Document:

EXHIBIT 4.1

                                DST SYSTEMS, INC.
                  1995 STOCK OPTION AND PERFORMANCE AWARD PLAN,
                       AMENDED AND RESTATED AS OF 05/14/02

Section 1.  Purpose.

     The purposes of the DST  Systems,  Inc.  1995 Stock Option and  Performance
Award Plan (the "Plan") are to generate an increased  incentive for Employees of
the Company to  contribute to the Company's  future  success,  to secure for the
Company  and its  stockholders  the  benefits  inherent in equity  ownership  by
Employees  of the  Company  and to enhance  the  ability of the  Company and its
Affiliates to attract and retain exceptionally qualified Employees upon whom, in
large measure,  the sustained progress,  growth and profitability of the Company
depend. By encouraging  Employees of the Company and its Affiliates to acquire a
proprietary  interest  in the  Company's  growth and  performance,  the  Company
intends  to  more  closely  align  the  interests  of the  Company's  Employees,
management and stockholders  and motivate  Employees to enhance the value of the
Company for the benefit of all stockholders.

Section 2.  Definitions.

     As used in the Plan, the following  terms shall have the meanings set forth
below:

     (a)  "Affiliate" means (i) any Person that directly,  or through one (1) or
          more intermediaries, controls, or is controlled by, or is under common
          control with, the Company, (ii) any entity in which the Company has an
          equity interest of at least fifty percent (50%),  and (iii) any entity
          in which the Company has any other  significant  equity  interest,  as
          determined by the Committee.

     (b)  "Award" means any Option,  Stock  Appreciation  Right,  Limited Right,
          Performance  Share,   Performance  Unit,   Restricted  Stock,  Shares,
          Dividend Equivalent,  or any other right, interest, or option relating
          to Shares granted pursuant to the provisions of the Plan.

     (c)  "Award  Agreement"  means any written  agreement,  contract,  or other
          instrument  or document  evidencing  any Award  granted  hereunder and
          signed by both the Company and the  Participant or by both the Company
          and an Outside Director.

     (d)  "Board" means the Board of Directors of the Company.

     (e)  "Code" means the Internal  Revenue Code of 1986,  as amended from time
          to time.

     (f)  "Committee"  means the  Compensation  Committee of the Board,  or such
          other committee designated by the Board,  authorized to administer the
          Plan under Section 3 hereof.  The Committee  shall consist of not less
          than two (2) directors, each of whom is a non-employee director within
          the meaning of Rule 16b-3 and an outside  director  within the meaning
          of Code Section  162(m).  Until the date of  completion  of the Public
          Offering, the KCSI Compensation and Organization Committee shall serve
          as the Committee authorized to administer this Plan.

     (g)  "Company" means DST Systems, Inc., a Delaware corporation.

     (h)  "Dividend  Equivalent"  means any right  granted  pursuant  to Section
          13(f) hereof.

     (i)  "Employee"  means any  employee  of the  Company  or of any  Affiliate
          regularly  employed  for more than twenty (20) hours per week and more
          than five (5) months per year.

     (j)  "Exchange  Act" means the  Securities  and  Exchange  Act of 1934,  as
          amended,  or any  successors  thereto,  and the rules and  regulations
          promulgated thereunder, all as shall be amended from time to time.

     (k)  "Fair Market  Value" means,  with respect to any property,  the market
          value of such  property  determined  by such methods or  procedures as
          shall be established from time to time by the Committee.

     (l)  "Incentive  Stock  Option"  means an Option  granted  under  Section 6
          hereof that is intended to meet the requirements of Section 422 of the
          Code or any successor provision thereto.

     (m)  "KCSI"  means  Kansas  City  Southern  Industries,  Inc.,  a  Delaware
          corporation

     (n)  "Limited  Right" means any right granted to a Participant  pursuant to
          Section 7(b) hereof.

     (o)  "Non-Qualified  Stock Option" means an Option  granted under Section 6
          hereof that is not intended to be an Incentive  Stock  Option,  and an
          Option granted to an Outside Director pursuant to Section 9 hereof.

     (p)  "Option"  means an  Incentive  Stock  Option  or  Non-Qualified  Stock
          Option.

     (q)  "Outside  Director" means a member of the Board who is not an Employee
          of the Company or of any Affiliate.

     (r)  "Participant" means an Employee or Outside Director who is selected to
          receive an Award under the Plan.

     (s)  "Performance   Award"  means  any  Award  of  Performance   Shares  or
          Performance Units pursuant to Section 8 hereof.

     (t)  "Performance Period" means that period established by the Committee at
          the time any  Performance  Award is granted or at any time  thereafter
          during which any  performance  goals  specified by the Committee  with
          respect to such Award are to be measured.

     (u)  "Performance  Share" means any grant pursuant to Section 8 hereof of a
          unit valued by reference to a designated number of Shares.

     (v)  "Performance Unit" means any grant pursuant to Section 8 hereof of (i)
          a bonus  consisting  of cash or other  property the amount or value of
          which,  and/or  the  entitlement  to which,  is  conditioned  upon the
          attainment of any  performance  goals  specified by the Committee,  or
          (ii) a unit valued by  reference  to a  designated  amount of property
          other than Shares.

     (w)  "Person" means any individual, corporation,  partnership, association,
          joint-stock company, trust, unincorporated organization, or government
          or political subdivision thereof.

     (x)  "Public  Offering"  means a public  offering  of Shares of the Company
          which  results in a reduction  of KCSI's  ownership  of Shares to less
          than eighty percent (80%).

     (y)  "Rule  16b-3"  means  Rule 16b-3  promulgated  by the  Securities  and
          Exchange  Commission  under the  Securities  Exchange Act of 1934,  as
          amended, or any successor rule or regulation thereto.

     (z)  "Shares"  means shares of the common  stock of the  Company,  one cent
          ($.01) par value.

     (aa) "Stock  Appreciation  Right" means any right  granted to a Participant
          pursuant to Section 7(a) hereof.

     (ab) "Stockholders Meeting" means the annual meeting of stockholders of the
          Company in each year.

     (ac) "Restricted  Stock" means any Share issued with the  restriction  that
          the holder may not sell,  transfer,  pledge,  or assign such Share and
          with such other restrictions as the Committee, in its sole discretion,
          may impose  (including,  without  limitation,  any  restriction on the
          right  to  vote  such  Share,  and  the  right  to  receive  any  cash
          dividends),  which restrictions may lapse separately or in combination
          upon such  conditions and at such time or times,  in  installments  or
          otherwise,   as  the  Committee  may  deem   appropriate,   and  which
          restriction  shall provide that the Shares subject to such restriction
          shall be  forfeited  if the  restriction  does not lapse prior to such
          date or such event as the Committee may deem appropriate.

     (ad) "Restricted  Stock  Award"  means an award of  Restricted  Stock under
          Section 8A hereof.

Section 3.  Administration.

     The Plan shall be administered by the Committee.  Subject to applicable law
and the terms of the Plan, the Committee shall have full power and authority to:
(i)  designate  Participants;  (ii)  determine the type or types of Awards to be
granted to each Participant  hereunder;  (iii) determine the number of Shares to
be covered by or with respect to which payments, rights, or other matters are to
be  calculated  in  connection  with each Award;  (iv)  determine  the terms and
conditions of any Award; (v) determine  whether,  to what extent, and under what
circumstances  Awards  may be  settled  or  exercised  in  cash,  Shares,  other
securities,  other  Awards,  or  other  property,  or  canceled,  forfeited,  or
suspended, and the method or methods by which Awards may be settled,  exercised,
canceled,  forfeited,  or suspended;  (vi) determine whether, to what extent and
under what circumstances  cash, Shares,  other securities,  other Awards,  other
property  and other  amounts  payable  with  respect to an Award under this Plan
shall be deferred either  automatically or at the election of the Participant or
the  Committee;  (vii)  interpret and  administer the Plan and any instrument or
agreement  relating to, or Award made under, the Plan; (viii) establish,  amend,
suspend or waive such rules and  regulations and appoint such agents as it shall
deem  appropriate for the proper  administration  of the Plan; and (ix) make any
other determination and take any other action that the Committee deems necessary
or desirable for  administration  of the Plan.  Subject to the terms of the Plan
(including without limitation Section 11 hereof),  the Committee shall also have
the authority to grant Awards in replacement of Awards previously  granted under
this Plan or any other compensation plan of the Company or an Affiliate.  Unless
otherwise  expressly  provided in the Plan,  all  determinations,  designations,
interpretations, and other decisions of the Committee shall be final, conclusive
and binding  upon all  Persons,  including  the Company,  any  Participant,  any
stockholder,  and  any  Employee  of  the  Company  or  of  any  Affiliate.  All
determinations  of the  Committee  shall be made by a majority  of its  members;
provided  that any  determination  affecting  any Awards made or to be made to a
member of the Committee may, at the Board's election,  be made by the Board. The
Committee,  in its  discretion,  may delegate its authority and duties under the
Plan to the Chief  Executive  Officer  and/or to other  officers  of the Company
under  such  conditions  and/or  limitations  as the  Committee  may  establish;
provided,  however,  that only the  Committee  may select and grant  Awards,  or
otherwise take any action with respect to Awards,  to  Participants  who are (i)
officers or  directors of the Company for purposes of Section 16 of the Exchange
Act; or (ii)  Participants  who are "covered  employees" under Section 162(m) of
the Code.

