APPLEBEE'S INTERNATIONAL, INC.

                 AMENDED AND RESTATED 1995 EQUITY INCENTIVE PLAN



               (Amended and Restated effective as of May 13, 2004)







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                                TABLE OF CONTENTS


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<S>       <C>                                                                                                      <C>
SECTION 1     PURPOSE AND DURATION..................................................................................1

    1.1.   EFFECTIVE DATE...........................................................................................1

    1.2.   PURPOSE OF THIS PLAN.....................................................................................1


SECTION 2     DEFINITIONS...........................................................................................1


SECTION 3     ADMINISTRATION........................................................................................5

    3.1.   THE COMMITTEE............................................................................................5

    3.2.   AUTHORITY OF THE COMMITTEE...............................................................................5

    3.3.   DELEGATION BY THE COMMITTEE..............................................................................5

    3.4.   NONEMPLOYEE DIRECTOR OPTIONS AND RESTRICTED STOCK........................................................6

    3.5.   DECISIONS BINDING........................................................................................6


SECTION 4     SHARES SUBJECT TO THIS PLAN...........................................................................6

    4.1.   NUMBER OF SHARES.........................................................................................6

    4.2.   LAPSED AWARDS............................................................................................6

    4.3.   ADJUSTMENTS IN AWARDS AND AUTHORIZED SHARES..............................................................6


SECTION 5     STOCK OPTIONS.........................................................................................7

    5.1.   GRANT OF OPTIONS.........................................................................................7

    5.2.   AWARD AGREEMENT..........................................................................................7

    5.3.   EXERCISE PRICE...........................................................................................7

    5.4.   EXPIRATION OF OPTIONS....................................................................................8

    5.5.   EXERCISABILITY OF OPTIONS................................................................................8

    5.6.   PAYMENT..................................................................................................8

    5.7.   RESTRICTIONS ON SHARE TRANSFERABILITY....................................................................8

    5.8.   CERTAIN ADDITIONAL PROVISIONS FOR INCENTIVE STOCK OPTIONS................................................9

    5.9.   REPRICING OF OPTIONS.....................................................................................9


SECTION 6     STOCK APPRECIATION RIGHTS.............................................................................9

    6.1.   GRANT OF SARS............................................................................................9

    6.2.   EXERCISE OF TANDEM SARS..................................................................................10

    6.3.   EXERCISE OF AFFILIATED SARS..............................................................................10

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<S>       <C>                                                                                                      <C>

    6.4.   EXERCISE OF FREESTANDING SARS............................................................................10

    6.5.   SAR AGREEMENT............................................................................................10

    6.6.   EXPIRATION OF SARS.......................................................................................10

    6.7.   PAYMENT OF SAR AMOUNT....................................................................................10


SECTION 7     RESTRICTED STOCK......................................................................................10

    7.1.   GRANT OF RESTRICTED STOCK................................................................................10

    7.2.   RESTRICTED STOCK AGREEMENT...............................................................................10

    7.3.   TRANSFERABILITY..........................................................................................11

    7.4.   OTHER RESTRICTIONS.......................................................................................11

    7.5.   REMOVAL OF RESTRICTIONS..................................................................................11

    7.6.   VOTING RIGHTS............................................................................................12

    7.7.   DIVIDENDS AND OTHER DISTRIBUTIONS........................................................................12

    7.8.   RETURN OF RESTRICTED STOCK TO COMPANY....................................................................12

    7.9.   SECTION 83(B) ELECTION...................................................................................12


SECTION 8     PERFORMANCE UNITS AND PERFORMANCE SHARES..............................................................12

    8.1.   GRANT OF PERFORMANCE UNITS/SHARES........................................................................12

    8.2.   VALUE OF PERFORMANCE UNITS/SHARES........................................................................12

    8.3.   PERFORMANCE OBJECTIVES AND OTHER TERMS...................................................................12

    8.4.   EARNING OF PERFORMANCE UNITS/SHARES......................................................................13

    8.5.   FORM AND TIMING OF PAYMENT OF PERFORMANCE UNITS/SHARES...................................................13

    8.6.   CANCELLATION OF PERFORMANCE UNITS/SHARES.................................................................13


SECTION 9     DIRECTOR OPTIONS AND RESTRICTED STOCK.................................................................13

    9.1.   NONEMPLOYEE DIRECTOR GRANTS..............................................................................14

    9.2.   EMPLOYEE DIRECTOR GRANTS.................................................................................14

    9.3.   GRANT DATE...............................................................................................14

    9.4.   AWARD AGREEMENT..........................................................................................14

    9.5.   EXERCISE PRICE...........................................................................................14

    9.6.   EXERCISABILITY...........................................................................................14

    9.7.   EXPIRATION OF OPTIONS....................................................................................14

    9.8.   NOT INCENTIVE STOCK OPTIONS..............................................................................15

    9.9.   VESTING PERIOD FOR RESTRICTED STOCK......................................................................15

    9.10.  OTHER TERMS..............................................................................................15

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<S>       <C>                                                                                                      <C>

SECTION 10    STOCK AWARDS..........................................................................................15

    10.1.  STOCK AWARDS.............................................................................................15


SECTION 11    MISCELLANEOUS.........................................................................................15

    11.1.  DEFERRALS................................................................................................15

    11.2.  NO EFFECT ON EMPLOYMENT OR SERVICE.......................................................................15

    11.3.  PARTICIPATION............................................................................................15

    11.4.  INDEMNIFICATION..........................................................................................15

    11.5.  SUCCESSORS...............................................................................................16

    11.6.  BENEFICIARY DESIGNATIONS.................................................................................16

    11.7.  TRANSFERABILITY..........................................................................................16

    11.8.  NO RIGHTS AS STOCKHOLDER.................................................................................16

    11.9.  CERTIFICATION............................................................................................16

    11.10. DISCRETIONARY ADJUSTMENTS PURSUANT TO SECTION 162(M).....................................................16


SECTION 12    AMENDMENT, TERMINATION, AND DURATION..................................................................17

    12.1.  AMENDMENT, SUSPENSION, OR TERMINATION....................................................................17

    12.2.  DURATION OF THIS PLAN....................................................................................17


SECTION 13    TAX WITHHOLDING.......................................................................................17

    13.1.  WITHHOLDING REQUIREMENTS.................................................................................17

    13.2.  WITHHOLDING ARRANGEMENTS.................................................................................17


SECTION 14    CHANGE IN CONTROL.....................................................................................17

    14.1.  CHANGE IN CONTROL........................................................................................17

    14.2.  DEFINITION OF CHANGE IN CONTROL..........................................................................18

    14.3.  IMPACT OF CHANGE IN CONTROL..............................................................................19


SECTION 15    LEGAL CONSTRUCTION....................................................................................19

    15.1.  GENDER AND NUMBER........................................................................................19

    15.2.  SEVERABILITY.............................................................................................19

    15.3.  REQUIREMENTS OF LAW......................................................................................19

    15.4.  SECURITIES LAW COMPLIANCE................................................................................20

    15.5.  GOVERNING LAW............................................................................................20

    15.6.  CAPTIONS.................................................................................................20
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                         APPLEBEE'S INTERNATIONAL, INC.

                 AMENDED AND RESTATED 1995 EQUITY INCENTIVE PLAN

                                   SECTION 1

                              PURPOSE AND DURATION

         1.1.   Effective  Date.  This Plan  permits  the grant of  Nonqualified
Stock Options,  Incentive  Stock Options,  SARs,  Restricted Stock,  Performance
Units  and  Performance  Shares. This  Plan  shall  become  effective  upon  the
affirmative  vote of the  holders of a majority of the  Shares which are present
in  person or by  proxy and  entitled to  vote at the  1995  Annual  Meeting  of
Stockholders. This Plan shall be deemed reapproved for purposes of Section  12.2
upon the affirmative vote of the  holders of a majority of the Shares present in
person or by proxy and entitled to vote at the 2004 Annual Meeting of
Stockholders.

         1.2.   Purpose  of  this  Plan.  This  Plan  is  intended  to  attract,
motivate,  and  retain  (a)  employees  of the Company and its  Affiliates,  (b)
consultants who provide  significant services to the Company and its Affiliates,
and (c)  directors of the  Company who are  employees of neither the Company nor
any Affiliate.  This Plan also is designed to further the growth  and  financial
success of the  Company and its  Affiliates  by aligning  the  interests  of the
Participants, through the ownership of Shares and through other incentives, with
the interests of the Company's stockholders.

