FORM OF TIME-BASED VESTING INCENTIVE STOCK OPTION AGREEMENT
EXHIBIT 10.23
FORM
OF TIME-BASED VESTING INCENTIVE STOCK OPTION AGREEMENT
This Stock Option Agreement (this “Agreement”) is entered into and effective as of
(the “Grant Date”) between FGX International Holdings Limited, a British
Virgin Islands company (the “Company”) and (the “Optionee”).
RECITALS
The Company is desirous of increasing the incentive of the Optionee whose contributions are
important to the continued success of the Company and its subsidiaries by means of the grant to the
Optionee of options to purchase the Company’s ordinary shares, $1.00 par value per share
(“Ordinary Shares”), under the FGX International Holdings Limited 2004 Key Executive Stock
Option Plan (f/k/a the Envision Worldwide Holdings Limited 2004 Key Executive Stock Option Plan)
(the “Plan”), a copy of which is attached hereto as Exhibit A.
TERMS OF AGREEMENT
NOW, THEREFORE, in consideration of the foregoing, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
| 1. | GRANT OF OPTION |
Subject to the terms and conditions of this Agreement and the Plan, the Company hereby grants
to the Optionee an option (the “Option”) to purchase an aggregate of Ordinary
Shares (the “Option Shares”). This Option is intended to be treated as an option which
qualifies as an “incentive stock option” within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the “Code”). The number of Option Shares shall be subject to
adjustment in the event of changes in the capitalization of the Company as set forth in Section 19
of the Plan.
| 2. | EXERCISE PRICE |
Subject to the terms and conditions of the Plan, the exercise price (the “Option
Price”) of this Option shall be $ per Option Share (prorated for any partial Option
Share), which is not less than the fair market value of the Ordinary Shares on the date of grant.
The Option Price of this Option shall be subject to adjustment in the event of changes in the
capitalization of the Company, as set forth in Section 19 of the Plan.
| 3. | TERM AND VESTING OF OPTION |
(a) Option Period. Subject to the terms and conditions of the Plan, this Option shall
terminate and all rights to purchase shares hereunder shall cease on the tenth anniversary of the
Grant Date.
(b) Vesting and Exercisability. Subject to the terms and conditions of the Plan, this
Option shall become exercisable upon the dates described in the following schedule and shall be
exercisable as to not more than the vested percentage of the shares subject to this Option as
follows:
| Incremental | Cumulative | |||
| Percentage of | Percentage of | |||
| Date | Option Exercisable | Option Exercisable | ||
Notwithstanding the foregoing, the Board of Directors of the Company (the
“Board”) may in its sole discretion provide that any vesting requirement or other such
limitation on the exercise of this Option may be rescinded, modified or waived by the Board, in its
sole discretion, at any time and from time to time after the Grant Date, so as to accelerate the
time at which this Option may be exercised; provided that the Optionee’s written consent be
obtained prior to any such rescission or modification which would adversely effect the Optionee’s
rights hereunder.
(c) Acceleration Upon Change in Control. Notwithstanding the foregoing provisions of
Section 3(b), this Option shall become fully vested and exercisable in full as of the Change in
Control Date upon a Change in Control if the Optionee continues to be employed by the Company or
any of its subsidiaries on the Change in Control Date or his employment was terminated by the
Company or its subsidiaries, as applicable, “without Cause” within six (6) months before and in
anticipation of, or twelve (12) months after, the Change in Control Date.
