Document:

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                                                                     EXHIBIT 4.4

                              THE DIAL CORPORATION
                          EMPLOYEE STOCK PURCHASE PLAN

                                    ARTICLE I
                                  INTRODUCTION

         1.01 Purpose. The Dial Corporation Employee Stock Purchase Plan is
intended to provide a method whereby Eligible Employees of The Dial Corporation
and its Participating Subsidiary Corporations will have an opportunity to
purchase shares of Common Stock through accumulated payroll deductions.

         1.02 Rules of Interpretation. Subject to Article XII, it is the
intention of the Company that the Plan will qualify as an "employee stock
purchase plan" under Section 423 of the Code. The provisions of the Plan shall
be construed so as to extend or limit the operation of, and participation in,
the Plan as necessary to conform to the requirements of that Section of the
Code.

                                   ARTICLE II
                                   DEFINITIONS

         Capitalized terms used in the Plan shall have the following meanings:

         2.01 "Board" shall mean the Board of Directors of the Company.

         2.02 "Code" shall mean the Internal Revenue Code of 1986, as amended.

         2.03 "Change in Capitalization" shall mean any increase or reduction in
the number of shares of Common Stock, or any change (including, but not limited
to, in the case of a spin-off, dividend or other distribution in respect of
shares of Common Stock, a change in value) in the shares of Common Stock or
exchange of shares of Common Stock for a different number or kind of shares,
other securities or other property of the Company or another corporation, by
reason of a reclassification, recapitalization, merger, consolidation,
reorganization, spin-off, split-up, issuance of warrants or rights or
debentures, stock dividend, stock split or reverse stock split, cash dividend,
property dividend, combination or exchange of shares, repurchase of shares,
change in corporate structure or otherwise.

         2.04 "Change in Control" shall have the meaning set forth on Appendix A
attached hereto.

         2.05 "Committee" shall mean the Executive Compensation Committee of the
Board.

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         2.06 "Common Stock" shall mean the common stock, par value $0.01 per
share, of the Company.

         2.07 "Company" shall mean The Dial Corporation, a Delaware corporation.

         2.08 "Compensation" shall mean the total of all amounts paid to a
Participant by the Company or an applicable Participating Subsidiary Corporation
for personal services (i) for Participants who receive a Federal Income Tax
Withholding Statement (Form W-2), as reported on such Statement, and (ii) for
Participants who do not receive a Federal Income Tax Withholding Statement (Form
W-2), as determined by the Committee (and, in the case of each of (i) and (ii),
excluding fringe benefits, overtime, bonuses and any amounts relating to
equity-based awards); provided, however, that the Committee may, in its
discretion, use any definition of "Compensation" so long as such definition and
its application satisfies Section 423 of the Code.

         2.09 "Eligible Employee" shall mean, as of any date, any Employee of
the Company or a Participating Subsidiary Corporation as of such date, but
excluding (i) any Employee who has been employed by the Company or an applicable
Participating Subsidiary Corporation for less than six months as of such date
and (ii) any Employee whose customary employment is 20 hours or less per week as
of such date; provided, however, that, with respect to any Offering, the
Committee may, in its discretion, expand or limit the class of Eligible
Employees for purposes of that Offering so long as such action is consistent
with Section 423 of the Code and the regulations promulgated and proposed
thereunder.

         2.10 "Employee" shall mean any individual who is a common law employee
of the Company or a Participating Subsidiary Corporation.

         2.11 "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.

         2.12 "Fair Market Value" on any date shall mean the mean between the
highest and lowest reported sales prices of the Common Stock on the New York
Stock Exchange Composite Tape or, if not listed on such exchange, on any other
national exchange on which the Common Stock is listed or on the NASDAQ National
Market System or on NASDAQ or, if there is no regular public trading market for
the Common Stock, as determined by the Committee in good faith.

         2.13 "Holding Period" shall mean, with respect to any shares of Common
Stock purchased pursuant to the Plan, the period commencing on the Offering
Termination Date on which such shares are purchased and ending on the second
anniversary of such Offering Termination Date; provided, that the Committee may,
in its discretion, shorten or lengthen the Holding Period applicable to shares
of Common Stock purchased in an Offering; and provided, further, that any action
of the Committee to shorten or lengthen any Holding

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Period shall be done and communicated to Participants in advance of the Offering
to which such action applies.

         2.14 "Offering Commencement Date" shall have the meaning set forth in
Section 4.02 hereof.

         2.15 "Offering Price" shall have the meaning set forth in Section 6.02
hereof.

         2.16 "Offering Termination Date" shall have the meaning set forth in
Section 4.02 hereof.

         2.17 "Offerings" shall have the meaning set forth in Section 4.02
hereof.

         2.18 "Participant" shall mean any Eligible Employee who elects to
participate in the Plan in accordance with the provisions of Section 3.03
hereof.

         2.19 "Participating Subsidiary Corporation" shall mean each "subsidiary
corporation" (as that term is defined in Section 424 of the Code) of the
Company, the common law employees of which are designated by the Board or the
Committee as eligible to participate in the Plan. The Participating Subsidiary
Corporations shall be set forth on Appendix B attached hereto (as such Appendix
may be revised from time to time by the Committee).

         2.20 "Plan" shall mean The Dial Corporation Employee Stock Purchase
Plan, as amended from time to time.

         2.21 "Plan Representative" shall mean the persons designated from time
to time by the Committee to receive certain notices and take certain other
administrative actions relating to the operation of, and participation in, the
Plan.

         2.22 "Securities Act" shall mean the Securities Act of 1933, as
amended.

                                   ARTICLE III
                          ELIGIBILITY AND PARTICIPATION

         3.01 Initial Eligibility. Each Employee who is an Eligible Employee on
an Offering Commencement Date shall be eligible to participate in the Offering
commencing on such Offering Commencement Date. Persons who are not Eligible
Employees on an Offering Commencement Date shall not be eligible to participate
in the Plan with respect to that Offering.

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         3.02 Restrictions on Participation. Notwithstanding any provision of
the Plan to the contrary, no Eligible Employee shall be granted an option to
purchase shares of Common Stock under the Plan:

                  (a) if, immediately after the grant, such Eligible Employee
would own stock and/or hold outstanding options to purchase stock (whether
granted under the Plan, or otherwise) possessing 5% or more of the total
combined voting power or value of all classes of stock of the Company (and, for
purposes of this paragraph, the rules of Section 423(b)(3) and Section 424(d) of
the Code shall apply in determining stock ownership of any Eligible Employee);
or

                  (b) which permits such Eligible Employee's rights to purchase
stock under all employee stock purchase plans of the Company and all
Participating Subsidiary Corporations to accrue at a rate which exceeds $25,000
of Fair Market Value of the Common Stock (determined at the time such option is
granted) for each calendar year in which such option is outstanding at any time.

