UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-K/A
                                 Amendment No. 1
(Mark one)
(X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

For the fiscal year ended December 31, 2001

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

For the transition period from _____________ to ____________

Commission File Number: 1-9293
         --------------------------------------------------------------

                          PRE-PAID LEGAL SERVICES, INC.
             (Exact name of registrant as specified in its charter)

             Oklahoma                                           73-1016728
  (State or other jurisdiction of                           (I.R.S. Employer
    incorporation or organization)                          Identification No.)

          321 East Main
          Ada, Oklahoma                                            74820
(Address of principal executive offices)                         (Zip Code)

Registrant's telephone number including area code:  (580) 436-1234


Securities registered pursuant to Section 12(b) of the Exchange Act:
                                                       Name of each exchange on
     Title of each class                                    which registered
     -------------------                                   ----------------
 Common Stock, $0.01 Par Value                          New York Stock Exchange


Securities registered under Section 12 (g) of the Exchange Act: None

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes X No

     Indicate by check mark if disclosure of delinquent  filers pursuant to Item
405 of Regulation S-K is not contained herein and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K ( ).

     State the aggregate market value of the voting stock held by non-affiliates
of the registrant.  The aggregate market value shall be computed by reference to
the price at which the stock was sold,  or the average  bid and asked  prices of
such stock,  as of a specified date within the past 60 days prior to the date of
the filing: As of February 28, 2002 - $370,000,000.

     Indicate  the  number of  shares  outstanding  of each of the  registrant's
classes of common stock, as of the latest  practicable  date: As of February 28,
2002 there were  20,168,524  shares of Common  Stock,  par value $.01 per share,
outstanding.



DOCUMENTS INCORPORATED BY REFERENCE.
     Portions of the Company's  definitive  proxy  statement for its 2002 annual
meeting  of  shareholders  are  incorporated  into Part III of this Form 10-K by
reference.

     The undersigned  registrant  hereby amends the following  items,  financial
statements,  exhibits  of other  portions  of its  Annual  Report  on Form  10-K
pursuant to Section 13 of the Securities and Exchange Act of 1934 for the fiscal
year ended  December  31,  2001,  as set forth  below and in the pages  attached
hereto.

     Part IV,  Item 14 -  "Exhibits  and  Reports on Form 8-K" is amended (i) to
include as Exhibit  99.1 the  attached  financial  information  relating  to The
Employee Stock Option Ownership and Thrift Plan and Trust ("Plan"),  as required
by Form 11-K, for the fiscal year of the Plan ended December 31, 2001,  which is
filed as an exhibit pursuant to Rule 15d-21 under the Securities Exchange Act of
1934,  and (ii) to  include  as  Exhibit  23.2 and  23.3 the  consents  of Grant
Thornton  LLP and  Deloitte & Touche  LLP,  respectively  relating to the use of
their reports which are included as part of Exhibit 99.1.

     The full text of Item 14 and the Exhibit  Index,  as  amended,  referred to
therein are as set forth below.

ITEM 14.      EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
------------------------------------------------------------------------------

(a) The following documents are filed as part of this report:

     (1)  Financial Statements:  See Index to Consolidated  Financial Statements
          and Consolidated  Financial Statement Schedule set forth on page 35 of
          this report.

     (2)  Exhibits:  For a list  of the  documents  filed  as  exhibits  to this
          report, see the Exhibit Index following the signatures to this report.

(b) Reports on Form 8-K:  None.


                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                    PRE-PAID LEGAL SERVICES, INC.

