Document:

CONSULTING AGREEMENT

         AGREEMENT  made this 28th day of  September,  2000,  by and  between EB
Consulting, a joint venture of Ed Heil and Bret Jenkins, hereinafter referred to
as the  "Consultant,"  and Community Home Mortgage  Corporation  whose principal
place of  business  is  located  at 510  Broadhollow  Road,  Melville,  NY 11747
hereinafter referred to as "Company."

         WHEREAS,  the Company  desires to engage the services of the Consultant
to perform  consulting  services for the Company  regarding its current business
and planned future business as an independent contractor and not as an employee;
and

         WHEREAS, Consultant desires to consult with the Board of Directors, the
officers of the Company, and the administrative  staff, and to undertake for the
Company   consultation  as  to  the  direction  of  certain  functions  in  said
management;

         NOW, THEREFORE, it is agreed as follows:

1.       Term. The respective duties and obligations of the contracting  parties
         shall be for a period of one year.

2.       Consultations.  Consultant shall be available to consult with the Board
         of  Directors,  the  officers  of the  Company,  and the  heads  of the
         administrative   staff,  at  reasonable   times,   concerning   matters
         pertaining  to the general  business  management  of the  Company,  the
         fiscal  policies of the Company,  the  relationship of the Company with
         its employees or with any organization representing its employees, and,
         in general,  the important  problems of concern in the business affairs
         of the Company.  Consultant shall not represent the Company,  its Board
         of  Directors,  its officers or any other members of the Company in any
         transactions or  communications  nor shall  Consultant make claim to do
         so. Consultant  understands that certain  information to be provided by
         the Company concerning the business and operations of the Company,  its
         subsidiaries,  and affiliates will be confidential information and will
         be treated by  Consultant  as such.  Consultant  will not,  directly or
         indirectly,   make  use  of  such   information  or  divulge  any  such
         information to others except as authorized by the Company.

3.       Liability.  With  regard  to  the  services  to  be  performed  by  the
         Consultant  pursuant  to the terms of this  agreement,  the  Consultant
         shall  not be  liable to the  Company,  or to anyone  who may claim any
         right due to any  relationship  with the  Corporation,  for any acts or
         omissions in the  performance of services on the part of the Consultant
         or on the part of the agents or  employees  of the  Consultant,  except
         when  said  acts or  omissions  of the  Consultant  are due to  willful
         misconduct or gross  negligence.  The Company shall hold the Consultant
         free and  harmless  from any  obligations,  costs,  claims,  judgments,
         attorneys'  fees,  and  attachments  arising from or growing out of the
         services  rendered  to the  Company  pursuant  to  the  terms  of  this
         agreement  or in any way  connected  with the  rendering  of  services,
         except when the same shall arise due to the willful misconduct or gross
         negligence  of the  Consultant  and the  Consultant  is  adjudged to be
         guilty  of  willful  misconduct  or  gross  negligence  by a  court  of
         competent jurisdiction.

4.       Compensation.  The  Consultant  shall  receive  compensation  from  the
         Company  for the  performance  of the  services  to be  rendered to the
         Company  pursuant  to the terms of the  agreement  $100,000  or two and
         one-half percent (2.5%) of the issued and outstanding  shares of common
         stock of the Company,  at the Company's  option.  If payment is made in
         the  form of  common  stock,  such  shares  of  common  stock  shall be
         deposited in an escrow  account with a law firm selected by the Company
         and be subject to a mutually acceptable escrow agreement. If Company is
         unable to clear  comments  received  from the  Securities  and Exchange
         Commission  relating  to the  Information  Statement  or Form 10,  then
         Company shall be entitled to a refund of all shares of its common stock
         previously  paid to Consultant  The common stock shall be registered as
         soon as practicable with the Securities and Exchange Commission on Form
         S-8 or  other  form of  registration  if Form S-8 is not  available  at
         Consultant's  expense.  In addition,  the Company  shall  reimburse the
         Consultant for any reasonable  out of pocket  expenses  incurred by the
         Consultant  pursuant to the terms of this  agreement that were approved
         by the Company.

5.       Arbitration.  Any  controversy  or claim  arising out of or relating to
         this Agreement, or the breach thereof, shall be resolved by arbitration
         in accordance of the rules of the American  Arbitration  Association in
         the City of New  York,  and  judgment  upon the award  rendered  by the
         arbitrator(s)  shall  be  entered  in  any  court  having  jurisdiction
         thereof.   For  that  purpose,   the  parties  hereto  consent  to  the
         jurisdiction  and venue of an  appropriate  court  located  in New York
         County,  State of New York. In the event that arbitration  results from
         or  arises  out  of  this  Agreement  or  the  performance  thereof  or
         litigation to enforce any award entered  therein,  the parties agree to
         reimburse the prevailing  party's  reasonable  attorney's  fees,  court
         costs,  and all other expenses,  whether or not taxable by the court as
         costs,  in addition to any other relief to which the  prevailing  party
         may be  entitled.  In the event of any such  claim or  controversy,  no
         action shall be entertained by said  arbitration if initiated more than
         one year subsequent to the date the cause(s) of action actually accrued
         regardless  of  whether   damages  were   otherwise  as  of  said  time
         calculable.

