**Exhibit 10.5**

 
|   | Date: |
|--------|-------|

 

Non-Statutory Stock Option Granted

 

by

 

THE J. JILL GROUP, INC.

(hereinafter called the “Company”)

 

to

 

 

(hereinafter called the “Holder”)

 

under the

 

2001 INCENTIVE AND NON-STATUTORY STOCK OPTION PLAN

 

WITNESSETH:

 

For valuableconsideration, the receipt of which is hereby acknowledged, the Company herebygrants to the Holder the following option:

 

FIRST:  Subject to the terms and conditionshereinafter set forth, the Holder is hereby given the right and option topurchase from the Company an aggregate of                 shares of Common Stock of the Company, par value $.01 per share, at the timeand in the manner hereinafter stated.  Schedule Aattached hereto and hereby incorporated herein sets forth, with respect to thisoption: (i) its expiration date, (ii) its exercise price per share, (iii) itsvesting rate, and (iv) certain other terms and conditions applicable tothis option and incorporated herein.

 

This option isand shall be subject in every respect to the provisions of The J. Jill Group, Inc.2001 Incentive and Non-Statutory Stock Option Plan (the “Plan”), as amendedfrom time to time, which is incorporated herein by reference and made a parthereof.  In the event of any conflict orinconsistency between the terms hereof and those of the Plan, the latter shallprevail.  References herein to theCommittee shall mean the Committee as defined in the Plan.

 

This optionshall be exercised by the delivery of written notice to the Company (the “Notice”)setting forth the number of shares with respect to which the option is to beexercised and the address to which the certificates for such shares are to bemailed, together with payment for such shares by one or more of the followingmethods: (i) in cash, by certified or bank check

 

----

 

or otherinstrument acceptable to the Committee; (ii) by the Holder’s delivering tothe Company a properly executed exercise notice together with irrevocableinstructions to a broker to promptly deliver to the Company cash or a checkpayable and acceptable to the Company to pay the purchase price; *provided* that in the event the Holderchooses to pay the purchase price as so provided, the Holder and the brokershall comply with such procedures and enter into such agreements of indemnityand other agreements as the Committee shall prescribe as a condition of suchpayment procedure; and *provided further*that the Company need not act upon such exercise notice until the Companyreceives full payment of the exercise price; or (iii) by any other means(including, without limitation, by delivery of a promissory note of the Holderpayable on such terms as are specified by the Committee; *provided*, however, that the interest rateborne by such note shall not be less than the lowest applicable federal rate,as defined in Section 1247(d) of the Internal Revenue Code) which theCommittee determines are consistent with the purpose of the Plan and withapplicable laws and regulations.

 

If the Holderof this option is an executive officer, director or beneficial owner of morethan ten percent (10%) of the Common Stock of the Company, any shares of stockissuable upon exercise of this option may not be sold or transferred (exceptthat such shares may be issued upon exercise of this option) by such Holder fora period of six months following the grant of this option.

 

SECOND:  The Company, in its discretion, may file aregistration statement on Form S-8 under the Securities Act of 1933 toregister shares of Common Stock reserved for issuance under the Plan.  At any time at which such a registrationstatement is not in effect, it shall be a condition precedent to any exerciseof this option that the Holder (or if any other individual or individuals areexercising this option, such individual or individuals) shall deliver to the Companyan investment letter in form and substance satisfactory to the Company and itscounsel which shall contain, among other matters, a statement in writing thatthe option is then being exercised only with a view to investment in, and notwith a view to the distribution of, the shares with respect to which the optionis then being exercised; that the Holder and/or the Holder’s attorneys,accountants, and/or analysts (or the individual or individuals exercising thisoption and/or his or their attorneys, accountants and/or analysts) have fullyinvestigated the Company and the business and financial conditions concerningit and have knowledge of the Company’s then current corporate activities andfinancial condition; and that the Holder believes that the nature and amount ofthe shares being purchased by him/her are consistent with his/her investmentobjectives, abilities and resources.

