Document:

EXHIBIT 10.1

                                                                 EXECUTION COPY

                                    SECOND AMENDMENT dated as of April 20, 2001
                           (this "Amendment"), among STILWELL FINANCIAL INC., a
                           Delaware corporation ("Stilwell" or a "Borrower"),
                           JANUS CAPITAL CORPORATION, a Colorado corporation
                           ("Janus" or a "Borrower", and together with Stilwell,
                           the Borrowers"), the lenders party hereto (the
                           "Lenders"), CITIBANK, N.A., as Administrative Agent
                           for the Lenders (in such capacity, the "Agent") and
                           as Swingline Lender.

                  A. Reference is made to (a) the 364-Day Credit Agreement dated
as of December 7, 2000 (as amended, supplemented or otherwise modified from time
to time, the "364-Day Agreement") and (b) the Five-Year Credit Agreement dated
December 7, 2000 (as amended, supplemented or otherwise modified from time to
time, the "5-Year Agreement", and together with the 364-Day Agreement, the
"Agreements"), in each case among the Borrowers, the Lenders party thereto,
Wells Fargo Bank West, N.A., as Documentation Agent for the Lenders, The Chase
Manhattan Bank, as Syndication Agent for the Lenders and the Agent. Capitalized
terms used but not otherwise defined herein have the meanings assigned to them
in the Agreements.

                  B. The Borrowers have requested that the Lenders amend certain
provisions of the Agreements. The Lenders are willing to agree to such
amendments on the terms and subject to the conditions of this Amendment.

                  Accordingly, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the sufficiency and receipt
of which are hereby acknowledged, the parties hereto hereby agree as follows:

                  SECTION 1. Amendments to Article 1 of the Agreements. Article
I of each Agreement is hereby amended by:

                  (a) deleting the last clause "or (iii) a 'change of control'
         in the indenture under which the LYONS are issued shall occur" from the
         definition of "Change of Control" and replacing it with the following:

                           "or (iii) a 'change of control' in any instrument
                           under which any Indebtedness permitted by Sections
                           6.01(a)(iv), (ix) or (xi) is issued shall occur."

                  (b) adding the following clause at the end of the
         parenthetical contained in clause (g) of the definition of
         "Indebtedness":

                           "and other than Stilwell's obligations under any
                           forward contract to purchase its own common stock as
                           part of its stock repurchase program; provided that
                           the documentation related to such forward contract
                           provides that in the event of a bankruptcy of
                           Stilwell, such obligations shall rank on a parity
                           with respect to priority of payment with claims of
                           holders of common stock of Stilwell)";

                  (c) deleting the words "as reasonably determined by  Stilwell"
         from the definition of "Liquid Assets";

                  (d) deleting in its entirety, the definition of "Lowry
         Property"; and

                  (e) deleting in its entirety, the definition of "LYONS."

                  SECTION 2. Amendment to Section 5.08 of the Agreements.
Section 5.08 of each Agreement is hereby deleted in its entirety and replaced by
the following:

                  "SECTION 5.08. Liquidity. Stilwell and its Consolidated
         Subsidiaries shall at all times maintain Liquid Assets having an
         aggregate fair market value greater than or equal to the sum of all
         Indebtedness outstanding at such time that is permitted by Sections
         6.01(a)(iv), (v) and (xi),

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         including, in the case of such Indebtedness issued with original issue
         discount, the sum of the issue price plus all accrued original issue
         discount at such time of all such outstanding Indebtedness."

                  SECTION 3. Amendment to Section 6.01 of the Agreements.
Section 6.01 of each Agreement is hereby amended by:

                  (a) deleting the word "and" at the end of clause (a)(ix);

                  (b) deleting the period at the end of clause (a)(x) and
         replacing it with the word "; and"; and

                  (c) adding a new clause (a)(xi) that reads in its entirety as
         follows:

                           "(xi) other Indebtedness of Stilwell and its Related
                  Subsidiaries that is not secured by any Lien in an aggregate
                  principal amount at any time outstanding that does not exceed
                  $800,000,000; provided that the incurrence of such
                  Indebtedness would not cause a Default or an Event of Default
                  under any other Section of this Agreement."

                  SECTION 4. Amendment to Section 6.01(a)(viii) of the
Agreements.  Section 6.01(a)(viii) of each Agreement is hereby deleted in its
entirety and replaced by the following:

                  "(viii) Intentionally Deleted;".

                  SECTION 5. Amendment to Section 6.02(g)of the Agreements.
Section 6.02(g) of each Agreement is hereby deleted in its entirety and replaced
by the following:

                  "(g) Intentionally Deleted;".

                  SECTION 6. Amendment to Section 6.03(b) of the Agreements.
Section 6.03(b) of each Agreement is hereby deleted in its entirety and replaced
by the following:
                  "(b) Intentionally Deleted.".

                  SECTION 7. Amendment to Section 6.07(d) of the Agreements.
Section 6.07(d) of each Agreement is hereby deleted in its entirety and replaced
by the following:

                  "(d) permit Consolidated Adjusted Net Worth to be less than
         $750,000,000 at any time; or".

                  SECTION 8. Amendment to Section 6.07(e) of the Agreements.
Section 6.07(e) of each Agreement is hereby deleted in its entirety and replaced
by the following:

                  "(e) permit Average Assets Under Management to be less than
         $180,000,000,000 on the last day of any month."

                  SECTION 9.  Representations, Warranties and Agreements.  Each
Borrower hereby represents and warrants to and agrees with each Lender and the
Agent that:

                  (a) The representations and warranties of each Borrower set
         forth in Article III of the Agreements are true and correct in all
         material respects with the same effect as if made on the Amendment
         Effective Date (as defined below), except to the extent such
         representations and warranties expressly relate to an earlier date.

                  (b) Such Borrower has the requisite power and authority to
         execute, deliver and perform its obligations under this Amendment and
         to perform its obligations under the Agreements as amended by this
         Amendment.

                  (c) The execution, delivery and performance by each Borrower
         of this Amendment and the performance by each Borrower of the
         Agreements, as amended by this Amendment, (i) have

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         been duly authorized by all requisite action and (ii) will not
         (A) violate (x) any provision of law, statute, rule or regulation, or
         of the certificate or articles of incorporation or other constitutive
         documents or by-laws of either Borrower, (y) any order of any
         Governmental Authority or (z) any provision of any indenture, agreement
         or other instrument to which either Borrower is a party or by which
         either of them or any of their property is or may be bound, (B) be in
         conflict with, result in a breach of or constitute (alone or with
         notice or lapse of time or both) a default under any such indenture,
         agreement for borrowed money or other agreement or instrument or
         (C) result in the creation or imposition of any Lien upon or with
         respect to any property or assets now owned or hereafter acquired by
         either Borrower.

                  (d) This Amendment has been duly executed and delivered by
         each Borrower. Each of this Amendment and the Agreements, as amended by
         this Amendment, constitutes a legal, valid and binding obligation of
         each Borrower, enforceable against each Borrower in accordance with its
         terms, except as enforceability may be limited by (i) any applicable
         bankruptcy, insolvency, reorganization, moratorium or similar laws
         affecting the enforcement of creditors' rights generally and (ii)
         general principals of equity.

                  (e) As of the Amendment Effective Date, no Event of Default or
         Default has occurred and is continuing.

                  (f) At the time of and immediately after giving effect to this
         Amendment, the outstanding aggregate principal amount of all Loans made
         by the Lenders under the Agreements (i) to Stilwell shall not exceed
         $350,000,000 and (ii) to Janus shall not exceed $250,000,000.

                  SECTION 10. Conditions to Effectiveness. This Amendment shall
become effective on the date of the satisfaction in full of the following
conditions precedent (the "Amendment Effective Date"):

                  (a) The Agent shall have received duly executed counterparts
         hereof which, when taken together, bear the authorized signatures of
         each Borrower, the Agent and the Required Lenders.

                  (b) All legal matters incident to this Amendment shall be
         satisfactory to the Required Lenders, the Agent and Cravath, Swaine &
         Moore, counsel for the Agent.

                  (c) The Agent shall have received such other documents,
         instruments and certificates as it or its counsel shall reasonably
         request.

                  SECTION 11. Amendment Fee. Stilwell agrees to pay to each
Lender that executes and delivers a copy of this Amendment to the Agent (or its
counsel) on or prior to May 4, 2001 an amendment fee (the "Amendment Fee") in an
amount equal to 0.05% of such Lender's aggregate Commitments (whether used or
unused) under the Agreements as of Amendment Effective Date; provided that
Stilwell shall have no liability for any such Amendment Fee if this Amendment
does not become effective. Such Amendment Fee shall be payable to each Lender
entitled to receive such fee on (i) the Amendment Effective Date, in the case of
each Lender entitled to receive such fee on the Amendment Effective Date, or
(ii) the date that is two Business Days after the date that the Agent (or its
counsel) receives an executed copy of this Amendment from such Lender, in the
case of each Lender that becomes entitled to receive such fee after the
Amendment Effective Date.

                  SECTION 12. Agreements. Except as specifically stated herein,
the Agreements shall continue in full force and effect in accordance with the
provisions thereof. As used therein, the terms "Agreement", "herein",
"hereunder", "hereto", "hereof" and words of similar import shall, unless the
context otherwise requires, refer to the Agreements as modified hereby.

                  SECTION 13.  Applicable Law.  THIS AMENDMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

                  SECTION 14. Counterparts. This Amendment may be executed in
any number of counterparts, each of which shall be an original but all of which,
when taken together, shall constitute but one instrument. Delivery of an
executed counterpart of a signature page of this Amendment by telecopy shall be
effective as delivery of a manually executed counterpart of this Amendment.

<PAGE>

                  SECTION 15. Expenses. Each Borrower agrees to reimburse the
Agent for its out-of-pocket expenses in connection with this Amendment,
including the reasonable fees, charges and disbursements of Cravath, Swaine &
Moore, counsel for the Agent.

                  IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their respective authorized officers as of the
date first above written.