         IN WITNESS WHEREOF,  the parties have hereunto  executed this Agreement
on the 28th day of September, 2000.

COMMUNITY HOME MORTGAGE CORPORATION

By:
   ----------------------------
Its:

EB CONSULTING

By: /s/ Ed Heil
   ---------------------------
   Ed Heil, Partner

By: /s/ Bret Jenkins
   ---------------------------
   Bret JenkinsCOMMUNITY HOME MORTGAGE CORPORATION
                            2000 STOCK INCENTIVE PLAN

         1.       Purpose.

         The  purpose  of  this  Plan  is  to  enable  Community  Home  Mortgage
Corporation  and its affiliates to recruit and retain capable  employees for the
successful  conduct of its  business and to provide an  additional  incentive to
directors,  officers and other eligible key employees,  consultants and advisors
upon  whom  rest  major   responsibilities  for  the  successful  operation  and
management of the Company and its affiliates.

         2.       Definitions.

         For purposes of the Plan:

                  2.1  "Affiliate  Corporation"  or  "Affiliate"  shall mean any
corporation,  directly  or  indirectly,  through  one  of  more  intermediaries,
controlling, controlled by or under common control with the Company.

                  2.2  "Agreement"  means  the  written  agreement  between  the
Company and an Optionee evidencing the grant of an Award.

                  2.3 "Award"  means an  Incentive  Stock  Option,  Nonqualified
Stock Option or Stock  Appreciation  Right granted or to be granted  pursuant to
the Plan.

                  2.4 "Board" means the Board of Directors of the Company.

                  2.5 "Cause" means:

                           (a) Solely with respect to Nonemployee Directors, the
commission  of an act of fraud or an act of  embezzlement,  misappropriation  or
conversion of assets or opportunities of the Company or any Affiliate, and

                           (b) For all other purposes,  unless otherwise defined
in the  Agreement  evidencing  a  particular  Award,  an Optionee  (other than a
Nonemployee  Director) (i) intentional  failure to perform  reasonably  assigned
duties,  (ii)  dishonesty or willful  misconduct in the  performance  of duties,
(iii)

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involvement in a transaction in connection with the performance of duties to the
Company which  transaction  is adverse to the interests of the Company and which
is engaged in for personal profit, or (iv) willful violation of any law, rule or
regulation  in  connection  with the  performance  of duties (other than traffic
violations or similar offenses).

                  2.6 "Change in Capitalization" means any increase or reduction
in the Number of Shares, or any change (including,  but not limited to, a change
in value) in the Shares or exchange of Shares for a different  number or kind of
shares or other  securities  of the  Company,  by reason of a  reclassification,
recapitalization,  merger,  consolidation,  reorganization,  spin-off, split-up,
issuance of warrants or rights or  debentures,  stock  dividend,  stock split or
reverse stock split,  combination  or exchange of shares,  repurchase of shares,
change in corporate structure or otherwise.

                  2.7  "Code"  means  the  Internal  Revenue  Code of  1986,  as
amended.

                  2.8  "Committee"  means a  committee,  as described in Section
3.1,  appointed by the Board to administer the Plan and to perform the functions
set forth herein.

                  2.9  "Company"  means  Community  Home  Mortgage   Corporation
(including any and all subsidiaries  currently existing or hereafter acquired or
established).

                  2.10  "Director  Option"  means an Option  for  Shares,  Stock
Appreciation Rights or Units granted pursuant to Section 6.

                  2.11  "Disability"  means a physical or mental infirmity which
impairs an Optionee's  ability to perform  substantially his or her duties for a
period of one hundred eighty (180) consecutive days.

                  2.12 "Disinterested  Director" means a director of the Company
who is "disinterested" within the meaning of Rule 16b-3 under the Exchange Act.

                  2.13 "Eligible  Individual"  means any director  (other than a
Nonemployee Director),  officer or employee of, or consultant or advisor to, the
Company or an Affiliate who is receiving cash compensation and who is

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<PAGE>

designated  by the  Committee  as  eligible  to  receive  Awards  subject to the
conditions set forth herein.

                  2.14  "Employee  Option" means an option  granted  pursuant to
Section 5.

                  2.15 "Exchange Act" means the Securities Exchange Act of 1934,
as amended.

                  2.16 "Fair Market  Value" on any date means the average of the
high and low sales prices of the Shares on such date on the principal securities
exchange on which such Shares are listed, or if such Shares are not so listed or
admitted to trading,  the arithmetic mean of the per Share closing bid price and
closing asked price per Share on such date as quoted on the quotation  system of
the Nasdaq  Stock  Market,  Inc.  or such other  market in which such prices are
regularly  quoted,  or, if there have been no published bid or asked  quotations
with respect to Shares on such date, the Fair Market Value as established by the
Board in good faith and, in the case of an Incentive Stock Option, in accordance
with Section 422 of the Code.

                  2.17 "Incentive  Stock Option" means an Option  satisfying the
requirements  of Section 422 of the Code and  designated  by the Committee as an
Incentive Stock Option.

