Billy backs out of plans with Alison to have dinner with Amanda and her father. Amanda's father declares that Billy is a worthless bum. Keith loans Alison his sports car, but she has it stolen at gunpoint. He comforts her when Billy isn't home to hear her tearful messages. Billy feels guilty about not being there for Alison. Amanda suspects that Billy is in love with Alison. He tries to disprove this by moving in with Amanda. Keith and Alison renew their relationship. She asks him to move in with her, but he later receives an unexpected job offer. Keith asks Alison to move to Seattle with him. Jake objects to ""silent partner"" Jo's attempts to help with the business. Jo takes Alison to the shooting range to try to help her overcome her fears about the carjacking, but Alison is horrified by the fact that Jo owns a gun. Jo mentions this to Jake, who is equally appalled. Jo promises to get rid of her gun. Jake apologizes for being stubborn and asks Jo to be his full partner and do

Billy and Alison's new relationship is torn apart when Amanda discovers that she is pregnant with his child. She insists that he is not obligated to take care of her, but he feels that he must take responsibility for his child. Michael breaks off his affair with Kimberly, and enlists Alison's help to arrange a meeting with Jane. He begs Jane to give him another chance, and she agrees to attend couples' therapy. Jo's nights out partying with Karen come to an end after she makes passes at both Jake and Jo.

The apartment building goes up for sale. Lucy resigns from D&D, and tells Amanda and Alison that promotions may be in their future. Amanda asks Alison to keep her pregnancy under wraps, but Alison lets it slip while out drinking with a colleague to make Billy jealous. Amanda denies the man's allegations. She later suffers a miscarriage while working late with Alison. Billy and Amanda grow closer as he consoles her, and he is torn between the two women. An unidentified individual begins harassing Alison. Keith returns to Los Angeles, completely obsessed with Alison. Michael and Jane rekindle their romance during a weekend getaway. Jo tries to dodge Jake's discussions of commitment. She is arrested for carrying a concealed weapon while working on a photo essay about the homeless. Jake is enraged to learn that she went back on her promise to get rid of the gun. Rhonda proposes to Terrence. Keith stakes out Alison's apartment, and attacks Billy from behind with a tire iron. While Billy is

Amanda's father offers Jake a high-paying job at his car restoration business. He refuses, but changes his mind after sleeping with Amanda. Jo is devastated by the news, but cheers up when Steve asks her on a date. Sydney prevents Michael from breaking up with her by threatening to expose their affair. Jane decides to take things slowly with Robert.

Jo, Alison and Billy go to Steve's ranch for the weekend. Billy is unhappy about Steve's attraction to Alison. Jo declines to sleep with Steve because she realizes that she hasn't gotten over Jake. Steve admits that he is also harboring feelings for someone, and suggests that they break up. Jo confronts Alison after deducing that she is the one for whom Steve is pining. Steve and Alison later share a kiss. Jake forms a friendship with Palmer and tries to get Amanda to open up about her childhood. Jake suspects that Palmer is engaging in fraud. Michael convinces Kimberly to stay at the hospital instead of moving back to Cleveland, and promises to remain professional.

Alison has to miss Thanksgiving dinner when Amanda sends her to San Francisco to check on the details for a presentation on Steve's account. Billy, aware that Steve will try to romance her, threatens to break up with Alison if she makes the trip. She ignores his ultimatum. A suddenly sympathetic Amanda urges Billy not to give up on Alison. He calls her room, but hangs up when Steve answers the phone. The FBI orders Jake to assist them with a sting on Palmer. Jake skips Thanksgiving dinner (or in Jo's words, ""Amanda's Thanksgiving tribute to the men in her life"") to hang out on the stairs and talk with Jo. Lauren apologizes to Sydney for misinterpreting her interest in her ""business."" She assures her that she and her girls can be her new family. Syd offers to cook Thanksgiving dinner for Jane, but gets rejected. Jane later offers Sydney a holiday truce, but Syd decides to dine with the girls. Kimberly's mother has her daughter shipped home to Cleveland.

Alison learns that Steve is leaving for Europe in a few days. He gives her a new jeep and confesses his feelings. Alison joins him for a weekend on his ranch, but suddenly dumps him because she wants to reconcile with Billy. Billy's bitterness about Alison clouds his judgment on a writing assignment. Jake forces Palmer to confess to fraud on tape. Palmer convinces Amanda that Jake set him up, so she dumps Jake and plots to evict him. Michael falls out of bed, and Sydney refuses to help him until he apologizes for his past actions. Jo rejects Jake's thinly veiled advances, but Billy and Amanda sleep together.