                        STILWELL FINANCIAL INC.,

                        by
                                /s/ Anthony P. McCarthy
                        -----------------------------------
                        Name:  Anthony P. McCarthy
                        Title: Vice President - Treasurer

                        JANUS CAPITAL CORPORATION,

                        by
                                /s/ Thomas A. Early
                        -----------------------------------
                        Name:  Thomas A. Early
                        Title: Vice President and General Counsel

                        CITIBANK, N.A., individually and as
                          Administrative Agent and as Swingline Lender,

                        by
                                /s/ Matthew Nichols
                        -----------------------------------
                        Name:  Matthew Nichols
                        Title: Vice President

                        WELLS FARGO BANK WEST, N.A.,
                          individually and as Documentation Agent,

                        by
                                /s/ Gary D. Watkins
                        -----------------------------------
                        Name:  Gary D. Watkins
                        Title: Vice President

                        THE CHASE MANHATTAN BANK, individually and as
                          Syndication Agent,

                        by
                                /s/ Robert A. Krasnow
                        -----------------------------------
                        Name:  Robert A. Krasnow
                        Title: Vice President

                        BANK OF AMERICA, N.A.,

                        by
                                /s/ Joan L. D'Amico
                        -----------------------------------
                        Name:  Joan L. D'Amico
                        Title: Managing Director

<PAGE>

                        THE GOVERNOR AND COMPANY OF THE BANK
                         OF IRELAND,

                        by
                                /s/ P. Rushe
                        -----------------------------------
                        Name:  P. Rushe
                        Title:

                        by
                                /s/ Siobhan Wallace
                        -----------------------------------
                        Name:  Siobhan Wallace
                        Title: Account Executive

                        BANK OF NEW YORK,

                        by
                                /s/ E. Murphy
                        -----------------------------------
                        Name:  E. Murphy
                        Title: Vice President

                        CREDIT SUISSE FIRST BOSTON,

                        by
                                /s/ Jay Chall
                        -----------------------------------
                        Name:  Jay Chall
                        Title: Director

                        by
                                /s/ Stuart B. Ganes
                        -----------------------------------
                        Name:  Stuart B. Ganes
                        Title: Vice President

                        FIRSTAR BANK  N.A.,

                        by
                                /s/ Barry P. Sullivan
                        -----------------------------------
                        Name:  Barry P. Sullivan
                        Title: Vice President

                        FLEET NATIONAL BANK,

                        by
                                /s/ David A. Bosselait
                        -----------------------------------
                        Name:   David A. Bosselait
                        Title:  Director

                        HSBC,

                        by
                                /s/ L. Sue Lomax
                        -----------------------------------
                        Name:  L. Sue Lomax
                        Title: Senior Vice President

                        THE ROYAL BANK OF SCOTLAND plc,

                        by
                                /s/ Clark McGinn
                        -----------------------------------
                        Name:  Clark McGinn
                        Title: Senior Vice President

                        STATE STREET BANK AND TRUST COMPANY,

                        by
                                /s/ John Stankard
                        -----------------------------------
                        Name:  John Stankard
                        Title: Vice President

                        UMB, N.A.,

                        by
                                /s/ Terry Dierks
                        -----------------------------------
                        Name:  Terry Dierks
                        Title: Senior Vice PresidentEXHIBIT 10.2

                             STILWELL FINANCIAL INC.

                       1998 Long Term Incentive Stock Plan

              (as amended and restated effective as of May 9, 2001)

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                                Table of Contents

Article                                                                     Page

1.  History, Effective Date, Objectives and Duration.........................  1

2.  Definitions..............................................................  1

3.  Administration...........................................................  8

4.  Shares Subject to the Plan and Maximum Awards...........................  10

5.  Eligibility and General Conditions of Awards............................. 11

6.  Stock Options............................................................ 15

7.  Stock Appreciation Rights and Limited Stock Appreciation Rights.......... 18

8.  Restricted Shares........................................................ 19

9.  Performance Units and Performance Shares................................. 20

10.  Bonus Shares............................................................ 21

11.  Beneficiary Designation................................................. 22

12.  Deferrals............................................................... 22

13.  Rights of Employees/Directors/Consultants............................... 22

14.  Change of Control....................................................... 23

15.  Amendment, Modification, and Termination................................ 24

16.  Withholding............................................................. 24

17.  Successors.............................................................. 26

18.  Additional Provisions................................................... 26

                                       2
<PAGE>

                             Stilwell Financial Inc.
                       1998 Long Term Incentive Stock Plan

              (AS AMENDED AND RESTATED EFFECTIVE AS OF May 9, 2001)

Article 1.   History, Effective Date, Objectives and Duration

        1.1           History.  Stilwell Financial  Inc., a Delaware corporation
the  "Company"),  has  established  the Stilwell  Financial  Inc. 1998 Long Term
Incentive  Stock Plan, as set forth herein,  and as the same may be amended from
time to time  (the  "Plan").  The Plan was  originally  adopted  by the Board of
Directors of the Company (the "Board") and approved by the sole  stockholder  of
the  Company,  Kansas  City  Southern  Industries,  Inc.  ("KCSI")  and  by  the
stockholders  of KCSI on July 15, 1998,  to be effective as of June 1, 1998 (the
"Effective  Date").  Effective  August 11,  1999,  Section  2.14 of the Plan was
amended and the Plan was renamed;  effective  June 15, 2000,  Sections 2.51, 5.7
and 15.1 were  amended;  effective  January 18, 2001,  Sections  2.42,  2.51 and
5.6(d) were amended; and effective May 9, 2001, Section 5.6(d) was amended. Each
such time the Plan was amended, the Plan has been restated as so amended, as set
forth herein.

        1.2           Objectives  of the Plan.  The Plan is  intended  to  allow
employees,  directors and  consultants  of the Company and its  Subsidiaries  to
acquire or increase equity ownership in the Company, thereby strengthening their
commitment to the success of the Company and stimulating their efforts on behalf
of the Company, and to assist the Company and its Subsidiaries in attracting new
employees, directors and consultants and retaining existing employees, directors
and  consultants.  The Plan also is intended to optimize the  profitability  and
growth of the Company through incentives which are consistent with the Company's
goals; to provide  employees,  directors and  consultants  with an incentive for
excellence in individual  performance;  and to promote teamwork among employees,
directors and consultants.

        1.3           Duration  of the Plan.  The Plan  shall  commence  on  the
Effective Date and shall remain in effect,  subject to the right of the Board to
amend or terminate the Plan at any time pursuant to Article 15 hereof, until all
Shares  subject to it shall have been  purchased  or acquired  according  to the
Plan's provisions. However, in no event may an Incentive Stock Option be granted
under the Plan on or after the date 10 years  following  the  earlier of (i) the
date the  Plan was  adopted  and  (ii)  the  date the Plan was  approved  by the
stockholders of the Company.

Article 2.   Definitions

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

        2.1           "Article" means an Article of the Plan.

        2.2           "Award" means Options (including Incentive Stock Options),
Restricted Shares, Bonus Shares, stock appreciation rights (SARs), limited stock
appreciation  rights (LSARs),  Performance  Units or Performance  Shares granted
under the Plan.

<PAGE>

        2.3           "Award Agreement" means the written agreement by which  an
Award shall be evidenced.

        2.4           "Board" has the meaning set forth in Section 1.1.

        2.5           "Bonus  Shares" means Shares that are awarded to a Grantee
without  cost  and  without  restrictions  in  recognition  of past  performance
(whether determined by reference to another employee benefit plan of the Company
or otherwise)  or as an incentive to become an employee,  director or consultant
of the Company or a Subsidiary.

        2.6           "Cause"  means,  unless  otherwise  defined  in  an  Award
Agreement,

               (i)    before the occurrence of a Change of Control,  any one  or
more of the following,  as determined by the Committee:

                      (A)      a Grantee's  commission of a crime which, in the
          judgment of the  Committee,  resulted or is likely to result in damage
          or injury to the Company or a Subsidiary;

                      (B)      the material  violation by the Grantee of written
          policies of the Company or a Subsidiary;

                      (C)      the habitual neglect or failure by the Grantee in
          the  performance  of his or her duties to the Company or a  Subsidiary
          (but  only if  such  neglect  or  failure  is not  remedied  within  a
          reasonable  remedial period after Grantee's  receipt of written notice
          from the Company which describes such neglect or failure in reasonable
          detail and specifies the remedial period); or

                      (D)   action or inaction  by  the Grantee  in  connection
          with his or her duties to the Company or a  Subsidiary  resulting,  in
          the judgment of the Committee,  in material injury to the Company or a
          Subsidiary; and

               (ii) from and after the  occurrence  of a Change of Control,  the
          occurrence of any one or more of the  following,  as determined in the
          good faith and reasonable judgment of the Committee:

                      (A)    Grantee's  conviction  for  committing  an  act  of
          fraud,  embezzlement,  theft,  or any other act  constituting a felony
          involving  moral  turpitude  or  causing  material  damage or  injury,
          financial or otherwise, to the Company;

                      (B)    a   demonstrably  willful  and  deliberate  act  or
          failure to act which is  committed  in bad faith,  without  reasonable
          belief that such action or  inaction is in the best  interests  of the
          Company,  which  causes  material  damage  or  injury,   financial  or
          otherwise,  to the  Company  (but only if such act or  inaction is not
          remedied  within 15  business  days of  Grantee's  receipt  of written
          notice  from  the  Company  which  describes  the act or  inaction  in
          reasonable detail); or

                                       2
<PAGE>

                      (C) the consistent  gross neglect of duties or  consistent
          wanton  negligence by the Grantee in the  performance of the Grantee's
          duties (but only if such neglect or negligence is not remedied  within
          a reasonable remedial period after Grantee's receipt of written notice
          from the  Company  which  describes  such  neglect  or  negligence  in
          reasonable detail and specifies the remedial period).