(d) For purposes of this Agreement, the following terms shall be defined as follows:
| (i) | “Cause” has the meaning set forth in the Employment Agreement between FGX International Inc. and the Optionee dated as of ___, and as the same may be further amended from time to time by the parties in accordance with the terms therein (the “Employment Agreement”). | ||
| (ii) | “Change in Control” has the meaning set forth in the Employment Agreement. |
| (iii) | “Change in Control Date” has the meaning set forth in the Employment Agreement. | ||
| (iv) | “Good Reason” has the meaning set forth in the Employment Agreement. | ||
| (v) | “without Cause” has the meaning set forth in the Employment Agreement. |
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| 4. | PROVISIONS OF PLAN |
The provisions of the Plan shall govern if and to the extent that there are inconsistencies
between those provisions and the provisions hereof. By execution of this Agreement, the Optionee
acknowledges receipt of a copy of the Plan and represents that he or she (a) is familiar with the
terms and provisions thereof, (b) accepts this Option granted hereby subject to all of the terms
and provisions of this Agreement and the Plan, and (c) after reviewing the Plan and this Agreement
in their entirety, has had the opportunity to obtain the advice of counsel and fully understands
all of the terms and provisions of this Agreement and the Plan prior to the execution hereof.
| 5. | MANNER OF EXERCISE AND PAYMENT |
(a) Exercise. This Option may be exercised to the extent vested as provided in Section 3
hereof by delivery to the Company on any business day, at its principal office, addressed to the
attention of the President of written notice of exercise, which notice shall specify the number of
shares with respect to which this Option is being exercised, and shall be accompanied by payment in
full of the Option Price of the shares for which this Option is being exercised, by one or more of
the methods provided below.
(b) Payment. Payment of the Option Price for the Ordinary Shares purchased pursuant to
the exercise of this Option shall be made (i) in cash or in cash equivalents; (ii) through the
tender to the Company of the Ordinary Shares, which shares shall be valued, for purposes of
determining the extent to which the Option Price has been paid thereby, at their fair market value
(determined in good faith by the Board) on the date of exercise; (iii) by delivering a written
direction to the Company that this Option be exercised pursuant to a “cashless” exercise/sale
procedure (pursuant to which funds to pay for exercise of this Option are delivered to the Company
by a broker upon receipt of stock certificates from the Company) or a cashless exercise/loan
procedure (pursuant to which the Optionee would obtain a margin loan from a broker to fund the
exercise) through a licensed broker acceptable to the Company whereby the stock certificate or
certificates for the Ordinary Shares for which this Option is exercised will be delivered to such
broker as the agent for the individual exercising this Option and the broker will deliver to the
Company cash (or cash equivalents acceptable to the Company) equal to the Option Price for the
Ordinary Shares purchased pursuant to the exercise of this Option plus the amount (if any) of
federal and other taxes that the Company, may, in its judgment, be required to withhold with
respect to the exercise of this Option; (iv) to the extent permitted by applicable law and agreed
to by the Board in its sole and absolute discretion, by the delivery of a promissory note of the
Optionee to the Company on such terms as the Board shall specify in its sole and absolute
discretion; or (v) by a combination of the methods described in clauses (i), (ii), (iii) and (iv).
Payment in full of the Option Price need not accompany the written notice of exercise if this
Option is exercised pursuant to the cashless exercise/sale procedure described above. An attempt
to exercise any Option granted hereunder other than as set forth above shall be invalid and of no
force and effect.
(c) Issuance of Certificates. Promptly after the exercise of this Option, Optionee shall
be entitled to the issuance of a certificate or certificates evidencing his
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ownership of such Ordinary Shares. The Company shall use reasonable efforts to deliver the
certificate within seven (7) days following such exercise. An individual holding or exercising an
Option shall have none of the rights of a shareholder until the Ordinary Shares covered thereby are
fully paid and issued to him and, except as provided in Section 19 of the Plan, no adjustment shall
be made for dividends or other rights for which the record date is prior to the date of such
issuance.
(d) Execution of Shareholders’ Agreement as Condition to Exercise of Option. In the event
that the Optionee shall desire to exercise all or any portion of this Option prior to the date on
which the Company shall have completed an Initial Public Offering, the Optionee shall, as a
condition precedent to such Optionee’s exercise of this Option, execute and deliver (to the extent
the Optionee is not already a party thereto) a copy of that certain Shareholders’ Agreement in the
form attached hereto as Exhibit B, with such amendments, modifications and changes thereto as shall
have been made by the parties thereto prior to the execution thereof by the Optionee.