Section 4.  Shares Subject to the Plan.

     (a)  Subject to  adjustment  as provided in Section 4(c), a total of thirty
          million (30,000,000) Shares shall be available for the grant of Awards
          under the Plan. Any Shares issued  hereunder may consist,  in whole or
          in part, of authorized and unissued shares or treasury shares.  If any
          Shares  subject to any Award  granted  hereunder are forfeited or such
          Award otherwise  terminates  without the issuance of such Shares or of
          other consideration in lieu of such Shares, the Shares subject to such
          Award,  to the extent of any such  forfeiture  or  termination,  shall
          again be  available  for grant  under the Plan.  In  addition,  to the
          extent permitted by Section 422 of the Code, any Shares issued by, and
          any  Awards  granted by or that  become  obligations  of, the  Company
          through or as the result of the  assumption of  outstanding  grants or
          the  substitution  of Shares under  outstanding  grants of an acquired
          company  shall not reduce the Shares  available  for grants  under the
          Plan.

     (b)  For purposes of this Section 4,

          (i)  If an Award (other than a Dividend  Equivalent) is denominated in
               Shares,  the number of Shares covered by such Award,  or to which
               such Award relates, shall be counted on the date of grant of such
               Award  against  the  aggregate  number  of Shares  available  for
               granting Awards under the Plan;

          (ii) Dividend  Equivalents  and Awards not denominated in Shares shall
               be counted against the aggregate  number of Shares  available for
               granting Awards under the Plan in such amount and at such time as
               the Committee  shall determine  under  procedures  adopted by the
               Committee consistent with the purposes of the Plan; and

          (iii)Awards   that   operate   in   tandem   with   (whether   granted
               simultaneously  with or at a different  time  from),  or that are
               substituted for, other Awards or awards under other Company plans
               may be counted or not  counted  under  procedures  adopted by the
               Committee in order to avoid double counting.

     (c)  In the event that the Committee  shall  determine that any dividend or
          other  distribution  (whether  in the form of cash,  Shares,  or other
          securities or  property),  stock split,  reverse stock split,  merger,
          reorganization,  consolidation,  recapitalization, split-up, spin-off,
          repurchase,  exchange of shares,  issuance of warrants or other rights
          to  purchase  Shares  or other  securities  of the  Company,  or other
          transaction  or event  affects the Shares such that an  adjustment  is
          determined  by the  Committee  to be  appropriate  in order to prevent
          dilution or enlargement of the benefits or potential benefits intended
          to be made available  under the Plan, then the Committee may: (i) make
          adjustments  in the  aggregate  number and class of shares or property
          which may be delivered under the Plan and may substitute  other shares
          or property for delivery under the Plan,  including  shares of another
          entity  which  is  a  party  to  any  such   merger,   reorganization,
          consolidation or exchange of shares;  and (ii) make adjustments in the
          number,  class  and  option  price of shares or  property  subject  to
          outstanding  Awards  and  Options  granted  under  the  Plan,  and may
          substitute  other shares or property for  delivery  under  outstanding
          Awards and  Options,  including  shares of another  entity  which is a
          party to any such merger, reorganization, consolidation or exchange of
          shares, as may be determined to be appropriate by the Committee in its
          sole  discretion,  provided  that the number of Shares  subject to any
          Award or Option shall always be a whole number. The preceding sentence
          shall not limit the actions which may be taken by the Committee  under
          Section 10 of the Plan.  No  adjustment  shall be made with respect to
          Awards of Incentive Stock Options that would cause the Plan to violate
          Section 422 of the Code.

Section 5.  Eligibility.

     Any  Employee  or Outside  Director  shall be  eligible to be selected as a
Participant. Notwithstanding any other provision of the Plan to the contrary, no
Participant may be granted an Option,  Limited Right, Stock Appreciation  Right,
Performance  Shares,  Shares or  Restricted  Stock  with  respect to a number of
Shares in any one (1) calendar year which,  when added to the Shares  subject to
any other Option,  Limited Right, Stock Appreciation Right,  Performance Shares,
Shares or Restricted Stock granted to such Participant in the same calendar year
shall exceed Eight Hundred  Thousand  (800,000)  Shares.  If an Option,  Limited
Right,  Stock  Appreciation  Right,  or  Performance  Share  is  cancelled,  the
cancelled Option,  Limited Right,  Stock Appreciation Right or Performance Share
continues  to count  against the  maximum  number of Shares for which an Option,
Limited Right, Stock Appreciation Right or Performance Share may be granted to a
Participant in any calendar  year. All Shares  specified in this Section 5 shall
be adjusted to the extent necessary to reflect adjustments to Shares required by
Section 4(c) hereof. No Participant may be granted  Performance Units in any one
(1) calendar  year which when added to all other  Performance  Units  granted to
such   Participant   in  the  same  calendar  year  shall  exceed  300%  of  the
Participant's  annual base salary as of the first day of such calendar year (or,
if  later,  as of the  date on  which  the  Participant  becomes  an  Employee);
provided,  however,  that no more than  $1,000,000  of annual base salary may be
taken into account for purposes of determining the maximum amount of Performance
Units which may be granted in any calendar year to any Participant.

Section 6.  Stock Options.

     Options  may be  granted  hereunder  to  Participants  either  alone  or in
addition to other Awards granted under the Plan.  Options may be Incentive Stock
Options  within the  meaning of Section 422 of the Code or  Non-Qualified  Stock
Options  (i.e.,  stock  options  which are not Incentive  Stock  Options),  or a
combination thereof. Any Option granted to a Participant under the Plan shall be
evidenced by an Award  Agreement in such form as the  Committee may from time to
time  approve.  Any such  Option  shall be  subject to the  following  terms and
conditions and to such additional terms and conditions,  not  inconsistent  with
the provisions of the Plan, as the Committee shall deem desirable:

     (a)  Option Price. The purchase price per Share purchasable under an Option
          shall be determined by the  Committee;  provided,  however,  that such
          purchase  price shall not be less than one hundred  percent  (100%) of
          the Fair Market Value of the Share on the effective  date of the grant
          of the Option;  provided, that (i) if the Committee so determines,  in
          the case of any  Option  retroactively  granted  in tandem  with or in
          substitution for another Award or any outstanding  Award granted under
          any other plan of the Company,  the purchase price per Share shall not
          be less than the purchase price on the effective date of grant of such
          other Award or award under another  Company plan; and (ii) in the case
          of any Option granted in substitution for or as a result of assumption
          by the  Company of  outstanding  grants of an  acquired  company,  the
          purchase price per Share shall be determined by the Committee.

     (b)  Option Term.  The term of each Option shall be fixed by the  Committee
          in its sole  discretion;  except as provided below for Incentive Stock
          Options.

     (c)  Exercisability. Options shall be exercisable at such time or times and
          subject  to  such  exercise   acceleration   conditions  (if  any)  as
          determined  by the  Committee  at or  subsequent  to grant;  except as
          otherwise provided in Section 10(a).

