm
designated by them) determine that any payment of the Severance Amount may
constitute “excess parachute payments,” the payments may be reduced to the
maximum amount which may be paid without the payments being “excess parachute
payments.” The determination shall take into account (i) whether the payments
are “parachute payments” under Section 280(3) and, if so, (ii) the amount of
payments under this Agreement that constitutes reasonable compensation under
Section 280G. Nothing contained in this Agreement shall prevent Employer,
after a Change of Control, from agreeing to pay Executive compensation or
benefits in excess of those provided in this Agreement.

      3.3 Tax Withholding. Employer shall have the right to deduct or withhold
from any amounts due to Executive hereunder (including, without limitation, the
Severance Amount) any and all federal, state or local taxes, withholdings and
deductions now applicable or that may be enacted and become applicable in the
future, including, but not limited to, federal income and Social Security
taxes.

      3.4 Profit Sharing. Executive shall be eligible to participate in such
executive bonus programs as Employer may establish from time to time. Under
the “Senior Management Bonus Plan” currently in effect, Executive’s maximum
target annual bonus shall be thirty five percent (35%) of her base salary for
the applicable fiscal year payable pursuant to Section 3.1.

      3.5 Stock Options. Executive has been granted Non-Qualified Stock Options
(“NQSOs”) to purchase Employer’s common stock on the terms set forth on Exhibit
B and in accordance with Employer’s 1992 Incentive Award Plan as amended and a
Key Employee Stock Option Incentive Award Agreement which is incorporated
herein by this reference.

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      3.6 Annual Vacation. Executive shall be entitled to vacation or personal
leave in accordance with Employer’s policies for executive vacations for a
period of up to four calendar weeks per year with prior approval.

      3.7 Automobile Allowance. Employer shall pay to Executive a monthly
automobile allowance of $900.

      3.8 Medical Coverage. Employer shall include Executive and her immediate
family in such health care plans as may be provided to executive officers of
Employer generally and under the same terms and conditions.

      3.9 Life Insurance. Employer shall provide to Executive such life
insurance, if any, as is currently provided to executive officers of Employer
generally and under the same terms and conditions.

      3.10 Qualified Plans. Employee shall be entitled to participate in
Employer’s qualified plans in accordance with the terms and conditions of the
plan documents.

      3.11 Reimbursement of Business Expenses. Employer shall promptly
reimburse Executive for all reasonable and necessary business expenses incurred
by Executive in connection with the business of Employer subject to compliance
by Executive with Employer’s Standard Operating Procedures with respect to the
amount, documentation and verification of such expenses as the same may be
amended from time to time.

      3.12 Tax Consulting. Employer shall reimburse Executive for all fees and
costs for personal tax and financial advisory services incurred by Executive up
to $750 per year.

4. TERMINATION

      4.1 At Will Relationship. Employer and Executive each hereby acknowledges
and agrees that, except as expressly set forth in Section 4.2, (i) as provided
in Employer’s employment policy, Executive’s relationship with Employer under
this Agreement is AT WILL and can be terminated at the option of either
Executive or Employer in her or its sole and absolute discretion, for any or no
reason whatsoever, with or without cause, (ii) no representations, warranties
or assurances have been made concerning the length of such relationship or the
aggregate amount of compensation to be received by Executive and (iii) after
the termination of his employment by Employer, Executive shall have no right,
title or interest in or claim to any revenues received by Employer from any
person for any goods sold or services rendered by Employer to such person,
whether or not Executive was the cause, in whole or in part, for such person to
purchase such goods from Employer or to retain Employer to perform such
services.

      4.2 Duties Upon Termination. In the event that Executive’s employment by
Employer under this Agreement is terminated, neither Employer nor Executive
shall have any remaining duties or obligations hereunder, except that (i)
Employer shall promptly pay to Executive, or her estate, all reimbursable
expenses incurred by Executive hereunder as of such date and such compensation
as is due pursuant to Sections 3.1 and 3.4, prorated through the date of
termination, (ii) Employer shall promptly provide to Executive such severance
as is due pursuant to Section 3.2 and (iii) Executive shall continue to be
bound by Section 2.5.

