STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") is entered into as of February
__, 2002, by and between Famous Fixins, Inc., a New York corporation (the
"Company"), and Xxxxx Xxxxx (the "Optionee").
R E C I T A L S
Whereas, Optionee is a valuable employee of the Company, and the Company
considers it desirable and in its best interest that the terms of options to
purchase shares of the Company's common stock (the "Common Stock") previously
granted to Optionee pursuant to an employment agreement dated as of April 12,
1999 (the "Employment Agreement") and an amended employment agreement dated as
of March 23, 2001 (the "Amended Employment Agreement") (collectively the "Xxxxx
Employment Agreements") be set forth in writing;
Whereas, Optionee was previously granted options pursuant to the Xxxxx
Employment Agreements to advance the interests of the Company ;
Whereas, the vesting criteria of the options as set forth in the Xxxxx
Employment Agreements have been satisfied;
Whereas, this Agreement supercedes any previously issued Stock Option
Agreement concerning the subject matter herein;
A G R E E M E N T
It is hereby agreed as follows:
1. GRANT OF OPTIONS. Optionee has been granted the right, privilege, and
option to purchase up to 1,500,000 shares of Common Stock at the purchase price
of $0.30 per share on the date of the Employment Agreement share (the "First
Options"), and additional options to purchase up to an additional 1,500,000
shares of Comon Stock at the purchase price of $0.03 per share pursuant to the
Amended Employment Agreement (the "Second Options") in the manner and subject to
the conditions therein provided. The time the Options shall be deemed granted,
sometimes referred to herein as the "date of grant," shall be the respective
dates of the Xxxxx Employment Agreements. These Options are cumulative and are
subject to anti-dilution rights, as more fully set forth in Section 12 below. As
of December 31, 2001, Options to purchase an aggregate of 3,000,000 shares
vested due to the achievement of the vesting criteria set forth in the Xxxxx
Employment Agreements.
2. VESTING SUBJECT TO CONDITION OF CONTINUED SERVICES TO THE COMPANY. The
Options are subject to certain conditions of continued service of the Optionee
by the Company. In the event the Optionee's employment with the Company is
terminated, at any time, for whatever reason, all Options which have not vested
as of the Optionee's termination of service date in accordance with the vesting
schedule set forth herein shall be immediately forfeited upon such termination.
Nothing contained in this Agreement shall obligate the Company to employ or have
another relationship with the Optionee.
3. OPTION PERIOD. Provided such Options have vested in accordance with the
award schedule set forth in Section 2 above, Options shall be exercisable at any
time during the period commencing with the date of this Agreement and expiring
on April 12, 2004 with respect to the First Options and expiring on April 12,
2006 with respect to the Second Options, unless earlier terminated pursuant to
Section 2 or Section 14 of this Agreement, or if said day is a day on which
banking institutions are authorized by law to close, then on the next succeeding
day which shall not be such a day, by presentation and surrender hereof to the
Company or at the office of its stock transfer agent, if any, together with all
Federal and state taxes applicable upon such exercise, if any.
4. AMOUNT OF PURCHASE PRICE. The purchase price per Share for each share
which the Optionee is entitled to purchase under the Options shall be $0.30 for
the First Options, and $0.03 for the Second Options.
5. METHOD OF EXERCISE. The Options shall be exercisable by the Optionee by
giving written notice to the Company of the election to purchase and of the
number of Shares the Optionee elects to purchase, such notice to be accompanied
by such other executed instruments or documents as may be required by the Board
of Directors pursuant to this Agreement, and unless otherwise directed by the
Board of Directors, the Optionee shall at the time of such exercise tender the
purchase price of the Shares he has elected to purchase. The Optionee may
purchase less than the total number of Shares for which the Option is
exercisable, provided that a partial exercise of an Option may not be for less
than One Hundred (100) Shares. If the Optionee shall not purchase all of the
Shares which he is entitled to purchase under the Options, his right to purchase
the remaining unpurchased Shares shall continue until expiration of the Options.