     (d)  Method of Exercise.  Subject to the other  provisions  of the Plan and
          any  applicable  Award  Agreement,  any Option may be exercised by the
          Participant  in  whole  or in  part at such  time  or  times,  and the
          Participant may make payment of the option price in such form or forms
          as the  Committee  shall  determine,  including,  without  limitation,
          payment  by  delivery  of cash,  Shares,  Restricted  Stock,  or other
          consideration  (including,  where  permitted by law and the Committee,
          Awards)  having a Fair Market Value on the exercise  date equal to the
          total option price, or by any combination of cash, Shares,  Restricted
          Stock and other  consideration  as the  Committee  may  specify in the
          applicable  Award  Agreement;  provided,  however,  that if Restricted
          Stock is  surrendered  to pay the  option  price,  an equal  number of
          shares issued as a result of the option  exercise  shall be subject to
          the same restrictions.

     (e)  Incentive  Stock  Options.  In  accordance  with rules and  procedures
          established  by  the  Committee,   the  aggregate  Fair  Market  Value
          (determined  as of the time of grant) of the  Shares  with  respect to
          which  Incentive Stock Options held by any Participant are exercisable
          for the first time by such Participant  during any calendar year under
          the Plan (and under any other  benefit  plans of the Company or of any
          parent or subsidiary  corporation of the Company as defined in Section
          424 of the  Code)  shall  not  exceed  One  Hundred  Thousand  Dollars
          ($100,000) or, if different,  the maximum  limitation in effect at the
          time  of  grant  under  Section  422 of  the  Code,  or any  successor
          provision,  and any  regulations  promulgated  thereunder.  The option
          price per Share  purchasable under an Incentive Stock Option shall not
          be less than one hundred  percent  (100%) of the Fair Market  Value of
          the Share on the date of grant of the  Option.  Each  Incentive  Stock
          Option  shall  expire  not later  than ten (10) years from its date of
          grant.  No Incentive  Stock Option shall be granted to any Participant
          if at the time the  Option is  granted  such  Participant  owns  stock
          possessing  more than ten percent (10%) of the total  combined  voting
          power of all  classes  of  stock of the  Company,  its  parent  or its
          subsidiaries  unless  (i) the  option  price per Share is at least one
          hundred and ten percent  (110%) of the Fair Market  Value of the Share
          on the  date of  grant,  and  (ii)  such  Option  by its  terms is not
          exercisable  after the expiration of five (5) years from the date such
          Option is granted.  The terms of any  Incentive  Stock Option  granted
          hereunder  shall comply in all respects with the provisions of Section
          422 of the  Code,  or any  successor  provision,  and any  regulations
          promulgated  thereunder.  To the  extent  an  Incentive  Stock  Option
          granted hereunder fails to comply,  it shall be a Non-Qualified  Stock
          Option.

     (f)  Form of Settlement. In its sole discretion,  the Committee may provide
          at the time of grant  that the  Shares to be issued  upon an  Option's
          exercise shall be in the form of Shares subject to restrictions as the
          Committee may determine,  or other similar securities,  or may reserve
          the right so to provide after the time of grant.

     (g)  Reload Options. If and to the extent the Committee expressly provides,
          at the time of grant or later,  that the  Participant  shall  have the
          right to receive  reload options with respect to  Non-Qualified  Stock
          Options,  the  Participant  shall receive reload options in accordance
          with and subject to the following terms and conditions

          (i)  Grant of the Reload Option;  Number of Shares;  Price. Subject to
               paragraph  (ii) of this  Subsection  and,  except as  provided in
               paragraph  (viii)  hereof,  to the  availability  of Shares to be
               optioned  to  the  Participant  under  the  Plan  (including  the
               limitations  set forth in  Section  5), if a  Participant  has an
               Option (the  "original  option")  with reload rights and pays for
               the exercise of the  original  option by  surrendering  Shares or
               Restricted  Stock  (whether  by means  of  delivering  Shares  or
               Restricted Stock previously held by the optionee or by delivering
               Shares or Restricted Stock simultaneously acquired on exercise of
               the original option),  the Participant shall receive a new Option
               ("reload  option") for the number of Shares or Restricted  Shares
               so  surrendered  at an option  price per Share  equal to the Fair
               Market  Value  of a  Share  on the  date of the  exercise  of the
               original option.

          (ii) Conditions to Grant of Reload Option. A reload option will not be
               granted:  (A) if the Fair Market  Value of a Share on the date of
               exercise of the original  option is less than the exercise  price
               of the original option; or (B) if the Participant is no longer an
               Employee of the Company or an Affiliate.

          (iii)Term of Reload  Option.  The reload  option  shall  expire on the
               same date as the  original  option,  or at such later date as the
               Committee may provide.

          (iv) Type of Option. The reload option shall be a Non-Qualified  Stock
               Option.

          (v)  Additional  Reload Options.  Except as expressly  provided by the
               Committee  (at the time of the  grant of the  original  option or
               reload  option or later),  reload  options  shall not include any
               right to subsequent reload options.

          (vi) Date of Grant,  Vesting.  The date of grant of the reload  option
               shall be the date of the  exercise of the  original  option.  The
               reload  options shall be  exercisable in full beginning from date
               of grant, except as otherwise provided by the Committee

          (vii)Stock  Withholding;  Grants  of  Reload  Options.  If  and to the
               extent permitted by the Committee,  if the other  requirements of
               this  Subsection  are  satisfied,  and if Shares are  withheld or
               Shares surrendered for tax withholding pursuant to Section 13(g),
               a  reload  option  will be  granted  for  the  number  of  Shares
               surrendered  as payment for the exercise of the  original  option
               plus the number of Shares  surrendered or withheld to satisfy tax
               withholding.

          (viii) Share Limits. Reload options shall not be counted against or as
               a reduction  from the number of shares  available for grant under
               Section 4 hereof  because such grants are a substitute for Shares
               transferred to or withheld by the Company.

          (ix) Other Terms and Conditions. In connection with reload options for
               officers who are subject to Section 16 of the  Exchange  Act, the
               Committee may at any time impose any  limitations  which,  in the
               Committee's sole discretion,  are necessary or desirable in order
               to comply with  Section  16(b) of the  Exchange Act and the rules
               and regulations  thereunder,  or in order to obtain any exemption
               therefrom.  Except as otherwise provided in this Subsection,  all
               the provisions of the Plan shall apply to reload options.

Section 7.  Stock Appreciation and Limited Rights.

     (a)  Stock  Appreciation  Rights may be granted  hereunder to  Participants
          either alone or in addition to other Awards granted under the Plan and
          may, but need not,  relate to a specific  Option granted under Section
          6. The  provisions of Stock  Appreciation  Rights need not be the same
          with respect to each recipient.  Any Stock  Appreciation Right related
          to a  Non-Qualified  Stock Option may be granted at the same time such
          Option  is  granted  or at any  time  thereafter  before  exercise  or
          expiration of such Option.  Any Stock Appreciation Right related to an
          Incentive Stock Option must be granted at the same time such Option is
          granted and must have a grant price equal to the option  price of such
          Option.  In the case of any Stock  Appreciation  Right  related to any
          Option,  the Stock  Appreciation  Right or applicable  portion thereof
          shall  terminate and no longer be exercisable  upon the termination or
          exercise of the related Option, except that a Stock Appreciation Right
          granted with respect to less than the full number of Shares covered by
          a  related   Option  shall  not  be  reduced  until  the  exercise  or
          termination  of the  related  Option  exceeds the number of Shares not
          covered by the Stock  Appreciation  Right.  Any Option  related to any
          Stock  Appreciation Right shall no longer be exercisable to the extent
          the related Stock  Appreciation  Right has been  exercised.  Any Stock
          Appreciation  Right related to an Option shall be  exercisable  to the
          extent,   and  only  to  the  extent,   that  the  related  Option  is
          exercisable.  The  Committee  may  impose  such  other  conditions  or
          restrictions  on the  exercise of any Stock  Appreciation  Right as it
          shall  deem  appropriate.  Subject  to the  terms  of the Plan and any
          applicable Award Agreement,  a Stock  Appreciation Right granted under
          the Plan shall confer on the holder  thereof a right to receive,  upon
          exercise  thereof,  the excess of (i) the Fair Market Value of one (1)
          Share on the date of exercise or with respect to any right  related to
          an Option other than an Incentive  Stock Option,  at any time during a
          specified period before or after the date of exercise as determined by
          the  Committee  over (ii) the grant price of the right as specified by
          the  Committee,  which shall not be less than the Fair Market Value of
          one (1)  Share on the date of grant of the  Stock  Appreciation  Right
          (or,  if the  Committee  so  determines,  in  the  case  of any  Stock
          Appreciation  Right  retroactively   granted  in  tandem  with  or  in
          substitution for another Award or any outstanding  award granted under
          any  other  plan of the  Company,  on the date of grant of such  other
          Award or  award),  multiplied  by the number of Shares as to which the
          holder is  exercising  the Stock  Appreciation  Right.  Subject to the
          terms of the Plan and any applicable  Award  Agreement,  the terms and
          conditions of any Stock  Appreciation  Right shall be as determined by
          the   Committee.   The  Committee   may  impose  such   conditions  or
          restrictions on the exercise of any Stock Appreciation Right as it may
          deem appropriate.

