Document:

Exhibit 10.02

                          REVOLVING CREDIT NOTE

$20,000,000.00                                     St. Louis, Missouri
                                                   November 30, 2000

     FOR VALUE RECEIVED, on the last day of the Revolving Credit Period, the
undersigned, LACLEDE GAS COMPANY, a Missouri corporation ("Borrower"),
hereby promises to pay to the order of FIRSTAR BANK, N.A. ("Lender"), the
principal amount of Twenty Million Dollars ($20,000,000.00), or such lesser
principal amount as may then be outstanding under this Note. The aggregate
principal amount which Lender shall be committed to have outstanding under
this Note at any one time shall not exceed the amount of Lender's Revolving
Credit Commitment, which amount may be borrowed, paid, reborrowed and
repaid, in whole or in part, subject to the terms and conditions of this
Note.

     Borrower further promises to pay to the order of Lender interest on
each loan under this Note from the date such loan is made until the maturity
of such loan (whether by reason of acceleration or otherwise) at a rate per
annum equal to such of the following as Borrower, at its option, shall
select: (a) (i) so long as no Event of Default under this Note has occurred
and is continuing, the Floating Rate or (ii) so long as any Event of Default
under this Note has occurred and is continuing, Two (2%) over and above the
Floating Rate, which rate of interest shall fluctuate as and when the
Floating Rate shall change; or (b) (i) so long as no Event of Default under
this Note has occurred and is continuing, the LIBOR Rate or (ii) so long as
any Event of Default under this Note has occurred and is continuing, Two
Percent (2%) over and above the LIBOR Rate. Interest on Floating Rate Loans
shall be payable monthly in arrears on the last day of each month commencing
on the first such date after such Floating Rate Loan is made, and at the
maturity of this Note, whether by reason of acceleration or otherwise.
Interest on LIBOR Loans shall be payable on the last day of each Interest
Period unless the duration of such Interest Period exceeds three (3) months,
in which case such interest shall be payable at the end of the first three
(3) months of such Interest Period and on the last day of such Interest
Period, and at the maturity of this Note, whether by reason of acceleration
or otherwise. From and after the maturity of this Note, whether by reason of
acceleration or otherwise, interest shall accrue and be payable on demand on
the outstanding principal balance of each loan under this Note at a rate per
annum equal to Two Percent (2%) over and above the greater of (determined
daily as of the opening of business by Lender on each Business Day and
separately with respect to each loan which is accruing interest at a
different interest rate) (i) the interest rate otherwise applicable to such
loan or (ii) the Floating Rate. Interest on

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each loan (whether based on the Floating Rate, the LIBOR Rate or otherwise)
shall be computed on an actual day, 360-day year basis. All payments
received by Lender under or in respect of this Note shall be allocated among
the principal, interest, fees, collection costs and expenses and other
amounts due under this Note in such order and manner as Lender shall elect.

     Borrower may request a loan under this Note by providing Lender with
oral or written notice thereof no later than (a) 10:00 a.m. (St. Louis time)
on the Business Day of each Floating Rate Loan and (b) 10:00 a.m. (St. Louis
time) at least three (3) Eurodollar Business Days before each LIBOR Loan.
Each request that Lender make a loan under this Note (a "Borrowing Notice")
shall specify (a) the date of such loan, which shall be a Business Day in
the case of a Floating Rate Loan and a Eurodollar Business Day in the case
of a LIBOR Loan, (b) the aggregate principal amount of such loan, which must
be at least (i) $50,000.00 or any larger multiple of $10,000.00 if the loan
requested is a Floating Rate Loan or (ii) $2,500,000.00 or any larger
multiple of $500,000.00 if the loan requested is a LIBOR Loan, (c) whether
such loan is to be a Floating Rate Loan or a LIBOR Loan and (d) in the case
of a LIBOR Loan, the duration of the initial Interest Period applicable
thereto, subject to the provisions of the definition of Interest Period.
Subject to the terms and conditions of this Note, provided that Lender has
received the Borrowing Notice, Lender shall (unless an Event of Default
under this Note or an event which with the passage of time, the giving of
notice or both would constitute an Event of Default under this Note has
occurred and is continuing) make available to Borrower the loan proceeds in
immediately available funds not later than 2:00 p.m., St. Louis time, on the
Business Day specified in the Borrowing Notice by depositing the amount of
such loan into Borrower's Account No. 1000300663 at Lender. Each request by
Borrower for a loan under this Note shall constitute a representation and
warranty by Borrower that (a) after giving effect to such loan, the
aggregate principal amount of all loans outstanding under this Note shall
not exceed the amount of Lender's Revolving Credit Commitment, (b) no Event
of Default and no event which with the passage of time or the giving of
notice or both would constitute an Event of Default under this Note has
occurred and is continuing or will result from the making of the requested
loan and (c) all of the representations and warranties made by Borrower in
this Note are true and correct in all material respects on and as of the
date of such loan as if made on and as of the date of such loan.  Borrower
hereby authorizes Lender to rely on telephonic, telegraphic, telecopy, telex
or written instructions of any person identifying himself or herself as one
of the individuals listed on Schedule A attached hereto and incorporated
herein by reference (or any other individual from time to time authorized to
act on behalf of Borrower pursuant to a resolution adopted by the Board of
Directors of Borrower and delivered to Lender), and on any signature which
Lender in good faith believes to be genuine, and Borrower shall be bound
thereby in the same manner

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as if such person were actually authorized or such signature were genuine.
Borrower also hereby agrees to indemnify Lender and hold Lender harmless
from and against any and all claims, demands, damages, liabilities, losses,
costs and expenses (including, without limitation, reasonable attorneys'
fees and expenses) relating to or arising out of or in connection with the
acceptance of instructions for making loans or repayments under this Note.
Borrower may not revoke or rescind any request for a LIBOR Loan. In no event
may Borrower have more than five (5) different Interest Periods outstanding
at any one time.

     The duration of the initial Interest Period for each LIBOR Loan shall
be as specified in the applicable Borrowing Notice.  Borrower shall elect
the duration of each subsequent Interest Period applicable to such LIBOR
Loan and the interest rate to be applicable during such subsequent Interest
Period (and Borrower shall have the option (a) in the case of any Floating
Rate Loan, to elect that such loan become a LIBOR Loan and the Interest
Period to be applicable thereto and (b) in the case of any LIBOR Loan, to
elect that such loan become a Floating Rate Loan), by giving notice of such
election to Lender by 10:00 a.m. (St. Louis time) on the Business Day of, in
the case of the election of the Floating Rate, or by 10:00 a.m. (St. Louis
time) at least three (3) Eurodollar Business Days before, in the case of the
election of the LIBOR Rate, the end of the immediately preceding Interest
Period applicable to such loan, if any; provided, however, that
notwithstanding the foregoing, in addition to and without limiting the
rights and remedies of Lender under this Note or at law or in equity, so
long as any Event of Default or any event which with the passage of time or
the giving of notice or both would constitute an Event of Default under this
Note has occurred and is continuing, Borrower shall not be permitted to
renew any LIBOR Loan as a LIBOR Loan or to convert any Floating Rate Loan
into a LIBOR Loan. If Lender does not receive a notice of election for a
LIBOR Loan pursuant to this paragraph within the applicable time limits
specified therein, Borrower shall be deemed to have elected to pay such
LIBOR Loan in whole on the last day of the current Interest Period with
respect thereto and to reborrow the principal amount of such loan on such
date as a Floating Rate Loan.

     Lender shall record in its books and records the date, amount, type and
maturity of each loan made by it to Borrower under this Note and the date
and amount of each payment of principal and/or interest made by Borrower
with respect thereto; provided, however, that the obligation of Borrower to
repay each loan made by Lender to Borrower under this Note shall be absolute
and unconditional, notwithstanding any failure of Lender to make any such
recordation or any mistake by Lender in connection with any such
recordation.  The books and records of Lender showing the account between
Lender and Borrower shall be admissible in evidence in any action or
proceeding and shall constitute prima facie proof of the items therein set
forth.