         3.03 Commencement of Participation. An Eligible Employee may become a
Participant by completing an authorization for payroll deductions on the form
provided by the Company and filing the completed form with the Committee on or
before the filing date set therefor by the Committee, which date shall be prior
to the Offering Commencement Date for the next following Offering. Payroll
deductions for a Participant shall commence on the next following Offering
Commencement Date after the Employee's authorization for payroll deductions
becomes effective and shall continue until termination of the Plan or the
Participant's earlier termination of participation in the Plan. Each Participant
shall be deemed to continue participation in the Plan until the earlier of (i)
the termination of the Plan and (ii) such Eligible Employee's termination of
participation in the Plan pursuant to Article VIII hereof.

                                   ARTICLE IV
                     STOCK SUBJECT TO THE PLAN AND OFFERINGS

         4.01 Stock Subject to the Plan. Subject to the provisions of Sections
13.03 and 13.04 hereof, the Board shall reserve for issuance under the Plan an
aggregate of six hundred and fifty thousand (650,000) shares of Common Stock,
which shares may be authorized but unissued shares of Common Stock or treasury
shares.

         4.02 Offerings. Subject to Section 4.03, the Plan will be implemented
by offerings ("Offerings") of Common Stock during consecutive, non-overlapping
periods of time selected by the Committee, the first of which shall commence on
August 14, 2000. The first day of an Offering shall be deemed the "Offering
Commencement Date" for such Offering, and the last day of an Offering shall be
deemed the "Offering Termination Date" for such

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Offering. The Offering Commencement Date and the Offering Termination Date shall
in all cases occur on a business day. It is intended that each Offering shall be
a period of approximately six months, but the Committee may, in its discretion,
set longer or shorter periods for any Offering, so long as the length of such
Offering is consistent with Section 423 of the Code.

         4.03 Effect of a Change in Control. In the event of a Change in
Control, the Offering Termination Date with respect to the Offering in which the
Change in Control would otherwise occur shall be accelerated to the last payroll
date immediately preceding the Change in Control.

                                    ARTICLE V
                               PAYROLL DEDUCTIONS

         5.01 Amount of Deduction. The form described in Section 3.03 will
permit a Participant to elect payroll deductions in increments of one percent
(1%) of such Participant's Compensation of such Participant's Compensation for
each pay period ending during an Offering, up to fifteen percent (15%) (or, in
the discretion of the Committee, such other percent or fixed dollar amount which
the Board or Committee may from time to time otherwise determine); provided,
that a Participant's payroll deductions may be reduced in whole or in part by
the Board or the Committee, in its discretion, at any time during an Offering
which is scheduled to end during the then-current calendar year to the extent
necessary in order to comply with the provisions of Section 423(b)(8) of the
Code and Section 3.02(b) hereof.

         5.02 Participant's Account. All payroll deductions made for a
Participant shall be credited to a book-entry account established for such
Participant under the Plan. A Participant may not make any separate cash
payments with respect to any Offering.

         5.03 Changes in Payroll Deductions. A Participant may reduce or
increase future payroll deductions (within the limits described in Section 5.01
hereof) by filing with the Committee a form provided by the Company for such
purpose. The effective date of any increase or reduction in future payroll
deductions will be the first day of the next Offering following the Company's
receipt of the change form, if the Company shall have timely received such
change form prior to the Offering Commencement Date of such Offering or as of
such earlier date as the Committee may, in its discretion, determine or as shall
be applicable in connection with the cessation of the Participant's
participation in the Plan pursuant to Section 8.01 hereof.

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                                   ARTICLE VI
                               GRANTING OF OPTION

         6.01 Number of Option Shares. On each Offering Commencement Date, each
Participant shall be deemed to have been granted an option to purchase a maximum
number of shares of Common Stock the Fair Market Value of which is equal to (i)
that amount of the Participant's Compensation which the Participant has elected
to have withheld with respect to such Offering (but in any event not in excess
of the limitations set by Section 5.01 hereof) divided by (ii) the applicable
Offering Price determined as provided in Section 6.02 hereof. Notwithstanding
the foregoing sentence, the maximum number of shares of Common Stock that a
Participant may purchase in the initial Offering is three thousand (3,000). The
Committee may, prior to the commencement of subsequent Offerings, establish such
maximums for such Offerings as it deems appropriate.

         6.02 Offering Price. The per share option price of shares of Common
Stock purchased with payroll deductions made during any Offering (the "Offering
Price") by a Participant shall be an option price determined by the Committee in
advance of such Offering, but not lower than the lower of:

                  (a) 85% of the Fair Market Value of the Common Stock on the
Offering Commencement Date for such Offering; and

                  (b) 85% of the Fair Market Value of the Common Stock on the
Offering Termination Date of such Offering.

                                   ARTICLE VII
                       EXERCISE AND OTHER TERMS OF OPTIONS

         7.01 Automatic Exercise. Subject to Section 6.01 hereof, each
Participant's option for the purchase of shares of Common Stock with payroll
deductions made during any Offering will be deemed to have been exercised
automatically on the applicable Offering Termination Date for the purchase of
the number of whole and deemed fractional shares of Common Stock which the
accumulated payroll deductions in the Participant's account at that time will
purchase at the applicable Offering Price.

         7.02 Withdrawal of Account. No Participant in the Plan shall be
entitled to withdraw any amount from the accumulated payroll deductions in his
or her account; provided, however, that a Participant's accumulated payroll
deductions shall be refunded to the Participant as and to the extent specified
in Section 8.01 hereof upon termination of such Participant's participation in
the Plan.

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         7.03 Fractional Shares. Fractional shares of Common Stock will not be
issued under the Plan. Any fractional share of Common Stock deemed purchased by
a Participant pursuant to Section 7.01 hereof will be combined with any
fractional shares deemed purchased by the Participant in subsequent Offerings
and whole shares of Common Stock then issued therefor.

         7.04 Non-Transferability of Options. Neither payroll deductions
credited to any Participant's account nor any option or rights with regard to
the exercise of an option or the receipt of Common Stock under the Plan may be
assigned, transferred, pledged, or otherwise disposed of in any way by the
Participant other than by will or the laws of descent and distribution. Any such
attempted assignment, transfer, pledge or other disposition shall be without
effect, except that the Company may, in its discretion, treat such act as an
election to withdraw from participation in the Plan in accordance with Section
8.01 hereof. During a Participant's lifetime, options held by a Participant
shall be exercisable only by such Participant.