     (b)  Limited  Rights may be granted  hereunder  to  Participants  only with
          respect to an Option  granted under Section 6 hereof or a stock option
          granted under another plan of the Company.  The  provisions of Limited
          Rights  need not be the  same  with  respect  to each  recipient.  Any
          Limited Right related to a  Non-Qualified  Stock Option may be granted
          at the same time  such  Option is  granted  or at any time  thereafter
          before  exercise or  expiration  of such  Option.  Any  Limited  Right
          related to an Incentive  Stock Option must be granted at the same time
          such Option is granted.  A Limited Right shall terminate and no longer
          be exercisable  upon  termination  or exercise of the related  Option,
          except that a Limited Right granted with respect to less than the full
          number of Shares  covered  by a related  Option  shall not be  reduced
          until the exercise or  termination  of the related  Option exceeds the
          number of Shares not covered by the Limited Right.  Any Option related
          to any Limited Right shall no longer be  exercisable to the extent the
          related Limited Right has been  exercised.  Any Limited Right shall be
          exercisable to the extent,  and only to the extent, the related Option
          is exercisable and only during the three (3) month period  immediately
          following a Change in Control of the Company (as defined in Section 10
          hereof).   The   Committee   may  impose  such  other   conditions  or
          restrictions  on the  exercise of any  Limited  Right as it shall deem
          appropriate. Subject to the terms of the Plan and any applicable Award
          Agreement,  a Limited Right granted under the Plan shall confer on the
          holder thereof a right to receive,  upon exercise  thereof,  an amount
          equal to the excess of (i) the Fair  Market  Value of one (1) Share on
          the date of  exercise  or if  greater  and only  with  respect  to any
          Limited  Right  related  to an Option  other than an  Incentive  Stock
          Option, the highest price per Share paid in connection with any Change
          in Control of the  Company,  over (ii) the option price of the related
          Option,  multiplied  by the number of Shares as to which the holder is
          exercising the Limited  Right.  The amount payable to the holder shall
          be paid by the  Company in cash.  Subject to the terms of the Plan and
          any  applicable  Award  Agreement,  the  terms and  conditions  of any
          Limited Right shall be as determined by the  Committee.  The Committee
          may impose such  conditions  or  restrictions  on the  exercise of any
          Limited Right as it may deem appropriate.

Section 8.  Performance Awards.

     Performance  Awards may be issued  hereunder to Participants in the form of
Performance  Shares or Performance  Units, for no cash consideration or for such
minimum  consideration  as may be required by applicable law, either alone or in
addition to other Awards  granted  under the Plan.  The value  represented  by a
Performance  Share or Unit shall be  payable  to, or upon the  exercise  by, the
Participant  holding such Award, in whole or in part,  following  achievement of
such  performance  goals during such  Performance  Period as  determined  by the
Committee.  Except as provided in Section  10,  Performance  Awards will be paid
only after the end of the relevant Performance Period. Performance Awards may be
paid  in  cash,  Shares,  Restricted  Stock,  Options,  other  property  or  any
combination  thereof,  in the sole  discretion  of the  Committee at the time of
payment.  The length of the  Performance  Period,  the  performance  criteria or
levels to be achieved for each Performance  Period,  and the amount of the Award
to be distributed shall be conclusively determined by the Committee. Performance
Awards may be paid in a lump sum or in  installments  following the close of the
Performance  Period  or,  in  accordance  with  procedures  established  by  the
Committee,  on  a  deferred  basis.  Notwithstanding  the  foregoing,  an  Award
Agreement may  condition  the vesting or exercise of a Performance  Award on any
combination  of the  achievement  of one or more  performance  goals  and/or the
completion of a specified  period of service as the Committee shall determine at
the time of grant.  To the  extent  determined  by the  Committee,  when  making
Performance  Awards  the  Committee  shall  adopt  performance  goals,   certify
completion of such goals and comply with any other Code  requirements  necessary
to be in compliance with the performance-based compensation requirements of Code
Section 162(m).  Performance goals for Performance Awards may be based, in whole
or in part, on one or more of the following  performance-based  criteria or such
other  criteria  as the  Committee  may  determine:  (i)  attainment  during the
Performance Period of a specified price per share of the Company's common stock;
(ii) attainment  during the Performance  Period of a specified rate of growth or
increase in the amount of growth in the price per share of the Company's  common
stock;  (iii) attainment  during the Performance  Period of a specified level of
the Company's earnings or earnings per share of the Company's common stock; (iv)
attainment  during  the  Performance  Period  of a  specified  rate of growth or
increase in the amount of growth of the Company's earnings or earnings per share
of the Company's common stock; (v) attainment during the Performance Period of a
specified  level  of the  Company's  cash  flow or cash  flow  per  share of the
Company's  common stock;  (vi)  attainment  during the  Performance  Period of a
specific  rate of growth or  increase  in the amount of growth of the  Company's
cash flow or cash flow per share of the Company's common stock; (vii) attainment
during the Performance  Period of a specified  level of the Company's  return on
equity;  (viii) attainment  during the Performance  Period of a specific rate of
growth or  increase in the amount of growth of the  Company's  return on equity;
(ix)  attainment  during  the  Performance  Period of a  specified  level of the
Company's return on assets; or (x) attainment during the Performance Period of a
specific  rate of growth or  increase  in the amount of growth of the  Company's
return on assets.

Section 8A.  Restricted Stock.

     (a)  Issuance.   Restricted   Stock  Awards  may  be  issued  hereunder  to
          Participants,   for  no  cash   consideration   or  for  such  minimum
          consideration as may be required by applicable law, either alone or in
          addition to other Awards  granted  under the Plan.  The  provisions of
          Restricted  Stock  Awards  need not be the same with  respect  to each
          recipient.  The granting of  Restricted  Stock shall take place on the
          date the Committee  decides to grant the Restricted  Stock,  or if the
          Restricted  Stock Award provides that the grant of Restricted Stock is
          conditioned upon the achievement of performance goals specified in the
          Restricted  Stock  Award,  on a  date  established  by  the  Committee
          following the achievement of such performance goals.

     (b)  Registration.  Any Restricted  Stock issued hereunder may be evidenced
          in such  manner as the  Committee  in its sole  discretion  shall deem
          appropriate, including, without limitation, book-entry registration or
          issuance  of a stock  certificate  or  certificates.  In the event any
          stock  certificate is issued in respect of shares of Restricted  Stock
          awarded under the Plan,  such  certificate  shall be registered in the
          name of the Participant, shall bear an appropriate legend referring to
          the terms, conditions,  and restrictions applicable to such Award, and
          shall be held in escrow by the Company.

     (c)  Forfeiture.  A  Restricted  Stock  Award  may  condition  the grant of
          Restricted  Stock and/or the lapse of any  restriction or restrictions
          on Restricted  Stock on any  combination of the  achievement of one or
          more performance  goals and/or the completion of a specified period of
          service as the Committee  shall  determine at the time the  Restricted
          Stock Award is made. To the extent  determined by the Committee,  when
          making  Restricted Stock Awards the Committee shall adopt  performance
          goals, certify completion of such goals and comply with any other Code
          requirements  necessary to be in compliance with the performance-based
          compensation  requirements of Code Section 162(m).  Performance  goals
          for Restricted  Stock Awards may be based, in whole or in part, on one
          or more of the  following  performance-based  criteria  or such  other
          criteria as the Committee may  determine:  (i)  attainment  during the
          Performance  Period of a  specified  price per share of the  Company's
          common  stock;  (ii)  attainment  during the  Performance  Period of a
          specified  rate of growth or  increase  in the amount of growth in the
          price per share of the Company's common stock; (iii) attainment during
          the Performance  Period of a specified level of the Company's earnings
          or earnings per share of the Company's  common stock;  (iv) attainment
          during  the  Performance  Period  of a  specified  rate of  growth  or
          increase in the amount of growth of the Company's earnings or earnings
          per share of the Company's  common stock;  (v)  attainment  during the
          Performance  Period of a specified level of the Company's cash flow or
          cash flow per share of the  Company's  common stock;  (vi)  attainment
          during the Performance Period of a specific rate of growth or increase
          in the  amount of growth of the  Company's  cash flow or cash flow per
          share of the  Company's  common  stock;  (vii)  attainment  during the
          Performance  Period of a specified  level of the  Company's  return on
          equity;  (viii) attainment during the Performance Period of a specific
          rate of growth or  increase  in the amount of growth of the  Company's
          return on equity;  (ix) attainment during the Performance  Period of a
          specified level of the Company's  return on assets;  or (x) attainment
          during the Performance Period of a specific rate of growth or increase
          in the amount of growth of the Company's return on assets.