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     Borrower may prepay all or any portion of any Floating Rate Loan under
this Note at any time prior to maturity without penalty or premium by paying
the principal amount to be prepaid. Borrower may, upon at least three (3)
Eurodollar Business Day's notice to Lender, prepay any LIBOR Loan under this
Note to which a given Interest Period applies, in whole, or in part in
amounts aggregating $2,500,000.00 or any larger multiple of $500,000.00, by
paying the principal amount to be paid together with all accrued and unpaid
interest thereon to and including the date of payment and any funding losses
and other amounts payable under the immediately following paragraph of this
Note; provided, however, that in no event may Borrower make a partial
prepayment of a LIBOR Loan which results in the total outstanding LIBOR
Loans with respect to which a given Interest Period applies being greater
than $0.00 but less than $2,500,000.00.

     Notwithstanding any provision contained in this Note to the contrary,
if (a) Borrower shall make any payment of principal with respect to any
LIBOR Loan on any day other than the last day of the Interest Period
applicable thereto, whether as a result of a voluntary prepayment, a
mandatory prepayment, maturity, acceleration or otherwise, (b) Borrower
fails to borrow or pay any LIBOR Loan after notice has been given by
Borrower to Lender in accordance with this Note or (c) any LIBOR Loan is
converted to a Floating Rate Loan pursuant to the requirements of this Note
on any day other than the last day of the Interest Period applicable
thereto, Borrower shall reimburse Lender on demand for any resulting losses
and expenses incurred by Lender, including, without limitation, any losses
incurred in obtaining, liquidating or employing deposits from third parties,
but excluding any loss of margin for the period after any such payment,
provided that Lender shall have delivered to Borrower a certificate as to
the amount of such losses and expenses, which certificate shall be
conclusive in the absence of manifest error.

     If with respect to any Interest Period (a) deposits in U.S. Dollars (in
the applicable amounts) are not being offered to Lender in the relevant
market for such Interest Period or (b) Lender determines in good faith that
the LIBOR Rate as determined pursuant to the definition thereof will not
adequately and fairly reflect the cost to Lender of maintaining or funding
the LIBOR Loans for such Interest Period, Lender shall forthwith give notice
thereof to Borrower, whereupon until Lender notifies Borrower that the
circumstances giving rise to such suspension no longer exist, (a) the LIBOR
Rate shall not be available to Borrower as an interest rate option on any
loans under this Note and (b) all of the then outstanding LIBOR Loans shall
automatically convert to Floating Rate Loans on the last day of the then
current Interest Period applicable to each such LIBOR Loan.  Interest
accrued on each such LIBOR Loan prior to any such conversion shall be due
and payable on the date of such conversion.

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     If, after the date of this Note, the adoption of any applicable law,
rule or regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental or regulatory
authority, central bank or comparable agency charged with the interpretation
or administration thereof, or compliance by Lender with any request or
directive (whether or not having the force of law) of any such governmental
or regulatory authority, central bank or comparable agency (each, a
"Regulatory Change") shall make it unlawful or impossible for Lender to
make, maintain or fund its LIBOR Loans to Borrower, Lender shall forthwith
give notice thereof to Borrower. Upon receipt of such notice, Borrower shall
convert all of the then outstanding LIBOR Loans on either (a) the last day
of the then current Interest Period applicable to such LIBOR Loan if Lender
may lawfully continue to maintain and fund such LIBOR Loan to such day or
(b) immediately if Lender may not lawfully continue to fund and maintain
such LIBOR Loan to such day, to a Floating Rate Loan in an equal principal
amount.  Interest accrued on each such LIBOR Loan prior to any such
conversion shall be due and payable on the date of such conversion together
with any funding losses and other amounts due under this Note.

     If (i) Regulation D or (ii) a Regulatory Change:

          (a)  shall subject Lender to any tax, duty or other charge with
     respect to any LIBOR Loan or its obligation make, maintain or fund
     any LIBOR Loan, or shall change the basis of taxation of payments
     to Lender of the principal of or interest on any LIBOR Loan or any
     other amounts due under this Note in respect of any LIBOR Loan or
     its obligation to make, maintain or fund any LIBOR Loan (except for
     taxes on or changes in the rate of tax on the overall net income of
     Lender); or

          (b)  shall impose, modify or deem applicable any reserve
     (including, without limitation, any reserve imposed by The Board of
     Governors of the Federal Reserve System), special deposit, capital
     or similar requirement against assets of, deposits with or for the
     account of, or credit extended or committed to be extended by,
     Lender or shall impose, modify or deem applicable any other
     condition affecting any LIBOR Loan or Lender's obligation to make,
     maintain or fund any LIBOR Loan;

and the result of any of the foregoing is to increase the cost to (or in the
case of Regulation D, to impose a cost on or increase the cost to) Lender of
making, maintaining or funding any LIBOR Loan, or to reduce the amount of
any sum received or receivable by Lender under this Note with respect
thereto, by an amount deemed by Lender to be material, and if Lender is not
otherwise fully compensated for such increase in cost or reduction in amount
received or receivable by virtue of the inclusion of the reference to "LIBOR
Reserve Percentage" in the calculation of the LIBOR Rate, then, within
fifteen (15) days after notice by Lender to Borrower together with a copy of

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the official notice of the applicable change in law (if applicable) and a
work sheet showing how the change in cost or reduction or increase in amount
received or receivable was calculated, Borrower shall pay Lender as
additional interest, such additional amount or amounts as will compensate
Lender for such increased cost or reduction. Lender will promptly notify
Borrower of any event of which it has knowledge, occurring after the date
hereof, which will entitle Lender to compensation pursuant to this
paragraph. The determination by Lender under this paragraph of the
additional amount or amounts to be paid to it hereunder shall be conclusive
in the absence of manifest error. In determining such amount or amounts,
Lender may use any reasonable averaging and attribution methods.

     If notice has been given by Lender or Borrower pursuant to this Note
requiring LIBOR Loans to be repaid, then, unless and until Lender notifies
Borrower that the circumstances giving rise to such repayment no longer
apply, all loans which would otherwise be made by Lender to Borrower as
LIBOR Loans shall be made instead as Floating Rate Loans.  Lender shall
promptly notify Borrower if and when the circumstances giving rise to such
repayment no longer apply.

     If, after the date of this Note, Lender shall have determined in good
faith that a Regulatory Change has occurred which has or will have the
effect of reducing the rate of return on Lender's capital in respect of its
obligations under this Note to a level below that which Lender could have
achieved but for such Regulatory Change (taking into consideration Lender's
policies with respect to capital adequacy), then from time to time Borrower
shall pay to Lender upon demand such additional amount or amounts as will
compensate Lender for such reduction.  All determinations made in good faith
by Lender of the additional amount or amounts required to compensate Lender
in respect of the foregoing shall be conclusive in the absence of manifest
error.  In determining such amount or amounts, Lender may use any reasonable
averaging and attribution methods.

     All indemnities set forth in this Note and all provisions set forth in
this Note relating to reimbursement to Lender of amounts sufficient to
protect the yield to Lender with respect to the loans shall survive the
payment of the loans and the termination of this Note.

     Notwithstanding any provision contained in this Note to the contrary,
Lender shall be entitled to fund and maintain its funding of the LIBOR Loans
in any manner it elects, it being understood, however, that for purposes of
this Note all determinations hereunder (including, without limitation, the
determination of Lender's funding losses and expenses) shall be made as if
Lender had actually funded and maintained each LIBOR Loan through the
purchase of deposits having a maturity corresponding to the maturity of the
applicable Interest Period relating to the applicable LIBOR Loan and bearing
an interest rate equal to the applicable LIBOR Base Rate.

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     From and including the first day of the Revolving Credit Period to but
excluding the last day of the Revolving Credit Period, Borrower shall pay
Lender a nonrefundable commitment fee on the unused portion of Lender's
Revolving Credit Commitment (determined by subtracting the aggregate
principal amount of outstanding loans made by Lender to Borrower under this
Note from the amount of Lender's Revolving Credit Commitment) at the rate of
One-Eighth of One Percent (1/8%) per annum.  Said commitment fee shall be
(a) calculated on a daily basis, (b) payable in arrears on the last day of
the Revolving Credit Period and (c) calculated on an actual day, 360-day
year basis.

