EXHIBIT (10) (iii) 1




                                 AMENDMENT NO. 1
                          TO THE CH ENERGY GROUP, INC.
                   LONG-TERM PERFORMANCE-BASED INCENTIVE PLAN


         WHEREAS,   the  CH  Energy  Group,   Inc.   ("Corporation")   Long-Term
Performance-Based  Incentive Plan ("Plan") became  effective on January 1, 2000;
and

         WHEREAS,  the  Corporation  wishes  to amend  the Plan to  provide  for
Non-qualified Stock Options to be granted to Non-Employee Directors;

         NOW,  THEREFORE,  in furtherance of such goal and pursuant to authority
of the Board of Directors of the  Corporation  granted on November 17, 2000, the
Plan is hereby amended, and as so amended, restated,  effective January 1, 2001,
to read as set forth in Appendix A attached  hereto,  subject,  however,  to the
approval  of a  majority  of all  outstanding  shares  of  Common  Stock  of the
Corporation  entitled to vote at the 2001 Annual Meeting of  Shareholders of the
Corporation.

         Pursuant  to  said  authorization  of the  Board  of  Directors  of the
Corporations,  I have executed  this  Amendment No. 1 this 17th day of November,
2000.

                                                     /s/ Paul J. Ganci
                                              --------------------------------
                                                        PAUL J. GANCI
                                              Chairman of the Board, President
                                              and Chief Executive Officer

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                                                                      APPENDIX A

                              CH ENERGY GROUP, INC.

                   LONG-TERM PERFORMANCE-BASED INCENTIVE PLAN

            (Effective as of January 1, 2000 and thereafter amended)

                         SECTION 1. PURPOSE; DEFINITIONS


The Plan has been structured in accordance with the following principles for the
Corporation and its Affiliates:

         (1)   Establishing   and   maintaining   salaries  of  key  executives,
               including base  compensation and short and long-term  incentives,
               at competitive market levels;

         (2)   Establishing a portion of  compensation  that is at risk and tied
               to performance relative to specific objectives; and

         (3)   The Plan establishes long-term incentives that include:

               (a)   Annual awards of performance based  shares that are awarded
                     on the basis of achieving superior total shareholder return
                     as measured against an industry index; and

               (b)   Awarding  stock options,  the value  of which  are directly
                     tied  to  the  long-term  increased  market  value  of  the
                     Corporation's common stock.

For purposes of the Plan, the following terms are defined as set forth below:

a.  "Affiliate"   means  a  corporation  or  other  entity   controlled  by  the
    Corporation  and designated by the Committee,  as defined in Section 2, from
    time to time as such.

b.  "Award" means a Stock Appreciation  Right,  Stock Option,  Restricted Stock,
    Performance Share or Performance Unit.

c.  "Award  Cycle" shall mean a period of  consecutive  fiscal years or portions
    thereof  designated by the  Committee  over which Awards are to be earned or
    are to vest.

d.  "Board" means the Board of Directors of the Corporation.

e.  "Cause" means (1) conviction of a participant  for committing a felony under
    federal  law or the law of the  state in which  such  action  occurred,  (2)
    dishonesty in the course of fulfilling a participant's  employment duties or
    (3) willful and deliberate

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    failure on the part of a  participant  to perform  employment  duties in any
    material  respect,  or such  other  events  as  shall be  determined  by the
    Committee. The Committee shall have the sole discretion to determine whether
    "Cause" exists, and its determination shall be final.

f.  "Change of Control"  and "Change of Control  Price"  have the  meanings  set
    forth in Sections 10(b) and (c), respectively.

g.  "Code"  means the  Internal  Revenue  Code of 1986,  as amended from time to
    time, and any successor thereto.

h.  "Commission"  means the Securities and Exchange  Commission or any successor
    agency.

i.  "Committee" means the Committee, as defined in Section 2.

j.  "Common Stock" means the common stock of the Corporation.

k.  "Corporation" means CH Energy Group, Inc., a New York corporation.

l.  "Covered Employee" means a participant,  including a Non-Employee  Director,
    designated  prior to the grant of an Award or Awards by the Committee who is
    or may be a "covered  employee"  within the meaning of Section  162(m)(3) of
    the Code in the year in which an award or awards are  expected to be taxable
    to such participant.

m.  "Disability"  means  permanent  and total  disability  as  determined  under
    procedures established by the Committee for purposes of the Plan.

n.  "Early   Retirement"  means  retirement  from  active  employment  with  the
    Corporation or an Affiliate  pursuant to the early retirement  provisions of
    the  applicable  pension  plan  of  such  employer;  and  in the  case  of a
    Non-Employee Director,  shall mean when such Non-Employee Director ceases to
    be a Director of the Corporation.

o.  "Exchange  Act" means the  Securities  Exchange Act of 1934, as amended from
    time to time, and any successor thereto.

p.  "Fair  Market  Value"  means,  as of any given  date,  the mean  between the
    highest and lowest reported sales prices of the  Corporation's  Common Stock
    on the New York  Stock  Exchange  Composite  Tape or, if not  listed on such
    exchange,  on any other  national  securities  exchange  on which the Common
    Stock is listed or on NASDAQ.  If there is no regular  public trading market
    for such Common  Stock,  the Fair Market  Value of the Common Stock shall be
    determined by the Committee in good faith.

q.  "Incentive Stock Option" means any Stock Option designated as, and qualified
    as, an  "Incentive  Stock  Option"  within the meaning of Section 422 of the
    Code.

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r.  "Non-qualified Stock Option" means any Stock Option that is not an Incentive
    Stock Option.

s.  "Non-Employee  Director"  means  a  member  of the  Corporation's  Board  of
    Directors  who  qualifies  as a  Non-Employee  Director  as  defined in Rule
    16b-3(b)(3), as promulgated by the Commission under the Exchange Act, or any
    successor definition adopted by the Commission.

t.  "Normal  Retirement"  means  retirement  from  active  employment  with  the
    Corporation,  or an  Affiliate  at or  after  age 65;  and in the  case of a
    Non-Employee Director, shall mean, when such Non-Employee Director ceases to
    be a Director of the Corporation.

u.  "Performance Goals" means the performance goals established by the Committee
    prior to the grant of Restricted  Stock,  Performance  Shares or Performance
    Units  that are based on the  attainment  of one or any  combination  of the
    following:   Specified   levels  of  earnings  per  share  from   continuing
    operations,  operating income, revenues, return on assets, return on equity,
    return  on  invested  capital,  shareholder  value,  economic  value  added,
    shareholder  return (measured in terms of stock price  appreciation)  and/or
    total  shareholder  return  (measured  in terms of stock price  appreciation
    and/or  dividend  growth),  achievement of cost controls,  delivery cost per
    kilowatthour  or delivery  cost per  millions of cubic feet of natural  gas,
    customer  satisfaction  ratings,  frequency  or  duration of electric or gas
    service  interruptions,  number of or  severity of gas leaks,  avoidance  of
    environmental,  public  or  employee  safety  problems,  realization  of the
    regulated  return on equity,  or the price of the Common  Stock,  fixed on a
    company-wide  basis  or with  reference  to the  Affiliate,  business  unit,
    division  or  department  of  the   Corporation  for  or  within  which  the
    participant  is primarily  employed,  and that are intended to qualify under
    Section  162(m)(4)(C) of the Code. Such Performance  Goals also may be based
    upon  attaining  specified  levels of  performance  under one or more of the
    measures described above relative to the performance of other  corporations.
    Such Performance  Goals shall be set by the Committee within the time period
    prescribed by Section 162(m) of the Code and related regulations.

v.  "Performance  Units_ or  "Performance  Shares" means awards made pursuant to
    Section 8 or Section 9 respectively.

w.  "Plan" means the Corporation's Long-Term  Performance-Based  Incentive Plan,
    as set forth herein and as hereinafter amended from time to time.

x.  "Restricted Stock" means an award granted under Section 7.

y.  "Retirement" means Normal or Early Retirement.

z.  "Rule  16b-3"  means Rule 16b-3,  as  promulgated  by the  Commission  under
    Section 16(b) of the Exchange Act, as amended from time to time.

aa. "Stock Appreciation Right" means a right granted under Section 6.

bb. "Stock Option" means an option granted under Section 5.