          As soon as  practicable  following  the lapse of the  restrictions  on
          Restricted Stock, unrestricted Shares, evidenced in such manner as the
          Committee shall deem appropriate, shall be issued to the grantee.

          Except as otherwise  determined by the Committee at the time of grant,
          upon  termination of employment for any reason before the  restriction
          lapses,  all shares of Restricted  Stock still subject to  restriction
          shall be forfeited by the Participant (who shall sign any document and
          take any other  action  required  to assign  such  shares  back to the
          Company) and reacquired by the Company.

Section 9.  Outside Directors' Annual Options.

     (a)  Grant of Options.  When an Outside  Director first takes a position on
          the Board the  Outside  Director  shall  receive an Option to purchase
          Shares ("Initial Options"). On the date of each Stockholders' Meeting,
          each  Outside  Director  shall  automatically  be granted an Option to
          purchase Shares ("Annual Options"); provided, however, that an Outside
          Director shall not be entitled to receive and shall not be granted any
          Annual Options on the date of any particular  Stockholders' Meeting if
          he will  not  continue  to serve as an  Outside  Director  immediately
          following such  Stockholders'  Meeting.  An Outside Director who first
          takes a  position  on the Board at the  annual  Stockholders'  Meeting
          shall be  entitled  to receive  the  Initial  Options  plus the Annual
          Options.  All such Options shall be Non-Qualified  Stock Options.  The
          number of Shares to be subject to the Initial Option and Annual Option
          grants shall be  determined  from time to time by the Committee or, at
          the Board's  discretion,  by the Board and not by the  Committee.  The
          price at which each Share  covered by such  Options  may be  purchased
          shall be one  hundred  percent  (100%) of the fair  market  value of a
          Share on the  date the  Option  is  granted.  Fair  market  value  for
          purposes  of this  Section 9 shall be deemed to be the  average of the
          high and low  prices of the Shares as  reported  on the New York Stock
          Exchange Composite  Transactions tape on the day the Option is granted
          or, if no sale of Shares  shall  have been made on that day,  the next
          preceding day on which there was a sale of Shares.

     (b)  Exercise of  Options.  All Shares  subject to an Option  granted to an
          Outside  Director  under  Section  9(a) shall  become  exercisable  as
          follows:  fifty  percent  (50%) on the day  preceding  the date of the
          first Stockholders' Meeting after the date of the grant of the Option;
          twenty-five  percent (25%) on the day preceding the date of the second
          Stockholders'  Meeting after the date of grant of the Option;  and the
          remaining  twenty-five  percent  (25%) on the day  preceding the third
          Stockholders' Meeting after the date of grant of the Option.  However,
          no Option shall be exercisable more than ten (10) years after the date
          of grant.  Options may be exercised by an Outside  Director during the
          period that: (i) the Outside  Director  remains a member of the Board;
          (ii) for a period of one (1) year after  ceasing to be a member of the
          Board by reason of death;  (iii) for the remaining  term of the Option
          in the  event  of an  Outside  Director's  disability;  (iv)  for  the
          remaining  term of the  Option if the  Outside  Director  retires  (as
          defined below) from the Board; or (v) for a period of ninety (90) days
          after  ceasing  to be a member  of the Board for  reasons  other  than
          retirement,   death  or  disability;   however,   only  those  Options
          exercisable at the date the Outside  Director ceases to be a member of
          the Board shall  remain  exercisable.  All Options  held by an Outside
          Director  and granted  under  Section  9(a) shall  become  exercisable
          immediately prior to termination of the Outside  Director's service on
          the Board by reason of an  Outside  Director's  death,  disability  or
          retirement.  For purposes of this Section 9, "retire" or  "retirement"
          shall mean  discontinuance of service as a director after the director
          has  reached age sixty (60) and has at least five (5) years or more of
          service  on the Board.  Notwithstanding  any  provision  herein to the
          contrary,  no Option  granted under Section 9(a) shall be  exercisable
          more than ten (10) years after the date of grant.  All Options granted
          under Section 9(a) shall immediately  become  exercisable in the event
          of a Change in Control, as hereinafter defined.

          If a former Outside Director shall die holding an Option granted under
          Section  9(a) that has not expired  and has not been fully  exercised,
          the Option  shall remain  exercisable  until the later of one (1) year
          after the date of death or the end of the  period in which the  former
          Outside  Director could have exercised the Option had he not died, but
          in no event shall the Option be  exercisable  more than ten (10) years
          after  the date of  grant.  In the  event of the  death of an  Outside
          Director or former Outside Director, the Options granted under Section
          9(a)  shall  be  exercisable   only  to  the  extent  that  they  were
          exercisable  at  his  date  of  death  and  only  by the  executor  or
          administrator  of the  Outside  Director's  estate,  by the  person or
          persons to whom the Outside  Director's  rights under the Option shall
          pass under the  Outside  Director's  will or the laws of  descent  and
          distribution,  or by a beneficiary designated in writing in accordance
          with Section 13(a) hereof.

     (c)  Payment.  An Option granted to an Outside  Director under Section 9(a)
          shall be  exercisable  only upon  payment  to the  Company of the full
          purchase price of the Shares with respect to which the Option is being
          exercised.  The  method of  exercise  shall be as set forth in Section
          6(d).

     (d)  Other Awards.  An Outside  Director is eligible to receive pursuant to
          any other  Section of the Plan an Option or other Award,  including an
          Option or other Award  granted in tandem with  Options  granted  under
          Section 9(a).

Section 10.  Change in Control.

     (a)  In order to  maintain  the  Participants'  rights  in the event of any
          Change  in  Control  of  the  Company,  as  hereinafter  defined,  the
          Committee,  as constituted before such Change in Control,  may, in its
          sole discretion,  as to any Award, either at the time an Award is made
          hereunder  or any  time  thereafter,  take  any one (1) or more of the
          following actions:  (i) provide for the purchase by the Company of any
          such  Award,  upon the  Participant's  request,  for an amount of cash
          equal to the amount that could have been attained upon the exercise of
          such Award or realization of the  Participant's  rights had such Award
          been currently  exercisable or payable;  (ii) make such  adjustment to
          any such Award then outstanding as the Committee deems  appropriate to
          reflect  such  Change in  Control;  or (iii) cause any such Award then
          outstanding to be assumed, or new rights substituted therefore, by the
          acquiring or surviving  corporation  after such Change in Control.  In
          the  event  of a  Change  of  Control,  there  shall  be an  automatic
          acceleration  of  any  time  periods   relating  to  the  exercise  or
          realization  of any such  Award and all  performance  award  standards
          shall be deemed  satisfactorily  completed without any action required
          by the  Committee  so that such Award may be  exercised or realized in
          full on or before a date fixed by the Committee. The Committee may, in
          its discretion, include such further provisions and limitations in any
          agreement  documenting such Awards as it may deem equitable and in the
          best interests of the Company.