5. GENERAL PROVISIONS

      5.1 Notices. Any notices to he given hereunder by either party to the
other shall be in writing and may he transmitted by personal delivery or by
mail, registered or certified, postage prepaid

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 with return receipt requested. Mailed notices shall be addressed to the
parties at the addresses appearing on the signature pages hereof, but each
party may change that address by written notice in accordance with this
section. Notices delivered personally shall be deemed communicated as of the
date of actual receipt; mailed notices shall be deemed communicated as of the
third day following the date of mailing.

      5.2 Arbitration. Any controversy between Employer and Executive involving
the construction or application of any of the terms, provisions, or conditions
of this Agreement shall on the written request of either party served on the
other be submitted to arbitration. Arbitration shall comply with and be
governed by the provisions of the California Arbitration Act and that certain
Agreement to Arbitrate Claims entered into by Employer and Executive as of the
date hereof, which Agreement is incorporated herein by this reference.

      5.3 Attorneys’ Fees and Costs. If any legal action based in contract law
is necessary to enforce or interpret the terms of this Agreement, the
prevailing party shall be entitled to reasonable attorneys’ fees, costs, and
necessary disbursements in addition to any other relief to which that party may
be entitled. This provision shall be construed as applicable to the entire
contract.

      5.4 SEC Compliance. Executive acknowledges that concurrently herewith she
has been provided with a copy of and will abide by the Employer’s Statement of
Company Policy Re: Securities Trades by Company Personnel as the same may be
amended from time to time by Employer, which Statement is incorporated herein
by this reference.

      5.5 Entire Agreement. This Agreement, together with its exhibits,
supersedes any and all other agreements, either oral or in writing, between the
parties hereto with respect to the employment of Executive by Employer and
contains all of the covenants and agreements between the parties with respect
to that employment in any manner whatsoever. Each party to this Agreement
acknowledges that no representation, inducements, promises, or agreements,
orally or otherwise, have been made by any party, or anyone acting on behalf of
any party, which are not embodied herein, and that no other agreement,
statement, or promise not contained in this agreement shall be valid or binding
on either party.

      5.6 Modifications. Any modification of this Agreement will be effective
only if it is in writing and signed by the party to be charged and approved by
the Board of Directors of Employer.

      5.7 Effect of Waiver. The failure of either party to insist on strict
compliance with any of the terms, covenants, or conditions of this Agreement by
the other party shall not be deemed a waiver of that term, covenant, or
condition, nor shall any waiver or relinquishment of any right or power at any
one time or times be deemed a waiver or relinquishment of that right or power
for all or any other times.

      5.8 Partial Invalidity. If any provision in this Agreement is held by a
court of competent jurisdiction to be invalid, void, or unenforceable, the
remaining provisions shall nevertheless continue in full force without being
impaired or invalidated in any way.

      5.9 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California except that, with respect
to matters of corporate governance, the laws of the State of Delaware shall
govern.

      5.10 Sums Due Deceased Executive. If Executive dies prior to the
expiration of the Employment Term, any sums that may be due him from Employer
under this agreement as of the date of death shall be paid to Executive’s
executors, administrators, heirs, personal representatives, successors, and
assigns.

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      5.11 Insurance. Executive shall be covered by any policy of directors’
and officers’ liability insurance maintained by Employer.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the date and year first set forth above.

	 	 	 	 	 	 	 
	Employer:			SPORT CHALET, INC.
	
	
	
	

				
By
			/s/ Craig L. Levra
				
			

				
			Craig L. Levra,
President and CEO

920 Foothill Boulevard

La Canada, CA 91011
	
	
	
	

	Executive:
	
	
	
	

				
			/s/ Claudia G. Reich
				
			

				
			Claudia G. Reich

2808 Jason Court

Thousand Oaks, CA 91362

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EXHIBIT A

Definitions

	1.	 	Affiliate. An “Affiliate” shall mean any entity which owns or controls,
is owned by or is under common ownership or control with, Employer.
	 
	2.	 	Base Salary. “Base Salary” shall, as determined on the termination date,
be equal to the greater of:

	 	(i)	 	Executive’s annual salary, excluding bonuses and special
incentive payments, on the date of the earliest Change of Control to
occur during the Covered Period; or
	 
	 	(ii)	 	Executive’s annual salary, excluding bonuses and special
incentive payments, on the termination date.

