Document:

LEASE AGREEMENT

         THIS  LEASE  entered  into as of the  15th  day of  April,  2001 by and
between A & B Holdings,  Inc.,  whose  address is P.O. Box 1379  LaFollette,  TN
37766-1379,  ("LESSOR"),  and D.H.B.  Capital  Group  maintaining  its corporate
offices at 555 Westbury Ave, Carle Place, NY 11514 , (hereinafter referred to as
the "LESSEE").

ARTICLE 1. PREMISES

         Lessor hereby  leases to Lessee,  and Lessee hereby leases from Lessor,
approximately 60,060 square feet of warehouse/manufacturing space in its "as is"
condition situated in Campbell County,  State of Tennessee,  bearing the address
of Mine Lane, Caryville, Tennessee and more particularly described in Exhibit A,
said exhibit being attached to and made a part of this Lease, referred to as the
"Premises",  together with all rights,  privileges,  easements and appurtenances
belonging or pertaining to the Premises and other improvements situated upon the
Premises  to have and to hold,  pursuant  to the  terms and  conditions  of this
Lease.  The  premises  shall  include  the  driveways,  parking  area  and  land
surrounding the  improvements as shown on Exhibit A. Lessor will warrant the air
conditioning  system,  including  but not limited to the air ducts,  compressor,
blower and thermostat,  to be in good working order on the  comencement  date of
said lease.  Lessee  agrees to maintain and keep in good repair  heating and air
conditioning system.

ARTICLE 2. TERM

         The term of this Lease  shall be FIVE (5) years and shall  commence  on
April 15, 2001 and continue through April 14, 2006, both dates inclusive, unless
such dates are revised by mutual written agreement of the parties.

ARTICLE 3. USE

         Lessee  shall  have  the  right  to use and  occupy  the  Premises  for
warehouse/manufacturing  space. Lessor warrants that this anticipated use of the
Premises is not in conflict with any applicable zoning or use restrictions.

ARTICLE 4. RENT
         Lessee shall pay Lessor at P.O. Box 1379, LaFollette, TN 37766-1379, or
at such other place as the Lessor shall from time to time  designate in writing,
a Base  Rent  equal  to the sum of $ 2.00 per  square  foot per year for a total
annual rent of $120,120.00. The monthly rent of $10,010.40 will be paid monthly,
in advance,  on the first day of the month.  Lessee shall pay the first  month's
rent upon execution of said lease. Upon execution of said lease, Lessee shall be
granted immediate possession of the premises.

ARTICLE 5. TRADE FIXTURES AND BUILDING ALTERATION

         All fixtures,  appliances,  furniture,  and any other personal property
which the Lessee may install in or upon the  Premises  shall remain the personal
property of Lessee,  and shall in no way be considered  attached to or a part of
the realty, and same may be removed by the Lessee during or at the expiration or
other termination of this Lease or any extension or renewal; provided,  however,
Lessee shall repair any physical damage caused to the Premises occasioned by the
removal.  Lessee shall not make any  alterations to Lessor's  building or to the
Premises without the prior written consent of Lessor.

 ARTICLE 6. ASSIGNMENT AND SUBLETTING

         Lessee shall not assign or sublet this Lease  without the prior written
consent of the Lessor.  No such agreement shall operate to relieve the Lessee of
its obligations imposed under this Lease.

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ARTICLE 7. SURRENDER OF PREMISES

         Lessee, at its own cost and expense, shall, on expiration of this Lease
remove from the  Premises all personal  property  belonging to it.  Lessee shall
repair  all damage to the  Premises  caused by such  removal,  and  restore  the
Premises to the condition they were in prior to the installation of any property
so removed. Lessee shall, on expiration of this Lease, surrender and deliver the
Premises in good condition, ordinary wear and tear, damage by the elements, fire
or act of God, excepted. Lessee shall at the same time return to Lessor all keys
to the Premises.

