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                                                                   EXHIBIT 10.85

                              KRAMONT REALTY TRUST

                              NON-EMPLOYEE DIRECTOR
                             1998 STOCK OPTION PLAN

    (FORMERLY THE CV REIT, INC. NON-EMPLOYEE DIRECTOR 1998 STOCK OPTION PLAN)

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                                  TABLE OF CONTENTS
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ARTICLE I.       PURPOSE........................................................      1

ARTICLE II.      DEFINITIONS....................................................      1

ARTICLE III.     ADMINISTRATION.................................................      3

ARTICLE IV.      SHARES AND OTHER LIMITATIONS...................................      4

ARTICLE V.       ELIGIBILITY....................................................      6

ARTICLE VI.      STOCK OPTIONS..................................................      7

ARTICLE VII.     TERMINATION PROVISIONS.........................................      8

ARTICLE VIII.    NON-TRANSFERABILITY............................................      9

ARTICLE IX.      CHANGE IN CONTROL..............................................      9

ARTICLE X.       TERMINATION OR AMENDMENT OF PLAN...............................      10

ARTICLE XI.      UNFUNDED PLAN..................................................      11

ARTICLE XII.     GENERAL PROVISIONS.............................................      11

ARTICLE XIII.    EFFECTIVE DATE OF PLAN.........................................      13

ARTICLE XIV.     TERM OF PLAN...................................................      14

ARTICLE XV.      NAME OF PLAN...................................................      14
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                              KRAMONT REALTY TRUST
                  NON-EMPLOYEE DIRECTOR 1998 STOCK OPTION PLAN

                                   ARTICLE I.

                                     PURPOSE

         The purpose of the Kramont Realty Trust Non-Employee Director 1998
Stock Option Plan (the "Plan") is to enhance the profitability and value of
Kramont Realty Trust (the "Company") for the benefit of its shareholders by
enabling the Company to make discretionary grants of Stock Options to induce
certain individuals to commence service as Non-Employee Directors, thereby
attracting, retaining and rewarding such Non-Employee Directors and
strengthening the mutuality of interests between such Non-Employee Directors and
the Company's shareholders. THE PLAN WAS FORMERLY KNOWN AS THE CV REIT, INC.
NON-EMPLOYEE DIRECTOR 1998 STOCK OPTION PLAN. AS A RESULT OF THE MERGER OF CV
REIT, INC. INTO THE COMPANY PURSUANT TO AN AGREEMENT AND PLAN OF REORGANIZATION
AND MERGER AMONG KRANZCO REALTY TRUST, KRT TRUST AND CV REIT, INC., DATED AS OF
DECEMBER 10, 1999, AS AMENDED (THE "REORGANIZATION AGREEMENT") THE COMPANY
ASSUMED THE CV REIT, INC. NON-EMPLOYEE DIRECTOR 1998 STOCK OPTION PLAN.

                                   ARTICLE II.

                                   DEFINITIONS

         FOR PURPOSES OF THE PLAN, THE FOLLOWING TERMS SHALL HAVE THE FOLLOWING
MEANINGS:

         2.1.     "BOARD" SHALL MEAN THE BOARD OF TRUSTEES OF THE COMPANY.

         2.2.     "CAUSE" SHALL MEAN, WITH RESPECT TO A PARTICIPANT'S
TERMINATION OF DIRECTORSHIP, AN ACT OR FAILURE TO ACT THAT CONSTITUTES "CAUSE"
FOR REMOVAL OF A DIRECTOR UNDER APPLICABLE DELAWARE LAW.

         2.3.     "CHANGE IN CONTROL" SHALL HAVE THE MEANING SET FORTH IN
ARTICLE IX.

         2.4.     "CODE" SHALL MEAN THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED. ANY REFERENCE TO ANY SECTION OF THE CODE SHALL ALSO BE A REFERENCE TO
ANY SUCCESSOR PROVISION.

         2.5.     "COMMON SHARES" SHALL MEAN THE COMMON SHARES OF BENEFICIAL
INTEREST OF THE COMPANY.

         2.6.     "COMPANY" SHALL MEAN KRAMONT REALTY TRUST, A MARYLAND REAL
ESTATE INVESTMENT TRUST.

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         2.7.     "EFFECTIVE DATE" SHALL MEAN THE EFFECTIVE DATE OF THE PLAN AS
DEFINED IN ARTICLE XIII.

         2.8.     "EXCHANGE ACT" SHALL MEAN THE SECURITIES EXCHANGE ACT OF 1934,
AS AMENDED.

         2.9.     "FAIR MARKET VALUE" FOR PURPOSES OF THE PLAN, UNLESS OTHERWISE
REQUIRED BY ANY APPLICABLE PROVISION OF THE CODE OR ANY REGULATIONS ISSUED
THEREUNDER, SHALL MEAN, AS OF ANY DATE, THE LAST SALES PRICE REPORTED FOR THE
COMMON SHARES ON THE APPLICABLE DATE: (I) AS REPORTED ON THE PRINCIPAL NATIONAL
SECURITIES EXCHANGE ON WHICH IT IS THEN TRADED OR THE NASDAQ STOCK MARKET, INC.,
OR (II) IF NOT TRADED ON ANY SUCH NATIONAL SECURITIES EXCHANGE OR THE NASDAQ
STOCK MARKET, INC., AS QUOTED ON AN AUTOMATED QUOTATION SYSTEM SPONSORED BY THE
NATIONAL ASSOCIATION OF SECURITIES DEALERS. IF THE COMMON SHARES ARE NOT READILY
TRADABLE ON A NATIONAL SECURITIES EXCHANGE, THE NASDAQ STOCK MARKET, INC., OR
ANY AUTOMATED QUOTATION SYSTEM SPONSORED BY THE NATIONAL ASSOCIATION OF
SECURITIES DEALERS, ITS FAIR MARKET VALUE SHALL BE SET IN GOOD FAITH BY THE
BOARD. FOR PURPOSES OF THE GRANT OF ANY STOCK OPTION, THE APPLICABLE DATE SHALL
BE THE DATE ON WHICH THE OPTION IS GRANTED OR, IF THE SALE OF THE COMMON SHARES
SHALL NOT HAVE BEEN REPORTED OR QUOTED ON SUCH DATE, ON THE FIRST DAY PRIOR
THERETO ON WHICH THE SALE OF THE COMMON SHARES WERE REPORTED OR QUOTED.

         2.10.    "NON-EMPLOYEE DIRECTOR" SHALL MEAN ANY DIRECTOR OF THE COMPANY
(OTHER THAN H. IRWIN LEVY) WHO IS NOT AN EMPLOYEE OF THE COMPANY OR ANY ENTITY
AFFILIATED WITH THE COMPANY.

         2.11.    "PARTICIPANT" SHALL MEAN ANY NON-EMPLOYEE DIRECTOR TO WHOM A
GRANT OF AN OPTION HAS BEEN MADE UNDER THE PLAN.

         2.12.    "RULE 16B-3" SHALL MEAN RULE 16B-3 UNDER SECTION 16(B) OF THE
EXCHANGE ACT AS THEN IN EFFECT OR ANY SUCCESSOR PROVISIONS.

         2.13.    "STOCK OPTION" OR "OPTION" SHALL MEAN ANY OPTION TO PURCHASE
COMMON SHARES GRANTED TO ANY NON-EMPLOYEE DIRECTOR UNDER THE PLAN.

         2.14.    "TERMINATION OF DIRECTORSHIP" SHALL MEAN, WITH RESPECT TO A
NON-EMPLOYEE DIRECTOR, THAT THE NON-EMPLOYEE DIRECTOR HAS CEASED TO BE A
DIRECTOR OF THE COMPANY AND, WITH RESPECT TO A FORMER NON-EMPLOYEE DIRECTOR OF
CV REIT, INC., THAT THE NON-EMPLOYEE DIRECTOR HAS CEASED TO BE A DIRECTOR OF CV
REIT, INC.