                  2.18  "Nonemployee  Director"  means a director of the Company
who is not an employee of the Company or an Affiliate.

                  2.19 "Nonqualified  Stock Option" means an Option which is not
an Incentive Stock Option.

                  2.20 "Option" means a Nonqualified  Stock Option, an Incentive
Stock Option, a Director Option, an Employee Option or any or all of them.

                  2.21  "Optionee"  means a person  to whom an  Option  is being
granted under the Plan.

                  2.22 "Outside Director" means a director of the Company who is
an "outside  director"  within the meaning of Section 162(m) of the Code and the
regulations promulgated thereunder.

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<PAGE>

                  2.23  "Parent"  means  any  corporation   which  is  a  parent
corporation  (within the meaning of Section  424(e) of the Code) with respect to
the Company.

                  2.24 "Plan" means The Community Home Mortgage Corporation 2000
Stock Option Plan.

                  2.25 "Pooling Transaction" means an acquisition of the Company
in a  transaction  which is intended  to be treated as a "pooling of  interests"
under generally accepted  accounting  principles as defined in Opinion No. 16 of
the Accounting Principles Board and the amendments and revisions thereto.

                  2.26  "Shares"  means the common  stock of the Company and any
securities  or other  consideration  issuable in respect of Shares in connection
with a Change in Capitalization.

                  2.27  "Stock  Appreciation  Right" or "SARs"  means a right to
receive  all or some  portion  of the  increase  in the  value of the  Shares as
provided in Section 8 hereof.

                  2.28 "Subsidiary"  means any corporation which is a subsidiary
corporation  (within the meaning of Section  424(f) of the Code) with respect to
the Company.

                  2.29 "Successor Corporation" means a corporation,  or a parent
or subsidiary  thereof within the meaning of 424(a) of the Code, which issues or
assumes a stock  option in a  transaction  to which  Section  424(a) of the Code
applies.

                  2.30 "Ten Percent  Stockholder" means an Eligible  Individual,
who, at the time an  Incentive  Stock Option is to be granted to him or her owns
(within the meaning of Section  422(b) (6) of the Code)  stock  possessing  more
than ten  percent  (10%) of the total  combined  voting  power of all classes of
stock of the Company, or of a Parent or a Subsidiary thereof.

         3.       Administration.

                  3.1 The Plan  shall be  administered  by the  Committee  which
shall  hold  meetings  at  such  times  as  may  be  necessary  for  the  proper
administration of the Plan. The Committee shall keep minutes of its meetings.  A
quorum shall  consist of not fewer than two (2) members of the  Committee  and a
majority of a quorum may  authorize  any action.  Any decision or

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<PAGE>

determination  reduced to writing and signed by a majority of all of the members
shall be as fully  effective  as if made by a  majority  vote at a meeting  duly
called and held.  The  Committee  shall consist of at least two (2) directors of
the  Company.  If the Board of  Directors  has any  Disinterested  Directors  or
Outside Directors,  at least one such Disinterested or Outside Director shall be
on the  Committee.  No member of the  Committee  shall be liable for any action,
failure to act,  determination or interpretation made in good faith with respect
to this Plan or any transaction hereunder, except for liability arising from his
or her own willful misfeasance, gross negligence or reckless disregard of his or
her duties.  The Company hereby agrees to indemnify each member of the Committee
for all costs and expenses and, to the extent  permitted by applicable  law, any
liability  incurred  in  connection  with  defending  against,   responding  to,
negotiating for the settlement of or otherwise dealing with any claim,  cause of
action  or  dispute  of any kind  arising  in  connection  with any  actions  in
administering  this  Plan or in  authorizing  or  denying  authorization  to any
transaction hereunder.

                  3.2  Subject to the  express  terms and  conditions  set forth
herein, the Committee shall have the power from time to time to:

                           (a)  determine  those  Eligible  Individuals  to whom
Employee  Options  shall be granted  under the Plan and the  number of  Employee
Options to be granted and to prescribe the terms and conditions  (which need not
be  identical) of each such Employee  Option,  including the purchase  price per
Share subject to each Employee Option, and make any amendment or modification to
any Option Agreement consistent with the terms of this Plan;

                           (b) construe and  interpret  the Plan and the Options
granted  hereunder and to establish,  amend and revoke rules and regulations for
the  administration of the Plan,  including,  but not limited to, correcting any
defect or supplying any omission,  or reconciling any  inconsistency in the Plan
or in any Agreement,  in the manner and to the extent it shall deem necessary or
advisable so that the Plan complies with  applicable  law,  including Rule 16b-3
under the Exchange Act and the Code to the extent  applicable,  and otherwise to
make the Plan fully effective. All decisions and determinations by the Committee
or the exercise of this power shall be final,  binding and  conclusive

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<PAGE>

upon the Company, its Affiliate Corporations, the Options, and all other persons
having any interest therein;

                           (c) determine the duration and purposes for leaves of
absence  which may be granted to an  Optionee  on an  individual  basis  without
constituting a termination of employment or service for purposes of this Plan;

                           (d)  exercise  its  discretion  with  respect  to the
powers and rights granted to it as set forth in the Plan; and

                           (e) exercise  such powers and perform such acts as it
deems  necessary or advisable to promote the best  interests of the Company with
respect to the Plan.

