Document:

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                                                                   Exhibit 10.20

                                 BRADLEES, INC.

                      2000 STOCK OPTION AND INCENTIVE PLAN

SECTION 1. GENERAL PURPOSE OF THE PLAN; DEFINITIONS

     The name of the plan is the Bradlees, Inc. 2000 Stock Option and Incentive
Plan (the "Plan"). The purpose of the Plan is to encourage and enable the
officers, full and part-time employees, Independent Directors and other key
persons (including consultants and prospective employees) of Bradlees, Inc. (the
"Company") and its Subsidiaries upon whose judgment, initiative and efforts the
Company largely depends for the successful conduct of its business to acquire a
proprietary interest in the Company. It is anticipated that providing such
persons with a direct stake in the Company's welfare will assure a closer
identification of their interests with those of the Company, thereby stimulating
their efforts on the Company's behalf and strengthening their desire to remain
with the Company.

     The following terms shall be defined as set forth below:

     "ACT" means the Securities Act of 1933, as amended, and the rules and
regulations thereunder.

     "ADMINISTRATOR" is defined in Section 2(a).

     "AWARD" or "AWARDS", except where referring to a particular category of
grant under the Plan, shall include Incentive Stock Options, Non-Qualified Stock
Options, Stock Appreciation Rights, Deferred Stock Awards, Restricted Stock
Awards, Unrestricted Stock Awards and Performance Share Awards.

     "BOARD" means the Board of Directors of the Company.

     "CHANGE OF CONTROL" is defined in Section 16.

     "CODE" means the Internal Revenue Code of 1986, as amended, and any
successor Code, and related rules, regulations and interpretations.

     "COVERED EMPLOYEE" means an employee who is a "Covered Employee" within the
meaning of Section 162(m) of the Code.

     "DEFERRED STOCK AWARD" means Awards granted pursuant to Section 8.

     "EFFECTIVE DATE" means the date on which the Plan is approved by
stockholders as set forth in Section 18.

     "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations thereunder.

     "FAIR MARKET VALUE" of the Stock on any given date means the fair market
value of the Stock determined in good faith by the Administrator; provided,
however, that if the Stock is admitted to quotation on the National Association
of Securities Dealers Automated Quotation System ("NASDAQ"), NASDAQ National
System or a national securities exchange, the determination shall be made by
reference to market quotations. If there are no market quotations for such date,
the determination shall be made by reference to the last date preceding such
date for which there are market quotations.

     "INCENTIVE STOCK OPTION" means any Stock Option designated and qualified as
an "incentive stock option" as defined in Section 422 of the Code.

     "INDEPENDENT DIRECTOR" means a member of the Board who is not also an
employee of the Company or any Subsidiary.

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     "NON-QUALIFIED STOCK OPTION" means any Stock Option that is not an
Incentive Stock Option.

     "OPTION" or "STOCK OPTION" means any option to purchase shares of Stock
granted pursuant to Section 5.

     "PERFORMANCE CYCLE" means one or more periods of time, which may be of
varying and overlapping durations, as the Administrator may select, over which
the attainment of one or more performance criteria will be measured for the
purpose of determining a grantee's right to and the payment of a Performance
Share Award, Restricted Stock Award or Deferred Stock Award.

     "PERFORMANCE SHARE AWARD" means Awards granted pursuant to Section 10.

     "RESTRICTED STOCK AWARD" means Awards granted pursuant to Section 7.

     "STOCK" means the Common Stock, par value $.01 per share, of the Company,
subject to adjustments pursuant to Section 3.

     "STOCK APPRECIATION RIGHT" means any Award granted pursuant to Section 6.

     "SUBSIDIARY" means any corporation or other entity (other than the Company)
in any unbroken chain of corporations or other entities beginning with the
Company if each of the corporations or entities (other than the last corporation
or entity in the unbroken chain) owns stock or other interests possessing 50
percent or more of the economic interest or the total combined voting power of
all classes of stock or other interests in one of the other corporations or
entities in the chain.

     "UNRESTRICTED STOCK AWARD" means any Award granted pursuant to Section 9.

SECTION 2. ADMINISTRATION OF PLAN; ADMINISTRATOR AUTHORITY TO SELECT GRANTEES
           AND DETERMINE AWARDS

     (a) COMMITTEE. The Plan shall be administered by the Compensation Committee
of the Board, except as contemplated by Section 2(c), which shall include not
less than two Independent Directors (the "Administrator").

     (b) POWERS OF ADMINISTRATOR. The Administrator shall have the power and
authority to grant Awards consistent with the terms of the Plan, including the
power and authority:

     (i) to select the individuals to whom Awards may from time to time be
granted;

     (ii) to determine the time or times of grant, and the extent, if any, of
any Award or any combination of Awards granted to any one or more grantees;

     (iii) to determine the number of shares of Stock to be covered by any
Award;

     (iv) to determine and modify from time to time the terms and conditions,
including restrictions, not inconsistent with the terms of the Plan, of any
Award, which terms and conditions may differ among individual Awards and
grantees, and to approve the form of written instruments evidencing the Awards;

     (v) to accelerate at any time the exercisability or vesting of all or any
portion of any Award;

     (vi) subject to the provisions of Section 5(a)(ii), to extend at any time
the period in which Stock Options may be exercised;

     (vii) to determine at any time whether, to what extent, and under what
circumstances distribution or the receipt of Stock and other amounts payable
with respect to an Award shall be deferred either automatically or at the
election of the grantee and whether and to what extent the Company shall pay or
credit amounts constituting interest (at rates determined by the Administrator)
or dividends or deemed dividends on such deferrals; and

     (viii) at any time to adopt, alter and repeal such rules, guidelines and
practices for administration of the Plan and for its own acts and proceedings as
it shall deem advisable; to interpret the terms and provisions of the Plan and
any Award (including related written instruments); to make all determinations it
deems advisable for the administration of the Plan; to decide all disputes
arising in connection with the Plan; and to otherwise supervise the
administration of the Plan.

