**AsamendedJuly 13, 2001**

 

 

 

**2001 Incentive and Non-Statutory Stock Option Plan***of***THE J.JILL GROUP, INC.**

** **

**TABLEOF 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.**                        |   |
| **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**            |   |

 

 

**2001 Incentive andNon-Statutory Stock Option PlanofThe J. Jill Group, Inc.**

**Section1. Purpose**

             This 2001 Incentive andNon-Statutory Stock Option Plan (the “Plan”) of The J. Jill Group, Inc. (the"Company"), is designed to provide additional incentive to executivesand other key employees of the Company, and any parent or subsidiary of theCompany, and for certain other individuals providing services to or acting asdirectors of the Company or any such parent or subsidiary.  The Company intends that this purpose willbe effected by the granting of incentive stock options ("Incentive StockOptions") 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 suchexecutives, key employees or other individuals an opportunity to acquire orincrease their proprietary interest in the Company through the acquisition ofshares of its Common Stock.  The Companyintends that Incentive Stock Options issued under the Plan will qualify as"incentive stock options" as defined in Section 422 of the Code andthe terms of the Plan shall be interpreted in accordance with thisintention.  The terms "parent"and "subsidiary" shall have the respective meanings set forth inSection 424 of the Code.

**Section 2. Administration**

**            ****2.1 The Committee****.**** **The Plan shall beadministered by the Compensation Committee of the Board of Directors (the"Board") or another committee consisting of at least two members ofthe Company's Board (in either case, the "Committee").  None of the members of the Committee shallbe an officer or other employee of the Company.  It is the intention of the Company that the members of theCommittee shall each be a "Non-Employee Director" within the meaningof Rule 16b-3 under the Securities Exchange Act of 1934 and an "OutsideDirector ” (as such term is defined below), but the authority and validity ofany act taken or not taken by the Committee shall not be affected if any personadministering the Plan is not a "Non-Employee Director" or"outside director."  Except asspecifically reserved to the Board under the terms of the Plan, the Committeeshall have full and final authority to operate, manage and administer the Planon behalf of the Company.  Action by theCommittee shall require the affirmative vote of a majority of all membersthereof.  The term “Outside Director” asused in the Plan (1) shall mean a director who (i) is not an employee ofthe Company or of any “affiliated group,” as such term is defined inSection 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 receivingcompensation for prior services (other than benefits under a tax-qualifiedretirement 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 notreceive remuneration from the Company or any Affiliate, either directly orindirectly, in any capacity other than as a director, and (2) shall bedetermined, and amended where necessary, in accordance with Section 162(m)of the Code and the Treasury regulations issued thereunder.

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

             (a)         Todetermine from time to time the persons eligible to receive options and theoptions to be granted to such persons under the Plan and to prescribe theterms, conditions, restrictions, if any, and provisions (which need not beidentical) of each option granted under the Plan to such persons;
             (b)        Toconstrue and interpret the Plan and options granted thereunder and toestablish, amend, and revoke rules and regulations for administration of thePlan.  In this connection, the Committeemay correct any defect or supply any omission, or reconcile any inconsistencyin the Plan, or in any option agreement, in the manner and to the extent itshall deem necessary or expedient to make the Plan fully effective.  All decisions and determinations by theCommittee in the exercise of this power shall be final and binding upon theCompany and optionees;

             (c)         Tomake, in its sole discretion, changes to any outstanding option granted underthe Plan, including:

                           (i)             to accelerate the vesting schedule;or

                           (ii)             to extend the expiration date;

*provided,* however, that theCommittee shall not have the power to reprice any options issued under thePlan, whether by reducing their exercise price or canceling them and issuingreplacement options in their stead.

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

**Section 3. Stock**

**            ****3.1 Stock to beIssued****.**** **The stocksubject to the options granted under the Plan shall be shares of the Company'sauthorized but unissued common stock, $.01 par value (the "CommonStock"), or shares of the Company's Common Stock held in treasury.  The total number of shares that may beissued pursuant to options granted under the Plan shall not exceed an aggregateof 1,000,000 shares of Common Stock; provided,however, that the class and aggregate number of shares which may be subject tooptions granted under the Plan shall be subject to adjustment as provided inSection 8 hereof.

**            ****3.2 Expiration,Cancellation or Termination of Option****.**** **Whenever anyoutstanding option under the Plan expires, is cancelled or is otherwiseterminated (other than by exercise), the shares of Common Stock allocable to theunexercised portion of such option may again be the subject of options underthe Plan.