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cc. "Termination  of  Employment"  means the  termination  of the  participant's
    employment  with the  Corporation  and any  Affiliate;  and in the case of a
    Non-Employee  Director shall mean when such Non-Employee  Director ceases to
    be a Director of the  Corporation.  A  participant  employed by an Affiliate
    shall also be deemed to incur a  Termination  of Employment if the Affiliate
    ceases to be such an  Affiliate  and the  participant  does not  immediately
    thereafter  become an  employee  of the  Corporation  or another  Affiliate.
    Temporary absences from employment because of illness,  vacation or leave of
    absence and transfers  among the  Corporation  and  Affiliates  shall not be
    considered Terminations of Employment.

In addition, certain other terms  used herein have  definitions given to them in
the first place in which they are used.

                            SECTION 2. ADMINISTRATION

The  Corporation,  acting by and  through  its Board of  Directors,  shall  have
overall  responsibility  for the  operation  of the  Plan.  The  Plan  shall  be
administered by the Committee on Compensation and  Succession/Retirement or such
other  committee of the Board as the Board may from time to time  designate (the
"Committee"),  which  shall  be  composed  of not  less  than  two  Non-Employee
Directors,  each of whom  shall be  required  to be an  "outside  director"  for
purposes of Section  162(m)(4) of the Code,  and shall be appointed by and serve
at the pleasure of the Board.

The Committee shall have plenary authority to grant Awards pursuant to the terms
of the Plan to officers and employees of the  Corporation and its Affiliates and
Non-qualified Stock Options to Non-Employee Directors of the Corporation.

Among other things, the Committee shall have the authority, subject to the terms
of the Plan and subject to approval of the Board:

(a) To select  the  officers  and other  employees  of the  Corporation  and its
    Affiliates to whom Awards may from time to time be granted;

(b) Determine  whether and to what extent an Award or any  combination of Awards
    are to be granted hereunder;

(c) Determine  the number of shares of Common  Stock to be covered by each Award
    granted hereunder;

(d) Determine  the  terms  and   conditions  of  any  Award  granted   hereunder
    (including,  but not limited to, the option price (subject to Section 5(a)),
    any vesting  condition,  restriction or limitation  (which may be related to
    the  performance of the  participant,  the Corporation or any Affiliate) and
    any vesting  acceleration or forfeiture  waiver  regarding any Award and the
    shares  of Common  Stock  relating  thereto,  based on such  factors  as the
    Committee shall determine;

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(e) Modify,  amend or adjust the terms and conditions of any Award,  at any time
    or from  time to time,  including  but not  limited  to  Performance  Goals;
    provided,  however,  that the  Committee  may not adjust  upwards the amount
    payable to a designated  Covered Employee with respect to a particular Award
    upon the satisfaction of applicable Performance Goals;

(f) Determine to what extent and under what circumstances Common Stock and other
    amounts payable with respect to an Award shall be deferred; and

(g) Determine under what  circumstances  and/or in what proportions an Award may
    be settled in cash or Common Stock under Sections 5(j) and 8(b)(i).

The  Committee  shall  have the  authority  to  adopt,  alter  and  repeal  such
administrative  rules,  guidelines and practices  governing the Plan as it shall
from time to time deem  advisable,  to interpret the terms and provisions of the
Plan and any Award issued under the Plan (and any  agreement  relating  thereto)
and to otherwise supervise the administration of the Plan.

The Committee  may act only by a majority of its members then in office,  except
that the members  thereof may (i) delegate to an officer of the  Corporation the
authority to make decisions pursuant to paragraphs (c), (f), (g), (h) and (i) of
Section 5  (provided  that no such  delegation  may be made that would cause any
Award or transaction  under the Plan to cease to be exempt from Section 16(b) of
the  Exchange  Act or cause any Award or payment  made in respect  thereof to be
"applicable  employee  remuneration" under Section 162(m)(4)(A) of the Code) and
(ii) authorize any one or more of their number or any officer of the Corporation
to execute and deliver documents on behalf of the Committee.

Any  determination  made by the  Committee  or pursuant to  delegated  authority
pursuant to the  provisions  of the Plan with respect to any Award shall be made
in the sole  discretion  of the  Committee  or such  delegate at the time of the
grant of the Award or, unless in  contravention of any express term of the Plan,
at any time thereafter. All decisions made by the Committee or any appropriately
delegated  officer  pursuant  to the  provisions  of the Plan shall be final and
binding on all persons, including the Corporation and Plan participants, subject
to the next paragraph.

The Committee annually shall report to the Corporation's Board of Directors with
respect to the operation of the Plan and at least  annually shall meet with such
Board to review the  Committee's  acts and  determinations  with  respect to the
Plan. The Board of Directors of the  Corporation  shall have the right to review
any  decision,  act or  determination  made by the  Committee and shall have the
right  to  amend,  modify,   reverse  or  rescind  any  such  decision,  act  or
determination,  which Board  action  shall be final and binding on all  persons,
including the Corporation and Plan participants.

                     SECTION 3. COMMON STOCK SUBJECT TO PLAN

The total number of shares of Common  Stock  reserved  and  available  for grant
under the Plan shall be 500,000,  no more than 50,000 of which  shares  shall be
granted as Awards of Restricted Stock which do not have Performance Goals as the
sole or partial  conditions for vesting.  No  participant  may be granted Awards
covering in excess of 150,000 shares of

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Common  Stock  over  the life of the  Plan,  including  Awards  that  expire  or
terminate  unexercised.  Shares  subject  to an  Award  under  the  Plan  may be
authorized and unissued  shares or may be treasury shares or may be purchased on
the open market or any combination thereof.

Any  shares  subject  to an Award  under the Plan,  which  Award for any  reason
expires or is terminated  unexercised as to such shares,  shall,  subject to the
provisions of the previous  paragraph  that may restrict  their  reissuance to a
particular  participant,  again be available for the grant of other Awards under
the Plan.

Subject to Sections  7(c)(iv) and 9(b) (iii), if any shares of Restricted  Stock
or  Performance  Shares are  forfeited or if any Stock Option (and related Stock
Appreciation Right, if any) terminates without being exercised,  or if any Stock
Appreciation  Right is exercised for cash,  shares subject to such Awards shall,
subject  to the  provisions  of the first  paragraph  of this  section  that may
restrict their distribution to a particular participant,  again be available for
distribution in connection with Awards under the Plan.

In the event of any change in corporate capitalization, such as a stock split or
a  corporate  transaction,  such  as  any  merger,  consolidation,   separation,
including  a  spin-off,  or  other  distribution  of stock  or  property  of the
Corporation, any reorganization (whether or not such reorganization comes within
the  definition  of such  term in  Section  368 of the Code) or any  partial  or
complete liquidation of the Corporation (_Corporate Transaction_), the Committee
or Board may make such  substitution or adjustments in the aggregate  number and
kind of shares  reserved for issuance  under the Plan,  in the number,  kind and
option  price  of  shares  subject  to  outstanding   Stock  Options  and  Stock
Appreciation  Rights,  in the  number  and  kind  of  shares  subject  to  other
outstanding   Awards  granted  under  the  Plan  and/or  such  other   equitable
substitution  or  adjustments  as it may determine to be appropriate in its sole
discretion;  provided  however,  that the number of shares  subject to any Award
shall always be a whole number. Such adjusted option price shall also be used to
determine the amount payable by the  Corporation  upon the exercise of any Stock
Appreciation Right associated with any Stock Option.