Date: July 1, 2002             By:  /s/ Randy Harp
                                    -------------------------------------------
                                    Randy Harp
                                    Chief Operating Officer




                                INDEX TO EXHIBITS


  Exhibit No.                 Description
-------------                 -----------

3.1  Amended and  Restated  Certificate  of  Incorporation  of the  Company,  as
     amended  (Incorporated  by reference to Exhibit 4.1 of the Company's Report
     on Form 8-K dated January 10, 1997)

3.2  Amended and Restated  Bylaws of the Company  (Incorporated  by reference to
     Exhibit  3.1 of the  Company's  Report  on Form 10-Q for the  period  ended
     September 30, 1996)

*10.1Employment  Agreement  effective  January 1, 1993  between  the Company and
     Harland C.  Stonecipher  (Incorporated  by reference to Exhibit 10.1 of the
     Company's  Annual  Report on Form  10-KSB for the year ended  December  31,
     1992)

*10.2Agreements  between Shirley  Stonecipher,  New York Life Insurance  Company
     and the  Company  regarding  life  insurance  policy  covering  Harland  C.
     Stonecipher  (Incorporated  by reference to Exhibit  10.21 of the Company's
     Annual Report on Form 10-K for the year ended December 31, 1985)

*10.3Amendment dated January 1, 1993 to Split Dollar  Agreement  between Shirley
     Stonecipher  and the  Company  regarding  life  insurance  policy  covering
     Harland C.  Stonecipher  (Incorporated  by reference to Exhibit 10.3 of the
     Company's  Annual  Report on Form  10-KSB for the year ended  December  31,
     1992)

*10.4Form of New Business  Generation  Agreement Between the Company and Harland
     C. Stonecipher (Incorporated by reference to Exhibit 10.22 of the Company's
     Annual Report on Form 10-K for the year ended December 31, 1986)

*10.5Amendment  to New  Business  Generation  Agreement  between the Company and
     Harland C. Stonecipher  effective January,  1990 (Incorporated by reference
     to Exhibit 10.12 of the Company's Annual Report on Form 10-KSB for the year
     ended December 31, 1992)

*10.6Amendment  No.  1 to Stock  Option  Plan,  as  amended  effective  May 2000
     (Incorporated  by reference to Exhibit 10.6 of the Company's  Annual Report
     on Form 10-K for the year ended December 31, 2000)

*10.7Demand Note of Wilburn L. Smith and Carol Smith dated  December 11, 1992 in
     favor of the Company  (Incorporated  by reference  to Exhibit  10.15 of the
     Company's Form SB-2 filed February 8, 1994)

*10.8Demand Note of Wilburn L. Smith and Carol Smith dated  December 31, 1996 in
     favor of the Company  (Incorporated  by  reference  to Exhibit  10.8 of the
     Company's Form 10-K filed for the year ending December 31, 1997)

*10.9Security  Agreement  between the Company,  Wilburn L. Smith and Carol Smith
     dated December 11, 1992  (Incorporated by reference to Exhibit 10.16 of the
     Company's Form SB-2 filed February 8, 1994)

*10.10 Letter  Agreements  dated  July 8,  1993 and March 7,  1994  between  the
     Company and Wilburn L. Smith (Incorporated by reference to Exhibit 10.17 of
     the Company's Form 10-KSB filed for the year ending December 31, 1993)

10.11Agreement  and  Plan of  Reorganization  dated  as of  September  23,  1998
     between the Company and TPN, Inc. (Incorporated by reference to Exhibit 2.1
     of the Company's Current Report on Form 8-K dated October 2, 1998)

10.12Stock  Purchase  Agreement  dated as of October 5, 1998 between the Company
     and Pioneer Financial Services,  Inc. (Incorporated by reference to Exhibit
     2.1 of the Company's Current Report on Form 8-K dated December 30, 1998)

*10.13 Demand  Note of Wilburn L.  Smith  dated  October 8, 1998 in favor of the
     Company  (Incorporated  by reference to Exhibit 10.13 of the Company's Form
     10-K filed for the year ended December 31, 1998)

*10.14 Stock  option  agreement  with David A.  Savula  dated  February  6, 1998
     (Incorporated  by reference  to Exhibit  10.14 of the  Company's  Form 10-K
     filed for the year ended December 31, 1998)

*10.15  Stock  option  agreement  with  David  A.  Savula  dated  July  2,  1998
     (Incorporated  by reference  to Exhibit  10.15 of the  Company's  Form 10-K
     filed for the year ended December 31, 1998)