     (b)  For  purposes of this Plan,  a "Change in Control"  shall be deemed to
          have occurred if (i) for any reason at any time less than seventy-five
          percent  (75%) of the members of the Board of Directors of the Company
          shall be  individuals  who fall into any of the following  categories:
          (A)  individuals  who were members of such Board on September 1, 1995;
          or (B) individuals  whose election,  or nomination for election by the
          Company's   stockholders,   was   approved  by  a  vote  of  at  least
          seventy-five  percent  (75%) of the members of the Board then still in
          office who were  members of such Board on  September  1, 1995;  or (C)
          individuals  whose  election,   or  nomination  for  election  by  the
          Company's   stockholders,   was   approved  by  a  vote  of  at  least
          seventy-five  percent  (75%) of the members of the Board then still in
          office who were  elected in the manner  described in (A) or (B) above,
          or (ii) any  "person"  (as such  term is used in  Sections  13(d)  and
          14(d)(2) of the Exchange Act) shall have become, according to a public
          announcement  or filing,  without  the prior  approval of the Board of
          Directors of the Company,  the "beneficial  owner" (as defined in Rule
          13(d)-3 under the Exchange Act) directly or indirectly,  of securities
          of the Company representing forty percent (40%) or more (calculated in
          accordance  with Rule  13(d)-3) of the  combined  voting  power of the
          Company's then outstanding  voting securities (such "person" hereafter
          referred to as a "Major  Stockholder");  or (iii) the  stockholders of
          the Company shall have approved a merger, consolidation or dissolution
          of the Company or a sale,  lease,  exchange or  disposition  of all or
          substantially  all of the  Company's  assets,  or a Major  Stockholder
          shall  have  proposed  any  such  transaction,   unless  such  merger,
          consolidation, dissolution, sale, lease, exchange or disposition shall
          have  been  approved  by at least  seventy-five  percent  (75%) of the
          members of the Board of Directors  of the Company who are  individuals
          falling  into  any  combination  of  the  following  categories:   (A)
          individuals  who were  members of such Board of Directors on September
          1, 1995, or (B) individuals  whose election or nomination for election
          by the Company's  stockholders  was approved by at least  seventy-five
          percent  (75%) of the members of the Board of Directors  then still in
          office who are members of the Board of Directors on September 1, 1995,
          or (C) individuals  whose election,  or nomination for election by the
          Company's stockholders was approved by a vote of at least seventy-five
          percent  (75%) of the  members  of the Board  then still in office who
          were elected in manner described in (A) or (B) above.

Section 11.  Amendments and Termination.

     The Board may amend, alter,  suspend,  discontinue,  or terminate the Plan,
but no amendment, alteration, suspension,  discontinuation, or termination shall
be made that would materially  impair the rights of a Participant under an Award
theretofore granted,  without the Participant's  consent. In addition, the Board
may  consider  for each  amendment  whether  the  approval  of  stockholders  is
desirable or is necessary for the amendment to be effective.

     The  Committee  may  amend  the  terms of any  Award  theretofore  granted,
prospectively  or  retroactively,  and may also substitute new Awards for Awards
previously  granted  under  this  Plan or for  awards  granted  under  any other
compensation  plan of the Company or an  Affiliate  to  Participants,  including
without  limitation  previously granted Options having higher option prices, but
no such  amendment or  substitution  shall  materially  impair the rights of any
Participant without his consent.

     The Committee shall be authorized,  without the Participant's  consent,  to
make adjustments in Performance Award criteria or in the terms and conditions of
other Awards in recognition of events that it deems in its sole discretion to be
unusual  or  nonrecurring  that  affect  the  Company  or any  Affiliate  or the
financial  statements  of the Company or any  Affiliate,  or in  recognition  of
changes in applicable laws, regulations or accounting  principles,  whenever the
Committee  determines that such  adjustments are appropriate in order to prevent
the dilution or  enlargement  of benefits or potential  benefits under the Plan.
The  Committee  may correct any defect,  supply any  omission or  reconcile  any
inconsistency  in the Plan or any Award in the manner and to the extent it shall
deem  desirable to carry it into effect.  In the event the Company  shall assume
outstanding  employee  benefit  awards or the right or obligation to make future
such  awards in  connection  with the  acquisition  of  another  corporation  or
business entity, the Committee may, in its discretion,  make such adjustments in
the terms of Awards under the Plan as it shall deem appropriate.

Section 12.  Termination of Employment and Noncompetition.

     The Committee shall have full power and authority to determine whether,  to
what  extent  and under  what  circumstances  any  Award  shall be  canceled  or
suspended and shall  promulgate  rules and  regulations  to (i)  determine  what
events constitute disability, retirement, termination for an approved reason and
termination for cause for purposes of the Plan, and (ii) determine the treatment
of a  Participant  under  the  Plan  in  the  event  of his  death,  disability,
retirement, or termination for an approved reason. If a Participant's employment
with the Company or an  Affiliate  is  terminated  for cause,  all  unexercised,
unearned, and/or unpaid Awards, including, but not by way of limitation,  Awards
earned, but not yet paid, all unpaid dividends and dividend equivalents, and all
interest  accrued on the foregoing  shall be canceled or forfeited,  as the case
may  be,  unless  the  Participant's  Award  Agreement  provides  otherwise.  In
addition,  but without  limitation,  all  outstanding  Awards to any Participant
shall be canceled  if the  Participant,  without  the consent of the  Committee,
while employed by the Company or after  termination of such employment,  becomes
associated  with,  employed  by,  renders  services  to, or owns any interest in
(other than any nonsubstantial  interest,  as determined by the Committee),  any
business that is in competition  with the Company or any Affiliate,  or with any
business in which the Company or any  Affiliate  has a  substantial  interest as
determined by the Committee or such officers or committee of senior  officers to
whom the authority to make such determination is delegated by the Committee.

Section 13.  General Provisions.

     (a)  Nonassignability.  No Award shall be assignable or  transferable  by a
          Participant  otherwise  than  by will or by the  laws of  descent  and
          distribution; provided, however, that a Participant may, pursuant to a
          written  designation  of  beneficiary  filed with and  approved by the
          Committee prior to his death,  designate a beneficiary to exercise the
          rights of the Participant  with respect to any Award upon the death of
          the Participant.  Each Award shall be exercisable  during the lifetime
          of the Participant,  only by the Participant or, if permissible  under
          applicable  law,  by  the  guardian  or  legal  representative  of the
          Participant.

     (b)  Terms.  Except for Options granted  pursuant to Section 9, the term of
          each Award  shall be for such  period of months or years from the date
          of its grant as may be determined by the Committee; provided, however,
          that in no event shall the term of any  Incentive  Stock Option or any
          Stock  Appreciation  or Limited Right  related to any Incentive  Stock
          Option exceed a period of ten (10) years from the date of its grant.

     (c)  Rights to Awards. No Employee,  Participant or other Person shall have
          any  claim to be  granted  any Award  under the Plan,  and there is no
          obligation for uniformity of treatment of Employees,  Participants, or
          holders or beneficiaries of Awards under the Plan.

     (d)  No Cash Consideration for Awards.  Awards shall be granted for no cash
          consideration  or  for  such  minimal  cash  consideration  as  may be
          required by applicable law.

     (e)  Restrictions.  All  certificates  for Shares  delivered under the Plan
          pursuant to any Award shall be subject to such  stock-transfer  orders
          and other  restrictions  as the Committee may deem advisable under the
          rules,  regulations,  and other  requirements  of the  Securities  and
          Exchange Commission, any stock exchange upon which the Shares are then
          listed,  and any applicable  Federal or state  securities law, and the
          Committee  may  cause a legend  or  legends  to be  placed on any such
          certificates to make appropriate reference to such restrictions.

     (f)  Dividend  Equivalents.  Subject to the provisions of this Plan and any
          Award  Agreement,  the  recipient  of  an  Award  (including,  without
          limitation,   any  deferred  Award)  may,  if  so  determined  by  the
          Committee,  be entitled to receive,  currently or on a deferred basis,
          interest or  dividends,  or interest  or  dividend  equivalents,  with
          respect to the number of Shares covered by the Award, as determined by
          the Committee,  in its sole discretion,  and the Committee may provide
          that such amounts (if any) shall be deemed to have been  reinvested in
          additional Shares or otherwise reinvested.

     (g)  Withholding.  The Company  shall be  authorized  to withhold  from any
          Award  granted,  payment due or shares or other  property  transferred
          under the Plan the amount of income, withholding and payroll taxes due
          and  payable  in  respect  of an  Award,  payment  or  shares or other
          property transferred hereunder and to take such other action as may be
          necessary in the opinion of the Company to satisfy all obligations for
          the payment of such taxes.  The Company may require the Participant to
          pay to it such tax prior to and as a  condition  of the making of such
          payment  or  transfer  of  Shares  or  property  under  the  Plan.  In
          accordance   with  any   applicable   administrative   guidelines   it
          establishes,  the Committee may allow a Participant  to pay the amount
          of taxes due or payable in respect of an Award by withholding from any
          payment of Shares due as a result of such Award,  or by permitting the
          Participant  to deliver to the  Company,  Shares  having a fair market
          value,  as  determined by the  Committee,  equal to the amount of such
          taxes.