     Borrower may, upon five (5) Business Days' prior written notice to
Lender, terminate entirely at any time, or reduce from time to time by an
amount of $5,000,000.00 or any larger multiple of $1,000,000.00, the unused
portion of Lender's Revolving Credit Commitment; provided, however, that (a)
at no time shall the amount of Lender's Revolving Credit Commitment be
reduced to a figure less than the aggregate principal amount of loans then
outstanding under this Note and (b) any such termination or reduction shall
be permanent and Borrower shall have no right to thereafter reinstate or
increase, as the case may be, the amount of Lender's Revolving Credit
Commitment.

     Borrower shall make each payment of principal of, and interest on, this
Note and all other amounts payable under this Note not later than 12:00 noon
(St. Louis time) on the date when due, in Federal or other immediately
available funds to Lender at One Firstar Plaza, 12th Floor, St. Louis,
Missouri 63101 or such other address as Lender may from time to time specify
in writing.  Any such payment received by Lender after 12:00 noon (St. Louis
time) shall be deemed to have been paid on the next succeeding Business Day.
Whenever any payment of principal of, or interest on, this Note shall be due
on a day which is not a Business Day, the date for payment thereof shall be
extended to the next succeeding Business Day.  If the date for any payment
of principal is extended by operation of law or otherwise, interest thereon,
at the then applicable rate, shall be payable for such extended time. The
acceptance by Lender of any payment of principal or interest due under this
Note after the date it is due shall not be held to establish a custom or
waive any rights of Lender to enforce prompt payment of any further payments
or otherwise.

     Borrower hereby represents and warrants to Lender that (a) all of the
proceeds of each loan evidenced by this Note will be used by Borrower solely
for the working capital and general corporate purposes of Borrower, (b)
Borrower is a corporation duly organized, validly existing and in good
standing under the laws of the State of Missouri, (c) the execution,
delivery and performance by Borrower of this Note (i) are within the
corporate powers of Borrower, (ii) have been duly authorized by all
necessary corporate action on the part of Borrower, (iii) require no
consent, approval or authorization of, action by or in

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respect of or filing or recording with any governmental or regulatory body,
instrumentality, authority, agency or official or any other person or entity
and (iv) do not conflict with, or result in a breach of the terms,
conditions or provisions of, or constitute a default under or result in any
violation of, the terms of the Articles of Incorporation or By-Laws of
Borrower, any applicable law, rule, regulation, order, writ, judgment or
decree of any court or governmental or regulatory body, instrumentality,
authority, agency or official or any agreement, document or instrument to
which Borrower is a party or by which Borrower or any of its property or
assets is bound or to which Borrower or any of its property or assets is
subject, (d) Borrower is not an "investment company" as that term is defined
in, and is not otherwise subject to regulation under, the Investment Company
Act of 1940, as amended, (e) Borrower is not a "holding company" as that
term is defined in, and is not otherwise subject to regulation under, the
Public Utility Holding Company Act of 1935, as amended, (f) this Note has
been duly executed and delivered by Borrower, constitutes the legal, valid
and binding obligation of Borrower and is enforceable against Borrower in
accordance with its terms, except as such enforceability may be limited by
(i) applicable bankruptcy, insolvency or similar laws affecting the
enforcement of creditors' rights generally and (ii) general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law) and (g) Borrower is not engaged principally,
or as one of its important activities, in the business of extending credit
for the purpose of purchasing or carrying margin stock (within the meaning
of Regulation U of The Board of Governors of the Federal Reserve System, as
amended) and no part of the proceeds of any loan will be used, whether
directly or indirectly, and whether immediately, incidentally or ultimately
(i) to purchase or carry margin stock or to extend credit to others for the
purpose of purchasing or carrying margin stock, or to refund or repay
indebtedness originally incurred for such purpose or (ii) for any purpose
which entails a violation of, or which is inconsistent with, the provisions
of any of the Regulations of The Board of Governors of the Federal Reserve
System, including, without limitation, Regulations U, T or X thereof, as
amended.

     Borrower hereby covenants and agrees to deliver to Lender:

          (a)  within one hundred (100) days after the end of each fiscal
     year of Borrower: (A) a consolidated balance sheet of Borrower and
     its Subsidiaries as of the end of such fiscal year and the related
     consolidated statements of income, retained earnings and cash
     flows for such fiscal year, setting forth in each case, in
     comparative form, the figures for the previous fiscal year, all such
     financial statements to be prepared in accordance with GAAP
     consistently applied and reported on by and accompanied by the
     unqualified opinion of independent certified public accountants
     selected by Borrower and reasonably acceptable to Lender;
     provided, however, that delivery to Lender of copies of the Annual

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     Report on Form 10-K of Borrower for such fiscal year filed with the
     Securities and Exchange Commission shall be deemed to satisfy
     the requirements of this clause (a);

          (b)  within fifty (50) days after the end of the first three (3)
     fiscal quarters of each fiscal year of Borrower, a consolidated
     balance sheet of Borrower and its Subsidiaries as of the end of
     such fiscal quarter and the related consolidated statements of
     income, retained earnings and cash flows for such fiscal quarter
     and for the portion of Borrower's fiscal year ended at the end of
     such fiscal quarter, setting forth in each case in comparative form,
     the figures for the corresponding fiscal quarter and the
     corresponding portion of Borrower's previous fiscal year, all in
     reasonable detail and satisfactory in form to Lender and certified
     (subject to normal year-end adjustments and absence of footnote
     disclosures) as to fairness of presentation, consistency and
     compliance with GAAP by the chief financial officer of Borrower;
     provided, however, that delivery to Lender of copies of the
     Quarterly Report on Form 10-Q of Borrower for such fiscal quarter
     filed with the Securities and Exchange Commission shall be
     deemed to satisfy the requirements of this clause (b);

          (c)  simultaneously with the delivery of each set of financial
     statements referred to in clauses (a) and (b) above, a certificate of
     an authorized officer of Borrower in the form attached hereto as
     Exhibit A and incorporated herein by reference (i) stating whether
     there exists on the date of such certificate any Event of Default or
     any event which with the passage of time or the giving of notice or
     both would constitute an Event of Default under this Note and, if
     any Event of Default or any event which with the passage of time
     or the giving of notice or both would constitute an Event of Default
     under this Note then exists, setting forth the details thereof and
     the action which Borrower is taking or proposes to take with
     respect thereto and (B) certifying that all of the representations and
     warranties made by Borrower in this Note are true and correct in all
     material respects on and as of the date of such certificate as if
     made on and as of the date of such certificate; and

          (d)  with reasonable promptness, such further information
     regarding the business, affairs and financial condition of Borrower
     as Lender may from time to time reasonably request.

     If any of the following events ("Events of Default") shall occur: (a)
Borrower shall fail to pay any principal of any loan under this Note as and
when the same shall become due and payable, whether by reason of demand,
maturity, acceleration or otherwise; (b) Borrower shall fail to pay any
interest, fees or other amounts (other than the principal of any loan under
this Note) due under this Note within five (5) Business Days after the date
the same shall first become due and payable, whether by reason of demand,
maturity, acceleration or otherwise; (c) any representation or warranty made
by Borrower in this Note or in any certificate, agreement, instrument