*10.16  Stock  option  agreement  with  David  A.  Savula  dated  July  2,  1998
     (Incorporated  by reference  to Exhibit  10.16 of the  Company's  Form 10-K
     filed for the year ended December 31, 1998)

10.17Demand Note of Randy Harp dated  December  22, 2000 in favor of the Company
     (Incorporated  by reference to Exhibit 10.17 of the Company's Annual Report
     on Form 10-K for the year ended December 31, 2000)

10.18Loan agreement  dated  November 6, 2001 between Bank of Oklahoma,  N.A. and
     the Company  (Incorporated  by reference to Exhibit  10.18 of the Company's
     Annual Report on Form 10-K for the year ended December 31, 2000)

10.19Security  agreement  dated November 6, 2001 between Bank of Oklahoma,  N.A.
     and  the  Company  (Incorporated  by  reference  to  Exhibit  10.19  of the
     Company's Annual Report on Form 10-K for the year ended December 31, 2000)

21.1 List of Subsidiaries of the Company  (Incorporated  by reference to Exhibit
     21.1 of the  Company's  Annual  Report  on Form  10-K  for the  year  ended
     December 31, 2001)

23.1 Consent of Grant Thornton LLP (Incorporated by reference to Exhibit 23.1 of
     the Company's  Annual  Report on Form 10-K for the year ended  December 31,
     2001)

23.2 Consent of Grant Thornton LLP relating to report  concerning plan financial
     information included as part of Exhibit 99.1

23.3 Consent  of  Deloitte  & Touche  LLP  relating  to report  concerning  plan
     financial information included as part of Exhibit 99.1

99.1 Financial  information  relating  to  the  Pre-Paid  Legal  Services,  Inc.
     Employee  Stock  Ownership  and Thrift Plan and Trust,  as required by Form
     11-K  for  the  fiscal   year  of  the  plan  ended   December   31,   2001
     --------------------

* Constitutes a management contract or compensatory plan or arrangement required
  to be filed as an exhibit to this report.


                  Exhibit 23.2 - Consent of Grant Thornton LLP


CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
---------------------------------------------------

We have  issued  our report  dated June 20,  2002,  accompanying  the  financial
statements and schedules of the Pre-Paid  Legal  Services,  Inc.  Employee Stock
Ownership  and  Thrift  Plan and Trust for the year  ended  December  31,  2001,
included in this Amendment No. 1 on Form 10-K/A of Pre-Paid Legal Services, Inc.
for the year ended December 31, 2001. We hereby consent to the  incorporation by
reference  of said  report  in the  Registration  Statement  of  Pre-Paid  Legal
Services, Inc. on Form S-8 (File No. 33-82144, effective July 28, 1994).


GRANT THORNTON LLP


Oklahoma City, Oklahoma
June 20, 2002




                 Exhibit 23.3 - Consent of Deloitte & Touche LLP


INDEPENDENT AUDITORS' CONSENT


We consent to the  incorporation  by reference  in  Registration  Statement  No.
33-82144 of Pre-Paid Legal  Services,  Inc. on Form S-8 of our report dated June
15, 2001 on the  financial  statements  of the  Pre-Paid  Legal  Services,  Inc.
Employee  Stock  Ownership and Thrift Plan and Trust for the year ended December
31, 2000  appearing  in this  Amendment  No. 1 on Form 10-K/A of Pre-Paid  Legal
Services, Inc. for the year ended December 31, 2001.


/s/DELOITTE & TOUCHE LLP
Deloitte & Touche LLP
Tulsa, Oklahoma
June 28, 2002



Exhibit 99.1 - Financial  Statements and Report of independent  certified public
accounts for the Pre-Paid Legal  Services,  Inc.  Employee  Stock  Ownership and
Thrift Plan Trust for the fiscal year of the plan ended December 31, 2001



Pre-Paid Legal Services, Inc. Employee Stock Ownership and Thrift Plan and Trust
                           December 31, 2001 and 2000


