AGREEMENT AND CERTIFICATE OF OPTION
PURSUANT TO THE LONG TERM INCENTIVE PLAN OF
FINLAY ENTERPRISES, INC.
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Agreement and Certificate of Option (this "Agreement") dated __________
(the "Date of Grant"), between FINLAY ENTERPRISES, INC. (the "Corporation") and
__________ (the "Grantee"):
1. The Option.
(a) Subject to the provisions of Section 4 hereof, the Corporation hereby
grants to the Grantee, a stock option (the "Option") to purchase, on the terms
and conditions herein set forth, up to shares of the Corporation's fully paid,
non-assessable shares of Common Stock, par value $0.01 per share (the "Shares"),
at the option price set forth in Section 2 below.
(b) The Option is granted pursuant to the Corporation's 1997 Long Term
Incentive Plan (the "Plan"), a copy of which is delivered herewith by the
Corporation and receipt thereof is acknowledged by the Grantee. The Option is
subject in its entirety to all of the applicable provisions of the Plan which
are incorporated herein by reference, and any conflict between the terms of this
Agreement and those of the Plan shall be resolved in favor of the terms of the
Plan. The Option is a "Non-Statutory Option" as that term is defined in the
Plan.
2. Exercise Price.
The purchase price of the Shares shall be $ per Share (the "Exercise
Price").
3. Exercise of Option.
(a) Except as otherwise provided in the Plan and this Agreement, the Option
is exercisable over a period of ten (10) years from the date hereof (the "Option
Period") in accordance with the following schedule (the portion of the Option
exercisable in accordance with such schedule being referred to herein as
"Vested"):
Percent of Shares Subject
Date to Option Purchasable
---- ---------------------
Commencing on the first anniversary
of the Date of Grant until (but not
including) the second anniversary
of the Date of Grant ....................................... 20%
Commencing on the second anniversary
of the Date of Grant until (but not
including) the third anniversary
of the Date of Grant ....................................... 40%
Commencing on the third anniversary
of the Date of Grant until (but not
including) the fourth anniversary
of the Date of Grant ....................................... 60%
Commencing on the fourth anniversary
of the Date of Grant until (but not
including) the fifth anniversary
of the Date of Grant ....................................... 80%
Commencing on the fifth anniversary
of the Date of Grant until (but not
including) the tenth anniversary
of the Date of Grant ....................................... 100%
Subject to the terms hereof, the Option may be exercised from time to time
during the Option Period as to the total number of Shares allowable under this
Section 3, or any lesser amount thereof, as long as the Grantee is employed by
the Corporation. For purposes of this Agreement, employment by the Corporation
or any Subsidiary (as defined in the Plan) shall be deemed to be employment by
the Corporation.
(b) In the event that the Grantee's employment is terminated other than by
reason of Retirement, death or Disability (as such terms are defined in the
Plan), (1) any portion of the Option not yet Vested shall thereupon expire and
terminate and (2) any portion of the Option that has Vested may be exercised
during the period ending twenty-one (21) days following such termination, after
which period any unexercised portion of the Option shall expire and terminate;
provided, however, that in the event that the Grantee's employment is terminated
for Cause (as hereinafter defined), the Option or any unexercised portion
thereof shall be permanently cancelled and terminated.
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(c) In the event that the Grantee's employment is terminated by reason of
Retirement, death or Disability, the entire Option (or any unexercised portion
thereof) shall thereupon be deemed Vested and may be exercised during the period
ending twenty-one (21) days following such termination, after which period any
unexercised portion of the Option shall expire and terminate.
(d) If this Option shall extend to one hundred (100) or more Shares, then
this Option may not be exercised for less than one hundred (100) Shares at any
one time, and if this Option shall extend to less than one hundred (100) Shares,
then this Option must be exercised for all such Shares at one time.
(e) The number of Shares to which the Grantee shall be entitled and the
Exercise Price shall be equitably adjusted to account for any relevant changes
in capitalization or classification, including, by way of example, but not by
way of limitation, split-ups or stock dividends. Nothing contained herein shall
be deemed to require the Corporation to issue any fractional Shares, and any
fractional Shares issuable upon exercise of the Option may, at the discretion of
the Corporation, be settled in cash or otherwise.
(f) At such time as the Grantee desires to exercise the Option granted
hereby, in whole or in part, the Grantee shall provide to the Corporation an
Exercise Form in the form of Annex A hereto. The Grantee's signature at the
place provided on said Exercise Form will evidence the Grantee's election to
purchase Shares of Common Stock pursuant to the terms and subject to the
conditions and limitations contained in the Plan, in this Agreement and in said
Exercise Form. The Option shall be considered exercised (in full or part, as the
case may be) on the date such Exercise Form is mailed to the Secretary of the
Corporation, postage prepaid, or delivered in person to the Secretary, together
with payment of the Exercise Price for the Shares to be purchased plus any
withholding tax required under any federal, state and local statutes.
(g) The Exercise Price shall be paid in full at the time of purchase of the
Shares, in cash or by check or in a manner otherwise approved by the
Corporation. If the Option is exercised in accordance with the provisions of the
Plan and this Agreement, then the Corporation shall deliver to the Grantee
certificates representing the number of Shares in respect of which the Option is
being exercised which Shares shall be registered in the Grantee's name.