                                   SECTION 2

                                  DEFINITIONS

         The  following  words and  phrases  shall have the  following  meanings
unless a different meaning is plainly required by the context:

         "1934 Act"  means the  Securities  Exchange  Act of 1934,  as  amended.
Reference to a specific  section of the 1934 Act or regulation  thereunder shall
include such section or regulation,  any valid regulation promulgated under such
section,  and any comparable  provision of any future  legislation or regulation
amending, supplementing or superseding such section or regulation.

         "Affiliate" means any corporation or any other entity  (including,  but
not limited to, partnerships and joint ventures)  controlling,  controlled by or
under common control with the Company.

         "Affiliated  SAR"  means an SAR that is granted  in  connection  with a
related  Option,  and that  automatically  will be deemed to be exercised at the
same time that the related Option is exercised.

         "Award" means, individually or collectively, a grant under this Plan of
Nonqualified  Stock Options,  Incentive Stock Options,  SARs,  Restricted Stock,
Performance Units or Performance Shares.

         "Award  Agreement" means the written  agreement setting forth the terms
and provisions applicable to each Award granted under this Plan.

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

         "Change in  Control"  shall have the  meaning  assigned to such term in
Section 14.2.


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         "Code" means the Internal  Revenue Code of 1986, as amended.  Reference
to a specific  section of the Code or regulation  thereunder  shall include such
section or regulation,  any valid regulation promulgated under such section, and
any  comparable  provision of any future  legislation  or  regulation  amending,
supplementing or superseding such section or regulation.

         "Committee"  means the  committee  appointed by the Board  (pursuant to
Section 3.1) to administer this Plan.

         "Company" means Applebee's International, Inc., a Delaware corporation,
and any successor  thereto.  With respect to the  definitions of the Performance
Goals,  the Committee in its sole  discretion may determine that "Company" means
Applebee's International, Inc. and its consolidated subsidiaries.

         "Consultant"  means any  consultant,  independent  contractor  or other
person who provides significant  services to the Company or its Affiliates,  but
who is neither an Employee nor a Director.

         "Covered  Employee" means a Participant who, as of the anticipated date
of vesting and/or payout of an Award, as applicable,  is reasonably  believed to
be one of the group of "covered  employees," as defined in Code section  162(m),
or any successor  statute,  and the regulations  promulgated  under Code section
162(m).

         "Director"  means  any  individual  who is a  member  of the  Board  of
Directors of the Company.

         "Disability"  means a permanent total disability  within the meaning of
Code section 22(e)(3),  provided that in the case of Awards other than Incentive
Stock  Options,  the Committee in its sole  discretion  may determine  whether a
permanent  and  total   disability   exists  in  accordance   with  uniform  and
non-discriminatory standards adopted by the Committee from time to time.

         "Earnings  Per Share" means as to any Fiscal Year,  the  Company's  Net
Income or a business  unit's Pro Forma Net Income or a business unit's Pro Forma
Net Income,  divided by the weighted  average number of Shares  outstanding  for
such Fiscal Year (basic  Earnings  Per Share as opposed to diluted  Earnings Per
Share),  rounded to the nearest cent  ($0.01).  The weighted  average  number of
shares  outstanding for any Fiscal Year will be determined by  disregarding  any
stock repurchases by the Company and the Net Income or Pro Forma Net Income will
be adjusted to reflect the net impact of any debt service  attributable to funds
borrowed to effect any stock repurchases.  For those purposes, all funds used to
effect stock purchases will be deemed to have been borrowed,  and at an interest
rate equal to the lowest cost of the Company's then existing borrowed funds.

         "Employee"  means  any  employee  of the  Company  or of an  Affiliate,
whether such employee is so employed at the time this Plan is adopted or becomes
so employed subsequent to the adoption of this Plan.

         "ERISA" means the Employee  Retirement  Income Security Act of 1974, as
amended. Reference to a specific section of ERISA or regulation thereunder shall
include such section or regulation,  any valid regulation promulgated under such
section,  and any comparable  provision of any future  legislation or regulation
amending, supplementing or superseding such section or regulation.

         "Exercise Price" means the price at which a Share may be purchased by a
Participant pursuant to the exercise of an Option.

         "Fair Market  Value" means the last quoted per share  selling  price at
which  Shares are traded on any given  date,  or if no Shares are traded on such
date, the most recent prior date on which Shares were traded, as reported in The


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Wall Street Journal. Notwithstanding the preceding, for federal, state and local
income tax  reporting  purposes,  fair market value shall be  determined  by the
Committee  (or its delegate) in  accordance  with uniform and  nondiscriminatory
standards adopted by it from time to time.

         "Fiscal Year" means the fiscal year of the Company.

         "Freestanding  SAR"  means a SAR that is granted  independently  of any
Option.

         "Grant Date" means,  with respect to an Award,  the date that the Award
was granted.

         "Incentive  Stock Option"  means an Option to purchase  Shares which is
designated as an Incentive Stock Option and is intended to meet the requirements
of section 422 of the Code.

         "Individual  MBOs"  means  as  to  a  Participant,  the  objective  and
measurable goals set by a "management by objectives" process and approved by the
Committee (in its sole discretion).

         "Net Income" means as to any Fiscal Year, the income after taxes of the
Company for the Fiscal Year  determined in accordance  with  generally  accepted
accounting  principles;  provided,  however,  that prior to the Fiscal Year, the
Committee shall determine  whether any significant  item(s) shall be included or
excluded  from  the  calculation  of Net  Income  with  respect  to one or  more
Participants.

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

         "Nonqualified Stock Option" means an Option to purchase Shares which is
not an Incentive Stock Option.

         "Operating   Return  on  Invested  Capital"  means  the  Company's  (i)
Operating  Earnings (as shown on its audited  financial  statements for a Fiscal
Year) after income taxes,  divided by (ii) average  Long-term  Debt plus average
Stockholders'  Equity  less  average  Cash and  Cash  Equivalents  less  average
Short-term  Investments  (all as shown on its audited  financial  statements for
such Fiscal Year)."

         "Option"  means an  Incentive  Stock  Option  or a  Nonqualified  Stock
Option.

         "Participant" means an Employee, Consultant or Nonemployee Director who
has been selected to receive an Award or who has an outstanding Award.

         "Performance-Based  Compensation"  means an  Award  that  qualifies  as
performance-based compensation under Code section 162(m).

         "Performance  Goals" means the goal(s) (or combined goal(s)) determined
by the Committee (in its sole discretion) to be applicable to a Participant with
respect to an Award.  As  determined by the  Committee,  the  Performance  Goals
applicable to an Award may provide for a targeted level or levels of achievement
using  one or more of the  following  measures:  (a)  Earnings  Per  Share,  (b)
Individual  MBOs,  (c) Net  Income,  (d) Pro Forma  Net  Income,  (e)  Return on
Designated Assets, (f) Return on Revenues,  (g) Satisfaction MBOs, (h) Operating
Return  on  Invested  Capital,  and  (i)  Total  Return  to  Shareholders.   The
Performance  Goals may differ from  Participant to Participant and from Award to
Award.  The Committee may  appropriately  adjust any  evaluation of  performance
under a  Performance  Goal to exclude  any of the  following  events  that occur
during a Performance  Period:  (a) asset  write-downs,  (b)  litigation or claim
judgments or  settlements,  (c) the effect of changes in tax laws or  accounting
principles,  (d) accruals for reorganization or restructuring  programs, and (e)


                                      -3-
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any  extraordinary  non-recurring  items as described in  Accounting  Principles
Board Opinion No. 30 and/or in management's discussion and analysis of financial
condition and results of operations appearing in the Company's Form 10-K for the
applicable year.

         "Performance  Period"  shall have the meaning  assigned to such term in
Section 8.3.

         "Performance Share" means an Award granted to a Participant pursuant to
Section 8.

         "Performance Unit" means an Award granted to a Participant  pursuant to
Section 8.

         "Period of  Restriction"  means the period during which the transfer of
Shares of  Restricted  Stock are subject to  restrictions  and,  therefore,  the
Shares are subject to a substantial  risk of forfeiture.  As provided in Section
7, such  restrictions  may be based on the passage of time,  the  achievement of
target levels of  performance or the occurrence of other events as determined by
the Committee in its sole discretion.

         "Plan" means the Applebee's  International,  Inc.  Amended and Restated
1995 Equity  Incentive  Plan, as set forth in this  instrument  and as hereafter
amended from time to time.

         "Pro Forma Net  Income"  means as to any  business  unit for any Fiscal
Year,  the portion of  Company's  Net Income  allocable to such  business  unit;
provided, however, that prior to such Fiscal Year, the Committee shall determine
the basis on which such allocation shall be made.