         4.       Stock Subject to the Plan.

                  4.1 The maximum  number of Shares that may be made the subject
of Options granted under the Plan is 1,000,000.  Upon a Change in Capitalization
the maximum  number of Shares  shall be adjusted in number and kind  pursuant to
Section  11. The Company  shall  reserve  for  purposes of the Plan,  out of its
authorized but unissued Shares or out of Shares held in the Company's  treasury,
or partly  out of each,  such  number of  Shares as shall be  determined  by the
Board.

                  4.2 Upon the  granting  of an  Option,  the  number  of Shares
available under Section 4.1 for the granting of further Options shall be reduced
by the number of shares subject to such Option granted. Whenever any outstanding
Option or portion thereof  expires,  is canceled or is otherwise  terminated for
any reason  without having been exercised or payment having been made in respect
of the entire Option, the Shares allocable to the expired, canceled or otherwise
terminated  portion of the Option  may again be the  subject of Options  granted
hereunder.

         5.       Option Grants for Eligible Individuals.

                  5.1 Authority of Committee.  Subject to the  provisions of the
Plan, the Committee shall have full and final authority to select those Eligible
Individuals who will receive Employee Options, the terms and conditions of which
shall be set forth in an Agreement.

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<PAGE>

                  5.2 Purchase Price.  The purchase price or the manner in which
the purchase  price is to be determined  for Shares under each  Employee  Option
shall be determined by the Committee and set forth in the  Agreement;  provided,
however,  that the purchase  price per Share under each  Incentive  Stock Option
shall not be less than 100% of the Fair Market  Value of a Share on the date the
Incentive Stock Option is granted (110% in the case of an Incentive Stock Option
granted to a Ten-Percent Stockholder).

                  5.3 Maximum  Duration.Employee Options granted hereunder shall
be for such term as the Committee  shall  determine,  provided that an Incentive
Stock Option granted  hereunder shall not be exercisable after the expiration of
ten (10)  years  from the date it is  granted  (five (5) years in the case of an
Incentive Stock Option granted to a Ten-Percent Stockholder), and a Nonqualified
Stock Option shall not be  exercisable  after the  expiration  of ten (10) years
from the date it is granted.  The Committee  may,  subsequent to the granting of
any Employee  Option,  extend the term thereof but in no event shall the term as
so extended exceed the maximum term provided for in the preceding sentence.

                  5.4 Vesting.  Each Employee Option shall become exercisable in
such  installments  (which  need  not be  equal)  and at  such  times  as may be
designated by the Committee  and set forth in the  Agreement.  To the extent not
exercised,  installments  shall  accumulate and be  exercisable,  in whole or in
part, at any time after  becoming  exercisable,  but not later than the date the
Employee Option expires.  The Committee may accelerate the exercisability of any
Option or portion thereof at any time.

                  5.5 Modification.  No modification of an Employee Option shall
adversely  alter or impair any rights or obligations  under the Employee  Option
without the Optionee's consent.

<PAGE>

         6.       Option Grants for Nonemployee Directors.

                  6.1  Purchase  Price.  The  purchase  price for Shares or SARs
under each  Director  Option  shall be not less than to 100% of the Fair  Market
Value of such  Shares on the date  immediately  preceding  the date of the grant
unless specifically determined to be otherwise by the Committee.

                  6.2  Vesting.  Subject to Sections  6.3 each  Director  Option
shall become exercisable within four (4) equal annual

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<PAGE>

installments  beginning  on the  date of  grant;  provided,  however,  that  the
Optionee  continues  to serve as a Director  as of such  dates.  If an  Optionee
ceases to serve as a Director for any reason,  the Optionee shall have no rights
with  respect to that  portion of a Director  Option  which has not then  vested
pursuant to the preceding sentence and the Optionee shall automatically  forfeit
that portion of the Director Option which remains unvested.

                  6.3 Limitations on Amendment. The provisions in this Section 6
and Section 7.1 shall not be amended more than once every six (6) months,  other
than  to  comport  with  changes  in the  Code  or  the  rules  and  regulations
thereunder.

         7.       Terms and Conditions Applicable to All Options.

                  7.1 Duration. Each Option shall terminate on the date which is
the tenth anniversary of the grant date, unless terminated earlier as follows:

                           (a) If an Optionee's employment or service terminates
for any reason  other than  Disability,  death or Cause,  the Optionee may for a
period of three (3) months after such termination  exercise his or her Option to
the extent,  and only to the extent,  such Option or portion  thereof was vested
and  exercisable  as of  the  date  of  the  Optionee's  employment  or  service
terminated, after which time the Option shall automatically terminate in full.

                           (b) If an Optionee's employment or service terminates
by reason of the  Optionee's  Disability,  the Optionee may, for a period of one
(1) year after such termination,  exercise his or her Option to the extent,  and
only to the extent, such Option or portion thereof was vested and exercisable as
of the date the Optionee's  employment or service  terminated,  after which time
the Option shall automatically terminate in full.

