<SUBMISSION>
<ACCESSION-NUMBER>0000950131-01-504344
<TYPE>S-8
<PUBLIC-DOCUMENT-COUNT>4
<FILING-DATE>20011129
<EFFECTIVENESS-DATE>20011129
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>NANOPHASE TECHNOLOGIES CORPORATION
<CIK>0000883107
<ASSIGNED-SIC>3390
<IRS-NUMBER>363687863
<STATE-OF-INCORPORATION>IL
<FISCAL-YEAR-END>1231
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>S-8
<ACT>33
<FILE-NUMBER>333-74170
<FILM-NUMBER>1802595
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>453 COMMERCE ST
<CITY>BURR RIDGE
<STATE>IL
<ZIP>60521
<PHONE>6303231200
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>453 COMMERCE STREET
<CITY>BURR RIDGE
<STATE>IL
<ZIP>60521
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>S-8
<SEQUENCE>1
<FILENAME>ds8.txt
<DESCRIPTION>FORM S-8
<TEXT>
<PAGE>

       As filed with the Securities and Exchange Commission on November 29, 2001


                                                    Registration No. 333-_______

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                      ------------------------------------
                                    FORM S-8

                             REGISTRATION STATEMENT
                        UNDER THE SECURITIES ACT OF 1933

                      ------------------------------------

                       NANOPHASE TECHNOLOGIES CORPORATION
             (Exact name of registrant as specified in its charter)

           Delaware                                         36-3687863
(State or Other Jurisdiction of                          (I.R.S. Employer
 Incorporation or Organization)                         Identification No.)

                              1319 Marquette Drive
                           Romeoville, Illinois 60446

               (Address of Principal Executive Offices) (Zip Code)

           NANOPHASE TECHNOLOGIES CORPORATION EQUITY COMPENSATION PLAN

                            (Full title of the plan)

                    JOSEPH E. CROSS, CHIEF EXECUTIVE OFFICER
                       NANOPHASE TECHNOLOGIES CORPORATION

                              1319 Marquette Drive
                           Romeoville, Illinois 60446

                     (Name and address of agent for service)

                                 (630) 771-6708

          (Telephone number, including area code, of agent for service)

<TABLE>
<CAPTION>
                                           CALCULATION OF REGISTRATION FEE
======================================================================================================================

     Title of each                                  Proposed maximum        Proposed maximum
  class of securities         Amount to be         offering price per      aggregate offering         Amount of
    to be registered          registered(1)             share(2)                price(2)           registration fee
----------------------------------------------------------------------------------------------------------------------
<S>                           <C>                  <C>                    <C>                    <C>
Common Stock ($.01 par
value)                           900,000                $6.28                 $5,652,000              $1,413.00
======================================================================================================================
</TABLE>


(1)      Pursuant to Rule 416(a) and 416(c), the number of shares being
         registered shall include (a) an indeterminate number of shares of
         common stock or common stock which may become issuable as a result of
         stock splits, stock dividends, or similar transactions in accordance
         with the anti-dilution provisions of the Equity Compensation Plan
         and (b) such indeterminate amount of interests in the plan that are
         deemed to be separate securities under the Security Act of 1933.

(2)      Estimated solely for the purpose of calculating the registration fee
         pursuant to Rule 457(c) and Rule 457(h) under the Securities Act of
         1933, as amended, on the basis of the average of the high and low
         prices reported on the Nasdaq Stock Market for the Registrant's Common
         Stock on November 28, 2001.

<PAGE>

                                     PART I

              INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS

     The document(s) containing the information specified in Part I of Form S-8
will be sent or given to participants in the Nanophase Technologies Corporation
Equity Compensation Plan (the "Plan") as specified by Rule 428(b)(1) promulgated
by the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Securities Act").

     Such document(s) are not being filed with the Commission, but constitute
(along with the documents incorporated by reference into the Registration
Statement pursuant to Item 3 of Part II hereof) a prospectus that meets the
requirements of Section 10(a) of the Securities Act.

<PAGE>
                                     PART II

               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

Item 3.   Incorporation Of Documents By Reference

     The following documents previously filed by Nanophase Technologies
Corporation (the "Company") with the Commission are incorporated by reference in
this Registration Statement:

     (a)  the Company's Annual Report on Form 10-K for the year ended December
          31, 2000 (File No. 0-22333);

     (b)  all other reports filed by the Company pursuant to Sections 13(a) or
          15(d) of the Securities Exchange Act of 1934 (the "Exchange Act")
          since the end of the fiscal year covered by the Company's Annual
          Report described in (a) above;

     (c)  the description of the Company's Common Stock contained in the
          Company's registration statement on Form S-1/A filed with the
          Commission on November 26, 1997 (file no. 333-36937), including any
          amendment or report filed for the purpose of updating such
          description.

     All documents subsequently filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, prior to the
filing of a post-effective amendment which indicates that all securities offered
hereby have been sold or which deregisters all securities then remaining unsold,
shall be deemed to be incorporated by reference into this Registration Statement
and shall be a part hereof from the date of filing of such documents. Any
statement contained herein, or in a document all or part of which is
incorporated or deemed to be incorporated by reference herein, shall be deemed
to be modified or superseded for purposes of this Registration Statement to the
extent that a statement contained herein, or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein,
modifies or supersedes such statement. Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Registration Statement.

Item 4.   Description Of Securities

         Not Applicable.

Item 5.   Interests Of Named Experts And Counsel

         Not Applicable.

Item 6.   Indemnification Of Officers And Directors

     Article VII of the Company's Certificate of Incorporation provides that the
company shall indemnify its directors to the full extent permitted by the
General Corporation Law of the State of Delaware and may indemnify its officers
and employees to such extent, except that the Company shall not be obligated to
indemnify any such person (i) with respect to proceedings, claims or actions
initiated or brought voluntarily by any such person and not by way of defense,
or (ii) for any amounts paid in settlement of an action indemnified against by
the Company without the prior written consent of the Company. The Company has
entered into indemnity agreements with each of its directors and its executive
officers. These agreements require the Company, among other things, to indemnify
such individuals against certain liabilities that may

<PAGE>

arise by reason of their status or service as directors or executive officers,
to advance expenses to them as they are incurred, provided that they undertake
to repay the amount advanced if it is ultimately determined by a court that they
are not entitled to indemnification, and to obtain directors' and officers'
liability insurance if available on reasonable terms.

     In addition, Article VII of the Company's Certificate of Incorporation
provides that a director of the Company shall not be personally liable to the
Company or its stockholders for monetary damages for breach of his or her
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Company or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) for willful or negligent conduct in paying dividends or
repurchasing stock out of other than lawfully available funds or (iv) for any
transaction from which the director derives an improper personal benefit.