                             SECTION 4. ELIGIBILITY

Officers  and other  employees of the  Corporation  and its  Affiliates  who are
responsible  for  or  contribute  to  the  management,  governance,  growth  and
profitability  of the business of the Corporation or its Affiliates are eligible
to be granted  Awards under the Plan. No grants shall be made under this Plan to
a Director who is not an officer or a salaried  employee of the  Corporation  or
its  Affiliates,  except  that  Non-qualified  Stock  Options  may be granted to
Non-Employee Directors.


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<PAGE>

                            SECTION 5. STOCK OPTIONS

Stock Options may be granted alone or in addition to other Awards  granted under
the Plan and may be of two types,  Incentive  Stock  Options  and  Non-qualified
Stock Options.  Any Stock Option granted under the Plan shall be in such form as
the Committee may from time to time approve.

The  Committee  shall have the authority to grant any optionee  Incentive  Stock
Options,  Non-qualified  Stock  Options or both types of Stock  Options (in each
case with or without Stock Appreciation  Rights);  provided however, that grants
hereunder  are  subject  to  the   aggregate   limit  on  grants  to  individual
participants set forth in Section 3. Incentive Stock Options may be granted only
to  employees  of the  Corporation  and its  Affiliates  (within  the meaning of
Section  424(f)  of the  Code).  To the  extent  that any  Stock  Option  is not
designated  as an  Incentive  Stock  Option  or even if so  designated  does not
qualify as an Incentive Stock Option, it shall constitute a Non-qualified  Stock
Option.

Stock Options shall be evidenced by option agreements,  the terms and provisions
of which may differ.  An option  agreement shall indicate on its face whether it
is intended to be an agreement for an Incentive  Stock Option or a Non-qualified
Stock  Option.  The grant of a Stock Option shall occur on the date on which the
Committee by resolution  selects an individual to be a participant  in any grant
of a Stock Option, determines the number of shares of Common Stock to be subject
to such Stock Option to be granted to such  individual  and  specifies the terms
and provisions of the Stock Option.  The Corporation  shall notify a participant
of any grant of a Stock  Option,  and a written  option  agreement or agreements
shall be duly executed and delivered by the Corporation to the participant. Such
agreement or agreements shall become effective upon execution by the Corporation
and the participant.

Anything  in the  Plan to the  contrary  notwithstanding,  no  term of the  Plan
relating to Incentive Stock Options shall be interpreted, amended or altered nor
shall any  discretion or authority  granted under the Plan be exercised so as to
disqualify the Plan under Section 422 of the Code or, without the consent of the
optionee  affected,  to disqualify any Incentive Stock Option under said Section
422.

Stock Options granted under the Plan shall be subject to the following terms and
conditions  and  shall  contain  such  additional  terms and  conditions  as the
Committee shall deem desirable:

(a)  Option Price. The option price per share of Common Stock  purchasable under
     a Stock Option shall be  determined  by the  Committee and set forth in the
     option  agreement,  but shall not be less than the Fair Market Value of the
     Common Stock subject to the Stock Option on the date of grant.

(b)  Option Term. The term of each Stock Option shall be fixed by the Committee,
     but no Incentive Stock Option shall be exercisable more than ten (10) years
     after the date on which the Stock Option is granted.


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(c)  Exercisability.  Except as otherwise  provided  herein and in Section 5A(c)
     specifically,  Stock Options shall be exercisable at such time or times and
     subject  to such  terms  and  conditions  as  shall  be  determined  by the
     Committee.  If the Committee  provides that any Stock Option is exercisable
     only in installments,  the Committee may at any time waive such installment
     exercise  provisions,  in whole or in part,  based on such  factors  as the
     Committee  may  determine.  In  addition,  the  Committee  may at any  time
     accelerate the exercisability of any Stock Option.

(d)  Method of  Exercise.  Subject to the  provisions  of this  Section 5, Stock
     Options  may be  exercised,  in whole or in part,  at any time  during  the
     option  term by  giving  written  notice  of  exercise  to the  Corporation
     specifying the number of shares of Common Stock subject to the Stock Option
     to be purchased.

     Such notice shall be  accompanied  by payment in full of the purchase price
     by certified or bank check or such other  instrument as the Corporation may
     accept. If approved by the Committee, payment, in full or in part, may also
     be made in the  form of  unrestricted  Common  Stock  already  owned by the
     optionee  (based on the Fair Market  Value of the Common  Stock on the date
     the Stock Option is exercised)  and which has been held by the optionee for
     at  least  six  (6)  months;  provided  however,  that,  in the  case of an
     Incentive Stock Option,  the right to make a payment in the form of already
     owned shares of Common Stock may be  authorized  only at the time the Stock
     Option is granted.

     In the  discretion of the  Committee,  payment for any shares  subject to a
     Stock Option may also be made by  delivering a properly  executed  exercise
     notice to the Corporation, together with a copy of irrevocable instructions
     to a broker to deliver  promptly to the  Corporation  the amount of sale or
     loan proceeds to pay the purchase price,  and, if requested,  by the amount
     of any federal,  state,  local or foreign  withholding taxes. To facilitate
     the foregoing,  the  Corporation  may enter into agreements for coordinated
     procedures with one or more brokerage firms.

     In addition,  in the  discretion of the  Committee,  payment for any shares
     subject to a Stock Option may also be made by instructing  the Committee to
     withhold a number of such shares  having a Fair Market Value on the date of
     exercise equal to the aggregate exercise price of such Stock Option.

     No shares of Common Stock shall be issued  until full payment  therefor has
     been made. An optionee shall have all of the rights of a shareholder of the
     Corporation  holding the class or series of Common Stock that is subject to
     such Stock Option (including,  if applicable,  the right to vote the shares
     and the right to receive  dividends),  when the optionee has given  written
     notice of exercise, has paid in full for such shares and, if requested, has
     given the representation described in Section 13 (a).

(e)  Nontransferability  of Stock Options. No Stock Option shall be transferable
     by the  optionee  other  than  (i) by will or by the  laws of  descent  and
     distribution; or (ii) in the case of a Non-qualified Stock Option, pursuant
     to (a) a  qualified  domestic  relations  order (as  defined in the Code or
     Title I of the Employee Retirement Income Security Act of 1974, as amended,
     or the rules thereunder) or (b) a gift to such optionee's

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     children,  whether  directly  or  indirectly  or by  means  of a  trust  or
     partnership  or  otherwise,  if expressly  permitted  under the  applicable
     option  agreement.  All Stock Options shall be exercisable,  subject to the
     terms of this Plan, during the optionee's lifetime, only by the optionee or
     by the guardian or legal  representative of the optionee or, in the case of
     a  Non-qualified  Stock  Option,  its  alternative  payee  pursuant to such
     qualified  domestic  relations  order or the recipient of a gift  permitted
     under the applicable option  agreement,  it being understood that the terms
     "holder" and "optionee"  include the guardian and legal  representative  of
     the optionee named in the option agreement and any person to whom an option
     is transferred by will or the laws of descent and  distribution  or, in the
     case of a  Non-qualified  Stock  Option,  pursuant to a qualified  domestic
     relations order or a gift permitted under the applicable option agreement.