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     All decisions and interpretations of the Administrator shall be binding on
all persons, including the Company and Plan grantees.

     (c) DELEGATION OF AUTHORITY TO GRANT AWARDS. The Administrator, in its
discretion, may delegate to the Chief Executive Officer of the Company all or
part of the Administrator's authority and duties with respect to the granting of
Awards at Fair Market Value, to individuals who are not subject to the reporting
and other provisions of Section 16 of the Exchange Act or Covered Employees. The
Administrator may revoke or amend the terms of a delegation at any time but such
action shall not invalidate any prior actions of the Administrator's delegate or
delegates that were consistent with the terms of the Plan.

     (d) INDEMNIFICATION. Neither the Board nor the Compensation Committee, nor
any member of either or any delegatee thereof, shall be liable for any act,
omission, interpretation, construction or determination made in good faith in
connection with the Plan, and the members of the Board and the Compensation
Committee (and any delegatee thereof) shall be entitled in all cases to
indemnification and reimbursement by the Company in respect of any claim, loss,
damage or expense (including, without limitation, reasonable attorneys' fees)
arising or resulting therefrom to the fullest extent permitted by law and/or
under any directors' and officers' liability insurance coverage which may be in
effect from time to time.

SECTION 3. STOCK ISSUABLE UNDER THE PLAN; MERGERS; SUBSTITUTION

     (a) STOCK ISSUABLE. The maximum number of shares of Stock reserved and
available for issuance under the Plan shall be 1,250,000 shares, subject to
adjustment as provided in Section 3(b). For purposes of this limitation, the
shares of Stock underlying any Awards which are forfeited, canceled, reacquired
by the Company, satisfied without the issuance of Stock or otherwise terminated
(other than by exercise) shall be added back to the shares of Stock available
for issuance under the Plan. Subject to such overall limitation, shares of Stock
may be issued up to such maximum number pursuant to any type or types of Award;
provided, however, that Stock Options or Stock Appreciation Rights with respect
to no more than 500,000 shares of Stock may be granted to any one individual
grantee during any one calendar year period. The shares available for issuance
under the Plan may be authorized but unissued shares of Stock or shares of Stock
reacquired by the Company and held in its treasury.

     (b) CHANGES IN STOCK. Subject to Section 3(c) hereof, if, as a result of
any reorganization, recapitalization, reclassification, stock dividend, stock
split, reverse stock split or other similar change in the Company's capital
stock, the outstanding shares of Stock are increased or decreased or are
exchanged for a different number or kind of shares or other securities of the
Company, or additional shares or new or different shares or other securities of
the Company or other non-cash assets are distributed with respect to such shares
of Stock or other securities, or, if, as a result of any merger or
consolidation, sale of all or substantially all of the assets of the Company,
the outstanding shares of Stock are converted into or exchanged for a different
number or kind of securities of the Company or any successor entity (or a parent
or subsidiary thereof), the Administrator shall make an appropriate or
proportionate adjustment in (i) the maximum number of shares reserved for
issuance under the Plan, (ii) the number of Stock Options or Stock Appreciation
Rights that can be granted to any one individual grantee and the maximum number
of shares that may be granted under a performance-based Award, (iii) the number
and kind of shares or other securities subject to any then outstanding Awards
under the Plan, (iv) the repurchase price for each share subject to any then
outstanding Restricted Stock Award, and (v) the price for each share subject to
any then outstanding Stock Options and Stock Appreciation Rights under the Plan,
without changing the aggregate exercise price (i.e., the exercise price
multiplied by the number of Stock Options and Stock Appreciation Rights) as to
which such Stock Options and Stock Appreciation Rights remain exercisable. The
adjustment by the Administrator shall be final, binding and conclusive. No
fractional shares of Stock shall be issued under the Plan resulting from any
such adjustment, but the Administrator in its discretion may make a cash payment
in lieu of fractional shares.

     The Administrator may also adjust the number of shares subject to
outstanding Awards and the exercise price and the terms of outstanding Awards to
take into consideration material changes in accounting practices or principles,
extraordinary dividends, acquisitions or dispositions of stock or property or
any other event if it is determined by the Administrator that such adjustment is
appropriate to avoid distortion in the operation of the Plan, provided that no
such

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adjustment shall be made in the case of an Incentive Stock Option, without the
consent of the grantee, if it would constitute a modification, extension or
renewal of the Option within the meaning of Section 424(h) of the Code.

     (c) MERGERS AND OTHER TRANSACTIONS. In the case of and subject to the
consummation of (i) the dissolution or liquidation of the Company, (ii) the sale
of all or substantially all of the assets of the Company on a consolidated basis
to an unrelated person or entity, (iii) a merger, reorganization or
consolidation in which the outstanding shares of Stock are converted into or
exchanged for a different kind of securities of the successor entity and the
holders of the Company's outstanding voting power immediately prior to such
transaction do not own a majority of the outstanding voting power of the
successor entity immediately upon completion of such transaction, or (iv) the
sale of all of the Stock of the Company to an unrelated person or entity (in
each case, a "Sale Event"), all Options and Stock Appreciation Rights that are
not exercisable immediately prior to the effective time of the Sale Event shall
become fully exercisable as of the effective time of the Sale Event and all
other Awards with conditions and restrictions relating solely to the passage of
time and continued employment shall become fully vested and nonforfeitable as of
the effective time of the Sale Event, except as otherwise provided in the
applicable Awards agreement. Upon the effective time of the Sale Event, the Plan
and all outstanding Awards granted hereunder shall terminate, unless provision
is made in connection with the Sale Event in the sole discretion of the parties
thereto for the assumption or continuation of Awards theretofore granted by the
successor entity, or the substitution of such Awards with new Awards of the
successor entity or parent thereof, with appropriate adjustment as to the number
and kind of shares and, if appropriate, the per share exercise prices, as such
parties shall agree (after taking into account any acceleration hereunder). In
the event of such termination, each grantee shall be permitted, within a
specified period of time prior to the consummation of the Sale Event as
determined by the Administrator, to exercise all outstanding Options and Stock
Appreciation Rights held by such grantee, including those that will become
exercisable upon the consummation of the Sale Event; provided, however, that the
exercise of Options and Stock Appreciation Rights not exercisable prior to the
Sale Event shall be subject to the consummation of the Sale Event.