         Promptly upon the termination of this Lease,  whether by term as herein
provided or otherwise,  a joint physical survey and written inspection report on
the Premises shall be made to determine whether any damages, other than ordinary
wear and tear  occurred  to the same  while  this  Lease was in  effect,  and to
reflect the then present condition. Such report shall be signed by both parties,
and each party shall  return a manually  signed copy of the report to the other.
This signed  report  shall be  conclusive  evidence as to the  condition  of the
Premises on the date the Lease was terminated and possession of the Premises was
actually or  constructively  returned to the Lessor. In the event of any dispute
as to the contents of the report or the condition of the  Premises,  the parties
will endeavor to resolve such dispute in an equitable and amicable  manner,  and
if necessary, by submitting it to binding arbitration. In the event no survey is
performed and a report  rendered by the parties  within thirty (30)  consecutive
days  from the  date of  termination  of this  Lease,  it shall be  conclusively
presumed  that  the  Premises,  at the  time of  surrender,  was in good  order,
condition and repair.

ARTICLE 8. LESSOR'S REMEDIES

         If Lessee shall fail to observe or perform any of its obligations under
this Lease,  and shall fail to cure such default  within  thirty (30) days after
written notice from Lessor giving notice of such default,  or if Lessee shall be
adjudicated bankrupt,  become insolvent or make an assignment for the benefit of
creditors,  then in any of such cases  Lessor may, at its option and upon thirty
(30) days written notice to Lessee,  terminate this Lease.  In the event of such
termination,  Lessor shall have the right to enter immediately upon the Premises
and take full and exclusive  possession  of the Premises.  The Lessor shall have
the right,  at its  option,  without  declaring  the Lease  void,  to sublet the
Premises  and collect the rents.  Should  Lessor be unable to relet the Premises
after reasonable  efforts to do so, or should such monthly rental after relet be
less than the rental Lessee was  obligated to pay under this Lease,  then Lessee
shall pay the amount of such rental  deficiency to Lessor. A partial receipt for
rent in arrears shall not operate as a waiver of any  forfeiture  which may have
occurred  before that time.  The thirty (30) day cure period will be extended by
Lessor  for such  time as is  necessary  to cure the  default  so long as Lessee
promptly  commences  efforts to cure the default and continues such efforts with
reasonable  diligence.  Lessee  shall also be  responsible  to pay to Lessor its
reasonable costs and expenses, including but not limited to reasonable attorneys
fees, in retaking or reletting the Premises.

         Any  installment of rent or additional  rent herein required to be paid
by Lessee  which is  received  after  the 10th day of the  month by Lessor  will
include an  additional  late payment  equal to ten percent  (10%) of the rent or
additional rent due.

ARTICLE 9. HOLDOVER

         If the Lessee shall remain on the Premises after the expiration of this
Lease,  and if at such time the parties shall have failed to negotiate a renewal
or  extension  of this Lease,  then Lessor shall have the option of pursuing its
remedies in law and equity  relative to Lessee's  holdover.  In the  alternative
Lessor,  by giving  written  notice to Lessee at least 30 days prior to any rent
increase,  may interpret Lessee's holdover as an offer to rent the Premises on a
month-to-month  tenancy,  at a monthly  basic  rental  equal to one  hundred ten
percent  (110%) of the monthly  basic  rental.  Such rental  shall be payable in
advance,  and  acceptance  of such  rental  payment by Lessor  shall  constitute
acceptance by Lessor of Lessee's offer to rent the premises on a  month-to-month
tenancy,  and in such  event all terms and  conditions  contained  in this Lease
shall be in full force and  effect  for each  succeeding  calendar  month  after
Lessor's acceptance of the basic monthly rental payment.  Any such holdover on a
monthly  basis may be  terminated  by either  party by giving  thirty  (30) days
written notice of  termination.  Said notice must be thirty (30) days before the
beginning of the next rental period.