     Reference is made to Section 145 of the General Corporation Law of the
State of Delaware which provides for indemnification or directors and officers
in certain circumstances.

     The Company maintains a directors' and officers' insurance policy which
entitles the Company to be reimbursed for certain indemnity payments it is
required or permitted to make to its directors and officers.

Item 7.    Exemption From Registration Claimed

     Not Applicable.

Item 8.    Exhibits

Exhibit No.     Description
-----------     -----------

4.1             Certificate of Incorporation of the Company (incorporated by
                reference to Exhibit 3.1 of the Company's 10-K for the year
                ended December 31, 1997).

4.2             Bylaws of the Company, as amended and restated (incorporated by
                reference to Exhibit 3.2 of the Company's Annual Report on Form
                10-K for the year ended December 31, 1997).

4.3             2001 Nanophase Technologies Corporation Equity Compensation Plan

5               Opinion of Wildman, Harrold, Allen & Dixon

23.1            Consent of Ernst & Young, LLP

23.2            Consent of Wildman, Harrold, Allen & Dixon (included in Exhibit
                5)

24              Power of Attorney (included in the signature page of the
                Registration Statement)

<PAGE>

Item 9.   Undertakings

      a.  The Company hereby undertakes to file, during any period in which
          offers or sales are being made, a post-effective amendment to this
          registration statement to include any material information with
          respect to the plan of distribution not previously disclosed in the
          registration statement or any material change to such information in
          the registration statement.

      b.  The Company hereby undertakes that, for the purpose of determining
          any liability under the Securities Act, each such post-effective
          amendment shall be deemed to be a new registration statement relating
          to the securities offered therein, and the offering of such securities
          at that time shall be deemed to be the initial bona fide offering
          thereof.

      c.  The Company hereby undertakes to remove from registration by means
          of a post-effective amendment any of the securities being registered
          which remain unsold at the termination of the offering.

      d.  The Company hereby undertakes that, for purposes of determining
          any liability under the Securities Act, each filing of the Company's
          annual report pursuant to Section 13(a) or Section 15(d) of the
          Exchange Act (and, where applicable, each filing of an employee
          benefit plan's annual report pursuant to Section 15(d) of the Exchange
          Act) that is incorporated by reference in the registration statement
          shall be deemed to be a new registration statement relating to the
          securities offered therein, and the offering of such securities at
          that time shall be deemed to be the initial bona fide offering
          thereof.

      e.  Insofar as indemnification for liabilities arising under the
          Securities Act may be permitted to directors, officers and controlling
          persons of the Company pursuant to the Delaware Corporation Law, the
          Certificate of Incorporation of the Company and the By-Laws of the
          Company, the Company has been advised that in the opinion of the
          Commission such indemnification is against public policy as expressed
          in the Securities Act and is, therefore, unenforceable. In the event
          that a claim for indemnification against such liabilities (other than
          the payment by the Company of expenses incurred or paid by a director,
          officer or controlling person of the Company in the successful defense
          of any action, suit or proceeding) is asserted by such director,
          officer or controlling person in connection with the securities being
          registered, the Company will, unless in the opinion of its counsel the
          matter has been settled by controlling precedent, submit to a court of
          appropriate jurisdiction the question of whether such indemnification
          by it is against public policy as expressed in the Securities Act and
          will be governed by the final adjudication of such issue.



<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, the Company
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Chicago, State of Illinois, on November 28, 2001.

                                 NANOPHASE TECHNOLOGIES CORPORATION

                                 By    /s/ JOSEPH E. CROSS
                                       ---------------------------
                                                Joesph E. Cross
                                       President and Chief Executive Officer

<PAGE>

                                POWER OF ATTORNEY

     KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below hereby constitutes and appoints Joseph E. Cross and Jess
Jankowski, or either of them, as his attorney-in-fact and agents, with full
power of substitution for him and in his name, place and stead, in any and all
capacities (including without limitation, as Director and/or principal Executive
Officer, principal Financial Officer, principal Accounting Officer or any other
officer of the Company), to sign and execute this Registration Statement on Form
S-8 and any amendment or amendments, including post-effective amendments
thereto, and all other documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorney-in-fact and agents full
power and authority to do and perform any and all acts and things requisite and
necessary to be done, and hereby ratifying and confirming all that said
attorney-in-fact and agent may do or cause to be done by virtue hereof.

     Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on November 28, 2001.

     Signature                     Title

By:  /s/ JOSEPH E. CROSS           President, Chief Executive Officer
    ------------------------       (Principal Executive Officer) and a Director
     Joseph E. Cross

By:  /s/ JESS JANKOWSKI            Acting Chief Financial Officer, Corporate
    ------------------------       Controller, Treasurer and Secretary
     Jess Jankowski                (Principal Financial and  Accounting Officer)


By:  /s/ DONALD S. PERKINS         Chairman of the Board and Director
    ------------------------
     Donald S. Perkins

By:  /s/ JAMES HENDERSON           Director
    ------------------------
     James Henderson

By:  /s/ JERRY PEARLMAN            Director
    ------------------------
     Jerry Pearlman

By:  /s/ JAMES A. MCCLUNG          Director
    ------------------------
     James A. McClung

By:  /s/ RICHARD W. SIEGEL         Director
    ------------------------
     Richard W. Siegel

<PAGE>

                                  EXHIBIT INDEX

Exhibit No.   Description
-----------   -----------

4.1           Certificate of Incorporation of the Company (incorporated by
              reference to Exhibit 3.1 of the Company's 10-K for the year ended
              December 31, 1997).

4.2           Bylaws of the Company, as amended and restated (incorporated by
              reference to Exhibit 3.2 of the Company's Annual Report on Form
              10-K for the year ended December 31, 1997).

4.3           2001 Nanophase Technologies Corporation Equity Compensation Plan

5             Opinion of Wildman, Harrold, Allen & Dixon

23.1          Consent of Ernst & Young, LLP

23.2          Consent of Wildman, Harrold, Allen & Dixon (included in Exhibit 5)

24            Power of Attorney (included in the signature page of the
              Registration Statement)




</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4.3
<SEQUENCE>3
<FILENAME>dex43.txt
<DESCRIPTION>2001 EQUITY COMPENSATION PLAN
<TEXT>
<PAGE>



                                                                     EXHIBIT 4.3

                       NANOPHASE TECHNOLOGIES CORPORATION
                       ----------------------------------

                            EQUITY COMPENSATION PLAN
                            ------------------------

     The purpose of the Nanophase Technologies Corporation Equity Compensation
Plan (the "Plan") is to provide (i) designated employees of Nanophase
Technologies Corporation (the "Company") and its subsidiaries, (ii) certain
advisors who perform services for the Company or its subsidiaries and (iii)
non-employee members of the Board of Directors of the Company (the "Board") with
the opportunity to receive grants of incentive stock options, non-qualified
options, share appreciation rights, dividend equivalent rights and cash awards.
The Company believes that the Plan will encourage the participants to contribute
materially to the growth of the Company, thereby benefiting the Company's
shareholders, and will align the economic interests of the participants with
those of the shareholders.