     Notwithstanding anything to the contrary in this Section 3(c), in the event
of a Sale Event pursuant to which holders of the Stock of the Company will
receive upon consummation thereof a cash payment for each share surrendered in
the Sale Event, the Company shall have the right, but not the obligation, to
make or provide for a cash payment to the grantees holding Options and Stock
Appreciation Rights, in exchange for the cancellation thereof, in an amount
equal to the difference between (A) the value as determined by the Administrator
of the consideration payable per share of Stock pursuant to the Sale Event (the
"Sale Price") times the number of shares of Stock subject to outstanding Options
and Stock Appreciation Rights (to the extent then exercisable at prices not in
excess of the Sale Price) and (B) the aggregate exercise price of all such
outstanding Options and Stock Appreciation Rights.

     (d) SUBSTITUTE AWARDS. The Administrator may grant Awards under the Plan in
substitution for stock and stock based awards held by employees, directors or
other key persons of another corporation in connection with the merger or
consolidation of the employing corporation with the Company or a Subsidiary or
the acquisition by the Company or a Subsidiary of property or stock of the
employing corporation. The Administrator may direct that the substitute awards
be granted on such terms and conditions as the Administrator considers
appropriate in the circumstances. Any substitute Awards granted under the Plan
shall not count against the share limitation set forth in Section 3(a).

SECTION 4. ELIGIBILITY

     Grantees under the Plan will be such full or part-time officers and other
employees, Independent Directors and key persons (including consultants and
prospective employees) of the Company and its Subsidiaries as are selected from
time to time by the Administrator in its sole discretion.

SECTION 5. STOCK OPTIONS

     Any Stock Option granted under the Plan shall be in such form as the
Administrator may from time to time approve.

     Stock Options granted under the Plan may be either Incentive Stock Options
or Non-Qualified Stock Options. Incentive Stock Options may be granted only to
employees of the Company or any Subsidiary that is a "subsidiary corporation"
within the meaning of Section 424(f) of the Code. To the extent that any Option
does not qualify as an Incentive Stock Option, it shall be deemed a
Non-Qualified Stock Option.

     No Incentive Stock Option shall be granted under the Plan after March 1,
2010.

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     (a) STOCK OPTIONS. Stock Options granted pursuant to this Section 5(a)
shall be subject to the following terms and conditions and shall contain such
additional terms and conditions, not inconsistent with the terms of the Plan, as
the Administrator shall deem desirable. If the Administrator so determines,
Stock Options may be granted in-lieu-of cash compensation at the optionee's
election, subject to such terms and conditions as the Administrator may
establish.

          (i) EXERCISE PRICE. The exercise price per share for the Stock covered
       by a Stock Option granted pursuant to this Section 5(a) shall be
       determined by the Administrator at the time of grant but shall not be
       less than 100 percent of the Fair Market Value on the date of grant in
       the case of Incentive Stock Options, or 85 percent of the Fair Market
       Value on the date of grant, in the case of Non-Qualified Stock Options
       (other than options granted in lieu of cash compensation). If an employee
       owns or is deemed to own (by reason of the attribution rules of Section
       424(d) of the Code) more than 10 percent of the combined voting power of
       all classes of stock of the Company or any parent or subsidiary
       corporation and an Incentive Stock Option is granted to such employee,
       the option price of such Incentive Stock Option shall be not less than
       110 percent of the Fair Market Value on the grant date.

          (ii) OPTION TERM. The term of each Stock Option shall be fixed by the
       Administrator, but no Stock Option shall be exercisable more than 10
       years after the date the Stock Option is granted. If an employee owns or
       is deemed to own (by reason of the attribution rules of Section 424(d) of
       the Code) more than 10 percent of the combined voting power of all
       classes of stock of the Company or any parent or subsidiary corporation
       and an Incentive Stock Option is granted to such employee, the term of
       such Stock Option shall be no more than five years from the date of
       grant.

          (iii) EXERCISABILITY; RIGHTS OF A STOCKHOLDER. Stock Options shall
       become exercisable at such time or times, whether or not in installments,
       as shall be determined by the Administrator at or after the grant date.
       The Administrator may at any time accelerate the exercisability of all or
       any portion of any Stock Option. An optionee shall have the rights of a
       stockholder only as to shares acquired upon the exercise of a Stock
       Option and not as to unexercised Stock Options.

          (iv) METHOD OF EXERCISE. Stock Options may be exercised in whole or in
       part, by giving written notice of exercise to the Company, specifying the
       number of shares to be purchased. Payment of the purchase price may be
       made by one or more of the following methods to the extent provided in
       the Option Award agreement:

                      (A) In cash, by certified or bank check or other
              instrument acceptable to the Administrator;

                      (B) Through the delivery (or attestation to the ownership)
              of shares of Stock that have been purchased by the optionee on the
              open market or that have been beneficially owned by the optionee
              for at least six months and are not then subject to restrictions
              under any Company plan. Such surrendered shares shall be valued at
              Fair Market Value on the exercise date;

                      (C) 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 and acceptable to the Company for 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 Administrator shall
              prescribe as a condition of such payment procedure; or

                      (D) By the optionee delivering to the Company a promissory
              note if the Board has expressly authorized the loan of funds to
              the optionee for the purpose of enabling or assisting the optionee
              to effect the exercise of his Stock Option; provided that at least
              so much of the exercise price as represents the par value of the
              Stock shall be paid other than with a promissory note if otherwise
              required by state law.