**            ****3.3 Limitation onGrants****.**** **In no event mayany person be granted options under the Plan in any calendar year to purchasemore than 250,000 shares of Common Stock. The number of shares of Common Stock issuable pursuant to an optiongranted under the Plan that is subsequently forfeited, cancelled or otherwiseterminated shall continue to count toward the foregoing limitation in thecalendar year of grant.

**Section 4. Eligibility**

**            ****4.1 Persons Eligible****.**** **Incentive StockOptions under the Plan may be granted only to officers and other employees ofthe Company or any parent or subsidiary of the Company.  Non-Statutory Options may be granted toofficers or other employees of the Company or any parent or subsidiary of theCompany, and to members of the Board and consultants or other persons whorender services to the Company or any such parent or subsidiary (regardless ofwhether they are also employees), provided,however, that options may be granted to members of the Board who are notemployees of the Company or any such parent or subsidiary ("EligibleDirectors") only as provided in Section 4.4.
****            ****4.2 Greater-Than-Ten-PercentStockholders****.**** **Except as mayotherwise be permitted by the Code or other applicable law or regulation, noIncentive Stock Option shall be granted to an individual who, at the time theoption is granted, owns (including ownership attributed pursuant to Section 425of the Code) more than ten percent of the total combined voting power of allclasses of stock of the Company or any parent or subsidiary (a"greater-than-ten-percent stockholder"), unless such Incentive StockOption provides that (i) the purchase price per share shall not be less than onehundred ten percent of the fair market value of the Common Stock at the timesuch option is granted, and (ii) that such option shall not be exercisable toany extent after the expiration of five years from the date it is granted.

**            ****4.3 Maximum AggregateFair Market Value****.**** **The aggregate fairmarket value (determined at the time the option is granted) of the Common Stockwith respect to which Incentive Stock Options are exercisable for the firsttime by any optionee during any calendar year (under the Plan and any otherplans of the Company or any parent or subsidiary for the issuance of incentivestock options) shall not exceed $100,000 (or such greater amount as may fromtime to time be permitted with respect to incentive stock options by the Codeor any other applicable law or regulation).

**            ****4.4 Option Grants to Eligible Directors.**

*             (a)             Relationto Prior Plans.* After thedate of the meeting of stockholders at which this Plan is approved, theprovisions of this Section 4.4 shall supersede those of Section 4.4 of the Company’sAmended and Restated 1993 Incentive and Non-Qualified Stock Option Plan.

             (b)             *Grantof Options.*

                           (i)             On the date each new EligibleDirector first joins the Board, such Eligible Director shall automatically begranted a Non-Statutory Option to purchase 20,000 shares of Common Stock.  Such Non-Statutory Option shall beimmediately vested in full unless otherwise determined by the Committee priorto the grant of such Non-Statutory Option.

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

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

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

**Section 5. Termination of Employment or Death of Optionee**

**            ****5.1 Termination ofEmployment****.**** **Except as maybe otherwise expressly provided herein, options shall terminate on the earlierof:

             (a)             thedate of expiration thereof;

             (b)             immediatelyupon the termination of the optionee's employment with or performance ofservices for the Company (or any parent or subsidiary of the Company) by theCompany (or any such parent or subsidiary) for cause (as determined by theCompany or such parent or subsidiary); or
             (c)             thirtydays after the date of termination of the optionee's employment with orperformance of services for the Company (or any parent or subsidiary of theCompany) by the Company (or any such parent or subsidiary) without cause orvoluntarily by the optionee;