	3.	 	Change in Duties. A “Change in Duties” shall mean any one or more of the
following:

	 	(i)	 	A significant change in the nature or scope of Executive’
authority or duties from those applicable to her immediately prior
to the date on which a Change of Control occurs;
	 
	 	(ii)	 	A significant reduction in Executive’s Base Salary from that
provided to her immediately prior to the date on which a Change of
Control occurs;
	 
	 	(iii)	 	A diminution in Executive’s eligibility to participate in
bonus, stock option, incentive award and other compensation plans
which provide opportunities to receive compensation, from the
greater of:
	 
	 		•	the opportunities provided by Employer (including
its subsidiaries) for executives with comparable duties; or
	 
	 	 	•	the opportunities under any such plans under
which Executive was participating immediately prior to the
date on which a Change of Control occurs.
	 
	 	(iv)	 	A diminution in Executive’s benefits (including, but not
limited to, medical, dental, life insurance and long-term disability
plans) and perquisites from the greater of:
	 
	 	 	•	the benefits and perquisites provided by Employer
(including its subsidiaries) to executives with comparable
duties; or
	 
	 	 	•	the benefits and perquisites to which Executive
was entitled immediately prior to the date on which a Change
of Control occurs.
	 
	 	(v)	 	A change in the location of Executive’s principal place of
employment by Employer (including its subsidiaries) to a location
not within Los Angeles County; or

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	 	 	 	(vi) A reasonable determination by the Board of Directors of
Employer that, as a result of a Change in Control and a change in
circumstances thereafter significantly affecting Executive’s
position, Executive is unable to exercise the authorities, powers,
function or duties attached to Executive’s position immediately
prior to the date on which a Change of Control occurs.

	4.	 	Change of Control. A “Change of Control” shall be deemed to have
occurred if:

	 	(i)	 	Norbert Olberz ceases to be the Chairman of the Board of
Employer;
	 
	 	(ii)	 	The directors of Employer who were last nominated by the
Board of Directors for election as directors, for which nomination
Norbert Olberz voted in favor, cease to constitute a majority of the
directors of Employer;
	 
	 	(iii)	 	Any “person,” including a “group” as determined in
accordance with the Section 13(d)(3) of the Securities Exchange Act
of 1934 (the “Exchange Act”), other than the trust or estate of
Norbert or Irene Olberz, or an entity wholly owned by any of them,
becomes the beneficial owner, directly or indirectly, of securities
of Employer representing 50% or more of the combined voting power of
Employer’s then outstanding Voting Securities and Executive is not a
member of such group;
	 
	 	(iv)	 	As a result of, or in connection with, any tender offer or
exchange offer, merger or other business combination, sale of assets
or contested election, or any combination of the foregoing
transactions (a “Transaction”), Norbert or Irene Olberz or their
trusts or estates shall cease to own a majority of the outstanding
Voting Securities of Employer or its successor;
	 
	 	(v)	 	Employer is merged or consolidated with another corporation
and as a result of the merger or consolidation less than 50% of the
outstanding Voting Securities of the surviving or resulting
corporation shall then be owned in the aggregate by Norbert or Irene
Olberz, or their respective trusts or estates or a group of which
Executive is a member;
	 
	 	(vi)	 	A tender offer or exchange offer is made and consummated for
the ownership of securities of Employer representing 50% or more of
the combined voting power of Employer’s then outstanding Voting
Securities and in which Executive is not a participant; or
	 
	 	(vii)	 	Employer transfers substantially all of its assets to
another corporation which is not a wholly-owned subsidiary of
Employer and which is not owned in whole or in part by Norbert or
Irene Olberz, their respective estates or trusts or by Executive.

	5.	 	Covered Period. “Covered Period” shall mean a period of time following
the occurrence of a Change of Control equal to the lesser of (a) the
Executive’s employment by Employer prior to that Change of Control, or (b)
three years following the occurrence of the Change of Control.

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	6.	 	Voting Securities. “Voting Securities” shall mean any securities which
ordinarily possess the power to vote in the election of directors without
the happening of any pre-condition or contingency.
	 