ARTICLE 10. INDEMNIFICATION

         LESSEE'S INDEMNIFICATION:  The Lessee agrees to indemnify save and hold
harmless Lessor from and against any and all losses,  damages,  claims, suits or
actions,  judgments  and cost  which may  arise or grow out of any  injury to or
death of persons, or damages to property,  arising out of or attributable to the
negligent acts or omission of Lessee, its agents, servants, employees or invitee
while on the  Premises,  except

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for injury to or death of  persons,  or damage to  property,  arising  out of or
attributable to the failure of the Lessor to fulfill its obligations as required
under  this  Lease.  In no event  shall  Lessee  be  liable  for  consequential,
incidental  or special  damages.  No provision of this Article  shall in any way
inure to the benefit of any third person so as to  constitute  any such person a
third party beneficiary of this Lease or of any one or more of the terms hereof,
or otherwise give rise to any cause of action in any person not a party thereto.

         LESSOR'S  DISCLAIMER OF LIABILITY:  Lessor shall not be liable for loss
of or damage to any  property  of  Lessee,  nor for any loss of or damage to any
property of others resulting from any cause whatsoever nature,  unless caused by
or due to any act or omission of Lessor,  its agents  contractors  (of  whatever
tier), servants, employees or invitee. No provision of this Article shall in any
way inure to the benefit of any third person so as to constitute any such person
a third  party  beneficiary  of this  Lease  or of any one or more of the  terms
hereof,  or otherwise give rise to any cause of action in any person not a party
hereto.

         INDEMNIFICATION:  Lessor  represents,  covenants,  warrants to and with
Lessee to defend, indemnify, save and hold harmless Lessee, its parent and their
respective directors,  officers, employees, agents and assigns, from and against
any and all  suits,  causes  of  action,  legal or  administrative  proceedings,
claims,  demands,  liabilities,   losses,  damages,  awards,  judgments,  costs,
attorneys' fees, and all expenses of whatever kind or nature (including expenses
to enforce this indemnity),  now existing or which may hereafter  arise,  exist,
result  from,  or caused by any  physical or  environmental  condition  or human
health risk, upon,  over, under or affecting the Premises,  which is inherent in
the Premises,  other than those  physical or  environmental  conditions or human
health  risks which  directly  result from or are caused by the  operations  and
activities of the Lessee while  occupying  the Premises  during the term of this
Lease,  or for any such  obligation  arising  after notice of such  condition is
given by Lessor to Lessee.  This provision shall survive the termination of this
Lease.

ARTICLE 11. WASTE AND NUISANCE

         Neither  party shall commit or suffer to be  committed  any waste on or
about the  Premises,  nor shall  either  party  maintain,  commit or permit  the
maintenance  or  commission  of any nuisance on the Premises or use the Premises
for any unlawful purpose. Each party shall indemnify and hold harmless the other
from and against all liability  arising out of, as a result of, or in connection
with the other party's illegal or unlawful use of the Premises.

ARTICLE 12. HAZARDOUS WASTE

         Lessee  agrees not to place or permit to be placed on the  premises any
hazardous  waste or hazardous  substance,  except in accordance  with all State,
Local, and Federal regulations, nor will Lessee release or permit the release of
any hazardous  waste or hazardous  substance on the premises.  In the event that
Lessee  places or permits to be placed on the  premises any  hazardous  waste or
hazardous substance, or in the event that Lessee releases or permits the release
of any hazardous waste or hazardous substance on the premises,  Lessee will bear
all  costs,  liabilities,  damages,  fines,  penalties  and  expense  arising or
resulting from the clean up, neutralization,  removal or remediation of any such
hazardous  waste or hazardous  substance.  Lessee  further  agrees to indemnify,
defend,  and hold Lessor harmless from and against any and all claims,  demands,
liabilities, damages, suits, acts, judgements, fines, penalties, loss, costs and
expense (including,  without  limitation,  attorney's fees) arising or resulting
from, or incurred by Lessor as a result  (either  directly or  indirectly),  of,
Lessee  placing or  permitting  to be placed,  or  releasing or  permitting  the
release of a hazardous  waste or hazardous  substance on the  premises,  whether
during the term of the Lease or thereafter.  The term  "hazardous  substance" as
used herein shall include both "hazardous  waste" and "petroleum," and all terms
as used herein shall have the same meaning and definition as set forth in United
States Code, Title 42, and Tennessee Code Annotated, S 68-46-101, et seq. Lessor
warrants  and  represents  to the best of  Lessor's  knowledge  that there is no
hazardous waste at, on, or under the premises at the present time.

