Exhibit
10.1


 


Amended and Restated


 


2001 Incentive and Non-Statutory Stock Option
Plan


 


of


 


THE J.
JILL GROUP, INC.


 





















 


Amended and Restated


2001 Incentive and Non-Statutory Stock Option
Plan


of


THE J.
JILL GROUP, INC.


 


TABLE OF
CONTENTS


 


	
  SECTION 1.
  PURPOSE

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 2. ADMINISTRATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  The Committee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.2

  	
   

  	
  Powers of the Committee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 3.
  STOCK

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  Stock to be Issued

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.2

  	
   

  	
  Expiration, Cancellation or Termination of
  Option

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.3

  	
   

  	
  Limitation on Grants

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 4. ELIGIBILITY

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  Persons Eligible

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.2

  	
   

  	
  Greater-Than-Ten-Percent Stockholders

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.3

  	
   

  	
  Maximum Aggregate Fair Market Value

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.4

  	
   

  	
  Option Grants to Eligible Directors

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 5.
  TERMINATION OF EMPLOYMENT OR DEATH OF OPTIONEE

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5.1

  	
   

  	
  Termination of Employment

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5.2

  	
   

  	
  Death or Retirement of Optionee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 6.
  TERMS OF THE OPTION AGREEMENTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  Expiration of Option

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.2

  	
   

  	
  Exercise

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.3

  	
   

  	
  Purchase Price

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.4

  	
   

  	
  Transferability of Options

  	
   

  



 


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  6.5

  	
   

  	
  Rights of Optionees

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.6

  	
   

  	
  Repurchase Right

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.7

  	
   

  	
  “Lockup” Agreement

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 7.
  METHOD OF EXERCISE, PAYMENT OF PURCHASE PRICE

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.1

  	
   

  	
  Method of Exercise

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.2

  	
   

  	
  Payment of Purchase Price

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 8.
  CHANGES IN COMPANY’S CAPITAL STRUCTURE

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8.1

  	
   

  	
  Rights of Company

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8.2

  	
   

  	
  Recapitalization, Stock Splits and
  Dividends

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8.3

  	
   

  	
  Merger without Change of Control

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8.4

  	
   

  	
  Sale or Merger with Change of Control

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8.5

  	
   

  	
  Adjustments to Common Stock Subject to
  Options

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8.6

  	
   

  	
  Miscellaneous

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 9. GENERAL
  RESTRICTION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9.1

  	
   

  	
  Investment Representations

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9.2

  	
   

  	
  Compliance with Securities Laws

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9.3

  	
   

  	
  Employment Obligation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9.4

  	
   

  	
  Withholding Tax

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 10.
  AMENDMENT OR TERMINATION OF THE PLAN

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 11.
  NONEXCLUSIVITY OF THE PLAN

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  SECTION 12.
  EFFECTIVE DATE AND DURATION OF THE PLAN

  	
   

  



 


ii





















 


Amended and Restated


2001 Incentive and Non-Statutory Stock Option
Plan


of


THE J.
JILL GROUP, INC.


 


Section 1. Purpose


 


This 2001
Incentive and Non-Statutory Stock Option Plan (the “Plan”) of The J. Jill
Group, Inc. (the “Company”), is designed to provide additional incentive to
executives and other key employees of the Company, and any parent or subsidiary
of the Company, and for certain other individuals providing services to or
acting as directors of the Company or any such parent or subsidiary.  The Company intends that this purpose will be
effected by the granting of incentive stock options (“Incentive Stock Options”)
as defined in Section 422 of the Internal Revenue Code of 1986, as amended
(the “Code”), and Non-Statutory stock options (“Non-Statutory Options”) under
the Plan which afford such executives, key employees or other individuals an
opportunity to acquire or increase their proprietary interest in the Company
through the acquisition of shares of its Common Stock.  The Company intends that Incentive Stock
Options issued under the Plan will qualify as “incentive stock options” as
defined in Section 422 of the Code and the terms of the Plan shall be
interpreted in accordance with this intention. 
The terms “parent” and “subsidiary” shall have the respective meanings
set forth in Section 424 of the Code.