                           (c) If an Optionee's employment or service terminates
for  Cause,  the Option  granted to the  Optionee  hereunder  shall  immediately
terminate in full and no rights thereunder may be exercised.

                           (d) If an  Optionee  dies  while  employed  or in the
service of the Company or an  Affiliate  or within the three (3) month or twelve
(12) month period described in clause (a) or (b),

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<PAGE>

respectively,  of this  Section 7.1 the Option  granted to the  Optionee  may be
exercised at any time within  twelve (12) months after the  Optionee's  death by
the person or persons to whom such rights  under the Option  shall pass by will,
or by the laws of descent and  distribution,  after which time the Option  shall
terminate  in full;  provided,  however,  that an Option may be exercised to the
extent,  and only to the extent,  such Option or portion thereof was exercisable
on the date of death or earlier  termination  of the  Optionee's  services  as a
Director.

Notwithstanding  clauses (a) through (d) above,  the  Agreement  evidencing  the
grant  of  an  Employee  Option  may,  in  the  Committee's  sole  and  absolute
discretion, set forth additional or different terms and conditions applicable to
Employee  Options upon a  termination  or change in status of the  employment or
service of an Eligible  Individual.  Such terms and conditions may be determined
at the time the Employee Option is granted or thereafter.

                  7.2 Non-transferability.  No Option granted hereunder shall be
transferable  by the  Optionee  to whom  granted  except  by will or the laws of
descent and distribution,  and an Option may be exercised during the lifetime of
such   Optionee   only  by  the  Optionee  or  his  or  her  guardian  or  legal
representative.  The terms of such Option shall be final, binding and conclusive
upon the beneficiaries,  executors,  administrators, heirs and successors of the
Optionee.

                  7.3 Method of  Exercise.  The  exercise of an option  shall be
made only by a written notice delivered in person or by mail to the Secretary or
Chief  Financial  Officer of the Company at the  Company's  principal  executive
office,  specifying  the number of Shares to be  purchased  and  accompanied  by
payment  therefor and  otherwise in accordance  with the  Agreement  pursuant to
which the Option  was  granted.  The  purchase  price for any  Shares  purchased
pursuant to the  exercise  of an Option  shall be paid in full in cash upon such
exercise.  Notwithstanding the foregoing, the Committee shall have discretion to
determine at the time of grant of each Employee  Option or at any later date (up
to and  including the date of exercise)  that the form of payment  acceptable in
respect of the  exercise  of such  Employee  Option may consist of either of the
following (or any combination thereof):  (i) cash or (ii) the transfer of Shares
to the Company upon such terms and  conditions as  determined by the  Committee.
The Optionee shall deliver the Agreement  evidencing the Option to

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<PAGE>

the  Secretary  or Chief  Financial  Officer of the  Company  who shall  endorse
thereon a notation of such  exercise and return such  Agreement to the Optionee.
No fractional  Shares (or cash in lieu thereof) shall be issued upon exercise of
an Option and the number of Shares that may be purchased  upon exercise shall be
rounded to the nearest number of whole Shares.

                  7.4 Rights of Optionees.  No Optionee  shall be deemed for any
purpose to be the owner of any Shares subject to any Option unless and until (i)
the Option shall have been  exercised  pursuant to the terms  thereof,  (ii) the
Company shall have issued and delivered the Shares to the Optionee and (iii) the
Optionee's  name shall have been entered as a stockholder of record on the books
of the Company.  Thereupon,  the Optionee  shall have full voting,  dividend and
other  ownership  rights with respect to such Shares,  subject to such terms and
conditions as may be set forth in the applicable Agreement.

         8. Stock  Appreciation  Rights. The Committee  may, in its  discretion,
either alone or in connection with the grant of an Employee Option,  grant Stock
Appreciation  Rights in accordance  with the Plan,  the terms and  conditions of
which  shall be set forth in an  Agreement.  If  granted in  connection  with an
Option,  a Stock  Appreciation  Right shall cover the same Shares covered by the
Option (or such lesser  number of Shares as the  Committee  may  determine)  and
shall, except as provided in this Section 8, be subject to the same terms.

                  8.1 Time of Grant. A Stock  Appreciation  Right may be granted
(i) at any time if  unrelated  to an  Option,  or (ii) if  related to an Option,
either at the time of grant,  or at any time  thereafter  during the term of the
Option.

                  8.2 Stock Appreciation Right Related to an Option.

                           (a)  Exercise.   Subject  to  Section  8.8,  a  Stock
Appreciation  Right granted in connection with an Option shall be exercisable at
such  time or  times  and  only to the  extent  that  the  related  Options  are
exercisable,  and will not be  transferable  except to the  extent  the  related
Option may be  transferable.  A Stock  Appreciation  Right granted in connection
with an  Incentive  Stock Option  shall be  exercisable  only if the Fair Market
Value of a Share on the date of exercise exceeds the purchase price specified in
the related Incentive Stock Option Agreement.