(e) Lock-Up of Option Shares. During the period commencing on the date hereof and ending
one hundred eighty (180) days after the date of the final prospectus relating to each of the
Initial Public Offering and any subsequent public offering of any of the Company’s securities (or
such longer period as may be required by the lead underwriter(s) in connection with such Initial
Public Offering or any such subsequent public offering), Optionee agrees not to (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly
or indirectly, any Option Shares or (ii) enter into any swap or other arrangement that transfers
all or a portion of the economic consequences associated with the ownership of any Option Shares,
without the prior written consent of the Board.
(f) Change of Control. In the event of a Change of Control, the Optionee shall be
entitled to receive upon exercise and payment in accordance with the terms of this Agreement the
same shares, securities or property as he would have been entitled to receive upon the occurrence
of such event if he had been, immediately prior to such event, the holder of the number of shares
of Ordinary Shares purchasable under this Option.
| 6. | TRANSFERABILITY OF OPTION |
This Option shall not be assignable or transferable by the Optionee, other than by will or the
laws of descent and distribution.
| 7. | TERMINATION OF EMPLOYMENT |
(a) Voluntary Termination by Optionee. If the Optionee voluntarily terminates his
employment with the Company or its subsidiaries, as applicable, (i) the portion, if any, of this
Option that has vested as of the date of such termination shall be exercisable for a period not to
exceed thirty (30) days after the date of such termination, at which time, the vested and
unexercised portion of this Option shall terminate, and the
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Optionee shall have no further right to purchase Ordinary Shares pursuant to the vested but
unexercised portion of this Option, and (ii) the portion, if any, of this Option that has not
vested as of the date of such termination shall terminate immediately, and the Optionee shall have
no further right to purchase Ordinary Shares pursuant to the unvested portion of this Option.
(b) Termination for Cause. If the Company or any of its subsidiaries, as applicable,
terminates the Optionee’s employment with the Company or such subsidiary for Cause, this Option
(including that portion of the Option that has vested and that portion of the Option that has not
vested as of the date of such termination) shall terminate immediately, and the Optionee shall have
no further right to purchase Ordinary Shares pursuant to this Option. The Board shall determine
whether Cause exists for purposes of this Agreement and such determination shall be final, binding
and conclusive.
(c) Termination Without Cause. If the Company or any of its subsidiaries, as applicable,
terminates the Optionee’s employment with the Company or such subsidiary without Cause, then (i)
the vesting of the portion, if any, of this Option that has not vested as of the date of such
termination but would have vested on or prior to December 31 of the year in which such termination
occurs under Section 3(b) (the “Accelerated Portion”) shall be accelerated, and the
Accelerated Portion shall become immediately exercisable as of the date of such termination, (ii)
the Accelerated Portion, together with the portion of this Option, if any, that has vested as of
the date of such termination shall be exercisable by the Optionee for a period of time not to
exceed thirty (30) days after the date of such termination, at which time, the vested and
unexercised portion of this Option (including any part of the Accelerated Portion that remains
unexercised) shall terminate, and the Optionee shall have no further right to purchase shares of
Common Stock pursuant thereto, and (iii) the portion, if any, of this Option that has not vested as
of the date of such termination (after taking into account the Accelerated Portion) shall terminate
immediately, and the Optionee shall have no further right to purchase shares of Common Stock
pursuant to the unvested portion of this Option. For avoidance of doubt, if there should be a
Change of Control and the Optionee continues to be employed by the Company or any of its
subsidiaries, as applicable, on the Change of Control Date, this Option shall become fully vested
and exercisable in full pursuant to Section 3(c).