        2.7      "Change of Control" means, unless otherwise defined in an Award
Agreement,  any one or more of the following:

               (i)    the  acquisition or holding by any person, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the 1934 Act), other than
by the Company or any Subsidiary or any employee  benefit plan of the Company or
a  Subsidiary  (and other than by KCSI prior to the Spin-off  Distribution),  of
beneficial  ownership  (within  the meaning of Rule 13d-3 under the 1934 Act) of
20% or more of the then-outstanding  Common Stock or the then-outstanding Voting
Power of the Company;  provided,  however, that no Change of Control shall occur
solely by reason of any such acquisition by a corporation with respect to which,
after such acquisition, more than 60% of both the then-outstanding common shares
and the then-outstanding  Voting Power of such corporation are then beneficially
owned, directly or indirectly,  by the persons who were the beneficial owners of
the  then-outstanding  Common Stock and Voting Power of the Company  immediately
before  such  acquisition,  in  substantially  the  same  proportions  as  their
respective   ownership,    immediately   before   such   acquisition,   of   the
then-outstanding Common Stock and Voting Power of the Company; or

               (ii)   individuals   who,   as  of  the  date  of   the  Spin-off
Distribution,  constitute the Board (the "Incumbent Board") cease for any reason
to  constitute  at least 75% of the  Board;  provided  that any  individual  who
becomes a director  after the Effective  Date whose  election or nomination  for
election  by the  Company's  stockholders  was  approved  by at least 75% of the
Incumbent  Board (other than an election or nomination  of an  individual  whose
initial  assumption  of office  is in  connection  with an actual or  threatened
"election  contest" relating to the election of the directors of the Company (as
such terms are used in Rule  14a-11  under the 1934 Act) or  "tender  offer" (as
such term is used in Section 14(d) of the 1934 Act) or a proposed  Extraordinary
Transaction  (as defined below)) shall be deemed to be a member of the Incumbent
Board; or

               (iii)  approval by the stockholders of the Company of any one  or
more of the following:

                      (A) a  merger,  reorganization,  consolidation  or similar
          transaction  (any of the foregoing,  an  "Extraordinary  Transaction")
          with  respect  to which  persons  who were the  respective  beneficial
          owners of the  then-outstanding  Common  Stock and Voting Power of the
          Company  immediately before such Extraordinary  Transaction would not,
          if such Extraordinary  Transaction were to be consummated  immediately
          after such stockholder  approval (but otherwise in accordance with the
          terms  presented  in writing to the  stockholders  of the  Company for
          their approval),  beneficially own, directly or indirectly,  more than
          60%   of   both   the   then-outstanding   common   shares   and   the
          then-outstanding  Voting Power of the corporation  resulting from such
          Extraordinary  Transaction,  in substantially  the same proportions as
          their  respective  ownership,  immediately  before such  Extraordinary

                                       3
<PAGE>

          Transaction,  of the then-outstanding Common Stock and Voting Power of
          the Company,

                      (B) a liquidation or dissolution of the Company, or

                      (C) the sale or other  disposition of all or substantially
          all of the  assets of the  Company in one  transaction  or a series of
          related transactions.

        2.8            "Change of Control Value" means the Fair  Market Value of
a Share on the date of a Change of Control.

        2.9           "Code" means the Internal Revenue Code of 1986, as amended
from time to time,  and  regulations  and rulings  thereunder.  References  to a
particular section of the Code include references to successor provisions of the
Code or any successor code

        2.10          "Committee,"  "Plan  Committee" and "Management Committee"
have the meanings set forth in Article 3.

        2.11          "Common Stock" means the common stock, $.01 par value,  of
the Company.

        2.12           "Company" has the meaning set forth in Section 1.1.

        2.13           "Covered  Employee"  means a Grantee who, as of the  date
that the value of an Award is  recognizable  as taxable  income,  is one of  the
group of "covered  employees,"  within the meaning of Code Section 162(m).

        2.14          "Disability" means, unless otherwise defined in  an  Award
Agreement,  for  purposes of the  exercise of an  Incentive  Stock  Option after
Termination of Affiliation,  a disability within the meaning of Section 22(e)(3)
of the Code, and for all other  purposes,  means total  disability as determined
for purposes of the long term  disability  plan of Stilwell or any Subsidiary or
other  employer  of the  Grantee  and  disability  shall be  deemed to occur for
purposes of the Plan on the date such determination of disability is made.

        2.15          "Disqualifying Disposition" has the meaning set  forth  in
Section 6.4.

        2.16          "Effective Date" has the meaning set forth in Section 1.1.

        2.17          "Eligible  Person" means (i) any  employee  (including any
officer) of the Company or any Subsidiary, including any such employee who is on
an approved leave of absence,  layoff, or has been subject to a disability which
does not  qualify  as a  Disability,  (ii) any  director  of the  Company or any
Subsidiary  and  (iii) any  person  performing  services  for the  Company  or a
Subsidiary in the capacity of a consultant. Solely for purposes of granting KCSI
Substitute  Options

                                       4
<PAGE>

(as defined in Section 6.3),  Eligible  Person shall also include any person who
holds a KCSI  Option  (as  defined  in  Section  6.3) as of the date that a KCSI
Substitute Option is granted.

        2.18          "Exchange  Act" means the Securities Exchange Act of 1934,
as  amended  from  time to time.  References  to a  particular  section  of  the
Exchange Act include references to successor provisions.

        2.19          "Extraordinary Transaction" has the meaning  set forth  in
Section 2.7.

        2.20          "Fair Market Value" means (A) with respect to any property
other than Shares,  the fair market value of such  property  determined  by such
methods  or  procedures  as  shall  be  established  from  time  to  time by the
Committee,  and (B) with respect to Shares,  unless otherwise  determined by the
Committee, as of any date, (i) the average of the high and low trading prices on
the date of  determination  on the New York Stock  Exchange  (or,  if no sale of
Shares was reported for such date, on the next preceding date on which a sale of
Shares  was  reported);  (ii) if the Shares are not listed on the New York Stock
Exchange,  the average of the high and low trading  prices of the Shares on such
other  national  exchange  on which  the  Shares  are  principally  traded or as
reported by the National Market System, or similar  organization,  or if no such
quotations are available,  the average of the high bid and low asked  quotations
in the  over-the-counter  market as reported by the  National  Quotation  Bureau
Incorporated or similar organizations; or (iii) in the event that there shall be
no  public  market  for the  Shares,  the fair  market  value of the  Shares  as
determined by the Committee.

        2.21          "Freestanding   SAR"  means   an  SAR   that  is  granted
independently of any other Award.

        2.22          "Good Reason" means, unless otherwise defined  in an Award
Agreement,  the occurrence after a Change of Control,  without a Grantee's prior
written consent, of any one or more of the following:

               (i)    the  assignment to the Grantee of any duties which  result
in a  material  adverse  change in the  Grantee's  position  (including  status,
offices,  titles,  and  reporting  requirements),  authority,  duties,  or other
responsibilities  with the  Company,  or any other  action of the Company  which
results in a material  adverse change in such position,  authority,  duties,  or
responsibilities,  other than an insubstantial  and inadvertent  action which is
remedied by the Company  promptly  after receipt of notice  thereof given by the
Grantee,

               (ii)   any  relocation of the Grantee of more  than 40 miles from
the place where the Grantee was located at the time of the Change of Control, or

               (iii)  a material  reduction  or elimination  of any component of
the Grantee's rate of compensation, including (x) base salary, (y) any incentive
payment  or  (z)  benefits  or  perquisites  which  the  Grantee  was  receiving
immediately prior to a Change of Control.

                                       5
<PAGE>

        2.23          "Grant Date" has the meaning set forth in Section 5.2.

        2.24          "Grantee" means an individual  who  has  been granted  an
Award.

        2.25          "Incentive  Stock Option"  means an option  granted  under
Article 6 of the Plan that is intended to meet the  requirements  of Section 422
of the Code or any successor provisions thereto.

        2.26          "including"  or "includes"  means  "including,  without
limitation," or "includes, without limitation," respectively.

        2.27          "LSAR" means a limited stock appreciation right.

        2.28          "Mature  Shares" means Shares for which the holder thereof
has good  title,  free and clear of all liens and  encumbrances,  and which such
holder  either (i) has held for at least six months or (ii) has purchased on the
open market.

        2.29          "Minimum Consideration" means $.01 per Share or such other
amount  that is from time to time  considered  to be  capital  for  purposes  of
Section 154 of the Delaware General Corporation Law.

        2.30          "Option" means an option granted under Article  6  of  the
Plan.

        2.31          "Option  Price"  means  the  price at which a Share may be
purchased by a Grantee pursuant to an Option.

        2.32          "Option Term" means the period beginning on the Grant Date
of an Option and ending on the expiration  date of such Option,  as specified in
the Award  Agreement for such Option and as may,  consistent with the provisions
of the  Plan,  be  extended  from  time to time by the  Committee  prior  to the
expiration date of such Option then in effect.

        2.33          "Outside  Director"  means a  member  of the  Board who is
not an employee of the Company or any Subsidiary.

        2.34          "Performance-Based  Exception" means the performance-based
exception from the tax deductibility limitations of Code Section 162(m).

        2.35          "Performance  Period"  has   the  meaning  set   forth  in
Section 9.2.

        2.36          "Performance Share" or "Performance Unit"  has the meaning
set forth in Article 9.

        2.37          "Period of  Restriction" means the period during which the
transfer of  Restricted  Shares is limited in some way (the length of the period
being based on the passage of time, the

                                       6
<PAGE>

achievement  of  performance  goals,  or upon the  occurrence of other events as
determined by the Committee),  and the Shares are subject to a substantial  risk
of forfeiture, as provided in Article 8.

        2.38          "Person"  shall have the  meaning  ascribed  to such  term
in Section  3(a)(9) of the  Exchange  Act and used in  Sections  13(d) and 14(d)
thereof, including a "group" as defined in Section 13(d) thereof.

        2.39          "Plan" has the meaning set forth in Section 1.1.

        2.40          "Required Withholding" has the meaning set forth in
Article 16.

        2.41          "Restricted  Shares"  means  Shares  that  are subject  to
forfeiture if the Grantee does not satisfy the conditions specified in the Award
Agreement applicable to such Shares.

        2.42          "Retirement"  means,  for  any  Grantee  who is a director
of the company or an employee,  Termination  of  Affiliation by the Grantee upon
either (i) having both attained age  fifty-five  (55) and completed at least ten
(10)  years of  service  with the  Company  or a  Subsidiary  or a  Consolidated
Subsidiary,  including any years of service such employee may have had with KCSI
or (ii) meeting such other requirements as may be specified by the Committee.

        2.43          "Rule 16b-3" means Rule 16b-3 promulgated by the SEC under
the Exchange  Act, as amended  from time to time,  together  with any  successor
rule, as in effect from time to time.

        2.44          "SAR" means a stock appreciation right.

        2.45          "SEC"  means the  United  States Securities  and  Exchange
Commission, or any successor thereto.

        2.46          "Section" means, unless the context otherwise requires,  a
Section of the Plan.

        2.47          "Section  16 Person"  means  a  person who  is subject  to
potential  liability  under  Section 16(b)  of the  1934  Act  with  respect  to
transactions involving equity securities of the Company.

        2.48          "Share" means a share of Common Stock.

        2.49          "Spin-off  Distribution"  means  the distribution  by KCSI
of at least 80% of the  outstanding  Shares,  as a result  of which the  Company
ceases to be a subsidiary of KCSI.

        2.50          "Strike  Price" of any SAR shall equal, for any Tandem SAR
(whether  such  Tandem  SAR is granted at the same time as or after the grant of
the related Option), the Option Price of such Option, or for any other SAR, 100%
of the Fair Market Value of a Share on the Grant Date of such SAR; provided that
the Committee may specify a higher Strike Price in the Award Agreement.