	7.	 	Termination for Cause. Executive’s employment shall be deemed to have
been terminated by Employer for Cause if it shall be terminated for any of
the following reasons:

	 	(i)	 	Executive’s continued and willful failure or refusal to
perform his duties hereunder; or
	 
	 	(ii)	 	The commission by Executive of any act of dishonesty, fraud,
misrepresentation or other misconduct in the performance of his
duties hereunder; or
	 
	 	(iii)	 	The conviction of Executive of a felony or a crime involving
moral turpitude or the pleading of no contest by Executive to the
same, whether or not committed in the course of his employment;
provided, however, that no such termination shall occur under
clauses (i) and (ii) unless Executive first shall have received
written notice specifying the acts or omissions alleged to
constitute such failure, refusal or act and, if the same can be
corrected, it continues after Executive shall have had reasonable
opportunity to correct it.

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                                                                     EXHIBIT 4.1

                              M&T BANK CORPORATION
                             2001 STOCK OPTION PLAN

1.       Definitions

         In this Plan, except where the context otherwise indicates, the
following definitions apply:

         (a) "Agreement" means the written agreement evidencing an Option.

         (b) "Board" means the Board of Directors of the Company.

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

         (d) "Committee" means the committee of the Board meeting the standards
of Rule 16b-3(d)(1) and Treasury Regulations ss. 1.162-27(c)(4), or any similar
successor rules or regulations, appointed by the Board to administer this Plan.
Unless otherwise determined by the Board, the Compensation Committee of the
Board shall be the Committee.

         (e) "Common Stock" means the authorized but unissued or reacquired
Common Stock, par value $.50 per share, of the Company.

         (f) "Company" means M&T Bank Corporation.

         (g) "Date of Exercise" means the date on which the Company receives
notice pursuant to Article 7 of the exercise of an Option.

         (h) "Date of Grant" means the date on which an Option is granted by the
action of the Committee or such later date as may be specified by the Committee
in taking such action.

         (i) "Director" means any person who is a director of the Company or any
Subsidiary.

         (j) "Employee" means any person determined by the Committee to be an
employee of the Company or any Subsidiary.

         (k) "Exchange Act" means the Securities and Exchange Act of 1934, as
amended.

         (l) "Fair Market Value" of a share of Common Stock means the amount
equal to the closing price for a share of Common Stock on the New York Stock
Exchange as reported by such source as the Committee may select, or, if such
price quotation for a share of Common Stock is not so reported, then the fair
market value of such stock as determined by the Committee pursuant to a
reasonable method adopted in good faith for such purpose, in each case subject
to adjustment under Article 9.

<PAGE>   2

         (m) "Incentive Stock Option" means an Option granted under the Plan
that qualifies as an incentive stock option under section 422 of the Code and
that the Company designates as such in the Agreement granting the Option.

         (n) "Key Employee" means (i) any Employee selected by the Committee to
receive Options under the Plan or (ii) a former trustee or officer of The East
New York Savings Bank who, upon closing of the acquisition by the Company of The
East New York Savings Bank, was granted nonstatutory stock options under the
1983 Plan pursuant to the terms of Section 5(i) of the Merger Agreement by and
between First Empire State Corporation, The East New York Savings Bank and the
incorporators of West Interim Savings Bank.

         (o) "1983 Plan" means the M&T Bank corporation 1983 Stock Option Plan.

         (p) "Nonstatutory Stock Option" means an Option granted under the Plan
which is not an Incentive Stock Option.

         (q) "Option" means an Incentive Stock Option or Nonstatutory Stock
Option granted under the Plan.

         (r) "Option Period" means the period during which an Option may be
exercised.

         (s) "Option Price" means the price per share at which an Option may be
exercised. The Option Price shall be determined by the Committee but, in no
event, shall the Option Price be less than the greater of the Fair Market Value
of the Common Stock determined as of the Date of Grant or the par value of the
Common Stock.

         (t) "Participant" means a Key Employee to whom an Option has been
granted.

         (u) "Plan" means the M&T Bank Corporation 2001 Stock Option Plan.

         (v) "Rule 16b-3" means Rule 16b-3 of the rules and regulations as
promulgated and amended from time to time by the SEC under Section 16(b) of the
Exchange Act.

         (w) "SEC" means the Securities and Exchange Commission.

         (x) "Subsidiary" means a corporation at least fifty percent of the
total combined voting power of all classes of stock of which is owned by the
Company, either directly or through one or more other Subsidiaries.

2.       Purpose

         This Plan is intended to aid in maintaining and developing strong
management through encouraging the ownership of Common Stock by Key Employees
and through stimulating their efforts by giving suitable recognition, in
addition to their other remuneration, to the ability and industry which
contribute materially to the success of the

<PAGE>   3

Company's business interests, and to provide an incentive to the continued
service of such Key Employees.