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

             An employment relationship betweenthe Company (or any parent or subsidiary of the Company) and the optionee shallbe deemed to exist during any period in which the optionee is employed by theCompany (or any such parent or subsidiary). Whether authorized leave of absence, or absence on military orgovernment service, shall constitute termination of the employment relationshipbetween the Company (or any parent or subsidiary of the Company) and theoptionee 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 optioneeand 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 andadverse effect on the business of the Company (or any such parent orsubsidiary) or on the optionee's ability to perform services for the Company(or any such parent or subsidiary), including, without limitation, thecommission of any crime (other than ordinary traffic violations), or (z) anymaterial misconduct or material neglect of duties by the optionee in connectionwith 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 orRetirement of Optionee****.**** **In the event of thedeath of the holder of an option that is subject to clause (b) or (c) ofSection 5.1 above prior to termination of the optionee's employment with orperformance of services for the Company (or any parent or subsidiary of theCompany) and before the date of expiration of such option, such option shallterminate on the earlier of such date of expiration or one year following thedate of such death.  After the death ofthe optionee, his executors, administrators or any person or persons to whomhis option may be transferred by will or by the laws of descent anddistribution, shall have the right, at any time prior to such termination, toexercise the option to the extent the optionee was entitled to exercise suchoption at the time of his death.
             If, before the date of theexpiration of an option that is subject to clause (b) or (c) of Section 5.1above, the optionee shall be retired in good standing from the Company forreasons 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 priorto the termination of such option to exercise the option to the extent to whichhe was entitled to exercise such option immediately prior to such retirement.

**Section 6. Terms of the Option Agreements**

             Each option agreement shall be inwriting and shall contain such terms, conditions, restrictions, if any, andprovisions as the Committee shall from time to time deem appropriate.  Such provisions or conditions may includewithout limitation restrictions on transfer, repurchase rights, or such otherprovisions as shall be determined by the Committee; *provided* that suchadditional provisions shall not be inconsistent with any other term orcondition of the Plan and such additional provisions shall not cause anyIncentive Stock Option granted under the Plan to fail to qualify as anincentive option within the meaning of Section 422 of the Code.  The shares of stock issuable upon exerciseof an option by any executive officer, director or beneficial owner of morethan ten percent of the Common Stock of the Company may not be sold ortransferred (except that such shares may be issued upon exercise of suchoption) by such officer, director or beneficial owner for a period of sixmonths following the grant of such option.

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

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

**            ****6.2 Exercise****.**** **Each option may beexercised, so long as it is valid and outstanding, from time to time in part oras a whole, subject to any limitations with respect to the number of shares forwhich the option may be exercised at a particular time and to such otherconditions as the Committee in its discretion may specify upon granting theoption.

**            ****6.3 Purchase Price.**** **The purchaseprice per share under  each option shallbe determined by the Committee at the time the option is granted; *provided*,however, that the option price of any option shall not, unless otherwisepermitted by the Code or other applicable law or regulation, be less than thefair 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 Optionto a greater-than-ten-percent stockholder). For the purpose of the Plan the fair market value of the Common Stockshall be the closing price per share on the date of grant of the option asreported by a nationally recognized stock exchange, or, if the Common Stock isnot listed on such an exchange, as reported by the National Association ofSecurities Dealers Automated Quotation System ("Nasdaq") NationalMarket System or, if the Common Stock is not listed on the Nasdaq NationalMarket System, the mean of the bid and asked prices per share on the date ofgrant of the option or, if the Common Stock is not traded over the counter, thefair market value as determined by the Committee.

**            ****6.4 Transferabilityof Options****.**** **Options shallnot be transferable by the optionee otherwise than by will or under the laws ofdescent and distribution, and shall be exercisable, during his lifetime, onlyby him/her.

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

**            ****6.6 Repurchase Right****.**** **The Committee may inits discretion provide upon the grant of any option hereunder that the Companyshall have an option to repurchase upon such terms and conditions as determinedby the Committee all or any number of shares purchased upon exercise of suchoption.  The repurchase price per sharepayable by the Company shall be such amount or be determined by such formula asis fixed by the Committee at the time the option for the shares subject torepurchase is granted.  In the event theCommittee shall grant options subject to the Company's repurchase option, thecertificates representing the shares purchased pursuant to such option shallcarry a legend satisfactory to counsel for the Company referring to theCompany's repurchase option.