         7.05 Delivery of Stock.

                  (a) As of each Offering Termination Date, the Company shall
cause all shares of Common Stock purchased by each Participant thereon to be
credited to a book-entry account maintained for the Participant. Subject to
Section 8.04, during the Holding Period applicable to such shares, the Company
shall deliver to the Participant, upon his or her request, any of such shares of
Common Stock so credited. As soon as practicable after expiration of the Holding
Period applicable to such shares (or pursuant to the last sentence of this
Section 7.05(a), if earlier), the Company shall deliver such shares to the
Participant. The Company may set limits as to the minimum number of shares that
a Participant may so request and may require the Participant to dispose of such
shares through one or more brokers designated by the Company. The Company shall
deliver all shares of Common Stock purchased by a Participant pursuant to the
Plan as soon as practicable after the Participant ceases to be an Eligible
Employee.

                  (b) The Company may deliver shares of Common Stock purchased
under the Plan in certificated or book entry form, in the Company's sole
discretion.

         7.06 Stock Transfer Restrictions. The Plan is intended to satisfy the
requirements of Section 423 of the Code. Shares of Common Stock purchased upon
exercise of options granted under the Plan may contain such restrictions, terms
and conditions as the Board or Committee may, in its discretion, determine, and
the Board or Committee may, in its discretion, require that an appropriate
legend be placed on the certificates evidencing such shares of Common Stock.

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                                  ARTICLE VIII
                                   WITHDRAWAL

         8.01 In General. A Participant may withdraw from an Offering at any
time prior to the Offering Termination Date of such Offering by giving written
notice to the Committee in accordance with any procedures the Committee may set.
Upon processing of any such notice of withdrawal, no further payroll deductions
will be made from the Participant's Compensation during such Offering, and such
Participant will not participate in such Offering or in any future Offering
unless and until (with respect to any future Offering) such Participant elects
to resume participation. Such Participant's payroll deductions accumulated prior
to processing of such notice of withdrawal, if any, together with an amount of
cash equal to the Fair Market Value of any deemed fractional shares then
credited in respect of the Participant, if any, shall be refunded (in each case
without interest) to him or her as soon as reasonably practicable. A Participant
may elect to resume participation in the Plan by providing written notice to the
Committee pursuant to Section 3.03 hereof in accordance with any procedures the
Committee may set.

         8.02 Effect on Subsequent Participation. Subject to Section 8.04, a
Participant's withdrawal from any Offering will not have any effect upon such
Participant's eligibility to participate in any subsequent Offering or in any
similar plan which may hereafter be adopted by the Company and for which such
Participant is otherwise eligible.

         8.03 Termination of Eligible Employee Status. Upon a Participant's
ceasing to be an Eligible Employee for any reason, including as a result of a
termination of the Participant's employment with the Company or any
Participating Subsidiary Corporation (as the case may be) for any reason
(including retirement or death), the Participant's participation in the Plan
shall automatically terminate and, in connection with such termination of
participation, his or her payroll deductions accumulated prior to such
termination, if any, together with an amount of cash equal to the Fair Market
Value of any deemed fractional shares then credited in respect of the
Participant, if any, shall be refunded (in each case without interest) to him or
her as soon as reasonably practicable, or, in the case of his or her death, to
the person or persons entitled thereto under Section 13.01 hereof.

         8.04 Withdrawal upon Request for Delivery of Common Stock. Subject to
the last sentence of this Section 8.04, the request of a Participant pursuant to
Section 7.05(a) of the Plan to take delivery of shares of Common Stock purchased
pursuant to the Plan prior to the expiration of the Holding Period applicable to
such shares shall constitute an election by the Participant (i) to withdraw from
the then-current Offering (if he or she is a Participant therein) and (ii) not
to participate in the next following Offering; provided, that the Committee may,
in its discretion, increase the number of Offerings to which clause (ii) of this
Section 8.04 applies so long as any such increased number has been established
and communicated by the Committee to Participants in advance of any Offering to
which such

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increased number applies; and provided, further, that this Section 8.04 shall
not apply to any delivery of Common Stock required by legal process. The
Committee shall have the discretion to cause this Section 8.04 not to apply to
one or more Offerings under the Plan so long as such action has been done and
communicated by the Committee to Participants in advance of any Offering to
which such action applies.

                                   ARTICLE IX
                                    INTEREST

         9.01 Payment of Interest. No interest will be paid or allowed on any
payroll deductions made pursuant to the Plan or credited to the account of or
distributed to any Participant.

                                    ARTICLE X
                                      STOCK

         10.01 Participant's Interest in Option Stock. No Participant will have
any interest in shares of Common Stock covered by any option held by such
Participant unless and until (a) such option has been exercised as provided in
Section 7.01 hereof, (b) the Company shall have issued shares of Common Stock in
respect of the Participant and (c) the Participant's name shall have been
entered as a stockholder of record on the books of the Company. Thereupon, the
Participant shall have full voting, dividend and other ownership rights with
respect to such shares of Common Stock. No Participant will have any interest in
deemed fractional shares of Common Stock covered by any option held by such
Participant other than the right to receive an amount of cash equal to the Fair
Market Value thereof from the Company pursuant to Sections 8.01 and 8.03 hereof.

         10.02 Registration of Stock. Shares of Common Stock purchased by a
Participant under the Plan will be recorded in the books and records of the
Company in the name of the Participant.

                                   ARTICLE XI
                                 ADMINISTRATION

         11.01 Committee. The Plan shall be administered by the Committee. A
majority of the Committee shall constitute a quorum, and the action of a
majority of the members of the Committee present at any meeting at which a
quorum is present, or acts unanimously approved in writing, shall be the acts of
the Committee. The interpretation and construction by the Committee of any
provision of the Plan or any option granted hereunder shall be final. No member
of the Committee shall be liable for any action or determination made in good
faith with respect hereto or any option granted hereunder.

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         11.02 Authority of Committee. The Committee may establish any policies
or procedures that in its discretion are necessary or appropriate for the
operation and administration of the Plan and may adopt rules for the
administration of the Plan. It is intended that the Committee will engage the
services of Plan Representatives and other plan administrators on such terms and
conditions as the Committee deems appropriate for the purposes of performing any
of its responsibilities and obligations hereunder (including, without
limitation, the distribution and collection of Participant notices and elections
under the Plan, the establishment of custodial accounts and the holding of
shares of Common Stock purchased by Participants upon the exercise of options
granted under the Plan), other than (i) the amendment and termination of the
Plan and (ii) any action required to by taken by it pursuant to Section 16 of
the Exchange Act.