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<PAGE>

                           (b)  Amount  Payable.  Upon the  exercise  of a Stock
Appreciation Right related to an Option, the holder shall be entitled to receive
an amount determined by multiplying (A) the excess of the Fair Market Value of a
Share on the date  preceding  the date of  exercise  of such Stock  Appreciation
Right over the per Share  purchase  price under the related  Option,  by (B) the
number of Shares as to which such Stock  Appreciation  Right is being exercised.
Notwithstanding  the  foregoing,  the  Committee may limit,  in any manner,  the
amount payable with respect to any Stock  Appreciation Right by including such a
limit in the Agreement evidencing the Stock Appreciation Right at the time it is
granted.

                           (c)   Treatment   of   Related   Options   and  Stock
Appreciation  Rights Upon  Exercise.  Upon the exercise of a Stock  Appreciation
Right granted in connection with an Option,  the Option shall be canceled to the
extent of the  number of  Shares  as to which  the Stock  Appreciation  Right is
exercised, and upon the exercise of an Option granted in connection with a Stock
Appreciation  Right or the surrender of such Option pursuant to Section 7.3, the
Stock Appreciation Right shall be canceled to the extent of the number of Shares
as to which the Option is exercised or surrendered.

                  8.3 Stock  Appreciation  Right  Unrelated  to an  Option.  The
Committee may grant to Eligible  Individuals Stock Appreciation Rights unrelated
to Options. Stock Appreciation Rights unrelated to Options shall not have a term
of greater  than ten (10) years.  Upon  exercise of a Stock  Appreciation  Right
unrelated  to an Option,  the holder shall be entitled to contain such terms and
conditions as to exercisability  (subject to Section 8.8),  vesting and duration
as the Committee shall  determine,  but, in no event,  shall they have a term of
greater  than  ten (10)  years.  Upon  exercise  of a Stock  Appreciation  Right
unrelated  to an  Option,  the  holder  shall be  entitled  to receive an amount
determined by multiplying  (A) the excess of the Fair Market Value of a Share on
the date  preceding the date of exercise of such Stock  Appreciation  Right over
the Fair Market  Value of a Share on the date the Stock  Appreciation  Right was
granted, by (B) the number of Shares as to which the Stock Appreciation Right is
being exercised.  Notwithstanding the foregoing, the Committee may limit, in any
manner,  the amount

                                                                              11
<PAGE>

payable with respect to any Stock  Appreciation  Right by including such a limit
in the Agreement  evidencing the same Stock Appreciation Right at the time it is
granted.

                  8.4 Method of  Exercise.  Stock  Appreciation  Rights shall be
exercised by a holder only by a written notice delivered in person or by mail to
the  Secretary  or Chief  Financial  Officer  of the  Company  at the  Company's
principal  executive  office,  specifying  the number of Shares with  respect to
which the Stock  Appreciation  Right is being  exercised.  If  requested  by the
Committee,   the  holder  shall  deliver  the  Agreement  evidencing  the  Stock
Appreciation  Right being  exercised  and the Agreement  evidencing  any related
Option to the  Secretary  or Chief  Financial  Officer of the  Company who shall
endorse  thereon a notation of such  exercise  and return such  Agreement to the
holder.

                  8.5 Form of Payment.  Payment of the amount  determined  under
Sections 8.2(b) or 8.3 may be made in the discretion of the Committee, solely in
whole  Shares in a number  determined  at their  Fair  Market  Value in the date
preceding  the date of exercise of the Stock  Appreciation  Right,  or solely in
cash, or in a combination of cash and Shares.  If the Committee  decides to make
full payment in Shares and the amount  payable  results in a  fractional  Share,
payment  for the  fractional  Share  will be made in cash.  Notwithstanding  the
foregoing,  no  payment in the form of cash may be made upon the  exercise  of a
Stock Appreciation Right pursuant to Sections 8.2(b) or 8.3 to an officer of the
Company who is subject to liability  under  Section  16(b) of the Exchange  Act,
unless the exercise of such Stock  Appreciation  Right is made either (i) during
the  period  beginning  on the third  business  day and  ending  on the  twelfth
business day  following  the date of release for  publication  of the  Company's
quarterly  or annual  statements  of  earnings  (the  "Window  Period")  or (ii)
pursuant to an irrevocable election to receive cash made at least six (6) months
prior to the exercise of such Stock Appreciation Right.

                  8.6 Modification.  No modification of an Award shall adversely
alter or impair  any  rights or  obligations  under the  Agreement  without  the
holder's consent.

         9.       Adjustment Upon Changes in Capitalization.

                                                                              12
<PAGE>

                  (a) In the event of a Change in Capitalization,  the Committee
shall  conclusively  determine the appropriate  adjustments,  if any, to the (i)
maximum  number of Shares with respect to which Options may be granted under the
Plan, (ii) maximum number of Shares with respect to which Options may be granted
to any Eligible  Individual  during the term of the Plan, (iii) number of Shares
which are  subject  to  outstanding  Options  granted  under  the Plan,  and the
purchase price therefor, if applicable,  and (iv) number of Shares in respect of
which Director Options are to be granted under Section 6.