I.   ADMINISTRATION OF THE PLAN
     --------------------------

     A.   Administration.

          i.    Committee. The Plan shall be administered and interpreted by a
          committee appointed by the Board (the "Committee"). The Committee
          shall consist of three or more persons appointed by the Board, all of
          whom shall be "outside directors" as defined under Section 162(m) of
          the Internal Revenue Code of 1986, as amended (the "Code"), and
          related Treasury regulations and shall be "non-employee directors" as
          defined under Rule 16b-3 promulgated under the Securities Exchange Act
          of 1934, as amended (the "Exchange Act").

          ii.   Committee Authority. The Committee shall have the sole authority
          to (i) determine the individuals to whom grants shall be made under
          the Plan, (ii) determine the type, size and terms of the grants to be
          made to each such individual, (iii) determine the time when the grants
          will be made and the duration of any applicable exercise or
          restriction period, including the criteria for exercisability and the
          acceleration of exercisability, and (iv) make all determinations with
          respect to any other matters arising under the Plan. The Committee may
          delegate the authority to make grants in the ordinary course during
          the periods between regularly scheduled meetings of the Committee;
          provided, however, grants in excess of 5,000 shares or grants with
          non-standard terms shall be made subject to Committee approval.

          iii.  Committee Determinations. The Committee shall have full power
          and authority to administer and interpret the Plan, to make factual
          determinations, and to adopt or amend such rules, regulations,
          agreements and instruments for implementing the Plan and for the
          conduct of its business as it deems necessary or advisable, in its
          sole discretion. The Committee's interpretations of the Plan and all
          determinations made by the Committee pursuant to the powers vested in
          it hereunder shall be conclusive and binding on all persons having any
          interest in

<PAGE>

               the Plan or in any awards granted hereunder. All powers of the
               Committee shall be executed in its sole discretion, in the best
               interest of the Company, not as a fiduciary, and in keeping with
               the objectives of the Plan. Determinations made by the Committee
               under the Plan need not be uniform as to similarly situated
               individuals.

          B.   Grants. Awards under the Plan may consist of grants of (i)
          incentive stock options as described in Section 2.1 ("Incentive Stock
          Options"), (ii) non-qualified options as described in Section 2.1
          ("Non-qualified Options") (Incentive Stock Options and Non-qualified
          Options are collectively referred to as "Options"), (iii) stock
          appreciation rights as described in Section 2.2 ("SARs"), (iv)
          dividend equivalent rights as described in Section 2.3 ("Dividend
          Equivalent Rights") and (v) cash awards as described in Section 2.4
          ("Cash Awards") (hereinafter collectively referred to as "Grants").
          All Grants shall be subject to the terms and conditions set forth
          herein and to such other terms and conditions consistent with the Plan
          as the Committee deems appropriate and as are specified in writing by
          the Committee to the individual in a grant instrument (the "Grant
          Instrument") or an amendment to the Grant Instrument. The Committee
          shall approve the form and provisions of each Grant Instrument. Grants
          under a particular Section of the Plan need not be uniform as among
          the grant recipients (the "Grantees").

          C.   Shares Subject to the Plan.

               i.   Shares Authorized. For purposes of the Plan, a "Share" means
               one share of common stock of the Company, par value $0.01 per
               share. Subject to adjustments as provided in Section 1.3(b)
               below, the aggregate number of Shares available for Grants under
               the Plan shall be 900,000 Shares.

          Subject to adjustments as provided in Section 1.3(b) below, the
maximum aggregate number of Shares that shall be subject to Grants made under
the Plan during any calendar year shall be 400,000 Shares.

          The maximum aggregate number of Shares that shall be subject to Grants
made under the Plan to any individual during any calendar year shall be equal to
one percent (1.0%) of the sum of the total amount of the Company's outstanding
Shares on December 31 of the prior year plus the total number of outstanding
options to purchase Shares granted under the Plan and under the Prior Plan
outstanding on December 31 of the prior year.

          The Shares may be authorized but unissued Shares or reacquired Shares,
including Shares purchased by the Company on the open market for purposes of the
Plan. If and to the extent Options or SARs granted under the Plan terminate,
expire, or are canceled, forfeited, exchanged or surrendered without having been
exercised, or if any Dividend Equivalent Rights are forfeited, the Shares
subject to such Grants shall again be available for purposes of the Plan.

               ii.  Adjustments for Significant Events. If there is any change
               in the number or kind of outstanding Shares (i) by reason of a
               dividend, spin-off, recapitalization, split or combination or
               exchange of Shares, (ii) by reason of a merger, reorganization or
               consolidation in which the Company is the surviving

<PAGE>

          corporation, (iii) by reason of a reclassification or change in par
          value, or (iv) by reason of any other extraordinary or unusual event
          affecting the outstanding Shares of the Company as a class without the
          Company's receipt of consideration, or if the value of outstanding
          Shares is substantially reduced as a result of a spin-off or the
          Company's payment of an extraordinary dividend or distribution, the
          maximum number of Shares available for Grants, the maximum number of
          Shares that any individual participating in the Plan may be granted in
          any year, the number of Shares covered by outstanding Grants, the kind
          of Shares issued under the Plan, and the price per Share or the
          applicable market value of such Grants may be appropriately adjusted
          by the Committee to reflect any increase or decrease in the number of,
          or change in the kind or value of, issued Shares to preclude, to the
          extent practicable, the enlargement or dilution of rights and benefits
          under such Grants; provided, however, that any fractional Shares
          resulting from such adjustment shall be eliminated. Any adjustments
          determined by the Committee shall be final, binding and conclusive.

     D.   Eligibility for Participation.

          i.   Eligible Persons. All employees of the Company, its parents and
          its subsidiaries ("Employees"), including Employees who are officers
          or members of the Board, and members of the Board who are not
          Employees ("Non-Employee Directors") shall be eligible to participate
          in the Plan. Advisors who perform services to the Company or any of
          its parents or its subsidiaries ("Key Advisors") shall be eligible to
          participate in the Plan if the Key Advisors render bona fide services
          and such services are not in connection with the offer or sale of
          securities in a capital-raising transaction.

          ii.  Selection of Grantees. The Committee shall select the Employees,
          Non-Employee Directors and Key Advisors to receive Grants and shall
          determine the number of Shares subject to a particular Grant in such
          manner as the Committee determines.

