This Option is exercisable by a written notice signed by you and delivered to the Company at itsexecutive offices, signifying your election to exercise the Option. The notice must state thenumber of Common Shares as to which your Option is being exercised and must be accompanied bypayment for (i) the full exercise price of the shares being acquired at the time of exercise plus(ii) such amount as is required for withholding taxes. You shall have the right to elect to paythe Option exercise price (and accompanying required tax withholding) by one or any combination ofthe following methods, to the extent permitted by law:     (A) a cash payment;     (B) by tendering, by either actual delivery of shares or by attestation, Common Shares valuedat Fair Market Value as of the date of exercise; or     (C) by irrevocably authorizing a third party to sell Common Shares (or a sufficient portion ofshares) acquired upon exercise of the Option and remit to the Company a sufficient portion of thesale proceeds against delivery of the shares underlying the Option exercise to pay the Option price(and applicable tax withholding resulting from such exercise).Any Common Shares delivered to the Company in satisfaction of all or any portion of such purchaseprice or withholding taxes shall be appropriately endorsed for transfer and assignment to theCompany. In all events (including any “cashless exercise” procedure) no share shall be issued uponan Option exercise until full payment therefor has been delivered to and received by the Company.“Fair Market Value” means, as of any date, the value of the Common Shares determined as follows:if the Common Shares are listed on any established stock exchange or traded on any market system,the Fair Market Value of a Common Share shall be the closing sales price for such stock (or theclosing bid if no sales were reported) as quoted on such exchange or market (or the exchange ormarket with the greatest volume of trading in the Common Shares) on the date in question, asreported by The Wall Street Journal or such other source as the Committee deems reliable. Unlessotherwise provided by the Committee, if there is no closing sales price (or closing bid if no saleswere reported) for the Common Shares on the date in question, then the Fair Market Value shall bethe closing sales price (or closing bid if no sales were reported) on the last preceding date forwhich such quotation exists; or in the absence of such markets for the Common Shares, the FairMarket Value shall be determined by the Committee in good faith and in a manner that complies withSections 409A and 422 of the Internal Revenue Code (“Code”).The Company has filed with the Securities and Exchange Commission a Form S-8 registration statementunder the Securities Act of 1933 with respect to the Plan and the Common Shares underlying theOption covered by this Agreement. The Company will endeavor to keep such registration statementeffective at all times that this Agreement is outstanding. Any exercise of the Option is subjectto the condition that if at any time the Company, in its discretion, shall determine that thelisting, registration or qualification of the shares covered by the Option upon any securitiesexchange or under any state or federal law is necessary or desirable as a condition of or inconnection with the delivery of shares thereunder, the exercise of this Option may be delayed orsuspended and the delivery of any or all shares pursuant to this Option may be
2

 
withheld unless and until such listing, registration or qualification shall have been effected. TheOptionee shall also deliver to the Company, prior to the exercise of the Option, such information,representations and warranties as the Company may reasonably request in order for the Company to beable to satisfy itself that the Option shares are being acquired in accordance with the terms of anapplicable exemption, if any, from the securities registration requirements of applicable federaland state securities laws.You agree that any sales of Common Shares received by you on Option exercise will be effected bymeans of a broker’s transaction.If a person or persons other than you give notice of the exercise of this Option, and providednotice of exercise by such person or persons is permitted under the Plan, then the Company mayrequire the submission to the Company of appropriate proof of the authority of such person orpersons to exercise this Option.Certificates for the Common Shares purchased or issued hereunder will be issued as soon aspracticable, unless such Common Shares shall be uncertificated. The Company, however, shall not berequired to issue or deliver a certificate for any shares, or cause to be made any book entry foruncertificated shares, until it has complied with all requirements of the Securities Act of 1933,the Securities Exchange Act of 1934, any stock exchange on which the Company’s Common Shares maythen be listed and all applicable state laws in connection with the issuance or sale of such sharesor the listing of such shares on such stock exchange. Until the date of issuance of such shares toyou (or any person succeeding to your rights pursuant to the Plan), you (or such other person, asthe case may be) shall have no rights as a stockholder with respect to any Common Shares subject tothis Option.5. Termination of Employment.If your employment with the Company or an Affiliate (as such term is defined in the Plan) isterminated or shall cease for any reason other than by death, disability (as such term is definedin Paragraph 12 of the Plan), Retirement (as defined below) or a period of Related Employment (assuch term is defined in the Plan), the Committee, pursuant to paragraph 5(e)(iii)(D) of the Plan,has expressly determined that the unvested portion of this Option shall immediately lapse andexpire and you may exercise, within three (3) months from the date of such termination (or withinsuch longer period, if any, as expressly set forth in any written employment agreement or writtenseverance agreement executed between you and the Company and then in effect) (and in no event afterthe Option has expired), that portion of this Option which was vested at the date of suchtermination, subject to paragraph 11(B).
3