Payment instruments will be received subject to collection. The delivery of
certificates representing the shares of Stock to be purchased pursuant to the
exercise of a Stock Option will be contingent upon receipt from the optionee (or
a purchaser acting in his stead in accordance with the provisions of the Stock
Option) by the Company of the full purchase price for such shares and the
fulfillment of any other requirements contained in the Option Award agreement or
applicable provisions of laws. In the event an optionee chooses to pay the
purchase price by previously-owned shares of Stock through the attestation
method, the number of shares of Stock transferred to the optionee upon the
exercise of the Stock Option shall be net of the number of shares attested to.

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          (v) ANNUAL LIMIT ON INCENTIVE STOCK OPTIONS. To the extent required
       for "incentive stock option" treatment under Section 422 of the Code, the
       aggregate Fair Market Value (determined as of the time of grant) of the
       shares of Stock with respect to which Incentive Stock Options granted
       under this Plan and any other plan of the Company or any of its
       subsidiary corporations become exercisable for the first time by an
       optionee during any calendar year shall not exceed $100,000. To the
       extent that any Stock Option exceeds this limit, it shall constitute a
       Non-Qualified Stock Option.

       (b) RELOAD OPTIONS. At the discretion of the Administrator, Options
granted under the Plan may include a "reload" feature pursuant to which an
optionee exercising an option by the delivery of a number of shares of Stock in
accordance with Section 5(a)(iv)(B) hereof would automatically be granted an
additional Option (with an exercise price equal to the Fair Market Value of the
Stock on the date the additional Option is granted and with such other terms as
the Administrator may provide) to purchase that number of shares of Stock equal
to the sum of (i) the number delivered to exercise the original Option and (ii)
the number withheld to satisfy tax liabilities, with an Option term equal to the
remainder of the original Option term unless the Administrator otherwise
determines in the Award agreement for the original Option grant.

       (c) STOCK OPTIONS GRANTED TO INDEPENDENT DIRECTORS. Each Independent
Director who is serving as Director of the Company on the fifth business day
after each annual meeting of shareholders, beginning with the 2000 annual
meeting, shall automatically be granted on such day a Non-Qualified Stock Option
to acquire 2,500 shares of Stock. The exercise price per share for the Stock
covered by a Stock Option granted under this Section 5(c) shall be equal to the
Fair Market Value of the Stock on the date the Stock Option is granted. The
Board, in its discretion, may grant additional Non-Qualified Stock Options to
one or more Independent Directors in recognition of past or expected future
performance of extraordinary duties or responsibilities by such Independent
Directors. Any such grant may vary among individual Independent Directors. In
the event an Independent Director first becomes a Director within eleven months
after any annual meeting, then the Administrator may grant such Independent
Director a Non-Qualified Stock Option to acquire a portion of 2,500 shares of
Stock based on the number of Director meetings such Independent Director is
expected to attend during the annual period ending on the annual meeting next
following the date such Independent Director first becomes a Director. Unless
otherwise determined by the Administrator, an Option granted under Section 5(c)
shall be exercisable only after the first anniversary of the grant date.

       (d) NON-TRANSFERABILITY OF OPTIONS. No Stock Option shall be transferable
by the optionee otherwise than by will or by the laws of descent and
distribution and all Stock Options shall be exercisable, during the optionee's
lifetime, only by the optionee, or by the optionee's legal representative or
guardian in the event of the optionee's incapacity. Notwithstanding the
foregoing, the Administrator, in its sole discretion, may provide in the Award
agreement regarding a given Option that the optionee may transfer his
Non-Qualified Stock Options to members of his immediate family, to trusts for
the benefit of such family members, or to partnerships in which such family
members are the only partners, provided that the transferee agrees in writing
with the Company to be bound by all of the terms and conditions of this Plan and
the applicable Option.

SECTION 6. STOCK APPRECIATION RIGHTS.

       (a) NATURE OF STOCK APPRECIATION RIGHTS. A Stock Appreciation Right is an
Award entitling the recipient to receive an amount in cash or shares of Stock or
a combination thereof having a value equal to the excess of the Fair Market
Value of the Stock on the date of exercise over the exercise price of the Stock
Appreciation Right, which price shall not be less than 85 percent of the Fair
Market Value of the Stock on the date of grant (or more than the option exercise
price per share, if the Stock Appreciation Right was granted in tandem with a
Stock Option) multiplied by the number of shares of Stock with respect to which
the Stock Appreciation Right shall have been exercised, with the Administrator
having the right to determine the form of payment.

       (b) GRANT AND EXERCISE OF STOCK APPRECIATION RIGHTS. Stock Appreciation
Rights may be granted by the Administrator in tandem with, or independently of,
any Stock Option granted pursuant to Section 5 of the Plan. In the case of a
Stock Appreciation Right granted in tandem with a Non-Qualified Stock Option,
such Stock Appreciation Right may be granted either at or after the time of the
grant of such Option. In the case of a Stock Appreciation Right granted in
tandem with an Incentive Stock Option, such Stock Appreciation Right may be
granted only at the time of the grant of the Option.

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       A Stock Appreciation Right or applicable portion thereof granted in
tandem with a Stock Option shall terminate and no longer be exercisable upon the
termination or exercise of the related Option.

       (c) TERMS AND CONDITIONS OF STOCK APPRECIATION RIGHTS. Stock Appreciation
Rights shall be subject to such terms and conditions as shall be determined from
time to time by the Administrator, subject to the following:

          (i) Stock Appreciation Rights granted in tandem with Options shall be
       exercisable at such time or times and to the extent that the related
       Stock Options shall be exercisable.

          (ii) Upon exercise of a Stock Appreciation Right, the applicable
       portion of any related Option shall be surrendered.

          (iii) All Stock Appreciation Rights shall be exercisable during the
       grantee's lifetime only by the grantee or the grantee's legal
       representative.