                                 C O N T E N T S


REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

FINANCIAL STATEMENTS

    STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS

    STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

    NOTES TO FINANCIAL STATEMENTS

SUPPLEMENTAL SCHEDULES

    SCHEDULE H, LINE 4i - ASSETS HELD FOR INVESTMENT PURPOSES

    SCHEDULE H, LINE 4j - REPORTABLE TRANSACTIONS


Report of Independent Certified Public Accountants
--------------------------------------------------

Trustee and Participants
Pre-Paid Legal Services, Inc. Employee Stock Ownership and Thrift Plan and Trust

We have audited the accompanying  statement of net assets available for benefits
of Pre-Paid Legal  Services,  Inc.  Employee Stock Ownership and Thrift Plan and
Trust as of  December  31,  2001,  and the related  statement  of changes in net
assets  available  for  benefits  for  the  year  then  ended.  These  financial
statements are the responsibility of the Plan's  management.  Our responsibility
is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the net assets available for benefits of Pre-Paid Legal
Services, Inc. Employee Stock Ownership and Thrift Plan and Trust as of December
31, 2001, and the changes in net assets available for benefits for the year then
ended in conformity with accounting  principles generally accepted in the United
States of America.

Our audit was  performed  for the  purpose  of  forming  an opinion on the basic
financial  statements taken as a whole as of and for the year ended December 31,
2001.  The  supplemental  schedules of assets held for  investment  purposes and
reportable transactions are presented for the purpose of additional analysis and
are not a required part of the basic financial  statements but are  supplemental
information  required by the  Department  of Labor's Rules and  Regulations  for
Reporting and Disclosure  under the Employee  Retirement  Income Security Act of
1974.  These  supplemental  schedules  are  the  responsibility  of  the  Plan's
management.  Such  supplemental  schedules  have been  subjected to the auditing
procedures  applied in the audit of the basic  financial  statements and, in our
opinion,  are fairly  stated in all  material  respects in relation to the basic
financial statements taken as a whole.






GRANT THORNTON LLP

Oklahoma City, Oklahoma
June 20, 2002



INDEPENDENT AUDITORS' REPORT


To the Trustees and Participants of the
   Pre-Paid Legal Services, Inc.
   Employee Stock Ownership and
   Thrift Plan and Trust:

We have audited the accompanying  statement of net assets available for benefits
of the Pre-Paid Legal  Services,  Inc.  Employee Stock Ownership and Thrift Plan
and Trust (the "Plan") as of December 31, 2000,  and the related  statements  of
changes in net assets  available  for  benefits  for the year then ended.  These
financial  statements  are the  responsibility  of the  Plan's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

We conducted our audit in accordance with auditing standards  generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit to obtain  reasonable  assurance  about  whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audit  provides  a
reasonable basis for our opinion.

In our  opinion,  such  financial  statements  present  fairly,  in all material
respects,  the net assets  available  for  benefits of the Plan at December  31,
2000,  and the changes in net assets  available  for  benefits for the year then
ended in conformity with accounting  principles generally accepted in the United
States of America.


/s/DELOITTE & TOUCHE LLP
Deloitte & Touche LLP
Tulsa, Oklahoma
June 15, 2001





             Pre-Paid Legal Services, Inc. Employee Stock Ownership
                          and Thrift Plan and Trust The
                                      STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS

                                  December 31,



                                                                                           2001                 2000
                                                                                           ----                 ----
ASSETS
                                                                                                      
    Cash and cash equivalents                                                          $   296,455          $   224,112
    Investments, at fair value
       Pre-Paid Legal Services, Inc. common stock                                        4,108,747            4,355,987
       Participant-directed mutual funds                                                   842,959              937,921
    Participant notes                                                                       50,502                  -
    Receivables
       Employer contributions                                                              210,671              161,973
       Participants' elective deferrals                                                      8,831                7,133
                                                                                       ------------         ------------
                  NET ASSETS AVAILABLE FOR BENEFITS                                     $5,518,165           $5,687,126
                                                                                       ------------         ------------






        The accompanying notes are an integral part of these statements.