                                   ARTICLE XII
                              FOREIGN JURISDICTIONS

         12.01 The Committee may adopt rules or procedures relating to the
operation and administration of the Plan to accommodate the specific
requirements of local laws and procedures. Without limiting the generality of
the foregoing sentence, the Committee is specifically authorized to adopt rules
and procedures regarding handling of payroll deductions, payment of interest,
conversion of local currency, payroll tax, withholding procedures and handling
of stock certificates which vary in accordance with the requirements of such
local law and procedures.

         12.02 The Committee may also adopt Plan supplements applicable to
particular subsidiaries or locations, which supplements may (as determined by
the Committee) constitute provisions of this Plan applicable to such
subsidiaries or locations or one or more sub-plans not intended to comply with
Section 423 of the Code. The terms and conditions of any such sub-plan shall
supersede the provisions of this Plan to the extent determined by the Committee,
with the exception of Section 4.01, but unless otherwise so superseded, the
provisions of this Plan shall be deemed incorporated into any such sub-plan.

                                  ARTICLE XIII
                                  MISCELLANEOUS

         13.01 Designation of Beneficiary. A Participant may file with the
Committee a written designation of a beneficiary who is to receive any shares of
Common Stock and/or cash under the Plan upon the Participant's death. Such
designation of beneficiary may be changed by the Participant at any time by
written notice to the Committee. Upon the death of a Participant and receipt by
the Company of proof of identity and existence at the Participant's death of a
beneficiary validly designated by the Participant under the Plan, and subject to
Article VIII hereof concerning withdrawal from the Plan, the Company shall
deliver such shares of Common Stock and/or cash to such beneficiary. In the
event of the

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death of a Participant lacking a beneficiary validly designated under the Plan
who is living at the time of such Participant's death, the Company shall deliver
such shares of Common Stock and/or cash to the executor or administrator of the
estate of the Participant, or if no such executor or administrator has been
appointed (to the knowledge of the Company), the Company may, in its discretion,
deliver such shares of Common Stock and/or cash to the spouse or to any one or
more dependents of the Participant, in each case without any further liability
of the Company whatsoever under or relating to the Plan. No beneficiary shall,
prior to the death of the Participant by whom he or she has been designated,
acquire any interest in the shares of Common Stock and/or cash credited to the
Participant under the Plan.

         13.02 Use of Funds. All payroll deductions received or held by the
Company under the Plan may be used by the Company for any corporate purpose. The
Company shall not be obligated to segregate such payroll deductions.

         13.03 Adjustment Upon Changes in Capitalization. In the event of a
Change in Capitalization, the maximum number and class of shares of Common Stock
or other stock or securities reserved for issuance under the Plan in the
aggregate and that a Participant may purchase pursuant to an Offering, the class
of shares of Common Stock or other stock or securities which the accumulated
payroll deductions in a Participant's account will purchase, and the Offering
Price therefor, shall be appropriately and equitably adjusted by the Committee.

         13.04 Amendment and Termination. The Board shall have complete power
and authority to terminate or amend the Plan; provided, however, that the Board
shall not, without the approval of the stockholders of the Company, alter (i)
the aggregate number of shares of Common Stock which may be issued under the
Plan (except pursuant to Section 13.03 hereof), or (ii) the class of employees
eligible to receive options under the Plan; and provided, further, however, that
no termination, modification, or amendment of the Plan may, without the consent
of a Participant then having an option under the Plan to purchase shares of
Common Stock, adversely affect the rights of such Participant under such option,
except that the foregoing shall not prohibit the Company from terminating the
Plan at any time (including during an Offering) and applying the amounts
theretofore withheld from Participants to the purchase of shares of Common Stock
as if the termination date of the Plan were an Offering Termination Date. Any
cash balance remaining after the purchase of shares of Common Stock in such
final Offering shall be refunded (without interest) to such Participant as soon
as reasonably practicable.

         13.05 Non-Exclusivity of the Plan. The adoption of the Plan by the
Board shall not be construed as amending, modifying or rescinding any previously
approved incentive arrangement or as creating any limitations on the power of
the Board to adopt such other incentive arrangements as it may deem desirable,
including, without limitation, the granting

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of stock options other than under the Plan, and such arrangements may be either
applicable generally or only in specific cases.

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

                  (a) give any person any right to be granted an option except
as specifically provided in the Plan;

                  (b) give any person any rights whatsoever with respect to
shares of Common Stock except as specifically provided in the Plan;

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

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

         13.07    Regulations and Other Approvals; Governing Law.

                  (a) The Plan and the rights of all persons claiming hereunder
shall be construed and determined in accordance with the laws of the State of
Delaware.

                  (b) The obligation of the Company to sell or deliver shares of
Common Stock with respect to options granted under the Plan shall be subject to
all applicable laws, rules and regulations, including all applicable federal and
state securities laws, and the obtaining of all such approvals by governmental
agencies as may be deemed necessary or appropriate by the Committee.

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

                  (d) The Board may make such changes to the Plan as may be
necessary or appropriate to comply with the rules and regulations of any
government authority.

                  (e) Each option is subject to the requirement that, if at any
time the Committee determines, in its discretion, that the listing, registration
or qualification of shares of Common Stock issuable pursuant to the Plan is
required by any securities exchange or under any state or federal law, or the
consent or approval of any governmental regulatory

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body is necessary or desirable as a condition of, or in connection with, the
grant of an option or the issuance of shares of Common Stock, no options shall
be granted or payment made or shares of Common Stock issued, in whole or in
part, unless listing, registration, qualification, consent or approval has been
effected or obtained free of any conditions not acceptable to the Committee.

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

                  (g) If a Participant makes a disposition, within the meaning
of Section 423(a) of the Code and regulations promulgated thereunder, of shares
of Common Stock issued to such Participant pursuant to the exercise of an option
within the two-year period commencing on the day after the date of the grant or
within the one-year period commencing on the day after the date of transfer of
shares of Common Stock to the Participant pursuant to such exercise, the
Participant shall, within ten (10) days of such disposition, notify the Company
thereof, by delivery of written notice to the Company at its principal executive
office.

         13.08 Withholding. In connection with the exercise of an option (in
whole or in part) or at the time of disposition of some or all of the Common
Stock issued under the Plan, a Participant shall make adequate provision for any
federal, state or other tax withholding obligations, if any, which arise upon
such exercise or disposition. At any time, the Company may, but shall not be
obligated to, withhold from the Participant's Compensation an amount necessary
for the Company to satisfy any applicable withholding obligations, including any
withholding required to make available to the Company any tax deductions or
benefits attributable to the early disposition of the Common Stock.