(f)  Termination by Death. Unless otherwise  determined by the Committee,  if an
     optionee's  employment terminates by reason of death, any Stock Option held
     by such optionee may  thereafter be exercised in full,  whether or not then
     exercisable,  or on such accelerated  basis as the Committee may determine,
     for a period of three (3) years (or such other period as the  Committee may
     specify in the option  agreement)  from the date of such death or until the
     expiration of the stated term of such Stock Option, whichever period is the
     shorter.

(g)  Termination by Reason of  Disability.  Unless  otherwise  determined by the
     Committee,  if an optionee's employment terminates by reason of Disability,
     any Stock Option held by such  optionee may  thereafter be exercised by the
     optionee,  to the extent it was exercisable at the time of termination,  or
     on such accelerated  basis as the Committee may determine,  for a period of
     three (3) years (or such shorter period as the Committee may specify in the
     option  agreement) from the date of such termination of employment or until
     the expiration of the stated term of such Stock Option, whichever period is
     the  shorter;  provided  however,  that if the  optionee  dies  within such
     period,   any  unexercised  Stock  Option  held  by  such  optionee  shall,
     notwithstanding  the expiration of such period,  continue to be exercisable
     to the extent to which it was exercisable at the time of death for a period
     of one (1) year from the date of such death or until the  expiration of the
     stated term of such Stock Option,  whichever period is the shorter.  In the
     event of termination of employment by reason of Disability, if an Incentive
     Stock Option is exercised after the expiration of the exercise periods that
     apply for  purposes  of Section  422 of the Code,  such Stock  Option  will
     thereafter be treated as a Non-qualified Stock Option.

(h)  Termination by Reason of  Retirement.  Except as provided for in Section 5A
     hereof and unless otherwise  determined by the Committee,  if an optionee's
     employment  terminates  by reason of  Retirement,  any Stock Option held by
     such optionee may thereafter be exercised by the optionee, to the extent it
     was  exercisable  at the time of such  Retirement,  or on such  accelerated
     basis as the  Committee may  determine,  for a period of five (5) years (or
     such shorter  period as the Committee may specify in the option  agreement)
     from the date of such  termination of employment or until the expiration of
     the stated  term of such Stock  Option,  whichever  period is the  shorter;
     provided  however,  that if the  optionee  dies  within  such  period,  any
     unexercised Stock Option held by such optionee shall,  notwithstanding  the
     expiration  of such  period,  continue to be  exercisable  to the extent to
     which it was

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<PAGE>

     exercisable  at the time of death for a period of twelve  (12)  months from
     the date of such death or until the  expiration  of the stated term of such
     Stock Option,  whichever period is the shorter. In the event of termination
     of  employment  by reason of  Retirement,  if an Incentive  Stock Option is
     exercised  after the  expiration  of the  exercise  periods  that apply for
     purposes of Section 422 of the Code,  such Stock Option will  thereafter be
     treated as a Non-qualified Stock Option.

(i)  Other Termination.  Unless otherwise determined by the Committee: (A) If an
     optionee  incurs a Termination of Employment  for Cause,  all Stock Options
     held by such optionee  shall  thereupon  terminate;  and (B) If an optionee
     incurs a  Termination  of  Employment  for any  reason  other  than  death,
     Disability  or  Retirement  or for  Cause,  any Stock  Option  held by such
     optionee,  to the extent then exercisable,  or on such accelerated basis as
     the Committee may  determine,  may be exercised for the lesser of three (3)
     months from the date of such  Termination  of  Employment or the balance of
     such Stock  Option's  term;  provided  however,  that if the optionee  dies
     within such three (3)-month  period,  any unexercised  Stock Option held by
     such optionee shall, notwithstanding the expiration of such three (3)-month
     period,  continue  to  be  exercisable  to  the  extent  to  which  it  was
     exercisable  at the time of death for a period of twelve  (12)  months from
     the date of such death or until the  expiration  of the stated term of such
     Stock  Option,  whichever  period  is  the  shorter.   Notwithstanding  the
     foregoing,  if an optionee incurs a Termination of Employment at or after a
     Change of  Control  (as  defined  Section  10(b)),  other than by reason of
     death,  Disability  or  Retirement,  any Stock Option held by such optionee
     shall be  exercisable  for the lesser of (i) six (6) months and one (1) day
     from the date of such  Termination of  Employment,  and (ii) the balance of
     such Stock Option's term. In the event of Termination of Employment,  if an
     Incentive  Stock Option is exercised  after the  expiration of the exercise
     periods  that apply for  purposes  of Section  422 of the Code,  such Stock
     Option will thereafter be treated as a Non-qualified Stock Option.

(j)  Cashing Out of Stock  Option.  Upon receipt of written  notice of exercise,
     the  Committee  may  elect  to cash out all or part of the  portion  of the
     shares of  Common  Stock for  which a Stock  Option is being  exercised  by
     paying the optionee an amount, in cash or Common Stock, equal to the excess
     of the Fair Market  Value of the Common  Stock over the option  price times
     the  number  of shares  of  Common  Stock  for  which  the  Option is being
     exercised on the effective date of such cash-out.

(k)  Change of Control  Cash-Out.  Notwithstanding  any other  provision  of the
     Plan,  during the  60-day  period  from and after a Change of Control  (the
     "Exercise  Period"),  unless the Committee shall determine otherwise at the
     time of grant,  an optionee shall have the right,  whether or not the Stock
     Option is fully  exercisable  and in lieu of the  payment  of the  exercise
     price for the shares of Common Stock being purchased under the Stock Option
     and by giving  notice to the  Corporation,  to elect  (within the  Exercise
     Period) to surrender all or part of the Stock Option to the Corporation and
     to receive cash,  within 30 days of such notice,  in an amount equal to the
     amount by which the  Change of Control  Price per share of Common  Stock on
     the date of such  election  shall  exceed the  exercise  price per share of
     Common Stock under the Stock Option (the "Spread") multiplied by the number
     of shares of Common  Stock  granted  under the Stock Option as to which the
     right granted under

                                                                              10
<PAGE>


     this Section 5(k) shall have been exercised.

(l)  Notwithstanding anything in the Plan to the contrary, no Stock Option shall
     be reissued or repriced.


                     SECTION 5A. STOCK OPTIONS FOR DIRECTORS

Each Non-Employee  Director shall annually be granted 1,000  Non-qualified Stock
Options  on January 1 of each year,  except  that in January  2001 the number of
such  Non-Qualified  Stock Options granted shall be increased by 2,000. No other
Awards under this Plan shall be granted to a Non-Employee Director.

Each such  Non-qualified  Stock  Option  grant shall be  evidenced  by an option
agreement  and shall be subject to the same terms and  conditions  applicable to
Non-Qualified Stock Options grants under the Plan and to the optionee recipients
thereof, except as follows:

(a)  the option  price per share of Common  Stock shall be the Fair Market Value
     of the Common Stock subject to the  Non-Qualified  Stock Option on the date
     of grant;

(b)  the term of each such  Non-Qualified  Stock Option shall be ten (10) years;
     and

(c)  each Non-qualified Stock Option awarded to Non-Employee  Directors shall be
     exercisable on and after the date of grant.

Any reference in this Plan to  "Retirement"  (Normal or Early  Retirement),  and
"termination  of  Employment",  and  "employment  terminates"  shall mean when a
Non-Employee Director optionee ceases to be a Director of the Corporation.