             Pre-Paid Legal Services, Inc. Employee Stock Ownership
                           and Thrift Plan and Trust
           STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS

                             Year ended December 31,



                                                                                            2001                 2000
                                                                                            ----                 ----
Additions
                                                                                                      
    Employer contributions (Pre-Paid Legal Services, Inc.
       common stock)                                                                   $   210,671          $   161,973
    Participant contributions                                                              375,299              292,978
    Interest and dividend income                                                            36,537               50,735
    Net appreciation in fair value of investments                                              -                256,883
                                                                                       ------------         ------------
                  Total additions                                                          622,507              762,569

Deductions
    Benefits paid to participants                                                          155,530              119,312
    Net depreciation in fair value of investments                                          635,938                    -
                                                                                       ------------         ------------
                  Total deductions                                                         791,468              119,312
                                                                                       ------------         ------------
                  NET INCREASE (DECREASE) IN NET ASSETS                                   (168,961)             643,257

Net assets available for benefits at beginning of year                                   5,687,126            5,043,869
                                                                                       ------------         ------------
Net assets available for benefits at end of year                                        $5,518,165           $5,687,126
                                                                                       ------------         ------------



        The accompanying notes are an integral part of these statements.



                          NOTES TO FINANCIAL STATEMENTS
                           December 31, 2001 and 2000


NOTE A - DESCRIPTION OF PLAN AND SUMMARY OF ACCOUNTING POLICIES

     The Pre-Paid Legal Services,  Inc. Employee Stock Ownership and Thrift Plan
     and Trust (the "Plan") was  established  on January 1, 1988 for the benefit
     of the employees of Pre-Paid Legal Services, Inc. and its subsidiaries (the
     "Company").  The  Plan is  administered  by a  committee  of two  employees
     appointed by the Company (the  "Committee").  The Committee  also serves as
     the Plan's Trustee and Investment Manager.

     Under the terms of the Plan, the Committee may acquire, hold and dispose of
     all cash and  investments,  including  common  and  preferred  stock of the
     Company, through a trust fund. Participants who have attained the age of 55
     have the  right to make an  election  to  direct  the  Committee  as to the
     investment of their accounts.  Such  participants may elect to diversify up
     to 100% of their deferred  compensation  accounts and the vested portion of
     their Company Contributed Accounts in one or more "no load" mutual funds of
     any regulated  investment company as defined by Section 851 of the Internal
     Revenue Code.

     Each participant or beneficiary shall have the sole right to vote shares of
     Company common stock allocated to such participant's  account. The right to
     vote such shares shall be exercised  by directing  the  Committee as to the
     manner in which the shares shall be voted.

     The following is a summary of the Plan's significant accounting policies.

     1. Basis of Accounting

     The Plan's  financial  statements  are  prepared  on the  accrual  basis of
     accounting in conformity with accounting  principles  generally accepted in
     the United States of America.

     2. Cash and Cash Equivalents

     Cash and cash equivalents  consist of the Plan's linked cash and money fund
     accounts at a national brokerage firm. Money fund amounts have a unit value
     of $1 and balances are immediately accessible by the Plan.

     3. Investments

     Investments  are  presented  at fair value as measured by market  prices in
     active  markets,  including  national  securities  exchanges.  The  cost of
     Company  common  stock sold is  determined  on the basis of  average  cost.
     Actual  cost is  used  as a  basis  for  sales  of all  other  investments.
     Investment transactions are recorded on a trade date basis.

     4. Participant Notes

     Effective  July 1,  2001,  the Plan  began  to  permit  participant  notes.
     Participant  notes are approved by the  Committee and cannot be made for an
     amount  less than  $1,000 or exceed the  lesser of  $50,000  reduced by the
     excess of the  highest  outstanding  balance of loans  during the  one-year
     period  ending  on the day  before  the  loan is  made or  one-half  of the
     participant's  vested balance.  The notes are secured by the  participant's
     vested  interest in the Plan,  bear interest and are  repayable  based upon
     rates and terms set forth in the Plan.

     5. Noncash Contributions

     Contributions  of  Company  common  stock  are  recorded  at fair  value as
     determined by using the average  closing  price of Company  common stock as
     quoted on the New York Stock Exchange for each day when the stock is traded
     during the 20 day period immediately preceding the date of contribution.