         13.09 Effective Date. The Plan shall become effective as of March 1,
2000, subject to approval by the holders of a majority of the shares of Common
Stock present and represented at any special or annual meeting of the
shareholders of the Company duly held

                                      -13-
<PAGE>   14

within twelve (12) months after adoption of the Plan. If the Plan is not so
approved, the Plan shall not become effective.

         13.10 Effect of Plan. The provisions of the Plan shall, in accordance
with its terms, be binding upon, and inure to the benefit of, all successors of
each Participant, including, without limitation, such Participant's estate and
the executors, administrators or trustees thereof, heirs and legatees, and any
receiver, trustee in bankruptcy or representative of creditors of such
Participant.

                                      -14-
<PAGE>   15

                                   APPENDIX A
                        DEFINITION OF "CHANGE IN CONTROL"

                  A "Change in Control" shall mean the occurrence, while the
Plan is in effect, of any of the following:

                  (a) The acquisition by any individual, entity or group (within
the meaning of Section 13(d) (3) or 14(d) (2) of the Exchange Act) (a "Person")
of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the
Exchange Act) of 20% or more of either (i) the then outstanding shares of common
stock of the Company (the "Outstanding Company Common Stock") or (ii) the
combined voting power of the then outstanding voting securities of the Company
entitled to vote generally in the election of directors (the "Outstanding
Company Voting Securities"); provided, however, that for purposes of this
subsection (a), the following acquisitions shall not constitute a Change in
Control: (i) any acquisition directly from the Company, (ii) any acquisition by
the Company, (iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation controlled by
the Company or (iv) any acquisition by any corporation pursuant to a transaction
which complies with clauses (i), (ii) and (iii) of subsection (c) below; or

                  (b) Individuals who, as of the date hereof, constitute the
Board (the "Incumbent Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any individual becoming a
director subsequent to the date hereof whose election, or nomination for
election by the Company's stockholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall be
considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person other than the
Board; or

                  (c) Consummation of a reorganization, merger or consolidation
or sale or other disposition of all or substantially all of the assets of the
Company (a "Business Combination"), in each case, unless, following such
Business Combination, (i) all or substantially all of the individuals and
entities who were the beneficial owners, respectively, of the Outstanding
Company Common Stock and Outstanding Company Voting Securities immediately prior
to such Business Combination beneficially own, directly or indirectly, more than
50% of, respectively, the then outstanding voting shares of common stock and the
combined voting power of the then outstanding voting securities entitled to vote
generally in the election of directors, as the case may be, of the corporation
resulting from such Business

                                      -15-
<PAGE>   16

Combination (including, without limitation, a corporation which as a result of
such transaction owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership, immediately prior to such Business
Combination, of the Outstanding Company Common Stock and Outstanding Company
Voting Securities, as the case may be, (ii) no Person (excluding any corporation
resulting from such Business Combination or any employee benefit plan (or
related trust) of the Company or such corporation resulting from such Business
Combination) beneficially owns, directly or indirectly, 20% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting power of the
then outstanding voting securities of such corporation except to the extent that
such ownership existed prior to the Business Combination and (iii) at least a
majority of the members of the board of directors of the corporation resulting
from such Business Combination were members of the Incumbent Board at the time
of the execution of the initial agreement, or of the action of the Board,
providing for such Business Combination; or

                  (d) Approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.

                                      -16-
<PAGE>   17

                                   APPENDIX B
                  LIST OF PARTICIPATING SUBSIDIARY CORPORATIONS

                                      -17-Exhibit 4.3

                            FACTORY 2-U STORES, INC.

                             1997 STOCK OPTION PLAN

                            THE AMENDED AND RESTATED

                            FACTORY 2-U STORES, INC.

                             1997 STOCK OPTION PLAN

1.    PURPOSE.

      This Amended and Restated Factory 2-U Stores,  Inc. 1997 Stock Option Plan
(the "Plan") is intended to provide  incentives  which will attract,  retain and
motivate highly competent  persons as key employees of Factory 2-U Stores,  Inc.
(the  "Company")  and of any  subsidiary  now  existing or  hereafter  formed or
acquired, by providing them opportunities to acquire shares of the common stock,
par value $0.01 per share, of the Company  ("Common  Stock").  Furthermore,  the
Plan is  intended to assist in  aligning  the  interests  of the  Company's  key
employees with those of its stockholders.

2.    ADMINISTRATION.

            (a) The Plan shall be administered by a committee (the  "Committee")
      appointed  by the Board of Directors  of the Company  (the  "Board")  from
      among its members.  The Committee  shall be comprised of not less than two
      members.  Each  member  of  the  Committee  shall  at all  times  be (i) a
      "Non-Employee  Director"  within the meaning of Rule  16b-3(b)(3)  (or any
      successor rule) promulgated under the Securities  Exchange Act of 1934, as
      amended (the "Exchange  Act"),  and (ii) an "outside  director" within the
      meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended
      (the "Code"), and the regulations promulgated  thereunder.  Subject to the
      provisions of the Plan,  the  Committee is  authorized  to establish  such
      rules and regulations as it deems necessary for the proper  administration
      of the Plan and to make such  determinations  and  interpretations  and to
      take such  action in  connection  with the Plan and any Stock  Options (as
      described in Section 5 below) granted  hereunder as it deems  necessary or
      advisable.  All determinations and  interpretations  made by the Committee
      shall be  binding  and  conclusive  on all  participants  and their  legal
      representatives. No member of the Board, no member of the Committee and no
      employee  of the  Company  shall be liable  for any act or  failure to act
      hereunder,  except in circumstances  involving his or her bad faith, gross
      negligence  or  willful  misconduct,  or for  any  act or  failure  to act
      hereunder  by any other  member or employee or by any agent to whom duties
      in connection  with the  administration  of this Plan have been delegated.
      The Company shall indemnify  members of the Committee and any agent of the
      Committee  who  is an  employee  of  the  Company,  against  any  and  all
      liabilities  or expenses to which they may be  subjected  by reason of any
      act or failure to act with  respect to their duties on behalf of the Plan,
      except  in  circumstances   involving  such  person's  bad  faith,   gross
      negligence or willful misconduct.