         "Restricted Stock" means an Award granted to a Participant  pursuant to
Section 7 or Section 9.

         "Retirement"  means,  in the  case of an  Employee,  a  Termination  of
Service  by  reason  of  the  Employee's  retirement  at or  after  age 65 or as
otherwise  specifically  provided  in or  pursuant  to  an  Award  Agreement  as
determined by the  Committee.  With respect to a Consultant,  no  Termination of
Service  shall be deemed to be on account  of  "Retirement."  With  respect to a
Nonemployee Director,  "Retirement" means termination of service on the Board at
or after age 70.

         "Return on Designated  Assets" means as to any Fiscal Year, (a) the Pro
Forma Net Income of a business  unit,  divided by the average of  beginning  and
ending  business unit designated  assets,  or (b) the Net Income of the Company,
divided by the average of beginning and ending designated corporate assets.

         "Return on Revenues" means as to any Fiscal Year, the percentage  equal
to the Company's Net Income or the business unit's Pro Forma Net Income, divided
by the Company's or the business unit's annual revenue.

         "Rule 16b-3" means Rule 16b-3  promulgated  under the 1934 Act, and any
future regulation amending, supplementing or superseding such regulation.

         "Satisfaction  MBOs" means as to any  Participant,  the  objective  and
measurable  individual  goals set by a "management  by  objectives"  process and
approved by the Committee, which goals relate to the satisfaction of external or
internal requirements.

         "Section 16 Person" means a person who, with respect to the Shares,  is
subject to Section 16 of the 1934 Act, as determined by the Board.

         "Shares" means the shares of common stock of the Company.


                                      -4-
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         "Stock Appreciation Right" or "SAR" means an Award, granted alone or in
connection  with a related  Option,  that is  designated  as a SAR  pursuant  to
Section 7.

         "Subsidiary" means any corporation in an unbroken chain of corporations
beginning  with the  Company  if each of the  corporations  other  than the last
corporation in the unbroken chain then owns stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of stock in one of the
other corporations in such chain.

         "Tandem SAR" means an SAR that is granted in connection  with a related
Option,  the exercise of which shall require forfeiture of the right to purchase
an equal  number  of  Shares  under  the  related  Option  (and  when a Share is
purchased under the Option, the SAR shall be canceled to the same extent).

         "Termination  of  Service"  means,  (a) in the case of an  Employee,  a
cessation  of the  employee-employer  relationship  between an employee  and the
Company  or an  Affiliate  for any  reason,  including,  but not  limited  to, a
cessation  by  resignation,  discharge,  death,  Disability,  Retirement  or the
disaffiliation of an Affiliate,  but excluding any such cessation where there is
a simultaneous  reemployment by the Company or an Affiliate, and (b) in the case
of a Consultant,  a cessation of the service  relationship  between a Consultant
and the Company or an Affiliate for any reason, including, but not limited to, a
cessation by resignation,  discharge, death, Disability or the disaffiliation of
an Affiliate,  but excluding any such  cessation  where there is a  simultaneous
reengagement of the Consultant by the Company or an Affiliate.

         "Total  Return to  Shareholders"  means (i) the Fair Market  Value of a
Share on the last day of a period  minus the Fair Market Value of a Share on the
first day of the period plus all  dividends  paid on a Share during such period,
divided by (ii) the Fair Market Value of a Share on the first day of the period.

                                   SECTION 3

                                ADMINISTRATION

         3.1.   The Committee. This Plan shall be administered by the Committee.
The Committee  shall consist of not less than two (2) Directors.  The members of
the  Committee  shall be appointed  from time to time by, and shall serve at the
pleasure of, the Board of Directors.  The Committee shall be comprised solely of
Directors  who are both (a)  "non-employee  directors"  under Rule 16b-3 and (b)
"outside  directors" under section 162(m) of the Code. The Board may delegate to
the Committee any or all of the administration of the Plan;  provided,  however,
that  the  administration  of  the  Plan  with  respect  to  Awards  granted  to
Nonemployee Directors may not be so delegated.  To the extent that the Board has
delegated to the Committee any authority and responsibility  under the Plan, all
applicable references to the Board in the Plan shall be to the Committee.

         3.2.   Authority  of  the  Committee.  It  shall  be  the  duty  of the
Committee   to  administer  this   Plan  in  accordance  with   its  provisions.
The Committee shall have all powers  and discretion  necessary or appropriate to
administer this  Plan and to control its operation,  including,  but not limited
to, the power to (a) determine which  Employees and Consultants shall be granted
Awards, (b)  prescribe the terms and  conditions of the  Awards (other  than the
Options granted to Directors pursuant to Section 9), (c) interpret this Plan and
the  Awards, (d)  adopt  rules  for   the  administration,   interpretation  and
application  of this Plan as are consistent therewith,  and (e) interpret, amend
or revoke any such rules.

         3.3.   Delegation  by  the  Committee.  The  Committee,  in  its   sole
discretion and on such terms and  conditions as it may provide, may delegate all
or any part of its authority and powers under this Plan to one or more directors


                                      -5-
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or officers  of  the  Company;  provided, however,  that the  Committee  may not
delegate its authority and powers (a) with respect to Section 16 Persons, or (b)
in any way which would jeopardize this Plan's qualification under section 162(m)
of the Code or Rule 16b-3.

         3.4.   Nonemployee   Director    Options    and    Restricted    Stock.
Notwithstanding  any  contrary  provision  of  this  Section 3,  the Board shall
administer  Section 9  of  this  Plan,  and  the  Committee  shall  exercise  no
discretion with respect to Section 9. In the Board's administration of Section 9
and the Options and Restricted Stock granted to Nonemployee Directors, the Board
shall have all authority and discretion  otherwise granted to the Committee with
respect to the administration of this Plan.

         3.5.   Decisions Binding. All determinations  and decisions made by the
Committee,  the Board and any delegate of the Committee  pursuant to Section 3.3
shall be final,  conclusive,  and binding on all persons, and shall be given the
maximum deference permitted by law.

                                   SECTION 4

                         SHARES SUBJECT TO THIS PLAN

         4.1.   Number of Shares. Subject to  adjustment  as provided in Section
4.3,  the total number of Shares  available  for grant under this Plan shall not
exceed  10,600,000.  Shares granted under this Plan may be either authorized but
unissued Shares or treasury Shares, or any combination thereof.

         4.2.   Lapsed Awards.  If an Award is settled in cash, or is cancelled,
terminates,  expires  or  lapses  for any  reason  (with  the  exception  of the
termination  of a  Tandem  SAR  upon  exercise  of the  related  Option,  or the
termination of a related Option upon exercise of the corresponding  Tandem SAR),
any Shares subject to such Award thereafter shall be available to be the subject
of an Award.

         4.3.   Adjustments in Awards and Authorized Shares. In the event of any
merger,    reorganization,    consolidation,    recapitalization,    separation,
liquidation,  stock dividend, stock split, Share combination, or other change in
the corporate structure of the Company affecting the Shares, the Committee shall
adjust the number and class of Shares  which may be  delivered  under this Plan,
the number,  class and price of Shares  subject to outstanding  Awards,  and the
numerical  limits of Sections  4.1, 5.1, 6.1, 7.1 and 8.1, in such manner as the
Committee  (in  its  sole  discretion)   shall  determine  to  be  advisable  or
appropriate  to prevent the  dilution or  diminution  of such  Awards.  Any such
numerical  limitations shall be subject to adjustment under this Section only to
the extent such  adjustment  will not affect the status of any Award intended to
qualify  as  Performance-Based  Compensation  or the  ability  to  grant  or the
qualification  of Incentive Stock Options under the Plan. In the case of Options
and Restricted Stock granted to Nonemployee Directors pursuant to Section 9, the
foregoing  adjustments  shall be made by the Board with  respect to Options  and
Restricted  Stock granted and that may be granted  thereafter  from time to time
pursuant  to  Section 9.  Notwithstanding  the  preceding,  the number of Shares
subject to any Award always shall be a whole number.

         Appropriate  adjustments  may also be made by the  Board  in the  other
terms of any Awards under the Plan to reflect such changes or  distributions  on
an equitable basis,  including  modifications of performance targets and changes
in the length of Performance Periods.

         The Board is authorized to make adjustments to the terms and conditions
of,  and  the  criteria  included  in,  Awards  in  recognition  of  unusual  or
nonrecurring  events  affecting the Company or the  financial  statements of the
Company,  or  in  response  to  changes  in  applicable  laws,  regulations,  or
accounting principles.