ARTICLE 13. QUIET POSSESSION

         Lessor shall, on the commencement date of the term of this Lease, place
Lessee in quiet  possession of the Premises and shall secure Lessee in the quiet
possession  of the  Premises  against all persons  claiming  the same during the
entire Lease term, or any extension thereof.

ARTICLE 14. RIGHT TO OFFER FOR LET

         Lessor  shall be  permitted,  during the one hundred  eighty (180) days
preceding the  termination  of this Lease,  to keep or exhibit on the Premises a
reasonable sign for display indicating the Premises are available for rental.

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ARTICLE 15. INSURANCE

         Lessee  agrees  to  maintain  public  liability  insurance  of at least
$1,000,000 per individual injury,  $2,000,000  aggregate and $1,000,000 property
damage  liability for any one occurrence  naming the Lessor as additional  named
insured.  Also,  it is  agreed  that the  Lessee  shall  furnish  $2,000,000  of
insurance in an "all risk"  policy to insure the  building and property  with no
greater than  $5,000.00  deductible and any damage will be paid to Lessor by the
insurance company plus any deductible will be paid by the Lessee to the Lessor.

All  insurance  provided for in this lease shall be in effect under  enforceable
policies  issued by insurers of  recognized  responsibility  and  licensed to do
business  in this  state at least 15 days  prior to the  expiration  date of any
policy,  the original  renewal policy for such  insurance  shall be delivered by
Lessee to Lessor.  Upon  Lessor's  request,  Lessee  shall  provide  Lessor with
certifications  that the coverage set forth herein is in effect.  Within 15 days
after the premium on any policy shall  become due and payable,  the Lessor shall
be furnished with satisfactory evidence of its payment.

If the Lessor so  requires,  the policies of insurance  provided  for,  shall be
payable  to the  holder of any  mortgage,  as the  interest  of such  holder may
appear,  pursuant to a standard mortgage clause. All such policies shall, to the
extent obtainable provide that any loss shall be payable to the Lessor or to the
holder of any mortgage notwithstanding any act of negligence of the Lessee which
might otherwise result in forfeiture of such insurance.  All such policies shall
contain  agreement  by the  insurers  that such  policies  shall not be canceled
without at least thirty (30) days prior written  notice to the Lessor and to the
holder of any mortgage to whom loss hereunder may be payable.  Lessee will carry
at  Lessee's  own expense  insurance  coverage on all  equipment,  fixtures  and
appliances.

WAIVER OF SUBROGATION: Lessor and Lessee hereby agree to release each other from
all liability, be it for negligence or otherwise, in connection with any and all
insurable  losses  covered by any insurance  policies which either party carries
with  respect  to the  Premises,  or any  interest  or  property  therein.  This
provision is  enforceable  only to the extent that such a loss is collected upon
under said insurance  policies.  Moreover,  this release is conditioned upon the
inclusion  in the policy or  policies of a  provision  whereby any such  release
shall not adversely  affect said polices or prejudice any right of the releasers
to recover thereunder.

ARTICLE 16.  CONDITION OF PREMISES

         Except as otherwise provided elsewhere in this Lease,  Lessor covenants
to  keep,  or  cause  to be  kept in  good  order,  repair  and  condition,  the
foundation,  roof and  exterior  walls,  unless such repairs or  maintenance  is
required as a result of Lessee's abusive use of the Premises,  provided however,
Lessor shall have no obligation to clean or clear floors, driveways,  sidewalks,
parking areas,  or loading docks and Lessee shall be responsible for cleaning or
clearing such areas.  Lessee is responsible  for all maintenance of landscaping,
including  all  grassed  areas.  Lessee  shall  notify  Lessor of any  condition
existing at the Premises which requires  repair and which is the  responsibility
of Lessor,  hereunder,  and Lessor  shall have a  reasonable  period  thereafter
within which to perform the necessary repairs.