         2.15.    "TRANSFER" OR "TRANSFERRED" SHALL MEAN ANTICIPATE, ALIENATE,
ATTACH, SELL, ASSIGN, PLEDGE, HYPOTHECATE, ENCUMBER, CHARGE OR OTHERWISE
TRANSFER.

                                  ARTICLE III.

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                                 ADMINISTRATION

         3.1.     THE BOARD. THE PLAN SHALL BE ADMINISTERED AND INTERPRETED BY
THE BOARD.

         3.2.     PLAN AWARDS. THE BOARD SHALL HAVE FULL AUTHORITY TO INTERPRET
THE PLAN AND TO DECIDE ANY QUESTIONS AND SETTLE ALL CONTROVERSIES AND DISPUTES
THAT MAY ARISE IN CONNECTION WITH THE PLAN; TO SELECT THE INDIVIDUALS TO WHOM
STOCK OPTIONS MAY BE GRANTED UNDER SECTION 6.3; TO DETERMINE THE NUMBER OF STOCK
OPTIONS TO BE GRANTED TO AN INDIVIDUAL UNDER SECTION 6.3; TO PRESCRIBE THE FORM
OR FORMS OF INSTRUMENTS EVIDENCING OPTIONS AND ANY OTHER INSTRUMENTS REQUIRED
UNDER THE PLAN AND TO CHANGE SUCH FORMS FROM TIME TO TIME; AND TO MAKE ALL OTHER
DETERMINATIONS AND TO TAKE ALL SUCH STEPS IN CONNECTION WITH THE PLAN AND THE
OPTIONS AS THE BOARD, IN ITS SOLE DISCRETION, DEEMS NECESSARY OR DESIRABLE.

         3.3.     GUIDELINES. SUBJECT TO ARTICLE X HEREOF, THE BOARD SHALL HAVE
THE AUTHORITY TO ADOPT, ALTER AND REPEAL SUCH ADMINISTRATIVE RULES, GUIDELINES
AND PRACTICES GOVERNING THE PLAN AND PERFORM ALL ACTS, INCLUDING THE DELEGATION
OF ITS ADMINISTRATIVE RESPONSIBILITIES, AS IT SHALL, FROM TIME TO TIME, DEEM
ADVISABLE; TO CONSTRUE AND INTERPRET THE TERMS AND PROVISIONS OF THE PLAN AND
ANY STOCK OPTION ISSUED UNDER THE PLAN (AND ANY AGREEMENTS RELATING THERETO);
AND TO OTHERWISE SUPERVISE THE ADMINISTRATION OF THE PLAN. THE BOARD MAY CORRECT
ANY DEFECT, SUPPLY ANY OMISSION OR RECONCILE ANY INCONSISTENCY IN THE PLAN OR IN
ANY AGREEMENT RELATING THERETO IN THE MANNER AND TO THE EXTENT IT SHALL DEEM
NECESSARY TO CARRY THE PLAN INTO EFFECT, BUT ONLY TO THE EXTENT ANY SUCH ACTION
WOULD BE PERMITTED UNDER THE APPLICABLE PROVISIONS OF RULE 16B-3. TO THE EXTENT
APPLICABLE, THE PLAN IS INTENDED TO COMPLY WITH THE APPLICABLE REQUIREMENTS OF
RULE 16B-3 AND SHALL BE LIMITED, CONSTRUED AND INTERPRETED IN A MANNER SO AS TO
COMPLY THEREWITH, HOWEVER NONCOMPLIANCE WITH RULE 16B-3 SHALL HAVE NO IMPACT ON
THE EFFECTIVENESS OF AN OPTION GRANTED UNDER THE PLAN.

         3.4.     DECISIONS FINAL. ANY DECISION, INTERPRETATION OR OTHER ACTION
MADE OR TAKEN IN GOOD FAITH BY OR AT THE DIRECTION OF THE COMPANY OR THE BOARD
(OR ANY OF ITS MEMBERS) ARISING OUT OF OR IN CONNECTION WITH THE PLAN SHALL BE
WITHIN THE ABSOLUTE DISCRETION OF THE COMPANY OR THE BOARD, AS THE CASE MAY BE,
AND SHALL BE FINAL, BINDING AND CONCLUSIVE ON THE COMPANY AND ALL EMPLOYEES AND
PARTICIPANTS AND THEIR RESPECTIVE HEIRS, EXECUTORS, ADMINISTRATORS, SUCCESSORS
AND ASSIGNS.

         3.5.     RELIANCE ON COUNSEL. THE COMPANY OR THE BOARD MAY CONSULT WITH
LEGAL COUNSEL, WHO MAY BE COUNSEL FOR THE COMPANY OR OTHER COUNSEL, WITH RESPECT
TO ITS OBLIGATIONS OR DUTIES HEREUNDER, OR WITH RESPECT TO ANY ACTION OR
PROCEEDING OR ANY QUESTION OF LAW, AND SHALL NOT BE LIABLE WITH RESPECT TO ANY
ACTION TAKEN OR OMITTED BY IT IN GOOD FAITH PURSUANT TO THE ADVICE OF SUCH
COUNSEL.

         3.6.     DESIGNATION OF CONSULTANTS/LIABILITY.

                  (a)      THE BOARD MAY DESIGNATE EMPLOYEES OF THE COMPANY AND
         PROFESSIONAL ADVISORS TO ASSIST THE BOARD IN THE ADMINISTRATION OF THE
         PLAN AND MAY GRANT

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         AUTHORITY TO EMPLOYEES TO EXECUTE AGREEMENTS OR OTHER DOCUMENTS ON
         BEHALF OF THE BOARD.

                  (b)      THE BOARD MAY EMPLOY SUCH LEGAL COUNSEL, CONSULTANTS
         AND AGENTS AS IT MAY DEEM DESIRABLE FOR THE ADMINISTRATION OF THE PLAN
         AND MAY RELY UPON ANY OPINION RECEIVED FROM ANY SUCH COUNSEL OR
         CONSULTANT AND ANY COMPUTATION RECEIVED FROM ANY SUCH CONSULTANT OR
         AGENT. EXPENSES INCURRED BY THE BOARD IN THE ENGAGEMENT OF ANY SUCH
         COUNSEL, CONSULTANT OR AGENT SHALL BE PAID BY THE COMPANY. THE BOARD,
         ITS MEMBERS AND ANY PERSON DESIGNATED PURSUANT TO PARAGRAPH (A) ABOVE
         SHALL NOT BE LIABLE FOR ANY ACTION OR DETERMINATION MADE IN GOOD FAITH
         WITH RESPECT TO THE PLAN. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE
         LAW, NO OFFICER OR FORMER OFFICER OF THE COMPANY OR MEMBER OR FORMER
         MEMBER OF THE BOARD SHALL BE LIABLE FOR ANY ACTION OR DETERMINATION
         MADE IN GOOD FAITH WITH RESPECT TO THE PLAN OR ANY STOCK OPTIONS
         GRANTED UNDER IT. TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW AND
         THE DECLARATION OF TRUST AND BY-LAWS OF THE COMPANY AND TO THE EXTENT
         NOT COVERED BY INSURANCE, EACH OFFICER OR FORMER OFFICER AND MEMBER OR
         FORMER MEMBER OF THE BOARD SHALL BE INDEMNIFIED AND HELD HARMLESS BY
         THE COMPANY AGAINST ANY COST OR EXPENSE (INCLUDING REASONABLE FEES OF
         COUNSEL REASONABLY ACCEPTABLE TO THE COMPANY) OR LIABILITY (INCLUDING
         ANY SUM PAID IN SETTLEMENT OF A CLAIM WITH THE APPROVAL OF THE
         COMPANY), AND ADVANCED AMOUNTS NECESSARY TO PAY THE FOREGOING AT THE
         EARLIEST TIME AND TO THE FULLEST EXTENT PERMITTED, ARISING OUT OF ANY
         ACT OR OMISSION TO ACT IN CONNECTION WITH THE PLAN, EXCEPT TO THE
         EXTENT ARISING OUT OF SUCH OFFICER'S OR FORMER OFFICER'S, MEMBER'S OR
         FORMER MEMBER'S OWN FRAUD OR BAD FAITH. SUCH INDEMNIFICATION SHALL BE
         IN ADDITION TO ANY RIGHTS OF INDEMNIFICATION THE OFFICERS, DIRECTORS OR
         MEMBERS OR FORMER OFFICERS, DIRECTORS OR MEMBERS MAY HAVE UNDER
         APPLICABLE LAW OR UNDER THE DECLARATION OF TRUST OR THE BY-LAWS OF THE
         COMPANY. NOTWITHSTANDING ANYTHING ELSE HEREIN, THIS INDEMNIFICATION
         WILL NOT APPLY TO THE ACTIONS OR DETERMINATIONS MADE BY AN INDIVIDUAL
         WITH REGARD TO STOCK OPTIONS GRANTED TO HIM OR HER UNDER THE PLAN.