3.       Administration

         This Plan shall be administered by the Committee. In addition to any
other powers granted to the Committee, it shall have the following powers,
subject to the express provisions of the Plan:

         (a) subject to the provisions of Articles 4 and 6, to determine in its
discretion the Key Employees to whom Options shall be granted under the Plan,
the number of shares to be subject to each Option, and the terms upon which, the
times at which, and the periods within which such Options may be acquired and
exercised;

         (b) to determine all other terms and provisions of each Agreement,
which need not be identical;

         (c) without limiting the foregoing, to provide in its discretion in an
Agreement:

                  (i) for an agreement by the Participant to render services to
                  the Company or a Subsidiary upon such terms and conditions as
                  may be specified in the Agreement, provided that the Committee
                  shall not have the power to commit the Company or any
                  Subsidiary to employ or otherwise retain any Participant;

                  (ii) for restrictions on the transfer, sale or other
                  disposition of the Common Stock issued to the Participant upon
                  the exercise of an Option;

                  (iii) for an agreement by the Participant to resell to the
                  Company, under specified conditions, stock issued upon the
                  exercise of an Option; and

                  (iv) for the form of payment of the Option Price upon the
                  exercise of an Option, including without limitation in cash,
                  by delivery (including constructive delivery) of shares of
                  Common Stock valued at Fair Market Value on the Date of
                  Exercise of the Option, or by a combination of cash and Common
                  Stock;

         (d) to construe and interpret the Agreements and the Plan;

         (e) to require, whether or not provided for in the pertinent Agreement,
of any person exercising an Option granted under the Plan, at the time of such
exercise, the making of any representations or agreements which the Committee
may deem necessary or advisable in order to comply with the securities laws of
the United States or of any state;

<PAGE>   4

         (f) to provide for satisfaction of an Optionee's tax liabilities
arising in connection with the Plan through, without limitation, retention by
the Company of shares of Common Stock otherwise issuable on the exercise of a
Nonstatutory Stock Option or through delivery of shares of Common Stock to the
Company by the Optionee under such terms and conditions as the Committee deems
appropriate; and

         (g) to make all other determinations and take all other actions
necessary or advisable for the administration of the Plan.

         Any determinations or actions made or taken by the Committee pursuant
to this Article shall be binding and final.

4.       Eligibility

         Options may be granted only to Key Employees, provided, however, that
the members of the Committee are not eligible to receive Options under the Plan.
A Key Employee who has been granted an Option may be granted additional Options.

5.       Stock Subject to the Plan

         (a) Subject to the provisions of Article 9, there is hereby reserved
for issuance upon the exercise of Options granted under this Plan an aggregate
of 10,000,000 shares of Common Stock. No Key Employee shall be granted in any
fiscal year of the Company Options for more than 150,000 shares, provided that a
newly-hired Key Employee who will serve as an executive officer of the Company
may receive an additional one-time grant of Options covering up to 150,000
shares of the Common Stock upon commencement of employment with the Company, and
provided further that such limits shall be subject to such adjustment, if any,
as the Committee deems appropriate to reflect such events as stock dividends,
stock splits, recapitalizations, mergers, consolidations or reorganizations of
or by the Company; and

         (b) Shares of Common Stock available under this Plan shall be reduced
by the sum of the aggregate number of shares of Common Stock which become
subject to outstanding Options. To the extent that shares of Common Stock are
not issued or delivered by reason of the settlement in cash, expiration,
termination, cancellation or forfeiture of such Options, or by reason of the
delivery or withholding of shares of Common Stock to pay all or a portion of the
exercise price of an award under the Plan, if any, or to satisfy all or a
portion of the tax withholding obligations relating to an award under the Plan,
then such shares of Common Stock shall again be available under the Plan. The
Committee is authorized to modify or amend this Section 5(b) in such manner as
the Committee deems appropriate for the administration of the Plan.

<PAGE>   5

6.       Options

         (a) Pursuant to the terms of the Plan, the Committee is hereby
authorized to grant Nonstatutory Stock Options and Incentive Stock Options to
Key Employees.

         (b) All Agreements granting Options shall contain a statement that the
Option is intended to be either (i) a Nonstatutory Stock Option or (ii) an
Incentive Stock Option.

