STOCK OPTION AGREEMENT
PURSUANT TO PACIFIC COAST APPAREL COMPANY, INC.
STOCK OPTION PLAN
(for Directors)
THIS AGREEMENT is entered into as of the 15th day of November, 1996, by and
between Pacific Coast Apparel Company, Inc., a California corporation (the
"Company") with its principal office at 00000 Xxxxx Xxxxxx, Xxxxxx Xxxx, XX
00000, and Xxxx X. Annex ("Optionee").
RECITALS
The Company has adopted the Pacific Coast Apparel Company, Inc. Stock
Option Plan (the "Plan"), which Plan is available for review by the Optionee at
the Company's principal office. The Committee established pursuant to the Plan
regards Optionee as a key employee of, or consultant to, the Company and has
determined that it would be in the best interests of the Company and its
shareholders to grant the option provided for herein to Optionee as an
inducement to become a director, or to remain in the service as a director of,
the Company and as an incentive for productive efforts during such service.
NOW, THEREFORE, the parties agree:
1. DEFINITIONS.
Capitalized terms not defined herein shall have the meaning set forth in
the Plan.
2. GRANT OF OPTION.
The Company hereby grants to Optionee, pursuant to the Plan, the right and
option to purchase under the terms of this Agreement all or any part of an
aggregate of 5,000 Shares. This option is not intended to be an "incentive
stock option" within the meaning of Section 422A of the Internal Revenue Code.
Optionee is advised to consult his or her personal advisor concerning the
federal and state income tax consequences of this option.
3. OPTION PRICE.
The option price for the Shares covered by this Agreement shall be $4.50
per Share ("Option Price").
4. EXERCISE OF OPTION.
Optionee may exercise this option with respect to all or any part of the
Shares then subject to purchase under this option by (i) giving the Company
irrevocable written notice of such exercise specifying the number of Shares as
to which such option is so exercised, and (ii) delivering to the Company (a)
cash equal to the Option Price for such Shares, (b) other shares of Company
common stock owned by the Optionee in a form acceptable to the Committee, (c) a
combination of such stock or cash, or (d) a loan from the Company in accordance
with Section 2.7 of the Plan; except that the Committee in its sole discretion
may require that payment be made solely by delivering cash equal to the option
price for the Shares as to which the option is exercised.
5. CONDITIONS OF EXERCISE.
The Optionee's right to exercise this option shall be subject to and
limited by the following conditions:
(a) This option shall be exercisable immediately upon grant.
(b) The option shall not be exercisable if and to the extent the Committee
determines that such exercise would be in violation of applicable state or
federal securities laws or the rules and regulations of any securities exchange
on which the Shares are traded. If the Committee makes such a determination, it
shall endeavor to obtain compliance with such laws, rules or regulations. In
making any determination hereunder, the Committee may rely on an opinion of
counsel for the Company. If deemed appropriate by the Company's counsel, the
stock certificates issued hereunder will bear a legend restricting transfer in
conformity with the Securities Act of 1933 and any applicable state securities
laws.
(c) In the event the Company determines that it is required to withhold or
collect, as a result of any exercise of this option or as a result of the
disposition of the Shares acquired upon such exercise, any state or federal
income or other tax, Optionee agrees to make arrangements satisfactory to the
Company to meet such withholding or collection requirements. Withholding taxes
also may be paid by withholding of Shares, or by delivery of shares of Company
common stock owned by the Optionee, in form acceptable to the Committee.
(d) As soon as practicable after receipt of payment and notice of
exercise, without transfer or issue tax or other incidental expense to Optionee
(except incident to a transfer permitted by Section 7), the Company shall
deliver to Optionee at the Company's principal office, or such other place as
may be mutually acceptable to the Company and Optionee, a certificate or
certificates for the Shares with respect to which exercise is made hereunder.
Such Shares, which shall be fully paid and non-assessable, shall be issued in
the name of Optionee, or, in the event the options granted hereby are properly
exercised by some person other than Optionee, such person. With the consent of
the Committee,
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such Shares may be issued jointly in the name of Optionee and one or more other
persons specified by Optionee.
6. TERM OF OPTION.
This Agreement and all rights of Optionee hereunder shall terminate on the
day preceding the fifth anniversary of this Agreement, at 5:00 p.m. Pacific
Time. Further, the option granted hereunder may be exercised only while
Optionee is in the employ or service of the Company, or thereafter, to the
extent the option was exercisable at the date of termination as follows:
(i) within six months following termination of service on account
of death or disability; or
(ii) within three months following termination of service by the
Company or by Optionee.
7. TRANSFERABILITY.
This Agreement may be transferred by Optionee to members of Optionee's
immediate family, or to a trust or entity for the benefit of Optionee's
immediate family. Upon death, this Agreement shall be transferable by will or
the laws of descent and distribution.
8. MISCELLANEOUS.
(a) SHAREHOLDER RIGHTS. Optionee shall not have any of the rights of a
shareholder with respect to the Shares subject to the option granted hereby,
except to the extent the certificates for such Shares shall have been issued
upon the exercise of such option as provided for herein.
(b) SERVICE. Nothing in this Agreement shall confer upon Optionee any
right to continue in the service of the Company or interfere in any way with the
right of the Company to terminate his or her service at any time with or without
cause.
(c) NOTICES. Any notices or communications by either party to the other
hereunder shall be given by personal delivery (including facsimile transmission)
or by first class mail, return receipt requested, addressed, if to the Company,
at its principal office, and if to Optionee, at:
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Notices or communications shall be deemed given on the date of mailing. Either
party may change its address for the receipt of notices or communications
hereunder, provided notice of such change is given in advance to the other party
in the manner provided in this paragraph.
(d) INTERPRETATION AND ENFORCEMENT. The interpretation, construction,
performance and enforcement of this Agreement and the Plan shall be within the
sole discretion of the Committee, and its determination shall be conclusive and
binding upon all interested persons.
(e) EXECUTORS, SUCCESSOR AND ASSIGNS. Subject to terms and provisions of
this Agreement limiting the right of assignment, this Agreement shall be binding
upon and inure to the benefit of the parties, their heirs, executors, successors
and assigns.
(f) GOVERNING LAW. This Agreement, and all rights and obligations
hereunder, shall be governed by the laws of the State of California.
IN WITNESS WHEREOF, this Agreement has been executed the year and date
first hereinabove written.
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Xxxx X. Annex
PACIFIC COAST APPAREL COMPANY, INC.
By
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Xxxxxxxx X. XxXxxxxx, Chief Executive Officer
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