                      SECTION 6. STOCK APPRECIATION RIGHTS

(a)  Grant and Exercise. Stock Appreciation Rights may be granted in conjunction
     with all or part of any Stock Option granted under the Plan. In the case of
     a Non-qualified Stock Option, such rights may be granted either at or after
     the time of grant of such Stock Option.  In the case of an Incentive  Stock
     Option,  such rights may be granted only at the time of grant of such Stock
     Option.  A Stock  Appreciation  Right  shall  terminate  and no  longer  be
     exercisable upon the termination or exercise of the related Stock Option.

     A Stock  Appreciation  Right may be exercised by an optionee in  accordance
     with Section 6(b) by  surrendering  the  applicable  portion of the related
     Stock Option in accordance  with  procedures  established by the Committee.
     Upon such exercise and surrender, the optionee shall be entitled to receive
     an amount  determined  in the  manner  prescribed  in Section  6(b).  Stock
     Options which have been so surrendered

                                                                              11
<PAGE>


     shall no longer be exercisable to the extent the related Stock Appreciation
     Rights have been exercised.

(b)  Terms and Conditions.  Stock  Appreciation  Rights shall be subject to such
     terms and conditions as shall be determined by the Committee, including the
     following:

     (i)    Stock Appreciation  Rights shall be exercisable only at such time or
            times and to the extent that the Stock  Options to which they relate
            are exercisable in accordance with the provisions Section 5 and this
            Section 6.

     (ii)   Upon the exercise of a Stock  Appreciation  Right, an optionee shall
            be entitled to receive an amount in cash,  shares of Common Stock or
            both,  equal in value to the excess of the Fair Market  Value of one
            share of Common Stock over the option  price per share  specified in
            the  related  Stock  Option  multiplied  by the  number of shares in
            respect  of which  the  Stock  Appreciation  Right  shall  have been
            exercised, with the Committee having the right to determine the form
            of payment.

     (iii)  Stock  Appreciation  Rights shall be transferable  only to permitted
            transferees  of the  underlying  Stock  Option  in  accordance  with
            Section 5(e).

     (iv)   Upon the exercise of a Stock Appreciation Right, the Stock Option or
            part thereof to which such Stock Appreciation Right is related shall
            be deemed to have been  exercised for the purpose of the  limitation
            set forth in Section 3 on the number of shares of Common Stock to be
            issued  under the  Plan,  but only to the  extent  of the  number of
            shares  covered  by the  Stock  Appreciation  Right  at the  time of
            exercise based on the value of the Stock  Appreciation Right at such
            time.

                           SECTION 7. RESTRICTED STOCK

(a)  Administration.  Shares of Restricted  Stock may be awarded either alone or
     in addition to other Awards  granted under the Plan.  The  Committee  shall
     determine  the officers  and other  employees  of the  Corporation  and its
     Affiliates  to whom and the time or times  at which  grants  of  Restricted
     Stock  will  be  awarded,  the  number  of  shares  to be  awarded  to  any
     participant  (subject  to the  aggregate  limit  on  grants  to  individual
     participants set forth in Section 3), the conditions for vesting,  the time
     or times  within  which such  Awards may be subject to  forfeiture  and any
     other terms and conditions of the Awards, in addition to those contained in
     Section 7(c).

     The Committee may, prior to grant,  condition  vesting of Restricted  Stock
     upon the attainment of Performance Goals. The Committee may, in addition to
     requiring  satisfaction of Performance  Goals,  condition  vesting upon the
     continued  service of the  participant.  The provisions of Restricted Stock
     Awards  (including the applicable  Performance  Goals) need not be the same
     with respect to each recipient.  All Performance Goals applicable to Awards
     of  Restricted  Stock  shall be  approved  by the  Committee  in writing as
     required by Section 162(m) of the Code and the rules

                                                                              12
<PAGE>

     and regulations  thereunder in order for the value of the Restricted  Stock
     delivered pursuant to such Award to be deductible.

(b)  Awards and  Certificates.  Shares of Restricted Stock shall be evidenced in
     such manner as the Committee may deem  appropriate,  including  book- entry
     registration or issuance of one or more stock certificates. Any certificate
     issued in respect of shares of Restricted  Stock shall be registered in the
     name of such participant and shall bear an appropriate  legend referring to
     the  terms,   conditions  and   restrictions   applicable  to  such  Award,
     substantially in the following form:

       "THE  TRANSFERABILITY  OF  THIS  CERTIFICATE  AND  THE  SHARES  OF  STOCK
     REPRESENTED  HEREBY  ARE  SUBJECT  TO THE TERMS AND  CONDITIONS  (INCLUDING
     FORFEITURE) OF CH ENERGY GROUP, INC. LONG-TERM  PERFORMANCE-BASED INCENTIVE
     PLAN AND A RESTRICTED  STOCK  AGREEMENT.  COPIES OF SUCH PLAN AND AGREEMENT
     ARE ON FILE AT THE OFFICES OF THE SECRETARY OF CH ENERGY GROUP,  INC.,  284
     SOUTH AVENUE, POUGHKEEPSIE, NEW YORK."

     The Committee may require that the  certificates  evidencing such shares be
     held in custody by the  Corporation  until the  restrictions  thereon shall
     have lapsed and that, as a condition of any Award of Restricted  Stock, the
     participant shall have delivered a stock power, endorsed in blank, relating
     to the Common Stock covered by such Award.

(c)  Terms and  Conditions.  Shares of Restricted  Stock shall be subject to the
     following terms and conditions:

     (i)    Subject  to the  provisions  of the  Plan and the  Restricted  Stock
            Agreement  referred to in Section  7(c)(vi),  during the period,  if
            any, set by the  Committee,  commencing  with the date of such Award
            for which such  participant's  continued  service is  required  (the
            "Restriction  Period"), and until the later of (i) the expiration of
            the Restriction Period and (ii) the date the applicable  Performance
            Goals (if any) are satisfied, the participant shall not be permitted
            to sell,  assign,  transfer,  pledge or otherwise encumber shares of
            Restricted Stock;  provided,  that the foregoing shall not prevent a
            participant  from pledging  Restricted Stock as security for a loan,
            the sole  purpose  of which is to  provide  funds to pay the  option
            price for Stock  Options.  Within these  limits,  the  Committee may
            provide for the lapse of  restrictions  based upon period of service
            in  installments  or otherwise and may accelerate or waive, in whole
            or in part,  restrictions  based  upon  period  of  service  or upon
            performance;  provided however, that in the case of Restricted Stock
            subject  to  Performance  Goals  granted to a  participant  who is a
            Covered  Employee,   the  applicable  Performance  Goals  have  been
            satisfied.

     (ii)   Except as provided in this  paragraph  (ii) and Section  7(c)(i) and
            the Restricted  Stock  Agreement,  the participant  shall have, with
            respect to the shares of  Restricted  Stock,  all of the rights of a
            shareholder of the Corporation holding the class or series of Common
            Stock that is the subject of the  Restricted  Stock,  including,  if
            applicable, the right to vote the shares


                                                                              13
<PAGE>

            and the right to receive any cash dividends. If so determined by the
            Committee in the applicable  Restricted  Stock Agreement and subject
            to Section  13(e) of the Plan,  (1) cash  dividends  on the class or
            series of Common Stock that is the subject of the  Restricted  Stock
            Award shall be  automatically  deferred and reinvested in additional
            Restricted   Stock,  held  subject  to  vesting  of  the  underlying
            Restricted  Stock,  or held  subject  to meeting  Performance  Goals
            applicable  only to dividends,  and (2) dividends  payable in Common
            Stock  shall  be paid in the  form of  Restricted  Stock of the same
            class as the Common Stock with which such  dividend  was paid,  held
            subject to vesting of the underlying  Restricted Stock,  and/or held
            subject to meeting Performance Goals applicable only to dividends.