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or written statement furnished or made or delivered pursuant hereto or in
connection herewith, shall prove to have been untrue or incorrect in any
material respect when made or effected; (d) Borrower shall fail to perform
or observe any term, covenant or provision contained in this Note; (e)
Borrower shall (i) voluntarily commence any proceeding or file any petition
seeking relief under Title 11 of the United States Code or any other
Federal, state or foreign bankruptcy, insolvency, receivership, liquidation
or similar law, (ii) consent to the institution of, or fail to contravene in
a timely and appropriate manner, any such proceeding or the filing of any
such petition, (iii) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator or similar official of itself or of a
substantial part of its property or assets, (iv) file an answer admitting
the material allegations of a petition filed against itself in any such
proceeding, (v) make a general assignment for the benefit of creditors,
(vi) become unable, admit in writing its inability or fail generally to pay
its debts as they become due or (vii) take any corporate or other action for
the purpose of effecting any of the foregoing; (f) an involuntary proceeding
shall be commenced or an involuntary petition shall be filed in a court of
competent jurisdiction seeking (i) relief in respect of Borrower, or of a
substantial part of the property or assets of Borrower, under Title 11 of
the United States Code or any other Federal, state or foreign bankruptcy,
insolvency, receivership, liquidation or similar law, (ii) the appointment
of a receiver, trustee, custodian, sequestrator or similar official of
Borrower or of a substantial part of the property or assets of Borrower or
(iii) the winding-up or liquidation of Borrower, and such proceeding or
petition shall continue undismissed for sixty (60) consecutive days or an
order or decree approving or ordering any of the foregoing shall continue
unstayed and in effect for sixty (60) consecutive days; (g) Borrower shall
be declared by Lender to be in default under or in respect of (i) any other
present or future obligation to Lender, including, without limitation, any
other loan, line of credit, revolving credit, guaranty or letter of credit
reimbursement obligation, or (ii) any other present or future agreement
purporting to convey to Lender a security interest in, or a lien or
encumbrance upon, upon any property or assets of Borrower; (h) the
occurrence of any default or event of default under or within the meaning of
any agreement, document or instrument evidencing, securing, guaranteeing the
payment of or otherwise relating to any indebtedness of Borrower for
borrowed money (other than this Note) having an aggregate outstanding
principal balance in excess of $5,000,000.00 which is not cured or waived in
writing within any applicable cure or grace period; (i) Borrower shall have
a judgment in an amount in excess of $5,000,000.00 entered against it by a
court having jurisdiction in the premises and such judgment shall not be
appealed in good faith (and execution of such judgment stayed during such
appeal) or satisfied by Borrower within thirty (30) days after the entry of
such judgment; or (j) any "Event of Default" (as defined therein) shall
occur under or within the meaning of that certain Loan Agreement dated as of
November 30, 2000, by and among Borrower, the banks from time to time party
thereto and Firstar Bank, N.A., as agent for such banks, as the

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same may from time to time be amended, modified, extended, renewed or
restated; then, and in each such event (other than an event described in
clauses (e) or (f) above), Lender may, at its option, declare that its
obligation to make any additional loans under this Note has terminated,
whereupon such obligation of Lender shall be immediately and forthwith
terminated, and Lender may further declare the entire outstanding principal
balance of this Note, all accrued and unpaid interest thereon and all fees
and other amounts owed under this Note to be immediately due and payable,
whereupon all of such outstanding principal balance, accrued and unpaid
interest, fees and other amounts shall become and be immediately due and
payable, without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by Borrower, and Lender may
exercise any and all other rights and remedies which it may have at law or
in equity; provided, however, that upon the occurrence of any event
described in clauses (e) or (f) above, Lender's obligation to make any
additional loans under this Note shall automatically terminate and the
entire outstanding principal balance of this Note, all accrued and unpaid
interest thereon and all fees and other amounts owed under this Note shall
automatically become immediately due and payable, without presentment,
demand, protest or notice of any kind, all of which are hereby expressly
waived by Borrower, and Lender may exercise any and all other rights and
remedies which it may have under at law or in equity.

     In the event that any payment of any principal, interest or other
amount due under this Note is not paid when due, whether by reason of
demand, maturity, acceleration or otherwise, and this Note is placed in the
hands of an attorney or attorneys for collection, or if this Note is placed
in the hands of an attorney or attorneys for representation of Lender in
connection with bankruptcy or insolvency proceedings relating to or
affecting this Note, Borrower hereby promises to pay to the order of Lender,
in addition to all other amounts otherwise due on, under or in respect of
this Note, the costs and expenses of such collection, foreclosure and
representation, including, without limitation, reasonable attorneys' fees
and expenses (whether or not litigation shall be commenced in aid thereof).

     Borrower hereby agrees to pay or reimburse Lender upon demand for (a)
all out-of-pocket costs and expenses including, without limitation,
reasonable attorneys' fees and expenses, incurred by Lender in connection
with the preparation, negotiation, execution, administration and/or
enforcement of this Note and any and all other agreements, documents and
instruments securing, guaranteeing the payment of and/or otherwise relating
to this Note (collectively, the "Loan Documents"), (b) all recording, filing
and search fees, costs and expenses incurred by Lender in connection with
this Note and the other Loan Documents and (c) all out-of-pocket costs and
expenses, including, without limitation, reasonable attorneys' fees and
expenses, incurred by Lender in connection with (i) the preparation of any
waiver or consent under this Note or any of the other Loan Documents, (ii)

                            Page 91
<PAGE>
<PAGE>
any amendment, modification, extension, renewal or restatement of this Note
or any of the other Loan Documents or (iii) any default or event of default
under this Note or any of the other Loan Documents. Borrower further agrees
to pay or reimburse Lender for any stamp or other taxes which may be payable
with respect to the execution, delivery, recording and/or filing of this
Note or any of the other Loan Documents.  All of the obligations of Borrower
under this paragraph shall survive the payment and termination of this Note.

     This Note may not be changed, nor may any term, condition or Event of
Default be waived, modified or discharged orally but only by an agreement in
writing, signed by Lender.  No failure or delay by Lender in exercising any
right, remedy, power or privilege under this Note shall operate as a waiver
thereof; nor shall any single or partial exercise thereof preclude any other
or further exercise thereof or the exercise of any other right, remedy,
power or privilege.

     Except as otherwise specified in this Note, each notice, request,
demand, consent and/or other communication under this Note shall be in
writing and delivered in person or sent by facsimile, recognized overnight
courier or registered or certified mail, return receipt requested and
postage prepaid, if to Borrower to 720 Olive Street, Suite 1525, St. Louis,
Missouri 63101, Attention: Treasurer, Facsimile No. (314) 421-1979, or if to
Lender at One Firstar Plaza, 12th Floor, St. Louis, Missouri 63101,
Attention: Large Corporate Department, Facsimile No.: (314) 418-2203, or at
such other address or facsimile number as either party may from time to time
designate as its address or facsimile number for communications hereunder by
notice so given.  Such notices shall be deemed effective on the day on which
delivered or sent if delivered in person or sent by facsimile (with
answerback confirmation received), on the first (1st) Business Day after the
day on which sent if sent by recognized overnight courier or on the third
(3rd) Business Day after the day on which mailed, if sent by registered or
certified mail.

     All parties hereto expressly waive presentment, demand for payment,
notice of dishonor, protest and notice of protest.

     For purposes of this Note, the following terms shall have the following
meanings:

          Business Day shall mean any day except a Saturday, Sunday or
     legal holiday observed by Lender or by commercial banks in St.
     Louis, Missouri.

          Fed Funds Base Rate shall mean, as of the date of any
     determination thereof, the rate per annum (rounded upwards, if
     necessary, to the next higher 1/100 of 1%) for overnight Federal
     Funds transactions which appears on the Telerate Page 5 as of
     9:00 a.m. (St. Louis time) on such date.

                            Page 92
<PAGE>
<PAGE>
          Fed Funds Rate shall mean a rate per annum equal to One-
    Quarter of One Percent (1/4%) over and above the Fed Funds Base
    Rate, which Fed Funds Rate shall fluctuate as and when said Fed
    Funds Base Rate changes.

          Eurodollar Business Day shall mean any Business Day on which
    commercial banks are open for international business (including
    dealings in dollar deposits) in London.

          Floating Rate shall mean a rate per annum equal to (a) the Fed
     Funds Rate if such rate is available or (b) if the Fed Funds Rate is
     not available, the Prime Rate. The Floating Rate shall fluctuate as
     and when the Fed Funds Rate or the Prime Rate, as applicable,
     changes.

          Floating Rate Loan shall mean any loan under this Note bearing
     interest based on the Floating Rate.

          GAAP shall mean, at any time, generally accepted accounting
     principles at such time in the United States.