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         Notwithstanding  any  provision  in  this  Plan  to  the  contrary,  no
adjustment   may  be  made  with  respect  to  Awards   intended  to  constitute
Performance-Based  Compensation,  to the extent such adjustment would affect the
status of such Award as Performance-Based  Compensation, or the ability to grant
(or the qualification of) Incentive Stock Options under the Plan.

         The determination of the Board as to the foregoing adjustments, if any,
shall be conclusive and binding on Participants under the Plan.

                                   SECTION 5

                                 STOCK OPTIONS

         5.1.   Grant of  Options. Subject to the terms and  provisions  of this
Plan,  Options may be granted to Employees and  Consultants at any time and from
time to  time  as  determined  by the  Committee  in its  sole  discretion.  The
Committee, in its sole discretion,  shall determine the number of Shares subject
to each Option;  provided,  however, that during any Fiscal Year, no Participant
shall be granted Options  covering more than 225,000  Shares.  The Committee may
grant Incentive Stock Options,  Nonqualified  Stock Options,  or any combination
thereof. Incentive Stock Options may be granted only to Employees.

         5.2.   Award  Agreement. Each  Option  shall be  evidenced  by an Award
Agreement  that shall specify the Exercise  Price,  the  expiration  date of the
Option,  the number of Shares to which the Option  pertains,  any  conditions to
exercise of the Option and such other terms and conditions as the Committee,  in
its sole  discretion,  shall  determine.  The Award Agreement also shall specify
whether the Option is intended to be an Incentive Stock Option or a Nonqualified
Stock Option.

         5.3.   Exercise Price.  Subject to the provisions of this  Section 5.3,
the Exercise  Price for each Option shall be  determined by the Committee in its
sole discretion.

              5.3.1.  Nonqualified Stock Options.  In the case of a Nonqualified
         Stock  Option,  the  Exercise  Price shall be not less than one hundred
         percent (100%) of the Fair Market Value of a Share on the Grant Date.

              5.3.2.  Incentive Stock Options. In the case of an Incentive Stock
         Option,  the Exercise Price shall be not less than one hundred  percent
         (100%) of the Fair Market Value of a Share on the Grant Date; provided,
         however, that if on the Grant Date, the Employee (together with persons
         whose stock ownership is attributed to the Employee pursuant to section
         424(d) of the Code)  owns stock  possessing  more than 10% of the total
         combined  voting power of all classes of stock of the Company or any of
         its Subsidiaries, the Exercise Price shall be not less than one hundred
         ten  percent  (110%) of the Fair  Market  Value of a Share on the Grant
         Date.

              5.3.3.  Substitute  Options.  Notwithstanding  the  provisions  of
         Sections 5.3.1 and 5.3.2, in the event that the Company or an Affiliate
         consummates  a  transaction  described  in  section  424(a) of the Code
         (e.g.,   the  acquisition  of  property  or  stock  from  an  unrelated
         corporation), persons who become Employees or Consultants on account of
         such  transaction may be granted  Options in  substitution  for options
         granted by such  former  employer or  recipient  of  services.  If such
         substitute Options are granted,  the Committee,  in its sole discretion
         and consistent with section 424(a) of the Code, may determine that such
         substitute  Options shall have an exercise  price less than one hundred
         (100%) of the Fair Market Value of the Share on the Grant Date.


                                      -7-
<PAGE>


         5.4.   Expiration of Options.

              5.4.1.  Expiration  Dates.  Each Option shall  terminate  upon the
         earlier of the first to occur of the following events:

                      (a) The date for  termination  of the  Option set forth in
         the Award Agreement; or

                      (b) The  expiration of ten (10) years from the Grant Date;
         or

                      (c) The  expiration  of one (1) year  from the date of the
         Optionee's   Termination  of  Service  for  a  reason  other  than  the
         Optionee's  death,  Disability  or  Retirement  (except as  provided in
         Section 5.8.2 regarding Incentive Stock Options); or

                      (d) The expiration of three (3) years from the date of the
         Optionee's  Termination  of Service by reason of Disability  (except as
         provided in Section 5.8.2 regarding  Incentive Stock Options) or death;
         or

                      (e) The expiration of three (3) years from the date of the
         Optionee's  Retirement  (except as provided in Section 5.8.2  regarding
         Incentive Stock Options).

              5.4.2.  Committee  Discretion.  Subject  to the  limits of Section
         5.4.1, the Committee, in its sole discretion, (a) shall provide in each
         Award Agreement when each Option expires and becomes unexercisable, and
         (b) may,  after an Option is granted,  extend the  maximum  term of the
         Option (subject to Section 5.8.4 regarding Incentive Stock Options).

         5.5.   Exercisability of Options. Options granted under this Plan shall
be exercisable at such times and be subject to such  restrictions and conditions
as the  Committee  shall  determine in its sole  discretion.  After an Option is
granted,   the   Committee,   in  its  sole   discretion,   may  accelerate  the
exercisability of the Option.

         5.6.   Payment.  Options   shall  be  exercised  by  the  Participant's
delivery of a written notice of exercise to the Secretary of the Company (or its
designee),  setting  forth the number of Shares with respect to which the Option
is to be exercised, accompanied by full payment for the Shares.

         Upon the exercise of any Option, the Exercise Price shall be payable to
the  Company  in full in cash or its  equivalent.  The  Committee,  in its  sole
discretion, also may permit exercise (a) by tendering previously acquired Shares
having an aggregate Fair Market Value at the time of exercise equal to the total
Exercise  Price,  or (b) by any other  means  which the  Committee,  in its sole
discretion,  determines (i) to provide legal  consideration for the Shares,  and
(ii) to be consistent with the purposes of this Plan.

         The Committee also may allow cashless  exercise as permitted  under the
Federal  Reserve  Board's  Regulation  T, subject to applicable  securities  law
restrictions,  or by any  other  means  which  the  Committee  determines  to be
consistent with the Plan's purpose and applicable law.

         As soon as  practicable  after  receipt  of a written  notification  of
exercise and full payment for the Shares purchased, the Company shall deliver to
the Participant (or the Participant's  designated  broker),  Share  certificates
(which may be in book entry form) representing such Shares.

         5.7.   Restrictions on Share  Transferability. The Committee may impose
such  restrictions on any Shares acquired  pursuant to the exercise of an Option


                                      -8-
<PAGE>


as it may deem advisable or appropriate in its sole discretion,  including,  but
not limited to, restrictions  related to applicable Federal securities laws, the
requirements of any national securities exchange or system upon which Shares are
then listed or traded, and any blue sky or state securities laws.

         5.8.   Certain Additional Provisions for Incentive Stock Options.

              5.8.1.  Exercisability.   The   aggregate   Fair   Market    Value
         (determined on the Grant Date(s))  of the Shares with  respect to which
         Incentive  Stock Options are  exercisable  for the  first time  by  any
         Employee  during any calendar year  (under all plans of the Company and
         its Subsidiaries) shall not exceed $100,000.

              5.8.2.  Termination of Service.  No Incentive  Stock Option may be
         exercised   more  than  three  (3)  months   after  the   Participant's
         Termination  of Service for any reason other than  Disability or death,
         unless (a) the Participant dies during such three-month period, and (b)
         the  Award  Agreement  or the  Committee  permits  later  exercise.  No
         Incentive  Stock Option may be  exercised  more than one (1) year after
         the  Participant's  termination of employment on account of Disability,
         unless (a) the Participant  dies during such one-year  period,  and (b)
         the Award Agreement or the Committee permits later exercise.

              5.8.3.  Company and Subsidiaries Only. Incentive Stock Options may
         be  granted  only to  persons  who are  employees  of the  Company or a
         Subsidiary on the Grant Date.

              5.8.4.  Expiration.  No  Incentive  Stock  Option may be exercised
         after the  expiration of ten (10) years from the Grant Date;  provided,
         however,  that if the Option is granted to an  Employee  who,  together
         with  persons  whose stock  ownership  is  attributed  to the  Employee
         pursuant to section 424(d) of the Code, owns stock possessing more than
         10% of the total  combined  voting power of all classes of stock of the
         Company or any of its  Subsidiaries,  the  Option may not be  exercised
         after the expiration of five (5) years from the Grant Date.

         5.9.   Repricing  of Options. The Company may not  reprice,  replace or
regrant an outstanding Option either in connection with the cancellation of such
Option or by amending an Award  Agreement  to lower the  Exercise  Price of such
Option.

                                   SECTION 6

                          STOCK APPRECIATION RIGHTS

         6.1.   Grant of SARs. Subject to the terms and conditions of this Plan,
an SAR may be granted to Employees and  Consultants at any time and from time to
time as shall be  determined  by the  Committee,  in its  sole  discretion.  The
Committee may grant  Affiliated  SARs,  Freestanding  SARs,  Tandem SARs, or any
combination thereof.

