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                                                                   EXHIBIT 10.54

                           INDEMNIFICATION AGREEMENT

THIS INDEMNIFICATION AGREEMENT is made effective as of the ___th day of _______,
2001, by and between BAM! Entertainment, Inc., a Delaware corporation (the
"Company") and _______________ ("Indemnitee").

WHEREAS, it is essential to the Company to retain and attract as directors and
executive officers the most capable persons available;

WHEREAS, Indemnitee has recently become, or continues to serve as a(n)
_____________ of the Company;

WHEREAS, the Bylaws and the Certificate of Incorporation of the Company require
the Company to indemnify its directors and officers to the fullest extent
permitted by law and Indemnitee is serving as a director or executive officer of
the Company, in part, in reliance on such Bylaws and Certificate of
Incorporation; and

WHEREAS, in recognition of Indemnitee's need for substantial protection against
personal liability, to maintain Indemnitee's continued service to the Company in
an effective manner in reliance on the aforesaid Bylaws and Certificate of
Incorporation, in part, to provide Indemnitee with specific contractual
assurance that the protection promised by such Bylaws and Certificate of
Incorporation will be available to Indemnitee (regardless of, among other
things, any amendment to or revocation of such Bylaws and Certificate of
Incorporation or any change in the composition of the Company's Board of
Directors or any acquisition transaction relating to the Company), the Company
desires to provide in this Agreement for the indemnification of and the advance
of expenses to Indemnitee to the fullest extent (whether partial or complete)
permitted by law, as set forth in this Agreement and, to the extent officers'
and directors' liability insurance is maintained by the Company, to provide for
continued coverage of Indemnitee under the Company's officers' and directors'
liability insurance policies.

NOW, THEREFORE, in consideration of the covenants contained herein and of
Indemnitee's continuing service to the Company directly, or at its request,
other enterprises, and intending to be legally bound thereby, the parties hereto
agree as follows:

1.   CERTAIN DEFINITIONS

          (a) Acquiring Person: shall mean any Person other than: (i) the
Company; (ii) any of the Company's Subsidiaries; (iii) any employee benefit plan
of the Company or of a Subsidiary of the Company or of a corporation owned
directly or indirectly by the stockholders of the Company in substantially the
same proportions as their ownership of stock of the Company; or (iv) any trustee
or other fiduciary holding securities under an employee benefit plan of the
Company or of a Subsidiary of the Company or of a corporation owned directly or
indirectly by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company.

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          (b) Change in Control: shall be deemed to have occurred if: (i) any
Acquiring Person is, or becomes the "beneficial owner" (as defined in Rule 13d-3
and 14d-1 under the Securities and Exchange Act of 1934, as amended (the
"Exchange Act")), directly or indirectly, of securities of the Company
representing 50% or more of the combined voting power or more of the then
outstanding Voting Securities of the Company; or (ii) members of the Incumbent
Board cease for any reason to constitute at least a majority of the Board of
Directors of the Company; or (iii) any reverse merger in which the Company is
the surviving entity but in which securities possessing more than fifty percent
(50%) of the total combined voting power of the Company's outstanding securities
are transferred to a person or persons different from those who held such
securities immediately prior to such merger; or (iv) the stockholders of the
Company approve a plan of complete liquidation of the Company or an agreement
for the sale or disposition by the Company of all or substantially all of the
Company's assets (or, if no such approval is required, the consummation of such
a liquidation, sale, or disposition in one transaction or series of related
transactions) other than a liquidation, sale, or disposition of all or
substantially all of the Company's assets in one transaction or a series of
related transactions to a corporation owned directly or indirectly by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company.

          (c) Claim: any threatened, pending, or completed action, suit,
proceeding or alternative dispute resolution mechanism (including, without
limitation, securities laws actions, suits, and proceedings), or any inquiry,
hearing or investigation (including discovery), whether conducted by the Company
or any other party, that Indemnitee in good faith believes might lead to the
institution of any action, suit, proceeding or alternative dispute resolution
mechanism whether civil, criminal, administrative, investigative, or other.

          (d) Expenses: include attorneys' fees and all other costs, travel
expenses, fees of experts, transcript costs, filing fees, witness fees,
telephone charges, postage, delivery service fees, expenses and obligations of
any nature whatsoever paid or incurred in connection with investigating,
defending, being a witness in or participating in (including on appeal), or
preparing to defend, be a witness in or participate in any Claim relating to any
Indemnifiable Event.

          (e) Incumbent Board: individuals, who, as of _______________ , 2001
constitute the Board of Directors of the Company and any other individual who
becomes a director of the Company after that date and whose election or
appointment by the Board of Directors or nomination for election by the
Company's stockholders was approved by a vote of at least a majority of the
directors then comprising the Incumbent Board.

          (f) Indemnifiable Event: any event or occurrence related to the fact
that Indemnitee is or was a director, officer, employee, agent, or fiduciary of
the Company, or is or was serving at the request of the Company as a director,
officer, employee, trustee, agent, or fiduciary of another corporation,
partnership, joint venture, employee benefit plan, trust, or other enterprise,
or by reason of anything done or not done by Indemnitee in any such capacity.
For purposes of this Agreement, the Company agrees that Indemnitee's service on
behalf of or with respect to any Subsidiary of the Company shall be deemed to be
at the request of the Company.

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          (g) Independent Legal Counsel: special, independent counsel selected
by Indemnitee and approved by the Company (which approval shall not be
unreasonably withheld), and who has not otherwise performed services for the
Company or for Indemnitee within the last five years (other than as Independent
Legal Counsel under this Agreement or similar agreements). Independent Legal
Counsel shall not be any person who, under the applicable standards of
professional conduct then prevailing, would have a conflict of interest in
representing either the Company or Indemnitee in an action to determine
Indemnitee's rights under this Agreement, nor shall Independent Legal Counsel be
any person who has been sanctioned or censured for ethical violations of
applicable standards of professional conduct.

          (h) Person: any person or entity of any nature whatsoever,
specifically including an individual, a firm, a company, a corporation, a
partnership, a limited liability company, a trust, or other entity. A Person,
together with that Person's Affiliates and Associates (as those terms are
defined in Rule 12b-2 under the Exchange Act), and any Persons acting as a
partnership, limited partnership, joint venture, association, syndicate, or
other group (whether or not formally organized), or otherwise acting jointly or
in concert or in a coordinated or consciously parallel manner (whether or not
pursuant to any express agreement), for the purpose of acquiring, holding,
voting, or disposing of securities of the Company with such Person, shall be
deemed a single "Person."