          Interest Period shall mean with respect to each LIBOR Loan:

          (a)  initially, the period commencing on the date of such loan
     and ending 1, 2, 3 or 6 months thereafter (or such other period
     agreed upon in writing by Borrower and Lender), as Borrower may
     elect in the applicable Borrowing Notice; and

          (b)  thereafter, each period commencing on the last day of the
     immediately preceding Interest Period applicable to such loan and
     ending 1, 2, 3 or 6 months thereafter (or such other period agreed
     upon in writing by Borrower and Lender), as Borrower may elect
     pursuant to the terms of this Note;

     provided that:

          (c)  subject to clauses (d) and (e) below, any Interest Period
     which would otherwise end on a day which is not a Eurodollar
     Business Day shall be extended to the next succeeding Eurodollar
     Business Day unless such Eurodollar Business Day falls in another
     calendar month, in which case such Interest Period shall end
     on the immediately preceding Eurodollar Business Day;

          (d)  subject to clause (e) below, any Interest Period which
     begins on the last Eurodollar Business Day of a calendar month (or
     on a day for which there is no numerically corresponding day in the
     calendar month at the end of such Interest Period) shall end on the
     last Eurodollar Business Day of a calendar month; and

          (e)  no Interest Period may extend beyond the last day of the
     Revolving Credit Period.

                            Page 93
<PAGE>
<PAGE>
     LIBOR Base Rate shall mean, with respect to the applicable Interest
Period, (a) the LIBOR Index Rate for such Interest Period, if such rate is
available or (b) if the LIBOR Index Rate is not available, the average
(rounded upward, if necessary, to the next higher 1/10,000 of 1%) of the
respective rates per annum of interest at which deposits in U.S. Dollars are
offered to Lender in the London interbank market by two (2) Eurodollar
dealers of recognized standing, selected by Lender in its sole discretion,
at or about 11:00 a.m. (London time) on the date two (2) Eurodollar Business
Days before the first day of such Interest Period, for delivery on the first
day of the applicable Interest Period for a number of days comparable to the
number of days in such Interest Period and in an amount approximately equal
to the principal amount of the LIBOR Loan to which such Interest Period is
to apply.

     LIBOR Index Rate shall mean, with respect to the applicable Interest
Period, a rate per annum (rounded upwards, if necessary, to the next higher
1/10,000 of 1%) equal to the British Bankers' Association interest
settlement rates for U.S. Dollar deposits for such Interest Period as of
11:00 a.m. (London time) on the day two (2) Eurodollar Business Days before
the first day of such Interest Period as published by Bloomberg Financial
Services, Dow Jones Market Service, Telerate, Reuters or any other service
from time to time used by Lender.

     LIBOR Loan shall mean any loan under this Note bearing interest based
on the LIBOR Rate.

     LIBOR Rate shall mean (a) the quotient of the (i) LIBOR Base Rate
divided by (ii) one minus the applicable LIBOR Reserve Percentage plus (b)
One-Quarter of One Percent (1/4%) per annum.  The LIBOR Rate shall be
adjusted automatically on and as of the effective date of any change in the
LIBOR Reserve Percentage.

     LIBOR Reserve Percentage shall mean for any day that percentage
(expressed as a decimal) which is in effect on such day, as prescribed by
The Board of Governors of the Federal Reserve System (or any successor), for
determining the maximum reserve requirement (including, without limitation,
any basic, supplemental, emergency, special or marginal reserves) with
respect to "Eurocurrency liabilities" as defined in Regulation D or with
respect to any other category of liabilities which includes deposits by
reference to which the interest rate on LIBOR Loans is determined, whether
or not Lender has any Eurocurrency liabilities subject to such reserve
requirement at such time. LIBOR Loans shall be deemed to constitute
Eurocurrency liabilities and as such shall be deemed subject to reserve
requirements without the benefit of any credits for proration, exceptions or
offsets which may be available from time to time to Lender.  The LIBOR Rate
shall be adjusted automatically on and as of the effective date of any
change in the LIBOR Reserve Percentage.

                            Page 94
<PAGE>
<PAGE>
     Prime Rate shall mean the interest rate announced from time to time by
Lender as its "prime rate" (which rate shall fluctuate as and when said
prime rate shall change).  Borrower acknowledges that such "prime rate" is a
reference rate and does not necessarily represent the lowest or best rate
offered by Lender to its customers.

     Regulation D shall mean Regulation D of The Board of Governors of the
Federal Reserve System, as amended.

     Revolving Credit Commitment shall mean, subject to any reduction of the
Revolving Credit Commitment by Borrower pursuant to the terms of this Note,
$20,000,000.00.

     Revolving Credit Period shall mean the period commencing December 20,
2000, and ending March 31, 2001.

     Subsidiary shall mean any corporation or other entity of which more
than Fifty Percent (50%) of the issued and outstanding capital stock or
other equity interests entitled to vote for the election of directors or
persons performing similar functions (other than by reason of default in the
payment of dividends or other distributions) is at the time owned directly
or indirectly by Borrower or any Subsidiary.

     Telerate Page 5 shall mean the display designated as "Page 5" on the
Telerate Service (or such other page as may replace Page 5 on that service
or such other service as may be used by Lender for the purpose of
determining the rate per annum for overnight Federal Funds transactions).

     BORROWER HEREBY IRREVOCABLY (A) SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF ANY MISSOURI STATE COURT OR ANY UNITED STATES OF AMERICA
COURT SITTING IN THE EASTERN DISTRICT OF MISSOURI, EASTERN DIVISION, AS
LENDER MAY ELECT, IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS NOTE, (B) AGREES THAT ALL CLAIMS IN RESPECT TO ANY SUCH
SUIT, ACTION OR PROCEEDING MAY BE HELD AND DETERMINED IN ANY OF SUCH COURTS,
(C) WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
BORROWER MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT, (D) WAIVES ANY CLAIM THAT
SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM AND (E) WAIVES ALL RIGHTS OF ANY OTHER JURISDICTION
WHICH BORROWER MAY NOW OR HEREAFTER HAVE BY REASON OF ITS PRESENT OR
SUBSEQUENT DOMICILES.  BORROWER (AND BY ITS ACCEPTANCE HEREOF, LENDER)
IRREVOCABLY WAIVE THE RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY ACTION IN
WHICH BORROWER AND LENDER ARE PARTIES RELATING TO OR ARISING OUT OF OR IN
CONNECTION WITH THIS NOTE.

                            Page 95
<PAGE>
<PAGE>
     ORAL AGREEMENTS OR COMMITMENTS TO LOAN MONEY, EXTEND CREDIT OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT, INCLUDING PROMISES TO EXTEND OR
RENEW SUCH DEBT, ARE NOT ENFORCEABLE. TO PROTECT BORROWER AND LENDER FROM
MISUNDERSTANDING OR DISAPPOINTMENT, ANY AGREEMENTS BORROWER AND LENDER REACH
COVERING SUCH MATTERS ARE CONTAINED IN THIS NOTE, WHICH NOTE IS THE COMPLETE
AND EXCLUSIVE STATEMENT OF THE AGREEMENTS BETWEEN BORROWER AND LENDER,
EXCEPT AS BORROWER AND LENDER MAY LATER AGREE IN WRITING TO MODIFY THEM.

     This Note shall be governed by and construed in accordance with the
substantive laws of the State of Missouri (without reference to conflict of
law principles).

                                  LACLEDE GAS COMPANY

                                  By_______________________________
                                  Title:  Treasurer & Assistant Secretary

Accepted and Agreed to:

Firstar Bank, N.A.

By:_________________________________

Title: _____________________________

                            Page 96
<PAGE>
<PAGE>
                                SCHEDULE A

                           Authorized Individuals

                             Douglas H. Yaeger
                             Gerald T. McNeive
                             Ronald L. Krutzman

                                 Page 97Exhibit 10.8
                                                                ------------

              TOUCHSTONE APPLIED SCIENCE ASSOCIATES, INC.

                       2000 STOCK INCENTIVE PLAN
                       -------------------------

          1.   Purpose.  The purpose of the 2000 Stock Incentive
               -------
Plan (the "Plan") is to aid the Company in attracting, retaining
and motivating officers, key employees, consultants and directors
by providing them with incentives for making significant contri-
butions to the growth and profitability of the Company.  The Plan
is designed to accomplish this goal by offering stock options and
other incentive awards, thereby providing Participants with a
proprietary interest in the growth, profitability and success of
the Company.

          2.   Definitions.
               -----------

          (a)  Award.  Any form of stock option, stock appreciation
               -----
right, stock or cash award granted under the Plan, whether granted
singly, in combination or in tandem, pursuant to such terms,
conditions and limitations as the Committee may establish in order
to fulfill the objectives, and in accordance with the terms and
conditions, of the Plan.