                                       7
<PAGE>

        2.51          "Subsidiary"  means,  for  purposes of grants of Incentive
Stock Options,  a corporation as defined in Section 424(f) of the Code (with the
Company  being  treated  as  the  employer  corporation  for  purposes  of  this
definition) and, for all other purposes,  a United States or foreign corporation
or limited liability  company,  partnership or other similar entity with respect
to  which  the  Company  owns,  directly  or  indirectly,  50% (or  such  lesser
percentage as the Committee may specify,  which  percentage  may be changed from
time to time and may be different for different  entities) or more of the Voting
Power of such  corporation,  limited  liability  company,  partnership  or other
similar  entity  and  "Consolidated  Subsidiary"  means  a  Subsidiary  that  is
consolidated with the Company for financial reporting purposes.

        2.52          "Tandem SAR" means an SAR that  is granted  in  connection
with a related Option,  the exercise of which shall require  cancellation of the
right  to  purchase  a Share  under  the  related  Option  (and  when a Share is
purchased under the related Option, the Tandem SAR shall similarly be canceled).

        2.53          "Termination of  Affiliation"  occurs on the first day  on
which an  individual  is for any  reason no  longer  providing  services  to the
Company  or  any  Subsidiary  in  the  capacity  of  an  employee,  director  or
consultant,  or with respect to an individual who is an employee or director of,
or consultant  to, a corporation  which is a Subsidiary,  the first day on which
such corporation ceases to be a Subsidiary.

        2.54          "10%  Owner"   means  a  person  who  owns  capital  stock
(including  stock treated as owned under Section 424(d) of the Code)  possessing
more than 10% of the total combined voting power of all classes of capital stock
of the Company or any Subsidiary.

        2.55          "Voting Power"  means  the  combined  voting  power of the
then-outstanding  securities of a corporation  entitled to vote generally in the
election of directors.

Article 3.   Administration

        3.1           Committee.

               (a)    Subject to Article 15, and to Section  3.2, the Plan shall
be  administered  by  the  Board,  or a  committee  appointed  by the  Board  to
administer  the Plan ("Plan  Committee").  To the extent the Board  considers it
desirable   to  comply   with  or   qualify   under   Rule  16b-3  or  meet  the
Performance-Based  Exception,  the Plan  Committee  shall consist of two or more
directors of the Company,  all of whom qualify as "outside directors" as defined
for purposes of the  regulations  under Code  Section 162(m)  and  "non-employee
directors"  within the meaning of Rule 16b-3.  The number of members of the Plan
Committee  shall  from  time to time be  increased  or  decreased,  and shall be
subject  to such  conditions,  in each case as the Board  deems  appropriate  to
permit transactions in Shares pursuant to the Plan to satisfy such conditions of
Rule 16b-3 and the Performance-Based Exception as then in effect.

                                       8
<PAGE>

               (b)    The Board or the Plan  Committee  may appoint and delegate
to another committee ("Management Committee") any or all of the authority of the
Board or the Plan Committee,  as applicable,  with respect to Awards to Grantees
other than Grantees who are  Section 16  Persons at the time any such  delegated
authority is exercised.

               (c)    Any  references  herein to  "Committee"  are references to
the Board, or the Plan Committee or the Management Committee, as applicable.

        3.2           Powers of Committee.  Subject to the express provisions of
the Plan,  the  Committee has full and final  authority  and sole  discretion as
follows:

               (i)      to determine when, to whom and in what types and amounts
Awards should be granted and the terms and conditions  applicable to each Award,
including the benefit  payable under any SAR,  Performance  Unit or  Performance
Share,  and whether or not specific  Awards shall be granted in connection  with
other specific Awards, and if so whether they shall be exercisable  cumulatively
with, or alternatively to, such other specific Awards;

               (ii)     to determine the amount,  if any, that a  Grantee  shall
pay for  Restricted  Shares,  whether to permit or require  the  payment of cash
dividends thereon to be deferred and the terms related thereto,  when Restricted
Shares  (including  Restricted  Shares  acquired upon the exercise of an Option)
shall be forfeited and whether such shares shall be held in escrow;

               (iii)    to construe and  interpret  the  Plan  and  to  make all
determinations necessary or advisable for the administration of the Plan;

               (iv)     to make,  amend, and rescind rules relating to the Plan,
including  rules with respect to the  exercisability  and  nonforfeitability  of
Awards upon the Termination of Affiliation of a Grantee;

               (v)      to determine  the  terms  and  conditions  of  all Award
Agreements  (which need not be identical)  and, with the consent of the Grantee,
to amend any such Award  Agreement at any time,  among other  things,  to permit
transfers of such Awards to the extent permitted by the Plan;  provided that the
consent of the Grantee  shall not be required for any  amendment  which (A) does
not adversely affect the rights of the Grantee, or (B) is necessary or advisable
(as  determined  by the  Committee)  to carry out the  purpose of the Award as a
result of any new or change in existing applicable law:

               (vi)     to cancel,  with the consent of the Grantee, outstanding
Awards and to grant new Awards in substitution therefor;

               (vii)    to accelerate  the  exercisability  (including
exercisability within a period of less than six months after the Grant Date) of,
and to accelerate or waive any or all of the terms and conditions applicable to,
any Award or any group of Awards for any reason  and at any time,  including  in
connection with a Termination of Affiliation;

                                       9
<PAGE>

               (viii)   subject  to  Sections  1.3 and 5.3,  to  extend the time
during which any Award or group of Awards may be exercised;

               (ix) to make such  adjustments  or  modifications  to  Awards  to
Grantees  working  outside  the United  States as are  advisable  to fulfill the
purposes of the Plan or to comply with applicable local law;

               (x)      to impose  such  additional  terms and  conditions  upon
the grant,  exercise or  retention  of Awards as the  Committee  may,  before or
concurrently with the grant thereof,  deem appropriate,  including  limiting the
percentage of Awards which may from time to time be exercised by a Grantee; and

               (xi)     to take any other  action  with  respect to any  matters
relating to the Plan for which it is responsible.

        All  determinations  on all matters relating to the Plan  or  any  Award
Agreement may be made in the sole and absolute discretion of the Committee,  and
all such determinations of the Committee shall be final,  conclusive and binding
on all  Persons.  No member of the  Committee  shall be liable for any action or
determination made with respect to the Plan or any Award.

Article 4.   Shares Subject to the Plan and Maximum Awards

        4.1           Number  of  Shares  Available   for  Grants.   Subject  to
adjustment as provided in Section 4.2, the number of Shares hereby  reserved for
issuance under the Plan shall be 30,000,000,  and the number of Shares for which
Awards (other than KCSI  Substitute  Options,  as defined in Section 6.3) may be
granted to any Grantee on any Grant  Date,  when  aggregated  with the number of
Shares for which Awards (other than KCSI  Substitute  Options)  have  previously
been granted to such  Grantee in the same  calendar  year,  shall not exceed one
percent (1%) of the total Shares  outstanding  as of such Grant Date;  provided,
however,  that the total  number of Shares  for which  Awards  (other  than KCSI
Substitute Options) may be granted to any Grantee in any calendar year shall not
exceed  2,000,000.  If any Shares  subject  to an 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.  If any  Shares  (whether  subject  to or
received pursuant to an Award granted  hereunder,  purchased on the open market,
or otherwise  obtained)  are withheld,  applied as payment,  or sold pursuant to
procedures approved by the Committee and the proceeds thereof applied as payment
in connection  with the exercise of an Award or the withholding of taxes related
thereto,  such Shares,  to the extent of any such withholding or payment,  shall
again be  available  or shall  increase  the  number  of  Shares  available,  as
applicable,  for  grant  under  the Plan.  The  Committee  may from time to time
determine  the  appropriate  methodology  for  calculating  the number of Shares
issued pursuant to the Plan.  Shares issued pursuant to the Plan may be treasury
Shares or newly-issued Shares.

                                       10
<PAGE>

        4.2           Adjustments in Authorized  Shares.  In the event that the
Committee  determines  that any dividend or other  distribution  (whether in the
form of cash, Shares,  other securities,  or other property),  recapitalization,
stock split,  reverse stock split,  subdivision,  consolidation  or reduction of
capital,  reorganization,  merger, scheme of arrangement,  split-up, spin-off or
combination  involving  the Company or repurchase or exchange of Shares or other
rights to purchase Shares or other  securities of the Company,  or other similar
corporate  transaction  or event  that  occurs at any time  after  the  Spin-off
Distribution  affects the Shares such that any  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 shall, in such manner as it may deem equitable, adjust any or
all of (i) the number and type of Shares (or other  securities or property) with
respect to which  Awards may be granted,  (ii) the number and type of Shares (or
other securities or property) subject to outstanding Awards, and (iii) the grant
or  exercise  price with  respect to any Award or, if deemed  appropriate,  make
provision  for a cash  payment  to the  holder  of an  outstanding  Award or the
substitution  of other  property  for Shares  subject to an  outstanding  Award;
provided, in each case that with respect to Awards of Incentive Stock Options no
such  adjustment  shall be authorized to the extent that such  adjustment  would
cause  the  Plan to  violate  Section  422(b)(1)  of the  Code or any  successor
provision  thereto;  and provided further,  that the number of Shares subject to
any Award denominated in Shares shall always be a whole number.

Article 5.   Eligibility and General Conditions of Awards

        5.1           Eligibility.  The  Committee  may  grant  Awards  to  any
Eligible Person, whether or not he or she has previously received an Award.

        5.2           Grant  Date.  The Grant  Date of an  Award  shall  be  the
date on which the Committee  grants the Award or such later date as specified by
the Committee.

        5.3           Maximum  Term.  The  Option  Term or other  period  during
which an Award may be outstanding shall under no circumstances  extend more than
10 years  after the Grant Date,  and shall be subject to earlier  termination as
herein provided;  provided,  however,  that any deferral of a cash payment or of
the delivery of Shares that is permitted or required by the  Committee  pursuant
to Article 12 may, if so  permitted  or required by the  Committee,  extend more
than 10 years after the Grant Date of the Award to which the deferral relates.

        5.4           Award  Agreement.  To the extent  not  set  forth  in  the
Plan,  the terms and  conditions  of each Award  (which need not be the same for
each grant or for each Grantee) shall be set forth in an Award Agreement.

        5.5           Restrictions on Share  Transferability.  The Committee may
impose such  restrictions  on any Shares  acquired  pursuant to the  exercise or
vesting  of an Award  as it may deem  advisable,  including  restrictions  under
applicable federal securities laws.