     E.   Limitation on Grants Prior to January 1, 2002. Notwithstanding
     anything in the Plan to the contrary, the Committee shall not make any
     Grants to Employees or Key Advisors prior to January 1, 2002.

II.  EQUITY INCENTIVE GRANTS
     -----------------------

     F.   Options.

          i. Number of Shares. The Committee shall determine the number of
          Shares that will be subject to each Grant of Options to Employees,
          Non-Employee Directors and Key Advisors.

          ii. Type of Option and Price.

              1. The Committee may grant Incentive Stock Options that are
              intended to qualify as "incentive stock options" within the
              meaning of

<PAGE>

          Section 422 of the Code or Non-qualified Options that are not intended
          so to qualify or any combination of Incentive Stock Options and
          Non-qualified Options, all in accordance with the terms and conditions
          set forth herein. Incentive Stock Options may be granted only to
          Employees. Non-qualified Options may be granted to Employees,
          Non-Employee Directors and Key Advisors.

          2.  The purchase price (the "Exercise Price") of Shares subject to an
          Option shall be determined by the Committee and may be equal to, or
          greater than, the Fair Market Value (as defined below) of a Share on
          the date the Option is granted; provided, however, that (x) the
          Exercise Price of an Incentive Stock Option shall be equal to, or
          greater than, the Fair Market Value of a Share on the date the
          Incentive Stock Option is granted and (y) an Incentive Stock Option
          may not be granted to an Employee who, at the time of grant, owns
          Shares possessing more than 10 percent of the total combined voting
          power of all Shares and other classes of stock of the Company or any
          parent or subsidiary of the Company, unless the Exercise Price per
          Share is not less than 110% of the Fair Market Value of a Share on the
          date of grant.

          3.  If the Shares are publicly traded, then the Fair Market Value per
          Share shall be determined as follows: (x) if the principal trading
          market for the Shares is a national securities exchange or the Nasdaq
          National Market, the last reported sale price thereof on the preceding
          date or, if there were no trades on that date, the latest preceding
          date upon which a sale was reported, or (y) if the Shares are not
          principally traded on such exchange or market, the mean between the
          last reported "bid" and "asked" prices of a Share on the preceding
          date, as reported on Nasdaq or, if not so reported, as reported by the
          National Daily Quotation Bureau, Inc. or as reported in a customary
          financial reporting service, as applicable and as the Committee
          determines. If the Shares are not publicly traded or, if publicly
          traded, are not subject to reported transactions or "bid" or "asked"
          quotations as set forth above, the Fair Market Value per Share shall
          be as determined in good faith by the Committee; provided that, if the
          Shares are publicly traded, the Committee may make such discretionary
          determinations where the Shares have not been traded for 10 trading
          days.

     iii. Option Term. The Committee shall determine the term of each Option.
     The term of any Option shall not exceed ten years from the date of grant.
     However, an Incentive Stock Option that is granted to an Employee who, at
     the time of grant, owns Shares possessing more than 10 percent of the total
     combined voting power of all Shares and other classes of stock of the
     Company, or any parent or subsidiary of the Company, may not have a term
     that exceeds five years from the date of grant.

     iv.  Vesting and Exercisability of Options.

<PAGE>

               1.  Vesting. Options shall vest in accordance with such terms and
               conditions as may be determined by the Committee and specified in
               the Grant Instrument or an amendment to the Grant Instrument. The
               Committee may accelerate the vesting of any or all outstanding
               Options at any time for any reason.

               2.  Exercisability. Notwithstanding the foregoing, the Option
               may, but need not, include a provision whereby the Grantee may
               elect at any time while an Employee, Non-Employee Director or Key
               Advisor to exercise the Option as to any part or all of the
               Shares subject to the Option prior to the full vesting of the
               Option. Any unvested Shares so purchased shall be subject to a
               repurchase right in favor of the Company, with the repurchase
               price to be equal to the lesser of (x) the original purchase
               price or (y) the Fair Market Value of the Shares on the date of
               such repurchase, or to any other restriction the Committee
               determines to be appropriate.

          v.   Termination of Employment, Disability or Death.

               1.  Except as provided below and subject to the provisions of the
               Grant Instrument, an Option may only be exercised while the
               Grantee is an Employee, Key Advisor or member of the Board. In
               the event that a Grantee has a Termination of Service (as defined
               below) for any reason other than Disability (as defined below),
               death or Cause (as defined below), any Option which is otherwise
               exercisable by the Grantee shall terminate unless exercised
               within 90 days after the date of such termination (or within such
               other period of time as may be specified by the Committee), but
               in any event no later than the date of expiration of the Option
               term. Any of the Grantee's Options that are not otherwise
               exercisable as of the date on which the Grantee has such a
               Termination of Service shall terminate as of such date.

               2.  In the event the Grantee has a Termination of Service on
               account of a termination for Cause by the Company, unless
               otherwise determined by the Committee (x) any Option held by the
               Grantee shall terminate a as of the date of such Termination of
               Service and (y) the Grantee shall automatically forfeit all
               Shares underlying any exercised portion of an Option for which
               the Company has not yet delivered the certificates, upon refund
               by the Company of the Exercise Price paid by the Grantee for such
               Shares.

               3.  In the event the Grantee has a Termination of Service on
               account of Disability, any Option which is otherwise exercisable
               by the Grantee shall terminate unless exercised within one year
               after the date of such Termination of Service (or within such
               other period of time as may be specified by the Committee), but
               in any event no later than the date of expiration of the Option
               term. Unless provided otherwise in the applicable Grant
               Instrument, any of the Grantee's Options which are not otherwise

<PAGE>

                    exercisable as of the date of such Termination of Service
                    shall terminate as of such date.

                    4. If the Grantee dies while an Employee, Key Advisor or
                    member of the Board or within 90 days after the date on
                    which the Grantee has a Termination of Service specified in
                    Section 2.1(e)(i) above (or within such other period of time
                    as may be specified by the Committee), any Option that is
                    otherwise exercisable by the Grantee shall terminate unless
                    exercised within one year after the date of such death or
                    Termination of Service (or within such other period of time
                    as may be specified by the Committee), but in any event no
                    later than the date of expiration of the Option term. Unless
                    provided otherwise in the applicable Grant Instrument, any
                    of the Grantee's Options that are not otherwise exercisable
                    as of the date shall terminate as of such date.