            (b) The Committee may delegate to one or more of its members,  or to
      one or more agents, such  administrative  duties as it may deem advisable,
      and the  Committee,  or any  person  to whom it has  delegated  duties  as
      aforesaid, may employ one or more persons to render advice with respect to

<PAGE>

      any  responsibility  the Committee or such person may have under the Plan.
      The  Committee  may employ such legal or other  counsel,  consultants  and
      agents as it may deem desirable for the administration of the Plan and may
      rely upon any  opinion  or  computation  received  from any such  counsel,
      consultant or agent.  Expenses incurred by the Committee in the engagement
      of such counsel,  consultant or agent shall be paid by the Company, or the
      subsidiary or affiliate  whose employees have benefitted from the Plan, as
      determined by the Committee.

3.    PARTICIPANTS.

      Participants shall consist of such key employees,  directors,  consultants
and  suppliers of the Company and any of its  subsidiaries,  as the Committee in
its sole discretion  determines to be significantly  responsible for the success
and future  growth and  profitability  of the Company and whom the Committee may
designate from time to time to receive Stock Options under the Plan. Designation
of a participant  in any year shall not require the Committee to designate  such
person to  receive a Stock  Option in any other  year or,  once  designated,  to
receive the same type or amount of Stock Option as granted to the participant in
any other year. The Committee  shall consider such factors as it deems pertinent
in  selecting  participants  and in  determining  the type and  amount  of their
respective Stock Options.

4.    COMMON STOCK AVAILABLE UNDER THE PLAN.

      The  aggregate  number of shares of Common  Stock  that may be  subject to
Stock Options granted under this Plan shall be 2,157,980 shares of Common Stock,
which  may be  authorized  and  unissued  or  treasury  shares,  subject  to any
adjustments  made in  accordance  with Section 6 hereof.  The maximum  number of
shares of Common Stock with respect to which Stock Options may be granted to any
individual  participant  under the Plan  during  the term of the Plan  shall not
exceed  361,596  shares,  subject to any  adjustments  made in  accordance  with
Section 6 hereof. Any shares of Common Stock subject to a Stock Option which for
any reason is cancelled, terminated without having been exercised, forfeited, or
delivered  to the  Company as pan of full  payment  for the  exercise of a Stock
Option shall again be available for Stock Options under the Plan.  The preceding
sentence  shall apply only for purposes of determining  the aggregate  number of
shares of Common Stock subject to Stock Options and shall not apply for purposes
of  determining  the maximum  number of shares of Common Stock  subject to Stock
Options that any individual participant may receive.

5.    STOCK OPTIONS.

            (a) IN GENERAL.  The  Committee is authorized to grant Stock Options
      to key employees, directors,  consultants and suppliers of the Company and
      any of its subsidiaries, and shall, in its sole discretion,  determine the
      key employees, directors, consultants and suppliers who will receive Stock
      Options  and the number of shares of Common  Stock  underlying  each Stock
      Option.  Stock Options may be (i) "incentive  stock  options"  ("Incentive
      Stock  Options"),  within the meaning of Section 422 of the Code,  or (ii)
      Stock   Options   which  do  not   constitute   Incentive   Stock  Options
      ("Nonqualified Stock Options").  The Committee shall have the authority to

<PAGE>

      grant  to  any  key  employee  one  or  more   Incentive   Stock  Options,
      Nonqualified Stock Options,  or both types of Stock Options,  and to grant
      to any other  participant  one or more  Nonqualified  Stock Options.  Each
      Stock Option shall be subject to such terms and conditions consistent with
      the Plan as the Committee may impose from time to time. In addition,  each
      Stock Option shall be subject to the  following  limitations  set forth in
      this Section 5.

            (b) STOCK OPTION  AGREEMENTS.  Stock  Options  shall be evidenced by
      agreements  (which need not be  identical)  in such forms as the Committee
      may from time to time approve; PROVIDED, HOWEVER, that in the event of any
      conflict between the provisions of the Plan and any such  agreements,  the
      provisions of the Plan shall prevail.

            (c)  EXERCISE  PRICE.  Subject to the  provisions  of  Section  5(f)
      hereof, each Stock Option granted hereunder shall have such exercise price
      as the Committee may  determine at the date of grant;  PROVIDED,  HOWEVER,
      that the exercise  price of any  Incentive  Stock Option shall not be less
      than 100 percent of the Fair Market  Value (as defined in Section 9 below)
      of the Common Stock on the date such Incentive Stock Option is granted.

            (d) PAYMENT OF EXERCISE  PRICE.  The Stock Option exercise price may
      be paid in cash or, in the discretion of the Committee, by the delivery of
      shares of Common Stock then owned by the  participant,  by the withholding
      of shares of Common Stock for which a Stock Option is exercisable, or by a
      combination of these methods. In the discretion of the Committee,  payment
      may also be made by delivering a properly  executed exercise notice to the
      Company  together with a copy of irrevocable  instructions  to a broker to
      deliver promptly to the Company the amount of sale or loan proceeds to pay
      the exercise  price.  To facilitate the  foregoing,  the Company may enter
      into  agreements  for  coordinated  procedures  with one or more brokerage
      firms. The Committee may prescribe any other method of paying the exercise
      price that it  determines  to be consistent  with  applicable  law and the
      purpose  of the  Plan,  including,  without  limitation,  in  lieu  of the
      exercise  of a Stock  Option by  delivery  of shares of Common  Stock then
      owned by a participant,  providing the Company with a notarized  statement
      attesting to the number of shares owned,  where upon  verification  by the
      Company,  the Company  would issue to the  participant  only the number of
      incremental  shares to which the  participant is entitled upon exercise of
      the Stock Option.  In determining  which methods a participant may utilize
      to pay the exercise  price,  the Committee may consider such factors as it
      determines  are  appropriate;  PROVIDED,  HOWEVER,  that with  respect  to
      Incentive  Stock Options,  all such  discretionary  determinations  by the
      Committee  shall be made at the time of grant and  specified  in the Stock
      Option agreement.

            (e) EXERCISE  PERIOD.  Stock Options granted under the Plan shall be
      exercisable at such time or times and subject to such terms and conditions
      as shall be determined by the Committee;  PROVIDED, HOWEVER, that no Stock
      Option  shall be  exercisable  later  than 10 years  after  the date it is
      granted.  All Stock Options shall terminate at such earlier times and upon
      such conditions or  circumstances as the Committee shall in its discretion
      set forth in such Stock Option agreement at the date of grant.