Billy tells Amanda that he and Alison are back together. Amanda responds by removing Alison from the Microcomp account because she was romantically involved with the client. Amanda moves forward with her plans to evict Jake, but Jo refuses to testify against him. Amanda relents when she needs Jake's help with a plumbing problem. Palmer confesses his guilt to Amanda and skips town. She goes back to Jake. Jo goes to her ten-year high school reunion and runs into Reed, an old boyfriend who has just been released from prison. He later turns up at her apartment. Michael has a breakthrough at a physical therapy session, and regains the use of his legs. Sydney is busted for prostitution. Michael bails her out and agrees to keep quiet if she helps him break up Jane and Robert.

Kimberly brings Michael home from the hospital. Sydney convinces Matt to visit her in prison, and tells him that Kimberly is setting her up. Sydney's father flies in from Chicago, but enrages his daughter by suggesting she seek a plea bargain. Matt becomes suspicious of Kimberly when he realizes that she is shielding Michael from the truth about their history. Sydney's outburst convinces Mr. Andrews that she is crazy, and he and Jane have her committed to a mental hospital. Alison and Meredith fly to Wisconsin and attempt to file charges against their father, but Meredith bails out when she realizes that the town respects Mr. Parker too much to give their story credence. Alison confronts her father in front of all the prominent townspeople at a barbecue, and pushes him into admitting his guilt. Billy is fired when Nancy learns that he helped D&D get the inside track on the Escapade account, but lands a job writing ad copy for D&D. Jake sleeps with Brittany, unaware that Palmer Woodward

Chris warns that his company will have to cancel his deal with Jane's firm if Michael does not sign off on it. Sydney calls Matt from the mental hospital and pleads with him to investigate Kimberly. Jane and Matt visit the beach house, where she bonds with Michael while Matt snoops. He discovers that Kimberly owns several wigs, then rips off her wig during a confrontation at the hospital. Sydney accepts a plea bargain after a scummy staff member propositions her, and is released into Jane's custody. Kimberly vows revenge against Matt. Palmer and Brittany continue their plot against Jake. Palmer turns up on Amanda's doorstep. Billy and Alison break up after she learns that he took a job at D&D without consulting her. Jo receives a surprise visit from Reed's parents. She reluctantly admits that Reed is the father of her child, and is shocked when the Carters sue her for custody.

Sydney (claiming to be someone named Miranda) hangs around the beach house and attempts to seduce Michael. Michael regains his memory when he is nearly struck by a car in a restaurant parking lot, but doesn't immediately reveal this. Michael leaves Sydney in an embarrassing situation in Jane's bedroom, prompting a suggestive remark from Chris. Michael confronts Kimberly and dares her to kill him, but she decides that she loves him too much to finish him off. Billy and Alison bicker constantly at the office. Jo extends an olive branch to the Carters, only to have them laugh in her face. Palmer tells Amanda that he cannot go to prison before paying off some debts, as he fears his creditors will harm her. He tells her of a secret safe deposit box and convinces her to withdraw $500,000. Palmer kidnaps Jake on the boat at gunpoint, and explains that he and Brittany are going to take the money and flee to Mexico. Brittany double-crosses Palmer, shooting him in the back. Jake discovers that t

Jake's friends (especially Jo and Amanda) are shocked to learn that the Pretty Lady has exploded. The Coast Guard finds Jake clinging for life to a buoy, and he returns to the building safely. Jo is hurt when Jake completely ignores her to visit Amanda, unaware that he is breaking the news of Palmer's death. When Jo shares her feelings with Jake, they get into a heated argument. He turns his apartment keys over to Matt and takes off on his motorcycle. Alison is disgusted when Billy begins dating their new secretary. Jane and Chris ask Sydney to seek Michael's share of the design firm in the divorce settlement, but Michael tricks her into settling for $5000.

Amanda is forced to confront her Scrooge-like behavior when Bruce appears to her in a dream and leads her in a version of The Christmas Carol. He encourages her to break free of the hold that Peter has over her. She visits Alison at the rehab center to apologize, and ensures that Bruce's children are financially secure. Terry becomes jealous after seeing Billy and Alison together, and admits his own feelings for her. Matt and Jo tell Peter that Kimberly has stolen her baby. Peter orders Michael to return the child to Jo. Kimberly goes ballistic and tries to throw herself in the ocean. After Michael saves her, she calls Mrs. Carter to tell her that her grandson is alive. Jeffrey breaks up with Matt because he needs time alone to cope with his illness. Jane convinces Syd to come home for the holidays.