                    5. For purposes of the Plan:

                       a.) "Cause" shall mean, except to the extent specified
                       otherwise by the Committee, a finding by the Committee
                       that (1) the Grantee has breached his or her employment,
                       service, noncompetition, nonsolicitation or other similar
                       contract with the Company or its parent and subsidiary
                       corporations, (2) has been engaged in disloyalty to the
                       Company or its parent and subsidiary corporations,
                       including, without limitation, fraud, embezzlement,
                       theft, commission of a felony or dishonesty in the course
                       of his or her employment or service, (3) has disclosed
                       trade secrets or confidential information of the Company
                       or its parents and subsidiary corporations to persons not
                       entitled to receive such information or (4) has entered
                       into competition with the Company or its parent or
                       Subsidiary Corporations. Notwithstanding the foregoing,
                       if the Grantee has an employment agreement with the
                       Company defining "Cause," then such definition shall
                       supersede the foregoing definition.

                       b.) "Disability" shall mean a Grantee's becoming disabled
                       within the meaning of Section 22(e)(3) of the Code.
                       Notwithstanding the foregoing, if the Grantee has an
                       employment agreement with the Company defining
                       "Disability," then such definition shall supersede the
                       foregoing definition.

                       c.) "Termination of Service" shall mean a Grantee's
                       termination of employment or service as an Employee, Key
                       Advisor or member of the Board (so that, for purposes of
                       the Plan, cessation of service as an Employee, Key
                       Advisor and member of the Board shall not be treated as a
                       Termination of Service if the Grantee continues without
                       interruption to serve thereafter in

<PAGE>

                    another one (or more) of such other capacities) unless the
                    Committee determines otherwise.

          vi.  Exercise of Options. A Grantee may exercise an Option that has
          become exercisable, in whole or in part, by delivering a notice of
          exercise to the Company with payment of the Exercise Price. The
          Grantee shall pay the Exercise Price for an Option as specified by the
          Committee (x) in cash, (y) by delivering Shares owned by the Grantee
          for the period necessary to avoid a charge to the Company's earnings
          for financial reporting purposes and to avoid adverse accounting
          consequences to the Company (including Shares acquired in connection
          with the exercise of an Option, subject to such restrictions as the
          Committee deems appropriate) and having a Fair Market Value on the
          date of exercise equal to the Exercise Price, or (z) by such other
          method as the Committee may approve, including payment through a
          broker in accordance with procedures permitted by Regulation T of the
          Federal Reserve Board; provided, that, for purposes of assisting a
          Grantee to exercise an Option, the Company may make loans to the
          Grantee or guarantee loans made by third parties to the Grantee, on
          such terms and conditions as the Committee may authorize. The Grantee
          shall pay the Exercise Price at the time of exercise and shall satisfy
          the withholding tax requirements of Section 3.1.

          vii. Limits on Incentive Stock Options. Each Incentive Stock Option
          shall provide that, if the aggregate Fair Market Value of the Shares
          on the date of the grant with respect to which Incentive Stock Options
          are exercisable for the first time by a Grantee during any calendar
          year, under the Plan and any other equity compensation plan of the
          Company or a parent or subsidiary, exceeds $100,000, then the option,
          as to the excess, shall be treated as a Non-qualified Option. No
          Incentive Stock Option shall be granted to any person who is not an
          Employee of the Company or a parent or subsidiary of the Company
          (within the meaning of Section 424(f) of the Code).

     G.   Stock Appreciation Rights.

          i.   General Requirements. The Committee may grant SARs to an
          Emplohyee, Non-Employee Director or Key Advisor separately from or in
          tandem with any Option (for all or a portion of the applicable
          Option). Tandem SARs may be granted either at the time the Option is
          granted or at any time thereafter while the Option remains
          outstanding; provided, however, that, in the case of an Incentive
          Stock Option, SARs may be granted only at the time of the grant of the
          Incentive Stock Option. The Committee shall establish the base amount
          of the SAR at the time the SAR is granted. Unless the Committee
          determines otherwise, the base amount of each SAR shall be equal to
          the per Share Exercise Price of the related Option or, if there is no
          related Option, the Fair Market Value of a Share as of the date of
          grant of the SAR.

          ii.  Tandem SARs. In the case of tandem SARs, the number of SARs
          granted to a Grantee that shall be exercisable during a specified
          period shall not



<PAGE>

              exceed the number of Shares that the Grantee may purchase upon the
              exercise of the related Option during such period. Upon the
              exercise of an Option, the SARs relating to the Shares covered by
              such Option shall terminate. Upon the exercise of SARs, the
              related Option shall terminate to the extent of an equal number of
              Shares.

              iii. Exercisability. A SAR shall be exercisable during the period
              specified by the Committee in the Grant Instrument and shall be
              subject to such vesting and other restrictions as may be specified
              in the Grant Instrument. The Committee may accelerate the
              exercisability of any or all outstanding SARs at any time for any
              reason. SARs may only be exercised while the Grantee is as an
              Employee, Key Advisor or member of the Board or during the
              applicable period after Termination of Service as described in
              Section 2.1(e). A tandem SAR shall be exercisable only during the
              period when the Option to which it is related is also exercisable.
              No SAR may be exercised for cash by an executive officer or
              director of the Company or any of its subsidiaries who is subject
              to Section 16 of the Exchange Act, except in accordance with Rule
              16b-3 under the Exchange Act.

              iv.  Value of SARs. When a Grantee exercises an SAR, the Grantee
              shall receive in settlement of such SAR an amount, payable in
              cash, Shares or a combination thereof equal to the amount by which
              the Fair Market Value of a Share on the date of exercise of the
              SAR exceeds the base amount of the SAR as described in Section
              2.2(a).

              v.   Form of Payment. The Committee shall determine whether the
              appreciation in an SAR shall be paid in the form of cash, Shares,
              or a combination of the two, in such proportion as the Committee
              deems appropriate.

For purposes of calculating the number of Shares to be received, Shares shall be
valued at their Fair Market Value on the date of exercise of the SAR. If Shares
are to be received upon exercise of a SAR, cash shall be delivered in lieu of
any fractional Share.