**            ****6.7 "Lockup" Agreement****.**** **The Committee may inits discretion specify upon granting an option that the optionee shall agreefor a period of time (not to exceed 180 days) from the effective date of anyregistration of securities of the Company (upon request of the Company or theunderwriters managing any underwritten offering of the Company's securities),not to sell, make any short sale of, loan, grant any option for the purchaseof, or otherwise dispose of any shares issued pursuant to the exercise of suchoption, 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 grantedunder the Plan may be exercised by the optionee by delivering to the Company onany business day a written notice specifying the number of shares of CommonStock the optionee then desires to purchase and specifying the address to whichthe 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 sharesof Common Stock purchased pursuant to the exercise of an option shall be madeby one or more of the following methods: (i) in cash, by certified or bankcheck or other instrument acceptable to the Committee; (ii) by the optioneedelivering to the Company a properly executed exercise notice together withirrevocable instructions to a broker to promptly deliver to the Company cash ora check payable and acceptable to the Company to pay the purchase price; *provided*that in the event the optionee chooses to pay the purchase price as soprovided, the optionee and the broker shall comply with such procedures andenter into such agreements of indemnity and other agreements as the Committeeshall prescribe as a condition of such payment procedure; and *providedfurther* that the Company need not act upon such exercise noticeuntil the Company receives full payment of the exercise price; or (iii) by anyother means (including, without limitation, by delivery of a promissory note ofthe 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 thelowest applicable federal rate, as defined in Section 1247(d) of the Code)which the Committee determines are consistent with the purpose of the Plan andwith applicable laws and regulations. As promptly as practicable after receipt of the Notice and accompanyingpayment, the Company shall deliver to the optionee certificates for the numberof shares with respect to which such option has been so exercised, issued inthe optionee's name; *provided*, however, that such deliveryshall be deemed effected for all purposes when the Company or a stock transferagent of the Company shall have deposited such certificates in the UnitedStates 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 ofoutstanding options shall not affect in any way the right or power of theCompany or its stockholders to make or authorize, without limitation, any orall adjustments, recapitalizations, reorganizations or other changes in theCompany's capital structure or its business, or any merger or consolidation ofthe Company, or any issue of Common Stock, or any issue of bonds, debentures,preferred or prior preference stock or other capital stock ahead of oraffecting the Common Stock or the rights thereof, or the dissolution orliquidation of the Company, or any  saleor transfer of all or any part of its assets or business, or any othercorporate act or proceeding, whether of a similar character or otherwise.

**            ****8.2 Recapitalization,Stock Splits and Dividends****.**** **If the Companyshall effect a subdivision or consolidation of shares or other capitalreadjustment, the payment of a stock dividend, or other increase or reductionof the number of shares of the Common Stock outstanding, in any such casewithout receiving compensation therefor in money, services or property, then(i) the number, class, and price per share of shares of stock subject tooutstanding options hereunder shall automatically be appropriately adjusted insuch 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 ofshares as he would have received as a result of the event requiring the adjustmenthad 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 beadjusted by substituting therefor that number and class of shares of stock thatthe owner of an equal number of outstanding shares of Common Stock would own asthe result of the event requiring the adjustment.

**            ****8.3 Merger withoutChange of Control****.**** **After a merger of oneor more corporations into the Company, or after a consolidation of the Companyand one or more corporations in which (i) the Company shall be the survivingcorporation, and (ii) the stockholders of the Company immediately prior to suchmerger or consolidation own after such merger or consolidation sharesrepresenting at least fifty percent of the voting power of the Company, eachholder of an outstanding option shall, at no additional cost, be entitled uponexercise of such option to receive in lieu of the number of shares as to whichsuch option shall then be so exercisable, the number and class of shares ofstock or other securities to which such holder would have been entitledpursuant to the terms of the agreement of merger or consolidation if,immediately prior to such merger or consolidation, such holder had been theholder of record of a number of shares of Common Stock equal to the number ofshares for which such option was exercisable.

**            ****8.4 Sale or Mergerwith Change of Control****.**** **If the Company ismerged into or consolidated with another corporation under circumstances wherethe Company is not the surviving corporation, or if there is a merger orconsolidation where the Company is the surviving corporation but thestockholders of the Company immediately prior to such merger or consolidationdo not own after such merger or consolidation shares representing at leastfifty percent of the voting power of the Company, or if the Company isliquidated, or sells or otherwise disposes of substantially all of its assetsto another corporation while unexercised options remain outstanding under thePlan, (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, eachholder of an outstanding option shall be entitled, upon exercise of suchoption, to receive, in lieu of shares of Common Stock, shares of such stock orother securities, cash or property as the holders of shares of Common Stockreceived pursuant to the terms of the merger, consolidation, liquidation, saleor disposition; (ii) the Committee may accelerate the time for exercise of allunexercised and unexpired options to and after a date prior to the effectivedate of such merger, consolidation, liquidation, sale or disposition, as thecase may be, specified by the Committee; or (iii) all outstanding options maybe cancelled by the Committee as of the effective date of any such merger,consolidation, liquidation, sale or disposition, *provided* that (x) notice ofsuch cancellation shall be given to each holder of an option and (y) eachholder of an option shall have the right to exercise such option to the extentthat the same is then exercisable or, if the Committee shall have acceleratedthe time for exercise of all unexercised and unexpired options, in full duringthe 30-day period preceding the effective date of such merger, consolidation,liquidation, sale or disposition.