          (i) Potential Change in Control: shall be deemed to have occurred if
(i) the Company enters into an agreement, the consummation of which would result
in the occurrence of a Change in Control; (ii) any Person (including the
Company) publicly announces an intention to take or to consider taking actions
that, if consummated, would constitute a Change in Control; (iii) any Acquiring
Person who is or becomes the beneficial owner, directly or indirectly, of
securities of the Company representing 10% or more of the combined voting power
of the then outstanding Voting Securities of the Company increases its
beneficial ownership of such securities by 5% or more over the percentage so
owned by that Person on the date of this Agreement; or (iv) the Board of
Directors of the Company adopts a resolution to the effect that, for purposes of
this Agreement, a Potential Change in Control has occurred.

          (j) Reviewing Party: any appropriate person or body consisting of a
member or members of the Company's Board of Directors or any other person or
body appointed by the Board who is not a party to the particular Claim for which
Indemnitee is seeking indemnification or Independent Legal Counsel.

          (k) Subsidiary: with respect to any Person, any corporation or other
entity of which a majority of the voting power of the voting equity securities
or equity interest is owned, directly or indirectly, by that Person.

          (l) Voting Securities: any securities that vote generally in the
election of directors, in the admission of general partners, or in the selection
of any other similar governing body.

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2.   BASIC INDEMNIFICATION AND EXPENSE REIMBURSEMENT ARRANGEMENT

          (a) If Indemnitee was, is, or becomes a party to or witness or other
participant in, or is threatened to be made a party to or witness or other
participant in, a Claim by reason of (or arising in part out of) an
Indemnifiable Event, the Company shall indemnify Indemnitee to the fullest
extent permitted by law as soon as practicable but in any event no later than 30
days after written demand is presented to the Company, against any and all
Expenses, judgments, fines, penalties, or amounts paid in settlement (including
all interest, assessments, and other charges paid or payable in connection with
or in respect of such Expenses, judgments, fines, penalties, or amounts paid in
settlement) of or with respect to that Claim and any federal, state, local or
foreign taxes imposed on the Indemnitee as a result of the actual or deemed
receipt of any payments under this Agreement (including the creation of the
trust referred to in Section 4 hereof). Notwithstanding anything in this
Agreement to the contrary and except as provided in Section 5, prior to a Change
in Control, Indemnitee shall not be entitled to indemnification pursuant to this
Agreement in connection with any Claim initiated by Indemnitee against the
Company or any director or officer of the Company unless the Company has joined
in or consented to the initiation of such Claim. Notwithstanding the foregoing,
the obligations of the Company under Section 2(a) shall be subject to the
condition that the Reviewing Party shall not have determined (in a written
opinion, in any case in which Independent Legal Counsel referred to in Section 3
hereof is involved) that Indemnitee would not be permitted to be indemnified
under applicable law. Nothing contained in this Agreement shall require any
determination under this Section 2(a) to be made by the Reviewing Party prior to
the disposition or conclusion of the Claim against the Indemnitee; provided,
however, that Expense Advances shall continue to be made by the Company pursuant
to and to the extent required by the provisions of Section 2(b).

          (b) If so requested by Indemnitee, the Company shall pay any and all
Expenses incurred by Indemnitee (or, if applicable, reimburse Indemnitee for any
and all Expenses incurred by Indemnitee and previously paid by Indemnitee)
within five business days after such request (an "Expense Advance"). The Company
shall be obligated to make or pay an Expense Advance in advance of the final
disposition or conclusion of any Claim. In connection with any request for an
Expense Advance, if requested by the Company, Indemnitee or Indemnitee's counsel
shall submit an affidavit stating that the Expenses incurred were reasonable.
Any dispute as to the reasonableness of any Expense shall not delay an Expense
Advance by the Company, and the Company agrees that any such dispute shall be
resolved only upon the disposition or conclusion of the underlying Claim against
the Indemnitee. If, when, and to the extent that the Reviewing Party determines
that Indemnitee would not be permitted to be indemnified with respect to a Claim
under applicable law, the Company shall be entitled to be reimbursed by
Indemnitee and Indemnitee hereby agrees to reimburse the Company without
interest (which agreement shall be an unsecured obligation of Indemnitee) for
all related Expense Advances theretofore made or paid by the Company; provided,
however, that if Indemnitee has commenced legal proceedings in a court of
competent jurisdiction to secure a determination that Indemnitee should be
indemnified under applicable law, any determination made by the Reviewing Party
that Indemnitee would not be permitted to be indemnified under applicable law
shall not be binding and Indemnitee shall not be required to reimburse the
Company for any

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Expense Advance, and the Company shall be obligated to continue to make Expense
Advances, until a final judicial determination is made with respect thereto (as
to which all rights of appeal therefrom have been exhausted or lapsed). If there
has not been a Change in Control, the Reviewing Party shall be selected by the
Board of Directors of the Company. If there has been a Change in Control, the
Reviewing Party shall be advised by or shall be the Independent Legal Counsel
referred to in Section 3 hereof, if and as Indemnitee so requests. If there has
not been any determination by the Reviewing Party or if the Reviewing Party
determines that Indemnitee substantively would not be permitted to be
indemnified in whole or in part under applicable law, Indemnitee shall have the
right to commence litigation in any court of the States of California or
Delaware having subject matter jurisdiction thereof and in which venue is proper
seeking an initial determination by the court or challenging any such
determination by the Reviewing Party or any aspect thereof, and the Company
hereby consents to service of process and to appear in any such proceeding. Any
determination by the Reviewing Party otherwise shall be conclusive and binding
on the Company and Indemnitee.

3.   CHANGE IN CONTROL

          The Company agrees that, if there is a Change in Control and if
Indemnitee requests in writing that Independent Legal Counsel advise the
Reviewing Party or be the Reviewing Party, then the Company shall not deny any
indemnification payments (and Expense Advances shall continue to be paid by the
Company pursuant to Section 2(b)) that Indemnitee requests or demands under this
Agreement or any other agreement or law now or hereafter in effect relating to
Claims for Indemnifiable Events. The Company further agrees not to request or
seek reimbursement from Indemnitee of any related Expense Advances unless, with
respect to a denied indemnification payment, Independent Legal Counsel has
rendered its written opinion to the Company and Indemnitee that the Company
would not be permitted under applicable law to pay Indemnitee such
indemnification payment. The Company agrees to pay the reasonable fees of
Independent Legal Counsel referred to in this Section 3 and to indemnify fully
Independent Legal Counsel against any and all expenses (including attorneys'
fees), claims, liabilities, and damages arising out of or relating to this
Agreement or Independent Legal Counsel's engagement pursuant hereto.