     (iii)  Except to the extent otherwise provided in the applicable Restricted
            Stock Agreement and Sections 7(c)(i), 7(c)(iv) and 10(a)(ii), upon a
            participant's  Termination  of Employment  for any reason during the
            Restriction  Period or before the applicable  Performance  Goals are
            satisfied,   all  shares  still  subject  to  restriction  shall  be
            forfeited by the participant.

     (iv)   Except to the extent otherwise provided in Section 10(a)(ii), in the
            event that a participant retires or such participant's employment is
            involuntarily terminated (other than for Cause), the Committee shall
            have the  discretion  to  waive,  in  whole  or in part,  any or all
            remaining  restrictions (other than, in the case of Restricted Stock
            with  respect  to  which  a  participant  is  a  Covered   Employee,
            satisfaction  of  any  applicable   Performance   Goals  unless  the
            participant's  employment  is  terminated  by  reason  of  death  or
            Disability) with respect to any or all of such participant's  shares
            of Restricted Stock.

     (v)    If and when any applicable  Performance  Goals are satisfied and the
            Restriction  Period  expires  without  a  prior  forfeiture  of  the
            Restricted Stock,  unlegended  certificates for such shares shall be
            delivered  to  the  participant   upon  surrender  of  the  legended
            certificates.

     (vi)   Each Award shall be confirmed  by, and be subject to, the terms of a
            Restricted Stock Agreement.


                          SECTION 8. PERFORMANCE UNITS

(a)  Administration.  Performance  Units  may  be  awarded  either  alone  or in
     addition  to other  Awards  granted  under the Plan.  The  Committee  shall
     determine  the officers  and other  employees  of the  Corporation  and its
     Affiliates to whom and the time or times at which  Performance  Units shall
     be  awarded,  the  number  of  Performance  Units  to  be  awarded  to  any
     participant  (subject  to the  aggregate  limit  on  grants  to  individual
     participants  set forth in Section 3), the  duration of the Award Cycle and
     any other terms and conditions of the Award, in addition to those contained
     in Section 8(b).

                                                                              14
<PAGE>


     The Committee may, prior to grant,  condition the settlement of Performance
     Units upon continued employment and/or the attainment of Performance Goals.
     The provisions of such Awards (including the applicable  Performance Goals)
     need not be the same with respect to each recipient.  All Performance Goals
     applicable to Awards of  Performance  Units  awarded  during an Award Cycle
     shall be approved by the Committee in writing as required by Section 162(m)
     of the Code and the rules and regulations  thereunder in order for the cash
     and/or property delivered pursuant to such Award to be deductible.

(b)  Terms and  Conditions.  Performance  Units  Awards  shall be subject to the
     following terms and conditions:

     (i)    Subject  to the  provisions  of the Plan and the  Performance  Units
            Agreement referred to in Section 8(b)(vi), Performance Units may not
            be sold,  assigned,  transferred,  pledged or  otherwise  encumbered
            during the Award Cycle.  At the  expiration of the Award Cycle,  the
            Committee shall evaluate the  Corporation's  performance in light of
            the Performance Goals for such Award to the extent  applicable,  and
            shall  determine  the  value of  Performance  Units  granted  to the
            participant which have been earned, and the Committee may then elect
            to deliver (1) the cash amount  equal to the value and number of the
            Performance  Units  determined by the Committee to have been earned,
            or (2) the number of shares of Common  Stock whose Fair Market Value
            is  equal  to  cash  value  and  number  of  the  Performance  Units
            determined by the Committee to have been earned the participant. The
            maximum  value of cash  and/or  property  that any  participant  may
            receive with respect to Performance Units in any year is $600,000.

     (ii)   Except  to  the  extent   otherwise   provided  in  the   applicable
            Performance  Unit Agreement and Sections  8(b)(iii) and  10(a)(iii),
            upon a participant's Termination of Employment for any reason during
            the  Award  Cycle or before  any  applicable  Performance  Goals are
            satisfied, the rights to the shares still covered by the Performance
            Units Award shall be forfeited by the participant.

     (iii)  Except to the extent otherwise  provided in Section  10(a)(iii),  in
            the event that a participant's  employment is terminated (other than
            for  Cause) or in the event a  participant  retires,  the  Committee
            shall have the discretion to waive,  in whole or in part, any or all
            remaining   payment   limitations   (other  than,  in  the  case  of
            Performance  Units with respect to which a participant  is a Covered
            Employee,  satisfaction of any applicable  Performance  Goals unless
            the  participant's  employment  is  terminated by reason of death or
            Disability)  with  respect  to  any or  all  of  such  participant's
            Performance Units.

     (iv)   A participant  may elect to further defer receipt of the Performance
            Units payable under an Award (or an  installment  of an Award) for a
            specified period or until a specified event, subject in each case to
            the Committee's  approval and to such terms as are determined by the
            Committee  (the  "Elective  Deferral  Period").  Such  election must
            generally be made prior to  commencement  of the Award Cycle for the
            Award (or for such installment of an Award).


                                                                              15
<PAGE>

     (v)    If and when any applicable  Performance  Goals are satisfied and the
            Elective  Deferral Period expires without a prior  forfeiture of the
            Performance Units, payment in accordance with Section 8(b)(i) hereof
            shall be made to the participant.

     (vi)   Each Award shall be confirmed  by, and be subject to, the terms of a
            Performance Unit Agreement.


                          SECTION 9. PERFORMANCE SHARES

(a)  Administration.  Performance  Shares  may be  awarded  either  alone  or in
     addition  to other  Awards  granted  under the Plan.  The  Committee  shall
     determine  the officers  and other  employees  of the  Corporation  and its
     Affiliates to whom and the time or times at which Performance  Shares shall
     be  awarded,  the  number  of  Performance  Shares  to be  awarded  to  any
     participant  (subject  to the  aggregate  limit  on  grants  to  individual
     participants  set forth in Section 3), the  duration of the Award Cycle and
     any other terms and conditions of the Award, in addition to those contained
     in Section 9(b).

     The Committee may, prior to grant,  condition the settlement of Performance
     Shares upon  continued  employment  and/or the  attainment  of  Performance
     Goals. The provisions of such Awards (including the applicable  Performance
     Goals) need not be the same with respect to each recipient. All Performance
     Goals  applicable to Awards of  Performance  Shares awarded during an Award
     Cycle shall be approved by the  Committee in writing as required by Section
     162(m) of the Code and the rules and  regulations  thereunder  in order for
     the  property  delivered  pursuant  to such Award to be  deductible  by the
     Corporation under the Code.

(b)  Terms and  Conditions.  Performance  Shares  Awards shall be subject to the
     following terms and conditions:

     (i)    Subject to the  provisions  of the Plan and the  Performance  Shares
            Agreement  referred to in Section 9(b)(vi),  Performance  Shares may
            not be sold, assigned, transferred,  pledged or otherwise encumbered
            during the Award Cycle.  At the  expiration of the Award Cycle,  the
            Committee shall evaluate the  Corporation's  performance in light of
            the Performance Goals for such Award to the extent  applicable,  and
            shall  determine  the value and  number of  Performance  Shares  and
            associated  reinvested  dividends earned by the  participant.  If so
            determined by the  Committee in the  applicable  Performance  Shares
            Agreement  and  subject  to  Section  13(e)  of the  Plan,  (1) cash
            dividends on the class or series of Common Stock that is the subject
            of the Performance  Share Award shall be automatically  deferred and
            reinvested  in additional  shares of Common  Stock,  held subject to
            vesting of the  underlying  Performance  Shares,  or held subject to
            meeting  Performance  Goals , and (2)  dividends  payable  in Common
            Stock  shall be paid in the form of shares  of  Common  Stock of the
            same class as the Common  Stock with which such  dividend  was paid,
            held subject to vesting of the underlying

                                                                              16
<PAGE>


            Performance  Shares,  or held  subject  to meeting  the  Performance
            Goals.  The  maximum  value of  property  that any  participant  may
            receive with respect to Performance  Shares in any year is $600,000.
            Delivery to the participant will be in shares of Common Stock only.