                                   ARTICLE IV.

                          SHARES AND OTHER LIMITATIONS

         4.1.     SHARES.

                  THE AGGREGATE NUMBER OF COMMON SHARES WHICH MAY BE ISSUED
         UNDER THE PLAN SHALL NOT EXCEED 150,000 SHARES (SUBJECT TO ANY INCREASE
         OR DECREASE PURSUANT TO SECTION 4.2), WHICH MAY BE EITHER AUTHORIZED
         AND UNISSUED COMMON SHARES OR COMMON SHARES HELD IN OR ACQUIRED FOR THE
         TREASURY OF THE COMPANY OR BOTH. IF ANY STOCK OPTION GRANTED UNDER THE
         PLAN EXPIRES, TERMINATES OR IS CANCELLED FOR ANY REASON WITHOUT HAVING
         BEEN EXERCISED IN FULL, THE NUMBER OF COMMON SHARES UNDERLYING THE
         UNEXERCISED STOCK OPTION SHALL AGAIN BE AVAILABLE FOR ISSUANCE

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         UNDER THE PLAN. IN DETERMINING THE NUMBER OF COMMON SHARES AVAILABLE
         FOR ISSUANCE UNDER THE PLAN, IF COMMON SHARES HAVE BEEN EXCHANGED BY A
         PARTICIPANT AS FULL OR PARTIAL PAYMENT TO THE COMPANY IN CONNECTION
         WITH THE EXERCISE OF A STOCK OPTION, THE NUMBER OF COMMON SHARES
         EXCHANGED AS PAYMENT IN CONNECTION WITH THE EXERCISE SHALL AGAIN BE
         AVAILABLE FOR ISSUANCE UNDER THE PLAN.

         4.2.     CHANGES.

                  (a)      THE EXISTENCE OF THE PLAN AND THE STOCK OPTIONS
         GRANTED HEREUNDER SHALL NOT AFFECT IN ANY WAY THE RIGHT OR POWER OF THE
         BOARD OR THE SHAREHOLDERS OF THE COMPANY TO MAKE OR AUTHORIZE ANY
         ADJUSTMENT, RECAPITALIZATION, REORGANIZATION OR OTHER CHANGE IN THE
         COMPANY'S CAPITAL STRUCTURE OR ITS BUSINESS, ANY MERGER OR
         CONSOLIDATION OF THE COMPANY, ANY ISSUE OF BONDS, DEBENTURES, PREFERRED
         OR PRIOR PREFERENCE STOCK AHEAD OF OR AFFECTING COMMON SHARES, THE
         AUTHORIZATION OR ISSUANCE OF ADDITIONAL COMMON SHARES, THE DISSOLUTION
         OR LIQUIDATION OF THE COMPANY, ANY SALE OR TRANSFER OF ALL OR PART OF
         ITS ASSETS OR BUSINESS OR ANY OTHER CORPORATE ACT OR PROCEEDING.

                  (b)      IN THE EVENT THERE IS ANY CHANGE IN THE CAPITAL
         STRUCTURE OR BUSINESS OF THE COMPANY BY REASON OF ANY STOCK DIVIDEND OR
         EXTRAORDINARY DIVIDEND, STOCK SPLIT OR REVERSE STOCK SPLIT,
         RECAPITALIZATION, REORGANIZATION, MERGER, CONSOLIDATION, SPLIT-UP,
         COMBINATION OR EXCHANGE OF SHARES, NON-CASH DISTRIBUTIONS WITH RESPECT
         TO ITS OUTSTANDING COMMON SHARES OR CAPITAL STOCK OTHER THAN COMMON
         SHARES, RECLASSIFICATION OF ITS CAPITAL STOCK, ANY SALE OR TRANSFER OF
         ALL OR PART OF THE COMPANY'S ASSETS OR BUSINESS, OR ANY SIMILAR CHANGE
         AFFECTING THE COMPANY'S CAPITAL STRUCTURE OR BUSINESS, AND THE BOARD
         DETERMINES IN GOOD FAITH THAT AN ADJUSTMENT IS NECESSARY OR APPROPRIATE
         UNDER THE PLAN TO PREVENT SUBSTANTIAL DILUTION OR ENLARGEMENT OF THE
         RIGHTS GRANTED TO, OR AVAILABLE FOR, PARTICIPANTS UNDER THE PLAN OR AS
         OTHERWISE NECESSARY TO REFLECT THE CHANGE IN ORDER TO PROVIDE A
         SUBSTANTIALLY EQUIVALENT BENEFIT TO THE PARTICIPANTS, THEN THE
         AGGREGATE NUMBER AND KIND OF SHARES OR SECURITIES OR OTHER PROPERTY
         WHICH THEREAFTER MAY BE SUBJECT TO OPTIONS GRANTED UNDER THE PLAN, THE
         NUMBER AND KIND OF SHARES OR OTHER SECURITIES OR OTHER PROPERTY
         (INCLUDING CASH) TO BE ISSUED UPON EXERCISE OF AN OUTSTANDING STOCK
         OPTION GRANTED UNDER THE PLAN THAT IS NOT CANCELLED OR TERMINATED
         PURSUANT TO ANOTHER PROVISION OF THE PLAN AND THE PURCHASE OR EXERCISE
         PRICE OF SUCH AN OPTION SHALL BE APPROPRIATELY ADJUSTED CONSISTENT WITH
         SUCH CHANGE IN SUCH MANNER AS THE BOARD MAY DEEM EQUITABLE TO PREVENT
         SUBSTANTIAL DILUTION OR ENLARGEMENT OF THE RIGHTS GRANTED TO, OR
         AVAILABLE FOR, PARTICIPANTS UNDER THE PLAN OR AS OTHERWISE NECESSARY TO
         REFLECT THE CHANGE, AND ANY SUCH ADJUSTMENT DETERMINED BY THE BOARD IN
         GOOD FAITH SHALL BE BINDING AND CONCLUSIVE ON THE COMPANY AND ALL
         PARTICIPANTS AND THEIR RESPECTIVE HEIRS, EXECUTORS, ADMINISTRATORS,
         SUCCESSORS AND ASSIGNS.