4.   ESTABLISHMENT OF TRUST

          In the event of a Potential Change in Control, the Company shall, upon
written request by Indemnitee, create a trust for the benefit of Indemnitee (the
"Trust") and from time to time upon written request of Indemnitee the Company
shall fund the Trust in an amount sufficient to satisfy any and all Expenses
reasonably anticipated at the time of each such request to be incurred in
connection with investigating, preparing for, and defending any Claim relating
to an Indemnifiable Event, and any and all judgments, fines, penalties, and
settlement amounts of any and all Claims relating to an Indemnifiable Event from
time to time actually paid or claimed, reasonably anticipated, or proposed to be
paid. The amount or amounts to be deposited in the Trust pursuant to the
foregoing funding obligation shall be determined by the Reviewing Party, in any
situation in which Independent Legal Counsel referred to in Section 3 is
involved. The terms of the Trust shall provide that, upon a Change in Control,
(i) the Trust shall not be revoked

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or the principal thereof invaded, without the written consent of Indemnitee;
(ii) the trustee of the Trust shall advance, within five business days of a
request by Indemnitee, any and all Expenses to Indemnitee (and Indemnitee hereby
agrees to reimburse the Trust under the circumstances in which Indemnitee would
be required to reimburse the Company for Expense Advances under Section 2(b) of
this Agreement); (iii) the Trust shall continue to be funded by the Company in
accordance with the funding obligation set forth above; (iv) the trustee of the
Trust shall promptly pay to Indemnitee all amounts for which Indemnitee shall be
entitled to indemnification pursuant to this Agreement or otherwise; and (v) all
unexpended funds in that Trust shall revert to the Company upon a final
determination by the Reviewing Party or a court of competent jurisdiction, as
the case may be, that Indemnitee has been fully indemnified under the terms of
this Agreement. The trustee of the Trust shall be chosen by Indemnitee. Nothing
in this Section 4 shall relieve the Company of any of its obligations under this
Agreement. All income earned on the assets held in the trust shall be reported
as income by the Company for federal, state, local and foreign tax purposes.

5.   INDEMNIFICATION FOR ADDITIONAL EXPENSES

          The Company shall indemnify Indemnitee against any and all costs and
expenses (including attorneys' and expert witnesses' fees) and, if requested by
Indemnitee, shall (within five business days of that request) advance those
costs and expenses to Indemnitee, that are incurred by Indemnitee in connection
with any claim asserted against or action brought by Indemnitee for (i)
indemnification or advance payment of Expenses by the Company under this
Agreement or any other agreement or provision of the Company's Certificate of
Incorporation or Bylaws now or hereafter in effect relating to Claims for
Indemnifiable Events and/or (ii) recovery under any directors' and officers'
liability insurance policies maintained by the Company, regardless of whether
Indemnitee ultimately is determined to be entitled to that indemnification,
advance expense payment, or insurance recovery, as the case may be.

6.   PARTIAL INDEMNITY

          If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for some or a portion of the Expenses, judgments,
fines, penalties, and amounts paid in settlement of a Claim but not, however,
for all of the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion thereof to which Indemnitee is entitled. Moreover,
notwithstanding any other provision of this Agreement, to the extent that
Indemnitee has been successful on the merits or otherwise in defense of any or
all Claims relating in whole or in part to an Indemnifiable Event or in defense
of any issue or matter therein, including dismissal without prejudice,
Indemnitee shall be indemnified against all Expenses incurred in connection
therewith.

7.   CONTRIBUTION

          (a) Contribution Payment: To the extent the indemnification provided
for under any provision of this Agreement is determined (in the manner
hereinabove provided) not to be permitted under applicable law, then if
Indemnitee was, is, or becomes a party to or witness or

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other participant in, or is threatened to be made a party to or witness or other
participant in, a Claim by reason of (or arising in part out of) an
Indemnifiable Event, the Company, in lieu of indemnifying Indemnitee, shall
contribute to the amount of any and all Expenses, judgments, fines, or penalties
assessed against or incurred or paid by Indemnitee on account of that Claim and
any and all amounts paid in settlement of that Claim (including all interest,
assessments, and other charges paid or payable in connection with or in respect
of such Expenses, judgments, fines, penalties, or amounts paid in settlement)
for which such indemnification is not permitted ("Contribution Amounts"), in
such proportion as is appropriate to reflect the relative fault with respect to
the Indemnifiable Event giving rise to the Contribution Amounts of Indemnitee,
on the one hand, and of the Company and any and all other parties (including
officers and directors of the Company other than Indemnitee) who may be at fault
with respect to such Indemnifiable Event (collectively, including the Company,
the "Third Parties") on the other hand.

          (b) Relative Fault: The relative fault of the Third Parties and the
Indemnitee shall be determined (i) by reference to the relative fault of
Indemnitee as determined by the court or other governmental agency assessing the
Contribution Amount, or (ii) to the extent such court or other governmental
agency does not apportion relative fault, by the Reviewing Party (which shall
include Independent Legal Counsel) after giving effect to, among other things,
the relative intent, knowledge, access to information, and opportunity to
prevent or correct the applicable Indemnifiable Event and other relevant
equitable considerations of each party. The Company and Indemnitee agree that it
would not be just and equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation or by any other method of allocation which
does take account of the equitable considerations referred to in this Section
7(b).

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8.   BURDEN OF PROOF

          It shall be a defense to any action brought by the Indemnitee against
the Company to enforce this Agreement (other than an action brought to enforce a
claim for expenses incurred in defending a Claim in advance of its final
disposition where the required undertaking has been tendered by the Company)
that the Indemnitee has not met the standards of conduct that make it
permissible under the Delaware General Corporation Law for the Company to
indemnify the Indemnitee for the amount claimed. In connection with any
determination by the Reviewing Party or otherwise as to whether Indemnitee is
entitled to be indemnified under any provision of this Agreement or to receive
contribution pursuant to Section 7 of this Agreement, the burden of proof shall
be on the Company to establish that Indemnitee is not so entitled.

9.   NO PRESUMPTION

          For purposes of this Agreement, the termination of any claim, action,
suit, or proceeding, by judgment, order, settlement (whether with or without
court approval), or conviction, or upon a plea of nolo contendere, or its
equivalent, shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that a court has
determined that indemnification is not permitted by applicable law.

10.  NON-EXCLUSIVITY

          The rights of Indemnitee hereunder shall be in addition to any other
rights Indemnitee may have under the Company's Certificate of Incorporation or
Bylaws, the Delaware General Corporation Law or otherwise. To the extent that a
change in the Delaware General Corporation Law (whether by statute or judicial
decision) permits greater indemnification by agreement than would be afforded
currently under the Company's Certificate of Incorporation or Bylaws and this
Agreement, it is the intent of the parties hereto that Indemnitee shall enjoy by
this Agreement the greater benefits so afforded by that change.