     6. Expenses

     The  Company  elected to pay all of the Plan's  administration  expenses in
     2001 and 2000  although it is not obligated to do so. Any expenses not paid
     by the Company would be paid by the Plan.

     7. Estimates

     The  preparation  of financial  statements  in  conformity  with  generally
     accepted  accounting  principles  requires management to make estimates and
     assumptions  that affect the reported  amounts of net assets  available for
     benefits and disclosure of contingent assets and liabilities at the date of
     the financial  statements and the reported amounts of changes in net assets
     available for benefits  during the reporting  period.  Actual results could
     differ from those estimates. Investment securities, in general, are exposed
     to  various  risks,  such as  interest  rate,  credit  and  overall  market
     volatility.  Due to the level of risk  associated  with certain  investment
     securities,  it is  reasonably  possible  that  changes  in the  values  of
     investment  securities  will  occur in the near term and that such  changes
     could  materially  affect the  amounts  reported in the  statements  of net
     assets available for plan benefits.


NOTE B - PLAN DESCRIPTION

     The following  brief  description of the provisions of the Plan is provided
     for general  information  purposes only.  Participants  should refer to the
     Plan agreement for more complete information.

     1. General

     The Plan is a defined  contribution  plan covering certain employees of the
     Company and  employees of  affiliated  companies  which are included in the
     Company's  consolidated  tax return.  The Plan year end is December 31. All
     employees  at least 21 years of age are  eligible  to enroll in the Plan on
     January 1 or July 1 following  the date the employee  completes one year of
     service  (1,000 hours)  within 12  consecutive  months of their  employment
     date.

     2. Discretionary Matching Company Contributions

     The Company may make discretionary  contributions to the Plan for each plan
     year.  The  contributions  may vary from year to year and are determined by
     written action of the Board of Directors of the Company.  Contributions may
     be made only out of the Company's  consolidated  net profits before federal
     and state  income  taxes from the  current or a  preceding  plan year.  The
     Company's contribution may be paid to the Trustee either in cash, qualified
     employer  securities or in other  property.  In 2001 and 2000,  all Company
     contributions were made in qualified employer securities.

     The Discretionary Matching Company Contribution is an amount determined, in
     the sole discretion of the Company and added to amounts  forfeited by other
     participants,  to match the following percentages of participants' deferred
     compensation  contributions  (up to a maximum of 6%) for the plan year. The
     Discretionary Matching Company Contribution is allocated at the end of each
     plan year to each participant's  Company  Contribution Account based on the
     following percentages:

      Years of service
      on first day of                                    Matching
         Plan year                                     percentages
      ----------------                                 -----------


         0 - 5                                              50%
         6 - 10                                             75%
        11 or more                                         100%


     3. Employee Deferred Compensation Contributions

     A participant may elect to defer a portion of his  compensation in the form
     of a  contribution  to his deferred  compensation  account  under the Plan.
     Participants contribute to the Plan on a pre-tax basis only. Subject to the
     limitations  contained  in the Plan, a  participant  may elect to defer any
     portion of his  compensation.  However,  a participant may never defer more
     than the lesser of the Internal Revenue Service limitation ($10,500 in 2001
     and 2000) in any plan year or a percentage of compensation greater than the
     maximum percentage of compensation determined annually by the Committee.

     Separate  accounts are maintained for each participant in the Plan. When an
     election is made by the participant to defer part of his  compensation,  an
     Employee  Deferred  Compensation  Account is established.  Each participant
     will also have a Company  Contribution  Account consisting of discretionary
     matching  contributions  made by the Company and a  proportionate  share of
     forfeitures.

     All amounts in the  participant's  accounts  are placed in a trust fund and
     invested by the  Trustee.  The Trustee must invest the trust fund solely in
     the interest of and for the exclusive purpose of providing  benefits to the
     participants  and their  beneficiaries  while  minimizing  the  expenses of
     administering   the  Plan.  Under  the  terms  of  the  Plan,  all  Company
     contributions  and  up to 75% of  the  participant's  contributions  may be
     invested in common stock of the Company or in preferred  stock  convertible
     into common  stock of the Company at a conversion  price  which,  as of the
     date of acquisition by the Plan, is reasonable.  Such securities are termed
     qualified employer securities.