     (h)  Deferral of Awards.  At the discretion of the Committee,  payment of a
          Performance  Dividend  Equivalent or any portion  thereof or any other
          Award  may  be  deferred  by a  Participant  until  such  time  as the
          Committee may establish.  All such deferrals  shall be accomplished by
          the  delivery  on a  form  provided  by  the  Company  of  a  written,
          irrevocable  election by the  Participant  prior to such time  payment
          would  otherwise  be made.  Further,  all  deferrals  shall be made in
          accordance with administrative guidelines established by the Committee
          to ensure that such deferrals comply with all applicable  requirements
          of the Code and its regulations.  Deferred payments shall be paid in a
          lump  sum  or  installments,  as  determined  by  the  Committee.  The
          Committee may also credit interest,  at such rates to be determined by
          the Committee,  on cash payments that are deferred and credit Dividend
          Equivalents on deferred payments denominated in the form of Shares.

     (i)  No Limit on Other Compensation Arrangements. Nothing contained in this
          Plan shall prevent the Company or any Affiliate from adopting other or
          additional compensation arrangements,  subject to stockholder approval
          if such  approval  is  required  and such  arrangements  may be either
          generally applicable or applicable only in specific cases.

     (j)  Governing Law. The validity,  construction, and effect of the Plan and
          any rules and regulations  relating to the Plan shall be determined in
          accordance  with the laws of the State of Delaware  other than its law
          respecting choice of laws and applicable Federal law.

     (k)  Severability. If any provision of this Plan or any Award is or becomes
          or  is  deemed  to  be  invalid,   illegal  or  unenforceable  in  any
          jurisdiction,  or as to any Person or Award,  or would  disqualify the
          Plan or any Award under any law deemed  applicable  by the  Committee,
          such  provision  shall be  construed  or deemed  amended to conform to
          applicable  laws,  or if it cannot  be  construed  or  deemed  amended
          without,  in the determination of the Committee,  materially  altering
          the  intent of the Plan or the  Award,  it shall be  stricken  and the
          remainder  of the Plan and any such Award  shall  remain in full force
          and effect.

     (l)  No Right to  Employment.  The grant of an Award shall not be construed
          as giving a Participant  the right to be retained in the employ of the
          Company  or any  Affiliate  or to be  retained  as a  director  of the
          Company.  Further,  the  Company  or an  Affiliate  may  at  any  time
          terminate the employment of a Participant, and a director's service as
          a member of the Board may be terminated,  free from any liability,  or
          any claim under the Plan, unless otherwise  expressly  provided in the
          Plan or in any Award Agreement.

     (m)  No Trust or Fund Created.  Neither the Plan nor any Award shall create
          or be  construed  to create a trust or separate  fund of any kind or a
          fiduciary  relationship  between  the Company or any  Affiliate  and a
          Participant  or any  other  Person.  To the  extent  that  any  Person
          acquires a right to receive payments from the Company or any Affiliate
          pursuant to an Award, such right shall be no greater than the right of
          any unsecured general creditor of the Company or any Affiliate.

     (n)  No  Fractional  Shares.  No  fractional  Shares  shall  be  issued  or
          delivered  pursuant to the Plan or any Award,  and the Committee shall
          determine whether cash, other  securities,  or other property shall be
          paid or transferred in lieu of any fractional  Shares, or whether such
          fractional Shares or any rights thereto shall be canceled, terminated,
          or otherwise eliminated

     (o)  Headings.  Headings are given to the Sections and  subsections  of the
          Plan solely as a convenience  to facilitate  reference.  Such headings
          shall  not  be  deemed  in  any  way   material  or  relevant  to  the
          construction or interpretation of the Plan or any provision thereof.

     (p)  With  respect to persons  subject to Section 16 of the  Exchange  Act,
          transactions   under  this  Plan  are  intended  to  comply  with  all
          applicable  conditions  of Rule 16b-3.  To the extent any provision of
          this Plan or action by the Committee fails to so comply, the Committee
          may deem, for such persons,  such provision or action null and void to
          the extent permitted by law.

Section 14.  Effective Date of Plan.

     The Plan shall be effective as of September  1, 1995.  This  amendment  and
restatement shall be effective as of May 14, 2002.

Section 15.  Term of Plan.

     No Award shall be granted  pursuant to the Plan after August 31, 2005,  but
any Award theretofore granted may extend beyond that date.FOURTH AMENDMENT TO CREDIT AGREEMENT

     THIS FOURTH AMENDMENT TO CREDIT AGREEMENT (this "Fourth Amendment") is
entered into by and among PEET'S OPERATING COMPANY, INC. (formerly known as
Peet's Coffee and Tea, Inc.) ("Borrower"), PEET'S TRADEMARK COMPANY, and PEET'S
COFFEE & TEA, INC. (formerly known as Peet's Companies, Inc.), each a Washington
corporation (each a "Credit Party" and collectively, the "Credit Parties"), and
GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation ("Lender"), as of
April 23, 2002, with reference to the following facts:

                                    RECITALS

     A.     Pursuant to that certain Credit Agreement dated as of September 1,
2000, as amended by that certain First Amendment to Credit Agreement dated as of
January 19, 2001, that certain Second Amendment to Credit Agreement dated as of
June 29, 2001, and that certain Third Amendment to Credit Agreement dated as of
March 1, 2002, each by and among Credit Parties and Lender (as the same may have
been further amended, supplemented, or otherwise modified from time to time
prior to the date of this Fourth Amendment, the "Credit Agreement"), Lender
agreed to provide certain financial accommodations to or for the benefit of
Borrower and the other Credit Parties upon the terms and conditions contained
therein. Unless otherwise defined in this Fourth Amendment, (i) capitalized
terms or matters of construction defined or established in Annex A to the Credit
Agreement shall be applied as defined or established therein, and (ii)
references to Sections, Schedules, and Annexes shall refer, respectively, to
Sections, Schedules, and Annexes of the Credit Agreement.

     B.     The Credit Parties have advised Lender that they propose to enter
into certain transactions described in a registration statement on Form S-3
(File No. 333-85082), filed with the Securities and Exchange Commission ("SEC")
on or about March 27, 2002, as amended on April 3, 2002, and further amended on
April 15, 2002 and a registration statement on Form S-3 (File No. 333-86586)
filed pursuant to Rule 462(b) of the Securities Act of 1933, as amended
(collectively, the "Registration Statement"), relating to the offer of (i)
Holdings to sell up to 3,137,500 shares of its common Stock through a Public
Offering (including 487,500 shares of its common Stock subject to the
underwriter's over-allotment option), (ii) Gerald Baldwin to sell up to 550,000
shares of common Stock of Holdings, and (iii) James Reynolds to sell up to
50,000 shares of common Stock of Holdings, in each case, on the terms described
in the Registration Statement (collectively, the "Offering"), and have requested
that Lender consent thereto. The Credit Parties have further advised Lender that
the effective date of the Offering is anticipated to occur on or about April 18,
2002, and the closing date of the Offering is anticipated to occur on April 24,
2002 (the "Closing Offering Date").

     C. Pursuant to the Credit Agreement, Credit Parties have agreed that they
shall not take certain actions described in the Registration Statement, and
certain related actions in connection with the Offering, without the prior
written consent of Lender. Credit Parties have requested the consent of Lender
to such actions, and Lender has agreed to such request on the terms and
conditions set forth in this Fourth Amendment. In addition, Credit Parties have
requested certain modifications to the Credit Agreement, and Lender has agreed
to such request on the terms and conditions set forth in this Fourth Amendment.

     NOW, THEREFORE, in consideration of Credit Parties' performance of their
promises and obligations hereunder, the continued performance by Credit Parties
of their promises and obligations under the Credit Agreement and the other Loan
Documents, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Credit Parties and Lender hereby
agree as follows:

                                    AGREEMENT

1.  Amendments. The Credit Agreement is hereby amended as follows:

     1.1 Clause (d) of Section 6.2 is hereby amended by deleting the reference
to "$35,000,000" contained therein and substituting "$45,000,000" in lieu
thereof.