          H.  Dividend Equivalent Rights.

              i.   General Requirements. The Committee may grant Dividend
              Equivalent Rights to Employees, Non-Employee Directors and Key
              Advisors. Each Dividend Equivalent Right shall represent the right
              to receive, either credits for or payments of, amounts based on
              the dividends declared on Shares, to be credited or paid as of the
              dividend payment dates, during the term of the Dividend Equivalent
              Right as determined by the Committee. With respect to Dividend
              Equivalent Rights granted with respect to Options intended to be
              qualified performance-based compensation for purposes of Section
              162(m) of the Code, such Dividend Equivalent Rights shall be
              payable regardless of whether such Option is exercised.

              ii.  Certain Terms. Unless otherwise determined by the Committee,
              a Dividend Equivalent Right is exercisable or payable only while
              the Grantee is an




<PAGE>

     Employee, member of the Board or Key Advisor. Payment of the amount
     determined in accordance with Section 2.3(a) shall be in cash, in Shares or
     a combination of the two, as determined by the Committee. The Committee may
     impose such other terms conditions on the grant of a Dividend Equivalent
     Right as it deems appropriate in its discretion as reflected by the terms
     of the Grant Instrument.

     iii. Dividend Equivalent Right with Other Grants. The Committee may
     establish a program under which Dividend Equivalent Rights may be granted
     in conjunction with other Grants. For example, and without limitation, the
     Committee may grant a Dividend Equivalent Right in respect of each Share
     subject to an Option which right would consist of the right to receive a
     cash payment in an amount equal to the dividend distributions paid on a
     Share from time to time.

     iv.  Deferral. The Committee may establish a program under which the
     payments with respect to Dividend Equivalent Rights may be deferred. Such
     program may include, without limitation, provisions for the crediting of
     earnings and losses on unpaid amounts, and, if permitted by the Committee,
     provisions under which Grantees may select from among hypothetical
     investment alternatives for such deferred amounts in accordance with
     procedures established by the Committee.

I.   Cash Awards. The Committee may grant Cash Awards to Employees, Non-Employee
Directors and Key Advisors. The cash payment due upon settlement of a Cash Award
shall be based on the attainment of performance goals and shall be subject to
such other conditions, restrictions and contingencies as the Committee shall
determine as reflected by the terms of the Grant Instrument. If Cash Awards are
granted pursuant to this Section 2.4, the maximum amount that may be paid to an
Employee, Non-Employee Director or Key Advisor under such Cash Awards during any
calendar year shall not exceed the amounts allowable under applicable law.

J.   Qualified Performance-Based Compensation.

     i.   Designation as Qualified Performance-Based Compensation. The Committee
     may determine that Cash Awards granted to an Employee shall be considered
     "qualified performance-based compensation" under Section 162(m) of the
     Code. The provisions of this Section 2.5 shall apply to Grants of Cash
     Awards that are intended to be "qualified performance-based compensation"
     under Section 162(m) of the Code.

     ii.  Performance Period and Performance Goals. When Cash Awards are granted
     as "qualified performance-based compensation," the Committee shall
     establish the performance period during which performance shall be measured
     (the "Performance Period"), performance goals applicable to such Cash Award
     ("Performance Goals"), if any, and such other conditions of the Grant as
     the Committee deems appropriate. Performance Goals may relate to the
     financial




<PAGE>

          performance of the Company or its operating units, the performance of
          Shares, individual performance, or such other criteria as the
          Committee deems appropriate.

          iii. Performance Goals. When Cash Awards that are intended to be
          "qualified performance-based compensation" are granted, the Committee
          shall establish in writing (i) the objective performance goals that
          must be met in order for amounts to be paid under the Cash Awards,
          (ii) the Performance Period during which the performance goals must be
          met, (iii) the threshold, target and maximum amounts that may be paid
          if the performance goals are met, and (iv) any other conditions,
          including without limitation provisions relating to death, Disability,
          other Termination of Service or Reorganization, that the Committee
          deems appropriate and consistent with the Plan and Section 162(m) of
          the Code and the Treasury regulations thereunder. The performance
          goals may relate to the Employee's individual performance or the
          performance of the Company and its subsidiaries as a whole, or any
          combination of the foregoing. The Committee shall use objectively
          determinable performance goals based on one or more of the following
          criteria: Share price, earnings per Share, net earnings, operating
          earnings, return on assets, shareholder return, return on equity,
          growth in assets, share volume, sales, market share, or strategic
          business criteria consisting of one or more objectives based on
          meeting specific revenue goals, market penetration goals, geographic
          business expansion goals, cost targets or goals relating to
          acquisitions or divestitures.

          iv.  Establishment of Goals. The Committee shall establish the
          performance goals in accordance with Section 2.5(b) in writing either
          before the beginning of the Performance Period or during a period
          ending no later than the earlier of (i) 90 days after the beginning of
          the Performance Period or (ii) the date on which 25% of the
          Performance Period has been completed, or such other date as may be
          required or permitted under applicable regulations under Section
          162(m) of the Code. The Performance Goals shall satisfy the
          requirements for "qualified performance-based compensation," including
          the requirement that the achievement of the goals be substantially
          uncertain at the time they are established and that the goals be
          established in such a way that a third party with knowledge of the
          relevant facts could determine whether and to what extent the
          performance goals had been met. The Committee shall not have
          discretion to increase the amount of compensation that is payable upon
          achievement of the designated performance goals.

          v.   Performance Certification. The Committee shall certify and
          announce the results for each Performance Period to all Grantees
          immediately immediately following the announcement of the Company's
          financial results for the Performance Period. If and to the extent
          that the Committee does not certify that the performance goals have
          been met, the grants of Cash Awards made pursuant to this Section 2.5
          for the Performance Period shall be forfeited.

<PAGE>

III.      GENERAL MATTERS
          ---------------

          K.   Withholding of Taxes. The Company shall be entitled to withhold
          from any payments or deemed payments any amount of tax withholding
          (including all federal, state and local taxes) determined by the
          Committee to be required by law. Without limiting the generality of
          the foregoing, the Committee may, in its discretion, require the
          Grantee to pay to the Company at such time as the Committee determines
          the amount that the Committee deems necessary to satisfy the Company's
          obligation to withhold federal, state or local income or other taxes
          incurred by reason of (i) the exercise of any Option or SAR, (ii) the
          receipt of a payment in respect of Dividend Equivalent Rights or Cash
          Awards or (iii) any other applicable income recognition event (for
          example, an election under Section 83(b) of the Code). Notwithstanding
          anything contained in the Plan to the contrary, the Grantee's
          satisfaction of any tax-withholding requirements imposed by the
          Committee shall be a condition precedent to the Company's obligation
          as may otherwise be provided hereunder to provide Shares to the
          Grantee and to the release of any restrictions as may otherwise be
          provided hereunder, as applicable; and the applicable options, SARs or
          Dividend Equivalent Rights shall be forfeited upon the failure of the
          Grantee to satisfy such requirements with respect to, as applicable,
          (i) the exercise of the option or SAR or (ii) payments in respect of
          any Dividend Equivalent Right.