 


Section 2. Administration


 


2.1 The Committee.  The Plan shall be administered by the
Compensation Committee of the Board of Directors (the “Board”) or another
committee consisting of at least two members of the Company’s Board (in either
case, the “Committee”).  None of the members
of the Committee shall be an officer or other employee of the Company.  It is the intention of the Company that the
members of the Committee shall each be a “Non-Employee Director” within the
meaning of Rule 16b-3 under the Securities Exchange Act of 1934 and an “Outside
Director” (as such term is defined below), but the authority and validity of
any act taken or not taken by the Committee shall not be affected if any person
administering the Plan is not a “Non-Employee Director” or “outside director.”  Except as specifically reserved to the Board
under the terms of the Plan, the Committee shall have full and final authority
to operate, manage and administer the Plan on behalf of the Company.  Action by the Committee shall require the
affirmative vote of a majority of all members thereof.  The term “Outside Director” as used in the
Plan (1) shall mean a director who (i) is not an
employee of the Company or of any “affiliated group,” as such term is defined
in Section 1504(a) of the Code, which includes the Company (an “Affiliate”),
(ii) is not a former employee of the Company or any Affiliate who is receiving
compensation for prior services (other than benefits under a tax-qualified
retirement plan) during the Company’s or any Affiliate’s taxable year, (iii)
has not been an officer of the Company or any Affiliate and (iv) does not
receive remuneration from the Company or any Affiliate, either directly or
indirectly, in any capacity other than as a director, and (2) shall be
determined, and amended where necessary, in accordance with Section 162(m)
of the Code and the Treasury regulations issued thereunder.


 


2.2 Powers of the Committee.  Subject to the terms and conditions of the
Plan, the Committee shall have the power:


 


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(a) To determine from time to time the
persons eligible to receive options and the options to be granted to such
persons under the Plan and to prescribe the terms, conditions, restrictions, if
any, and provisions (which need not be identical) of each option granted under
the Plan to such persons;


 


(b) To construe and interpret the Plan
and options granted thereunder and to establish, amend, and revoke rules and
regulations for administration of the Plan. 
In this connection, the Committee may correct any defect or supply any
omission, or reconcile any inconsistency in the Plan, or in any option
agreement, in the manner and to the extent it shall deem necessary or expedient
to make the Plan fully effective.  All
decisions and determinations by the Committee in the exercise of this power
shall be final and binding upon the Company and optionees;


 


(c) To make, in its sole discretion,
changes to any outstanding option granted under the Plan, including:


 


(i)                                     to
accelerate the vesting schedule; or


 


(ii)                                  to
extend the expiration date;


 


provided, however, that the Committee shall not
have the power to reprice any options issued under the Plan, whether by
reducing their exercise price or canceling them and issuing replacement options
in their stead.


 


(d) Generally, to exercise such powers
and to perform such acts as are deemed necessary or expedient to promote the
best interests of the Company with respect to the Plan.


 


Section 3. Stock


 


3.1 Stock to be Issued.  The stock subject
to the options granted under the Plan shall be shares of the Company’s
authorized but unissued common stock, $.01 par value (the “Common Stock”), or
shares of the Company’s Common Stock held in treasury.  The total number of shares that may be issued
pursuant to options granted under the Plan shall not exceed an aggregate of
3,250,000 shares of Common Stock; provided,
however, that the class and aggregate number of shares which may be subject to
options granted under the Plan shall be subject to adjustment as provided in Section 8
hereof.


 


3.2 Expiration,
Cancellation or Termination of Option. 
Whenever any outstanding option under the Plan
expires, is cancelled or is otherwise terminated (other than by exercise), the
shares of Common Stock allocable to the unexercised portion of such option may
again be the subject of options under the Plan.


 


3.3 Limitation on Grants.  In no event may any person be granted options
under the Plan in any calendar year to purchase more than 825,000 shares of
Common Stock.  The number of shares of
Common Stock issuable pursuant to an option granted under the Plan that is
subsequently forfeited, cancelled or otherwise terminated shall continue to
count toward the foregoing limitation in the calendar year of grant.