                                       11
<PAGE>

        5.6           Termination   of   Affiliation.   Except  as  otherwise
provided in an Award  Agreement,  and subject to the provisions of Section 14.1,
the extent to which the Grantee  shall have the right to  exercise,  vest in, or
receive  payment in respect of an Award  following  Termination  of  Affiliation
shall be determined in accordance with the following  provisions of this Section
5.6.

               (a)           For Cause. If  a  Grantee  has  a  Termination   of
Affiliation for Cause, (i) the Grantee's  Restricted Shares that are forfeitable
shall thereupon be forfeited, subject to the provisions of Section 8.4 regarding
repayment of certain amounts to the Grantee;  and (ii) any  unexercised  Option,
LSAR or SAR, and any Performance Share or Performance Unit with respect to which
the  Performance  Period  has not  ended as of the date of such  Termination  of
Affiliation,  shall terminate  effective  immediately  upon such  Termination of
Affiliation.

               (b)           On  Account  of  Death or Disability.  If a Grantee
has a Termination of Affiliation on account of death or Disability, then:

                      (i) the Grantee's  Restricted Shares that were forfeitable
shall thereupon become nonforfeitable;

                      (ii) any  unexercised  Option  or  SAR,  whether  or   not
exercisable on the date of such Termination of Affiliation, may be exercised, in
whole or in  part,  within  the  first  12  months  after  such  Termination  of
Affiliation  (but only during the Option  Term) by the Grantee or,  after his or
her death, by (A) his or her personal  representative  or the person to whom the
Option or SAR, as applicable,  is transferred by will or the applicable  laws of
descent  and  distribution,  or (B)  the  Grantee's  beneficiary  designated  in
accordance with Article 11; and

                      (iii) the  benefit   payable   with   respect    to    any
Performance  Share or  Performance  Unit with  respect to which the  Performance
Period  has not  ended  as of the date of such  Termination  of  Affiliation  on
account of death or Disability  shall be equal to the product of the Fair Market
Value of a Share as of the date of such  Termination of Affiliation or the value
of the Performance  Unit specified in the Award Agreement  (determined as of the
date of such Termination of Affiliation), as applicable, multiplied successively
by each of the following:

                             (1) a fraction,  the  numerator  of  which  is  the
number of  months  (including  as a whole  month any  partial  month)  that have
elapsed  since the beginning of such  Performance  Period until the date of such
Termination of Affiliation  and the denominator of which is the number of months
(including as a whole month any partial month) in the Performance Period; and

                             (2) a percentage  determined by the Committee  that
would be earned under the terms of the applicable Award Agreement  assuming that
the rate at which the  performance  goals have been  achieved  as of the date of
such Termination of Affiliation  would continue until the end of the Performance
Period,  or, if the Committee elects to compute the benefit after the end of the
Performance Period, the Performance Percentage,  as determined by the Committee,
attained during the Performance Period.

                                       12
<PAGE>

               (c)           On  Account of  Retirement.  If  a  Grantee  has  a
Termination of Affiliation on account of Retirement, then:

                      (i) the Grantee's  Restricted Shares that were forfeitable
shall thereupon become nonforfeitable;

                      (ii) any  unexercised  Option  or  SAR,   whether  or  not
exercisable on the date of such Termination of Affiliation, may be exercised, in
whole or in part,  within  the  first  five  years  after  such  Termination  of
Affiliation  (but only during the Option  Term) by the Grantee or,  after his or
her death, by (A) his or her personal  representative  or the person to whom the
Option or SAR, as applicable,  is transferred by will or the applicable  laws of
descent  and  distribution,  or (B)  the  Grantee's  beneficiary  designated  in
accordance with Article 11; and

                      (iii) the benefit payable  with respect to any Performance
Share or Performance  Unit with respect to which the Performance  Period has not
ended as of the date of such Termination of Affiliation on account of Retirement
shall be equal to the product of the Fair Market Value of a Share as of the date
of  such  Termination  of  Affiliation  or the  value  of the  Performance  Unit
specified in the Award Agreement  (determined as of the date of such Termination
of  Affiliation),  as  applicable,   multiplied  successively  by  each  of  the
following:

                             (1) a fraction,  the  numerator  of  which  is  the
number of  months  (including  as a whole  month any  partial  month)  that have
elapsed  since the beginning of such  Performance  Period until the date of such
Termination of Affiliation  and the denominator of which is the number of months
(including as a whole month any partial month) in the Performance Period; and

                             (2) a percentage  determined by the Committee  that
would be earned under the terms of the applicable Award Agreement  assuming that
the rate at which the  performance  goals have been  achieved  as of the date of
such Termination of Affiliation  would continue until the end of the Performance
Period,  or, if the Committee elects to compute the benefit after the end of the
Performance Period, the Performance Percentage,  as determined by the Committee,
attained during the Performance Period.

               (d)           Any Other  Reason.  If a Grantee has a  Termination
of  Affiliation  for any  reason  other  than for Cause,  death,  Disability  or
Retirement, then:

                      (i) the  Grantee's   Restricted   Shares,  to  the  extent
forfeitable on the date of the Grantee's  Termination of  Affiliation,  shall be
forfeited on such date;

                      (ii) any   unexercised   Option  or  SAR,  to  the  extent
exercisable immediately before the Grantee's Termination of Affiliation,  may be
exercised  in  whole  or in  part,  not  later  than  three  months  after  such
Termination of Affiliation  (but only during the Option Term) by the Grantee or,
after his or her death, by (A) his or her personal  representative or the person
to whom  the  Option  or  SAR,  as  applicable,  is  transferred  by will or the
applicable laws of descent and  distribution,  or (B) the Grantee's  beneficiary
designated in accordance with Article 11;

                                       13
<PAGE>

                      (iii)  if  such   Termination   of   Affiliation   is  the
result of the  Grantee's  termination  of  employment  by the  Corporation  or a
Consolidated  Subsidiary  (other  than for Cause),  then,  in addition to giving
effect to the immediately  preceding clause (ii), the portion of any Option that
was not exercisable immediately before the Grantee's Termination of Affiliation,
may be  exercised  in whole or in part,  not later than three  months after such
Termination of Affiliation  (but only during the Option Term) by the Grantee or,
after his or her death, by (A) his or her personal  representative or the person
to whom the Option is transferred by will or the applicable  laws of descent and
distribution,  or (b) the Grantee's  beneficiary  designated in accordance  with
Article 11: and

                      (iv) any  Performance  Shares  or  Performance  Units with
respect  to which the  Performance  Period  has not ended as of the date of such
Termination of Affiliation shall terminate  immediately upon such Termination of
Affiliation.

        5.7           Nontransferability of Awards.

               (a)    Except as provided in Section  5.7(c)  below,  each Award,
and each right under any Award,  shall be exercisable only by the Grantee during
the  Grantee's  lifetime,  or,  if  permissible  under  applicable  law,  by the
Grantee's guardian or legal representative.

               (b)    Except as  provided  in  Section  5.7(c)  below,  no Award
(prior to the time, if applicable,  Shares are issued in respect of such Award),
and no right under any Award,  may be assigned,  alienated,  pledged,  attached,
sold or otherwise  transferred or encumbered by a Grantee otherwise than by will
or by the laws of descent and distribution (or in the case of Restricted Shares,
to  the  Company),  and  any  such  purported  assignment,  alienation,  pledge,
attachment,  sale,  transfer  or  encumbrance  shall be void  and  unenforceable
against the  Company or any  Subsidiary;  provided,  that the  designation  of a
beneficiary shall not constitute an assignment,  alienation, pledge, attachment,
sale, transfer or encumbrance.

               (c)    To  the  extent  and  in  the  manner   permitted  by  the
Committee,  and subject to such terms,  conditions,  restrictions or limitations
that may be prescribed by the Committee,  a Grantee may transfer an Award (other
than  an  Incentive  Stock  Option)  to (i) a  spouse,  sibling,  parent,  child
(including an adopted child) or grandchild (any of which,  an "Immediate  Family
Member")  of the  Grantee;  (ii) a trust,  the  primary  beneficiaries  of which
consist  exclusively of the Grantee or Immediate  Family Members of the Grantee;
or (iii) a  corporation,  partnership  or  similar  entity,  the owners of which
consist exclusively of the Grantee or Immediate Family Members of the Grantee.

        5.8           Cancellation and Rescission  of  Awards.  Unless the Award
Agreement  specifies  otherwise,  the  Committee may cancel,  rescind,  suspend,
withhold,  or otherwise limit or restrict any  unexercised  Award at any time if
the Grantee is not in  compliance  with all  applicable  provisions of the Award
Agreement and the Plan or if the Grantee has a Termination  of  Affiliation  for
Cause.

        5.9           Loans  and  Guarantees.  The  Committee  may,  subject  to
applicable  law,  (i) allow a Grantee to defer  payment to the Company of all or
any portion of the Option Price of an Option or

                                       14
<PAGE>

the purchase  price of Restricted  Shares,  or (ii) cause the Company to loan to
the  Grantee,  or guarantee a loan from a third party to the Grantee for, all or
any portion of the Option Price of an Option or the purchase price of Restricted
Shares or all or any  portion  of any taxes  associated  with the  exercise  of,
nonforfeitability  of, or payment of benefits in connection  with, an Award. Any
such payment  deferral,  loan or guarantee by the Company shall be on such terms
and conditions as the Committee may determine.

Article 6.  Stock Options

        6.1           Grant of Options.  Subject to the terms and  provisions of
the Plan, Options may be granted to any Eligible Person in such number, and upon
such terms,  and at any time and from time to time as shall be determined by the
Committee.  Without in any manner limiting the generality of the foregoing,  the
Committee  may grant to any Eligible  Person,  or permit any Eligible  Person to
elect  to  receive,  an  Option  in lieu  of or in  substitution  for any  other
compensation  (whether  payable  currently or on a deferred  basis,  and whether
payable under this Plan or otherwise) which such Eligible Person may be eligible
to receive from the Company or a Subsidiary.

        6.2           Award  Agreement.  Each Option grant shall be evidenced by
an Award  Agreement  that shall specify the Option Price,  the Option Term,  the
number of shares to which the Option  pertains,  the time or times at which such
Option shall be  exercisable  and such other  provisions as the Committee  shall
determine.