11.  NO CONSTRUCTION AS EMPLOYMENT AGREEMENT

          Nothing contained herein shall be construed as giving Indemnitee any
right to be retained in the employ of the Company of any of its Subsidiaries.

12.  LIABILITY INSURANCE

          Except as otherwise agreed to by the Company and Indemnitee in a
written agreement, to the extent the Company maintains an insurance policy or
policies providing directors' and officers' liability insurance, Indemnitee
shall be covered by that policy or those policies, in accordance with its or
their terms, to the maximum extent of the coverage available for any Company
director or officer.

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13.  PERIOD OF LIMITATIONS

          No legal action shall be brought and no cause of action shall be
asserted by or on behalf of the Company or any affiliate of the Company against
Indemnitee or Indemnitee's spouse, heirs, executors, or personal or legal
representatives after the expiration of three years from the date of accrual of
that cause of action, and any claim or cause of action of the Company or its
affiliate shall be extinguished and deemed released unless asserted by the
timely filing of a legal action within that three-year period; provided,
however, that, if any shorter period of limitations is otherwise applicable to
any such cause of action, the shorter period shall govern.

14.  AMENDMENTS

          No supplement, modification, or amendment of this Agreement shall be
binding unless executed in writing by both of the parties hereto. No waiver of
any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provisions hereof (whether or not similar) nor shall that
waiver constitute a continuing waiver.

15.  SUBROGATION

          In the event of payment under this Agreement, the Company shall be
subrogated to the extent of that payment to all of the rights of recovery of
Indemnitee, who shall execute all papers required and shall do everything that
may be necessary to secure those rights, including the execution of the
documents necessary to enable the Company effectively to bring suit to enforce
those rights.

16.  NO DUPLICATION OF PAYMENTS

          The Company shall not be liable under this Agreement to make any
payment in connection with any claim made against Indemnitee to the extent
Indemnitee has otherwise actually received payment (under any insurance policy,
provision of the Company's charter or Bylaws or otherwise) of the amounts
otherwise indemnifiable hereunder.

17.  BINDING EFFECT; MERGER

          This Agreement shall be binding upon and inure to the benefit of and
be enforceable by the parties hereto and their respective successors, assigns
(including any direct or indirect successor by purchase, merger, consolidation,
or otherwise to all or substantially all of the business or assets of the
Company), spouses, heirs, and personal and legal representatives. The Company
shall require and cause any successor (whether direct or indirect by purchase,
merger, consolidation or otherwise) to all, substantially all, or by written
agreement in form and substance satisfactory to Indemnitee, expressly to assume
and agree to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform if no such succession had taken
place. This Agreement shall continue in effect regardless of whether Indemnitee
continues to serve as an officer or director of the Company or another
enterprise at the Company's request.

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18.  SEVERABILITY

          If any provision of this Agreement is held to be illegal, invalid, or
unenforceable under present or future laws effective during the term hereof,
that provision shall be fully severable; this Agreement shall be construed and
enforced as if that illegal, invalid, or unenforceable provision had never
comprised a part hereof; and the remaining provisions shall remain in full force
and effect and shall not be affected by the illegal, invalid, or unenforceable
provision or by its severance from this Agreement. Furthermore, in lieu of that
illegal, invalid, or unenforceable provision, there shall be added automatically
as a part of this Agreement a provision as similar in terms to the illegal,
invalid, or unenforceable provision as may be possible and be legal, valid, and
enforceable.

19.  GOVERNING LAW

          This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware applicable to contracts made
and to be performed in that state without giving effect to the principles of
conflicts of laws or choice of laws.

20.  CONSTRUCTION

          The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Pronouns shall be construed to include the masculine, feminine,
neuter, singular and plural as the context requires.

21.  NOTICES

          Whenever this Agreement requires or permits notice to be given by one
party to the other, such notice must be in writing to be effective and shall be
deemed delivered and received by the party to whom it is sent upon actual
receipt (by any means) of such notice. Receipt of a notice by any officer of the
Company shall be deemed receipt of such notice by the Company.

22.  COUNTERPARTS

          This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original, but in making proof hereof it shall not be
necessary to produce or account for more than one such counterpart.

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          IN WITNESS WHEREOF, the undersigned has executed this agreement as of
the date first written above.

                                    BAM! ENTERTAINMENT, INC.

                                    a Delaware corporation

                                    By:
                                       -----------------------------------
                                       Raymond C. Musci
                                       Chief Executive Officer and President

                                    INDEMNITEE:

                                    By:
                                       -----------------------------------

                                       11<PAGE>
Exhibit 10.36

                       AMERICAN SHARED HOSPITAL SERVICES

                             2001 STOCK OPTION PLAN

                                 I. INTRODUCTION

                1.1 PURPOSES. The purposes of the 2001 Stock Option Plan (the
"Plan") of American Shared Hospital Services (the "Company") and its
subsidiaries from time to time (individually a "Subsidiary" and collectively the
"Subsidiaries") are to align the interests of the Company's shareholders and the
recipients of options under this Plan by increasing the proprietary interest of
such recipients in the Company's growth and success and to advance the interests
of the Company by attracting and retaining officers and other key employees and
well-qualified persons who are not officers or employees of the Company for
service as directors ("non-employee directors"), consultants and advisors of the
Company. For purposes of this Plan, references to employment by the Company
shall also mean employment by a Subsidiary, which shall mean an entity in which
the Company directly or indirectly owns a majority of the voting interests or,
whether by contract or otherwise, has the power to control the policies of such
entity.

                1.2 ADMINISTRATION. This Plan shall be administered by a
committee (the "Committee") designated by the Board of Directors of the Company
(the "Board") consisting of two or more members of the Board.

                The Committee shall, subject to the terms of this Plan, select
eligible officers and other key employees for participation in this Plan and
shall determine the number of shares of Common Stock subject to each option
granted hereunder, the exercise price of such option, the time and conditions of
exercise of such option and all other terms and conditions of such option,
including, without limitation, the form of the option agreement. The Committee
shall, subject to the terms of this Plan, interpret this Plan and the
application thereof, establish rules and regulations it deems necessary or
desirable for the administration of this Plan and may impose, incidental to the
grant of an option, conditions with respect to the grant, such as limiting
competitive employment or other activities. All such interpretations, rules,
regulations and conditions shall be conclusive and binding on all parties. Each
option hereunder shall be evidenced by a written agreement (an "Agreement")
between the Company and the optionee setting forth the terms and conditions
applicable to such option.

                The Committee may delegate some or all of its power and
authority hereunder to the Chief Executive Officer or other executive officer of
the Company as the Committee deems appropriate; provided, however, that the
Committee may not delegate its power and authority with regard to the grant of
an award under this Plan to any person who is a "covered employee" within the
meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code") or who, in the Committee's judgment, is likely to be a covered employee
at any time during the period an option granted hereunder to such employee would
be outstanding.