              6.1.1.  Number  of  Shares.  The  Committee  shall  have  complete
         discretion to determine the number of SARs granted to any  Participant,
         provided that during any Fiscal Year, no  Participant  shall be granted
         SARs covering more than 225,000 Shares.

              6.1.2.  Exercise Price and Other Terms. The Committee,  subject to
         the  provisions  of  this  Plan,  shall  have  complete  discretion  to
         determine  the terms and  conditions  of SARs granted  under this Plan;
         provided,  however, that the exercise price of a Freestanding SAR shall
         be not less than one hundred percent (100%) of the Fair Market Value of
         a Share on the Grant Date.  The exercise  price of Tandem or Affiliated
         SARs shall equal the Exercise Price of the related Option.


                                      -9-
<PAGE>


         6.2.   Exercise of Tandem SARs. Tandem SARs may be exercised for all or
part of the Shares subject to the related Option upon the surrender of the right
to exercise the equivalent  portion of the related  Option.  A Tandem SAR may be
exercised  only with respect to the Shares for which its related  Option is then
exercisable.  With  respect  to a  Tandem  SAR  granted  in  connection  with an
Incentive  Stock  Option:  (a) the  Tandem  SAR shall  expire no later  than the
expiration of the underlying Incentive Stock Option; (b) the value of the payout
with  respect to the Tandem  SAR shall be for no more than one  hundred  percent
(100%) of the difference between the Exercise Price of the underlying  Incentive
Stock Option and the Fair Market Value of the Shares  subject to the  underlying
Incentive  Stock  Option at the time the  Tandem SAR is  exercised;  and (c) the
Tandem SAR shall be  exercisable  only when the Fair Market  Value of the Shares
subject  to the  Incentive  Stock  Option  exceeds  the  Exercise  Price  of the
Incentive Stock Option.

         6.3.   Exercise of Affiliated SARs.  An Affiliated SAR shall be  deemed
to be exercised upon the exercise of the related Option.  The deemed exercise of
an Affiliated  SAR shall not  necessitate a  reduction in the  number of  Shares
subject to the related Option.

         6.4.   Exercise  of  Freestanding  SARs.  Freestanding  SARs  shall  be
exercisable  on  such  terms  and  conditions  as the  Committee,  in  its  sole
discretion, shall determine.

         6.5.   SAR  Agreement. Each SAR grant  shall be  evidenced  by an Award
Agreement  that shall  specify  the  exercise  price,  the term of the SAR,  the
conditions of exercise, and such other terms and conditions as the Committee, in
its sole discretion, shall determine.

         6.6.   Expiration  of SARs. An SAR granted under this Plan shall expire
upon the date determined by the Committee, in its sole discretion,  as set forth
in the Award Agreement.  Notwithstanding the foregoing, the terms and provisions
of Section 5.4 also shall apply to SARs.

         6.7.   Payment of SAR Amount.  Upon  exercise of an SAR, a  Participant
shall be entitled to receive payment from the Company in an amount determined by
multiplying;

                      (a) The positive  difference between the Fair Market Value
         of a Share on the date of exercise over the exercise price; by

                      (b) The number of Shares with  respect to which the SAR is
         exercised.

         At the sole discretion of the Committee, the payment upon SAR exercise
may be in cash, in Shares of equivalent value, or in any combination thereof.

                                   SECTION 7

                               RESTRICTED STOCK

         7.1.   Grant of Restricted Stock.  Subject to the  terms and provisions
of this Plan, the Committee, at any time and from time to time, may grant Shares
of  Restricted  Stock  to  Employees  and  Consultants in  such  amounts as  the
Committee,  in its sole discretion, shall  determine. The Committee, in its sole
discretion,  shall  determine  the  number  of  Shares  to  be  granted  to each
Participant;  provided,  however,  that  during any Fiscal Year, no  Participant
shall receive more than 225,000 Shares of Restricted Stock.

         7.2.   Restricted Stock Agreement. Each Award of Restricted Stock shall
be evidenced by an Award Agreement that shall specify the Period of Restriction,
the  number of Shares  granted,  and such  other  terms  and  conditions  as the


                                      -10-
<PAGE>


Committee, in its sole discretion, shall determine. Unless the Committee, in its
sole discretion,  determines otherwise, Shares of Restricted Stock shall be held
by the  Company  as  escrow  agent  until  the end of the  applicable  Period of
Restriction.

         7.3.   Transferability. Except as provided in this Section 7, Shares of
Restricted  Stock may not be sold,  transferred,  gifted,  bequeathed,  pledged,
assigned, or otherwise alienated or hypothecated,  voluntarily or involuntarily,
until the end of the applicable Period of Restriction.

         7.4.   Other Restrictions. The Committee,  in its sole discretion,  may
impose  such other  restrictions  on Shares of  Restricted  Stock as it may deem
advisable or appropriate in accordance with this Section 7.4.

              7.4.1.  General  Restrictions.  The Committee may set restrictions
         based  upon (a) the  achievement  of  specific  performance  objectives
         (Company-wide,  divisional or  individual),  (b) applicable  Federal or
         state  securities  laws,  or (c)  any  other  basis  determined  by the
         Committee in its sole discretion.

              7.4.2.  Section 162(m) Performance  Restrictions.  For purposes of
         qualifying   grants   of   Restricted   Stock   as   "performance-based
         compensation"  under section 162(m) of the Code, the Committee,  in its
         sole  discretion,  may set  restrictions  based upon the achievement of
         Performance  Goals. The Performance Goals shall be set by the Committee
         on or before the latest date permissible to enable the Restricted Stock
         to qualify as "performance-based  compensation" under section 162(m) of
         the Code.  In  granting  Restricted  Stock that is  intended to qualify
         under Code section  162(m),  the Committee  shall follow any procedures
         determined  by it in its  sole  discretion  from  time  to  time  to be
         necessary,  advisable or  appropriate  to ensure  qualification  of the
         Restricted  Stock under Code section 162(m) (e.g.,  in determining  the
         Performance Goals).

              7.4.3.  Legend  on  Certificates.   The  Committee,  in  its  sole
         discretion,  may legend the certificates  representing Restricted Stock
         to give  appropriate  notice of such  restrictions.  For  example,  the
         Committee  may  determine  that some or all  certificates  representing
         Shares of Restricted Stock shall bear the following legend:

              "THE SALE OR OTHER  TRANSFER  OF THE  SHARES OF STOCK
              REPRESENTED BY THIS CERTIFICATE,  WHETHER  VOLUNTARY,
              INVOLUNTARY,  OR BY  OPERATION  OR LAW, IS SUBJECT TO
              CERTAIN  RESTRICTIONS ON TRANSFER AS SET FORTH IN THE
              APPLEBEE'S  INTERNATIONAL,  INC. AMENDED AND RESTATED
              1995 EQUITY INCENTIVE PLAN, AND IN A RESTRICTED STOCK
              AGREEMENT.  A COPY OF THIS  PLAN AND SUCH  RESTRICTED
              STOCK AGREEMENT MAY BE OBTAINED FROM THE SECRETARY OF
              APPLEBEE'S INTERNATIONAL, INC."

         7.5.   Removal of Restrictions.  Except as  otherwise  provided in this
Section 7, Shares of  Restricted  Stock covered by each  Restricted  Stock grant
made under this Plan shall be released from escrow as soon as practicable  after
the end of the applicable  Period of  Restriction.  The  Committee,  in its sole
discretion,  may accelerate the time at which any  restrictions  shall lapse and
remove any restrictions;  provided,  however,  that the Period of Restriction on
Shares  granted  to a  Section  16 Person  may not lapse  until at least six (6)
months after the Grant Date (or such shorter period as may be permissible  while
maintaining  compliance with Rule 16b-3). After the end of the applicable Period
of Restriction,  the Participant shall be entitled to have any legend or legends


                                      -11-
<PAGE>


under Section 7.4.3  removed from his or her Share  certificate,  and the Shares
shall be freely  transferable by the Participant,  in accordance with applicable
securities laws.

         7.6.   Voting  Rights.  During the Period of Restriction,  Participants
holding  Shares of Restricted  Stock granted  hereunder may exercise full voting
rights with  respect to those  Shares,  unless the  applicable  Award  Agreement
provides otherwise.