 
6. Period of Related Employment.If your employment with the Company or an Affiliate shall cease solely by reason of a period ofRelated Employment (as such term is defined in the Plan), you may, during such period of RelatedEmployment (but in no event after the Option has expired), exercise the Option as if you continuedsuch employment.7. Retirement or Disability.If your employment with the Company or an Affiliate is terminated by reason of your disability (assuch term is defined in Paragraph 12 of the Plan) or your Retirement and this Option has notexpired and has not been fully exercised, the unvested portion of this Option shall immediatelylapse and expire and you, at any time within three (3) years after the date you ceased suchemployment, (but in no event after the Option has expired), may exercise that portion of the Optionwhich was vested at the date of such termination. For purposes of this paragraph 7, “Retirement”shall mean termination or separation from employment with the Company or an Affiliate on or after(i) attaining age 65 and having completed at least five (5) Years of Service (as defined under TheTalbots, Inc. Pension Plan, whether or not you are a participant in The Talbots, Inc. Pension Plan)or (ii) attaining age 55 and having completed at least ten (10) Years of Service.8. Death.If you die while employed by the Company or an Affiliate and this Option has not expired and hasnot been fully exercised, the unvested portion of this Option shall immediately lapse and expireand your executors, administrators, heirs or distributees, as the case may be, may, at any timewithin one (1) year after the date of death (but in no event after the Option has expired),exercise that portion of the Option which was vested at the time of your death.9. Non-Transferability of Option.This Option may not be sold, assigned, transferred, pledged, hypothecated or otherwise disposed ofby you, except by will or the laws of descent and distribution, and shall be exercisable duringyour lifetime only by you, except as otherwise set forth herein or in the Plan.10. Dilution and Other Adjustments.If at any time after the date of the grant of this Option, there is any change in the outstandingCommon Stock of the Company by reason of any stock split, stock dividend, split-up, spin-off,recapitalization, merger, consolidation, rights offering, reorganization, combination or exchangeof shares, a sale by the Company of all or part of its assets, any distribution to shareholdersother than a normal cash dividend, or other extraordinary or unusual event, then the number ofCommon Shares available for this Option as well as the terms of this Option shall be appropriatelyadjusted for any such change by the Committee, whose adjustment shall be conclusive and binding.
4

 
11. Trading Black Out Periods.(A) By entering into this Agreement you expressly agree that: (i) during all periods of youremployment with the Company or its Affiliates, or while you are otherwise maintained on the payrollof the Company or its Affiliates, you shall abide by all trading “black out” periods with respectto purchases or sales of Company stock or exercises of stock options for the Company’s stockestablished from time to time by the Company (“Trading Black Out Periods”) and (ii) upon anycessation or termination of employment with the Company or its Affiliates for any reason, you agreethat for a period of six (6) months following the effective date of any termination of employmentor, if later, for a period of six (6) months following the date as of which you are no longer onthe payroll of the Company or its Affiliates, you shall continue to abide by all such Trading BlackOut Periods established from time to time by the Company; provided that in no event shall you beprohibited from making a purchase or sale of the Company’s stock or exercising stock options forthe Company’s stock under this paragraph 11 if such sale, purchase or exercise is made pursuant toa written plan for trading securities within the meaning of Rule 10b5-1 under the SecuritiesExchange Act of 1934, as amended (a “10b5-1 Trading Plan”), and such 10b5-1 Trading Plan isconsistent with the Company’s insider trading policy and has been approved by the Company.(B) In the event that (i) your employment with the Company or an Affiliate is terminated or ceasesfor any reason other than Cause and, pursuant to Section 5 above, you are entitled to a period ofthree months following such termination or cessation of employment to exercise the vested portionof this Option and (ii) a Trading Blackout Period is in effect on the last day of suchpost-termination exercise period and has been in effect for more than 60 consecutive days prior tothe expiration of the post-termination exercise period (or if the post-termination exercise periodis 60 days or less, for the entirety of the exercise period), then you, at any time within theseven consecutive business days commencing immediately following the last day of such TradingBlackout Period (but in no event after the Option has expired), may exercise that portion of theOption which was vested at the date of such termination or cessation of employment.12. Change in Control.This Option, to the extent then outstanding and unvested, shall become immediately exercisable andfully vested upon a Change in Control Event (as such term is defined in the Plan).13. Subject to Terms of the Plan.This Agreement shall be subject in all respects to the terms and conditions of the Plan and in theevent of any question or controversy relating to the terms of the Plan, the decision of theCommittee shall be final and conclusive, except as expressly set forth in this Agreement.14. Tax Status.It is the intent of the Company that this Option not be classified as an “incentive stock option”under the provisions of Section 422 of the Code. The income tax implications of your receipt ofthis Option and your exercise of this Option should be discussed with your tax counsel.
5

 
      Sincerely yours,