         Lessee  shall,  at all times  during  the Lease and at its own cost and
expense,  repair,  replace,  and  maintain  in a  good,  safe,  and  substantial
condition,   all  interior  portions  of  the  building  and  any  improvements,
additions,  and alterations  thereto  including the HVAC System on the Premises,
and shall use all reasonable  precaution to prevent waste,  damage, or injury to
the  Premises.  Lessor shall  transfer any new  equipment  warranties  which are
provided by suppliers or manufacturers.

ARTICLE 17. FIRE AND OTHER CASUALTY

         If the Premises  shall be so damaged by fire,  the elements,  casualty,
public  disorder,  any  act,  authorized  or  unauthorized,  on the  part of any
governmental  authority,  or  for  any  other  cause  or  happening  so as to be
substantially destroyed,  then this Lease shall terminate, and any unearned rent
paid in  advance  by Lessee  shall be  refunded  to it. In the event of  partial
damage, Lessee shall receive a refund of any unearned rent as to that portion of
the Premises rendered  untenantable,  and further there shall be an abatement of
future  rental in  proportion  to that  portion  of the  Premises  which  remain
untenantable  prior to repair or  restoration.  If Lessor shall fail to start to
restore the Premises  within thirty days,  Lessee may terminate  this Lease upon
giving five (5) days written notice.

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ARTICLE 18. CONDEMNATION

         In the  event  that the  Premises  in  whole  or in part  are  taken or
condemned  for a temporary  or  permanent  public or  quasi-public  use so as to
substantially  destroy  the use of the  Premises,  Lessee  may,  at its  option,
terminate this Lease and receive a refund of any rental paid in advance.  Lessor
and Lessee shall each be entitled to receive and retain such separate  awards as
may be allocated to their respective interests in any condemnation  proceedings.
The  termination  of this Lease  shall not  affect the rights of the  respective
parties to such awards.

ARTICLE 19. LESSOR'S RIGHT OF ENTRY

         Upon reasonable notice from Lessor, but not less than 48 hours,  Lessee
shall permit Lessor and its agents to enter upon the Premises at all  reasonable
times for the purpose of inspecting  same, or for the purpose of maintaining the
Premises or making repairs or alterations.

ARTICLE 20. UTILITIES AND TAXES

         Lessor shall,  during the term herein demised or any extended term pay,
and Lessee shall  reimburse,  all real property  taxes and/or any in lieu of tax
payment costs. Such costs shall be invoiced annually by Lessor to Lessee and due
upon receipt.  If said payment is not received by Lessor within thirty (30) days
of due date,  Lessee will be in default of said lease, and Lessor is entitled to
pursue the remedies as outlined in ARTICLE 8, LESSOR'S  REMEDIES.  Lessee shall,
during the term pay all assessments,  water and sewer rents,  rates and charges,
charges for public utilities,  excises, levies, and all other license and permit
fees  and  other  governmental  charges,  general  and  special,   ordinary  and
extraordinary,  unforeseen and foreseen, of any kind and nature whatsoever which
at any time  during the term or  extended  term of this  Lease may be  assessed,
levied,  imposed  upon, or due or become due and payable out of or in respect of
or  become a lien on,  the  Premises  or any part  thereof  or any  appurtenance
thereto, for any period during the term of this Lease.

ARTICLE 21. SUCCESSOR'S RIGHTS AND OBLIGATIONS

         It is understood and agreed that the covenants and agreements contained
in this Lease shall be binding upon and inure to the  respective  successors and
assigns of the parties.

ARTICLE 22. ENTIRE AGREEMENT

         This  Lease  embodies  the  entire  agreement  of  the  parties  and no
understandings  or  agreements,  verbal or otherwise,  exist between the parties
except as expressly  set forth in this Lease.  The  provisions  of the Lease may
only be modified or changed by mutual written  agreement signed by an authorized
representative of Lessor and Lessee.

ARTICLE 23. WAIVER

         Failure of either  party to insist upon the strict  performance  of any
provision of this Lease or to exercise any right or remedy shall not be deemed a
general waiver of any right or remedy,  or of any existing or subsequent  breach
or default, and the election by either party of any particular remedy or default
shall not be deemed  exclusive of any other, and all rights and remedies of both
parties shall be cumulative.