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                No member of the Board of Directors or Committee, and neither
the Chief Executive Officer nor other executive officer to whom the Committee
delegates any of its power and authority hereunder, shall be liable for any act,
omission, interprctation, construction or determination made in connection with
this Plan in good faith, and the niembers of the Board of Directors and the
Committee and the Chief Executive Officer or other executive officer shall be
entitled to indemnification and reimbursement by the Company in respect of any
claim, loss, damage or expense (including attorneys' fees) arising therefrom to
the full extent permitted by law and under any directors' and officers'
liability insurance that may be in effect from time to time.

                A majority of the Committee shall constitute a quorum. The acts
of the Committee shall be either (i) acts of a majority of the members of the
Committee present at any meeting at which a quorum is present or (ii) acts
approved in writing by a majority of the members of the Committee without a
meeting.

                1.3 ELIGIBILITY. Participants in this Plan shall consist of such
officers and other key employees of the Company and its Subsidiaries, and such
non-employee consultants and advisors, as the Committee in its sole discretion
may select from time to time; provided, however, that any officer who
beneficially owns more than 15% of the outstanding shares of Common Stock shall
not be eligible to participate in the Plan. The Committee's selection of a
person to participate in this Plan at any time shall not require the Committee
to select such person to participate in this Plan at any other time.
Non-employee directors of the Company shall be eligible to participate in this
Plan in accordance with Section III.

                1.4 SHARES AVAILABLE. Subject to adjustment as provided in
Section 4.7, 250,000 common shares, without par value, of the Company ("Common
Stock"), shall be available for grants of options under this Plan, 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 subject to an
outstanding option are not issued or delivered by reason of the expiration,
termination, cancellation or forfeiture of such option or by reason of the
delivery or withholding of shares of Common Stock to pay all or a portion of the
exercise price of such option, if any, or to satisfy all or a portion of the tax
withholding obligations relating to such option, then such shares of Common
Stock shall again be available under this Plan.

                Shares of Common Stock to be delivered under this Plan shall be
made available from authorized and unissued shares of Common Stock.

                                II. STOCK OPTIONS

                2.1 GRANTS OF STOCK OPTIONS. The Committee may, in its
discretion, grant options to purchase shares of Common Stock to such eligible
persons as may be selected by the Committee. Each option, or portion thereof,
that is not an incentive stock option, shall be a non-qualified stock option. An
incentive stock option shall mean an option to purchase shares of Common Stock
that meets the requirements of the Code, or any successor provision, which is
intended by the Committee to constitute an incentive stock option. Each
incentive stock option

<PAGE>

shall be granted within ten years of the effective date of this Plan. To the
extent that the aggregate Fair Market Value (determined as of the date of grant)
of shares of Common Stock with respect to which options designated as incentive
stock options are exercisable for the first time by a participant during any
calendar year (under this Plan or any other plan of the Company, or any parent
or Subsidiary) exceeds the amount (currently $100,000) established by the Code,
such options shall constitute non-qualified stock options. "Fair Market Value"
shall mean the closing transaction price of a share of Common Stock as reported
in the American Stock Exchange Composite Transactions on the date as of which
such value is being determined or, if there shall be no reported transaction on
such date, on the next preceding date for which a transaction was reported;
provided that if Fair Market Value for any date cannot be determined as above
provided, Fair Market Value shall be determined by the Committee by whatever
means or method as the Committee, in the good faith exercise of its discretion,
shall at such time deem appropriate.

                2.2 TERMS OF STOCK OPTIONS. Options shall be subject to the
following terms and conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of this Plan, as the Committee shall
deem advisable:

                        (a) Number of Shares and Purchase Price. The number of
shares of Common Stock subject to an option and the purchase price per share of
Common Stock purchasable upon exercise of the option shall be determined by the
Committee; provided, however, that the purchase price per share of Common Stock
purchasable upon exercise of a non-qualified stock option shall not be less than
25% of the Fair Market Value of a share of Common Stock on the date of grant of
such option and the purchase price per share of Common Stock purchasable upon
exercise of an incentive stock option shall not be less than 100% of the Fair
Market Value of a share of Common Stock on the date of grant of such option;
provided further, that if an incentive stock option shall be granted to any
person who, at the time such option is granted, owns capital stock possessing
more than ten percent of the total combined voting power of all classes of
capital stock of the Company (a "Ten Percent Holder"), the purchase price per
share of Common Stock shall be the price (currently 110% of Fair Market Value)
required by the Code in order to constitute an incentive stock option.

                        (b) Option Period and Exercisabilitv. The period during
which an option may be exercised shall be determined by the Committee and set
forth in the Agreement relating to such option; provided, however, that no
option shall be exercised later than ten years after its date of grant; provided
further, that if an incentive stock option shall be granted to a Ten Percent
Holder, such option shall not be exercised later than five years after its date
of grant. The Committee shall determine whether an option shall become
exercisable in cumulative or non-cumulative installments and in part or in full
at any time. An exercisable option, or portion thereof, may be exercised only
with respect to whole shares of Common Stock. At any time after the grant of an
option the Committee may, in its sole discretion and subject to whatever terms
and conditions it determines appropriate, accelerate the period during which an
option is exercisable.

                        (c) Method of Exercise. An option may be exercised (i)
by giving written notice to the Company specifying the number of whole shares of
Common Stock to be

<PAGE>

purchased and accompanied by payment therefor in full (or arrangement made for
such payment to the Company's satisfaction) either (A) in cash, (B) by delivery
of previously owned whole shares of Common Stock for which the optionee has good
title, free and clear of all liens and encumbrances, and having a Fair Market
Value, determined as of the date of exercise, equal to the aggregate purchase
price payable by reason of such exercise, (C) by authorizing the Company to
withhold whole shares of Common Stock which would otherwise be delivered upon
exercise of the option having a Fair Market Value, determined as of the date of
exercise, equal to the aggregate purchase price payable by reason of such
exercise, (D) in cash by a broker-dealer acceptable to the Company to whom the
optionee has submitted an irrevocable notice of exercise together with
irrevocable instructions to sell a sufficient portion of the shares and deliver
the sale proceeds to the Company, or (E) a combination of (A), (B) and (C), in
each case to the extent set forth in the Agreement relating to the option and
(ii) by executing such documents as the Company may reasonably request. The
Committee shall have sole discretion to disapprove of an election pursuant to
any of clauses (B)-(E) and in the case of an optionee who is subject to Section
16 of the Securities Exchange Act of 1934 ("Exchange Act"), the Company may
require that the method of making such payment be in compliance with Section 16
and the rules and regulations thereunder. Any fraction of a share of Common
Stock which would be required to pay such purchase price shall be disregarded
and the remaining amount due shall be paid in cash by the optionee. No
certificate representing Common Stock shall be delivered until the full purchase
price therefor has been paid.