                  (b) Any such  adjustment  in the Shares  subject to  Incentive
Stock Options (including any adjustments in the purchase price) shall be made in
such manner as not to constitute a modification as defined by Section  424(h)(3)
of the Code and only to the extent  otherwise  permitted by Sections 422 and 424
of the Code.

                  (c) If, by reason of a Change of  Capitalization,  an Optionee
shall be  entitled to exercise  an Option  with  respect to new,  additional  or
different  shares of stock,  such new,  additional  or  different  shares  shall
thereupon  be subject to all of the  conditions,  restrictions  and  performance
criteria  which were  applicable to the Shares  subject to the Option,  prior to
such Change in Capitalization.

         10. Effect of Certain Transactions.  Except as otherwise provided in an
Agreement,  in the event of (i) the liquidation or dissolution of the Company or
(ii) a merger or consolidation  of the Company,  the Plan and the Options issued
hereunder shall continue in effect in accordance with their respective terms.

         11.      Interpretation.

                  (a) The Plan is intended to comply with Rule 16b-3 promulgated
under the Exchange Act and the  Committee  shall  interpret and  administer  the
provisions of the Plan or any Agreement in a manner  consistent  therewith.  Any
provisions inconsistent with such Rule shall be inoperative and shall not affect
the validity of the Plan.

                  (b) The Director  Options  described in Section 6 are intended
to qualify as formula awards under Rule 16b-3 promulgated under the Exchange Act
(thereby preserving the disinterested status of Nonemployee  Directors receiving
such

                                       13
<PAGE>

Awards)  and  the  Committee  shall  generally   interpret  and  administer  the
provisions of the Plan or any Agreement in a manner  consistent  therewith.  Any
provisions inconsistent with the foregoing intent shall be inoperative and shall
interpret and administer the provisions of the Plan or any Agreement in a manner
consistent  therewith.  Any provisions  inconsistent  with the foregoing  intent
shall be inoperative and shall not affect the validity of the Plan.

                  (c)  Unless   otherwise   expressly  stated  in  the  relevant
Agreement,   each   Option   granted   under   the  Plan  is   intended   to  be
performance-based compensation within the meaning of Section 162(m)(4)(C) of the
Code. The Committee  shall not be entitled to exercise any discretion  otherwise
authorized  hereunder  with  respect to such  Options if the ability to exercise
such  discretion  or the  exercise  of such  discretion  itself  would cause the
compensation   attributable   to   such   Options   to  fail   to   qualify   as
performance-based compensation.

         12.      Termination and Amendment of the Plan.

                  The  Plan  shall   terminate  on  the   preceding   the  tenth
anniversary of the date of its adoption by the stockholders of the Company,  and
no Option may be granted  thereafter.  Subject  to  Section  6.5,  the Board may
sooner  terminate the Plan,  and the Board may at any time and from time to time
amend, modify or suspend the Plan; provided, however, that:

                  (a) No such amendment, modification, suspension or termination
shall impair or adversely alter any Award already granted under the Plan, except
with the consent of the  Optionee  or holder of an SAR nor shall any  amendment,
modification  or  termination  deprive  any  Optionee or holder of an SAR of any
Shares which he or she may have acquired through or as a result of the Plan; and

                  (b)  To  the  extent  necessary  under  Section  16(b)  of the
Exchange  Act and the  rules and  regulations  promulgated  thereunder  or other
applicable  law,  no  amendment  shall  be  effective  unless  approved  by  the
stockholders of the Company in accordance with applicable law and regulations.

         13.      Non-Exclusivity of the Plan.

                                                                              14
<PAGE>

                  The  adoption of the Plan by the Board shall not be  construed
as  amending,   modifying  or  rescinding  any  previously   approved  incentive
arrangement  or as creating any  limitations  on the power of the Board to adopt
such other incentive arrangements as it may deem desirable,  including,  without
limitation,  the granting of stock options  otherwise  than under the Plan,  and
such arrangements may be either applicable generally or only in specific cases.

         14.      Limitation of Liability.

                  As  illustrative  of  the  limitations  of  liability  of  the
Company, but not intended to be exhaustive thereof, nothing in the Plan shall be
construed to:

                           (a) give any person any right to be granted an Option
other than at the sole discretion of the Committee;

                           (b)  give  any  person  any  rights  whatsoever  with
respect to Shares except as specifically provided in the Plan;

                           (c)  limit  in any way the  right of the  Company  to
terminate the employment of any person at any time; or

                           (d) be evidence of any  agreement  or  understanding,
expressed or implied,  that the Company will employ any person at any particular
rate of compensation or for any particular period of time.

         15.      Regulations and Other Approvals; Governing Law.

                  15.1  Except as to matters of Federal  law,  this Plan and the
rights of all persons  claiming  hereunder  shall be construed and determined in
accordance with the laws of the State of New York.

                  15.2 The  obligation of the Company to sell or deliver  Shares
with  respect  to  Options  granted  under  the  Plan  shall be  subject  to all
applicable  laws, rules and  regulations,  including all applicable  Federal and
state  securities  laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.