            (f) LIMITATIONS ON INCENTIVE STOCK OPTIONS.  Incentive Stock Options
      may be granted only to  participants  who are key employees of the Company

<PAGE>

      or any of its  subsidiaries  at the date of grant.  The  aggregate  market
      value  (determined  as of the time the  Stock  Option is  granted)  of the
      Common  Stock with respect to which  Incentive  Stock  Options  (under all
      option  plans of the  Company)  are  exercisable  for the first  time by a
      participant  during  any  calendar  year shall not  exceed  $100,000.  For
      purposes of the preceding  sentence,  (i) Incentive Stock Options shall be
      taken  into  account  in the  order in which  they  are  granted  and (ii)
      Incentive  Stock  Options  granted  before  1987  shall not be taken  into
      account.  Incentive  Stock  Options may not be granted to any  participant
      who, at the time of grant, owns stock possessing (after the application of
      the attribution  rules of Section 424(d) of the Code) more than 10 percent
      of the total combined voting power of all outstanding  classes of stock of
      the Company or any of its  subsidiaries,  unless the option price is fixed
      at not less than 110 percent of the Fair Market  Value of the Common Stock
      on the date of grant and the exercise of such option is  prohibited by its
      terms  after  the  expiration  of 5 years  from  the date of grant of such
      option.  In  addition,  no  Incentive  Stock  Option  shall be issued to a
      participant in tandem with a Nonqualified Stock Option.

6.    ADJUSTMENT PROVISIONS.

      If  there  shall  be any  change  in the  Common  Stock,  through  merger,
consolidation,  reorganization,  recapitalization,  stock dividend, stock split,
reverse  stock split,  split up,  spinoff,  combination  of shares,  exchange of
shares,  dividend  in  kind  or  other  like  change  in  capital  structure  or
distribution  (other than normal cash dividends) to stockholders of the Company,
an adjustment shall be made to each outstanding Stock Option such that each such
Stock Option shall  thereafter be exercisable for such  securities,  cash and/or
other  property  as would have been  received  in  respect  of the Common  Stock
subject  to such  Stock  Option had such Stock  Option  been  exercised  in full
immediately  prior to such change or distribution,  and such an adjustment shall
be made successively each time any such change shall occur. In addition,  in the
event of any such  change  or  distribution,  in order to  prevent  dilution  or
enlargement of  participants'  rights under the Plan,  the Committee  shall have
authority to adjust, in an equitable manner,  the number and kind of shares that
may be  issued  under  the  Plan,  the  number  and kind of  shares  subject  to
outstanding  Stock Options,  the exercise price applicable to outstanding  Stock
Options,  and the  Fair  Market  Value  of the  Common  Stock  and  other  value
determinations applicable to outstanding Stock Options.  Appropriate adjustments
may also be made by the  Committee in the terms of any Stock  Options  under the
Plan to reflect such changes or  distributions  and to modify any other terms of
outstanding  Stock Options on an equitable  basis,  including  modifications  of
performance   targets  and  changes  in  the  length  of  performance   periods.
Notwithstanding  the foregoing,  (i) any adjustment with respect to an Incentive
Stock Option shall comply with the rules of Section 424(a) of the Code, and (ii)
in no event shall any adjustment be made which would render any Incentive  Stock
Option granted  hereunder  other than an incentive  stock option for purposes of
Section 422 of the Code.

7.    CHANGE IN CONTROL.

            (a)  Notwithstanding any other provision of this Plan, if there is a
      Change in Control of the Company, all then outstanding Stock Options shall
      immediately become exercisable.  For purposes of this Section 7, a "Change
      in Control" of the Company  shall be deemed to have  occurred  upon any of
      the following events:

<PAGE>

                  (i) any person or group within the meaning of Section 13(d)(3)
         of the Exchange Act (other than the persons who do so on the  Effective
         Date)  shall  beneficially  own (within the meaning of Rule 13d-3 under
         the  Exchange  Act)  more  than 50% of the  total  voting  power of all
         classes of capital stock of the Company  entitled to vote  generally in
         the election of directors of the Company;

                  (ii)  the Company  consolidates with, merges into, or sells,
         leases or  conveys  all or  substantially  all of its  assets to, any
         other person; or

                  (iii) the  Company  enters  into or  approves  any  agreement,
         transaction  or proposal  that would  result in the  occurrence  of any
         event  described in clauses (i) or (ii) (including  without  limitation
         any agreement, transaction or proposal that would have such result with
         the passage of time, upon the payment of money or other  consideration,
         or upon the occurrence of any contingency or contingencies).

            (b) The Committee,  in its discretion,  may determine that, upon the
      occurrence  of a Change in  Control  of the  Company,  each  Stock  Option
      outstanding  hereunder shall terminate  within a specified  number of days
      after notice to the holder, and such holder shall receive, with respect to
      each share of Common Stock subject to such Stock  Option,  an amount equal
      to the  excess of the Fair  Market  Value of such  shares of Common  Stock
      immediately  prior to the  occurrence  of such Change in Control  over the
      exercise  price per  share of such  Stock  Option;  such  amount  shall be
      payable in cash, in one or more kinds of property (including the property,
      if any,  payable in the transaction) or in a combination  thereof,  as the
      Committee, in its discretion, shall determine.

8.    TRANSFERABILITY.

      Each  Stock  Option  granted  under  the  Plan to a  participant  shall be
exercisable,  during the participant's  lifetime, only by the participant and no
such Stock Option shall be  transferable  otherwise  than by will or the laws of
descent and distribution. In the event of the death of a participant, each Stock
Option theretofore granted to him or her shall be exercisable during such period
after his or her death as the  Committee  shall in its  discretion  set forth in
such  option  or right at the date of grant  and then  only by the  executor  or
administrator of the estate of the deceased participant or the person or persons
to whom the deceased  participant's  rights under the Stock Option shall pass by
will or the laws of descent and distribution.

9.    FAIR MARKET VALUE.

      For purposes of this Plan and any Stock  Option  granted  hereunder,  Fair
Market  Value shall be (i) the closing  price of the Common Stock on the date of
calculation  (or on the last  preceding  trading  date if  Common  Stock was not
traded on such date) if the  Common  Stock is  readily  tradeable  on a national
securities  exchange or other  market  system or (ii) if the Common Stock is not
readily  tradeable,  the amount determined in good faith by the Committee as the
fair market value of the Common Stock.