         (c) The Option Period shall be determined by the Committee and
specifically set forth in the Agreement, provided, however, that an Option shall
not be exercisable after ten years from the Date of Grant in the case of an
Incentive Stock Option and after ten years and one day from the Date of Grant in
the case of a Nonstatutory Stock Option.

         (d) The aggregate Fair Market Value (determined as of the date an
Incentive Stock Option is granted) of the Common Stock with respect to which all
Incentive Stock Options granted to any one person at any time (under all stock
option plans of the person's employer corporation and its "parent" and
"subsidiary" corporations) may first become exercisable in any calendar year
shall not exceed $100,000. For purposes of this Paragraph (d), the terms
"parent" and "subsidiary" corporations shall have the respective meanings given
to them in section 424 of the Code.

         (e) All Incentive Stock Options granted under the Plan shall comply
with the provisions of the Code governing incentive stock options and with all
other applicable rules and regulations.

         (f) All other terms of Options granted under this Plan shall be
determined by the Committee in its sole discretion.

7.       Exercise

         An Option may be exercised, subject to the terms of the Agreement under
which it was granted, in whole or in part by the delivery to the Company of
written notice of the exercise, in such form as the Committee may prescribe,
accompanied, in the case of an Option, by either (a) full payment for the Common
Stock with respect to which the Option is exercised; (b) delivery of shares of
Common Stock (including constructive delivery) having a Fair Market Value on the
date of surrender equal to the aggregate exercise price of the Shares as to
which said option shall be exercised, provided that the shares of Common Stock
to be delivered (if acquired under the Plan or any other plan maintained by the
Company) have been held by the Participant for at least six (6) months; or (c) a
properly executed exercise notice and irrevocable instructions to a broker
promptly to deliver to the Company cash equal to the exercise price.

8.       Nontransferability

         Except as otherwise provided in an Agreement, Options and Rights
granted under the Plan shall not be transferable otherwise than by will or the
laws of descent and distribution, and an Option may be exercised, during the
Participant's lifetime, only by

<PAGE>   6

the Participant or, in the event of the Participant's legal disability, by the
Participant's legal representative.

9.       Capital Adjustments

         The number, class and Fair Market Value of shares subject to each
outstanding Option, the Option Price, the aggregate number and class of shares
for which grants thereafter may be made and the maximum number of shares of
Common Stock subject to an Option that may be granted to a Participant shall be
subject to such adjustment, if any, as the Committee in its sole discretion
deems appropriate to reflect such events as stock dividends, stock splits,
recapitalizations, mergers, consolidations or reorganizations of or by the
Company, provided, in each case that (a) with respect to Incentive Stock Options
no such adjustment shall be authorized to the extent that such authority would
cause the Plan to violate Section 422(b)(1) of the Code, as from time to time
amended and (b) with respect to any Option, no such adjustment shall be
authorized to the extent that such authority would be inconsistent with the
Plan's meeting the requirements of Section 162(m), unless otherwise determined
by the Committee.

10.      Termination or Amendment

         The Board shall have the power to terminate the Plan and to amend it in
any respect, provided that no such amendment, alteration, suspension,
discontinuation or termination shall be made without stockholder approval if
such approval is necessary to comply with any tax or regulatory requirement for
which or with which the Board deems it necessary or desirable to comply. No
termination or amendment of the Plan shall affect adversely the rights or
obligations or the Participant under the Plan without the Participant's consent.

11.      Modification, Extension and Renewal of Options

         Subject to the terms and conditions and within the limitations of the
Plan, the Committee may modify, extend or renew outstanding Options granted
under the Plan; or may accept the surrender of outstanding Options (to the
extent not exercised theretofore) granted under the Plan, or outstanding options
(to the extent not exercised theretofore) granted under any other stock option,
stock purchase, stock appreciation rights, or other stock-related plan of the
Company or of a company which has been merged or consolidated with the Company
or a Subsidiary or which has become a Subsidiary through the acquisition by the
Company or by a Subsidiary of stock or assets of the company, and authorize the
granting of new Options pursuant to the Plan in substitution therefor (to the
extent not exercised theretofore), and the substituted Options may specify terms
different than the surrendered options and rights or have any other provisions
which are authorized by the Plan; or may assume options and rights granted by
such other company, and such options shall not reduce the number of shares of
Common Stock available for the grant of Options under this Plan, except to the
extent that such options are granted under this Plan pursuant to a provision of
a plan or agreement of merger of such other company with the Company, and to the
extent that such options, if granted under this Plan, would reduce the number of
shares of Common Stock available pursuant