SECTION 7.  RESTRICTED STOCK AWARDS

       (a) NATURE OF RESTRICTED STOCK AWARDS. A Restricted Stock Award is an
Award entitling the recipient to acquire, at such purchase price as determined
by the Administrator, shares of Stock subject to such restrictions and
conditions as the Administrator may determine at the time of grant ("Restricted
Stock"). Conditions may be based on continuing employment (or other service
relationship) and/or achievement of pre-established performance goals and
objectives. The grant of a Restricted Stock Award is contingent on the grantee
executing the Restricted Stock Award agreement. The terms and conditions of each
such agreement shall be determined by the Administrator, and such terms and
conditions may differ among individual Awards and grantees.

       (b) RIGHTS AS A STOCKHOLDER. Upon execution of a written instrument
setting forth the Restricted Stock Award and payment of any applicable purchase
price, a grantee shall have the rights of a stockholder with respect to the
voting of the Restricted Stock, subject to such conditions contained in the
written instrument evidencing the Restricted Stock Award. Unless the
Administrator shall otherwise determine, certificates evidencing the Restricted
Stock shall remain in the possession of the Company until such Restricted Stock
is vested as provided in Section 7(d) below, and the grantee shall be required,
as a condition of the grant, to deliver to the Company a stock power endorsed in
blank.

       (c) RESTRICTIONS. Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of except as
specifically provided herein or in the Restricted Stock Award agreement. If a
grantee's employment (or other service relationship) with the Company and its
Subsidiaries terminates for any reason, the Company shall have the right to
repurchase Restricted Stock that has not vested at the time of termination at
its original purchase price, from the grantee or the grantee's legal
representative.

       (d) VESTING OF RESTRICTED STOCK. The Administrator at the time of grant
shall specify the date or dates and/or the attainment of pre-established
performance goals, objectives and other conditions on which the
non-transferability of the Restricted Stock and the Company's right of
repurchase or forfeiture shall lapse. Subsequent to such date or dates and/or
the attainment of such pre-established performance goals, objectives and other
conditions, the shares on which all restrictions have lapsed shall no longer be
Restricted Stock and shall be deemed "vested." Except as may otherwise be
provided by the Administrator either in the Award agreement or, subject to
Section 14 below, in writing after the Award agreement is issued, a grantee's
rights in any shares of Restricted Stock that have not vested shall
automatically terminate upon the grantee's termination of employment (or other
service relationship) with the Company and its Subsidiaries and such shares
shall be subject to the Company's right of repurchase as provided in Section
7(c) above.

       (e) WAIVER, DEFERRAL AND REINVESTMENT OF DIVIDENDS. The Restricted Stock
Award agreement may require or permit the immediate payment, waiver, deferral or
investment of dividends paid on the Restricted Stock.

SECTION 8.  DEFERRED STOCK AWARDS

       (a) NATURE OF DEFERRED STOCK AWARDS. A Deferred Stock Award is an Award
of phantom stock units to a grantee, subject to restrictions and conditions as
the Administrator may determine at the time of grant. Conditions may be based on
continuing employment (or other service relationship) and/or achievement of
pre-established performance goals and objectives. The grant of a Deferred Stock
Award is contingent on the grantee executing the Deferred Stock Award

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agreement. The terms and conditions of each such agreement shall be determined
by the Administrator, and such terms and conditions may differ among individual
Awards and grantees. At the end of the deferral period, the Deferred Stock
Award, to the extent vested, shall be paid to the grantee in the form of shares
of Stock.

       (b) ELECTION TO RECEIVE DEFERRED STOCK AWARDS IN LIEU OF COMPENSATION.
The Administrator may, in its sole discretion, permit a grantee to elect to
receive a portion of the cash compensation or Restricted Stock Award otherwise
due to such grantee in the form of a Deferred Stock Award. Any such election
shall be made in writing and shall be delivered to the Company no later than the
date specified by the Administrator and in accordance with rules and procedures
established by the Administrator. The Administrator shall have the sole right to
determine whether and under what circumstances to permit such elections and to
impose such limitations and other terms and conditions thereon as the
Administrator deems appropriate.

       (c) RIGHTS AS A STOCKHOLDER. During the deferral period, a grantee shall
have no rights as a stockholder; provided, however, that the grantee may be
credited with dividend equivalent rights with respect to the phantom stock units
underlying his Deferred Stock Award, subject to such terms and conditions as the
Administrator may determine.

       (d) RESTRICTIONS. A Deferred Stock Award may not be sold, assigned,
transferred, pledged or otherwise encumbered or disposed of during the deferral
period.

       (e) TERMINATION. Except as may otherwise be provided by the Administrator
either in the Award agreement or, subject to Section 14 below, in writing after
the Award agreement is issued, a grantee's right in all Deferred Stock Awards
that have not vested shall automatically terminate upon the grantee's
termination of employment (or cessation of service relationship) with the
Company and its Subsidiaries for any reason.

SECTION 9.  UNRESTRICTED STOCK AWARDS

       GRANT OR SALE OF UNRESTRICTED STOCK. The Administrator may, in its sole
discretion, grant (or sell at par value or such higher purchase price determined
by the Administrator) an Unrestricted Stock Award to any grantee pursuant to
which such grantee may receive shares of Stock free of any restrictions
("Unrestricted Stock") under the Plan. Unrestricted Stock Awards may be granted
in respect of past services or other valid consideration, or in lieu of cash
compensation due to such grantee.

SECTION 10.  PERFORMANCE SHARE AWARDS

       (a) NATURE OF PERFORMANCE SHARE AWARDS. A Performance Share Award is an
Award entitling the recipient to acquire shares of Stock upon the attainment of
specified performance goals. The Administrator may make Performance Share Awards
independent of or in connection with the granting of any other Award under the
Plan. The Administrator in its sole discretion shall determine whether and to
whom Performance Share Awards shall be made, the performance goals, the periods
during which performance is to be measured, and all other limitations and
conditions.