1.2 The definition of "Change of Control" in Annex A to the Credit Agreement is
hereby deleted in its entirety and the following is substituted in lieu thereof:

     "Change of Control" means any of the following: (a) any person or group of
persons (within the meaning of the Securities Exchange Act) shall have acquired
beneficial ownership (within the meaning of Rule 13d-3 promulgated by the
Securities and Exchange Commission under the Securities Exchange Act,) of 25% or
more of the issued and outstanding shares of capital Stock of Holdings having
the right to vote for the election of directors of Holdings under ordinary
circumstances; (b) during any period of twelve consecutive calendar months,
individuals who at the beginning of such period constituted the board of
directors of Holdings (together with any new directors whose election by the
board of directors of Holdings or whose nomination for election by the
Stockholders of Holdings was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason other than death or disability to constitute a
majority of the directors then in office; (c) Holdings ceases to own and control
all of the economic and voting rights associated with all of the outstanding
capital Stock of Borrower; or (d) Borrower ceases to own and control all of the
economic and voting rights associated with all of the outstanding capital Stock
of any of its Subsidiaries.

     1.3 Disclosure Schedule 3.7 is hereby amended to add the information set
forth on the addendum set forth on Exhibit A hereto.

2.  Lender's Consent to Certain Transactions. Notwithstanding any contrary term
or provision set forth in the Credit Agreement (including, without limitation,
Sections 6.5 and 8.1(l) or any other Loan Document, Lender hereby consents to
(a) the issuance of Stock by Holdings and the transfers of Stock of Holdings by
Gerald Baldwin and James Reynolds, and the payment of related and underwriting
and marketing fees and expenses to be effected pursuant to the terms of the
Offering ("Offering Stock Transfer"), and (b) Credit Parties' filing, execution,
and delivery, as applicable, of the Registration Statement, and agrees that the
foregoing shall not constitute a breach of the Credit Agreement or any other
Loan Document, subject to the following terms and conditions:

     2.1 on or before the Closing Offering Date, the Credit Parties shall have
delivered to Lender true and correct copies of the Registration Statement,
including all exhibits thereto filed with SEC and any additional amendments
filed thereto, together with evidence that such Registration Statement has been
duly approved by the boards of directors or holders of Stock of Holdings, as
applicable, with the intent of adopting or otherwise giving effect to such
documents on or about the effective date of the Offering;

     2.2 immediately upon any Credit Party's receipt of any initial proceeds of
the Offering, and on any Business Day thereafter on which any Credit Party has
received further proceeds of the Offering, Credit Parties shall report to Lender
in writing as to the receipt and proposed disposition of such proceeds;

     2.3 Credit Parties and Lender shall apply all proceeds of the Offering, net
of underwriting discounts and commissions and other reasonable costs paid to
non-Affiliates in connection therewith, as set forth in the Credit Agreement,
including, without limitation, Sections 1.3(b)(iii)(A) and 1.3(b)(iv) thereof,
and to the extent proceeds of the Offering are not applied to the Loans, the
Credit Parties may expend such proceeds pursuant to and subject to the
limitations set forth in the Credit Agreement;

     2.4 within thirty days of the date on which any Credit Party receives any
initial proceeds of the Offering, and on the first Business Day of each Fiscal
Quarter thereafter, Credit Parties shall deliver to Lender an addendum to
Disclosure Schedule (3.8) setting forth updated information concerning the Stock
of Holdings held at such time by the Persons constituting, as of the date of the
Offering Stock Transfers or such later date as is reflected in such addendum,
each of the directors, executive officers, and 5% shareholders of Holdings, as
each such term is used in the description of "Principal and Selling
Shareholders" set forth in the Registration Statement; and

     2.5 after giving effect to this Fourth Amendment, no Default or an Event of
Default shall have occurred and be continuing.

3.  Effectiveness. This Fourth Amendment shall be effective as of April 24,
2002, upon Lender's receipt of an original of this Fourth Amendment duly
executed by the Credit Parties and Lender.

4.  Representations and Warranties. Each Credit Party hereby represents and
warrants that (a) as of the date of this Fourth Amendment, it has no Commercial
Tort Claims, (b) at all times from the Closing Date through and until the date
of this Fourth Amendment WBG has remained inactive and (c) the representations
and warranties contained in the Credit Agreement were true and correct in all
material respects when made and, after giving effect to this Fourth Amendment,
shall remain true and correct in all material respects as of the date hereof and
thereof, except to the extent that a particular representation or warranty by
its terms expressly applies only to an earlier date. The Credit Agreement and
the other Loan Documents, as modified and amended by this Fourth Amendment,
constitute legal, valid and binding obligations of each Credit Party that is a
party thereto, enforceable against such Credit Party in accordance with their
respective terms.

5.  Ratification. Except as specifically modified by this Fourth Amendment, the
parties acknowledge that the Credit Agreement shall remain binding upon Credit
Parties and Lender and all provisions of the Credit Agreement shall remain in
full force and effect. Credit Parties expressly ratify and affirm their
respective obligations to Lender under the Credit Agreement and the other Loan
Documents.

6.  Miscellaneous.

     6.1 Entire Agreement; Amendment. This Fourth Amendment, together with the
Credit Agreement and the other Loan Documents, is the entire agreement between
the parties hereto with respect to the subject matter hereof. This Fourth
Amendment supersedes all prior and contemporaneous oral and written agreements
and discussions with respect to the subject matter hereof or thereof. No
amendment, modification, or waiver of any of the provisions of this Fourth
Amendment shall be valid or enforceable unless set forth in a writing signed by
Credit Parties and Lender.

     6.2 Recitals. The recitals set forth at the beginning of this Fourth
Amendment are true and correct, and such recitals are incorporated into and are
a part of this Fourth Amendment.

     6.3 Headings. Section headings used herein are for convenience of reference
only, are not part of this Fourth Amendment, and are not to be taken into
consideration in interpreting this Fourth Amendment.

     6.4 Counterparts. This Fourth Amendment may be executed in identical
counterpart copies, each of which shall be an original, but all of which shall
constitute one and the same agreement.  Delivery of an executed counterpart of a
signature page to this Fourth Amendment by facsimile transmission shall be
effective as delivery of a manually executed counterpart of this Fourth
Amendment. Any party delivering this Fourth Amendment by facsimile shall send
the original manually executed counterpart of this Fourth Amendment to the other
party promptly after such facsimile transmission.

     6.5 GOVERNING LAW. THIS FOURTH AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN SUCH STATE, WITHOUT REGARD TO THE
PRINCIPLES THEREOF REGARDING CONFLICT OF LAWS.

     6.6 No Waiver. Except as specifically set forth in this Fourth Amendment,
the execution, delivery and effectiveness of this Fourth Amendment shall not (a)
limit, impair, constitute a waiver of or otherwise affect any right, power or
remedy by Lender under the Credit Agreement or any other Loan Document, (b)
constitute a waiver of any provision in the Credit Agreement or any other Loan
Document, or (c) alter, modify, amend or in any way affect any of the terms,
conditions, obligations, covenants or agreements contained in the Credit
Agreement or any other Loan Document, all of which are ratified and affirmed in
all respects and shall continue in full force and effect.

     6.7 Conflict of Terms. In the event of any inconsistency between the
provisions of this Fourth Amendment and any provision of the Credit Agreement,
the terms and provisions of this
Fourth Amendment shall govern and control.

[Remainder of Page Intentionally Left Blank]

<PAGE>

     IN WITNESS WHEREOF, this Fourth Amendment to Credit Agreement has been duly
executed as of the date first written above.

                              "Credit Parties"

                              PEET'S COFFEE & TEA, INC.

                              By: /s/ Mark N. Rudolph
                              Name: Mark N. Rudolph
                              Title: CFO

                              PEET'S OPERATING COMPANY, INC.

                              By: /s/ Mark N. Rudolph
                              Name: Mark N. Rudolph
                              Title: CFO

                              PEET'S TRADEMARK COMPANY

                              By: /s/ Mark N. Rudolph
                              Name: Mark N. Rudolph
                              Title: CFO

                              "Lender"

                              GENERAL ELECTRIC CAPITAL
                              CORPORATION

                              By: /s/ Todd Gronski
                              Name: Todd Gronski
                              Duly Authorized Signatory

<PAGE>
                                    Exhibit A

            Addendum to Disclosure Schedule (3.7) to Credit Agreement

                                  See Attached

<PAGE>
                       Addendum to Disclosure Schedule 3.7

The following stock plans shall be added to Disclosure Schedule 3.7:

2000 Equity Incentive Plan
2000 Non-Employee Director Plan
2000 Employee Stock Purchase Plan

<PAGE>

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