<DOCUMENT>
<TYPE>EX-10.36
<SEQUENCE>3
<FILENAME>f76675ex10-36.txt
<DESCRIPTION>EXHIBIT 10.36
<TEXT>
<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.


<PAGE>

                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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</DOCUMENT>