       (b) RIGHTS AS A STOCKHOLDER. A grantee receiving a Performance Share
Award shall have the rights of a stockholder only as to shares actually received
by the grantee under the Plan and not with respect to shares subject to the
Award but not actually received by the grantee. A grantee shall be entitled to
receive a stock certificate evidencing the acquisition of shares of Stock under
a Performance Share Award only upon satisfaction of all conditions specified in
the Performance Share Award agreement (or in a performance plan adopted by the
Administrator).

       (c) TERMINATION. Except as may otherwise be provided by the Administrator
either in the Award agreement or, subject to Section 14 below, in writing after
the Award agreement is issued, a grantee's rights in all Performance Share
Awards shall automatically terminate upon the grantee's termination of
employment (or cessation of service relationship) with the Company and its
Subsidiaries for any reason.

       (d) ACCELERATION, WAIVER, ETC. At any time prior to the grantee's
termination of employment (or other service relationship) by the Company and its
Subsidiaries, the Administrator may in its sole discretion accelerate, waive or,
subject to Section 14, amend any or all of the goals, restrictions or conditions
applicable to a Performance Share Award.

<PAGE>

SECTION 11.  PERFORMANCE-BASED AWARDS TO COVERED EMPLOYEES

       Notwithstanding anything to the contrary contained herein, if any
Restricted Stock Award, Deferred Stock Award or Performance Share Award granted
to a Covered Employee is intended to qualify as "Performance-based Compensation"
under Section 162(m) of the Code and the regulations promulgated thereunder (a
"Performance-based Award"), such Award shall comply with the provisions set
forth below:

       (a) PERFORMANCE CRITERIA. The performance criteria used in performance
goals governing Performance-based Awards granted to Covered Employees may
include any or all of the following: (i) the Company's return on equity, assets,
capital or investment; (ii) pre-tax or after-tax profit levels of the Company or
any Subsidiary, a division, an operating unit or a business segment of the
Company, or any combination of the foregoing; (iii) comparable store sales
results; (iv) total shareholder return; (v) changes in the market price of the
Stock; (vi) sales or market share; (vii) earnings per share; or (viii) a change
in the number of stores.

       (b) GRANT OF PERFORMANCE-BASED AWARDS. With respect to each
Performance-based Award granted to a Covered Employee, the Administrator shall
select, within the first 90 days of a Performance Cycle (or, if shorter, within
the maximum period allowed under Section 162(m) of the Code) the performance
criteria for such grant, and the achievement targets with respect to each
performance criterion (including a threshold level of performance below which no
amount will become payable with respect to such Award). Each Performance-based
Award will specify the amount payable, or the formula for determining the amount
payable, upon achievement of the various applicable performance targets. The
performance criteria established by the Administrator may be (but need not be)
different for each Performance Cycle and different goals may be applicable to
Performance-based Awards to different Covered Employees.

       (c) PAYMENT OF PERFORMANCE-BASED AWARDS. Following the completion of a
Performance Cycle, the Administrator shall meet to review and certify in writing
whether, and to what extent, the performance criteria for the Performance Cycle
have been achieved and, if so, to also calculate and certify in writing the
amount of the Performance-based Awards earned for the Performance Cycle. The
Administrator shall then determine the actual size of each Covered Employee's
Performance-based Award, and, in doing so, may reduce or eliminate the amount of
the Performance-based Award for a Covered Employee if, in its sole judgment,
such reduction or elimination is appropriate.

       (d) MAXIMUM AWARD PAYABLE. The maximum Performance-based Award payable to
any one Covered Employee under the Plan for a Performance Cycle is 500,000
Shares (subject to adjustment as provided in Section 3(b) hereof).

SECTION 12.  TAX WITHHOLDING

       (a) PAYMENT BY GRANTEE. Each grantee shall, no later than the date as of
which the value of an Award or of any Stock or other amounts received thereunder
first becomes includable in the gross income of the grantee for Federal income
tax purposes, pay to the Company, or make arrangements satisfactory to the
Administrator regarding payment of, any Federal, state, or local taxes of any
kind required by law to be withheld with respect to such income. The Company and
its Subsidiaries shall, to the extent permitted by law, have the right to deduct
any such taxes from any payment of any kind otherwise due to the grantee. The
Company's obligation to deliver stock certificates to any grantee is subject to
and conditioned on tax obligations being satisfied by the grantee.

       (b) PAYMENT IN STOCK. Subject to approval by the Administrator, a grantee
may elect to have the minimum required tax withholding obligation satisfied, in
whole or in part, by (i) authorizing the Company to withhold from shares of
Stock to be issued pursuant to any Award a number of shares with an aggregate
Fair Market Value (as of the date the withholding is effected) that would
satisfy the withholding amount due, or (ii) transferring to the Company shares
of Stock owned by the grantee with an aggregate Fair Market Value (as of the
date the withholding is effected) that would satisfy the withholding amount due.

SECTION 13.  TRANSFER, LEAVE OF ABSENCE, ETC.

       For purposes of the Plan, the following events shall not be deemed a
termination of employment:

       (a) a transfer to the employment of the Company from a Subsidiary or from
the Company to a Subsidiary, or from one Subsidiary to another; or

<PAGE>

       (b) an approved leave of absence for military service or sickness, or for
any other purpose approved by the Company, if the employee's right to
re-employment is guaranteed either by a statute or by contract or under the
policy pursuant to which the leave of absence was granted or if the
Administrator otherwise so provides in writing.

SECTION 14.  AMENDMENTS AND TERMINATION

       The Board may, at any time, amend or discontinue the Plan and the
Administrator may, at any time, amend or cancel any outstanding Award for the
purpose of satisfying changes in law or for any other lawful purpose, but no
such action shall adversely affect rights under any outstanding Award without
the holder's consent. If and to the extent determined by the Administrator to be
required by the Code to ensure that Incentive Stock Options granted under the
Plan are qualified under Section 422 of the Code or to ensure that compensation
earned under Awards qualifies as performance-based compensation under Section
162(m) of the Code, if and to the extent intended to so qualify, Plan amendments
shall be subject to approval by the Company stockholders entitled to vote at a
meeting of stockholders. Nothing in this Section 14 shall limit the
Administrator's authority to take any action permitted pursuant to Section 3(c).