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4. Stockholders' and Registration Rights Agreements; Additional
Repurchase Provisions.
(a) It is a condition to the grant of the Option that the Grantee execute
and deliver to the Corporation, simultaneously with the execution and delivery
of this Agreement by the Grantee, counterparts of the Amended and Restated
Stockholders' Agreement dated as of March 6, 1995 and the Registration Rights
Agreement, dated as of May 26, 1993 (respectively the "Stockholders' Agreement"
and the "Registration Rights Agreement"), by and among the Corporation, Xxxxx X.
Xxxxxxxxx, Xxxxxx X. Xxxxxx and certain other parties. Upon the Grantee's
execution and delivery of such agreements, the Grantee will be deemed to be a
"Management Holder" under the Stockholders' Agreement and a "Management
Stockholder" under the Registration Rights Agreement, and as such the Grantee
will be subject, in addition to the provisions of this Agreement, to all of the
terms, conditions and obligations of such agreements, including, without
limitation, restrictions on the transferability of the Option and any Shares
purchased upon exercise thereof. Two copies of each of such agreements are
enclosed herewith. Capitalized terms used but not otherwise defined herein are
used as defined in the Stockholders' Agreement.
(b) Notwithstanding anything to the contrary contained herein or in the
Stockholders' Agreement, in the event that the Grantee's employment is
terminated for Cause, the Corporation shall have the right, exercisable by
written notice within twenty-one (21) days of such termination of employment, to
repurchase from the Grantee (and any of Grantee's Permitted Transferees, if
applicable), any and all Shares theretofore purchased by the Grantee hereunder
at a price per Share equal tothe Exercise price in respect of such Shares. For
purposes of this Agreement, termination for "Cause" shall mean termination by
reason of the Grantee's fraud, dishonesty or commission of a crime, whether or
not in the course of his or her employment.
5. Transferability of Option and Shares.
(a) The Option is not transferable other than by will or by the laws of
descent and distribution and during a Grantee's lifetime is exercisable only by
the Grantee. Any assignment in violation of this Section 5(a) shall be void and
of no force or effect.
(b) The transferability of the Option and the Shares is limited by the
terms of the Stockholders' Agreement and the Registration Rights Agreement and
by applicable law.
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(c) Without limiting the generality of the foregoing, no purported sale,
assignment or other transfer of the Shares shall be effective unless and until
the transferee of the Shares so transferred executes and delivers to the
Corporation its agreement, in form and substance satisfactory to the
Corporation, to be bound by the provisions of this Agreement.
6. Covenants of the Grantee.
The Grantee's exercise of the Option shall be subject to the Grantee
acknowledging and agreeing to the following at the time of such exercise:
(a) The Shares have not been registered under the Securities Act of
1993, as amended (the "Act"), or the securities or "Blue Sky" laws of any
state and may not be sold or otherwise disposed of, except in compliance
with the Act and any applicable Blue Sky laws.
(b) The Shares are being acquired by the Grantee for the Grantee's
benefit and account for investment purposes and not with a view to or for
resale in connection with a public offering and distribution thereof.
(c) The Shares will not be sold, hypothecated, transferred or
otherwise disposed of by the Grantee in any manner, directly or indirectly,
(i) without registration thereof under the Act and any applicable Blue Sky
laws unless an exemption from such registration is available and, if the
Corporation so requests, the Grantee causes counsel satisfactory to the
Corporation to deliver to the Corporation a reasoned written opinion of
such counsel in form and substance satisfactory to the Corporation; or (ii)
in violation of any law; or (iii) in violation of the Stockholders'
Agreement or the Registration Rights Agreement.
(d) The certificate or certificates representing the Shares shall have
an appropriate legend referring to the terms of this Option.
(e) The Grantee acknowledges that, in the event of termination of his
or her employment with the Corporation, his or her rights to exercise this
Option are restricted as set forth in Section 3 above.
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7. General Provisions.
This Agreement is subject in all respects to the terms and conditions of
the Plan, which terms and conditions the Grantee is deemed to accept and consent
to by the Grantee's acceptance of the Option. Nothing contained in this
Agreement shall confer upon any employee any right to continue in the employ of
the Corporation or shall in any way affect the right and power of the
Corporation to dismiss or otherwise terminate the employment of the employee at
any time for any reason with or without cause. This Agreement shall be governed
and construed in accordance with the laws of the State of New York applicable to
contracts entered into and to be performed wholly with such State.
If the foregoing is in accordance with the Grantee's understanding and
accepted and agreed to by the Grantee, the Grantee may so confirm by signing and
returning the duplicate of this Agreement delivered for that purpose, as well as
one copy of the enclosed Stockholders' Agreement and Registration Rights
Agreement.
FINLAY ENTERPRISES, INC.
By
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Xxxxxx X. Xxxxxx
Vice Chairman
The foregoing is in accordance with my understanding and is hereby accepted
and agreed.
GRANTEE
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[Name]
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Date:
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