         7.7.   Dividends  and  Other   Distributions.  During   the  Period  of
Restriction,  Participants  holding Shares of Restricted Stock shall be entitled
to receive  all  dividends  and other  distributions  paid with  respect to such
Shares unless otherwise provided in the applicable Award Agreement.  If any such
dividends or  distributions  are paid in Shares,  the Shares shall be subject to
the same  restrictions on  transferability  and  forfeitability as the Shares of
Restricted Stock with respect to which they were paid.

         7.8.   Return of Restricted  Stock to Company. On the date set forth in
the applicable Award Agreement, the Restricted Stock for which restrictions have
not lapsed shall  revert to the Company and  thereafter  shall be available  for
grant under this Plan.

         7.9.   Section  83(b)  Election. The  Committee may provide in an Award
Agreement that the Award of Restricted Stock is conditioned upon the Participant
making or  refraining  from making an election  with  respect to the Award under
section  83(b) of the Code.  If a  Participant  makes an  election  pursuant  to
section 83(b) of the Code concerning a Restricted  Stock Award,  the Participant
shall be required to promptly file a copy of such election with the Company.

                                   SECTION 8

                    PERFORMANCE UNITS AND PERFORMANCE SHARES

         8.1.   Grant  of  Performance  Units/Shares.   Performance   Units  and
Performance  Shares may be granted to Employees and  Consultants at any time and
from  time to  time,  as  shall  be  determined  by the  Committee,  in its sole
discretion.  The Committee  shall have complete  discretion in  determining  the
number of Performance Units and Performance  Shares granted to each Participant;
provided, however, that during any Fiscal Year, (a) no Participant shall receive
Performance  Units having an initial  value  greater than  $250,000,  and (b) no
Participant shall receive more than 225,000 Performance Shares.

         8.2.   Value of Performance  Units/Shares. Each  Performance Unit shall
have an initial  value that is  established  by the  Committee  on or before the
Grant Date. Each Performance Share shall have an initial value equal to the Fair
Market Value of a Share on the Grant Date.

         8.3.   Performance Objectives and Other Terms.  The Committee shall set
performance  objectives in its sole discretion which, depending on the extent to
which they are met, will determine the number or value of  Performance  Units or
Performance Shares, or both, that will be paid out to the Participants. The time
period during which the  performance  objectives must be met shall be called the
"Performance  Period".  Performance  Periods  of Awards  granted  to  Section 16
Persons  shall,  in all cases,  exceed six (6) months in length (or such shorter
period as may be permissible while maintaining compliance with Rule 16b-3). Each
Award of Performance Units or Performance  Shares shall be evidenced by an Award
Agreement that shall specify the  Performance  Period,  and such other terms and
conditions as the Committee, in its sole discretion, shall determine.

              8.3.1.  General  Performance  Objectives.  The  Committee  may set
         performance  objectives based upon (a) the achievement of Company-wide,


                                      -12-
<PAGE>


         divisional  or  individual  goals,  (b)  applicable  Federal  or  state
         securities  laws, or (c) any other basis determined by the Committee in
         its discretion.

              8.3.2.  Section  162(m)  Performance  Objectives.  For purposes of
         qualifying  grants  of  Performance  Units  or  Performance  Shares  as
         "performance-based  compensation" under section 162(m) of the Code, the
         Committee,  in its sole discretion,  may determine that the performance
         objectives  applicable to Performance  Units or Performance  Shares, as
         the case may be,  shall be  based  on the  achievement  of  Performance
         Goals. The Performance Goals shall be set by the Committee on or before
         the  latest  date  permissible  to  enable  the  Performance  Units  or
         Performance   Shares,   as  the   case   may   be,   the   qualify   as
         "performance-based  compensation"  under section 162(m) of the Code. In
         granting  Performance Units or Performance Shares which are intended to
         qualify  under Code  section  162(m),  the  Committee  shall follow any
         procedures  determined  by it from  time to  time  to be  necessary  or
         appropriate  in its sole  discretion  to  ensure  qualification  of the
         Performance Units or Performance Shares, as the case may be, under Code
         section 162(m) (e.g., in determining the Performance Goals).

         8.4.   Earning  of  Performance  Units/Shares.   After  the  applicable
Performance  Period has ended,  the holder of  Performance  Units or Performance
Shares shall be entitled to receive a payout of the number of Performance  Units
or Performance  Shares,  as the case may be, earned by the Participant  over the
Performance  Period,  to be  determined as a function of the extent to which the
corresponding  performance  objectives have been achieved.  After the grant of a
Performance Unit or Performance  Share,  the Committee,  in its sole discretion,
may reduce or waive any  performance  objectives  for such  Performance  Unit or
Performance Share; provided, however, that Performance Periods of Awards granted
to  Section 16  Persons  shall not be less than six (6) months (or such  shorter
period as may be permissible while maintaining compliance with Rule 16b-3).

         8.5.   Form and Timing of Payment of  Performance Units/Shares. Payment
of earned  Performance Units or Performance  Shares  shall  be  made  as soon as
practicable after the end of the applicable  Performance  Period. The Committee,
in its sole discretion,  may pay earned  Performance Units or Performance Shares
in the form of cash, in Shares (which have an aggregate  Fair Market Value equal
to the value of the earned Performance Units or Performance  Shares, as the case
may be, at the end of the applicable  Performance Period), or in any combination
thereof.

         8.6.   Cancellation of Performance Units/Shares. On the earlier of date
set forth in the Award  Agreement or the  Participant's  Termination  of Service
(other than by death,  Disability or, with respect to an Employee,  Retirement),
all  unearned or  unvested  Performance  Units or  Performance  Shares  shall be
forfeited to the Company, and thereafter shall be available for grant under this
Plan. In the event of a Participant's  death,  Disability or, with respect to an
Employee,  Retirement,  prior to the end of a Performance  Period, the Committee
shall reduce his or her Performance Units or Performance Shares  proportionately
based on the date of such Termination of Service.

                                   SECTION 9

                      DIRECTOR OPTIONS AND RESTRICTED STOCK

         The  provisions  of this Section 9 are  applicable  only to Options and
Restricted Stock granted to Nonemployee Directors.


                                      -13-
<PAGE>


         9.1.   Nonemployee Director Grants.

                      (a) In  addition  to  any   cash   compensation   paid  to
         Nonemployee  Directors  for  their  service  on the Board or any of its
         committees, each Nonemployee Director shall receive compensation in the
         form of Options and/or shares of Restricted  Stock.  The amount and mix
         of such equity  compensation  shall be determined  annually by Board of
         Directors based on providing overall  compensation (cash and equity) in
         the range of the 75th percentile of nonemployee  director  compensation
         paid by a selected peer group of public companies.

                      (b) Each  Nonemployee  Director  shall  receive  an annual
         grant of Options and/or  Restricted  Stock pursuant to Section  9.1(a),
         above,  and each person  first  elected or appointed to the board after
         May 1, 2004 shall receive a one-time grant of Options and/or Restricted
         Stock equal to the number of Options and/or shares of Restricted  Stock
         granted  to the  Nonemployee  Directors  in the  immediately  preceding
         January.

                      (c) Each  year,  by  written  election  made no later than
         December 15, each  Nonemployee  Director may designate all or a portion
         of his or her annual cash retainer for the following year to be paid by
         the grant of Director Options. If a Nonemployee Director so designates,
         such  Nonemployee  Director shall receive  Director Options to purchase
         that  number of Shares  that  equals the  portion  of the  annual  cash
         retainer so designated divided by three/tenths (0.3) of the Fair Market
         Value of a Share on the Grant Date, rounded to the next higher multiple
         of ten.

         9.2.   Employee  Director  Grants.  Employee  Directors  shall  receive
Options or Restricted Stock  only in  their  capacity  as  Employees  and not in
their capacity as Directors.

         9.3.   Grant Date. All annual grants of Director Options and Restricted
Stock  shall be granted on the first day in each  calendar  year that the Shares
trade on a United States stock exchange or  inter-dealer  quotation  system,  as
designated  by the Board.  All one-time  Director  Options  issued under Section
9.1(b) shall be granted on the  effective  date of such  Nonemployee  Director's
election or appointment.

         9.4.   Award  Agreement. Each Option and each grant of Restricted Stock
granted  pursuant to this  Section 9 shall be  evidenced  by an Award  Agreement
which shall be executed by the Nonemployee Director and the Company.

         9.5.   Exercise Price.  The  Exercise  Price  for the Shares subject to
each Option granted pursuant to this  Section 9 shall be 100% of the Fair Market
Value of such Shares on the Grant Date.