                        (d) Additional Options. The Committee shall have the
authority to include in any Agreement relating to an option a provision
entitling the optionee to an additional option in the event such optionee
exercises the option represented by such option agreement, in whole or in part,
by delivering previously owned whole shares of Common Stock in payment of the
purchase price in accordance with this Plan and such Agreement. Any such
additional option shall be for a number of shares of Common Stock equal to the
number of delivered shares, shall have a purchase price determined by the
Committee in accordance with this Plan, shall be exercisable on the terms and
subject to the conditions established by the Committee at the time of grant of
such additional option, and shall be subject to such other terms and conditions
as the Committee shall determine in accordance with this Plan.

                2.3 TERMINATION OF EMPLOYMENT OR DIRECTORSHIP.

                        (a) Permanent and Total Disability. Subject to Section
4.8 and unless otherwise specified in the Agreement relating to an option, if an
optionee's employment or directorship with the Company terminates by reason of
Permanent and Total Disability (as defined in Section 22(e)(3) of the Code),
each option held by such optionee shall be exercisable only to the extent that
such option is exercisable on the effective date of such termination and may
thereafter be exercised by such optionee (or such optionee's legal
representative or similar person) until and including the earliest to occur of
(i) the date which is one year (or such shorter period as set forth in the
Agreement relating to such option) after the effective date of such termination
and (ii) the expiration date of the term of such option.

                        (b) Death. Subject to Section 4.8 and unless otherwise
specified in the Agreement relating to an option, if an optionee's employment or
directorship with the

<PAGE>

Company terminates by reason of death, each option held by such optionee shall
be exercisable only to the extent that such option is exercisable on the date of
such optionee's death and may thereafter be exercised by such optionee's
executor, administrator, legal representative, beneficiary or similar person, as
the case may be, until and including the earliest to occur of (i) the date which
is one year (or such shorter period as set forth in the Agreement relating to
such option) after the date of death and (ii) the expiration date of the term of
such option.

                        (c) Other Termination. Subject to Section 4.8 and unless
otherwise specified in the Agreement relating to an option, if an optionee's
employment or directorship with the Company terminates for any reason other than
Permanent or Total Disability or death, each option held by such optionee shall
be exercisable only to the extent that such option is exercisable on the
effective date of such optionee's termination and may thereafter be exercised by
such optionee (or such optionee's legal representative or similar person) until
and including the earliest to occur of (i) the date which is three months (or
such shorter period as set forth in the Agreement relating to such option) after
the effective date of such optionee's termination and (ii) the expiration date
of the term of such option; provided that if such optionee's employment is
terminated for Cause, all options held by such optionee shall terminate
automatically on the effective date of such optionee's termination of
employment. For purposes of this Plan, "Cause" shall mean termination for
commission of an act of dishonesty, theft, fraud, embezzlement, falsification of
books and records, continued or prolonged intoxication, both alcohol and drug
related, and conviction of a felony or a crime involving moral turpitude, and in
any event, the determination of the Committee with respect thereto shall be
final and conclusive.

                        (d) Death Following Termination of Employment. Subject
to Section 4.8 and unless otherwise specified in the Agreement relating to an
option, if an optionee dies during the one-year period following termination by
reason of Permanent and Total Disability, or if an optionee dies during the
three-month period following termination for any reason other than Permanent or
Total Disability or death (or, in each case, such shorter period as the
Committee may specify in the Agreement relating to an option), each option held
by such optionee shall be exercisable only to the extent that such option is
exercisable on the date of such optionee's death and may thereafter be exercised
by such optionee's executor, administrator, legal representative, beneficiary or
similar person, as the case may be, until and including the earliest to occur of
(i) the date which is one year (or such shorter period as set forth in the
Agreement relating to such option) after the date of death and (ii) the
expiration date of the term of such option.

                        (e) Unexercisable Options. No portion of an option which
is unexercisable as of the date on which an optionee's employment or
directorship with the Company terminates shall thereafter become exercisable;
provided, however, that provision may be made in the Agreement relating to such
option that such option shall become exercisable, with the consent of the
Committee, in the event of a termination of employment because of the optionee's
normal retirement or permanent and total disability (each as determined by the
Committee in accordance with Company policies), or death, or in the event of
termination of directorship upon expiration of the regular term thereof.

<PAGE>

        III. PROVISIONS RELATING TO NON-EMPLOYEE DIRECTORS

                3.1 ELIGIBILITY. Each member of the Board of Directors of the
Company who is not an employee, either full-time or part-time, of the Company or
a Subsidiary shall be granted options to purchase shares of Common Stock in
accordance with this Section III. All options granted under this Section III
shall be non-qualified stock options.

                3.2 GRANTS OF STOCK OPTIONS. Each non-employee director shall be
granted non-qualified stock options as folio

                        (a) Time of Grant. Commencing with the 2001 annual
meeting of stockholders (or, if later, on the date on which a person is first
elected or begins to serve as a non-employee director other than by reason of
termination of employment), and, thereafter, on the date of each annual meeting
of stockholders of the Company, each person who is a non-employee director after
such meeting of stockholders shall be granted an option to purchase 4,000 shares
of Common Stock (which amount shall be pro-rated if such person is first elected
or begins to serve as a non-employee director on a date other than the date of
an annual meeting of stockholders) at a purchase price per share equal to the
Fair Market Value of the Common Stock on the date of grant of such option;
provided, that the aggregate number of options granted to any person hereunder
or under any other plan of the Company, including, but not limited to, the 1995
Stock Option Plan, shall not exceed 12,000.

                        (b) Option Period and Exercisability. Each option
granted under this Article III shall be fully exercisable one year after its
date of grant (unless the Agreement relating to such option specifies an earlier
date, either as to all or a portion of the shares covered thereby) and shall
expire ten years after its date of grant. An exercisable option, or portion
thereof, may be exercised in whole or in part only with respect to whole shares
of Common Stock. Options granted under this Article HI shall be exercisable in
accordance with Section 2.2(c) and shall be subject to the provisions of
Sections 2.3(a) through (d) in the event of the termination of a director's
service on the Board.

                                   IV. GENERAL

                4.1 EFFECTIVE DATE AND TERM OF PLAN. This Plan will be submitted
for the approval of the Company's stockholders within 12 months after the date
of the Board's initial adoption of this Plan. Options may be granted prior to
such stockholder approval, provided that such Options shall not be exercisable
prior to the time when this Plan is approved by the stockholders, and provided
further that if such approval has not been obtained at the end of said 12-month
period, all options previously granted shall thereupon be cancelled and become
null and void. This Plan shall terminate ten years after its effective date
unless terminated earlier by the Board. Termination of this Plan shall not
affect the terms or conditions of any option granted prior to termination.
Options may be granted hereunder at any time prior to the termination of this
Plan, provided that no award may be made later than ten years after the
effective date of this Plan.