 

THIRD:  As promptly as practicable after receipt ofthe Notice and payment described in paragraph FIRST and, if required as acondition to exercise, the investment letter described in paragraph SECOND, theCompany shall deliver or cause to be delivered to the Holder (or if any otherindividual or individuals are exercising this option, to such individual orindividuals) at the address specified in the Notice a certificate orcertificates for the number of shares with respect to which the option is thenbeing exercised, registered in the name or names of the individual orindividuals exercising the option, either alone or jointly with another personor persons with rights of survivorship, as the individual or individualsexercising the option shall prescribe in writing to the Company at or prior tosuch purchase; provided, however, that such delivery shall be deemed effectedfor all purposes when the Company or a stock transfer agent shall havedeposited such certificate or certificates in the United States mail, addressedto the Holder (or

 

2

----

 

suchindividual or individuals) at the address so specified; and provided furtherthat if any law or regulation or order of the Securities and ExchangeCommission or other body having jurisdiction in the premises shall require theCompany or the Holder (or the individual or individuals exercising this option)to take any action in connection with the shares then being purchased, the datefor the delivery of the certificates for such shares shall be extended untilsuch action shall be taken and completed, it being understood that the Companyshall have no obligation to take and complete any such action.

 

FOURTH:  The existence of this option shall not affectin any way the right or power of the Company or its stockholders to make orauthorize any or all adjustments, recapitalizations, reorganizations or otherchanges in the Company’s capital structure or its business, or any merger orconsolidation of the Company, or any issue of Common Stock, or any issue ofbonds, debentures, preferred or prior preference stock ahead of or affectingthe Common Stock or the rights thereof, or the dissolution or liquidation ofthe Company, or any sale or transfer of all or any part of its assets orbusiness, or any other corporate act or proceeding, whether of a similarcharacter or otherwise.

 

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, without receivingcompensation therefor in money, services or property, then the number, class,and per share price of shares of stock subject to this option shall beappropriately adjusted in such a manner as to entitle the Holder to receiveupon exercise of this option, for the same aggregate consideration, the sametotal number and class of shares as the Holder would have received as a resultof the event requiring the adjustment had the Holder exercised this option infull immediately prior to such event.

 

After a mergerof one or more corporations into the Company, or after a merger orconsolidation of the Company and one or more corporations in which (i) theCompany shall be the surviving corporation, and (ii) the stockholders ofthe Company immediately prior to such merger or consolidation own after suchmerger or consolidation shares representing at least fifty percent of thevoting power of the Company, the Holder shall, at no additional cost, beentitled upon exercise of this option to receive in lieu of the number ofshares as to which this option shall then be so exercisable, the number andclass of shares of stock or other securities, cash or property to which theHolder would have been entitled pursuant to the terms of the agreement ofmerger or consolidation if, immediately prior to such merger or consolidation,the Holder had been the holder of record of a number of shares of Common Stockequal to the number of shares as to which this option shall be so exercised.

 

If the Companyis merged into or consolidated with another corporation under circumstanceswhere the 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 its assets toanother corporation while this option remains outstanding, (i) subject tothe provisions of clause (iii) below, after the effective date of suchmerger, consolidation, liquidation, sale or other disposition, as the case maybe, the Holder of this option shall be entitled, upon exercise of this

 

3

----

 

option, toreceive, in lieu of shares of Common Stock, shares of such stock or such othersecurities, cash or property as the holders of shares of Common Stock receivedpursuant to the terms of the merger, consolidation, liquidation, sale or otherdisposition; (ii) the Committee may accelerate the time for exercise ofthis option, so that from and after a date prior to the effective date of suchmerger, consolidation, liquidation, sale or other disposition, as the case maybe, specified by the Committee, exercisable in full; or (iii) this optionmay be cancelled by the Committee as of the effective date of any such merger,consolidation, liquidation, sale or other disposition provided that (x) noticeof such cancellation shall be given to the Holder and (y) the Holder shall havethe right to exercise this option to the extent that the same is thenexercisable or, if the Committee shall have accelerated the time for exerciseof this option pursuant to clause (ii) above, in full during the 30-dayperiod preceding the effective date of such merger, consolidation, liquidation,sale or other disposition.