        6.3           Option  Price.  The Option Price of an Option  under  this
Plan shall be  determined by the  Committee,  and shall be equal to or more than
100% of the Fair Market Value of a Share on the Grant Date;  provided,  however,
that any Option that is (i) granted to a Grantee in connection with the Spin-off
Distribution, (ii) associated with an option to purchase shares of stock of KCSI
("KCSI  Option")  held by  such  Grantee  immediately  prior  to  such  Spin-off
Distribution,  and (iii) intended to preserve for the Grantee the economic value
of all or a portion of such KCSI Option ("KCSI  Substitute  Option") may, to the
extent necessary to achieve such preservation of economic value, be granted with
an Option  Price that is less than 100% of the Fair  Market  Value of a Share on
the Grant Date; and provided,  further, that any Option that is (x) granted to a
Grantee in connection with the acquisition ("Acquisition"), however effected, by
the Company of another  corporation or entity ("Acquired  Entity") or the assets
thereof,  (y) associated  with an  option  to  purchase  shares  of stock of the
Acquired Entity or an affiliate thereof  ("Acquired Entity Option") held by such
Grantee immediately prior to such Acquisition,  and (z) intended to preserve for
the  Grantee  the  economic  value of all or a portion of such  Acquired  Entity
Option  ("Substitute  Option")  may,  to the extent  necessary  to achieve  such
preservation  of economic  value,  be granted  with an Option Price that is less
than 100% of the Fair Market Value of a Share on the Grant Date.

        6.4           Grant of  Incentive  Stock  Options.  At the  time  of the
grant of any Option,  the Committee may designate that such Option shall be made
subject to  additional  restrictions  to permit it to  qualify as an  "incentive
stock option" under the  requirements  of  Section 422  of the Code.  Any Option

                                       15
<PAGE>

designated as an Incentive Stock Option shall, to the extent required by Section
422 of the Code:

               (i)      if granted to a 10% Owner, have an Option Price not less
than 110% of the Fair Market Value of a Share on its Grant Date;

               (ii)     be  exercisable  for a period of not more than 10  years
(five years in the case of an  Incentive  Stock  Option  granted to a 10% Owner)
from its Grant Date, and be subject to earlier termination as provided herein or
in the applicable Award Agreement;

               iii)     not have an aggregate Fair Market Value (as of the Grant
Date of each  Incentive  Stock  Option)  of the  Shares  with  respect  to which
Incentive  Stock  Options  (whether  granted  under the Plan or any other  stock
option  plan of the  Grantee's  employer  or any  parent or  Subsidiary  thereof
("Other  Plans")) are  exercisable for the first time by such Grantee during any
calendar  year,  determined in accordance  with the provisions of Section 422 of
the Code, which exceeds $100,000 (the "$100,000 Limit");

               (iv)     if  the  aggregate  Fair  Market  Value  of  the  Shares
(determined  on the Grant Date) with  respect to the portion of such grant which
is exercisable for the first time during any calendar year ("Current Grant") and
all  Incentive  Stock  Options  previously  granted under the Plan and any Other
Plans which are  exercisable  for the first time during the same  calendar  year
("Prior Grants") would exceed the $100,000 Limit be exercisable as follows:

                      (A)      the  portion of the  Current  Grant  which would,
          when added to any Prior Grants,  be exercisable with respect to Shares
          which would have an aggregate Fair Market Value  (determined as of the
          respective  Grant  Date for such  options)  in excess of the  $100,000
          Limit  shall,  notwithstanding  the  terms of the  Current  Grant,  be
          exercisable for the first time by the Grantee in the first  subsequent
          calendar year or years in which it could be exercisable  for the first
          time by the Grantee when added to all Prior Grants  without  exceeding
          the $100,000 Limit; and

                      (B)      if,  viewed as of the date of the Current  Grant,
          any  portion  of a  Current  Grant  could not be  exercised  under the
          preceding   provisions  of  this  Section  during  any  calendar  year
          commencing  with the  calendar  year in which it is first  exercisable
          through and  including  the last  calendar year in which it may by its
          terms be exercised,  such portion of the Current Grant shall not be an
          Incentive Stock Option, but shall be exercisable as an Option which is
          not an Incentive Stock Option at such date or dates as are provided in
          the Current Grant;

               (v)      be granted  within  10 years  from the  earlier  of  the
date the Plan is adopted or the date the Plan is approved by the stockholders of
the Company; and

               (vi)     by its terms not be assignable  or  transferable   other
than by will or the  laws of  descent  and  distribution  and may be  exercised,
during the Grantee's lifetime, only by the Grantee;

                                       16
<PAGE>

provided, however, that the Grantee may, in any manner permitted by the Plan and
specified by the  Committee,  designate in writing a beneficiary to exercise his
or her Incentive Stock Option after the Grantee's death.

        Any Option  designated  as an Incentive  Stock Option shall also require
the Grantee to notify the  Committee  of any  disposition  of any Shares  issued
pursuant to the exercise of the Incentive  Stock Option under the  circumstances
described  in  Section 421(b)  of the Code  (relating  to certain  disqualifying
dispositions) (any such circumstance, a "Disqualifying Disposition"),  within 10
days of such Disqualifying Disposition.

        Notwithstanding  the foregoing and Section 3.2(v),  the  Committee  may,
without the consent of the Grantee, at any time before the exercise of an Option
(whether or not an Incentive Stock Option), take any action necessary to prevent
such Option from being treated as an Incentive Stock Option.

        6.5           Payment.  Options  granted  under this  Article 6 shall be
exercised  by the  delivery  of a written  notice of  exercise  to the  Company,
setting  forth the  number of Shares  with  respect to which the Option is to be
exercised, accompanied by full payment for the Shares made by any one or more of
the following means subject to the approval of the Committee:

                      (a)  cash, personal check or wire transfer;

                      (b)  Mature Shares, valued at their Fair  Market Value  on
          the date of exercise;

                      (c)  Restricted  Shares  held by the  Grantee for at least

          six months prior to the exercise of the Option, each such Share valued
          at the Fair Market Value of a Share on the date of exercise;

                      (d) subject to applicable   law,  pursuant  to  procedures
          approved by the Committee,  through the sale of the Shares acquired on
          exercise of the Option through a broker-dealer to whom the Grantee has
          submitted  an   irrevocable   notice  of  exercise   and   irrevocable
          instructions to deliver  promptly to the Company the amount of sale or
          loan  proceeds  sufficient to pay for such Shares,  together  with, if
          requested  by the  Company,  the amount of  federal,  state,  local or
          foreign  withholding  taxes  payable  by  Grantee  by  reason  of such
          exercise; or

                      (e) when  permitted by the  Committee, payment may also be
          made in accordance with Section 5.9.

        If any  Restricted  Shares  ("Tendered  Restricted  Shares") are used to
pay the Option  Price,  a number of Shares  acquired  on  exercise of the Option
equal to the number of Tendered  Restricted  Shares shall be subject to the same
restrictions  as the Tendered  Restricted  Shares,  determined as of the date of
exercise of the Option.

                                       17
<PAGE>

Article 7.   Stock Appreciation Rights and Limited Stock Appreciation Rights

        7.1           Grant  of SARs.  Subject  to the terms and  conditions  of
the Plan,  SARs may be granted to any Eligible  Person at any time and from time
to time as shall  be  determined  by the  Committee.  The  Committee  may  grant
Freestanding SARs, Tandem SARs, or any combination thereof.

        The Committee shall determine the number of SARs granted to each Grantee
(subject to Article 4), the Strike Price thereof,  and,  consistent with Section
7.2 and the other  provisions  of the  Plan,  the  other  terms  and  conditions
pertaining to such SARs.

        7.2           Exercise  of  Tandem  SARs.  Tandem SARs  may be exercised
for all or part of the Shares subject to the related Award upon the surrender of
the right to exercise the equivalent  portion of the related Award. A Tandem SAR
may be exercised  only with respect to the Shares for which its related Award is
then exercisable.

        Notwithstanding  any other  provision of this Plan to the contrary, with
respect  to a Tandem  SAR,  (i) the  Tandem  SAR will  expire no later  than the
expiration of the underlying  Option;  (ii) the value of the payout with respect
to the Tandem  SAR may be for no more than 100% of the  difference  between  the
Option  Price of the  underlying  Option and the Fair Market Value of the Shares
subject to the  underlying  Option at the time the Tandem SAR is exercised;  and
(iii) the Tandem SAR may be  exercised  only when the Fair  Market  Value of the
Shares subject to the Option exceeds the Option Price of the Option.

        7.3           Payment of  SAR  Amount.  Upon  exercise  of  an  SAR, the
Grantee  shall be  entitled  to receive  payment  from the  Company in an amount
determined by multiplying:

               (a)    the  excess of the Fair  Market  Value of  a  Share on the
         date of  exercise  over the Strike Price;

by

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

provided that the Committee may provide in the Award  Agreement that the benefit
payable on  exercise  of an SAR shall not  exceed  such  percentage  of the Fair
Market Value of a Share on the Grant Date as the  Committee  shall  specify.  As
determined  by the  Committee,  the payment upon SAR exercise may be in cash, in
Shares which have an aggregate  Fair Market Value (as of the date of exercise of
the SAR) equal to the amount of the payment, or in some combination  thereof, as
set forth in the Award Agreement.

        7.4           Grant of  LSARs.  Subject  to the   terms  and  conditions
of the Plan,  LSARs may be granted to any  Eligible  Person at any time and from
time to time as  shall  be  determined  by the  Committee.  Each  LSAR  shall be
identified  with a Share subject to an Option or SAR held by the

                                       18
<PAGE>

Grantee,  which may include an Option or SAR previously  granted under the Plan.
Upon the exercise,  expiration,  termination,  forfeiture or cancellation of the
Option or SAR with which an LSAR is identified, such LSAR shall terminate.

        7.5           Exercise  of LSARs.   Each  LSAR  shall  automatically  be
exercised  upon a Change of Control which has not been approved by the Incumbent
Board. The exercise of an LSAR shall result in the cancellation of the Option or
SAR with which such LSAR is identified, to the extent of such exercise.

        7.6           Payment of LSAR Amount.  Within 10 business days after the
exercise of an LSAR,  the Company  shall pay to the Grantee,  in cash, an amount
equal to the difference between:

               (a)    the  greatest of (i) the  Change of Control  Value,  (ii)
                      the Fair Market Value  of  a  Share on the date  occurring
                      during  the 180-day   period  immediately  preceding  the
                      date of the Change of  Control on which  such Fair  Market
                      Value  is  the  greatest  or (iii) such   other  valuation
                      amount,  if  any, as  may be  determined  pursuant  to the
                      provisions of the applicable Award Agreement;

minus

               (b)    either (i) in the case of  an  LSAR  identified   with  an
                      Option,  the Option Price of such  Option  or (ii) in  the
                      case of an LSAR  identified with  an SAR, the Strike Price
                      of such SAR.