SECTION 15.  STATUS OF PLAN

       With respect to the portion of any Award that has not been exercised and
any payments in cash, Stock or other consideration not received by a grantee, a
grantee shall have no rights greater than those of a general creditor of the
Company unless the Administrator shall otherwise expressly determine in
connection with any Award or Awards. In its sole discretion, the Administrator
may authorize the creation of trusts or other arrangements to meet the Company's
obligations to deliver Stock or make payments with respect to Awards hereunder,
provided that the existence of such trusts or other arrangements is consistent
with the foregoing sentence.

SECTION 16.  CHANGE OF CONTROL PROVISIONS

       Upon the occurrence of a Change of Control as defined in this Section 16:

       (a) Except as otherwise provided in the applicable Award agreement, each
outstanding Stock Option and Stock Appreciation Right shall automatically become
vested and fully exercisable.

       (b) Except as otherwise provided in the applicable Award Agreement,
conditions and restrictions on each outstanding Restricted Stock Award, Deferred
Stock Award and Performance Share Award which relate solely to the passage of
time and continued employment will be removed. Performance or other conditions
(other than conditions and restrictions relating solely to the passage of time
and continued employment) will continue to apply unless otherwise provided in
the applicable Award agreement.

       (c) "CHANGE OF CONTROL" shall have the meaning defined in each Plan
participant's employment agreement to the extent one exists, or if there is no
such employment agreement, Change of Control shall mean the occurrence of any
one of the following events:

          (i) any "PERSON," as such term is used in Sections 13(d) and 14(d) of
       the Act (other than the Company, any of its Subsidiaries, or any trustee,
       fiduciary or other person or entity holding securities under any employee
       benefit plan or trust of the Company or any of its Subsidiaries),
       together with all "affiliates" and "associates" (as such terms are
       defined in Rule 12b-2 under the Act) of such person, shall become the
       "beneficial owner" (as such term is defined in Rule 13d-3 under the Act),
       directly or indirectly, of securities of the Company representing 30
       percent or more of the combined voting power of the Company's then
       outstanding securities having the right to vote in an election of the
       Company' Board of Directors ("Voting Securities") (in such case other
       than as a result of an acquisition of securities directly from the
       Company); or

          (ii) persons who, as of the Effective Date, constitute the Company's
       Board of Directors (the "Incumbent Directors") cease for any reason,
       including, without limitation, as a result of a tender offer, proxy
       contest, merger or similar transaction, to constitute at least a majority
       of the Board, provided that any person becoming a director of the Company
       subsequent to the Effective Date shall be considered an Incumbent
       Director if such person's election was approved by or such person was
       nominated for election by either (A) a vote of at least a majority of the
       Incumbent Directors or (B) a vote of at least a majority of the Incumbent
       Directors who are members of a nominating committee comprised, in the
       majority, of Incumbent Directors; but provided further, that any such
       person whose

<PAGE>

       initial assumption of office is in connection with an actual
       or threatened election contest relating to the election of members of the
       Board of Directors or other actual or threatened solicitation of proxies
       or consents by or on behalf of a Person other than the Board, including
       by reason of agreement intended to avoid or settle any such actual or
       threatened contest or solicitation, shall not be considered an Incumbent
       Director; or

          (iii) the stockholders of the Company shall approve (A) any
       consolidation or merger of the Company where the stockholders of the
       Company, immediately prior to the consolidation or merger, would not,
       immediately after the consolidation or merger, beneficially own (as such
       term is defined in Rule 13d-3 under the Act), directly or indirectly,
       shares representing in the aggregate more than 50% of the voting shares
       of the corporation issuing cash or securities in the consolidation or
       merger (or of its ultimate parent corporation, if any), (B) any sale,
       lease, exchange or other transfer (in one transaction or a series of
       transactions contemplated or arranged by any party as a single plan) of
       all or substantially all of the assets of the Company or (C) any plan or
       proposal for the liquidation or dissolution of the Company.

SECTION 17.  GENERAL PROVISIONS

       (a) NO DISTRIBUTION; COMPLIANCE WITH LEGAL REQUIREMENTS. The
Administrator may require each person acquiring Stock pursuant to an Award to
represent to and agree with the Company in writing that such person is acquiring
the shares without a view to distribution thereof.

       No shares of Stock shall be issued pursuant to an Award until all
applicable securities law and other legal and stock exchange or similar
requirements have been satisfied. The Administrator may require the placing of
such stop-orders and restrictive legends on certificates for Stock and Awards as
it deems appropriate.

       (b) DELIVERY OF STOCK CERTIFICATES. Stock certificates to grantees under
this Plan shall be deemed delivered for all purposes when the Company or a stock
transfer agent of the Company shall have mailed such certificates in the United
States mail, addressed to the grantee, at the grantee's last known address on
file with the Company.

       (c) OTHER COMPENSATION ARRANGEMENTS; NO EMPLOYMENT RIGHTS. Nothing
contained in this Plan shall prevent the Board from adopting other or additional
compensation arrangements, including trusts, and such arrangements may be either
generally applicable or applicable only in specific cases. The adoption of this
Plan and the grant of Awards do not confer upon any employee any right to
continued employment with the Company or any Subsidiary.

       (d) LOANS TO GRANTEES. The Company shall have the authority to make loans
to grantees of Awards hereunder (including to facilitate the purchase of shares)
and shall further have the authority to issue shares for promissory notes
hereunder.