 


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Section 4. Eligibility


 


4.1 Persons Eligible. 
Incentive Stock Options under the Plan may be granted only to officers
and other employees of the Company or any parent or subsidiary of the
Company.  Non-Statutory Options may be
granted to officers or other employees of the Company or any parent or
subsidiary of the Company, and to members of the Board and consultants or other
persons who render services to the Company or any such parent or subsidiary
(regardless of whether they are also employees), provided, however, that options may be granted to members of
the Board who are not employees of the Company or any such parent or subsidiary
(“Eligible Directors”) only as provided in Section 4.4.


 


4.2 Greater-Than-Ten-Percent
Stockholders. 
Except as may otherwise be permitted by the Code or other applicable law
or regulation, no Incentive Stock Option shall be granted to an individual who,
at the time the option is granted, owns (including ownership attributed
pursuant to Section 424 of the Code) more than ten percent of the total
combined voting power of all classes of stock of the Company or any parent or
subsidiary (a “greater-than-ten-percent stockholder”), unless such Incentive
Stock Option provides that (i) the purchase price per
share shall not be less than one hundred ten percent of the fair market value
of the Common Stock at the time such option is granted, and (ii) that such
option shall not be exercisable to any extent after the expiration of five
years from the date it is granted.


 


4.3 Maximum
Aggregate Fair Market Value.  The aggregate fair market value (determined
at the time the option is granted) of the Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by any optionee during any calendar year (under the Plan and any
other plans of the Company or any parent or subsidiary for the issuance of
incentive stock options) shall not exceed $100,000 (or such greater amount as
may from time to time be permitted with respect to incentive stock options by
the Code or any other applicable law or regulation).


 


4.4 Option Grants to Eligible
Directors.


 


(a) Relation to Prior Plans.  After the date of the meeting of
stockholders at which this Plan is approved, the provisions of this Section 4.4
shall supersede those of Section 4.4 of the Company’s Amended and Restated
1993 Incentive and Non-Qualified Stock Option Plan.


 


(b) Grant
of Options.


 


(i)                                     On
the date each new Eligible Director first joins the Board, such Eligible
Director shall automatically be granted a Non-Statutory Option to purchase
15,000 shares of Common Stock.  Such
Non-Statutory Option shall be immediately vested in full unless otherwise
determined by the Committee prior to the grant of such Non-Statutory Option.


 


(ii)                                  On
the date of each annual meeting of the Company’s stockholders or special
meeting in lieu thereof, each Eligible Director who has served for at least six
months and continues to serve at that meeting shall automatically be granted a
Non-Statutory Option to purchase 7,500 shares of Common Stock.  Such Non-Statutory Option shall be
immediately vested in full.


 


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(c) Purchase
Price.  The purchase price per
share of Common Stock under each Non-Statutory Option granted pursuant to this Section 4.4
shall be equal to the fair market value of the Common Stock on the date the
Non-Statutory Option is granted, such fair market value to be determined in
accordance with the provisions of Section 6.3.


 


(d) Expiration.  Each Non-Statutory Option granted to an
Eligible Director under this Section 4.4 shall expire on the tenth
anniversary of the date of grant.


 


Section 5. Termination
of Employment or Death of Optionee


 


5.1 Termination of
Employment. 
Except as may be otherwise expressly provided herein, options shall
terminate on the earlier of:


 


(a) the date of
expiration thereof;


 


(b) immediately
upon the termination of the optionee’s employment with or performance of
services for the Company (or any parent or subsidiary of the Company) by the
Company (or any such parent or subsidiary) for cause (as determined by the
Company or such parent or subsidiary); or


 


(c) thirty days
after the date of termination of the optionee’s employment with or performance
of services for the Company (or any parent or subsidiary of the Company) by the
Company (or any such parent or subsidiary) without cause or voluntarily by the optionee;


 


provided, that Non-Statutory Options granted
to persons who are not employees of the Company (or any parent or subsidiary of
the Company) need not, unless the Committee determines otherwise, be subject to
the provisions set forth in clauses (b) and (c) above.