Article 8.   Restricted Shares

        8.1           Grant of  Restricted  Shares.  Subject  to  the terms  and
provisions of the Plan,  the  Committee,  at any time and from time to time, may
grant Restricted  Shares to any Eligible Person in such amounts as the Committee
shall determine.

        8.2           Award  Agreement.  Each grant of  Restricted  Shares shall
be  evidenced  by an  Award  Agreement  that  shall  specify  the  Period(s)  of
Restriction,  the number of Restricted Shares granted, and such other provisions
as the Committee  shall  determine.  The  Committee  may impose such  conditions
and/or  restrictions on any Restricted Shares granted pursuant to the Plan as it
may  deem  advisable,  including  restrictions  based  upon the  achievement  of
specific   performance  goals  (Company-wide,   divisional,   Subsidiary  and/or
individual),  time-based  restrictions  on vesting,  and/or  restrictions  under
applicable securities laws.

        8.3           Consideration.  The Committee  shall determine the amount,
if any, that a Grantee shall pay for Restricted  Shares,  which shall be (except
with respect to Restricted Shares that are treasury shares) at least the Minimum
Consideration  for each Restricted  Share. Such payment shall be made in full by
the Grantee  before the delivery of the shares and in any event no later than 10
business days after the Grant Date for such shares.

                                       19
<PAGE>

        8.4           Effect of Forfeiture.  If Restricted Shares are forfeited,
and if the  Grantee  was  required  to pay for  such  shares  or  acquired  such
Restricted Shares upon the exercise of an Option, the Grantee shall be deemed to
have resold such Restricted Shares to the Company at a price equal to the lesser
of (x) the  amount paid by the Grantee for such  Restricted  Shares,  or (y) the
Fair Market Value of a Share on the date of such  forfeiture.  The Company shall
pay to the Grantee the required amount as soon as is administratively practical.
Such Restricted Shares shall cease to be outstanding, and shall no longer confer
on the Grantee  thereof any rights as a  stockholder  of the  Company,  from and
after the date of the event causing the  forfeiture,  whether or not the Grantee
accepts the Company's tender of payment for such Restricted Shares.

        8.5           Escrow;   Legends.   The  Committee  may  provide that the
certificates for any Restricted  Shares (x) shall be held (together with a stock
power  executed  in blank by the  Grantee)  in  escrow by the  Secretary  of the
Company  until such  Restricted  Shares become  nonforfeitable  or are forfeited
and/or (y) shall bear an  appropriate  legend  restricting  the transfer of such
Restricted Shares. If any Restricted Shares become  nonforfeitable,  the Company
shall cause certificates for such shares to be issued without such legend.

Article 9.   Performance Units and Performance Shares

        9.1           Grant of Performance Units and Performance Shares. Subject
to the terms of the Plan, Performance Units or Performance Shares may be granted
to any Eligible Person in such amounts and upon such terms,  and at any time and
from time to time, as shall be determined by the Committee.

        9.2           Value/Performance Goals.  Each Performance Unit shall have
an initial value that is established by the Committee at the time of grant. Each
Performance  Share shall have an initial value equal to the Fair Market Value of
a Share on the date of grant.  The Committee shall set performance  goals which,
depending  on the extent to which  they are met,  will  determine  the number or
value of Performance  Units or  Performance  Shares that will be paid out to the
Grantee.  For  purposes  of this  Article 9, the time  period  during  which the
performance goals must be met shall be called a "Performance Period."

        9.3           Earning  of  Performance  Units  and  Performance  Shares.
Subject to the terms of this Plan, after the applicable  Performance  Period has
ended, the holder of Performance  Units or Performance  Shares shall be entitled
to  receive  a payout  based on the  number  and value of  Performance  Units or
Performance  Shares  earned by the Grantee over the  Performance  Period,  to be
determined  as a function of the extent to which the  corresponding  performance
goals have been achieved.

        If  a  Grantee is  promoted,  demoted  or  transferred  to  a  different
business unit of the Company  during a Performance  Period,  then, to the extent
the Committee  determines the  performance  goals or  Performance  Period are no
longer  appropriate,   the  Committee  may  adjust,   change  or  eliminate  the
performance goals or the applicable  Performance  Period as it deems appropriate
in order to make them  appropriate  and  comparable  to the initial  performance
goals or Performance Period.

                                       20
<PAGE>

        9.4           Form  and  Timing  of  Payment  of  Performance  Units and
Performance  Shares.  Payment of earned  Performance Units or Performance Shares
shall be made in a lump sum  following the close of the  applicable  Performance
Period.  The Committee may pay earned Performance Units or Performance Shares in
the  form of cash or in  Shares  (or in a  combination  thereof)  which  have an
aggregate Fair Market Value equal to the value of the earned  Performance  Units
or Performance Shares at the close of the applicable  Performance  Period.  Such
Shares may be granted  subject to any  restrictions  deemed  appropriate  by the
Committee.  The form of  payout of such  Awards  shall be set forth in the Award
Agreement pertaining to the grant of the Award.

        As determined by the Committee,  a Grantee may be  entitled  to  receive
any  dividends  declared  with  respect  to Shares  which  have  been  earned in
connection  with grants of Performance  Units or Performance  Shares but not yet
distributed  to the Grantee.  In addition,  a Grantee may, as  determined by the
Committee, be entitled to exercise his or her voting rights with respect to such
Shares.

Article 10.   Bonus Shares

        Subject to the terms of the Plan, the Committee may grant  Bonus  Shares
to any Eligible  Person,  in such amount and upon such terms and at any time and
from time to time as shall be  determined  by the  Committee.  The terms of such
Bonus Shares shall be set forth in the Award  Agreement  pertaining to the grant
of the Award.

Article 11.   Beneficiary Designation

        Each Grantee under the Plan may, from time to time, name any beneficiary
or  beneficiaries  (who may be named  contingently or  successively) to whom any
benefit  under the Plan is to be paid in case of his or her  death  before he or
she receives any or all of such benefit.  Each such designation shall revoke all
prior  designations  by the same Grantee,  shall be in a form  prescribed by the
Company,  and will be  effective  only when filed by the Grantee in writing with
the  Company  during  the  Grantee's  lifetime.  In  the  absence  of  any  such
designation,  benefits  remaining unpaid at the Grantee's death shall be paid to
the Grantee's estate.

Article 12.   Deferrals      The  Committee  may  permit  or  require a  Grantee
to defer  receipt of the  payment of cash or the  delivery  of Shares that would
otherwise  be due by virtue of the  exercise  of an Option or SAR,  the lapse or
waiver of restrictions  with respect to Restricted  Shares,  the satisfaction of
any  requirements  or goals with  respect to  Performance  Units or  Performance
Shares,  or the grant of Bonus  Shares.  If any such  deferral  is  required  or
permitted,   the  Committee  shall  establish  rules  and  procedures  for  such
deferrals.  Except as otherwise  provided in an Award Agreement,  any payment or
any Shares that are subject to such  deferral  shall be made or delivered to the
Grantee upon the Grantee's Termination of Affiliation.

                                       21
<PAGE>

Article 13.   Rights of Employees/Directors/Consultants

        13.1          Employment.  Nothing in the Plan shall  interfere with  or
limit in any way the right of the Company to terminate any Grantee's employment,
directorship  or  consultancy at any time, nor confer upon any Grantee the right
to continue in the employ or as a director or consultant of the Company.

        13.2          Participation.  No  employee, director or consultant shall
have the right to be selected to receive an Award under the Plan or, having been
so selected, to be selected to receive a future Award.

Article 14.   Change of Control

        14.1          Change of Control.   Except  as otherwise provided  in  an
Award Agreement, if a Change of Control occurs, then:

               (i)  the  Grantee's   Restricted  Shares  that  were  forfeitable
shall thereupon become nonforfeitable;

               (ii) any unexercised  Option or SAR,  whether or not  exercisable
on the date of such Change of Control,  shall thereupon be fully exercisable and
may be exercised, in whole or in part; and

               (iii) the Company shall  immediately  pay to  the Grantee,   with
respect to any Performance  Share or Performance  Unit with respect to which the
Performance  Period has not ended as of the date of such  Change of  Control,  a
cash payment equal to the product of (A) in the case of a Performance Share, the
Change of Control Value or (B) in the case of a Performance  Unit,  the value of
the Performance Unit specified in the Award Agreement, as applicable, multiplied
successively by each of the following:

                      (1) a fraction,  the  numerator  of which is the number of
whole and  partial  months  that have  elapsed  between  the  beginning  of such
Performance Period and the date of such Change of Control and the denominator of
which is the number of whole and partial months in the Performance Period; and

                      (2) a  percentage  equal  to a greater of  (x)  the target
percentage,  if any,  specified  in the  applicable  Award  Agreement or (y) the
maximum  percentage,  if any,  that  would  be  earned  under  the  terms of the
applicable Award Agreement assuming that the rate at which the performance goals
have been achieved as of the date of such Change of Control would continue until
the end of the Performance Period.

        14.2          Pooling  of   Interests  Accounting.    If  the  Committee
determines,  prior  to a sale  or  merger  of the  Company  that  the  Committee
determines is reasonably likely to occur, that the grant

                                       22
<PAGE>

or  exercise  of Options,  SARs or LSARs  would  preclude  the use of pooling of
interests  accounting  ("pooling") after the consummation of such sale or merger
and that such preclusion of pooling would have a material adverse effect on such
sale or merger, the Committee may (a) make any adjustments in such Options, SARs
or LSARs  prior  to the sale or  merger  that  will  permit  pooling  after  the
consummation of such sale or merger or (b) cause the Company to pay the benefits
attributable to such Options, SARs or LSARs (including for this purpose not only
the spread  between  the then Fair  Market  Value of the Shares  subject to such
Options,  SARs or LSARs and the Option Price or Strike Price applicable thereto,
but also the additional value of such Options,  SARs, or LSARs in excess of such
spread,  as determined  by the  Committee) in the form of Shares if such payment
would not cause the  transaction  to remain or become  ineligible  for  pooling;
provided,  however,  no  such  adjustment  or  payment  may be made  that  would
adversely affect in any material way any such Options, SARs or LSARs without the
consent of the affected Grantee.

Article 15.   Amendment, Modification, and Termination

        15.1          Amendment,  Modification,  and   Termination.  Subject  to
the terms of the Plan,  the Board may at any time and from time to time,  alter,
amend, suspend or terminate the Plan in whole or in part without the approval of
the Company's stockholders.  The Board may delegate to the Plan Committee any or
all of the authority of the Board under Section 15.1 to alter, amend, suspend or
terminate the Plan.