     Participants  who have  reached the age of 55 may elect to  diversify up to
     100% of  their  Employee  Deferred  Compensation  Accounts  and the  vested
     portion of their Company  Contribution  Accounts in one or more  qualifying
     "no load" mutual funds.

     A  participant  will be  entitled  to his  Employee  Deferred  Compensation
     Account  at the  normal  retirement  date (age 59 1/2),  or upon  permanent
     disability,  death,  separation  from employment or in the case of hardship
     (as determined by the Committee).

     A participant  will be entitled to the full amount  credited to his Company
     Contribution  Account  at the  normal  retirement  date or  upon  permanent
     disability or death. If a participant  terminates employment for any reason
     after he has completed at least one year of service, he will be entitled to
     receive a portion or all of his account, depending on his years of service.
     The percentage of the Company  Contribution  Account to which a participant
     is  entitled  and the  percentage  forfeited  if a  participant  leaves the
     Company for reasons other than  retirement,  permanent  disability or death
     prior to becoming  fully  vested is  computed  according  to the  following
     formula:

                                      Vested                Forfeited
        Years of service             percentage             percentage
       ------------------            ----------             ----------

        Less than 1                       0%                     100%
        1 but less than 2                 20%                     80%
        2 but less than 3                 40%                     60%
        3 but less than 4                 60%                     40%
        4 but less than 5                 80%                     20%
        5 or more                        100%                     0%

     A  participant  will  always  be  fully  vested  in his  Employee  Deferred
     Compensation Account, regardless of his years of service.

     The  Company  may amend  the Plan at any time to  conform  to the  Internal
     Revenue Code, Treasury Regulations and Rulings thereunder.  The Company has
     the right to terminate  the Plan at any time upon prior  written  notice to
     the  Trustee  and may  direct  the  Trustee  to  liquidate  the  shares  of
     participants in the trust fund. Upon termination or permanent suspension of
     contributions,  the accounts of all  participants  affected  thereby  shall
     become nonforfeitable and shall be distributed.


NOTE C - INVESTMENTS

     At December 31, 2001 and 2000,  the Plan held  187,614 and 170,823  shares,
     respectively,  of the Company's  common stock with a cost of $1,544,034 and
     $1,126,512, respectively. Other than the Company's common stock (which is a
     nonparticipant-directed   investment),   investments   of  the  Plan  which
     represented  5% or more of the Plan's net assets  available for benefits at
     December  31,  2001  and  2000  were  participant-directed  investments  of
     $372,802  and  $452,415,  respectively,  held  in the  Federated  Investors
     Automated   Cash   Management   Trust   SS.   In   addition,   the   Plan's
     nonparticipant-directed   Merrill  Lynch  CMA  Government  Securities  Fund
     balance of $296,455  represented 5.37% of net assets available for benefits
     at December 31, 2001.


NOTE D - NONPARTICIPANT-DIRECTED INVESTMENTS

     Information regarding the Plan's nonparticipant-directed  investment in the
     Company's  common stock at December 31, 2001 and 2000 is included in Note C
     above.  Significant  components  of the  changes in net assets  relating to
     nonparticipant-directed  investments (including activity in the Plan's cash
     and cash  equivalents) for the years ended December 31, 2001 and 2000 is as
     follows:



                                                                                               2001             2000
                                                                                               ----             ----

                                                                                                         
       Net investment gain (loss)                                                            $(601,372)        $254,731
       Contributions
           Employer                                                                            210,671          161,973
           Employee                                                                            375,299          292,978
       Benefits paid to participants                                                           (60,074)        (119,312)
       Transfers to participant-directed investments, net                                      (48,919)         (65,768)
                                                                                             ---------        ---------

                                                                                             $(124,395)        $524,602
                                                                                              ========          =======



NOTE E - TAX STATUS

     A favorable  determination letter dated June 22, 1993 was received from the
     Internal  Revenue  Service  indicating  that the Plan,  as amended  through
     December 17, 1991,  qualifies under Section 401(a) of the Internal  Revenue
     Code and is exempt from Federal  income taxes under  Section  501(a) of the
     Code. The Plan has been amended since receiving the  determination  letter.
     However,  the Company and the Committee  believe that the Plan is currently
     designed and operated in compliance with the applicable requirements of the
     Internal  Revenue Code.  Therefore,  the Company and the Committee  believe
     that the Plan  continues to be qualified  and no provision for income taxes
     has been included in the Plan's financial statements.