       (e) DESIGNATION OF BENEFICIARY. Each grantee to whom an Award has been
made under the Plan may designate a beneficiary or beneficiaries to exercise any
Award or receive any payment under any Award payable on or after the grantee's
death. Any such designation shall be on a form provided for that purpose by the
Administrator and shall not be effective until received by the Administrator. If
no beneficiary has been designated by a deceased grantee, or if the designated
beneficiaries have predeceased the grantee, the beneficiary shall be the
grantee' estate.

SECTION 18.  EFFECTIVE DATE OF PLAN

       This Plan shall become effective upon approval by the holders of a
majority of the votes cast at a meeting of stockholders at which a quorum is
present. Subject to such approval by the stockholders and to the requirement
that no Stock may be issued hereunder prior to such approval, Stock Options and
other Awards may be granted hereunder on and after adoption of this Plan by the
Board.

SECTION 19.  GOVERNING LAW

       This Plan and all Awards and actions taken thereunder shall be governed
by, and construed in accordance with, the laws of the Commonwealth of
Massachusetts, applied without regard to conflict of law principles.

DATE APPROVED BY BOARD OF DIRECTORS:                              March 1, 2000

DATE APPROVED BY STOCKHOLDERS:<PAGE>

                                   EXHIBIT 4.1

                             RETAINER AGREEMENT WITH

                                 HORWITZ & BEAM

                            DATED SEPTEMBER 28, 1993

<PAGE>

                                 LAW OFFICES OF
                             HORWITZ, CUTLER & BEAM
                                TWO VENTURE PLAZA
                                    SUITE 380
                            IRVINE, CALIFORNIA 92718
                                 (714) 453-0300
                                 (310) 842-8574
                               FAX: (714) 453-9416

Lawrence W. Horwitz, Esq.                              * Also Admitted in Texas
M. Richard Cutler, Esq.*
Gregory B. Beam, Esq.
Lawrence R. Bujold, Esq.
Lawrence M. Cron, Esq.
Duncan H. Taylor, Jr., Esq.

                                 October 5, 1993

Mr. Tony Shahbaz
I/OMAGIC CORPORATION
41 LaCosta Court
Laguna Beach, California 92651

         RE:      LEGAL REPRESENTATION

Dear Mr. Shahbaz:

         This is to confirm our understanding whereby you have engaged this firm
to represent you and your company with respect to the incorporation of I/OMagic
Corporation (hereinafter referred to as the "Matter"). At your request, we may
also undertake to represent you with respect to other ongoing and new matters.
California law requires lawyers to have written fee contracts with their
clients. This letter, when signed by you, will constitute the written fee
contract required by California law. In connection therewith, our understanding
and agreement is as follows:

         1. We will undertake to advise you in connection with the Matter and
any other matters you ask us to undertake. We will undertake to prepare such
documents as may be required to effect the foregoing.

         2. There can be no assurances, and we make no guarantees,
representations or warranties as to the particular results from our services and
the response and timeliness of action by any governmental official or
department.

         3. You understand that the accuracy and completeness of any document
prepared by us is dependent upon your alertness to assure that it contains all
material facts which might be important and that such documents must not contain
any misrepresentation of a material fact nor omit information necessary to make
the statements therein not misleading. To that end, you agree to review, and
confirm to us in writing that you have reviewed, all materials for their
accuracy and completeness prior to any use thereof. You also acknowledge that
this responsibility continues in the event that the materials become deficient
in this regard.

         4. We will undertake the incorporation of your corporation for a flat
rate fee of $1,500.00. Any other additional matters, will be $150.00 per hour
for partners and $125.00 per hour for associates. We will begin our
representation of you upon receipt of a retainer check in the amount of
$2,000.00. We will bill you monthly with the understanding that, except as set
forth otherwise herein, unless otherwise agreed to by us, you will pay

<PAGE>

the full amount of each statement within ten days after your receipt thereof.
Amounts past due for 30 days or more will be charged a finance charge of 18% per
annum.

         5. Except as set forth above, fees do not include incidental costs and
expenses such as copying charges, long distance telephone charges, messenger
charges, filing fees, court costs and facsimile charges. The other costs will be
billed to you or, in the case of certain expenses such as corporate filing
costs, you will be requested to provide such amounts in advance. You agree to
pay all expenses advanced by the firm and to provide expenses in advance to the
extent requested by the firm.

         6. With respect to any new matters, hourly fees do not include
incidental costs and expenses such as copying charges, long distance telephone
charges, messenger charges, and facsimile charges. These costs will be billed to
you on a monthly basis. You agree to pay all expenses advanced by the firm and
to provide expenses in advance to the extent requested by the firm.

         7. The firm reserves the right to immediately withdraw its
representation in the event that (i) we discover any misrepresentation of
information provided to us, or (ii) you and any of your affiliates engages in
any conduct or activities contrary to our advice which in our opinion would
constitute a violation of applicable law. In the event legal action is required
to collect any amounts due hereunder, you agree to pay legal fees and expenses
required to collect such amounts.

         8. We will consult with you on all major decisions and will attempt to
keep you fully informed of the status of the preparation of documents and
responses to filings, if any, as well as our recommended strategies. You should
feel free to call at any time if you have any questions or wish to discuss any
aspect of this matter.

         9. You are advised that the Firm maintains errors and omissions
insurance coverage applicable to the services to be rendered.

         10. This Agreement shall be governed by the laws of the State of
California and venue for any action hereunder shall be in Orange County,
California.

         If this letter correctly sets forth your understanding and agreement
with respect to the matters mentioned above, please execute and return one copy
of this letter.

                                       Very truly yours,

                                       HORWITZ, CUTLER & BEAM

                                       /s/  Lawrence W. Horwitz
                                       ------------------------

                                       Lawrence W. Horwitz

The undersigned hereby confirms and agrees that this letter, executed and
effective this _____ day of ______________ 1993, sets forth my understanding and
agreement.

I/O MAGIC CORPORATION

By: /s/ Tony Shahbaz
    ---------------------------
    Tony Shahbaz, President

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