ARTICLE 24. HEADINGS

         The headings as to the contents of particular Articles are in no way to
be  construed  as a part of this  Lease or as a  limitation  on the scope of the
particular Articles to which they refer.

ARTICLE 25. LIENS

         A. The Lessee  covenants and agrees with the Lessor that the Lessor may
encumber  its  title  to the  Premises  with  a  mortgage,  irrespective  of the
existence of this Lease.  Lessee shall have no power or authority to mortgage or
otherwise encumber its interest in this Lease.

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         B. The Lessee shall never, under any  circumstances,  have the power to
subject the present or residual  interests  of the Lessor in the Premises or any
improvements  thereof,  to any mechanic or materialman's  lien or other liens of
any kind.  All persons who may  hereafter  during the life of this Lease furnish
work,  labor,  services or materials to the Premises,  by or through the Lessee,
must look wholly to the interests of the Lessee, and not to that of the Lessor.

         C. Lessee  consents to the  assignment  of the Lease from Lessor to any
Lender or Mortgagee  ("the  lender").  During the time of any such assignment to
the Lender,  the  parties  agree that the Lease shall not be modified or amended
without the prior written  consent of the Lender.  Lessor will provide notice of
any such assignment to Lessee including the assignee's name and address.  In the
event of a default by Lessor under the Lease,  Lessee  agrees to give the Lender
prompt  written  notice of such default at the same time such notice is given to
Lessor.  The notice and cure periods shall be the same as afforded  Lessor under
the Lease and shall run successive to those periods afforded Lessor.

         D. Lessor shall have the right to transfer,  assign, mortgage or convey
in whole or in part the  Premises,  land upon which it is situated,  and any and
all of its rights under this Lease,  and nothing  herein shall be construed as a
restriction  upon  Lessor's  so doing.  This  Lease and all rights of the Lessor
hereunder are subject and  subordinate to any deeds of trust,  mortgage or other
instruments of security which do now or may hereafter cover the Building and the
land or any interest of Lessor therein,  and to any and all advances made on the
security  thereof,  and to  any  and  all  increases,  renewals,  modifications,
consolidations,  replacements  and  extensions  of  any  such  deeds  of  trust,
mortgages or  instruments of security.  This provision is hereby  declared to be
self-  operative  and no further  instrument  shall be  required  to effect such
subordination  of this Lease.  Lessor will insure that each such  instrument  to
which this is to be subordinate  provides that Lessee's  possession shall not be
disturbed so long as Lessee is not in default  hereunder,  not  withstanding any
default by Lessor  under such  instrument.  Lessee shall  execute any  necessary
instruments in this regard.

ARTICLE 26. NOTICES

         Any notices  required  or desired to be given to the  parties  shall be
sent by certified mail, return receipt requested to the following addresses:

         If to Lessor:              A & B Holdings, Inc.
                                                     P.O. Box 1379
                                                     LaFollette, TN  37766-1379

         If to Lessee:              D.H.B. Capital Group
                                    555 Westbury Ave.
                                    Carle Place, NY 11514
                                    516-997-1155
                                    Attn: Sandra Hatfield

ARTICLE 27. ESTOPPEL CERTIFICATE

         Lessee will from time to time and on a  reasonable  number of occasions
upon  not  less  than  thirty  (30)  days  prior  request  by  Lessor,  execute,
acknowledge  and  deliver to Lessor a  statement  in writing  executed by Lessee
certifying that the Lease is unmodified and in full effect or if there have been
modifications,  that this Lease is in full effect or as modified,  setting forth
such modifications; the dates to which the rent has been paid and either stating
that to the knowledge of the signer of the said statement that default exists or
specifying  each such  default  of which the signer  may have  knowledge.  It is
intended  that any such  statement  executed by Lessee may be relied upon by any
prospective purchaser or mortgagee or existing mortgagee of the building or land
upon which it is situated.