                4.2 AMENDMENTS. The Board may amend this Plan as it shall deem

<PAGE>

advisable, subject to any requirement of stockholder approval required by
applicable law, rule or regulation; provided, however, that no amendment shall
be made without stockholder approval if such amendment would (a) increase the
maximum number of shares of Common Stock available under this Plan (subject to
Section 4.7), (b) reduce the minimum purchase price per share of Common Stock
subject to an option, (c) effect any change inconsistent with Section 422 of the
Code, or (d) extend the term of this Plan or the maximum period during which an
option may be exercised; provided, further, that this Plan shall not be amended
in a manner which fails to comply with Rule l6b-3(c)(2)(ii)(B) under Section 16
of the Exchange Act. No amendment may impair the rights of a holder of an
outstanding option without the consent of such holder.

                4.3 AGREEMENT. No option shall be valid until an Agreement is
executed by the Company and the optionee and, upon execution by the Company and
the optionee and delivery of the Agreement to the Company, such option shall be
effective as of the effective date set forth in the Agreement.

                4.4 NON-TRANSFERABILITY. No option hereunder shall be
transferable other than by will or the laws of descent and distribution or
pursuant to the beneficiary designation procedures set forth in Section 4.11.
Each option may be exercised during the optionee's lifetime only by the optionee
or the optionee's legal representative or similar person. Except as permitted by
the second preceding sentence, no option hereunder shall be sold, transferred,
assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by
operation of law or otherwise) or be subject to execution, attachment or similar
process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate,
encumber or otherwise dispose of any option hereunder, such option and all
rights thereunder shall immediately become null and void.

                4.5 TAX WITHHOLDING. The Company shall have the right to
require, prior to the issuance or delivery of any shares of Common Stock,
payment by the optionee of any Federal, state, local or other taxes which may be
required to be withheld or paid in connection with an option hereunder. An
Agreement may provide that (i) the Company shall withhold whole shares of Common
Stock which would otherwise be delivered upon exercise of the option having an
aggregate Fair Market Value determined as of the date the obligation to withhold
or pay taxes arises in connection with the option (the `Tax Date") in the amount
necessary to satisfy any such obligation or (ii) the optionee may satisfy any
such obligation by any of the following means:

(A) a cash payment to the Company, (B) delivery to the Company of previously
owned whole shares of Common Stock for which the optionee has good title, free
and clear of all liens and encumbrances, and having an aggregate Fair Market
Value determined as of the Tax Date, equal to the amount necessary to satisfy
any such obligation, (C) authorizing the Company to withhold whole shares of
Common Stock which would otherwise be delivered upon exercise of the option
having an aggregate Fair Market Value determined as of the Tax Date, (D) a cash
payment by a broker-dealer acceptable to the Company to whom the optionee has
submitted an irrevocable notice of exercise together with irrevocable
instructions to sell a sufficient portion of the shares and deliver the sale
proceeds to the Company or (E) any combination of (A), (B) and (C), in each case
to the extent set forth in the Agreement relating to the option; provided,
however, that the Committee shall have sole discretion to disapprove of an
election pursuant to any of clauses (B)(E) and that in the case of an optionec
who is subject to Section 16 of the Exchange Act, the Company may require that
the method of satisfying any such obligation be in compliance with

<PAGE>

Section 16 and the rules and regulations thereunder. An Agreement may provide
for shares of Common Stock to be delivered or withheld having a Fair Market
Value in excess of the minimum amount required to be withheld. Any fraction of a
share of Common Stock which would be required to satisfy such an obligation
shall be disregarded and the remaining amount due shall be paid in cash by the
optionee.

                4.6 RESTRICTIONS ON SHARES. Each option hereunder shall be
subject to the requirement that if at any time the Company determines that the
listing, registration or qualification of the shares of Common Stock subject to
such option upon any securities exchange or under any law, or the nsent or
approval of any governmental body, or the taking of any other action is
necessary or desirable as a condition of, or in connection with, the delivery of
shares thereunder, such shares shall not be delivered unless such listing,
registration, qualification, consent, approval or other action shall have been
effected or obtained, free of any conditions not acceptable to the Company. The
Company may require that certificates evidencing shares of Common Stock
delivered pursuant to any option hereunder bear a legend indicating that the
sale, transfer or other disposition thereof by the holder is prohibited except
in compliance with the Securities Act of 1933, as amended, and the rules and
regulations thereunder.

                4.7 ADJUSTMENT. In the event of any stock split, stock dividend,
recapitalization, reorganization, merger, consolidation, combination, exchange
of shares, liquidation, spin-off or other similar change in capitalization or
event, or any distribution to holders of Common Stock other than a regular cash
dividend, the number and class of securities available under this Plan, the
number and class of securities subject to each outstanding option, the purchase
price per security, and the number of securities subject to each option to be
granted to non-employee directors pursuant to Article III shall be appropriately
adjusted by the Committee, such adjustments to be made in the case of
outstanding options without an increase in the aggregate purchase price. The
decision of the Committee regarding any such adjustment shall be final, binding
and conclusive. If any adjustment would result in a fractional security being
(i) available under this Plan, such fractional security shall be disregarded, or
(ii) subject to an option under this Plan, the Company shall pay the optionee,
in connection with the first exercise of the option in whole or in part,
occurring after such adjustment, an amount in cash determined by multiplying (A)
the fraction of such security (rounded to the nearest hundredth) by (B) the
excess, if any, of (x) the Fair Market Value on the exercise date over (y) the
exercise price of the option.

                4.8 CHANGE IN CONTROL.

                        (a) (1) Notwithstanding any provision in this Plan or
any Agreement, in the event of a Change in Control pursuant to Section (b)(3) or
(4) below in connection with which the holders of Common Stock receive shares of
common stock that are registered under Section 12 of the Exchange Act, there
shall be substituted for each share of Common Stock available under this Plan,
whether or not then subject to an outstanding option, the number and class of
shares into which each outstanding share of Common Stock shall be converted
pursuant to such Change in Control. In the event of any such substitution, the
purchase price per share of each option shall be appropriately adjusted by the
Committee, such adjustments to be made without an increase in the aggregate
purchase price or base price.