          (b)  Award Agreement.  An agreement between the Company
               ---------------
and a Participant setting forth the terms, conditions and
limitations applicable to an Award.

          (c)  Board.  The Board of Directors of Touchstone Applied
               -----
Science Associates, Inc.

          (d)  Code.  The Internal Revenue Code of 1986, as amended
               ----
from time to time.

          (e)  Committee.  Such committee of the Board as may be
               ---------
designated from time to time by the Board to administer the Plan or
any subplan under the Plan.  Any such committee shall consist of
not less than two members of the Board who are not officers or
employees of the Company.

          (f)  Company.  Touchstone Applied Science Associates,
               -------
Inc. and its direct and indirect subsidiaries.

          (g)  Exchange Act.  The Securities Exchange Act of 1934,
               ------------
as amended.

          (h)  1991 Plan.  The Company's Amended and Restated 1991
               ---------
Stock Option Incentive Plan, as amended.

          (i)  Fair Market Value.  If the Stock is listed on the
               -----------------
New York Stock Exchange (or other national exchange), the average
of the high and low sale prices as reported on the New York Stock
Exchange (or such other exchange) or, if the Stock is not listed on
a national exchange, the closing price of the Stock in the over-the-
counter market, as reported by the National Association of
Securities Dealers through its Automated Quotation System or
otherwise, in either case for the date in question, provided that
                                                    --------
if no transactions in the Stock are reported for that date, the
average of the high and low sale prices or the closing price, as
appropriate, as so reported for the preceding day on which
transactions in the Stock were effected.

          (j)  Participant.  An officer, director or employee of
               -----------
the Company to whom an Award has been granted.

          (k)  Touchstone.  Touchstone Applied Science Associates, Inc.
               ----------

          (l)  Stock.  Authorized and issued or unissued shares of
               -----
Common Stock, par value $.0001 per share, of Touchstone or any
security issued in exchange or substitution therefor.

          3.   Eligibility.  Only officers, key employees,
               -----------
consultants and directors who are also officers or employees of the
Company or who have been designated by the Board as eligible to
receive Awards are eligible to receive Awards under the Plan.  Key
employees are those employees who hold positions of responsibility
or whose performance, in the judgment of the Committee, can have a
significant effect on the growth and profitability of the Company.

          4.   Stock Available for Awards.  Subject to Section 14
               --------------------------
hereof, a total of 300,000 shares of Stock, plus such additional
number of shares as becomes available under the 1991 Plan by reason
of the forfeiture of awards granted thereunder or their
cancellation or expiration without exercise shall be available for
issuance pursuant to Awards granted under the Plan, provided,
                                                    --------
however, that the aggregate number of shares of Stock subject to
-------
options and upon which stock appreciation rights are based pursuant
to Awards hereunder shall not exceed 150,000 for any Participant
during any three consecutive fiscal-year periods beginning on or
after November 1, 2000.  From time to time, the Board and
appropriate officers of Touchstone shall file such documents with
governmental authorities and, if the Stock is listed on the New
York Stock Exchange (or other national exchange), with such stock
exchange, as are required to make shares of Stock available for
issuance pursuant to Awards and publicly tradeable.  Shares of
Stock related to Awards, or portions of Awards, that are forfeited,
canceled or terminated, expire unexercised, are surrendered in
exchange for other Awards, or are settled in cash in lieu of Stock
or in any other manner such that all or some of the shares of Stock
covered by an Award are not and will not be issued to a Par-
ticipant, shall be restored to the total number of shares of Stock
available for issuance pursuant to Awards, unless such Awards, or
portions thereof, are canceled in connection with an exchange for
options issued at a lower price or the holders of a majority of the
shares of Stock voting on such matter approve such exchange.

          5.   Administration.
               --------------

          (a)  General.  The Plan shall be administered by the
               -------
Committee, which shall have full and exclusive power to (i) autho-
rize and grant Awards to persons eligible to receive Awards under
the Plan; (ii) establish the terms, conditions and limitations of
each Award or class of Awards, including terms, conditions and
limitations governing the extent (if any) to which the Award may be
assigned or transferred; provided that, Awards shall not be
                         --------
assignable or transferable to any person who is not at the time of
transfer a member of the Participant's immediate family or to any
entity that is not established for the benefit of, or wholly-owned
by, the Participant or a member or members of the Participant's
immediate family; (iii) construe and interpret the Plan and all
Award Agreements; (iv) grant waivers of Plan restrictions; (v)
adopt and amend such rules, procedures, regulations and guidelines
for carrying out the Plan as it may deem necessary or desirable;
and (vi) take any other action necessary for the proper operation
and administration of the Plan, all of which powers shall be
exercised in a manner consistent with the objectives, and in
accordance with the terms and conditions, of the Plan.  The
Committee's powers shall include, but shall not be limited to, the
authority to (A) adopt such subplans as may be necessary or appro-
priate (1) to provide for the authorization and granting of Awards
to promote specific goals or for the benefit of specific classes of
Participants, (2) to provide for grants of Awards by means of for-
mulae, standardized criteria or otherwise, or (3) for any other
purposes as are consistent with the objectives of the Plan, and to
segregate shares of Stock available for issuance under the Plan
generally as being available specifically for the purposes of one
or more subplans, and (B) subject to Section 11 hereof, adopt
modifications, amendments, rules, procedures, regulations, subplans
and the like as may be necessary or appropriate (1) to comply with
provisions of the laws of other countries in which the Company may
operate in order to assure the effectiveness of Awards granted
under the Plan and to enable Participants employed in such other
countries to receive advantages and benefits under the Plan and
such laws, (2) to effect the continuation, acceleration or
modification of Awards under certain circumstances, including
events which might constitute a Change in Control (as set forth in
Section 7 hereof) of Touchstone, or (3) for any other purposes as
are consistent with the objectives of the Plan.  All such
modifications, amendments, rules, procedures, regulations and
subplans shall be deemed to be a part of the Plan as if stated
herein.

          (b)  Committee Actions.  All actions of the Committee
               -----------------
with respect to the Plan shall require the vote of a majority of
its members or, if there are only two members, by the vote of both.
Any action of the Committee may be taken by a written instrument
signed by a majority (or both members) of the Committee, and any
action so taken shall be as effective as if it had been taken by a
vote at a meeting.  All determinations and acts of the Committee as
to any matters concerning the Plan, including interpretations or
constructions of the Plan and any Award Agreement, shall be
conclusive and binding on all Participants and on any parties
validly claiming through any Participants.

          6.   Delegation of Authority.  The Committee may delegate
               -----------------------
to the Chief Executive Officer of Touchstone and to other executive
officers of the Company certain of its administrative duties under
the Plan, pursuant to such conditions or limitations as the Commit-
tee may establish, except that the Committee may not delegate its
authority with respect to (a) the selection of eligible persons as
Participants in the Plan, (b) the granting or timing of Awards,
(c) establishing the amount, terms and conditions of any such
Award, (d) interpreting the Plan, any subplan or any Award
Agreement or (e) amending or otherwise modifying the terms or
provisions of the Plan, any subplan or any Award Agreement.

          7.   Awards.  Subject to Section 4, the Committee shall
               ------
determine the types and timing of Awards to be made to each
Participant and shall set forth in the related Award Agreement the
terms, conditions and limitations applicable to each Award.  Awards
may include, but are not limited to, those listed below in this
Section 7.  Awards may be granted singly, in combination or in
tandem, or in substitution for Awards previously granted under the
Plan.  Awards may also be made in combination or in tandem with, in
substitution for, or as alternatives to, grants or rights under any
other benefit plan of the Company, including any such plan of any
entity acquired by, or merged with or into, the Company.  Any such
Awards made in substitution for, or as alternatives to, grants or
rights under a benefit plan of an entity acquired by, or merged
with or into, the Company in order to give effect to the
transaction shall be deemed to be issued in accordance with the
terms and conditions of the Plan.  Awards shall be effected through
Award Agreements executed by the Company in such forms as are ap-
proved by the Committee from time to time.