 


An employment
relationship between the Company (or any parent or subsidiary of the Company)
and the optionee shall be deemed to exist during any
period in which the optionee is employed by the
Company (or any such parent or subsidiary). 
Whether authorized leave of absence, or absence on military or
government service, shall constitute termination of the employment relationship
between the Company (or any parent or subsidiary of the Company) and the optionee shall be determined by the Committee at the time
thereof.  As used herein, “cause” shall
mean (x) any material breach by the optionee of any
agreement to which the optionee and the Company (or
any parent or subsidiary of the Company) are both parties, (y) any act or
omission to act by the optionee which may have a
material and adverse effect on the business of the Company (or any such parent
or subsidiary) or on the optionee’s ability to perform services for the Company
(or any such parent or subsidiary), including, without limitation, the
commission of any crime (other than ordinary traffic violations), or (z) any
material misconduct or material neglect of duties by the optionee
in connection with the business or affairs of the Company (or any such parent
or subsidiary) or any affiliate of the Company (or any such parent or
subsidiary).


 


5.2 Death or
Retirement of Optionee.  In the event of the death of the holder of an option that is
subject to clause (b) or (c) of Section 5.1 above prior to termination of
the optionee’s employment with or performance of services for the Company (or
any parent or subsidiary of the Company) and before the date of expiration of
such option, such option shall


 


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terminate on the earlier of such date of
expiration or one year following the date of such death.  After the death of the optionee,
his executors, administrators or any person or persons to whom his option may
be transferred by will or by the laws of descent and distribution, shall have
the right, at any time prior to such termination, to exercise the option to the
extent the optionee was entitled to exercise such
option at the time of his death.


 


If, before the
date of the expiration of an option that is subject to clause (b) or (c) of Section 5.1
above, the optionee shall be retired in good standing
from the Company for reasons of age or disability under the then established
rules of the Company, the option shall terminate on the earlier of such date of
expiration or ninety (90) days after the date of such retirement.  In the event of such retirement, the optionee shall have the right prior to the termination of
such option to exercise the option to the extent to which he was entitled to
exercise such option immediately prior to such retirement.


 


Section 6. Terms of
the Option Agreements


 


Each option
agreement shall be in writing and shall contain such terms, conditions,
restrictions, if any, and provisions as the Committee shall from time to time
deem appropriate.  Such provisions or
conditions may include without limitation restrictions on transfer, repurchase
rights, or such other provisions as shall be determined by the Committee; provided that such additional provisions
shall not be inconsistent with any other term or condition of the Plan and such
additional provisions shall not cause any Incentive Stock Option granted under
the Plan to fail to qualify as an incentive option within the meaning of Section 422
of the Code.  The shares of stock
issuable upon exercise of an option by any executive officer, director or
beneficial owner of more than ten percent of the Common Stock of the Company
may not be sold or transferred (except that such shares may be issued upon
exercise of such option) by such officer, director or beneficial owner for a
period of six months following the grant of such option.


 


Option
agreements need not be identical, but each option agreement by appropriate
language shall include the substance of all of the following provisions:


 


6.1 Expiration of Option.  Notwithstanding any other provision of the
Plan or of any option agreement, each option shall expire on the date specified
in the option agreement, which date shall not, in the case of an Incentive
Stock Option, be later than the tenth anniversary (fifth anniversary in the
case of a greater-than-ten-percent stockholder) of the date on which the option
was granted, or as specified in Section 5 of this Plan.


 


6.2 Exercise.  Each option may be exercised, so long as it
is valid and outstanding, from time to time in part or as a whole, subject to
any limitations with respect to the number of shares for which the option may
be exercised at a particular time and to such other conditions as the Committee
in its discretion may specify upon granting the option.


 


6.3 Purchase Price. 
The purchase price per share under each option shall be determined by
the Committee at the time the option is granted; provided, however, that the option price of any option shall
not be less than the fair market value of the Common Stock on the date the
option is granted (110% of the fair market value in the case of the grant of an
Incentive Stock Option to a greater-than-ten-percent stockholder).  For the purpose of the Plan the fair market


 


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value of the Common Stock shall be the
closing price per share on the date of grant of the option as reported by a
nationally recognized stock exchange, or, if the Common Stock is not listed on
such an exchange, as reported by the National Association of Securities Dealers
Automated Quotation System (“Nasdaq”) National Market System or, if the Common
Stock is not listed on the Nasdaq National Market System, the mean of the bid
and asked prices per share on the date of grant of the option or, if the Common
Stock is not traded over the counter, the fair market value as determined by
the Committee.