<PAGE>

                                (2) Notwithstanding any provision in this Plan
or any Agreement, in the event of a Change in Control pursuant to Section (b)(1)
or (2) below, or in the event of a Change in Control pursuant to Section (b)(3)
or (4) below in connection with which the holders of Common Stock receive
consideration other than shares of common stock that are registered under
Section 12 of the Exchange Act, each outstanding option shall be surrendered to
the Company by the holder thereof, and each such option shall immediately be
cancelled by the Company, and the holder shall receive, within ten days of the
occurrence of a Change in Control pursuant to Section (b)( 1) or (2) below or
within ten days of the approval of the stockholders of the Company contemplated
by Section (b)(3) or (4) below, a cash payment from the Company in an amount
equal to the number of shares of Common Stock then subject to such option,
multiplied by the excess, if any, of (i) the greater of (A) the highest per
share price offered to stockholders of the Company in any transaction whereby
the Change in Control takes place or (B) the Fair Market Value of a share of
Common Stock on the date of occurrence of the Change in Control over (ii) the
purchase price per share of Common Stock subject to the option. The Company may,
but is not required to, cooperate with any person who is subject to Section 16
of the Exchange Act to assure that any cash payment in accordance with the
foregoing to such person is made in compliance with Section 16 and the rules and
regulations thereunder.

                        (b) "Change in Control" shall mean:

                                (1) the acquisition by any individual, entity or
group (a "Person"), including any "person" within the meaning of Section
13(d)(3) or 14(d)(2) of the Exchange Act, of beneficial ownership within the
meaning of Rule 13d-3 promulgated under the Exchange Act, of 25% or more of
either (i) the then outstanding shares of common stock of the Company (the
"Outstanding Company Common Stock") or (ii) the combined voting power of the
then outstanding securities of the Company entitled to vote generally in the
election of directors (the "Outstanding Company Voting Securities"); excluding,
however, the following: (A) any acquisition directly from the Company (excluding
any acquisition resulting from the exercise of an exercise, conversion or
exchange privilege unless the security being so exercised, converted or
exchanged was acquired directly from the Company), (B) any acquisition by the
Company, (C) any acquisition by an employee benefit plan (or related trust)
sponsored or maintained by the Company or any corporation controlled by the
Company or (D) any acquisition by any corporation pursuant to a transaction
which complies with clauses (i), (ii) and (iii) of subsection (3) of this
Section 4.8(b);

                                (2) individuals who, as of the effective date of
the Plan, constitute the Board of Directors (the "Incumbent Board") cease for
any reason to constitute at least a majority of such Board; provided that any
individual who becomes a director of the Company subsequent to the effective
date of the Plan whose election, or nomination for election by the Company's
stockholders, was approved by the vote of at least a majority of the directors
then comprising the Incumbent Board shall be deemed a member of the Incumbent
Board; and provided further, that any individual who was initially elected as a
director of the Company as a result of an actual or threatened election contest,
as such terms are used in Rule 14a-11 of Regulation 14A promulgated under the
Exchange Act, or any other actual or threatened solicitation of proxies or
consents by or on behalf of any Person other than the Board shall not be deemed
a member of the Incumbent Board;

<PAGE>

                                (3) approval by the stockholders of the Company
of a reorganization, merger or consolidation or sale or other disposition of all
or substantially all of the assets of the Company (a "Corporate Transaction");
excluding, however, a Corporate Transaction pursuant to which (i) all or
substantially all of the individuals or entities who are the beneficial owners,
respectively, of the Outstanding Company Common Stock and the Outstanding
Company Voting Securities immediately prior to such Corporate Transaction will
beneficially own, directly or indirectly, more than 60% of, respectively, the
outstanding shares of common stock, and the combined voting power of the
outstanding securities of such corporation entitled to vote generally in the
election of directors, as the case may be, of the corporation resulting from
such Corporate Transaction (including, without limitation, a corporation which
as a result of such transaction owns the Company or all or substantially all of
the Company's assets either directly or indirectly) in substantially the same
proportions relative to each other as their ownership, immediately prior to such
Corporate Transaction, of the Outstanding Company Common Stock and the
Outstanding Company Voting Securities, as the case may be, (ii) no Person (other
than: the Company; any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company; the
corporation resulting from such Corporate Transaction; and any Person which
beneficially owned, immediately prior to such Corporate Transaction, directly or
indirectly, 25% or more of the Outstanding Company Common Stock or the
Outstanding Company Voting Securities, as the case may be) will beneficially
own, directly or indirectly, 25% or more of, respectively, the outstanding
shares of common stock of the corporation resulting from such Corporate
Transaction or the combined voting power of the outstanding securities of such
corporation entitled to vote generally in the election of directors and (iii)
individuals who were members of the Incumbent Board will constitute at least a
majority of the members of the board of directors of the corporation resulting
from such Corporate Transaction; or

                                (4) approval by the stockholders of the Company
of a plan of complete liquidation or dissolution of the Company.

                4.9 NO RIGHT OF PARTICIPATION OR EMPLOYMENT. No person shall
have any right to participate in this Plan. Neither this Plan nor any option
granted hereunder shall confer upon any person any right to continued employment
by the Company, any Subsidiary or any affiliate of the Company or affect in any
manner the right of the Company, any Subsidiary or any affiliate of the Company
to terminate the employment of any person at any time without liability
hereunder.

                4.10 RIGHTS AS STOCKHOLDER. No person shall have any right as a
stockholder of the Company with respect to any shares of Common Stock which are
subject to an option hereunder until such person becomes a stockholder of record
with respect to such shares of Common Stock.

                4.11 DESIGNATION OF BENEFICIARY. Each optionee may file with the
Committee a written designation of one or more persons as such optionee's
beneficiary or beneficiaries (both primary and contingent) in the event of the
optionee's death. To the extent an outstanding option granted hereunder is
exercisable, such beneficiary or beneficiaries shall be entitled to exercise
such option.

<PAGE>

                Each beneficiary designation shall become effective only when
filed in writing with the Committee during the optionee's lifetime on a form
prescribed by the Committee. The spouse of a married optionee domiciled in a
community property jurisdiction shall join in any designation of a beneficiary
other than such spouse. The filing with the Committee of a new beneficiary
designation shall cancel all previously filed beneficiary designations.

                If an optionee fails to designate a beneficiary, or if all
designated beneficiaries of an optionee predecease the optionee, then each
outstanding option hereunder held by such optionee, to the extent exercisable,
may be exercised by such optionee's executor, administrator, legal
representative or similar person.

                4.12 GOVERNING LAW. This Plan, each option hereunder and the
related Agreement, and all determinations made and actions taken pursuant
thereto, to the extent not otherwise governed by the Code or the laws of the
United States, shall be governed by the laws of the State of California and
construed in accordance therewith with out giving effect to principles of
conflicts of laws.

                                            Adopted by the Board of Directors
                                            on November 30, 2000

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