The Options shall be exercisable with respect of whole Shares only, and
fractional Share interests shall be disregarded.
6. PAYMENT OF PURCHASE PRICE. At the time of the Optionee's notice of
exercise of the Options, the Optionee shall tender in cash or by certified or
bank cashier's check payable to the Company, the purchase price for all Shares
then being purchased. Nothwithstanding the foregoing, cashless exercise of the
Options is specifically permitted. If authorized by the Company's Board of
Director, alternative means of payment, including by means of a promissory note,
an advance from the Company, or other means, is permitted.
7. ISSUANCE OF STOCK CERTIFICATES. Upon receipt of the materials delivered
by the Optionee indicating exercise of the Options, the Company shall, as
promptly as practicable and in any event within five (5) business days
thereafter, execute and deliver, or cause to be executed and delivered, to the
Optionee a certificate or certificates representing the aggregate number of
Shares specified in such notice or form together with cash in lieu of any
fractional share as hereinafter provided. The certificate or certificates so
delivered shall be in such denomination or denominations as may be specified in
such notice or form and shall be registered in the name of the Optionee or such
other name as shall be designated (together with an address) in such notice or
form. Such certificate(s) shall be deemed to have been issued and the Optionee
or any other person so designated to be named therein shall be deemed to have
become a holder of record of such Shares as of the exercise date. The Company
shall pay all expenses and other charges payable in connection with the
preparation, issuance and delivery of share certificates under this Section
except that, in the case such share certificates shall be registered in a name
or names other than the name of the Optionee, funds sufficient to pay all share
transfer taxes which shall be payable upon issuance of such share certificate or
certificates shall be paid by the Optionee at the time the notice of exercise
hereinabove is delivered to the Company.
8. SHARES FULLY PAID. All Shares shall be, when issued, duly authorized,
validly issued and non-assessable.
9. NO IMPAIRMENT. The Company will not, by amendment of its charter or
though reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of the Options, but will
at all times in good faith assist in the carrying out of all such terms and in
the taking of all such action as may be necessary or appropriate in order to
protect the rights of the Optionee of the Options against impairment.
Notwitstanding the foregoing, in the event of a "change of control" as defined
in the Employment Agreement, the Options shall vest immediately in their
entirety.
10. RESERVATION OF SHARES. The Company hereby agrees that, during the time
period the Options are exercisable, there shall be reserved for issuance and/or
delivery upon exercise of the Options such number of shares of its common stock
as shall be required for issuance or delivery upon exercise of the Options.
11. FRACTIONAL SHARES. With respect to any fraction of a Share called for
upon any exercise hereof, the Optionee agrees to waive the Optionee's right to
such fractional Shares. As such, no fractional Shares or scrip representing
fractional Shares shall be issued upon the exercise of the Options.
12. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. As used herein, the term
"Adjustment Event" means an event pursuant to which the outstanding shares of
the Company are increased, decreased or changed into, or exchanged for a
different number or kind of shares or securities, without receipt of
consideration by the Company, through reorganization, merger, recapitalization,
reclassification, stock split, reverse stock split, stock dividend, stock
consolidation or otherwise. The term "Adjustment Event" shall also mean to
include: (i) any issuance by the Company of the Company's securities (excluding
securities issued to the Company's employees, directors, consultants and others
similarly situtated) below fair market value for such securities as determined
at the time of issuance; and (ii) any issuance at a price below the purchase
price per Share for the common stock underlying the Options, as adjusted. Upon
the occurrence of an Adjustment Event, (i) appropriate and proportionate
adjustments shall be made to the number and kind and exercise price for the
shares subject to the Options, and (ii) appropriate amendments to this Agreement
shall be executed by the Company and the Optionee if the Board of Directors in
good faith determines that such an amendment is necessary or desirable to
reflect such adjustments. If determined by the Board of Directors to be
appropriate, in the event of an Adjustment Event which involves the substitution
of securities of a corporation other than the Company, the Board of Directors
shall make arrangements for the assumptions by such other corporation of the
Options. Notwithstanding the foregoing, any such adjustment to the Options shall
be made without change in the total exercise price applicable to the unexercised
portion of the Options, but with an appropriate adjustment to the number of
shares, kind of shares and exercise price for each share subject to the Options.