 

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 to subscribe therefor, or upon conversion ofshares or obligations of the Company convertible into such shares or othersecurities, shall not affect, and no adjustment by reason thereof shall be madewith respect to, the number or price of shares of Common Stock then subject tothis option.

 

FIFTH:  No person shall, by virtue of the granting ofthis option to the Holder, be deemed to be a holder of any shares purchasableunder this option or to be entitled to the rights or privileges of a holder ofsuch shares unless and until this option has been exercised with respect tosuch shares and they have been issued pursuant to that exercise of this option.

 

The Companyshall, at all times while any portion of this option is outstanding, reserveand keep available, out of shares of its authorized and unissued stock orreacquired shares, a sufficient number of shares of its Common Stock to satisfythe requirements of this option; shall comply with the terms of this optionpromptly upon exercise of the option rights; and shall pay all fees or expensesnecessarily incurred by the Company in connection with the issuance anddelivery of shares pursuant to the exercise of this option.

 

SIXTH:  This option is not transferable by the Holderotherwise than by will or under the laws of descent and distribution; thegranting of this option shall not impose upon the Company any obligation toemploy or to continue to employ the Holder; and the right of the Company toterminate the employment of the Holder shall not be diminished or affected byreason of the fact that this option has been granted to such Holder.

 

This option isexercisable, during the Holder’s lifetime, only by the Holder, and by theHolder only while the Holder is an employee of the Company, except that in theevent the employment of the Holder terminates for any reason, other than forcause as determined by the Company and other than in the event of death orretirement in good standing from the employ of the Company for reasons of ageor disability under the then established rules of the Company, the Holdershall have the right to exercise this option within thirty (30) days after thedate the Holder ceases to be an employee of the Company (but not later than theexpiration date of this option) with respect to the shares which werepurchasable by the Holder by exercise of this option at the time of suchcessation of employment.  As used in thisparagraph, “cause” shall

 

4

----

 

mean (i) anymaterial breach by the Holder of any agreement to which the Holder and theCompany are both parties, (ii) any act or omission to act by the Holderwhich may have a material and adverse effect on the Company’s business or onthe Holder’s ability to perform services for the Company, including, withoutlimitation, the commission of any crime (other than ordinary trafficviolations), or (iii) any material misconduct or material neglect ofduties by the Holder in connection with the business or affairs of the Companyor any affiliate of the Company.

 

In the eventof the retirement of the Holder in good standing from the employ of the Companyfor reasons of age or disability under the then established rules of theCompany, this option shall terminate on the earlier of its expiration date anda date ninety (90) days after the Holder’s retirement.  After such retirement the Holder shall havethe right, at any time prior to such termination, to exercise this option tothe extent the Holder was entitled to exercise such option immediately prior tosuch retirement.

 

In the eventof the death of the Holder while the Holder is in the employ of the Company andbefore the expiration date of this option, this option shall terminate on theearlier of its expiration date and a date one (1) year after hisdeath.  After the death of the Holder,the Holder’s executors, administrators or any person or persons to whom theHolder’s 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 such option to the extent the Holder was entitled to exercise suchoption at the time of the Holder’s death.

 

An employmentrelationship between the Company and the Holder shall be deemed to exist duringany period in which the Holder is employed by the Company or by any parent orsubsidiary corporation of the Company.

 

SEVENTH:  Any notice to be given to the Companyhereunder shall be deemed sufficient if addressed to the Company and deliveredby hand or by mail to the Treasurer of the Company, 4 Batterymarch Park,Quincy, Massachusetts 02169-7468 or such other address as the Company mayhereafter designate.

 

Any notice tobe given to the Holder hereunder shall be deemed sufficient if addressed to anddelivered in person to the Holder or when deposited in the mail, postageprepaid, addressed to the Holder at the Holder’s address furnished to the Company.

 

EIGHTH:  This option is subject to all laws,regulations and orders of any governmental authority which may be applicablethereto and, notwithstanding any of the provisions hereof, the Holder agreesthat the Holder will not exercise the option granted hereby nor will theCompany be obligated to issue or sell any shares of stock hereunder if theexercise thereof or the issuance or sale of such shares, as the case may be,would constitute a violation by the Holder or the Company of any such law, regulationor order or any provision thereof.  TheCompany shall not be obligated to take any affirmative action in order to causethe exercise of this option or the issuance of shares pursuant hereto to complywith any such law, regulation, order or provision.