<PAGE>   7

to the provisions of Article 5. The Company may grant options otherwise than
under the provisions of this Plan and may adopt other stock option plans or
stock purchase, stock appreciation rights, or other stock-related plans, and
such options and stock granted or issued under such plans shall not reduce the
number of shares of Common Stock available for the grant of Options under this
Plan. Neither the adoption or amendment of this Plan nor the submission of the
Plan or amendments for stockholder approval shall be deemed to impose any
limitation on the powers of the Company to grant or assume options otherwise
than under this Plan or to adopt other stock option plans or stock purchase,
stock appreciation rights, or other stock-related plans, nor shall they be
deemed to impose any requirement of stockholder approval upon the same.
Notwithstanding the foregoing, however, (i) the authority conferred by this
Article 11 shall not be used by the Committee to cause an Option granted under
this Plan to be repriced within the meaning of Item 402(i)(1) of Regulation S-K
(17 C.F.R. ss. 229.402(i)(1)) as in effect on the date hereof and (ii) no
modification of an Option granted under the Plan shall adversely alter or impair
the rights or obligations of the holder of such Option without the consent of
the holder.

12.      Effectiveness of the Plan

         The Plan and any amendments which require stockholder approval pursuant
to Article 10 are subject to approval by vote of the stockholders of the Company
within twelve months after their adoption by the Board. Subject to such
approval, the Plan and any amendments are effective on the date on which they
are adopted by the Board. Options may be granted prior to stockholder approval
of the Plan or amendments, but each such Option granted shall be subject to the
approval, if required, of the Plan or amendments by the stockholders. Except as
otherwise required to satisfy the requirements of Rule 16b-3, the day on which
any Option granted prior to required stockholder approval of the Plan or
amendments is granted shall be the Date of Grant for all purposes as if the
Option had not been subject to such approval. No Option granted may be exercised
prior to such required stockholder approval.

13.      Term of the Plan

         Unless sooner terminated by the Board pursuant to Article 10, the Plan
shall terminate ten years from the date on which the Board approves the most
recent amendment to the Plan that changes either the aggregate number of shares
of Common Stock that may be issued under the Plan or the class of persons
eligible to receive Options under the Plan, and which amendment subsequently is
approved by the stockholders of the Company. No Options may be granted after
termination. Termination of the Plan shall not affect the validity of any Option
outstanding on the date of termination.

14.      Indemnification of Committee

         In addition to such other rights of indemnification as they may have as
Directors or as members of the Committee, the members of the Committee shall be
indemnified by the Company against the reasonable expenses, including attorneys'
fees, actually and reasonably incurred in connection with the defense of any
action, suit or proceeding, or in

<PAGE>   8

connection with any appeal therein, to which they or any of them may be a party
by reason of any action taken or failure to act under or in connection with the
Plan or any Option granted hereunder, and against all amounts reasonably paid by
them in settlement thereof or paid by them in satisfaction of a judgment in any
such action, suit or proceeding, if such members acted in good faith and in a
manner which they believed to be in, and not opposed to, the best interests of
the Company.

15.      General Provisions

         (a) The establishment of the Plan shall not confer upon any Employee or
Key Employee any legal or equitable right against the Company, any Subsidiary or
the Committee except as expressly provided in the Plan.

         (b) The Plan does not constitute inducement or consideration for the
employment of any Employee, nor is it a contract between the Company and any
Subsidiary and any Employee or Key Employee. Participation in the Plan shall not
give any Employee or Key Employee any right to be retained in the service or
employ of the Company or any Subsidiary. The Company and its Subsidiaries retain
the right to hire and discharge any Employee at any time, with or without cause,
as if the Plan never had been adopted.

         (c) The interests of any Participant under the Plan are not subject to
the claims of creditors and may not be assigned, alienated or encumbered in any
way.

         (d) The Plan shall be governed, construed and administered in
accordance with the laws of the State of New York and the intention of the
Company that Incentive Stock Options granted under the Plan qualify as such
under section 422 of the Code.

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