The good faith determination by the Board of Directors as to what adjustments,
amendments or arrangements shall be made pursuant to this Section, and the
extent thereof, shall be final and conclusive, provided that the Options herein
are adjusted in a manner that is no less favorable than the manner of adjustment
used as to any other options issued by the Company to its employees, directors,
consultants or in any transaction. No fractional Shares shall be issued on
account of any such adjustment or arrangement.
13. RIGHTS OF THE OPTIONEE. The Optionee shall not be entitled to the
privileges of stock ownership as to any Shares not actually issued and delivered
to the Optionee. No Shares shall be purchased upon the exercise of any Options
unless and until, in the opinion of the Company's counsel, any then applicable
requirements of any laws, or governmental or regulatory agencies having
jurisdiction, and of any exchanges upon which the stock of the Company may be
listed shall have been fully complied with.
14. EFFECT OF DEATH OF THE OPTIONEE. If the Optionee dies, all Options
shall expire six (6) months thereafter. During such six (6) month period (or
such shorter period prior to the expiration of the Option by its own terms),
such Options may be exercised by the executor or administrator or the person or
persons to whom the Option is transferred by will or the applicable laws of
descent and distribution, as the case may be, but only to the extent such
Options were exercisable on the date the Optionee died.
15. NONTRANSFERABILITY OF OPTIONS. The Options shall not be transferable,
either voluntarily or by operation of law, otherwise than by will or the laws of
descent and distribution and shall be exercisable during the Optionee's lifetime
only by the Optionee.
16. SECURITIES LAWS COMPLIANCE. The Company will diligently endeavor to
comply with all applicable securities laws before any stock is issued pursuant
to the Options. Without limiting the generality of the foregoing, the Company
may require from the Optionee such investment representation or such agreement,
if any, as counsel for the Company may consider necessary in order to comply
with the Securities Act of 1933 as then in effect, and may require that the
Optionee agree that any sale of the Shares will be made only in such manner as
is permitted by the Board of Directors. The Optionee shall take any action
reasonably requested by the Company in connection with registration or
qualification of the Shares under federal or state securities laws.
17. SECURITIES SUBJECT TO LEGEND. If deemed necessary by the Company's
counsel, all certificates issued to represent the Options and/or the Shares
purchased upon exercise of the Options shall bear such appropriate legend
conditions as counsel for the Company shall require in substantially the
following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY BE TRANSFERRED ONLY
(A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR (B) IN
ACCORDANCE WITH THE ACT AND SUBJECT TO RECEIPT OF AN OPINION OF COUNSEL
REASONABLY ACCEPTABLE TO THE ISSUER THAT THE PROPOSED TRANSACTION IS EXEMPT FROM
REGISTRATION UNDER THE ACT."
18. REPRESENTATIONS OF OPTIONEE.
(a) SOPHISTICATION OF OPTIONEE. The Optionee acquired the Options for
investment and not with a view to the sale or distribution thereof, and the
Optionee has no commitment or present intention to liquidate the Company or to
sell or otherwise dispose of the Options or the underlying Shares. The Optionee
represents and warrants that, by reason of financial, tax and business
sophistication, income, net assets, education, background and business acumen,
the Optionee has the experience and knowledge in business and financial matters
to evaluate the risks and merits attendant to an investment decision in the
Company, either singly or through the aid and assistance of a competent
professional, and is fully capable of bearing the economic risk of loss of the
total investment pursuant to this Agreement. The Optionee represents and
warrants to the Company that the Optionee has been an employee of the Company
and is fully familiar with its business and oeprations and has been provided
with, and has had access to, all material information about the Company.