                  (c)      FRACTIONAL COMMON SHARES RESULTING FROM ANY
         ADJUSTMENT TO A STOCK OPTION PURSUANT TO SECTION 4.2(A) OR (B) SHALL BE
         AGGREGATED UNTIL, AND ELIMINATED AT, THE TIME OF EXERCISE. NO
         FRACTIONAL COMMON SHARES SHALL BE ISSUED UNDER THE PLAN. THE BOARD MAY
         REDUCE THE NUMBER OF SHARES TO A WHOLE NUMBER OF SHARES OR MAY, IN

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         ITS SOLE DISCRETION, PAY CASH IN LIEU OF ANY FRACTIONAL COMMON SHARES
         IN SETTLEMENT OF AWARDS UNDER THE PLAN. NOTICE OF ANY ADJUSTMENT SHALL
         BE GIVEN BY THE BOARD TO EACH PARTICIPANT WHOSE STOCK OPTION HAS BEEN
         ADJUSTED AND SUCH ADJUSTMENT (WHETHER OR NOT SUCH NOTICE IS GIVEN)
         SHALL BE EFFECTIVE AND BINDING FOR ALL PURPOSES OF THE PLAN.

                  (d)      IN THE EVENT OF A MERGER OR CONSOLIDATION IN WHICH
         THE COMPANY IS NOT THE SURVIVING ENTITY OR IN THE EVENT OF ANY
         TRANSACTION THAT RESULTS IN THE ACQUISITION OF ALL OR SUBSTANTIALLY ALL
         OF THE COMPANY'S OUTSTANDING COMMON SHARES BY A SINGLE PERSON OR ENTITY
         OR BY A GROUP OF PERSONS AND/OR ENTITIES ACTING IN CONCERT, OR IN THE
         EVENT OF THE SALE OR TRANSFER OF ALL OR SUBSTANTIALLY ALL OF THE
         COMPANY'S ASSETS (ALL OF THE FOREGOING BEING REFERRED TO AS
         "ACQUISITION EVENTS"), THEN THE BOARD MAY, IN ITS SOLE DISCRETION,
         TERMINATE ALL OUTSTANDING STOCK OPTIONS, EFFECTIVE AS OF THE DATE OF
         THE ACQUISITION EVENT, BY DELIVERING NOTICE OF TERMINATION TO EACH SUCH
         PARTICIPANT AT LEAST THIRTY (30) DAYS PRIOR TO THE DATE OF CONSUMMATION
         OF THE ACQUISITION EVENT; PROVIDED, THAT DURING THE PERIOD FROM THE
         DATE ON WHICH SUCH NOTICE OF TERMINATION IS DELIVERED TO THE
         CONSUMMATION OF THE ACQUISITION EVENT, EACH SUCH PARTICIPANT SHALL HAVE
         THE RIGHT TO EXERCISE IN FULL ALL OF HIS OR HER STOCK OPTIONS THAT ARE
         THEN OUTSTANDING (WHETHER VESTED OR NOT VESTED AND WITHOUT REGARD TO
         ANY LIMITATIONS ON EXERCISABILITY OTHERWISE CONTAINED IN THE STOCK
         OPTION) BUT CONTINGENT ON THE OCCURRENCE OF THE ACQUISITION EVENT, AND,
         PROVIDED THAT, IF THE ACQUISITION EVENT DOES NOT TAKE PLACE WITHIN A
         SPECIFIED PERIOD AFTER GIVING SUCH NOTICE FOR ANY REASON WHATSOEVER,
         THE NOTICE AND EXERCISE SHALL BE NULL AND VOID. IF AN ACQUISITION EVENT
         OCCURS, TO THE EXTENT THE BOARD DOES NOT TERMINATE THE OUTSTANDING
         STOCK OPTIONS PURSUANT TO THIS SECTION 4.2(d), THEN THE PROVISIONS OF
         SECTION 4.2(b) SHALL APPLY.

         4.3.     PURCHASE PRICE. NOTWITHSTANDING ANY PROVISION OF THE PLAN TO
THE CONTRARY, IF AUTHORIZED BUT PREVIOUSLY UNISSUED COMMON SHARES ARE ISSUED
UNDER THE PLAN, SUCH SHARES SHALL NOT BE ISSUED FOR A CONSIDERATION WHICH IS
LESS THAN AS PERMITTED UNDER APPLICABLE LAW.

                                   ARTICLE V.

                                   ELIGIBILITY

            5.1. ELIGIBILITY. NON-EMPLOYEE DIRECTORS ARE ELIGIBLE TO RECEIVE
GRANTS OF STOCK OPTIONS UNDER SECTION 6.3 IN ACCORDANCE WITH THE TERMS OF THE
PLAN. ELIGIBILITY TO RECEIVE GRANTS OF STOCK OPTIONS UNDER SECTION 6.3 OF THE
PLAN WILL BE DETERMINED BY THE BOARD IN ITS SOLE DISCRETION.

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                                   ARTICLE VI.

                                  STOCK OPTIONS

         6.1.     NON-QUALIFIED STOCK OPTIONS. STOCK OPTIONS GRANTED HEREUNDER
SHALL BE NON-QUALIFIED STOCK OPTIONS.

         6.2.     AUTOMATIC AWARDS. NOTWITHSTANDING, ANYTHING ELSE HEREIN,
AUTOMATIC AWARDS SHALL NOT BE MADE UNDER THIS PLAN AFTER THE EFFECTIVE TIME (AS
DEFINED IN THE REORGANIZATION AGREEMENT).

         6.3.     INITIAL AWARDS. THE BOARD SHALL HAVE THE AUTHORITY, IN ITS
SOLE DISCRETION, TO GRANT TO AN INDIVIDUAL A STOCK OPTION TO PURCHASE UP TO
20,000 COMMON SHARES ON THE DATE ANY INDIVIDUAL FIRST COMMENCES SERVICE AS A
NON-EMPLOYEE DIRECTOR TO INDUCE SUCH INDIVIDUAL TO COMMENCE SERVICE AS A
NON-EMPLOYEE DIRECTOR.

         6.4.     TERMS OF OPTIONS. STOCK OPTIONS GRANTED UNDER THIS ARTICLE VI
SHALL BE SUBJECT TO THE FOLLOWING TERMS AND CONDITIONS AND SHALL BE IN SUCH
FORM, NOT INCONSISTENT WITH TERMS OF THE PLAN, AS THE BOARD SHALL DEEM
DESIRABLE:

                  (a)      EXERCISE PRICE. THE EXERCISE PRICE PER COMMON SHARE
         SUBJECT TO A STOCK OPTION SHALL BE EQUAL TO THE FAIR MARKET VALUE OF
         THE COMMON SHARES AT THE TIME OF GRANT.

                  (b)      EXERCISABILITY. EXCEPT AS OTHERWISE PROVIDED HEREIN,
         THE INITIAL OPTION SHALL FULLY VEST AND BECOME EXERCISABLE ONE HUNDRED
         EIGHTY (180) DAYS AFTER THE DATE OF GRANT, PROVIDED THAT THE
         PARTICIPANT HAS NOT INCURRED A TERMINATION OF DIRECTORSHIP PRIOR
         THERETO AND ALL OTHER OPTIONS SHALL BE FULLY VESTED ON THE DATE OF
         GRANT.