(d) Death. If the Optionee dies while serving as an employee of the Company or any of its
subsidiaries, as applicable, then (i) the vesting of the portion, if any, of this Option that has
not vested as of the date of the Optionee’s death but would have vested on or prior to December 31
of the year in which he dies (the “Death Accelerated Portion”) shall be accelerated, and
the Death Accelerated Portion shall become immediately exercisable as of the date of the Optionee’s
death, (ii) the Death Accelerated Portion, together with the portion of this Option, if any, that
has vested as of the date of his death shall be exercisable by the executors or administrators or
legatees or distributees of the Optionee’s estate for a period of time not to exceed ninety (90)
days after the date of the Optionee’s death, at which time, the vested and unexercised portion of
this Option shall expire, and such persons shall have no further right to purchase Ordinary Shares
pursuant to the vested but unexercised portion of this Option and (iii) the
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portion, if any, of this Option that has not vested as of the date of the Optionee’s death
(after taking into account the Death Accelerated Portion) shall terminate immediately, and the
executors, administrators, legatees and/or distributees of the Optionee’s estate shall have no
further right to purchase Ordinary Shares pursuant to the unvested portion of this Option.
(e) Disability. If the Optionee’s employment with the Company or any of its subsidiaries,
as applicable, is terminated by reason of the “permanent and total disability” (within the meaning
of Section 22(e)(3) of the Code) of such Optionee, then (i) the vesting of the portion, if any, of
this Option that has not vested as of the date of such termination but would have vested on or
prior to December 31 of the year in which such termination occurs (the “Disability Accelerated
Portion”) shall be accelerated, and the Disability Accelerated Portion shall become immediately
exercisable as of the date of such termination, (ii) the Disability Accelerated Portion, together
with the portion of this Option, if any, that has vested as of the date of such termination, shall
be exercisable by the Optionee for a period of time not to exceed ninety (90) days after the date
of such termination, at which time, the vested and unexercised portion of this Option shall
terminate, and the Optionee shall have no further right to purchase Ordinary Shares pursuant to
the vested but unexercised portion of this Option, and (iii) the portion, if any, of this Option
that has not vested as of the date of such termination (after taking into account the Disability
Accelerated Portion) shall terminate immediately, and the Optionee shall have no further right to
purchase Ordinary Shares pursuant to the unvested portion of this Option. Whether a termination of
employment is to be considered by reason of “permanent and total disability” for purposes of this
Agreement shall be determined by the Board, which determination shall be final, conclusive and
binding on the Optionee.
(f) General. Notwithstanding the foregoing, the Board may provide, in its sole and
absolute discretion, that following termination of employment of the Optionee with the Company or
any of its subsidiaries, as applicable, the Optionee may exercise an Option, in whole or in part,
at any time subsequent to such termination of employment and prior to termination of the Option,
either subject to or without regard to any vesting or other limitation on exercise imposed
hereunder. Unless otherwise determined by the Board, temporary absence from employment because of
illness, vacation, approved leaves of absence, military service and transfer of employment shall
not constitute a termination of employment with the Company or any of its subsidiaries, as
applicable.
| 8. | DISCLAIMER OF RIGHTS |
No provision of this Agreement shall be construed to confer upon the Optionee, the right to
remain in the employ of the Company or any of its subsidiaries or to interfere in any way with the
right and authority of the Company or any of its subsidiaries either to increase or decrease the
compensation of the Optionee, at any time, or to terminate any employment relationship between the
Optionee and the Company or any of its subsidiaries.
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| 9. | MISCELLANEOUS |
(a) Waivers, Etc. Neither the failure nor any delay on the part of either party to
exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude
any other or further exercise of the same or of any other right, remedy, power or privilege, nor
shall any waiver of any right, remedy, power or privilege with respect to any occurrence be
construed as a waiver of such right, remedy, power or privilege with respect to any other
occurrence. No waiver shall be effective unless it is in writing and is signed by the party
asserted to have granted such waiver.
(b) Governing Law and Jurisdiction. This Agreement shall be construed in accordance with
and governed by the laws of the State of Rhode Island applicable to contracts executed and to be
wholly performed within such State (without regard to the choice of law provisions thereof). Each
party hereby irrevocably and unconditionally consents and submits to the exclusive jurisdiction of
the courts of the State of Rhode Island sitting in Providence County, Rhode Island and of the
United States District Court for the District of Rhode Island for any actions, suits or proceedings
arising out of or relating to this Agreement and the transactions contemplated hereby and each
party agrees not to commence any action, suit or proceeding relating thereto except in such courts.