19. MISCELLANEOUS.
(a) Binding Effect. This Agreement shall bind and inure to the benefit of
the successors, assigns, transferees, agents, personal representatives, heirs
and legatees of the respective parties.
(b) Further Acts. Each party agrees to perform any further acts and execute
and deliver any documents which may be necessary to carry out the provisions of
this Agreement.
(c) Amendment. This Agreement may be amended at any time by the written
agreement of the Company and the Optionee.
(d) Syntax. Throughout this Agreement, whenever the context so
requires, the singular shall include the plural, and the masculine gender shall
include the feminine and neuter genders. The headings and captions of the
various Sections hereof are for convenience only and they shall not limit,
expand or otherwise affect the construction or interpretation of this Agreement.
(e) Choice of Law. The parties hereby agree that this Agreement has been
executed and delivered in the State of New York and shall be construed, enforced
and governed by the laws thereof. This Agreement is in all respects intended by
each party hereto to be deemed and construed to have been jointly prepared by
the parties and the parties hereby expressly agree that any uncertainty or
ambiguity existing herein shall not be interpreted against either of them.
(f) Severability. In the event that any provision of this agreement shall
be held invalid or unenforceable, such provision shall be severable from, and
such invalidity or unenforceability shall not be construed to have any effect
on, the remaining provisions of this agreement.
(g) Notices. All notices and demands between the parties
hereto shall be in writing and shall be served either by registered or certified
mail, and such notices or demands shall be deemed given and made forty-eight
(48) hours after the deposit thereof in the United States mail, postage prepaid,
addressed to the party to whom such notice or demand is to be given or made, and
the issuance of the registered receipt therefor. If served by telegraph,
such
notice or demand shall be deemed given and made at the time the telegraph agency
shall confirm to the sender, delivery thereof to the addressee. All notices and
demands to the Optionee or the Company may be given to them at the following
addresses:
If to the Optionee: Xxxxx Xxxxx
_______________________
_______________________
If to Corporation: Famous Fixins, Inc.
000 X. 00xx Xx., Xxxxx 0000
Xxx Xxxx, XX 00000
Attn.: Board of Directors
With a copy to: Law Offices of Xxx Xxxxxxx
00 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Fax: (000) 000-0000
Such parties may designate in writing from time to time such other place or
places that such notices and demands may be given.
(h) Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto pertaining to the subject matter hereof, this
Agreement supersedes all prior and contemporaneous agreements and understandings
of the parties, and there are no warranties, representations or other agreements
between the parties in connection with the subject matter hereof except as set
forth or referred to herein. No supplement, modification or waiver or
termination of this Agreement shall be binding unless executed in writing by the
party to be bound thereby. No waiver of any of the provisions of this Agreement
shall constitute a waiver of any other provision hereof (whether or not similar)
nor shall such waiver constitute a continuing waiver.
(i) Attorneys' Fees. In the event that any party to this Agreement
institutes any action or proceeding, including, but not limited to, litigation
or arbitration, to preserve, to protect or to enforce any right or benefit
created by or granted under this Agreement, the prevailing party in each
respective such action or proceeding shall be entitled, in addition to any and
all other relief granted by a court or other tribunal body, as may be
appropriate, to an award in such action or proceeding of that sum of money which
represents the attorneys' fees reasonably incurred by the prevailing party
therein in filing or otherwise instituting and in prosecuting or otherwise
pursuing or defending such action or proceeding, and, additionally, the
attorneys' fees reasonably incurred by such prevailing party in negotiating any
and all matters underlying such action or proceeding and in preparation for
instituting or defending such action or proceeding.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the
date first set forth above.
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Xxxxx Xxxxx (the "Optionee")
FAMOUS FIXINS, INC.
By:
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Xxxxxx Xxxxx, Director