 


6.4 Transferability
of Options. 
Options shall not be transferable by the optionee
otherwise than by will or under the laws of descent and distribution, and shall
be exercisable, during his lifetime, only by him/her.


 


6.5 Rights of Optionees.  No optionee shall
be deemed for any purpose to be the owner of any shares of Common Stock subject
to any option unless and until the option shall have been exercised pursuant to
the terms thereof, and the Company shall have issued and delivered the shares
to the optionee.


 


6.6 Repurchase Right. 
The Committee may in its discretion provide upon the grant of any option
hereunder that the Company shall have an option to repurchase upon such terms
and conditions as determined by the Committee all or any number of shares
purchased upon exercise of such option. 
The repurchase price per share payable by the Company shall be such
amount or be determined by such formula as is fixed by the Committee at the
time the option for the shares subject to repurchase is granted.  In the event the Committee shall grant
options subject to the Company’s repurchase option, the certificates
representing the shares purchased pursuant to such option shall carry a legend
satisfactory to counsel for the Company referring to the Company’s repurchase
option.


 


6.7 “Lockup” Agreement. 
The Committee may in its discretion specify upon granting an option that
the optionee shall agree for a period of time (not to
exceed 180 days) from the effective date of any registration of securities of
the Company (upon request of the Company or the underwriters managing any
underwritten offering of the Company’s securities), not to sell, make any short
sale of, loan, grant any option for the purchase of, or otherwise dispose of
any shares issued pursuant to the exercise of such option, without the prior
written consent of the Company or such underwriters, as the case may be.


 


Section 7. Method of
Exercise, Payment of Purchase Price


 


7.1 Method of Exercise.  Any option granted under the Plan may be
exercised by the optionee by delivering to the
Company on any business day a written notice specifying the number of shares of
Common Stock the optionee then desires to purchase
and specifying the address to which the certificates for such shares are to be
mailed (the “Notice”), accompanied by payment for such shares.


 


7.2 Payment of Purchase Price.  Payment for the shares of Common Stock
purchased pursuant to the exercise of an option shall be made by one or more of
the following methods: (i) in cash, by certified or
bank check or other instrument acceptable to the Committee; (ii) by the optionee delivering to the Company a properly executed
exercise notice together with irrevocable instructions to a broker to promptly
deliver to the Company cash or a check payable


 


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and acceptable to the Company to pay the purchase
price; provided that in the event
the optionee chooses to pay the purchase price as so
provided, the optionee and the broker shall comply
with such procedures and enter into such agreements of indemnity and other
agreements as the Committee shall prescribe as a condition of such payment
procedure; and provided further
that the Company need not act upon such exercise notice until the Company
receives full payment of the exercise price; or (iii) by any other means
(including, without limitation, by delivery of a promissory note of the optionee payable on such terms as are specified by the
Committee; provided, however,
that the interest rate borne by such note shall not be less than the lowest
applicable federal rate, as defined in Section 1247(d) of the Code) which
the Committee determines are consistent with the purpose of the Plan and with
applicable laws and regulations.  As
promptly as practicable after receipt of the Notice and accompanying payment,
the Company shall deliver to the optionee certificates
for the number of shares with respect to which such option has been so
exercised, issued in the optionee’s name; provided,
however, that such delivery shall be deemed effected for all purposes when the
Company or a stock transfer agent of the Company shall have deposited such
certificates in the United States mail, addressed to the optionee,
at the address specified in the Notice.


 


Section 8. Changes in
Company’s Capital Structure


 


8.1 Rights of Company.  The existence of outstanding options shall
not affect in any way the right or power of the Company or its stockholders to
make or authorize, without limitation, any or all adjustments,
recapitalizations, reorganizations or other changes in the Company’s capital
structure or its business, or any merger or consolidation of the Company, or
any issue of Common Stock, or any issue of bonds, debentures, preferred or
prior preference stock or other capital stock ahead of or affecting the Common
Stock or the rights thereof, or the dissolution or liquidation of the Company,
or any  sale or transfer of all or any
part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.