         9.6.   Exercisability. Each  Option granted  pursuant to Section 9.1(a)
or (b) shall  become  immediately  exercisable on  the  first anniversary of the
Grant  Date and each  Option  granted  pursuant to  Section 9.1(c)  shall become
exercisable in 12  equal monthly  installments  on the last day of each month in
the calendar year in which such Option is granted. Notwithstanding the preceding
sentence,  whenever  an  optionee  ceases  to  be  a  Director  for  any  reason
whatsoever,  any portion of his or her Options which are not exercisable at that
time shall lapse and shall not become exercisable thereafter.

         9.7.   Expiration  of  Options.  Each Option  shall terminate  upon the
first to occur of the following events:

                      (a) The  expiration of ten (10) years from the Grant Date;
         or


                                      -14-
<PAGE>


                      (b) The  expiration  of one (1) year  from the date of the
         Optionee's termination of service as a Director for any reason.

         9.8.   Not Incentive  Stock Options. Options  granted  pursuant to this
Section 9 shall not be designated as Incentive Stock Options.

         9.9.   Vesting  Period for Restricted  Stock. The Period of Restriction
for the Shares of Restricted  Stock granted  pursuant to this Section 9 shall be
one (1) year. If a person  ceases to be a  Director for any  reason prior to the
end of such period, the Restricted Stock shall revert to the Company.

         9.10.  Other Terms.  All provisions of this Plan not  inconsistent with
this  Section  9  shall  apply  to  Options  and  Restricted  Stock  granted  to
Nonemployee  Directors;  provided,  however,  that Sections  5.2,  7.4.1 and 7.5
(relating  to the  Committee's  discretion  to set the terms and  conditions  of
Options and Restricted  Stock) shall be inapplicable with respect to Nonemployee
Directors.

                                   SECTION 10

                                  STOCK AWARDS

         10.1.  Stock  Awards.   The  Committee   may  grant   other   types  of
equity-based or equity-related  Awards (including the grant or offer for sale of
unrestricted Shares) in such amounts and subject to such  terms and  conditions,
as the Committee shall determine.  Such Awards may entail the transfer of actual
Shares to Employees,  or payment in cash  or otherwise  of amounts based  on the
value of Shares and may include,  without limitation,  Awards designed to comply
with or take advantage of the applicable local laws of jurisdictions  other than
the United States.

                                   SECTION 11

                                 MISCELLANEOUS

         11.1.  Deferrals. The Committee,  in its sole discretion,  may permit a
Participant  to defer  receipt of the payment of cash or the  delivery of Shares
that  would  otherwise  be due to such  Participant  under  an  Award.  Any such
deferral  election  shall be subject to such  rules and  procedures  as shall be
determined by the Committee in its sole discretion.

         11.2.  No Effect on Employment  or Service.  Nothing in this Plan shall
interfere  with or limit in any way the right of the  Company to  terminate  any
Participant's  employment  or service at any time,  with or without  cause.  For
purposes  of this Plan,  transfer of  employment  of a  Participant  between the
Company and any of its Affiliates (or between  Affiliates) shall not be deemed a
Termination of Service.  Employment with the Company and its Affiliates is on an
at-will  basis  only,  unless  otherwise  provided by an  applicable  employment
agreement between the Participant and the Company or its Affiliate,  as the case
may be.

         11.3.  Participation. No Employee or Consultant shall have the right to
be selected to receive an Award under this Plan, or, having been so selected, to
be selected to receive a future Award.

         11.4.  Indemnification. Each person who is or shall have been a member
of the Committee, or of the Board, shall be indemnified and held harmless by the
Company  against and from (a) any loss,  cost,  liability or expense  (including
attorneys'  fees) that may be imposed upon or reasonably  incurred by him or her
in connection  with or resulting from any claim,  action,  suit or proceeding to
which he or she may be a party or in which he or she may be  involved  by reason
of any action  taken or  failure to act under this Plan or any Award  Agreement,
and (b) from any and all amounts paid by him or her in settlement thereof,  with


                                      -15-
<PAGE>


the Company's prior written  approval,  or paid by him or her in satisfaction of
any judgment in any such claim,  action,  suit or proceeding against him or her;
provided,  however, that he or she shall give the Company an opportunity, at its
own expense, to handle and defend the same before he or she undertakes to handle
and defend it on his or her own behalf.  The foregoing right of  indemnification
shall not be  exclusive  of any other  rights of  indemnification  to which such
persons may be entitled  under the Company's  Certificate  of  Incorporation  or
Bylaws,  by contract,  as a matter of law or otherwise,  or under any power that
the Company may have to indemnify them or hold them harmless.

         11.5.  Successors. All obligations of the Company under this Plan, with
respect to Awards  granted  hereunder,  shall be binding on any successor to the
Company,  whether the  existence of such  successor is the result of a direct or
indirect purchase,  merger,  consolidation or otherwise, of all or substantially
all of the business or assets of the company.

         11.6.  Beneficiary  Designations. If  permitted  by  the  Committee,  a
Participant  under this Plan may name a beneficiary or beneficiaries to whom any
vested but unpaid Award shall be paid in the event of the  Participant's  death.
Each such designation shall revoke all prior designations by the Participant and
shall  be  effective  only if  given  in a form  and  manner  acceptable  to the
Committee. In the absence of any such designation, any vested benefits remaining
unpaid at the Participant's death shall be paid to the Participant's estate and,
subject to the terms of this Plan and of the  applicable  Award  Agreement,  any
unexercised  vested Award may be exercised by the  administrator  or executor of
the Participant's estate.

         11.7.  Transferability. Except  as  otherwise  set  forth  in  an Award
Agreement, no Award granted under this Plan may be sold,  transferred,  pledged,
assigned,  or otherwise  alienated or  hypothecated,  other than by will, by the
laws of descent and  distribution,  or to the limited extent provided in Section
11.6;  provided,  however,  that,  except  as  otherwise  set  forth in an Award
Agreement,  an Award  granted under this Plan may be  transferred  to a holder's
family members,  to trusts created for the benefit of the holder or the holder's
family members, or to charitable entities.

         11.8.  No Rights as Stockholder.  Except to the limited extent provided
in Sections 7.6 and 7.7, no Participant (nor any beneficiary thereof) shall have
any of the rights or privileges of a stockholder  of the Company with respect to
any Shares issuable pursuant to an Award (or the exercise  thereof),  unless and
until certificates  representing such Shares shall have been issued, recorded on
the records of the Company or its transfer  agents or registrars,  and delivered
to the Participant (or his or her beneficiary).

         11.9.  Certification. Prior to the payment of any compensation under an
Award intended to qualify as Performance-Based Compensation under Section 162(m)
of the Code,  the Committee  shall  certify the extent to which any  Performance
Goals and any other material  terms under such Award have been satisfied  (other
than in cases  where  such  relate  solely to the  increase  in the value of the
Shares).

         11.10. Discretionary   Adjustments   Pursuant    to   Section   162(m).
Notwithstanding  satisfaction of any completion of any Performance Goals, to the
extent  specified  at the time of grant of an Award to  Covered  Employees,  the
number of Shares, Options or other benefits granted,  issued,  retainable and/or
vested under an Award on account of satisfaction of such  Performance  Goals may
be reduced by the Committee on the basis of such further  considerations  as the
Committee in its sole discretion shall determine.


                                      -16-
<PAGE>


                                   SECTION 12

                      AMENDMENT, TERMINATION, AND DURATION

         12.1.  Amendment,  Suspension,  or Termination.  The Board, in its sole
discretion,  may amend or terminate this Plan, or any part thereof,  at any time
and for any reason;  provided,  however,  that the Board will obtain stockholder
approval for any amendment which would require stockholder  approval pursuant to
the listing standards of the Nasdaq Stock Market or any other applicable laws or
regulations.  The  amendment,  suspension or termination of this Plan shall not,
without  the  consent  of  the  Participant,  alter  or  impair  any  rights  or
obligations  under any Award theretofore  granted to such Participant.  No Award
may be granted  during any period of  suspension  or after  termination  of this
Plan.

         12.2.  Duration of this Plan.  This Plan shall become  effective on the
date specified herein,  and subject to Section 12.1 (regarding the Board's right
to amend or terminate this Plan), shall remain in effect  thereafter;  provided,
however, that no Incentive Stock Option may be granted under this Plan after the
tenth  anniversary  of the original  effective  date of this Plan,  or the tenth
anniversary of any subsequent  approval of the Plan by the  stockholders  of the
Company.

                                   SECTION 13

                                 TAX WITHHOLDING

         13.1.  Withholding Requirements. Prior to the delivery of any Shares or
cash pursuant to an Award (or the exercise thereof),  the Company shall have the
power and the right to deduct or withhold,  or require a Participant to remit to
the Company,  an amount  sufficient  to satisfy  Federal,  state and local taxes
(including  the  Participant's  FICA  obligation)  required to be withheld  with
respect to such Award (or the exercise thereof).