 

NINTH:  This option shall be governed by, andconstrued and enforced in accordance with, the substantive laws of TheCommonwealth of Massachusetts.

 

5

----

 

IN WITNESSWHEREOF, the Company has caused this instrument to be executed in its name andon its behalf as of the date first above written.

 

 

[Seal]

 

 
| ATTEST:   | THE J. JILL GROUP, INC. |
|-----------|-------------------------|
|      |                    |
|      |                    | By: |   |   |
| Secretary |                    | Its |
|           |                         |  |  |  |

 

6

----

 

SCHEDULE A TO NON-STATUTORY STOCK OPTION

THE J. JILL GROUP, INC.

 
| **Date of Grant**:                                                  |       |       |       |
|---------------------------------------------------------------------|------------|------------|------------|
|                                                                |       |       |       |
| **Name of Holder**:                                                 |       |       |       |
|                                                                |       |       |       |
| **Address**:                                                        |       |       |       |
|                                                                |       |       |       |
| **City, State, Zip**:                                               |       |       |       |
|                                                                |       |       |       |
| **Social Security Number**:                                         |       |       |       |
|                                                                |       |       |       |
| **Maximum number of shares for which this  option is exercisable**: | ** ** | ** ** | ** ** |
|                                                                |       |       |       |
| **Exercise (purchase) price per share**:                            |       |       |       |
|                                                                |       |       |       |
| **Expiration date of option:**                                      |       |       |       |

 

**Vesting Rate**:  The Holder shall have the right and option topurchase any or all of the shares subject to this option as follows:

 

(a) onethird (1/3) of the shares on                      ;and

 

(b) anadditional one third (1/3) of the shares on each of                      and                      .

 

Notwithstandingthe foregoing, (a) in the event of the death of the Holder while theHolder is in the employ of the Company (or a subsidiary of the Company) andbefore this option has become exercisable in full, then at the time of suchdeath this option shall become exercisable in full; (b) in the event thata Qualified Sale (as hereinafter defined) occurs before this option has becomeexercisable in full, and immediately before such Qualified Sale the Holder isemployed by the Company (or a subsidiary of the Company), then immediatelybefore such Qualified Sale this option shall become exercisable as to anadditional one third (1/3) of the shares subject to this option; and (c) inthe event of the Qualified Retirement (as hereinafter defined) of the Holderbefore this option has become exercisable in full, then immediately before suchQualified Retirement this option shall become exercisable in full.  A Qualified Sale shall mean the closing of asale of all or substantially all of the assets or issued and outstandingcapital stock of the Company, or the closing of a merger or consolidationinvolving the Company in which the stockholders of the Company immediately beforesuch merger or consolidation do not own immediately after such merger orconsolidation capital stock or other equity interests of the survivingcorporation or entity representing more than fifty percent in voting power ofthe capital stock or other equity interests of such surviving corporation orentity outstanding immediately after such merger or consolidation.  Qualified Retirement shall mean the Holder’sretirement from employment at a time when the Holder’s successor as ChiefExecutive Officer of the Company has accepted the Company’s offer of employmentin such capacity.

 

The right topurchase shares under this option shall be cumulative.

 

A-1

----

 

**Other terms and conditions:**  The Holder agrees that for a period of up toone hundred eighty (180) days from the effective date of any registration ofsecurities of the Company (upon request of the Company or the underwritersmanaging any underwritten offering of the Company’s securities), he will notsell, make any short sale or loan of, grant any option for the purchase of, orotherwise dispose of any shares of Common Stock held by him without the priorwritten consent of the Company or such underwriters, as the case may be.

 

Theundersigned Holder acknowledges receipt of the stock option of which this Schedule Ais a part.

 

 
|   |                    |   |
|--------|-------------------------|--------|
|   | Holder’s Signature |

 

A-2

----