 


8.2 Recapitalization,
Stock Splits and Dividends. 
If the Company shall effect a subdivision or consolidation of shares or
other capital readjustment, the payment of a stock dividend, or other increase
or reduction of the number of shares of the Common Stock outstanding, in any
such case without receiving compensation therefor in
money, services or property, then (i) the number,
class, and price per share of shares of stock subject to outstanding options
hereunder shall automatically be appropriately adjusted in such a manner as to
entitle an optionee to receive upon exercise of an
option, for the same aggregate cash consideration, the same total number and
class of shares as he would have received as a result of the event requiring
the adjustment had he exercised his option in full immediately prior to such
event; and (ii) the number and class of shares set forth in Sections 3.1, 3.3
and 4.4 shall be adjusted by substituting therefor
that number and class of shares of stock that the owner of an equal number of
outstanding shares of Common Stock would own as the result of the event
requiring the adjustment.  The number of
shares set forth in Sections 3.1, 3.3 and 4.4 have been so adjusted to reflect
the 3-for-2 stock split in the form of a stock dividend that was paid on June 28,
2002 and, notwithstanding the foregoing provisions, there shall be no further
adjustments to such numbers to reflect such stock split.


 


8.3 Merger without
Change of Control. 
After a merger of one or more corporations into the Company, or after a
consolidation of the Company and one or more corporations in


 


7





















 


which (i) the
Company shall be the surviving corporation, and (ii) the stockholders of the
Company immediately prior to such merger or consolidation own after such merger
or consolidation shares representing at least fifty percent of the voting power
of the Company, each holder of an outstanding option shall, at no additional
cost, be entitled upon exercise of such option to receive in lieu of the number
of shares as to which such option shall then be so exercisable, the number and
class of shares of stock or other securities to which such holder would have
been entitled pursuant to the terms of the agreement of merger or consolidation
if, immediately prior to such merger or consolidation, such holder had been the
holder of record of a number of shares of Common Stock equal to the number of
shares for which such option was exercisable.


 


8.4 Sale or Merger with Change of
Control. If the Company is merged into or
consolidated with another corporation under circumstances where the Company is
not the surviving corporation, or if there is a merger or consolidation where
the Company is the surviving corporation but the stockholders of the Company
immediately prior to such merger or consolidation do not own after such merger
or consolidation shares representing at least fifty percent of the voting power
of the Company, or if the Company is liquidated, or sells or otherwise disposes
of substantially all of its assets to another corporation while unexercised
options remain outstanding under the Plan, (i)
subject to the provisions of clause (iii) below, after the effective date of
such merger, consolidation, liquidation, sale or disposition, as the case may
be, each holder of an outstanding option shall be entitled, upon exercise of
such option, to receive, in lieu of shares of Common Stock, shares of such
stock or other securities, cash or property as the holders of shares of Common
Stock received pursuant to the terms of the merger, consolidation, liquidation,
sale or disposition; (ii) the Committee may accelerate the time for exercise of
all unexercised and unexpired options to and after a date prior to the
effective date of such merger, consolidation, liquidation, sale or disposition,
as the case may be, specified by the Committee; or (iii) all outstanding
options may be cancelled by the Committee as of the effective date of any such
merger, consolidation, liquidation, sale or disposition, provided
that (x) notice of such cancellation shall be given to each holder of an option
and (y) each holder of an option shall have the right to exercise such option
to the extent that the same is then exercisable or, if the Committee shall have
accelerated the time for exercise of all unexercised and unexpired options, in
full during the 30-day period preceding the effective date of such merger,
consolidation, liquidation, sale or disposition.


 


8.5 Adjustments
to Common Stock Subject to Options. 
Except as hereinbefore expressly provided, the issue by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, for cash or property, or for labor or services, either upon direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of
the Company convertible into such shares or other securities, shall not affect,
and no adjustment by reason thereof shall be made with respect to, the number
or price of shares of Common Stock then subject to outstanding options.


 


8.6 Miscellaneous.  Adjustments under this Section 8 shall
be determined by the Committee, and such determinations shall be
conclusive.  No fractional shares of
Common Stock shall be issued under the Plan on account of any adjustment
specified above.