ARTICLE 28. MEMORANDUM OF LEASE

         Each party  agrees  upon the  request of the other party to execute and
deliver a  memorandum  of this Lease in  recordable  form for  recording  in the
Campbell County  registrar's  office,  setting forth the existence of the Lease,
Lease term, and renewal terms.

ARTICLE 29. COMMISSION

         Lessor shall pay Baker Realty Company a lease commission as outlined in
the Brokerage Listing  Agreement,  dated January 18, 2001, between the Owner and
Broker.  Lessor and Lessee  warrant that neither has any obligation to any other
person or entity for brokerage  fees,  finders fees, or commissions  relative to
this lease agreement.

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IN WITNESS  THEREOF,  the parties  hereto have executed this Lease as of the day
and year first above written.

WITNESS:                                    LESSOR:

BY:

ITS:

WITNESS:                                              LESSEE:

BY:

ITS:

CORPORATE ACKNOWLEDGEMENT

STATE OF                                         :
         ----------------------------------------
                              : ss
COUNTY OF                                     :
          ------------------------------------

On this the day of , 2001 , before me appeared to me personally known, who being
by  me  duly   sworn,   did  say   that  he  is  the  Vice   President   of  the
__________________  and that said  instrument was signed and sealed in behalf of
said corporation by authority of its Board of Directors,  and said  acknowledged
said instrument to be the free act and deed of said corporation.

  Witness my hand and official seal at office, this_____ day of _____, 2001 .

              My Commission expires:
                                     ------------   -------------------
                                     notary public

CORPORATE ACKNOWLEDGEMENT

STATE OF                                         :
         ----------------------------------------
                              : ss
COUNTY OF                                     :
          ------------------------------------

On this the day of , 2001 , before me appeared to me personally known, who being
by me duly  sworn,  did say that he is the of , and  that  said  instrument  was
signed and sealed in behalf of said  partners by  authority  of its  Partnership
Agreement and said  acknowledged  said instrument to be the free act and deed of
said corporation.

Witness my hand and official seal at office, this       day of           , 2001.
                                                 ------         ----------
                       My Commission expires:
                                              ------------   -------------------
                                                                notary public

                                       7CHANCELLOR GROUP, INC.
                              2001 STOCK AWARD PLAN

     1. Purpose of the Plan

     The Chancellor  Group,  Inc. 2001 Stock Award Plan (the "Plan") is intended
to attract, retain, motivate and reward officers,  directors,  employees of, and
consultants to Chancellor  Group,  Inc. (the "Company") and  subsidiaries of the
Company,  who are and will be contributing to the success of the business of the
Company; to provide competitive  incentive  compensation  opportunities;  and to
further  opportunities  for stock ownership by such employees and consultants in
order to increase their proprietary interest in the Company. It is the intention
of the Company that the Plan comply with the definition of an "employee  benefit
plan"  contained in Rule 405 under the Securities Act of 1933, as amended,  (the
"Act"),  and that  awards be made only to  "employees"  as  defined in Rule 405.
Accordingly,  the Company may from time to time, grant to selected employees and
consultants  ("participants") awards ("awards") of shares of common stock of the
Company, $.0001 par value ("Shares"), subject to the terms and

     2. Administration of the Plan

     This Plan shall be  administered  by the Board of  Directors of the Company
(the  "Board").  The Board is authorized to interpret the Plan and may from time
to time adopt such rules and  regulations  for  carrying  out the Plan as it may
deem   appropriate,   including   rules  and  regulations  to  comply  with  the
requirements  of Rule  16(b)(3)  under the  Securities  Exchange Act of 1934. No
Director  shall be eligible to vote or decide upon awards to such Director under
the Plan.  Decisions of the Board in connection with the  administration  of the
Plan shall be final,  conclusive,  and binding upon all parties,  including  the
Company, shareholders, employees and consultants.