                  (c)      METHOD OF EXERCISE. SUBJECT TO THE VESTING AND
         WAITING PERIOD PROVISIONS OF SECTION 6(B) ABOVE, 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 COMPANY SPECIFYING THE NUMBER
         OF SHARES TO BE PURCHASED, ACCOMPANIED BY PAYMENT IN FULL OF THE
         EXERCISE PRICE. COMMON SHARES PURCHASED PURSUANT TO THE EXERCISE OF A
         STOCK OPTION SHALL BE PAID FOR AT THE TIME OF EXERCISE AS FOLLOWS: (i)
         IN CASH OR BY CHECK, BANK DRAFT OR MONEY ORDER PAYABLE TO THE ORDER OF
         COMPANY; (ii) IF THE COMMON SHARES ARE TRADED ON A NATIONAL SECURITIES
         EXCHANGE OR QUOTED ON A NATIONAL QUOTATION SYSTEM THROUGH THE DELIVERY
         OF IRREVOCABLE INSTRUCTIONS TO A BROKER TO DELIVER PROMPTLY TO THE
         COMPANY AN AMOUNT EQUAL TO THE PURCHASE PRICE; (iii) BY DELIVERY OF
         COMMON SHARES OWNED BY THE PARTICIPANT FOR A PERIOD OF AT LEAST SIX (6)
         MONTHS (AND FOR WHICH THE PARTICIPANT HAS GOOD TITLE FREE AND CLEAR OF
         ANY LIENS AND ENCUMBRANCES) BASED ON THE FAIR MARKET VALUE OF THE
         COMMON SHARES ON THE PAYMENT DATE; OR (iv) BY SUCH OTHER METHOD
         APPROVED BY THE BOARD. NO COMMON

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         SHARES SHALL BE ISSUED UNTIL PAYMENT THEREOF, AS PROVIDED HEREIN, HAS
         BEEN MADE OR PROVIDED FOR.

                  (d)      OPTION AGREEMENT. OPTIONS SHALL BE EVIDENCED BY
         OPTION AGREEMENTS IN SUCH FORM AS THE BOARD SHALL APPROVE FROM TIME TO
         TIME.

                  (e)      OPTION TERM. IF NOT PREVIOUSLY EXERCISED, CANCELED OR
         TERMINATED, EACH STOCK OPTION SHALL EXPIRE TEN (10) YEARS AFTER THE
         DATE THE STOCK OPTION IS GRANTED.

                                  ARTICLE VII.

                             TERMINATION PROVISIONS

         7.1.     TERMINATION OF DIRECTORSHIP. THE FOLLOWING RULES APPLY WITH
REGARD TO STOCK OPTIONS UPON THE TERMINATION OF DIRECTORSHIP OF A PARTICIPANT:

                  (a)      TERMINATION OF DIRECTORSHIP BY REASON OF DEATH. UPON
         A PARTICIPANT'S TERMINATION OF DIRECTORSHIP BY REASON OF DEATH, ALL
         THEN OUTSTANDING STOCK OPTIONS SHALL FULLY VEST AND BECOME EXERCISABLE
         (TO THE EXTENT UNVESTED ON THE DATE OF DEATH) AND ALL THEN OUTSTANDING
         STOCK OPTIONS SHALL REMAIN EXERCISABLE BY THE LEGAL REPRESENTATIVE OF
         THE ESTATE AT ANY TIME WITHIN A PERIOD OF TWO (2) YEARS FROM THE DATE
         OF DEATH, BUT IN NO EVENT BEYOND THE EXPIRATION OF THE STATED TERM OF
         SUCH STOCK OPTIONS.

                  (b)      TERMINATION OF DIRECTORSHIP OTHER THAN FOR CAUSE OR
         DEATH. UPON A PARTICIPANT'S TERMINATION OF DIRECTORSHIP ON ACCOUNT OF
         RESIGNATION, FAILURE TO STAND FOR REELECTION OR FAILURE TO BE REELECTED
         OR OTHERWISE OTHER THAN AS SET FORTH IN SECTION 7.1(A) OR (C), ALL THEN
         OUTSTANDING STOCK OPTIONS HELD BY THE PARTICIPANT MAY BE EXERCISED, TO
         THE EXTENT EXERCISABLE ON THE DATE OF SUCH TERMINATION OF DIRECTORSHIP,
         AT ANY TIME WITHIN A PERIOD OF TWO (2) YEARS FROM THE DATE OF SUCH
         TERMINATION OF DIRECTORSHIP, BUT IN NO EVENT BEYOND THE EXPIRATION OF
         THE STATED TERM OF SUCH STOCK OPTIONS.

                  (c)      TERMINATION OF DIRECTORSHIP FOR CAUSE. UPON REMOVAL
         FOR CAUSE, OR FAILURE TO BE RENOMINATED FOR CAUSE, OR IF THE COMPANY
         OBTAINS OR DISCOVERS INFORMATION AFTER TERMINATION OF DIRECTORSHIP THAT
         SUCH PARTICIPANT HAD ENGAGED IN CONDUCT THAT WOULD HAVE JUSTIFIED A
         REMOVAL FOR CAUSE DURING SUCH DIRECTORSHIP, ALL THEN OUTSTANDING STOCK
         OPTIONS OF SUCH PARTICIPANT SHALL IMMEDIATELY TERMINATE AND SHALL BE
         NULL AND VOID.

                  (d)      TERMINATION OF STOCK OPTIONS. EXCEPT AS PROVIDED IN
         SECTION 7.1(A), STOCK OPTIONS THAT WERE NOT EXERCISABLE DURING THE
         PERIOD THAT AN INDIVIDUAL SERVES AS A NON-EMPLOYEE DIRECTOR SHALL NOT
         THEREAFTER BECOME EXERCISABLE UPON A TERMINATION

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         OF DIRECTORSHIP FOR ANY REASON OR NO REASON WHATSOEVER, AND SUCH STOCK
         OPTIONS SHALL TERMINATE AND BECOME NULL AND VOID UPON A TERMINATION OF
         DIRECTORSHIP.

                                  ARTICLE VIII.

                               NON-TRANSFERABILITY

         8.1.     NON-TRANSFERABILITY. EXCEPT AS PROVIDED IN THE LAST SENTENCE
OF THIS ARTICLE VIII, NO STOCK OPTION SHALL BE TRANSFERRED BY A PARTICIPANT
OTHERWISE THAN BY WILL OR BY THE LAWS OF DESCENT AND DISTRIBUTION. ALL STOCK
OPTIONS SHALL BE EXERCISABLE, DURING THE PARTICIPANT'S LIFETIME, ONLY BY THE
PARTICIPANT. NO STOCK OPTION SHALL, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED BY
LAW OR HEREIN, BE TRANSFERRED IN ANY MANNER, AND ANY ATTEMPT TO TRANSFER ANY
STOCK OPTION SHALL BE VOID, AND NO SUCH STOCK OPTION SHALL IN ANY MANNER BE USED
FOR THE PAYMENT OF SUBJECT TO, OR OTHERWISE ENCUMBERED BY OR HYPOTHECATED FOR
THE DEBTS, CONTRACTS, LIABILITIES, ENGAGEMENTS OR TORTS OF ANY PERSON WHO SHALL
BE ENTITLED TO SUCH STOCK OPTION, NOR SHALL IT BE SUBJECT TO ATTACHMENT OR LEGAL
PROCESS FOR OR AGAINST SUCH PERSON. NOTWITHSTANDING THE FOREGOING, THE BOARD MAY
DETERMINE AT THE TIME OF GRANT OR THEREAFTER, THAT A STOCK OPTION THAT IS
OTHERWISE NOT TRANSFERABLE PURSUANT TO THIS ARTICLE VIII IS TRANSFERABLE IN
WHOLE OR PART AND IN SUCH CIRCUMSTANCES, AND UNDER SUCH CONDITIONS, AS SPECIFIED
BY THE BOARD.

                                   ARTICLE IX.

                                CHANGE IN CONTROL

         9.1.     BENEFITS. IN THE EVENT OF A CHANGE IN CONTROL OF THE COMPANY
(AS DEFINED BELOW), ALL OUTSTANDING STOCK OPTIONS GRANTED PRIOR TO THE CHANGE IN
CONTROL SHALL BE FULLY VESTED AND, SUBJECT TO THE SECOND SENTENCE OF SECTION
6.4(B) ABOVE, IMMEDIATELY EXERCISABLE IN THEIR ENTIRETY, PROVIDED THAT THE
PARTICIPANT HAS NOT INCURRED A TERMINATION OF DIRECTORSHIP PRIOR THERETO.