                  15.3 The Board may make such  changes as may be  necessary  or
appropriate  to  comply  with  the  rules  and  regulations

                                                                              15
<PAGE>

of any  government  authority,  or to obtain for  Eligible  Individuals  granted
Incentive Stock Options the tax benefits under the applicable  provisions of the
Code and regulations promulgated thereunder.

                  15.4 Each Option is subject to the requirement that, if at any
time the Committee determines, in its discretion, that the listing, registration
or  qualification  of Shares  issuable  pursuant  to the Plan is required by any
securities  exchange  or under any  state or  federal  law,  or the  consent  or
approval or any  governmental  regulatory  body is  necessary  or desirable as a
condition of, or in connection  with,  the grant of an Option or the issuance of
Shares,  no Options shall be granted or payment made or Shares issued,  in whole
or in part, unless listing, registration, qualification, consent or approval has
been effected or obtained free of any conditions as acceptable to the Committee.

                  15.5  Notwithstanding  anything  contained  in the Plan or any
Agreement to the contrary,  in the event that the disposition of Shares acquired
pursuant to the Plan is not  covered by a then  current  registration  statement
under the Securities Act of 1933, as amended (the "Securities  Act"), and is not
otherwise exempt from such registration, such Shares shall be restricted against
transfer  to the extent  required  by the  Securities  Act and Rule 144 or other
regulations thereunder. The Committee may require an individual receiving Shares
pursuant to an Award granted under the Plan, as a condition precedent to receipt
of such  Shares,  to  represent  and warrant to the Company in writing  that the
Shares  acquired  by  such  individual  are  acquired  without  a  view  to  any
distribution  thereof and will not be sold or transferred other than pursuant to
an exemption  applicable  under the Securities Act as amended,  or the rules and
regulations  promulgated  thereunder.  The  certificates  evidencing any of such
Shares shall be  appropriately  amended to reflect  their  status as  restricted
securities as aforesaid.

         16.      Miscellaneous.

                  16.1 Multiple  Agreements.  The terms of each Award granted to
an Eligible  Individual  may differ from other Awards  granted under the Plan at
the same time, or at some other time. The Committee may also grant more than one
Award to a given  Eligible  Individual  during  the term of the Plan,  either in

                                                                              16
<PAGE>

addition to, or in substitution  for, one or more Awards  previously  granted to
that Eligible Individual.

                  16.2     Withholding of Taxes.

                           (a) At such times as an  Optionee or holder of an SAR
recognizes  taxable  income in  connection  with the  receipt  of Shares or cash
hereunder (a "Taxable Event"), the Optionee or holder shall pay other amounts as
may be required by law to be withheld by the Company in issuance or release from
escrow of such  Shares or the payment of such cash.  The Company  shall have the
right to deduct  from any  payment  of cash to an  Optionee  or holder an amount
equal  to  the  Withholding  Taxes  in  satisfaction  of the  obligation  to pay
Withholding Taxes. In satisfaction of the obligation to pay Withholding Taxes to
the  Company,  the  Optionee  or holder  may make a written  election  (the "Tax
Election"), which may be accepted or rejected in the discretion of the Committee
to have  withheld a portion of the Shares then  issuable to him or her having an
aggregate  Fair Market Value,  on the date  preceding the date of such issuance,
equal to the  Withholding  Taxes,  provided  that in respect of an  Optionee  or
holder who may be subject to liability  under  Section 16(b) of the Exchange Act
either;  (i)(A) the Tax  Election  is made at least six (6) months  prior to the
date of the Taxable Event and (B) the Tax Election is  irrevocable  with respect
to all Taxable Events of a similar nature  occurring  prior to the expiration of
six (6) months  following a revocation of the Tax  Election;  or (ii)(A) the Tax
Election is made at least six (6) months  after the date the Award was  granted,
(B) the Award is exercised  during the Window Period and (C) the Tax Election is
made during the Window  Period in which the related  Award is exercised or prior
to such Window Period and subsequent to the immediately preceding Window Period.
Notwithstanding  the  foregoing,  the Committee may, by the adoption of rules or
otherwise, (i) modify this Section 17.2 (other than as regards Director Options)
or impose such other  restrictions or limitations on Tax Elections to be made at
such times and subject to such other conditions as the Committee determines will
constitute exempt transactions under Section 16(b) of the Exchange Act.

                           (b) If an Optionee  makes a  disposition,  within the
meaning of Section 424 (c) of the Code and regulations  promulgated  thereunder,
of any Share or Shares  issued to such  Optionee  pursuant to the exercise of an
Incentive  Stock Option within the two-year  period  commencing on the day after
the date

                                                                              17
<PAGE>

of the grant or within the one-year period  commencing on the day after the date
of transfer of such Share or Shares to the Optionee  pursuant to such  exercise,
the Optionee shall, within ten (10) days of such disposition, notify the Company
thereof, by delivery of written notice to the Company at its principal executive
office.

                  16.3  Effective  Date. The effective date of the Plan shall be
as determined by the Board.

                                                                              18

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