          L.   Transferability of Grants.

               i.  In General. Except as provided in Section 3.2(b), only the
               Grantee may exercise rights under a Grant during the Grantee's
               lifetime. A Grantee may not transfer those rights except by will
               or by the laws of descent and distribution. When a Grantee dies,
               the personal representative or other person entitled to succeed
               to the rights of the Grantee ("Successor Grantee") may exercise
               such rights in accordance with the terms of the Plan. A Successor
               Grantee must furnish proof satisfactory to the Company of his or
               her right to receive the Grant under the Grantee's will or under
               the applicable laws of descent and distribution.

               ii. Transfer of Non-qualified Options. Notwithstanding the
               foregoing, the Committee may provide in a Grant Instrument that a
               Grantee may transfer Non-qualified Options to family members or
               other persons or entities according to such terms as the
               Committee may determine where the Committee determines that such
               transferability does not result in accelerated federal income
               taxation; provided that the Grantee receives no consideration for
               the transfer of an Option and the transferred Option shall
               continue to be subject to the same terms and conditions as were
               applicable to the Option immediately before the transfer.

          M.   Reorganization or Change in Control of the Company.

               i.  Definitions.

                   1. As used herein, a "Reorganization" shall be deemed to have
                   occurred if the shareholders of the Company approve (or, if
                   shareholder approval is not required, the Board approves) an
                   agreement providing for



<PAGE>



                    (i) the merger or consolidation of the Company with another
                    corporation where the shareholders of the Company,
                    immediately prior to the merger or consolidation, will not
                    beneficially own, immediately after the merger or
                    consolidation, Shares entitling such shareholders to more
                    than 50% of all votes to which all shareholders of the
                    surviving corporation would be entitled in the election of
                    directors (without consideration of the rights of any class
                    of stock to elect directors by a separate class vote), (ii)
                    the sale or other disposition of all or substantially all of
                    the assets of the Company, or (iii) a liquidation or
                    dissolution of the Company.

                    2.      As used herein, a "Change of Control" shall be
                    deemed to have occurred if any "person" (as such term is
                    used in Sections 13(d) and 14(d) of the Exchange Act) or any
                    of its subsidiaries or affiliates becomes a "beneficial
                    owner" (as defined in Rule 13d-3 under the Exchange Act),
                    directly or indirectly, of securities of the Company
                    representing a majority of the voting power of the then
                    outstanding securities of the Company except where the
                    acquisition is approved by the Board.

               ii.  Assumption of Grants. Upon a Reorganization where the
               Company is not the surviving corporation (or survives only as a
               subsidiary of another corporation), all outstanding Options and
               SARs that are not exercised shall be assumed by, or replaced with
               comparable options or rights by, the surviving corporation.

               iii. Notice and Acceleration. Upon a Reorganization or a Change
               of Control, (i) the Company shall provide each Grantee with
               outstanding Grants written notice of such event and (ii) all
               outstanding Options and SARs shall automatically accelerate and
               become fully exercisable.

      N.       Requirements for Issuance or Transfer of Shares.

               i.   Shareholder's Agreement. The Committee may require that a
               Grantee execute a shareholder's agreement, with such terms as the
               Committee deems appropriate, with respect to any Shares
               distributed pursuant to the Plan.

               ii.  Limitations on Issuance or Transfer of Shares. No Shares
               shall be issued or transferred in connection with any Grant
               hereunder unless and until all legal requirements applicable to
               the issuance or transfer of such Shares have been complied with
               to the satisfaction of the Committee. The Committee shall have
               the right to condition any Grant made to any Grantee hereunder on
               such Grantee's undertaking in writing to comply with such
               restrictions on his or her subsequent disposition of such Shares
               as the Committee shall deem necessary or advisable as a result of
               any applicable law, regulation or official interpretation
               thereof, and certificates representing such Shares may be
               legended to reflect any such restrictions. Certificates
               representing Shares issued or transferred under the Plan will be
               subject to such stop-transfer orders, registration and other
               restrictions as


<PAGE>




               may be required by applicable laws, regulations and
               interpretations, including any requirement that a legend be
               placed thereon.

            O. Amendment and Termination of the Plan.

               i.    Amendment. The Board may amend or terminate the Plan at any
               time; provided that the Board may not make any amendment to the
               Plan without the approval of the shareholders, if such
               shareholder approval is required by any requirement of applicable
               law or regulation.

               ii.   Termination of Plan. The Plan shall terminate on the day
               immediately preceding the tenth anniversary of the Effective Date
               (as defined below), unless the Plan is terminated earlier by the
               Board or is extended by the Board with the approval of the
               shareholders.

               iii.  Termination and Amendment of Outstanding Grants. A
               termination or amendment of the Plan that occurs after a Grant is
               made shall not materially impair the rights of a Grantee unless
               the Grantee consents or unless the amendment is required in order
               to comply with applicable law. The termination of the Plan shall
               not impair the power and authority of the Committee with respect
               to an outstanding Grant. Whether or not the Plan has terminated,
               an outstanding Grant may be terminated or amended in accordance
               with the Plan or may be amended by agreement of the Company and
               the Grantee consistent with the Plan.

               iv.   Governing Document. The Plan shall be the controlling
               document. No other statements, representations, explanatory
               materials or examples, oral or written, may amend the Plan in any
               manner. The Plan shall be binding upon and enforceable against
               the Company and its successors and assigns.

            P. Miscellaneous.

               i.    Programs. The Committee may adopt one or more programs not
               inconsistent with this Plan pursuant to which Grants may be made
               under this Plan. Such programs shall be deemed merely programs of
               implementation of this Plan and shall not be deemed new plans.

               ii.   Funding of the Plan. The Plan shall be unfunded. The
               Company shall not be required to establish any special or
               separate fund or to make any other segregation of assets to
               assure the payment of any Grants under the Plan. Except as
               provided in Section 2.3(d) above, in no event shall interest be
               paid or accrued on any Grant, including unpaid installments of
               Grants.

               iii.  Rights of Participants. Nothing in the Plan shall entitle
               any Employee, Non-Employee Director, Key Advisor or other person
               to any claim or right to be granted a Grant under the Plan.
               Neither the Plan nor any action taken hereunder shall be
               construed as giving any individual any rights to be retained by
               or in the employ of the Company or any other employment rights.