<PAGE>

10.   WITHHOLDING.

      All payments or  distributions  made  pursuant to the Plan shall be net of
any amounts required to be withheld  pursuant to applicable  federal,  state and
local tax withholding  requirements.  If the Company  proposes or is required to
distribute  Common Stock  pursuant to the Plan,  it may require the recipient to
remit  to it or to  the  corporation  that  employs  such  recipient  an  amount
sufficient to satisfy such tax withholding requirements prior to the delivery of
any  certificates  for such Common Stock.  In lieu  thereof,  the Company or the
employing  corporation shall have the right to withhold the amount of such taxes
from any other sums due or to become due from such  corporation to the recipient
as the Committee  shall  prescribe.  The Committee  may, in its  discretion  and
subject  to such  rules as it may adopt  (including  any as may be  required  to
satisfy  applicable  tax  and/or  non-tax  regulatory  requirements),  permit  a
participant to pay all or a portion of the federal,  state and local withholding
taxes arising in connection with any Stock Option consisting of shares of Common
Stock by electing to have the Company  withhold  shares of Common Stock having a
Fair Market Value equal to the amount of tax to be withheld, such tax calculated
at rates required by statute or regulation.

11.   TENURE.

      A  participant's  right,  if any,  to  continue  to serve the Company as a
director,  officer,  employee, or otherwise,  shall not be enlarged or otherwise
affected by his or her designation as a participant under the Plan.

12.   UNFUNDED PLAN.

      Participants shall have no right,  title, or interest  whatsoever in or to
any investments  which the Company may make to aid it in meeting its obligations
under the Plan.  Nothing  contained in the Plan, and no action taken pursuant to
its provisions, shall create or be construed to create a trust of any kind, or a
fiduciary  relationship  between the Company and any  participant,  beneficiary,
legal representative or any other person. To the extent that any person acquires
a right to receive payments from the Company under the Plan, such right shall be
no greater than the right of an unsecured  general creditor of the Company.  All
payments  to be made  hereunder  shall  be paid  from the  general  funds of the
Company and no special or separate fund shall be established  and no segregation
of assets shall be made to assure  payment of such  amounts  except as expressly
set forth in the Plan.  The Plan is not  intended to be subject to the  Employee
Retirement Income Security Act of 1974, as amended.

13.   NO FRACTIONAL SHARES.

      No fractional shares of Common Stock shall be issued or delivered pursuant
to the Plan. The Committee shall determine  whether cash or other property shall
be issued or paid in lieu of fractional shares or whether such fractional shares
or any rights thereto shall be forfeited or otherwise eliminated.

<PAGE>

14.   DURATION, AMENDMENT AND TERMINATION.

      No Stock Option  shall be granted  more than 10 years after the  Effective
Date (as  defined  below).  The  Board  may  amend the Plan from time to time or
suspend or terminate  the Plan at any time;  PROVIDED,  HOWEVER,  that no action
authorized  by this  Section 14 shall  reduce the amount of any  existing  Stock
Option or change the terms and  conditions  thereof  without  the  participant's
consent. No amendment of the Plan shall, without approval of the stockholders of
the  Company,  (i) increase the total number of shares which may be issued under
the Plan,  (ii)  increase  the  maximum  number of shares  underlying  all Stock
Options that may be granted to any individual during the term of the Plan, (iii)
modify the  requirements  as to  eligibility  for Stock Options grants under the
Plan, or (iv) disqualify any Incentive Stock Options granted hereunder.

15.   GOVERNING LAW.

      This Plan, Stock Options granted hereunder and actions taken in connection
herewith  shall be governed  and  construed in  accordance  with the laws of the
State of  Delaware  (regardless  of the law that might  otherwise  govern  under
applicable Delaware principles of conflict of laws).

16.   EFFECTIVE DATE.

            (a) The Plan  shall be  effective  as of the date on which the Plan,
      having been theretofore adopted by the Committee, shall be ratified by the
      Board  (the  "Effective  Date");  PROVIDED,  HOWEVER,  that the Plan shall
      thereafter  be  approved by the  stockholders  of the Company at an annual
      meeting or any special  meeting of  stockholders  of the Company within 12
      months after the Effective Date, and such approval of  stockholders  shall
      be a condition to the right of each  participant  to receive Stock Options
      hereunder.  Any Stock Option granted under the Plan prior to such approval
      of stockholders  shall be effective as of the date of grant (unless,  with
      respect to any Stock Option, the Committee specifies otherwise at the time
      of grant),  but no such Stock  Option may be  exercised  or settled and no
      restrictions  relating  to any  Stock  Option  may  lapse  prior  to  such
      stockholder  approval,  and if  stockholders  fail to approve  the Plan as
      specified hereunder, any such Stock Option shall be cancelled.

            (b) This  Plan  shall  terminate  on the  tenth  anniversary  of the
      Effective Date (unless sooner terminated by the Board).

<PAGE>

                                 AMENDMENT TO
               AMENDED AND RESTATED FAMILY BARGAIN CORPORATION
                             1997 STOCK OPTION PLAN

            WHEREAS the Board of Directors of Factory 2-U Stores, Inc., formerly
Family Bargain Corporation (the "Company"), has determined that it would be in
the best interest of the Company to amend the Amended and Restated 1997 Stock
Option Plan of the Company (the "Plan");

            NOW, THEREFORE, effective as of the date hereof, the Plan is amended
as follows:

            1.    The name of the Plan is hereby amended to be "Factory 2-U
Stores, Inc. 1997 Stock Option Plan."

            2. Section 1 of the Plan is hereby amended to change all references
to "Family Bargain Corporation" to "Factory 2-U Stores, Inc."

            3.    Section 4 of the Plan is hereby amended to read in its
entirety as follows:

                  "4.   Common Stock Available Under the Plan.

                        The aggregate number of shares of Common Stock that may
                  be subject to Stock Options granted under this Plan shall be
                  2,157,980 shares of Common Stock, which may be authorized and
                  unissued or treasury shares, subject to any adjustments made
                  in accordance with Section 6 hereof. The maximum number of
                  shares of Common Stock with respect to which Stock Options may
                  be granted to any individual participant under the Plan during
                  the term of the Plan shall not exceed 361,596 shares, subject
                  to any adjustments made in accordance with Section 6 hereof.
                  Any shares of Common Stock subject to a Stock Option which for
                  any reason is canceled, terminated without having been
                  exercised, forfeited or delivered to the Company as part of
                  full payment for the exercise of any Stock Option shall again
                  be available for Stock Options under the Plan. The preceding
                  sentence shall apply only for purposes of determining the
                  aggregate number of shares of Common Stock subject to Stock
                  Options and shall not apply for purposes of determining the
                  maximum number of shares of Common Stock subject to Stock
                  Options that any individual participant may receive."

            4.    In all other respects the Plan shall remain unchanged and
in full force and effect.

Dated:  June 27, 2000               /S/ SUSAN M. SKROKOV
                                    --------------------------------------------
                                    Susan M. Skrokov, Secretary

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00011-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00011-of-00352.parquet"}]]