        15.2          Adjustment  of Awards  Upon  the  Occurrence   of  Certain
Unusual or Nonrecurring  Events. The Committee may make adjustments in the terms
and  conditions  of, and the criteria  included  in,  Awards in  recognition  of
unusual or nonrecurring  events  (including the events described in Section 4.2)
affecting the Company or the  financial  statements of the Company or of changes
in  applicable  laws,  regulations,  or  accounting  principles,   whenever  the
Committee  determines that such  adjustments are appropriate in order to prevent
dilution or  enlargement  of the benefits or potential  benefits  intended to be
made  available  under  the  Plan;  provided  that no such  adjustment  shall be
authorized  to the extent that such  authority  would be  inconsistent  with the
Plan's meeting the requirements of the Performance-Based Exception.

        15.3          Awards  Previously  Granted.  Notwithstanding   any  other
provision  of  the  Plan  to  the  contrary,  no  termination,   amendment,   or
modification  of the Plan shall  adversely  affect in any material way any Award
previously granted under the Plan, without the written consent of the Grantee of
such Award.

                                       23
<PAGE>

Article 16.   Withholding

        16.1          Withholding

               (a)      Mandatory Tax Withholding.

                      (1) Whenever,  under the Plan,  Shares are to be delivered
               upon  exercise or payment of an Award or upon  Restricted  Shares
               becoming  nonforfeitable,  or any other  event  with  respect  to
               rights and benefits  hereunder,  the Company shall be entitled to
               require  (i) that the  Grantee  remit an  amount  in cash,  or if
               determined by the Committee, Mature Shares, sufficient to satisfy
               all   federal,   state,   local  and  foreign   tax   withholding
               requirements related thereto ("Required  Withholding"),  (ii) the
               withholding  of  such  Required   Withholding  from  compensation
               otherwise  due to the Grantee or from any Shares or other payment
               due to the Grantee under the Plan or (iii) any combination of the
               foregoing.

                      (2) Any Grantee who makes a  Disqualifying  Disposition or
               an election  under  Section  83(b) of the Code shall remit to the
               Company an amount  sufficient to satisfy all  resulting  Required
               Withholding;  provided  that,  in lieu of or in  addition  to the
               foregoing,  the  Company  shall have the right to  withhold  such
               Required  Withholding  from  compensation  otherwise  due  to the
               Grantee or from any Shares or other  payment  due to the  Grantee
               under the Plan.

               (b)      Elective Share Withholding.
                      (1) Subject to subsection  16.1(b)(2), a Grantee may elect
               the withholding ("Share Withholding") by the Company of a portion
               of the Shares subject to an Award upon the exercise of such Award
               or upon Restricted Shares becoming non-forfeitable or upon making
               an election  under  Section  83(b) of the Code (each,  a "Taxable
               Event")  having a Fair  Market  Value  equal  to (i) the  minimum
               amount  necessary  to  satisfy  Required  Withholding   liability
               attributable  to the Taxable Event;  or (ii) with the Committee's
               prior  approval,  a greater  amount,  not to exceed the estimated
               total amount of such  Grantee's tax liability with respect to the
               Taxable Event.

                      (2)  Each Share Withholding election shall be  subject  to
the following conditions:

                             (i)           any   Grantee's  election   shall  be
subject to the  Committee's  discretion to revoke the  Grantee's  right to elect
Share Withholding at any time before the Grantee's election if the Committee has
reserved the right to do so in the Award Agreement;

                             (ii)          the  Grantee's  election must be made
before the date (the "Tax  Date") on which the amount of tax to be  withheld  is
determined; and

                             (iii)          the Grantee's election shall  be
irrevocable.

                                       24
<PAGE>

        16.2     Notification  under  Code  Section 83(b).  If the Grantee,   in
connection with the exercise of any Option,  or the grant of Restricted  Shares,
makes the election  permitted under Section 83(b) of the Code to include in such
Grantee's gross income in the year of transfer the amounts  specified in Section
83(b) of the Code,  then such Grantee  shall notify the Company of such election
within 10 days of filing the notice of the election  with the  Internal  Revenue
Service,  in  addition  to any  filing and  notification  required  pursuant  to
regulations  issued  under  Section 83(b)  of the Code.  The  Committee  may, in
connection with the grant of an Award or at any time thereafter prior to such an
election  being  made,  prohibit a Grantee  from making the  election  described
above.

Article 17.   Successors

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

Article 18.   Additional Provisions

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

        18.2          Severability.  If any  part of the Plan  is  declared   by
any court or governmental authority to be unlawful or invalid, such unlawfulness
or invalidity  shall not  invalidate  any other part of the Plan. Any Section or
part of a Section so declared to be unlawful or invalid shall,  if possible,  be
construed  in a manner  which will give  effect to the terms of such  Section or
part of a Section to the fullest  extent  possible  while  remaining  lawful and
valid.

        18.3          Requirements  of  Law.  The   granting of  Awards  and the
issuance  of Shares  under the Plan  shall be subject  to all  applicable  laws,
rules,  and regulations,  and to such approvals by any governmental  agencies or
stock exchanges as may be required. Notwithstanding any provision of the Plan or
any Award,  Grantees  shall not be entitled  to  exercise,  or receive  benefits
under,  any Award,  and the Company shall not be obligated to deliver any Shares
or other benefits to a Grantee,  if such exercise or delivery would constitute a
violation by the Grantee or the Company of any applicable law or regulation.

                                       25
<PAGE>

        18.4          Securities Law Compliance.

               (a)    If the Committee  deems it necessary to  comply  with  any
applicable  securities law, or the requirements of any stock exchange upon which
Shares may be  listed,  the  Committee  may  impose  any  restriction  on Shares
acquired  pursuant  to  Awards  under  the  Plan as it may deem  advisable.  All
certificates  for Shares  delivered  under the Plan pursuant to any Award or the
exercise  thereof  shall be  subject  to such  stop  transfer  orders  and other
restrictions  as the Committee may deem advisable  under the rules,  regulations
and other requirements of the SEC, any stock exchange upon which Shares are then
listed,  any applicable  securities law, and the Committee may cause a legend or
legends to be put on any such certificates to make appropriate reference to such
restrictions.  If so requested by the Company,  the Grantee shall make a written
representation  to the Company that he or she will not sell or offer to sell any
Shares unless a registration  statement  shall be in effect with respect to such
Shares under the  Securities Act of 1993, as amended,  and any applicable  state
securities law or unless he or she shall have furnished to the Company  evidence
satisfactory to the Company that such registration is not required.

               (b)    If   the   Committee   determines  that   the  exercise or
nonforfeitability  of, or  delivery  of  benefits  pursuant  to, any Award would
violate any applicable  provision of securities laws or the listing requirements
of any stock  exchange upon which any of the  Company's  equity  securities  are
listed, then the Committee may postpone any such exercise,  nonforfeitability or
delivery,  as applicable,  but the Company shall use all  reasonable  efforts to
cause such  exercise,  nonforfeitability  or  delivery  to comply  with all such
provisions at the earliest practicable date.

        18.5          No Rights as a  Stockholder.  A Grantee shall not have any
rights as a  stockholder  of the Company with respect to the Shares  (other than
Restricted  Shares)  which may be  deliverable  upon exercise or payment of such
Award until such shares have been  delivered to him or her.  Restricted  Shares,
whether held by a Grantee or in escrow by the  Secretary  of the Company,  shall
confer on the  Grantee all rights of a  stockholder  of the  Company,  except as
otherwise  provided  in the Plan or Award  Agreement.  At the time of a grant of
Restricted  Shares,  the  Committee  may require  the payment of cash  dividends
thereon to be deferred  and,  if the  Committee  so  determines,  reinvested  in
additional Restricted Shares. Stock dividends and deferred cash dividends issued
with respect to Restricted  Shares shall be subject to the same restrictions and
other  terms  as apply to the  Restricted  Shares  with  respect  to which  such
dividends  are  issued.  The  Committee  may  provide for payment of interest on
deferred cash dividends.

        18.6          Nature  of  Payments.  Awards  shall  be special incentive
payments  to the Grantee and shall not be taken into  account in  computing  the
amount of salary or  compensation of the Grantee for purposes of determining any
pension,  retirement,  death or other benefit under (a) any pension, retirement,
profit-sharing,  bonus,  insurance or other employee benefit plan of the Company
or any Subsidiary or (b) any agreement between (i) the Company or any Subsidiary
and (ii) the Grantee, except as such plan or agreement shall otherwise expressly
provide.

        18.7          Performance  Measures.  Unless  and  until  the  Committee
proposes for stockholder vote and  stockholders  approve a change in the general
performance measures set forth

                                       26
<PAGE>

in this Section 18.7, the performance measure(s) to be used for purposes of such
Awards shall be chosen from among the following:

        (a)    Earnings (either in the aggregate or on a per-share basis);

        (b)    Net income (before or after taxes);

        (c)    Operating income;

        (d)    Cash flow;

        (e)    Return measures (including return on assets, equity, or sales);

        (f)    Earnings before or after either,  or any  combination  of, taxes,
               interest or depreciation  and amortization;

        (g)    Gross revenues;

        (h)    Share price (including  growth measures and stockholder return or
               attainment by the Shares of a  specified value  for  a  specified
               period of time);

        (i)    Reductions  in  expense  levels in each  case, where  applicable,
               determined  either on a Company-wide basis or in respect  of  any
               one or more business units;

        (j)    Net economic value; or

        (k)    Market share.

        Any of the foregoing  performance measures may be applied, as determined
by the Committee,  on the basis of the Company as a whole,  or in respect of any
one or more Subsidiaries or divisions of the Company or any part of a Subsidiary
or division of the Company that is specified by the Committee.

        The Committee  may adjust the determinations of the degree of attainment
of the preestablished  performance goals;  provided,  however, that Awards which
are designed to qualify for the Performance-Based  Exception may not be adjusted
upward  without the approval of the Company's  stockholders  (the  Committee may
adjust such Awards downward).

        In the event that applicable tax and/or securities laws change to permit
Committee  discretion  to  alter  the  governing  performance  measures  without
obtaining  stockholder  approval  of such  changes,  and still  qualify  for the
Performance-Based  Exception,  the Committee  shall have sole discretion to make
such changes without obtaining stockholder approval.

                                       27
<PAGE>

        18.8          Governing  Law.  The Plan,  and all  agreements hereunder,
shall be construed in  accordance  with and governed by the laws of the State of
Delaware other than its laws respecting choice of law.

                                       28

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