         13.2.  Withholding  Arrangements. The Committee, in its sole discretion
and pursuant to such  procedures as it may specify from time to time, may permit
a Participant to satisfy such tax withholding  obligation,  in whole or in part,
by (a) electing to have the Company withhold  otherwise  deliverable  Shares, or
(b) delivering to the Company Shares then owned by the Participant having a Fair
Market  Value  equal to the amount  required to be  withheld.  The amount of the
withholding requirement shall be deemed to include any amount that the Committee
agrees may be withheld at the time any such election is made,  not to exceed the
amount  determined by using the maximum federal,  state or local marginal income
tax rates  applicable to the  Participant  with respect to the Award on the date
that the amount of tax to be withheld is to be determined. The Fair Market Value
of the Shares to be withheld or  delivered  shall be  determined  as of the date
that the taxes are required to be withheld.

                                   SECTION 14

                               CHANGE IN CONTROL

         14.1.  Change in Control.  Except as provided in Section  14.3,  in the
event of a Change in Control of the Company,  all Awards granted under this Plan
that  then  are  outstanding  and  not  then   exercisable  or  are  subject  to
restrictions,  shall,  unless  otherwise  provided  for in the Award  Agreements
applicable thereto, become immediately  exercisable,  and all restrictions shall
be  removed,  as of the first date that the Change in Control has been deemed to
have  occurred,  and shall remain as such for the remaining life of the Award as
provided herein and within the provisions of the related Award Agreements.


                                      -17-
<PAGE>


         14.2.  Definition of Change in Control.

                      (a) For  purposes of this  Section 14, for Awards  granted
         prior to the Company's 2004 Annual Meeting of Stockholders, a Change in
         Control  of the  Company  shall  be  deemed  to  have  occurred  if the
         conditions  set forth in any one or more of the  following  shall  have
         been  satisfied,  unless  such  condition  shall  have  received  prior
         approval by a majority  vote of the  Continuing  Directors,  as defined
         below, indicating that Section 14.1 shall not apply thereto:

                          (i)   any  "person",  as such term is used in Sections
                13(d) and 14(d) of the 1934 Act  (other  than the  Company,  any
                trustee or other fiduciary holding  securities under an employee
                benefit plan of the Company or any corporation  owned,  directly
                or   indirectly,   by  the   stockholders   of  the  Company  in
                substantially  the same  proportions as their ownership of stock
                of the  Company),  is or  becomes  the  "beneficial  owner"  (as
                defined  in  Rule  13d-3  under  the  1934  Act),   directly  or
                indirectly,  of  securities of the Company  representing  thirty
                percent  (30%)  or  more of the  combined  voting  power  of the
                Company's then outstanding securities;

                          (ii)  during any period of two consecutive  years (not
                including any period prior to the Effective  Date of this Plan),
                individuals  ("Existing Directors") who at the beginning of such
                period  constitute the Board of Directors,  and any new director
                (an "Approved  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), (b) or (c) of
                this Section  14.2) whose  election by the Board of Directors or
                nomination  for  election  by  the  Company's  shareholders  was
                approved by a vote of a least  two-thirds (2/3) of the directors
                then still in office who either were  directors at the beginning
                of the  period or whose  election  or  nomination  for  election
                previously  was so approved  (Existing  Directors  together with
                Approved Directors constituting "Continuing  Directors"),  cease
                for any reason to constitute at least a majority of the Board of
                Directors; or

                          (iii) the stockholders of the Company approve a merger
                or  consolidation  of the Company with any other  person,  other
                than (i) 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 for 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 (ii) a merger in which no "person" (as defined
                in Section  14.2(a)(i))  acquires more than thirty percent (30%)
                of the combined  voting power of the Company's then  outstanding
                securities; or

                          (iv)  the  stockholders of the  Company  approve (1) a
                plan of complete  liquidation of the Company or (2) an agreement
                for  the  sale  or   disposition   by  the  Company  of  all  or
                substantially  all of the Company's  assets (or any  transaction
                having a similar effect).

                      (b) For  purposes of this  Section 14, for Awards  granted
         after the Company's 2004 Annual Meeting of  Stockholders,  or for prior
         Awards if consented to by the  Participant,  a Change in Control of the
         Company shall be deemed to have occurred if the conditions set forth in
         one or more of the  following  shall have been  satisfied,  unless such


                                      -18-
<PAGE>


         condition  shall have received prior approval by a majority vote of the
         Continuing  Directors  (For  purposes of Section  14.2(b),  "Continuing
         Directors" shall mean any individual who either (i) was a member of the
         Board on the date of the 2004 Annual Meeting of  Stockholders,  or (ii)
         was designated  (as of the day of initial  election as a Director) as a
         Continuing  Director by a majority of the then  Continuing  Directors),
         indicating that Section 14.1 shall not apply thereto:

                          (i)   Continuing  Directors  no  longer  constitute at
                least 2/3 of the Company's Board;

                          (ii)  any  person or group of persons  (as  defined in
                Rule 13d-5 under the 1934 Act),  together  with its  affiliates,
                become the beneficial  owner (as defined in Rule 13d-3 under the
                1934 Act),  directly or  indirectly,  of thirty percent (30%) or
                more of the Company's  then  outstanding  common stock or thirty
                percent  (30%)  or  more of the  combined  voting  power  of the
                Company's then outstanding  securities (calculated in accordance
                with  Section  13(d)(3)  or  14(d)  of the  1934  Act)  entitled
                generally to vote for the election of the Company's directors;

                          (iii) the merger or  consolidation of the Company with
                any  other  corporation,  the sale of  substantially  all of the
                assets of the Company or the  liquidation  or dissolution of the
                Company,  unless, in the case of a merger or consolidation,  the
                then Continuing  Directors in office  immediately  prior to such
                merger  or  consolidation  will  constitute  at least 2/3 of the
                Board of Directors of the surviving  corporation  of such merger
                or consolidation and any parent (as such term is defined in Rule
                12b-2 under the 1934 Act) of such corporation; or

                          (iv)  at least 2/3 of the then Continuing Directors in
                office  immediately  prior to any other  action  proposed  to be
                taken by the Company's  stockholders  or by the Board  determine
                that such proposed action,  if taken,  would constitute a change
                in control of the Company and such action is taken.

         14.3.  Impact of Change in Control.  Notwithstanding  the provisions of
Section  14.1,  in the event  there is a Change in  Control of the  Company,  as
determined  by the Board or the  Committee,  the Board or Committee  may, in its
discretion, (i) provide for the assumption or substitution of, or adjustment to,
each outstanding Award; (ii) accelerate the vesting of Options and terminate any
restrictions on Awards;  and (iii) provide for the  cancellation of Awards for a
cash payment to the  Participant.  The  provisions of this Section 14.3 will not
apply to Awards granted prior to the 2004 Annual Meeting of Stockholders  unless
a Participant consents to such application as to a particular Award.

                                   SECTION 15

                              LEGAL CONSTRUCTION

         15.1.  Gender and  Number.  Except  where  otherwise  indicated  by the
context,  any masculine  term used herein also shall  include the feminine,  the
plural shall include the singular, and the singular shall include the plural.

         15.2.  Severability.  In the event any  provision of this Plan shall be
held illegal or invalid for any reason,  the illegality or invalidity  shall not
affect the  remaining  parts of this Plan,  and this Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.

         15.3.  Requirements  of Law.  The grant of Awards and the  issuance  of
Shares  under  this Plan  shall be subject  to all  applicable  laws,  rules and
regulations,  and to such  approvals  by any  governmental  agencies or national
securities exchanges as may be required from time to time.


                                      -19-
<PAGE>


         15.4.  Securities Law  Compliance.  With respect to Section 16 Persons,
Awards under this Plan are intended to comply with all applicable  conditions of
Rule 16b-3. To the extent any provision of this Plan,  Award Agreement or action
by the  Committee  fails to so comply,  it shall be deemed null and void, to the
extent  permitted by law and deemed advisable or appropriate by the Committee in
its sole discretion.

         15.5.  Governing  Law.  This  Plan and all  Award  Agreements  shall be
construed  in  accordance  with and  governed by the laws of the State of Kansas
(excluding its conflict of laws provisions).

         15.6.  Captions.  Captions  are  provided  herein  for  convenience  of
reference  only,  and  shall  not  serve  as  a  basis  for   interpretation  or
construction of this Plan.




                                      -20-