Each party further agrees that any service of process, summons, notice or document sent by U.S.
registered mail to its address set forth herein shall be effective service of process for any
action, suit or proceeding brought against it in any such court. Each party irrevocably and
unconditionally waives any objection to the laying of venue of any action, suit or proceeding
arising out of this Agreement or the transactions contemplated hereby in such courts, and
irrevocably and unconditionally waives and agrees not to plead or claim in any such court that any
action, suit or proceeding brought in any such court has been brought in an inconvenient forum.
(c) Notices. All notices, requests, demands and other communications required or
permitted under this Agreement shall be in writing and shall be deemed to have been duly given,
made and received only when personally delivered, one business day following the day when deposited
with an overnight courier service for overnight priority service, such as Federal Express, for
delivery to the intended addressee or three days following the day when deposited in the United
States mails, first class postage prepaid, certified or registered mail, and addressed, in the case
of the Company at its principal place of business and to the attention of its Stock Option
Administrator and, in the case of Optionee, as set forth below Optionee’s signature on the last
page hereof. Any person may alter the address to which communications or copies are to be sent by
giving notice of such change of address in conformity with the provisions of this Section for the
giving of notice.
(d) Binding Nature of Agreement; Transferability. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective heirs, personal
representatives, successors and permitted assigns. This Agreement shall not be assignable or
transferable by the Optionee other than by will or the laws of descent and distribution.
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(e) Severability. The provisions of this Agreement are independent of and separable from
each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of
the fact that for any reason any other or others of them may be invalid or unenforceable in whole
or in part.
(f) Section Headings. The section headings in this Agreement are for convenience only;
they form no part of this Agreement and shall not affect its interpretation.
(g) Number of Days. In computing the number of days for purposes of this Agreement, all
days shall be counted, including Saturdays, Sundays and holidays; provided, however, that if the
final day of any time period falls on a Saturday, Sunday or holiday on which national banks are or
may elect to be closed, then the final day shall be deemed to be the next day which is not a
Saturday, Sunday or such holiday.
(h) No Third-Party Beneficiaries. This Agreement shall not confer any rights or remedies
upon any person other than the parties and their respective heirs, personal representatives,
successors and assigns.
(i) Entire Agreement. This Agreement (including the Plan and the other documents and
exhibits referred to herein) constitutes the entire agreement among the parties with respect to the
subject matter hereof and supersedes any prior understandings, agreements, or representations by or
among the parties, written or oral, that may have related in any way to the subject matter hereof.
(j) Amendments. This Agreement may not be amended, supplemented or modified in whole or
in part except by an instrument in writing signed by the party or parties against whom enforcement
of any such amendment, supplement or modification is sought.
(k) Construction. The language used in this Agreement will be deemed to be the language
chosen by the parties to express their mutual intent, and therefore strict construction shall be
applied against any party. Any reference to any federal, state, local or foreign statute or law
shall be deemed also to refer to the rules and regulations promulgated thereunder, unless the
context requires otherwise. The parties intend that each representation, warranty, and covenant
contained herein shall have independent significance. If any party has breached any
representation, warranty, or covenant contained herein in any respect, the fact that there exists
another representation, warranty or covenant relating to the same subject matter (regardless of the
relative levels of specificity) which the party has not breached shall not detract from or mitigate
the fact that the party is in breach of the first representation, warranty or covenant.
(l) Counterparts. This Agreement may be executed in one or more counterparts, each of
which will be deemed an original and all of which together will constitute one and the same
instrument.
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(m) Pronouns. The use of any gender in this Agreement shall be deemed to include all
genders, and the use of the singular shall be deemed to include the plural and vice versa, wherever
it appears appropriate from the context.
[Signatures Appear on Following Page]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first
above written.
| FGX INTERNATIONAL HOLDINGS LIMITED |
||||
| By: | /s/ | |||
| Name: | ||||
| Title: | ||||
| OPTIONEE |
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