     Subject to the terms, provisions,  and conditions of this Plan as set forth
herein, the Board shall have sole discretion and authority:

     (a)  to select the employees and consultants to be awarded Shares (it being
          understood  that  more  than  one  award  may be  granted  to the same
          employee or consultant);

     (b)  to determine the number of Shares to be awarded to each recipient;

     (c)  to determine the time or times when the awards may be granted;

     (d)  to prescribe the form of stock legend for the  certificates  of Shares
          or other  instruments,  if any,  evidencing any awards,  granted under
          this Plan, and

     (e)  to cause  Shares to be  registered  on Form S-8  under the Act  either
          prior or subsequent to the making of an award.

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     3. Shares Subject to the Plan

     The  aggregate  number of Shares which may be awarded  under the Plan shall
not exceed  750,000  Shares of stock of the Company.  Shares to be awarded under
the Plan shall be made  available,  at the discretion of the Board,  either from
the authorized but unissued shares of the Company or from shares of common stock
reacquired by the Company, including shares purchased in the open market.

     4. Eligibility

     Shares  shall be awarded  only to  employees  (the term  "employees"  shall
include  officers  as well as other  key  employees  of the  Company,  and shall
include  directors who are also employees of the Company) of and  consultants to
the Company it being the intention of the Company that awards shall be made only
to persons who satisfy the definition of "employee"  contained in Rule 405 under
the Act.

     5. Awards and Certificates

     Each  recipient  shall be issued a certificate in respect of Shares awarded
under  the  Plan.  Such  certificate  shall  be  registered  in the  name of the
participant,  and  shall  bear an  appropriate  restrictive  legend on its face,
unless such Shares have been registered  under the Act. The Company may register
on Form S-8 under the Act, on behalf of the  recipients,  Shares issued or to be
issued pursuant to the Plan.

     6. Termination and Amendment

     The Board may amend,  suspend,  or terminate  the Plan at any time provided
that no such  modification  shall impair the rights of any  recipient  under any
award.

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     7. Miscellaneous

     (a)  Nothing in the Plan shall require the Company to issue or transfer any
          Shares pursuant to an award if such issuance or transfer would, in the
          opinion  of the  Board,  constitute  or result in a  violation  of any
          applicable  statute or regulation of any jurisdiction  relating to the
          disposition of securities.

     (b)  Notwithstanding  any other provision of the Plan, the Board may at any
          time make or provide for such adjustment to the Plan, to the number of
          Shares  available  thereunder,  or to any awards of Shares as it shall
          deem  appropriate,  to  prevent  dilution  or  enlargement  of rights,
          including  adjustments  in the  event  of  changes  in the  number  of
          outstanding  Shares  by reason of stock  dividends  or  distributions,
          stock  splits  or  other   combinations   or  subdivisions  of  stock,
          recapitalization,     issuances    by    reclassification,    mergers,
          consolidations,  combinations  or  exchanges  of shares,  separations,
          reorganizations, liquidations, or other similar corporate changes. Anu
          such determination by the Board shall be conclusive.

     (c)  No employee,  consultant or other person shall have any claim or right
          to be granted  Shares  under the Plan,  and  neither  the Plan nor any
          action taken  thereunder shall be construed as giving any participant,
          recipient,  employee,  consultant  or  other  person  any  right to be
          retained in the employ of or by the Company.

     (d)  Income  realized  as a  result  of an  award of  Shares  shall  not be
          included in the  recipient's  earnings  for the purpose of any benefit
          plan in which the recipient may be enrolled or for which the recipient
          may become eligible unless otherwise specifically provided for in such
          plan.

     (e)  If and when a  recipient  is  required  to pay the  Company  an amount
          required to be withheld  under any federal,  state or local income tax
          laws in connection with an award under the Plan, the Board may, in its
          sole discretion and subject to such rules as it may adopt,  permit the
          participant  to  satisfy  the  obligation,  in whole  or in  part,  be
          electing  to have the  Company  withhold  Shares  having a fair market
          value equal to the amount  required to be  withheld.  The  election to
          have Shares  withheld must be made on or before the date the amount of
          tax to be withheld is determined.

          8. Effective Date and Term of the Plan

          The  effective  date of the Plan shall be March 26,  2001 and the Plan
          shall remain in full force until December 31, 2003 or until all Shares
          have been awarded, whichever first occurs.

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