     (ii)   Except  to  the  extent   otherwise   provided  in  the   applicable
            Performance  Unit Agreement and Sections  9(b)(iii) and  10(a)(iii),
            upon a participant's Termination of Employment for any reason during
            the  Award  Cycle or before  any  applicable  Performance  Goals are
            satisfied, the rights to the shares still covered by the Performance
            Shares Award shall be forfeited by the participant.

     (iii)  Except to the extent otherwise  provided in Section  10(a)(iii),  in
            the event that a participant's  employment is terminated (other than
            for  Cause) or in the event a  participant  retires,  the  Committee
            shall have the discretion to waive,  in whole or in part, any or all
            remaining   payment   limitations   (other  than,  in  the  case  of
            Performance  Shares with respect to which a participant is a Covered
            Employee,  satisfaction of any applicable  Performance  Goals unless
            the  participant's  employment  is  terminated by reason of death or
            Disability)  with  respect  to  any or  all  of  such  participant's
            Performance Shares.

     (iv)   A participant  may elect to further defer receipt of the Performance
            Shares  payable under an Award (or an installment of an Award) for a
            specified period or until a specified event, subject in each case to
            the Committee's  approval and to such terms as are determined by the
            Committee (the "Elective  Deferral  Period").  Such election must be
            made prior to  commencement of the Award Cycle for the Award (or for
            such installment of an Award).

     (v)    If and when any applicable  Performance  Goals are satisfied and the
            Elective  Deferral Period expires without a prior  forfeiture of the
            Performance  Shares,  payment in  accordance  with  Section  9(b)(i)
            hereof shall be made to the participant.

     (vi)   Each Award shall be confirmed  by, and be subject to, the terms of a
            Performance Unit Agreement.


                    SECTION 10. CHANGE OF CONTROL PROVISIONS

(a)  Impact of Event.  Notwithstanding  any other  provision  of the Plan to the
     contrary, in the event of a Change of Control:

     (i)    Any Stock Options and Stock  Appreciation  Rights  outstanding as of
            the date such Change of Control is determined to have occurred,  and
            which  are not then  exercisable  and  vested,  shall  become  fully
            exercisable and vested to the full extent of the original grant.

                                                                              17
<PAGE>

     (ii)   The  restrictions  and  deferral   limitations   applicable  to  any
            Restricted Stock shall lapse, and such Restricted Stock shall become
            free of all restrictions and become fully vested and transferable to
            the full extent of the original grant.

     (iii)  All Performance  Shares shall be considered to be earned and payable
            to the extent that any  Performance  Goals which the Committee shall
            establish  have  been met or  exceeded,  and any  deferral  or other
            restriction shall lapse and such Performance Shares shall be settled
            in cash as promptly as is practicable.

(b)  Definition  of Change of Control.  For  purposes of the Plan,  a "Change of
     Control" shall mean the happening of any of the following events:

     (i)    The  acquisition  by any  individual,  entity or group  (within  the
            meaning of Section  13(d)(3) or 14(d)(2) of the Securities  Exchange
            Act of 1934,  as  amended  (the  "Exchange  Act")) (a  "Person")  of
            beneficial  ownership  (within the meaning of Rule 13d-3 promulgated
            under  the  Exchange  Act)  of 50% or more of  either  (1) the  then
            outstanding   shares  of  Common  Stock  of  the  Corporation   (the
            "Outstanding  Corporation  Common Stock") or (2) the combined voting
            power of the then outstanding  voting  securities of the Corporation
            entitled  to  vote  generally  in the  election  of  directors  (the
            "Outstanding  Corporation Voting  Securities");  provided,  however,
            that for purposes of this subsection (i), the following acquisitions
            shall  not  constitute  a Change  of  Control;  (1) any  acquisition
            directly  from  the   Corporation,   (2)  any   acquisition  by  the
            Corporation,  or (3) any acquisition by an employee benefit plan (or
            related  trust)  sponsored or maintained by the  Corporation  or any
            corporation controlled by the Corporation.

     (ii)   Approval  by the  shareholders  of  the  Corporation  of a  complete
            liquidation or dissolution of the  Corporation or the sale of all or
            substantially  all of the assets of the Corporation or the merger or
            consolidation of the Corporation with or into another corporation.

(c)  Change of  Control  Price.  For  purposes  of the Plan,  "Change of Control
     Price" means the higher of (i) the highest  reported  sales price,  regular
     way, of a share of Common Stock in any transaction reported on the New York
     Stock  Exchange  Composite  Tape or other  national  exchange on which such
     shares  are  listed or on NASDAQ  during  the  60-day  period  prior to and
     including  the date of a Change of Control or (ii) if the Change of Control
     is the result of a tender or exchange offer or a Corporate Transaction, the
     highest  price per share of Common  Stock paid in such  tender or  exchange
     offer or  Corporate  Transaction;  provided,  however,  that in the case of
     Incentive Stock Options and Stock Appreciation Rights relating to Incentive
     Stock  Options,  the Change of Control Price shall be in all cases the Fair
     Market Value of the Common Stock on the date such Incentive Stock Option or
     Stock Appreciation Right is exercised. To the extent that the consideration
     paid in any such  transaction  described  above  consists all or in part of
     securities or other non-cash consideration, the value of such securities or
     other noncash  consideration  shall be determined in the sole discretion of
     the Board.

                                                                              18
<PAGE>

                   SECTION 11. TERM, AMENDMENT AND TERMINATION

The Plan will  terminate 10 years after the effective  date of the Plan.  Awards
outstanding as of such date shall not be affected or impaired by the termination
of the Plan.

The Board may amend, alter or discontinue the Plan, but no amendment, alteration
or  discontinuation  shall be made  which  would  (i)  impair  the  rights of an
optionee  under a Stock  Option or a recipient  of a Stock  Appreciation  Right,
Restricted  Stock  Award,  Performance  Share  Award or  Performance  Unit Award
therefore granted without the optionee's or recipient's consent,  except such an
amendment  made to cause the Plan to qualify for the exemption  provided by Rule
16b-3, or (ii)  disqualify the Plan or any Award or transaction  thereunder from
the exemption  provided by Rule 16b-3.  In addition,  no such amendment shall be
made without the approval of the  Corporation's  shareholders to the extent such
approval is required by law, regulation or agreement.

The Committee may amend the terms of any Stock Option or other Award theretofore
granted, prospectively or retroactively,  but no such amendment shall impair the
rights of any holder without the holder's  consent except such an amendment made
to cause the Plan,  or Award,  transaction  or payment  made under the Plan,  to
qualify for the exemption provided by Rule 16b-3 and any such amendment shall be
subject to Section 2(e) hereof.

Subject to the above  provisions,  the Board shall have  authority  to amend the
Plan to take into account changes in law and tax and accounting rules as will as
other developments,  and to grant Awards which qualify for beneficial  treatment
under such rules with shareholder approval.