          All or part of any Award may be subject to conditions
established by the Committee, and set forth in the Award Agreement,
which conditions may include, without limitation, achievement of
specific business objectives, increases in specified indices,
attainment of growth rates and other measurements of Company
performance.

          The Committee may determine to make any or all of the
following Awards:

          (a)  Stock options.  A grant of a right to purchase a
               -------------
specified number of shares of Stock at an exercise price not less
than 100% of the Fair Market Value of the Stock on the date of
grant, during a specified period, all as determined by the
Committee.  Without limitation, a stock option may be in the form
of (i) an incentive stock option which, in addition to being
subject to such terms, conditions and limitations as are es-
tablished by the Committee, complies with Section 422 of the Code,
provided that, no more than 300,000 shares of Stock in the
aggregate may be subject to options granted hereunder as incentive
stock options, or (ii) a non-qualified stock option subject to such
terms, conditions and limitations as are established by the Commit-
tee.

          (b)  Stock Appreciation Rights.  A right to receive a
               -------------------------
payment, in cash or Stock, equal to the excess of the Fair Market
Value (or other specified valuation) of a specified number of
shares of Stock on the date the stock appreciation right ("SAR") is
exercised over the Fair Market Value (or other specified valuation)
on the date of grant of the SAR, except that if a SAR is granted in
tandem with a stock option, valuations on the grant and exercise
dates shall be no less than as determined on the basis of Fair
Market Value.  The eventual amount, vesting or issuance of an SAR
may be subject to future service, performance standards and such
other restrictions and conditions as may be established by the
Committee.

          (c)  Stock Awards.  An Award made in Stock or denominated
               ------------
in units of Stock.  The eventual amount, vesting or issuance of a
Stock Award may be subject to future service, performance standards
and such other restrictions and conditions as may be established by
the Committee.  Stock Awards may be based on Fair Market Value or
another specified valuation.

          (d)  Cash Awards.  An Award made or denominated in cash.
               -----------
The eventual amount of a cash Award may be subject to future
service, performance standards and such other restrictions and
conditions as may be established by the Committee.

          Dividend equivalency rights, on a current or deferred
basis, may be extended to and be made part of any Award denominated
in whole or in part in Stock or units of Stock, subject to such
terms, conditions and restrictions as the Committee may establish.

          Notwithstanding the provisions of the paragraphs of this
Section 7, Awards may be subject to acceleration of exercisability
or vesting in the event of a Change in Control of Touchstone (i) as
set forth in agreements between Touchstone and certain of its
officers, directors and key employees which provide for certain
protections and benefits in the event of a change in control (as
defined in such agreements) or (ii) as may otherwise be determined
by the Committee under and in accordance with the terms and
conditions of the Plan.  "Change in Control" for purposes of the
Plan shall mean a change in control of Touchstone under such
circumstances as shall be specified by (x) the Committee or (y)
where applicable to any Awards granted under the Plan by such
agreements between Touchstone and a Participant as (1) may have
been entered into prior to the effective date of the Plan or (2)
shall be entered into after the effective date of the Plan with, to
the extent such an agreement is applicable to an Award, the ap-
proval of the Committee.  A "Change in Control" may, without
limitation, be deemed to have occurred if (A) any "person" or
"group" of persons (as the terms "person" and "group" are used in
Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as
amended, and the rules thereunder) is or becomes the beneficial
owner, directly or indirectly, of securities of Touchstone
representing 30% or more of the combined voting power of the then
outstanding securities of Touchstone, or (B) a change of more than
25% in the composition of the Board occurs within a two-year
period, unless such change in composition was approved in advance
by at least two-thirds of the previous directors.

          8.   Payment under Awards.  Payment by the Company
               --------------------
pursuant to Awards may be made in the form of cash, Stock or
combinations thereof and may be subject to such restrictions as the
Committee determines, including, in the case of Stock, restrictions
on transfer and forfeiture provisions.  Stock subject to transfer
restrictions or forfeiture provisions is referred to herein as
"Restricted Stock".  The Committee may provide for payments to be
deferred, such future payments to be made in installments or by
lump-sum payment.  The Committee may permit selected Participants
to elect to defer payments of some or all types of Awards in
accordance with procedures established by the Committee to assure
that such deferrals comply with applicable requirements of the
Code.

          The Committee may also establish rules and procedures for
the crediting of interest on deferred cash payments and of dividend
equivalencies on deferred payments to be made in Stock or units of
Stock.

          At the discretion of the Committee, a Participant may be
offered an election to substitute an Award for another Award or
Awards, or for awards made under any other benefit plan of the
Company, of the same or different type.

          9.   Stock Option Exercise.  The price at which shares of
               ---------------------
Stock may be purchased upon exercise of a stock option shall be
paid in full, or arrangements acceptable to the Committee for
payment in full shall be made, at the time of the exercise, in cash
or, if permitted by the Committee, by (a) tendering Stock or
surrendering another Award, including Restricted Stock, or an
option or other award granted under another benefit plan of the
Company, in each case valued at, or on the basis of, Fair Market
Value on the date of exercise, (b) delivery of a promissory note
issued by a Participant to the Company pursuant to the terms and
conditions as determined by the Committee, or (c) any other means
acceptable to the Committee.  The Committee shall determine
acceptable methods for tendering Stock or surrendering other Awards
or grants and may impose such conditions on the use of Stock or
other Awards or grants to exercise a stock option as it deems
appropriate.  If shares of Restricted Stock are tendered as consid-
eration for the exercise of a stock option, the Committee may
require that the number of shares issued upon exercise of the stock
option equal to the number of shares of Restricted Stock used as
consideration therefor be subject to the same restrictions as the
Restricted Stock so surrendered and any other restrictions as may
be imposed by the Committee.  The Committee may also permit
Participants to exercise stock options and simultaneously sell some
or all of the shares of Stock so acquired pursuant to a brokerage
or similar arrangement which provides for the payment of the
exercise price substantially concurrently with the delivery of such
shares.

          10.  Tax Withholding.  The Company shall have the right
               ---------------
to deduct applicable taxes from any Award payment or shares of
Stock receivable under an Award and to withhold an appropriate
number of shares of Stock for payment of taxes required by law or
to take such other action as may be necessary in the opinion of the
Company to satisfy all tax withholding obligations.  In addition,
the Committee may permit Participants to elect to (a) have the
Company deduct applicable taxes resulting from any Award payment
to, or exercise of an Award by, such Participant by withholding an
appropriate number of shares of Stock for payment of tax obli-
gations or (b) tender to the Company for the purpose of satisfying
tax payment obligations other Stock held by the Participant.  If
the Company withholds shares of Stock to satisfy tax payment
obligations, the value of such Stock in general shall be its Fair
Market Value on the date of the Award payment or the date of
exercise of an Award, as the case may be.  If a Participant tenders
shares of Stock pursuant to clause (b) above to satisfy tax payment
obligations, the value of such Stock shall be the Fair Market Value
on the date the Participant tenders such Stock to the Company.

          11.  Amendment, Modification, Suspension or Termination
               --------------------------------------------------
of the Plan.  The Board may amend, modify, suspend or terminate the
-----------
Plan, or adopt subplans under the Plan, (a) for the purpose of
meeting or addressing any changes in any applicable tax, securities
or other laws, rules or regulations, or (b) for any other purpose
permitted by law.  Subject to changes in law or other legal
requirements that would permit otherwise, the Plan may not be
amended without the approval of the stockholders to (i) increase
materially the aggregate number of shares of Stock that may be
issued under the Plan (except for any increase resulting from
adjustments pursuant to Section 14 hereof), (ii) increase the
aggregate number of shares that may be issued to any individual
Participant pursuant to options, or which are used as a basis of
SARs granted under the Plan, or (iii) modify materially the
requirements as to eligibility for participation in the Plan.
Further, the Plan may not be amended in a manner that would alter,
impair, amend, modify, suspend or terminate any rights of a Parti-
cipant or obligation of the Company under any Awards theretofore
granted, in any manner adverse to any such affected Participant,
without the consent of such affected Participant.