 


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Section 9. General Restriction


 


9.1 Investment
Representations. 
The Company may require any person to whom an option is granted, as a
condition of exercising such option, to give written assurances in substance
and form satisfactory to the Company to the effect that such person is
acquiring the Common Stock subject to the option for his own account for
investment and not with any present intention of selling or otherwise
distributing the same, and to such other effects as the Company deems necessary
or appropriate in order to comply with federal and applicable state securities
laws.


 


9.2 Compliance with
Securities Laws. 
The Company shall not be required to sell or issue any shares under any
option if the issuance of such shares shall constitute a violation by the optionee or by the Company of any provisions of any law or
regulation of any governmental authority. 
In addition, in connection with the Securities Act of 1933, as now in
effect or hereafter amended (the “Act”), upon exercise of any option, the
Company shall not be required to issue such shares unless the Committee has
received evidence satisfactory to it to the effect that the holder of such
option will not transfer such shares except pursuant to a registration
statement in effect under such Act or unless an opinion of counsel satisfactory
to the Company has been received by the Company to the effect that such
registration is not required.  Any
determination in this connection by the Committee shall be final, binding and
conclusive.  In the event the shares
issuable on exercise of an option are not registered under the Act, the Company
may imprint upon any certificate representing shares so issued the following
legend or any other legend which counsel for the Company considers necessary or
advisable to comply with the Act and with applicable state securities laws:


 


The shares of stock represented by this
certificate have not been registered under the Securities Act of 1933 or under
the securities laws of any State and may not be sold or transferred except upon
such registration or upon receipt by the Corporation of an opinion of counsel
satisfactory to the Corporation, in form and substance satisfactory to the
Corporation, that registration is not required for such sale or transfer.


 


The Company
may, but shall in no event be obligated to, register any securities covered
hereby pursuant to the Act; and in the event any shares are so registered the
Company may remove any legend on certificates representing such shares.  The Company shall not be obligated to take any
other affirmative action in order to cause the exercise of an option or the
issuance of shares pursuant thereto to comply with any law or regulation of any
governmental authority.


 


9.3 Employment Obligation.  The granting of any option shall not impose
upon the Company (or any parent or subsidiary of the Company) any obligation to
employ or continue to employ any optionee; and the
right of the Company (or any such parent or subsidiary) to terminate the
employment of any officer or other employee shall not be diminished or affected
by reason of the fact that an option has been granted to him/her.


 


9.4 Withholding Tax.  Whenever under the Plan shares of Common
Stock are to be delivered upon exercise of an option, the Company shall be
entitled to require as a condition of delivery that the optionee
remit an amount sufficient to satisfy all federal, state and other governmental
withholding tax requirements related thereto.


 


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Section 10. Amendment
or Termination of the Plan


 


The Board of
Directors may terminate this Plan at any time. 
The Board of Directors may amend this Plan at any time and from time to
time, except that any material amendment to this Plan, including any change to
the class of persons eligible to receive options and any change to the
aggregate number of shares issuable pursuant to this Plan other than by
operation of Section 8 hereof, shall require stockholder approval.


 


Section 11. Nonexclusivity
of the Plan


 


Neither the
adoption of the Plan by the Board of Directors nor the submission of the Plan
to the stockholders of the Company for approval shall be construed as creating
any limitations on the power of the Board of Directors to adopt such other
incentive arrangements as it may deem desirable, including, without limitation,
the granting of stock options otherwise than under the Plan, and such
arrangements may be either applicable generally or only in specific cases.


 


Section 12. Effective
Date and Duration of the Plan


 


The Plan shall
become effective upon its adoption by the Board of Directors, provided that the stockholders of the
Company shall have approved the Plan within twelve months prior to or following
the adoption of the Plan by the Board. 
No option may be granted under the Plan after the tenth anniversary of
the effective date.  The Plan shall
terminate (i) when the total amount of Common Stock
with respect to which options may be granted shall have been issued upon the
exercise of options or (ii) by action of the Board of Directors pursuant to Section 10
hereof, whichever shall first occur.


 


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