                       SECTION 12. UNFUNDED STATUS OF PLAN

It is presently  intended that the Plan shall  constitute an "unfunded" plan for
incentive and deferred compensation. The Committee may authorize the creation of
trusts or other  arrangements to meet the obligations  created under the Plan to
deliver  Common  Stock or make  payments;  provided  however,  that  unless  the
Committee  otherwise   determines,   the  existence  of  such  trusts  or  other
arrangements is consistent with the "unfunded" status of the Plan.

                         SECTION 13. GENERAL PROVISIONS

(a)  The  Committee  may require  each person  purchasing  or  receiving  shares
     pursuant  to an Award to  represent  to and agree with the  Corporation  in
     writing  that such  person is  acquiring  the shares  without a view to the
     distribution  thereof.  The  certificates  for such  shares may include any
     legend which the Committee deems appropriate to reflect any restrictions on
     transfer.

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<PAGE>

     Notwithstanding any other provision of the Plan or agreements made pursuant
     thereto,  the  Corporation  shall not be  required  to issue or deliver any
     certificate or certificates for shares of Common Stock under the Plan prior
     to fulfillment of all of the following conditions:

     (1)    Listing or  approval  for  listing  upon  notice of issuance of such
            shares  on  the  New  York  Stock  Exchange,  Inc.,  or  such  other
            securities  exchange as may at the time be the principal  market for
            the Common Stock;

     (2)    Any  registration  or  other  qualification  of such  shares  of the
            Corporation  under  any  state  or  federal  law or  regulation,  or
            maintaining in effect any such  registration or other  qualification
            which the  Committee  shall,  in its  absolute  discretion  upon the
            advice of counsel, deem necessary or advisable; and

     (3)    Obtaining  any other  consent,  approval or permit from any state or
            federal  governmental  agency  which  the  Committee  shall,  in its
            absolute discretion after receiving the advice of counsel, determine
            to be necessary or advisable.

(b)  Nothing  contained  in  the  Plan  shall  prevent  the  Corporation  or any
     Affiliate from adopting other or additional  compensation  arrangements for
     its employees and its Non-Employee Directors.

(c)  Neither  adoption of the Plan nor the grant or any Award  thereunder  shall
     confer upon any employee any right to  continued  employment,  nor shall it
     interfere in any way with the right of the  Corporation or any Affiliate to
     terminate the employment of any employee at any time.

(d)  No later than the date as of which an amount first  becomes  includible  in
     the gross income of the  participant  for federal  income tax purposes with
     respect  to any  Award  under the Plan,  the  participant  shall pay to the
     Corporation, or make arrangements satisfactory to the Corporation regarding
     the  payment of, any  federal,  state,  local or foreign  taxes of any kind
     required  by law  to be  withheld  with  respect  to  such  amount.  Unless
     otherwise  determined by the  Corporation,  withholding  obligations may be
     settled with Common Stock, including Common Stock that is part of the Award
     that gives rise to the  withholding  requirement.  The  obligations  of the
     Corporation  under  the Plan  shall be  conditioned  upon such  payment  or
     arrangements,  and the Corporation and its Affiliates  shall, to the extent
     permitted by law,  have the right to deduct any such taxes from any payment
     otherwise  due  to  the  participant.  The  Committee  may  establish  such
     procedures as it deems appropriate, including making irrevocable elections,
     for settlement of withholding obligations with Common Stock.

(e)  Reinvestment  of dividends in additional  Restricted  Stock or  Performance
     Shares at the time of any dividend  payment  shall only be  permissible  if
     sufficient  shares of Common Stock are  available  under Section 3 for such
     reinvestment  (taking into account then outstanding Stock Options and other
     Awards).

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<PAGE>

(f)  The Committee shall establish such procedures as it deems appropriate for a
     participant to designate a beneficiary  to whom any amounts  payable in the
     event of the  participant's  death are to paid or by whom any rights of the
     participant, after the participant's death, may be exercised.

(g)  In the case of a grant of an Award to any  employee of an  Affiliate of the
     Corporation,  the  Corporation  may, if the Committee so directs,  issue or
     transfer the shares of Common  Stock,  if any,  covered by the Award to the
     Affiliate, for such lawful consideration as the Committee may specify, upon
     the condition or understanding  that the Affiliate will transfer the shares
     of Common Stock to the employee in  accordance  with the terms of the Award
     specified by the Committee pursuant to the provisions of the Plan.

(h)  Notwithstanding  the foregoing,  if any right granted pursuant to this Plan
     would   make   a   Change   of   Control    transaction    ineligible   for
     pooling-of-interests accounting under APB No. 16 that but for the nature of
     such grant would otherwise be eligible for such accounting  treatment,  the
     Committee  shall  have the  ability  to  substitute  for any  cash  payable
     pursuant to such right  Common  Stock with a Fair Market Value equal to the
     cash that would otherwise be payable hereunder.

(i)  Notwithstanding  anything  in this  Plan to the  contrary,  no  transaction
     between a participant and the  Corporation  that requires as a condition of
     its  exemption  from  Section 16 of the Exchange Act approval in the manner
     set forth in paragraph  (d)(1) or (d)(2) of Rule 16b-3 shall be consummated
     until such approval is obtained;  but failure to obtain such approval shall
     not cause a  transaction  consummated  to be void or  voidable  without the
     consent of such  participant nor shall it disqualify the  transaction  from
     the benefit of any of available exemption from said Section 16.

(j)  Unless the Committee shall otherwise determine or any provision of the Plan
     shall otherwise  specifically  require, no delivery of cash and/or property
     shall be made to any "covered employee", as that term is defined in Section
     162(m)(3) of the Code, or any  transferee to whom the right of such covered
     employee to receive such cash and/or  property has been  transferred as the
     result of a transfer  permitted by the Plan, in any year to the extent that
     the value such cash and/or  property,  together with the value of all other
     cash and/or  property  delivered to such covered  employee or transferee in
     such year,  shall not be deductible by the  Corporation  as a result of the
     operation  of Section  162(m) of the Code.  Any cash  and/or  property  not
     deliverable  because of the  application of the previous  sentence shall be
     delivered  together  with  the  value of all  other  cash  and/or  property
     delivered  to such  covered  employee  or  transferee  in such year,  is so
     deductible,  until such cash and/or  property  shall have been delivered in
     full.  Such  undelivered  cash and/or property shall bear interest from the
     date on which it was first payable, but for the application of this Section
     (j),  until paid in full,  at a rate of interest per annum to be determined
     by the  Committee in  accordance  with any rules adopted under said Section
     162. For purposes of computing such interest, the Committee shall determine
     the value of such property,  based upon (i) its Fair Market Value (adjusted
     as the  Committee  shall see fit, but at least  quarterly)  if it is Common
     Stock or if its value is determinable with reference to the price of Common
     Stock or (ii) as the  Committee  shall  determine in all other cases.  This
     Section (j) shall cease to have effect upon

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<PAGE>

     the  occurrence  of a Change of Control  and the Plan shall  thereafter  be
     construed  as if this  Section (j) had never been part  thereof,  except in
     respect of the obligation of the  Corporation  to pay interest  pursuant to
     the provisions of this Section (j); without limiting the generality of this
     sentence, (i) all property deliverable as a result of such occurrence shall
     be delivered  when due as if this Section (j) were not part of the Plan and
     (ii) all property deliverable,  but for the provisions of this Section (j),
     shall  become  deliverable  upon such  Change  of  Control,  together  with
     interest accrued thereon.

(k)  The Plan and all Awards made and actions taken thereunder shall be governed
     by and  construed  in  accordance  with the laws of the  State of New York,
     without reference to principles of conflict of laws.

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