         9.2.     CHANGE IN CONTROL. FOR PURPOSES OF THE PLAN, A "CHANGE IN
CONTROL" SHALL BE DEEMED TO HAVE OCCURRED:

                  (a)      UPON ANY PERSON (AS DEFINED IN SECTION 3(A)(9) OF THE
         EXCHANGE ACT AND AS USED IN SECTIONS 13(D) AND 14(D) THEREOF)
         (EXCLUDING THE COMPANY OR ANY EMPLOYEE BENEFIT PLAN SPONSORED OR
         MAINTAINED BY THE COMPANY (INCLUDING ANY TRUSTEE OF ANY SUCH PLAN
         ACTING IN HIS OR HER CAPACITY AS TRUSTEE), BECOMING THE BENEFICIAL
         OWNER (AS DEFINED IN RULE 13(D)-3 UNDER THE EXCHANGE ACT), DIRECTLY OR
         INDIRECTLY, OF SECURITIES OF THE COMPANY HAVING AT LEAST TWENTY-FIVE
         PERCENT (25%) OF THE TOTAL NUMBER OF VOTES THAT MAY BE CAST FOR THE
         ELECTION OF DIRECTORS OF THE COMPANY;

                                       9
<PAGE>

                  (b)      IF DURING ANY PERIOD OF TWO (2) CONSECUTIVE YEARS,
         INDIVIDUALS WHO AT THE BEGINNING OF SUCH PERIOD CONSTITUTE THE BOARD,
         AND ANY NEW DIRECTOR (OTHER THAN A DIRECTOR DESIGNATED BY A PERSON WHO
         HAS ENTERED INTO AN AGREEMENT WITH THE COMPANY TO EFFECT A TRANSACTION
         DESCRIBED IN PARAGRAPH (A), (C), OR (D) OF THIS SECTION OR A DIRECTOR
         WHOSE INITIAL ASSUMPTION OF OFFICE OCCURS AS A RESULT OF EITHER AN
         ACTUAL OR THREATENED ELECTION CONTEST (AS SUCH TERMS ARE USED IN RULE
         14A-11 OF REGULATION 14A PROMULGATED UNDER THE EXCHANGE ACT) OR OTHER
         ACTUAL OR THREATENED SOLICITATION OF PROXIES OR CONSENTS BY OR ON
         BEHALF OF A PERSON OTHER THAN THE BOARD) WHOSE ELECTION BY THE BOARD OR
         NOMINATION FOR ELECTION BY THE COMPANY'S SHAREHOLDERS WAS APPROVED BY A
         VOTE OF AT LEAST TWO-THIRDS (2/3) OF THE DIRECTORS THEN STILL IN OFFICE
         WHO EITHER WERE DIRECTORS AT THE BEGINNING OF THE TWO (2) YEAR PERIOD
         OR WHOSE ELECTION OR NOMINATION FOR ELECTION WAS PREVIOUSLY SO
         APPROVED, CEASE FOR ANY REASON TO CONSTITUTE AT LEAST A MAJORITY OF THE
         BOARD;

                  (c)      UPON THE MERGER OR CONSOLIDATION OF THE COMPANY WITH
         ANY OTHER CORPORATION OR ENTITY, OTHER THAN A MERGER OR CONSOLIDATION
         WHICH WOULD RESULT IN THE VOTING SECURITIES OF THE COMPANY OUTSTANDING
         IMMEDIATELY PRIOR THERETO CONTINUING TO REPRESENT (EITHER BY REMAINING
         OUTSTANDING OR BY BEING CONVERTED INTO VOTING SECURITIES OF THE
         SURVIVING ENTITY) MORE THAN FIFTY PERCENT (50%) OF THE COMBINED VOTING
         POWER OF THE VOTING SECURITIES OF THE COMPANY OR SUCH SURVIVING ENTITY
         OUTSTANDING IMMEDIATELY AFTER SUCH MERGER OR CONSOLIDATION; OR

                  (d)      UPON APPROVAL BY THE SHAREHOLDERS OF THE COMPANY OF A
         PLAN OF COMPLETE LIQUIDATION OF THE COMPANY OR AN AGREEMENT FOR THE
         SALE OR DISPOSITION BY THE COMPANY OF ALL OR SUBSTANTIALLY ALL OF THE
         COMPANY'S ASSETS OTHER THAN THE SALE OF ALL OR SUBSTANTIALLY ALL OF THE
         ASSETS OF THE COMPANY TO A PERSON OR PERSONS WHO BENEFICIALLY OWN,
         DIRECTLY OR INDIRECTLY, AT LEAST FIFTY PERCENT (50%) OR MORE OF THE
         COMBINED VOTING POWER OF THE OUTSTANDING VOTING SECURITIES OF THE
         COMPANY AT THE TIME OF THE SALE.

                                   ARTICLE X.

                        TERMINATION OR AMENDMENT OF PLAN

         10.1.    TERMINATION OR AMENDMENT. NOTWITHSTANDING ANY OTHER PROVISION
OF THE PLAN, THE BOARD MAY AT ANY TIME, AND FROM TIME TO TIME, AMEND, IN WHOLE
OR IN PART, ANY OR ALL OF THE PROVISIONS OF THE PLAN (INCLUDING ANY AMENDMENT
DEEMED NECESSARY TO ENSURE THAT THE COMPANY MAY COMPLY WITH ANY REGULATORY
REQUIREMENT REFERRED TO IN THIS ARTICLE X), OR SUSPEND OR TERMINATE IT ENTIRELY,
RETROACTIVELY OR OTHERWISE; PROVIDED, HOWEVER, THAT, UNLESS OTHERWISE REQUIRED
BY LAW OR SPECIFICALLY PROVIDED HEREIN, THE RIGHTS OF A PARTICIPANT WITH RESPECT
TO STOCK OPTIONS GRANTED PRIOR TO SUCH AMENDMENT, SUSPENSION OR TERMINATION, MAY
NOT BE IMPAIRED WITHOUT THE CONSENT OF SUCH PARTICIPANT. A NON-EMPLOYEE DIRECTOR
SHALL HAVE NO RIGHTS WITH RESPECT TO A STOCK OPTION UNTIL SUCH OPTION IS GRANTED
PURSUANT TO THE TERMS OF THE PLAN.

                                       10
<PAGE>

                  NOTWITHSTANDING THE FIRST SENTENCE OF THIS SECTION 10.1, THE
BOARD MAY NOT EFFECT ANY AMENDMENT THAT WOULD REQUIRE THE APPROVAL OF
SHAREHOLDERS UNDER APPLICABLE LAW OR UNDER ANY REGULATION OF A NATIONAL
SECURITIES EXCHANGE OR AUTOMATED QUOTATION SYSTEM UNLESS SUCH APPROVAL IS
OBTAINED.

                                   ARTICLE XI.

                                  UNFUNDED PLAN

         11.1.    UNFUNDED STATUS OF PLAN. THE PLAN IS INTENDED TO CONSTITUTE AN
"UNFUNDED" PLAN FOR INCENTIVE AND DEFERRED COMPENSATION. WITH RESPECT TO ANY
PAYMENTS AND THE VALUE OF ANY SECURITIES OR OTHER PROPERTY AS TO WHICH A
PARTICIPANT HAS A FIXED AND VESTED INTEREST BUT WHICH ARE NOT YET MADE OR ISSUED
TO A PARTICIPANT BY THE COMPANY, NOTHING CONTAINED HEREIN SHALL GIVE ANY SUCH
PARTICIPANT ANY RIGHTS THAT ARE GREATER THAN THOSE OF A GENERAL CREDITOR OF THE
COMPANY.

                                  ARTICLE XII.