          12.  Termination of Employment.  Except as otherwise set
               -------------------------
forth in an applicable Award Agreement or determined by the
Committee, or as otherwise provided in paragraph (a) or (b) of this
Section 12, if a Participant's employment by or association with
the Company terminates, all unexercised, deferred and unpaid Awards
(or portions of Awards) shall be canceled immediately.

          (a)  Retirement, Resignation or Other Termination.  If a
               --------------------------------------------
Participant's employment or association with the Company terminates
by reason of the Participant's retirement or resignation, or for
any other reason (other than the Participant's death or
disability), the Committee may, under circumstances in which it
deems an exception from the provisions of the first sentence of
this Section 12 to be appropriate to carry out the objectives of
the Plan and to be consistent with the best interests of the
Company, permit Awards to continue in effect and be exercisable or
payable beyond the date of such termination, up until the
expiration date specified in the applicable Award Agreement and
otherwise in accordance with the terms of the applicable Award
Agreement, and may accelerate the exercisability or vesting of any
Award, in either case, in whole or in part.

          (b)  Death or Disability.
               -------------------

                   (i)     In the event of a Participant's death, the
  Participant's estate or beneficiaries shall have a period, not
  extending beyond the expiration date specified in the
  applicable Award Agreement (except as otherwise provided in
  such Award Agreement), within which to exercise any
  outstanding Award held by the Participant, as may be specified
  in the Award Agreement or as may otherwise be determined by
  the Committee.  All rights in respect of any such outstanding
  Awards shall pass in the following order: (A) to beneficiaries
  so designated in writing by the Participant; or if none, then
  (B) to the legal representative of the Participant; or if
  none, then (C) to the persons entitled thereto as determined
  by a court of competent jurisdiction.  Awards so passing shall
  be exercised or paid at such times and in such manner as if
  the Participant were living, except as otherwise provided in
  the applicable Award Agreement or as determined by the
  Committee.

                  (ii)     If a Participant ceases to be employed by or
  associated with the Company because the Participant is deemed
  by the Company to be disabled, outstanding Awards held by the
  Participant may be paid to or exercised by the Participant, if
  legally competent, or by a committee or other legally
  designated guardian or representative if the Participant is
  legally incompetent, for a period, not extending beyond the
  expiration date specified in the applicable Award Agreement
  (except as otherwise provided in such Award Agreement),
  following the termination of his or her employment by or
  association with the Company, as may be specified in the Award
  Agreement or as may otherwise be determined by the Committee.

                 (iii)     After the death or disability of a Participant,
  the Committee may at any time (A) terminate restrictions with
  respect to Awards held by the Participant, (B) accelerate the
  vesting or exercisability of any or all installments and
  rights of the Participant in respect of Awards held by the
  Participant, and (C) instruct the Company to pay the total of
  any accelerated payments under the Awards in a lump sum to the
  Participant or to the Participant's estate, beneficiaries or
  representatives, notwithstanding that, in the absence of such
  termination of restrictions or acceleration of payments, any
  or all of the payments due under the Awards might ultimately
  have become payable to other beneficiaries.

                  (iv)     In the event of uncertainty as to the in-
  terpretation of, or controversies concerning, paragraph (b) of
  this Section 12, the Committee's determinations shall be
  binding and conclusive on all Participants and any parties
  validly claiming through them.

       13.  Nonassignability.
            ----------------

       (a)  Except as the Committee may expressly provide
otherwise in or with respect to an Award Agreement, in each case in
accordance with paragraph (a)(ii) of Section 5 hereof, and except
as provided in paragraphs (a) and (b) of Section 12 hereof and
paragraph (b) of this Section 13, no Award or any other benefit
under the Plan, or any right with respect thereto, shall be assign-
able or transferable, or payable to or exercisable by, anyone other
than the Participant to whom it is granted.

       (b)  If a Participant's employment by or association with
the Company terminates in order for such Participant to assume a
position with a governmental, charitable or educational agency or
institution, and the Participant retains Awards pursuant to
paragraph (a) of Section 12 hereof, the Committee, in its
discretion and to the extent permitted by law, may authorize a
third party (including, without limitation, the trustee of a
"blind" trust), acceptable to the applicable authorities, the
Participant and the Committee, to act on behalf of the Participant
with respect to such Awards.

       14.  Adjustments.  In the event of any change in the
            -----------
outstanding Stock by reason of a stock split, stock dividend,
combination or reclassification of shares, recapitalization,
merger, consolidation  or similar event, the Committee shall adjust
proportionally (a) the number of shares of Stock (i) reserved under
the Plan, (ii) available for options or other Awards and available
for issuance pursuant to options, or upon which SARs may be based,
for individual Participants and (iii) covered by outstanding Awards
denominated in Stock or units of Stock; (b) the prices related to
outstanding Awards; and (c) the appropriate Fair Market Value and
other price determinations for such Awards.  In the event of any
other change affecting the Stock or any distribution (other than
normal cash dividends) to holders of Stock, such adjustments as may
be deemed equitable by the Committee, including adjustments to
avoid fractional shares, shall be made to give proper effect to
such event.  In the event of a corporate merger, consolidation,
acquisition of property or stock, separation, reorganization or
liquidation, the Committee shall be authorized to issue or assume
stock options or other awards, whether or not in a transaction to
which Section 424(a) of the Code applies, by means of substitution
of new stock options or Awards for previously issued stock options
or awards or an assumption of previously issued stock options or
awards.

       15.  Notice.  Any written notice to Touchstone required
            ------
by any of the provisions of the Plan shall be addressed to the
Committee, c/o the Secretary of Touchstone, and shall become
effective when received by the Secretary.

       16.  Unfunded Plan.  Insofar as the Plan provides for
            -------------
Awards of cash or Stock, the Plan shall be unfunded unless and
until the Board or the Committee otherwise determines.  Although
bookkeeping accounts may be established with respect to
Participants who are entitled to cash, Stock or rights thereto
under the Plan, any such accounts shall be used merely as a
bookkeeping convenience.  Unless the Board otherwise determines,
(a) the Company shall not be required to segregate any assets that
may at any time be represented by cash, Stock or rights thereto,
nor shall the Plan be construed as providing for such segregation,
nor shall the Company, the Board or the Committee be deemed to be
a trustee of any cash, Stock or rights thereto to be granted under
the Plan; (b) any liability of the Company to any Participant with
respect to a grant of cash, Stock or rights thereto under the Plan
shall be based solely upon any contractual obligations that may be
created by the Plan and an Award Agreement; (c) no such obligation
of the Company shall be deemed to be secured by any pledge or other
encumbrance on any property of the Company; and (d) neither the
Company, the Board nor the Committee shall be required to give any
security or bond for the performance of any obligation that may be
created by or pursuant to the Plan.

       17.  Payments to Trust.  Notwithstanding the provisions
            -----------------
of Section 16 hereof, the Board or the Committee may cause to be
established one or more trust agreements pursuant to which the
Committee may make payments of cash, or deposit shares of Stock,
due or to become due under the Plan to Participants.

       18.  No Right to Employment.  Neither the adoption of the
            ----------------------
Plan nor the granting of any Award shall confer on any Participant
any right to continued employment by or association with the
Company or in any way interfere with the Company's right to
terminate the employment or association of any Participant at any
time, with or without cause, and without liability therefor.
Awards, payments and other benefits received by a Participant under
the Plan shall not be deemed a part of the Participant's regular,
recurring compensation for any purpose, including, without
limitation, for the purposes of any termination indemnity or sever-
ance pay law of any jurisdiction.

       19.  Governing Law.  The Plan and all determinations made
            -------------
and actions taken pursuant hereto, to the extent not otherwise
governed by the Code or the securities laws of the United States,
shall be governed by and construed under the laws of the State of
Delaware.

       20.  Effective and Termination Dates.  The Plan, and any
            -------------------------------
amendment hereof requiring stockholder approval, shall become
effective as of the date of its approval by the stockholders of
Touchstone by the affirmative vote of a majority of the votes cast
at a stockholders' meeting at which the approval of the Plan (or
any such amendment) is considered, provided that the total vote
                                   --------
cast represents over 50% of all shares entitled to vote on the
proposal.  The Plan shall terminate ten years after its initial
effective date, subject to earlier termination by the Board
pursuant to Section 11 hereof, except as to Awards then
outstanding.

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