NOTE F - DISTRIBUTIONS

     Former participants may request  distribution of their accounts in the form
     of  Company  common  stock  or  cash.  The  ability  of the  Plan  to  make
     distributions  in cash depends,  in part, on the cash available  within the
     Plan to purchase the former  participants'  vested  shares of the Company's
     common stock.  Former  participants  who have elected to diversify all or a
     portion  of their  Plan  accounts  into  qualified  "no load"  mutual  fund
     investments  will  receive a  distribution  of mutual  fund shares or cash.
     Distributions  made in 2001  consisted  of 1,089  shares  of the  Company's
     common stock and cash of $134,717.  Distributions made in 2000 consisted of
     1,932 shares of the Company's common stock and cash of $63,380.

     Former  participants who terminated  employment during 2001 and had not yet
     received  distribution  of their  account at December 31, 2001 will receive
     distribution  in 2002. The balance due former  participants at December 31,
     2001 included 270 shares of the Company's  common stock and cash of $2,000.
     The  balance due former  participants  at December  31, 2000  included  592
     shares of the Company's common stock and cash of $4,365.





                            SUPPLEMENTAl SCHEDULES
                            ----------------------




             Pre-Paid Legal Services, Inc. Employee Stock Ownership
                            and Thrift Plan and Trust
            SCHEDULE H, LINE 4i - ASSETS HELD FOR INVESTMENT PURPOSES

                                December 31, 2001
-----------------------------------------------------------------------------------------------------------------------


  (a)                      (b)                                (c)                       (d)                   (e)

       Identity of issuer, borrower, lessor,                                                                Current
  or similar party; description of investment                Units                     Cost                  value
-----------------------------------------              --------------------        --------------         -------------


                                                                                                   
Corporate common stock
    *Pre-Paid Legal Services, Inc.                       187,614 shares              $1,544,034             $4,108,747

Short-term funds
    Federated Investors
       Automated Cash Management Trust SS                       372,802 units                 372,802           372,802
    Merrill Lynch - Money Funds
       CMA Government Securities Fund                           296,455 units                 296,455           296,455
    American Funds
       U.S. Treasury Money Fund of America                      227,827 units                 227,827           227,827
    Morgan Stanley Dean Witter
       Dividend Growth Securities B                              3,619 units                  187,067           166,569
       Liquid Asset Fund                                           1 unit                           1                 1
    Vanguard Group
       Health Care Fund                                           614 units                    66,427            71,785
       500 Index Fund                                             38 units                      4,785             3,975
                                                                                         ------------      ------------
                                                                                            1,155,364         1,139,414


                                                                                           $2,699,398        $5,248,161
                                                                                            =========         =========








*  Party-in-interest to the Plan




            SCHEDULE H, LINE 4j--REPORTABLE TRANSACTIONS

                          Year ended December 31, 2001
-------------------------------------------------------------------------------------------------------------------------------


                                                                                               
(a)               (b)              (c)          (d)        (e)       (f)                (g)         (h)                (i)
Identity of                                                             Expense                     Current value of   Net
  party           Description of   Purchase     Selling    Lease     incurred with      Cost of       asset on         gain
involved              asset         Price        Price     Rental     Transaction        Asset      transaction date   (loss)
-----------       --------------   --------     -------    ------    -------------      --------    ----------------   ------
*Pre-Paid Legal    Common stock,    $447,537    $          $                $ -          $447,537       $447,537         $ -
 Services, Inc.     8 purchases                     -         -







* Party in interest