                               GENERAL PROVISIONS

         12.1.    LEGEND. THE BOARD MAY REQUIRE EACH PERSON RECEIVING COMMON
SHARES PURSUANT TO THE EXERCISE OF A STOCK OPTION UNDER THE PLAN TO REPRESENT TO
AND AGREE WITH THE COMPANY IN WRITING THAT SUCH PERSON IS AN ACCREDITED INVESTOR
WITHIN THE MEANING OF RULE 501 OF REGULATION D PROMULGATED UNDER THE SECURITIES
ACT OF 1933 AND IS ACQUIRING THE COMMON SHARES WITHOUT A VIEW TO DISTRIBUTION
THEREOF. IN ADDITION TO ANY LEGEND REQUIRED PURSUANT TO THE PLAN, THE
CERTIFICATES FOR SUCH COMMON SHARES MAY INCLUDE ANY LEGEND WHICH THE BOARD DEEMS
APPROPRIATE TO REFLECT ANY RESTRICTIONS ON TRANSFER.

         ALL CERTIFICATES FOR COMMON SHARES DELIVERED UNDER THE PLAN SHALL BE
SUBJECT TO SUCH STOCK TRANSFER ORDERS AND OTHER RESTRICTIONS AS THE BOARD MAY
DEEM ADVISABLE UNDER THE RULES, REGULATIONS AND OTHER REQUIREMENTS OF THE
SECURITIES AND EXCHANGE COMMISSION, ANY STOCK EXCHANGE UPON WHICH THE COMMON
SHARES ARE THEN LISTED OR ANY NATIONAL SECURITIES ASSOCIATION SYSTEM UPON WHOSE
SYSTEM THE COMMON SHARES ARE THEN QUOTED, ANY APPLICABLE FEDERAL OR STATE
SECURITIES LAW, AND ANY APPLICABLE CORPORATE LAW, AND THE BOARD MAY CAUSE A
LEGEND OR LEGENDS TO BE PUT ON ANY SUCH CERTIFICATES TO MAKE APPROPRIATE
REFERENCE TO SUCH RESTRICTIONS.

         12.2.    OTHER PLANS. NOTHING CONTAINED IN THE PLAN SHALL PREVENT THE
BOARD FROM ADOPTING OTHER OR ADDITIONAL COMPENSATION ARRANGEMENTS, SUBJECT TO
SHAREHOLDER APPROVAL IF SUCH APPROVAL IS REQUIRED; AND SUCH ARRANGEMENTS MAY BE
EITHER GENERALLY APPLICABLE OR APPLICABLE ONLY IN SPECIFIC CASES.

                                       11
<PAGE>

         12.3.    NO RIGHT TO SERVE AS A NON-EMPLOYEE DIRECTOR. NEITHER THE PLAN
NOR THE GRANT OR EXERCISE OF ANY STOCK OPTIONS HEREUNDER SHALL IMPOSE ANY
OBLIGATIONS ON THE COMPANY TO RETAIN ANY PARTICIPANT AS A NON-EMPLOYEE DIRECTOR
NOR SHALL IT IMPOSE ON THE PART OF ANY PARTICIPANT ANY OBLIGATION TO CONTINUE TO
SERVE AS A NON-EMPLOYEE DIRECTOR.

         12.4.    WITHHOLDING OF TAXES. THE COMPANY SHALL HAVE THE RIGHT TO
DEDUCT FROM ANY PAYMENT TO BE MADE TO A PARTICIPANT, OR TO OTHERWISE REQUIRE,
PRIOR TO THE ISSUANCE OR DELIVERY OF ANY COMMON SHARES OR THE PAYMENT OF ANY
CASH HEREUNDER, PAYMENT BY THE PARTICIPANT OF, ANY FEDERAL, STATE OR LOCAL TAXES
REQUIRED BY LAW TO BE WITHHELD.

         12.5.    LISTING AND OTHER CONDITIONS.

                  (a)      UNLESS OTHERWISE DETERMINED BY THE BOARD, AS LONG AS
         THE COMMON SHARES ARE LISTED ON A NATIONAL SECURITIES EXCHANGE OR
         SYSTEM SPONSORED BY A NATIONAL SECURITIES ASSOCIATION, THE ISSUE OF ANY
         COMMON SHARES PURSUANT TO THE EXERCISE OF AN OPTION SHALL BE
         CONDITIONED UPON SUCH SHARES BEING LISTED ON SUCH EXCHANGE OR SYSTEM.
         THE COMPANY SHALL HAVE NO OBLIGATION TO ISSUE SUCH SHARES UNLESS AND
         UNTIL SUCH SHARES ARE SO LISTED; PROVIDED, HOWEVER, THAT ANY DELAY IN
         THE ISSUANCE OF SUCH SHARES SHALL BE BASED SOLELY ON A REASONABLE
         BUSINESS DECISION AND THE RIGHT TO EXERCISE ANY OPTION WITH RESPECT TO
         SUCH SHARES SHALL BE SUSPENDED UNTIL SUCH LISTING HAS BEEN EFFECTED.

                  (b)      IF AT ANY TIME COUNSEL TO THE COMPANY SHALL BE OF THE
         OPINION THAT ANY SALE OR DELIVERY OF COMMON SHARES PURSUANT TO THE
         EXERCISE OF AN OPTION IS OR MAY IN THE CIRCUMSTANCES BE UNLAWFUL OR
         RESULT IN THE IMPOSITION OF EXCISE TAXES ON THE COMPANY UNDER THE
         STATUTES, RULES OR REGULATIONS OF ANY APPLICABLE JURISDICTION, THE
         COMPANY SHALL HAVE NO OBLIGATION TO MAKE SUCH SALE OR DELIVERY, OR TO
         MAKE ANY APPLICATION OR TO EFFECT OR TO MAINTAIN ANY QUALIFICATION OR
         REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR OTHERWISE
         WITH RESPECT TO COMMON SHARES OR OPTIONS, AND THE RIGHT TO EXERCISE ANY
         OPTION SHALL BE SUSPENDED UNTIL, IN THE OPINION OF SAID COUNSEL, SUCH
         SALE OR DELIVERY SHALL BE LAWFUL OR WILL NOT RESULT IN THE IMPOSITION
         OF EXCISE TAXES ON THE COMPANY.

                  (c)      UPON TERMINATION OF ANY PERIOD OF SUSPENSION UNDER
         THIS SECTION 12.5, ANY OPTION AFFECTED BY SUCH SUSPENSION WHICH SHALL
         NOT THEN HAVE EXPIRED OR TERMINATED SHALL BE REINSTATED AS TO ALL
         SHARES AVAILABLE BEFORE SUCH SUSPENSION AND AS TO SHARES WHICH WOULD
         OTHERWISE HAVE BECOME AVAILABLE DURING THE PERIOD OF SUCH SUSPENSION,
         BUT NO SUCH SUSPENSION SHALL EXTEND THE TERM OF ANY OPTIONS.

                  (d)      A PARTICIPANT SHALL BE REQUIRED TO SUPPLY THE COMPANY
         WITH ANY CERTIFICATES, REPRESENTATIONS AND INFORMATION THAT THE COMPANY
         REQUESTS AND OTHERWISE COOPERATE WITH THE COMPANY IN OBTAINING ANY
         LISTING, REGISTRATION, QUALIFICATION, EXEMPTION, CONSENT OR APPROVAL
         THE COMPANY DEEMS NECESSARY OR APPROPRIATE.

                                       12
<PAGE>

                  (e)      IF THE GRANT OF ANY OPTION OR ANY SALE OR DELIVERY OF
         COMMON SHARES PURSUANT TO EXERCISE OF AN OPTION ADVERSELY AFFECTS THE
         COMPANY'S QUALIFICATION AS A REAL ESTATE INVESTMENT TRUST WITHIN THE
         MEANING OF SECTIONS 856 THROUGH 860 OF THE CODE, THE COMPANY SHALL HAVE
         NO OBLIGATION TO MAKE SUCH GRANT, SALE OR DELIVERY UNTIL SUCH GRANT,
         SALE OR DELIVERY WILL NO LONGER ADVERSELY AFFECT SUCH QUALIFICATION.