**            ****8.5 Adjustments toCommon Stock Subject to Options****.**** **Except ashereinbefore expressly provided, the issue by the Company of shares of stock ofany class, or securities convertible into shares of stock of any class, forcash or property, or for labor or services, either upon direct sale or upon theexercise of  rights or warrants tosubscribe therefor, or upon conversion of shares or obligations of the Companyconvertible into such shares or other securities, shall not affect, and noadjustment by reason thereof shall be made with respect to, the number or priceof shares of Common Stock then subject to outstanding options.

**            ****8.6 Miscellaneous****.**** **Adjustments under thisSection 8 shall be determined by the Committee, and such determinations shallbe conclusive.  No fractional shares ofCommon Stock shall be issued under the Plan on account of any adjustmentspecified above.

**Section 9. General Restriction**

**            ****9.1 InvestmentRepresentations****.**** **The Company mayrequire any person to whom an option is granted, as a condition of exercisingsuch option, to give written assurances in substance and form satisfactory tothe Company to the effect that such person is acquiring the Common Stocksubject to the option for his own account for investment and not with anypresent intention of selling or otherwise distributing the same, and to suchother effects as the Company deems necessary or appropriate in order to complywith federal and applicable state securities laws.

**            ****9.2 Compliance withSecurities Laws****.**** **The Companyshall not be required to sell or issue any shares under any option if theissuance of such shares shall constitute a violation by the optionee or by theCompany of any provisions of any law or regulation of any governmentalauthority.  In addition, in  connection with the Securities Act of 1933,as now in effect or hereafter amended (the "Act"), upon exercise ofany option, the Company shall not be required to issue such shares unless theCommittee has received evidence satisfactory to it to the effect that theholder of such option will not transfer such shares except pursuant to aregistration statement in effect under such Act or unless an opinion of counselsatisfactory to the Company has been received by the Company to the effect thatsuch registration is not required.  Anydetermination in this connection by the Committee shall be final, binding andconclusive.  In the event the sharesissuable on exercise of an option are not registered under the Act, the Companymay imprint upon any certificate representing shares so issued the followinglegend or any other legend which counsel for the Company considers necessary oradvisable to comply with the Act and with applicable state securities laws:

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

             The Company may, but shall in noevent be obligated to, register any securities covered hereby pursuant to theAct; and in the event any shares are so registered the Company may remove anylegend on certificates representing such shares.  The Company shall not be obligated to take any other affirmativeaction in  order to cause the exerciseof an option or the issuance of shares pursuant thereto to comply with any lawor regulation of any governmental authority.

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

**            ****9.4 Withholding Tax****.**** **Whenever under thePlan shares of Common Stock are to be delivered upon exercise of an option, theCompany shall be entitled to require as a condition of delivery that theoptionee remit an amount sufficient to satisfy all federal, state and othergovernmental withholding tax requirements related thereto.

**Section 10. Amendment or Termination of the Plan**

             The Board of Directors may modify,revise or terminate this Plan at any time and from time to time, except that(i) the class of persons eligible to receive options and the aggregate numberof shares issuable pursuant to this Plan shall not be changed or increased,other than by operation of Section 8 hereof, without the consent of thestockholders of the Company, other than to comport with changes in the Code,the Employee Retirement Income Security Act, or the rules thereunder.

**Section 11. Nonexclusivity of the Plan**

             Neither the adoption of the Plan bythe Board of Directors nor the submission of the Plan to the stockholders ofthe Company for approval shall be construed as creating any limitations on thepower of the Board of Directors to adopt such other incentive arrangements asit 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 specificcases.

**Section 12. Effective Date and Duration of the Plan**

             The Plan shall become effectiveupon its adoption by the Board of Directors, *provided* that thestockholders of the Company shall have approved the Plan within twelve monthsprior to or following the adoption of the Plan by the Board.  No option may be granted under the Planafter the tenth anniversary of the effective date.  The Plan shall terminate (i) when the total amount of CommonStock with respect to which options may be granted shall have been issued uponthe exercise of options or (ii) by action of the Board of Directors pursuant toSection 10 hereof, whichever shall first occur.****