<PAGE>
               iv.    No Fractional Shares. No fractional Shares shall be
               issued or delivered pursuant to the Plan or any Grant. The
               Committee shall determine whether cash, other awards or other
               property shall be issued or paid in lieu of such fractional
               Shares or whether such fractional Shares or any rights thereto
               shall be forfeited or otherwise eliminated.

               v.     Section Headings. Section headings are for reference only.
               In the event of a conflict between a title and the content of a
               Section, the content of the Section shall control.

               vi.    Effective Date of the Plan. Provided the Plan has been
               approved by the Company's Board of Directors, the Plan shall be
               effective on the first business day immediately following the
               Plan's approval by the Shareholders of the Company (the
               "Effective Date").

               vii.   Reporting Company. The provisions of the Plan that refer
               to the Company becoming a Reporting Company, or that refer to, or
               are applicable to persons subject to, Section 16 of the Exchange
               Act or Section 162(m) of the Code, shall be effective, if at all,
               upon the initial registration of the Shares under Section 12(g)
               of the Exchange Act, and shall remain effective thereafter for so
               long as such Shares are so registered.

               viii.  Grants in Connection with Corporate Transactions and
               Otherwise. Nothing contained in the Plan shall be construed to
               (i) limit the right of the Committee to make Grants under the
               Plan in connection with the acquisition, by purchase, lease,
               merger, consolidation or otherwise, of the business or assets of
               any corporation, firm or association, including Grants to
               employees thereof who become Employees or for other proper
               corporate purposes, or (ii) limit the right of the Company to
               grant stock options or make other awards outside of the Plan.
               Without limiting the foregoing, the Committee may make a Grant to
               an employee of another corporation who becomes an Employee by
               reason of a corporate merger, consolidation, acquisition of stock
               or property, reorganization or liquidation involving the Company
               or any of its subsidiaries in substitution for a stock option
               grant made to such employee by such corporation. The terms and
               conditions of the substitute grants may vary from the terms and
               conditions required by the Plan and from those of the substituted
               stock incentives. The Committee shall prescribe the provisions of
               the substitute grants.

               ix.    Compliance with Law. The Plan, the exercise of Options and
               SARs and the obligations of the Company to issue or transfer
               Shares under Grants shall be subject to all applicable laws and
               to approvals by any governmental or regulatory agency as may be
               required. With respect to persons subject to Section 16 of the
               Exchange Act, it is the intent of the Company that the Plan and
               all transactions under the Plan comply with all applicable
               provisions of Rule 16b-3 or its successors under the Exchange
               Act. The Committee may revoke any Grant if it is contrary to law
               or modify a Grant to bring it into compliance with any valid and

<PAGE>
               mandatory government regulation. The Committee may, in its sole
               discretion, agree to limit its authority under this Section.

               x.     Successors. All obligations of the Company under the Plan
               with respect to awards granted hereunder shall be binding on any
               successor to the Company, whether the existence of such successor
               is the result of a direct or indirect purchase, merger,
               consolidation or otherwise, of all or substantially all of the
               business or assets of the Company.

               xi.    Governing Law. The validity, construction, interpretation
               and effect of the Plan and Grant Instruments issued under the
               Plan shall exclusively be governed by and determined in
               accordance with the law of the State of Delaware.

               xii.   Transition Provisions Relating to the Prior Plan. Upon the
               effectiveness of the Plan, the Company's Amended and Restated
               1992 Stock Option Plan (the "Prior Plan") shall be deemed
               terminated subject to the provisions of Section 12(b) of the
               Prior Plan relating to the post termination effectiveness of
               grants under the Prior Plan. The Plan shall not be deemed an
               amendment or restatement of the Prior Plan. Nothing in the Plan
               shall be deemed to impair the rights of any person receiving
               grants under the Prior Plan nor shall any provision in the Plan
               shall be deemed to give any new or additional rights to any
               person receiving grants under the Prior Plan.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-5
<SEQUENCE>4
<FILENAME>dex5.txt
<DESCRIPTION>OPINION OF WILDMAN, HARROLD, ALLEN & DIXON
<TEXT>
<PAGE>

                                                                       EXHIBIT 5

                  [Wildman, Harrold, Allen & Dixon Letterhead]

Nanophase Technologies Corporation
1319 Marquette Drive
Romeoville, Illinois  60446

         Re:      Registration Statement on Form S-8

Ladies and Gentlemen:

         We have acted as counsel to Nanophase Technologies Corporation, a
Delaware corporation (the "Company"), in connection with the filing with the
Securities and Exchange Commission of a registration statement on Form S-8 (the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Act") relating to 900,000 shares (the "Shares") of the Company's common stock,
par value $.01 per share, which may be issued and sold pursuant to the Company's
Equity Compensation Plan (the "Plan").

         In connection with this opinion, we have examined and are familiar with
originals or copies, certified or otherwise identified to our satisfaction, of
(i) the Plan; (ii) the Registration Statement; (iii) the Certificate of
Incorporation, as amended, of the Company; (iv) the By-laws of the Company; and
(v) such other documents as we have deemed necessary and appropriate as a basis
for the opinion set forth below. In rendering our opinion set forth below, we
have assumed the authenticity of all documents submitted to us as originals, the
genuineness of all signatures and the conformity to authentic originals of all
documents submitted to us as copies. We have also assumed the legal capacity for
all purposes relevant hereto of all natural persons and, with respect to all
parties to agreements or instruments relevant hereto other than the Company,
that such parties had the requisite power and authority (corporate or otherwise)
to execute, deliver and perform such agreements or instruments, that such
agreements or instruments have been duly authorized by all requisite action
(corporate or otherwise), executed and delivered by such parties and that such
agreements or instruments are the valid, binding and enforceable obligations of
such parties. As to questions of fact material to our opinions, we have relied
upon certificates of officers of the Company and of public officials.

         Based upon and subject to the foregoing, we are of the opinion that the
Shares have been duly authorized and, assuming full payment is made for the
Shares, when issued pursuant to the terms of the Plan, the Shares will be
validly issued, fully paid and non-assessable.

         Our opinions expressed above are limited to the Delaware General
Corporation Law.

         We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement.

Dated:  November 29, 2001                   Very truly yours,

                                             /s/ Wildman, Harrold, Allen & Dixon



</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-23.1
<SEQUENCE>5
<FILENAME>dex231.txt
<DESCRIPTION>CONSENT OF ERNST & YOUNG, LLP
<TEXT>
<PAGE>

                                                                    EXHIBIT 23.1

                          Consent of Ernst & Young, LLP

The Board of Directors and Stockholders
Nanophase Technologies Corporation:

We consent to the incorporation by reference in the Registration Statement (Form
S-8) pertaining to the Nanophase Technologies Corporation Equity Compensation
Plan of our report dated February 2, 2001 with respect to the financial
statements and schedule of Nanophase Technologies Corporation included in its
Annual Report (Form 10-K) for the year ended December 31, 2000, filed with the
Securities and Exchange Commission.





November 28, 2001
Chicago, Illinois

                                                         /s/ ERNST & YOUNG, LLP














</TEXT>
</DOCUMENT>
</SUBMISSION>