         12.6.    GOVERNING LAW. THE PLAN SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND (REGARDLESS OF THE LAW THAT
MIGHT OTHERWISE GOVERN UNDER APPLICABLE MARYLAND PRINCIPLES OF CONFLICT OF
LAWS).

         12.7.    CONSTRUCTION. WHEREVER ANY WORDS ARE USED HEREIN IN THE
SINGULAR FORM THEY SHALL BE CONSTRUED AS THOUGH THEY WERE ALSO USED IN THE
PLURAL FORM IN ALL CASES WHERE THEY WOULD SO APPLY.

         12.8.    OTHER BENEFITS. NO OPTION GRANTED OR EXERCISED UNDER THE PLAN
SHALL BE DEEMED COMPENSATION FOR PURPOSES OF COMPUTING BENEFITS UNDER ANY
RETIREMENT PLAN OF THE COMPANY NOR AFFECT ANY BENEFITS UNDER ANY OTHER BENEFIT
PLAN NOW OR SUBSEQUENTLY IN EFFECT UNDER WHICH THE AVAILABILITY OR AMOUNT OF
BENEFITS IS RELATED TO THE LEVEL OF COMPENSATION.

         12.9.    COSTS. THE COMPANY SHALL BEAR ALL EXPENSES INCLUDED IN
ADMINISTERING THE PLAN, INCLUDING EXPENSES OF ISSUING COMMON SHARES PURSUANT TO
THE EXERCISE OF ANY OPTIONS HEREUNDER.

         12.10.   DEATH/DISABILITY. THE BOARD MAY IN ITS DISCRETION REQUIRE THE
TRANSFEREE OF A PARTICIPANT'S OPTIONS TO SUPPLY IT WITH WRITTEN NOTICE OF THE
PARTICIPANT'S DEATH OR DISABILITY AND TO SUPPLY IT WITH A COPY OF THE WILL (IN
THE CASE OF THE PARTICIPANT'S DEATH) OR SUCH OTHER EVIDENCE AS THE BOARD DEEMS
NECESSARY TO ESTABLISH THE VALIDITY OF THE TRANSFER OF AN OPTION. THE BOARD MAY
ALSO REQUIRE THE AGREEMENT OF THE TRANSFEREE TO BE BOUND BY ALL OF THE TERMS AND
CONDITIONS OF THE PLAN.

         12.11.   SEVERABILITY OF PROVISIONS. IF ANY PROVISION OF THE PLAN SHALL
BE HELD INVALID OR UNENFORCEABLE, SUCH INVALIDITY OR UNENFORCEABILITY SHALL NOT
AFFECT ANY OTHER PROVISIONS HEREOF, AND THE PLAN SHALL BE CONSTRUED AND ENFORCED
AS IF SUCH PROVISIONS HAD NOT BEEN INCLUDED.

         12.12.   HEADINGS AND CAPTIONS. THE HEADINGS AND CAPTIONS HEREIN ARE
PROVIDED FOR REFERENCE AND CONVENIENCE ONLY, SHALL NOT BE CONSIDERED PART OF THE
PLAN, AND SHALL NOT BE EMPLOYED IN THE CONSTRUCTION OF THE PLAN.

                                       13
<PAGE>

                                  ARTICLE XIII.

                             EFFECTIVE DATE OF PLAN

         THE PLAN (FORMERLY THE CV REIT, INC. NON-EMPLOYEE DIRECTOR 1998 STOCK
OPTION PLAN) INITIALLY BECAME EFFECTIVE AS OF JANUARY 15, 1998. GRANTS OF
OPTIONS UNDER THE PLAN WILL BE MADE ON OR AFTER THE EFFECTIVE DATE OF THE PLAN;
PROVIDED THAT, IF THE PLAN IS NOT APPROVED BY THE REQUISITE VOTE OF
SHAREHOLDERS, ALL OPTIONS WHICH HAVE BEEN GRANTED PURSUANT TO THE TERMS OF THE
PLAN SHALL BE NULL AND VOID. THIS AMENDED AND RESTATED PLAN IS EFFECTIVE ON JUNE
16, 2000 (DEFINED AS THE EFFECTIVE TIME IN THE REORGANIZATION AGREEMENT).

                                  ARTICLE XIV.

                                  TERM OF PLAN

         NO STOCK OPTIONS SHALL BE GRANTED PURSUANT TO THE PLAN ON OR AFTER THE
TENTH ANNIVERSARY OF JANUARY 15, 1998, BUT STOCK OPTIONS GRANTED PRIOR TO SUCH
DATE MAY EXTEND BEYOND THAT DATE.

                                   ARTICLE XV.

                                  NAME OF PLAN

         THE PLAN SHALL BE KNOWN AS THE "KRAMONT REALTY TRUST NON-EMPLOYEE
DIRECTOR 1998 STOCK OPTION PLAN."

                                       14<PAGE>

                                                                   EXHIBIT 10.86

                    SECOND AMENDMENT TO EMPLOYMENT AGREEMENT

         This Second Amendment (this "Second Amendment") is dated effective July
1, 2003 by and among Kramont Operating Partnership, L.P., a Delaware limited
partnership (the "Company"), Kramont Realty Trust, a Maryland real estate
investment trust ("Kramont") and Carl E. Kraus ("Executive").

                                   BACKGROUND

         WHEREAS, the parties hereto entered into an Employment Agreement
effective as of March 21, 2002, as amended by First Amendment dated July 1,
2002, (herein referred to as "Employment Agreement"), wherein the parties agreed
to the terms and conditions of Executive's employment with the Company; and

         WHEREAS, the parties hereto desire to further amend certain of the
terms and conditions of the Employment Agreement.

         NOW THEREFORE, in consideration of the mutual promises and covenants
herein contained, and intending to be legally bound hereby, the parties hereto
agree as follows:

         1.       All capitalized terms used herein, but not otherwise defined,
shall have the meanings ascribed in the Employment Agreement.

         2.       Subject to the provisions contained in Paragraph 3 of the
Employment Agreement, the Term of Employment is hereby extended to June 30, 2004
(the "Extended Term of Employment").

         3.       During the Extended Term of Employment, Executive's Base
Salary shall be $210,000.00 payable in equal bi-weekly installments in
accordance with the Company's normal payroll practices.

         4.       Subject to the provisions contained in Paragraph 5 of the
Employment Agreement, it is agreed and understood that that Executive shall be
entitled to four (4) weeks of vacation.

         5.       In accordance with the Kramont 2000 Incentive Plan, the
Company hereby grants the Executive 5,981 restricted shares of common stock
under the terms and conditions contained in a share grant letter agreement (the
"Share Grant Agreement"), the form of which is attached hereto and made a part
hereof as Exhibit "A". Simultaneous with the execution of this Third Amendment,
Executive agrees to execute and deliver to the Company the Share Grant
Agreement.

<PAGE>

         6.       This Second Amendment and the Employment Agreement represent
the entire understanding between the parties and supercede all other oral or
written agreements between the parties. The Employment Agreement, as amended by
this Second Amendment, is hereby ratified and confirmed and remains in full
force and effect.

         IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Second Amendment as of the date and year first above written.

         KRAMONT OPERATING PARTNERSHIP, L.P.

                                    By: ________________________________________
                                        Louis P. Meshon, Sr.
                                        President

                                    KRAMONT REALTY TRUST

                                    By: ________________________________________
                                        Louis P. Meshon, Sr.
                                        President

                                    Executive

                                    By: ________________________________________
                                        Carl E. Kraus

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